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Review of Post-18 Education and Funding

Volume 789: debated on Tuesday 20 February 2018


My Lords, with the leave of the House I will now repeat a Statement made in the other place by my right honourable friend the Secretary of State for Education. The Statement is as follows:

“With permission, Mr Speaker, I will now make a Statement on the review of post-18 education and funding. While I am not announcing new policy today, I welcome the opportunity to confirm to the House details of a major review across post-18 education and funding, as announced by the Prime Minister yesterday.

Before I discuss the specifics of the review, I should highlight some of the strengths and successes of our existing post-18 education system. We have a world-class higher education system. Sixteen British universities are in the world’s top 100, and four are in the top 10. We have record numbers of young people entering university, including from disadvantaged backgrounds. Our student finance system removes up-front financial barriers and provides protections for borrowers so that they have to contribute only when they can afford to do so. A university degree provides significant financial returns for individuals—graduates on average benefit from their university education by over £100,000 over their lifetime.

The Higher Education and Research Act sets the foundation for further improvements, with the Office for Students to be a strong voice for students and ensure minimum standards; the Director for Fair Access and Participation to drive social mobility; the Teaching Outcomes and Excellence Framework—TEF—measures; and the facilitation of further diversity with new providers and shorter degrees delivered at a lower cost to students.

The Technical and Further Education Act 2017 extends the responsibilities of the Institute for Apprenticeships to include technical education, as well as introducing degree-level apprenticeships. New institutes of technology will be established which will focus on higher-level technical skills and will be eligible for access to loans and grants for their students. T-levels are in development—a true equal-standing alternative to A-levels.

It is these important reforms that we will build on in this review, and we will also look at parts of the system that are not working as well as they could be. While we have seen further growth in three-year degrees for 18 year-olds, the post-18 system does not always offer a comprehensive range of high-quality alternative routes for the many young people who pursue a technical or vocational path at this age. In universities, we have not seen the extent of increase in choice that we would have wanted. The great majority of courses are priced at the same level, and three-year courses are the norm. Meanwhile, although the funding system is a progressive one, with in-built protections, these elements are not always well understood.

It is for these reasons that the Government are committed to conducting this major review across post-18 education, to look further at how we can ensure that our post-18 education system is joined up and supported by a funding system that works for students and taxpayers. The review will look at four key strands: choice and competition across post-18 education and training; value for money for graduates and taxpayers; accessibility of the system to all; and delivering the skills that our country needs. This means identifying ways to help people make more effective choices between the different options available at and after 18, so they can make more informed decisions about their futures, and making sure there is a more diverse range of options to choose from beyond classic three- or four-year undergraduate degrees.

We will look at how students and graduates contribute to the cost of their studies to ensure that funding arrangements across post-18 education in the future are transparent and do not stop people accessing higher education or training. We will examine how we can best ensure that people from all backgrounds have equal opportunities to progress and succeed in post-18 education, including considering how disadvantaged students receive maintenance support, both from the Government and from universities and colleges. We will look at how we can best support education outcomes that deliver our industrial strategy ambitions, by contributing to a strong economy and delivering the skills that our country needs. We are clear that we must maintain and protect key elements of our current post-18 education system that work well already. We will maintain the principle that students should contribute to the cost of their studies, and we will place no cap on the number of students who can benefit from post-18 education. We will not regress to a system like in Scotland, where controls on student numbers continue to restrict the aspirations of young people.

The review will be informed by independent advice from an expert panel from across post-18 education, business and academia, chaired by Philip Augar, a financial author and former non-executive director of the Department for Education. To inform its advice, the panel will carry out extensive consultation and engagement with the sector and, among others, people currently or recently participating in post-18 education. The panel will publish its report at an interim stage before the Government conclude the overall review in early 2019.

The UK is truly a world-leading destination for study and research. Record numbers of young people, including from disadvantaged backgrounds, are entering university. But we recognise concerns and that we must look at how we can go further to provide choice, open up access, and deliver value for money for students and taxpayers to ensure that the system as a whole is delivering the best possible outcomes for young people and the economy, supported by a fair and sustainable funding system. That is why we are carrying out this review. I commend this Statement to the House”.

