Student Loan Interest Rates

Lord Johnson of Marylebone Excerpts

Wednesday 27th March 2024 Lords Chamber

[Baroness Barran (Con)]

I come back to my earlier answer: we have a system in which it is very clear that above a certain threshold, 9% of income goes to repaying part or all of a graduate’s debt. The overall package, obviously, in terms of affordability of mortgages and housing, is dependent on many issues, of which graduate debt is one.

[Lord Johnson of Marylebone (Con)]

My Lords, the Government’s excellent recent reforms to the student loan book have significantly improved its affordability to the taxpayer, with less than a third now expected to be written off. Given this, and given the funding crunch facing universities—which will be worsened if the Government take a hatchet to the graduate route, by the way—does my noble friend the Minister agree with me that it is time to allow universities to increase fees in line with inflation for those that can demonstrate they are delivering great outcomes for students, as assessed by the teaching excellence framework?

[Baroness Barran (Con)]

As my noble friend touched on, the Government are trying to balance, or triangulate, a number of things. One is affordability for students, hence the freeze we have had for seven years on fees. Another is addressing poor-quality provision—at the other end of the issue from the one my noble friend raises—through the new Office for Students regime. In relation to motivation, reward and recognition for the highest-performing institutions, a review of allowing indexation of fees based on the TEF is not under consideration currently, but I will say that having a high-quality teaching framework does allow for strong recruitment and research income.

Higher Education

Lord Johnson of Marylebone Excerpts

Thursday 7th March 2024 Lords Chamber

[Lord Johnson of Marylebone (Con)]

My Lords, the Chancellor may not have used his Budget speech to tackle the funding crisis but, as the noble Lord, Lord Blunkett, said in his excellent speech, at least he mustered some praise for our universities. That was a welcome change of tone at a time of often scepticism, bordering on hostility, towards higher education.

There is of course nothing new in the criticism that too many go to university—we have heard it again today—or that too much public money is wasted on low-value courses. Such attacks have been a constant in the history of the expansion of higher education and everybody is well used to it. I do not want to fall into the trap of complacency, and I certainly agree with the noble Lord, Lord Londesborough, that there is a case for cracking down hard on pockets of poor provision in the sector, which affect a minority of students on a minority of courses. We want to ensure that value for money is produced by this system.

However, I do not think that we should succumb to a general cynicism about higher education; nor do I think that we should return to a system of rationing higher education and limiting access to the number of students who progress from level 3 to levels 4, 5 and, particularly, degree level 6. Why do I say this? I say it because there is a very well-established skills bias in knowledge economies. Job creation takes place overwhelmingly in roles requiring graduate skills and, in the UK, this is happening at a time when we are already suffering from marked skills shortage, where we do not have enough highly skilled individuals to fill many vacancies. Our real problem as an economy is skills shortages. This really matters if we care about levelling up. Unless we continue to develop the pipeline of highly skilled human capital, we will see increasing inequality as wages rise more rapidly for those whose skills will be in stronger demand. We must not lose sight of how imbalanced our economy is. The FT recently calculated that, if you strip London out of our GDP per capita figures, the average Briton is worse off than the average resident of Mississippi, the poorest state in the United States.

The second reason is that we are living in an era of unprecedented technological disruption. As the noble Lord, Lord Blunkett, said, there are massive changes ripping through our economy due to two big waves of innovation; the first is a digital innovation wave, built on AI, supercomputing and automation; the second is a deep-science innovation wave based on biotechnologies and nanotechnologies. Our ability to surf those waves depends on the absorptive capacity of our firms and the adaptability of our people.

We are already seeing massive labour market disruption. As the noble Lord, Lord Blunkett, said, these powerful technologies, a number of which are converging at the same time—not just AI, but big data, cloud computing, the internet of things, virtual reality and blockchain—are driving change in all aspects of our lives. As the World Economic Forum’s Future of Jobs report found in its survey of employers, 44% of workers’ skills are likely to be disrupted over the course of the next five years. It is only the quality of our education system that will determine whether the UK will benefit from these innovations and whether it will be able to join the ranks of countries developing the next technologies. The most highly innovative knowledge economies around the world—look at South Korea, Israel, Japan and Canada—have boosted tertiary participation rates to well above ours, to the order of 60%, 70% or even more. Our ambition should be to join this vanguard of knowledge economies, not to give in to the dismal voices calling for student number controls that will hold back our productivity, widen inequality and throw sand into the engines of social mobility.

Lifelong Learning (Higher Education Fee Limits) Bill

Lord Johnson of Marylebone Excerpts

Monday 10th July 2023 Grand Committee

[Lord Johnson of Marylebone (Con)]

My Lords, I will speak to Amendment 6A in my name. I declare my interests in the register as a visiting professor at King’s College London and as chairman of FutureLearn. As other noble Lords have indicated, this amendment attempts to address what is an elephant in the room in our debates. This is obviously a controversial issue, which is very much present but has largely been avoided as a subject for discussion: the absolute level of fees and tuition fees.

While it is very welcome that we are introducing a more flexible system of student finance, that is not much good on its own unless we address the relentless erosion in the value of tuition fees themselves. I have always found it a little unreal that we have a Bill that refers in its title to “Higher Education Fee Limits” but we have not actually had any discussion whatever of those fee limits.

The legal cap on tuition fees for full-time undergraduate study at most universities is now £9,250—that is barely changed from the £9,000 that it was when the system was introduced a decade ago. By May this year, inflation had eroded the value of these fees to £6,020 in 2012 money. If inflation remains elevated, it will be materially below £6,000 in 2012 money by September and teaching UK students at this level will be loss-making for many, if not most, institutions. Carry on like this and we will have stretched the unit of resource to such a point that a crisis is inevitable. The LLE certainly will not be offered, nor will much else. My view is that we are really not doing our job unless we do something in this Committee, and during the passage of the Bill, about the fact that the system as a whole is becoming unsustainable.

The current impasse is creating a situation in which we are systematically defunding our universities, depriving the engines of our knowledge economy of the fuel they need to offer great teaching and world-class research. If we want to retain our position as one of the world’s most highly regarded higher education systems, and to have a fighting chance of attracting researchers to support our goal of becoming a science superpower, this clearly cannot go on. We all know that this needs to be fixed, yet we seem to lack the political courage to do what needs to be done.

