My Lords, we have all seen the devastating impact of Covid-19 around the world. Recovering from this will take time and Her Majesty’s Government are already providing an unprecedented set of measures to support the people of this country along the way. One such beneficiary of the support is our world-renowned higher education sector. My right honourable friend the Secretary of State for Education announced a stabilisation package for the sector on 4 May. This included the introduction of temporary student number controls, which relate to the regulations that we are debating today. I thank the Secondary Legislation Scrutiny Committee of your Lordships’ House for considering the draft regulations. I am pleased to see that one of its members, the noble Lord, Lord Liddle, is taking part in our proceedings.
To understand why these regulations are necessary, we must look at the potential financial consequences of the pandemic on higher education providers, their staff and, of course, their students. For instance, in the 2018-19 academic year, tuition fees from international students accounted for around £7 billion of the sector’s income. Realising the risk that a sharp decline in international students might pose, many providers have already responded by attempting to recruit more domestic students than normally they would. Some issued a record number of unconditional offers to encourage students to study with them. While seeking to ensure their own financial stability is only natural, this strategy, if replicated widely, could have unfortunate consequences for the sector as a whole—providers and students alike.
I shall first spell out the consequences for providers. There is already a finite pool of prospective students, made smaller by a 1.5% decrease in the number of 18 year-olds this year compared with last. In these exceptional circumstances, an unusually high number of offers made by a provider may attract more students than normal to that provider, but, therefore, away from others which would normally have recruited them, and which could not absorb the associated loss of income. Repeated across the whole sector, this could place some providers at risk of collapse. That would destabilise the sector, threaten staff livelihoods and, of course, leave many students without a provider in the middle of their education.
That leads me to the consequences for the students themselves. Different providers, rightly, have different entry standards. Every student is unique, with different academic abilities and needs. A positive student experiences is a vital and fundamental part of university life. It is to everyone’s benefit that there should be a range of providers, offering a range of different learning environments catering to different academic needs. The long-term consequences of the potential instability in the sector which we saw emerging earlier this year could far outweigh the short-term benefits to individual providers. It is for this reason, together with the need to avoid an unfair imbalance in public expenditure, that temporary number controls have been introduced, and that the associated regulations have been laid before your Lordships’ House to consider.
I turn to the regulations themselves, which, so far as higher education providers in England are concerned, will reduce the maximum amount of tuition fees that providers can charge in the next academic year but one—the academic year 2021-22—if they recruit more students than their allocated number in the coming academic year, 2020-21. As far as higher education institutions in the devolved nations are concerned, the numbers apply to England-domiciled students who start a course in Scotland, Wales or Northern Ireland. If an institution exceeds its number in the academic year 2020-21, the maximum tuition fee loan amounts available to such students—and ultimately to the institutions—starting courses in the academic year 2021-22 are reduced to the same extent as fee limits in England.
These short-term measures are necessary: should a provider recruit a higher number of students, it will receive a greater share of taxpayer funding. This will create an imbalance in the system between providers. By taking students, and therefore funding, away from other providers, they increase the risks that those providers will fail and give rise to a potential call on public funds. That is an exposure for which the Government must account, so it is right that the Government, and the taxpayers that we serve, should be able to redress that funding imbalance in the following academic year.
Therefore, this is about the Government using the mechanism of the taxpayer-funded student loan system to ensure the stability of the sector. The regulations do this by reducing the sums available to a provider which chooses to exceed its number through the student finance system in the subsequent academic year. I recognise
the concerns that a reduction in the fees available to providers may itself place them under strain, but the scale of the reductions has been calculated in proportion to the extent by which a provider exceeds its number. Accordingly, there is a proportionate correlation between the amount of reduction and the additional income secured by the provider by recruiting in excess of its numbers.
I consider these regulations to be a crucial part of the steps that we need to take to ensure the stability of our much-valued higher education sector, and I commend them to the House. I beg to move.
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Amendment to the Motion