That concludes the Statement.

My Lords, I thank the Minister for repeating the Statement and I remind the House of my wife’s role as a consultant to the Education and Training Foundation. I should like first to ask the Minister about the status of the advisory panel. Can he assure me that it is going to be allowed to work without ministerial interference and direction? I would not ask him this except for the statements made by the Secretary of State at the weekend which seemed to set out most of the conclusions he expects the advisory panel to reach. On that, I should raise one particular issue that has struck me, which is that of charging lower fees for degree subjects with lower salary outcomes and the suggestion that it would mean that the fees for, say, arts courses would be lower than those for science and engineering courses. I cannot think of a more stupid outcome than that. In particular for poorer students, it would act as a huge disincentive to take up the very subjects that this country excels at. I hope that the Minister will tell me that that was just a whim of the Secretary of State and that the advisory panel will be given a clear indication that it is to come to its own conclusions on the issues it has been set.

I turn to the terms of reference. The Statement rather glosses over the important point in the terms of reference that the review cannot make recommendations on tax and must follow the Government’s fiscal policies. Does that mean that the review cannot address anything that would increase spending—and, if that is the case, does it mean that it cannot consider recommending the restoration of maintenance grants, reducing the current interest rates or increasing the teaching grant?

The Minister has made much of the T qualifications and the extension of education, but I remind him that his party’s manifesto promised a review of tertiary education across the board. Despite that, hundreds of thousands of 16 to 18 year-olds studying in FE colleges do not form part of the review. Perhaps he could say why that is.

In closing, the noble Lord set out the core principles under which the advisory panel and Ministers will work and said in particular that the review would look at value for money for graduates and taxpayers. On that, will the review look at the current rate of interest being charged? It is three percentage points above RPI, which all observers believe is unjustified and based on a discredited level of inflation. I remind the noble Lord of the Treasury Select Committee report published this month which states:

“The Committee sees no justification for using RPI to calculate student loan interest rates. RPI is no longer a National Statistic and has been widely discredited. In its Autumn Budget the Government acknowledged that the use of RPI was unfair for business rates, and the Committee is unconvinced by the case put forward for its use”,

by the then Minister. The committee goes on:

“The Government should abandon the use of RPI in favour of CPI to calculate student loan interest rates”.

I notice that the review is not looking at value for money for students. I would say to the noble Lord that what I find difficult about the RPI rate is that it is applied to students’ loans from the moment they reach university. That really needs to be looked at.

On the question of student loans in particular, will the noble Lord remind the House what percentage of graduates are expected to repay their loans in full and what percentage of the loan is likely to be repaid? Will he also say what the Department for Education wrote off in respect of student loans in the last financial year, and for how much below its value has the loan book been sold so far? Will he also say what sum it is now estimated will have to be finally written off at the end of the 30-year term? Will he also confirm that, due to the quirks of accountancy rules, the annual write-offs are missing from the deficit figures, but that while the value of the loan book is not netted off against the national debt, any cash for which it is sold is netted off? In fact, does he agree with the Treasury Select Committee, which described student loan accounting as being a “fiscal illusion”? Up to £7 billion of annual debt write-offs has simply gone missing, allowing the Government to artificially reduce the deficit by saddling young people with the debt. I very much hope that the advisory panel will be able to look at that.

Oh so wearyingly we hear more about a market in higher education—despite the fact that the Government have said that we have the most outstanding higher education system in the world. I shall make one further comment in relation to the report of the Treasury Select Committee. It notes:

“Without adequate information, an efficiently functioning market will struggle to develop. Prospective students face the unenviable task of determining whether to participate in higher education based on increasing quantities of university marketing material coupled with a lack of proven, reliable metrics for judging the quality of courses”.

