Committee (6th Day)
Relevant document: 10th Report from the Delegated Powers Committee
Amendments 312 to 316 not moved.
Amendments 317 and 318
317: Clause 47, page 27, line 38, leave out “and foundation degrees”
318: Clause 47, page 27, line 39, leave out “and foundation degrees”
Amendments 317 and 318 agreed.
Amendments 319 to 322 not moved.
323: Clause 47, page 28, line 8, leave out “or foundation degrees”
Amendment 323 agreed.
Amendment 324 not moved.
325: Clause 47, page 28, line 12, leave out “or foundation degree”
Amendment 325 agreed.
Amendments 326 to 328 not moved.
Amendments 329 and 330
329: Clause 47, page 28, line 16, leave out “or a foundation degree”
330: Clause 47, page 28, line 18, leave out “or a foundation degree”
Amendments 329 and 330 agreed.
Amendment 331 not moved.
332: Clause 47, page 28, line 21, leave out “or foundation degrees”
Amendment 332 agreed.
Amendment 333 not moved.
334: Clause 47, page 28, line 29, leave out “or a foundation degree”
Amendment 334 agreed.
Amendment 335 not moved.
336: Clause 47, page 28, line 30, leave out “or a foundation degree”
Amendment 336 agreed.
Amendments 337 and 338 not moved.
Debate on whether Clause 47, as amended, should stand part of the Bill.
My Lords, I beg noble Lords’ indulgence because there will be a couple of times when I will need to look up the wording of the Government’s factsheet, which may cause a delay. Clause 47 states:
“If (having regard to advice from the OfS) the Secretary of State considers it necessary or expedient, the Secretary of State may by regulations … authorise the OfS to enter into validation arrangements”.
That sounds quite reasonable, until one realises what is actually happening here. The OfS is the regulator of the sector and is being authorised to award degrees.
This is an extraordinary proposition. For an organisation that is regulating higher education providers, and bestowing and removing from them the power to award degrees according to terms of registration committee conditions, also to award degrees may not be unprecedented but it seemed rather amazing when I first read the clause. I read it four or five times to make sure I had not completely misunderstood it.
Clearly, from what the Government have said they do not expect this to happen very often. One must rather hope it will not because, as I shall argue, the problem is not simply that this is not an appropriate thing for a regulator to do, it is that the Office for Students is not in a substantive position to do it properly. For example, the factsheet says that the OfS will, indeed, issue certificates and that:
“We would expect any degree certificate to reflect”,
the institution that it came from,
“whilst also making reference to the fact that the degree was validated and thus awarded by the OfS”.
I am not making a mistake; this is very clear. The idea is that there will be occasions when the OfS will award degrees.
It is my impression that the gas regulator is not allowed to set up and run gas supply companies. I do not think the communications regulator is busy setting up its own TV companies either. I therefore find it quite extraordinary that this is seen as an appropriate or, indeed, feasible state of affairs. In fact, I am completely confused that the same factsheet says that a,
“validating body and the provider being validated need to be registered Higher Education Providers”.
In a sense, that is quite logical: the OfS must be a regulated higher education provider, as well as a regulator for everybody else. But we have both the substantive problem of what a regulator should be—or indeed, as far as I know, is in any other sector—and a practical problem, because it is really not clear how this could be organised.
If you are a validator working with an institution you will do so in quite an intensive way. You will help to set up procedures and processes, and the assumption will therefore be that you know what you are talking about. If the OfS is going to start awarding degrees it will need a whole set of experienced and competent people on its staff. Indeed, on page 14 of the factsheet the Government say,
“we would expect the OfS to be ‘best in class’ in terms of demonstrating that its validation services abide by best practice”.
I am not sure who except the OfS will decide that it is “best in class” but that is what they aspire it to be.
The factsheet then starts to wonder how it will go about this. The Government say that they would expect the internal structure of the OfS that is set up,
“to be suitably independent from its other functions, to avoid any conflict of interest. This could for instance take the form of a separate internal division”,
somewhere down the corridor. This is perhaps not as reassuring as most of us would wish but what is just as concerning in many ways is how the staff who are to do this, and who one would expect to include academics as well as people experienced in quality assurance, are somehow going to be found; that is, they will simply be drawn into the OfS whenever something like this happens. The faith of the Government is rather touching when they say:
“As we expect that the OfS board will between them have experience of providing Higher Education in England, the organisation would have the necessary expertise to recruit the staff needed to set up a validation function”.
I do not find this terribly convincing.
Why should the OfS need to do this in the first place? The argument is that there may be cases when interesting, innovative or new higher education providers cannot get validation from anybody else, either because no one has the specific expertise or because the sector as a whole has dug its heels in. That has not happened very much and we have had a huge growth in the number of validated institutions but let us suppose that the Government really want to set up something very new and innovative, which therefore needs hands-on and genuinely expert help. Let us also suppose that validation is not just about providing a formal signature but mentoring, setting up and checking systems, and, therefore, that validators must know about the subject area. That is exactly what validation needs to be.
For example, a college I know—one of the most outstanding colleges in the country, which does a great deal of higher education—has different validators for different subject areas because it works closely with different universities which have the in-depth subject expertise and expertise in the sorts of areas that it wants. I do not see how the OfS can possibly bring people in on a very short-term basis and provide that sort of input. In fact, the Government are quite clear that it would not. They say:
“Students would be taught by their provider”,
and that the OfS,
“would not have any day to day involvement in teaching”,
“As the institution being validated has to be a registered higher education provider, it needs to abide by the quality regime”—
so one would hope.
The problem here is that to be a good new institution, you need a lot of hard work, a lot of expertise and, in many cases, a lot of help. If you say simply that in cases where an institution has a problem, it would just call in the OfS and it would do it, you are ignoring the substance of the whole exercise. How did we get into this mess? It is a legal mess. It is a mess because the legislation has not thought through how this would actually happen. How would somebody from the centre actually do it if they were trying to help a new, innovative, exciting institution get on its feet and get started, and for some reason there was not any help from a nearby established institution?
The Government say that this is necessary because there is “anecdotal evidence” that problems with validation have been limiting innovation. I am not sure that anecdotal evidence is quite what one would want as the basis for doing an overwhelming upheaval of a whole sector. However, it is true that, as a number of people have pointed out, the sector has been getting more uniform. There are fewer part-time students and fewer adult learners, and we have not had anything nearly as exciting as or on the scale of the plate-glass universities of the 1960s and 1970s. Although giving validation as the reason does not seem to be borne out by the evidence, it is true that it would be very nice to have more exciting new institutions in the system. I have tabled another amendment, which we will discuss later today, which addresses this point. While it is not reasonable to blame the validation system, there is a case for the Government feeling that something active needs to be done to increase the diversity, the innovation and the way in which our higher education sector responds.
Then the question is: if you accept my argument that just getting the OfS to set up a division down the corridor and pull in a few people who will not actually be involved in teaching or very involved at all is not the way, how else might we do it? There are two things I would like to say. First, as people have pointed out, in the past new institutions were not required to have a validation agreement. They were set up and they had degree-awarding powers. That was a different era but it was an era in which government acted in a much more far-sighted, interventionist and innovation-oriented way. These institutions were set up over a long period with money, with experienced staff, with vice-chancellors who were deeply involved in the sector, and with an enormous amount of preparatory time and resource, and then they got royal charters. I am not clear whether or not the Bill actually forbids institutions to have a royal charter on top of registration—probably not—but that was how they were set up and it does not seem to have caused any problems. But that is not the way that the Government seem to want to go.
Secondly, we were wrong not to spend more time thinking about an independent quality assurance organisation, which could act in this way and could bring in additional help. It would also be a very good idea to have, as the noble Lord, Lord Stevenson, suggested, the Open University or some other institution as a validator of last resort. But I think that the problem that is being flagged is not a problem. The solution is not a solution. It will not provide the help that new institutions need. It will not create diversity. It will create conflicts of interest. I do not think that many students will want a degree that says it was awarded by the Office for Students. I hope the Government will go away and think again.
My Lords, I have added my name to this amendment for all the good reasons set out by the noble Baroness, Lady Wolf.
The ability for the regulator also to validate degrees, and thereby operate within the market it regulates, continues to be widely seen as wholly inappropriate for a regulator, and unnecessary. There is no evidence to support the lack of a suitable validator being a barrier to entry. We believe, furthermore, that there are no circumstances in which the proposal in Clause 47 would be appropriate or necessary, so there is no reason for the clause to remain in the Bill, even as a backstop power. The policy intent is covered by Clause 46, which allows the Office for Students to make arrangements with a higher education provider to act as a validator of last resort, and, as we discussed on Monday, the Open University could very well provide this service without any conflict of interest.
The removal of Clause 47, therefore, does not remove the policy intent of opening up the market through a wider choice of validation arrangements—as the noble Baroness has pointed out—but removes the need for the OfS, as authorised by the Secretary of State, to enter into validation arrangements with providers.
We support the option of identifying a central validation body. The current system of awarding bodies works well, though it is recognised that protectionist practices are sometimes adopted on both sides. We therefore agree that validating bodies should commit to competition, diversity and innovation, though that should not mean that all comers must be validated. Expertise in validation —as the noble Baroness, Lady Wolf, has set out so clearly—lies in the objective and impartial appraisal of an institution’s capacity to deliver and maintain appropriate standards of quality and student experience. We acknowledge that many universities already offer validation to students whose provider institutions are in trouble and such arrangements should be allowed to continue.
Whichever way you look at it, there is no need for Clause 47.
My Lords, I speak for Clause 47. I have not spoken on the Bill to date but I have followed its progress closely because I was the author of the last review of higher education funding and student finance, commonly referred to as the Browne review. It looked at three pillars of the system: quality, participation and sustainability. Its recommendations were conceived as part of a holistic package. Much needed to change to secure the future of the sector. I welcome the Bill for completing many of those recommendations: by linking teaching excellence with fees charged to students; removing barriers to market entry for new providers; and creating a new regulator that is fit for purpose.
One of the principles that guided the review was diversity of institutions being essential to creating a competitive market that can provide quality teaching and satisfy student demand. Organisations offering courses validated by a provider with degree-awarding powers are critical to this diversity. However, in compiling the review, my panel and I spoke to many such organisations and found that in many instances the validation arrangements simply did not work. Highly lucrative for the established providers, they created a closed shop that stifled innovation and competition among new entrants and as a result reduced student choice. I hope, therefore, that the Bill will prompt traditional providers to recognise the benefits for all in expanding the higher education sector, promoting greater choice, greater opportunities and excellence in higher education. I hope they will respond positively to such competition.
In the rare case where that does not happen, however, it seems entirely right that the Office for Students should be able to step in as a validator of last resort. In doing so, it is essential that the regulator is independent. The OfS’s board must be populated with those with no vested interests in the sector. If it is not, the reforms proposed in this Bill will be neither sustainable nor credible.
My Lords, I was going to speak early in this debate, but the intervention by the Lord Speaker, with his new approach to managing business, saved your Lordships from that—although I did have a wonderful anecdote that I was going to share and a few jokes that I thought might get us off at a good speed to what will be a very long session. However, we have all benefited from the two excellent speeches from the noble Baronesses, Lady Wolf and Lady Garden, against the clause standing part. It is also good to see the noble Lord, Lord Browne, in his place. His report continues to send waves through this area, and it is good to hear, in his voice, what he would have done had he been in a position to deliver the rest of the recommendations in it.
These issues were raised on the last amendment on the previous day in Committee, but we are still left with some questions that need to be answered before we can make progress in this area. Although the noble Baroness, Lady Wolf, made it clear that the evidence that has been provided is only anecdotal, there may be problems in this area and it may be that we need a new validating system involving an independent validator like the OfS, which was set up to take away any hint that there might be some competitive pressures or any other issues that might interfere with innovation and challenger institutions of a new type coming into the system. However, again, I am not sure that that answers the problem of how the Office for Students, if it is the regulator, combines its responsibilities for validation with its responsibilities for overseeing standards, publishing statistics and overseeing fair access. The more we think about the OfS as some sort of Gilbertian character, reflective of all the various issues for which it is responsible and which are needed in the higher education sector, the more we lose touch with the reality of how that system will work. The noble Baroness, Lady Wolf, is quite right to ask how we got into this mess and whether this is really the right solution to get us out of it.
The issue that needs to be sorted out is whether the validation that is required in the system can be provided from within that system or whether it has to be provided from outside. If it is outside, surely it should be independent and available on the basis that it is not responsible for those who might benefit from any decision or other action that is part of it. But we have others that could do this job. The professional bodies all have a stake in the success or otherwise of the institutions and students for which they are responsible. Professional bodies do a lot of validation of institutions and courses, and their expertise could be used and harnessed. As we discussed on a previous amendment, and again today, the CNAA is still, in a vestigial form, present in the Open University, and maybe that would be a way forward. Alternatively, it may need to be a body completely independent of the system currently set up for the purpose. Whatever it is, I do not think Clause 47 has taken the trick that needs to be taken. It will not sort out the problem that we have and it should be taken back by the Government and reviewed.
My Lords, I support that final point, because we have to get at the principle of whether it is appropriate for a regulator to participate in the market it is regulating. That is the key issue. Based on the very effective arguments put forward by the noble Baroness, Lady Wolf, I urge the Government to think very carefully about this. There was an enormous amount of consultation on the Bill prior to it coming to the Commons and to this House, and yet, although there are lots of other areas where there could have been conflict rather than simple disagreement with the sector, this is the one area where the whole of the sector seems to have come together to suggest that the Government really need to think again.
As the former chair of a regulator, and having worked with other regulators, I cannot think of any regulator which is empowered to act in this way. This seems the key issue that the Government need to address. The current validation process seems to have worked pretty well, but if private providers are having problems, we should address those problems and, if necessary, have an independent validator—possibly more than one if we are going to give the range of processes that might be needed, as described by other speakers, for different courses, for example. We really need to think very carefully about that principle and address it.
My Lords, I wonder how this works in view of Clause 47(6):
“Regulations under subsection (1) may include power for the OfS to deprive a person of a taught award or foundation degree granted by or on behalf of the OfS under validation arrangements”.
What sort of validation of a degree is it when it can be taken from you—after you have got it, I assume?
My Lords, I thank noble Lords for the opportunity to discuss validation arrangements. We believe that they are essential to a fully functioning higher education sector. We have listened to the concerns raised around the potential for Clause 47 to create a conflict of interest. However, I believe that a more substantial conflict of interest already exists within the sector.
At the moment, new providers usually have to find a willing incumbent provider to validate their provision. This gives those incumbent providers significant levers to control which new providers can enter the market, and what kind of provision they offer. Even if established providers are willing to help new providers get a foothold in the sector, there is an inherent conflict of interest if the proposed new provision would directly compete with one of their own courses. Of course, conflicts of interest are not the only problem validated providers can face. We know that some providers still find it difficult to find a partner that is willing to enter into validation arrangements with them, or have established arrangements unexpectedly withdrawn, and not because they are considered poor quality.
The noble Baroness, Lady Garden, stated that there was no evidence, but I have to put her right. We only need to look at events at Teesside University last year. Following a change of leadership, the university unexpectedly withdrew important validation services to 10 local colleges, based on a change of strategic direction and not as a reflection of the quality of the provision. Ensuring new and existing high-quality providers are not locked out of the market via their preferred entry route is essential to ensuring that students are able to access the right type of higher education for them.
The OfS cannot force providers to enter into validation arrangements. If insufficient providers are entering into validation agreements with each other or into commissioning arrangements with the OfS, or these fail to correct the problem, the OfS will need to find another way to promote competition and choice. Without further powers, the OfS could potentially be forced to stand by and watch while good-quality providers that do not want to seek their own degree-awarding powers remain locked out of degree-level provision indefinitely.
The OfS will, if it performs any validation function, have to have regard to the need to encourage competition among higher education providers in England. Its aim will not be to compete with the other higher education providers with a view to diminishing their attractiveness or their ability to offer validation services. It will only offer these services if there is demonstrable evidence that validation services are failing to support the sector. A regulator needing to take a role in the sector it regulates is not totally unprecedented. For example, the Bank of England regulates many aspects of the financial sector in order to maintain financial stability in the UK. In extremis, however, it will also act as the lender of last resort, or a market-maker of last resort, for example by buying and selling assets such as government bonds to provide liquidity at a time of financial stress.
Noble Lords might wish to read an interim report by the Open University and Independent Higher Education on a joint project piloting a streamlined approach to validation. The report highlights several perceived obstacles for providers in developing successful validation partnerships, including restrictive behaviour on the part of some validating universities and,
“insufficient support for alternative delivery models including accelerated and more work-based degrees”.
While the report accepts that this is not representative of all validation partnerships, it recognises the importance of validation as a route into the higher education sector and the need to fix problems which, if left unchecked, could have an adverse impact on student choice.
The report says:
“Validation stands as a critical part of the regulatory infrastructure, and its role as a gateway into the higher education sector means that any dysfunction will have a substantially negative impact on the diversity and quality of provision available to students”.
Relying on incumbents to shape the future of higher education can also curb innovation and result in the entrenchment of the same model of higher education, as providers may be hesitant to validate courses that do not conform to their usual modes of delivery. As the noble Lord, Lord Browne, said, validation can create a closed shop. As part of its work on improving validation services, we would expect the OfS to draw and build on this and other work already carried out.
I also noted the suggestion in the previous debate to create an independent central validation body akin to the CNAA model. As a regulator of the higher education sector, the OfS is ultimately responsible for ensuring that the regulatory framework and its supporting processes are functioning effectively. As the noble Lord, Lord Browne, said, it therefore makes sense for the OfS to have a role in determining how validation problems that could prevent it from fulfilling its responsibilities, such as ensuring that market entry routes and related processes are functioning effectively, are actually fixed.
The OfS’s broader strategic role makes it best placed to identify emerging trends in validation services across the sector and to monitor the impact of whatever solution it puts in place to correct any problems. It will be able to draw on information and advice from all its designated bodies and stakeholders to develop a robust evidence-based approach to address any serious validation failings. I reassure noble Lords that this is not a power easily given or used. We envisage that the OfS would be authorised as a validator of last resort only if it was absolutely necessary or expedient after other measures had been tried and failed.
The noble Baroness, Lady Wolf, said that this would be based only on anecdotal evidence. The Secretary of State may exercise this power if she considers that it is necessary or expedient to do so, having taken OfS advice. That advice is most likely to come in the form of an evidence-based report.
The Secretary of State would need to lay secondary regulations in Parliament. As we all know, it is common practice for these regulations, which use the negative procedure, to be laid before Parliament 21 days before coming into force, giving Parliament the opportunity to see these conditions. As always, Parliament retains the power of veto.
The regulations, should they be deemed necessary, are expected to set out the terms and conditions of any OfS validation activity. I would expect the OfS, as the overall regulator of higher education quality and champion of students’ interests, to be best in class in terms of demonstrating that its validation services abided by best practice validation principles and delivered to the highest standards. I would also expect the OfS to put in place appropriate governance arrangements ensuring that an appropriate level of independent scrutiny was applied to the validating arm of the organisation and the safeguards to protect student interests.
The noble Baroness, Lady Wolf, asked how this would work, who within the OfS would do the validating and whether they would have the requisite skills and qualifications. The regulations by the Secretary of State could attach certain conditions to ensure that the service set up by the OfS was underpinned by the necessary expertise. As we expect members of the OfS board to have between them experience of providing higher education, the organisation will have the necessary expertise to recruit the staff needed to set up a validation function. For further detail on how the OfS validation arrangements would work, I again refer noble Lords to my letter of 19 January enclosing a factsheet published by the Department for Education on validation. With that, I move that this clause stand part of the Bill.
My Lords, I thank the Minister for his full reply, though if anything I am now more confused than ever. Either the validation issue is a serious one, in which case presumably the OfS will be giving out degrees in large quantities, or it is not, in which case I am not quite sure why we have these massive powers. I hope the Government revisit the whole validation issue. I actually have no idea when it appeared on the scene; it was not the case for many years, and I assume it was created by government for a purpose. This is an issue we will want to return to on Report, but at the moment I am happy to see the clause stand part of the Bill.
Clause 47, as amended, agreed.
Clause 48 agreed.
Clause 49: Unrecognised degrees
Amendments 338ZA and 339ZB not moved.
Clause 49 agreed.
Clause 50 agreed.
Amendment 338A not moved.
Clause 51: Use of “university” in title of institution
339: Clause 51, page 32, line 6, leave out “(instead of the Privy Council) consents” and insert “and the Privy Council consent”
My Lords, this group of amendments deals with whether and on what basis the powers of the OfS should be strengthened to ensure that it takes over responsibility for many areas which are currently the responsibility of the Privy Council. I should like to make it clear that I have no particular brief for the Privy Council. I am not a member of it; I have never aspired to it, and I do not know how it operates, although I know it operates in relative secrecy. Having experienced some of the debates around the BBC charter renewal and press standards, I want to make it clear that I am not arguing for the Privy Council. It is probably sufficiently devalued—in the public mind at least—and fallen from grace so as not to be considered the way forward in future. I am arguing in this group of amendments for some level of scrutiny and oversight, reflective of what the Privy Council does at present, to be reinserted into this Bill.
Amendments 339, 340 and 341 reinsert the words “Privy Council” where they have been deleted. In Amendments 342 and 343 and in the whole of Clause 52, there are issues that need to be addressed by the Government in promoting the Bill further on this basis and which I hope will be picked up in debate and discussed.