As far as I can tell, a lot of effort is going on across all parties to work out how to say as little as possible about higher education funding ahead of the next general election. I am very grateful for the support from my colleagues opposite and hope that, were this amendment to find favour, they would continue to support it as we make progress with the Bill. The amendment seeks to force the debate into the open and to flush out the extent to which the Government—and Opposition parties—are seriously engaging with this issue before the crisis in funding takes a further turn for the worse.

The amendment itself is very simple. It would automatically allow higher education institutions that deliver great teaching and student outcomes, as assessed by the teaching excellence framework, to raise fees in line with inflation. There is nothing novel about this. A mechanism to link funding to quality in exactly this way exists already in law in the Higher Education and Research Act 2017. Schedule 2 to that Act allows fee caps to be set at differing levels based on a provider’s teaching excellence framework award, subject to overall limits prescribed by regulations that are scrutinised by Parliament. This amendment would ensure that the mechanism is used automatically each year, ensuring that high-quality providers can continue to deliver great teaching and student outcomes without their tuition income being relentlessly eroded by inflation. There is nothing new in it.

As noble Lords may recall, the Cameron Government used this exact method to enable fees to rise with inflation from £9,000 to £9,250, some five years ago. In my view, we should have continued with that approach, as it would have maintained university funding on a more sustainable footing than it is at present and entirely avoided the current crisis. Gold-rated and silver-rated providers would today have been able to charge fees of approaching £12,000. The University of East Anglia, for example, would have had an extra £38 million, which would wipe out the black hole in its finances. Such a system, linking funding to quality, aligns the interests of students, taxpayers and providers, and is an immediately deliverable solution which can be implemented as soon as the next TEF results come out this September.

We do not need a big review. We should not wait for our universities to start falling over one by one. We need to get on and use the mechanism that already exists.

[Baroness Barran (Con)]

My Lords, I will respond to Amendment 2, tabled by the noble Baroness, Lady Garden of Frognal, and Amendment 5, tabled by the noble Baroness, Lady Twycross, and also in the names of the noble Baronesses, Lady Garden, Lady Wilcox of Newport and Lady Thornton. I will speak also to Amendment 6A, tabled by my noble friend Lord Johnson of Marylebone. These amendments seek to put the number of notional learning hours that constitute one credit in the Bill, to limit the default credit value to a maximum of 20 credits, and to allow certain higher education providers to increase their tuition fees automatically each year in line with inflation if they have a teaching excellence framework rating.

Amendment 2 would define in the Bill a credit as equivalent to 10 notional learning hours. As has been set out in the other place, while it is crucial that the definition of credits in the fee limit calculation aligns to standard practice in the sector, the Government plan to set this out in detail in secondary regulations, rather than in primary legislation. The power to do so is provided for in new paragraph 1B of Schedule 2 to the Higher Education and Research Act 2017, introduced through Clause 1 of this Bill.

Specifying the learning hours in secondary legislation, rather than primary, means that providers which might choose to use a different number of learning hours per credit will simply have those courses treated as non-credit-bearing for fee limit purposes. If we took the approach of this amendment, those same providers could instead be considered in breach of the fee limit rules as a whole, with all the regulatory consequences that that might bring. The Government do not intend to change the number of learning hours in a credit unless standards in the sector change: learning hours are, and should continue to be, based on sector-led standards. Regulations on learning hours will follow the affirmative resolution procedure, so Parliament will always get the opportunity to debate and formally approve any changes to those regulations.

Amendment 5 queries the extent to which the Government are prepared to fund modules of fewer than 30 credits through the LLE. As I referred to in my response made at Second Reading, and as set out in the Government’s consultation response, modules must have a minimum size of 30 credits for funding purposes. This is in line with the recommendation in the Augar review. None the less, as the noble Baroness, Lady Thornton, pointed out, it will be possible to bundle two or more modules from the same parent course to meet the 30-credit funding requirement.

This amendment also refers to the default credit value. If your Lordships will permit, it may be helpful to provide the Committee with some further detail on the purpose of this value. The default credit value is intended to allow fee limits to be set on full courses that do not bear credits or on full courses that are more suited to annual fee limits than credit-based fee limits. For example, this could include some degree programmes at Oxford and Cambridge or sandwich years where the provider has not assigned credits. It could also include courses such as postgraduate certificates in education or first degrees in nursing. For these types of study, a default number of credits will be used in the fee-limit calculation, instead of any provider-assigned number of credits. These default values will be set at 120 credits per year for full-time courses, with other amounts for other intensities, all of which will align with sector-recognised standards. The default credit values will not apply to modules undertaken separately from their full course. As all modules funded through the LLE will be required to bear credit, they will always have the fee limit calculated using the provider-assigned number of credits, not a default number of credits.

To be clear, the default credit value applies only to full courses, not to modules. If default values are all set at 20 credits, that would mean that, for example, Oxford and Cambridge would be allowed to charge for only 20 credits a year for their degrees, instead of 120 credits, which I am sure is not the noble Baroness’s intention. We would not want providers to be limited to being able to charge for this number of credits per year.

I now turn to speak to Amendment 6A, tabled by my noble friend Lord Johnson of Marylebone. It is clearly vital that our higher education sector remains on a sustainable financial footing. It is an important contributor to our national economy, and it is something that we excel at as a nation. That is why the Government keep all elements of student finance and higher education funding, including fee limits, under constant review. We have said that fees will remain frozen until the start of the 2025 academic year. This ensures that students and taxpayers continue to receive value for money. However, we are also investing an extra £750 million in higher education teaching and students over three years to 2024-25 through the strategic priorities grant. This will help providers to fund their provision of high-cost subjects, such as medicine, science and engineering, and help students to succeed.

We provide support for the sector through subsidised fee loans. This is our investment in the skills, people and economy of this country, and one that is even more important in current circumstances. A continuous automatic increase in fees in line with inflation would undermine the incentive for providers to find efficiencies in their business models or to develop other sources of revenue to diversify their income and achieve sustainability in ways that benefit British students and British taxpayers. Despite current pressures, the Office for Students found in its latest report that the overall aggregate financial position of the sector remains sound, though there is variation between individual providers.

