Higher Education Reform

It is hard to make a statement without reflecting on the tragic events overnight with the criminal invasion of Ukraine, a democratic free country, by Putin. My family lived through and experienced a despotic dictator in Saddam Hussein who lashed out at his neighbours. It never ends well for them, because ultimately democracy, truth and justice prevail. I am certain that they will prevail again.

With permission, Mr Deputy Speaker, I would like to make a statement about how the Government are safeguarding the future of our universities, putting them on a sustainable path for taxpayers and students. Our universities—indeed, our entire higher education system—are some of the most innovative, important institutions in our country. Four of our great institutions are ranked in the global top 10 list. They are a true powerhouse of innovation and research—they even played a leading role in the development of the covid vaccine—and they will play a significant role in the prosperity of our country for years to come.

We recognise that education at all levels plays a role in learners’ personal fulfilment and pursuit of knowledge, whether that is in the humanities or in science and engineering as in my case, and in higher or further education. As we move past the pandemic and start a new chapter in our country’s history, now is the time to ensure that our universities are on a solid footing and sustainable ground for generations to come. To do so, I am announcing the launch of two consultations, which, taken together, outline our proposals for the higher education sector and secure a better deal for the student and the taxpayer. The consultations will deliver solutions to the problems that Sir Philip Augar’s independent panel examined in such depth and so thoroughly. The higher education policy statement and reform consultation, and the lifelong loan entitlement consultation, address the pivotal recommendations made by the panel, to whom I am indebted for their excellent work.

As Members across the House know, one of the Augar panel’s core recommendations was the provision of a lifelong learning loan allowance. That is why today I am launching a consultation on the lifelong loan entitlement, to seek views from the sector and the public on the shape and scope of this important policy. Under this new and flexible skills system, people will be provided with a loan entitlement equivalent to four years of post-18 education to use over their lifetime, whether in modules or as a whole. They will be able to train, retrain and upskill as needed in response to changing skills needs, sectors and employment patterns. It will be a powerful and innovative vehicle in levelling up, providing real opportunities for everyone and giving businesses the skilled workforce they need to thrive and grow.

In light of the new entitlement, it is now more important than ever that our higher education funding system is fair for both the student and the taxpayer. The bottom line is this: if we fail to act, we can expect just 23% of students who enter full-time higher education next year to repay the full cost of their loan. That is a challenge that our reforms will address. We are maintaining the repayment threshold at its current level for current plan 2 graduates until 2025—those who took out loans after 2012. We are also reducing the repayment threshold to £25,000 and extending the loan repayment period from 30 years to 40 years for students starting their studies in autumn 2023. That will make the system fairer for students and taxpayers. Graduates will see the benefit of their degree all their earning life, so it is only right and fair that they continue to contribute. We expect that as a result of our changes the proportion of students paying back their loan in full will increase to just over half. Our significant regulatory reform work, which we are taking forward with the Office for Students, alongside the measures we are consulting on, will drive up student outcomes and help students to access high-value employment that benefits them and the economy.

Without those interventions, the student loan book will balloon to nearly half a trillion pounds—half a trillion pounds—by 2043. I have thought very carefully about fairness for students when pulling together this balanced package of reforms. I am pleased to say that we have delivered on our manifesto commitment to address high interest rates, by reducing interest rates for students starting next year to RPI plus 0%, ensuring that graduates, under these terms, will not have to repay more than they have borrowed in real terms. New students starting in the academic year September 2023 are expected to borrow an average of £39,300. I have seen some spurious headlines today. In today’s prices, they will borrow £39,300.

We forecast that the average graduate will repay £25,300 in today’s prices over the course of their loan. How does that compare with the current system? Under the current system, £19,500 is what they repay. I hope that offers colleagues clarity, rather than claptrap headlines. I want to be clear: no student will repay more than they took out in today’s prices. Let me repeat that: no student will repay more than they took out in today’s prices. We are also continuing to freeze tuition fees for all students for a further two years. The combination of those measures, the reduction in interest rates and the two-year freeze, means a student entering a three-year course next autumn could see their debt reduced by up to £6,500 at the point at which they become eligible to repay. When the total seven-year freeze is taken into account, that totals up to £11,500 less debt at the point at which they become eligible to repay.

