My Lords, I am pleased to respond to this debate on treating students fairly, the second report from the Economic Affairs Committee chaired by my noble friend Lord Forsyth of Drumlean. I echo the appreciation expressed by this House for the work of the members of the committee in producing the report. The breadth of its scope is impressive and the process for collecting evidence was a substantial undertaking. I thought that this would be an excellent debate and I have not been disappointed, with some constructive and thoughtful speeches, not least from my noble friend Lady Jenkin on FTSA and the importance of social action.
The Government welcome the report and agree that for too long young people have not had a genuine choice in what and where they wish to study. I am sure that your Lordships will agree that we want a country where everyone, no matter where they are born or grow up, has the opportunity to fulfil their potential. It is essential for there to be clear pathways for young people into and through both further and higher education, and then on into employment—different but equal routes to rewarding careers.
Parity of esteem has been mentioned by many noble Lords in this debate, including the noble Lord, Lord Kerr, the noble Baroness, Lady Smith, and the noble Baroness, Lady Finlay. Let me say at the outset that it is what the Government are saying, too, and what we are working on. To achieve this, all school leavers need access to high-quality careers advice if they are to make the most of their skills and know about the full range of opportunities available. My noble friend Lady Harding is right about the need to champion this and bring parents on board. The committee is right that for too long there has been too much focus on the traditional university route. That is now changing—I make the point again.
Let me start with the basics. Our Careers Strategy, published in 2017, sets out a long-term plan to build a world-class careers system. This emphasises the responsibility of schools and colleges to provide their students with a full picture of their options. Under a law introduced by this Government last year, known as the Baker clause, head teachers must allow technical education and apprenticeship providers—that is, employers—into their schools to talk to pupils about their offer. I am concerned by the remarks made by the noble Baroness, Lady Garden; I will follow up on what she has said, check on the figures she has produced, write to her and place a letter in the Library.
Like many in the Chamber, I echo the remarks made by my noble friend Lord Baker about the idea, the development and the progress of UTCs. He has been resolving problems in education, as my noble friend Lord Tugendhat said.
To improve high-quality technical options that offer credible alternatives to traditional academic qualifications, this Government are introducing T-levels. Their creation represents the biggest reform of post-16 education since A-levels were introduced 70 years ago. In addition, we have maintained our commitment to delivering high-quality apprenticeships. Apprenticeships provide a work-based alternative to academic study, ensuring that people have the skills and training needed to enter the job market and progress in their careers. I will say more on this subject later.
Compared to other countries, there is also a large gap in the number of people who study higher-level technical skills—the area of study between A-levels or T-levels and a degree. Only 7% of learners aged 18 to 65 are studying for these higher technical qualifications. This compares with 20% in France and Germany, and 35% in Canada. That is why the Secretary of State announced last month that we will establish a system of employer-led national standards for higher technical education. These will be based on existing apprenticeship standards, and will be available from 2022.
Eloquent speeches were made by my noble friend Lady Harding and the noble Lord, Lord Bilimoria, on the question of the digital revolution, based—I imagine—on their long experience of business, which I appreciate. A few speeches touched on the importance of lifelong learning, and we have had two recent valuable debates on this subject. The noble Baroness, Lady Garden, touched on this as well. We recognise that the labour market is continually changing, with the demand for skills. Technological progress and automation will help drive that change.
The National Retraining Scheme will aim to drive adult learning and retraining, and will be a big part of the department’s response to technological progress; £100 million has been committed to start the rollout of this particular scheme.
In the area of higher education, the Government are committed to developing and delivering policies to ensure that all students, regardless of their background, can make more informed choices about their higher education. Informed choice is a fundamental part of the new regulatory landscape and is crucial for ensuring that prospective students make decisions that are right for them. We are working to improve the information that is available and to ensure that students have better access to it. Before Christmas, the Government awarded contracts to two tech companies as part of the higher education open data competition, to develop digital tools that present graduate outcomes data in an accessible and engaging way.
The Office for Students will play a key role in improving and supporting informed choice, through a student information strategy and through a new online student information resource tool that will replace Unistats by September 2019.