I remind the Committee that overall tuition fee income in English higher education providers has increased in cash terms from £13.7 billion in 2014-15 to £21.6 billion in 2021-22, an increase of around 58%, but there are significant differences in income and student number growth between providers. Some providers have increased their student numbers significantly in recent years, in particular in business and management courses, which have grown rapidly. With the public outlay to support students to go to university having increased so much in recent years in cash terms, the rapid, localised growth that we have seen in some courses and at some providers emphasises the need for us to ensure that the quality of provision remains high, so that students can achieve the employment outcomes that they are looking for and the economy benefits from our considerable investment in higher education.

As my noble friend understands very well indeed, fee income from domestic students is just one element of the income mix of higher education institutions. Obviously, there is income from international students, research fees and funding institutes, as well as commercial income. There are questions that the Government would be keen to work with universities on, and, if helpful, I would be happy to meet my noble friend or providers to think about the scale and breadth of courses offered by individual institutions and groups of institutions within an area, as well as about how the cost base of institutions will develop in future.

Lifelong Learning (Higher Education Fee Limits) Bill

Lord Johnson of Marylebone Excerpts

2nd reading
Monday 19th June 2023 Lords Chamber

[Lord Johnson of Marylebone (Con)]

My Lords, I echo others in saying what a pleasure it is to follow those two excellent maiden speeches this afternoon. I draw attention to my interests in the register, particularly as visiting professor at King’s College London and as chairman of FutureLearn.

I sincerely welcome this Bill as it addresses a very important problem with our current funding system for higher education. Our system, modified by my noble friend Lord Willetts, is one of an income-contingent, time-limited graduate contribution towards the repayment of heavily subsidised loans for tuition and maintenance. In my mind it is the least bad of all available systems, but it does have three flaws.

The Bill is important in that it address one major flaw: the impact that our current system has had—as we have heard from many Members this afternoon—on lifelong and adult learning, which has been in crisis in this country for a decade. On its own, however, it is not enough, because it does not address two prior problems with our student funding system: the fact that our system has not allowed for tuition fees to rise with inflation, which has led to the progressive defunding of our universities, and the increasingly precarious dependence of our universities on international student tuition income, cross-subsidising domestic tuition and the important research that goes on in our system.

Sadly, this Bill does not address that problem. Nor does it address a related issue: we have a system that has no link at all between the quality of provision and the fees that institutions can charge for that provision. It is very important to have alignment between quality and funding; it seems to me essential that we put such a system in place. The coalition Government did attempt that under David Cameron’s Administration when they instituted a link via the teaching excellence framework, which resulted in the only year of inflationary uplift to tuition funding over the last decade. Institutions that participated in the teaching excellence framework were allowed to raise their fees from £9,000 to £9,250. Sadly, however, that sensible innovation lasted only one year, because a snap election resulted in the Government losing the majority on which the policy depended.

Since that time we have seen, effectively, a crisis whereby our institutions, so important to our future as a knowledge economy, are becoming increasingly financially vulnerable. Had we stuck with the mechanism that the Cameron Government instituted, we would not have a situation where, for example, UEA had a £40 million deficit this financial year; tuition fees would have been allowed to rise to around £11,700 for those institutions that acquitted themselves well in the teaching excellence framework; and we would have a link between teaching quality and funding, which any sensible system should have.

So, all that aside, it would be better if this Bill reinstated a link between quality and funding and made automatic an inflationary uplift in the upper limit of our tuition fee system, to put our universities on a stable footing. But that is by the by. The important thing is what this Bill does try to do; that is what is important today. The Bill creates a framework for us to move to a much more flexible system whereby we fund credits rather than years of study and enable people to dip in and out of learning throughout their lives. That is really welcome. I thoroughly support the objectives of the Bill and the framework that it creates for a much more detailed policy that is, hopefully, to come.

My concern, though, is about a policy that is in development at the moment in the department. There are lessons that we need to learn from the short-courses trial, which a number of Members have already referred to today. The trial is clearly struggling, with only 37 participants to date. That really is a paltry number, and I do not think it is sensible for us just to plough on and not try to learn some lessons from what is going on right now with the pilot and from the rather lacklustre response from providers—universities—in coming forward with suitable content for LLE funding.

There are potentially three lessons that we might preliminarily try to draw from what is going on with this pilot, and they are as follows. First, it is a mistake for us to focus so narrowly on level 4 to 5 courses at the expense of level 6 and level 7—that is, master’s—courses. Obviously, levels 4 and 5 are important, and I am not trying to say we should not have people doing level 4 and 5 study, but it is disappointing that modular degrees are not going to be available until the academic year 2027-28, almost a decade after the Augar report was commissioned and eight years or so after it landed. That is an inordinately long time for us to be getting off the policy drawing board into delivery mode for modular degrees, and I think the department could actively look at ways of accelerating that.

In respect of level 7, as the noble Lord. Lord Rees, said, it is important that we make modular funding available for level 7. Of course, master’s loans are available in non-modular form outside the LLE, but many people in work who already have level 6 qualifications will want to continue to progress to higher levels of educational attainment and will want to access level 7 courses. So I strongly urge the Government to remove their mental block on making LLE funding available for levels of study above level 7.

The second lesson that I suggest can be drawn from the pilot is about the minimum size of funding for which LLE funding will be made available. As the noble Lord, Lord Stevens, said in his excellent speech, 30 credits is too large a block of funding both in terms of learning commitment and time and with regard to the amount of loan funding—probably over £2,000—that the learner will have to commit to taking out. Other countries’ experience is that blocks of study of 10 or 15 credits are a much more flexible way of getting this thing off the ground, and I urge the Government to be a bit more flexible regarding the minimum size of funding that LLE will make available.

My third lesson, and this is probably the most important one, is about the kind of provision that will be eligible for LLE funding. At the moment the Government are determined, as far as I understand, to replicate provision that already exists; it has to derive from an existing HE qualification. In effect, we are saying that we want more of the same but in smaller pieces. This is a big missed opportunity. We want to enable learners to access different kinds of provision from different kinds of providers in different shapes and forms. We do not want to create a policy framework that completely chokes off innovation at this stage. Learners, as Andreas Schleicher from the OECD put it in his recent HEPI lecture, will want to access many different types of provision from many different types of provider in lots of different ways, so I urge the Government to be a bit more flexible in the range of providers and the types of courses that they allow into the LLE funding regime.