The correspondence on this matter has been flowing. An issue raised by the Constitution Committee resulted in a letter being sent to the noble Viscount, Lord Younger, on 6 January. It raised questions, the response to which I assume is still in preparation. I have not seen a reply, although the noble Viscount may be able to tell us when he responds to this debate. It asked why a number of powers have been transferred from the Privy Council to the Office for Students. The Delegated Powers and Regulatory Reform Committee has also expressed concern about this and the degree to which the exercise of these powers will, or will not, be subject to parliamentary scrutiny. Indeed, we have discussed these thanks to the interventions of the noble Lord, Lord Lisvane, and other noble Lords on a number of occasions, and there are more to come.
Common to all who have commented on this issue is how removing powers from the Privy Council will, in effect, remove them from the oversight of a body that is independent of and separate from Parliament. In some senses, it can be regarded as being cross-party. It behoves those who wish to support the line of argument that I am taking to make suggestions as to how this might be resolved. It seems that the Office for Students is to be the all-singing, all-dancing regulator, both validator and remover of degrees—as we have just discussed—guardian of the flame and operator of all the functions relating to higher education. If this is so, it must not be given responsibilities which cannot be checked and covered if decisions are taken which are not appropriate. There must be some sort of appeals system. Its advice to the sector and to Ministers should, on occasion—and this will be relatively slight—be subject to the will of Parliament. The question is how.
The Privy Council stands as a surrogate for a process which requires Ministers and their advisers—in this case, the Office for Students—to defend the decisions they take in a way which at least opens them to wider scrutiny. I do not see—and it will be for the Minister to convince us if this is wrong—any position within the arrangements currently laid out in the Bill which will satisfy the high standard that the Privy Council is intended to confer on this mode of scrutiny. I beg to move.
My Lords, let me first reassure your Lordships that we absolutely agree that a university title is valuable and prestigious, and that a university’s reputation needs to be protected. I am grateful for the opportunity to set out how we want to do this. I thank the noble Lord, Lord Stevenson, for raising some genuinely interesting points which I shall try to address.
As regards Clauses 51 and 52, currently there are three main legislative routes for English higher education providers to obtain university title. Two of these require consent of the Privy Council. The other requires consent of the Secretary of State under the Companies Act to the use of the word “university” in a company or business name. While the criteria are the same for all routes, in general publicly-funded higher education providers obtain university title from the Privy Council. Alternative providers can currently use only the Companies Act route. This creates a slightly complex and certainly inconsistent situation. The Government want to achieve the position whereby the OfS is able to grant university title to all providers. Clauses 51 and 52 achieve this by making changes to the two Privy Council routes by transferring the responsibility for consenting to the use of university title to the Office for Students. This transfer to the OfS will not lower standards. We believe the reforms will continue to ensure that only the highest-quality providers can call themselves a university. That is because we are not anticipating wide-ranging changes to the criteria. As now, we want any institution that wants to call itself a university to demonstrate that it has a cohesive academic community and a critical mass of HE students. This means that there will continue to be a distinction between universities and other degree- awarding bodies. That is not changing.
I endeavour to reassure the noble Lord, Lord Stevenson: we envisage that providers will be eligible for university title only if they are registered in either the approved or the approved fee cap category, and have undergone strict financial sustainability and quality checks; have over 55% of full-time equivalent students studying HE; and have successfully operated with full degree-awarding powers for three years. As we do now, we intend to set out the detailed criteria and processes for obtaining university title in guidance, and we plan to consult on the detail of this before publication. The OfS will make awards having regard to this guidance, just as the Privy Council does now. I make it clear that we want this to be a high bar, designed to ensure that the reputation and prestige of being an English university are maintained. That is in the interests of the whole sector. The term “university” will, of course, remain a sensitive word under the Companies Act, which means that it cannot be used in a business or company name without the appropriate consent.
I know there are some concerns that our reforms would open the door to low-quality or even bogus universities. That would be a very unwelcome prospect. However, I submit that the protection of the word “university”, along with all the safeguards I have just outlined in relation to obtaining university title, are designed to ensure that this could not happen.
I turn to the amendments that relate to the role of the Privy Council. As I said, we intend to keep the broad structures for the award of university title—that is, a decision which is made independently, having regard to published guidance. At present, providers send their application to HEFCE, which advises the department, which in turn advises the Privy Council, which then rubber-stamps a decision. This is unnecessarily complex. It is legitimate to ask the question posed by the noble Lord, Lord Stevenson: what is the role of the Privy Council in this context? That is an important question. A briefing paper of the Library of the House of Commons describes the Privy Council, in this context, as,
“effectively a vehicle for executive decisions made by the Government”.
We have investigated and cannot cite a single case in recent memory where the Privy Council disagreed with a recommendation by the department.
I hope I have been able to explain that we are not planning to change the independent decision-making and scrutiny, nor the core of what it means to be a university. I therefore suggest that the amendments proposed by the noble Lord, Lord Stevenson, are not necessary and in these circumstances I ask him to withdraw Amendment 339.
My Lords, I thank the Minister for her contribution. I am glad to see that she has got over her sore throat and it is not worse than at our last meeting so she is in full voice again. I am a bit confused about quite where that answer took us. I welcome the candour with which a Minister of the Crown has spoken about the role Ministers play in relation to royal charter achievements. The idea that the Privy Council has never turned down a Minister’s recommendations is exactly the point that many of us were making in relation to the BBC. The former chairman is sitting there, looking as if he is about to leap to his feet and comment on this matter—I am sure he will at a later stage.
The subtlety of that point, I am afraid, has been lost on me entirely and therefore I will continue. The point I was trying to make —it completes the circle of the argument—is that it is not about the Privy Council in essence but about independent scrutiny of the processes under which organisations achieve the valuable status of becoming universities, which at the moment is done by an outside body. It may not be perfect, and probably it is not, but it still requires a step to be taken by a body beyond the processes controlled by Ministers which could, at least in theory, raise questions of an uncomfortable nature.
The Minister will be aware that although there has been no occasion when the Privy Council has not accepted the recommendations, I am sure there have been occasions when difficult questions have been asked of institutions which have wanted to change statutes or make changes to their own governing arrangements. Indeed, I know that to be true. Because of Privy Council requirements these have had to be laid before the council and before they could be agreed they were the subject of a considerable exchange of information, discussion and debate. Indeed, anecdotally one could even talk about the recent press standards issue. Just after the legislation went through both Houses of Parliament, the royal charter for the press recognition arrangement could not be implemented because the Privy Council could not consider two applications for approval on a single area at the same time. There are processes that engage with the sort of scrutiny I am talking about. It is not about the Privy Council but about whether such standards should be in existence. Let us park that for a moment.
As I understand it, the changes proposed in the Bill will not reduce standards. I accept that. There will still be a process under which a university title is different from being a higher education provider—the Minister read out a list including the number of students, the amount of time it takes and so on. These are distinctions that would be made and the body currently charged with that, the Office for Students, would have to make the recommendations, whether to the Privy Council or not, on that issue. That is good and I am not trying to move away from it, but it still raises the question of whether the last step, which may not be a substantive step at the moment but could be, is still required. That is the point that we might want to return to, but I will not detain the Committee further. I look forward to reading Hansard and I may come back to this on Report. I beg leave to withdraw the amendment.
Amendment 339 withdrawn.
Clause 51 agreed.
Clause 52: Unauthorised use of “university” in title of institution etc
Amendments 340 to 343 not moved.
Clause 52 agreed.
Clause 53: Revocation of authorisation to use “university” title
Amendments 344 to 347B not moved.
Clause 53 agreed.
Clause 54: Revocation of authorisation: procedure
Amendments 348 to 352 not moved.
Amendments 353 to 356
353: Clause 54, page 34, line 34, leave out from second “the” to end of line 35 and insert “notice of the decision must specify the date on which the revocation takes effect under the order to be made under section 53(1).”
354: Clause 54, page 34, line 39, after “The” insert “order under section 53(1) implementing the decision to revoke the authorisation, consent or other approval may not be made and the”
355: Clause 54, page 34, line 39, leave out from “when” to end of line 41 and insert “—
(a) an appeal under section 55(1)(a) or (b), or a further appeal, could be brought in respect of the decision to revoke, or(b) such an appeal is pending.”
356: Clause 54, page 34, line 42, after “prevent” insert “the order under section 53(1) being made or”
Amendments 353 to 356 agreed.
Amendment 357 not moved.
358: Clause 54, page 34, line 43, at end insert—
“(10) Where subsection (8) ceases to prevent a revocation taking effect on the date specified under subsection (6), the OfS is to determine a future date on which the revocation takes effect under the order to be made under section 53(1).(11) But that is subject to what has been determined on any appeal under section 55(1)(a) or (b), or any further appeal, in respect of the decision to revoke.”
Amendment 358 agreed.
Clause 54, as amended, agreed.
Clause 55: Appeals against revocation of authorisation
359: Clause 55, page 35, line 3, leave out from “against” to end of line 5 and insert “either or both of the following—
(a) a decision of the OfS to revoke, by an order under section 53(1), an authorisation, consent or other approval given to the institution to include the word “university” in its name;(b) a decision of the OfS as to the date specified under section 54(6) as the date on which the revocation takes effect.”
Amendment 359 agreed.
Amendment 360 not moved.
361: Clause 55, page 35, line 12, at end insert—
“( ) vary the date on which the revocation takes effect under the order to be made under section 53(1);”
Amendment 361 agreed.
My Lords, if Amendment 362 is agreed to, I cannot call Amendment 363 by reason of pre-emption.
Amendment 362 not moved.
363: Clause 55, page 35, line 14, after “decision” insert “(including the date on which the revocation takes effect)”
Amendment 363 agreed.
Clause 55, as amended, agreed.
Clause 56 agreed.
Schedule 5: Powers of entry and search etc
364: Schedule 5, page 85, line 14, at end insert—
“( ) the suspected breach may constitute fraud, or concerns serious or wilful mismanagement of public funds,”
My Lords, this amendment stands in my name and that of my noble friend Lady Wolf. It would limit the powers of entry and search to suspected breaches of registration concerning fraud and serious financial mismanagement of public funds. The relationship between the Office for Students and registered providers is basically a civil one, and indeed in many areas a supportive one, and criminal proceedings such as search and entry should clearly be used only in cases of very serious misconduct, as specified in the amendment.
I recognise that paragraph 1(3)(b) of Schedule 5 says that,
“the suspected breach is sufficiently serious to justify entering the premises”,
and I am sure that the intent is that powers of entry would be used only in exceptional circumstances. However, this part of the Bill has been described by the sector as draconian, and the amendment, in effectively defining what constitutes “sufficiently serious” breaches, would provide considerable reassurance to the sector. I beg to move.
My Lords, I thank the noble Baroness for her contribution. Clause 56 and Schedule 5 as drafted will ensure that the Office for Students and the Secretary of State have the powers needed to investigate effectively if there are grounds to suspect serious breaches of funding or registration conditions at higher education providers. The amendment recognises that these powers are necessary where there are suspicions of fraud, or serious or wilful mismanagement of public funds.
As the noble Baroness indicated, we would expect the majority of cases where these powers would be used to fall into this category, but limiting the powers to this category would risk compromising our ability to investigate effectively certain other cases where value for public money, quality, or the student interest is at risk.
The OfS may, at the time of an institution’s registration or later, impose a “specific registration” condition. This is a key part of our risk-based regulatory framework. For example, an institution with high drop-out and low qualification rates could have a student number control imposed by the OfS if it considered that this poor level of performance was related to recruiting more students than the institution could properly cater for.
A breach of such a condition may not constitute fraud, or serious or wilful mismanagement of public money, as students will still be eligible to access student support. But there is a very real risk that students, quality, and value for public money will all suffer. If the OfS has reason to believe that despite, for example, the imposition of a condition that limits the numbers of students a provider can recruit the provider is nevertheless undertaking an aggressive student enrolment campaign, it will be important that evidence can be swiftly secured to confirm this. If the proposed amendment were made, a warrant to enter and search may not be granted in such cases. That would be an unfortunate and perhaps unintended deficiency in these important powers. I therefore ask the noble Baroness to withdraw Amendment 364.
Before my noble friend sits down, I was wondering whether the justice of the peace who is to decide such a matter has to give a certificate that he has been satisfied on all the matters required in the schedule at this point in order to grant the warrant, because it sets out conditions about which he must be satisfied. I think it would be quite a reasonable requirement that before the warrant was granted, he should certify that he—or she, I should of course have said—is satisfied on each one of all those rather important conditions.
I thank my noble and very learned friend for his contribution. I cannot comment on the specifics of the operation of magistrates’ warrants in England, but I certainly can undertake to write to him with clarification as to how—a very large piece of paper has just been handed to me, entitled, “What will the magistrate take into account when considering whether to issue a search warrant?” If your Lordships, like me, are agog to know this riveting information, here we go.
The magistrate would need to be satisfied on the basis of the written evidence and the questions answered on oath that reasonable grounds existed for suspecting a serious breach of a condition of funding or registration, and that entry to the premises was necessary to determine whether the breach was taking place. Further to this, the magistrate would also need to be satisfied that entry to the premises was likely to be refused or that the purpose of entry would be frustrated or seriously prejudiced. These criteria will ensure the exercise of the power is narrowly limited.
Well, as FE Smith once famously said to a judge, I may not be any wiser, but I am much better informed.
My Lords, I am grateful for that, but of course it does not deal with the question that I am asking. It is very useful information—or rather, I think I am right in saying that, at least so far as I followed it, it is a repetition of what is already in the Bill. The question, however, is whether the magistrate needs to be aware that these are the conditions. When applications for warrants are dealt with, the degree of speed required sometimes slightly derogates from the detail in which they are considered. This is an important matter: if a higher education institution has a search warrant on its premises that is a pretty damaging thing, especially if it happens to come out in the press that a highly regarded senior institution is being subjected to a search of its premises, which may be quite large, when it comes to it.
It would be useful to have a requirement that the magistrate should certify that he or she is satisfied on these matters and grants the warrant accordingly, or something like that.
I thank the Minister for her detailed reply. I am not sure I understand what the grounds for search and entry in the case of a risk to quality might be. Indeed, as an engineer not a lawyer, I feel that taking a large number of students who you had been told you could not take when they were supported by government loans could count as wilful mismanagement of public funds, but I am sure others have a better understanding than I have.
However, when there is time, I ask the Minister to reflect that some of the clauses in the Bill seem rather draconian powers for a regulator whose general tone is about supporting the system to prosper and grow. But at this point, I beg leave to withdraw the amendment.
Amendment 364 withdrawn.
Schedule 5 agreed.
Clauses 57 and 58 agreed.
365: Before Clause 59, insert the following new Clause—
“Duty to compile and make available higher education information
(1) The relevant body must—(a) compile appropriate information relating to registered higher education providers and the higher education courses they provide, and (b) make the information available in an appropriate form and manner to the OfS, UKRI and the Secretary of State.(2) In this section “the relevant body” means—(a) the designated body (see section 60), or(b) if there is no such body, the OfS.(3) What is “appropriate” for the purposes of subsection (1)(a) and (b) is to be determined—(a) by the designated body if the OfS has notified the body that it is required to do so (and has not withdrawn the notification), or(b) otherwise, by the OfS.(4) A notification under subsection (3) may relate to one or both of the paragraphs of subsection (1).(5) When the designated body or the OfS determines what is appropriate for the purposes of subsection (1), it must in particular consider what would be helpful to the persons mentioned in subsection (1)(b).(6) The OfS must from time to time obtain and consider, or require the designated body to obtain and consider, the views of the persons listed in subsection (7) about the information that should be made available under this section.(7) Those persons are—(a) UKRI,(b) the Secretary of State, and(c) such other persons as the body seeking views considers appropriate.(8) In performing the duty under subsection (1)(a), the relevant body must—(a) cooperate with other persons who collect information from registered higher education providers, and(b) have regard to the desirability of reducing the burdens on such providers relating to the collection of information.(9) In carrying out other functions under this section, the OfS and the designated body must have regard to the desirability of reducing the burdens described in subsection (8)(b).(10) The functions conferred by this section do not affect any other functions of the OfS regarding information.”
Amendment 365 agreed.
Clause 59: Duty to publish English higher education information
366: Clause 59, page 37, line 3, leave out “body” and insert “bodies”
My Lords, in moving this amendment I shall also speak to others in this group in the name of my noble friend Lord Stevenson. Amendment 366 is self-explanatory, so I will say a little about the others. Amendment 374 seeks to extend “what … when and how” to,
“what … when, where and how”,
when the Office for Students is determining what course information is to be published. It is designed to make it incumbent on the OfS to consider what would be helpful to students on higher education courses in terms of where the information should be made available. The Government have decided to ensure that how the information provided by the OfS is disseminated should be subject to all considerations with the exception of where it should be available. Surely this is one small amendment that the Minister cannot find a reason to turn down.
At first reading, Amendments 376 and 377 may seem pedantic, but the aim is simply to ensure that this subsection is all encompassing. If the Minister declines to accept these two amendments, it could imply that only some people considering applying for such courses should be included. Should that be the Minister’s intention, he needs to say who he thinks might or should be excluded. I hope that would not mean mature students.
Amendment 379 would achieve the same purpose in respect of staff, who also need to be given consideration in this case. Amendment 384 would add staff working in higher education institutions to the list of those whom the OfS must consult from time to time about the information to be made available. Students and prospective employers are included in the Bill so it is fair to ask why not the people who collectively work to ensure that the student experience is as rewarding, in all senses of the word, as possible. This clearly casts the net wider than academics. Support staff in many categories also contribute to the success of the courses provided to students at our universities and it is therefore appropriate that they should also be part of the consultation exercise.
Amendments 396 and 406 are similarly concerned with ensuring that the views of higher education staff are taken into account—the first in respect of consultation prior to recommendation of the designated body and the latter in situations where it is proposed that the designation be removed. I suspect the Minister will point to the final subsection in all three cases, which allows for the involvement of “such persons” as the Secretary of State “considers appropriate”. These two amendments are concerned with inclusion—involving the people who work day to day in our higher education institutions. The Government have been unwilling to include staff explicitly as the Bill stands, or perhaps they have considered them and deemed such inclusion inappropriate. As a result, what confidence would staff likely have that the Secretary of State might suddenly decide that it was a good idea and introduce them under the “such persons” subsection? These two amendments are about including staff; doing so would not exclude anyone else. It is right and proper that the Minister should agree to this common-sense addition to the Bill.
Finally and most importantly among the amendments in this group in the name of my noble friend Lord Stevenson, I turn to Amendment 368. As recent media reports have revealed, too many universities today employ academic staff on short-term—sometimes zero-hours—contracts. In some situations, lecturers are even paid on an hourly basis, a situation unthinkable just a few years ago. That means that job insecurity is a major concern among staff at many institutions, and the higher education sector needs to wake up to the likely consequences of any race to the bottom in employment practices. In some ways, this is a natural development of the increasing marketisation of the sector, a shift about which the Government are wildly enthusiastic and a philosophy that underpins the whole Bill. Those of us urging caution have genuine fears as to where it might lead.
We have heard much about the importance of student satisfaction in our deliberations, and rightly so. That is one of the metrics that is supposed to drive up teaching standards, yet it seems to ignore the fact that good teaching depends not just on well-qualified staff but on well-motivated staff. What sort of motivation stems from not knowing whether you are going to be teaching a class next week, far less next term or next session? That is a question universities have to consider very carefully and the requirements of Amendment 368 will encourage them to do that. Those that place short-term economic considerations before the long-term interests of their staff—and, by extension, their students—are treading a path that leads to poorer standards and potentially lasting damage to their reputation. Institutions that have nothing to hide in terms of employment practices—and their impact on staff/student ratios—have nothing to fear, and neither should the Government in accepting this improvement to Clause 59. I beg to move.
My Lords, I have three amendments in this group. Amendment 371 urges the Government to make as much of these data open as possible. This is not really the pattern with university data at the moment. Even HESA, which is an easy organisation to deal with, none the less guards them closely so that it can charge fees for their release. I think life will be a good deal better for prospective students if that information is more widely used, available and circulated. It is a principle the Government have established in other areas such as Ordnance Survey and the Land Registry, and it has worked extremely well. I would like to push the Government in that direction so far as university data are concerned.
My second amendment is Amendment 383 and we have been here before. It should be obvious that the principal customers for these data are prospective students. They are the ones who need to know about universities. We really ought to take the views of people who look after prospective students into account in deciding how data should be made available.
I have tabled Amendment 413 because there is a tendency for bodies, once you have given them the power to charge, to start inventing things to do, because they can always get them paid for. Look at UCAS, for example; it probably does five times as much as it needs to. The central “apply” function, which everybody uses, is only about 20% of UCAS’s activity. The rest it can get paid for and it is interesting, so it does it. This body ought to be under tighter financial discipline than that.
My Lords, I support the amendments in this group, particularly Amendment 368, which is about the number of staff on non-permanent contracts and zero-hours contracts, as the noble Lord, Lord Watson, set out. As we have discussed before, these sorts of metrics might be more valuable to the TEF than many of the metrics already in it, because the non-permanent staff and zero-hours staff will have a greater impact on teaching quality than many of the other things which the TEF purports to measure. On Amendments 376 and 377, it is important at all stages of the Bill to ensure that adult, mature and part-time students are included as part of the student population.
