Draft Higher Education (Fee Limits and Fee Limit Condition) (England) Regulations 2018

Sam Gyimah Excerpts

Monday 16th July 2018 General Committees

[The Minister for Universities, Science, Research and Innovation (Mr Sam Gyimah)]

I beg to move,

That the Committee has considered the Draft Higher Education (Fee Limits and Fee Limit Condition) (England) Regulations 2018.

It is a pleasure to serve under your chairmanship, Mr Rosindell. On 2 July, I announced that maximum fees for students undertaking undergraduate courses in the 2019-2020 academic year would remain at 2018-2019 levels for the second year running. The Government have listened to the views of young people, parents and Members, and have decided to freeze maximum tuition fees for the 2019-2020 academic year, saving students up to £255.

The freeze in fees builds on other changes we have made to help students with their finances. From the ’18-’19 tax year we increased the threshold above which graduates are required to make repayments on their loans from £21,000 to £25,000, rising by average earnings thereafter. That puts more money in the pockets of graduates, and it is happening in the context of widening access to higher education. A record proportion of 18-year-olds, including those from disadvantaged backgrounds, are going to university to study full time. However, there is still more to do across higher education. That is why the Government are undertaking a major review of post-18 education and funding to ensure that we have a joined-up education system that is accessible to all and encourages the development of the skills we need as a country. The Government expect to conclude the review in early 2019.

These regulations are made under section 10 and schedule 2 of the Higher Education and Research Act 2017. They set the maximum fee limits that providers in England can charge home students in 2019-2020. The existing fee caps, made under section 24 of the Higher Education Act 2004, will be revoked automatically on 1 August 2019 as a result of paragraph 30(2) of schedule 11 to the 2017 Act. It is therefore essential that new regulations are made under HERA to ensure that fee caps continue and that students benefit from the freeze in maximum fees.

Under HERA, providers can choose to register with the new independent regulator, the Office for Students, in one of two categories: the “Approved (fee cap)” category or the “Approved” category. Providers registering in the “Approved (fee cap)” category will, for 2019-2020, be eligible for OfS grant funding and subject to maximum fees set in the regulations—£9,250 for a full-time course offered by a provider with a teaching excellence and student outcomes award. Students attending “Approved (fee cap)” providers will be able to access loans to cover the full costs of their fees. Providers registering in the “Approved” category, however, will not be eligible for OfS grant funding or subject to maximum fees. Students attending those providers will be able to access lower rates of loans towards the costs of their fees. Under HERA, the OfS will be able to limit fees charged by “Approved (fee cap)” providers once the regulations come into force.

Without the regulations, providers will be free legally to charge whatever fees they wish, and we will be unable to implement fully the new regulatory framework under HERA—in particular, the requirement for “Approved (fee cap)” providers to submit access and participation plans to the OfS in order to charge fees above £6,165 for full-time courses. The regulations will ensure that providers have to adhere to the maximum cap, and without them, providers would be free to charge whatever they want. I commend the regulations to the Committee.

--- Later in debate ---

[Mr Gyimah]

I thank hon. Members for a wide-ranging debate and for some very pertinent questions, which I will try to answer.

The first question pertained to the independent reviewer for the teaching excellence and outcomes framework. I want to put it on the record that the process of appointing the reviewer is under way and an announcement will be made in due course, once the appointment has been made.

A number of issues were raised about the current fees system. Interestingly, the Opposition did not mention the effect of raising the threshold, which is an important policy. It cost billions of pounds and will save the average student about £10,000 over the duration of the loan. It is not an insignificant policy in ensuring that we alleviate the burden of debt for students.

Since I was appointed to this job, I have travelled around the country speaking directly to students. I have spoken to about 1,500 students since I was appointed in January. When I say that what we are doing is a response to listening to students, that is meant very seriously. Students have a range of concerns. The issue that is most likely to get them to riot on campus is actually not tuition fees, but the rent going up. That has come up repeatedly.

In that context, maintenance grants were mentioned. It is worth putting it on the record that maintenance grants offered significantly less money than a student can get through a loan. It was actually more difficult for students to pay their way through university, because they received maintenance grants of about £3,000, whereas now they can get a loan, with almost no questions asked, of £10,000. Furthermore, if someone earns less than £25,000 and cannot pay back the loan, they do not have to and after 30 years it is written off. That is helpful for disadvantaged people, because there is no barrier to their accessing higher education. It is therefore unsurprising that the proportion of disadvantaged 18-year-olds applying for full-time undergraduate courses was, in January this year, a record high of 22.6%.

