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Student Finance

Volume 785: debated on Wednesday 11 October 2017


My Lords, with the leave of the House, I will now repeat a Statement made in the other place by my honourable friend the Minister of State for Universities, Science, Research and Innovation. The Statement was as follows:

“On 9 October, I made a Written Ministerial Statement to the House setting out changes to the repayment threshold for student loans from April 2018 and confirming the maximum tuition fees for the 2018-19 academic year. The Government’s reforms to higher education funding since 2012 have delivered a 25% increase in university funding per student per degree. University funding per student is today at the highest level it has ever been in the last 30 years.

As the House is aware, the Government have decided to maintain tuition fees at their current level for the 2018-19 academic year. This means that the maximum level of tuition fees will be £9,250 for the next academic year, 2018-19, which is around £300 less than if the maximum fee had been uprated with inflation. We will also increase the repayment threshold for student loans from its current level of £21,000 to £25,000 for the 2018-19 financial year. Thereafter, we will adjust it annually in line with average earnings. This change applies to those who have taken out, or will take out, loans for full-time and part-time undergraduate courses in the post-2012 system. It also applies to those who have taken out, or will take out, an advanced learner loan for a further education course.

Increasing the repayment threshold will put more money in the pockets of graduates by lowering their monthly repayments. They will benefit by up to £360 in the 2018-19 financial year. Overall lifetime benefits are greatest for graduates on middle incomes; low earners, of course, continue to be exempt from repayments.

We have a world-class university system, accessed by record numbers of people from disadvantaged backgrounds, and a progressive funding system. We are building on those strengths through our planned reforms, including through technical education to provide new routes to skilled employment and strengthening how we hold universities to account for teaching and outcomes they deliver through the teaching excellence framework. The changes that we are making are considered proposals that reinforce the principles of our student loan system and ensure that costs continue to be split fairly between graduates and the taxpayer.

However, we recognise that there is more to do. We have further work under way to offer more choice to students and ensure they get value for money. We want more competition and innovation, including through many two-year courses. As the Prime Minister made clear last week, we will continue to keep the system under careful review, to ensure that it remains fair and effective. The Government will set out further steps on higher education student financing in due course”.

That completes the Statement.

My Lords, I am grateful to the Minister for making that Statement. In her speech at the Conservative Party conference, the Prime Minister promised a major review of university funding and student financing, yet details about that review were absent from what the Minister said this afternoon. What are the review’s terms of reference, who will conduct it, what is the timetable, and when will the Government make a Statement to both Houses on it?

Ministers did not say anything either here or in the Commons about the policy on maintenance. Are the Government considering restoring maintenance grants, as they briefed to the media? They have also said that they will publish the revised resource accounting and budgeting charge—the Government’s estimate of the portion of loan that will never be repaid by graduates, which has risen steadily under the jurisdiction of this Government. Have they calculated the impact on the RAB of this latest announcement? If so, why have not they published it with the announcement?

Separately, there is a question about the impact on the department’s own budget in this and future financial years. Will the Government make an additional allocation for the department to cover the costs of the announcement, or does it imply cuts in education spending? Will there be any reduction in funding for universities as a consequence of these changes?

I thank the noble Lord for his questions. First, as I said, the Prime Minister indicated that there would be a review. Actually, the tuition fee system is kept under constant review, so what she announced was that more detail and information would come out towards the end of the year on what is proposed. However, I cannot go into further detail at present.

The noble Lord also asked about maintenance grants. No, there is no plan to bring back maintenance grants, but he will have to wait until the end of the year to see what further announcements might come, as Jo Johnson said earlier in the Commons.

As the noble Lord will know, the resource and accounting figures come out regularly. I understand that the latest figures will be out soon. They will show that we are on track in effect to write off—as of before the announcement—around 30% of all the loans. This is all part of the complicated funding formula used for the tuition fee system. Of course it should be noted that, with the changes that we have announced, the write-off will go up slightly to between 30% and 40%.

My Lords, I am grateful to the Minister for this Statement. I do not want to go into the issue of maintenance grants again because he has replied to that. The Office for Fair Access showed that, in 2014-15, 8.8% of full-time students from low-income backgrounds did not continue at university beyond their first year.