My Lords, I have one amendment in this group, which is a very small amendment in that it asks that one word be substituted for another. But if I read out the original clause, it may be evident why this is really quite important. I am very much in sympathy with what the noble Lord, Lord Lucas, said about keeping an eye on the fees that people charge.
The original Clause 61(2) reads:
“The amount of a fee payable by a registered higher education provider under this section may be calculated by reference to costs incurred, or to be incurred”—
so you do not even have to incur it yet—
“by the body in the performance by the body of any of its functions under this Act which are unconnected with the provider”.
My amendment would replace “unconnected” with “connected”. This is quite typical of a number of statements in the Bill to which amendments have been tabled already; it implies a degree of freedom for the regulator or designated body to impose fees of any sort or level, without any requirement that the necessity or even the link to the provider being charged be demonstrated.
It would be entirely possible for the Government, without losing sight of any of their major objectives, to go through the Bill and change these extraordinarily open-ended invitations to levy a charge for something that we know not what. It starts to sound something like the South Sea bubble. With a regulator or an official body, it is very important that the nature of fees, like the nature of information, be very clear, and that there is not an ambiguity in the legislation about the ability of organisations that rest on statute to be able to levy charges that are not in any sense proportionate to the activities or what is required of the individual provider. I would be very grateful if the Minister could come back to us on that.
My Lords, the amendments in my name are relevant to the points that the noble Baroness, Lady Wolf, has just made. I am concerned with the scope that the OfS has to levy charges on the sector; effectively, it is a provision to tax the sector for unlimited purposes, which are not clear, and there needs to be some mechanism of control and full consultation on any proposed charges. Just as regulators impose limits on rises in fees on institutions in line with the cost of living, similarly the regulators should be under an obligation to try not to put up their charges on the sector above the rate of increase that universities can themselves charge.
I think that I am right in saying that some years ago it was decided that a statutory authority did not have power to charge fees unless it was expressly conferred on the body in question. As the noble Baroness said, this is the authority for this fee, so it is exceedingly important that we see that the authority is limited to what it ought to refer to. How exactly it should be dealt with in relation to unconnected matters strikes me as a little strange. I cannot see exactly why something completely unconnected should be regarded as something on which you can reasonably charge other people—taxpayers, or people applying for help.
The noble Lord, Lord Watson of Invergowrie, said that there was no reference to employees in this Bill, but I found one—and I found it a little unsatisfactory, and tabled an amendment to deal with it, Amendment 492. In a moment of reflection, he may see it and come to my help.
My Lords, I remind the Committee that the people who will pay these fees that the regulator is charging will be the students. Therefore, we very much need to make sure the regulator is charging the absolute minimum it can to perform its duties effectively.
My Lords, I shall speak to Amendment 371. I hope that the amendment of the noble Lord, Lord Lucas, will not get lost in this group because what he raises is fundamental to the Bill and to the way we are going to improve the offer we make to students and the veracity with which we look at the higher education sector.
I have written to the Minister on this issue and raised it as a question earlier. I am referring again to the role of HESA and the role of data. Unless you have accurate data with which to interrogate, and unless they are consistent across all providers, quite frankly, they are pretty useless. At the moment, it is not simply that you cannot get at some of HESA’s data. I gave the Minister an example just this week. You cannot get the data because HESA simply says, “Different institutions collect them in different ways”. That is a brilliant cop-out for saying, “We can’t let you have it”.
The other cop-out, which occurs quite frequently, is to say that data are sensitive to the universities because they own them, and therefore could be damaging to their reputation. If we are to give students the sort of offer they rightly should have, and if we are to give taxpayers the confidence they rightly should have, data should not be hidden. Data are absolutely key to delivering a higher education system of the highest possible quality which will maintain the high quality we already have in the future. I urge the Minister, in reference to Amendment 371, to reflect on how we are to ensure that data are not just left to HESA, but that the Office for Students has powers to ensure their consistency and effectiveness to be interrogated.
I thank all noble Lords who have raised these important issues. I agree immediately with the noble Lord, Lord Willis, about the importance and quality of data. I will make one overarching point, in the interest of brevity, before addressing individual amendments. We are not seeking to determine in the Bill exactly which data must be collected or exactly who must be consulted. Data requirements and needs evolve over time, and the body needs to maintain the ability to adapt to changes.
In response to comments made by the noble Lord, Lord Watson, I appreciate what he said. We do not feel it is appropriate, for example, to specify workforce data when all other data will—very importantly—be agreed under the duty to consult. The relevant body will have the duties to plan data publication in conjunction with the full range of interested parties, with sufficient flexibility to take a responsive approach.
Turning to Amendments 376, 377 and 383, given the OFS’s duty to have regard to the need to promote greater choice and opportunities for students, just to reassure my noble friend Lord Lucas, there is, to my mind, no question that under Clause 59(5), considering the needs of people thinking about undertaking higher education courses must include considering what would be helpful to prospective and potential students from a diverse range of backgrounds.
In considering Amendments 368, 379, 384, 396 and 406, it is expected that the views of higher education staff will be considered as part of the voice of the sector institutions. The OfS will also have the discretion to consult persons they consider appropriate, including any relevant bodies representing the staff interests. I think the noble Lord, Lord Watson, foresaw the words that I have just spoken.
On that point, the Minister said that it would be “expected” of the OfS, but I do not see what could be done if it chose not to do it. I would think it was a normal thing to do, but if it is expected, why not just say that or something equivalent to it in the Bill?
The noble Lord makes a fair point, but I must go back to the overarching statement that I made at the beginning of the Bill: we have carefully crafted it to look ahead to the future. I have said specifically that we do not consider it right to be too exact in what we put in the Bill. I hope he will accept that.
On Amendment 371, spoken to by my noble friend Lord Lucas, the Government are committed to making data available publicly and in a format that can be easily used wherever possible. However, the data body will collect personal data and it may therefore not be appropriate or lawful to publish identifiers. In accordance with the code of practice for official statistics, the statistics published by the body should not reveal the identity of an individual.
On Amendments 413, 415, 415A and 415B, fees should be fair and proportionate, neither creating disproportionate barriers to entry nor disadvantaging any category of provider. I want to reassure noble Lords that there are several safeguards to prevent a burdensome charging regime. First, the Bill makes clear that the total fees charged by the body must not exceed the total costs incurred. However, I recognise that there must in addition to this be due oversight to ensure that these costs are kept to a minimum—so let me answer some points raised by the noble Baroness, Lady Wolf, the noble Lord, Lord Liddle, and my noble and learned friend Lord Mackay. The data body will be required to publish a statement showing the amount of the fees it charges and the basis on which they are calculated. Also, as part of the triennial reporting process, the OfS must report to the Secretary of State on the appropriateness of any fees charged by the designated body. We are confident that these safeguards are sufficient and that further specific requirements would be overly restrictive.
On Amendment 366, I must stress that we want to minimise the regulatory burden on providers by avoiding duplication. For this reason, it is best for the sector to have only one body designated to collect the information at any one time. However, I also recognise that there are already several sector organisations with an interest in gathering data, and I understand that noble Lords may have concerns about the availability of data and collaboration over their use. I assure Members that Clause 59(7) and (8) set out a clear expectation that the data body must co-operate with those other organisations and have regard to the desirability of reducing burdens on providers.
The noble Baroness, Lady Wolf, referred to unconnected fees. I hope I can give some reassurance that I understand the intention to ensure that fees are calculated fairly. However, I fear the effect would be to damage the interests of both the data body and providers. It would prevent legitimate overheads related to designated functions being incorporated in the annual fee and block the current practice, common to sector bodies, of charging fees varied by the number of students at a provider, which is essential to ensuring proportionate and affordable fees. With these explanations, I hope the Lord will withdraw Amendment 366.
On the Minister’s last point about connected and unconnected fees, I understand that the Secretary of State has to be satisfied that the fees charged are proportionate. On the other hand, the Secretary of State is not obliged to consider whether they are connected in any way whatever with the provider. That is the problem. The Secretary of State’s power to monitor the fees depends on what the authority is for the fees being charged. Most of the illustrations that the Minister has given are connected in some way with the provider. For example, if it is a question of assembling data, the data will include those provided by the provider who is charged—so that is connected to the provider all right. It is perfectly reasonable to charge for overheads in relation to a function connected with a provider, but charging for those unconnected with a provider seems to open up a large and rather unspecific area.
I will attempt to answer the points made by my noble and learned friend. Surely this is encompassed by the safeguards that I outlined. There will be an opportunity on a regular basis, as I mentioned, to analyse and scrutinise the statement showing the amount of fees, including those that are unconnected, and how they were made up.
My Lords, I am grateful to my noble friend for his reply on Amendment 371, but I think he rather missed the point. In respect of school data, the Department for Education already publishes extensive information, under the heading of performance tables, as open data. The level of information has grown substantially over the years and is free for anyone to reuse, as is the database on schools, EduBase. I am very sorry to say, as the proprietor of the Good Schools Guide, that this has resulted in the emergence of a lot of competitors, which is thoroughly tiresome. While it would be convenient for me if the Government did not do it, it is very good for the economy and for students and pupils that they have, and it is the pattern I would like them to pursue with regard to university data.
The Department for Education also makes available the National Pupil Database, which is confidential, at various levels. The whole database is available to the “very serious” level of researchers, but anonymised information is also available at pupil level, which is immensely useful for understanding how schools are operating and how various examinations and other aspects of the school system are working. That is a precedent for really good practice that is, now, contained within the same department that will look after university data.
The practice for university data is different. It is either held by UCAS, in which case it is effectively not available to anybody, or by HESA. In the latter case, there is a long application process to determine whether it will let the data out because nothing is standardised and you have to ask permission from individual institutions. It then charges a hefty fee. This is a comfortable situation for me, as a user of HESA data, because it means I do not get a lot of competition, but it is not the way the market should be. The market should be open. The only reason that the use of the data is charged for is that HESA wants to make money out of it. If it is given the power to charge institutions then it is in the interests of the economy and the country that it makes it freely available whenever it can. It is much better for the country that HESA should make a little bit of money by making it available in a more restricted way and for a large fee, or a substantial fee—not an unreasonable fee; HESA is a good organisation. We should go open. The Government, as a whole, have made a lot of progress in making much bigger collections of data open, when they were formally charged for. There has been a lot of benefit from that. That is the practice we should follow with the university data.
My Lords, this has been a livelier group of amendments than had been anticipated. Gratitude is due to the noble Baroness, Lady Wolf, for exciting some controversy. It is a surprise that the shortest amendment to the entire Bill—it is just two letters—led to so much impassioned debate.
The Minister is treading on rather boggy ground if he feels that his legal people will be able to counter the argument of the noble and learned Lord, Lord Mackay, about the precedent for statutory bodies. The Minister has developed the practice of writing letters to us in Committee. I suggest to the noble and learned Lord, Lord Mackay, that he might write to the Minister on this particular point and perhaps assist in clarifying the position and getting the Minister to think again.
I liked the noble and learned Lord’s point about spotting a reference to an employee in the Bill. He was, of course, referring to a part that we will consider on Monday, but that it took his legal eagle eye to detect it underlines my point about staff being notable by their absence from the Bill, and hence, I would suggest, being undervalued. I take on board what the Minister said about it being expected that the OfS will consult staff. Experience tells us that expecting organisations or employers to do something on behalf of their staff often leads to disappointment, and that is why I believe it should have been a bit more explicit in the Bill. I suspect, however, that his comments today may well be quoted by a number of staff and their representative organisations in future. There is another question, which perhaps he could answer in one of his famous letters, which is: what recourse would be open to staff if it was shown that the OfS was not considering their views, as I suggested in my amendment?
Other noble Lords spoke about financial issues, which I think remain as they were prior to the debate, but it has been both enjoyable and interesting. On that basis, I beg leave to withdraw my amendment.
Amendment 366 withdrawn.
367: Clause 59, page 37, line 3, leave out from “of,” to end of line 5 and insert “appropriate information relating to registered higher education providers and the higher education courses they provide”
Amendment 367 agreed.
Amendment 368 not moved.
Amendments 369 and 370
369: Clause 59, page 37, line 10, leave out paragraph (a) and insert—
“(a) at appropriate times, and”
370: Clause 59, page 37, line 12, leave out from “published” to end of line 13 and insert “in an appropriate form and manner.”
Amendments 369 and 370 agreed.
Amendment 371 not moved.
Amendments 372 and 373
372: Clause 59, page 37, line 13, at end insert—
“(4A) What is “appropriate” for the purposes of subsections (1), (3) and (4) is to be determined—(a) by the designated body if the OfS has notified the body that it is required to do so (and has not withdrawn the notification), or(b) otherwise, by the OfS.(4B) A notification under subsection (4A) may relate to one or more of subsections (1), (3) and (4).”
373: Clause 59, page 37, line 14, leave out from beginning to “must” in line 15 and insert “When the designated body or the OfS determines what is appropriate for the purposes of subsection (1), (3) or (4), it”
Amendments 372 and 373 agreed.
Amendment 374 not moved.
375: Clause 59, page 37, line 17, leave out “in England”
Amendment 375 agreed.
Amendments 376 and 377 not moved.
Amendment 378 had been withdrawn from the Marshalled List.
Amendment 379 not moved.
Amendment 380 had been withdrawn from the Marshalled List.
Amendments 381 and 382
381: Clause 59, page 37, line 21, after “consult” insert “, or require the designated body to consult,”
382: Clause 59, page 37, line 28, leave out “in England”
Amendments 381 and 382 agreed.
Amendments 383 and 384 not moved.
Amendments 385 to 387
385: Clause 59, page 37, line 39, leave out “its”
386: Clause 59, page 37, line 39, after “OfS” insert “and the designated body”
387: Clause 59, page 37, line 44, leave out “in England”
Amendments 385 to 387 agreed.
Clause 59, as amended, agreed.
Clause 60: Designated body
Amendments 388 to 391
388: Clause 60, page 38, line 2, leave out first “section” and insert “sections (Duty to compile and make available higher education information) and”
389: Clause 60, page 38, line 6, leave out “section” and insert “sections (Duty to compile and make available higher education information) and”
390: Clause 60, page 38, line 10, leave out from “decision” to end of line 11 and insert “about what is appropriate for the purposes of section (Duty to compile and make available higher education information)(1) or section 59(1), (3) or (4).”
391: Clause 60, page 38, line 14, leave out “duty under section” and insert “duties under sections (Duty to compile and make available higher education information)(1) or”
Amendments 388 to 391 agreed.
Amendment 392 not moved.
Amendment 393 had been withdrawn from the Marshalled List.
Clause 60, as amended, agreed.
Schedule 6: English higher education information: designated body
394: Schedule 6, page 90, line 17, leave out “in England”
Amendment 394 agreed.
Amendments 395 and 396 not moved.
397: Schedule 6, page 91, line 6, leave out “section” and insert “sections (Duty to compile and make available higher education information) and”
Amendment 397 agreed.
Amendment 398 not moved.
399: Schedule 6, page 91, line 21, leave out “duty of the relevant body under section” and insert “duties of the relevant body under sections (Duty to compile and make available higher education information)(1) and”
Amendment 399 agreed.
Amendments 400 and 401 not moved.
Amendment 402 had been withdrawn from the Marshalled List.
Amendment 403 not moved.
Amendment 404 had been withdrawn from the Marshalled List.
405: Schedule 6, page 92, line 11, leave out “in England”
Amendment 405 agreed.
Amendments 406 and 407 not moved.
Amendments 408 to 412
408: Schedule 6, page 92, line 27, leave out “duty under section” and insert “duties under sections (Duty to compile and make available higher education information)(1) and”
409: Schedule 6, page 92, line 31, leave out “duty under section” and insert “duties under sections (Duty to compile and make available higher education information)(1) and”
410: Schedule 6, page 92, line 38, leave out “duty under section” and insert “duties under sections (Duty to compile and make available higher education information)(1) and”
411: Schedule 6, page 93, line 11, leave out “in England”
412: Schedule 6, page 93, line 22, leave out “duty under section” and insert “duties under section (Duty to compile and make available higher education information)(1) or”
Amendments 408 to 412 agreed.
Schedule 6, as amended, agreed.
Clause 61: Power of designated body to charge fees
Amendment 413 not moved.
414: Clause 61, page 38, line 32, leave out “duty under section 59(1) and its other”
Amendment 414 agreed.
Amendments 415 to 415B not moved.
Clause 61, as amended, agreed.
Clause 62 agreed.
Clause 63: Studies for improving economy, efficiency and effectiveness
416: Clause 63, page 39, line 37, at end insert “, limited to the specific activities of the registered provider under the same contractual conditions as registration.”
My Lords, many of the providers which will come under this Bill are operating with similar qualifications in other markets and countries. I thoroughly approve of this clause and what it aims to do, but the providers deserve the same level of confidentiality from researchers as they get from regulators. I beg to move.
My Lords, I thank the noble Lords, Lord Stevenson and Lord Lucas, and the noble Baroness, Lady Wolf, for raising these important issues.
The amendments seek to limit the power of the OfS or someone working on its behalf to carry out efficiency studies on HE providers under Clause 63. I assure the noble Lord, Lord Lucas, that we entirely accept the principle of what he is seeking to achieve here. For many providers on the register the teaching of higher education will be just a part of their overall business. Many providers will also carry out other activities, such as offering corporate conference facilities or operating sports facilities which the public can access.
Let me also assure my noble friend that the Government would not want the OfS to look at the efficiency of those other activities. Instead, the Government would expect the OfS to confine its efficiency studies to providers’ HE teaching activities. I accept that the Bill does not explicitly limit the OfS’s efficiency studies power in the way my noble friend seeks but we do not think that these amendments would achieve that laudable end. They seek to link the OfS’s efficiency studies power to those activities which are subject to the contract between the OfS and the provider relating to the provider’s registration. A provider’s registration, however, is not subject to a contract.
The Bill is not, though, entirely silent on how the OfS should carry out its functions. I point to the general duties this Bill places on the OfS in Clause 2(1)(e), which requires the OfS to,
“use the OfS’s resources in an efficient, effective and economic way”.
Furthermore, Clause 2(1)(f) places a duty on the OfS to have regard to,
“the principles of best regulatory practice, including the principles that regulatory activities should be … transparent, accountable, proportionate and consistent, and … targeted only at cases in which action is needed”.
Let me also assure my noble friend that individuals conducting efficiency studies on behalf of the OfS will be subject to the same confidentiality requirements as the OfS.
I hope that these latter points provide my noble friend with some reassurance that the OfS will carry out its efficiency studies in the focused way he seeks to achieve. This level of focus is certainly something the Government want to see. In these circumstances I ask him to withdraw Amendment 416.
My Lords, I am very grateful to my noble friend for that explanation, which I shall go away and chew over. It is not that the university might be running a tiddlywinks club for money that worries me, but that it may well be selling the same higher education product as commercial training outside the university sector, or internationally online. These are both money-making activities where the university is concerned about commercial confidentiality but, under the Bill’s current wording, researchers might be asked to look at and gather data on them.
I shall have to do some work between now and Report, but I hope the Government will look again at what I have said today. I beg leave to withdraw the amendment.
Amendment 416 withdrawn.
Amendments 417 to 419 not moved.
Clause 63 agreed.
Amendment 419A not moved.
Clause 64: Registration fees
420: Clause 64, page 40, line 26, leave out subsection (3) and insert—
“( ) The regulations may not provide for the fees to be calculated except by reference to costs incurred, or to be incurred, by the OfS in the performance of its functions connected with the institution in question.”
My Lords, in moving Amendment 420, which is in my name and that of my noble friend Lady Wolf, I will also speak to Amendments 421 and 421A in my noble friend’s absence.
These amendments bring us back to the discussion we had previously about the costs and charges of the OfS. The purpose of the amendments is to probe the issue of who will act to control the costs and charges of the regulator—the Office for Students. Higher education providers will pay these charges, and hence students, at the end of the day, will have to bear them. The OfS is referred to frequently as a regulator by Ministers and others talking about the Bill, but nowhere is it clear in the Bill whether or not the OfS will have to sign up to the Regulators’ Code, published by the Department for Business, Innovation and Skills in 2014. If it was clear that the OfS was covered by the code, it would provide some of the reassurance sought in a number of amendments to the Bill.
The code for example requires that regulators must consider how they can best minimise the,
“costs of compliance for those they regulate”—
the issue behind some of these amendments. They also,
“should avoid imposing unnecessary regulatory burdens”,
“should carry out their activities in a way that supports those they regulate to comply and grow”.
As your Lordships can hear, the language of the Regulators’ Code is both clear and supportive. Can the Minister provide assurance that the OfS will sign up to the Regulators’ Code? It would be helpful in providing clarity and reassurance to the sector. I beg to move.
My Lords, I am greatly in sympathy with what the noble Baroness has just said. I very much hope that universities will carry those principles through into their current practice of taking lots of money off students who are studying humanities in order to give it to students who are studying sciences. The little bits of money being unfairly taken off students to fund the OfS are not a very substantial worry in proportion to what universities are already doing to students on different classes of course.