If the Government are determined to go down the market route, they will have to ensure, first, that prospective students have information that they can use effectively. Secondly, they must ensure that the education sector does not repeat the problem of the health sector, which is to introduce a quasi market and then attempt to micromanage it through the regulator. My great fear about the Office for Students is that, while ostensibly it is there to encourage a market, in reality it is there to micromanage the sector. The outcome of that will be an unholy muddle and a higher education sector that is less than it ought to be.

My Lords, we on these Benches welcome this review. Without seeking to prejudge its outcome and indeed the Government’s response, we need a post-18 education system with a guarantee that it is accessible to all. I am particularly delighted that the noble Baroness, Lady Wolf of Dulwich, is to be a member of the panel. She will bring a tremendous amount of wisdom and understanding to the question of vocational education.

As the noble Lord, Lord Hunt, said, one term that is not mentioned in the Statement is “interest”—but I am sure that every single young person racking up a huge debt on their student loan will wonder why they are paying way above the market rate. The word “maintenance” appears only once, as does the word “grants”—and unfortunately they do not appear consecutively. Maintenance grants must be an essential recommendation of the panel. I wonder if the Minister could comment on that.

The review does not seem to do anything to improve opportunities and financial support for people who enter higher education at a later stage in life. Will equalising funding support for older students be part of the review? I go back to the point made by the noble Lord, Lord Hunt, on the subject of variable degree course costs dependent on the subject being studied. What will that do to help boost application rates for courses that are more expensive to deliver and which universities might expect to charge more for, such as medicine and engineering, in which it is incredibly important that we continue to train enough people? Will this not exacerbate skills shortages in those areas and mean that people from disadvantaged backgrounds in particular are deterred from studying these subjects?

Finally, we have talked about universities going down the market route. I fear that they have already gone down it with a vengeance. UK higher education allows publicly funded universities to both validate and franchise degrees, and they can subcontract the teaching of their students to private providers. Students are registered with the university and subcontracted colleges provide the teaching. We see tiny companies with no track record getting subcontracted teaching. They can be part of a larger group of firms that are owned by equity companies which are registered in places like Jersey and Luxembourg. I hope that the review might be permitted to look at some of the excesses in current practices. However, overall I welcome the review.

My Lords, I thank the noble Lords, Lord Hunt and Lord Storey, for their input and their questions, which I will attempt to answer. The first point raised by the noble Lord, Lord Hunt, was about the panel. First, I echo what was said by the noble Lord, Lord Storey, about the appointment of the noble Baroness, Lady Wolf. I am sure that she will be a valuable addition to the panel. I can reassure the noble Lord, Lord Hunt, that it is absolutely clear that Philip Augar and his panel will be independent. It is vitally important that it can carry out its work without interference—perhaps that was the word that he used—by the Government. Again, it must be fully independent.

Both noble Lords referred to the issue of differential pricing between courses. The noble Lord, Lord Hunt, raised the issue that has been much in the press in recent days about the difference between arts courses and engineering courses, and perhaps some comments that might have come from Ministers. I must admit that I have not read any of those comments. Those issues are in scope. I have no doubt that the independent review panel will look at the different courses between, say, humanities and engineering or science subjects as part of the review. I am not willing to be drawn on any other comments about that. I am sure that it will come up with some conclusions on that.

Equally, both noble Lords raised maintenance loans. It is the case that some students are finding it quite tough to live in expensive areas, including London. I know that maintenance loans are within scope. It will be up to the panel to decide whether they wish to look at that, but I clarify that it is within scope.

On the review of tertiary education, I reassure noble Lords that we are looking at a complete review of post 18 education. That includes those who are post-18 in further, higher and technical education; it is catch-all post-18. Again, it is one of the issues that the panel will look at.

The noble Lord, Lord Hunt, asked about interest rates. Again, interest rates have been much in the press and have been much discussed. They will indeed be in scope. I am not willing to comment on the difference between RPI and CPI. I note what the noble Lord said, but that is again something for the panel to look at.

Both noble Lords are correct that we are still looking to be sure that students have value for money. They must be sure that, for their choice of course, they go in with a transparent view as to what they will be paying, the course that they are doing and the outcomes that will come from it. Obviously, the advice to them is very important.

