Education Committee 

Oral evidence: Accountability hearings, HC 341

Tuesday 23 July 2019

Ordered by the House of Commons to be published on 23 July 2019.

Watch the meeting 

Members present: Robert Halfon (Chair); Lucy Allan; Ben Bradley; Marion Fellows; James Frith; Emma Hardy; Trudy Harrison; Ian Mearns; Lucy Powell; Thelma Walker; Mr William Wragg.

Questions 2523 - 2595

Witnesses

I: Rt Hon Anne Milton MP, Minister for Apprenticeships and Skills, Department for Education.

II: Philip Augar, Chair, Professor Edward Peck, Member, and Matt Toombs, Secretariat, Independent Panel, Review of Post-18 Education and Funding.

Examination of witnesses

Witness: Rt Hon Anne Milton MP

Q2523  Chair: Good morning. Thank you very much for coming. We just watched, in private session, the video of the T Levels, which looks excellent. Thank you for bringing it to the Committee. Is it public now?

Anne Milton: I should stress that this is not a promotional video. I asked officials to put these clips together from some of the promotional material that will be going out, so it was really just for you. That in itself will not be going out on its own.

Q2524  Chair: Okay. We will start formally now, thank you. In your response to the latest apprenticeship and levy stats, you said you are very pleased that the number of people starting an apprenticeship has increased by 7.1% compared to last year. I have tweeted that that is very good news. But there has been a sharp fall in opportunities for young people in under-19 starts, falling by 23% since 2016-17, while 25-plus starts have shot up by 34%. There has also been a serious fall in level 2 starts. Across all ages, starts have fallen by 51% since 2016-17. Are you concerned about the decline in under-19 starts and level 2 starts?

Anne Milton: The reasons are quite complex. In the last figures I looked at I think 82% of all starts are level 2 or 3, but you are right to raise it. I think 16-year-olds are doing other things. There has been a big drop in the retail sector and there were quite a lot of level 2 starts in the retail sector. I am not worried as long as young people are doing something that is useful. Are some of them staying on to do level 3 qualifications? I think that is the case. T Levels will be another option for them. Some of the 25-year-olds and some of the apprentices that I have met are people who did not get very good level 2 qualifications and have not been in a very good job, so I am as keen for them to get on an apprenticeship as I am for a 16, 17 or 18-year-old to get on one.

Q2525  Chair: Does the Department take a view of what—apart from retail, which you mentioned—is driving this huge drop in younger people doing apprenticeships and level 2?

Anne Milton: It is of note to the Department, so we are watching it and looking at a decline in sectors that might have had an impact on that. We are very mindful of it. As with everything on apprenticeships since the reforms in 2017, we have to keep a watching brief on what is going on, what choices young people in particular—but also older people—are making, to make sure that if we need to intervene in it we will be able to do so.

Q2526  Chair: What specific plans are you looking at to stem the drop?

Anne Milton: It is not just about stemming the drop. We need to find out what they are doing instead. If they are not in education, employment or training, we are obviously worried. If they are leaving at 18, say, and doing low-skill, low-wage jobs, we are concerned because I would like them to be on an apprenticeship. We need to keep a watching brief and if we need to intervene we should, but I think it would be too early to do so at this stage.

Q2527  Chair: When would be the right time?

Anne Milton: I think you need to look at the trajectory. You need to see if it continues to drop. You need to look at that information alongside other information, like NEET data, and also to find out what is happening to them doing level 3. If a lot of the people who would have done a level 2 apprenticeship stay on and do level 3 qualifications that they do not succeed at or drop out of halfway through, we probably need to make sure that there is better advice given to those young people.

Q2528  Ian Mearns: As a supplementary to that, Minister, you talked about NEET data and seeing what is happening to young people who are not in education, employment or training. As the Minister for this level of education, does it not concern you that we now seem to have a new category of NEETs who are pre-16 because of off-rolling and exclusions?

Anne Milton: I should mention that I am not the Schools Minister.

Ian Mearns: I know that.

Anne Milton: I do have discussions with the Schools Minister, and I know that they are very concerned about off-rolling and they are looking at the data of that for sure. It is another discussion and possibly not for today, but, if you look at young people who are NEETs and people who have been out of work and those who are in low-paid, low-skilled work, there is a whole piece of work that we need to do about those young people, who often have been in alternative provision. I don’t think at the moment we are necessarily as well co-ordinated as we should be. That will involve more than saying that we need to work jointly with DWP, but we do and with education providers as well.

Q2529  Chair: To go back to this under-19 starts fall of 23%, do you have any sort of figures or analysis as to why that has specifically happened?

Anne Milton: I think it is a combination. The Committee would be best served if I put something in writing to you about that, because it will be quite an extensive analysis.

Q2530  Chair: I was talking about the level 2, but in terms of addressing that?

Anne Milton: Yes, I think that would probably be best because it is quite a complex picture.

Q2531  Chair: In our Committee report last week on school and college funding—and I should add that I know you have been a brilliant advocate of trying to get more college funding and are quite passionate about it and you have said it time and time again—we noted there was a real terms funding per student decline of 16% since 2010-11 and 2018-19 for further education. How hopeful are you that that shortfall will be met and that we will get proper increased funding for further education?

Anne Milton: Through the spending review. I am a big advocate of FE funding because often those who go into further education are young people who have possibly not done well in the existing school system, but that is not universally the case. There are a lot of young people with special educational needs. There will be a lot of young people who have been on alternative provision or who, after 11 years of education, have not been able to get adequate level 2 qualifications. They need input that is more intensive and almost more expensive than it would be for the students who are sailing through. I feel very strongly about it. It is still about 50% of the population that do not go to university and so I do feel very strongly.

I know you are seeing Philip Augar later, but I know the emphasis in the Augar report on adequate funding for FE is part of it. It is also the case with adequate education where the budget has fallen significantly more.

Q2532  Chair: That is a good segue. In adult education, the employer investment in training fell by 42% in real terms between 2005 and 2011 and there are no signs that it is about to hugely pick up, the levy aside. Do you not think we need radical changes to lifelong learning, for example either restructuring the existing tax reliefs that are available for research and development to incentivise business to retrain their workforce, or perhaps having a social justice tax credit of some kind, again incentivising people to retrain their workforce, especially given the march of the robots and automation and what is to come as well as the existing problems we face already?

Anne Milton: I will mention a little about the National Retraining Scheme. I am not well placed to decide what Treasury incentives would be best placed to encourage alternative behaviour. What you have to be very careful of is that you do not incentivise people and then end up with insufficiently good training and employers just using it as an opportunity to get hold of those incentives. It has to be high quality. We are starting a pilot of the National Retraining Scheme in Liverpool in the summer in a very small and confined way. That will grow. A lot of the early work—I think frustratingly for some—was absolutely essential if you want to get the lifelong learning idea right.

We have looked at what incentives people need to retrain, because lifelong learning is a concept that is very attractive to people who enjoy learning. If somebody said to me I would have to learn for the rest of my life, I would be appalled. A lot of people when they leave education are very thrilled that they don’t have to do it, so it needs to be packaged in a way that encourages people to take it up. You need to take into account their personal circumstances. Some people might have one or two jobs, be a lone parent or have young children, so you have to look at the practicalities of their lives and how they will learn.

Although ed-tech has a big role to play in this—as the early research would suggest—that is not enough on its own. You can’t tick the job as done by asking people to do online courses, because some people need mentoring and encouragement. Some people would prefer to learn at their homes. There is all that research and we are building on that as we roll this out.

Q2533  Chair: Something like 49% of adults in the lower socioeconomic groups have had no retraining at all since they left education. Do you think one idea might be to have an adult community learning centre in every town across the country?

Anne Milton: It is too early to say that, because learning at home in the evenings might suit some people but others would benefit enormously from a joint enterprise of learning with others. We should not be prescriptive because the research we did before the NRS starts to roll out suggested that you need quite a bespoke offer for people.