My Lords, I will speak to Amendment 423 in my name. The question is about grants to the OfS for set-up and running costs, but there is the additional possibility, picked up in the amendment of the noble Baroness, Lady Brown, that there may be other aspects and bright ideas that come to mind about how these charges might be recouped. The amendment asks whether or not there are tight guidelines available which would restrict the ability of the OfS to raise funds in a broader sense other than specifically for set-up and running costs. I look forward to hearing the Minister’s response.
The point raised by the noble Baroness, Lady Brown, in her opening remarks on Amendment 420 is important, because we still worry a bit about what the nature of the beast called “OfS” is. Is it a regulator? It has been said that it is, and if it is, does it fall under the Regulators’ Code? I think I heard the Minister say on a previous amendment that it did not qualify to be considered within the code of practice for regulators. But if that is so, why call it a regulator? It will cause confusion and doubt if, in the public mind, it is a regulator for the sector but in fact it is not because it does not fulfil the criteria that would normally apply to other regulators. As the Minister said, these are not unhelpful comments in relation to regulator practice. They would clarify a lot of the uncertainty we have been experiencing in terms of how the regulator will operate. It might be that there is a case for it, even though it was not intended.
The noble and learned Lord, Lord Mackay, has pointed out a number of times that there are other statutory provisions and considerations that might bear on how this Bill is constructed and issues relating to it. It is wise to have a wider net on these matters than simply to focus on the wording of the Bill. If there are other considerations that we ought to be aware of, it would be helpful if the Minister could respond, making quite clear what it is that drives the determination that the regulatory code does not apply in this area, even though some of the factors might be helpful and effective in terms of how it discharges its responsibilities.
My Lords, I want to repeat what has been said by a large number of people in the Committee this afternoon about the issue of fees paid and how this is looked at and moderated. It seems fundamental to the future of the relationship between the regulator and the sector. An awful lot of what one gets from reading the Bill is the sense that they will be at odds—that the regulator is there to punish, to force, to fine and to search. Ultimately, that is completely destructive. The most destructive thing of all will be if people are fighting constantly over the nature of fees, what is legitimate and what is not.
Therefore, rather than repeating comments that I made in connection with an earlier amendment, I simply say how fundamentally important this issue is and how very much I hope that the Government will look carefully at the structures that are being set up. Fees and payments go to the heart of everything. As a policy researcher, “follow the money” is always what I say to myself. It would be very helpful if the Minister were able to assure us that, following this House’s deliberations on the Bill, that is one of the things that the Government will look at in terms of other legislation and statutory requirements, and that they will look at how, going forward, the OfS will interact with the sector in a way that is mutually beneficial rather than being made up of constant arguments and turf wars.
My Lords, it is the Government’s intention that the OfS’s running costs will be shared between the sector, in the form of registration fees charged on registered providers, and government. The Bill enables this, granting the OfS the power to charge fees to cover the cost of its functions, with the detail of those fees to be set out in secondary legislation following proper consultation with the sector. That consultation is now open.
Moving to a co-funded model will be more sustainable, bringing the approach to funding the OfS in line with that of other, established regulators, such as Ofgem and Ofcom. It also reflects current practice in sector-owned bodies, including HESA and the QAA. Asking providers to contribute will strengthen their incentive to hold the OfS to account and challenge its efficiency. To reassure your Lordships, the total amount of funding raised by fees would represent less than 0.1% of the annual income that the sector generates.
Turning to Amendment 423, I thank the noble Lord, Lord Stevenson, for his thoughtful contribution. Let me assure him that the fees consultation seeks views on guiding principles in relation to areas where the Secretary of State may provide supplementary funding to the OfS. This could include funding to cover set-up costs and elements of its running costs. If we were to specify this in legislation, however, in the way that the amendment does, it would inadvertently prohibit the Secretary of State from giving money to the OfS to distribute as teaching grant.
The Government are therefore actively seeking to address the concerns raised by the amendment through consultation, and to ensure that sector views help to shape the final funding model so that it is fair and proportionate. I also remind noble Lords that the OfS will need to ensure that it charges only fees sufficient to cover its costs, and has a general duty to operate economically and efficiently. It will also operate transparently: the final fee structure will be subject to Treasury consent and set in secondary legislation subject to the negative resolution procedure, and the OfS will lay an annual report before Parliament. So there is a wide degree of transparency about what will happen.
I turn to the amendments tabled by the noble Baroness, Lady Wolf. Fees should be fair and proportionate, neither creating disproportionate barriers to entry nor disadvantaging any category of provider. The HE White Paper announced that fees will vary in part by the size of a provider, recognising sector concerns around affordability. We are consulting on this issue, including the points raised, and will reflect on responses. However, it would be premature and potentially unfair on some providers to restrict the fees in the way that the amendment suggests.
On Amendment 421A, I reassure the noble Baronesses, Lady Wolf and Lady Brown, that the Government remain wholeheartedly committed to the principles of the Regulators’ Code. Clauses 2(1)(f) and 7 already require the OfS to have good regulatory practices reflecting many principles in the Regulators’ Code. If necessary, the Government could make the body formally subject to the code by order. I say to the noble Baronesses that we are content to look into this further. The Government do not believe that the designated bodies should be subject to the code, as they are not responsible for the rules of regulation and are not public bodies.
It is the Government’s intention that these reforms should further strengthen the overall quality and diversity of our world-class HE sector. This is in the student interest and certainly in the interest of all providers. Sharing the costs of regulation between the Government and the sector is a more sustainable approach common to other regulators. It creates a strong incentive for providers to hold the regulator to account for its efficiency, and that efficiency is further assured by explicit safeguards in the Bill. The Government are absolutely committed to developing a charging system that is fair and proportionate, which is why we are consulting on this very issue. In these circumstances, having regard to my remarks, I ask the noble Baroness to withdraw Amendment 420.
My Lords, I thank the Minister for her detailed reply and her very strong assurances in this area. I thank noble Lords who have contributed to the debate. As the noble Baroness, Lady Wolf, said, a healthy relationship between the regulator and the sector will be hugely important to success. The assurances that the Minister has given us, and indeed her agreement to look further into whether the OfS should sign up to the Regulators’ Code, are extremely helpful. Again, speaking as an engineer and a former vice-chancellor, I think the language of the Bill is sometimes quite hard for a novice reader to understand. The language of the Regulators’ Code is excellent; it is clear and simple and is about building an effective relationship between the regulator and the regulated. It would be a real assurance for the sector if the Government looked hard at the OfS signing up to it. I thank the Minister for her reassuring response, and beg leave to withdraw the amendment.
Amendment 420 withdrawn.
Clause 64 agreed.
Clause 65: Other fees
Amendment 421 not moved.
Clause 65 agreed.
Amendment 421A not moved.
Clauses 66 and 67 agreed.
Schedule 7: Costs recovery: procedure, appeals and recovery
422: Schedule 7, page 94, line 20, leave out from “when” to end of line 22 and insert “—
(a) an appeal under paragraph 3(1)(a) or (b), or a further appeal, could be brought in respect of the requirement to pay the costs, or(b) such an appeal is pending.”
Amendment 422 agreed.
Schedule 7, as amended, agreed.
Clause 68: Grants from the Secretary of State
Amendments 423 to 427 not moved.
Clause 68 agreed.
Clause 69: Regulatory framework
Amendment 428 not moved.
Clause 69 agreed.
429: After Clause 69, insert the following new Clause—
“Transfer of regulatory functions relating to higher education providers and students from Competition and Markets Authority to Office for Students
On the establishment of the OfS—(a) the OfS assumes responsibility for the regulatory functions in respect of higher education providers and students enrolled on higher education courses hitherto performed by the Competition and Markets Authority; and(b) the Competition and Markets Authority ceases to have responsibility for those regulatory functions.”
My Lords, Amendment 429 is in my name and that of the noble Baroness, Lady Wolf. This is a probing amendment to investigate the relationship between the two higher education regulators—the Office for Students and the Competition and Markets Authority. The perception of overlap between the two regulators, the potential for conflicting advice and requirements, and the perception of the difficulty of collaboration under Competition and Markets Authority regulation are all issues causing concern in the sector. As an aside, this is part of the reason behind our desire for the OfS to promote both competition and collaboration.
I ask the Minister: would it not be possible for the sector to work with a single regulator, the OfS? If this cannot be the case, will she explain how the two regulators will work together with the sector to ensure they support,
“those they regulate to comply and grow”,
as the Regulators’ Code says? I beg to move.
My Lords, I strongly support what my noble friend Lady Brown said. Up until now, higher education has been fortunate in that it has had relatively few different regulatory authorities. The OfS will be quite different from anything that we have had before.
I refer to other sectors. I personally know the social care sector quite well. Those of us who have worked with or in this sector or the health sector, for example, know that, when you have more than one regulator, if they overlap or if it is not really clear who is responsible for what, you get regulatory and expenditure creep. This is not necessarily what the regulators mean—at least, not at the top level—but it is very much the experience that one has. The noble Lord, Lord Willetts, referred to this earlier in our deliberations. He talked about the problems that you could have in the health sector as a result of Monitor thinking that bringing institutions together was not a good idea when other people thought it was.
This is a probing amendment to ask for clarity, if not total simplicity, because there are very real costs when a sector does not have it.
My Lords, I apologise to the Minister. I was watching a figure behind who seemed to be moving towards an upright position and therefore might speak. If he is not I will carry on.
This is an interesting amendment and I am glad that it has been raised in the form that it has. We cover a number of points every time we debate this, but here is a question that cannot be ducked. The reality is that universities have to face a number of different regulators already. Those that are charities obviously have the Charity Commission as their regulator. Then there are those that are established as companies. As we have heard, many higher education providers have the permission of the Secretary of State to use “university” in their title or, even if they do not, are subject to anything that may be required under the Companies Acts. Many will have a variety of regulators; it is not unknown to have companies that are also charities. There are also bodies that are not for profit—corporations that are subject to the Companies Acts, but in a different way from those that are set up for profit.
However, I think the main purpose was to try to untangle the relationship between the CMA—a recent entry to this area—and the universities. It is a little surprising that the CMA has entered this area rather late given that it stated recently that providers of higher education that now come within its scope are subject to the Consumer Protection from Unfair Trading Regulations 2008; the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013; the Unfair Terms in Consumer Contracts Regulations 1999, for contracts concluded prior to 1 October 2015; and Part 2 of the Consumer Rights Act 2015. That Act went through your Lordships’ House just over a year ago and included the application of consumer rights to public bodies such as institutions of higher education. It was amended during its passage through the House.
As I think is well known, the CMA has carried out a preliminary investigation into the new responsibilities that it has taken on in the last 18 months, and has obtained undertakings from more than a few universities to secure improvements to their terms and/or practices. It has written to all higher education providers, drawing the findings of the compliance review to their attention, and asking them to review and revise their practices and terms, as necessary, to ensure compliance with consumer protection law.
Where will this wave of regulatory practice, which is sweeping in with unforeseen and possibly unpleasant purposes, stop? I do not object to the CMA’s engagement or to anything that raises standards and keeps public bodies moving forward. However, there will be regulatory overload, as has been mentioned. We must be very careful to guard against that. The way most sectors operate in the event of overlapping regulators is to obtain a memorandum of understanding between the principal regulator—or in this case regulators—and the one closest to the bodies concerned. If the OfS is to be a regulator, we will need to know how this will operate in practice. It is welcome news that the Bill team is considering whether to engage more directly with the Regulators’ Code, as that would solve a lot of problems.
Before we proceed further with the Bill, we should be told exactly what the boundary between the CMA and the OfS, as envisaged, is. Indeed, it would be helpful to be informed of the boundary between the Charity Commission and the Registrar of Companies, if that is relevant. We should also probe a little further whether it is envisaged that a memorandum of understanding between these regulators will be drawn up to protect the provision we are discussing. If so, what timescale applies to that? Could that be provided by Report, at least in draft form, so that we can discuss it further?
My Lords, I thank the noble Baronesses, Lady Brown and Lady Wolf, and others for laying this amendment as it gives me the opportunity to clarify the role of the Competition and Markets Authority in the higher education sector. I say at the outset that I understand that the CMA is content that there is no conflict between the two organisations. The Government share that view.
In summary, the CMA is not a sector regulator but an enforcer of both competition and consumer protection law across the UK economy. It also has a number of other investigatory-type functions across the economy, including investigating mergers and conducting market studies and investigations, so I shall say a little more about competition and consumer enforcement in particular.
Enforcing competition law is a specialist activity requiring particular economic and legal expertise. Enforcement cases require substantial input of specific skills over a sometimes protracted period of time. The OfS will not have these and it would be unnecessary and expensive to replicate them. Placing a duty on the OfS to encourage competition between higher education providers in the interests of students and employers is a very different matter to enforcing competition law. We believe that there is no conflict between these two different responsibilities. Arguably, giving the OfS additional competition enforcement powers would risk distracting it from its important regulatory duties, or would possibly create conflicts of interest.
To answer concerns that encouraging competition would be at the expense of collaboration, there should be no conflict between providers collaborating and the OfS’s duty to have regard to the need to encourage competition where that competition is in the interest of students and employers. We are wholly supportive, as is the CMA, of collaboration and innovation where they are in the interest of students.
I turn now to the enforcement of consumer protection law carried out by the CMA and other such enforcers such as trading standards. Students can have consumer rights and, as such, are protected under law. As outlined in our White Paper, we want the OfS to be a consumer-focused market regulator putting students’ interests at its heart. This includes looking after their consumer rights, ensuring the right information is available for them at the right time and making sure they have a route of redress should something go wrong. Compliance with consumer law is important not only in protecting students, but in maintaining student and public confidence in the higher education sector. I know that higher education institutes have been working hard on meeting their consumer rights obligations. I remind noble Lords that the CMA operates extremely effectively alongside a wide range of sector regulators such as Ofcom, Ofgem and Ofwat. I am grateful for the continued involvement of the CMA in preparatory work to establish the OfS. Its experience is valued tremendously. With that short explanation I invite the noble Baroness, Lady Wolf, to withdraw her amendment.
I thank the Minister for his explanation and the further detail he supplied. I would be interested to know whether there is any thought that there might be an MoU between the regulators. I also ask him to encourage the CMA to produce some advice for universities in simple language to explain its role and how it works alongside the OfS. I very much hope that we will hear more about a potential MoU and, in the light of his detailed explanation, I beg leave to withdraw the amendment.
Amendment 429 withdrawn.
Clause 70 agreed.
Clause 71: Secretary of State’s power to give directions
Amendments 430 to 433 not moved.
Clause 71 agreed.
Clause 72: Power to require information or advice from the OfS
Amendment 434 not moved.
Clause 72 agreed.
434ZA: After Clause 72, insert the following new Clause—
“Power to require information on the need for new providers
(1) The Secretary of State must establish an independent committee to provide information to the Secretary of State and to the OfS on emerging needs for new providers within the higher education sector.(2) The independent committee may provide recommendations to the Secretary of State on matters including—(a) the type and location of new provision that is required;(b) how best to make validation arrangements for particular new providers, should they be required, and whether mentoring by established institutions will be required.(3) In making recommendations under this section, the independent committee must take into account—(a) skills shortages, including forecast skills shortages, within the economy of the United Kingdom; (b) lack of adequate provision within the higher education sector for certain disciplines;(c) restricted access to higher education, or to particular disciplines, in certain areas of England, including restricted access for part-time and employed learners.(4) In this section “validation arrangements” means arrangements between the Secretary of State, the Office for Students and a registered higher education provider under which the higher education provider is authorised to grant taught awards or research awards or both.”
Amendment 434ZA, in my name and that of the noble Viscount, Lord Ridley, is not exactly a probing amendment but it seeks to emphasise the importance of something that gets rather little attention in the Bill as it stands. In speeches and discussions we have heard a great deal about the importance of innovation, opening up the sector and preventing vested interests getting in the way. There has also been quite a lot of discussion on the Floor of the House about the need for diversity. However, there is remarkably little about diversity in the Bill. When I looked through it did not appear at all, although the Lords spiritual had a couple of amendments that explicitly talked about it. The point of this amendment is to make explicit that diversity is truly important and we stand to benefit from a far more diverse set of institutions. However, diversity will not happen by magic or automatically simply by virtue of making it easier for a certain number of new providers to enter the higher education sector.
It is very important that we think positively about diversity and not negatively in terms of possible barriers. Diversity does not happen automatically, and one reason that Governments exist is to tackle what are in effect major barriers to entry when those barriers mean that we do not serve the long-term or even the short-term interests of the country and of students.
Having more providers that offer business degrees may be very good for the quality of business degrees but it will not in itself do anything either about the need to think of very different ways of delivering higher education and lifelong learning or about the areas where we know that we have enormous skills shortages in this country, which will not be solved without active government.
Over the last 15 or 20 years, there has been a very large increase in the number of providers, although possibly there should be more. Alternative providers offer courses which are cheap, which you can afford to put on with the resources at hand and which do not put you at risk of going broke in week one. That is absolutely as it should be but, when you look at the profile and detail of what is being offered, as I have done, you find that it is accounting and business and business accounting—things that do not need huge up-front investment.
A similar pattern can be seen in, for example, the apprenticeship statistics. Again, there has been a regime of effectively inviting people to offer apprenticeships—not dissimilar to what we are talking about for higher education. The result has been overwhelmingly a growth in apprenticeships that do not require expensive equipment or involve high-risk activity, which means that you can cover your costs and more with relative ease.
Therefore, the purpose of the amendment is to argue that it is truly vital that the Government take a more active approach to encouraging new and different institutions. If they do not, then simply enacting the current regime as proposed will not solve the problem. New entrants will not on the whole do science or engineering. I am sure that lots of them would love to do exciting and expensive things, but the reality of being a new, small institution is that they do not.
I have mentioned the history of apprenticeships. Another example is the fight over saving archaeology A-level. I have considerable sympathy with the examination boards. Running things where you lose money heavily is quite hard to do. Unless you are large enough to spread those courses, by and large you just do not do them. These courses are very expensive and, without government support, they will be too risky and long-term for most people, but they are areas that are badly needed.
In a week in which an industrial strategy has just been launched, it would be appropriate for the discussions on the Higher Education and Research Bill also to take account of the fact that, in the past, Governments in other countries have felt the need to take a very active role in this area. They have felt the need to put long-term planning and substantial government money into the sector in a directed and planned way, because otherwise things would not happen. In this context, it seems to me that the Dyson Institute of Technology, which is clearly a wonderful initiative, makes the point. How many very rich individual entrepreneurs with the ability and money to take these decisions are there in this country? So far, there has been James Dyson. As a strategy for providing that part of the higher education sector, relying on the beneficence, good will and commitment of rich individuals is not very sensible. Obviously we cannot go back to the 1960s but it is worth looking at the commitment, vision and expenditure that were put in back then.
Therefore, the amendment asks for the Secretary of State—not the OfS—to have an obligation to take, on a regular basis, a strategic view of where in the country and in what disciplines we might need something more, something new, something different and something involving government commitment and government money. We suggest that the Government also look at how these institutions can be set up. We have gone on a lot this afternoon about validation. Going back to the 1960s, we had institutions that were developed over time. They launched forth, they had their own degree-awarding powers from day one and they had royal charters.
I think we are getting into a sort of mindset here in which there is the existing sector and then there will be new, brave little institutions, which may or may not need validation by other institutions and, if they do not, maybe the OfS will do it. That is too narrow and far too limited a view of what our universities and our higher education need to look like. I am sure that one possible response will be to say, “Oh, I’m sure the Office for Students will do it”. The Office for Students is already being asked to do an amazing number of things. I do not believe that this is a matter for a regulator; it is for the Secretary of State, on behalf of the nation and on a regular basis, to look at how, in new ways or “back to the future” ways, something can be done to create genuine diversity and genuine responsiveness to the needs of the economy and of society now and in the decades to come. I beg to move.
My Lords, I support the amendment, which also stands in my name. I did not speak at Second Reading but I hope the Committee will indulge me. I attended nearly all of the Second Reading debate but, because I thought I would not be there at the end, I did not put my name down to speak.
I share some of the doubts that have been expressed about the Bill in other parts, but I am enthusiastic about one of its principal aims, which is what the amendment seeks to reinforce. I refer to the encouragement of diversity and innovation, as the noble Baroness, Lady Wolf, has eloquently explained, and the encouragement of new entrants, not just passively but actively—letting 1,000 flowers bloom but planting 1,000 flowers as well.
I am a great believer in competition, so it is important that we do our best to bring forward new ways of doing higher education, as well as new types of courses and new locations for them, especially in vocationally relevant areas—areas that are in demand with employers and where the signal is not being transmitted well enough to students. As the noble Baroness, Lady Wolf, said, it is not just a matter of opening the gate and seeing a flock of new entrants come through; starting a new university is a huge investment and there are enormous barriers to entry. You need premises, people, programmes and quite a lot of pennies. So, before taking the plunge, as the noble Baroness said, entrepreneurs will need to be given signals that the state prioritises supporting certain courses and certain disciplines. As has been said, the industrial strategy makes the case for singling out and encouraging certain things that we think will be important in the future.
The example that I would give is data science. I know somebody who, as a sideline, retrains the holders of physics PhDs as data scientists, because that makes them much more valuable to employers in the private sector. There is a huge demand for data science in business, and that is the kind of thing that perhaps it would not be immediately obvious to existing universities to supply, or indeed obvious to new entrants, who might be hard pressed for cash and so on. I think that with the right kind of encouragement from government, advised by independent expertise, the sector could benefit from this sort of duty on the Secretary of State to consider where new ideas should come from.