Those are three early lessons that I would draw from the pilot. I do not think it is irremediable at this point. We are not going to launch the LLE until 2025-26, so there is plenty of time to get the policy right, but we need to crack on with it. In the meantime, I strongly support the Bill for providing the legislative framework for what I hope will be the skills revolution that Ministers want.

Higher Education (Freedom of Speech) Bill

Lord Johnson of Marylebone Excerpts

Committee stage
Monday 14th November 2022 Lords Chamber

[Lord Johnson of Marylebone (Con)]

My Lords, I rise to support my noble friend Lord Willetts, who seeks to prevent the creation of a new statutory tort. We have heard a couple of criticisms of the tort that are a little inconsistent. We heard that it will, on the one hand, lead to a flood of vexatious claims that will bog up our legal system and be very costly for our universities; and, on the other, that it is otiose, because the right for people to make claims to the courts already exists. It surely cannot be both at once.

My objection to Clause 4 is that I think it will undermine the regulator, the Office for Students. I speak not as a lawyer or an expert jurist, so I enter into this terrain with great trepidation. From a very practical point of view, my concern is for the work of the director for free speech and the authority of the Office for Students if we put this new statutory tort into law.

Having been involved in helping to set up the Office for Students through the Higher Education and Research Act with my noble friend Lord Younger, I am acutely aware that we have already created a very powerful regulator. The reporting structure that this Bill creates around the director for freedom of speech is none the less extremely useful. That is why I support this aspect of the Bill, which creates this new position in the leadership team of the Office for Students.

However, once the director for freedom of speech’s position is created, his or her position will be very strong and he or she will have sufficient powers to do the job that we expect him or her to do in promoting freedom of speech in our system. That is because the director for freedom of speech will be able to impose conditions of registration on any provider that falls short of the enhanced duties created by this Bill.

These conditions of registration are an extremely powerful regulatory tool, because they consist of far more than just the nuclear option that HEFCE used to have, which was just to withhold funding from a provider. The Office for Students has a very subtle suite of regulatory tools at its disposal. They run a full range from simply seeking an action plan from a university all the way through to imposing fines on an institution if it does not deliver on the action plan it has agreed with the director for freedom of speech. They do not need to consist simply of suspending a provider from the register and therefore effectively dooming it to failure, or taking away its university title. Those are nuclear options that no regulator really has any credibility in threatening, but the director for freedom of speech will have many other more useful tools at his or her disposal.

A statutory tort on the statute book will not help the regulator in any way at all; it already has the tools it needs. I strongly support my noble friend Lord Willetts. I hope the Government will listen to the debate and the excellent interventions that we have heard this afternoon and accept Clause 4’s removal from the Bill.

[Lord Triesman (Lab)]

My Lords, it is a pleasure to follow the noble Lord, Lord Johnson. Like so many other people in the debate, I strongly agree with the comments made, from the speech by the noble Lord, Lord Grabiner, onwards. I also do not believe that this clause should remain. I do not believe it will do the job it is supposed to, and it will almost inevitably lead to the chilling effect that the noble Lord, Lord Willetts, and others have described.

My noble friend Lord Blunkett asked why the not entirely fictitious person Kathleen could not pursue an action for unfair dismissal because she was compelled into a position that was intolerable. I believe that there was a time when she would have been advised to do that, would probably have done so, and could have counted on the support of her trade union in pursuing that course of action—I can say this directly, as my interest has been declared any number of times. Of course, she found that she could not count on the support of her trade union. I submit to your Lordships that one of the reasons she could not now count on its support is precisely the reason that my noble friend described. If you go back seven, eight, certainly 10 years, the battle that would have taken place in that union to make sure that someone’s employment rights had been sustained without having to resort to any other regulator or court would have been absolute. It would have been the determined position of that union. Some may say that if that would no longer happen, maybe we need something else.

I submit that the “something else” we need is certainly not Clause 4 and this tort. There are those who might say that they are not so concerned about the chilling effect because they do not believe that enough of these things will happen. I say to your Lordships’ Committee that if it wanted to hand-pick a group of its fellow citizens who would argue in the most tortured way about absolutely anything, it should go to one of our universities. There they are: serried ranks of people whose day-by-day enjoyment is to have furious arguments about matters of little consequence. [Interruption.] I have been one for many years.

I will tell the noble Baroness, Lady Smith, that at Cambridge University, after the faculty of economics was redecorated, I was inveigled into taking part in a debate as to the order in which the portraits of its Nobel prize winners should be rehung and whether it should be Marshall or Keynes in the pre-eminent position. I left that debate after eight hours. No one was an inch further down the line of resolving it and, to my knowledge, the portraits have never been hung, because 20 years later no one is any further down the path of resolving it. I hate to say this: the only place where I have seen disputes followed with the same tenacious interest and complete unwillingness to give an inch is in my synagogue, but that is because it largely comprises lawyers. I do not make this point to be frivolous or humorous. The truth is that this is a most vexatious and disputatious group of people. They are employed to have arguments with each other; it reaches into every corner of their lives. If we think that they are unlikely to do so in these circumstances, we mislead ourselves completely.

Some people will be very well backed in pursuing this course of action. I think the noble Lord, Lord Willetts, made the point that some will be at a great disadvantage financially. The student unions that we are talking about are usually run by a small group of young people with no experience whatever of the law. Generally speaking, they are unable to exert any control over all the clubs that form the diaspora of their organisation—the Minister made that point. They will be put in a position that they cannot afford or control, and to which there will be no satisfactory long-term resolution.

All this brings me to say that the points that have been made, including by the noble Lord, Lord Johnson, about having a regulator that can manage these things, and build on knowledge of how to manage them, is a route to a sensible solution. The rest of it—and I apologise if this is thought to be offensive; I do not mean it to be—is completely fanciful, and anybody who has spent more than a few weeks working in a university will know it.

--- Later in debate ---

Moved by

[Lord Johnson of Marylebone]

63: Clause 9, page 12, line 39, at end insert—
“(3A) The duty in subsection (1) includes a duty to consider whether a registered higher education provider or any constituent institution is overly reliant on overseas funding from a single country of origin.”Member’s explanatory statement
This amendment, together with the other amendment to this clause in Lord Johnson’s name, would include income from international tuition fees in the definition of overseas funding and ensure that the Office for Students has a duty to monitor over-reliance on overseas funding from a single country.

