– in a Public Bill Committee on 23rd March 2023.
Amendment proposed: 9, in clause 1, page 4, line 33, after “course” insert
“as specified in a standardised transcript.”—(Matt Western.)
This amendment would ensure that there is consistency amongst the academic record of students wishing to transfer between providers through a standardised transcript.
I beg to move amendment 7, in clause 1, page 5, line 3, at end insert—
“(4) When making regulations under paragraph 1B, 1C or 1F, the Secretary of State must have regard to the additional costs associated with the delivery of the course.”
This amendment would ensure that when exercising the powers granted in this Bill, the Secretary of State has regard to the additional costs associated with the delivery of modular study.
With this it will be convenient to discuss amendment 8, in clause 1, page 5, line 3, at end insert—
“(4) When making regulations under paragraph 1B, 1C or 1F, the Secretary of State must have regard to the financial sustainability of providers.”
This amendment would ensure that when exercising the powers granted in this Bill, the Secretary of State has regard to the financial sustainability of providers.
It is a pleasure to serve under your chairship this afternoon, Mrs Cummins, and to welcome everyone back for this second sitting of the day. We had a constructive discussion on our various amendments under clause 1 this morning. We continue now with amendments 7 and 8, which have rightly been grouped together as they address a pretty thorny issue: financial sustainability. The amendments set out that in exercising their powers under clause 1, the Secretary of State should first have due regard to the additional costs associated with delivery and secondly look at financial sustainability in the round.
On the additional costs associated with the delivery of modular learning, we heard collectively a plethora of evidence from our witnesses during Tuesday’s sitting about how the impact of lifelong learning might affect providers. Indeed, when it comes to higher education providers, Professor Press from Manchester Metropolitan University made it clear that there were difficulties for institutions in the “mechanics” of the delivery of lifelong learning, partly due to the additional cost of delivery when moving from a full year or full three years of a course to a module. Quite understandably, that will introduce an additional cost burden, whether that be costs of onboarding or administrative processing. Worryingly, given the take-up for lifelong learning is so uncertain—the pilot programme did not attract high numbers at all—Professor Press found it difficult to predict what precisely the costs would be. That is concerning.
It is important that we have seen that uncertainty, seen what it might mean and seen the additional costs. There has been very low take-up of the apprenticeship levy, T-levels and accelerated learning. Accelerated learning and the apprenticeship levy certainly have real merits, but they can bring an additional cost burden, and a restructuring or reshaping of courses for institutions. That means more financial pressure on institutions when things are already difficult—as I am sure, Mrs Cummins, you will be aware, given that you have a university on your doorstep.
The effect may be far worse for colleges, as acknowledged by Liz Bromley of Newcastle and Stafford Colleges Group and David Hughes of the Association of Colleges. Colleges clearly have already been facing a dire financial settlement over the past 13 years—a point that I am sure my hon. Friend the Member for Chesterfield will want to build on and explore thoroughly in his comments, given his expertise in and knowledge of the sector. Certainly, almost all the witnesses representing the further education sector whom we heard from on Tuesday called for an injection of cash—presumably, to combat a gradual decline in the real-terms funding settlement for further education colleges. Lecturer pay, workload, staff retention, the administrative burden and regulatory costs were all cited as reasons why modular provision in the form of lifelong learning may hit roadblocks in the years ahead. The recent decision to take the further education sector into the public sector, denying colleges the ability to borrow and limiting their access to risk capital, will also dampen the supply of new course provision.
In the impact assessment as published, there is an estimated cost of £211,000 for all providers to familiarise themselves with lifelong learning, although it is worth pointing out that the Russell Group thinks that that is a large underestimation. Perhaps the Minister can explain how the figure of £211,000 was arrived at. When we look at how many institutions we have, whether they be further education colleges or higher education institutions, that figure probably works out at about 300 quid each. I am sure the Minister can explain how the figure was arrived at and, indeed, what the approximate cost will be for those institutions, but even that rough calculation suggests that the cost is massively understated by the Government in their impact assessment. That is concerning, because we all want to start this scheme on solid ground and ensure that it is being approached correctly and has the best chance of delivery and success. That example suggests that it has not been accurately thought out, but I will wait to hear what the Minister has to say.
Not only does the financial capacity of the sector affect the provision of courses; it also risks the financial sustainability of the whole sector. On Tuesday we heard from Dr Norton of Coventry University, who helpfully demonstrated that higher education providers work on a five-year forecasting model, which is made harder if students are opting for modular study over a several-years-long course. At a time when over one in three higher education providers are reporting a deficit, the real-terms value of tuition fees has crumbled to below £6,750—my understanding is that it is probably more like £6,400—and the Government’s own policy impact assessment for the Bill admits that the lifelong learning entitlement
“could result in providers having less financial certainty”, the concern is that this mammoth reform may well be the straw that breaks the camel’s back. There is a real concern that it could bring down institutions in the sector. As of today, I am not entirely sure of the level of Government concern at that prospect. I hope the Minister will reassure us with his perspective of financial sustain-ability versus precarity of institutions in the sector—higher education and further education colleges alike.
This skeletal Bill introduces sweeping reforms to the way in which the student finance model works, and I would hope that the Minister would be totally assured that the reforms will pose as little risk as possible to institutional financial sustainability. That is why I was so concerned to read what I did in the impact assessment. What stress tests have the Department conducted ahead of implementation to ensure the sector can cope with the changes introduced in the Bill? What additional financial support, if any, does the Minister intend to provide to higher education providers and colleges seeking to implement modular study, given the limited financial capacity of the sector?