I am no fan of committees for committees’ sake, so I am not wedded to the exact form of the amendment. In that sense, I see it as somewhat probing—raising the issue and seeing whether the Government are interested in responding in a positive way to this suggestion.
My Lords, I support the amendment. As the noble Baroness, Lady Wolf, said, the possible proliferation of new universities is likely to include a great many offering subjects such as business and management, and far fewer offering subjects such as civil engineering, artificial intelligence and modern languages—whereas it would make sense for any new provision to arise out of shortages in disciplines and skills within the UK.
Secondly, there are parts of the country that are ill served by further and higher education. I have noble friends from Berwick-upon-Tweed who often relay the lack of local provision for local people to study. This is a cause of unfairness, not only in the north-east but in other parts of the country which are also ill served. If new provision were being set up it would make a lot of sense to look geographically at the parts of the country where there is less provision for people to study. Surely it would be a helpful part of the duties of the Office for Students to ensure that new providers should be established only—or mainly, perhaps—where they meet needs both of location and of provision. The amendment therefore seems a helpful addition to the Bill.
I too support the amendment. There are things that only Governments can do. If we want an example of creating universities, we should look at the career of our late colleague Lord Briggs and what he did, and what the status of the institutions he created is now. They are considered to be top-ranking universities. As the noble Baroness, Lady Wolf, said, they were just made and put in place and they ran. It can be done. Indeed, it is happening overseas: other countries are doing it.
We are proud that we have a collection of top-ranking international universities. Why do we not want another one? What would it take to make another one? It would take substantial action by the Government. Do we need a tech powerhouse on the lines of Stanford or MIT? Yes, I think we probably do. As my noble friend Lord Ridley said, there is a space for that—but it is not going to happen through little institutions founding themselves. We have seen enough of what that is like. I am involved with a couple of small institutions trying to become bigger ones, and it is a very hard path. Reputation is hard won in narrow areas, and it takes a long time. Look at how long it has taken BPP to get to its current size: it has taken my lifetime.
The Government can make things happen much faster, and if they realise that things need to be done, they can do that. For them to come to that realisation, a process of being focused on it is needed, and the committee proposed in the amendment certainly represents one way of achieving that. I would like to see, for instance, much wider availability of a proper liberal arts course in British universities. By and large, they are deciding not to offer such courses. If the Government said, “We want to see it; we will fund this provision”, and if the existing universities did not respond, we could set up a new one, in a part of the country that needed it. That would be a great thing. Equally, the idea might be taken up by existing universities. That is not going to happen through the market, because the market in this area is far too slow. But the Government can do it, and they ought to be looking to do it.
I support the amendment and endorse everything that the noble Baroness, Lady Wolf, said in introducing it. She hit the nail on the head very firmly. There are issues around new providers. There is not very good evidence, and the evidence that there is seems to be anecdotal rather than scientific. The information published recently by HEPI threw doubt on whether many of the institutions that have come forward were bona fide or would survive, and some questionable practices were exposed—so there is an issue there.
In addition to the points that the noble Baroness made, which I endorse, there is, again, a gap in the centre of what the Office for Students is being established to do. It could have been imagined—pace the points made by the noble Lord, Lord Willetts, about not wanting to overload the OfS—that it would have a responsibility to speak for the sector to the Secretary of State about the gaps that it may see in provision, and the issues that may need to be picked up in future guidance. I would have expected that to be the normal thing.
However, it is interesting to see that the general duties in Clause 2 do not cover it. They are all about functions to do with quality, competition, value for money, equality of opportunity and access. They are nothing to do with surveying and being intelligent about the future and how it might go. However, as the noble Viscount, Lord Ridley, said, the game may have changed a bit now with the publication of a strongly worded industrial strategy—or at least, we hope it will turn into an industrial strategy after the consultation period. Out of that will come a requirement to think much harder about the training and educational provision that will support and supply the industrial machine that we will need as we go forward into the later parts of this century. It therefore makes sense to have advance intelligence about this, and to recruit from those who have expertise. It makes even more sense to do that in the way suggested by the amendment.
My Lords, we agree that it is necessary to have a holistic overview of the sector to understand whether our aim of encouraging high-quality, innovative and diverse provision that meets the needs of students is being achieved. However, I do not agree that to achieve this an independent standing committee is necessary. There are already a number of provisions in the Bill that allow the Secretary of State, the OfS and other regulatory or sector bodies, where necessary, to work together to consider these important issues.
For example, Clause 72 enables the Secretary of State to request information from the OfS, which, as the regulator, will have the best overview of the sector. Clause 58 enables the OfS to co-operate and share information with other bodies, and, as we have discussed at length, the Secretary of State can give guidance to the OfS to encourage this further.
We have already debated the issue of new providers at length, but let me reiterate that there is a need for new innovative providers. The Competition and Markets Authority concluded in its report on competition in the HE sector that aspects of the current system could be holding back greater competition among providers and need to be addressed. In a 2015 survey of vice-chancellors and university leaders, 70% expected higher education to look the same in 2030. This risks becoming a self-fulfilling prophecy.
We must not be constrained by our historical successes, because if we place barriers in the way of new and innovative providers we risk diminishing the relevance and value of our higher education sector to changing student and employer needs, and becoming a relic of the last century while the rest of the world is moving on.
I do not think that the amendment was proposing barriers of any sort. We need to be clear about that. It does not propose barriers in aid of diversity. It just says that simply removing barriers to entry would not deliver diversity. I apologise if that was not made clear.
I thank the noble Baroness for her intervention. I fully accept that the express text may not have intended that—but we have to look at what the consequences of this new independent committee would be, and infer from that what effect it might have on the broader sector.
At the moment we have a university sector that needs to do more to support its students and the wider economy: it has built up over time to serve only parts of the country; it is not providing employers with enough of the right type of graduate, especially STEM graduates; it can do more to offer more flexible study options to meet students’ diverse needs; and it can to do more to support social mobility. It is not enough simply to ensure that all young people with the potential to benefit have a theoretical opportunity to go to university and secure a good job when they graduate.
Alternative providers are already supporting greater diversity in the sector: 56% of students at alternative providers are aged 25 or over, compared with 23% of students at publicly funded institutions. They also have more BME students: 59% of undergraduate students at alternative providers are from BME groups, compared with 21% at HEIs.
The Government are determined to build a country that works for everyone. That is why we have announced a number of opportunity areas that will focus their energy, ideas and resources on allowing children and young people to fulfil their potential. That, in conjunction with what the Act sets out to achieve—the broad vision that I think universities accept as positive for the sector—holds out hope that we are proceeding on a journey in which we can have a lot of optimism and confidence.
I note the references to skills and would stress that we are carrying out reform programmes in higher education and in technical and vocational education at the same time. This gives us the opportunity to ensure that these programmes of reform are complementary. The Government’s recently published Green Paper on an industrial strategy outlines further our vision for skills and a system that can drive increases in productivity and improvements in social mobility. We are committed to reforms that will improve basic skills, create a proper system of technical education, address regional skills imbalances and shortages in STEM skills, and make it easier for adults to retrain and upskill in later life.
One of the 10 pillars of the industrial strategy is that we will create the right structures and institutions to support specific places and sectors. In some cases, this will mean strengthening existing educational institutions or creating new ones. We recognise the need for accurate information to identify and address current and future skills shortages, and we will work towards a single authoritative source of this information. To ensure a joined-up approach, the OfS’s ability to co-operate with a range of other bodies, including the Skills Funding Agency and the Institute for Apprenticeships, will be important. Clause 58 enables that.
The important issue of part-time education was raised. The Government agree that part-time education, distance learning and adult education bring enormous benefits to individuals, the economy and employers. Our reforms to part-time learning, advanced learner loans and degree apprenticeships are opening significant opportunities for mature students to learn. The OfS must—it is not a question of should, or if it feels like it—have regard to the need to promote greater choice and opportunities for students, and to the need to encourage competition between providers where that competition is in the interests of students and employers. That is alongside the other practical support that the Government are already giving for part-time students, including providing tuition fee loans where previously they were not available. We have also recently completed a consultation on providing, for the first time ever, part-time maintenance loans. We are now considering options. The Bill already provides for the mechanisms to enable the kind of information referenced here to be gathered effectively. I hope my remarks have reassured the noble Baroness, and I therefore ask her to withdraw her amendment.
Would it be worth considering inserting the phrase from this amendment,
“emerging needs for new providers within the higher education sector”, into the general duties of the OfS in Clause 2? It might well be a mechanism for this being studied.
I observe that a whole section of Schedule 1 relating to the Office for Students concerns committees. Paragraph 8(1) states:
“The OfS may establish committees, and any committee so established may establish sub-committees”.
This appears to be a power without limitation. The noble Baroness not only can have her committee on new providers; she can have a range of sub-committees as well. We could spawn a whole bureaucracy around the provision of new providers. One hopes that, at the end of it, we will actually get some new providers and not just committees. In one of the many letters she is sending us, I wonder if the Minister could confirm that, under that power, it would be perfectly possible for the OfS to establish a committee for the purposes that the noble Baroness and the noble Viscount have in mind.
I thank the noble Lord for his intervention. He is quite correct that the schedule does indeed empower the OfS to set up committees. It is anticipated that that would be an important source of information to the OfS. I am happy to endeavour to clarify the position, as he seeks, and we will send a letter to him.
I thank the Minister. For part of the last five minutes I felt as though two different plays were going on in the Chamber, somehow scheduled on the same stage. The issue is not, to repeat, whether there should be new providers. The amendment clearly supports that. The issue is whether without direct intervention activity we will get the degree and type of diversity that the country needs. I thank the noble and learned Lord, Lord Mackay, for his suggestion, which would at least place the importance of this firmly at the beginning of the Bill. I hope that we might pursue that. This is not about hoping or having faith that new little providers will do all these things. We know, factually, that they will not, just as we know factually from the whole history of apprenticeships that if you throw it open in the way that is proposed for higher education and just wait to see what people will get from the general fee regimes available, you will not get the expensive ones.
Of course I will withdraw the amendment for the moment, but I hope we can return to it. This is not necessarily about committees—I share noble Lords’ views about committees—but about making sure that there is a clear function and duty on the Secretary of State to address these issues. I would very much like to pursue the noble and learned Lord’s suggestion, and I hope we can return to that on Report. I beg leave to withdraw the amendment.
Amendment 434ZA withdrawn.
Clause 73: Power to require application-to-acceptance information
Amendments 434A and 435 not moved.
Clause 73 agreed.
Clauses 74 to 78 agreed.
Clause 79: Other definitions
Amendments 436 and 437
436: Clause 79, page 48, line 29, at end insert—
““foundation degree only authorisation” has the meaning given by section 40(3);”
437: Clause 79, page 49, line 14, at end insert—
“( ) When construing references in this Part to a time when an appeal could be brought, any possibility of an appeal out of time is to be ignored.”
Amendments 436 and 437 agreed.
Clause 79, as amended, agreed.
Clause 80: Power to make alternative payments
438: Clause 80, page 50, line 42, at end insert—
“(ha) in relation to England, for contributions made in respect of an alternative payment to be dealt with, with the consent of the Treasury, otherwise than by payment into the Consolidated Fund;”
My Lords, the Government want to make this a country that works for everyone. That is why we have introduced Clauses 80 and 81 of the Bill. Amendments 438 and 439 simply clarify the role of Treasury consent in establishing a system for alternative payment contributions to be dealt with other than by payment into the consolidated fund. They are narrow and functional amendments.
I know that the noble Lord, Lord Sharkeys has a considerable interest in the introduction of alternative student finance as provided for in Clauses 80 and 81. I beg to move.
My Lords, I will speak to Amendment 442 in my name and that of my noble friend Lord Willis. The Committee will know that sharia law forbids interest-bearing loans. That prohibition is a barrier to Muslim students attending our universities. This has been a problem for the Muslim community in this country since at least 2012. Prior to then, many Muslim students were able to attend university because they were financed by family and friends. This was possible when tuition fees were low, but it is much more difficult with fees at their current levels. Successive Governments have known about this problem. They have recognised that the current system effectively discriminates against devout Muslims for whom interest-bearing loans are not acceptable.
The system works to the direct disadvantage of our Muslim communities. Many Muslim students, although qualified, cannot progress to tertiary education. The system also works to the disadvantage of our society as a whole. An important part of the community is effectively deprived of access to higher and further education, of the opportunity to mix with others and to learn from and contribute to our culture. These are damaging and dangerous exclusions. They are also completely unnecessary.
In April 2014, BIS launched a consultation on possible sharia-compliant ways of financing students. This consultation generated an astonishing 20,000 responses. The consultation outlined the proposed solution, based on the widely used Islamic finance instrument, called a takaful. In their response to the consultation, the Government said:
“It is clear from the large number of responses … that the lack of an Alternative Finance product as an alternative to conventional student loans is a matter of major concern to many Muslims”.
The response went on to say:
“There is demand for the proposed Alternative Finance product and responses to the consultation indicate that this would enable many of those who have been or will be prevented from undertaking both FE and HE, to attend by removing the conflict between faith and funding”.
The Government’s conclusion was equally clear; they said that,
“the Government supports the introduction of a Sharia-compliant Takaful Alternative Finance product available to everyone”.
But there was a cautionary addendum:
“Given the complexity of these issues and the time needed to resolve them, it is unlikely that any Alternative Finance product could be available before academic year 2016/17”.
That was written in September 2014—two and a half years ago—and only now is enabling legislation before us. If that sounds like criticism I should say immediately that I warmly congratulate the Government and Jo Johnson on finally producing the legal framework to solving the problem. It is a vital step forward, but it has one major defect. The Bill is silent as to when the takaful scheme will be in place. We are already in academic year 2016-17. We are too far into the year for any scheme to affect the 2017-18 intake and, worse, I have been told privately that it is likely that the scheme will not be ready until the academic year 2019-20. That is seven years after the problem was recognised, five years after the solution was agreed, and two academic years away from now. If that is correct, it means that Muslim students will continue to be discriminated against and disadvantaged for another two years; another two cohorts of young people who are unable to attend university.
My Amendment 442 addresses the problem directly. It simply requires the takaful scheme to be in place to benefit students going into further education or higher education in the autumn of 2018. I have tried to get to the bottom of why there might be this extended delay of five years between agreeing a solution and putting it into practice. I have consulted with Islamic finance experts and people familiar with the operational requirements involved in introducing a takaful scheme. I am told that, with the necessary political will, a working takaful system can be put in place within eight to 12 months, and that assumes that no significant work has already been done. That is why I have chosen the deadline of academic year 2018-19.
I am also told that the reason for the very likely prolonged delay that would otherwise occur is not lack of good intentions but the inability of the Student Loans Company and HMRC to organise themselves to deliver the product in a reasonable time. People I have talked to speak of a lack of resource in both agencies and an inability to process additional work in a reasonable time. A timetable that leads up to autumn 2019-20 is not reasonable and not necessary, especially when there is precedent for moving a lot faster. For example, the Sharia-compliant version of the Help to Buy guarantee scheme took five or six months, from the beginning, to develop and launch. These things can be done in good time, if there is the will and the allocation of the required resource. When the Minister responds he—or she—may say that the takaful scheme will in fact be in operation for the academic year 2018-19. If the Minister does say that, it will be heard, noted and welcomed as a commitment by the Muslim community and Muslim students, who will at last be able to go on to university. If he does that make that commitment to the Muslim community and to Muslim students I will not press my amendment.
My Lords, I promised the noble Lord that I would try to be present for this brief debate, and I am sure it will be brief. I think he has performed a very signal service, not just for the Muslim community, but the student community in general. I sincerely hope that my noble friend Lady Goldie, who I am told is due to reply to this debate, will be able to meet the points made by the noble Lord in an extremely well-balanced, sensible and moderate speech, with a realistic timetable built into his amendment. In giving my support and expressing that hope, I also express the hope that we will not be disappointed.
My Lords, having launched that original consultation document I am delighted that we now have these provisions in this Bill. It is welcome progress and the lack of legal framework to do it was the main reason for the delays. I very much hope that the new scheme can be brought in as quickly as possible. Although it is a familiar excuse, there are IT issues to be resolved and the noble Lord is right to press for rapid progress on that.
My one qualification to the noble Lord’s otherwise excellent speech was that we have to be careful not to assume that all Muslims take the view that the current arrangements are not acceptable within Islamic law. The good news is that there are many Islamic students whose religious advice is that they can use the current framework. There is a small number who do not believe that that is satisfactory and that is why we need this provision, but it is very important that this Committee does not give the impression that Muslims cannot use the current scheme. Many of them do and their imams say that they can.
My Lords, it is very much to be welcomed that Muslim students are to be offered Sharia-friendly student loans which should assist in applying to university, although I accept the point of the noble Lord, Lord Willetts, that only some students have been put off in the past in the belief that taking out a loan conflicts with their religious beliefs.
This is certainly a big step forward, but as the noble Lord, Lord Sharkey, outlined, when will it happen? He has traced the path that has been followed since 2012, when a government commitment was first made. As he said, the consultation exercise was undertaken and the Government responded in September 2014—quite quick for government replies. Their response said that,
“the Government supports the introduction of a Sharia-compliant takaful alternative finance product available to everyone, and will work on its development”.
That response also mentioned the need to find what was described as an “appropriate legislative window”. Two years on—more than that, in fact—we are at that window, yet we do not have a date for the commencement.
Amendments 442 and 516 in the names of the noble Lords, Lord Sharkey and Lord Willis, appear to me to be rather contradictory. Amendment 442 calls for the scheme to begin in the autumn of 2018, while Amendment 516 seeks its introduction immediately after the Bill becomes law, but no matter. We wish to see the scheme introduced as soon as it is practical, and I trust the Minister will outline the timescale that the Government have in mind. In particular, I hope they will offer some explanation if, as the noble Lord, Lord Sharkey, said, they suggested that a delay would be necessary until 2019. I found it very interesting that the noble Lord, Lord Sharkey, said that he had consultations with people in the Muslim community who said that it need not take that long, so we look forward to the Minister’s response on this important matter.
My Lords, the debate has been helpful. I think we all agree that participation and choice in further and higher education must be open to everyone with the potential to succeed, irrespective of their background, gender or religion. I thank the noble Lord, Lord Sharkey, for a sensitive and reflective contribution to that debate.
The Government recognise that, under the current system, there are concerns that some prospective Muslim students may feel deterred from accessing student loans; we appreciate that they might consider that student loans are not consistent with the principles of Islamic finance. Our research has suggested to us that Muslim students are less likely to use student loans than their contemporaries. That is why the Government have introduced Clauses 80 and 81, which are ground-breaking and innovatory and set out our intention to provide the Secretary of State with the power, for the first time, to offer alternative payments alongside existing powers to offer grants and loans. We are the first Government to legislate to make alternative student finance possible, and we have legislated at the first opportunity. We are fully committed to making alternative student finance available.
I reassure noble Lords that the Government, while bringing forward this legislation, are also continuing to work on the policy and operational detail that will be needed for forthcoming regulations and for the new model to work within our systems and processes. It is only by exercising due diligence on all this detail, including with experts on Islamic finance, that we will be able to meet our policy objective—our shared policy objective—of supporting participation in education. This careful, sensitive and important work cannot be rushed towards a deadline that is simply chosen and written into legislation. Our timeframes must be grounded in the realities of the work necessary to deliver a workable system. The Government are reliant on the successful passage of Clauses 80 and 81 if we are to be able to make alternative student finance available. That is the issue which concerns us today.
The Government’s commitment to alternative student finance is not in doubt. We are the first to legislate for it, we will continue to work on it and we will make it available. In these circumstances, I beg to move Amendment 438 and urge the noble Lord, Lord Sharkey, not to press his amendment.
There are commencement provisions in relation to Clauses 80, 81 and 82, which is why, I assume, the noble Lords, Lord Sharkey and Lord Willis, have put in a commencement provision. What they have done is not inconsistent, because it says that the provision comes into force as law when the Bill is passed, and the Bill says that it will come in in 2018. This is an important difference between what the Secretary of State proposes, which is pretty open—although it seems to relate only to the Welsh aspect of the matter. So there is a point in this relationship that has to be looked into.
Amendment 438 agreed.
439: Clause 80, page 50, line 43, at beginning insert “in relation to Wales,”
Amendment 439 agreed.
Clause 80, as amended, agreed.
Clause 81 agreed.
Clause 82: Other amendments relating to financial support
Amendments 440 and 441
440: Clause 82, page 52, line 34, after “persons” insert “(whether before or after the regulations are made)”
441: Clause 82, page 52, line 46, after “persons” insert “(whether before or after the regulations are made)”
Amendments 440 and 441 agreed.
Clause 82, as amended, agreed.
442: After Clause 82, insert the following new Clause—
“Sharia-compliant student finance: deadline
The Secretary of State must introduce a Sharia-compliant student finance scheme to be available to students expecting to enter tertiary education in the autumn of 2018.”
I am grateful to the noble Lords, Lord Cormack, Lord Willetts and Lord Watson, and the noble and learned Lord, Lord Mackay of Clashfern, for speaking to this amendment. I would say in passing to the noble Lord, Lord Willetts, that his own consultation answers the point he made, as it points out that the unattractiveness of conventional student loans is a matter of major concern to many Muslims. That is the point I was trying to make—and it is still of major concern.