Let me now give an update on our major review of post-18 education and funding, which relates directly to the committee’s recommendations on student finance. A number of noble Lords, including the noble Lords, Lord Bilimoria and Lord Kerslake, asked questions in this critical area. Partly as a reminder, the review is considering a number of important questions, specifically,
“how we ensure that tertiary education is accessible to everyone, from every background; how our funding system provides value for money, for both students and taxpayers; how we incentivise choice and competition right across the post-18 sector and how we deliver the skills that we need as a country”.
The independent panel of experts supporting the review has undertaken an extensive programme of stakeholder engagement and evidence gathering, to which the Economic Affairs Committee’s report is a valuable contribution. We remain open-minded in our approach and do not want to pre-empt the outcome of the panel’s work at this stage. The noble Baroness, Lady Garden, may have guessed that I would come to that particular conclusion.
However, I do have more to say, and I now turn to the comments made by the noble Lord, Lord Sharkey, on maintenance loans. We increased support for full-time students’ living costs by 3.2% in 2018-19, with a further 2.8% in 2019-20 for students living away from home and studying outside London. This is the highest on record.
While some of the report’s specific recommendations on issues such as maintenance support will be subject to the outcome of this review, this should not detract from the progress made in other areas, including higher technical education and apprenticeships. As set out in their terms of reference, the independent panel will report in early 2019, before the Government conclude the overall review. The Government intend to move swiftly to improve the post-18 system once the review has concluded. Implementation timetables will depend on the review’s recommendations and any legislative and operational requirements. The Secretary of State has given his commitment to write to the committee once the review has been completed.
Turning to a point raised by my noble friend Lord Baker, who stated that further education for college funding had been cut far too much since 2010, and also in response to issues raised by the noble Lord, Lord Layard, we have protected the base rate of funding for 16 to 19 year-olds until 2020, to make sure that every young person has access to the education they deserve. T-levels will attract an additional £500 million of funding per annum when they are fully rolled out.
The noble Lord, Lord Layard, raised a few other issues on apprenticeships. We have increased opportunities in technical and professional education by doubling—in cash terms—the funding available for apprenticeships in 2019-20, when compared with actual levels of spend in 2010-11. Apprenticeships are supported by the Institute for Apprenticeships, which I will talk more about later. Employers are developing new, industry-recognised standards at levels 2 to 7. Traineeships provide work experience, work preparation training and English and maths for those who are not ready for work or who are on an apprenticeship; 62% progress to apprenticeships, employment or further training.
I will conclude in this area by making some rounded comments in response to the noble Lords, Lord Sharkey and Lord Kerr, and my noble friends Lord Willetts and Lady Harding, who all commented on student finance, maintenance loans and interest rates. We have had a great number of valuable and insightful comments on student finance, for which I am grateful; they were timely and welcome. As I have outlined, the review of post-18 education is carefully considering these issues. It is essential we get this right for future generations. And I will ensure that today’s feedback is passed on to the independent panel. The Secretary of State has already agreed to write to the Economic Affairs Committee once the review concludes.
I want to move on to higher education and touch on the market. I was pleased that the noble Lord, Lord Burns, pointed out some favourable trends in higher education, in addition to his constructive points this afternoon, because higher education has undergone a period of sustained expansion. Nearly one in two of 18 to 30 year-olds in this country will now go to university. As he said, the system of fees and loans has allowed us to remove number controls and open up opportunities for students. Eighteen year-olds from disadvantaged backgrounds are 52% more likely to enter full-time higher education now than in 2009.
My noble friend Lord Willetts is absolutely right to say that universities offer a range of distinct missions. The diversity of our higher education sector is one of its biggest assets—from the small and specialist to the research-intensive and degrees taught in further education colleges. I noted the point made by the noble Baroness, Lady Finlay, who gave her own example. This diversity is essential to social mobility and our world-leading reputation, and one key thing is essential to it: assuring a high-quality offer and experience for students. That is exactly why we created the Office for Students, which has an explicit role to uphold quality and the value of degrees over time. I am sure that my noble friend Lord Willetts had this in mind when he did so much to pave the way for greater diversity in universities, with greater choice on offer.