[Lord Johnson of Marylebone (Con)]

In rising to speak to Amendments 63 and 64 in my name, I draw attention to my interests in the register as a visiting professor at King’s College London, chairman of Access Creative College and chairman international of ApplyBoard.

I am not sure we are capturing exactly what we need to in this section of the Bill on overseas funding. If we are to legislate afresh, as we seem to be doing, on freedom of speech in higher education, the chilling effects arising from the excessive concentration of international research and tuition income surely need to be part of the discussion. The four categories of relevant overseas funding in Clause 9 are all good as far as they go, but they manage to exclude altogether the largest single source of such income. That is, of course, the income that universities receive from the uncapped and unregulated tuition fees charged to international students.

Like so many in this place, I strongly support the contribution that international students make to the success of our higher education system, and I am very pleased indeed that we met the Government’s target of 600,000 international students in this country by 2021, 10 years ahead of the 2030 target. There are many critics of international students in the country today. I note only that the proportion international students represent in the overall student population has not changed markedly since 2014. While the actual number has increased by 28% since that time, that has been matched by a similar growth in the UK student population, meaning that their proportion of the mix has stayed broadly the same.

--- Later in debate ---

[Baroness Barran (Con)]

My Lords, I would like to address the group of amendments relating to overseas funding.

Amendments 63 and 64, tabled by my noble friend Lord Johnson of Marylebone, seek to amend the transparency measures concerning overseas income received by higher education providers. They would add tuition fees to the categories of overseas funding in scope and require the OfS to consider whether a provider or college was “overly reliant” on funding from a single country of origin.

Increasing awareness of foreign interference risks in higher education is of course vital. That is why we have already added measures to the Bill that will require the OfS to monitor the overseas funding of registered higher education providers and their constituent institutions so that it can assess the risk that the funding may pose to freedom of speech and academic freedom in the provision of higher education within a given institution. However, we have ensured that the scope of these measures is proportionate to the risk, in order to ensure that our universities remain a place where freedom of speech can thrive.

The Government consider that these further amendments are unnecessary and potentially overly bureaucratic. Providers are already required to submit data to the OfS on course fees by broad domicile, broken down by UK, other EU and non-EU. In addition, international student numbers are reported to the Higher Education Statistics Agency and published online, broken down by country of domicile and by provider. This means that information about international tuition fees is already available to the OfS. If the OfS considered that a provider was overly reliant on student tuition fees—the noble Lord, Lord Collins, talked about the business case for overseas students—it could take steps if it thought that this would threaten the financial sustainability of the provider. That is included in the registration conditions that providers must already comply with. The OfS can issue sanctions for breach of these conditions.

Amendment 65, in the name of my noble friend Lord Willetts, seeks to increase the financial threshold for reporting required by higher education providers under Clause 9. This would require that no less than 1% of the total income of a higher education provider would fall to be reported, thereby reducing the burden of reporting on providers.

For many large providers, 1% of their total income could represent tens of millions of pounds, but I am sure noble Lords will agree that, for example, £1 million would be a very significant amount of money if an individual member of the academic staff received it as a research grant. Amendment 65 would mean that such instances might not fall to be reported.

The aim of Clause 9 is to increase the transparency of overseas funding. The OfS will require providers to supply information to them on relevant overseas funding. Relevant funding is defined as certain specified types of funding received by the provider, a constituent institution or a member or members of staff from a relevant overseas person, where that exceeds a threshold—to be set out in legislation—within a period of 12 months. The current intention is to set this at £75,000 in a 12-month period for providers and colleges.

We recognise that the risk of undue influence arising from smaller amounts of overseas income is likely to be lower. We have therefore ensured that the scope of these measures is proportionate to the possible risk to freedom of speech. We believe that the intended threshold of £75,000 for providers and colleges is appropriate, as it will strike the right balance by increasing the transparency of significant transactions without creating undue bureaucracy by requiring the reporting of smaller transactions that are less likely to pose a risk. The information required is further narrowed in scope, as “relevant overseas person” is a limited category and there will also be countries that are excluded from this provision that will be set out in regulations.

We take the impact on the higher education sector seriously, which is why the Bill includes the measures that I have just described to reduce the level of reporting required. We are therefore ensuring the proper targeting of the measure to the risk to freedom of speech, and that the burden on providers will not be too great.

I now turn to Amendment 66 tabled by the noble Lord, Lord Wallace of Saltaire, and spoken to by the noble Baroness, Lady Smith of Newnham, which seeks to clarify why students’ unions have been included within the scope of the overseas income measure in Clause 9. The overseas funding measures in the Bill seek to increase the transparency of overseas donations and other income received by higher education providers, their constituent institutions and students’ unions to better enable the OfS as a regulator to understand the possible extent of financial leverage from a foreign source, which may influence behaviour to pose a threat to freedom of speech and academic freedom. The information reported will enable the OfS to monitor and report on any sector trends and patterns.

In order for these measures to have the maximum intended effect on countering the threat of foreign interference in higher education and to increase public confidence in the sector, we considered it vital that the overseas funding duties extend to students’ unions, as other measures in the Bill do. Students’ unions across England are in receipt of a variety of overseas income every year and there is diversity across students’ unions in the ways in which they are funded. Information published by the Charity Commission demonstrates that a large number of students’ unions are very reliant on the annual donations and legacies that they receive. Therefore, it would be remiss not to include students’ unions in Clause 9.

The scope of the measure—noting in particular the threshold amount, which we anticipate will be set at an appropriate level for students’ unions—means that the burden on those unions will not be too great and will ensure the proper targeting of the measure to the risk to freedom of speech. I trust I have given reassurance that Clause 9 as drafted offers sufficient and proportionate protection against undue foreign influence on freedom of speech and academic freedom within higher education.

[Lord Johnson of Marylebone (Con)]

I am grateful to my noble friend the Minister for her response and to noble Lords for their excellent contributions. I will reflect on the debate and particularly on whether this was the best place for my amendment, which I recognise I have rather contrived to attach to this Bill. In the meantime, I am very happy to beg leave to withdraw it.

