Lords debate on Higher Education: Financial Pressures - Mar 30

Moved by

Lord Knight of Weymouth

To move that this House takes note of the financial pressures on Higher Education and the impact on (1) local communities, (2) the United Kingdom’s science and innovation exports, and (3) the impact on delivering the Turing Scheme.

Lord Knight of Weymouth (Lab)

My Lords, it is a pleasure to open this debate. The Minister is taking her seat, and she knows that I am a bit of a schools policy obsessive, so I come to this area of education somewhat afresh—and I am pretty alarmed by what I have found.

I must start by underscoring that higher education is critical to Britain. For individual learners hoping to prosper in the future labour market, we know that, as technology and the greening of the economy deskills and demands new skills, future prospects will require higher levels of learning for more people. Employers are desperate for talent with strong cognitive and collaborative ability, and are relying on a thriving higher education sector to deliver that. For university towns and cities, the sector creates and sustains-high quality jobs. Many are anchor institutions for the local economy. They bring large numbers of students to pay rent and spend money in that economy. Universities are major property owners and developers, and their research translates into spin-outs, start-ups and consultancies. Nationally, we have a persistent problem in the economy of low productivity that needs more of these highly educated individuals who can work well with both technology and each other. Britain also needs to continue to be at the forefront of applying academic research to maintain any competitive advantage we have left post Brexit. In export terms, international students alone generated £19.5 billion in export earnings in 2020.

According to Universities UK, the sector contributes £95 billion to the economy and supports 815,000 jobs. We are the third most popular destination for international students globally and we have the highest degree completion rates in the OECD. Then last week, I woke up to the news that Cambridge University, my alma mater, alone contributes £30 billion a year to the UK economy. I have also just been reading about the impact of the Graphene Engineering Innovation Centre in Manchester and the potential of the venture science doctorate being developed by Deep Science Ventures.

A healthy, vibrant higher education sector is essential as this country seeks to grow and thrive. That is why I was so alarmed to see news from places such as Norwich and Wolverhampton, and then to read last year’s National Audit Office report and the response from the Public Accounts Committee. This paints a picture of serious financial stress in the sector. The report found that the number of higher education providers with in-year deficits has risen from 1% to 15% in the last five years and that 20 have been in deficit for at least three years. In 2020-21, 43 out of 254 higher education institutions were reporting deficits and the net operating cashflow of the sector had halved. These problems cover the full range of types of higher education institution, suggesting a set of systemic issues that cannot be written off as a hangover from Covid. So what is going on?

Put simply, it appears that the university business model is teetering. Universities rely on four sources of income: government funding, tuition fees, research grants and other income such as property investments, IP exploitation, conferences and endowments. These are just the kinds of things that allow the rich, such as Oxford and Cambridge, to get richer while the rest struggle. The balance between tuition fee income from UK students and UK government funding has shifted significantly in the last decade, and this is the core of the problem. In 2010, funding from government was close to three times the level of tuition fee income. Ten years later, following the raising of tuition fees to over £9,000 and cuts in government funding, fee income was almost 2.7 times the level of government funding—an almost straight swap. This reliance on fees for half of income is so important in understanding the problems.

For good reason, the Government have capped fees since 2017 and they are now fixed until at least 2024. But galloping inflation means that, in real terms, the fee of £9,250 is now worth just £6,585 and government funding has not then filled the gap. Ours is the lowest level of government funding for universities in the OECD, hence the financial pressures. Teaching domestic students is now done at a loss, so recruiting more UK students to fill the gap does not necessarily help. That has led some to rely on international students; income from this source has been growing rapidly, by around 12% per year—but I do not believe that this can continue for ever. Students pay the highest fees in the OECD and are starting to get less in return. The Institute for Fiscal Studies has found that spending on students fell by 18% in real terms in the last 10 years, as universities try to make savings.

I take over as chair of the Council of British International Schools in May. Four hundred schools around the world are members, educating over 165,000 students, and their recent survey was revealing. It found that 96% of their pupils go on to university: 44% of them in the UK, 19% in their host country and the remainder shopping around globally. What is striking is that the UK is becoming less attractive, with 29% of schools reporting it as a decreasing choice of destination for their students. Why is that?

When asked, the students give a variety of reasons. For 65%, it is the cost; 35% mention Brexit; and 26% mention the cost of the visas and the post-study work entitlement. What a massive lost opportunity. Public First recently did some work for Universities UK and found that 64% of the public believed that the UK should host the same number of—or more—international students. Given that the continued growth of overseas students is crucial to relieving the financial pressures on universities that I have set out, can the Minister update us, in her response, on whether the Government plan further restrictions on international students? Can she confirm the Government’s commitment to the graduate visa route and whether they remain committed to their international education strategy? The Turing scheme is a relative success and nurtures an important global mindset by facilitating international student exchange. Therefore, it makes no sense for us not to do our utmost to reciprocate by hosting more students in this country.

Alongside the increasing income from students, it is reasonable to ask whether there is more that universities should and could do in terms of savings. There are problems here with the impact on staff leading to further industrial action, but there are also questions of what that means for students themselves. Students are already struggling with the cost of living crisis and a student maintenance package that is the lowest in seven years. They are borrowing money, half of which will never be repaid. Teaching has been cut and accommodation is hard to find for too many. Post Covid, many students are struggling with mental health problems and have lost out on teaching contact time due to strikes, so dropout rates have increased, further hitting university finances. This is especially important for our public services. Of the MillionPlus members, 66% of university graduates work in the public sector, and they tell us that applications for nursing are down by over 18%, when we need an increase of 20% to meet our targets. As the Minister knows, there is a similar story for teachers, where applications from those wanting to enter teacher training are down by over 15% and are much worse in priority secondary school subjects. I do not believe that further savings that impact on the student experience are sustainable.

The other pressure on our university system comes in the critical area of research. The research function of British universities punches well above its weight. We have one of the lowest levels of investment in the OECD, yet the academic impact of our work is ranked the highest in the G7. Funding is based both on overall university performance and on grant funding for specific projects. However, it is not designed to recover the full cost of undertaking the research. In 2020, only 71% of research costs were recovered, which means using income from teaching funding and elsewhere to fill the gap. I have already discussed the problems in that area. Clearly, the lack of access to the €84 billion Horizon scheme has added to these problems as one of the self-inflicted harms of the Brexit deal with the EU. I am delighted that the Windsor agreement allows that to be reopened. Can the Minister update the House on the progress of those negotiations?

All of that said, the state of university finances looks a bit of a mess. Government policy deliberately shifted universities to a reliance on fee income. The reality of that creating unsustainable levels of debt has meant capping that source, so this vital sector is now in some trouble. We need innovation and change; there is no easy solution. Having seen the economic reality of gambling with our money, thanks to Liz Truss, we also know that there is no magic money tree. While we are waiting for change across our education ecosystem to create something fit for purpose for people and the economy, we also need an answer to give confidence to the sector. We have seen, through councils such as Croydon and Thurrock, that, when push comes to shove, the Treasury will intervene to stop our local authorities from going belly-up. I hope that I have made the case that our universities are too important for us to allow them to be vulnerable.

The Government did the right thing in protecting customers in the wake of the collapse of Silicon Valley Bank earlier this month. Can the Minister assure us that, somewhere between the Office for Students, the Department for Education and the Treasury, someone is working on a plan B so that students and staff at our universities will be assured that they will not be left high and dry, as the business model for our universities looks like it might be running out of road? I beg to move.

3.35pm
The Earl of Dundee (Con)

My Lords, I congratulate the noble Lord, Lord Knight of Weymouth, on introducing this very timely debate. I will briefly mention three aspects: international co-operation between universities; the extent to which reciprocal university programmes can also be supported by their cities, regions, industries and communities; and the relevance of public/private partnerships in funding, both here and abroad, studies and learning, including in higher education.

International co-operation between higher education institutions is able to reduce financial costs by sharing human resources, while achieving improved education and research results, thus preparing students better for their future professional challenges in a globalised world. There are two immediate facilitators. First, EU Horizon grant funding for research is still available, for a short while, for United Kingdom institutions in their own right. Secondly, Horizon funding of partnerships will continue to apply to an institution in the United Kingdom, provided its partner is within the EU. One example is the proposed partnership between the Scottish University of the Highlands and Islands and the University of Zadar in Croatia. In helping to put this together, I declare an interest as recent chairman of the Council of Europe’s Education and Culture Committee and as current chairman of the All-Party Parliamentary Group on Croatia.

The second point relates to the ways in which corresponding cities and regions also gain from reciprocal university programmes. Of course, the more advantages accrue not just to the universities but to their regions and communities as well, the more university costs themselves can decrease as a result. UHI and Zadar University each happen to be researching new technologies for greener energy in any case, on the Cromarty Firth and the Adriatic coast respectively. Equally, they are each researching into improved conditions and opportunities for people living in their similar locations of remote areas and islands. However, joint efforts will assist those universities and their localities to a greater extent, while also expediting, earlier than otherwise, constructive outcomes from research. Here, then, are obvious examples of how, at reduced costs, universities and communities alike stand to benefit considerably from international partnerships and their focused designs.

In this context, together with the Department for Education, what plans does the Minister have to encourage partnerships between United Kingdom universities and others within the EU, thereby ensuring that the United Kingdom has access to EU funding for higher education and research as a third country and non-EU member state—purposes which, in its present form, the Turing scheme cannot facilitate? Does she also agree that revised entitlement to funding, such as for the Horizon scheme, should apply uniformly, without differentiating across the United Kingdom?

Then, as an active member of its intergovernmental committee, there is the United Kingdom’s position as a key operator within the human rights affiliation of 46 states of the Council of Europe, which in Strasbourg has prepared the European outline convention for cross border co-operation at local level. Higher education institutions in the United Kingdom will wish to take up this opportunity. How will the Department for Education assist them to do so?

