Lord Johnson of Marylebone:

Moved by Lord Johnson of Marylebone

63: Clause 9, page 12, line 39, at end insert—“(3A) The duty in subsection (1) includes a duty to consider whether a registered higher education provider or any constituent institution is overly reliant on overseas funding from a single country of origin.”Member’s explanatory statementThis amendment, together with the other amendment to this clause in Lord Johnson’s name, would include income from international tuition fees in the definition of overseas funding and ensure that the Office for Students has a duty to monitor over-reliance on overseas funding from a single country.

In rising to speak to Amendments 63 and 64 in my name, I draw attention to my interests in the register as a visiting professor at King’s College London, chairman of Access Creative College and chairman international of ApplyBoard.

I am not sure we are capturing exactly what we need to in this section of the Bill on overseas funding. If we are to legislate afresh, as we seem to be doing, on freedom of speech in higher education, the chilling effects arising from the excessive concentration of international research and tuition income surely need to be part of the discussion. The four categories of relevant overseas funding in Clause 9 are all good as far as they go, but they manage to exclude altogether the largest single source of such income. That is, of course, the income that universities receive from the uncapped and unregulated tuition fees charged to international students.

Like so many in this place, I strongly support the contribution that international students make to the success of our higher education system, and I am very pleased indeed that we met the Government’s target of 600,000 international students in this country by 2021, 10 years ahead of the 2030 target. There are many critics of international students in the country today. I note only that the proportion international students represent in the overall student population has not changed markedly since 2014. While the actual number has increased by 28% since that time, that has been matched by a similar growth in the UK student population, meaning that their proportion of the mix has stayed broadly the same.

What has changed, particularly since our departure from the EU, is the composition of this international student body. Concentrations of international students from particular countries are intensifying quite rapidly. Efforts to diversify are generally making feeble progress. Recent research by Janet Ilieva of Education Insight for Universities UK International highlighted this clearly. Her research pointed to an increase in the number of UK higher education institutions recruiting more than half of their undergraduate students from just one country, and at postgraduate level the number of higher education institutions recruiting more than half of their PG students from one country has increased over the past three years from 42% to 50%.

A full quarter of international students in the UK are from China. It is reasonable for policymakers to ask whether this is perhaps too much of a good thing, at least for some institutions. Dependency on China for international students varies markedly across the UK system, driven by the strong preference of Chinese students for prestigious and highly ranked institutions. China accounts for 51% of all non-EU students at the 24 universities of the Russell group—10 times more than the next country, India, which accounts for just 5% of such students. The Russell group has made a clear business decision to focus its international student recruitment on a group that yields the most revenue per place. That is because average tuition spend is almost £20,000 for a Chinese student, whereas it is £11,000 for a student from Nigeria and an average of £10,800 for a student from India. Six of our Russell group universities—a quarter of them—had more than 5,000 students from China in the last academic year, and one big institution currently has more than 11,000 Chinese students, roughly a quarter of its total student body of 44,000.

The problem is that excessive concentrations of students from particular countries within certain institutions can create financial dependencies that may limit freedom of speech and result in academic self-censorship. This issue pertains to China now, especially within the Russell group, but it could easily be about other countries exercising inappropriate influence and instrumentalised student flows in the future. We are living through torrid geopolitical times, and views may vary as to how likely some form of disorderly disengagement in our relations with China is and over what timeframe, but we should assign some probability to a severe disruption to student flows and research partnerships.

To my mind, the Office for Students is late on to this from the perspective of institutional and systemic financial sustainability, and I also believe that UKRI is late on to it in terms of assessing the impact on our capabilities in key fields, including telecommunications and applied materials, where a significant portion of our most impactful research is undertaken in collaboration with Chinese partners. That is why I would welcome a broader definition of overseas funding than is currently in the Bill and why I believe it would be sensible to add a duty on the Office for Students to consider whether a registered higher education provider is overly reliant on income from a single country of origin. I beg to move.