It is interesting that you mentioned 49% because 49% of adults have the maths skills of an 11-year-old or less. We know that people who have had some training probably do not have enough training to get on and get a better, well-paid job.

Q2534  Chair: Finally before I pass to my colleagues, on the Baker clause the DfE survey of FE providers suggested that only 5% of respondents think all schools in their areas allow providers proper access to their pupils, and there have been other investigations. Can we really rely on an ad hoc system of whistle-blowing to make sure schools abide by their legal obligations in terms of the Baker clause? Would it not be better to provide greater weight to the clause by making the consequences of evasion more serious?

Anne Milton: It has been quite a focus for me. You have to allow schools and colleges to adjust. What is important is the action that Ministers take in response to that low compliance. There was a big focus on it in National Careers Week. We have shared good practice in Tes. I wrote to all local authorities and included that information elsewhere. I wrote to the five large MATs to make sure that they publish compliance arrangements on their websites. I have written to schools where we have had notice of non-compliance. Ofsted grade descriptions set out expectations on it, which I think will be an important part of it. We are trialling a letter to parents in areas where T Levels are being delivered, for instance. We need to do a lot more and we need to bear down and maybe more is needed to make sure that we do get compliance.

Q2535  Chair: What would “more” be?

Anne Milton: More for me now is about checking the compliance and then personal letters to headteachers and governors. The governing bodies have a big role to play in this.

Q2536  James Frith: Good morning, Minister. On T Levels and work placements, could you give us a sense of your assessment of the range of employers at the table through the work of the pilots with colleges and FE institutions now, with specific reference to where we have a mix of both public and private sector, large and small employers, or any distinction between rural and urban or coastal? The question is motivated to understand whether or not there will in fact be enough placements available for the students taking them. If you have any ideas on numbers, that would be very helpful.

Anne Milton: The most challenging thing about T Levels is industry placements. That is why I asked for that little video to be put together so you could see where it is working well, but that it is not job done. The pilots have been fascinating. We estimate that 8,000 to 9,000 equivalent T Level placements will have been provided—and that is up to the 315 hours—and we expect that to go up substantially.

It was useful that we had an employer that worked for a local authority because local authorities, the public sector, have a lot of opportunity to offer these placements. A lot of them will do digital. Some might well have construction projects going on on fthe ground, and they probably will not be delivering it themselves. There is a lot of opportunity.

We are not worried, but this is really new stuff for employers. There is a £60 million capacity and delivery fund, and it is interesting that you asked about the difference between urban and rural areas. What was quite interesting through the pilots is that some providers in rural areas have done it really well. What is critical is that this is not something that can be added on by the provider. You can’t ask a teacher in that area to just go and get some employers. You need a proper infrastructure within the provider organisation to work with the employers that you have.

It is about finding the sweet spot between the employer and the provider, because some employers might want young people in after midday, for instance. The provider needs to be able to adapt the industry placements around the employer’s needs and it is about finding that sweet spot. The National Apprenticeship Service has worked with over 11,000 employers so far, as part of the industry placement matching service, and we need to expand that.

We are starting in quite a small way with T Levels. We are expecting 2,000 in the first year—probably growing to 100,000 in a steady state—and as we grow the programme we will grow the involvement of employers. Those stories you heard from employers are critical to persuading other employers to take on somebody. The critical thing that did come out, is that this is not like work experience. In two-week work experience the person is felt to be a bit of a burden but if you have 315 hours, approximately 45 days, it is a proper programme and the young people can do something very specific. I would not underestimate the challenge.

Chair: Very gently, because we have lots to get through, if we can be more focused. We are going to finish before 11.00 am, so we have a lot to get through.

Anne Milton: Sorry. I am concentrating on it. I do not underestimate the challenge, but I think we have made extraordinary progress.

Q2537  James Frith: You mentioned 89,000 placements.

Anne Milton: It is 8,000 to 9,000. It is not 89,000, gosh.

James Frith: Okay. I was coming back to that number. You expect 2,000 in the first year; is that right?

Anne Milton: Two thousand in the first year.

Q2538  James Frith: In the guidance it talks about students in part-time work and that days in part-time work can contribute to that placement time. Is it a good idea if they happen to be in work that that contributes to a core part of a technical qualification?

Anne Milton: What matters with an industry placement is that it is meaningful. The T Level team and the ministerial team have been very clear that it has to be meaningful. The issue comes up as to whether you can have an industry placement with more than one employer. In some circumstances you can probably agree to two, but with any more than that it stops being meaningful and becomes like work experience. There is a distinct difference between work experience and that industry placement and, if T Levels are to be a success—which we want them to be and I have no doubts now, a year on from when I was last before you, that they will be—it is all around that industry placement.

Q2539  James Frith: What support will the employer get for those 45 days?

Anne Milton: That will be through the provider. The capacity and delivery fund is allowing the opportunity for the providers to support the placements.

Q2540  James Frith: From that 8,000 to 9,000, how will we get to 2,000 placements in time or is that relying on multiple placements in each employer?

Anne Milton: Yes, a lot of employers will take on more than one student, for sure. In the pilots we had some of the quite small businesses taking on five or six students at any one time, which can work quite well for them. In things like education and childcare there has been quite a long tradition of industry placements with employers, so for some providers and with some T Levels this will be the sort of thing they have already done.

Q2541  Thelma Walker: Good morning. Thinking about placements in rural areas, the concern is that there is a lack of funding currently to support students in accessing the placements. Will there be additional transport support included in the DfE’s plans to improve this support?

Anne Milton: In the pilots in one area they bought or hired a minibus—I can’t remember the details, but I can send them to you—because it is an incredibly rural area, and with some of the money that they had been given they bussed the children to their placements. As T Levels roll out, we need to make sure that we can cover all the areas we need to, because we do not want cold spots on T Levels.

When they are fully rolled out—and this is me looking a long way into the future—maybe you have industry placements done in a sort of summer school type setup, where you use existing residential accommodation when there is not an opportunity to do a placement near where you want to do your T Level.

The really remarkable thing about these first three T Levels is how well the civil servants here behind me have worked with the providers, and we have adapted as we have gone along in response to provider feedback. They are keen to make it work and we are keen to make it work, and it will only work if we listen to what their experience is on the ground.

Q2542  Thelma Walker: Thinking about the actual placement—the 45-day placement—the Social Mobility Commission voiced concerns about young people from disadvantaged backgrounds not having access to the higher quality placements and students from more advantaged backgrounds, who are often more articulate, being able to secure higher quality placements. What are your thoughts on that?

Anne Milton: That is entirely valid. I think Emma Hardy has heard me talk about middle classes with pretty sharp elbows before. It will not be for the students to find their placements. It will be for the provider to set up the placements, so the students are not going out, otherwise we would get exactly what you are talking about. It will not be for the students to find their placements. That will be part of what a provider has to do.

Q2543  Thelma Walker: What would the criteria be for the provider? If you look at the index of need, the individual student’s background, would they bear in mind that index of multiple deprivations, for instance?

Anne Milton: With respect to—

Thelma Walker: With each student and their background and access to a placement.

Anne Milton: Yes. Students will need to be prepared properly for their placements. There will be some kids who can walk into a workplace, who have done work experience with their families and have access to that sort of experience. There will be some kids who have never done that.

Q2544  Thelma Walker: Will the provider be aware of that? There are the areas of family structure, skill level, disability, age, and demand for labour. Will all of those things be borne in mind?

Anne Milton: That is right, yes, and we have made provision for people with special educational needs to allow some of the industry placements to be on site, not necessarily in the workplace. We are very keen to make sure that access is flat and equal.

Q2545  Lucy Allan: Minister, I would like to take you back to lifelong learning and adult skills. As a Committee, we are very concerned about social justice as an issue and I do feel that participation in adult learning is an extremely important social justice issue. In figures released by the DfE, we see participation in adult learning at an all-time low. We see a continuous year-on-year decrease in participation rates. I want to understand why, and I want to understand what your Department is doing about that.