Online learning proved its worth during the Covid pandemic. It is still essential for thousands of displaced Ukrainian students and for a great many others elsewhere. Yet apart from in emergencies, online learning remains extremely relevant, owing to its enabling of reduced costs for education, research and students. Does the Minister therefore consider that online learning has a major part to play in reducing financial pressures on higher education?

During its fairly recent G7 presidency, the United Kingdom committed to help promote education in the third world and elsewhere in countries where education systems do not fully operate. What actions have the Government taken since then? Which combined initiatives are in progress? And at all teaching levels, further to promote and provide education overseas, where it is required, does my noble friend agree that, in terms of both quality and cost control, by far the most effective deployments are distance learning online programmes?

Such delivery connects to the need for public/private partnerships in various fields, yet certainly including higher education. In the city of Dundee, for instance, the online games industry works with universities. Increasingly, and in any event in the interest of their own employment recruitment, most sectors of industry have a reason to support good education. Does my noble friend concur that education deliveries through public/private partnerships are cost effective, timely and of sustained quality? If so, what steps are the Department for Education taking to advance and increase these partnerships?

In summary, the best approach to reduce financial pressures upon universities is a proactive one. That applies to all manifestations of the problem and how to tackle them. Yet, not least do the three aspects just outlined reveal why an innovative approach is essential. They illustrate the need for stronger government encouragement to international partnerships between universities, the associated advantages to their localities, and the separate case for supporting public/private partnerships to assist education both at home and abroad. These are some of the necessary prescriptions for raising standards, lowering costs and benefiting communities.

3.41pm
Baroness Wilcox of Newport (Lab)

My Lords, as a former teacher, I am glad to have the opportunity to speak on this issue. As noted in the register, I am the chair of trustees of the Council for Dance, Drama and Musical Theatre.

I do not need to tell noble Lords taking part in this debate about the strengths of the UK’s higher education sector. Whether it is our fantastic HE colleges or our world-famous universities, the teaching and research they give us should be a source of immense pride. That is why it is so important that the Government are alive to the risks the sector faces, and that they take a proactive approach to supporting providers and their students to weather them. I am grateful to my noble friend Lord Knight for bringing these matters to the attention of the House through this debate. Indeed, universities and higher education institutions face a perfect storm of rising costs, with EU structural funds ending and an increasingly combative Government raising fears about capping international students.

In June last year, the House of Commons Public Accounts Committee published a concerning report into the financial sustainability of England’s HE sector. The number of institutions with an in-year deficit has risen more than sixfold, from 5% in 2015-16 to 32% in 2019-20. It would not be fair to draw attention to any particular provider, but we know that when organisations look to balance their books, they often have to cut staff and subjects. This can be devastating for students and regional economies alike.

I am sure that noble Lords across the House will speak in more detail than I intend to on the second and third aspects of the debate, and I am certain they will do a sterling job. I wish to focus on the threats to local communities, and particularly the key role the Office for Students must play in supporting providers, considering the central contribution they often make within their surrounding economies. There is value in probing the regulatory role of the OfS, particularly how well it monitors the financial sustainability of the sector, and its role in protecting students from fallout when things go wrong. As my noble friend highlighted in the blog he published last week prior to this debate, the university sector brings much-needed skills to local communities: 73% of UK university students study locally, or go back to the region they grew up in to work. However, when the sector struggles, the impact on the local community is widely felt.

I will mention an institution that I relied heavily upon when teaching at Hawthorn High School, in Pontypridd. The University of Glamorgan, now the University of South Wales, generously gave of its time and facilities to my A-level students in preparation for their radio coursework submissions. It allowed us access to a fully equipped radio studio, when all I had in school was a double cassette recorder. This engagement not only allowed students to produce the best technical examples of their work but took youngsters from backgrounds where university was not part of their experience into the campus itself, where they saw that they too could look to engage with a university education in their future lives. It was an important aspect of the university within the community, and I could share many more examples, if time allowed.

The National Audit Office report noted that it collects a great deal of data on institutions to check the validity of the economic model, but smaller institutions question why they have to give the same amount of information as large ones. Perhaps the Minister could address this concern in her remarks and say whether the Government agree with the remarks of smaller institutions regarding information overload. When they speak to the Office for Students, perhaps they could ask how this could be reviewed and refined. I believe that the OfS is trying valiantly to refresh its comms approach. I hope it will improve the situation, and I trust it will set robust metrics to measure its success on this. What is the Government’s view on whether the OfS is communicating effectively.

As well as having clearer comms, the National Audit Office review recommended that the OfS should

“improve where necessary and then reauthorise student protection plans for all providers to ensure they remain adequate and can respond to new risks.”

The Office for Students must get this right. The “responding to new risks” part of the recommendation is absolutely crucial. Threats to the sector are evolving all the time, so the OfS must see its role as proactive: to foresee these risks and see them off before a university fails. Although the OfS sees the risk of multiple provider failures remaining low, the consequences for an area of its local college going under are simply too catastrophic for the regulator not to do everything in its power to set the conditions for success.

On this basis, I have several questions for the Minister. Are the Government satisfied that the OfS has the appropriate clout—I mean the regulatory tools and powers—to monitor the financial health of institutions effectively? Does the Minister believe the OfS is sufficiently alive to the financial instability of many institutions, and does it see its role as preventive or simply reactive? Should a provider fail, is the regulator confident it could mitigate the damage to the undergraduates and staff, and to the surrounding local economy? What is the Government’s overall assessment of the financial stability of the sector, and what are they doing to support it?

Over the next five years, it is predicted that universities alone will help set up more than 20,000 new businesses and provide more than £11.5 billion of support and services to industries and not-for-profit companies. Instead of the worrying trend of treating the sector as a convenient political arena for a culture war, it is imperative that the UK Government do everything they can to protect the jewel in the UK’s crown.

3.48pm
Baroness Garden of Frognal (LD)

My Lords, I thank the noble Lord, Lord Knight, for this debate. I am very pleased to speak on this very important subject which is close to my heart.

The UK’s universities and colleges are world-regarded, as the noble Lord has already set out. However, like much of the country at the moment, they are under extreme financial pressure to do all that they need and would like to do, but are deprived of the resources to do it. I thank all those who have sent us briefings—Universities UK, MillionPlus, Horizon, London Higher and others I shall mention later. I will concentrate my remarks on a couple of issues: the Turing Scheme and part-time education, which of course impacts local communities.

First, I turn to the Turing Scheme. It is a poor replacement for the wonderful Erasmus, which the Conservative Government assured us would be kept after Brexit—another broken promise. We have heard from the British Council and the University Council of Modern Languages of their concerns. Modern languages are more important than ever since Brexit. Our European neighbours no longer need to speak English as we are no longer in the club, but British ability to speak French, German, Spanish, Italian and other languages has been seriously depleted since a GCSE in a modern language is no longer regarded as important. It was good to hear the King speaking in German on his visit to Germany, and I gather that, had he been allowed into France, he would have spoken French too—a great example. But what about Mandarin and Arabic, arguably the languages of the future? How can we communicate, trade and understand each other without other languages, and how will this impact on international relations?

As we know, unlike Erasmus+, inward mobility is not supported by the Turing Scheme, nor does it provide funding for staff placements. Significantly, the scheme does not cover tuition fees, and these are expected to be waived by host universities—how is that working, I wonder? Erasmus+ helped to enhance language skills and ensured that UK-based students and staff could work across different cultures and within a diverse workforce, as well as establish critical international partnerships. Following the loss of this Erasmus+ opportunity for UK study, and the introduction of a student route points-based immigration system, students from the EU, EEA and EFTA face increased costs due to the change in the home fee status and eligibility for tuition fee loans. Before the transition period ended these students were able to study in the UK without a visa, which will now cost them money that they may well not have.

Additionally, the financial settlement for the Turing Scheme is to be renewed on a yearly basis, so HEIs can no longer assure students applying for their degree that funding will be available for a year abroad. This creates considerable uncertainty for students, particularly for those whose degrees would historically have been expected to include a year abroad component—for example, language degrees. Can the Minister say what plans the Government have to ensure a long-term commitment to funding the scheme and make sure more certain levels of funding are available, so that students can plan and universities can commit to students of modern languages and others who would like to study abroad?

By the time funding is confirmed with institutions and then with individuals, students need to have planned their period of residence abroad. This makes planning difficult for universities and causes significant anxiety for students, who plan their year abroad with no guarantee of financial support. However, we know that the value of modern languages for trade and general economic competitiveness is widely acknowledged. Furthermore, the uncertainty of funding disproportionately affects the widening participation of students.

I should also like to raise part-time higher education in England, which has long been the Cinderella of the HE sector, where financial pressures are very acute. Wonderful organisations such as the Open University and Birkbeck have long opened opportunities for adult learners, or indeed younger people who choose to study at their own pace. I need to declare an interest as a fellow of Birkbeck and a long-time supporter of the Open University. Enrolment has dropped. We know that all students are struggling with the cost of living, but pressures will be particularly felt by part-time students. They tend to be older—seven out of 10 are aged 25 and over—and, as a result, are more likely to have significant financial and caring responsibilities. Part-time students in England are also unlikely to be eligible for government support with their living costs. The vast majority—90%—are excluded from maintenance support, and part-time students are unable to access support offered to students who are parents via the parents’ learning allowance and the childcare grant. Financial burdens are also likely to have an impact on student well-being and mental health, again feeding through to a heightened risk of non-continuation.

