Higher Education Reform

Lord Addington Excerpts

Monday 28th February 2022 Lords Chamber

[Baroness Sherlock (Lab)]

My Lords, in May 2019, the then Prime Minister, Theresa May, launched the report of the Augar review. That was a long time ago, and it feels like a very long time ago. I wish I could say that the time has been well used, but let us have a look at what has been put out in this report.

First, there are changes to student loans. From the academic year 2023-24, the interest rate on loans will be changed to RPI for everybody, which is interesting, because Ministers keep telling me that RPI is no longer an official statistic because of concerns over its methodology. I can only assume that, somehow, it is not good enough when you are paying money out to benefit recipients but it is fine when you are taking money away from students. If only the noble Lord, Lord Forsyth, were here, I think he would have something to say about that.

Secondly, it reduces the repayment threshold to £25,000 and increases the repayment term to 40 years—much of a working life. For those on the current loan scheme, the repayment threshold will stay at the current level until 2024-25, which, given the current inflation rate, is quite a bit of fiscal drag. The effect of these measures together is highly regressive, hitting the lowest earners the hardest.

Paul Johnson of the IFS said this about it:

“looked at from the point of view of progressivity, redistribution, winners and losers, the reforms look truly horrible. Low-to-middle-earning graduates could be made about £20,000 worse off over their lifetime by the changes; the highest earners could benefit by £25,000.”

The equality analysis published alongside the consultation document said that

“among new borrowers, the largest proportional increases in lifetime repayments will be from lower earners … by 174% for those in the 4th decile”.

Meanwhile,

“the highest lifetime earners among new borrowers will experience large decreases in lifetime repayments (down 26%)”.

Why have the Government chosen to reform the loan system in a way which so profoundly benefits higher earners and hits those on lower incomes?

If noble Lords are wondering what the attraction of this particular approach is, it is perhaps worth mentioning that, thanks to a quirk of government accounting rules, these changes make the public finances look quite a bit better, but only in the short term. The IFS says that it will take about £1 billion off the cost of the student loan scheme, but:

“We expect the budget deficit to fall by about £5 billion in 2023 as a result of the changes, with subsequent hits to the deficit further down the road as new loans accumulate less interest.”


It finishes, drily:

“This will please the Treasury.”


Indeed it will.

However, this will not please many people because the pain does not fall equally in other ways. The equality analysis says that women, disabled people, some ethnic minorities and those from certain regions are likely to face increased lifetime repayments. Men gain and women lose. On average, men will repay around £5,500 less and women will pay £6,600 more. The IFS notes a remarkable comment:

“the taxpayer cost of funding men’s student loans will actually increase as a result of the reform … the saving on women’s student loans alone is greater than the total at £1.6 billion.”

Women students are not only paying for the reduced cost to the Exchequer; they are paying for the men’s changes as well. The Minister will doubtless say that this discrimination is not intentional, it is just that women earn less. But the Government know that women earn less across their lifetime. So, having known that, can the Minister tell the House what consideration was given to the differential impact of these proposals before deciding on them?

The Government are also consulting on other measures, including reintroducing government controls over student numbers. But not just by a global figure; they are consulting on whether to control them by sector, provider, subject, level or even by mode of study. Are the Government planning to do all of them? Might they do them all? Could the Government conceive of a world in which the Secretary of State could decide that physics is in but history is out? Could he close down the music department at Lindchester University completely? Could he decree that all computing is going to be done in FE from now on? This may not be their plan, but there is no way to tell from the documents published what their plan is. So could the Government give the House some hints?

They are also consulting on minimum eligibility requirements, including an option of requiring level 4 or above—that is a grade C in old money—in maths and English at GCSE. I found it quite hard to work out the numbers affected, because the tables in the equality analysis are quite confusing, but the Minister may be able to shed some light on that. I am pretty sure this will have a differential effect with regard to region and disadvantage.

It is not just about access to university; it is about access to the loan book. The Minister can confirm that presumably a student whose parents—or who themselves—could pay fees upfront has no problem, but then what happens to the more than half of pupils eligible for free school meals who will leave education without GCSE maths and English? Can the Minister tell the House what work has been done to look at the effect of such a plan on poorer children and young people from deprived areas?

There is also a proposal to limit funding for foundation years—and yes, once again this has differential effects. The equality analysis says that

“mature students and black, Asian and mixed/other ethnic minority groups … may be at greater risk of reduced access to HE and choice of provision”.

This is all really very disappointing. Augar was launched amid concerns about fairness and affordability for students, but those are clearly not the drivers at the heart of this response. The loan reforms are regressive and will hit lower-earning graduates. Rather than focusing on raising standards in schools and in HE, they risk penalising those who already find it hardest to get on through education.

Meanwhile, there is nothing on living costs for students, nothing to boost efforts on widening participation and nothing on the timing of admissions—except after a very big think they have decided not to do anything at all about post-qualification admissions. The consultation on the lifelong learning entitlement is still really vague. There is quite a lot on the how but not very much on the what, and certainly not on the why.

We have waited a thousand days for a response to Augar. That is roughly the length of an undergraduate degree, I reckon—you could probably do a PhD in that time; it is pretty much three years. After all that time, where is the strategic plan? Where is the vision for a strong, diverse higher education system that could help all of our young people and students to fulfil their potential? This feels like a missed opportunity. I hope the Minister can persuade me otherwise.

