Universities: Funding and Employment

Debate between Rebecca Paul and Pam Cox

Wednesday 2nd April 2025 Westminster Hall

[Rebecca Paul (Reigate) (Con)]

It is a pleasure to serve under your chairmanship, Mr Vickers. I thank the hon. Member for Bedford (Mohammad Yasin) for securing this important debate, which could not be more timely, and I am grateful to all colleagues who have contributed.

Our universities are among the most important institutions in our national life. They are centres of research, innovation and learning, and for many thousands of young people every year, they are the route to opportunity, economic independence and personal growth. Despite its great importance, the higher education sector has come under increasing pressure in recent years. The latest modelling from the Office for Students suggests that nearly three quarters of English higher education providers could be in deficit by 2025-26, and 40% would have fewer than 30 days’ liquidity. Indeed, as we have heard from many Members today, redundancy programmes are already under way in some institutions and, across the country, university staff are understandably anxious about the future.

I will say at the outset that I am deeply sympathetic to those who work in institutions that have found themselves in financial difficulty. Nevertheless, I believe it is past time for us to have a grown-up conversation about university finances, in which we look seriously at what is driving the pressures and what it might be possible to do to alleviate them.

I will begin by stating the obvious: decisions taken in recent years have increased the financial pressure on students and graduates, without necessarily addressing the deeper questions of value and sustainability. We have seen steady rises in student loan interest rates and tuition fees, which both fall heavily on students, and now, the spike in employer national insurance contributions is putting further cost pressures on universities.

Meanwhile, the Government’s proposals to cut funding for level 7 apprenticeships, which are essential qualifications in a number of fields, including education, health and engineering, risk further undermining key parts of the post-18 education ecosystem. Many university departments rely on that funding not just to sustain course provision, but to attract and retain highly qualified staff. The impact of the cuts will not be evenly spread, and it is right that we consider how they will affect institutions already under financial pressure.

[Pam Cox]

Will the shadow Minister take some responsibility, on behalf of her party, for the situation that many universities find themselves in?

[Rebecca Paul]

I suggest to the hon. Member that we need to deal with the situation that we have now, and that her questions should be targeted towards the Minister. We should make the right decisions to do the right thing for our country, and for our students and university staff.

We must confront an uncomfortable truth: there is mounting evidence, including from the Institute for Fiscal Studies, that a sizeable share of higher education courses simply do not provide good value for money either for the taxpayer or for the individual student. The IFS has concluded that around 30% of graduates, both men and women, would have been better off financially had they not gone to university at all. That raises important questions about how we can ensure that our higher education system delivers for those who fund it—namely, the students who invest years of their lives and take on significant debt, and the public whose taxes support the student loan system.

The current funding model is failing under the enormous weight of rapid expansion, marketisation and insufficient quality controls. The ability of an institution to prop itself up on the backs of overseas students who pay vast fees is coming to an end. Although fee income from international students has grown by an average of 15% a year between 2017 and 2023, the recent international recruitment environment has been challenging. Recent Home Office data indicates that 393,125 visas were issued to main applicants in 2024. That is down 13.9% year on year and down 18.8% compared with two years ago.

While some institutions have embraced innovation, strong outcomes and world-class research, others have pursued growth at all costs, adding courses with limited market value, often to attract overseas students or to maximise short-term income. We cannot and should not return to a time when university was accessible only to a wealthy minority, but we do need to have a serious conversation about the purpose of higher education, who it is for, and how it can be sustainably funded in a way that delivers for students, taxpayers and the wider economy. That means looking at systemic reform, rather than simply demanding that young people pay more without addressing the underlying issues. We need to examine course quality, graduate outcomes, student choice, and the role of further education and apprenticeships alongside traditional degrees.

Apprenticeships

Debate between Rebecca Paul and Pam Cox

Tuesday 4th February 2025 Westminster Hall

[Rebecca Paul (Reigate) (Con)]

It is a pleasure to serve under your chairmanship, Mr. Jardine, and to respond today for the first time for His Majesty’s Opposition. I congratulate the hon. Member for Peterborough (Andrew Pakes) on securing this debate on the value of apprenticeships and National Apprenticeships Week.

We have heard some tremendously insightful points this morning and, like others, I thank all Members for their contributions. I think it is apparent that everyone who has spoken today recognises the inherent merit of apprenticeships and it was we in the Conservative party who acted to deliver a world-class apprenticeship system that has created opportunities for countless young people, which would otherwise have remained out of reach, allowing them to earn while they learn.

Since 2010, there have been more than 5.8 million apprenticeship starts, with 736,500 people participating in an apprenticeship in England in the 2023-24 academic year alone. The numbers are impressive, but what truly makes the system we put in place one of the most laudable in the world is the sheer diversity of occupations that have been opened up to our young people. In England today, the apprenticeship system reaches into nearly 700 different occupations—everything from finance to agriculture to construction to nuclear physics. That means that today it is more viable than ever before for young people to chart their own paths and take those vital first steps into the careers that they have been dreaming of.

