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Higher Education (Fee Limits and Fee Limit Condition) (England) Regulations 2018

Volume 792: debated on Tuesday 24 July 2018

Motion to Approve

Moved by

My Lords, I thank the noble Lords on the Secondary Legislation Scrutiny Committee for their scrutiny of the fees regulations laid before this House in July and considered in the 36th report from the committee.

My purpose here today is to speak to the fees regulations that require approval. They support our aim that anyone with the talent and potential to benefit from higher education will be able to do so.

UCAS data show that we have made good progress on this. In 2017, 18 year-olds were more likely to enter full-time higher education than ever before, with disadvantaged 18 year-olds 50% more likely to enter full-time higher education than in 2009. The most recent UCAS data on application rates for English 18 year-olds show an increase by 0.2 percentage points on last year’s deadline to 38.1%. This is a record high.

However, as I have said before, we know that there is more to do. That is why the Government are currently undertaking a major review of post-18 education and funding to ensure we have a joined-up education system that is accessible to all and encourages the development of the skills that we need as a country. We expect to conclude the review in early 2019.

Turning to fees, the Government announced on 2 July in a Written Statement that maximum fees for students undertaking undergraduate courses in the 2019-20 academic year would remain at 2018-19 levels for the second year running, saving students up to £255.

This is not the only change we have made to help students. From the tax year 2018-19 starting in April 2018, we increased the repayments threshold above which graduates are required to make repayments on their loans from £21,000 to £25,000, rising by average earnings thereafter. We have also taken the opportunity to review policy for EU students. The Written Statement of 2 July I mentioned earlier also announced that existing eligibility rules for students from the European Union, and their family members, who start their courses in England in the 2019-20 academic year will remain unchanged. This means that EU nationals will remain eligible for home fee status, undergraduate, postgraduate and advanced learner financial support from Student Finance England for the duration of their course under the current eligibility rules.

Why are these regulations important? I turn now to the details of the fees regulations being considered today. They are made under Section 10 and Schedule 2 of the Higher Education and Research Act 2017. They will ensure that the Office for Students, the new regulator for higher education since 1 January 2018, has the powers to set maximum fee limits for home students studying at providers in England that are subject to a fee limit condition in 2019-20. These regulations will also ensure that the Government can implement the new regulatory framework under HERA in full; in particular, the requirement for providers to submit access and participation plans to the OfS in order to charge fees above £6,165 for a full-time course.

The existing fee caps, made under Section 24 of the Higher Education Act 2004 will be revoked automatically on 1 August 2019, as a result of Schedule 11(30)(2) of HERA. It is therefore essential that new regulations are made under HERA to ensure that fee caps continue and that students benefit from the freeze in maximum fees. Under HERA, providers can choose to register with the OfS in one of two categories: either the Approved (Fee Cap) or Approved categories. Providers registering in the Approved (Fee Cap) category will, for 2019-20, be eligible for OfS grant funding and will also be subject to maximum fees set through the regulations being discussed today: £9,250 for a full-time course offered by a provider with a teaching excellence and student outcomes award. Students attending Approved (Fee Cap) providers will be able to access loans to cover the full costs of their fees. Providers registering in the Approved category will not be eligible for OfS grant funding or subject to maximum fees. Students attending those providers will be able to access lower rates of loans towards the costs of their fees.

Under HERA, the OfS will be able to limit fees charged by Approved (Fee Cap) providers once these regulations come into force. So without these regulations, providers would be free legally to charge whatever fees they wished. In addition to setting maximum fees for the 2019-20 academic year, these regulations also amend another set of regulations that will allow the OfS to operate under HERA. The Fee Limit Condition Regulations, which came into force on 1 April 2018, deliver the framework for the capping of student fees for qualifying students and courses at providers registering in the Approved (Fee Cap) part of the OfS register. These regulations amend the Fee Limit Condition Regulations so that persons who have a current grant of stateless leave, and their family members, who are undertaking qualifying courses in the 2019-20 academic year are defined as qualifying persons. This means that they will benefit from the same maximum fees that currently apply to other qualifying persons, such as persons who are settled in the United Kingdom.