[Lord Addington (LD)]

My Lords, this is a very odd Statement because it suggests one or two nice things but does not really give us much detail. As the noble Baroness has just pointed out, the noble Lord, Lord Forsyth, is missed on this one. His intellectually honest toe-caps have gone into the ribs of many of us here and the Government Front Bench has actually felt them on many an occasion. A student finance system that celebrates going from 23% repayment to maybe half is a weird thing. Why do we still persist with this loan system? It is seen to be financially failing—unless creating a form of junk bond at the end of it is the aim. There will be not quite so much junk; that would seem to be about the essence of it.

If we are looking at how we get further education better into the system by giving better bonuses for lifelong learning—a suggestion of something that might be better in the future—we have to get people to go on the courses. What are we doing about careers guidance that would improve what people know about this? The first thing you will have to do is to train teachers, who are, let us face it, predominantly graduates, and we all know that what we did is right—if you do not come from that group, then you are very much in a minority—as we “stick to nurse”. Where is the training to make sure teachers are giving the right information to people or at least stand half a chance of so doing?

This has not got any easier with the introduction of T-levels and the removal of BTECs, which provided a series of fairly established ways of finding your way into higher education and the level 4 and 5 qualifications which are mentioned. We need some clear guidance to get this through and see how they are going to all tag in together. At the moment, I would say that it is an optimistic mess. We are not quite sure what the Government are expecting. It is going to be better, and it just might be that, after my entire lifetime, in relation to people at levels 4 and 5—I think it is technician-level qualification—we might be starting to address that, but we are doing it in a very chaotic way. The paths into education have fundamentally changed over the last couple of years, and they have changed in an incoherent manner.

To come to the last point, which the noble Baroness also touched on, if we have a special educational needs review taking place, why are we putting in a requirement for English and maths, which are the things that certainly the group I come from—that is, dyslexics—find difficult? It is 10% of the population; stick in dyscalculia, and that is another 3%, and those are conservative figures. Why are we making it so much more difficult for this group to get on to that pathway? When it comes to adult entrants into education, we are getting rid of BTECs, which were the way in, and we are saying that people have to have two A-levels. If you want later entrants—if you want entrants after having done, say, a level 4 course—why are we putting this in? It does not make any sense. Can we have some coherence about this?

Reading this as it stands, the Equality Act might have quite a lot to say about it. I have mentioned only two groups; others are available. Can we get some coherence around this? At the moment, the Government have waved a few ideas at us. The repayment structure may be slightly better for the Treasury, but I do not think it makes much difference to anybody else. Can we please hear what the Government are really about? If they are going to limit the amount of money we waste on the repayment structure, they have set themselves a very unambitious target.

[The Parliamentary Under-Secretary of State, Department for Education (Baroness Barran) (Con)]

I thank the noble Baroness and the noble Lord for their remarks and their questions. The noble Baroness rightly focuses on issues of fairness and access to higher education. The Government have tried to balance fairness to students with fairness to the taxpayer. Currently, a great proportion of the subsidy that the taxpayer makes towards higher education is funded by those who did not have the benefits of that higher education themselves. Students going to university have the advantages of their degree throughout their working lives.

Our estimate is that, over the course of their degree, the average graduate will borrow £39,300 from next year. Today, the average graduate would repay £19,500, and under the new proposed system, they would repay £25,300, so there is still a tremendous subsidy for the average graduate. The noble Baroness focuses on those who are more marginalised and are lower-earners, and she will be well aware that below £25,000 there is no repayment at all.

The noble Baroness also talked about the consultation around limitations on student numbers and minimum-entry requirements. This is, as she well understands, very much part of our drive towards having higher-quality courses. The numbers affected by the consultation—and I would stress it is a genuine consultation; we genuinely want to understand how stakeholders feel about this—and affected by proposed GCSE requirements would be less than 1% of students, and around 1% for the suggested entry requirement at A-level.

The noble Lord focuses on the barrier that that may present to those with special educational needs, but I would respectfully suggest it is also a tremendous barrier for everybody not to have English and maths at a basic level, since they are such an important entry requirement for almost every job. There are not many jobs in this country that you can do if you cannot read, write and add up. That is why the Government have extended their support, so that students can retake English and maths for whatever reason that might be.

[Lord Addington (LD)]

My Lords, will the noble Baroness give way for a moment? If you have got a disability, it means you have trouble doing it. You have legal requirements that say you are not supposed to discriminate and there are other ways around it. For instance, voice operation—which is available as a standard item on every computer for English. If you are not going to bring that into the system—which would have been a perfectly valid answer—why are you excluding them?

[Baroness Barran (Con)]

There is absolutely no intention to exclude at all. The department is heavily focused on trying to improve outcomes for pupils with special educational needs and the noble Lord will be aware of the enormous range of outcomes depending on which school a child with the same disability or special need goes to. We want to equalise those, so it should make no difference where a child goes to school in terms of their outcomes.

If I may continue, the noble Baroness questioned what we were doing in relation to foundation years. I did not quite follow her argument. We are consulting on reducing the maximum fee and loan limits for foundation years, from the current just over £9,000 to £5,197, and that is to bring it in line to be the same amount as an access to a higher education diploma. We hope it will make those foundation years—which are an important access route for those who may be more disadvantaged to get into higher education or potentially for mature students—more accessible.