Post-18 Review of Education and Funding
Debate between Lord Bassam of Brighton and Baroness Garden of Frognal
Lord Bassam of Brighton (Lab)
My Lords, I thank the Minister for repeating the Secretary of State’s Statement. I too am grateful to the independent panel led by Philip Augar and to the expert stakeholders, industry leaders and representatives who contributed to that review. The review’s recommendations include some positive measures and we welcome the focus on encouraging more flexible learning, including support for more bite-sized learning, with improved opportunity to ensure that the most diverse range of learners can benefit from further and higher education.
The report recommends the reintroduction of maintenance grants of at least £3,000 a year for disadvantaged students. It also calls for an increase in the amount of teaching grant funding that follows disadvantaged students and a greater focus on individual level measures of disadvantage, such as free school meals and household income, in allocating funding through the student premium. I hope that the Government will accept these proposals with the commensurate levels of funding required. Although the Minister noted that there were 53 recommendations to follow, signing up to these proposals early on would be a very positive step.
The headline-grabbing part of the report is of course on tuition fees. It was designed for that purpose by a Prime Minister panicked by the outcome for the last generation. The recommendations covering student fees, rebranded as student contributions, suggest that there should be a cut from £9,250 to £7,500. Not surprisingly, I favour Labour’s policy of scrapping tuition fees completely. For those who leave university owing £50,000 or more, with an interest rate at 6%, the cumulative effect of the proposals in the Augar report could be eye-watering. The recommendations do little to address the problem of the expanding burden of student debt. On the contrary, the report recommends lowering the repayment threshold from the current £25,725 to £23,000 and extending the repayment period before the debt is written off from 30 to 40 years. This is a terrible and regressive proposal that will increase the total payments made by lower-income earners, such as teachers and nurses, while providing relief for those on higher incomes—who of course have the capacity to pay off early.
Analysis by Universities UK estimates that these changes would result in middle earners paying back more—£11,823 more over their lifetime—while higher earners would have to pay back less, saving almost £19,000 in repayments. The LSE has already highlighted that this would disproportionately impact upon female graduates, so while the Statement lauds the progressive system that the Government believe is currently in place, the report introduces a highly regressive system. Given the Minister’s regard for education as a great engine of social mobility, I hope that he and his colleagues will immediately reject this recommendation and other regressive changes to the student finance system, and commit to working with whoever the new leader of his party is to ensure that there is a fair funding model for further and higher education. Perhaps he could even take this issue up with those colleagues who are running for leader, however many there may be.
I would also be grateful if the Minister could confirm whether the Government are prepared to consider the report’s recommendation that graduates’ lifetime repayments should be capped at 1.2 times the original capital in real terms. While it does not offer a solution to the problem of overwhelming student debt in itself, a cap is an interesting idea that deserves further consideration.
On cost and funding, this is apparently going to be a major issue, because the report recommends that the Government increase central funding. However, the fear is that these reconditions, if adopted, will be at the cost of universities. There is an implicit assumption within the Treasury that universities can and will make efficiency gains to make up for funding shortfalls, which currently stand at around £1.8 billion a year. Take that money away from universities and they will suffer. Some universities may increase their efforts to recruit more lucrative, high fee-paying international students; the reality is that without a substantial and appropriate increase in central government funding the shortfall will burgeon, to the detriment of students and those in wider society who benefit from this country having a skilled workforce. Further shortfalls will inevitably mean reduced spending involving redundancies, recruitment freezes, smaller annual pay increases and cutting student support services—that is just for starters. This would limit opportunity, damage universities, decrease the number of highly skilled employees that business needs and reduce our international competitiveness at a time when modern Britain needs it most, not least in the post-Brexit world.
The problems that need addressing with further and higher education funding are plain to see. We hope that the next Prime Minister will commit to ensuring that the system of funding will benefit students, employers, universities and our communities across all four nations of the UK, and that political uncertainly does not mean that this review will—as so many other reviews have been under Mrs May—be kicked into the long grass.