[Emma Reynolds]

I welcome the threshold that the Minister outlined in his opening speech and has just emphasised, but there is a difference between a grant and a loan. Even if someone will never pay the loan back, they do not know that for sure because they are not entirely sure how much they will earn over their lifetime. Does he not accept that, although maintenance grants were only £3,000, that was money in people’s pockets up front that they never had to pay back? That is different from a loan.

[Mr Gyimah]

There are two points to make about that. If someone got a £3,000 grant in the previous system and then had to go to a bank to borrow, that would cost them a lot more than it does to borrow under the current loans system. The truth about the current system, which is obviously under review, is that it is a hybrid between a loans system and a contribution system. Opposition Members do students a disservice by pretending that it is similar to a loan from Lloyds bank. It does not go on their credit score if a student is not able to pay the money back, they will not have a bailiff knocking on their door, and there is the issue of their having a job in which they earn more than £25,000. That is very different from a commercial loan, and we do students a disservice by not explaining the system to them and pretending that it is something it is not.

[Gordon Marsden]

I am sorry to have to intervene on the Minister on that point. He accused the Opposition of not talking about the raising of the threshold. Let me put it on the record to satisfy him, for what it is worth, that we welcome the raising of the threshold. We have persistently and continually argued for the need to raise it, not least because of its implications for students in certain parts of the country who leave university and do not get a decent graduate premium immediately. They are in a very different situation.

However, I really must take issue with the Minister saying, “Oh well, they don’t have to pay it back.” I thought that this was supposed to be a fiscally prudent Government who wanted to look to the future, but the Minister is throwing around public loans like a man with no arms. We all know—surely the Minister has seen this too—that the resource accounting and budgeting figure for the debt that will be lain on future generations is going up and up. We cannot simply work on that basis.

The other point I will mention briefly is that the Minister says that it is much better to take up a loan, based entirely on the assumption that the cohort is made up of 18 to 22-year-olds. I am not sure that is even correct for them, but it is very different for older people—mature students in their 30s and 40s and those doing part-time courses—to take on a debt of the sort of amount we are talking about. The statistics are clear that there has been a catastrophic drop in the number of mature students and part-timers. Although we cannot say absolutely that the tripling of the fees is 100% responsible, it certainly bears a great part of the responsibility.

[Mr Gyimah]

I thought that was meant to be an intervention but it was a mini-speech. At the risk of drifting into a Second Reading debate on the student finance system, there is one clear difference between Government Members and Opposition Members: if university education was made free, which the Opposition argue for, the numbers would have to be capped. If it is free, it is capped; and if it is capped, it is the well-off who will benefit the most. The system we have introduced means that more disadvantaged students are going to university than ever before. We do not say that the system is perfect, and that is why there is a post-18 review with a wide-ranging remit looking at the issues, including the interest rate, which was raised by the Opposition. If the Opposition would make it free, they have to tell us whose child will not go to university under their scheme when they cut the numbers.

A number of other questions were raised. On the OfS and its capacity to register, it does have that capacity. A lot is going on, and it is on track to deliver in the timeframe that has been set. On new providers, the OfS is dealing with a number of inquiries from them. On EU students and whether the clarification regarding university students applies to FE students, I would like to put it on the record that it does.

The issue of part-time students is of serious concern. We have adopted a number of measures to support part-time and mature students. For example, in the next academic year, part-time students will for the first time be able to access full-time maintenance loans, and we are looking at a lot more support for such students as part of the Augar review.

The regulations must be introduced now because universities have to market their courses for the next academic year, but this is by no means the end of the matter as far as student finance is concerned. I thank Members for their contributions and I welcome the points raised by the Opposition. We must ensure that access to our elite universities is as open as possible, without resorting to any kind of social engineering, so that wherever in our system someone is educated, they are competitive and can apply and get into the top universities if they have the grades. That is a real focus and passion of mine, and I will say lots more about it in due course. I therefore commend the regulations to the Committee.

Question put and agreed to.

Resolved,

That the Committee has considered the draft Higher Education (Fee Limits and Fee Limit Condition) (England) Regulations 2018.