Amendment 63 withdrawn.

Times Education Commission Report

Lord Johnson of Marylebone Excerpts

Thursday 13th October 2022 Lords Chamber

[Lord Johnson of Marylebone (Con)]

My Lords, I am grateful for the opportunity to speak very briefly in the gap and I congratulate my noble friend Lord Lexden on convening this excellent discussion. It is an honour to follow the excellent contributions from Members of this House.

I was particularly struck by my noble friend Lord Lexden’s comments about the need for rigorous manifesto processes and the Times Education Commission being an example of a rigorous process likely to result in good policy in due course. I was privileged to serve alongside the noble Lord, Lord Rees, on the commission and have had a little experience of writing manifestos for the Conservative Party. I agree wholeheartedly with the sentiment that the more manifestos road test their recommendations with the widest possible groups—the more they consult and the more they engage—the likelier they are to result in deliverable programmes of government. Sadly, the manifesto that I was involved in most closely, in 2015, resulted in the first majority Conservative Government in 25 years but, as a programme for government, lasted less time than I spent helping to write it due to the change in government following the referendum of that year. Good process does not necessarily get you all the way you want to go in the end.

I also want to take advantage of my time to commend the Times and, in particular, as the noble Lord, Lord Rees, mentioned, the outgoing editor, John Witherow; the person who held the pen on this whole project, Rachel Sylvester; and Sir Anthony Seldon for coming up with the idea in the first place. It is worth noting that, as John Witherow retires, after many years at the head of the Times and before that the Sunday Times, he has been a great force for good in British journalism and across the UK media landscape. He has always been a great pragmatic, calm figure. He is someone of great distinction and we owe him a lot for all the good work he has done at the Times and, before that, the Sunday Times over the years.

The commission approached its work very much in an ecumenical spirit. I was grateful to my noble friend Lord Willetts for noting the constructive tone of the report. There were very few arguments between commissioners, notwithstanding the very diverse range of backgrounds and political viewpoints from which they all came. There were very few points of disagreement. Very seldom did it get heated. There was a genuine commitment to trying to work in the greater interests of the country, setting aside party-political disagreements and avoiding point-scoring wherever possible. Rachel Sylvester helped brilliantly in that regard by not really giving us much of an opportunity to comment on the draft once she had written it. It went to print very rapidly before any of us, experts in the art of write-rounds, could stick our oar in. Well done, Rachel, in that respect.

On the substantive points that Members have made, it speaks to an issue of capability in our government system at the moment that we need an exercise such as the Times Education Commission to help us lift our eyes to the horizon and think about the big challenges that our education system faces. Why did it require this? The reality, as we all know, is that Governments of all types—it is not just true right now, although we are in a particularly turbulent time—fail to think for the long term and tend to be consumed by one crisis after another. Ministers have also struggled to think strategically and about systems as a whole. There is an opportunity to take the Times Education Commission’s last recommendation, which is for a 15-year strategy, and to think of the mechanism by which we can best put that in place. I suggest, in my dying seconds, that we could consider a recommendation for a royal commission to create that first 15-year strategy. We have not had a royal commission on education for many years and I think one is long overdue.

Skills and Post-16 Education Bill [HL]

Lord Johnson of Marylebone Excerpts

Consideration of Commons amendments
Thursday 7th April 2022 Lords Chamber

It is vital to the success of the country that young and old are encouraged to improve their skills in all the areas which are needed for prosperity, and so it is a great relief that the Government are not cutting off their nose to spite their face, and have listened to the many well-argued and passionate arguments from around this House and given this reprieve. I thank the Minister.

[Lord Johnson of Marylebone (Con)]

My Lords, as at previous stages, I draw attention to my interests in the register.

I echo the noble Lord, Lord Blunkett, and others in welcoming that we are no longer planning to move straight to a binary world of A-levels and T-levels. I was glad to see that the Secretary of State, in his letter to Peers today, said that BTECs and similar qualifications will have a continuing and important role alongside T-levels and A-levels.

Can the Minister please reassure us on two further points? First, will the Government seek parity of esteem for all quality technical and academic options, so that there is no hierarchy between A-levels, T-levels, BTECs and similarly applied general qualifications? This would mean that the Government would cease to refer to T-levels as the best option and the best technical route. Secondly, can she address the continuing issue of the blight that hangs over the provision of BTECs and other applied general qualifications during this extended reform process, so that it does not deter providers from offering these important and valued technical options and discourage students from embarking on them out of concern that these qualifications will be disparaged by the Government in the process of the reforms and lose their value over time?

[Lord Watson of Invergowrie (Lab)]

My Lords, it has been a long and winding road with this Bill, stretching back over 10 months from the position that we find ourselves in today. There is very little to add to what noble Lords have said in the last 20 minutes or so, but of course that does not mean that I will not make an attempt at it.

It is very pleasing that we have reached this position because, when the Bill arrived here, it was skeletal in form and many noble Lords made the point that it would be fleshed out only through secondary legislation. I do not think that many find that an acceptable means of legislating, given the restrictions on scrutiny that it entails. But we have had some fleshing out. We have the lifetime skills guarantee—albeit from only level 3 upwards—which will be introduced in 2024. We have the lifelong loan entitlement, which we know a bit more about and which is out for consultation at the moment; it will not come into play until 2025. There are also other consultations ongoing on level 2 and level 3 qualifications, so there is still quite a lot out in the ether and what will finally emerge is for the future.

I echo the points of noble Lords, particularly my noble friend Lord Blunkett, about the discussions into which the Minister, the noble Baroness, Lady Penn, and officials entered with us in the last few days. They have been productive.

I was slightly disappointed to get a message this morning from someone in the higher education sector who said that they were disappointed that the fight against BTECs being defunded, had fizzled out. Being a fairly forthright Scot, I replied that this was, shall we say, not quite the case. I have also had messages about the extension to 2024 and the clarity that will be provided in the documents that the Minister referred to—the Secretary of State’s letter and the table. I am not sure whether the table has yet been distributed to noble Lords, but it will be. It sets out the defunding process. The main point, as the noble Baroness, Lady Garden, mentioned, is that when this started, it was said that only a small range of BTECs would survive. We have now come not quite full circle but some considerable distance, with only a small range of BTECs facing defunding and in certain circumstances, as the Minister outlined. That is very much progress, and we welcome it.