Anne Milton: The adult education budget has gone down substantially, so that must be in there; that must be part of it.

Q2546  Lucy Allan: Is that because the Government are not committed to adult learning?

Anne Milton: It is about the Government saying there was a greater priority at the time. Governments never say something is not important. They just say that something is more important than something else. There has not been the focus on that, but I would share the Committee’s concern about adult learning. The NRS is starting to fix some of that. I would praise the TUC with its working on this—it has been brilliant, as has the CBI—and unionlearn is a very good vehicle and way of getting people who otherwise would not be happy or confident to undertake further training.

We need to talk more about adult training not education, because if you have had a negative experience of education you do not want to go into education. We are much better to reframe it around adult training, which I think is more acceptable. If you have felt very foolish all the way through your school years because you kept failing things, somebody suggesting you do it again is not going to feel very attractive. I absolutely share the Committee’s concern. We are introducing a basic digital skills entitlement from 2020 and I think that is an important part of it.

Q2547  Lucy Allan: Could you say something about the outreach work that is being done in order to engage with the adults that we want to see participate?

Anne Milton: At the moment the NRS is where a lot of this is happening. Last week we published the results of the flexible learning from the career development pilots. Those address many of the issues that we might all have in mind when we are talking about access, ability to learn, how people learn, the rural-urban problems, the use of ed-tech and all those sorts of things. Those are important to inform how we do it.

From having sat in this position for two years, the most important thing is that a lot of these decisions are made by people who would have no problem learning anything, who are possibly better educated than many of the people that we are talking about. We are not necessarily well placed to decide for that group of people how to do it, so what is really important is the background research. We need to get able people to train, upskill, get a better job, around what are often very complicated lives and a cohort of people who have very little confidence in their ability to train or learn more.

Q2548  Ian Mearns: This is a three-part question, Minister.

Anne Milton: Right, multiple choice.

Ian Mearns: What do you think are the main barriers that are faced by disadvantaged individuals when it comes to participating in adult education and skills? What assessment have you made of those barriers? What are the barriers and what are you doing to address those barriers?

Anne Milton: What is really important is not to lump everybody who has been disadvantaged into the same pot. The danger is—as we often do in this place—that we talk about disadvantaged people as if they are a homogenous group, and they are not. They are disadvantaged for a multitude of reasons. For a chunk of them it is about educational attainment up to 16. Without a doubt that is a big chunk of them. It is not necessarily because they are not bright. It is because we decided that we are going to assess people at 16 and 18 and there are plenty of people who do not want to be assessed at that age.

It is still true, which I think it is pretty shocking, that you get through 11 years of schooling and despite the best efforts of many teachers—I am looking at Thelma at this point—you cannot pass your level 2 qualifications adequately at all. That is one barrier. With that a lot of other barriers get put in place: low self-esteem, lack of confidence, low aspiration and, probably because the only job that you can do is quite low skilled and low wages, you pile on top of that low income. The barriers compound as they go along, which is why it is so important that we take a quite bespoke attitude to this.

What is extraordinary—and I might have said this to the Committee before—is why is it that somebody suddenly starts to retrain? I met a woman who had no qualifications. She had three children all in their late teens and suddenly she decided to go back and do level 2 qualifications. When I saw her she was just completing a level 5 foundation degree and I said to her, “What was it that sparked your interest in doing this? You have a busy life. You are a single parent, three teenagers. Good heavens” and she said, “Because I thought I was worth it”. The role of self-esteem and confidence is very significant within people who are disadvantaged.

Some people are disadvantaged because they have special educational needs or they have poor social capital, so they don’t have families for whom learning or continuing to upskill or retrain is something that they do. There are multiple barriers that compound on each other.

If we are truly to do something about it, it will not make headlines. The last thing I would like to see is a Government headline launching some incredible scheme that has not been thought through. Lots of Governments of all political persuasions have wanted to do something about this for a very long time and they have not done it, not through lack of goodwill and intent but because it is complicated.

Nick Gibb needs to sort out education so that you do get through 11 years of school with good qualifications. I know that we are making progress on that—and very good progress—but nonetheless we will always be left with a cohort of people for whom school does not work.

Q2549  Ian Mearns: The next time we have the Minister for Schools in front of the Committee you are more than welcome to join us. I couldn’t agree more with the vast majority of what you said. One of the things that particularly struck a chord with me earlier on in your comment was about people on low income. We do know that now, because of the nature of much of the new work that is in the jobs market, people are in combinations of part-time jobs, in precarious employment and low pay but on a treadmill just to keep things together.

Anne Milton: It is difficult when you are on a low wage and you know you could get a better wage, but you simply can’t afford to take the time out. That is why apprenticeships are brilliant. Why I have the best job in Government is because I see some of the people that we are talking about who have had an opportunity to upskill and retrain through an apprenticeship while still earning a wage.

It goes back to not just people who are NEET or people who DWP work with, not just those who are not in employment, but we have to suck in the people who are in low-skill, low-wage jobs because they really are one group. At any one time that person might be in work, but it is likely to be insecure work. It might be seasonal work. You have to address those two groups together—the low-wage, low-skill workers and the unemployed—and then we need to continue to provide opportunities.

Q2550  Ian Mearns: Therefore, does it concern you that we have had a significant tail off in the number of adults who are applying to go to the Open University, for instance? The Open University is now backfilling a lot of the courses that they used to provide for the people of this country with overseas students. There is nothing wrong with that, but what it means is that an awful lot of people for whom the Open University was meant are not now able to engage its services.

Anne Milton: I don’t do higher education, but I am aware of what you are saying. I do know that. Are some of the people who used to do OU now able to go to university? Do you see what I mean? I don’t know what the trade-off is between the two, so I don’t know whether that is the reason. But we have organisations like OU and unionlearn. We have a real appetite from employers—although you saw it on T Levels—which is something to do with Brexit, but I think it is there anyway, realising that they also have to be involved in upskilling, retraining and apprenticeships. I have been nothing but inspired by the stories of people who did not have any qualifications who go on to get them.

Q2551  Lucy Powell: Thanks very much, Minister. Can I say, because I might not get an opportunity later—who knows what the next few days will hold and whether people will stay in their office or what have you—but it has been my pleasure to work with you as the FE Minister? You have been a very open, approachable and fair Minister, so thank you very much for that and hopefully we will keep you, but who knows.

Anne Milton: Thank you. That is very kind.

Q2552  Lucy Powell: Can I ask about the devolved adult education budgets? They are finally now being devolved, but later than originally hoped. There is a lot of concern that because of the statutory requirements therein that there is not going to be that much scope for the devolved combined authorities—including Greater Manchester and others—to really do much different with them. What do you think about that?

Anne Milton: Be it me or any other Minister that comes into this role, meeting with those devolved areas is going to be important. I had a meeting and four of the mayors turned up and those who could not come sent their officers. It is very interesting to see how they are approaching it and they are doing very different things. In one authority most of the money was spent in the city centre and they have completely changed, and they are going out into the more rural areas, the harder-to-reach groups. They are all taking a different approach. The devolution of adult education could work very well.

What is tricky—and this transition is tricky—is when you have both systems running. That is always going to be a challenge. There are constraints about how it happens, and I am not sure whether that can loosen up in the future.

It was delayed to some extent because the authorities did not feel quite ready to take it on, so we are on a little bit of a pilot phase. We need to see how they get on. The mayors and their teams have worked very well with civil servants here. In a way, in learning for adult education generally, I would like those authorities to be seen as pilot test beds. Some of them will do things that work well and some of them will try things that do not work well at all. It is important that we continue to work with that group of combined authorities to gather the best practice from them all. It is very difficult for people to share best practice. Nobody ever likes sharing anything and when they do nobody takes it on, but it is important because the learning will be very important.

Q2553  Lucy Powell: The adult education budget for those devolved areas is still quite small. It is a very small part, and local employment markets, local markets, do demand different approaches to the skills agenda. Would you be in favour of a faster approach to the devolution of post-16 skills budgets, which would be significantly bigger pots of money to play with?