There were a number of questions from noble Lord, Lord Hunt, on loan repayments. I will need to write to him with the detail on that, but he will know that the RAB charge, as we might call it, has gone up to 45%. That is the write-off rate. There is always a subsidy, which has gone up to 45% because the thresholds were raised recently, as he knows—up to £25,000 and at the higher level up to £45,000. Along with a number of questions that he has raised, I will write to him with those specific details.

Finally, on the comments made about the market, one thing that is certain is that we absolutely believe that the basics behind the tuition fee system should remain in place. It is right that there should be a marketplace, that students should be in the lead and that they should be able to choose the right universities and courses. What we are leading on to, which is linked to the TEF, is to have assessments of courses, not just universities. That was always the intention behind the base laid during the passage of the Higher Education and Research Act. I hope that I have answered the questions from the two noble Lords.

My Lords, why is there no mention of the anomalous position of what used to be student nurses, who now have to take out loans, as do other students, in particular having regard to the pressure on the health service and the difficulties that it has in recruiting nurses?

Again, they will be in scope in terms of making sure that the support we give to nurses, who are so important in our society, is there. That is within scope and it is noted.

My Lords, the review had some very interesting things in it. I must give the Government some credit for the best back-down I have ever read in any document:

“Many elements of our current post-18 education system work well”—

if ever there was a way of saying some do not. I have never heard of anything like it before. The section on “A system that is accessible to all” talks about those with a disadvantaged background. I draw the House’s attention to my declared interests with the British Dyslexia Association and as a chairman of Microlink. We have a situation where disabled students have different provisions made at different universities doing the same courses. Are the Government going to make sure in the review that there is some way of allowing a student to know what is effectively happening to those disabled students, particularly those who do not qualify for the disabled students’ allowance, as there is currently a very confused system? The Government have refused to put in any outside quality control on them, saying that they will all make their own way forward. Will there be something in the review that dictates that you will know the type of support you will get?

Also, as the old provisions of the old system mean that the level 1 and level 2 provision of the four-band system are now provided by the institution, how well do they function with the DSA? Will this be made available? Will all those colleges undertaking any degree tuition be brought into this system so that people can find out what they are going to get? If you want anything that is market-driven to be effective you have to have knowledge of that market for those who access it. At the moment it is confused and almost like a quagmire. Unless the Government can tell us that they are addressing that in some way, they will still continue not to achieve.

The noble Lord again raises the issue of the DSA. I know that he has done a huge amount of work over many years for the disabled and disadvantaged sectors. I reiterate that the Government are very much committed to ensuring that all students with disabilities receive the very best possible support to enable them to study alongside their fellow students on an equal basis. Disabled students have access to a package of support to cover additional costs that they may face to participate in higher education. I reassure the noble Lord that this is in scope, but I do not want to prejudge the outcome of the review. I am certain the panel will want to look at it. Beyond that, I cannot really comment because the panel is independent.

My Lords, this is a review of the burdens being placed on students and young graduates, so can the Minister tell us what is the age of the youngest person on the review? Looking down the list of the six members, it does not look to me as if any of them are under the age of 50. Does he think it a good idea that there are no students on the review? Will he explain why there is no current student experiencing higher education and paying these fees on the review? Could he undertake that the Secretary of State will meet members of the Youth Parliament with me to discuss their views on student fees and loans and how the system should be reformed, given that they have no membership of this review?

On the noble Lord’s first question, I will not be drawn on the ages of the members of the panel. I think that was the gist of his question. Even if I knew the ages, I would not wish to be drawn on that.

Will the Minister write and tell me the ages? It is a material factor given that this is a review of student finance.

I am certainly not going to commit to that. I do not feel terribly comfortable giving out the ages of the panel. It may well be in the press, but I am not prepared to do that. We have a very strong panel.

