My Lords, I congratulate the noble Lord, Lord Forsyth, and his Economic Affairs Committee on their excellent report, Treating Students Fairly: The Economics of Post-School Education. On Brexit, the noble Lord and I are at opposite ends of the spectrum, but in the 12 years that I have been here, on almost every other issue, we have been on the same page.
The report states right up front:
“Successive governments, over many decades, have pursued and encouraged the expansion of higher education. These efforts have succeeded: in the 1960s, five per cent of young people went into higher education; today, around half of young people do … By contrast, the number of students graduating with other higher education qualifications … have declined in recent years … with an 88 per cent reduction in enrolments at the Open University over that period for qualifications at Levels 4 and 5. There has also been a … decline in the number of qualifications awarded to adults at Level 3”.
So there is a problem here. On the other hand, the report continues:
“The UK does however produce more workers with undergraduate degrees than similar countries”.
The report states that the reforms to financing for university funding that happened after 2010 election,
“failed in their aim to create an effective market amongst universities”.
I remember this clearly. When tuition fees were tripled in one go, from £3,000 to £9,000, the Government of the day said, “This will create a market and people will then be able to choose which degrees they want to do and which degrees are worth more”. What did they do at the same time? People did not notice it, but they withdrew teaching funding hugely. I was chancellor of Thames Valley University—or the University of West London—at the time. What did universities do? They had no option but to charge the maximum £9,000 to cover the lack in funding for tuition.
Loans have been a huge issue. The report looks into them in great detail, saying that the total student loan book will be worth £1.2 trillion in nominal terms. That is a huge figure. The report talks about reforms. Is it worth having student loans but then saying that in the long run they will not be repaid? The report’s analysis is very good. It then talks about maintenance support for students being inconsistent across different areas.
The report states that,
“the Institute for Fiscal Studies suggests that students from the poorest 40 per cent of families will graduate with an average debt of £57,000; their peers from the richest 30 per cent of families will owe £43,000. This £14,000 difference is entirely due to maintenance loan entitlement and the accrued interest”.
Other speakers have referred to the unfairness of this system, which continues after graduation. The report states:
“Data published by the Department for Education show that students entitled to free school meals have lower average earnings after graduation; five years after graduation those eligible for free school meals earned 13 per cent less than those not entitled”.
“no interest should accrue until graduation, with a sliding interest rate dependent on earnings afterwards that was capped at CPI plus one per cent”.
It pointed out that this would not cost the Government much in the long run, in light of the proportion of student loan lending that is written off under the present system. Does the Minister agree?
I am chancellor of the University of Birmingham, which again agrees with a lot in this report. We are concerned about the fact, which most people do not realise, that many students are significantly concerned about meeting their living costs while studying. For some students these problems are of far greater concern than the tuition fees. The Government’s switch from maintenance grants to loans had a more significant impact on those from more disadvantaged backgrounds, who need to take out higher loans for living costs, as I have just pointed out, and so have higher lifetime loan repayments. It just does not seem fair or right. The university is also concerned that the switch has deterred poorer local students from applying to study at the university in the first place. Does the Minister agree? The University of Birmingham would support the reinstatement of government maintenance grants, funded by new money, targeted to those students who need them the most. It is essential that this should not be at the cost of reducing funding for universities in other ways. Any reduction in income for universities would have an impact on the student experience. Universities would have to reduce investment in teaching or other educational activities that support high levels of employment.
My other point concerns this distinction between universities and further education. At the University of West London, I remember we used to have the saying “Further to higher”. At the University of Birmingham, we partner with University College Birmingham in delivering courses. We partner with industry—that should also be taken into account. The University of Cambridge is also worried and says that it already subsidises, on average, more than half the cost associated with the education of each home undergraduate. It is worried about any cuts and says that if there are cuts to domestic students, it may be forced to increase the number of international students. That is also a concern. If Britain leaves the European Union and focuses on delivering its industrial strategy, supporting growth and innovation productivity, it is essential that the UK’s unique asset of world- leading, university-based research is not threatened—for example, by disruptive changes to university funding. Research is also something that not many have spoken about.
Before I conclude, I want to mention two other points in the report. Spending on 16 to 19 education has been badly hit. Total expenditure has fallen by 17.5% between 2010 and 2017. What are we doing? This is a key stage, which we should be funding.
Turning to adult education, the report says that,
“adult education funding has seen significant reductions”.
Related to this decline, older students are more likely to study part-time. I mentioned that the effect on part- time education has been drastic. The number of part-time students aged over 30 has fallen by 41%. There is a growing consensus, nationally and internationally, that with the advance of machine learning, AI and robotics, post-school education will become of increasing importance to societies and economies. There will be an increasing need for lifelong learning, extending beyond school and, for those who go to university, beyond their university degree as well. Continuing education contributes positively to well-being and health, which, as well as being an intrinsic good, has positive consequences for the economy through the health of the population and the workforce. Some 60% of those entering primary school in 2018 will ultimately work in jobs and functions that do not currently exist. By 2030 there will be a talent deficit. Half the subject knowledge acquired by first-year undergraduates is out of date by the time they graduate.
Then there is the challenge of Brexit. Learning and improved life chances should not stop when you reach your 20s. This was recognised in 1919 in a report on adult education, and I am proud to be a member of the Centenary Commission on adult education, which has just been launched and had its first meeting. Dame Helen Ghosh, the master of Balliol College, is head of the commission and we will report later this year. I urge the Economic Affairs Committee to take heed of our report, because this needs to be at the heart of our endeavours to improve the prosperity of our country and the well-being of our people.