Higher Education Funding

Lord Willetts Excerpts

Thursday 12th September 2024 Lords Chamber

[Lord Willetts (Con)]

My Lords, I congratulate the noble Lord, Lord Krebs, on calling this debate and thank him for his exciting vision for our universities as the care homes of the future. I declare my interest, especially if we are talking about care homes; I am a visiting professor at King’s College London. His speech correctly identified the pressures that universities face, on both their research funding and their teaching funding. They are linked in various ways, including because overseas student fees, which used to help subsidise the cost of research, are increasingly being used to subsidise the cost of teaching, which puts extra pressures on research funding. The DSIT capacity to do research is being cut because the DfE will not increase teaching fees for undergraduates.

I think it is important that we tackle the pressures on the cost of teaching students through an increase in the fees that they pay. This is important, above all, because of the interests of students themselves in a well-funded higher education. It is also in the interests of the wider economy to have well-funded, effective higher education, with good-quality teaching.

I particularly draw the Minister’s attention to an excellent piece of research showing the economic benefits of universities, and of creating more universities, by two academics at the London School of Economics, Professor John Van Reenen and Anna Valero, who now both happen to be in the Chancellor’s Economic Advisory Council—a very useful place for them to be located.

If we are to increase funding for teaching in universities, the Minister has a mechanism available to her—fees. There may be arguments for more selective funding of research. The UKRI budget is already allocated in a pretty selective way; a very high proportion of current research funding goes to the most prestigious, elite, research-intensive universities. More research funding could be allocated, if that is what the noble Lord, Lord Krebs, wants, but it would not tackle the underlying need to have better-funded teaching across the entire sector.

There is no brilliant alternative. Of course, if fees go up, it is right to expect clear evidence that this will mean better quality teaching. My noble friend Lord Johnson of Marylebone, who increased fees from £9,000 to £9,250, did so in association with that much more rigorous assessment of teaching quality in universities.

Most depressing is the belief that this mechanism is somehow no longer available for us, despite the fact that almost every party represented in this House now has in the past used precisely such a mechanism to fund higher education. It has been the cross-party agreed basis for funding higher education over the past 20 years. I have heard people say that students cannot afford it because of the cost of living crisis, but we know that students do not pay upfront. We also know that it does not affect the amount that graduates repay; there is a repayment formula for that, which is highly progressive. Rightly or wrongly, there are no longer interest rates on graduate debt. It is reasonable to expect a prosperous middle-aged person to pay back for a couple of extra years if it means that the university education of the younger generation is properly funded. I very much hope that the Minister will accept that this is one mechanism at her disposal to tackle this financial crisis.