1: Clause 1, page 2, line 5, at end insert “in consultation with relevant higher education sector stakeholders.”
Member’s explanatory statement
This amendment ensures that, before determining which method is used, the Secretary of State will consult relevant higher education sector stakeholders.
My Lords, I shall speak to Amendment 1 in my name and the names of my noble friends Lady Thornton and Lady Wilcox and the noble Baroness, Lady Garden of Frognal, and to Amendment 4 in my name and those of my noble friends Lady Thornton and Lady Wilcox.
As Labour made clear at Second Reading, we support the intention of the Bill. It is no longer the case that someone’s career can be predictable from the time they leave school, college or university. It is unlikely that someone starting their career will not have further educational needs during their lifetime and it is right that that is reflected in the funding available. However, it is Labour’s view that this is a good Bill that could be even better. As I said at Second Reading, it is a short Bill, and arguably too short. On the surface it does what it says on the tin, but with a bit more detail it would be more likely to succeed in the lifetime guarantee offers and a lifetime entitlement that it would bring about.
The further and higher education sectors also support the Bill. However, having such a limited Bill with little concrete information in it is of concern to those in higher education. We think that further consultation should therefore be built in to safeguard the success of the legislation. As the Open University said in its commentary, the Bill could be transformative, but the OU makes clear that its detailed design will be key to determining how it works in practice and whether it will be able to achieve the Government’s ambitions to deliver a fundamental and seismic shift towards flexible lifelong learning.
Amendment 1 would insert sectoral consultation into the decision about whether the fee limit for a course should be fixed or module based. Currently the Secretary of State has huge scope to decide that. It is likely that not all courses would lend themselves to being module based. We think that the extent to which a course is suited to being module based is likely to be something that the sector would be well-placed to have a view on.
My Lords, I thank the Minister for her willingness to discuss issues in the Bill with all interested noble Lords. I have added my name to Amendment 1, for all the reasons set out by the noble Baroness, Lady Twycross. For these provisions to succeed, close co-operation and consultation with higher education and indeed other awarding organisations are crucial.
This is a small Bill with considerable limits. We had hoped to table amendments to ensure that careers information, advice and guidance were available to any of those wishing to take advantage of the provisions of the Bill, but we were told that that was out of scope. I fear that other of our concerns may also turn out to be categorised in that way.
There are a great many unknowns in the Bill. It is a matter of great concern that the number of adults over 21 accessing higher-level skills has fallen dramatically over a number of years. One reason is the lack of maintenance support—also, I fear, out of scope. The majority of part-time students do not have access to maintenance support and that can be a serious disincentive for them, so can the Minister say whether any thought has been given to maintenance loans—or, better still, grants—to enable the provisions of the Bill to succeed? I guess that this, again, will be out of scope.
As the Minister is aware, the Liberal Democrats are not convinced that large cohorts of adult learners will be keen to take on debt, and the lifelong learning entitlement is indeed a debt. We propose a skills wallet, putting money into learners’ pockets to enhance their skills learning and competence at three stages of their careers. We argue that that money would be rapidly recouped by the enhanced earning capacity of those who took advantage of it. We know that many adults are loath to take on additional debt, particularly in these times of economic difficulties. We will support any amendments calling for reviews to see how successful the offer of loans and debt is to adults.
My Lords, I shall speak to Amendment 1, tabled by the noble Baroness, Lady Twycross, also in the names of the noble Baronesses, Lady Garden of Frognal, Lady Wilcox of Newport and Lady Thornton, and Amendment 4, tabled by the noble Baroness, Lady Twycross, and in the names of the noble Baronesses, Lady Wilcox of Newport and Lady Thornton, which would require the Government to consult relevant stakeholders and others before, first, setting out which method should be used to calculate fee limits and, secondly, determining the nature and extent of credit-differentiated activity and the number of credits associated with it.
The Government intend for all courses offered under the lifelong loan entitlement, the LLE, to use the new credit-based method for calculating fee limits in order to create a consistent and unified fee limit system. That policy has been designed in consultation with relevant higher education sector stakeholders. I agree with the noble Baroness opposite that it is extremely important to take account of their views. That is exactly what the Government have done in designing this policy.
The Government intend to retain the ability to set fee limits using the current yearly system, as well as the new credit-based system, but would use this ability only by exception. The Government do not currently anticipate any courses to use the fixed method from 2025 and are confident that all courses can use the credit-based method. The Government concluded their consultation on the LLE on 6 May last year. The consultation included a question on whether any courses should continue to be funded per academic year under the LLE rather than according to the number of credits.
Through the consultation, the Government understand that some courses, such as postgraduate certificates in education or nursing degrees, may not be suited to having fee limits set using provider-assigned credit values. This is due to variations in how different providers assign credits to these courses, which could lead to variable fee limit outcomes. For those courses, the intention is to set fee limits using a consistent rate of 120 credits per year for full-time courses, with other values for other intensities. That will enable those courses to use the new credit-based method while retaining parity with the current per-year system.
My Lords, I thank the Minister for her response. I also thank the noble Baroness, Lady Garden of Frognal, for adding her name to Amendment 1 and for her contribution to this discussion; as she said, we desperately need more skills, so we need this Bill to succeed.