The amendments are important in establishing what risk there is to the wider tertiary education sector, and in ensuring sustainability. It cannot be logical that the costs per student unit will remain the same for modular learning provision. There will be a significant increase in the cost burden to institutions through the delivery of courses, but also in the administration and onboarding of students, and in managing departing students, and all the data needs around those changes. As we heard in our witness sessions, we have not even got to the wraparound support that students may require.
Has my hon. Friend reflected particularly on the evidence from Professor Rigby in the evidence session? She went into quite some detail about the administrative costs and the regulatory burdens of the modular approach, and the costs that that approach is likely to add to providers. Does my hon. Friend share my concern that the result of those administrative burdens might be that, without the additional funds he is asking for, colleges will find these courses unsustainable to run, and we will not get the amount of provision that we all want to see?
My hon. Friend is right to cite the evidence of Professor Rigby, and we heard from others on this point. There is a very real risk here, and none of us should underestimate that. We support the Government and the purpose of a lifelong learning entitlement—there is a need for it, in society, and also economically—so it is important that provisions are brought in, but they should succeed, and the delivery is really important in that regard.
To pick up on the point made by my hon. Friend the Member for Chesterfield, an interesting parallel is degree apprenticeships. We see real interest in them, but there are significant costs associated with their provision, including the regulatory burden, of which my hon. Friend will be more than aware. Involving employers in designing those courses and so on is intensive for an educational institution. The implementation—getting the course up and running—is a significant process.
Warwickshire College Group in my constituency, and other establishments that I have been speaking to up and down the country, would like to be able to do better and more on degree apprenticeships, but are being held back by the admin and financial burden; and it is that which will lead to much of the success or failure of these measures. It seems that there is currently no support, and that too much of the burden is falling on the institutions or the individuals. That will be the unravelling of what could be an important piece of legislation and policy to address the gap in our educational provision.
The salaries of further education providers and lecturers is far less than school teachers and university providers. I asked one of the witnesses in the evidence session whether the lack of the injection of cash mentioned by a previous witness would make these measures unsustainable. There is a problem with recruitment and retention, and many people can get better money out there actually doing vocational jobs, but we need these people to teach others vocational skills such as construction and hospitality. We already know that there is a skills shortage. Why are we not looking to address those particular issues, so that we can get our economy up and running? We support this legislation, but we have to hope that the finances are appropriated in the right places.
My hon. Friend is totally right that one of the huge issues in the sector is the paucity of remuneration to further education college lecturers and staff. While going around the country, I have heard lots of anecdotal evidence about how difficult it is to recruit good staff. We clearly want the best, most inspiring people to deliver and impart information through their teaching. Whether it be in pure vocational education or in academic subjects, we want the best people, with expertise and talent, who can really inspire others to get into that subject and to succeed.
I hear, from talking to establishments around the country, that there is a huge remuneration or salary disadvantage—a difference between what people can earn vocationally in roles versus what they earn as lecturers in colleges. What I am hearing indicates that there is a 40% difference in pay between delivering a vocational role and teaching. That is really to the detriment of the next generation, and it is why we do not have the number of people coming into teaching as we should have across the board. I totally agree with my hon. Friend’s points, which highlight another immense challenge for the sector in the financial burden; the remuneration would ideally be greater.
Amendments 7 and 8 identify a real pressure point for the sector, in terms of the burden from this Bill. As I evidenced through the degree apprenticeships, institutions have to bear additional costs to deliver good-quality courses, but the yield—the cost cover—is not there. It is actually to the cost of the institution to provide them; it is the right thing to do, but it is coming at great cost to them to do that. With that, I will end my remarks.
It is a great pleasure to serve under your chairship, Mrs Cummins. I rise to speak to my hon. Friend’s amendments. I think that he has already made the case well, but there are a few points that I would like to add, particularly regarding the financial sustainability of further education colleges and independent learning providers.
The amendments absolutely speak to the heart of our reservations about the approach being taken. They are quite modest in their scope, but given the evidence that we heard in the evidence sessions, which was touched on in earlier discussions on other amendments, they do, as I say, cut to the heart of our concerns. Amendment 7 asks the Secretary of State to have regard for additional costs associated with the delivery of the course, and amendment 8 asks the Secretary of State to have regard to the financial sustainability of providers.
I will speak to amendment 7 first. In the evidence session, David Hughes explained that colleges,
“do not have any of what the private sector might call risk capital”.––[Official Report, Lifelong Learning (Higher Education Fee Limits) Public Bill Committee,
Given that FE college funding has fallen by 27% in real terms between 2010 and 2019, according to the House of Commons Library, and given the increasing financial pressures—with the booming energy prices and wage inflation all affecting colleges too—the financial picture for many of our colleges, crucial as they are, is very difficult indeed.
For that reason, David Hughes told us that the risk appetite of colleges for putting on courses that they do not know that anyone will study is likely to be pretty limited and restrained. As my hon. Friend the Member for Warwick and Leamington said, with colleges now being inside the public sector and therefore unable to seek private-sector borrowing, and being forced to run balanced budgets, colleges will just not be able to run courses that they cannot be pretty certain will have learners taking them.
My hon. Friend is making an excellent point about the difficult landscape that FE colleges find themselves in, but is he as surprised as I was to hear that Eton College was proposing to enter into the fray across the country—my own constituency included, notwithstanding that there was an oversupply in the sector already—thereby adding to the difficulties and undermining existing colleges? Is that not exactly the wrong way to go when the landscape is already so difficult?
My hon. Friend makes an interesting point. I am not specifically aware of the intended provision that he raised but, absolutely, the strength of his oratory on the issues facing further education colleges is absolutely right, and I would be very interested to learn more about what it is that Eton College believes it can offer that is not currently being provided.