Part-time higher education is a critical enabler for flexible lifelong learning. It is desperately needed to spread opportunity to all and boost productivity, but it needs support and incentivising, with government policies and funding. Why is it, for instance, that part-time distance learners are still locked out of maintenance support in England, apart from a very small minority who have a serious enough disability to be able to claim it? That is clear in the Government’s response to the lifelong loan entitlement consultation, but there is no reason why. However, this support can be accessed by part-time students in Wales. At this morning’s meeting of the Education for 11-16 Year Olds Committee, we heard that Wales is leading the way in a number of educational initiatives—I am sure that is music to the ears of the noble Baroness, Lady Wilcox. If it is good enough for Wales, why is not good enough for England?

The LLE feels optimistic. We Liberal Democrats proposed a skills wallet that would provide grants, not loans, which are more acceptable for adults with many calls on their purses. We are very pleased to see an end to the ELQ rule, and trust that the new per credit fee limit will be applied as the rule and not the exception.

In her reply, can the Minister offer any assurances on the future of modern languages in the UK and the future of part-time learning? Both are significant for our economic prosperity, our well-being and our place in the world.

3.54pm
Baroness Donaghy (Lab)

My Lords, I thank my noble friend Lord Knight for initiating this debate and for his comprehensive introduction. I worked as a university administrator for 33 years, and I have a pension from the USS. There were not the commercial incentives in universities when I worked there, although there would have been limits to the possibilities anyway. The Institute of Education, where I worked, was entirely postgraduate, and although heavily involved in research, there is not much money in teacher training and education. As the noble Baroness, Lady Garden, has already said, institutions with a significant proportion of part-time students—such as the institute or Birkbeck or the Open University—were always Cinderella services when it came to funding.

Universities have always had a hierarchy in funding and research grants, so I am not going to claim that some golden period of access, standards, student support systems or value for money ever existed. However, what we have now is the worst of all worlds, with tuition fees falling in value by 15%, student loans reduced by at least £1,000 since 2020-21, overreliance on overseas student fees, commercialisation threatening standards, and damaging limits on the number of training places for doctors, nurses and teachers.

Until last month, I was a member of the Industry and Regulators Committee, which has launched an inquiry into the role of the Office for Students. So, as a mark of respect to that excellent committee, I will refrain from making rude remarks about the Office for Students, tempting though it is.

My first question for the Minister is: what plans do the Government have for funding more university places for doctors, nurses and teachers? It is not a great money-spinner for universities, but it would help. It would also meet a desperate need for more homegrown doctors, nurses and teachers and reduce the need for overseas talent.

Although we know that 44% of student loans are subsidised by government and some say the system is broken, I will leave it to others to elaborate on that. However, do the Government have any plans to unfreeze tuition fees before the next general election, as this represents a substantial cut in university income, or will it have to wait until after? Do the Government propose to place a cap on the number of overseas students and compensate universities for any lost income?

I have heard noble Lords on the Government Benches deploring the fact that the student experience at university has deteriorated, but they do not seem to accept that increased commercialisation might have something to do with it. I have real concerns that there is a growing backlog of repairs and maintenance in universities and much-needed capital expenditure, which will not only impact on the student experience but will have health and safety implications for the future.

In his introduction, my noble friend Lord Knight referred to the value to local and regional areas of having a university, and I support that statement strongly. I am thinking of a town which is crying out for a higher education institution. It would provide much-needed jobs and income and transform the community. When the Government are talking about their levelling-up agenda, they might consider the transformative impact of setting up a university in such a town.

Some have said that the financial pressures might lead to the closure of some university institutions. I hope that we never have to face these dilemmas, but a worse fate would be the inexorable decline in standards throughout the whole system. We have such a lot to lose in the UK, with our deserved reputation for centres of excellence, but the uncertainties around Erasmus and Horizon funding and the inadequacy of Turing funding are already showing a downward trend in the international league tables. It was the height of irony for the Government to name the scheme after Alan Turing, a genius who was tortured by the state and whose name will now be linked to a poor-relation funding scheme.

Returning to the fall in value of student loans, I point out that the recent Education (Student Fees, Awards and Support) (Amendment) Regulations 2023 were considered by the Secondary Legislation Scrutiny Committee. It referred to a report by the Institute for Fiscal Studies stating that

“the value of loans has been reduced by more than £1,000 in real terms compared to 2020–21”.

The DfE has accepted that these proposed changes will, overall, have a negative impact for students. Although there was some mitigation via hardship funds and the Office for Students, the Secondary Legislation Scrutiny Committee concluded that

“the mitigating actions outlined by Department will not compensate for the loss in the real value of maintenance loans”.

The equality impact assessment stated that the 2023-24 uprating

“will likely lead to a further erosion of students’ purchasing power”

and that women, mature students, those on low incomes and ethnic minority students would be particularly

“adversely affected by the real term decrease in the value of the loan”.

This result will achieve the exact opposite of widening access and levelling up. Reeling off a series of one-off government funding announcements does not disguise the Government’s failure to recognise the importance of higher education.

I have run out of time, so all I can say is that I agree wholeheartedly with the comments of the noble Earl, Lord Dundee, on the importance of international co-operation between universities.

4.02pm
Viscount Chandos (Lab)

My Lords, I join other noble Lords in thanking my noble friend Lord Knight of Weymouth for securing this important debate and in paying tribute to his powerful introduction to it. I strongly endorse his analysis of the intense financial challenges faced by the higher education sector and add my voice to the questions he asked the Minister. I declare my interest as vice-chair and trustee of the drama school LAMDA and as a co-opted member of the investment committee of Worcester College, University of Oxford—a rich university with a poor college within it.

I am also privileged to have taken the place of my noble friend Lady Donaghy as a member of the Industry and Regulators Committee of your Lordships’ House. I am therefore currently involved in the inquiry into the Office for Students. I would be as unpopular pre-empting the conclusions of the committee as I would be giving a plot spoiler to the current series of “Succession”—which stars, in Brian Cox, a distinguished alumnus of LAMDA—but some of the points that I will make this afternoon have been formed by the evidence about the HE sector that has already been heard by the committee.

Academic politics is

“the most vicious and bitter form of politics, because the stakes are so low”,

wrote Professor Wallace Sayre in the 1950s. He may have been reflecting the views of President Woodrow Wilson, and subsequently Henry Kissinger has characteristically claimed the analysis for his own. Senior common-room debate can be impassioned on a wide range of subjects, and the intellectual self-confidence of members of the academic community undoubtedly makes the governance of universities and HE institutions challenging.

Professor Sayre’s dictum may accurately represent one aspect of academic life, but it would be completely wrong to interpret it more broadly as implying that the stakes in higher education generally are low. They could not, in fact, be more important. That importance is based on the education and training provided to UK citizens of every age, but particularly as young adults; the research and innovation undertaken of national and global scope; the economic benefits of a vibrant HE sector nationally; and, as my noble friend Lord Knight and others have highlighted, the benefits for local communities. It also includes the contribution to the UK’s international standing and relationships through the foreign students who are drawn to the excellence of our institutions. Where these are all interconnected, students benefit from being taught by academics at the forefront of research and from their interaction with overseas students, for instance.

I believe that there should be greater clarity in defining the priorities and objectives for HE policy. I would argue that it should be first and foremost about providing that education and training to UK students in order to create a productive workforce and a civilised society. The economic benefits arising directly from the sector, such as £20 billion of export earnings, £100 billion of GDP and the driving economic force in many local communities, are hugely important, but they are a welcome by-product of the central objective of providing the best possible education for current and future generations. Research is of course vital but, whereas teaching is universal to all HE institutions, research is more concentrated—not, I should emphasise, in Russell Group universities alone but wherever specialised expertise resides.

I believe that thinking about HE policy in this way is essential for any fair and successful reform of funding. Not only is it necessary to increase the overall funding for the sector in real terms, it needs to be implemented in a way that ensures, as far as possible, that the costs fall fairly and proportionately on the different stakeholders. For instance, there is disagreement about the extent of cross-subsidies between teaching and research most of all, but this issue must be resolved as part of any sustainable changes to the funding of the sector. With the cap on tuition fees for domestic undergraduate courses frozen in nominal terms, and therefore falling in real terms at an accelerating rate, there is increasing divergence between the fees for domestic undergraduates and what the market for foreign students may be able to bear. There must be an increasing risk that, however much vice-chancellors and their governing bodies are committed to the mission of teaching UK students—as I have heard them say—an unreformed system will inexorably increase the pressure to further emphasise the recruitment of foreign students for narrow financial reasons.

In my remaining time, I will touch briefly on the importance of smaller, specialist institutions. LAMDA, of which I am the vice-chair, is one, along with other world-leading drama schools, music conservatoires and the Royal College of Art, which has been rated the number one art and design college in the world for eight consecutive years. Through the OfS, the Department for Education provides additional funding for some specialist institutions in recognition of the higher costs involved in teaching these specialist courses, as well as the proportionately higher costs that come from being a small, stand-alone institution. Sir Michael Barber, the first chair of the OfS, has recorded the importance that he attached during his term of office to protecting and enhancing the position of such institutions. That support is very welcome and, I believe—I would, wouldn’t I?—fully justified. The world-leading reputation of these institutions and the quality of the education and training provided are fundamentally based on their small size and independence; I say that without denigrating the excellent courses in these areas provided by larger, multi-faculty universities. Can the Minister confirm that the Government remain committed to supporting smaller, specialist institutions at historic levels or higher?

4.09pm
Lord Davies of Brixton (Lab)

My Lords, central to this debate is the failure to invest enough in our higher education system. Consequently, we have to restrict the number of domestic students relative to the number of those from abroad, because universities lose money on domestic students. In other words, UK universities are supporting the nation’s science and further education ambitions through the income that they receive from international fees. This is inherently an unpredictable and risky platform on which to provide a higher education system.