These regulations also amend the Fee Limit Condition Regulations so that students already holding an equivalent or higher level qualification who are undertaking pre-registration, nursing, midwifery and other healthcare courses will be defined as qualifying persons and will benefit from maximum fee limits. With those explanations, I beg to move that these regulations be approved.

My Lords, I am grateful to the Minister for introducing the regulations so lucidly. He referred to the review that is taking place on student finance, which is of huge importance, of course, to students and their families and to universities. He said that the report would come in early 2019 but he said nothing more about it. I have three specific questions about the review. First, will it be publishing either an interim report or any interim statements or summaries of evidence taken? I think that could be quite useful in stimulating the public debate that needs to take place around the future of the higher education funding system.

The second point is about consultation. Which groups of students and young people are the Government consulting, because a big and controversial issue has been the failure to include young people in the review team? The one group that is not a part of the review team directly is the group of very young people and students who are directly affected by this. That is a big mistake. The right thing to do, particularly if we are to win support from the generation that is paying these fees in a reformed system, is to have some buy-in from them at the beginning. The failure to put those arrangements in place will cost the Government dear. It would be good to know what consultation is taking place with young people.

Thirdly, what polling among the public and young people is the review doing to ascertain the attitudes of the public at large to the sharing of the burdens of paying for higher education and the attitudes among young people? My view all along, having played a part in the introduction of the original scheme in 2004 but having been opposed to the trebling of tuition fees in 2010, has been that students recognise that in order to be responsible and constructive members of society, particularly in the current climate, where they are very focused on getting jobs and making their way in the world, they need to make some contribution to the higher education system, but they resent the fact that all the costs of the higher education system have been moved to the students and the graduates. Polling might bring that out and might help to establish a basis of agreement on public attitudes, which might make a burden-sharing approach possible which, to be blunt, might mean cutting the level of fees from £9,500 but not eliminating them entirely.

My party’s official position is now to eliminate fees entirely. The noble Viscount’s position is to have them at £9,500. There is quite a big space between zero and £9,500. Being, as ever, moderate and constructive, I am quite keen that we come in somewhere in the middle of that space. That might be sustainable among the public, rather than doing what I fear may happen, which is lurching from a very high level of fees by international standards to no fees at all.

Finally, when I read the debate in the House of Commons Delegated Legislation Committee on these regulations, the Minister for Higher Education said that he was conducting a listening tour around the country. I am strongly in favour of listening tours; I wish the Government would conduct them on many other issues, too, including Brexit, but that is for a later debate. However, he gives an extraordinary figure for the number of students he has met, which I am hugely impressed by. He said that on his listening tour so far he has met more than 1,500 students. I am not sure whether those 1,500 have been in the hall with him as he has been going around or whether he has personally conducted conversations with them.

I would be very grateful if the noble Viscount could tell us whether he has any findings from the Minister’s listening tour or whether the Minister might publish findings from his tour when he has finished it, because knowing that he has conducted a listening tour but not knowing what he has heard is not of great use to Parliament when we come to consider these significant student finance and funding issues after the review reports in the early part of next year.

My Lords, building on the reviews by the noble Lord, Lord Adonis, can the Minister say what progress the Government have made in appointing the independent reviewer of the teaching excellence framework? I can only apologise if I have missed the announcement somewhere along the line.

What assurances can the Government give that the independent reviewer of the teaching excellence framework will be a genuine exercise that influences the future design of the scheme? We would oppose any attempts to link tuition fee rises to the quality of teaching as determined by the TEF, which we maintain has flawed metrics, several of which have nothing to do with teaching.