Anne Milton: I know that the combined authorities would love to get their hands on more money, for obvious reasons. The overall envelope of the adult education budget is small. It has gone down substantially and that is one of the problems. I would be reluctant to devolve apprenticeships because it gets incredibly complicated, to be absolutely honest. The apprenticeship system is not perfect by any means, but it needs to be left alone for the moment.

Q2554  Lucy Powell: I suppose my point is about the principle: do you think that for a local jobs market and local industry, those decisions about supply are better taken at a local level than they are by central Government?

Anne Milton: Generally, yes, but you have to be slightly careful. The Skills Advisory Panels will be an important way of informing local areas and local areas being able to identify what their needs are. We need those up and running well before you talk about what money might follow that. I do not think it is beyond question, but the Skills Advisory Panels need to be running first and adult education devolution needs to bed in.

Q2555  Chair: This devolution issue is an incredibly difficult one. I agree with that, but do you think there is potential for confusion? If you take an FE college, for example, that is getting some of its money from devolved budgets for adults and some of its money from the centre for pre-adults, there is going to be a lot of confusion about pots of money and funding streams and so on.

Anne Milton: Further education is complex anyway and this does add another complexity, I don’t doubt that. I don’t think it makes it the wrong thing, but it is complex when we do not have devolution across the country.

Q2556  Emma Hardy: Adding to what Lucy said, thank you for your help and support with Hull College and everything that they went through. I am sure that you have been up all night reading our report on school and college funding as one of your key things to read. What are your thoughts on the idea of increasing pupil premium up to age 18? I know I have asked you about this in the past, but hopefully the compelling case that we made in our report might have convinced you that there is a need to extend the pupil premium.

Anne Milton: Money needs to be available, and it goes back to a little bit earlier. I do not feel well placed to decide what the vehicle is for doing it. Further education has disadvantage funding of £127 million that is distributed. I am not sure whether that is the way that one should do it or whether it should be through pupil premium. It should be looked at for sure.

Q2557  Emma Hardy: One of the other things you were looking at is how there could be greater data sharing. This was seen as an obstacle to identifying pupils from disadvantaged backgrounds with the Department for Work and Pensions sharing more accurately with Education. What are your thoughts on that?

Anne Milton: Government Departments are generally very bad at working together. It needs ministerial drive. Government Departments do not like pooling resources because they always see this as a possibility for Treasury to cut the overall envelope. That might be the case, I don’t know, but that is not a reason not to work together. DWP and Education need to work very closely together, much more closely than we are, on adult education, low skills and unemployed people.

I have been saying that rather than traineeships we should be talking about pre-employment programmes. There are some people who need a very closely supervised mentor programme, but there are some people who just need pre-employment training that could be done more easily. The way to get that working is probably for us to share a budget with DWP and work with DWP. There are five different Departments with a budget for ESOL, which is ridiculous. There is Justice, there is us and there is DWP. I can’t remember them all, but this is not a good way to distribute what is quite a small budget. It can’t be the best way.

Q2558  Emma Hardy: I was talking to Scope, the charity, recently. One of the suggestions it made was for there to be a Minister for Disabled Children to work across the Department for Work and Pensions and the Department for Education to look holistically at disabled children. Is that an idea that you would encourage?

Anne Milton: I can see where Scope is coming from, but in fact that is just trying to cure a problem. If DWP and Education work closely together that will not be a problem. What I am saying is that real joint ministerial tie-up is the way to do it.

Q2559  Emma Hardy: On a slightly different topic—going back to T Levels—one of the suggestions that was made to me was that T Levels might be more successful if they could be mixed with A Levels. Could you see this in the future as what could happen, so you could take a Technical Level in something and A Levels?

Anne Milton: We have not precluded that. I think that with some of the qualifications there is an obvious fit with A Level maths, and we are looking at other options at the moment, but definitely I think allowing some sort of mix is possible. We do not want to put people off doing full A Levels but maybe there is a role for AS Levels as well. Definitely, maths is the obvious one, but it might be biology or chemistry, if you think of the health and science route. They would be obvious ones to do alongside.

Q2560  Emma Hardy: Would you see that as the path as we go forward?

Anne Milton: Yes, I would see that. T Levels is a big programme. One should not underestimate how big a programme it is, so it would not be for everybody, but it would be for some.

Q2561  Marion Fellows: It is really nice to see you here, Anne—old sparring partners as Whips. I want to ask about student loans. Sorry, Chair, am I right?

Anne Milton: I am not really a student loans person

Marion Fellows: No, sorry.

Q2562  Chair: I beg your pardon. I can’t believe that we have galloped so far that we are going into the next session. I will ask one final question. I know you said the levy has to bed down but if you had a magic wand and you were able to make one or two changes to it, what would they be?

Anne Milton: This levy was like turning around an oil tanker. Business was very cross about it. It has got used to it and now it is rolling with it. We need to let this bed down for another two years. If you look at, say, the nurse apprenticeships figures, there has been a massive increase in associate nurse registration. You can feel these programmes growing. Employers have put in place proper teams to get apprentices. It is the biggest enabler of social mobility that I have ever seen.

Q2563  Chair: You would make no changes?

Anne Milton: There is a lot we need to do. We need to be properly auditing standards and properly looking at pricing of standards. What is needed now is a flow of cash.

Q2564  Chair: Talking about cash—and again you read my mind—could the £60 million that goes to help providers and apprenticeships in deprived areas be better spent, still helping disadvantaged but, let’s say, it went to bridging organisations like the Workers’ Educational Association or Prince’s Trust or whatever it may be rather than just going into—

Anne Milton: The Education and Skills Funding Agency constantly needs to bear down and look at where money is spent and is it spent well. Although the system needs stability, it needs more money into it without a doubt and should not have a dramatic shift or change of direction. There are a lot of things around the edges that we need to do. We need to look at the provider market, the progression of apprenticeships, which is very important to me. There is no one apprenticeship that is better than another, so we need to look at where that is spent, and could it be spent better elsewhere. I think probably not, but we need to constantly look at the apprenticeship programme as it goes along, look at provider behaviour and employer behaviour.

Q2565  Chair: Given that you said that the Apprenticeship Levy is a real engine of social mobility, would you foresee it being extended perhaps in the future? At the moment, obviously you know it is just 2% of companies that pay it. Would you either increase the levy to the existing companies or extend the number of companies that would come under the umbrella of the levy?

Anne Milton: I don’t know what is the best thing or the right thing to do. You have to get the money. There are only two sources of money, from business or from Government. If the apprenticeship scheme is to continue—and it has its critics—are we paying for apprenticeship training when short, bite-sized pieces of training would be better? I would query that. If you want to improve productivity and enable social mobility, without a doubt, this is the best way of doing it.

Q2566  Chair: Do you think it should be extended at some point, either to increase the number of companies that come under it in terms of the wage bill or to increase the existing levy to the existing companies?

Anne Milton: I think not this year because business has only just started feeling that it is getting something out of it. There might be an appetite when it really feels that it is getting something out of it. You need to go with the grain a bit. It needs to come from there or from the taxpayer.

Q2567  Chair: You would consider it in the future?

Anne Milton: Well, you have to keep it open.

Chair: I think Emma and Lucy speak for all of us. Thank you very much, because you are such a passionate advocate for FE and that has been very clear. Given that Hull College was mentioned, thank you for visiting Harlow College earlier; that was a great visit. We wish you well. Thank you.

Anne Milton: Thank you very much.

Examination of witnesses

Witnesses: Philip Augar, Professor Edward Peck, and Matt Toombs.

Q2568  Chair: Good morning. It is a real pleasure to have you here. Whether we agree or disagree with the work, it is a serious piece of work. It is also good to have someone from one of my favourite universities in the country before my Committee. It is genuinely an inspirational university. I visited it a lot in my job and it is a fantastic place.

Lucy Powell: I will just say that he does say that a lot when you are not here as well, I can assure you.