Returning to the point I was making, there is a real need for somebody to step in and provide the certainty of funding that might allow more courses to be put on. Realistically, this legislation will not even come into force until 2025, so it will fall on the next Government to make this work, not the current Government, with all their best intentions. It will fall on the next Government to ensure that our constituents and learners across the country can actually take advantage of what is being offered.
Over the course of the 13 years I have been a Member of Parliament, I have become used to quizzing Ministers on pieces of legislation: “How is it going to work? What are you going to do?” This is one of those situations where the Minister is laying out what he anticipates might happen with the legislation, but all these questions will probably be for his successor. He may still be the Minister—no one knows the outcome of a future election.
However, as His Majesty’s Opposition, as a responsible Opposition, we have to think carefully about the fact that we might inherit this legislation and inherit responsibility for ensuring that these courses are available, that colleges and independent learning providers are sustainable, and that this provision is available to our constituents. It is therefore important for the Minister to confirm at this stage, given the recent Budget, whether any provision has put in place to recognise the additional costs for FE colleges or independent learning providers in delivering a more modular form of learning.
As we heard in evidence—I will expand on that in a moment—additional administrative and cost burdens will be placed on colleges. Will money be put aside to ensure that they are able to run these courses sustainably? If it is not the Department for Education or the Minister that will be ensuring additional funds, will it fall on local mayors to provide financial reassurance? Might the need for this kind of provision appear in local skills improvement plan? There would then be an expectation that a Metro Mayor would provide additional financial reassurance.
If not, I fear that this scheme will end up being something that largely happens in the private sector, where there is maybe a bit more risk appetite, and only with employers who can provide certainty about the economies of scale by placing several learners on courses. If a particular employer says, “Well, I want seven of my staff to do a specific course,” then someone might run one on that basis. But we are looking for colleges or independent providers to pre-emptively offer a course and see who signs up for it, so all these financial implications will only add to the potential nervousness around that. We heard several witnesses say that this measure has the potential to be a game changer for colleges, but only if they can afford to take the risk. This amendment, proposed by my hon. Friend the Member for Warwick and Leamington, offers some potential for the Government to illustrate that that risk has been seriously considered.
It will be useful for the Committee if I specify some of the additional costs that learning providers will face. We know that one of the Bill’s objectives is that someone who studies in this kind of modular way should not pay any more than they would have done had they studied in what you might call the usual way on a short-term, full-time course. Providers are saying that delivering in this new way will be more expensive, so there is a gap. Someone has to fill that gap, and it will either be some form of Government or the provider themselves. If it is going to be the providers, they will have to think carefully about whether that will be affordable.
If we think, for example, about the recruitment costs for any college that takes on lecturers—advertising a position, going through the interviews, all the administrative costs with collating CVs and going through and meeting to discuss those CVs—and all those things that might normally happen in advance of a three-year university degree, with all the revenues that will come in from that, all those costs still apply. However, it might be that those costs apply to someone who will actually be working for a short length of time and with far less revenue coming into the learning provider, and the barriers to recruitment will arguably grow.
We have already heard from my hon. Friends the Members for Sheffield, Brightside and Hillsborough and for Warwick and Leamington about the difficulty in recruiting college lecturers because in sectors such as construction, IT and accountancy, they can earn 40%, 50% or 60% more doing the job than they can teaching other people to learn the job. If we think about attracting someone into that sector to give them a few hours of work—maybe eight weeks of work over the course of a year—that will further shrink the pool of people who might be available to do that.
The costs of recruiting are the same and the barriers to recruiting are arguably greater, yet the amount that the college or independent learning provider will receive will be considerably less. In his evidence session, David Hughes said these recruitment difficulties
“might get worse in the short term”––[Official Report, Lifelong Learning (Higher Education Fee Limits) Public Bill Committee,
rather than better. My hon. Friend the Member for Sheffield, Brightside and Hillsborough is absolutely right to say that there is now a huge discrepancy between the amount that people earn in FE in comparison with our school sector. That did not use to be the case, and if we look back 15, 20 years or so, further education lecturers were paid commensurately with people in our schools. The much greater cuts to the FE sector have led to wages falling behind and a huge talent drift either to schools or out of teaching all together and into industry. It is incredibly important to recognise that point.
It is also important to recognise the administrative and regulatory burdens. I will turn to Professor Rigby’s evidence, where she was at pains to say:
“In terms of the regulatory burden, it is significant. I would estimate that the cost of regulation to my university”—
“over the last year has been in excess of half a million pounds.”––[Official Report, Lifelong Learning (Higher Education Fee Limits) Public Bill Committee,
She went on to say:
“Once we break that down into subject areas—I run around 80 different subject areas—we amplify that level of bureaucratic oversight potentially by 80. Breaking that down into modules means that every one of my degrees, which at the moment are a unitary entity, is broken down into 12 pieces, any one of which could be the focus of oversight by the Office for Students. You are amplifying my administrative or overhead burden of regulation by 80 times 12, which is significant, given that it is not cheap.”––[Official Report, Lifelong Learning (Higher Education Fee Limits) Public Bill Committee,
It is beholden on all of us on the Committee to think about what we expect colleges and universities to sustain. That is not to say that we do not continue to support the intentions of the Bill; we just want the Committee to be candid with itself and honest with the sector about the challenges it will face, which will potentially prevent some of those institutions from running courses of this kind.