My Lords, if I may respectfully say so, I was extremely interested in the observations of the noble Lord, Lord Johnson of Marylebone, in support of the two amendments to which his name is attached. But there is another aspect of this discussion that gives me an opportunity to have a personal grouse, based on my own experience of higher education in the UK. Until recently I was the master of Clare College, Cambridge, and before that I was for many years chairman at the London School of Economics. We always took enormous pleasure on those occasions when we were able to recruit under-privileged students from poor postcode districts. At the end of the day, it is a terribly important part of the education process that we are concerned with.

The big problem with the current state of play—it has been going on for many years now—is that the cost of educating an undergraduate student at, say, Russell group universities is significantly more than the £9,250 charge that we make. Accordingly, most universities operate at a working loss in respect of the undergraduate school. It is only when you get to the uncapped overseas funds and the kinds of people we are talking about in these amendments that universities get an opportunity to, in effect, balance the books. I am afraid that for many years now, to balance the books we have had to take unregulated students from abroad—with, I entirely agree, a special emphasis at the moment on China.

Some of these fees are literally enormous, at £20,000, £30,000 or even more for certain specified courses. This is a very unsatisfactory state of affairs, not least because, when these students come from somewhere like mainland China, we are not interested in poor postcodes or whether they come from underprivileged families and so on. The answer is that they do not: they come from well-heeled families or state-funded backgrounds, enabling them to be educated here and—invariably, I am afraid, in most cases—to go straight back to their home countries. This is a serious concern, because we need strong cohorts of foreign students to come to our universities, without whom we would not be able to balance the books.

My Lords, following on from the noble Lord, Lord Grabiner, two words in the amendment cause me some concern: “overly reliant”. The problem is that no touchstone is provided in the amendment as to how that phrase is to be applied.

As it stands, subsection (2) gives clear guidance as to what the OfS is to look at. The problem to which the noble Lord, Lord Johnson of Marylebone, has drawn our attention is very widespread. It is not only China that one has to consider; there may be other countries too, and there is the question of balancing the contribution made in proportion to the size of the country, and whether it is so great that it gives rise to particular concerns. However, if I may say so with respect, the clause would be improved if it said a little more about the particular point to which the OfS should direct its attention, so that it knows itself what it should be doing.

My Lords, in the light of that last comment, I can briefly intervene with reference to Amendment 65 in my name. I register my interests as a member of the board of UKRI and a director of Thames Holdings.

I have two questions for the Minister but they arise also from the important intervention of my noble friend Lord Johnson of Marylebone. First, we do indeed need some sense of proportionality; the figure of 1% of the total income of a registered provider was an attempt to get some sense of what constituted undue influence. It would be very helpful to have an update from the Minister on the Government’s view on that. Secondly—I am speaking very much in a personal capacity—this clause is really about research funding. Of course, my noble friend has made an important point about teaching income. In the legislation which he steered through this House, there was a rather clear distinction between teaching, which is a responsibility of the OfS, and research, which is a responsibility of UKRI. It is important that those two bodies work together.

It would also be helpful to hear from the Minister how she envisages the OfS scrutinising what in this clause is predominantly research funding, for which the OfS has historically and legally not had any responsibility, but for which a different government body, on whose board I sit, currently has the main responsibility.

My Lords, I rise in part to move Amendment 66 in the name of my noble friend Lord Wallace of Saltaire. Before I do that, I would like to speak to the amendments tabled by the noble Lord, Lord Johnson of Marylebone, and the noble Lord, Lord Willetts.

My immediate reaction on reading Amendment 63 and the term “overly reliant” was to ask, how defined? In many ways, Amendment 65 in the name of the noble Lord, Lord Willetts, shows that there is a way of defining overly reliant; 1% might be the right amount or might not, but it begins to give us a way of saying what over-reliance means. Therefore, I believe Amendment 65 to be a helpful addition.

Amendment 64 is interesting but, as the noble Lord, Lord Willetts, pointed out, we need to be careful regarding whether we are talking about research funding or wider university finance. The noble Lord, Lord Grabiner, is obviously correct that the home undergraduate fee does not cover tuition adequately; international student fees are deemed by many higher education institutions to be extremely important. However, an important question raised by the noble and learned Lord, Lord Hope of Craighead, is: what is over-reliance? If 60% of a British university’s students came from one country and then its economy completely collapsed, that would leave the university more than decimated—potentially, minus 60% of its fee income if that market disappeared. So it is in many ways in the interests of higher education institutions to make sure they are not overly reliant on a single source of student fees.

