Funding Higher Education

Carol Monaghan Excerpts

Wednesday 28th February 2018 Westminster Hall

[Mr Streeter]

I do agree. I am looking for change and I think the Government are looking for change, which I guess is why the review is taking place. When the level of fees was increased, we were led to believe that different universities would charge different fees. Some of us who have been around for quite a long time recognised that that might not happen, and indeed all universities went for the maximum more or less straight away. However, the reason why we are here today and why the Government are reviewing this matter is that the system is not working as planned, and we now need to see some real change. That is very much what I am calling for.

Under our current system, students in the United Kingdom are landed with the greatest amounts of student debt in the developed world—greater even than the notoriously large student debts in the United States of America, which reach an average of $36,000 on graduation. The Institute for Fiscal Studies has recently reported that 77% of UK graduates will never pay off their full debt, even if they are still repaying in their fifties, and that is projected to rise to 83% once the new figures have been introduced. This is an important point: we have a system that is almost set up to fail. Built into the system is an understanding that most of the people who participate will not repay. I do not want that system in place for the long term. When graduates immediately move abroad, that results in more unpaid debts. When a graduate’s employer is not UK-based, they are not subject to the automatic repayment system as they would be in the United Kingdom. In 2014, it was estimated that, by 2042, £90 billion of student support funded by the Treasury will remain unpaid.

It is certainly right for students to contribute to the cost of obtaining a degree. The stats still demonstrate that, over a lifetime, a graduate is likely to earn significantly more than a non-graduate. According to Universities UK:

“Official figures are clear that, on average, university graduates continue to earn substantially more than non-graduates and are more likely to be in employment.”

In debates with sixth-formers and others, I guess many of us have argued, “Why should a proverbial taxi driver who does not have a degree pay extra tax to help others improve their income?” There are pushbacks and answers to that, but it is still a compelling and important point. We must remember that the figures involved are significant, with each new crop of student loans being £13 billion a year. That is a substantial sum that we are having to find to support students going to university.

The principle of students contributing to their own higher education is surely right, but it must be sustainable. I am beginning to see that it is not sustainable for someone to have a debt of up to £50,000 around their neck when they enter the workplace.

[Carol Monaghan (Glasgow North West) (SNP)]

Does the hon. Gentleman share my concern that some students, particularly those from a disadvantaged background, will experience much higher debt than that because their families are unable to support them financially? Students from disadvantaged backgrounds entering the workplace will have a much higher burden of debt.

[Mr Streeter]

I agree that people who are not able to draw down on the bank of mum and dad have a much tougher time. The figures I am quoting presuppose that someone has taken out loans for tuition fees and support. I think they are the maximum figures. I think the point that the hon. Lady and I would agree on is that there are students who do not rack up that kind of debt because they get support. Once again, there is an issue of fairness for students from disadvantaged backgrounds.

That debt is certainly a hindrance to getting on the housing ladder, to which 85% of young people aspire. It is something that the Government are desperate to encourage. If we are to meet the aspirations of generation rent, we might have to remove some of the burden from their backs. The prospect of having such a large debt hanging over their heads inevitably leads to some mental health worries among higher education students and graduates. In 2015, a study published in the Journal of Public Health, entitled “The impact of tuition fees amount on mental health over time in British students”, found that in the UK,

“poor mental health in students has been linked to financial problems, considering dropping out for financial reasons, financial concern, being in debt and concern about debt.”

It is worth noting that countries such as Sweden, Denmark, Finland and, more recently, Germany have moved away from the tuition fee model.

There are big questions about whether universities provide proper value for money for their degrees and offer favourable returns for graduates. The National Audit Office reported that two thirds of students consider that universities do not provide decent value for money. More students—especially those from poorer backgrounds, to come back to the point we were debating a few moments ago—are choosing to stay at home and attend their local university due to fears over unsustainable debt. That is a regrettable trend, because the whole university experience is partly about moving away from home for the first time, growing up and learning independence.