Baroness Garden of Frognal (LD)
My Lords, this report has been long awaited and I do not doubt that the Minister is quite relieved that he is at last able to tell us about it. We owe a debt of gratitude to Philip Augar and his team for the amount of work that they have put into it. It makes some really welcome recommendations on further education and skills, as the noble Lord, Lord Bassam, set out. Successive Governments have neglected the importance of colleges and lifelong learning, so this change of emphasis is to be commended.
Over the last 10 years colleges have had to deal with an average funding cut of 30%, while costs have increased dramatically. Further education is the only part of the education budget to have had year-on-year cuts since 2010. Funding for adult education has had a cut of 62%; in the last 10 years, we have seen total enrolments for adults drop from 5.1 million to 1.9 million; funding for students aged 16 to 18 has been cut by 8% in real terms since 2010; and colleges have been tasked with the new T-levels, which may or may not turn out to be an improvement on the well-respected vocational qualifications which are around at the moment.
We note that Augar’s proposed lifelong learning loan allowance is restricted to a limited range of courses. Mature students may not want to take out a loan late in their careers and this funding model may not work for those who have financial constraints, such as a mortgage or children. Taking out a loan is unlikely to be the most effective way of triggering a revolution in lifelong learning. Will the Minister consider expanding it to cover a wider range of education and training, and to provide grants rather than loans so that no one is unable to afford the education they need to advance their careers? Giving everyone, no matter their age, the right to a free level 3 qualification—equivalent to A-levels—will ensure that no one is denied the basic skills they need to advance their career.
We welcome the recommendation that:
“The unit funding … for economically valuable adult education courses should be increased”.
I still think it sad that the general interest programmes which colleges used to provide have gone. They were a valuable source of social mobility and improved health and well-being. They encouraged adults into learning for the fun of it. I taught French and Spanish classes way back when to people who were inveterate learners, and all the better for it, but those days of happy free learning have—alas—gone.
The capital investment of at least £1 billion is well overdue, as is the recommendation that:
“Investment in the FE workforce should be a priority, allowing improvements in recruitment and retention, drawing in more expertise from industry, and strengthening professional development”.
The FE workforce has been underpaid for far too long.
As was mentioned, anyone who does not have an undergraduate degree will be entitled to a lifelong learning loan allowance. This will allow them to receive tuition fee and maintenance loans for any level 4, 5 or 6 course. It is welcome that the ELQ rules that prevent students receiving public funding for a course at the same or lower level than one they already possess should be abolished for levels 4 to 6. This rule has prevented many people retraining for fresh opportunities.
On apprenticeships, we should also like to see more emphasis on the Richard review recommendations:
“An apprentice must be new to the job or job role”,
and that the,
“upskilling of the adult workforce … should not be bundled with apprenticeships”.
The apprenticeship levy seems to be having the reverse effect of encouraging adult upskilling at the expense of new entrants to the workforce.
It is good that universities offering degree-level courses at level 6 should award an interim qualification to students who complete their first one or two years, allowing those who drop out to still have a certificate to show for their efforts. This might in time encourage credit accumulation and transfer to enable them to take their part-qualification on in the future. This has been on the cards for years and has never found a market. Will the Government encourage a new push for credit accumulation and transfer between colleges and universities?
With many good things in these parts of the review, we do have questions over the university proposals, as the noble Lord, Lord Bassam, set out. We regret that the review has been undermined by a shoddy, regressive change to student loans, which we rather suspect has been influenced by No. 10. How much less will students now repay? This is, of course, a trick question. Graduates will now pay their loans back earlier and for 10 years longer. Most new graduates will pay about £15 a month more than under the current system. Bringing maintenance grants back will ensure that students from the poorest homes do not have the most to repay. Augar’s proposal for student loans for higher further education learners is a good start but it is not radical enough. As our economy changes rapidly, everyone will need to retrain and upskill throughout their lives.
I have some questions for the Minister. First, does he agree that the Government must compensate universities in full if the tuition fees cut goes ahead? We hear that teaching grants should be increased to reflect the loss of funding to universities that a cut in tuition fees will bring. However, the grants should be allocated to reflect the cost of teaching the subject and the subject’s social and economic value. Where will subjects such as ancient history sit and will pure research become a thing of the past? If the funding is not made up, universities will doubtless cut their widening participation budgets and drop subjects that are too expensive to teach; I do not include ancient history in that group. Secondly, will the Government curb the sky-high interest rates put on loans after people graduate? The Government make a great deal from middle-income graduates because the interest rates bear no relation to the cost of government borrowing. Thirdly, given the crisis in NHS recruitment, will the Government bring back nurses’ bursaries?