To echo the noble Lord, Lord Baker, T-levels will ultimately be a success—we want them to be and they will be; it is a question of time. In our discussions earlier in the week, the Government’s target was 100,000 T-level starts in 2024. That is quite ambitious, given that we have only 5,000 at the moment, but I wish them well. Equally, I welcome that for those young and not so young people for whom T-levels are not appropriate for whatever reason—there are many reasons why that might be the case—there are other options remaining open to them, not least the route into higher education, which has been, as many noble Lords have said, very important. I am pleased that we have got to this. As my noble friend Lord Blunkett said, the Minister has been very helpful in that regard.

The noble Lord, Lord Baker, deserves considerable credit. Through his efforts, the clause bearing his name from the 2017 Act has been beefed up and will carry much more weight and be much more effective than it has hitherto been, with the ability of providers to be brought into schools. There will be much less likelihood of head teachers saying, “No, no, we don’t need that actually. Most of our young people are going to university, we don’t really need to hear about apprenticeships or any form of technical education”. That is wrong in any situation and is now much less likely.

The question of careers education is important. The noble Lord, Lord Blunkett, mentioned it, and I am very proud to say that there is a young man—my son Thomas—sitting on the steps of the Throne who is about to enter senior school. By the time he reaches 16, I hope that these reforms will have bedded in and he will have many options open to him and his cohort, enabling them to make informed decisions on how their lives will pan out, whether through further education, higher education, apprenticeships or whatever. I very much hope that that will be the case.

I do not really have anything else to say, other than that the Bill is in a much better state than it was when it arrived here. Many noble Lords have played an important role in getting us here, and I have to say that the Government have been willing to listen and act. It is important that this Bill is a success. The futures of many young and not so young people depend on it, and the future economy of this country depends on it. I hope it will succeed.

Skills and Post-16 Education Bill [HL]

Lord Johnson of Marylebone Excerpts

Consideration of Commons amendments
Thursday 24th March 2022 Lords Chamber

[Lord Shipley (LD)]

My Lords, I agree with what the noble Lord, Lord Willetts, has just said about the timescales. I had the privilege of chairing your Lordships’ Select Committee on Youth Unemployment, which reported in November. I am grateful to the noble Baroness, Lady Wolf, for giving us her time and the benefit of her expertise to advise the committee, which was much appreciated.

We reported in November and have just had the reply from Her Majesty’s Government. What we concluded from the evidence given to us was substantial. I shall read to the House our recommendation 40 on this issue:

“The Government must reconsider its decision to defund tried and tested level 3 qualifications like BTECs, Extended Diplomas and AGQs”—


that is, applied general qualifications.

“We support the amendment to the Skills and Post-16 Education Bill requiring a four-year moratorium on defunding these qualifications and urge the Government to reconsider this policy in its entirety.”

That was the unanimous conclusion of the committee.

The Government’s reply came to us a few days ago, and the word “overlap” appears in it again. They say they will

“remove funding from qualifications that overlap with T Levels … at a pace that allows growth of T Levels and time for providers, awarding organisations, employers, students, and parents to prepare.”

They conclude that one year is enough. I conclude that it requires four years and, as the noble Lord, Lord Willetts, has just said, it may be more than that. In introducing these amendments, the Minister talked about two consultations that have taken place on the issue but, as I recall, she did not say, as the noble Baroness, Lady Blackstone, has reminded us, that 86% of respondents thought the Government’s timetable was too complicated.

I will just give the House some statistics that the committee received. We said in our report:

“230,000 students received level 3 BTEC results in August 2021. They are a common route into HE and are particularly taken up by students from disadvantaged backgrounds or those with special educational needs and disabilities … Almost half of black British students accepted into university have at least one BTEC.”


The evidence is conclusive, and the contributions today from around your Lordships’ House have demonstrated that the Government need to think again on this issue. For that reason, in supporting Amendment 15A and indeed Amendment 16A in the name of the noble Lord, Lord Baker, I will say on behalf of these Benches that if the noble Lord, Lord Blunkett, decides to press this matter to a Division, we shall support him.

[Lord Johnson of Marylebone (Con)]

My Lords, I draw attention to my interests in the register as chair of Access Creative College, an independent training provider of further education for the creative industries. Access welcomes many of the measures in the Bill, as do I. However, I have real concerns that we are inadvertently blighting the applied general qualifications, including BTECs, that it provides.

I listened carefully to the Minister’s remarks responding to Amendment 15A, tabled by the noble Lord, Lord Blunkett. I may have misheard but I thought I heard her say that A-levels and T-levels were the best routes for learners. I really worry that that kind of language, which creates a hierarchy between qualifications, will lead us to diminish the applied general qualifications and the place they have in our system. I worry that we are denigrating them, which will make it harder for providers confidently to offer them and for learners to undertake them, not knowing whether they will hold their value over time in the eyes of employers and the Government. We need to be careful to ensure that when we talk of parity of esteem we include applied general qualifications in that, so that it is parity of esteem not just between A-levels and T-levels but between A-levels, T-levels and applied general qualifications, including reformed BTECs if they are to be further reformed.

It is really important that the Government try to set out a long-term vision for applied general qualifications. We have to recognise that we have moved quite a long way from the previous government position of there being nothing in between A-levels and T-levels. The Government are now acknowledging that there are going to be a large number of qualifications of the applied general variety, but we need to ensure stability and certainty over their funding and their place in the system, otherwise providers are simply not going to get going and offer them, and learners are not going to be confident about taking them.

In that respect, it would be extremely helpful, for example, if the Government set out when they intend to end the moratorium that has been in place since September 2020 on the creation of new applied general qualifications. To my mind, it does not make any sense to have a moratorium if the Government, in their new policy position, now see value in qualifications in this space between T-levels and A-levels. What purpose does a moratorium serve? To my mind, it crimps and constrains innovation. It prevents providers adapting to the needs of employers and learners and stops them innovating. That is a real issue, and the Government would do well to set out a timeline for ending this moratorium.

