Higher Education and Research Bill (Fourth sitting)

Debate between Lord Johnson of Marylebone and Valerie Vaz

Committee Debate: 4th sitting: House of Commons
Thursday 8th September 2016 Public Bill Committees

[Valerie Vaz]

Thank you, Mr Hanson. It is a pleasure to serve under your chairmanship. My amendment is intended to be helpful; obviously, if Members do not like what I say, they can just trash me in the press. “Office for Students” is a misnomer. First, this body is not about being an office for students; as various clauses make clear, the body is about registration and regulation—a registration procedure—and not about students. It is certainly not about having students as part of the office for students.

Secondly, from the written and oral evidence given to the Committee, the situation of postgraduate students has clearly not been acknowledged or mentioned in setting up this body, and, with the new changes in the Government, we now have two responsible Departments. Postgraduates do a fantastic job of not only research, but teaching, so they are split between the two. There is a gap there, which has been acknowledged. Postgraduate students have to be somewhere in the Bill.

Furthermore, there is nothing about subject-specific support—the strategic and vulnerable subjects, which require a higher level of funding. That is why I say that this body is not about students. There is nothing about skills, the skills deficit or protecting the STEM subjects of science, technology, engineering and maths. I liken the office for students to the Care Quality Commission. This is like calling the CQC the “office for patients” when its responsibility is not actually about that, but about regulating healthcare providers.

The office for students appears to set up regulation and registration processes. We can see in the Bill a power to impose monetary penalties and a power for the suspension of registration. Higher education providers will have to pay for the benefit of being part of the register. If we continue to look through the Bill, we see clauses titled “De-registration by the OfS” and “De-registration by the OfS: procedure”. Higher education providers are going to be spending all their time on bureaucracy, and all that money will be taken away from front-line services—away from the students themselves. That is why I say, again, that it is not about students.

According to clause 2(2), the Secretary of State has to give guidance. Again, there is no clarity. We need to change that, because we now have two Secretaries of State. If the OFS was for students it would be about fees protection, because students who were having to face bills of £27,000 are now being provided with invoices for £45,000. It would also be about students’ wellbeing, the skills shortage, retraining, returners, and all those people who do not classify themselves as students as we imagine them to be. Our time as a student is actually a very short part of our lives. There are people who do not fit the student mould, yet who will be students at some stage during their lifetime.

I want to pick up on the Minister’s remarks earlier about my being the only one who wants to pause the Bill. I do so because I am a lawyer, and was a Government lawyer. It is important to have clarity on the face of the Bill. Currently, that is not the case. The Minister helpfully told us that he has been living with the Bill for 14 months. I sympathise with him on that, but there have been a lot of changes, not least the new grammar school policy that might be coming through. What happens at the early stages of education filters up. The abolition of the Office for Fair Access and what happens to young people as they go through the education system will have a great impact. I know that it is not part of the programme motion, and I have been told that we cannot discuss this, but what happened on 23 June is vital. I say again that the machinery of Government changes.

There is no clarity on the face of the Bill. “Office for Students” is a misnomer. I would prefer to work with the Minister to find another way to describe the body, not least because it is not about students.

[The Minister for Universities, Science, Research and Innovation (Joseph Johnson)]

I echo the hon. Lady’s pleasure at serving under your chairmanship, Mr Hanson.

I shall move straight to the points raised by the amendment, with which I fundamentally disagree. I do, though, appreciate the hon. Lady’s efforts to be helpful and am pleased to have a chance to address the points she made. The Bill sets out a programme of reforms for higher education that will improve quality and choice for students. It will encourage competition and allow for consistent and fair oversight.

As I said when I gave evidence to the Committee this morning, there have been several significant changes to the higher education system since the last legislation was introduced to overhaul the regulation of the sector, all the way back in 1992. The majority of funding for the system used to come directly from the Government, in the form of grants. We have now moved to a system in which students themselves fund their studies.

The regulation of the sector clearly needs to keep pace with developments if confidence, as well as our international reputation and standing, are to be maintained, so we need an HE regulator that is focused on protecting students’ interests, promoting fair access and ensuring the value for money of their investment in higher education. That has been a central tenet of Government reforms since the publication of the 2011 White Paper, “Students at the Heart of the System”. Ensuring that the student interest is at the centre of the sector’s systems and structures is a cardinal principle of our approach.

