House of Commons Business, Innovation and Skills Committee Government reform of Higher Education Twelfth Report of Session 2010–12 Volume I Volume I: Report, together with formal minutes, oral and written evidence Additional written evidence is contained in Volume II, available on the Committee website at www.parliament.uk/BIS Ordered by the House of Commons to be printed 1 November 2011 HC 885 Published on 10 November 2011 by authority of the House of Commons London: The Stationery Office Limited £0.00 Business, Innovation and Skills Committee The Business, Innovation and Skills Committee is appointed by the House of Commons to examine the expenditure, administration, and policy of the Department for Business, Innovation and Skills. Current membership Mr Adrian Bailey MP (Labour, West Bromwich West) (Chair) Mr Brian Binley MP (Conservative, Northampton South) Paul Blomfield MP (Labour, Sheffield Central) Katy Clark MP (Labour, North Ayrshire and Arran) Julie Elliott (Labour, Sunderland Central) Rebecca Harris MP (Conservative, Castle Point) Margot James MP (Conservative, Stourbridge) Simon Kirby MP (Conservative, Brighton Kemptown) Ann McKechin (Labour, Glasgow North) Mr David Ward MP (Liberal Democrat, Bradford East) Nadhim Zahawi MP (Conservative, Stratford-upon-Avon) The following members were also members of the Committee during the parliament. Luciana Berger MP (Labour, Liverpool, Wavertree) Jack Dromey MP (Labour, Birmingham, Erdington) Dan Jarvis MP (Labour, Barnsley Central) Gregg McClymont MP (Labour, Cumbernauld, Kilsyth and Kirkintilloch East) Ian Murray MP (Labour, Edinburgh South) Nicky Morgan MP (Conservative, Loughborough) Chi Onwurah MP (Labour, Newcastle upon Tyne Central) Rachel Reeves MP (Labour, Leeds West) Powers The Committee is one of the departmental select committees, the powers of which are set out in House of Commons Standing Orders, principally in SO No 152. These are available on the Internet via www.parliament.uk. Publication The Reports and evidence of the Committee are published by The Stationery Office by Order of the House. All publications of the Committee (including press notices) are on the internet at www.parliament.uk/parliament.uk/bis. A list of Reports of the Committee in the present Parliament is at the back of this volume. The Reports of the Committee, the formal minutes relating to that report, oral evidence taken and some or all written evidence are available in a printed volume. Additional written evidence may be published on the internet only. Committee staff The current staff of the Committee are James Davies (Clerk), Charlotte Pochin (Second Clerk), Neil Caulfield (Second Clerk), Louise Whitley (Inquiry Manager), Ian Hook (Senior Committee Assistant), Jennifer Kelly (Committee Assistant), Pam Morris (Committee Assistant). Contacts All correspondence should be addressed to the Clerk of the Business, Innovation and Skills Committee, House of Commons, 7 Millbank, London SW1P 3JA. The telephone number for general enquiries is 020 7219 5777; the Committee’s email address is [email protected] Government reform of Higher Education 1 Contents Report Page 1 Terms of Reference 3 2 Higher Education Reform 4 Background 4 The Independent Review of Higher Education Funding and Student Finance 5 The Higher Education White Paper 6 Government communication of higher tuition fees 8 Communications strategy 10 3 Funding: tuition fees and student finance 13 Introduction 13 Teaching grant 13 Tuition fees 14 Postgraduate education 15 Loan Repayments 16 Annual Loan Statements 17 Affordability of the loan system 18 Early Repayment 21 Cross-subsidy 22 Support for maintenance and living costs 23 Student living costs 25 Financial support for students studying at “alternative providers” 26 4 Student numbers 28 Introduction 28 Government proposals 28 Excess demand 30 Government proposals to increase demand 30 Creating a market: the effect of the proposals 33 Fair access 36 “Off-quota” students 37 5 Provision of information, advice and guidance 39 Introduction 39 Key Information Set (KIS) 39 Employment data 40 Provision of information at schools 41 Careers advice 42 Quality of information, advice, and guidance 45 6 Widening participation in higher education 47 Introduction 47 Funding widening participation work 47 Government proposals 49 2 Government reform of Higher Education National Scholarship Programme 50 Fee waivers versus bursaries 52 7 Alternative higher education providers 54 The role of alternative higher education providers 54 Government proposals 55 Access and widening participation at alternative providers 57 Higher Education in Further Education 58 8 The role of employers in Higher Education 60 Involvement in course design 61 Entrepreneurship 63 9 Regulatory framework 64 Quality Assurance 64 Degree-awarding powers and ‘university’ title 65 10 Conclusion 68 Conclusions and recommendations 69 Formal Minutes 77 Witnesses 78 List of printed written evidence 80 List of additional written evidence 81 List of Reports from the Committee during the current Parliament 82 Government reform of Higher Education 3 1 Terms of Reference 1. This inquiry was launched in February 2011 in the expectation of the imminent publication of the Government’s Higher Education White Paper (originally promised for Winter 2010). The Terms of Reference were deliberately broad, in the absence of the White Paper, enabling us to spark a debate about the issues considered most important by students and their parents, universities, academics and employers. Witnesses to this inquiry were invited to submit evidence on the following points: i. The conclusions of the Browne Report and the content of the Government’s proposed White Paper on higher education; and ii. The role and future of state funding in higher education. 