The evidence from David Hughes on further education salaries, in response to my hon. Friend the Member for Sheffield, Brightside and Hillsborough, in column 51 of the evidence session, said that he had spoken to the Minister, and there is real concern about the impact of the potential increase in school pay on further education sustainability—again, it is moving further away from what is being enjoyed by FE lecturers. He also said, in response to my hon. Friend the Member for Brighton, Kemptown:
“If you think about the extra learner needs and the high number of young people and adults in FE colleges with additional learning needs and disabilities, it is enormous— much higher than in any other sector. That learning support needs to be fully invested in.”––[Official Report, Lifelong Learning (Higher Education Fee Limits) Public Bill Committee,
The success that FE colleges have had in supporting students with special educational needs or disabilities is why they face additional running costs and why cuts to the FE sector have been so self-defeating over the last 13 years.
Turning to amendment 8, I have already described some of the additional costs that institutions could face. This Bill will create opportunities that the Minister and we all hope will lead to FE colleges and ILPs putting on modular bitesize courses that either do not exist in the same way today or will be much enhanced. My hon. Friend’s amendment would demand that the Secretary of State gives regard to the financial sustainability of those institutions in the funding support that colleges and ILPs receive.
We have already spoken about our concerns that that could lead to a shift in the responsibility for funding for work-based learning from employers to employees. When an employer books several places on a course, it is easy to see how that could happen. When colleges have to pre-emptively run courses in the hope that they attract people in their local areas, if Government or Metro Mayors do not have regard to the sustainability of those institutions, they may just find that those colleges will not run the courses, and that learners in those areas that be disadvantaged.
Given the financial outlook for many colleges, exacerbated by the Government’s decision on capital funding as they move into the public sector, it would be a good thing for the Secretary of State to have regard for the financial sustainability of FE colleges in any case. Indeed, if she had that regard in the first place, we would not have seen a 27% real-terms fall in funding between 2010 and 2019. It is important that we hear from the Minister what steps the Government have taken, what budgets they have set aside, and how the sector can be assured that the opportunities that we are all promoting to learners will actually be available because FE colleges and ILPs are financially sustainable.
It is an honour to serve under you, Mrs Cummins. I am supportive of the sentiment behind these amendments and recognise the importance of considering the impacts on providers. The Government have been fully mindful of the financial sustainability of providers during the development of the LLE, particularly of FE colleges. The Government are also mindful of the additional costs that providers may incur when offering shorter modular provision at large scale.
We engaged with a wide range of stakeholders to gather input, to inform policy development and to build awareness of the LLE. We are grateful to the stakeholders that have engaged with the Department on the LLE and, of course, we will continue to work closely with the sector on its design and delivery. It is important to note that the LLE and its ambitions have been strongly welcomed by the sector for the most part. Stakeholders responded positively to the flexibility and the keenness of a simpler finance system.
The Committee will be aware that the Government published an impact assessment for the Bill, which included a consideration of impact on the providers. The hon. Member for Warwick and Leamington and the hon. Member for Chesterfield both asked how the cost was constructed. The basis of the calculation is set out on pages 36 and 37 of the impact assessment. That sets out the estimates of the potential implementation costs to providers, which is separate to the wider assessment of the benefits of the LLE.
The hon. Member for Warwick and Leamington also mentioned FE reclassification. He will know that the decision was taken by the Office for National Statistics, but we are supporting colleges with a package that includes an additional allocation of £150 million over the 2023-24 period, and we have invested £300 million in the reprofiling of payments before the end of the financial year, to eliminate the current deficit.
How does that capital allocation compare with the number of colleges that had, were in the process of negotiating, or have received offers for, private sector loans in advance of becoming public sector institutions? Will the amount of money allocated enable all those arrangements to go forward? Or is it likely that some will no longer go forward?
As well as the figures I mentioned, the DFE is working closely with colleges to try to deal with the difficulties that have come about because of the reclassification of FE colleges. I hope to be able to set out more on that in the weeks ahead.
If the hon. Gentleman does not mind, I want to press on because I have a fair whack to get through.
On the cost to providers, the Government will publish a full and detailed impact assessment, including the qualification of expected costs and the benefits of LLE in its entirety, when we lay the necessary secondary legislation to fully implement the LLE. It is important to note that the Bill is simply three technical clauses to create the architecture to enable the LLE.
On funding, I will always champion more resources for FE and skills. There have been some steps forward: we are spending an extra £3.8 billion on skills over this Parliament; increasing 16-to-19 funding by £1.6 billion; spending £2.7 billion, I think, on apprenticeships by 2025; and spending up to £500 million on T-levels. I could go on—for example, we are spending nearly £300 million on the institute of technology colleges.
The hon. Member for Sheffield, Brightside and Hillsborough raised the issue of FE recruitment, which does concern me. I accept absolutely accept that there is an issue; I do not deny that for one minute. We have an FE teacher training bursary programme to encourage recruitment in key areas of FE that is worth up to £26,000 and will over the coming year, 2023-24. We are investing in a further education workforce package to support the sector with the recruitment, retention and development of teachers, including through a national recruitment campaign.
The hon. Lady will know about our Taking Teaching Further campaign, which supports people business and industry to move into FE part time. I am concerned about recruitment and, although I cannot give any funding commitments other than those I have mentioned, it is very close to my heart, as it is to hers. We are going to make further increases in FE rates over the academic year 2023-24, which will mean that in the relevant financial year we will invest into 16-to-19 education a further £125 million of the £1.6 billion from the spending review. We are also increasing the national funding rate by 2.2%, from £4,500 to £4,642 per student.
The hon. Member for Warwick and Leamington knows that I champion degree apprenticeships. We have spent £8 million to facilitate an increase in the number of degree apprenticeships, of which we have had 140,000 over the past few years. It is a completely new concept that we introduced. I am looking at the burden of regulation and other issues, but I am keen to champion degree apprenticeships—I have always described them as my two favourite words in the English language.