There are more particular problems. The noble Baroness, Lady Garden, referred to the uncertainties surrounding the Turing scheme. This particularly affects students from disadvantaged backgrounds, who are particularly vulnerable to this uncertainty. Universities face myriad funding pressures in pursuing their mission and sustaining academic excellence, but having fees frozen at £9,250—which, as my noble friend has already explained, in real terms is now equivalent to only £6,500—means that they simply do not have the money to cover the cost of courses, in particular the cost of STEM subjects. The fact that student fees have been stuck at this level for some years, for the reasons that we understand, coupled with inflation, mission creep—additional responsibilities being placed on institutions—the pressure from industrial action, and so on, means that universities are experiencing a damaging squeeze on their finances. Coupled with the cost of living crisis, the lack of resources means that that there is inevitable damage to the important objectives of increasing social mobility and local community engagement. This is despite universities’ regulatory requirements to spend part of their tuition fee income on widening participation.

There is a growing risk to social mobility if, for pragmatic reasons, universities have to make hard decisions to recruit fewer domestic students relative to international students or have to spread their limited bursary and hardship funds over a thinner entry. The ability of universities to collaborate with local government and third-sector partners is also being strained, in large part by the budgetary pressures on would-be partners, particularly in deprived communities with lower social resilience capacity, during this cost of living crisis.

Turning to research and innovation, there are intense funding challenges on universities in sustaining their infrastructure and talent pools. The challenge that we face is that virtually all forms of research run as a loss-making activity that must be supported by teaching and, in turn, as has been explained by myself and other speakers, that is dependent on overseas students. Having an internationalised learning community brings immense cultural and academic benefits to campuses, but there are systematic risks of universities becoming overly dependent on particular countries’ markets at a time of rising geopolitical tension and geostrategic competition. The risks are clear. For example, if relations with China were to deteriorate, we would be in a very challenging position. Does the department have a plan to cope with this situation if we hit such problems?

Sir Paul Nurse’s recent review recommended increases in the full economic cost recovery provided by competitively allocated research grants and an uplift in the block grant QR funding. He also highlighted underlying issues with the precarity of early career research pathways that are in large part a corollary of short-termism in the way public funding works, leading to pressure and stress on those involved.

As the Financial Times has reported, universities are having difficulties in the initial phase of the Turing scheme, with shortfalls in expected annual allocations and delayed payments, in some cases leading to places not being taken up. The inability of universities to provide certainty about funding to students only compounds the problems for those from more disadvantaged backgrounds, undermining their willingness and ability to pursue opportunities.

Finally, it is vital to a world-class UK research and innovation endeavour that the UK enjoys broad access to Horizon Europe. The real prize here is not access to the funding pool, but the huge, collaborative multiplier benefits of working with leading scientists and researchers across Europe and leading on multi-country researcher consortium bids. As the House will be aware, British universities have already experienced challenges in recruiting world-class researchers because of the enduring climate of uncertainty over participation. It is not just Horizon that has given problems; the sudden withdrawal from collaborative research funded by the Official Development Assistance programme two years ago also hit the UK’s reputation. As has been pointed out recently in the Times Higher Educationsupplement, much of the damage, coupled with the broader effects of Brexit, has already been done and will be hard to recover from. Nevertheless, a return to Horizon in a timely and efficient manner is vital to the UK’s ability to attract and retain leading British and global research talent and investment.

4.17pm
Viscount Hanworth (Lab)

My Lords, I intend to talk about the internal consequences for universities of their financial crises. The number of universities running financial deficits has increased in recent years. The proportion of providers with a yearly deficit has increased from 5% in 2015-16 to 32% in 2019-20; the figures for the subsequent academic years will undoubtedly be far worse. The deficits can be attributed to the declining values in real terms of the fee income received from students and of the grants from central government. The finances of universities have been sustained by the fees paid by overseas students, as we have heard. It had been feared that in consequence of the Covid pandemic there would be a major loss of the income from this source but, remarkably, it has been maintained.

However, it is by no means assured that the numbers of overseas students will be maintained. The recent increases have been attributable mainly to students from China and India, but our relations with the Governments of these countries are deteriorating and their students might be encouraged to go elsewhere. The number of students from the European Union has plummeted: there was a decline of 40% in applications for undergraduate study in the UK from EU countries in 2021-22, and the decline has continued.

A natural advantage of British universities, their use of the English language, is being eroded rapidly. It should be recognised that the majority of postgraduate courses in European universities are now taught in English. The fees demanded by those universities are much lower than British fees. Therefore, European universities are liable to be more attractive at the postgraduate level, at least to overseas students, than British universities, which also face competition from universities in other English-speaking countries.

The financial outlook is extremely worrying. A further factor in the financial difficulties of our universities has been a consequence of the Government’s decision, or desire, to make them compete among themselves in the recruitment of students. Instead of competing via the level of fees, universities have chosen to complete via the amenities they offer students. This has led them to capital expenditures that few can afford.

University administrations have reacted to the financial stringencies that have prevailed over many years by endeavouring to reduce their salary bills. University lecturers have, on average, lost 25% of their real incomes since 2009. I believe that that figure is way out of date as a consequence of current inflation. Meanwhile, the disparities in their incomes have increased, with the top earners moving rapidly ahead.

The collapsing value of the USS pension fund has led to the expectation that the retirement income of academics will be reduced by 35% relative to previous expectation. Whereas security of employment was a traditional compensation for the relatively modest earnings of academics, their employment has become increasingly insecure, with a large proportion of staff on short-term contracts. Academics who previously would have benefited from tenure are now subject to dismissal when the administrators judge that they have become surplus to requirements in consequence of restructuring plans.

The commercialisation of higher education has led universities to become increasingly responsive to consumer demand, and they have adapted their teaching accordingly by alleviating or abolishing difficult or demanding courses which are often at the core of the disciplines. The managements have aimed to expand the more profitable activities at the expense of the less profitable ones. Thus, at the University of Leicester, at which I am an emeritus professor, business studies, which represent a profitable cost centre, have been expanded while the mathematics department has been affected by numerous redundancies. This surely flies in the face of a widely recognised national priority to foster STEM subjects.

The academics have reacted to their loss of income and pension rights, and to their excessive workloads, by striking. In some cases, the reaction of the management to the strikes has been grotesque. Queen Mary University, my erstwhile university, has enjoined its students to report striking staff, while threatening to dock full pay for 39 days if those named fail to reschedule their missed teaching. Last July, it deducted 21 days’ full pay from more than 100 staff who had refused to mark students’ work in June as part of a national boycott. Their intention had been only to delay the marking. Staff have been resigning in protest.

Universities in the UK are chronically understaffed on the academic side, albeit the number of administrators has grown to outnumber the academics. The lack of academic manpower has been met by employing postgraduate students to teach classes, which is not always done adequately.

The governance of universities by professional administrators is in marked contrast to the circumstances that prevailed when I joined the academic ranks in the 1970s. Then, the administration of universities was in the hands of senior academics and academics who had opted to serve their universities in an administrative capacity instead of pursuing a research career. Such people are no longer available for this role; the likelihood is that they have been weeded out in consequence of their poor research performance. The hypertrophy of the administration has largely been a consequence of the audits demanded by governments in pursuit of transparency and accountability. There is a research excellence framework, a teaching excellence framework and, latterly, a knowledge exchange framework, each of which has engendered its own bureaucracy.

Academics no longer have any ownership of the processes they mediate, and their loyalty to their institutions has largely been destroyed. Nowadays, the academics and the administrators constitute mutually hostile factions. What has transpired is an old-fashioned and atavistic struggle of the management against the workers. We are witnessing the rapid decline of British universities.

4.23pm
Lord Austin of Dudley (Non-Afl)

My Lords, I draw attention to my entry in the register of interests and, in particular, my work with Dudley College and the Warwick Manufacturing Group. I also thank my noble friend Lord Knight not just for calling this debate but for the huge contribution he makes, and has made for years, to improving education in the UK.

I want to make the case I have been making for years, which is that we have to make education and skills, at all levels, the UK’s number one priority. Improving education is the answer to our country’s biggest challenges, as it brings new investment, new industries and good, well-paid jobs to areas that have lost traditional industries. It tackles poverty and improves social mobility, builds a stronger economy and boosts productivity. It not only enables young people to lead more fulfilled and prosperous lives but reduces the costs of inequality and poverty on the NHS, on housing and on benefits.

Young people today will work with technologies that have not yet been invented and have jobs not yet imagined. The old days when you learned skills to equip you for a job for life have gone for good. Instead, the pace of change will get quicker and quicker, so young people must learn how to adapt, how to learn and how to acquire new skills. This is why investing in education and skills is the most important investment any of us can make as individuals, communities, the Government or the country as a whole.

At the outset, I want to lay to rest the idea that we send too many young people to university. If I may so, it is total nonsense. For the people who say this, if I may say this as well, it is never their children or young people from their community who they think should not be going to university. When they say it they are talking about young people in places like the Black Country.

There are communities that have routinely sent more than half their young people to university for years. There are schools, families and communities where going to university is, and has been for decades, the normal, expected thing to do. Then there are towns across the country that have no university campus, where school standards have not been good enough and which have sent a small minority of young people to university. Yet these are the places that most need higher skills, and the new industries and jobs that those skills can attract. The truth is that we need to ensure standards at school improve, that more young people stay on and go to college and sixth form, to apprenticeships or to university. We need to do all these things to equip our country for the challenges of the modern economy.

The point I want to focus on is the contribution that universities make to their local communities. You only have to get off the train at Cambridge to be stunned at the level of investment that its link to science, education and research has made in that city. If you go to Coventry and Warwickshire, you will see industries, companies and jobs that have resulted from the world-beating partnerships between academia and industry at the Warwick Manufacturing Group. Then you travel 30 miles up to the road to the Black Country, which has struggled to replace jobs lost in traditional industries over the last 40 or 50 years.