--- Later in debate ---

[Joseph Johnson]

I thank my hon. Friend for his point. That is right. HEFCE is a brilliant body. As we discussed this morning, it was set up in 1992 as the successor body to the Universities Funding Council. It is in the tradition of being a funding council at a time when the Government no longer principally funds the universities, so it is doing its job in a regulatory environment that reflects a bygone era. We need a regulatory structure that reflects the fact that students are now the primary funders of their education through the student loan system. This is a market, as recognised in law, so we need a market regulator. The office for students is the body that we believe is best placed to do that.

A change of name of the kind that the hon. Member for Walsall South suggests would go against the main principles that we are trying to achieve through these reforms. I note that none of the stakeholders who gave evidence to the Committee on Tuesday or today asked for a change of name.

As a regulator, the OFS will need to build relationships across the sector. Part of its duties will be thinking about the health and sustainability of the HE sector. However, that does not change the fact that the new market regulator should have students at its heart, and I believe that the name of the organisation needs to reflect that. For that reason, I ask that the hon. Lady withdraws her amendment.

[Valerie Vaz]

The stakeholders may not have asked for it, but that does not mean that people cannot have an idea of their own, take soundings or look at the face of the Bill and see what strikes them. I have not missed the point, as the Minister said, because clause 2(1)(b) says that the OFS is needed

“to encourage competition between English higher education providers in connection with the provision of higher education”.

Anything to do with students, universities or higher education is also about collaboration and public good. I wanted to flag up the fact that the name, as it currently stands, does not incorporate the idea of putting students at the heart of it, for reasons that I will not go through again. It is open to very clever civil servants to come up with something that reflects this debate. With that, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 1 ordered to stand part of the Bill.

Schedule 1

The Office for Students

Higher Education and Research Bill (First sitting)

Debate between Lord Johnson of Marylebone and Valerie Vaz

Committee Debate: 1st sitting: House of Commons
Tuesday 6th September 2016 Public Bill Committees

[Valerie Vaz (Walsall South) (Lab)]

asked whether there had been any discussions about how the change in the machinery of government would affect the Bill, given that it would be split between two Departments.

[Joseph Johnson]

stated that the machinery of Government changes had gone through in July and that the lines of ownership were clear.

Student Loan Repayments

Debate between Lord Johnson of Marylebone and Valerie Vaz

Monday 27th June 2016 Commons Chamber

[Joseph Johnson]

Yes, of course. Higher education has been devolved in Scotland and Wales since 1999 and in Northern Ireland since 2007, and we continue to look at how other nations within the United Kingdom choose to allocate public funds to the higher education system to see what lessons are to be learned from that.

In England, we now have a fair and sustainable system of funding our higher education system. The £21,000 threshold is higher than the one we inherited from Labour, and is fairer on lower earners. The system is also more progressive. Interest rates after graduation increase with income so that higher earners repay more. For someone earning £21,000 or less, the interest rate is set at RPI—the loan balance does not increase in real terms. For graduates who earn more than this, the interest rate increases to a maximum of RPI plus 3%. It is only fair that the graduates who have benefited most from their education should pay the most back into the system.

Student loans are very different from a mortgage or credit card debt. Repayments are determined by income, not the amount borrowed. Graduates are protected; if at any point their income drops, so do their repayments. The loans are income-contingent, so borrowers will repay only if they earn above the threshold, and, as I said, the loans are written off after 30 years, meaning that many graduates will not repay the full amount. This is a crucial part of the taxpayer’s investment in our country’s skills base.

Our approach is based on the fundamental principle that a borrower’s contribution to the cost of their education should be linked to their ability to pay. Graduates generally benefit from higher earnings than those who do not go to university, and we must ensure that we maintain a fair balance between taxpayers and graduates in the costs of higher education.

It is clearly important that students know what they are signing up to when they agree to take out their loans. All students are provided with clear information to help them understand what financial support they may be eligible for, as well as the interest rates and the repayment terms that will apply. They must also confirm that they understand the information before they are granted the loan. All of the information that the Student Loans Company provides to students is reviewed regularly to ensure that it is both accurate and accessible.