Alongside that, we are investing almost £900 million in our fantastic higher education system over the next three years. That includes the largest increase in government funding for the higher education sector to support students and teaching in over a decade. An additional £750 million will be invested in high quality teaching and facilities, including in science and engineering, in subjects that support the NHS, and in degree apprenticeships. There are those who say, “Why aren’t you making higher education free?” To those people I would say, “Look at our counterparts in Scotland.” Over the last five years, universities in England have been able to cover their teaching costs more successfully than their Scottish peers, because of our more sustainable system of tuition fees and grants.

As part of our plans to reform the higher education sector, we are building on our work with the Office for Students to set minimum expectations around completion rates and progression to graduate jobs or further study. We are seeking views on policies that will help to ensure that every student has confidence that they are on a high-quality course that leads to good outcomes, a good job and ensuring that the growth in our university sector is focused on high-quality provision wherever they are in the country. We are consulting on controlling student numbers and introducing a minimum eligibility requirement to access student finance. I want to make sure that every student who goes to university will be able to reap its true benefits and not feel that they have been mis-sold and saddled with debt after completing their course.

It is really important that we have the conversation about the need for minimum eligibility requirements to ensure students are sufficiently prepared to benefit from higher education before they enter university. For example, that could be a return to the old requirement of two E grades at A-level, or a pass in GCSE English and maths. Of course, there will have to be exemptions for some groups, including mature students and part-time learners, on which we are also consulting. Young people should not be pushed into university if they are not ready. After our proposed exemptions that we are consulting on are applied, less than 1% of total entrants would be affected by a minimum eligibility requirement set at grade 4 at GCSE, but we will listen and be open-minded.

Student number controls would limit the uncontrolled growth of provision that does not lead to good outcomes or good jobs. Incentivising the expansion of provision with the best outcomes for students, society and the economy has to be our goal. The proposals are about advancing real social mobility. That means shifting from a focus on simply getting students in the door counting the inputs, to ensuring they complete their course and secure a good outcome after they graduate—being obsessed about outputs and outcomes.

As with everything my Department does, my officials and I have also considered carefully how we can support disadvantaged students with this package of reforms. Access to higher education must be dependent on attainment and ability to succeed, and not inhibited by a student’s background. Our proposals to reduce fees for foundation years would make them more affordable for students who need a second chance to enter higher education. Our flagship national scholarship programme, in which we will be investing up to £75 million, will help to support high-achieving young people from disadvantaged backgrounds to achieve their dream, regardless of course or university.

Finally, to complement the lifelong loan entitlement, we are rolling out new approved higher technical qualifications. Those will be high-quality, job-facing alternatives to degrees, approved to deliver the skills that employers need. From academic year 2023-24, we will extend student finance access to those qualifications and allow learners studying them part-time to access maintenance loans, as they can with degrees. That will address financial barriers for learners and move towards the flexibility that we envisage through the lifelong loan entitlement. Those two policies will be vital to bringing further and higher education much closer together, just as the independent panel recommended.

I believe that these reforms are fit for a dynamic and growing economy. The reality is that, apart from buying somewhere to live, taking on a student loan can be one of the biggest financial commitments that any young person can make. I am confident that they will set the sector up for success in the years to come and keep our student finance system fair and sustainable for students and the taxpayer. I have been continually impressed by the resilience demonstrated by students throughout the adversity of this pandemic. We owe it to this generation, and generations to come, to ensure that education remains open to anyone with the ability and desire to benefit from it. I commend this statement to the House.

I thank the right hon. Gentleman for advance sight of his statement and I join him in his comments about the events that we see unfolding in Ukraine.

Given that 1,000 days have passed since May 2019, Members might be forgiven for forgetting the recommendations of the Augar review and the context in which it was launched. Concerns about fairness and affordability for students seem to have been lost entirely today. As the then Conservative Prime Minister outlined in launching the report:

“removing maintenance grants from the least well-off students has not worked”.

There has been little sign of any real concern for less well-off students this week. Instead, we have seen the Government’s total lack of urgency about any matter except their own self-preservation; their lack of ambition for our young people; their lack of ambition for our universities; and ultimately, their lack of ambition for our country. This is a Government whose approach to some of the biggest issues facing our universities is simply to kick the can down the road. They are freezing fees, not changing them, and tying interest rates to measures that they intend to phase out, and there is a deafening silence on living costs for students.