This is the approach we have adopted in Dudley, with a brand new £100 million town centre campus, which includes a new institute of technology and plans for a university centre focused on healthcare technologies. We are making education the borough’s number one priority, to strengthen the local economy. But one of the challenges that towns in the Midlands and the north that have lost traditional industries face is that they often have no university to boost skills and drive growth.

For example, the Black Country is an area of four boroughs and 1.1 million people, but just one local university, the University of Wolverhampton. As I will explain, like other modern new universities, the University of Wolverhampton does a brilliant job of serving local people, but the boroughs in the area are some of the largest places in the country with no university campuses. The region as a whole has less higher education provision than other areas, which is one of the reasons why we have higher levels of unemployment.

This is why, where we once built communities around factories, we must now build them around universities and colleges. That is why universities like the University of Wolverhampton need more support from the Government and must be able to attract and teach more students. Look at the facts: research in 2019 showed that the university, its students and their visitors—as the noble Lord, Lord Knight, said earlier—supported nearly 4,000 jobs locally, while MillionPlus’s report last year, Staying Local to Go Far, showed it contributes almost £200 million to the local economy and that modern universities generate £1.17 billion in the wider West Midlands.

More than eight out of 10 of Wolverhampton’s 21,000 students come from within 25 miles. One in every three undergraduates is on subjects allied to medicine, training to become nurses and health professionals. Almost nine out of 10 of the graduates from the most recent cohort were in work or further study, according to the latest Graduate Outcomes report, and six out of 10 UK students went on to highly skilled rates. Compared with other universities, more of Wolverhampton’s students not only are recruited locally, as I said, but remain in the local area, contributing to the local economy and driving its improvement after graduation too.

Wolverhampton is not unique in this regard. Lots of the modern universities are like this and have a high proportion of students from poorer backgrounds, who have been in care or on free school meals, who are from families that have not sent other people to university or are from neighbourhoods with fewer students and graduates. Universities such as Wolverhampton—all of these modern universities—are critical to the Government’s levelling-up ambitions, to tackling poverty and to building a stronger economy. They are critical for the important role they still play in working collaboratively with local stakeholders, such as the NHS, businesses and local government, to drive regional development and strengthen the social fabric of the cities and towns in which they are located. It is vital that the Government ensure that universities and communities such as these, in the towns of the Midlands and the north that have lost their traditional industries and which desperately need to attract new investment and new jobs, receive more support. This is not just important for them but vital for the country as a whole.

4.30pm
Lord Leong (Lab)

My Lords, I declare my interests in education and training and as chair of the Council for Education in the Commonwealth as set out in the register. I congratulate my noble friend Lord Knight of Weymouth, whom I hold in the highest regard in this field, on securing this debate. This subject not only is very close to my heart but draws attention to serious concerns in the HE sector, many of which have been raised by Members in the Chamber this afternoon. I have so much to say that there was a danger that this speech would become like a sprawling undergraduate essay: full of enthusiasm for the subject, but ultimately unfocused and ineffective. So I will address one very specific topic, which, if it were an essay question, would be: “Compare and contrast the merits of Erasmus+ and the Turing scheme and identify what steps you would recommend to deliver the best outcomes for the students and institutions involved.”

Here are the facts. Erasmus was formed in 1987 and evolved into Erasmus+ in 2014 through the consolidation of various other mobility programmes for people who were not at university. The UK was one of the 11 founding members. One common misconception, even among many of its supporters, is that Erasmus+ is exclusively a scheme for EU members and students. This is not the case. It is a global success story, yet the UK is no longer part of it because this Government decided to end participation from 31 December 2020—Brexit day. Non-EU countries, both within Europe and elsewhere, are eligible to join. Norway, Iceland and Turkey are full members of the programme. Others, from Morocco to Armenia to Ukraine, are eligible as programme partners. More than 80 countries around the world participate in one or more Erasmus+ scheme.

Secondly, since the programme operates over a seven-year funding cycle, students and institutions can promote and plan their participation in a relatively stable environment. In the period 2014 to 2020, the UK received nearly €1.1 billion for 6,892 projects involving 331,765 participants. This represents 7.8% of the total Erasmus+ budget and 6% of all participants out of 80-odd countries. Our involvement was considerable.

Some might argue that it is unfair to contrast Erasmus+ with the Turing scheme, which was announced in 2020 and commenced in September 2021, as it is not yet quite two years old and was launched into an educational environment still reeling from the impact of the pandemic. However, even allowing for these mitigating circumstances, initial comparisons do not reflect well. Although institutions are glad that at least something is on offer, the Turing application process is considerably more bureaucratic, evaluation is less transparent and, as it runs on an annual basis, it is inherently less secure for planning and promotion.

Moreover, as the noble Baroness, Lady Garden, has already mentioned, Turing is structured as a one-way scheme, supporting UK students who wish to study abroad but with no reciprocal offer to students from the EU or anywhere else in the world to come to the UK. For several reasons, including the world-leading reputations of many UK universities, and the fact that most other countries learn English as their second language, the UK hosted many more visiting students under Erasmus+. This enriched courses in the UK with cultural vitality—students from more disadvantaged economic backgrounds could apply—as well as the obvious benefits from money spent in the UK economy while students were living here. There is no such opportunity under the Turing Scheme.

Lastly, I come to the issue of unnecessary divergence. UK qualifications are already moving away from European qualifications framework standards, which means that eventually UK qualifications will not be equally recognised by the EQF and our young people will be further disadvantaged and disfranchised from studying on the continent. Given all that, why the Government decided to leave Erasmus+ and replace it with the evidently inferior Turing Scheme remains, if noble Lords will forgive me, a complete enigma—one that even its namesake would struggle to resolve.

Labour has been clear that, when we are in government, our education mission will be to:

“Break down the barriers to opportunity … preparing young people for work and for life.”

We recognise that, in an increasingly interconnected world, the greater the educational opportunities that we provide for our students and young people, the brighter our nation’s future will be.

4.37pm
Lord Parekh (Lab)

My Lords, I congratulate the noble Lord, Lord Knight of Weymouth, on securing this debate and introducing it with considerable erudition and eloquence. This debate has become important in a post-Brexit age. It is because we have gone through the baptism of post-Brexit, and because of what is to follow, that we are concerned about the issues that it raises. I therefore want to ask myself what new issues it has raised, what the context is in which we are debating them and how old problems appear in new forms.

I shall concentrate on three issues that are important but, for obvious reasons, have not been discussed. The first has to do with the whole idea of student loans. Let us remember that a student comes out of university with a debt of, on average, £45,000. Even before he comes out with that debt and is still at university, he has to provide for his maintenance costs, which he does by relying on personal savings, with part-time work and in various other ways. There are many reports telling us how many students do not have food to eat, suffer hardships and undergo an enormous amount of pain in order to be able to graduate with some degree of decency.

Student loans do not serve the function of redistribution, which is what they are supposed to do. Levelling up must begin with, if anything, student loans, but that is not being done. Every penny that is given in loans has to be paid back, unless one is unable to do so after so many years and having earned below a certain amount of money. This does not happen in many of our competitive economies. For example, in France, tuition fees are pretty low; in Germany, they are non-existent in some Länder and very low in others. What is no less important is that the differential between the overseas student and the home student is much less than it is in our country. My feeling is that, rather than think of overseas students as a cow to milk and asking how they can help us bridge the gap in our own resources, we should be asking ourselves how the levelling-up scheme can be applied to them as well. In other words, the idea of the student loan needs to be rethought.

The second important subject I want to concentrate on is how the idea of the student loan has built in to it an element of structural bias in favour of overseas students having to pay more. If there is a teaching budget deficit, the expectation is that we will turn to overseas students, charge them £10,000 more than we charge domestic students and hope that they will bail us out. Our students cannot afford that kind of money, and they go to low-tariff universities. So there is a division between low-tariff universities, where our students go, and high-tariff universities, where overseas students go—a class division is almost built in to the student community. I do not think we fully appreciate how much resentment and hatred it causes among many of our students. I can say this with some confidence, having been a university professor for about 40 years.

The third element we need to think about is the Turing Scheme. There has been a lot of vacillation about Erasmus—should we join it or not? The Prime Minister said we should not and we finally decided—I think in December 2020—to go with the Turing Scheme. Why did we decide not to join Erasmus and to go for the Turing Scheme? We wanted to go global. What does that mean? It means that we should not be tied to any particular group. What does that mean? It means that we should be free to choose a country with which we associate. What does that mean? How are you going to take the mighty leap and launch out into the world at large, rather than connect with various groups with which you are already affiliated? I should have thought that, rather than take this mighty jump and pick and choose partners, we should be thinking about collaborating with those with whom we have already been connected and then gradually spread out into the rest of the world.

More importantly, there remain difficulties with the Turing Scheme. For example, the amount involved is much less than what we would have got if we had been part of Erasmus—I am told about £83 million. The scheme is subject to the spending review, and therefore there is no continuity, because the amount of money can change year to year. There is no funding for staff exchange or for pupils coming to the UK. We are not clear about language learning facilities. There is also unease about the time it could take to process visa applications for overseas students, and the question of not sharing best practices or learning resources.

I therefore want to end by putting three questions to the Minister. First, is there any attempt to look at the student loan in the context of an opportunity to level up? Has any thought been given to that? Secondly, should we not be thinking of overseas students just as much as we think of our own? Should we be thinking of all of them as Arabs and rich Nigerians and Indians, or should we not also think of those whom I encounter regularly—those who are poor and want to benefit from our education? Thirdly, is any attempt being made to reconsider the Turing scheme?