Quite separate from that, in the case of freedom of speech the question then becomes: to what extent do we believe there is an issue about where the money is coming from? If we are talking about Confucius Institutes, for example, that is money coming directly into universities, and there might be questions about the conditions. If we are talking about undergraduate or graduate students coming to study in the UK, the questions might be slightly different. Wealthy parents from whichever country will not necessarily say, “We will send our offspring to the United Kingdom to be educated only if freedom of speech is in some way curtailed or if certain norms and values are articulated.” That is probably not what we will hear from China.

If there is somehow government intervention from countries paying fees for their brightest and best to come to the UK, maybe it is something to be explored, but I am not sure that this Bill is the right place to be doing that. There is a whole set of higher education funding issues that we might need to think about, but that then becomes very specific in the Bill, and I am not wholly persuaded that fee income will be a major factor in curtailing freedom of speech.

That also underlies Amendment 66 in the name of my noble friend Lord Wallace, which is a probing amendment to ask to what extent His Majesty’s Government think there is a problem with regard to the funding of student unions. Is money coming directly from the Governments of other countries? If so, are they constraining what student unions are able to do? The real question is: is this a problem that needs to be resolved, or is it simply the Government thinking they might like to have another regulator exploring a bit more what student unions are doing? In that case, perhaps we should not support that particular part of Clause 9.

My Lords, I thank the noble Lord, Lord Johnson, for raising this issue, because it is an important thing we should debate. Fundamentally, it is about balance and being proportionate—and, as we have heard, there is also the business case about overreliance on a single source of income. Certainly, if foreign students are coming from one country, as the noble Baroness, Lady Smith, said, clearly there is a risk factor in that.

I will start by saying, as I think the noble Lord, Lord Johnson, was saying too, that foreign students are an important element of our soft power. We should not underestimate how making our universities open to overseas students is an important part of the three Ds of our integrated policy of defence, diplomacy and development. Okay, I hear what the noble Lord, Lord Grabiner, said: often, the people whom we are attracting are a growing part of the wealthy side of society and instead we should be focusing on other areas, particularly in Africa, where we should be encouraging more students. However, when I was a student, I found that many of the overseas students that I became friends with subsequently became leaders of countries and influencers of countries, and we should not underestimate that. So I start by saying that I am very much in favour of supporting overseas students and that universities should continue to encourage them—especially from China. I do not think we should be debating that Chinese students are a bad thing. The Chinese Communist Party is a bad thing, but not Chinese students—we should absolutely be committed to that.

As I said at Second Reading and in other debates, the key to addressing the influence of income on free speech is transparency. I am sympathetic to the idea that there should be a requirement to say just what proportion of income is coming from which areas—that is absolutely right—but I also support the view of the noble Lord, Lord Willetts, that in introducing that element of transparency we should not place burdens on institutions that could inhibit academic research and the commitment to follow through those income streams. When we look at other countries, certainly when it comes to reporting requirements, we are talking about a much higher level than those currently envisaged by the Government.

So it is very important that we address these issues, but I share the concern of the noble Baroness, Lady Smith, that this Bill is not necessarily the appropriate place to do it.

My Lords, I would like to address the group of amendments relating to overseas funding.

Amendments 63 and 64, tabled by my noble friend Lord Johnson of Marylebone, seek to amend the transparency measures concerning overseas income received by higher education providers. They would add tuition fees to the categories of overseas funding in scope and require the OfS to consider whether a provider or college was “overly reliant” on funding from a single country of origin.

Increasing awareness of foreign interference risks in higher education is of course vital. That is why we have already added measures to the Bill that will require the OfS to monitor the overseas funding of registered higher education providers and their constituent institutions so that it can assess the risk that the funding may pose to freedom of speech and academic freedom in the provision of higher education within a given institution. However, we have ensured that the scope of these measures is proportionate to the risk, in order to ensure that our universities remain a place where freedom of speech can thrive.