The hon. Gentleman will know that we have devolved 60% of the adult education budget. The mayoral combined authorities will be important players in the skills systems, which is why the skills for jobs White Paper makes it clear that they will be engaged in the development of the local skills improvement plans. MCAs will continue to play an important role in the development of provision that responds to a local skills gap, and they obviously have a significant say when it comes to the devolved 60% of the adult education budget. It is important to note what the impact assessment shows: that providers may see increased tuition fee revenue if the LLE encourages more people to engage with lifelong education.
Is the Minister saying that he is cognisant of the concerns, but that no additional money has been allocated in the recent Budget for the additional costs that providers have told us will be attached to this style of learning?
These things will be decided in future spending statements, and I have highlighted the extra money going into further education over the Parliament and over the coming Budget period.
The pilot scheme was mentioned briefly. I strongly recommend an article about the pilot scheme—the hon. Member for Warwick and Leamington has probably read it—by a witness to our Committee, the vice-chancellor of Nottingham Trent University, who says that the whole purpose of the scheme was to show the system working. It was not about quantity, even though there are 100 available courses. He writes that
“the effective administration of those received shows that SLC systems and processes are ready to support modular study.”
In the rest of the article, which I will not detain the Committee by quoting at length, he mentions all the other courses and pilots on modular learning that there have been, stating:
“The In-Work Skills pilot was also a pathway policy for the LLE. Delivered by Institutes of Technology (IoTs)…10 IoTs delivered the In-Work Skills pilot, which was a 1-year pilot that delivered high quality, higher technical short courses…The IoTs delivered a total of 59 short courses to 3,060 learners”.
He also cites other figures to show the extent of the move towards flexible and modular learning.
Importantly, as the hon. Member for Warwick and Leamington will know, the strategic priorities grant provides Government funding on an annual basis to support higher education providers’ ongoing teaching, and of course funding levels will be considered in the round at the next spending review, with the LLE in mind. Therefore, as the Government have been mindful of these concerns throughout the development of the LLE, and are confident that providers will be able to consider their own financial sustainability and costs when deciding which courses and modules to offer, we will not support the amendment.
We have had a pretty healthy debate on the amendments. I particularly appreciated the contribution of my hon. Friend the Member for Chesterfield, who has expertise specifically across the further education sector, but also in the delivery of apprenticeships.
I hear what the Minister says about the Government being mindful of the costs and so on, but when I look at the provision of further education and the costs at FE colleges, I wonder whether the Government are really being mindful of the cost pressures for them, and I wonder whether they are being mindful of the cost pressures that face the higher education sector, in which 32% of providers are currently in deficit, or of the cost of delivering degree apprenticeships.
This is a crucial point. We have already heard about the 27% cuts to the further education sector between 2010 and 2019. The Minister was at pains to say, “Well, there are some pots of money that we are looking at,” but he has also made it absolutely clear that, as things stand, this is being handed over to the next Government with an additional price tag on it and no money allocated. That is what we have heard in today’s debate.
Indeed, which is why the amendments are important. We want to start this policy on solid foundations, because we buy into and support it, but currently it just does not have the financial structure to make it deliverable, because these institutions are already facing massive costs. As my hon. Friend said, there are pots of money, but they are small pots of money when the sectors—particularly the further education sector—are already at a significant disadvantage.
I admire the Minister’s ambition in wanting to increase the retention of staff across the further education sector, but we are also seeing in schools a massive haemorrhaging of the staff—expert teachers and lecturers and so on—and the technicians who support so many of these courses, because they just are not getting the remuneration that they deserve so are leaving. To retain people, we must give them the right reward, and they currently feel massively undervalued by the way the Government are doing things.
As the Minister said—he mentioned his two favourite words—he believes in the sector and its value. I urge him, in future Budget negotiations, to get the support that education needs, particularly in respect of the sectors we are discussing. Too often, they are described as the Cinderella sector, and it is just not good enough. We absolutely must believe in delivering proper education, whether it be technical or otherwise, across society, and presently that is just not happening.
My hon. Friend the Member for Chesterfield reminded us of the issue of risk capital, as described by David Hughes, and the situation we have with the reclassification of debt. I am sure the sector feels completely financially handcuffed by where it is, because it just does not have the funds to do what it needs to do.
On top of that, my hon. Friend reminded us of the statement from Professor Rigby. When we think of an institution delivering a course once or twice a year—with a September, October or January start date for the delivery of courses—and suddenly increasing that from two to 12, it has six times as many. How does an institution staff that? How does it make that happen, as opposed to having modules and courses delivered by a certain number of staff at those start dates? It must lead to a multiplication of the resource, which comes with a significant financial burden. I just do not believe that the impact assessment underlines the reality of what the sector will face. As my hon. Friend reminded us, the context is the 27% reduction in real-terms funding in the FE sector between 2010 and 2019, which has made it all the more difficult.
Let me go back to the Minister’s point, because I love the words “degree apprenticeships” as well. They are fantastic programmes, but as I understand it the problem is that we are seeing a tailing off, and institutions are already saying they will not expand the programmes because of the associated costs. That gives the lie to the ambition, because if that is already beginning to reduce, what chance does this policy have? We will face the same sorts of challenges with lifelong learning, as it is currently set out, that institutions face with the delivery of degree apprenticeships.
Amendment proposed: 8, in clause 1, page 5, line 3, at end insert—
“(4) When making regulations under paragraph 1B, 1C or 1F, the Secretary of State must have regard to the financial sustainability of providers.”—
This amendment would ensure that when exercising the powers granted in this Bill, the Secretary of State has regard to the financial sustainability of providers.