Let me turn to the threshold freeze, which the hon. Member for Walsall South has mentioned. To put higher education funding on to a more sustainable footing, we must ask graduates who benefit from university to meet more of the costs of their studies. It is clear that graduates benefit hugely from higher education. On average, graduate earnings are much higher than those of non-graduates. In 2015, graduates’ salaries averaged £31,500, compared with a non-graduate average salary of £22,000. The only alternative to asking higher-earning graduates to support higher education is to ask the taxpayer, who on average will earn much less than those graduates.

We did not take the decision to freeze the repayments threshold lightly. We consulted on the changes before they were announced last November and conducted a full equalities impact assessment. The changes will mean that graduates earning more than £21,000 will repay about £6 per week more than if we had increased the threshold in line with average earnings. The threshold is higher in real terms than the one we inherited from Labour, meaning that graduates under this system keep more of their earnings before they start to repay.

A sustainable student finance system enabled us to abolish student number controls, lifting the cap on aspiration and enabling more people to receive the benefits of a university education. That is essential if we are to maintain our place as a country with a modern, highly skilled economy. We still send proportionately fewer people to university to study at undergraduate level than our main competitors. Between now and 2022, more than half of job vacancies will be in occupations most likely to employ graduates. If we are to continue to grow our economy, we must equip our young people with the skills and qualifications they will need to fill those roles.

[Valerie Vaz]

I thank the Minister for his response, but he has not answered my questions and he seems to have ignored the breakdown evidence I have given him, including the fact that those who receive £40,000 pay less. I agree with him that it is very important that more people are going to university, but that does not address the issue of the loans. Moreover, would someone be able to apply for a mortgage with a student loan debt against their name?

[Joseph Johnson]

The critical thing is that we have put our higher education finance system on a sustainable footing. In order to do that, we had to take some difficult decisions. Freezing the repayment threshold was certainly one of them, but it was rooted in an underlying fairness, which is that graduates, who will go on in their lifetimes to earn significantly more than non-graduates, have to make a contribution towards the cost of running a big, expanding and successful higher education system. If they do not make a bigger contribution, the cost of funding that system will fall back on many of the hon. Lady’s constituents who did not go to university and did not get a chance to have a higher-earning career path over their lifetimes as a result. I am sure she will appreciate that fundamental fairness.

[Valerie Vaz]

This is about a difference in ideology. I was lucky to benefit from a free education. I went to university without having to pay for anything. In fact, because I stayed at home, I actually saved on my grant, which is slightly unusual. The taxpayer does not have to pay, because graduates will pay a higher rate of tax when they graduate, so they will be putting more back into the economy. Burdening students with a debt of £45,000 when they start their lives is not the right way.

[Joseph Johnson]

The hon. Lady was fortunate, in that she went to university at a time when the country had a much smaller system. As a percentage of the 18 and 19-year-old cohort, when she went to university, I imagine that a very much smaller proportion went to university at all. Now, we are in the mid-40s as a percentage of that cohort. It is a big system to run.

If we make the cost of that system fall solely on the taxpayer, we will put a much bigger burden on those who have not benefited from the higher earnings path to which being a graduate gives access. For women, as the hon. Lady will be aware, the lifetime earnings of a graduate are likely to amount to some £250,000 more than those of a woman who did not go to university. For a man, the difference is something like £170,000 more over their lifetime. Going to university puts people on a significantly higher earnings path, which makes the amount of debt that they might take on, on an income-contingent basis, look relatively small by comparison. When we think about this, it is important to set the huge lifetime gains from higher education against the sums of debt that people take on to generate them.

England is not unique in grappling with these problems. However, according to experts in the financing of higher education systems, such as the OECD, we are one of a very few countries in the world to have found what is deemed to be a sustainable solution to funding a mass higher education system. That has been recognised internationally. The OECD has praised our student loan system in England as that of

“one of the few countries to have figured out a sustainable approach to higher education finance”.

The hon. Lady mentioned bursaries and funding for health students. The present system is simply not working for patients, for students or for the universities that train them. To deliver more nurses and other health professionals for the NHS, a better funding system for health students and a sustainable model for universities, we need to move health students’ grants and bursaries on to the standard student support system, as we have for all other degrees. That will allow us to move away from centrally imposed student number controls and financial limitations. As a result, the Department of Health expects the measure to enable up to 10,000 additional nursing, midwifery and other health professional training places over this Parliament. That is just one example of why we have one of the best and most sustainable higher education systems of anywhere in the world.

Question put and agreed to.