Higher Education (Industry and Regulators Committee Report)

Lord Agnew of Oulton Excerpts

Tuesday 21st May 2024 Grand Committee

[Lord Agnew of Oulton (Con)]

My Lords, I refer to my interests in the register, which include being a member of the Industry and Regulators Committee that produced this report. I thank the noble Baroness, Lady Taylor, for her highly effective stewardship of the report to publication.

I have spent the last 14 years involved in primary and secondary education, but there are many who would tell you that there is no connection between this and tertiary education. I respectfully disagree and will try to show noble Lords why in the next few minutes. I should probably issue a trigger warning to those noble Lords who will disagree profoundly with many of my points today.

First, there are still people out there who think that the British university system is wonderful. I am sorry to be blunt but, other than a few exceptions, these people are living an illusion. The OfS was set up in 2018 to provide better governance. Perhaps it was just bad luck that it received the hospital pass, but the main outcome has been to see the future prospects of so many of our young people simply benighted.

The sixth sector hides behind the financial constraints that it suffers from. Of course, it is tough to live off the same £9,250 a year that has been the settlement for several years, but have a look at the secondary sector. I set up an academy trust in 2012. Today, we have 17 schools with 11,000 pupils and dozens of ageing buildings, many that pre-date university campuses. In our sixth forms, per student funding is £6,073 in Norwich for the so-called elite subjects of maths and science and £5,421 in Thetford.

Time and again during our inquiry, I was told by university luminaries that it was much more expensive to educate young people a year or two older than those for whom I have responsibility. This is despite a sixth-form phase providing 24 hours a week of face-to-face education in small settings of 20 or so students. How many undergraduate courses provide even two-thirds of that? Of course, the academic year of a university is substantially shorter, so why are there such differences in the operating model?

First, universities have indulged in a binge of building. Their buildings are funded on cheap debt, but they have to be maintained and interest rates have now normalised. Secondly, there is a vast bureaucracy. Vice-chancellors are broadly overpaid, in my view; they have recently awarded themselves another 5% pay rise, on average, while of course the people doing all the work at the front line—the lecturers—are underpaid. Universities have created a Ponzi scheme based on growing student numbers. Not one of the university managers we interviewed was able to provide a clear financial model of how their institution worked, other than relying on foreign students.

This year, my academy trust will receive an increase in its general annual grant of about 1.5%. The local LEA has taken a larger chunk to fund SEND. Despite this, we provide an extended school day to every secondary school pupil, costing about £1 million a year but adding a whole year of education over their five years in that school. We spend £400,000 subsidising musical instruments for pupil premium children and a further £500,000 hiring reading mentors to deal with a post-Covid literacy crisis. We have found that we have 1,500 pupils with reading ages between three and seven years behind their chronological age. Yes, we receive some odd capital sums to build a new school block, which is additional to those funds, but from September this year we will be educating around 270 children for free. So-called lagged funding means that we will not get the £1.7 million per pupil settlement that would have operated if we were paid for all those children on our campuses.

How do we achieve this? We achieve it through relentless and ruthless cost control at every level. Every photocopier is tracked for excess output of colour printing; every light bulb has been replaced with LED; every invoice has to be pre-validated via a central electronic purchase ordering system; every head teacher has to learn the principles of curriculum-led financial planning to control timetabling and resource allocation. I heard none of this during our inquiry.

No one could tell me why an undergraduate needed three years to complete a degree with six hours of contact time a week, why it was acceptable to take six weeks to mark and provide feedback on an essay or why, during the lecturers’ strikes, they did not use the money that they were not paying in wages to provide alternative mechanisms for those abused young people who could not get their degrees to apply for their jobs. This is before I get going on foundation years—a cynical way of luring young people for an additional paid year of study, having failed their A-levels—or unconditional offers, removing aspiration from young people as they knew they could glide in whatever happened, or offering lower grades for pupils in so-called areas of deprivation, even though they were in private schools. This happened to my own son and the next year to the daughter of the noble Earl, Lord Leicester, at the same institution. All this is for £50,000 of debt that hangs over them for up to 40 years. There were no solutions, just an agonising moanathon about how difficult everything is.

I turn to the vexed issue of overseas students. The idea that our universities have been hoovering up the world’s best and brightest is one of the most blatant sophistries of modern times. I am grateful to my honourable friend Neil O’Brien for his detailed research on this. Using data from the Migration Advisory Committee review of the graduate route to visas, he has shown that the median person on the graduate route earns about half of what the median full-time worker does. A staggering 41% earn less than £15,000 a year. Put that against the minimum wage of £24,000 and the threshold of a work visa at £30,000, and the whole grisly story unfolds.

On the point of the noble Lord, Lord Parekh, about colonialism, there is an unpleasant truth emanating from the MAC’s report. Since 2005, the number of overseas post-study visas issued to the US, Canada, Australia, New Zealand and Japan has been almost utterly consistent at around 20,000 a year. However, since study visas were reintroduced in 2019, visas for India have increased by 900% and for sub-Saharan Africa by 700%. Should students from these countries really be paying a huge premium compared to domestic fees, and then earn less than the minimum wage?

I challenge the statement of the noble Lord, Lord Norton—I paraphrase—that overseas students then return to their home countries. The MAC’s statistics show that, although only 6% of US students stay, that figure rises to between 25% and 35% for Pakistan, Nigeria and Bangladesh. The OfS claims, of course, that it has no remit on any of this. It seems that its energies are directed into meddling in a performative way on second-order and third-order issues, such as insisting that artwork from degree courses be stored for five years. So the full-size papier mâché Brontosaurus has to lurk in a basement serving no purpose to anyone. If the OfS had focused on demanding proper accountability in the financial management of the sector, it is possible that we would not be faced with upwards of 60 higher education institutions facing serious financial challenges.

I read today that my noble friend Lord Cameron, straying from his international brief, warns of widespread closures. Well, that is what happens if organisations are mismanaged. The problem should not be solved by dragging in hundreds of thousands of migrants and dependents to prop up a failing system. The current crisis represents a once-in-a-generation opportunity to repurpose many HE institutions into training institutions that reflect the needs of today’s British society and economy —think my noble friend Lord Baker on steroids. The public debate agonises about our decline in productivity and lack of economic growth but we hear virtually nothing emanating from these organisations to lead the charge.

I have only one question for my noble friend the Minister—I know that this is not her day job—and would prefer a written answer. How aware is the DfE of the impending financial collapse of dozens of our universities, and what is it doing about it?