We probably need to go further. As Martin Lewis has argued, for most graduates, the current system works a bit like a graduate tax, so why not turn it into one? All the frightening language about “fees”, “loans” and “debt” disappears overnight. Students from wealthier families, who bypass the system by paying tuition fees up front, instead pay their fair share. The system becomes more progressive and most graduates would pay a little less. There are, of course, problems with a graduate tax too. We would want to review the proposals to see what impact it would have on widening participation and on universities’ budgets. However, it seems that the Conservatives have encouraged Philip Augar to put a catchy headline on reduced fees above the truth. Does the Secretary of State realise that Augar’s positive recommendations for further education have been undermined by these regressive proposals for student loans? Has the Treasury approved an increase in teaching grants to cover the tuition fees cut? If not, the Prime Minister will have achieved the impossible: charging seven in 10 students more to go to university, but paying universities less to teach them.
Our party would be keen to create personal education and skills accounts, giving every adult over 25 the opportunity to learn for free wherever they want, whenever they want, with careers guidance in place to support them along the way. Good careers guidance is key to much of the benefit in these proposals. The more people enjoy learning and the more they learn, the more ready they are to learn more, which in the long term benefits our economy, making it easier for employers to find the higher-skilled and more creative people they will increasingly need as technology develops. We hope that the Government will support the FE proposals to the hilt, but look again at the changes to tuition fees which may well disadvantage those the Government most want to help.
Higher Education (Monetary Penalties and Refusal to Renew an Access and Participation Plan) (England) Regulations 2019
Debate between Lord Bassam of Brighton and Baroness Garden of Frognal
Lord Bassam of Brighton (Lab)
My Lords, the regulations before your Lordships’ House relate to the power of the Office for Students to impose penalties for a breach of regulations, and I am grateful to the Minister for setting out the Government’s explanation of them. Of course, ultimately they are a reflection of the marketised system that we now have and the necessary bureaucracy that comes with that form of regulation, which intervenes and seeks to make the market perform better.
On this side of the House we have no qualms about the basic principles in the system. There must be a system that ensures that higher education providers comply with the regulations, and for that reason we have no intention of opposing their passage. I will, however, register a number of our concerns in the hope that the Minister can assure the House that these regulations will be efficient in their aim of promoting greater regulatory compliance in HE access and participation.
Before moving on to the specifics of these regulations, I draw attention to the fact that, despite the enormous potential consequences for any HE institution at risk of non-compliance, the Government have chosen not to publish any form of impact assessment for them. This is not the first time that the Government have laid such significant secondary legislation without the publication of that information.
In the Explanatory Memorandum produced by the Department for Education, the department’s failure to produce an assessment is excused by the idea that there will be no financial impact on those providers that are compliant. Well, there will be implications for those that are not. Surely an assessment should have been produced, at least internally, of the financial impact on providers that, for whatever reasons, fall short. If it has been produced, why is the House not privy to that information? In the absence of such an assessment being provided to the House, can the Minister at least offer Peers a brief estimate of the effect of this instrument on providers who are not compliant? Does the Minister anticipate that they will be put into financial difficulties as a consequence, and does he believe there will be any knock-on impact for students at such providers’ institutions?
Turning to the specifics of these regulations, I will use the bulk of my time to focus on the nature of the monetary penalties. Of course, it has to be right that those who fail to comply with the necessary regulations face some variation of a punishment. But such penalties must find the right balance between being stern enough to ensure compliance and not so harsh as to create extraordinary financial difficulties for providers that receive a penalty.
In previous consultations, the maximum fine suggested was 5%, as the Minister said, rather than 2%. Although I think the House will agree that the latter is the better choice, I would welcome the Minister’s saying how the Government reached that conclusion and chose to pitch at the lower level. Did any stakeholders suggest that a higher limit would be better or preferable? What factors did the Government assess when deciding on the nature of the penalties?