Chair: Can you please introduce yourselves for the benefit of the tape and for those watching on the internet outside?

Philip Augar: I am Philip Augar. I chaired the panel reporting into the Government’s review of post-18 education and funding.

Professor Peck: I am Edward Peck. My day job is Vice-Chancellor at Nottingham Trent University, and I was a member of the panel.

Matt Toombs: I am Matt Toombs. I led the secretariat to the independent panel.

Q2569  Chair: Thank you. I will start off by asking you about part-time higher education. We know that in just four years—between 2013 and 2017—the number of people starting a first degree in part-time higher education went down by a quarter. A number of factors have driven the decline but clearly student finance reform in 2012 played a substantial part. We know that the part-time learner cohort is very different from a full-time one. The DfE’s own research showed that learners tend to be highly debt averse. On average, they are older and have more financial commitments—I have seen that in my constituency—about a third have dependants and many are from very disadvantaged or modest backgrounds.

Your review made recommendations regarding loans for part-time higher education but there was not a lot on introducing some sort of grant for the most disadvantaged learners. Why didn’t you address this issue? Do you think we should reinstate some sort of grant support for the most disadvantaged learners who will do courses that will lead to a good return on the job market?

Philip Augar: Thank you. First of all, we did recommend the reintroduction of maintenance grants for most disadvantaged learners.

On part-time, one of our core recommendations—perhaps the core recommendation—is the introduction of a lifelong learning loan allowance that would be available for every adult. That could be drawn down over the adult’s working lifetime, if necessary, if appropriate, in modules sometimes as low as 30 credits. In a full bachelor degree, one year is 120 credits.

We had in mind exactly the kind of learner that you described, Chair. We had in mind, for example, a young woman who might have left college at the age of 18 with relatively few qualifications, begun a career, perhaps in retail—let’s use that as an example—had a family, is now in her mid-20s, perhaps has two children, a three-year-old and a five-year-old, and she is ready to return to work and to education. She is not in a position to and does not want to do a full-time full degree, nor does she necessarily feel ready yet to study part-time, but she might be interested in a 30-credit module. It was our conception of a way of solving the problem that you identified. It is really one of our core recommendations. It has been relatively little commented on by think tanks and the media but for us it was core to what we were trying to get at, as was the problem that you outlined.

Q2570  Chair: I understand about the loan, but, going back to my question, the research shows that this group is particularly debt averse. If I can just give a constituency case, I know a single parent who took up a loan to go to university and, because she has very little money, she got so terrified about whether or not she would be able to pay it back that, sadly, she withdrew from the course. She wanted to do a teaching degree. I find that incredibly depressing. These people will not take out these loan allowances in my experience in my area, and I suspect that I can speak for other members as well. Why persist with a loan particularly for this disadvantaged group?

Philip Augar: It is indeed a depressing story and I noticed nods around the table to suggest that it is far from isolated. To repeat: we propose the reintroduction of a maintenance grant for the disadvantaged. We do understand. We spent a lot of time—and perhaps Professor Peck might like to come in on this in a moment—talking about the perception of student debt. We understand and we recommend that this be completely re-messaged, renamed as student contribution to recognise the fact that this is not a debt that Government and society expect to be repaid in full. This is a form of student contribution. It is a student contribution system.

We recommend that it be renamed, re-messaged. We recommend changes in the student loan statement. We endorse the work of the consumer champion, Martin Lewis, and the Russell Group who have put forward some propositions in this area. There is a communications element in this. I don’t know whether Professor Peck would like to add something. He works very much in this area.

Professor Peck: It is a very good point. We are clear that the maintenance grant should be available for these part-time learners doing one module at a pro rata rate, as well as access to loans for fees.

One of the gaps in the system at the moment—and we do touch on this—is the amount of outreach work universities do, with 18-year-olds and below, in secondary school and primary school, so that people understand the system, what they are taking on and what their responsibility is. We don’t do as much work at the moment with older adults, so one of our purposes in the report was to try to create much more supply and opportunity to supply from universities—levels 4 and 5—on modular shorter courses.

In a conversation at OFS, there would be a case for making sure that sort of outreach was designed to speak to both 16 to 18-year-olds but also people in their 30s and 40s about what going to university means, what the responsibility is, what the loan arrangements mean and how the grants work, so that people can have some confidence and make good choices that work for them.

Q2571  Chair: If I can go back the case, I agree with rebadging and all that, absolutely. It was wrong to call it a student loan in the first place, the way the thing has been structured, but that still does not help my constituent. She has a small council home with a seven-year-old son. Ironically, the maintenance grant of course would be helpful, but it is less important than the fees of the university. To say that she then has to take out a loan, she is going to be debt averse to this. The research shows this. To me, you do not have an answer to this problem, and it is incredibly important. I think the student loan issue—I am actually supportive of the student loans, although I cannot speak for my colleagues—is the fundamental reason why there is a huge decline in part-time students, the figures that I mentioned earlier.

Philip Augar: Indeed. I am not sure if there is a question.

Chair: The question is I still feel that with your excellent report you have not answered this conundrum about part-time students. Just saying they should have a loan and they are getting a maintenance grant is not going to be the answer, I do not think.

Philip Augar: I am sorry if that is your opinion. It was an opinion I respected, I must say. It was an intention of the panel to help part-time learners through the modular-based loan allowance, through a repackaging and re-messaging of student loans as student contributions, by increasing awareness of the range of options at level 4 and 5 and facilitating the flow of level 4 and smaller modules into a full level 4, level 5, even a full degree. I am sorry if we have not hit the mark in that sense.

Professor Peck: Part of the exam question was to make it fiscally neutral as an overall package of proposals. Clearly, you can start to make some choices about what you might prioritise, how you might think about subsidising fee loans, if you were not working that particular constraint and you had priorities that you wanted to be sure of—the sort you described, Chair. What the report hopefully does is map out some of the consequences of those choices, how they interact and how they can be afforded, and if you are going to spend £2 billion more or £2 billion less on the whole education system.

Q2572  Chair: If I can move on, and please do not take this as a criticism because there are many good things in your report, but we need to scrutinise all the questions. You were sitting in the session for the Skills Minister and you heard that I was asking about adult community learning centres. In your review there is very little mention of adult community learning in terms of centres. Why did you not include a stronger focus on this, and do you think there is merit in further Government work on this space?

Philip Augar: It would be an interesting thing to explore, certainly, so there is merit in further work in that. We identified a network of further education colleges as the locus for this kind of work. That was a decision we took. Clearly there were alternatives.

Q2573  Chair: They can be side by side. An adult community learning centre could be based at an FE college, for example. Again using my own local example, they are incredibly important and an incredible bridge for the disadvantaged, the first step—even if some of the courses may be anything from photography to cooking—to then go on to further things. It is the first step that encourages people who might want to do that, to then go on to an FE college and then go to Nottingham Trent or wherever it may be. We neglect these centres. When I was a Skills Minister the Government were not even aware of how many adult community learning centres there were around the country because they were all local. There had never been any sort of counting done and so on.

Could I ask you again about the basic skills and lifelong learning? In your review you recommended that full funding, for a first full level 2 qualification—for those who are 24 and over and who are employed—should be restored. You also said the current age gap should be removed so that, “A first ‘full’ level 3 qualification is free to all learners whether they are in work or not”. Are there any problems with reintroducing the first full level 2 and level 3 qualifications without stipulating what people might study, and is this logic consistent with other recommendations in your review that favour a more selective approach to subjects that are likely to carry more weight in the job market?

Philip Augar: We identified level 2 and level 3 as the essential building block, the platform from which the other aspects of our review would spring. That is why we adopted that quite broad approach.

Q2574  Marion Fellows: The reclassification of student loans changed economic goalposts while your review was underway. Do you think that a new Prime Minister and Chancellor inevitably shift the political goalposts? As a wee added bit, if a new Prime Minister requested that you revisit the review with a freer hand, what would you say?