--- Later in debate ---

[Mr Streeter]

The Minister is absolutely right to make that point.

The second reason why I think a fresh look might be helpful is that, under a graduate contribution scheme, students would not leave university with the worries associated with personally owing so many thousands of pounds. There would be no massive debt figure around their neck. I know the Minister was snowed in this morning, so I am not sure whether he heard me say that I am coming to the view that young people having a personal debt of £40,000 or £50,000 around their neck as they enter the workplace is becoming a massive problem that we need to think about. I hope the review will look at that.

I believe that the vast majority of graduates would be happy to pay a fair income-contingent contribution in return for the direct payment of fees by the Government, thus breaking the perceived link between the cost of tuition and repayments from students. Such a change would hopefully serve to alleviate some of the mental health worries faced by students and graduates who, on finishing university, receive the infamous letter outlining how many tens of thousands of pounds they now owe: “Congratulations on graduating. Now we want the money back.” Paying a regular, reasonable graduate contribution through tax gives far less reason to worry than the contents of those letters sent to graduates. A graduate contribution system would also provide the Treasury and higher education institutions with a long-term guaranteed stream of money as graduates pay regular instalments of additional tax in line with their incomes over a certain number of working years.

The Minister might like to reflect on this next point. It would be possible also to tailor the contribution system to change the rate of tax on degrees that the Government are keen to encourage, perhaps in science, technology, engineering and maths subjects, and nursing, as an inducement for students to pursue those degree courses and consequent careers. I can see that the Minister is not leaping to his feet to agree with me. He will no doubt deal with that point when he winds up the debate later.

Obviously, training and recruiting sufficient nurses to meet the growing needs of our NHS is becoming a huge priority for our country. The Royal College of Nursing, which I had a meeting with recently in my constituency, informs me that applications to nursing courses have fallen by 33% since tuition fees for undergraduate nursing were introduced. The Government wisely said that they would review the impact on nurse training and recruitment once the new system had been in place for a year or two. We are now approaching that moment in time. I hope the review currently being undertaken by the Government will reflect on that and make recommendations. We cannot have a system that starves our NHS of sufficient nurses for the future, because that would be short-sighted.

[Carol Monaghan]

Coupled with that we have the issue of the sharp decline in EU nurses applying for positions here in the UK.

[Mr Streeter]

Yes, I agree, and one of the many consequences of the decision made by the people of our country in June 2016—

[Carol Monaghan]

Not my country.

[Mr Streeter]

Well, the decision was made by the majority of people in the United Kingdom. One of the consequences is that fewer doctors and nurses are coming here to work in our NHS. That is a very regrettable problem, but there we are. We are democrats and will therefore comply with the wishes of the people.

I hope my thoughts are useful to the Government—I can see the Minister nodding his head—as we try to find our way to a system that is fair and reasonable to students and taxpayers alike, and that ensures that the United Kingdom encourages the brightest and the best to reach their potential through higher education. I look forward to the rest of the debate and the Minister’s response.

--- Later in debate ---

[Paul Blomfield]

Again, my hon. Friend is absolutely right. From the point of view of the needs of the NHS and the opportunities for mature students, and just for the sake of justice, we need to look again at nursing, midwifery and allied health courses.

I will make my third point very briefly, because this is a much bigger topic. I raise this issue as co-chair of the all-party group on international students. Universities’ financial stability is partly based on this country’s enormous success in attracting international students to come and study here. Those numbers are flatlining as a result of measures taken by the Home Office and the inclusion of international students in the net migration numbers, which inevitably leads to policy decisions that discourage international students. The Minister will say that the numbers are holding roughly up, but holding roughly up is not good enough in a growing market, because it means a relative decline.

There is a huge risk as we leave the European Union, because some 125,000 of our 450,000 international students come from the EU, and most universities are modelling on the basis that we will lose about 80% of them. One third of non-EU students said before the referendum that if we chose to leave the European Union, they would find the UK a less attractive place to come to. The Government need to put in place measures within the framework of the strategy to actively encourage more international students. They can start by removing them from the net migration targets.