I am taken with the phrase “an education system that works for all”. Yet we know that 60% of young people do not go to university. Those who pursue a vocational route must enjoy parity of esteem with those following an academic option. People should be able to access further or higher education at any age. Will the Government consider the issue of student finance more broadly, so that people can choose for themselves when to access government funding for education and training, rather than feel pressured into attending university at 18 or 19 when it may not be suitable for them?

First, I recognise—as the House will recognise—that there is concern about student debt. We know that some students have accumulated a considerable amount of debt. This is part of the reason for the announcement today and the Written Statement on Monday, thereby raising the threshold from £21,000 to £25,000 and freezing the increase. These changes are designed to be helpful to students.

The noble Lord is absolutely right about creating parity of esteem between vocational and academic entry. This is part of the range of educational reforms that this Government have been making and which we wish to continue. I know that the noble Lord has been at the forefront in trumpeting these issues.

Linking to that, whatever may be decided in terms of student funding will—or may—come out towards the end of the year as part of the regular reviews going on.

My Lords, I too welcome the Minister’s Statement. I should like to follow up on what the noble Lords, Lord Hunt and Lord Storey, have already said.

There are two major issues on which I would certainly welcome clarification. First, what we have at the moment is unquestionably a system which is building up a vast amount of unrepayable debt which will fall on the general taxpayer and is very regressive. I would welcome clarification as to whether both the quantity of debt and its impact—on the people who are ultimately paying for it—are going to be addressed in this somewhat ever-receding review.

The second issue is equally important. The Minister repeated that this Government intend that technical education should provide new and improved routes—something I strongly welcome. However, I draw the Minister’s and the House’s attention to the fact that the only current funding system for people who are doing not university degrees but more advanced degrees of a technical sort is—increasingly—something called advanced learner loans. This system is in total collapse. I do not know why but, basically, it seems impossible for the Government to lend the money, which must mean that people cannot access it, that they do not think it is going to work, or that the terms are totally unacceptable. I would be grateful if the Minister could confirm whether or not this—and related aspects of the student finance system—will be covered fully and in depth in the review when it happens.

I thank the noble Baroness for her point. We are alert to a certain number of students who have accumulated debt but the changes today—raising the threshold to £25,000, and at the upper level from £41,000 to £45,000—should and will help students and will provide some relief. We firmly believe that the tuition fee system is working. It has certainly enabled more people from disadvantaged backgrounds to go to university, which I think everybody recognises, and that must be an extremely good thing.

The advanced learning points that the noble Baroness has raised may well be included in the comments that will come out towards the end of the year. I hasten to add that the noble Lord, Lord Hunt, talked about a major review—yes, the Prime Minister did say that. The issue is that there is a constant review going on, so there will be some views coming out towards the end of the year. There will be no formation of a committee coming out of that review, however, just specific review comments.

My Lords, I find the Minister’s response to my noble friend Lord Hunt’s question about the independent review, and indeed what he has just said in response to the previous question, a little puzzling and confusing. Surely there is some urgency in setting up this independent review that the Prime Minister announced. The current system is not working as well as the Minister has just claimed: the level of debt is now enormous and the amount of repayment is far below what was originally anticipated, so the hole in the public finances in the future will be huge. Moreover there is a very important group—part-time and mature students—whose numbers have declined hugely as a result of the enormous rise in fees from £3,000 to £9,000. Can the Minister go back to his colleagues and to the Minister in the other place and express the views of this House—certainly it is my view and I think that of others who have spoken—on the importance of getting on with this review and that part-time and mature students should be considered? Students doing vocational and technical courses should also be considered, not only in higher education but in further education, as that group has been hugely neglected in the past.

I am well aware that the noble Baroness has taken quite a lead, particularly during the passage of the higher education Act, on part-time and mature students. The Minister in the other place will take this into account; I have no doubt that that will be the case in constantly reviewing this aspect, although I cannot confirm whether it will be at the top of the list. In terms of her concerns about urgency, we issued a Written Ministerial Statement on Monday and followed that up with the announcement today, and here I am at the Dispatch Box. These changes are as a result of our listening to students and to parliamentarians—we have taken some action. The resource and accounting figures are kept constantly under review but there will be a slight increase, of course, as a result of our changes; I made that point earlier. Tuition fees are, in effect, a subsidy to the nation to allow more people to go to university.