I was going to answer the noble Lord, Lord Watson, in a slightly more prolix way than did the noble and learned Lord, Lord Mackay, but I think the noble and learned Lord made the point very eloquently about the commencement date.
I am extremely disappointed by the Minister’s response, which was so vague and non-committal that it seems to send a message to the Muslim community that it is entirely possible that the next two cohorts of your children will not be able to take a student loan. That is an unsatisfactory situation, as it was nearly five years ago. I am extremely disappointed that the Government have not proposed any method of speeding it up. I acknowledge the point about IT failures, but that is a universal truth. I am not convinced by the apparent complexity that the Government are relying on as a cause for this delay. I have talked to Islamic experts—some of whom were involved in designing the scheme—who have told me explicitly that the scheme itself is judged to be sharia-compliant, and the problem is only one of administration within the Student Loan Company and HMRC. A delay caused by an administrative failure in those agencies is not a good reason to deprive two cohorts of children of funding to go to university.
As I say, I am very disappointed by the Minister’s response. Will the Minister agree to meet me and other interested parties before Report to see whether we can find a way out of an extremely unsatisfactory situation? I do not see a response from the Minister, but perhaps he did not hear what I said. I was inviting him to agree to a meeting with me and other interested parties to discuss whether we can find a way out of this unsatisfactory situation. Since I still do not get a response, I assume that the answer is no—and I shall inquire on Report why that is the case. For the moment, I beg leave to withdraw.
That is not possible. The noble Lord has spoken to it, so it must be moved, and I shall propose the amendment.
We have run into a slight procedural problem, in that Amendments 440 and 441 in a previous group were moved formally when they should have been moved properly and debated. Given that they are of a relatively trivial nature, we can pass over that—unless the noble and learned Lord, Lord Mackay, has read them quickly and found that devastating little point that he always brings in at this stage. We can move on, but we should be a bit more careful in future on that procedural point.
Technically, the noble Lord, Lord Sharkey, spoke to Amendment 442 as part of the earlier group, but the Deputy Chairman has now called the amendment, so it would be appropriate if the Minister made a brief response and then we can move on.
My Lords, perhaps I can be helpful to the noble Lord, Lord Stevenson, in reply. Given that we did not have a full debate on government Amendments 440 and 441, and bearing in mind that noble Lords seemed reasonably comfortable with what we are proposing, I think it right that I write to explain what we are proposing. I hope that is helpful.
Amendment 442 withdrawn
443: After Clause 82, insert the following new Clause—
“Access to support for students recognised as needing protection
(1) Within six months from the day on which this Act comes into force, the Secretary of State must, by regulations, make provision for financial support for higher education courses offered to students with certain immigration statuses.(2) The regulations specified in subsection (1) must include, but shall not be restricted to—(a) provision for persons who have been brought to the UK under the Syrian Vulnerable Persons Relocation Scheme, or any equivalent scheme, and their family members to access student loans on the same basis as refugees recognised in-country, and(b) provision for persons who have claimed asylum and been granted a form of leave to remain in the UK to be eligible for—(i) home fees for a higher education course if they have been ordinarily resident in the United Kingdom and Islands since being granted leave, and(ii) student loans for a higher education course, if—(a) they have been ordinarily resident in the United Kingdom and Islands since being granted leave, and(b) are ordinarily resident in the United Kingdom and Islands on the first day of the first academic term of that course.(3) In this section—“home fees” means fees for a higher education course charged to persons considered as “qualifying persons” under regulations made under the Higher Education Act 2004;“student loans” means loans made to students in connection with their undertaking of a higher education course under the Teaching and Higher Education Act 1998.”
My Lords, this amendment has wide support across the House, and I look forward to hearing the comments from others who have joined my noble friend Lord Dubs’s amendment. My noble friend apologises to the House for being unable to be present, but he has been asked to be the guest of honour at a Holocaust memorial service in Reading and felt that he could not stand up that occasion. I am sure the House will be sympathetic.
Very briefly, because I am sure others will make the point, the amendment deals with people who are in a bit of a lacuna as far as support for loans and maintenance is concerned. Currently, people with refugee status in the UK are classified as having home fee status for purposes of higher education as well as being able to access student finance. However, other potential university students who have either been given a different form of protection or who, after claiming asylum, have been granted a type of leave other than refugee status encounter restrictions and delays in accessing home fee status and student finance. Therefore, they face a barrier to education that is often insurmountable.
The amendment would rectify this arrangement so that all refugees resettled to the UK, as well as people seeking asylum granted forms of leave other than refugee status, can access student finance and home fees. I beg to move.
My Lords, I speak in support of the amendment, to which I was pleased to add my name. Access to higher education represents a potentially important avenue to the integration and strengthening of the life chances of young people forced to flee their home countries by increasing their employability, career prospects and earning potential, and integrating them into the community of students.
These are young people who are likely to be in this country for some time. Access to higher education can enhance the contribution they can make and wish to make to British society. If they are eventually able to return to their home countries, would we begrudge them being able to use what they have learned to contribute to those countries?
When this was debated on Report in the Commons, Paul Blomfield MP, who moved the amendment, suggested there had been some discomfort on the Government Benches when it was voted down in Committee. I believe that the Minister’s arguments there were not found to be exactly convincing. Mr Blomfield focused in particular on the treatment of Syrian refugees resettled under the vulnerable persons resettlement scheme who are granted five years’ humanitarian protection rather than refugee status, thereby denying them the access to student support enjoyed by those with refugee status. Earlier in Committee, he commented that the Government have never explained why this is so. Since then, however, the noble Lord, Lord Bates, explained in an oral answer to me that,
“what we have is people in acute need and we want to get them here as quickly as possible. Humanitarian protection is the vehicle by which we can do so. If we first have to go all the way through the route of establishing refugee status for a lot of people who have no identification papers, it means they are at risk for longer. That is why we have chosen to take that particular route, to ensure that we can get people here and give them the help they need as quickly as possible”.—[Official Report, 10/1/17; col. 1859.]
I can see the logic in that, but it raises the question of why it is not possible to treat humanitarian protection as an interim status that can be, in effect, upgraded to refugee status once it is possible to establish that that is appropriate. The problems caused by the current position were raised by the Public Accounts Committee in its recent report on the Syrian vulnerable persons resettlement scheme. It noted the undue stress that those problems cause.
The Government have tended to argue that humanitarian protection is broadly the same thing as refugee status, but among other things, as we have already heard, it does not provide the same access to student support, hence this amendment. When giving oral evidence to the Public Accounts Committee, Paul Morrison, director of the Syrian VPRS, said that they are now aware of these issues and are working closely with DfE officials and others to look at them, and are keeping them under active review. I am not sure who will reply to the debate, but I suspect the noble Viscount will not be in a position to throw any light on what progress has been made in these discussions now. I ask him to relay our concern about the particular implications for access to higher education. If he is able to enlighten us, perhaps at Report or in one of his many epistles, that would be very helpful.
Refugee Action tells me that this issue is causing considerable problems for resettled Syrian refugees. They cited one family encountering serious financial difficulties because the son had ceased claiming benefits in order to pursue a computer science degree with no financial support. If he had lived in Scotland, there would not have been a problem because the Scottish Government have introduced special fee status for this group that allows them immediate access to student support. Some universities, to their credit, make special provisions, but, welcome as this is, it is inevitably hit and miss. Refugees should not have to rely on the grace and favour of particular institutions.
Of course, we cannot resolve the issue of the refugee status of resettled Syrian refugees through the Bill. This amendment does, however, provide an opportunity to address one of the problems it causes, as well as help those on other resettlement schemes and young asylum seekers who have been given permission to remain. We are talking about a particularly vulnerable group of young people. Would it not be a wonderful thing if we could open up to them the whole world of higher education in this country? I hope very much that the Minister will take this away, discuss it with colleagues in the Home Office and DfID and respond more positively than the Higher Education Minister did when it was debated in the Commons.
My Lords, it is my privilege to have added my name to this amendment. My favourite Christmas card of the past year came from a refugee from Burundi. Last summer, when I visited Burundi, I accessed the rector of the university that she had had to flee and arranged for her qualifications from that university to be released and forwarded to her in this country so that she could commence university, which she will do in September this year. It was a huge relief to her because without that piece of paper she would have had to return and undertake A-levels. In her Christmas card she not only thanked me, but said that it was being able to access higher education straightaway that made her feel welcome and wanted, and that we believed in integrating her into our country.
Amendment 443, tabled by the noble Lord, Lord Dubs, would allow all refugees resettled to the UK, including the Syrian refugees being resettled at present, as well as those young people who have made applications for asylum who are granted a form of leave other than refugee status, to access student finance and home fees. It is an important amendment because it addresses one element of how we as a country treat people to whom we have said we will offer protection. Currently, individuals with refugee status can access student finance and qualify for home fee status from the moment they are awarded their protection. However, those with a slightly different status—that of humanitarian protection —are treated differently. Those with humanitarian protection have to be able to show at the start of the academic year that they have been ordinarily resident for at least three years to be able to receive financial support. This is the case despite people granted humanitarian protection having been found to be at real risk of suffering if they were to return to their country of origin. This includes risk of the death penalty, unlawful killing and torture.
The group most impacted by this are the Syrian refugees currently being resettled under the vulnerable persons resettlement scheme, as these refugees are granted humanitarian protection rather than refugee status. The result of this is that a young Syrian refugee who arrived in the UK would not qualify for student finance until the start of the academic year in 2020. The only exception to this, as the noble Baroness, Lady Lister, pointed out, is in Scotland.
I currently serve on the inquiry of the All-Party Parliamentary Group on Refugees looking at the experience of refugees once they are settled in their status. We have heard from many witnesses, including refugees themselves, that there are several barriers to successful integration, and one of the most often cited is access to education. Amendment 443 would remove at least one of the barriers.
Subsection (2)(a) of the proposed new clause would ensure that all resettled refugees, no matter what status they were given or where in the UK they were placed, could access student support immediately. Subsection (2)(b) would make student finance available for those who were granted humanitarian protection after making an application for asylum. For people granted humanitarian protection after applying for asylum, their future is clearly in the United Kingdom, so they should be allowed to access university education in order to build their lives here and to be able fully to contribute to society.
Subsection (2)(b) would also provide access to student finance and home fee status to people who had applied for asylum and then been granted another form of immigration leave. Again, the Government have accepted that the immediate future of such individuals is in the UK and so they should be given every opportunity to contribute and develop, yet they face significant hurdles in doing so. This is because, in 2012, the Government changed the rules so that potential university students in this situation could no longer access student finance and would be reclassified as international students, meaning that they would face much higher fees.
The Supreme Court found these rules discriminatory and, as a result, a new criterion of “long residence” was introduced. However, young people who have gone through the asylum process, including those children who arrive as unaccompanied asylum-seeking children, are unlikely to meet the long residency criteria and so will have to watch their school peers go off to university, leaving them behind.
This amendment is not about creating special circumstances for refugees and other people who have arrived in the UK seeking asylum. Instead, it is about removing the existing barriers that prevent young people who came to the UK seeking protection and who are capable of attending university fulfilling their potential and gaining the skills and knowledge that will then allow them to participate fully in, and contribute to, the United Kingdom. I hope that the Minister will offer some support and agreement for the amendment, because it would help refugees feel more welcome.
My Lords, I, too, am glad to have my name on the amendment. Appreciation and tribute should be offered to those universities which of their own initiative are doing what they can to meet the challenge in the current situation, but that is obviously not adequate.
In the long debates on this Bill, we have constantly returned to the argument about the quality and tradition of our universities. It is really rather sad to see universities with that quality and tradition caught up in such an oppressive and negative administrative policy.
I relate this to another amendment which we shall discuss quite soon, about security and terrorism. In the awful problems relating to security which we face, a key issue is the battle for the minds of the young. We want young people to have good education which helps them to form a more responsible and enlightened view about society and their role within it.
The potential students to whom we refer have been through the most dreadful experiences. It is important to keep reminding ourselves of that: they have been through harrowing experiences, and very seldom is it their fault. We have to look at the situation as they see it, and how they talk of it with their friends and contemporaries. They see it as oppressive and negative. It is not helping to build stability and peace in the world. If we take security and peace in the world seriously, we should want to do everything we can to meet this challenge and to enable potential students to have the advantage of education. I very much hope that the Minister will take on board the seriousness of this issue and try to meet it in some way in his response.
I sometimes worry already about the anecdotal evidence that I hear about how negative attitudes are beginning to build up across the world, and not just in the places from where those potential students come. I worry about how far the United Kingdom is really the sort of place in which they want to come and study, whether it really is the warm, welcoming society which it has traditionally been. There is too much evidence of a culture of “no”, of rejection, unless there is an exception. This amendment would help to meet that situation and I hope that the Minister will find an opportunity to say something positive in response.
My Lords, I should apologise to the Committee, as I did not speak at Second Reading, but I am very deliberately speaking from the Front Bench as a member of these Benches’ home affairs team to add our support to the amendment.
I want to speak about integration—I cannot do so as eloquently or forcefully as the right reverend Prelate. I remind the Committee that we are talking about people whose status here is legal. Integration is a two-way process. The Home Office uses much too often for my comfort the term “hostile environment” and does so very deliberately. In the context of the subject of this amendment, we should be talking about a supportive environment.
If one changes the perspective, many people in these categories can be seen as a resource for the UK, so this is not just an altruistic point. People who meet individual refugees are often startled at their high level of skills and education, and startled too at their determination to be educated. Of course that does not apply to every individual, but it is really quite notable. Noble Lords who attended a City of Sanctuary event recently were impressed by hearing a young woman’s experience in overcoming the hurdles which the amendment seeks to address to get to university. She did but, my goodness, what a waste of time along the way.
As well as it being the right thing for us to do as a society, it would be to our benefit to facilitate the education of those who seek sanctuary and who are likely to be here on a long-term basis. Many of them come from cultures which value education very highly, perhaps because it is harder to attain. It often seems to me more highly valued among them than by those in our indigenous community, who perhaps take it rather more for granted. We very much support the amendment.
My Lords, I thank the noble Lord for bringing forward this amendment. I am very sorry that the noble Lord, Lord Dubs, is not in his place. I think the House is aware, as certainly I am, that he has worked assiduously in support of the Syrians. This is an important issue, and I realise that it is also a sensitive one, but it is already addressed within the student support regulations. The noble Lord, Lord Judd, talked about the importance of the UK being a warm welcoming country. I absolutely agree and I will make some very strong points on that matter in a subsequent debate, which I hope will take place today.
I am pleased to say that those who come to this country and obtain international protection are already able to access student support. Our regulations have for some time included provision for those granted refugee status or humanitarian protection and their family members. As the right reverend Prelate the Bishop of Durham said, people who enter the UK under the Syrian vulnerable persons resettlement scheme are granted humanitarian protection. Like UK nationals, they are therefore eligible to obtain student support and home fee status after only three years’ residence in the UK. Persons on the programme are not precluded from applying for refugee status if they consider they meet the criteria. As Home Office officials said at the Public Accounts Committee on 7 November 2016, the department is aware of the issue and keeps it under active review. I believe that the noble Baroness, Lady Lister, understands that. I reassure the House that I have also had discussions with Home Office officials on this important matter, so there is joined-up thinking—if I may put it that way—between the DfE and the Home Office.
Those with refugee status are uniquely allowed to access student support immediately, a privilege not afforded to UK nationals or those granted other forms of leave. Recently, the Supreme Court upheld the Government’s policy of requiring most persons, including UK citizens, to be ordinarily lawfully resident in the UK for at least three years immediately prior to starting their course in order to be eligible for student support. It also upheld the Government’s case that it was legitimate to target the substantial taxpayer subsidy of student loans on those who are likely to remain in England—or at least the UK—indefinitely, so that the general public benefits of their tertiary education will ensue to the country’s advantage. The second part of the amendment would break that long-established policy by extending support to failed asylum seekers who, it has been decided, do not need our protection but have been granted temporary leave to remain in the UK. In other words, these are persons who have only recently established a connection to the UK, which may well prove temporary. This amendment would therefore allow people who may subsequently be required to leave the country to access taxpayer funding for their study.
I realise that this is a sensitive issue but I hope that with these explanations the noble Lord will withdraw his amendment.
But, my Lords, that is not what the amendment says. I have listened very carefully to the Minister and I will certainly read Hansard when it is published, but the intention behind the amendment—whether he has picked it up correctly or not—is for people who claim asylum and are not recognised as refugees but are granted another form of leave, such as humanitarian protection or leave as unaccompanied children, to be given the fee eligibility of home rather than overseas students if they satisfy the test of being ordinarily resident. That test is if they have lawfully and habitually resided in the UK out of choice since being granted leave, and being eligible for student finance if they are also ordinarily resident on the first day of their course. We are not talking about people who are temporarily here and who might suddenly be removed without notice, making them unable to take their course; we are talking about people with a right to be in the United Kingdom.
All the Minister’s points about this not being in accordance with Home Office policy are therefore not correct, in my respectful view. We have picked up that there are people with an ordinarily resident status who do not technically qualify for refugee status, and that it is only for refugee status that the three-year ordinarily resident requirement is given. If that is where the Minister is coming from, surely what my noble friends Lord Judd and Lady Lister and the right reverend Prelate said were on point: imposing a three-year residency requirement for somebody who wishes to exercise their ability to remain in the UK in order to use that time to study is a ridiculously aggressive attitude for a caring Government to take. The Minister talked about a warm, welcoming, integrated and supportive environment but the facts are that an enormous barrier is being put in the way of people’s ability to benefit from being given the ability to stay in the United Kingdom. That cannot be right.
I understand that this is an emotional and difficult area and it may be better if we could meet outside to talk about it. Perhaps we could also bring in representatives from the Home Office who obviously hold the whip hand. If the Minister is able to do that it would be a great deal better. This is not something we can give up on but in the interim I beg leave to withdraw the amendment.
Amendment 443 withdrawn.
444: After Clause 82, insert the following new Clause—
“Student support: requirement to assess repayment terms
(1) The Teaching and Higher Education Act 1998 is amended as follows.(2) In section 22 (new arrangements for giving financial support to students)—(a) in subsection (3)(b), after “and” insert “, subject to subsection (3A)”;(b) after subsection (3) insert—“(3A) Regulations under subsection (3)(b) must include a level of earnings below which a person shall not be required to make repayments of such a loan.”(3) After section 22 insert –“22A Duty to assess consumer prices in determining terms for loan repayments(1) In relation to regulations made subject to the requirement in section 22(3A), the Secretary of State must, for each tax year, review UK consumer price inflation for the period since the last review under this subsection.(2) If the review concludes that consumer prices for the previous tax year have increased, the Secretary of State must, by regulations under section 22(3)(b), amend the level of earnings specified in accordance with the requirement in section 22(3A) by the same percentage increase as UK consumer price inflation as determined under subsection (1).(3) If the Secretary of State is not required to make regulations under this section, the Secretary of State shall lay before each House of Parliament a report explaining the reasons for arriving at that determination.(4) For the purpose of this section—“consumer prices” means the Consumer Price Index;“consumer price inflation” refers to the annual assessment made by the Office for National Statistics’ Consumer Price Inflation Statistical Bulletin.””
My Lords, Amendment 444, in my name and that of the noble Lord, Lord Storey, seeks to mirror the rules around the benefits system, which require the Secretary of State to uprate benefits automatically each year in line with inflation unless he passes, as is currently the case, law to freeze them. The clause would mean that similar procedures have to be followed in uprating the starting point of £21,000 for repayment fees. Under the current tuition fees system, a graduate starts to repay their fees only if they are earning about £21,000 a year. One of the principles we agreed in coalition was that this threshold should rise in line with inflation from April 2017 so that only those earning a decent salary are repaying their fees. This is important in ensuring that only those who can truly afford to over their careers pay back the full £9,000 a year fees.
Liberal Democrats therefore strongly oppose the bad-faith decision of the previous Chancellor to freeze the repayment threshold. This effectively amounts to a change in contract terms for those with fees to repay that would be wholly unacceptable in any private business dealing. It is no wonder that Martin Lewis, who helped explain the Government’s original scheme, has sought legally to challenge this unfair retrospective action. The freeze means that people on relatively low incomes will start paying back fees, meaning those on low and middle incomes will end up paying back more while those on the top salaries, who will pay off their fees before they reach the 30-year cut-off, will be unaffected.
The issue is even more important considering rapidly increased inflation due to Brexit. Our amendment therefore seeks to provide a mechanism to ensure that the repayment level must rise with inflation. It uses rules around social security benefit increases to require the Secretary of State to consider whether prices have changed over the last 12 months—ie, inflation has taken place—and, if so, to increase the repayment threshold by a similar level. This would therefore require a new order every year to be placed before Parliament, ensuring the Government can never again unilaterally decide to freeze the point at which students start to pay.
Liberal Democrats hesitate, for good reason, to talk about university fees. We suffered the political consequences of breaking our contract with the electorate. The Chancellor was very clever, but there was very little saving in the end to the Exchequer and there were concessions to the Liberal Democrats. What we are looking at now is the elimination bit by bit, piece by piece, of those concessions, starting with grants and moving on to access, and so on. So the policy has clearly worsened, and what we have currently, with the raising of the threshold, is nothing short of a scandal. A contract has been broken and there has been a one-sided redefinition of the terms of the loan. In any other context, as Martin Lewis quite correctly said, this would lead to legal action. The only reason legal action is not possible in this case is the small print, which, as far as most undergraduates are concerned, was very small indeed.