[Carol Monaghan]

One of the other issues with international students is that we have lost a lot of the diversity within that group. Whereas in the past, students came from India, Australia, the United States and Canada, we are more and more relying on the Chinese student population. That is problematic, because if anything happens politically to change that relationship, our universities could have difficulties.

[Paul Blomfield]

The hon. Lady makes a very important point. The numbers have been sustained only by the huge increase in the number of Chinese students. Of course, Chinese students are very welcome in the UK, but no business would be satisfied with becoming over-dependent on one customer. China is moving ahead in leaps and bounds in developing its own universities, and now has some of the finest universities in the world, doing some of the finest research in the world, so we cannot rely on that market. The hon. Lady is absolutely right that part of the new strategy that we need to encourage people to come from all over the world needs to be about looking at countries such as India, from which the numbers have dropped.

[Carol Monaghan (Glasgow North West) (SNP)]

It is a pleasure to serve under your chairmanship, Mr Hosie. I thank the hon. Member for South West Devon (Mr Streeter) for securing this debate. I listened to his speech with interest, and surprisingly I found myself nodding along to a lot of what he said. We have had an admission from the Prime Minister that the current system in England is not working for students. Admitting we have got it wrong is one thing, but actually carrying out a review and making appropriate changes is another. I worry that we might get stuck in the detail.

I will try to limit my comments about Scotland, where the Scottish National party has restored the tradition of free higher education while maintaining educational maintenance allowance for those in school or further education, and bursaries for young people from disadvantaged backgrounds in higher education. Our support package works: Scottish 18-year-olds from the most disadvantaged areas are now 67% more likely to apply to higher education institutions than they were 12 years ago. Scottish students graduate with the lowest debt in the UK. Their debt is less than £12,000, which contrasts with the astronomical figures we have heard about this morning. We believe that university education should be based on the ability to learn, and never on the ability to pay.

[Mr Gyimah]

To be absolutely clear, university education in England is not based on the ability to pay. On the contrary, no one has failed to get a university place in England because they cannot pay. Payment is only significant after the graduate earns more than £21,000—it will be earnings of more than £25,000 from 1 April. It is important to get the facts right.

[Carol Monaghan]

We also have to look at the retention rates for young people from disadvantaged backgrounds who do not have full support.

Ultimately, this debate should be about who benefits. We educate children in schools not simply for their own economic benefit, but for the benefit of society. We have got to ask whether the young people embarking on tertiary education courses will contribute economically and societally to our nations, or whether we are simply providing them with a service, for which they must pay. As legislators, we must be clear about that. Post-Brexit, the UK’s economic success will rely on a well-educated population. We have skills shortages in science, technology, engineering, healthcare, education and digital. Graduates are needed now to ensure that the UK remains competitive outside the EU.

The hon. Member for Sheffield Central (Paul Blomfield) mentioned the variance in fees. I have difficulties with that. If as has been rumoured we lower the fees for less expensive courses, how will we encourage our young people to study the more expensive science, technology, engineering and maths subjects, graduates of which are so desperately needed? EngineeringUK estimates that we have an annual shortfall of 20,000 engineering graduates alone. The hon. Member for South West Devon mentioned the impact of removing the nursing bursary. Again, who benefits? We should encourage young people to study those courses, not put additional barriers in their way.

Fees are not the only difficulty for English students. The interest on student loans has risen sharply—it is currently 6.1% for some students. Maintenance grants have been scrapped, and it is rumoured that student debt on completion has reached £50,000. Many young graduates will be left saddled with debt throughout most of their working lives.