Time and again, this Conservative Government reach for the pockets of working people, with council tax put up twice, income tax thresholds frozen, a national insurance hike and now falling repayment thresholds that will see working people paying more for longer. This Government, who are responsible for a growing failure to support young people to achieve at GCSE, now want to shut people out of university rather than raising standards in schools, slamming the door on opportunity and ambition. As for the lifelong learning loan, which, as the Secretary of State noted, was a core recommendation of the review, why are we waiting even longer for yet another consultation when that was first promised as part of the Skills and Post-16 Education Bill?

I respectfully remind the hon. Lady that someone from a disadvantaged background today is 80% more likely to go to university than they were a decade ago.[Official Report, 9 March 2022, Vol. 710, c. 5MC.] Let me go further and remind her that, in 2016, the coalition Government introduced the new apprenticeship standards and made sure that businesses were at the heart of setting those standards, because it is not politicians or experts in Whitehall who can decide what sectors of the economy will change and re-emerge.

There is a common theme—a strategy—running through all our reforms, from the apprenticeship standards, with more than 5 million people entering apprenticeships, to the skills White Paper, the Skills and Post-16 Education Bill, which we just voted on and sent to the other place, and now our HE reforms. What if someone had said to me when I was choosing those new standards as the apprenticeships tsar that there would come a Prime Minister and a Chancellor who would back adults at any point in their life to upskill or reskill, or that we would say to someone in Aberdeen oil and gas who wanted to go and work in offshore wind, “We will stand behind you” with funding of £37,000, the equivalent of four years of education? That is what this Government are delivering and I am proud to be the son of a country that gives real opportunity to people from all backgrounds.

The hon. Lady mentioned the issue of excluding those who may not do so well in GCSEs. That is not what the consultation is about. It is about making sure that there are routes for those people, so that if they do not do well in their maths or English GCSEs, but do well in their A-levels, university is still open to them. However, a different route—an apprenticeship degree—is also open to them, as well as other vocational qualifications. Bringing FE and HE together was central to the Augar panel’s recommendations and that is what we are doing.

I broadly welcome the Government’s proposals. I pay tribute to the Secretary of State and particularly to the Minister for Higher and Further Education, who I know has worked hard on them; I am very grateful for the briefing that she gave me.

I welcome the cut in interest rates, which I think will make the system fairer. I have always felt it unfair that working-class people in my constituency of Harlow and across the country have a huge tax burden to pay for people to go to university and get better-paid jobs. The Government are right to rebalance that; I just urge caution on the maths and English GCSE issue. I know that the Secretary of State has qualified it, but there is a better option: just as apprentices do functional skills while doing their apprenticeships, why not make students who have difficulties with maths and English do refresher courses while they have the chance to go to university?

A more fundamental issue is that our education system narrows too early from the age of 16. I urge the Government to consider introducing an international baccalaureate system, as is used in 150 other countries. It could include vocational and technical education, but also English and maths: we would then not face the problem of people not being able to do maths and English by the time they get to university.

I really welcome the extra £900 million investment. I urge the Secretary of State to allocate a significant proportion—perhaps £500 million—to degree apprenticeships, which would mean an extra 34,000 apprentices at higher level. That would solve the student finance problem, because students would earn while they learn and would meet not only their own skills needs, but those of the country. They would be almost guaranteed a job, because 90% get a job at the end. That is the way forward. I know that the Secretary of State wants a 10% target, but a target over the next 10 years for 50% of students to do degree apprenticeships would transform skills in our country and transform the lives of those students.

I am grateful for the support for our proposals from my right hon. Friend the Chair of the Select Committee on Education. I will absolutely be listening—this is a real consultation—to his proposals and concerns about the maths and English GCSEs. I completely agree that the concept of someone having to pay back more than they have borrowed is unfair; addressing that is a manifesto commitment, so we are delivering it. I am proud that we are touching 20,000 students on degree apprenticeships. I want to go much further than that and have set a target of 10%.

On the international baccalaureate, my right hon. Friend will know, because he has known me for a very long time, that I am about delivery and outcomes. I have the Department focused on skills, schools and family. Sometimes if you try to hug the world, you don’t do anything well enough, but I hear what he says. Let me deliver what I can while I have the privilege of leading the Department and then go back and do some more afterwards.

I thank the Secretary of State for the advance copy of his statement; I recognise that a lot is going on this morning and that not everything has happened on the normal timeline, so I appreciate it. I add my voice to those expressing solidarity with the Ukrainian people as the horrific events unfold.