Of course, a robust apprenticeship scheme offering access to qualifications ranging from level 2 through to master’s degrees at level 7 cannot be delivered on the cheap. That is why successive Conservative Governments always sought to fund apprenticeships properly. In our final year in office, we delivered £2.7 billion for apprenticeships. As Members will appreciate, even the most excellent apprenticeship schemes are of little use without the anticipated uptake. That is why, when in government, we set out to cut red tape for businesses offering apprenticeships. We fully funded young people up to the age of 21 undertaking apprenticeships in small businesses, increased the amount of money apprenticeship levy payers could give to SMEs to hire an apprentice and put all apprenticeships on UCAS so that young people can compare apprenticeships in the same way they would a university degree.

[Pam Cox]

Will the hon. Member give way?

[Rebecca Paul]

I am sorry; I will need to make progress so that the Minister has sufficient time.

Crucially, it was a Conservative Government that brought the Skills and Post-16 Education Act 2022 into law, ensuring that all pupils now meet providers of technical education so that they understand the wide range of career routes and training available to them, such as apprenticeships, T-levels or traineeships—not just the traditional academic options.

I know that Members will have their own accounts of how this fantastic system is working to nurture and support young people in their constituencies, and we have heard many of them today. I could not miss the opportunity presented by the debate to highlight one of my own. I was recently fortunate enough to visit the UK headquarters of Toyota, located in Burgh Heath, in the Reigate constituency. The visit included the chance to meet and hear from some of the outstanding apprentices working at the company. I was struck by the truly impressive enthusiasm, intelligence and dedication of these young workers. Though still in the early stages of their careers, the apprentices were already making hugely valuable contributions across departments from engineering to finance to marketing. In return, they received experience and training that I have no doubt will leave them in excellent standing for the duration of their working lives. That is an example of apprenticeships done right—an exemplar of what Conservative Governments have been working to enable and support for the last 14 years.

It is of real concern that today the very framework that made these apprenticeships, and so many others like them, possible now appears to be in some jeopardy. That jeopardy arises from a Government commitment to replace the apprenticeship levy with a growth and skills levy that will allow firms to spend up to 50% of their levy contributions on non-apprenticeship related training. If we make the plausible assumption that businesses will take maximum advantage of that flexibility, the number of apprenticeships on offer could slump from about 350,000 to just 140,000, a 60% decrease.

Of particular concern is that the worst of the impact would be felt by our youngest workers at the very first stages of their careers. If we again assume the full 50% decrease in spending, the number of apprenticeships available to those under the age of 19 would crash to below 40,000. That would be a drop from 106,000 in 2017. I concede that the Government’s intended approach might make some degree of sense if a significant portion of the apprenticeship levy remained unspent and would otherwise be serving no useful purpose. However, this is simply not the case. A full 98% of the apprenticeship budget has been used up over the last two years. That funding has gone to support high-quality, career-boosting apprenticeships of the sort we have been discussing this morning. It is concerning that this commitment risks seeing apprenticeship funding diffuse out into lower value courses, or even seminars and programmes that employers would have offered anyway. That is clearly not in the best interests of our young people, and risks creating a cohort with markedly worse life chances than that which came before.

It may well be the case that the Government intend to have their cake and eat it. It would be possible to both allow firms the flexibility to spend 50% of their levy contributions elsewhere and to maintain the current number of apprenticeships, but that could only be achieved with additional Government spending. To maintain the number of apprenticeship starts at the current level—assuming the 50% flexibility on levy spending—the Government would be forced to invest an additional £1.5 billion of new funding.

I ask the Minister to provide clarity on the Government’s intentions. Will firms be given 50% discretion to divert funding away from apprenticeships, as was previously announced? If so, will the Government step in with fresh investment to maintain numbers or will they allow our dynamic apprenticeship system to wither? If Ministers intend to intercede, where will the £1.5 billion they need be found? I pose those important questions not to score political points, but because we derive enormous value in this country from the transformative effect of apprenticeships and want to see as many young people benefit from them as possible.

With one eye on the clock to ensure the Minister has sufficient time to respond, I will say a brief word on defence. As of November 2023, the Ministry of Defence was the largest single deliverer of apprenticeships in the UK, with over 22,000 personnel engaged on a nationally recognised apprenticeship programme at any one time. In addition, over 95% of our non-commissioned military recruits are offered an apprenticeship after their trade training. That includes schemes with focuses on digital, nuclear, analytics and much more. Apprenticeships are a thread that runs through our armed forces, the Ministry of Defence and those private sector organisations that support both. It is of great importance that in their rush to redefine the way apprenticeships are delivered in this country the Government do not deprive our armed forces of the much-needed talent and capacity that is now nurtured and developed through apprenticeship schemes.

I have left the Minister much to address, so will now end where I began, by congratulating the hon. Member for Peterborough on providing us with this valuable opportunity to express our support for, and commitment to, apprenticeships. I wish everyone participating from 10 February a successful National Apprenticeship Week.