Draft Higher Education (Fee Limits and Fee Limit Condition) (England) (Amendment) Regulations 2025

Stephen Morgan Excerpts

Monday 24th February 2025 General Committees

[The Parliamentary Under-Secretary of State for Education (Stephen Morgan)]

I beg to move,

That the Committee has considered the draft Higher Education (Fee Limits and Fee Limit Condition) (England) (Amendment) Regulations 2025. 

It is a pleasure to serve under your chairship this evening, Ms Furniss. This statutory instrument, which was laid in draft on 20 January 2025, increases the limits on tuition fees that higher education providers can charge students studying undergraduate courses at approved fee cap providers in the 2025-26 academic year. This SI also introduces new lower tuition fee limits for foundation years in classroom-based subjects offered by approved fee cap providers, starting in the 2025-26 academic year.

Our higher education sector is part of what makes our country great. The sector makes a vital contribution to powering our economy, delivering world-leading research and innovation, enriching our society, supporting communities and opening up opportunities for individuals. From my personal experience—I was the first in my family to go to university—I know that the sector is a beacon of opportunity that everyone in this House ought to be proud of.

But this world-leading sector is now facing severe financial challenges. With tuition fees frozen for the last seven years, universities have suffered a significant real-terms decline in their income. Teaching income per UK student has declined in real terms since 2015-16 and is now approaching its lowest level since 1997. The Office for Students reports that a growing number of higher education providers are facing significant financial difficulty. Its analysis suggests that, by 2025-26, up to 72% of providers could be in deficit, and 40% face low liquidity if no mitigating action is taken.

We need to act now to put our higher education sector on a secure footing to face the challenges of the next decade, and to ensure that all students can have confidence that they will receive the world-class higher education they deserve. We also need to ensure that students receive value from their investment.

Taking each of those objectives in turn, this SI is intended to fix the foundations and put this vital sector on a more secure footing. It will mean that, from 1 August 2025, tuition fee limits for undergraduate courses will increase by 3.1%, in line with forecast inflation, based on the retail prices index excluding mortgage interest payments inflation measure. That means an increase to £9,535 for a standard full-time course, £11,440 for a full-time accelerated course, and £7,145 for a part-time course.

The decision to increase maximum fees has not been easy, but it is necessary to ensure that our higher education sector can continue to contribute to our economic growth, our globally important research and our local communities, and can continue to open up opportunities for those who wish to participate in higher education. Members on both sides of this Committee will agree that it is no use keeping tuition fees down if there are no universities for students to attend, or if students are not receiving the quality of education that they deserve and that is needed to meet the skills needs of our economy now and in the future.

I understand that some students may worry about the affordability of higher education, but I reassure them that eligible students will continue to be able to apply for up-front fee loans to meet the full cost of their tuition, and that when they start repaying their loan, they will not see higher monthly repayments as a result of these fee changes. That is because monthly repayments depend on earnings, and at the end of their loan term, any outstanding loan balance will be written off. We will also be working with the sector to ensure that it does more to improve access for those from disadvantaged backgrounds, and to deliver the very best outcomes both for students and for the country.

This SI also focuses on improving efficiency and delivering value for students. Lower fee limits will be introduced for undergraduates starting foundation years in classroom-based subjects in the 2025-26 academic year: £5,760 for a full-time course and £4,315 for a part-time course. The Government recognise the importance of foundation years for promoting access to higher education, but there has been a rapid and disproportionate growth of foundation years in classroom-based subjects that can be delivered more efficiently at a lower cost to students. To be clear, providers offering foundation years in all other subjects, such as those in science, technology, engineering and maths and the creative arts, will be able to charge fees up to the new fee limits of £9,535 for a standard full-time undergraduate course and £7,145 for a part-time course.

This SI will put our higher education sector on a more secure footing, enabling the sector to continue delivering the world-class higher education that both current students and future generations deserve. I hope that hon. Members will support these important regulations, which I commend to the Committee.