We welcome the Minister’s announcement that further detail and consultation will come in the autumn. The Labour Party is keen to work with the Government to make sure that this Bill is the game-changer that it could be. I hope that, once we get the detail of the consultation, we will look at whether additional consultation will need to be built into the Bill. At the moment, we think that there is merit in building something into the legislation. I beg leave to withdraw the amendment.
2: Clause 1, page 2, line 10, at end insert—
“(1A) For the purposes of this Schedule, one credit corresponds to 10 notional learning hours.”Member's explanatory statement
This amendment puts the number of hours that constitute a credit on the face of the Bill.
My Lords, I have also added my name to Amendment 5 in this group.
Currently, the definition of a credit is outlined in Ofqual’s conditions of registration, the Office for Students’ sector-recognised standards and the QAA’s higher education credit framework. It is outlined in the Bill’s Explanatory Notes but not on the face of the Bill. It is important to put it in the Bill to ensure that the Government do not amend the value of a credit without any proper scrutiny. Even though the current Minister committed to the affirmative resolution procedure, there is no ongoing commitment for future Governments. Evidence given to the Bill Committee also set out reasons why a definition should be in the Bill.
It is really important to communicate to a student what a credit means. In essence, a student wants to know a number of things: how much this is going to cost them; what they will have to expend in effort and energy to complete the module; and what they will get for that module and those credits from the institution that they choose to go to. Transparency around the relationship between credits and fees and between credits and module content, including what is expected within that, is very important. Would it not also help anyone whom we want to use the lifelong learning entitlement to understand what their fees translate to in practice?
For a similar reason, I have added my name to Amendment 5, which the noble Baroness, Lady Twycross, will address more fully. It is a probing amendment on credit structure. Other institutions have told us that they are on a 20-credit system and so increasing the structure to 30 credits would cause significant disruption, inhibit a quick rollout and be a great disincentive to many learners. There is the argument that short courses are valuable to employers and that putting in a higher credit minimum limits the potential for students’ choice in short courses.
My Lords, I will speak to Amendment 5 in the name of my noble friend Lady Twycross, to which my noble friend Lady Wilcox and I, and the noble Baroness, Lady Garden, have added our names. It is a probing amendment intended to ensure that modules worth 20 credits or more are included within the lifelong learning entitlement.
We are concerned that there is a series of questions on this that need clarification. The briefing that we have all received from the Association of Colleges also expresses concern about how the credits system will work. It says in its briefing that this is a significant reform and that we need to ensure that credit requirements do not limit access to modular learning, as many providers teach 20-credit modules and a minimum requirement of 30 credits would require learners to bundle together at least two modules to meet the funding requirement.
This issue was discussed in Committee in the Commons, where a similar amendment was tabled to the one that I have put down here to probe this issue further. Since we put our amendment down the noble Lord, Lord Johnson of Marylebone, has tabled his Amendment 6A, which is of great interest. I want to see what the noble Lord has to say about it but, on the face of it, it is the kind of amendment that we would be interested in discussing as we move forward with the Bill.
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.
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.
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Amendment 4 would include a similar requirement with credit-differentiated activity—for example, in relation to placements. The current wording gives the Secretary of State huge scope to decide the worth of placements in terms of credits. The amendment would insert a requirement for the Secretary of State to consult higher education and placement providers.
Without wanting to put words in the Minister’s mouth, I am confident that she may say that it is self-evident that the Secretary of State would consult on these matters. However, if that is the case, why not simply put the requirement to consult into legislation? I hope that the Minister will see the common sense in doing so and I look forward to her response on this matter.
I am not sure whether the Minister answered those concerns at Second Reading but obviously now we have to concentrate on the amendments tabled, which largely centre on clarification of what is or is not included in the Bill. We can only hope that the Bill has the desired effect. The country is woefully short of people with the skills that the economy needs and, if more adults can be encouraged to acquire those skills, we shall all benefit. However, it is a very little Bill.
In relation to credit-differentiated activity, the Government want to ensure that periods of sandwich placement and study abroad continue to be subject to lower fee limits. In the current system, these lower limits are applied to full academic years, which makes them incompatible with the per-credit system. To enable those lower limits within the credit-based method, the Bill introduces the term “credit-differentiated activity”. This will mean that substantial periods of sandwich placement and study abroad can have their lower fee limits applied accurately even when they do not conform to full academic years. Regulations will set out details on how this system will work, including a mechanism to enable credit-differentiated activities to work for non-credit-bearing placements.
I can also announce that, in the autumn of this year, the Government will publish further detail of the fee limits regulations. This will give the sector and the public an opportunity to scrutinise the detail and plan accordingly for the introduction of the LLE in 2025, as well as ensuring that the Government can receive feedback on their proposals prior to the laying of regulations. This will include detail on the maximum and default credit values for different course types.
In conclusion, given that consultation has already taken place and that further engagements with the sector will take place as part of the pathway to the LLE’s delivery, the Government cannot support these amendments.
This group has also acquired Amendment 6A in the name of the noble Lord, Lord Johnson. We certainly support it. Higher education institutions should be allowed to uprate in line with inflation and this measure should be in the Bill; there would be little incentive for them otherwise.
These are three useful amendments. I beg to move Amendment 2.
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.
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.