I beg to move amendment 1, in clause 1, page 5, line 23, at end insert—
“(1IA) The fee limit as determined under paragraphs 1D, 1E and 1I is to be indexed to any future increase in tuition fees”.
This amendment is to ensure that should the Secretary of State or Parliament decide on any increase in the value of tuition fees, the fee limit is adjusted accordingly to ‘future-proof’ the value of the lifelong learning entitlement.
It is a delight to see you in the Chair this afternoon, Mrs Cummins. I thank the Minister for his commitment to lifelong learning and for his acknowledgement of the position regarding FE lecturers and teachers. All of us who value our superb FE sector are aware of the pressures it is under, but I ask him to take up with me outside this discussion the unintended consequences of bringing other providers into a field where they can detract and take people away.
I welcome the commitment to lifelong learning but, as my amendment speaks to the issue of fees and therefore indebtedness, I also feel obliged to place on the record my thanks to Governments past for making the commitment to provide me and my generation with an entirely free education. Given that I started as an undergraduate in the 1970s, I recognise the wisdom of Harold Wilson in establishing the Open University. His good sense, and that of Jim Callaghan, ensured that working-class youngsters could fulfil their potential without the burden of long-term debt.
It is a different world now, and I very much regret the commodification and commercialisation of education in this neoliberal world. I hope that future Governments will abolish tuition fees for those embarking on their higher education journey. I am of the view that some of the changes we have seen since the 1970s have not been to the betterment of those wishing to further their training and education, or to the betterment of our economy and society. But we are where we are, and the Government’s intended commitment to lifelong learning warrants support—albeit, as ever, subject to the rigours of examination in the Bill Committee process.
Specifically, my amendment inserts the following provision:
“The fee limit as determined under paragraphs 1D, 1E and 1I is to be indexed to any future increase in tuition fees”.
As part of the lifelong loan entitlement, learners will be entitled to a maximum of £37,000 to use to dip in and out of modular study. That is equivalent to the cost of four years of undergraduate study—£,9,250 times four. Given that the system is intended for life, it is important that the real-terms value of the funding on offer does not decline over time. If the value were to decline, it would inevitably affect the uptake for courses on offer in the coming decades.
This issue should be seen in the context of the Conservatives presiding over a continual decline in the unit of resource for student funding at undergraduate level. Mark Corver, director of the higher education consultancy dataHE, has done some thorough work on the real-terms value of the annual tuition fee. The cap for full-time undergraduate fees at universities in England was set at £9,000 in 2012. It has increased just once, in 2017, to £9,250. That is not the entirety of funds for teaching because there is additional Government funding for certain high-cost subjects, but in England and Wales it dominates universities’ resources.
Even the relatively low inflation over the last decade has been sufficient to erode the value of that 2012 money. Real funding went from £9,000 in 2012 to around £7,760 by 2020, with universities having 15% less to spend on teaching each student than they did in 2012. Of course, that was before the recent spike in inflation. By 2022, real funding had fallen to £5,600—a 38% cut from 2012. Two years later, taking us to 2024, the real value will have slumped to £4,400—a 51% cut. By that point, universities will be needing to teach two students with the resources they had for one in 2012. If universities made it through to 2030 under that scenario, they would find their real funding per student had dropped to around £2,000. That is less than a quarter of the 2012 resource. That is in line with analysis from the Institute for Fiscal Studies that up-front spending on teaching resources per higher education student was 18% lower in 2022-23 than it was in 2012-13.
The amendment would ensure that if the Secretary of State chooses—or rather, as the Minister pointed out, if Parliament votes—to increase tuition fees by any amount from their current level, the amount available to learners in their lifelong loan entitlement, which is a total of £37,000, would rise by the same amount. The aim is to futureproof the lifelong loan entitlement amount to ensure that learners who return to study a significant period of time after undertaking their first module receive no less funding than they did previously.
That idea was supported in some comments during our evidence session. Professor Sue Rigby, the vice-chancellor of Bath Spa University, has been quoted often this afternoon. She told us:
“Throughout the Bill, I have identified a multitude of technical changes that will affect the provision of probably a couple of million existing students in order that, in ’27-28, we will start to see the roll-out of the LLE. Intuitively, I wonder why form does not follow function, in that we should design the LLE and then make sure that the funding system will permit it, rather than changing the funding system ahead and precluding some of the design opportunities that would otherwise reside in the LLE.”––[Official Report, Lifelong Learning (Higher Education Fee Limits) Public Bill Committee,
Sir Philip Augar, whose work leading the review of post-18 education and funding is widely and extremely well regarded, told us in his evidence:
“I would not really like to say what the fee should be 10 years out, but, clearly, one would expect that inflation would have been reflected in it to some degree”.––[Official Report, Lifelong Learning (Higher Education Fee Limits) Public Bill Committee,
In conclusion, I trust that the Government will accept the need to have that clarity on the face of the Bill so that the necessary assurance is plain to see for learners at the outset and so that they are not deterred at the first hurdle by any doubts about their ability to access the entirety of their lifelong learning programme.
I thank my hon. Friend the Member for Middlesbrough for tabling this amendment and arguing for it so well. He is quite right that, given what we have been through over the past decade or so, the effective freeze in tuition fees has led to a significant decline in the value of the unit of resource, and he is right about the need for some form of futureproof guarantee that, should there be a rise in tuition fees, that should be matched by a consequent rise in the value of the lifelong loan entitlement.