This amendment is simply an attempt to avoid a repetition of that bad situation by defining a minimum level of earnings and a mechanism for adjusting it in a rational, open way. It would avoid partiality, exploitation, misunderstanding and lack of trust, which is absolutely crucial. That, surely, is the way to go. The Government would be doing the right thing by accepting this amendment. I beg to move.
My Lords, perhaps I could briefly challenge the proposals of the noble Baroness, Lady Garden. I do so very aware of how the Conservative Party and the Liberal Democrats worked together on this years ago, and I pay tribute once again to my former ministerial colleague, Sir Vince Cable, with whom it was a pleasure to work. But I think her account of the way the decision was taken is not quite correct and I do not think that her proposals for the future will work in the best interests of students or the Exchequer.
When we set the £21,000 repayment threshold in 2011, we were working on the basis of forecasts of where earnings would be by 2017. We thought we were setting the £21,000 repayment threshold at about 75% of earnings—I cannot remember the exact figure. What has happened since then is that earnings have grown by much less than was forecast, as a result of which the repayment threshold has become significantly more generous relative to earnings than we expected when we set it. With the wisdom of hindsight, I wish that we had put in brackets alongside £21,000, “that is, approximately 75% of earnings”, but what is relevant for graduates is that this is relative to their earnings and average earnings. On that basis, the purpose of the current freeze of the £21,000 threshold is to bring it back gradually towards the kind of relationship to average earnings that was envisaged when it was first proposed in 2011.
I agree with the noble Baroness, Lady Garden, that it would be worth having some kind of mechanism for review of this threshold. I have proposed a kind of five-year review at the start of each Parliament of the right place to set the repayment threshold. I do not think some fixed relationship to the RPI is relevant. The big social decision—it is a decision—is where it should be relative to average earnings. Of course, the coalition decided it should be a significantly higher threshold than that in the old system. Although I remember working with Martin Lewis on this, I think his argument that this is some terrible breach of faith is incorrect. This is actually a relationship to earnings which has ended up much higher than was originally expected.
I also think that Amendment 449 is misconceived and would be very dangerous indeed. It proposes that these loans should be regulated as if they are commercial loans by the Financial Conduct Authority. The student loans scheme steers a very narrow course between two equal and opposite problems. One problem would be if student finance were once more counted as public expenditure, as a result of which it would be rationed and we would not see the increase in cash for universities that we have seen. Although some people think this is public spending—to my surprise, the noble Baroness, Lady Garden, talked about there being very little saving to the Exchequer—the fact is that the shift to fees and loans achieved a very significant reduction in public spending. We do not want to go back to the days of it being public spending.
However, neither do we want it to be a commercial loan scheme. It is absolutely not a commercial loan scheme. I worked very closely with Lib Dem colleagues at every opportunity to explain to prospective students that this is not a commercial loan. This is not like an overdraft or a credit card. It is a universal scheme accessible to almost all students and is in no way like taking out a loan from a bank regulated by the Financial Conduct Authority. If the Student Loans Company were regulated by the Financial Conduct Authority, it would immediately have to go through requirements such as the “know your customer” requirement. It would have to decide: “Should we lend to young John Smith? Is he going to be able to repay? Should we lend to young Janet Smith? Is she going to be able to repay?”. That panoply of assessment of whether individuals should take out loans, which is part of the regulatory regime for commercial loans, should not apply to this provision. This is a universal scheme using taxpayer finance. Therefore, requiring it to be regulated as if it is a commercial loan would be a retrograde step and very regressive.
All three parties in this Chamber today, when faced with the dilemma of how to finance university education, have ended up with an essentially similar model: fees and loans, with a universal loan scheme. It is no accident that we have ended up with this model. It is because it steers between two equal and opposite perils. These Lib Dem amendments would destabilise that model, which is now working to the advantage of students, universities and the Exchequer.
My Lords, Amendments 446, 449 and 449B are in my name. Amendment 446 is a reaction to the fact that Conservative education policy has had a detrimental effect on the education and life chances of those from low and middle-income backgrounds. We can trace that back to 2010, when Labour left office, with 71% of state-educated pupils going to university. By 2014, that had fallen to 62%.
The change from maintenance grants to loans is a regressive policy, introduced last year, that will leave students from low and middle-income backgrounds facing higher debts, which they may never be able to repay; we will discuss this in a later amendment. Bringing back the maintenance grant, which is what is proposed in this amendment, is a necessary move to ensure there is that investment in our young people, helping more of them access a university education, and providing the country with the highly educated and highly skilled workforce that we need.
English students already face some of the highest levels of student debt in Europe, with the average student graduating with anything up to £50,000 of debt. This is a particular problem for students from low and middle-income backgrounds, who are more likely to need to rely on loans to fund their studies. It is well known that students from more affluent backgrounds do not need a loan—they may take one out because it provides access to cheap money—but for low and middle-income students, that is not an option; they have to take that loan out. Increasing the amount of debt they face by replacing grants with loans could act as a disincentive that will stop some of them pursuing higher education at all.
It may well be asked: if you were to reintroduce this, what would it cost? Labour has in fact costed it. We reckon it would cost about £1.5 billion in each academic year but our policy is quite clear and has been stated before: we would raise corporation tax by 1% to 1.5%. By funding the policy in this way, it is a direct correlation: companies would be contributing to the education and training of the highly skilled, highly trained workforce that is needed to help Britain’s economy thrive in the 21st century. It would be a cause and effect in that respect.
I heard what the noble Lord, Lord Willetts, said about Amendment 449. I bow to his greater experience and, indeed, direct involvement in this until quite recently. The Student Loans Company appears to be a law unto itself. In many ways, it seems out of control. Repayment levels are well below projections and there is very little confidence in the company. The loans are regarded as a non-contingent tax liability, not a normal loan, and therefore they are not regulated. I hear what the noble Lord, Lord Willetts, said, and there are reasons for that, but the money has to come from somewhere. I accept that for those seeking a loan affordability is an issue. We are very concerned about the way in which the Student Loans Company operates.
Just a few minutes ago, in a quite unrelated set of amendments, we were treated to a further example. When the noble Baroness, Lady Goldie, told us that one of the reasons why the sharia-compliant finance product could not be introduced—and she did not appear to have the faintest idea of when it would be released—was that the Student Loans Company needed time to get its processes into suitable order. So thousands of Muslim students are forced to wait while the Student Loans Company dithers. That is symptomatic of the way in which that organisation operates. The Student Loans Company does need proper regulation, if not by the Financial Conduct Authority, then by some other means. If the noble Lord, Lord Willetts, thinks it is operating satisfactorily, he should say so, but I would be very surprised if he does.
The last amendment I will speak to is Amendment 449B. It traces back to when the noble Lord, Lord Willetts, was Higher Education Minister. In the 2015 Autumn Statement the then Chancellor announced that the repayment threshold on student loans was to be frozen at £21,000 from April 2017, instead of being uprated in line with earnings, as was promised in the marketing materials and in writing from—and I am not trying to score particular points—the noble Lord, the Minister at the time. That is an important point.
Labour MPs submitted a raft of amendments to this Bill in another place that were designed to stop retrospective changes to student loans by Ministers, and to bring them under regulation by the FCA. The key issue is that millions of students have taken out loans with an understanding that the threshold would increase with earnings, and have had their loans changed retrospectively and regressively. I say to both Ministers opposite that that is the sort of underhand tactic that undermines the public’s trust in politics and politicians, and that alone would be sufficient reason to overturn this decision. Worse, however, the change places additional financial burdens on poorer students and sets a dangerous precedent. It also falls short of the standards that we would expect from the private sector, where the FCA has the power to stop this happening.
The noble Baroness, Lady Garden, outlined the effect on students. Our amendment would prevent any changes to the repayment of a student loan after the terms and conditions of repayment had been agreed. This would apply to existing loans after the commencement of the Act, and it would ensure that such a situation would not recur by bringing loans under the regulation of the Consumer Credit Act 1974. These amendments demonstrate the need to regulate the student loan market and would provide the protection that students need and, we believe, deserve.
My Lords, I broadly support, in particular, Amendment 446, tabled by my noble friend Lord Watson. Opportunistically, however, I ask the Minister, since we are discussing student fees, when there will be clarity vis-à-vis student finance for EU students who want to register for courses in 2018-19. They have no clarity at the moment, and this is putting some EU students off even thinking about applying to UK universities.
My Lords, I thank noble Lords for their contributions. I am aware that this is an issue that stimulates debate and the contributions have been genuinely informed and reflective.
When the Government reformed student finance in 2011 we put in place a sustainable system designed to make higher education accessible to all. It is working well, because total funding for the sector has increased and will reach £31 billion by 2017-18. These amendments cover a number of areas of the student finance system.
I refer first to the issue of the student loan repayment threshold. The decision to freeze the repayments threshold for post-2012 loans was taken to put higher education funding on to a more sustainable footing. To do this, we had to ask those who benefit from university to meet more of the costs of their studies. I thank my noble friend Lord Willetts for providing a very clear explanation of the threshold freeze and the circumstances that led to it. Freezing the threshold enabled us to abolish student number controls, lifting the cap on aspiration and enabling more people to realise their potential.
On average, graduate earnings remain much higher than those of non-graduates. Students continue to get a fair deal: the current threshold remains £3,500 higher than that for pre-2012 loans. Uprating the threshold in line with average earnings would cost around £5 billion in total by April 2021 compared to the current system. The total cost of uprating by CPI would be around £4 billion over the same period. Taxpayers—many of whom will be non-graduates earning much less than the graduates who would benefit—would have to bear that cost.
On the matter of student loan terms and conditions, I share your Lordships’ desire to ensure that students are protected. That is why the loan terms are set out in legislation. However, it is important that, subject to parliamentary scrutiny, the Government retain the power to adjust terms and conditions. Student loans are subsidised by the taxpayer, and we must ensure that the interests of both borrowers and taxpayers continue to be protected. This amendment would also prevent the Government making any changes to the loan agreement that would favour the borrower. Finally, we believe that the Government should continue to be able to make necessary administrative amendments to the terms and conditions to ensure that the loans can continue to be collected efficiently.
With regard to the replacement of maintenance grants with loans, I reassure noble Lords that this Government remain committed to increasing access to higher education. Indeed, the proportion of students from disadvantaged backgrounds entering higher education has increased from 13.6% in 2009 to 19.5% in 2016. We have, furthermore, increased support for students on the lowest incomes by over 10%. Reinstating the system of maintenance grants would reduce the up-front support available for students from some of the most disadvantaged backgrounds, while costing the taxpayer over £2.5 billion each year. Students recognise the value of a degree. Lifetime earnings are, on average, higher for graduates than non-graduates and it is right that students who earn more contribute towards the cost of their education. Repayments are related to the ability to pay and start only when a borrower is earning £21,000.
I turn now to the amendments relating to the regulation of student loans. I agree that it is important that students are protected. However—as my noble friend Lord Willetts set out—student loans are not like commercial loans: we must remember that. They are not for profit and are available to all, irrespective of their financial history. Repayments depend on income and the interest rate is limited by legislation. The loans are written off after 30 years with no detriment to the borrower. The key terms and conditions are set out in legislation and are subject to the scrutiny and oversight of Parliament. This means that additional regulation is unnecessary.
Lenders regulated by the FCA are obliged to assess the creditworthiness of all their borrowers, and the affordability and suitability of the loan product for each borrower. Were the Financial Conduct Authority to regulate student loans—as Amendment 449 seeks—it could affect the ability of some students to obtain them. My noble friend Lord Willetts spoke powerfully about that.
Our system allows the Government, through these subsidised loans, to make a conscious investment in the skills of our citizens. I hope that this addresses the concerns raised by noble Lords and I therefore ask that Amendment 444 be withdrawn.
My Lords, I thank the Minister for her detailed response. I bow, of course, to the remarks of the noble Lord, Lord Willetts. I remember working with him in coalition when I was Higher Education Minister in the Lords—heady days indeed.
In spite of his reassurances, I am still concerned that the less well-paid and less privileged students should not be disproportionately penalised or deterred by repayments. After all, they repay for longer than the better-paid students, and there are problems in that. I also support the amendments of the noble Lord, Lord Watson. I think that the noble Baroness, Lady Royall, will find that we may touch on those issues when we come to the amendments on international students. She makes, however, a very valid point that needs consideration. At this stage, however, and in the light of the Minister’s remarks, I beg leave to withdraw the amendment.
Amendment 444 withdrawn.
Amendments 445 and 446 not moved.
Amendments 447 and 448 had been withdrawn from the Marshalled List.
Amendments 449 to 449B not moved.
Clause 83: Qualifying institutions for purposes of student complaints scheme
450: Clause 83, page 53, line 13, at end insert—
“( ) in the words before paragraph (a), omit “in England or Wales”,( ) in the opening words of paragraph (a)—(i) after “university” insert “in England or Wales”, and(ii) after “the 1992 Act” insert “or section 37 or 87 of the Higher Education and Research Act 2017 (“the 2017 Act”)”,”
My Lords, these amendments make a number of largely technical changes to this clause, which deals with the student complaints scheme in higher education. It may help if I begin by explaining that none of these changes impacts on the policy intent. This is to ensure that the definition of a qualifying institution for the student complaints scheme is widened to ensure that all providers on the OfS register will be required to join the scheme. Amendments 455 and 456 go slightly further by confirming, as is current practice, that higher education providers delivering courses in a franchise arrangement will also be required to join the student complaints scheme.
This approach means that all higher education students should have the same right to have their unresolved complaints considered through this route, provided that their complaint meets the requirements for consideration under the scheme. The key change we are now introducing is to ensure that the requirement we are putting into legislation that deals with providers that are no longer regarded as qualifying institutions of the complaints handling scheme will apply in both England and Wales. That is important given that the complaints handling scheme has operated successfully across both nations for over 10 years. In practice, this means that providers that cease to be qualifying institutions are classed as transitional providers and still subject to the scheme for a further period of up to 12 months. This ensures an additional protection for students.
In addition, through Amendment 457, we are making a minor change to ensure that the operator of the student complaints scheme continues to have the discretion to agree with individual providers what courses should be covered by the scheme. This is existing practice, and the amendment simply ensures it applies correctly to all those providers who are part of the scheme. Without this discretion, it is likely that the complaints handling scheme could inadvertently stray into other parts of the education sector, such as schools or further education. Many of the providers now joining the complaints handling scheme offer more than higher education courses. This might include courses considered as part of the schools or further education sector, where separate complaints arrangements are already in place. Finally, the amendments make some minor technical changes, mainly to ensure that this clause is linked to all the appropriate clauses in the Bill. I beg to move.
Amendment 450 agreed.
Amendments 451 to 461
451: Clause 83, page 53, line 14, leave out from “section 40” to end to line 15 and insert “or 43 of the 2017 Act”,”
452: Clause 83, page 53, line 15, at end insert—
“( ) in paragraph (b), after “institution” insert “in England or Wales”,( ) in paragraph (c), after “institution” insert “in England or Wales”,( ) in paragraph (d), at beginning insert “an institution in Wales which is”,”
453: Clause 83, page 53, line 17, after “(da)” insert “an institution in England which is”
454: Clause 83, page 53, line 19, at end insert—
“(ba) in paragraph (e)—(i) after “institution” insert “in England or Wales”, and(ii) for “another paragraph” substitute “any of the preceding paragraphs”,”
455: Clause 83, page 53, line 19, at end insert—
“(bb) after paragraph (e) insert—“(ea) an institution in England (other than one within any of the preceding paragraphs of this section) which provides higher education courses leading to the grant of an award by or on behalf of—(i) another institution in England within another paragraph of this section, or(ii) the Office for Students where the grant is authorised by regulations under section 47(1) of the 2017 Act;”, and”
456: Clause 83, page 53, leave out lines 20 and 21 and insert—
“( ) in paragraph (f)—(i) after “institution” insert “in England or Wales”, and(ii) after “the 1992 Act” insert “or section 40 or 43 of the 2017 Act”.”
457: Clause 83, page 53, line 21, at end insert—
“( ) In section 12(3) (qualifying complaints), for “paragraph (e)” substitute “paragraph (da), (e), (ea)”.”
458: Clause 83, page 53, line 24, leave out “in England”
459: Clause 83, page 53, line 33, leave out “in England”
460: Clause 83, page 53, line 40, leave out “paragraph (e)” and insert “paragraph (da), (e), (ea)”
461: Clause 83, page 53, line 41, leave out “either of those paragraphs” and insert “the paragraph in question”
Amendments 451 to 461 agreed.
Clause 83, as amended, agreed.
462: After Clause 83, insert the following new Clause—
“Students at higher education establishments: treatment for public policy purposes
The Secretary of State has a duty to encourage international students to attend higher education establishments covered by this Act, and to that end shall ensure that no student, either undergraduate or postgraduate, who has received an offer to study at such a higher education establishment shall be treated for public policy purposes as an economic migrant to the UK, for the duration of their studies at such an establishment.”
My Lords, Amendment 462 is in my name and the names of the noble Baroness, Lady Garden, the noble Lord, Lord Patten of Barnes, and the noble Baroness, Lady Royall of Blaisdon. The subject of this amendment is the practice of treating higher education undergraduate and postgraduate students as long-term economic migrants. It is a subject that is, frankly, extremely familiar to the House. We have debated it on a number of occasions in the last six years to my knowledge, and speakers from all corners of the House have deplored this method of treating students as economic migrants. I remember an occasion, I think when the noble Lord, Lord Bates, was standing up for the Home Office, when 20 people in succession denounced this system, and not one spoke in its favour. Noble Lords are familiar with this matter, so I will not go on at great length, but we have an opportunity to do something about it, not just to wring our hands and talk about it.
I will not weary the Committee with a shower of statistics, but no one contests that the excellence of our higher education establishments is a massive national asset, making the sector one of our largest invisible exports and putting us second only to the United States in the league tables of that sector. In addition, no one contests that overseas students who pay in ready cash for their fees and maintenance costs put huge resources into our economy and create, rather than substitute, employment. They are an important part of our universities’ ability to function effectively and, as they have done in recent years, to expand.
To give just a few figures, 13% of undergraduates are overseas students, while 38% of postgraduates are. No one contests that when these students return to their home countries, they represent a substantial, if unquantifiable, source of soft power for this country for decades to come. Yet we categorise these students as economic migrants, and in recent years have piled up a mass of obstacles, both bureaucratic and material, to their coming to study here, and post-Brexit, there could be more. The consequences are pretty clear: overseas student figures are down substantially. Overall, the number of non-EU students is down by between 2% and 8%. The number of students from India is down by a half in the last two or three years.
The Government protest that we are doing extraordinarily well because of the numbers from China, but I really would ask whether it is wise to depend to an increasing extent on students from an authoritarian country which could quite easily turn the tap off, just like that, if there was a political spat between us. Look at our main competitors: the US, in that same period that we were down by between 2% and 8%, was up by 7.1%; and Australia was up by 8%. We are losing market share—it is as simple as that.
This amendment has two objectives, one positive and the other negative. The objective of the positive part of the amendment is to place a duty on the Secretary of State to encourage overseas students to come to this country—not just to not discourage that but to positively encourage it. I know the Government make efforts to do that, but most of the efforts they make are countered by this pile of obstacles that they put up at the same time. The objective of the negative part of the amendment is to cease treating these students, whether postgraduates or undergraduates, for public policy purposes, as economic migrants. This is much more than just a statistical issue—although the statistics are part of it—but I sometimes ask myself how there could be any rational explanation for a Government who are under criticism for the level of immigration insisting on artificially boosting the figures by including students. It makes no sense when it is not done by the United States, Australia or others where the issue of immigration is also very sensitive. They do not make this mistake.
The wording of the amendment, therefore, goes wider than statistics and addresses the whole range of policies that might discourage higher education students from studying here. I hope very much that this can be pursued and adopted as part of the Bill. I beg to move.
My Lords, my default position is always to try to be helpful. That is one reason why I was so pleased to support this very important amendment to this legislation. How can I be helpful? First, we know that having now shaken off the chains of membership of the European Union, and having turned our back on a millennium of introverted, insular history, we have become “global Britain”. It would be extraordinary if, having become “global Britain”, we were to prevent the huge numbers more of international students coming to study here. It has been said again and again in this debate that our higher education system is one of the jewels in our crown. It is not surprising, therefore, that so many other people want to enjoy its benefits.
The noble Lord, Lord Hannay, pointed out some of the absurdities of the present situation, such as the fact that we choose to define students as immigrants. They are not immigrants. There is arguably a problem about immigration in the medium term or the long term. What we do is simply take the figure that represents those who have come to the country in one year and those who leave it in four or five years’ time. We count them as immigrants. Why do we do it? Why do we deny ourselves and our universities the benefits of educating more young people from around the world? Why do we deny ourselves that benefit? It is not, frankly, because people in this country think we would be crazy to define students as what they are.
Every bit of research that I have seen, including research undertaken by the Conservative Party, has made it absolutely clear that people understand the difference between a student and an immigrant. People understand the contribution that students make to local economies. People understand the benefits, in the long term, of having out there—I noted what the noble Lord, Lord Judd, said about this—people who understand what it is to have a great education in a liberal, plural society. It is an enormous benefit to us, so it is not just about money or price, but about values.