I am all for T-levels, and Access Creative College, which I mentioned, is embracing such T-levels as exist that are relevant to its areas of expertise, including the digital T-level—but let us not develop them at the expense of BTECs and other applied qualifications, which meet the needs of their learners extremely well. Let us not create a burning platform for T-levels that does great damage to their needs.

[Lord Adonis (Lab)]

My Lords, as the Minister who gave the authorisation to Crossrail, I can say that it was never the intention that the Central line would close; there would be pandemonium in London if it did. The whole purpose of Crossrail was to supplement and improve the Central line, not to replace it, and indeed it goes out further west and east.

That goes to the heart of what the noble Lord, Lord Johnson, has just said, and indeed there seems to be a consensus in the debate that we want a range of qualifications that meet employers’ and students’ needs and do so because they have a strong currency. That strong currency should of course be decided by the students and employers, not imposed by the Government—at least not until the point where it is so clear that the currency is there that it becomes a kind of tidying-up exercise rather than the straightforward force majeure abolition exercise that it looks like at the moment.

I was struck by the fact that when the noble Baroness, Lady Wolf—whom we hold in extremely high regard—spoke about the local skills plans, she did not speak at all about T-levels and did not reply to my noble friend Lord Blunkett. There was a deafening silence on that issue, and I am not sure whether silence was supposed to mean consent; I suspect it might have. I am sure the House will listen with close attention, since she is the Government’s adviser, if she wants to intervene again to say whether she disagrees.

The point being made here is that there may be a longer-term case for these qualifications continuing together, just as there is a long-term case for Crossrail and the Central line continuing together. At the very least we should not abolish the right of students to have access to BTECs until we can be reasonably confident that the replacement qualifications have a strong currency, not a weak one. I am surprised that it should be us on this side having to say this, because it is an enormously Conservative argument: you do not abolish what is there at the moment until you are clear that what is going to replace it is stronger.

This point was brought out particularly strongly in the remarks of the noble Lord, Lord Shipley, who has chaired a Select Committee looking at some of the underlying issues that these qualifications seek to address. He gave the figure to the House that last year 230,000 students finished BTECs. In preparing for this debate, I read the T Level Action Plan of September 2021, which says that as of last year 5,450 students started on 10 T-levels. Let us recap those figures: 230,000 students finished BTECs last year, while in the rollout of T-levels at the moment 5,450 students have started. The noble Lord, Lord Willetts, said that the plans at the moment for opening T-levels are highly ambitious. Extrapolating from that model for the Central line and Crossrail, we would be opening Crossrail in about the middle of this century—not next year with a one-year delay.

My noble friend Lord Blunkett’s amendment seems extremely reasonable. He is calling for a two-year delay and a review at the end of that to see whether the currency is strong enough. That would seem a very sensible step. Not only is it moderate in its own terms, given the timescales; it could be vital for the life chances of hundreds of thousands of students for whom BTECs are, at the moment, their currency into employment. We should not take that currency away until we are clear that there is an alternative at least as good.

Higher Education Reform

Lord Johnson of Marylebone Excerpts

Monday 28th February 2022 Lords Chamber

[Baroness Barran (Con)]

The noble Baroness asks a number of important questions about the funding model for our universities but, as she acknowledged, they are incredibly successful in attracting international students, with over 605,000 of those students coming to our universities. In the other place the other day, my right honourable friend the Secretary of State quoted the figure that of every four international students, two go to the US, one comes to the UK and the rest of the world shares the last one.

We are aiming to build on that success; the investment that we announced along with this package aims to focus on both teaching and facilities to make sure that the highest-quality future-facing education is offered in our universities. My right honourable friend the Minister for Universities and Higher Education has been extremely active in stressing her concerns about how students’ experience has suffered over Covid and the responsibility of universities to respond, get back to face-to-face teaching and meet their needs, but I am happy to pick up in writing some of the wider points that the noble Baroness raised.

[Lord Johnson of Marylebone (Con)]

My Lords, I strongly support the Government’s student finance reforms, which strengthen what I think is the least bad system of funding higher education, but I have to say that I am puzzled by why the Government appear to be disavowing what in my view has been the standout levelling-up policy of the last decade: the removal of student number controls, which have allowed disadvantaged young people to go to university in far greater numbers—they are 80% more likely to do so in 2021 than they were in 2010. I would be very grateful if the Minister could reassure me that any student number controls will be imposed only in the most egregious cases of poor outcomes identified by the OfS and will not be used as a back-door means of reimposing sweeping caps or quotas on aspiration across the entire system.

[Baroness Barran (Con)]

I am delighted to reassure my noble friend that we will not be introducing the sweeping caps to which he alludes. As he said, universities have been extremely successful in terms of social mobility. By consulting on student number controls, we are not taking a position on what the correct proportion of people going to university should be, but we want to tilt provision towards the best outcomes for students and, as I said, make sure that our further education system also offers fantastic pathways to success.

Post-18 Education and Funding

Lord Johnson of Marylebone Excerpts

Tuesday 4th June 2019 Commons Chamber

[Damian Hinds]

No, that is not correct. This is an independent panel report that feeds into the wider process of the Government’s review into post-18 education and its financing. As I said to the hon. Member for Ashton-under-Lyne (Angela Rayner), who speaks for the Opposition, we will of course consider very fully all the recommendations.

The hon. Member for Glasgow North West (Carol Monaghan) asked about repayment thresholds. I might ask her why Scottish students are still waiting—and, I gather, will still be waiting until 2021—for the recommendation made by her independent review into repayment thresholds to be put in place. She talked about barriers to young people going into higher education. I am afraid that the reality is: in England, we have record numbers of people going into higher education. In Scotland, as a direct result of her policy, the number of university places remains capped, which limits the number of young people who can benefit from the opportunity of going to university. The impact of that is that the disadvantage gap, if we look at England, Scotland and Wales, is biggest of all in Scotland.

[Joseph Johnson (Orpington) (Con)]

The Augar review does not mention the teaching excellence framework. What use does the Secretary of State think the TEF will have in assessing which courses offer value for money for students and the general taxpayer?

[Damian Hinds]

I am grateful to my hon. Friend for giving me an opportunity to pay tribute to all the work he did as universities Minister. The TEF is a very important reform and is part of the framework from HERA—the Higher Education and Research Act 2017—and the OFS that enables a much more holistic view of quality in higher education. It remains a central part of that architecture.