Select Committee on Education and Skills Sixth Report


The Dearing Report

  34. The Dearing Report asserted that "the costs of higher education should be shared among those who benefit from it",[40] with the individual, the state and employers all as key beneficiaries. The Report presented a new perspective on the issue of student finance. The rapid expansion of higher education meant that the former system of means-tested maintenance grants and wholly subsidised tuition could not be supported in a massively expanded system. Dearing rejected the creeping replacement of grants by loans and proposed a system of state support through a 50/50 combination of non-repayable means-tested grants and subsidised loans to be repaid by graduates through income-contingent contributions, and proposed a flat rate contribution to tuition fees payable after graduation on an income-contingent basis.[41]

35. The Government accepted some, but not all of these proposals, making its position clear immediately on publication of the report.[42] The proposal for the tuition fee was taken up, but with a means test applied and students, rather than graduates, liable for the payments of one quarter of the average cost of tuition. The proposal for a partial return to maintenance grants was rejected and the student loans scheme was expanded with 75 per cent of the loan as a universal entitlement and 25 per cent subject to means testing.

36. The Dearing proposals can be said to have examined the principle of free higher education at a politically sensitive moment. The Government's response was to create a framework for student support which shifted the new responsibilities for repayment of loans onto graduates rather than their parents.[43] The implementation of a contribution towards tuition fees (paid up front) also generated funds which could be made available to universities immediately.

37. It is our view that many of the problems encountered in the present system of student finance originate from a failure by the Government clearly in public to debate the essential elements of the Dearing proposals and the reason for its recommendations and a fear of alienating key elements of the electorate.

Devolved responses

  38. Devolution in the UK has enabled the devolved administrations to develop their own approaches to student finance. In July 1999 the Scottish Executive set up an Independent Committee of Inquiry into Student Finance chaired by Mr Andrew Cubie (the Cubie Committee). In December 2000 Ms Jane Davidson AM, the Minister for Education and Lifelong Learning at the National Assembly for Wales, established the Independent Investigation Group on Student Hardship and Funding in Wales, chaired by Professor Teresa Rees (the Rees Committee).

The Scottish model[44]

  39. Tuition fees had been a high profile issue during the 1999 election campaign for the Scottish Parliament and were a crucial element in the agreement between the Labour and Liberal Democrat parties to form a coalition Executive. The Cubie Committee published its report on 21 December 1999.

40. The Cubie Committee concluded that a 'mixed economy' of tuition fee arrangements for further and higher education should be maintained. Their principal recommendations were:

  • tuition fees for further education courses should be paid by the state;
  • tuition fees for full-time undergraduate courses should be abolished;
  • flexible support package for part-time and postgraduate students should be available;
  • a Scottish Graduate Endowment fund should be created whereby graduates would make a contribution of £3,075 paid on an income-contingent basis once their income exceeded £25,000. The proceeds of the fund would be invested in higher education;
  • a charitable foundation should be created to receive voluntary contributions from prior beneficiaries of the Scottish higher education system;
  • a Wider Access Bursary Scheme should be developed to target non-repayable support to particularly disadvantaged students in higher education.

41. To ensure that the abolition of up-front tuition fees would not lead to a reduction in funds available to universities, the Cubie Committee proposed that the Scottish Executive should make up the shortfall at a cost of £12 million in cash terms. The Cubie Committee acknowledged that students from low-income backgrounds had a particular aversion to debt. The Foundation would provide support to students or institutions consistent with the Cubie Committee's guiding principles for student finance. This would include non-repayable bursaries to the disadvantaged, such as young adults from low-income families and mature students.

42. Following the publication of the Cubie Report, the Scottish Executive established a ministerial working group with representatives of each of the Executive Parties to set out the Scottish Executive's response to the Cubie recommendations. The Scottish Executive published its response to the Cubie Report on 26 January 2000. The agreed system for student support in respect of undergraduate higher education may be summarised as follows:

  • tuition fees for eligible Scottish and EU students studying approved courses in Scotland will be paid by the state;
  • Scottish students studying elsewhere in the UK will be liable to make a means-tested contribution to tuition fees. The actual contribution is dependent on individual circumstances and any balance will be met by the Students' Awards Agency for Scotland (SAAS);
  • for new students under 25 years, Young Students' Bursaries will be available to those studying in Scotland on a means-tested basis. For 2002-03 the maximum bursary will be £2,050;
  • students from homes with assessed residual income of less than £15,000 to receive an additional £510;
  • young students studying outside Scotland and from low-income families will also be entitled to the Young Students' Outside Scotland Bursary;
  • entitlement to zero real interest rate student loans will be means-tested with students from high-income families with a residual income of £50,000 or more entitled to a loan of £770. Students from low-income families will be eligible for a loan entitlement of £2,365;
  • Scottish students studying outside Scotland will be eligible to apply for means-tested student loans. The minimum loan for those studying in London is £2,015 and outside London, £1,870;
  • loans will be repaid when earnings have reached a threshold of £10,000 and repayments are set at a minimum of 9 per cent of earnings above the threshold;
  • students studying outside Scotland will not be entitled to receive Young Students' Bursaries and will not be expected to contribute to the Graduate Endowment;
  • the Graduate Endowment (£2,000 for 2001-02 and linked to inflation thereafter) will be payable by students in the April following graduation, either by a lump sum or through an additional student loan. There will be significant exceptions to the Graduate Endowment and only 50 per cent of graduates are expected to be liable;
  • mature students (over 25 years) who choose to study in Scotland will be eligible to apply for the non-repayable Mature Students' Bursary of up to £2,000 as well as a maximum loan entitlement of £3,905;
  • additional funds will be available to students who have dependents or other special circumstances.[45]