On his second question, which was to do with the representation of students, he is absolutely right, but the point is that this panel will deliberately be kept small to make it more manageable. They will be engaging with a complete range of stakeholders, including students and student representatives, business and many other areas. I hope I can reassure the noble Lord that this is a wide-ranging stakeholder engagement process with a small and neat panel.

Will the Secretary of State meet members of the Youth Parliament with me to discuss their views on these matters?

On that third question, I am very happy to pass that on, but I do not want to give any guarantees that he will agree to do so.

My Lords, I accept that the Minister will not want to prejudge the work of the panel, but he set out in the Statement one or two principles that are set down to guide the work. I do not think that this is a question that he answered in response to the Front-Bench questions about the introduction of variable fees. Will he give the House an assurance that one of the principles he will set out for the panel is that the price of the course should not be a determinant in a student’s choice of degree course or eventual career?

I take note of the question from the noble Baroness but, as she predicted, I will not be drawn on giving a commitment on that. I have no doubt that the panel will want to look at it, as I indicated earlier.

My Lords, I welcome the review. I have a couple of questions. The Minister said that there would be an interim report. When is that likely to be? He gave us the final date.

The Statement refers to participation to drive social mobility, the teaching outcomes and excellence framework and,

“the facilitation of further diversity with new providers and shorter degrees delivered at a lower cost to students”.

That is something for which I have been arguing for quite a while. However, alongside that greater flexibility and, I hope, the use of new technology, we need to ensure that we get the quality as well. There have been some worrying developments in apprenticeships recently where we have warned about focusing not on the quantity but on ensuring the quality.

The Statement also talks about,

“identifying ways to help people make more effective choices between the different options available at and after 18”.

I still think that the current drive in secondary schools is to push most young people towards university and not look at the alternative vocational route. Given that schools rely on ensuring that their sixth-form colleges are full, what steps are the Government taking to ensure that they really are made aware of alternative routes?

The noble Lord asked a number of questions. First, I am not able to give an interim date for the review. I made it quite clear that the full results of the review will come out early in 2019. Obviously, I would want to keep the House updated as to when that would be—that would of course come from the review panel.

The noble Lord also made an important point about shorter degrees. I would like to add to that part-time courses. As we know, there has been a fall-off in part-time courses, which is a concern and one of the issues that the panel will definitely want to address. We want to be sure that the courses are right, that they are at the right price and that take-up is much better than it has been. That is within scope. Again, beyond that, I do not want to prejudge what the panel will come up with.

I was about to come to quality. Of course, the noble Lord is right that it is extremely important that the quality of the courses in higher education is outstanding. He mentioned apprenticeships. He will know that the Institute for Apprenticeships is focused solely on making sure that the quality of apprenticeships is as high as it can be. We want to replicate that in university courses as well. One of the main remits of the Office for Students is to monitor the quality of courses.

On choices for students, I know that the noble Lord has quite a lot of experience in this field. I think I am right in saying that he was instrumental in introducing the concept of employers going into schools and giving careers advice. That is important and valuable. On students being informed, it is a mix of parents being better informed and being able to talk to their children—who probably become less child-like as they move into the higher education system. Schools and employers certainly have a role. One of the things we most want to do—I hope it will extend into the review—is to look at the vocational and technical routes as opposed to the academic route. It is important that they are marketed and sold appropriately. I said earlier in the Chamber today that I was driving into town last night and heard on the radio an advertisement for apprenticeships. We want to hear more of that and more promotion for these areas.

My Lords, there will be a wide welcome for the emphasis on technical education. The Minister has just referred to it, and it looms large in the Statement. Can my noble friend tell us when T-levels are likely to become available to students? At the conclusion of the review early next year, will there be a government document that indicates not only what conclusions have been arrived at but the action that will be taken thereafter?

Yes, indeed. On the second question, my noble friend will know that the review will conclude in 2019. The Government have pledged to give a speedy response to it. I cannot give any timescales, but “speedy” means that they will want to move quickly to look carefully at what the panel has come up with and to respond accordingly. I feel sure that they will do that.

On T-levels and the timings for them, I will have to write to my noble friend to be sure that I am accurate.