Have the Government considered replacing fees with a graduate tax? This statutory instrument makes no attempt to find a solution to the position set out in the recent Economic Affairs Committee report, which estimates that in 30 years’ time the Government will have to find:

“an extra £8.4 billion to cover expected losses on the 2017/18 student loans”.

Does the Minister have any comment on the immense debt with which the current scheme is burdening future generations?

We are pleased to see in these regulations that the Erasmus year continues to be mentioned. Can the Minister give us any further assurance on government plans to ensure that we continue to be part of Erasmus, whether or not we leave the EU? It is a programme that brings great benefits to participants and to the economy, as students return with a more significant skill set to offer to employers. Does the Minister have any certainty to offer us on Erasmus?

We continue to be concerned about the changes to nursing funding, and would strongly support reinstating student bursaries. It is good to read here about the exemptions on equivalent and lower qualifications for health professionals. Might that lead to a wider exemption for ELQs in other areas? As we know, loss of ELQ funding is one of the key factors in the disastrous decline in adult education, and we would welcome some good news on that front.

Will the Government carefully monitor the effect on nurse recruitment and retention of the recent changes to funding? We note that the number of applicants to undergraduate nursing courses in the year after the abolition of bursaries was announced fell by 11,750—a reduction of 18%. This compounds the existing shortage of nurses in the UK. Almost every hospital is dangerously short of nurses, and the Royal College of Nursing estimates that there are 40,000 nursing vacancies across the health and social care sectors. That shortage will only worsen if nurses cannot be easily recruited from the EU. I hope the Minister can offer some reassurances on those various aspects.

My Lords, may I add something from a university perspective? I declare an interest as chair of the council of Lancaster University. I welcome the fact that the £9,250 maximum fee is being extended for another year—although of course that has denied to universities for the past two years the inflation increase that they were promised.

The review is necessary given the political climate surrounding fees, and the Government have to take into account the risky financial situation now facing the university sector. Any significant cut in fees would have a big impact on the excellence of our universities, unless it were wholly made up for by an increase in teaching grant. I ask the noble Viscount whether he is in any position to offer the sector any assurance that any cut in fees would be made up for by an increase in teaching grant. If it is not, there will be consequences, particularly for universities like mine, which has ambitious plans for expansion, and also, for a leading academic institution, has one of the best rates of state school pupils and people from deprived backgrounds in the country. We are good on equity as well as excellence, and the possibility is a real cloud over our financial prospects for the future.

One of the issues the Government have to address is that if there is a significant cut in fees following the review and there is no increase in teaching grant, one of the areas that universities are bound to look at is the money set aside for widening participation. At the moment we give a lot of bursaries to poor students. I have met many students at Lancaster who say that the reason why they came there was that we could offer them a £1,000 bursary. With the withdrawal of the means-tested maintenance grant, this has become very significant. I hope that the Government are considering bringing back a means-tested maintenance grant, but the real point I want to make is that these regulations give universities financial certainty for only an additional year. The future prospect is very clouded. Universities need more certainty if they are to be one of the starring sectors of the British economy, as they have been for the last 20 years.

My Lords, I thank the Minister for introducing and moving these regulations. He will not be surprised to hear me say that we accept they are necessary, because we want to ensure that higher education providers do not have the ability to charge fees in excess of the level of £9,250 set out in the regulations. I make those comments bearing in mind those just made by my noble friend Lord Liddle. We also welcome the fact that the regulations have the effect of freezing fees for a second year although, given the level at which they are set, we believe that is the bare minimum the Government could have done to alleviate the burden on students, until 2020 at least.

Of course, these regulations do not take account of the provisions of the Higher Education and Research Act 2017, which will see different levels of fees across the sector following the introduction of the teaching excellence framework. I imagine those provisions would have been brought into force via these regulations had it not been for the fact that, in the wash-up prior to the snap election, Labour forced the then Government to concede that there would be a review of the TEF. It had been one of the most controversial parts of a Bill which, it is fair to say, was no stranger to controversy.