2. We are very grateful to all those who gave oral evidence between mid-March and the end of May. We had hoped to take oral evidence on the content of the White Paper, but its eventual publication only three weeks before the Summer recess meant that we were limited to one oral evidence session after its publication, with the Advocate for Access to Education, Simon Hughes MP, and the Minister for Universities and Science, David Willetts MP. 3. In reporting our findings, we have not attempted to re-run the Browne review, nor to address every issue raised by witnesses in what were extremely interesting, enlightening and wide-ranging evidence sessions. We have instead, provided our analysis of the Government’s proposals. While at times we are critical of those proposals, our Report should be seen as a constructive engagement with Government on those issues we consider to be most in need of urgent action. There remain many uncertainties and policy details which are still out to consultation, and we look forward to discussing these with Ministers in more detail when firm proposals are made. 4 Government reform of Higher Education 2 Higher Education Reform Background 4. The proportion of young people going on to higher education has increased dramatically over the last 50 years from around 6% in the early 1960s to closer to 45% today.1 A review by Lord Robbins in 19632 recommended an expansion in university places: this expansion began with the transformation of Colleges of Advanced Technology into universities and continued until the conversion of the former polytechnics in the mid 1990s. 5. The expansion of higher education was accompanied by a drop in available funding per student, leading to the establishment of the National Committee of Inquiry into Higher Education in the late 1990s. This Committee, chaired by Lord Dearing, recommended the introduction of private contributions to the cost of higher education, in the form of tuition fees. Lord Dearing’s recommendation that payment of the fees be deferred until after graduation was not taken on board, and up-front tuition fees of £1000 were introduced for the first time in 1998. 6. The Higher Education Act 2004 raised the cap on fees to £3,000 per year (enabling so- called ‘variable’ or ‘top-up fees’) and introduced deferred payments so that higher education once again became free at the point of entry. These provisions came into effect for students entering university in 2006. Recognising Members’ concern about the potential impact of this increase in fees, during parliamentary debates on the Bill the then Secretary of State for Education, Rt Hon Charles Clarke MP gave a commitment to examine the variable fee regime after three years of operation.3 7. The system of a fee cap envisaged that different institutions would charge different amounts, from zero to the maximum.4 Universities wanting to charge more than the previous £1,000 per year would need to divert some of that fee income into bursaries to support students from lower-income backgrounds and would need to develop an ‘Access Agreement’ with the Office for Fair Access (OFFA), setting out the other measures they would use to widen participation and the diversity of their student intake. In practice, the £3,000 maximum quickly became the standard fee, and no university now charges below this level. 5 1 Jo Blanden and Stephen Machin, Department of Economics, University College London and Centre for Economic Performance, London School of Economics, Educational Inequality and the Expansion of UK Higher Education (July 2003; September 2003—revised) 2 Higher education: report of the Committee appointed by the Prime Minister under the Chairmanship of Lord Robbins 1961-63, Cmnd. 2154 3 HC Deb, 8 January 2004, col 418 4 HC Deb, 8 January 2004, col 418 5 Lord Browne of Madingley, Independent Review of Higher Education Funding & Student Finance (2010), p.37 Government reform of Higher Education 5 The Independent Review of Higher Education Funding and Student Finance 8. Lord Browne of Madingley was commissioned by the previous Government in November 2009 to conduct the promised review of tuition fees. The Review Panel issued an initial call for evidence at the beginning of December 2009, seeking responses from higher education, business, students, and all others with an interest in higher education, and exploring the impact of the introduction of variable tuition fees since 2006.