4.45pm
Baroness Warwick of Undercliffe (Lab)

My Lords, like others I pay tribute to my noble friend Lord Knight for securing this timely debate. It is quite clear from it that a great deal is expected of our higher education institutions: excellence above all, in teaching and research, and certainly in providing students with a life-changing experience. Successive Governments have also wanted them to be engines for economic growth, to provide the skills needed for the economy, to be leaders and stimulators of innovation and a means of social mobility by widening access to opportunities for graduate jobs, to be anchors in their communities, and to be flexible in their response to changing needs while embracing new technologies, among lots of other things.

Not all can respond to all these demands and one of the hallmarks of the UK system is its variety. However, to provide all of these things and more, financial security is essential. To maintain what everyone agrees is our worldwide reputation for excellence, stability in policy-making, as well as resourcing, is fundamental. Universities UK has listed some of the sector’s achievements, as noble Lords have in this debate. They are certainly impressive: its £95 billion contribution to the economy; its outstanding international reputation for teaching, as we are the third most popular destination for international students globally; its excellent teaching and world-leading research. This debate has forced us to ask: are we in danger of throwing away this hard-won international reputation for excellence?

In a 2022 report on the financial sustainability of the HE sector, the House of Commons Public Accounts Committee expressed concern that the proportion of providers with an in-year deficit has increased in each of the last four years—from 5% to 32% in 2019-20, and that number is expected to increase. Fees are a key factor. They have been stagnant, with the £9,250 headline fee for English universities now worth £6,585 to them. The fee income available in Scotland, Wales and Northern Ireland is even lower. Yet England and Wales also have the highest domestic undergraduate fees in the OECD, including the semi-privatised US system. Looking at our international competitors, the UK has the lowest share of public funding in tertiary education among OECD member countries.

English universities have, so far, managed shrinking income

“through sensible and prudent financial management”,

according to the Office for Students. Part of this has come from generating income from other streams—particularly, although not exclusively, recruiting international students. It is clear, however, that under increased funding pressure and rising costs, as UUK has said, universities will be faced with

“compromises in teaching or research, damaging our hard-won international reputation and putting pressure on students and staff.”

This of course compounds other pressures on students. Just as the cost of living crisis is hitting students, their maintenance package in England is at its lowest value in seven years. Students are now also eligible for much lower maintenance loans than when the system was first designed. Under recent changes, more students will repay their full loan than under the 2012 system, with the highest earners paying less than before and low and middle earners paying more. On research, the HE sector provides the skills, talents and facilities that drive the UK’s capabilities in science and technology, yet without long-term and stable investment the UK is bound to fall behind.

Universities are having to use teaching funding to shore up a lack of investment in research, or to reduce or stop research activity altogether. Our universities generate growth and opportunity across the UK. They bring jobs, investment and facilities to our local communities, as we have heard right across this House, and they will be at the heart of addressing economic and social disparities. Yet increasing financial pressures are affecting universities’ capacity to engage.

I sit on the board of Nottingham Trent University, which has made superb efforts to maintain its financial stability. While the finances of some universities are stable in the short term, that cannot last. As this debate has made clear, many are now facing huge financial pressures, which will not be addressed without impacting significantly on the student experience and the capacity to undertake research and innovation. Many are located in the very communities where students need the most support to acquire the skills they need, and where companies most need research and innovation to grow. Given the long-standing freeze of fees for home undergraduate students, most universities are relying on increased international student numbers to deal with inflationary pressures, and any moves to restrict these would have a further major impact on the viability of the sector. Can the Minister confirm the Government’s commitment to both the graduate visa route—a real attraction to international students—and the international education strategy?

All these factors need to be addressed if universities are to be able to respond to the positive steps the Government are taking—for example, the lifelong loan entitlement, which could transform the adult education landscape in England. I hope the Minister can give the sector some reassurance that its excellence is valued, and that they recognise the vital importance of long-term investment.

4.51pm
Lord Wallace of Saltaire (LD)

My Lords, none of us has felt the need to declare our interests, but I will declare a family interest as both of my children are currently working in research-intensive universities in this country, and both have been offered salaries considerably greater than they are currently earning. My son, who leads a systems biology laboratory at a Russell group university, is working in one of this country’s strategically important STEM areas. He came back from the United States after 10 years there on a Marie Curie scholarship—a European Union scheme that encourages researchers in North America to come back to Europe, and which, of course, no longer exists in Britain. He has had a series of temporary contracts and has just, at the age of 41, been offered a long-term contract. But he is still earning slightly less than what I understand most train drivers are earning. A hedge fund with quite close associations with a major donor to the Conservative Party offered him several times this salary some months ago—which was, naturally, a little tempting.

We should not assume that the situation in British universities can be maintained for very long. Some Members may have seen the article in the latest Times Higher Education supplement which suggests that Britain’s reputation as a science superpower is very shaky. It quotes Douglas Kell, the former executive chair of the Biotechnology and Biological Sciences Research Council:

“Funding has dropped in real terms”

for research in STEM subjects

“by 60 per cent since 2009”.

It adds that, if you look at the data on who is producing the best scientific papers, the argument that UK science is so much better than European science, so we can look to partner with Asian and American institutions instead, is rather shaky too. Therefore, we should not take our current situation for granted.

I was shaken some months ago after talking to one of the younger colleagues with whom I used to work. He had moved from Oxford to Berlin because, he said, the institutions he now works with in Berlin are more intellectually rigorous and more pleasant to work in. That is worrying.

There are two narratives about UK universities that one hears from the Government and the Conservative Party. The first is that our universities are a major national asset, a crucial element of soft power and the basis of our claim to be a scientific superpower, as Boris Johnson was very proud of saying. They are also crucial for innovation, national economic growth and regional regeneration, and thus, as several Peers have said, for levelling up. Universities are also hubs for city regions and sources of skilled workers and cultural leadership for their regions.

The second, alternative narrative is that universities are nests of left-wing intellectuals, hostile to common sense and the instincts of ordinary voters, intent, to quote the Sunday Telegraph on “indoctrinating” their students with leftist or even Marxist ideas. It is the Policy Exchange perspective, if you like. University staff are alleged to be structurally biased. Even worse, they are “experts”, whom we all know are not to be listened to. They are “people of nowhere”, in the David Goodhart-Theresa May definition, dismissed as people who prefer foreign food and foreign friends to being proud of all things English. Particular fury has been directed at the humanities and the social sciences as offering irrelevant and frivolous courses. I find that a very dangerous narrative. I note that it comes from the anti-intellectual arguments produced by Republicans in the United States, and I hope that the Minister, who I know cares passionately about education, does not share it. Sadly, some of her colleagues do. The noble Baroness, Lady Wilcox, remarked that it is a convenient arena for a culture war, if one wants one. We do not want one; it is the last thing we need in this country.

The Government have wobbled between these two narratives over the past eight years. They have squeezed university funding as severely as funding for schools and preschool education. They have frozen tuition fees, and they have left the EU, and thus Horizon and Erasmus, and also the structural funds, some of which flowed to universities in the poorer parts of Britain.

The incoherence of policy has been really quite remarkable. That is partly because of the high turnover of Ministers. In the five years since January 2018, we have had successive reorganisations of ministerial responsibility and witnessed seven Secretaries of State for Education come and go; six Secretaries of State for Business and Industrial Strategy, and now a seventh for Business and Trade; seven Ministers for Higher Education; and, thankfully, only five Secretaries of State for Science and Innovation. None has stayed in post long enough to master their brief; policies have drifted, with the overall assumption that the UK should distance itself as far as possible from the European continent and that, as far as possible, public spending on education and research should be held down. This is not the way we need to go, and we very much need to reverse course.

I add that the role of the Office for Students, which has been mentioned by several people in the debate, is itself in question. It is unclear whether the Office for Students is there to help support the university sector or to police and regulate what are seen as the dangers of the university sector. That is another area at which we need to look.

Several Members have talked about the freezing of tuition fees. Their value has dropped by well over 20% and the current inflation makes it worse. If we were now to have a collapse in the intake of students from east and south Asia, there would be a financial crisis in many of our universities. We have not talked much about maintenance grants and social mobility, but the squeezing of funds for foundation courses is a real squeeze on social mobility. Some universities, Oxford and Cambridge included, are now working very hard to find bright but undereducated young people from disadvantaged backgrounds.

I suggest that, now that we are returning to rather a calmer sort of government—we hope—the Government might like to think about setting out another independent review of what we need to do about university funding when the current arrangements end in 2024-25, after the next election. The Minister will remember that, in 2008, the Labour Government kicked the issue of tuition fees past the election by setting up the Browne review. I recommend that the Government consider doing the same now, so that at least when the next Government come in there is some sort of consensus about where we need to go from here.

We have talked a little about international research networks. All research is essentially international and cross-border. We benefit enormously from links with European countries, North America and beyond, and we all recognise that leaving the European Union has damaged those links very considerably. Incoherence is there again across Whitehall. I have heard British academics working in the United States say that that they do not wish to come back to Britain because they know their American wives will be in the queue at the Home Office and that they will have to pay a lot of money to get them into this country. My son brought his American wife back and did pay the money he needed to pay to do it.

Some 20% or more of most universities’ staff come from abroad, and the tightening of Home Office policy on visas means that, when they accept a post, it is harder and harder for them to get their families into this country. That damages the culture of our universities as well. Getting the Home Office, the Department for Education, the Treasury and the Department for Business to have, together, a sense of understanding about what is needed for our universities to flourish is something the Government might usefully spend time on.

