My Lords, I thank the Minister for repeating the Secretary of State’s Statement. I too am grateful to the independent panel led by Philip Augar and to the expert stakeholders, industry leaders and representatives who contributed to that review. The review’s recommendations include some positive measures and we welcome the focus on encouraging more flexible learning, including support for more bite-sized learning, with improved opportunity to ensure that the most diverse range of learners can benefit from further and higher education.
The report recommends the reintroduction of maintenance grants of at least £3,000 a year for disadvantaged students. It also calls for an increase in the amount of teaching grant funding that follows disadvantaged students and a greater focus on individual level measures of disadvantage, such as free school meals and household income, in allocating funding through the student premium. I hope that the Government will accept these proposals with the commensurate levels of funding required. Although the Minister noted that there were 53 recommendations to follow, signing up to these proposals early on would be a very positive step.
The headline-grabbing part of the report is of course on tuition fees. It was designed for that purpose by a Prime Minister panicked by the outcome for the last generation. The recommendations covering student fees, rebranded as student contributions, suggest that there should be a cut from £9,250 to £7,500. Not surprisingly, I favour Labour’s policy of scrapping tuition fees completely. For those who leave university owing £50,000 or more, with an interest rate at 6%, the cumulative effect of the proposals in the Augar report could be eye-watering. The recommendations do little to address the problem of the expanding burden of student debt. On the contrary, the report recommends lowering the repayment threshold from the current £25,725 to £23,000 and extending the repayment period before the debt is written off from 30 to 40 years. This is a terrible and regressive proposal that will increase the total payments made by lower-income earners, such as teachers and nurses, while providing relief for those on higher incomes—who of course have the capacity to pay off early.
Analysis by Universities UK estimates that these changes would result in middle earners paying back more—£11,823 more over their lifetime—while higher earners would have to pay back less, saving almost £19,000 in repayments. The LSE has already highlighted that this would disproportionately impact upon female graduates, so while the Statement lauds the progressive system that the Government believe is currently in place, the report introduces a highly regressive system. Given the Minister’s regard for education as a great engine of social mobility, I hope that he and his colleagues will immediately reject this recommendation and other regressive changes to the student finance system, and commit to working with whoever the new leader of his party is to ensure that there is a fair funding model for further and higher education. Perhaps he could even take this issue up with those colleagues who are running for leader, however many there may be.
I would also be grateful if the Minister could confirm whether the Government are prepared to consider the report’s recommendation that graduates’ lifetime repayments should be capped at 1.2 times the original capital in real terms. While it does not offer a solution to the problem of overwhelming student debt in itself, a cap is an interesting idea that deserves further consideration.
On cost and funding, this is apparently going to be a major issue, because the report recommends that the Government increase central funding. However, the fear is that these reconditions, if adopted, will be at the cost of universities. There is an implicit assumption within the Treasury that universities can and will make efficiency gains to make up for funding shortfalls, which currently stand at around £1.8 billion a year. Take that money away from universities and they will suffer. Some universities may increase their efforts to recruit more lucrative, high fee-paying international students; the reality is that without a substantial and appropriate increase in central government funding the shortfall will burgeon, to the detriment of students and those in wider society who benefit from this country having a skilled workforce. Further shortfalls will inevitably mean reduced spending involving redundancies, recruitment freezes, smaller annual pay increases and cutting student support services—that is just for starters. This would limit opportunity, damage universities, decrease the number of highly skilled employees that business needs and reduce our international competitiveness at a time when modern Britain needs it most, not least in the post-Brexit world.
The problems that need addressing with further and higher education funding are plain to see. We hope that the next Prime Minister will commit to ensuring that the system of funding will benefit students, employers, universities and our communities across all four nations of the UK, and that political uncertainly does not mean that this review will—as so many other reviews have been under Mrs May—be kicked into the long grass.