Philip Augar: We are very happy to discuss the report that we did produce, outline the thinking behind it and, if necessary, defend the proposals and accept constructive comments, of which there have already been several this morning. I would rather just confine us to the work of the panel, if you would not mind.

Yes, you are right that the reclassification did change the game to some degree. It ought not to have done, because an accounting change ought not to drive public policy, but an accounting policy ought not to have driven public policy in the first place. It certainly crystallised things. As part of our objectives, we had to look at value for money from the perspective of the student and the taxpayer. We were well sighted on value for money for the student before that reclassification changed. The ONS decision certainly brought our attention right slap bang into the middle of value for money for the taxpayer. We were then able to start to calculate how big the taxpayer subsidy was, where it landed and what value it produced, not just for the student—we were already sighted on that—but for the economy at large.

Q2575  Marion Fellows: Do you think a degree of cherry picking is inevitable of the recommendations that you gave?

Philip Augar: Again I hope I am not being unhelpful, but I would rather stick to what we said rather than what might happen. We were asked to produce a joined-up system at the panel. We preferred “coherent”, but something that linked together, and we produced a set of recommendations that are intended to work as a package. That was how we envisaged it.

Q2576  Marion Fellows: I can understand you not wanting to get involved in the political landscape at the moment. We would rather not be where we are at the moment.

Your report called for the abolition of the language of loans, including the renaming of the Student Loans Company, and better public information about how the system operates. I am a mother of three, some of whom are still repaying loans that they took out a number of years ago. What do you think about the way in which student finances have been described up to this point? Obviously you do not like it, but why?

Philip Augar: It is the points that the Chair made at the beginning of the meeting, in a sense. The language of debt, for a certain group in particular, raises an obstacle. We found in our researches—again I would like to invite Professor Peck to come in on this—that this was more an issue for parents and grandparents than it was for students. Where it was a concern for students, it was among the disadvantaged group, who were a focus of a lot of our work.

Professor Peck: I do not have much to add to that. I think that is right. The students are quite canny about how the system works and the choices they are making, and I think other groups are not. I am the father of two daughters who are also paying back their loans. The way in which I look at the letters and how the loans are described, it is not conducive to creating a sense of comfort and a long-term view about how these things are going to work out. Our report clearly says that should change because it does drive people’s concerns about the system in the way it is currently being framed. There is a lot of work we could do there that would make people much more comfortable in what they got into and how it was playing out.

Marion Fellows: I know it was a great relief in Scotland when student fees were abolished. I taught in a further education college at that point and a lot of students dropped out. The idea of loans was anathema to them.

Philip Augar: Simply improving the statement, making the statement look less like a bank statement. It is quite simple things. The Money Saving Expert website, Martin Lewis’s website, has some very sensible, quite easy to implement recommendations that could change things a lot.

Q2577  Marion Fellows: I am intrigued by the idea of an introduction of a tax code suffix. We are already familiar with that in Scotland. I have “S” at the end of my tax code because of that, and it does work if you are identifying people. Do you think that the abolition of the statements—which you are for—would ensure that the psychological and practical burdens of the debt idea are eliminated, if you use a tax suffix?

Philip Augar: It would certainly be a step forward.

Q2578  Marion Fellows: Do you think such a system could be made progressive sufficiently?

Philip Augar: The system is progressive already and the set of recommendations that we came up with are for a highly progressive system. Essentially, the more you earn the more you pay. That was one of our guiding principles. We wanted that to be principle based. Essentially, we felt that you should be paying for your student finance for the period in which you are benefiting. Therefore, we set the threshold at what we felt was an appropriate point in terms of earnings and, as you may know, we set the payback period at 40 years, reflecting the lengthening in lives and working lives over the coming years.

We wanted it to be principle based; we absolutely wanted it to be progressive. The whole package of HE and FE put together was perceived as a progressive package. In a sense, the core message of our report is that massive resources go into the 50% of young people who attend higher education. Very few resources go towards the 18 to 30s who go into further education, and—to reflect the Chair’s opening comments—almost no resources go into the vast majority of the population who are out there as mature adults who might want to return to education later in their life. Restoring that was our core message.

Chair: A lot of what you say I would agree with.

Q2579  Lucy Powell: Following on from that, obviously one of the criticisms when the report was published was that the extension from 30 to 40 would benefit the most the highest earners who would then pay back less than they currently do. It is a difficult issue, the very highest earners. Were you aware of that as a potential criticism before it was appointed? What did you think about that?

Philip Augar: We leant heavily on the DfE’s modelling and the DfE’s modelling is consistent with the IFS modelling. Do you want to add anything at this point?

Matt Toombs: Alongside the report, the Department published a number of papers sitting alongside the core report, including quite detailed distribution analysis that showed the impact by graduate deciles of proposed changes. It was certainly something that the panel and the supporting secretariat were fully aware of and used the modelling.

Q2580  Lucy Powell: When you say that it being progressive was at the heart of what you were trying to do, you still made a recommendation that you knew was not so progressive.

Professor Peck: It is about the balance between the fee level, the threshold at which you start paying, the interest rate and the length of term. Within that you could make an argument extending the term means that middle-income earners pay slightly more, but they still pay less than the really high earners in comparison to the previous scheme. They are about the judgments and choices you want to make, given the fiscal terms of reference that you have been given or what you are trying to achieve in terms of overall spend. The report has raised people’s awareness of how these four elements interact. Some elements of the scheme might not look progressive in a particular part, yet the overall screen can look progressive.

The other thing that is paradoxical, of course, is that what people believe and what is the case is quite difficult to convey in the language of debt. Often people think that if they change this element it will be more attractive to attract students in, but in the medium term, as middle earners, they might end up paying back more. It is: what is the balance between what you think about people as they enter the scheme and their confidence in being able to pay it back, and what they are thinking about when they can pay it back because they are middle earners? It is an interesting conundrum.

Q2581  Lucy Powell: Sure. Obviously I know you were part of it, but we did a big inquiry ourselves into value in higher education. Did that report form part of your evidence, did you read it, and what did you think?

Philip Augar: It certainly did form part of our evidence and we read it. We may even have quoted from it. I would need to check that, but I think we quoted from it. We certainly referenced it anyway.

Lucy Powell: We will double-check that.

Chair: To be fair, he did come and talk to me about our report.

Q2582  Lucy Powell: A couple of areas that we talked about were a little bit in your report and I know were part of your thinking, some of which did not make it in, were about barriers to entry—not just financial—for those in the most disadvantaged communities. We recommended a much stronger approach to contextual admissions, so that those who have perhaps suffered a life of disadvantage with poorer schooling and so on are able to get to university, full stop, and to the top universities, with lower A level grades. If I could ask you about that?

Secondly, I know there was some advance briefing that never made it into your report, about this issue of a tariff floor of people who get D grades and lower in their A levels not going to university, which we would have been against as a Committee, especially for those who enter foundation courses. Edward will know this from his own university. They are some of the students who need the most help and support and go on to do best. Why did you not put that in and what do you think about contextual admissions? Sorry, I know there is a lot there.

Philip Augar: I will give a general answer and Edward will give a more specific answer. We welcome the increased participation from disadvantaged students into higher education. We welcome that very much and we think that is necessary but not sufficient. We felt that continuation rates, post-graduation employment prospects, suggest that further support is needed. We were surprised that there has been no overall evaluation of the access and participation money and the student premium money, so we recommended that that should take place. We were very concerned about this group, and putting in place a pastoral and financial package of support for this group while at university features heavily in the report.

Q2583  Lucy Powell: Did you consider contextual admissions?

Philip Augar: I should allow Professor Peck to comment on that.

Professor Peck: The OfS is in the process of agreeing with universities their access and participation plans. It has put a major emphasis on narrowing the gap in admissions between the richest households and the poorest households in the country and is giving us a number of years to achieve that as universities. I welcome that. It is a very clear approach.