The UK Government are presiding over a cost of living crisis, yet they are pursuing policy after policy such as the national insurance hike, the universal credit cut, the mandatory energy loan—even for students without a permanent address, who will have to pay it back despite not necessarily getting it this year—and now this. The UK Government’s decision to create a lifelong graduate tax by increasing the number of years in which graduates pay back will affect only those who are not well off enough to pay it back already. So the tax will hit hardest those who are already struggling to make ends meet.

If new students will on average pay £6,000 more back, where is the money going to come from? Has the Secretary of State done any assessment of the effect on those people’s pension pots as they approach retirement age, given that £6,000 less disposable income will be available to them? If half the students will be paying back the loan for almost their entire lifetime, it makes little difference to them what the total value of the loan is. The changes proposed benefit those who are already paying back, not those who have no hope of doing so.

In Scotland we believe in free education. We believe that it is important, and we will keep tuition free. I make no apologies for that position; it is the right thing to do. How can the Secretary of State and his Cabinet colleagues who paid nothing to attend university justify burdening those who go to university now with lifelong debt?

I am grateful for the hon. Lady’s remarks and her solidarity on the situation in Ukraine.

I respectfully disagree with the hon. Lady because, when we look at the overall reforms, we should focus on the outcomes for students. That is what the reforms do. The lifelong loan entitlement, the work that we have done on skills, the ability to do a T-level as a fusion between an apprenticeship and an A-level—there are different paths to achieving a great career as an adult.

Non-graduates continue to pay—at the moment, all taxpayers fund higher education in England at 41p in the pound.[Official Report, 9 March 2022, Vol. 710, c. 5MC.] We do not think that that is fair or equitable. As former students reach 50 or 51 years old at the 30-year repayment stage, they are coming to their peak ability to earn, so it is only fair that they be able to pay back the loan that they have taken out to give them the opportunity of a great job.

I must say that I particularly welcome the Secretary of State’s opening statement about Ukraine. If this country has one institution that speaks for liberality, openness of vision, and conversation across cultures and across parts of our nation, it is the university. His statement at the beginning was absolutely right, and I welcome it.

I hugely welcome the measures that the Secretary of State set out. I congratulate him and the Minister for Higher and Further Education on their work, particularly its focus on quality and inclusiveness together. I can tell them both from a Herefordshire perspective that if someone is coming out of a career serving Her Majesty in the Army or the special forces, the chance to go back and learn as a mature student and pick up a lifelong loan entitlement is of inestimable value. We should massively welcome it across the Chamber.

I also hugely welcome the combination of HE and FE. Skills-based higher education is absolutely vital. As for this conception among the Opposition that there is some lack of ambition, nothing could be further—

Order. Please could we have the question?

Of course, Mr Deputy Speaker—in my exuberance, I was enjoying that. Could I ask the Secretary of State to talk just a little more about how the package will work and how it will meet the twin goals of quality and inclusiveness, which are so central to our future development as a nation?

I am grateful for my right hon. Friend’s support for the package. He is absolutely right to cite those who come out of their time serving their country with the opportunity to feel that their Government will stand behind them for the equivalent of a four-year degree course. Crucially, they can pull it down in modules, which speaks to the dynamic high-skills, high-productivity economy. That will make a difference. On his point about inclusion, I know that he has been a great champion of the New Model Institute for Technology and Engineering in his constituency. That innovation in our HE sector is equally important. I see it as a priority in our levelling-up agenda.

Will Members please go straight to their question, with no preamble?

My only preamble, Mr Deputy Speaker, is that every Member who has spoken so far has had free higher education, including me, the Secretary of State and you, I believe. Anyone in their right mind knows that this is an area that we should look at—of course we should, so I am glad that it is open to discussion. I have a vested interest: in a former life I was a university academic. Indeed, I taught you at university, Mr Deputy Speaker.

Not very well. [Laughter.]

Obviously not very well.

I am also a visiting professor and have a long-term interest in this area, and I have worked with the Secretary of State before. I am worried about some of the unintended consequences of this. I am worried about the long-term impact on many, many people’s lives of higher tax burdens. I am not thinking of the high-fliers, such as those who go into high finance and merchant banking; I am thinking of the core of our skills, the people who became teachers, doctors, nurses and social workers. May I ask him to make this inclusive and, as far as possible, to secure all-party agreement on some of the aspects? As for lifelong skills, many people have tried it but no one has really cracked it. Please value FE as well as HE.