When these regulations were discussed in another place last week, my Front-Bench colleague Gordon Marsden MP asked the Minister of State for Universities, Science, Research and Innovation—a title which, I imagine, must be challenging to fit on a business card—for a progress report on the appointment of the independent person who will be in charge of the review. That elicited the response that,

“an announcement will be made in due course”—[Official Report, Commons, Second Delegated Legislation Committee, 16/7/18; col. 8]—

the catch-all phraseology used when the Government do not really know quite what is happening or when anything actually will. I say to the Minister that if someone, somewhere within the DfE does not inject some urgency to the process then the introduction of the TEF will not fall within the planned timeframe. I think he will share my view that it was always going to be a challenge to gain the agreement of all those involved.

The TEF was intended to address the failure of the 2012 reforms to create a market among universities. The recent report by the Economic Affairs Committee of your Lordships’ House noted that there was,

“little evidence to suggest that the higher education sector is suitable or amenable to market regulation”.

The committee went on to say that the TEF,

“will not impose sufficient discipline on the sector to ensure the quality of the ever-increasing provision of undergraduate degrees”,


“Risk is borne almost entirely by students and taxpayers rather than the institutions”.

Further criticism has emanated from the Public Accounts Committee, which has characterised the student loan system as economically unsustainable and damaging to social mobility.

The Minister will know that I believe strongly that those hardest hit by the 2012 funding changes have been in the part-time and distance-learning sector. I have raised this issue on various occasions in debates, most recently last week when we considered the export value of higher education. The noble Baroness, Lady Garden, has just mentioned adult education. The numbers of part-time students in England have dropped by almost two-thirds in the last six years, while those who have been most deterred from study by the trebling of tuition fees are not 18 year-olds entering full-time higher education but older, especially disadvantaged, students. It is beyond doubt that the main factor in that decline is tuition fees because the scale of the decline in England, where fees are much higher, is 2.5 times greater than in the rest of the UK. The Sutton Trust has reported that the biggest decrease in part-time students has been in the 30 to 49 age group, which is of course prime working age. These regulations are silent on that issue.

In a debate on lifelong learning in April, the Minister said that the post-18 funding review, to which various noble Lords have referred, would look at how we can encourage flexible and part-time learning. We await the details with interest. Hopefully, they will emerge when the interim report to which he referred is published in the autumn.

The introduction of full-time equivalent maintenance loans in the coming academic year will provide some financial support to part-time students, although their family circumstances often starkly differ from those of the typical full-time student. Any changes resulting from the post-18 review will not come into effect for at least three years. Can the Minister point to any further government initiative in the interim that could encourage the reversal of the decline in part-time and distance learning?

I could have introduced the thorny topic of student debt but I think I shall leave that for another day. It is important, though, that the Minister does not gain the impression that, while we are content with these regulations, we are also content with the overall structure and distribution of funding in the post-school education sector. The report of the Economic Affairs Committee, to which I referred earlier, characterised it as “unfair and inefficient”. That is a conclusion with which we on these Benches wholeheartedly agree.

I thank noble Lords for their broad support of the regulations, but I shall pick up on the words mentioned by the noble Lord, Lord Watson. There are some issues circling around; he will be aware of that. Most of the questions focused on the future of fees and I shall spend most of my remarks focusing on the 18-plus review, which was raised initially by the noble Lord, Lord Adonis. I shall give as much information as I can on this important review.

The questions raised by the noble Lord, Lord Adonis, focused on whether there will be an interim report, consultation and polling, which was an interesting question. I think he was asking whether it would be a good thing to poll young people to ascertain their views. That is noted, but I reassure him that part of the extensive programme of engagement with stakeholders and experts includes students and recent graduates, and that is ongoing as part of the review. I shall give a little more information on this.

