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.

King’s Speech

Lord Willetts Excerpts

Friday 19th July 2024 Lords Chamber

[Lord Willetts (Con)]

My Lords, I begin by drawing the House’s attention to my interests, particularly a professorship at King’s College London and a role at the University of Southampton. I also welcome both our new Ministers to their roles. We very much look forward to engaging with them in the months and years ahead.

I congratulate my noble friend Lady Monckton on her excellent maiden speech. In her reference to her grandfather, she might have put the muzzling of cats on the political agenda. It sounds like a cause that this House might embrace.

I would also like to say how much my noble friend Lady Barran contributed to our debates on education with her extraordinary courtesy. Her speeches were always so well informed and long may she continue in a Front-Bench role.

I would like to focus on higher education, because it is crucial to the priorities the Government have set out in the King’s Speech and it is very important for opportunity. Higher education is the one stage of education where kids from disadvantaged backgrounds outperform. It is also key for growth. A lot of vocational and technical training happens in higher education. We should not have an old-fashioned picture of our education whereby that is not part of the role of universities, when it is.

Of course, higher education institutions can transform places. The journey from starting off as a mechanics institute or a teacher training college, becoming a big, ambitious FE college and then a university is often associated with the transformation and growth of a city. Worcester, if I may say so, is a vivid example of that process. Universities are one of the most powerful mechanisms we have, therefore, for spreading opportunity to some of the cold spots in the UK.

Higher education cannot do this, however, if its resources are as constrained as they are at the moment. Universities are under serious financial pressure. We all lose out but, above all, students lose out if the real resource behind their education and their university experience is being cut. I therefore very much hope that we will now see action to tackle this crisis before a university goes bust. Many are under financial pressure; some are in real danger of going bust.

We do not need another big review of our entire higher education system. All three of the main parties represented here in this Chamber, when faced with the responsibilities of office, have essentially operated the same system: a graduate repayment system. There is no fantasy alternative model that gets rid of all the imperfections of the current model. We therefore do not need to waste time on some massive review; we need instead simply to focus on improving the current system, getting across the crucial message, of course, that students do not pay up front. For students, the main issue is the cash they have to live on while they are at university. That is the pressure point threatening access, not misconceptions about the cost of fees.

There is—if I may use a rather crude term in this elevated debate—a deal to be done. Of course, Ministers and the Government will have pressures that they want to meet, so the deal must involve some increase in fees, so that universities are better funded. It should also involve more initiatives on access. BTECs are a very important part of access to university. The new Minister will notice that there is a dangerous cabal of ex-Ministers around. When I see the noble Baroness, Lady Morris, and my noble friend Lord Baker debating, it is a bit like veterans Wimbledon: you can come here and see the education debates of 20 years ago going on. However, when they make common cause on BTECs—others here also associate ourselves with that—I hope that Ministers will listen. As part of the deal, there also needs to be pressure to ensure that education standards are rising in universities and that students get a fair deal.

All that can be done and should be done as a matter of urgency. The demographic backdrop is very important as well. Because of the surge in the birth rate, reaching a peak in 2012-13, we now face a decline in the number of young people in nurseries and primary schools. The number of young people in secondary education has peaked; the next five years will see a surge in the number of people over 18. They should benefit from a reformed apprenticeship levy, high-quality further education and a properly resourced and effective higher education system.