The hon. Member for South West Devon mentioned students staying at home for their university experience, and was concerned about the impact on the whole package experienced by students at university. In Scotland and Ireland there is a cultural predisposition to stay at home. It is not necessarily financially driven—my son is staying at home during university—so there may be other factors at play. His education is not impacted. Students have opportunities for other life experiences, such as summer placements, industrial placements and travelling abroad. The hon. Member for Northampton South (Andrew Lewer) mentioned Erasmus, which is a rich experience for students even if they stay at home during university. I push the Minister to make a commitment on Erasmus, because university students and many people across the sector want that commitment as part of the Brexit process.

We are often told that our free tuition policy in Scotland prevents Scottish students from accessing available places, but since 2007, the number of Scottish-domiciled full-time degree entrants has risen by 12%. Since 2013, the total number of funded places available at Scottish universities, including additional places to widen access for students from Scotland’s most deprived communities, has also increased. The hon. Member for Sheffield Central mentioned the metrics used in the teaching excellence framework, and graduate success as an indication of our universities’ quality. Graduate salaries are a lot lower in many geographical areas in the UK, so students graduating in parts of England and Scotland will automatically have a lower salary than those in south-east England. That is a flaw in that metric.

We often talk about the number of young people going to higher education as a measure of economic success. I could not count the number of times I hear people talking about encouraging people to do high-quality apprenticeships, yet that seems to be forgotten when we talk about higher education. I would like there to be parity among apprenticeships, further education colleges and quality employment. In fact, we should look at positive destinations, not just the number of young people going to university. For many young people, a high-quality apprenticeship—degree level or otherwise—allows them to make excellent progress in the workplace without necessarily saddling themselves with debt.

[Dr Blackman-Woods]

The hon. Lady makes an important point. Does she agree that it is important not to talk in binary terms about university or technical education? Our universities deliver some of the best technical education in the country, and we should aim for a route to whatever form of education is best for the young person or older person retraining. We should not get stuck in the binary divide, but ensure that we make connections between them.

[Carol Monaghan]

We have a problem if we educate only graduates—we need a full range of different people with different skills. I usually speak about tertiary education because, in Scotland, the lines between further education and higher education are less defined than they are in other parts of the UK. In fact, a lot of our degree courses are delivered in further education colleges. The movement between FE and HE is a very important part of our educational landscape in Scotland.

Positive destinations should be a measure of success, and we should encourage young people of all backgrounds into whatever is appropriate for them. That includes those from the most advantaged backgrounds considering apprenticeships. We need to try to break down that barrier. I agree with the hon. Member for South West Devon that vice-chancellor pay has reached a ridiculous level for some. Lecturers were out on strike this week and last week because their pensions are under threat. I agree with him that perhaps the time has come to look at the pay package that we offer all staff.

Paying for education is a duty of Government, business and society, including the taxpayer. We need to ensure that we have a well-educated population that can provide economic growth in different businesses and sectors. Post-Brexit, there will be a struggle to create economic growth. We all have the duty to pay our taxes so that they fund the education of our young people, benefit society and fuel economic growth. The Scottish National party is fully committed to guaranteeing fair access to higher education, so that every young person, regardless of background, has an equal chance to go to university. My party will continue to work hard to ensure that.

--- Later in debate ---

[Mr Gyimah]

I will take the hon. Gentleman’s intervention in a second.

I will end this myth-busting section by focusing on Scotland, where controls on student numbers continue to restrict the aspiration of young people. The Sutton Trust recently stated that Scottish 18-year-olds from the most advantaged areas are still more than four times more likely to go straight to university than those from the least advantaged areas, compared with 2.4 times in England. Audit Scotland has stated:

“It has become more difficult in recent years for Scottish students to gain a place at a Scottish university as applications have increased more than the number of offers made by universities.”

That is not an example I want to copy here in England.

[Carol Monaghan]

Of course, as I said, the distinction between FE and HE in Scotland is far more fluid, and UCAS admits that a third of young people studying degree-level courses are doing so in further education colleges, which is not captured by Sutton Trust figures or UCAS figures. Scotland is doing extremely well in this area.

[Mr Gyimah]

Audit Scotland clearly does not share the hon. Lady’s view.