Others have spoken on Erasmus and Turing, so I need to say little, except that moving back towards a more sensible and rational relationship with our neighbours must include rejoining not only Horizon but Erasmus. Rejoining Horizon will not be easy and there are those who say, “Good heavens, we are going to have to pay for this”. Of course we are going to have to pay. We gained more from Horizon when we were members of the European Union than we paid in for the scheme, but that was because this was part of an overall balance between contributions and obligations to the European Union. Now that we are outside—and saving our £350 million, or whatever it is, per week—if we wish to rejoin these schemes, we will have to pay. There are advantages for us.

We are, I hope, an international country. We are escaping, I hope, from English nationalism, from which we have suffered so badly in the last few years. That means we need to maintain a university network which benefits enormously from its international ties but which contributes fundamentally to the prosperity of this country. I think the Minister shares all these objectives; I only wish the rest of the Government did.

5.02pm
Baroness Twycross (Lab)

My Lords, like others, I thank my noble friend Lord Knight for calling this important debate today. I am pleased to be able to take part in what has been an informed and informative debate. I apologise to the House for being slightly late at the start of the debate; a rookie mistake but one which, in the context of a debate about learning, I promise I will learn from.

British higher education has historically rightly been held in high esteem. The UK has welcomed, and benefitted from, the large number of overseas students wanting to study here, and from overseas academics contributing to research and teaching. British universities are known and respected round the world. We have some fantastic higher education colleges, delivering top-rate courses. Many of us in this House, including me, have benefitted in our lives and careers from superb education from these world-class institutions. However, as this debate has shown, we cannot take this for granted.

The noble Lord, Lord Wallace, and others highlighted the sometimes insecure and comparatively low-paid nature of academic life, and the risks this creates. As so many of the contributions have noted, the financial sustainability of our higher education is one we should not take for granted. It is clear, and this point was raised by so many noble Lords today, that it cannot be right that the higher education system has a current financial model that finds so many institutions in deficit.

I repeat the concerns raised by my noble friend Lady Wilcox, which surely must concern this whole House, that in just four years under this Government the number of institutions with an in-year deficit has risen more than sixfold, from 5% in 2015-16 to 32% in 2019-20. That is about a third of all higher education institutions. In any other sector, this would be regarded as a crisis.

Do the Government agree with the Office for Students that there is no major risk of one or more higher education institutions failing due to financial issues? If so, why are they not concerned? Is it complacency or is it just that the Government are hoping the problem goes away, or do they have a plan for resolving the issue? I would be interested to know whether any higher education institutions have raised specific concerns with the Government, or the Office for Students, about their financial sustainability? What assurances have the Government sought in relation to the sustainability of the sector?

I was particularly struck by the contributions of my noble friends Lord Knight, Lord Hanworth, Lord Davies, and others, on the fact that universities make a loss on UK students. My noble friend Lady Warwick gave a welcome focus on the student experience, and I particularly note the point made by my noble friend Lady Donaghy that there is a significant and almost greater risk than the failure of an institution of a decline in the quality of courses provided to students. With respect to the noble Earl, Lord Dundee, I fear that this might be increased were online courses, as he proposed, not confined to where they are appropriate but extended more widely simply to save cost.

Our British higher education institutions have a proud history of innovation. Over the past few years, at the exact same point at which the financial stress on universities has been starting to show, we have seen British research contribute to the fight against Covid, not least in relation to the development of some of the first vaccines. Can the Minister tell the House how the Government intend to make sure that the UK can continue to be at the forefront of innovation through the higher education system? Will they look, as my noble friend Lord Davies and others suggested, to rejoin Horizon, and will they take up the suggestion of my noble friend Lady Donaghy to provide financial support to universities for courses in much-needed expertise, such as medicine, nursing and teaching, to ensure we can get home-grown UK graduates into key roles?

As has been noted in this debate and by Universities UK, the economic contribution of the HE sector in England is considerable, contributing £52 billion to GDP and supporting more than 815,000 jobs. As someone who grew up in a university city, I know that a university town or city depends on these jobs—quite simply, the service industry or tech industries that grow up around a university would be unlikely to thrive without the university being there. As the noble Lord, Lord Austin, said, a university or higher education institution can also renew areas where traditional industries have declined or vanished by introducing valuable new jobs and skills.

My noble friend Lady Wilcox described the potential consequences for a community of their local college going under as simply too catastrophic for the regulator not to do everything in its power to set the conditions for success. In relation to the sector’s dependence on overseas students, the Government simply cannot have it both ways. We gain in so many ways from having the rich exchange of ideas and cultures that overseas students and academics provide—a rich exchange that, as my noble friend Lord Leong made clear in his passionate speech focusing on Erasmus and Turing, ideally works both ways, with UK students and academics having the opportunity to go overseas, as well as people coming here.

Many noble Lords, including the noble Lord, Lord Parekh, the noble Baroness, Lady Garden, and my noble friend Lord Davies noted concerns about Turing. Overseas students studying in UK higher education here, as this debate has demonstrated, provide financial benefits to our universities and colleges—arguably to a much greater extent than is appropriate. As the noble Viscount, Lord Chandos, pointed out, this carries significant risks.

What is unarguable, however, is that the Government cannot assume in one department that overseas students will shore up the finances of our higher education sector, when in another they try to make it considerably harder or less attractive—even through rhetoric—for overseas students or academics to come to the UK. As my noble friends Lord Davies and Lord Hanworth said, this income from overseas students is also at risk from wider geopolitical issues and concerns. Can the Minister reassure us that government departments are talking to each other and agreeing a strategy in this regard?

The final point I would like to make—although my notes go on for a bit, so it is not necessarily my final point—is in relation to the role of higher education in social mobility, or “levelling up”, as a number of noble Lords have referred to it. Last year, as highlighted in the Financial Times this week, the number of people applying to university through UCAS was 767,000 and UCAS is predicting that by 2030 this will rise to 1 million, cue to the mini-boom in the birth rate that will lead to an increased demand by the end of the decade. It is understandable and right that students and their families aspire for children to achieve their potential, to do well at school and to go on to university; we value education not just for its own sake but for the opportunities it provides.

Does the Minister agree with the Minister for Higher Education that the new places to ensure that the increased number of applicants can access higher education may not be for undergraduate degrees but could well be within further education or apprenticeships? I could not have agreed more with the noble Lord, Lord Austin, on the points he raised about the rhetoric on limiting the number of children going on to university, and the fact that the children who do not go on to university, in the minds of the people who are saying this, are not their own.

What are the Government intending to do to make sure that the higher-status courses—those that often lead to higher-paid opportunities—are open to all, irrespective of who prospective students are and where they come from? I would be concerned if these students did not have access to a supply of high-quality opportunities. As the chief executive of UCAS has made clear, the interests of disadvantaged students must not lose out or be forgotten during the period of increasing competition. She rightly pointed out:

“This is an economic challenge as much as an educational one”—

and it is a challenge for opportunities.

I would ask the Minister to do whatever she can to respond to this point, and to other points raised in this debate. The future of our higher education institutions, and the towns and cities they are part of and support through their presence, is at stake. Critically, the life chances of their current and prospective students depend on this Government taking the issues raised today seriously and not simply hoping that the problem of higher education financial sustainability will go away. The price is simply too high.

5.12pm
The Parliamentary Under-Secretary of State, Department for Education (Baroness Barran) (Con)

My Lords, I am very grateful to the noble Lord, Lord Knight, for bringing to your Lordships’ attention the important matter of financial sustainability in the higher education sector, and for securing this important debate. As we have heard this afternoon, higher education is of vital importance to this country’s prosperity. Many of our institutions are world leading and provide a top-class education which equips students with the skills they need to get great jobs and to make sure that we have an internationally competitive workforce. For these reasons, higher education providers will continue to play an integral role in supporting this Government’s aim of levelling up productivity and employment.

We know that the finances of HE providers are sound when we look at this at a sector level. The income in the sector has increased from just under £35 billion in 2018-19 to just over £37 billion in 2020-21. But the sector is not uniform, and it might be helpful to step back slightly and look at some of the longer-term structural changes in the sector. We have seen a very significant growth in the number of students over the last five years to 2.34 million in the last year, but we have also seen a very significant increase in the number of institutions, from 153 five years ago to 248 in 2020-21. That includes roughly a doubling in specialist postgraduate providers and almost a quadrupling in smaller specialist providers. So I do not want to suggest that funding is not an issue in all of this, but there are some structural changes in the sector, including the size of some institutions, which are also relevant to your Lordships’ debate.

As your Lordships have mentioned, the number and profile of providers in deficit is not uniform. It is unchanged for high-tariff providers, according to the Higher Education Statistics Agency data. It is down slightly for medium-tariff universities, whereas the number in deficit among specialist providers was up from two to 21 between 2017 and 2021, and for low-tariff providers it was up from 47 to 70, so we have seen a very significant shift. I say this because higher education providers are autonomous and independent. They are responsible for the decisions they make about their operating model and for their day-to-day management and sustainability. My understanding is that your Lordships believe that that is very important.

The Office for Students is the independent regulator of higher education in England and monitors the financial viability and sustainability of providers registered with it. Next month, the OfS is expected to publish its next report on the financial health of the HE sector, based on the analysis of providers’ financial forecasts and annual financial returns for 2022. Officials in the department meet regularly with the OfS, as do Ministers, to oversee the climate of higher education provider financial sustainability and to identify emerging risks and issues for the sector.

At this point, I thank the noble Lord, Lord Austin of Dudley, for highlighting the need for more educational opportunities in areas that traditionally have not had them. That important point was also raised by the noble Baroness, Lady Twycross. I am delighted to hear the noble Lord’s enthusiasm about the local institute of technology in his area. As he will know, we have increased the number of institutes of technology—which are partnerships between colleges, universities and employers—from the original 12 to 21 institutes, and we are investing close to £300 million in them.

