My Lords, I speak to Amendment 92 in my name and draw attention to my interests in the register, as chair of TES, the
education software and information group, and of Access Creative College, an independent provider of training for the digital and creative industries.
Amendment 92 is a probing amendment, to test the Government’s ambitions for the lifelong loan entitlement and to probe their assumptions about what provision is worthy of funding under it. We do not yet have critical details on the LLE, for which the Bill provides the legislative underpinning. That will emerge only following the consultations that the Minister has just mentioned, and then in secondary legislation due in 2024, ahead of the LLE’s actual introduction in 2025. In theory, the combination of the LLE and the introduction of the system of modular funding that the Minister has just mentioned, for sub-degree chunks of study, will make it easier for adults and young people to access learning in a more flexible way, to space out their studies and to earn while they learn if they wish.
Since 2012-13, English HE students have been eligible for loans only if they are studying at an intensity of 25% or more of a full-time equivalent course and are following a full course for a specified qualification, hence students studying individual modules or shorter courses of less intensity have not been eligible for loans. This has been an important factor in the decline of part-time adult learners. The LLE will, in theory, help to address this problem—therefore so far, so good, and I very much welcome it.
However, there is real complexity involved in the introduction of the lifelong loan entitlement, and a danger that theory and practice might diverge in crucial ways in certain respects. One of the main sources of danger is that the Treasury, partly out of its desire for quick savings from higher education in the spending review, may water down the promised skills revolution by insisting on retaining the so-called equivalent or lower qualification rule. Indeed, I expect that the Treasury will put up a valiant attempt to keep the ELQ rule whatever the consultations on the LLE say when they are eventually produced.
The traditional rationale for the ELQ restriction is that funding available for student support is finite and that it is necessary to put in place limits to ensure that all eligible students who wish to enter HE for the first time can do so. Accordingly, the ELQ rule prevents those studying a second HE course, at an equivalent or lower level, from receiving tuition fee loans or maintenance support for the course. For example, if you study classics for an undergraduate degree in your 20s at UCL, you could not then reskill in your 30s by undertaking a diploma in graphic design at UAL.
Restrictions apply even to those who previously followed privately funded courses which they self-financed. These ELQ restrictions seem complex and very unusual, when you look across the global HE landscape. For example, they do not exist in Canada, Australia, or New Zealand, whose HE systems are quite similar to England’s. The obvious trouble is that the ELQ rule not only constrains student choice about how best to retrain if they already have a qualification but treats tertiary education—post-18 education—as a one-off event, rather than as part of a process of lifelong learning in a world in which people can expect to have
multiple careers over their working lives. Keeping it will therefore make a nonsense of the entire lifelong loan entitlement.
My contention is that any savings which the Exchequer might make on the subsidy in the loan book from retaining it are outweighed by the broader economic costs incurred by making it so difficult for students to change subject and retrain for new careers. We need a serious economic impact analysis of the ELQ rule before we can consider the secondary legislation on the LLE. Indeed, since it was introduced in 2008, various Governments have already effectively acknowledged the flaws with the ELQ by peppering it with ever more complicated exceptions, such as those applying for medicine, dentistry, and initial teacher training. Part-time ELQ exemptions have been made for engineering, computer science and technology, extended to STEM courses in 2016-17. In 2018 further exceptions were made for nursing, midwifery, allied health professions, and so on.
ELQ restrictions were possibly appropriate for a restricted grant-based HE system, but, under the current loans-based system, they are anachronistic and antithetical to the broader objectives of the Government’s skills reforms. That is why the 2019 Augar report rightly recommended that the ELQ rules be scrapped entirely for those taking out loans for levels 4, 5 and 6—yet nothing has happened since.
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Two things seem to underpin the Government’s reluctance to remove what remains of the ELQ rule. First is the Treasury’s flawed—in my view—conception of value for money, which crudely measures the worth of the course by how much students repay of their loans. Secondly, there is an entirely misplaced belief in Whitehall’s ability to predict the skills needs of the economy and to operate a kind of modern-day Gosplan through number controls on particular subjects deemed to be oversupplied and out of kilter with the needs of the economy.
If Covid has taught us anything it is surely that we need to value socially useful but lower-earning professions. I am far from convinced that the Treasury’s reliance on the LEO data or belief in its ability to do this micro workforce planning is actually delivering good policy. As my noble friend Lord Willetts said on Monday, we need a “wider range of perspectives”—earnings data cannot be the “be-all and end-all” of education policy. As my noble friend Lord Lucas put it, it is simply much too “one-dimensional” an approach.
We have already seen this short-sighted approach to value for money at work in the rules governing access to the lifetime skills guarantee, which offers funding for those who are 19 or over and do not already have a level 3 qualification. The current list of level 3 qualifications for which the Treasury is allowing funding via the lifetime skills guarantee is far too restrictive, with Ministers stating that this narrow group of courses has been selected principally on the basis of their wage returns. It is striking that, as a result, there is not a single creative arts and design course on that list. In my view, it speaks volumes about whether the Government really do understand the value and importance of the creative industries.
My fear now is that the Government will use this legislation’s fine print and the operation of the lifelong loan entitlement to effectively defund level 4 to 6 courses that have lower rates of repayment via a possible combination of student number controls, frozen or selectively reduced tuition fees and tougher minimum entry requirements. If adopted, this approach would, once again, particularly penalise the creative arts and design courses that fuel some of the country’s most promising creative industries, including those mentioned by the noble Lord, Lord Watson, and including games design, music production and technology, fashion and textiles and the performing arts.
Of course, it would a false economy. The creative industries were growing two and a half times faster than the rest of the economy as a whole in the decade leading up to Covid. Presumably, they were generating enough tax revenue for the Exchequer to repay the Government’s subsidy to creative courses in the student loan book many times over.
The Government seem to have a sense that universities have piled in to creative arts provision and that it has grown like some kind of Japanese knotweed, absorbing an ever-greater share of subsidy in the loan book since the removal of student number controls. This is factually wrong, and it is important that the Treasury recognises that. HESA data shows that 167,000 students were enrolled in creative arts and design courses in 2014-15, representing 7.4% of the student body. There were 187,000 students enrolled in such courses in 2019-20, again representing 7.4% of the student body. Yes—there has been a 12% increase in the number of such students over six years, but that is entirely in line with the growth in HE enrolments across the system as a whole and no more than that. Given that the creative industries were growing at two and a half times the rate of the rest of the economy in the run-up to Covid, it could even be argued that this is a surprisingly low rate of growth in this area of HE provision.
However, we are seeing a number of government levers being simultaneously pulled, effectively discouraging young people from studying non-STEM subjects in the social sciences and the arts and humanities. In my view, this approach is fundamentally mistaken. It will be highly detrimental to international perceptions of the English higher education system if we continue to reduce the subject range of our universities and the supply of high-quality provision across all disciplines and institutional types. The strength in breadth of our higher education system is one of its great features, and it is a big part of what makes it internationally attractive.
So I wonder if the Minister would agree that we need not only a proper economic impact analysis of the ELQ restriction but a serious and holistic evaluation of the economic costs and benefits of creative arts education before we wave through the LLE. If the Treasury really wants to save big money, the Government should abandon any plans that they might have to restrict student choice in this way and instead focus on fixing some of the needlessly costly features of the student loan that my noble friend Lord Willetts mentioned earlier—for example, reducing the student loan repayment threshold could save billions and significantly reduce the proportion of the student loan book that ends up
being subsidised by the taxpayer. This would be a far better way of putting the student finance system on a sustainable footing than constraining student choice, stifling education for the creative industries and choking off the supply of talent to socially valuable but lower-earning professions.