Noble Lords will know that this review was announced by the Prime Minister on 19 February. It is a major review across post-18 education looking at funding. We want to ensure that there is a joined-up system that works for everyone and is accessible for all. The review will ensure, as an overarching principle, that the system gives everyone a genuine choice between high-quality technical, vocational and academic routes. Students and taxpayers must get value for money and employers must be able to access the skilled workforce they need. Above all, we are also looking at the student experience. We must have a system whereby students go to university and come out feeling that they have had a good experience and have a good degree.

The review is being informed by independent advice. I must stress the independence of this review, so I may not be able to answer some of the questions directly because the review is independent. It is chaired by Philip Augar and one of our colleagues, the noble Baroness, Lady Wolf, is on the panel. There are five leading figures from across the post-18 education and business worlds. There is extensive engagement going on. I reassure the noble Lord and the House that there will be an interim review. I do not have a particular date in mind, but my understanding is—and I will write to noble Lords if I am wrong—that the interim review will come out some time this year. The actual review will come some time early in 2019 and after that there will be a response from the Government.

Does this review cover the whole of the United Kingdom, a point that is perhaps particularly relevant in view of the earlier comments by the noble Lord, Lord Adonis, about Northern Ireland? It would be good to know whether the entire country is included.

My understanding is that it covers England only. I understand that discussions are going on with the devolved Administrations, but the review focuses on England only.

I am sorry to interrupt the noble Viscount, but the situation of Northern Ireland is therefore very serious because there is no other means of conducting a review or introducing changes in the current climate. When the review was set up, it looked as if the Northern Ireland Executive might be re-established. That has not happened. Is he in a position to inform the House further about the Government’s attitude in respect of Northern Ireland?

I think I will add that to the letter that I will write to the noble Lord specifically about Northern Ireland. I remember what he said in the previous debate.

The noble Baroness, Lady Garden, and the noble Lord, Lord Watson, asked about progress in appointing an independent reviewer of the TEF. The recruitment of the independent reviewer is under way and an announcement will be made in due course. I have taken note of the comments the noble Baroness made about the TEF and the feelings that were expressed in this House about it last year. If they have not gone away, it is an issue that will be addressed.

I reassure the House that this is a devolved matter—this is going back to the question raised by the noble Lord, Lord Adonis. The review covers England alone, but it comes back to the point that I was making that I will write to him about matters relating to Northern Ireland.

The noble Baroness, Lady Garden, asked whether we can continue to take part in Erasmus. An announcement on the Erasmus programme will be made in due course, particularly to take account of the planning needs of students and universities.

The noble Baroness, Lady Garden, also asked about ELQ exemptions and part-time study. The ELQ rules have been relaxed to support students who already hold an honours degree qualification and who wish to retrain on a part-time basis in a STEM subject. The review of post-18 education and funding will look at how we can encourage learning that is more flexible. This takes account of comments that I made in a recent debate on this important subject, particularly relating to the Open University.

The noble Lord, Lord Watson, and the noble Baroness, Lady Garden, asked about the decrease in part-time study, particularly in the 30 to 49 age group. In this academic year, part-time students will, for the first time ever, be able to access full-time equivalent maintenance loans, as I think the House will be aware.

The noble Lord, Lord Liddle, raised some interesting points about the perspective from universities, and I took note of what he said regarding Lancaster University. It is a fair point, because if fees are capped, less money goes to universities. We are obviously aware of that and will take account of it as part of the 18-plus review. It is part of the overall view of how the future of tuition fees will pan out. That includes the points he made about the means-tested maintenance grant.

My final point is aimed to address something said by the noble Lord, Lord Adonis. He was talking about a range of where tuition fees might be from £0 to £9,250. I took it that the £0 meant that it was still Labour Party policy that, if it were ever to come into government, it would offer free education to students.

I do not speak for the Labour Party—that is for my noble friend on the Front Bench—but that was the policy at the last election.

My point in raising that was to say that this 18-plus review is also looking at these matters. Nothing is ruled in and nothing is ruled out and the independent panel will be looking at it. With that, I commend the regulations.

Motion agreed.