Monday 19 November 2018
Business, Energy and Industrial Strategy
On 15 November 2018 the General Court of the Court of Justice of the European Union found in favour of Tempus Energy, against the European Commission, removing the Commission’s state aid approval for the UK capacity market. The Court held that the Commission should have consulted more fully before granting state aid approval in 2014.
This judgment was decided on procedural grounds. It was not a challenge to the nature of the UK capacity market mechanism itself.
The judgment removes state aid approval for the capacity market, preventing the UK Government from holding any capacity auctions or making any capacity payments under existing agreements until re-approval.
National Grid has confirmed that it does not believe the judgment will cause any risk to security of supply this winter. It has informed market participants of the judgement.
We are considering the judgment in detail alongside the European Commission and are working to support it as it considers the legal options available.
We believe the capacity market is an effective mechanism that is designed in such a way as to minimise costs to consumers. The design of the capacity market has not been called into question, and our focus is therefore on ensuring it can be reinstated as soon as possible.
As part of this, we are seeking immediate state aid approval for a T-1 auction that will cover winter 2019-20. Alongside this, we are working to reinstate the full capacity market regime and are discussing the swiftest means of doing so with the Commission.
The Government and National Grid will ensure that market participants are kept updated.
I will keep the House updated as appropriate.
Student Finance Update
The Higher Education and Research Act 2017 received Royal Assent on 27 April 2017. It set out significant reforms to help ensure that students receive value for money from their investment in higher education. The Act included a power for the Government to set specific annual fee amounts for accelerated degree courses in regulations.
An accelerated degree is the equivalent of a standard degree in every sense but one: it is completed one year sooner than its standard equivalent. By studying for more weeks each year and taking shorter breaks between terms, accelerated students can, for example, complete the full content of a three-year degree—but graduate in two years.
In spite of the many benefits, there are currently very few accelerated degree courses available, as the current fee limit creates a financial disincentive for higher education providers.
Accelerated degrees cost more to deliver each year than their standard equivalents because of the higher number of weeks taught each year. Providers, however, can only charge up to the maximum annual fee cap for each year of teaching, regardless of the comparative volume of teaching delivered each year.
During the passage of the 2017 Act, the Government agreed to consult on values for specific accelerated degree fee caps, with the aim of removing the financial barrier and incentivising wider provision. Our consultation proposed a 20% uplift in the annual tuition fee for accelerated degrees.
For example, the annual tuition fee for a two-year accelerated course at a TEF-rated, fee-capped university (that is, a university with an approved access and participation plan and high-level quality rating) would be capped at £11,100 per year, compared with £9,250 per year for the same course taught over three years.
The total fee cost would be £22,200 for the accelerated degree, compared with £27,750 for the standard equivalent—for students, a 20% saving in tuition costs. The £22,200 total revenue for universities offers providers £3,700 more per accelerated degree (80% of the three-year fee), compared with the current £18,500 maximum (67% of the three-year fee) that they can currently charge for the same two-year course.
Today the Government are publishing their response to the accelerated degrees consultation, setting out our intention to proceed with regulations to set the new accelerated degree fee caps as soon as possible, subject to parliamentary approval. The full text of the response can be found on www.gov.uk.
These proposals apply to England only. We will also review the impact of the introduction of accelerated degrees fee caps three years after implementation. Our intention is to also bring forward regulations providing for increased loan amounts for accelerated degree courses.
This announcement will give providers confidence that the arrangements for accelerated courses are here to stay, and are consistent with all types of current non-accelerated fee levels and caps. The higher annual fee cap for accelerated degrees will drive up provision of accelerated courses across a far greater range of providers. Wider provision will in turn offer many more students the choice of applying for an accelerated course with their preferred subject and provider.
The new accelerated degree fee cap is consistent with the Government’s overall ambitions for diverse and flexible post-18 education, currently being developed through the ongoing review of post-18 education and funding.
TEF Reviewer Appointment
I am pleased to announce today that the Secretary of State for Education has appointed Dame Shirley Pearce DBE to report on the operation of the Teaching Excellence and Student Outcomes Framework (TEF) in line with the process set out in section 26 of the Higher Education and Research Act 2017.
The review will commence in December this year and we expect the reviewer to report in summer 2019.
Dame Shirley has a distinguished track record in higher education and has made an outstanding contribution to a number of other areas of public life.
This makes her an excellent choice to lead this review and clearly shows that she will command the confidence of HE providers.
I will place a copy of her detailed biography in the House Libraries.
Further details and guidance will be published on www.gov.uk.