Over the last decade, we have seen tuition fees reach £9,250 but they have essentially been frozen for the last five years, having had, as my hon. Friend explained, a marginal reduction back in 2017. We have seen a real-terms decline in their value. Indeed, Universities UK calculated that by the end of the 2024 academic year inflation would reduce the value of the annual tuition fee to £6,600 based on prices in 2012, when the fees cap was trebled to £9,000. That is a reduction of almost £2,500 in the unit of resource to an institution, which is putting huge pressures on those institutions. That was the point we were making in the debate on amendments 7 and 8. Institutions are under real financial pressure as there has been such a massive decline in the value of that unit of resource. London Economics has estimated that over the past decade, the overall income for students per unit of resource would be back at 2006 levels, when fees were £3,000. That gives some context as to just how much the sums involved have been devalued over time.
As I mentioned earlier, that devaluation is having a tangible effect on institutional financial sustainability, with many institutions reporting deficits and having to cross-subsidise their courses, take on more international students or borrow from the private sector. The amendment would seek to tie the lifelong learning loan to any rise in the value of tuition fees, as I have said. The point is that if this really is to be a lifelong loan entitlement, it is important that learners who benefit from a module in, say, two years’ time and who wish to return to studying 20 years later, in 2045, have access to the same quantity of learning as they would have done 20 years before. Otherwise, we will see the risk of individuals using their entitlement very early on in their lives paying the price of that and not being able to access further training or tuition later in life because they have used up their entitlements.
Given that there is a real need to make this work and to make the system as attractive as possible, we urge the Government to consider some form of indexation. Sir Philip Augar described this system as having
“the potential to be a game changer”––[Official Report, Lifelong Learning (Higher Education Fee Limits) Public Bill Committee,
We have heard that description before. But that potential can be realised only if the system is protected against the real risk of inflation. We saw inflation peak yet again yesterday—to, I think, 10.6%.
I want to come in at this moment, because we would all hope that learners who are looking for work and on universal credit might, as part of their efforts to get another job, take on courses and develop their skills. During the progression of the Bill that became the Skills and Post-16 Education Act 2022, we highlighted issues about the entitlement to study for those in receipt of universal credit, and amendments to the skills Bill in both the Commons and the Lords would have enabled some people in receipt of universal credit to study. Those were removed by the Government, but at the time, they offered the reassurance that they were consulting with the Department for Work and Pensions about the issue. I have heard nothing more since, so I hope the Minister might be able to tell us what happened with that consultation. Does my hon. Friend agree that in order for this measure to be as transformational and game changing as we hope, people who are in receipt of universal credit must be able to access a loan to develop their skills in order to get into another job, rather than being told, “No, you can’t do that because you’re not spending enough time looking for another job”?
My hon. Friend brings up a valid and pertinent point about the reality for so many people. The intent behind this legislation and policy is a good one, and it should be there to assist people in that particular predicament, but, as he says, it does not seem that that will necessarily be the case. However, I am sure that the Minister listened to his points and will address them in his response.
This amendment would ensure the long-term sustainability of the lifelong learning model and allow students who “bank” their credits to have the same chances later on in life to add to that bank. I will understand if the Minister is unable to accept the amendment as drafted, but given that he is planning on introducing long-lasting reforms to be used by people in the course of their lives, I would like to press him on how he envisages the value of the LLE being maintained over the years.
I congratulate the hon. Member for Middlesbrough on his amendment and his kind words. I am absolutely with him on the Open University, which many of my constituents in Harlow have had incredible value from. It is one of the great education reforms of the last century, without a shadow of a doubt. As an anoraky child, I watched some of its content on television —now it is all on the internet—late at night, because I was at home a lot, growing up. I therefore have complete sympathy with his remarks.
It is worth mentioning that the lifelong loan entitlement is intended to replace, as we have discussed throughout today, the current student finance system. As a result, from 2025 onwards, the fee limit rate and the per-credit fee rate will be exactly the same thing. It may help if I provide further detail about paragraphs 1D, 1E and 1I, which set out the fee limit calculation for credit-bearing and non-credit-bearing course years, and introduce the per-credit method into existing clauses in schedule 2 that set out how the four different fee rates are applied. Essentially, they set out how the credit-based fee limit method will work.
The LLE will be the route for people wanting student finance for levels 4 to 6 study across higher and further education. For example, from 2025 the LLE will replace current HE student finance support as the way an 18-year-old could fund their degree. The Government intend all courses offered under the LLE to use the new credit-based method for calculating fee limits. That includes longer programmes such as three-year degrees, as well as short courses and modules, regardless of whether they are studied on a full-time, part-time or accelerated basis.
As I have mentioned, from 2025 onwards the fee limit rate and the per-credit fee rate will be the same thing. Rather than the fee limit being set out as an annual amount, as it is under the current system, it will instead be set out as a per-credit amount. Those per-credit rates will apply to all courses and modules funded through the LLE. There is no separate method through which the Secretary of State can control tuition fees outside the setting of fee limits, which, under the LLE, will be in accordance with the Bill.
Providers will continue to be free to set their fees at or below the fee limit amount. All the Government have the power to do, subject to regulation made under the affirmative procedure, is set the fee limit. The Government intend the fee loan rates to echo the fee limit rates, as they do under the current system, so that the amount a student can borrow matches the amount a provider can charge. For that reason, we cannot support the amendment as it is not necessary: the fee limits set for the LLE through the Bill will be the sole basis of fee limits, or controlling tuition fees, going forward. The whole purpose is to ensure a coherent, fair system, with fee limits that apply across all types of provision.
May I clarify something that the hon. Member for Middlesbrough said about the uprating of the £37,000 with inflation? The Secretary of State would have the facility to uprate the £37,000 entitlement with any change to fee limits. That will be subject to regulations made by affirmative resolution, so Parliament would have to decide.