I am particularly concerned that, if the penalties are too overbearing, they will create insurmountable financial trouble for providers that are already struggling, as the Minister will be aware. Indeed, reports emerged in late 2018 that up to three higher education institutions may be on the brink of bankruptcy, and last month, the Guardian reported that 25% of English universities were in deficit. Post Augar, this picture could worsen. Can the Minister hint when the Augar review will be published and explain the relationship between that and this system of penalties?
The regulations make it clear that the OfS has the discretion to impose a monetary penalty but are not entirely clear about what factors will be considered. For example, will the financial position of the provider be taken into consideration? Universities UK has made it clear that penalties must be awarded proportionately and effectively, and that what this looks like will vary according to individual circumstances and the position of the institution involved. I urge the Minister to ensure a degree of flexibility in the application of penalties.
On communicating these changes, it is right that the Government make sure that those who will be impacted upon fully understand how the new regime will work, as with any regulatory change. Although higher education providers should be aware of their access and participation responsibilities, they should be reminded of monetary penalties that could be awarded if they fail to comply. How has the Minister’s department communicated the monetary penalties to the 350 education providers now registered with the Office for Students?
Before concluding, I will touch briefly on Regulation 9, which allows the Secretary of State to appoint either an individual or panel and pay remuneration and allowances. Aside from the fact that this must comply with the code on public appointments, the regulations give no further indication or clue as to what factors will be considered when making appointments of this nature. Could the Minister explain why not? How will the Secretary of State make such appointments? Will there be a need for a further statutory instrument?
In conclusion, the concerns that I have raised are not enough for us to oppose the regulations in their entirety; indeed, we welcome the Government’s limited attempt to promote greater regulatory compliance regarding HE access and participation. However, I ask the Minister to take far more ambitious steps to ensure that we make higher education more welcoming for students from all backgrounds. Given that over 12,000 fewer English undergraduate students from low-participating areas now start courses each year than did so in 2011-12, we cannot underestimate the scale of the challenge. I would welcome any details from the Minister on how his Government intend to rectify this and ensure the access that I think all sides of your Lordships’ House would very much welcome for HE students.
Baroness Garden of Frognal (LD)
My Lords, we too understand the need for these regulations and thank the Minister for setting them out. Universities certainly need to be held to account for widening participation and supporting students from under- represented backgrounds throughout their studies, and monetary fines need to be part of the mix of sanctions available. However, I note that the Minister himself mentioned the concern that this might take away from provider income, and that in the notes the consultation process identified some concerns that monetary penalties could take away provider income that would otherwise be used for the benefit of students. Are there any safeguards to ensure that that will not actually be the case?
We certainly wish to ensure that all universities work to widen participation across the sector and prioritise their work with schools and colleges that have not traditionally been ones where young people went to universities, and we need every university to be transparent about selection criteria. However, we would also like to see the Government doing their fair share to widen participation by reinstating maintenance grants for the poorest students to ensure that disadvantaged young people do not have the highest loans to repay.
We note that the trend is narrowing but we see also that UCAS warns that for the fourth consecutive year limited progress has been made in reducing the size of the multiple equality measure gap, which remains at a similar value to that seen in 2014. Surely that should be a concern too. It also concluded that among the universities with the highest entry requirements the entry gap is widest, and in 2018 the most advantaged students were 15 times more likely to enter than the most disadvantaged. We have quite a long way to go with this.
The Minister and the noble Lord, Lord Bassam, have touched on most of the issues that I would have mentioned on this, but I have a question for the Minister. Where will the money from these funds go? Will it just go straight back to the Treasury and get lost in the general pot, or is there any suggestion that these fines will be put into a separate fund that will help to benefit disadvantaged students? Money that just disappears into the Treasury is not going to do anything to help the students that we most want to help but, if there were some suggestion that it could be used beneficially for those students, that would be a very reassuring move.
As I say, there are some concerns about the effect of the fines, which I hope will be monitored as we go along to see whether they have an adverse effect on universities being able to provide for disadvantaged students. If not, of course, we have no intention of imposing this measure.