Higher Education (Basic Amount) (England) Regulations 2010

My Lords, I will speak also to the second Motion in my name, on the higher amount, to the amendments in the name of the noble Lord, Lord Triesman, and to the Motion in the name of the noble Lord, Lord Bilimoria. I will explain why the House should not support either the amendments of the noble Lord, Lord Triesman, or the Motion of the noble Lord, Lord Bilimoria. The subject that we are considering has aroused strong feelings. I will talk about the package of measures that the coalition Government are proposing, but will start by describing factually the Motions before the House. The Higher Education Act 2004 allowed publicly funded higher education institutions to charge for their tuition costs, subject to conditions. It created the concept of a basic amount and a higher amount for these charges; there are effectively two caps, a basic cap and a higher cap. Any higher education institution can charge below the basic amount, and the Act sets no conditions for this. An institution that wishes to charge above the basic amount can do so only if it has first agreed an access plan with the Director of Fair Access. No publicly funded institution can charge above the higher amount. More than six years after the Act was passed, the Motions before the House today propose increases to the basic amount and to the higher amount. For the basic amount, the proposed figure is £6,000; for the higher amount, it is £9,000. The basic amount of £6,000 is not a minimum figure; it is a cap, beyond which any institution looking to charge more requires an access agreement. There is nothing to stop any provider of higher education charging less. I should also explain how this translates into the Motions on the Order Paper today. Changes to the basic cap on tuition charges, set at £1,200 by the 2004 Act, can be made by statutory instrument subject to an affirmative resolution. A Motion to approve draft regulations raising the basic amount is therefore the first Motion standing in my name on the Order Paper today. The amendment to my first Motion, tabled late yesterday by the noble Lord, Lord Triesman, would, if carried, prevent the regulations being approved and is consequently fatal. I should remind the House what fatal means. There is absolutely no mechanism for the Commons to address or put right a defeat in these circumstances, and accepting one or both of the noble Lord’s amendments would therefore, in practice, be a veto. There is no ping-pong in this case. During the passage of the Higher Education Act 2004, concern was expressed in this House and in another place about the arrangements for increasing the higher level for tuition charges. There was concern that Ministers should not be able to make new regulations, setting new higher levels, without a debate on the Floor of both Houses. The solution agreed is set out in Section 26 of that Act. Regulations that would increase the higher level can be made only if both Houses have previously passed a resolution specifying what the new higher level should be and the date from which it applies. Only once that resolution has been passed can regulations be made to increase the higher level to that amount. A resolution under Section 24 of the Higher Education Act 2004 raising the higher amount is therefore the second Motion standing in my name on the Order Paper today. I should stress that the amendment to my second Motion proposed by the noble Lord, Lord Triesman, is also fatal. If the amendment were carried, my resolution would no longer meet the requirements of the Higher Education Act 2004. My two Motions, which have been approved in similar terms by another place, are part of a package and they are linked. The Motion in the name of the noble Lord, Lord Bilimoria, is a free-standing resolution. Although it will be debated alongside my two Motions and the amendments thereto, it will be decided separately and independently at the end of our debate if the noble Lord decides to move it. The Motion calls on the Government not to implement increases in the higher level or basic level in 2012. The Government believe that that course of action would damage our higher education system, and I will consequently be urging the House not to support the noble Lord’s Motion. The backdrop to our proposals is the huge fiscal deficit that we inherited. We can no longer ask the taxpayer to continue the current level of higher education funding. In tackling that deficit, we want to maintain a high-quality university sector that is more responsive to the needs of students and is underpinned by a progressive system of graduate contributions. We have carefully studied the independent review of higher education funding and student finance undertaken by the noble Lord, Lord Browne of Madingley, who reported in October after months of consultation. I pay tribute to the noble Lord for that report, in which he made a powerful case for reform. We have also listened to representations from universities, students and parents. I cannot accept the suggestion that appears in the amendments tabled by the noble Lord, Lord Triesman, that there has not been enough discussion of these issues. In essence, we are changing the way that funding flows to our universities and colleges. From 2012-13, we will start to reduce the amount of funding that we provide to the Higher Education Funding Council for England to support university courses. This is in line with our announcements in the October spending review. The council will still get funding for the highest-cost subjects and for those that are strategically important and vulnerable. We are correspondingly increasing