One of the reasons we were reducing the fee is it does give the OfS more flexibility to incentivise certain behaviours by using the teaching grant in certain ways to make up the fee difference. One of our major priorities was the student premium, where those universities who took high numbers of students with disadvantaged backgrounds would receive more money for doing so. We think that will drive behaviour across the whole of the sector, when at present there is not an even distribution of students from poor backgrounds across our institutions.

Contextual admissions will play a part in both of those strategies, because universities will have to start to look at how they are making judgments about the grade students are predicting and what they had to achieve to get them, the background schooling and so on. Therefore, I do think it is a positive move around contextual admissions.

You will have noticed that when talking about the minimum entry tariff, the tariff floor, we were very clear that if the Government ever thought about doing that in the future, it had to be contextualised so that it was not the simple three Ds, it was three Ds on the basis of what those young people had to do to get three Ds. There was some interesting detailed modelling in the report of what that does and the number of people who would get in from various backgrounds, if you did have a contextualised three-D threshold.

Philip Augar: The second part of your question was: why did we decide not to do it? I should respond to that. It was not an advanced briefing. It was speculation. It was indeed something that we spoke about. The only thing that we considered at all seriously was a contextualised minimum-entry threshold. We considered it only because we were worried about continuation rates and post-graduation returns for that cohort.

We spoke to UCAS, which has done a lot of work around contextualised admissions, and that formed the basis of what we wrote. We concluded that, while this is potentially an issue—the issue being the poor continuation rates and post-graduation returns—we felt that the right thing to do was to raise this issue in the report to give the sector time to respond. The status of our report is that it would feed into the Government’s review and there would be consultation with the sector. We hoped—and we still do hope—that this is the kind of thing that will emerge in that consultation. Contextualised, absolutely.

Q2584  James Frith: I refer members to my declaration of interests. Why was there no employer contribution for the benefit of employment of graduates in the conclusion of your report?

Philip Augar: There are three participants, three principal stakeholders in this. There is the taxpayer. There is the student and there is the employer. It is a fair point that you raise because in a sense employers are the consumers of the product. Their businesses benefit from the output of universities and further education colleges. They do pay, in a sense, through corporation tax. Employers do pay through corporation tax. Our terms of reference excluded any consideration of taxation. I think but for that we might have looked at this.

Q2585  James Frith: Obviously they pay the Apprenticeship Levy. We have another scenario where FE comes with a premium or penalty, depending on what side of that fence you are talking about, but HE or the beneficiaries of HE as employers, they do not pay that. It would strike me that for parity of esteem and balance, just as the Apprenticeship Levy is payable, so too should there be recognition of that by employers.

Philip Augar: I certainly understand the point that you are making. We did comment on the role of employers in the report and we noted the decline in training over the period, but our terms of reference did exclude taxation.

Q2586  James Frith: Both your report and I are results of the 2017 general election. I enjoyed your report. It is a big and creative and strong summation of what is possible within the sector, although I am concerned by the cherry picking and whether it survives a new Prime Minister. My concern is that you would conclude—not least because of the 2017 election but for the arguments that have been rehearsed here—that longer lifetime repayments for our lowest earners is a progressive move, and that more to the taxpayer in absence of any payment by the employer is a progressive move. In fact, the Government that instigated your review said the deficit above all else was the most important. You are making recommendations that increase the deficit and are more complicated. You have said in this session that some changes in statement presentation might help but, ultimately, things like the repayment cap introduced more complexity to a system that is already baffling.

Philip Augar: Four points. Let me have a crack at them and Professor Peck may want to come in. Thank you for your positive comments on the report. I had a sense there was a “but” coming and there was. There were four buts.

The longer repayment period: we wanted to produce something that was principle based. The principle we wanted to introduce was the idea that graduates pay for their loans, repay their contributions, for the period in which they are benefiting. We recognised that working lives are extending; that lives indeed are extending. If this were to be implemented in October, we are talking about the world in 2059.

The other part of lengthening the period, as well as being principle based, was we wanted to produce better value as well. We comment in the report on bearing down or at least making prospective students aware of the value and the quality of the courses that they are doing, so a longer period but better value. The employer point we discussed in the previous question.

The deficit: we were asked to produce something, you are right, that did not increase the deficit as a proportion of GDP. At the end of the report we cost out our proposals at up to £500 million, so it is slightly stretching the point. We did the best that we could. The student contribution, the student loan point, the panel’s view—and we discussed this right at the beginning—was that the cost of post-18 education should be shared between the beneficiaries, being the state and the student. I accept your point about the employers. Edward, do you want to add anything?

Professor Peck: No, I think that is a very good reply.

Q2587  Emma Hardy: Good morning, everyone, lovely to see you all. I want to ask about the unintended consequences that possibly come out of the report. There are a number of things combining that are making life very, very difficult for universities. One was the removal of the students’ admissions cap, which I know is nothing to do with your report. The second is the concern around whether or not the fully funded decrease in fees will be implemented. In the evidence I have seen they have said if it is cut to £7,500, Government need £1.8 billion, based on the 2018-19 numbers. We have a 23% increase in the number of 18-year-olds by 2030 and that is going to increase the amount of money needed to deal with that fees reduction.

I am all for fees reduction and I am all for getting rid of them all entirely, but my concern is: how serious are the Government about fully funding this decrease because universities are very, very nervous at the moment? I am not talking about the elite ones; I am talking about the regular universities, like my beloved Hull University. They are feeling very nervous. Can you give you give any reassurance that this would be fully funded if it was implemented, and what conversations are you having with Government to address this concern and nervousness?

Philip Augar: I have to repeat the answer that I gave earlier. We are happy to speak about the report itself and the process we went into in reaching that report, but we are not in a position and nor are we able to speculate on what might happen. I would repeat again that the panel’s proposals are intended to be taken as an integrated suite. In commenting on the reduction of the fee to £7,500, we say that the average unit of resource must—we used the word “must”—be topped back up to £9,250, so spread across the sector as a whole there should be no reduction in resource. The direction of that would change. We used the word “must” quite deliberately and we say in a couple of places that this is intended to be a coherent suite. Would you like to add to that?

Professor Peck: I understand the nervousness around the financial situation of universities. That point is very well made. It is worth emphasising the grant also brings benefits to Government in thinking about how the costs of provision are being reflected, in how much institutions are receiving to reflect particularly the cost of high-cost subjects. Engineering springs to mind. The second part of it is how you reward those universities that take students from poor backgrounds. The third might be how you recompense those universities with a particular focus on subjects that will drive the industrial strategy.

The principles we had were that the system had become a little too market driven, and there was probably too little intervention from the Government on shaping the system in the interests of the economy, in some cases the students and in some cases the institutions themselves. That is why the reason for reducing the fee was to give the Government some more levers they could use to shape the system through the good teaching grant, as they put it. Philip is right: we are very clear that you cannot reduce the fee without putting the money back in over all through the grant.

Q2588  Emma Hardy: On that point—I am pleased, as that was going to be my second point—giving the Government that greater influence over the degree subjects being taught could again have unintended consequences. This is the thing that, whenever we do anything with education, we sometimes have these unintended consequences, because currently we have half of the students choosing humanities and choosing arts and social sciences. KPMG’s analysis found that these cost £8,800 to teach, £1,300 more than the proposed £7,500 fees, meaning universities will be forced to operate these courses at a substantial deficit.

If that is reduced even further because the Government want to discourage people from taking that, then surely, because universities operate as businesses, they will be less inclined to operate these courses despite the demand from students being there.

On the point about the STEM subjects, again KPMG found there was an average deficit of £650 per student per year for engineering courses. That is only going to increase anyway, so we could have, through a well-meaning recommendation, the situation where universities are not offering the arts and humanities and social science degrees, which are still valued by employers, because universities cannot afford to put them on.

Philip Augar: We certainly understand that. Of course, the consequence with unintended consequences is that they are in fact unintended.

A word on the £8,800 figure that you quoted: this ties back to the analysis done for the panel by KPMG. What the universities describe as the cost of provision, the panel spun that on its head and said, “Okay, let’s think of this in a different way. Let’s say that this is what universities choose to spend on providing the degrees and let’s try to get behind that”. The £8,800 includes a fat margin, called the margin for sustainability, the MSI. There is also on average across the sector a 3% operating margin.

