My Lords, I declare an interest as a member of council at UCL. I am also a member of the Economic Affairs Committee, which produced the report. The issues that our report addressed, which will be addressed by the Philip Augar review, are critical to the maintenance of a healthy and successful system for post-18 education. Given the limited time available, I shall expand on only a few of them, starting with part-time and continuing education.
The noble Lord, Lord Willetts, who I am very glad to see in his place, and whose contribution I very much look forward to, gave evidence to our committee. We noted that there had been a catastrophic 61% decline in the number of part-time students since 2010 and that this decline was probably an effect of the tuition fees regime. I asked the noble Lord whether it is something that we should be concerned about and, if so, what was the remedy. He replied:
“I would have to accept that is one of my biggest regrets of my time as minister … We need new mechanisms for helping adults to study part-time and I accept that the loan model has not delivered for them … a public spending package for adult learners, including helping mature students with the cost of tertiary education, be it university or not, would be a high priority”.
I thought at the time that this was an admirably clear and compelling answer. It was certainly clearer and more compelling than most of the answers we got to the question of how to promote lifelong learning. But there was general agreement that tuition fees and the equivalent level qualification rule were largely to blame. This rule means that students cannot access state support to study for a qualification equivalent to, or lower than, one they already have.
As enrolment of part-time students has collapsed, so have the institutions we need to teach these students. We have lost two-thirds of our continuing education departments in the last 10 years. To remedy this chicken-and-egg situation, more funding into FE and HE is needed—exactly as the noble Lord, Lord Willetts, said. Also needed is a reform of the ELQ rule and a proper, workable system of transferable academic credits introduced and enforced by the new regulator. If we do not resolve these issues and cannot establish a thriving and sustainable system for lifelong learning, the outlook for our productivity and competitiveness looks especially bleak.
The second area I turn to is maintenance loans. In the course of our inquiry, we invited students to talk to us about their current preoccupations—a very useful and enjoyable exercise. I think we were all surprised that the main source of anxiety was not tuition fees but the maintenance loan. In many cases the loan amounts now available are significantly less than the cost of accommodation and basic necessities. For example, the maximum loan for a student in London is £8,430. There are London halls of residence where the basic charge is more than this. In any case, the system is regressive. The IFS calculated that students from the poorest 40% of families will graduate with an average debt of £57,000. Those from the richest 30% will owe £43,000. The difference was entirely due to the maintenance loan entitlement and the accrued interest. We recommended that we reinstate the pre-2016 system of means-tested grants and loans and that the total sum available to students be increased to reflect their real cost of living and be consistent across all post-school education, regardless of method or place of study.
The final area I will briefly discuss is the tuition fee loans, which—as the noble Lord, Lord Forsyth, said—we recommended be frozen at the current level of £9,250 for the medium term. There are reports that the Government may be thinking of reducing the fee to around £6,500, but who would benefit from this fee reduction? Certainly not the least well off. A London Economics study in 2018 found that if the fee were reduced to £6,000, say, loan repayments in the bottom five deciles would be unchanged and only wealthier undergraduates would benefit. This was because many lower-earning graduates will currently pay nothing, or close to nothing, in loan repayments over their lifetimes. But the HE sector itself would suffer a drop in income of over £3 billion. This sector contains an astonishingly disproportionate number of outstanding institutions and as a whole is a critical engine of growth in the knowledge economy and in the economies of many of our towns and cities. The Treasury would have to step in.
But does there exist a way in practice to defend direct Treasury funding from other calls on the public purse? Past experience shows that it is extremely unlikely that universities would compete very successfully for highly contested public funds. They would, I am afraid, be losers—so, in particular, would lifelong learning and part-time students on whose upskilling and retraining we must increasingly rely. I urge the Minister to recognise the great danger in such a reduction in tuition fees and to focus reforms instead on the proper provision of lifelong learning, the introduction of realistic means-tested maintenance grants and loans and a reduction in the absurdly usurious interest rates the Government currently charge.