the public money that we will make available as loans for students who want to attend higher education. In all, we do not expect the overall income of the higher education sector to reduce. We are also maintaining, in cash terms, our spending on the science budget with resource spending of £4.6 billion a year by 2014-15. The regulations and resolution that we are proposing today enable those universities and colleges that can attract students to get the funding that they need to offer high-quality teaching. Universities will decide what charges they make for which of their courses. They will need to estimate the value that students place on what they are offering and adjust their charges accordingly. We believe that having to consider carefully what potential students want and need will benefit universities as well as students. Crucially, no full-time undergraduate student studying for their first degree will need to pay any of their tuition costs up front. The tuition loans from the public purse will not be means-tested and will cover the full costs of the courses. We will, for the first time, be giving part-time undergraduate students a similar entitlement to tuition loans as full-time students, on a pro rata basis. Following representations from universities with large numbers of part-time students, we are extending the entitlement to tuition loans to students studying for at least one-quarter of their time, rather than one-third of their time as was originally proposed. A core part of our proposals are the repayment arrangements, which are a significant improvement on the current situation. We have already promised to increase the repayment threshold—the income at which graduates start to repay their contribution—from the current £15,000 a year to £21,000 in 2016. Raising the threshold reduces the monthly repayments for every single graduate. That £15,000 threshold figure was introduced by the previous Government as part of their 2004 Higher Education Act changes. It has never been uprated. We propose to uprate it annually from 2012 by RPI, subject to discussions with the devolved Administrations. From 2016, when the £21,000 figure starts to apply, we will uprate not by inflation but annually by earnings. Therefore, students who enter higher education in 2012 or beyond and complete a three-year degree can know that they will not suffer if they do not get high-paid jobs. That cost will be carried by the public purse. The amendments tabled by the noble Lord, Lord Triesman, call for an impact assessment of the effect on students. We have published an equality impact assessment, and bodies such as the Institute for Fiscal Studies has also examined our proposals. We estimate that around a quarter of graduates will be better off under this regime than under the present regime. We know that, for example, women taking time out to bring up a family will not need to repay their graduate contribution if they are not earning £21,000. They, in particular, are likely to benefit from any outstanding graduate contribution being written off after 30 years. On the other hand, graduates who earn the higher salaries will be paying back more. That is a progressive system. Those who benefit the most from their higher education pay back the most. We have been asked what safeguards there will be against all universities simply charging £9,000, just as they all charged £3,000 in 2006. The first difference from 2006 is that we are empowering the student and not simply giving extra money to the university. Under our proposal, universities and colleges that cannot attract students will immediately lose money and will have to change their approach, so they will have to think very carefully about the value for money of their offer to a potential student. Secondly, and also different from 2006, we are toughening the access plan requirements enforced by the director of the Office for Fair Access. In 2006 some institutions levied the maximum possible charge and gave blanket, untargeted bursaries to almost all their students. They were giving discounts on their published charges at public expense. That gave a spurious impression of uniform charging across higher education. We are now asking the director of OFFA not to approve this sort of proposal. In 2006, the Government required access plans to be renewed every five years. Under our proposals, they will have to be renewed each year, so there will be a hard and regular look at what institutions are doing under their access agreements. If a university or college does not do what it has promised, the director can refuse to renew its agreement the following year. But we know that there is still a problem in securing fair access to some universities. Institutional bursaries by themselves have not worked. Instead, we want universities to concentrate on improving their outreach work with schools and colleges, and to support our new £150-million national scholarship programme—for instance, by universities offering a second year’s free tuition to the most disadvantaged students. A national programme of that type will provide a more visible and understandable offer than institutional bursaries to potential students from disadvantaged backgrounds. The Secretary of State has published, on his department’s website, the draft letter of guidance that he envisages writing to the Director of Fair Access. This sets out in more detail the way that we expect the access plan arrangements to work. He has said he will listen to comments before finalising that letter in early January. The regulations and resolution being considered today form only part of our higher education proposals, but they are an urgent part.