Once you start to knock that off the £8,800, you get back to £7,500 as the reasonable cost of provision—to use the panel’s words—of an arts and humanities degree. We felt that would be the appropriate starting point. We wanted to ensure that no undergraduate student pays more than the reasonable cost of provision for their course, that more-expensive-to-provide courses would then be topped up by the Government grant at the discretion and we wanted to ensure that that lines up more closely with the industrial strategy subjects.

This ties back to your point about the ONS reclassification, because that focuses attention on where the subsidy is going. By using earnings data you can start to see where the taxpayer subsidy is going. For example, in 2017-18 the taxpayer subsidy is £8 billion. About a quarter of that is going on creative arts and social studies, much less than that is going on the core industrial strategy subjects. We felt that was an unintended consequence of the change in funding methodology in 2012. We saw an opportunity to put that right, without in any sense devaluing the role of creative arts and arts and humanities disciplines.

Professor Peck: I think that is a very full answer.

Q2589  Emma Hardy: On the point of principle—and you might disagree with me on this—do you not sense there is a slight nervousness at the moment of any Government having the power to influence what is taught and what is not taught at university through the withholding and giving of finances? One of the great things about our country is the independence of our universities. Do you not sense that, when you start to give any Government more control and more power over pulling those levers over what happens in university, that again could have worse unintended consequences?

Professor Peck: Yes, of course, but I think ultimately it is about the decisions students make about what they want to study at 18, or indeed at 35, and that independence must remain. I think students need to be better informed about the options and consequences of their choices. The report does show—and there has been other analysis that underpins this—that there are some courses at some institutions that students would probably be well advised not to take because of the quality of the provision and the outcomes they get. The Government have a right and perhaps a responsibility to shape and influence that where they can. The question is: how do they do it? Ultimately, our universities are so good because they are independent organisations free from Government influence. I would very much want to maintain that.

Philip Augar: Would you mind if I came in behind that? I agree entirely with that. I think that academic autonomy absolutely has to be respected but there also has to be accountability, surely, for the taxpayer subsidy. We should surely expect the institutions to be accountable and we should also expect Government to be accountable for where they put taxpayers’ money.

Q2590  Chair: We do not often do this, but can I take a slightly different viewpoint to my colleague on this? If the country has a big skills deficit in a certain area—and we know we have skills deficits in huge areas—and if it is a strategic priority of the Government to meet that skills deficit, of any Government, given that universities get a significant amount of public funds, surely it is then the right of Government to say they need universities to focus on X or Y. It does not mean they would not do all subjects, because we have to meet our future skills needs, just as in schools there is a national curriculum and the Government says there should be work on maths and English or literacy or whatever it may be.

Philip Augar: That was very much the panel’s view, and the skills gap is such a crucial issue. The skills gap starts to feed into the productivity gap, the productivity gap starts to feed into the way the economy performs. That starts to feed into the divisions that we have in society. Filling the skills gap is absolutely crucial, was the panel’s view.

Q2591  Chair: That means you cannot just leave it to students to make these decisions, because there has to be some direction of Government on how they think those public funds should be spent.

Professor Peck: It is a balance, Chair. The example of nursing is interesting here. For many years there were nursing bursaries because the Government wanted to encourage people to do nursing. They were removed. That has had a consequence for nursing recruitment, and they are probably going to come back in. We have already been shaping the market in education for a number of years. The question is: how extensive is that and what skills and subjects do we want the Government to have that influence that?

In terms of the skills gaps you are talking about, Chair, there is a case for saying the Government should have more influence on some of that, as they always have had on things like nursing and medicine.

Q2592  Chair: Before I pass on to Lucy Allan, could I ask you about degree apprenticeships? Your recommendation was that funding for level 6 and above apprenticeships should normally be available only for apprentices who have not previously undertaken a publicly supported degree. I have to say I am in two minds about this. I know there were a limited number of degree apprenticeships available, but are you saying that degree apprenticeships should solely be targeted at those who want to go down a more technical route at any earlier age?

Philip Augar: Not necessarily. We fully understand your support for degree apprenticeships, Chair. That support I think has been important in ensuring that a minority pursuit at the moment has become better known. What was behind this is that it is in a sense a contingency for the levy getting exhausted and getting used. In those circumstances, we felt that the first priority should be for those who have not already taken a publicly funded degree. We were quite careful to put in a rider there, “in normal circumstances”. We could envisage exceptions.

Q2593  Chair: The problem has been in apprenticeships where there is gaming and there is rebadging of graduate schemes, but I would be very reluctant not to allow somebody, if there was genuinely no gaming, to reskill and get it. We know that a lot of accounting is going to be done by robotics. Somebody may have a degree in accounting but not to allow that accountant to do an apprenticeship degree in cyber security, for example, I think would be a big mistake.

Philip Augar: We would agree with that. There is gaming of all sorts. We heard examples of employers pushing quite senior employees through various forms of degree apprenticeships, frankly, to use their share of the pot. There is gaming of all sorts but, broadly speaking, the panel supports degree apprenticeships. We were mindful of a situation where funds became strained, in which case we felt that that was the right rationing.

Q2594  Lucy Allan: I want to take you back to the point that our Chair was talking about in terms of the taxpayers’ value for money. I was delighted to see that element of the report. In your conclusion you said that there was accidental overinvestment in certain subjects and underinvestment in others. Could you say what should be areas for priority investing? I know you have talked about the industrial strategy but are there specific areas you would like to see as a priority for investment, and perhaps a little bit of explanation as to why?

Philip Augar: The accidental overinvestment came about from 2012 from the trebling of fees, which took the tuition fee for the lowest-cost subjects—the band D subjects as they are called—above what was then being charged. That immediately created a distortion in the charging rate. For example, you will see that over the period we looked at, for history degrees and arts degrees, tuition costs went up 49%[1]. Physics, I think, or certainly some of the STEM subjects went up only 6%. That is the correction that we are trying to make.

On the subjects, we could not do better than the Government’s industrial strategy. We felt that there is no point in having an industrial strategy if tertiary education does not line up behind it. Would you like to add anything, Edward?

Professor Peck: No, I think that is absolutely right.

Q2595  Lucy Allan: I am very glad that that was in the report and that there is some focus on that. In conclusion, I have a son about to go to university. He wants to study philosophy. Professor Peck, do you feel there should be fewer philosophy graduates?

Professor Peck: I am a philosophy graduate. It did me no harm, at least in the long term. Of course there should be philosophy graduates.

Lucy Allan: Fewer than currently, given the industrial strategy reference that we have been discussing?

Professor Peck: I doubt we have many philosophy students these days, at least doing pure philosophy. It is one of the purest disciplines because it teaches you how to think. We have philosophy at NTU, and we are going to make sure we have it for many years to come, regardless of how the fee regime changes. It is part of a portfolio of a comprehensive university, in my view, so we are very proud of it.

Chair: Thank you very much indeed. It really is a serious report and I am sure some of the recommendations will be adopted. It is an enormous amount of work. Thank you to you and your fellow commissioners who worked with you. It is really appreciated.

Philip Augar: Thank you too for engaging with us during the preparation of the report, for the terrific questions today and for your own insightful and incisive reports on the sector.

Chair: How is Jimmy Chipolata, your famous therapy dog, who I met when I visited Nottingham Trent?

Professor Peck: He has been very busy during exam time. He is having a short break now before the re-sits start.

Chair: An amazing dog. I want it on the public record that Anne Milton has resigned—not because of our Committee session, I should add—and I want to place on the record a tribute to her for the work that she has done on FE skills and apprenticeships and also, particularly, given that she was going to resign, for still appearing before the Committee. She could have resigned an hour earlier and not have had to face the Education Committee. To get it on the record, the Committee would like to give huge respect to Anne and thank her for all her work.