The Government consider that these further amendments are unnecessary and potentially overly bureaucratic. Providers are already required to submit data to the OfS on course fees by broad domicile, broken down by UK, other EU and non-EU. In addition, international student numbers are reported to the Higher Education Statistics Agency and published online, broken down by country of domicile and by provider. This means that information about international tuition fees is already available to the OfS. If the OfS considered that a provider was overly reliant on student tuition fees—the noble Lord, Lord Collins, talked about the business case for overseas students—it could take steps if it thought that this would threaten the financial sustainability of the provider. That is included in the registration conditions that providers must already comply with. The OfS can issue sanctions for breach of these conditions.

Amendment 65, in the name of my noble friend Lord Willetts, seeks to increase the financial threshold for reporting required by higher education providers under Clause 9. This would require that no less than 1% of the total income of a higher education provider would fall to be reported, thereby reducing the burden of reporting on providers.

For many large providers, 1% of their total income could represent tens of millions of pounds, but I am sure noble Lords will agree that, for example, £1 million would be a very significant amount of money if an individual member of the academic staff received it as a research grant. Amendment 65 would mean that such instances might not fall to be reported.

The aim of Clause 9 is to increase the transparency of overseas funding. The OfS will require providers to supply information to them on relevant overseas funding. Relevant funding is defined as certain specified types of funding received by the provider, a constituent institution or a member or members of staff from a relevant overseas person, where that exceeds a threshold—to be set out in legislation—within a period of 12 months. The current intention is to set this at £75,000 in a 12-month period for providers and colleges.

We recognise that the risk of undue influence arising from smaller amounts of overseas income is likely to be lower. We have therefore ensured that the scope of these measures is proportionate to the possible risk to freedom of speech. We believe that the intended threshold of £75,000 for providers and colleges is appropriate, as it will strike the right balance by increasing the transparency of significant transactions without creating undue bureaucracy by requiring the reporting of smaller transactions that are less likely to pose a risk. The information required is further narrowed in scope, as “relevant overseas person” is a limited category and there will also be countries that are excluded from this provision that will be set out in regulations.

We take the impact on the higher education sector seriously, which is why the Bill includes the measures that I have just described to reduce the level of reporting required. We are therefore ensuring the proper targeting of the measure to the risk to freedom of speech, and that the burden on providers will not be too great.

I now turn to Amendment 66 tabled by the noble Lord, Lord Wallace of Saltaire, and spoken to by the noble Baroness, Lady Smith of Newnham, which seeks to clarify why students’ unions have been included within the scope of the overseas income measure in Clause 9. The overseas funding measures in the Bill seek to increase the transparency of overseas donations and other income received by higher education providers, their constituent institutions and students’ unions to better enable the OfS as a regulator to understand the possible extent of financial leverage from a foreign source, which may influence behaviour to pose a threat to freedom of speech and academic freedom. The information reported will enable the OfS to monitor and report on any sector trends and patterns.

In order for these measures to have the maximum intended effect on countering the threat of foreign interference in higher education and to increase public confidence in the sector, we considered it vital that the overseas funding duties extend to students’ unions, as other measures in the Bill do. Students’ unions across England are in receipt of a variety of overseas income every year and there is diversity across students’ unions in the ways in which they are funded. Information published by the Charity Commission demonstrates that a large number of students’ unions are very reliant on the annual donations and legacies that they receive. Therefore, it would be remiss not to include students’ unions in Clause 9.

The scope of the measure—noting in particular the threshold amount, which we anticipate will be set at an appropriate level for students’ unions—means that the burden on those unions will not be too great and will ensure the proper targeting of the measure to the risk to freedom of speech. I trust I have given reassurance that Clause 9 as drafted offers sufficient and proportionate protection against undue foreign influence on freedom of speech and academic freedom within higher education.

I am grateful to my noble friend the Minister for her response and to noble Lords for their excellent contributions. I will reflect on the debate and particularly on whether this was the best place for my amendment, which I recognise I have rather contrived to attach to this Bill. In the meantime, I am very happy to beg leave to withdraw it.

Amendment 63 withdrawn.

Amendments 64 to 66 not moved.

Clause 9 agreed.

Clause 10: Director for Freedom of Speech and Academic Freedom