My Lords, before I discuss fees, I would like first to be clear that the Government welcome genuine international students, and to reiterate the confirmation that I offered in Committee that we have no plans to cap the number of genuine students who can come to the UK to study, nor to limit an institution’s ability to recruit genuine international students, based on its TEF rating or on any other basis.
As well as the link to student numbers, this amendment would remove an important principle at the heart of the TEF: the link to fees. The TEF is intended to rebalance the priority given to teaching and learning compared to research. Funding for teaching is currently based on quantity, whereas research is funded on quality. It was a Conservative Government who first introduced early versions of the research excellence framework. Over the past 30 years, the principle of linking funding to quality has incentivised the UK’s research base to develop into the world-leading sector that we have today. We want to apply the same principle that has driven such continuous improvement in research to teaching. Linking fees to the TEF will provide strong reputational and financial incentives to prioritise the student learning experience.
It is important that high-quality institutions can maintain fees in line with inflation if we are to ensure that the sector remains sustainable. As I pointed out in Committee, the £9,000 fees introduced in 2012 are worth only £8,500 today and will be worth less than £8,000 by the end of the Parliament. If we want to provide the best-quality education in our universities, and to compete with our global rivals, universities need the resource to invest in their teaching facilities. This is why the Universities UK board unanimously supported the link between an effective TEF and fee rises. Some 299 institutions have voluntarily applied to take part in the TEF this year out of about 400: that represents a big majority. This includes the majority of the established higher education sector, including all the English Russell group universities. I think that noble Lords will agree that this represents a very encouraging and excellent endorsement of the current scheme.
Furthermore, as GuildHE said:
“The link between the TEF and inflation increases in fee and loan caps makes sense ... When the £9000 fee cap was introduced in 2012/13, the BIS spending review assumption was that it would rise by inflation each year. Instead, the price has been held flat for four years. Without an increase to take account of rising teaching costs, the ability of institutions to invest in the quality of the learning experience on offer will, inevitably, decline”.
However, there will be no something for nothing. Make no mistake: if this amendment is enacted the sector will lose £16 billion over the course of the next 10 years. This is the value of the funding we intend to make available for institutions through the TEF. We will not allow universities to raise their fees unless they can demonstrate, through the TEF, that their teaching is of the highest quality.
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The noble Lord, Lord Kerslake, has suggested that we might be circumventing Parliament. I would put him right on this: we believe we are not. We will be using the same mechanism that was introduced by the Labour Government in 2004—the noble Lord, Lord Stevenson, alluded to that. All fee increases will need to undergo parliamentary scrutiny as they do now.
This amendment would have a knock-on impact on academic jobs, student experience and regional employment. It would leave our best universities facing a major funding gap. Alternatively, the intention behind this amendment may be to let every university raise its fees, regardless of the quality of its teaching. That position seems very hard to justify. The noble Lord, Lord Watson of Invergowrie, said in Committee:
“Since tuition fees were increased from £3,000 to £9,000 in 2012, there is no evidence to suggest that there has been a consequential improvement in teaching quality … institutions have, in some cases, been shown to spend additional income from the fees rise on increased marketing materials rather than on efforts to improve course quality”.—[Official Report, 18/1/17; col. 253.]
Linking fees to teaching quality, through the TEF, is the only way of providing the necessary incentive for universities to genuinely focus on improving teaching.
Every higher education Minister since the noble Lord, Lord Mandelson, was in post has recognised the need to put in place incentives for better teaching, and we are delivering on a manifesto commitment to do just that. Without allowing financial incentives of the kind proposed, noble Lords will be failing generations of students who want to see their higher education institutions give teaching the same priority as they give research. The financial incentive is already driving improvements on the ground, with some universities reforming their promotion criteria to place a greater emphasis on teaching and others putting increasing effort into narrowing the attainment gap between advantaged and disadvantaged students. We all know that money talks, and linking the TEF to fees is driving change where decades of kind words and encouragement have simply not.
The noble Baroness, Lady Deech, in her impassioned speech, made the point that the TEF will negatively impact on social mobility, but we expect that the TEF will actually support further social mobility—I hope I made that clear in my remarks on other amendments. The TEF metrics are explicitly benchmarked so that institutions that take substantial numbers of students from disadvantaged backgrounds will not be penalised—quite the reverse. Indeed, the Sutton Trust has said,
“we need to shake the university sector out of its complacency and open it up to a transparency that has been alien to them for far too long. It is good that they are judged on impact in the research excellence framework, and that the teaching excellent framework will force them to think more about how they impart knowledge to those paying them £9000 a year in fees”.
The noble Baroness suggests that the TEF and fee link will cement the existing perceived hierarchy among universities. We believe that this is simply not the case. As Edward Peck, the vice-chancellor of Nottingham Trent University says:
“The TEF could redefine the idea of ‘great’ universities”.
Nevertheless, we recognise that genuine and considered concerns were raised by noble Lords in Committee, and we are listening. For this reason, in February the Minister for Universities, Science, Research and Innovation reaffirmed his commitment that a genuine lessons-learned exercise will take place after this trial year. He confirmed that this will review how the metrics are flagged and used to form hypotheses; the balance between metrics and provider submissions; and the number and names of the ratings.
Furthermore, we are bringing in the fee link gradually. For the first two years, all providers that take part in the TEF will receive the full inflationary uplift. It is only in the third year—after the lessons-learned exercise—that we will introduce a differential fee link. The noble Lord, Lord Kerslake, suggested that bronze providers will not get to raise their fees. I say to him that they will be able to charge 100% of inflation until differentiation is introduced. Thereafter, we intend that they will be able to charge up to 50% of the inflationary uplift. The Minister also announced that he would extend the pilot phase of subject-level TEF by an additional year, meaning that the first full year of TEF subject-level assessments will not be until spring 2020. This is a significant delay that reflects the desire of noble Lords not to rush into the TEF, and plays rather well, I think, into the point made earlier by the noble Lord, Lord Lipsey.
We believe that our position is an entirely reasonable one; it has been consistently supported by the sector, which has said:
“Allowing universities to increase fees in line with inflation, on the condition of being able to demonstrate high-quality teaching through an effective TEF, is a balanced and sustainable response to these two objectives”.
It has also said:
“The government continues to demonstrate a genuine commitment to work with the sector as the TEF evolves”.
Similarly, we have listened to and acted on the concerns raised in this House. We have made meaningful changes but this one would go too far. We believe that linking the TEF to fees is the only way to maintain the sustainability of our higher education system while ensuring good value for students. As UUK and GuildHE said in their letter to Peers:
“We believe that adding more to the bill about the TEF (beyond the existing clause which allows this framework to be established) risks damaging the flexibility which is required to allow the sector and government to work together to achieve a tool which is ultimately useful for students, staff and employers”.
In addition, in an op-ed today on the TEF, Professor Sir Steve Smith from Exeter University said:
“I, like every other member of the Universities UK Board, support the link between an effective TEF and fees. In order to provide the best quality education and student experience in our universities it is essential that we are allowed to maintain our fees in line with inflation—but it is entirely reasonable of the government to demand in exchange that we are providing a high quality education”.
I therefore ask that Amendment 19 be withdrawn.