The hon. Gentleman also talked about universal credit and the LLE. As he will know, the detail on claiming universal credit as a student is on gov.uk; those qualifying could include those aged 21 and under in full-time, non-advanced education who do not have parental support; those living with their potential partners for universal credit; and those who are disabled and have limited capacity for work. Under the LLE, students are eligible for benefits, and a student responsible for a child may continue to qualify for universal credit while they are studying on a higher education course. I reassure the hon. Gentleman that the Government intend to preserve existing safeguards that allow students eligible for benefits to access UC while studying.
The hon. Member for Warwick and Leamington asked for clarification on HE funding. We believe that a continued fee freeze achieves the best balance between ensuring that the system remains financially sustainable, offering good value for the taxpayer and reducing debt levels for students in real terms. To be clear, we are investing an extra £750 million over three years, from 2022 to 2024-25, to support high-quality teaching and facilities for subjects that support the NHS and degree apprenticeships.
I thank the Minister for his response. On the ancillary issue of universal credit, I have an uncanny feeling that the protections are not as universal as the Opposition hope. Nevertheless, we have been given some reassurances. On the substantive matter of my amendment, I am pleased that the system works, that the Minister has been persuaded of the veracity of our arguments and that it is already built into his thinking. With that, I will not press the amendment to a Division, and I thank the Minister for his clarifications.
I forgot to mention this but I think the hon. Gentleman asked to see me. I would, of course, be happy to meet him at any time.
This has been a good debate on clause 1, which enables tuition fee limits for higher education courses and modules to be calculated using a per-credit method under the Higher Education and Research Act 2017. The current tuition fee limits system, where fees are determined per academic year, cannot be applied appropriately to the short courses and modules that are integral to flexible lifelong learning and the wider LLE. If HERA is not amended, students who use the LLE to study shorter programmes could face tuition fees that are disproportionate to the size of their course. For example, a single parent studying one 30 credit module in social care could be charged £9,250 per year—the same as a student studying a full year of a degree programme.
The new per-credit method introduced by this clause will ensure that fee caps can be applied fairly to all types of learning under the LLE, whether the learner chooses to build up a qualification at their own pace or undertake the entire qualification in one go. Therefore, the single parent studying the 30 credit module will pay a proportionate amount compared to a larger programme, making it more affordable for them to space out their studies and learn at a pace that is right for them.
The principle of the credit-based method is set out in the Bill in new paragraph 1D, which is that fee limits will be set at the number of credits undertaken by the student, multiplied by the relevant per-credit limit. That is supplemented by the new powers in paragraph 1C, which ensure that the necessary numerical details can be set out in the regulations, as they are now, which Parliament will be able to scrutinise under the affirmative procedure.
To introduce the per-credit fee limit method, clause 1 includes three key measures. First, in new paragraph 1A, it introduces the concept of the credit as the basis of a new fee-limit calculation. Credits are defined in the Bill, in accordance with their current usage across further and higher education, and are already a popular measure of learner time.
Secondly, clause 1(2)(b) introduces the concept of a course year as the period to which fee limits are applied. The course year offers far more accuracy than the current academic year, as it can start on the first of any month in a year. That means fee limits for short courses and modules can be set with greater precision. Currently, if a course begins in November, its fee limits are applied from the 12 months beginning on
Finally, as set out in new paragraph 1C, the clause enables the Secretary of State to limit the number of credits that can be charged for each type of course. Providers would not be able to charge for more than 360 credits for a three-year bachelor’s degree with honours. As in the current system, they may still offer more than 360 credits for the degree, but would not be able to charge the student extra fees, preventing students from being charged unfairly for their studies.
The clause is an integral part of the Government’s transformation of student finance, giving people a real choice in how and when they study, so that they can acquire new life-changing skills.
As I said at the outset and on Second Reading, we agree with the essence of this Bill. We certainly agree with the purpose behind introducing lifelong learning, but, for the reasons outlined in our amendments, we have real concerns about its delivery and whether it will be successful. I am sure that the take-up of recent initiatives such as the T-level programme and accelerated degrees is not as high as the Government wanted it to be. We fear that this measure will not be successful either, for all the reasons given today and on Second Reading.
Picking up on the points made in Tuesday’s witness sessions, we believe that there needs to be more consultation with all stakeholders—not just the education providers, but all those involved in the design and provision of training, particularly vocational and skills training. I am disappointed that those amendments were not agreed to.
We have made an important point about the definition of credits and the standardisation of transcripts relating to students moving between courses and providers. That should be reflected in the Bill. It is vital that the sector and the institutions have confidence in this programme and that they trust each other and the standard of the qualification with which individuals come to them. They already have those sorts of arrangements, but they are very much bespoke and ad hoc and have been built up over time. Suddenly, this is going to be opened up considerably. I am sure that the sector is very nervous about what that will mean for the onboarding of students into institutions.
We addressed financial sustainability at some length. The pressures faced by the sector—including FE colleges and higher education institution providers—cannot be exaggerated. The Minister said that there is no need to increase the unit of resource, but the fact that 32% of higher education providers are already in deficit really should be ringing alarm bells in the Department for Education regarding what our educational landscape will look like over the next few. That is why our amendments were important—they would have ensured that the Minister and the Department had due regard to the financial pressures faced by the sector.
I am disappointed that the amendment on minimum credits was not accepted, but I very much hope that the Minister will reflect on it, given that the purpose behind it is to reskill, retrain and help people back into the workplace. It would also have benefited the plethora of organisations of different shapes and sizes that the economy will support in the future, which will require a very different training model as they address social need. That is why I think that challenging the 30 credits was the right thing to do. I very much hope that the Government will remain open to thinking about how that might work, rather than just having a bundle of three 10-credit modules in future. We support the Bill, but we will abstain on the clause.