In this context, the Higher Education and Research Act 2017 introduced reforms to increase competition between providers and promote greater choice for students. The Act laid the foundations for a new regulator for the higher education sector: the Office for Students. The OfS is focused on ensuring that any student with the ability to benefit from higher education is supported in doing so, that they have a positive experience and that they receive worthwhile outcomes. Value for money is of particular importance to the OfS. One of its duties under the Act is to have regard to the need to promote value for money in the provision of higher education by English providers.
My noble friend Lord Forsyth and the noble Lord, Lord Burns, raised an important issue: what the Government are doing about grade inflation. I know that I handled an Oral Question on that not so long ago. Our reforms must make sure that students’ hard-won qualifications continue to hold their value. The OfS has been asked to deal firmly with any institution found to be inflating grades unreasonably.
My noble friend Lord Willetts asked about having a pupil premium at universities. I agree that the idea of a pupil premium is interesting but we are already making great headway with social mobility. In 2018-19, universities and colleges plan to spend more than £860 million on measures to improve access and success for students from disadvantaged backgrounds. This is up significantly from £404 million in 2009. As he knows, the OfS also has a statutory duty to promote equality of opportunity for disadvantaged and underrepresented groups. I will certainly take this idea back to the department.
I thank the committee for bringing to the attention of the ONS, and the Treasury Select Committee, the need to re-examine the treatment of student loans in the public finances. The noble Lord, Lord Kerr of Kinlochard, my noble friend Lord Forsyth and the noble Baroness, Lady Bowles of Berkhamsted— who, by the way, is clearly something of an expert in this area—spoke on this point. In response to the recommendation, the ONS has decided that, due to the income-contingent nature of student loan repayments, the current treatment does not reflect the economic substance of the assets. My noble friend Lord Forsyth and the noble Baroness, Lady Bowles, eloquently spelt out the details of this. As she said, it has therefore been decided to split the loans into a genuine lending portion—the loan asset—and a spending portion, which is the amount we expect not to recover. If you like, it is lend versus spend.
The ONS has decided that the best way to reflect student loans within the national accounts and public sector finances is to treat part of these loans as financial assets and part as government expenditure. The ONS cited the committee’s report as one of the reasons for carrying out its own review. The Government will consider the ONS report and work with it to establish a methodology for implementing any necessary changes to be included in the new guidance. I thank the committee again for its contribution in this area.
The committee also emphasised the importance of flexible learning as a means by which people access and achieve higher education qualifications. We recognise that a diverse offer improves the choices available to potential students. My noble friends Lady Harding and Lord Dundee made points about the credit system, which has been designed to boost flexibility, particularly in adult part-time study. She also made insightful comments on flexible learning, in particular the importance of credit transfer and the role of the Open University. We have already given the Office for Students the power to promote student transfer and in 2017-18 and 2018-19, the Government have provided £29.5 million each year to support part-time study at the Open University.
My noble friend Lord Willetts and the noble Lord, Lord Sharkey, spoke about part-time students. The Government recognise the importance of studying part-time and the benefits that can bring to individuals, employers and the wider economy. We have already made a number of changes to support part-time and mature learners. This academic year, for the first time ever, part-time students can access full-time equivalent maintenance loans. This issue crops up in the Lords on many occasions and we firmly take note of its importance; this is very much a work in progress.
Let us return to apprenticeships, as I promised. In 2015, the Government set an ambitious goal of achieving 3 million apprenticeship starts by 2020. This is still our ambition but we remain steadfast in our view that we will not sacrifice quality for quantity. We want to see 3 million quality apprenticeships; we have already seen 1.5 million starts to date, providing more opportunities for people of all ages and backgrounds. The committee pointed to Ofsted’s findings on insufficient off-the-job training and apprentices not being able to apply their learning at work. In the previous academic year, there was a nine percentage-point increase in the providers that Ofsted found to be good or outstanding for apprenticeships. We agree with the committee that apprenticeships should have parity of esteem with other routes, as I touched on earlier. To ensure this, we have introduced 390 new industry-designed apprenticeship standards to replace the old frameworks that employers told us were not equipping apprentices to do the job. By August 2020, all new starts will be on these new standards, meaning that employers and apprentices can be assured about the quality of training they are getting.