On the final point the noble Baroness, Lady Twycross, made—which was not long at all and was very important—about making sure that higher status courses are available to disadvantaged students, I think we all feel that status has traditionally sat with the most academic courses. However, there is a real need to recognise the importance and value of technical courses as well as some academic ones. I think a shift in the narrative is happening about what represents status, and that should be accessible to all. She will be aware that the proportion of disadvantaged students accessing higher education has been on a welcome upward trajectory, but her challenge about making sure that it is always in relation to the highest-quality courses is very welcome.

The noble Lord, Lord Knight of Weymouth, and the noble Baronesses, Lady Wilcox and Lady Warwick of Undercliffe, all raised a number of wider issues in the sector and different aspects of financial pressure that I will try to address. The noble Viscount, Lord Chandos, raised a specific point about specialist institutions. As I am sure he knows, the OfS concluded its review of small and specialist providers in December last year, and those providers that were judged to be world-leading will retain that status for five years. The OfS intends to keep its funding allocations fixed during that period, subject to affordability.

A number of noble Lords raised the issue of tuition fees, including the noble Lord, Lord Davies of Brixton. The Government’s principal priority for students is to ensure that their best interests are protected, and we have taken a number of measures relating to student finance to try to ensure this. To deliver better value to students and to keep the cost of higher education under control, we have frozen the maximum tuition fees for the 2023-24 and 2024-25 academic years. By 2024-25, maximum fees will have been frozen for seven years. We believe that continued fee freeze achieves the best balance between ensuring that the system remains financially stable, offering good value for the taxpayer and reducing debt levels for students in real terms, but we also understand that, of course, this puts pressure on some providers and requires their business model to evolve. I will touch on that more in a moment.

The noble Baroness, Lady Warwick of Undercliffe, touched particularly on maintenance loans and the pressures that students face. In addition to the tuition fees freeze, we have continued to increase maximum loans and grants for living and other costs for undergraduates and postgraduate students each year. This academic year saw a 2.3% increase, while a further 2.8% increase has been announced for the academic year 2023-24. The Government recognise the additional cost of living pressures that have arisen this year and have impacted students. However, decisions on student finance will have to be taken alongside other spending priorities. This will ensure that the system remains financially sustainable and that the costs of education are shared fairly between students and taxpayers, not all of whom have benefited from going to university.

The noble Baroness, Lady Donaghy, asked whether the Government planned to unfreeze tuition fees before the next election. The maximum tuition fees will be frozen until 2024-25, and Ministers will review those fees for 2025-26. The noble Baronesses, Lady Donaghy and Lady Twycross, asked about funding more university places for doctors, nurses and teachers. Teaching and nursing places are not capped by the Government. Medical student number targets are set by the Department of Health and Social Care, based on the workforce needs of the NHS and the availability of clinical training placements. Along with the postgraduate teaching apprenticeships, the Department for Education and IfATE are currently co-designing a degree-awarding apprenticeship that will confer an undergraduate degree alongside qualified teacher status, with a view to launching this as soon as possible.

A number of your Lordships asked what the Government would do in response to a university failure. If a provider were at risk of an unplanned closure, our priority would be to act with the Office for Students, the institution and other government departments to make sure that students’ best interests are protected.

The noble Lord, Lord Parekh, referred to some of the changes in the student finance and loan repayment system, and asked whether the Government were looking at levelling up in relation to the student loan system. We would argue that the system is already shaped in such a way as to protect those people who do not end up on higher incomes. Today, only 20% of student borrowers who entered full-time education in the 2021-22 academic year are forecast to repay their loans in full, with the remainder paid for by the taxpayer. The Government believe that this has to change, which is why we have reformed the system so that 55% of borrowers entering full-time higher education in the 2023-24 academic year will repay their loans in full.

The noble Baroness, Lady Wilcox, asked whether we saw the Office for Students as preventive or reactive. The Office for Students’ approach is very much about identifying in advance where there might exist material risk in a provider, and we have introduced new registration conditions that facilitate that.

The noble Baroness also asked about the proportionality of regulations. The Office for Students has a duty to be proportionate in its approach to regulation under the Regulators’ Code, and it takes that duty seriously. If the noble Baroness has specific examples of concerns that she would like to share, I will happily take them back.

The noble Baroness, Lady Twycross, asked how we can stay in front as an R&D nation. The Government are committed to increasing R&D funding. The Department for Science, Innovation and Technology is responsible for most of the Government’s spending on R&D. This includes an allocation of £25.1 billion for UK Research and Innovation over this spending review period to invest in innovation, foundational research, infrastructure and talent. I hope that the noble Viscount, Lord Hanworth, accepts that some of that spending will also help the environment for staff within universities, which he described so clearly.

UKRI’s allocation includes £6.2 billion for Research England, which will directly support research and knowledge exchange in UK universities and other higher education institutions, as well as £2 billion for a new pooled approach to talent programmes. This funding will help to maintain the world-class reputation of UK research. We have four of the top 10 research universities in the world and our research councils are the envy of the world. With less than 1% of the world’s population, the UK’s share of highly cited publications is 13.4%, placing us third in the world. I thank the son of the noble Lord, Lord Wallace of Saltaire, for his contribution to those numbers—every individual counts.

Earlier this month, the Prime Minister launched the Government’s plan to cement the UK’s place as a science and technology superpower by 2030. The Department for Business and Trade is delivering this vision by harnessing the combined power of our export of and investment in our science and technology sectors. Our science exports are already strong. Life sciences, for example, is one of the UK’s top exporting sectors, with pharmaceutical exports valued at £24 billion in 2022 and medical technologies exports valued at £4.1 billion.

The noble Lord, Lord Knight, my noble friend Lord Dundee and a number of other noble Lords asked about our work in relation to the Horizon programme. Obviously, the Government welcome the EU’s recent openness to discussing this issue after two years of delay. Both the UK and the EU have been clear that they are open to taking forward discussions on UK association, as was set out at the Partnership Council on 24 March.

Along with our life sciences exports, higher education is obviously an important export. The latest figures show that it generated £19.5 billion for the UK economy in 2020, growing even through the pandemic. The Government recognise the cultural and economic importance of international students to the UK and to our universities, where they enrich the experience for all students. International students are also an important part of international partnerships and research, which put the UK at the forefront of tackling global challenges. My noble friend Lord Dundee asked whether the Government support those partnerships; I am happy to say that we absolutely do.

This is about much more, perhaps, than the narrow financial reasons the noble Viscount, Lord Chandos, suggested. In recognition of the importance of education exports, the Government published the International Education Strategy in 2019, and I am happy to confirm to the House that we retain our absolute commitment to it. Regarding how our international strategy links with immigration issues, I reassure the noble Baroness, Lady Twycross, that we work very closely, particularly with the Home Office, obviously, on those issues.

As ever, I am running out of time. A number of noble Lords spoke about the Turing scheme, particularly the noble Baroness, Lady Garden, and the noble Lord, Lord Leong. I am not sure that I have been in a debate with the noble Lord before, but it was a pleasure to listen to his speech, which was a lot better than any of my rambling undergraduate essays—when I even wrote them. As your Lordships know, the Turing scheme is the Government’s global programme to study and work abroad. It has allocated nearly £130 million in grant funds for over 52,000 student placements from higher education providers since 2021. We have confirmed funding for continuation in 2024-25, but obviously we then enter a new spending review period.

The noble Baroness, Lady Garden, asked about the Turing scheme in relation to modern foreign languages. Every country in the world is eligible as a destination for UK students, but of the top 10 most popular destinations in the 2022-23 academic year, only four are English-speaking. I hope that gives the noble Baroness some reassurance. I would like to reject the slightly dismissive description of the scheme from the noble Baroness, Lady Donaghy. I will have to write regarding the contribution of universities to their local economies. We are seeing some exciting partnerships, including one that I am familiar with from the University of Bristol, which is bringing a great deal of economic progress to the city, but there are many others.

The noble Lord, Lord Knight of Weymouth, in his opening remarks, incredibly eloquently, as ever, set out the real value of our universities, and the noble Lord, Lord Wallace, rightly questioned and probed the Government’s commitment to the wider vision we have heard from a number of your Lordships this afternoon. I hope I have in some way reassured the House that we believe strongly and passionately in the value of our universities. We see our role as being to encourage, to focus, to set out our priorities, but we absolutely respect their autonomy in delivering them.

5.33pm
Lord Knight of Weymouth (Lab)

My Lords, I thank all noble Lords who have spoken in this debate; I have thoroughly enjoyed it. I have learned a lot—it is not my natural home as a policy area—particularly about the ups and downs of the Turing scheme. I make special mention of my friend, the noble Lord, Lord Austin, and his comments about the importance of universities for community generation. Also, this was the first time I have heard my noble friend Lady Twycross speak from the Front Bench. Clearly, it is her natural home, so I look forward to more of the same from her.

It is good to hear that across the House we are proud of our higher education sector. We want to allow it to continue to pursue excellence, as well as community renewal, and that requires a solid financial foundation. I noticed that in her fine speech, the Minister talked about the seven-year freeze in tuition fees allowing the sector to remain financially stable. I gently put it to her that, having shifted to half the income for the sector being reliant on tuition fees, to then have a seven-year freeze at a time of double-digit inflation is not the best recipe for financial stability.

However, with that note of caution—I do not want to depress anyone—it is still a vibrant sector and is still hugely important, and we are all committed to helping it.

Baroness Barran (Con)

With the permission of the House, I quoted one figure incorrectly and would just like to set the record straight. I said that, according to the HESA data, the increase in the number of low or unknown tariff higher education institutions that were in deficit in 2016-17 was 11 and in 2020-21 it was 21. I quoted earlier the number of institutions, which rose from 47 in 2016-17 to 70 in 2021. I would just like to get that right and not have to put it in yet another letter.

Motion agreed.