--- Later in debate ---

[Stephen Morgan]

I thank the shadow Minister and my hon. Friend the Member for York Central for their contributions. First, I reiterate the importance of the statutory instrument in putting our higher education sector on a secure footing and ensuring that students receive value from their investment. Committee members will know the sector’s importance for economic growth. They will know about its world-leading research and contribution to local communities, as well as how it changes the lives of those who participate in it.

Providers have suffered a significant real-terms decline in their income, following seven years of frozen tuition fees, and we need to act now to ensure that future generations of students can benefit from our world-class higher education sector. However, we are clear that in universities, as across our public services, investment can come only with the promise of major reform. That was why my right hon. Friend the Secretary of State for Education announced in the House on 4 November last year that we will publish a plan for higher education reform in the summer.

The shadow Minister made a number of points about national insurance contributions. As the Chancellor set out in the Budget, raising the revenue needed to fund public services and restore economic stability requires difficult decisions on tax. That is why the Government are asking employers to contribute more. We strongly believe that that is the fairest choice to help to fund the NHS and wider national priorities. The higher education finance and funding system needs to work for students, taxpayers and providers. The fee increase represents a significant additional investment from students into the sector, and we will support higher education providers in managing the financial challenges that they are facing.

On student loan repayments, we understand that some students might worry about the impact that the increased fee limits will have on the size of their loan. We want to reassure students that, when they start repaying their loan, they will not see higher monthly repayments as a result of changes to fee and maintenance loans. That is because student loans are not like consumer loans; monthly repayments depend on earnings, not simply the amount borrowed or interest rates. At the end of any loan term, any remaining loan balance, including interest that has built up, will be cancelled.

The shadow Minister asked about graduate earnings. On average, graduates benefit from their university education by over £100,000 in their lifetime compared with someone who did not go through higher education. He also asked about the press coverage of the University of Greater Manchester. Of course, that is a matter for the university, but we understand that the Office for Students—the independent regulator for HE in England—has been notified of this case. The university is conducting its own investigation and it would not be appropriate to comment any further at this stage.

My hon. Friend the Member for York Central, who is a real champion of higher education for her constituents and her community, made helpful points about quality. Students and the taxpayer have a right to expect a good-quality education in return for their considerable investment in higher education. For their investment, students deserve excellent teaching that supports them to learn and develop the skills that they need to achieve their full potential. That was why we made a commitment to raise university teaching standards in our manifesto, and we want higher education providers to collaborate, share best practice and deliver continuous improvement in the quality of their provision. Students also deserve to know what to expect when making their investment in higher education. We want providers to be transparent about the things that matter to students, such as the number of contact hours that they can expect when studying specific courses.

On international higher education students, the Education Secretary, in her speech in July 2024, made it clear that we welcome international students who have a positive impact on UK higher education, and on our economy and society as a whole. International students enrich our university campuses, forge lifelong friendships with domestic students and become global ambassadors for the UK. Our universities have taught dozens of current and recent world leaders. This gives us an enormous amount of soft power and also builds strong relationships, which is why we offer international students who successfully complete their studies the opportunity to work, or look for work, in the UK on a graduate visa for two or three years after their studies finish, allowing them to live and work here, and to contribute to our society and economy.

[Rachael Maskell]

I am grateful for what the Minister says, but we know that the changes in visa requirements have had a major impact on higher education. I urge him to take that back to the Department and look at the changes again so that our universities can welcome students and their dependents into our country.

[Stephen Morgan]

My hon. Friend is being kind to me, as she knows I am not the Government spokesperson on higher education, but I will ensure that my colleague who does lead on it takes that point back to the Department.

My hon. Friend the Member for York Central made a number of helpful points about access and participation. Our mission is to break down the link between background and success that has hampered the life chances of too many in this country. We are committed to supporting the aspiration of every person who meets the requirements and wants to go to university. We know that there are stubborn and persistent inequalities within our education system, and those must be addressed. It is vital that all higher education providers play a stronger role in expanding access and improving outcomes for disadvantaged students.

By summer, we will set out our plan for higher education reform and the part that we expect providers to play in that. Through our reform, we are determined to ensure that universities are engines of opportunity, fairness and growth. I commend the regulations to the Committee.

Question put and agreed to.