My noble friend Lord Baker spoke about degree apprenticeships and having more degree apprentices because that is where the jobs are. There were 10,880 starts at levels 6 and 7 in 2017-18, over six times as many as in 2016-17. In addition, over 70 new high-quality apprenticeship standards are now available at level 6+. UCAS and the National Apprenticeship Service have developed a higher and degree apprenticeship vacancy finder to consolidate many of these opportunities in one place. In November, we published thousands of vacancies from various employers starting in 2019.
We established the Institute for Apprenticeships to ensure quality throughout the apprenticeship system. Given some of the comments made, I felt it would be wise to spend some time on this. Its responsibilities include: developing and maintaining quality criteria for the approval of apprenticeship standards and assessment plans; and supporting the development of standards and assessment plans by employer groups, and reviewing and approving them. The institute has supported the delivery of new standards. We have seen strong uptake by employers, with 44% of all starts on standards in 2017-18. It has established route panels of industry leaders to ensure that each apprenticeship it approves meets industry requirements and provides apprentices with full occupational competence on completion. It has also started to build its capacity in readiness to expand its remit to T-levels in 2019.
The IfA is supporting the construction sector to develop apprenticeship standards at all levels, from bricklayer at level 2 to architect at level 7. Contrary to comments made by some, including my noble friend Lord Dundee, the institute is a new and developing organisation that plays a vital role in creating quality apprenticeships that meet industry needs. We do not agree that it should be abolished. It should be given time to continue its focus on improving the quality of our apprenticeship and technical education offer to young people. I was glad that there was some support for this from the noble Lord, Lord Watson. Employers have been positive about the institute. For example, GlaxoSmithKline has commented that working with the institute has been very positive and that relationship managers have given excellent support along the way.
The noble Lord, Lord Kerr of Kinlochard, spoke about the slow speed of progressing standards. I accept that some while ago there were some problems in that area, but the institute’s Faster and Better programme has already resulted in a significant improvement in the time taken to approve standards.
The noble Baroness, Lady Smith of Newnham, spoke about EU migrants in the UK filling the UK skills gap. While I am aware of the need to continue welcoming EU and non-EU migrants to the UK to fill the skills gap, this is why there needs to be no limit on the number of international students who can come to the UK to study. This is a matter of long-standing government policy, as she will have heard me say previously in this Chamber.
The noble Lord, Lord Bilimoria, asked about the financial sustainability of higher education providers in the context of Brexit, and the possibility of providers needing to accept more international students. We are working closely with the Office for Students, which monitors and assesses the financial sustainability of English higher education providers, and will monitor the impact of Brexit-related changes on providers and the sector. The Government recognise the important contribution of international students, both financially and culturally, which is why there is no limit on the number who can come to the UK to study. I sound like a long-playing record, but I wish to say that again.
The noble Baroness, Lady Deech, asked whether the Government will provide relief on tuition fees for medical and nursing students, which is a fair point. The number of medical places in England is increasing by 1,500 from 2018 to 2019. This represents the largest ever expansion of medical training in one year. The Government provide significant investment in the education of medical students, because we recognise the importance of this workforce in the NHS. The post-18 review will consider how students and graduates contribute to the costs of their studies—including the level, terms and duration of their contributions—while maintaining the link that those who benefit from post-18 education contribute to its costs.
I am aware that time is running on and certainly wish to write to my noble friend Lady Jenkin on FTSA. Having mentioned it earlier, I owe her a proper reply to her point. My noble friends Lord Baker and Lord Forsyth raised a question about the recommendation to restore funding to further education colleges for levels 4 and 5. Last year we launched a review of classroom-based technical education at levels 4 and 5, which aims to address the intermediate and higher skills needs of the economy by ensuring that learners have high-quality, accessible and attractive study choices at levels 4 and 5.
To conclude, when future generations and historians look back, it is my sincere hope that they will recognise that this as a pivotal moment when our country took bold steps to provide credible routes for technical education, while maintaining our place as home to the some of the world’s finest universities. This is an endeavour at the heart of our nation’s future prosperity and success. Once again, I offer my deep gratitude to my noble friend Lord Forsyth and the committee for bringing their wealth of experience to this area.