My Lords, I will respond to Amendment 2, tabled by the noble Baroness, Lady Garden of Frognal, and Amendment 5, tabled by the noble Baroness, Lady Twycross, and also in the names of the noble Baronesses, Lady Garden, Lady Wilcox of Newport and Lady Thornton. I will speak also to Amendment 6A, tabled by my noble friend Lord Johnson of Marylebone. These amendments seek to put the number of notional learning hours that constitute one credit in the Bill, to limit the default credit value to a maximum of 20 credits, and to allow certain higher education providers to increase their tuition fees automatically each year in line with inflation if they have a teaching excellence framework rating.
Amendment 2 would define in the Bill a credit as equivalent to 10 notional learning hours. As has been set out in the other place, while it is crucial that the definition of credits in the fee limit calculation aligns to standard practice in the sector, the Government plan to set this out in detail in secondary regulations, rather than in primary legislation. The power to do so is provided for in new paragraph 1B of Schedule 2 to the Higher Education and Research Act 2017, introduced through Clause 1 of this Bill.
Specifying the learning hours in secondary legislation, rather than primary, means that providers which might choose to use a different number of learning hours per credit will simply have those courses treated as non-credit-bearing for fee limit purposes. If we took the approach of this amendment, those same providers could instead be considered in breach of the fee limit rules as a whole, with all the regulatory consequences that that might bring. The Government do not intend
to change the number of learning hours in a credit unless standards in the sector change: learning hours are, and should continue to be, based on sector-led standards. Regulations on learning hours will follow the affirmative resolution procedure, so Parliament will always get the opportunity to debate and formally approve any changes to those regulations.
Amendment 5 queries the extent to which the Government are prepared to fund modules of fewer than 30 credits through the LLE. As I referred to in my response made at Second Reading, and as set out in the Government’s consultation response, modules must have a minimum size of 30 credits for funding purposes. This is in line with the recommendation in the Augar review. None the less, as the noble Baroness, Lady Thornton, pointed out, it will be possible to bundle two or more modules from the same parent course to meet the 30-credit funding requirement.
This amendment also refers to the default credit value. If your Lordships will permit, it may be helpful to provide the Committee with some further detail on the purpose of this value. The default credit value is intended to allow fee limits to be set on full courses that do not bear credits or on full courses that are more suited to annual fee limits than credit-based fee limits. For example, this could include some degree programmes at Oxford and Cambridge or sandwich years where the provider has not assigned credits. It could also include courses such as postgraduate certificates in education or first degrees in nursing. For these types of study, a default number of credits will be used in the fee-limit calculation, instead of any provider-assigned number of credits. These default values will be set at 120 credits per year for full-time courses, with other amounts for other intensities, all of which will align with sector-recognised standards. The default credit values will not apply to modules undertaken separately from their full course. As all modules funded through the LLE will be required to bear credit, they will always have the fee limit calculated using the provider-assigned number of credits, not a default number of credits.
To be clear, the default credit value applies only to full courses, not to modules. If default values are all set at 20 credits, that would mean that, for example, Oxford and Cambridge would be allowed to charge for only 20 credits a year for their degrees, instead of 120 credits, which I am sure is not the noble Baroness’s intention. We would not want providers to be limited to being able to charge for this number of credits per year.
I now turn to speak to Amendment 6A, tabled by my noble friend Lord Johnson of Marylebone. It is clearly vital that our higher education sector remains on a sustainable financial footing. It is an important contributor to our national economy, and it is something that we excel at as a nation. That is why the Government keep all elements of student finance and higher education funding, including fee limits, under constant review. We have said that fees will remain frozen until the start of the 2025 academic year. This ensures that students and taxpayers continue to receive value for money. However, we are also investing an extra £750 million in higher education teaching and students over three years
to 2024-25 through the strategic priorities grant. This will help providers to fund their provision of high-cost subjects, such as medicine, science and engineering, and help students to succeed.
We provide support for the sector through subsidised fee loans. This is our investment in the skills, people and economy of this country, and one that is even more important in current circumstances. A continuous automatic increase in fees in line with inflation would undermine the incentive for providers to find efficiencies in their business models or to develop other sources of revenue to diversify their income and achieve sustainability in ways that benefit British students and British taxpayers. Despite current pressures, the Office for Students found in its latest report that the overall aggregate financial position of the sector remains sound, though there is variation between individual providers.
I remind the Committee that overall tuition fee income in English higher education providers has increased in cash terms from £13.7 billion in 2014-15 to £21.6 billion in 2021-22, an increase of around 58%, but there are significant differences in income and student number growth between providers. Some providers have increased their student numbers significantly in recent years, in particular in business and management courses, which have grown rapidly. With the public outlay to support students to go to university having increased so much in recent years in cash terms, the rapid, localised growth that we have seen in some courses and at some providers emphasises the need for us to ensure that the quality of provision remains high, so that students can achieve the employment outcomes that they are looking for and the economy benefits from our considerable investment in higher education.
As my noble friend understands very well indeed, fee income from domestic students is just one element of the income mix of higher education institutions. Obviously, there is income from international students, research fees and funding institutes, as well as commercial income. There are questions that the Government would be keen to work with universities on, and, if helpful, I would be happy to meet my noble friend or providers to think about the scale and breadth of courses offered by individual institutions and groups of institutions within an area, as well as about how the cost base of institutions will develop in future.
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I thank my noble friend for raising a valuable discussion on this topic. The Government absolutely agree with him that a sustainably funded higher education sector is vital to our national economy and to the prospects of the many thousands of people it educates every year. However, the Government do not believe that it is fair to students to increase tuition fees at this time. Therefore, I ask him not to press his amendment. For the reasons set out earlier, the Government cannot support the other amendments in this group.