Why do we behave so foolishly? It is because of our fixation with the immigration target. Let us be clear: we put higher education in a more difficult position and we cut ourselves off from a great deal of economic benefits because of that obsession with an immigration target, which we fail to reach, very often because we are growing so rapidly year after year. We cannot say that we are doing this because people in this country think we would be crazy to make a change: they do not; they think it would be sensible. We cannot say that we do this because other countries around the world do not behave like that. They do, as the noble Lord, Lord Hannay, said. We take advice from the Australians on immigration policy, apparently, and look what they do. Look at what the Americans and Canadians do. They all know that at the moment, with the growth of the middle class in Asia, more and more people want to spend their money on educating their children in great western universities. We—global Britain—have made the choice to cut ourselves off from that. It is completely crazy
I support this amendment and, if necessary, I will go on supporting it as long as we debate this issue in this House. I support it, first, because I think I am being helpful to global Britain and to the Government, including the Prime Minister. When she went on that trip to India the other day, which I am sure was very successful, she wanted to talk about trade and they wanted to talk about students. I also do it because of my regard for the Minister of State. It is not only that Minister’s brother who has said how crazy it was to pursue this policy and that we should change it. I first became convinced of the importance of changing it when I read an article two and a half years ago by that admirable man Nick Pearce and Jo Johnson. Nick Pearce was then head of the Prime Minister’s think tank in No. 10. At the end of that article in the Financial Times, Mr Johnson, the Minister of State—who is not in his normal place today, so we must send him this bonne bouche down the Corridor—and Nick Pearce wrote this:
“Changing the way students are classified will have little effect on the Government’s ability to control medium to long-term net migration … The Government faces real choices over policy on international students. The difference they make to long-term net migration is relatively small. The difference these choices make to the education sector, to Britain’s soft power around the world and to the UK economy is very significant”.
That was the Minister in the Financial Times, so it must be true.
By supporting these important amendments, the whole House, as well as individual Members, is being very supportive of the Government and particularly supportive of the Minister for Higher Education, who wants us to do what is in the amendments.
My Lords, I have added my name to this amendment; I strongly support the words that we have heard from the noble Lords, Lord Hannay and Lord Patten. I, too, will try to be helpful because this amendment highlights the significant impact of international students and their contribution to the success of UK universities. It builds on Amendment 127, which I spoke to earlier in Committee, so I shall curtail my remarks at this stage.
As has been said, counting international students in migration targets is a poor policy choice. It damages the reputations of UK universities. There seems to be universal agreement that it should be reversed and that other countries do not treat their students in this way. We will doubtless hear from the Government that there is no limit on the number of international students who can come into the country. The trouble is that they follow that up by saying, “But we will count them in immigration targets and we are intent on reducing immigration”. This sends very mixed and misleading messages to students who are left mystified about this but feeling generally unwelcome. It does not help now that we make them leave the country as soon as they finish their studies, rather than staying on to make some postgraduate contribution to the country.
Our messages are unwelcoming and overseas students hear those unwelcoming messages. We understand that these decisions are within the Home Office, not within the department the Minister represents, but we ask him to take back to his colleagues in the Home Office—or, indeed, to his right honourable friend the Prime Minister—how very strongly this House feels that these measures should be changed.
My Lords, I too have added my name to the amendment. Everything has already been said. I would merely say that Nick Pearce is now a professor at the University of Bath—so that is good, isn’t it?
Like the noble Lord, Lord Patten, and all other noble Lords, I find it particularly bizarre that in this brave new world, where we want to be outward-facing, persuade the world to trade with us and attract people to study at our universities, we still persist in including students in the immigration figures, which, as the noble Baroness has just said, sends out bad feelings. It is perception that is important. The noble Lord may be right that we are welcoming everyone but, even if that were true—and I am not sure it is—the perception is that we are not, and that is a big problem.
In an earlier debate on an amendment tabled by the noble Lord, Lord Lucas, which unfortunately I missed although I supported his amendment, he said he was searching for ways in which,
“the university sector could organise and present itself so that the nation would be on its side and it would be equipped with the data”.—[Official Report, 11/1/17; col. 1999.]
Of course I agree with that, but I would add, as the noble Lord, Lord Patten, said, that the public are already onside, with 57% of them saying that foreign students should not be in the immigration figures compared with 32% who thought that they should be. So as the Government are so determined to pursue a hard Brexit because a mere 52% of the population voted in favour of leaving the EU while 48% were against, why can they not now act on the 57% who say that they would be content with taking students out of the immigration figures?
We are all against bogus institutions, and we are glad that the Government have acted on that. We are all against those who overstay, but the figures on overstaying cited in the past by the Government are, at best, merely estimated and, at worst, being used for political ends. When will better data be available, and when will the consultation on the study immigration route be concluded?
I well understand the political importance of immigration and immigration figures, as well as the concerns expressed by the citizens of our country. However, bona fide students studying at bona fide institutions are not economic migrants but visitors, and that is the view of the people of this country. I hope that the Government will act accordingly.
My Lords, I declare my interests as someone employed at the University of Cambridge. One of my roles is as co-director of the Master of Studies programme, which brings in international students on a regular basis. They come not for a year or two at a time but for temporary periods, yet they have to go through the whole visa regime, which is long and complicated. One of the things that is so difficult in higher education and recruitment is that over the years UKBA has made it so difficult for students to come here. The procedures are lengthy and time-consuming, and very often are done out of country. Yesterday I talked to one of my tutees who said that from Kazakhstan she has to apply for a visa in the Philippines—not necessarily the most obvious thing to have to do.
In many ways, part-time students have an easier time than full-time students because most of them have full-time employment so can fulfil visa requirements quite easily. However, as the noble Lord, Lord Hannay, said in his opening remarks, there is something very strange about treating international students as economic migrants. Normally we think of economic migrants as people coming to work and taking jobs. That may be a good thing or it may be bad, but it is very specific. International students are paying fees. They are contributing to the local economy, contributing jobs and making a real difference. Yet time and again, usually led by the Home Office, we get decisions that make it harder for us to recruit international students.
I was going to refer to “global Britain” but the noble Lord, Lord Patten, has already mentioned it. So I will not go much further, except to say that there seems to be something very odd when a Government who are saying, “We want to make a success of Brexit and are looking for international opportunities”, do not see international students as a major opportunity.
Should the Government not be thinking of the situation for EU students? The noble Baroness, Lady Royall, has already mentioned them. At present EU students are treated as home students. Presumably on the day we leave—we keep being told that nothing changes until that day—EU students become international students. Are they then going to become part of our immigration target? Are we then going to say that EU students appear even less welcome than students have traditionally done? What are we saying? What sort of message is going to be given? What opportunity can we as Members of your Lordships’ House offer to assist the Government and the Minister of State in getting the rules changed?
In a Question for Short Debate a few weeks ago, the noble Lord, Lord Lucas, asked, “What is the problem?”. In the past, under the coalition Government, the problem appeared to be the then Home Secretary, who was not very keen to liberalise international student numbers. That former Home Secretary is of course now the Prime Minister, and she does not seem to have changed her mind.
The noble Lord, Lord Hannay, referred to all corners of this House supporting the amendment. When I made my maiden speech, I was sitting exactly where the noble Lord is sitting now. I spoke on European matters and said I looked forward to working on them with Members from all parts of your Lordships’ House. All parts of your Lordships’ House appear to be in agreement on this amendment, with one exception: some Members on Her Majesty’s Front Bench. Can we find a way of persuading the Government to accept this amendment, take international students out of the immigration figures and accept that international students are an export and are not about economic immigration?
My Lords, we have heard about the importance of international students in the context of soft power and global Britain. I want to talk about the importance of international students from my perspective as an engineer. They are crucial to the delivery of our industrial strategy and to the UK being able to develop the STEM skills that it will need to deliver that strategy.
When I was principal of the engineering faculty at Imperial College, many of my engineering courses had more than 50% overseas students. Those students were not taking the places of UK students; they were providing the additional fee income that enabled Imperial College to provide the outstanding facilities to train UK students in key engineering disciplines. Some of those courses would not have been sustainable without the income from our overseas students. The noble Lord, Lord Lucas, has highlighted to us a number of times that universities have used additional funding that they now get for arts students in order to subsidise the high-cost subjects.
An outstanding institution such as Cranfield, for example, relies on overseas students to run the wide range of industry-focused Master’s programmes that are of huge benefit to UK industry. Again, those programmes would not be sustainable without the higher levels of overseas student fees that they can charge. These overseas students are critical to enabling us to maintain the quality of engineering education in our universities that will enable us to ensure that UK students can develop the STEM skills that we will need in future.
My Lords, I support the amendment. I do not have much to add to the eloquent comments that have been made by the noble Lord, Lord Hannay, and other speakers. I would like to express bafflement that we are still banging on about this issue, which surely has been a compelling argument for more than two years. In the time of the coalition there was already discussion about this but the Government resisted, although there was clearly support for this within BIS.
It is clear that what is happening is an own goal in a number of ways. We need these students in our universities for academic reasons, to sustain specialised courses, to maintain academic quality and to make friends in the long term. It is a matter of perception as well as reality. The reason why the numbers from India plummeted more than from China was that the Indian press were able to present the message that students were not welcome any more in the UK. So perception is very important. We will lose a great deal of soft power in the long run if we maintain this perception. The present Government’s policy is baffling, not only to many of us on the Cross Benches, but to many people within the Government and on the Conservative Benches. George Osborne expressed concern about this, and other Ministers have too.
There is the separate issue of whether we should be more liberal in allowing graduates with talent to stay in this country. Our policy has been strongly attacked by James Dyson, one of our leading entrepreneurs, who presented a report for the Conservative Government.
On all these grounds, I support this amendment and renew my bafflement that it is—at least up till now—meeting so much resistance from the Government. I hope that there will be a change of view and a realisation that it is an own goal to sustain this policy.
My Lords, I congratulate without qualification those who have put this amendment forward. When I was a young MP in the other place, back in the 1960s, I cut my teeth by making my first major speech on this subject. Anthony Crosland was the Minister at that time and we became great friends.
The world is totally interdependent. It is simply impossible to think of a place that calls itself a university that does not reflect this reality—that international character in every dimension of its activity which is so important to the learning process. We talk about overseas students in financial terms, but what interests me is their indispensable contribution to the whole character, quality and calibre of the university.
I am an emeritus governor of the LSE. I have been involved in the place for a very long time, since I was an undergraduate. I am also a member of Court at Lancaster and Newcastle. There is absolutely no question that the quality of these universities is related to the overseas students and staff. They contribute to the dimension of the university—not only in their specialist studies but by their presence.
Post Brexit—lamentable Brexit—we are going to be faced with this reality of global interdependence more acutely than ever. Let us come to our senses in time.
My Lords, I support the amendment introduced by the noble Lord, Lord Hannay. As my noble friend Lord Patten displays such a close familiarity with Conservative slogans, let me add a second—one of the great Brexit slogans, “Take back control”. I do not see why our migration policy should be determined by the United Nations. No other country says its policy should be determined by how the United Nations has chosen to define immigration. If we want to take back control, I do not see why we should allow our policy to be determined by the United Nations. We should take back control of our migration policy and set it in accordance with our national requirements, rather than allowing this dangerous, global institution to decide who we should or should not count as migrants. As well as being about global Britain, the excellent proposition from the noble Lord, Lord Hannay, is about taking back control.
I have two brief questions for the Minister. We all appreciate the difficult position that he is in. One of the problems for universities has always been planning ahead and marketing themselves around the world when there is always a danger of further changes to the migration rules. If there is anything he could say that would indicate that the Government are not planning any changes in the regime for overseas students that would be a modest but helpful step.
Secondly, could the Minister indicate where he thinks education could sit within the industrial strategy? In the brief reading I have made of the documents so far, what has surprised me has been that I did not immediately see education in the list of key potential sectors. I hasten to add that education is not simply a business sector; it has a value in its own right. Nevertheless, it is a very successful British export. If, in response to the consultation on the industrial strategy, there were a message from the education sector that it would like to be backed by the Government in an exporting mission and be seen as an important part of GDP, I hope the Minister would be able to indicate that they would strongly support education as a key British export sector as part of their industrial strategy.
My Lords, I felt that this part of the debate would not be complete without the voice of the overseas student. I was an overseas student. I did my PhD at Harvard. The process for getting a visa was rather fierce. I remember going to the American embassy in London with a chest X-ray in a very large brown paper envelope, and there were other things that had to be produced. When the time came to leave, I had an American husband and a baby with an American passport. That made no difference. I was a foreign student who had come in under a particular programme, with a particular sort of visa, and I had to leave.
The point that is relevant now is that it is the accuracy and precision of the control process that prevents any drift from student status to economic migrant status. This is what matters and pretending that they are one and the same does not really address the problem. The problem is surely clarity about categories and controls.
My Lords, this has been a terrific debate. It must rank as one of the better ones on this topic that have taken place over the years. It has lacked only one thing. We normally like to have the comfort of the noble Lord, Lord Cormack, making an orotund statement to sum up our feelings and allow us to drift off into the night in a comfortable way. The noble Lord is present but he is not going to speak and I am saddened by this. There is nothing more that needs to be said—the points have been put across so well.
Perception is always at the heart of this. We send messages that we are unwelcoming. We do not live up to the best that could happen in UK plc and we are missing huge opportunities in soft power and the development of our own arrangements. It may be a step too far to take back control from the United Nations. Even the noble Lord, Lord Willetts, when he comes to his senses—if ever—will realise that it may not be the best argument we have heard tonight. The arguments are almost irresistible. I cannot believe that the Minister will not want to endorse them in every respect.
My Lords, I mentioned something about hot seats in respect of my position later in Monday’s debate. I feel that the temperature has risen somewhat in debating this issue. As one noble Lord said, it is rather an old chestnut for this House. Nevertheless, I acknowledge that it is an important matter.
I am grateful to the noble Lord, Lord Hannay of Chiswick, for moving this amendment and to those noble Lords who have put their names to it. This debate has demonstrated considerable strength of feeling and provided a useful opportunity to discuss international students.
Before dealing with the specific amendment, I should like to make clear the Government’s position on international students generally. As has been said—the noble Baroness, Lady Royall, put it pretty succinctly—perception is vital. It is important that we give the impression that the UK is a welcoming place for international students. I make no apology that, when we came to power in 2010, we took steps to rid the system of abuse that was then rife. No one denies now that action needed to be taken then. More than 900 institutions lost the ability to bring in international students. However, there is a world of difference between clamping down on abuse and our policies on genuine students. The Government welcome genuine international students who come to study here. Their economic contribution is significant. Not only do they enrich the experience of home students, they should also form a favourable view of the UK which should serve this country well. That is why we have never imposed any limit on the number of genuine international students who can study here, and why—I must emphasise this point—we have no plans to impose such a limit. Educational institutions will continue to be able to recruit as many international students as they want. I agree that it is a major opportunity, as the noble Baroness, Lady Smith, said.
Noble Lords have said that UK educational institutions are in competition with other countries for the best student talent. I want to outline the UK’s offer and how it compares internationally. Students from outside the EU need a visa to study in the UK. They need to show that they have the necessary academic ability, competence in English and funds to support themselves. Other developed countries, quite reasonably, set similar requirements. The system already allows students from low-risk countries to produce fewer documents. In 2015, 93% of student entry clearance visa applications were approved, a number that has risen every year since 2010, and 99% are approved within 15 days.
The terms which apply to students once here are again highly competitive. International students attending higher education institutions are allowed to work 20 hours per week during term time, the maximum that is compatible with devoting sufficient time to their studies, and similar to the rules in the United States, Australia and Canada. International students are additionally allowed to work full-time during holidays.
Post-study work is a matter of considerable interest to the education sector. Any international graduate of a UK university who is able to secure a skilled job can move into the workforce. There is no limit on the number who can do so and numbers have been rising year on year, with over 6,000 recent graduates doing so in 2015. If international students have been undertaking a course lasting more than a year, which covers the majority, they can remain in the UK for four months after finishing their studies, during which time they can work. The only country in the world with more international students than the UK is the United States. In the US, international graduates, other than when they are undertaking work directly relevant to their degree, must leave the country within 60 days of the completion of their programme.
I give a few statistics to support my proposition that the UK does welcome students. The UK is the world’s second most popular destination for international higher education students. Since 2011, university-sponsored visa applications have risen by 8%. Although Indian student numbers have fallen, as was mentioned earlier, we have seen strong growth in respect of other countries, including a 9% increase in Chinese students in the year ending September 2016, as was also mentioned. This shows that our immigration system allows for growth. I apologise for speaking at some length on these matters but it is important to lay out the facts and address this very important point of perception.
I turn to the specifics of the amendment before us. While I am grateful to the noble Lord, Lord Hannay, for the clear way in which he introduced it, I must confess that I am somewhat puzzled by it as it requires that no student should be treated as an “economic migrant”. But what is an economic migrant? I suspect that we all have a view of what we understand the phrase to mean, but no such term exists in law. We believe that it is used in the media; it is just a term which is used. I assume that those behind this amendment have in mind, when they refer to economic migrants, people who come to the United Kingdom on tier 2 work visas. People on a tier 2 visa come for a specific purpose on a time-limited visa and are expected to leave again when it expires, but that is precisely what the education sector tells us happens with international students. Similarly, those coming on a work visa may have conditions attached about the kind of work they can do. Equally, international students are limited in the number of hours they can work during term time. Again, this seems unexceptionable, and I am not sure why a parallel between international students and economic migrants would be seen as a bad thing. In one important regard there is a difference between economic migrants and international students. The main tier 2 (general) work visa is capped, with an annual limit of 20,700. By contrast, there is no limit on the number of genuine international students who can come to study here.
I should also deal with the inclusion of students in net migration statistics. Immigration statistics are produced by the ONS, the UK’s independent statistical authority. It would be inappropriate for the Government to seek to influence how statistics are compiled. By including international students in its net migration calculations, the ONS is following international best practice. I say in response to a point raised by the noble Baroness, Lady Garden, on this matter that this approach is considered best practice by the United Nations, which I think was mentioned by my noble friend Lord Willetts, and is used by a wide range of countries, including the United States of America, Australia and New Zealand. International students use public services and contribute to population levels. Those planning the provision of such services need to know who is in this country.
With respect to the Government’s net migration target, so long as, in any given year, the number of arriving students broadly corresponds to the number who leave having completed their course, students should make a minimal contribution to net migration. I repeat that genuine international students are absolutely welcome here. We do not, and will not, seek to cap or limit the number of international students.
The noble Baroness, Lady Royall, asked when the Government’s consultation would be published. I suspect she has heard this response in the House before but we intend to seek views shortly. I am afraid that at present I cannot give the House an exact date or timetable.
The noble Baroness, Lady Smith, asked about the arrangements for EU students post Brexit. We recognise that future arrangements after we leave the EU for students and staff who come to the UK is a key issue for the higher education sector. The noble Baroness will have heard my next point before, but this issue will need to be considered as part of the wider discussions about the UK’s future relationship with the EU.
My noble friend Lord Willetts asked a couple of questions, including one on the ability of universities to plan ahead. He asked me to confirm that the Government were not planning changes to the visa regime. He also asked where education was placed within the industrial strategy. I have made it clear that we have no plans to limit the number of genuine international students whom our educational institutions can recruit. They can plan on that basis. I do not have a full answer to his question on the industrial strategy. However, having attended a number of meetings, I know that the skills aspect is very much a key part of that strategy. I think it is best that I follow that up with a full brief on how that fits into the industrial strategy and, indeed, any other educational matters which fit into that area.
As the noble Lord, Lord Stevenson, said, this has been a good debate. I am sure that I have not answered every question that was asked or, indeed, satisfied the Committee given that this is a hot topic and an old chestnut, as was said earlier. I am very grateful indeed to all those who have contributed. However, with the assurances that I have given, I hope that the noble Lord will see fit to withdraw this amendment.
My Lords, I am most grateful to all who have taken part in this extremely lively and, I think, rather useful debate—useful, at any rate, if the Government Front Bench has understood the depth of feeling around the Committee. I took a slight risk in saying that my amendment was likely to draw support from all corners of the Committee. It is always a bit unwise to say that before it has actually happened. I thank everyone for preventing me suffering the ignominy of having wrongly predicted that. In fact, it has turned out to be the case.
I do not wish to get into a long argument with the Minister except to say that he has put before the Committee arguments which we have heard for about six years. I accept absolutely that the action taken by the Prime Minister when she was Home Secretary to close down “dodgy” language schools was valuable and necessary. I just wish that the Government would not now snatch defeat from the jaws of victory, because that is what they doing. They have cleaned up the biggest problem in the area, yet still go on introducing measures and using language which discourages overseas students. Therefore, I hope that the noble Viscount will use the gap between now and Report to reflect on the views of the House, which were so strongly expressed tonight. I hope I am not disobliging when I say to him that I propose to withdraw this amendment but not because of the reasons that he advanced.
Amendment 462 withdrawn.
463: After Clause 83, insert the following new Clause—
“Students at higher education establishments: immigration
Persons, who are not British citizens, who receive an offer to study as an undergraduate or postgraduate student at a higher education establishment shall not, in respect of that course of study, be subject to more restrictive immigration controls or conditions than were in force for a person in their position on the day on which this Act was passed.”