43. To adopt the Scottish Executive's system of student finance in England would be extremely costly (the cost of abolishing fees alone was estimated to be £270 million in cash terms for 2002-03[46]) and would divert resources away from other priority spending areas.[47] We do not recommend the adoption of the Scottish system for England.

The Welsh approach

  44. In June 2001 the Independent Investigation Group on Student Hardship and Funding in Wales, chaired by Professor Teresa Rees,[48] published its Report, Investing in Learners: Coherence, clarity and equity for student support in Wales. The Rees Report shared much in terms of its spirit with that of the Cubie Committee and with regard to student finance proposed:

  • the abolition of front loaded tuition fees;
  • the establishment of an end loaded Graduate Endowment scheme;
  • further means-testing for access to student loans;
  • an increase in the repayment threshold for student loans to £17,000;
  • loan forgiveness for those students whose income has not reached £15,000, fifteen years after graduation;
  • means-tested Learner Maintenance Bursaries, consolidating existing Access and Hardship funds which are available to all students enrolled on a programme of 30 credits or more;[49]
  • access to the student loans scheme for post-graduate students.

45. In February 2002 Ms Jane Davidson AM, the Minister for Education and Lifelong Learning at the National Assembly for Wales, announced the introduction of means-tested grants for Welsh students in higher education, wherever they choose to study in the UK. Grants of up to £1,500 per year will be targeted at students from the poorest families. Tuition fees and the student loans system are to be retained.[50] Although the Rees Report recommended the abolition of tuition fees, this is a reserved matter that the National Assembly for Wales has no power to change. We were not persuaded to recommend the adoption of the Welsh approach for England.

Lessons for England

  46. One of the opportunities offered by devolution is that devolved administrations will tackle education and other policies in distinct ways. We recommend that the Department should make careful appraisals of the Scottish and Welsh higher education funding initiatives. Developments in Wales and Scotland have fuelled expectations about the outcomes of the Government's review. Given that the current student support regime has only been in operation for a few years, there were initial expectations that the review would conclude relatively quickly and be limited to a series of small scale measures to address weaknesses in or to enhance the existing system. As time has passed, expectations of more radical changes have risen.

The Government's participation target

  47. In the autumn of 2001 the Government announced its participation target for higher education. Initially expressed in Labour's 2001 education manifesto as "we will enable 50 per cent of young people under the age of 30 to progress to higher education by 2010 while improving standards", this target has since been revised to "increase participation towards 50 per cent of those aged 18-30 by the end of the decade, while maintaining standards".[51] Sir Howard Newby, Chief Executive of the Higher Education Funding Council for England (HEFCE), told us in oral evidence that the current rate of participation for school-leavers in England was 34 per cent.[52]

48. The Higher Education Funding Council for England (HEFCE) has calculated that to meet the 50 per cent target for participation in higher education, an additional 350,000 full-time equivalent students will have to be enrolled by 2010, approximately a 35 per cent increase on current numbers. Using current staff/student ratios HEFCE estimates that an additional 17,000 academic staff will be required to support the expansion.[53] Failure to resource the expansion adequately will necessarily have a negative effect on those students who require high levels of support after enrolling at University.

49. Setting aside the methodological issues concerning measurement of past, present and future participation in higher education, the need for a meaningful definition of participation, and the question as to whether the target itself is well chosen, it is clear that in order to meet this target, participation in higher education will need to be expanded in previously under-represented economic and socio-cultural groups. Arrangements for student support, along with higher attainment levels, are therefore likely to be of critical importance in the fulfilment of the target.

50. Margaret Hodge told us that the intention of the student support review was to "come out with a sustainable solution [for student finance] which will ensure that we can meet our higher education target of having 50 per cent of under 30-year olds in higher education by 2010 without debt and the fear of debt being a deterrent to that target".[54] Acknowledging that in order to meet the target, the profile of new students into higher education would have to change, Mrs Hodge added "our purpose must be not just to expand numbers to meet the skills agenda but also from the social exclusion agenda to ensure that there is real opportunity across all socio-economic groups".[55]

40   NCIHE summary report, paragraph 90 Back

41   NCIHE recommendation 78 Back

42   HC Deb 23 July 1997 vol 298 cols 953-5 Back

43   Higher Education Quarterly Vol 52, No 1, January 1998, Dearing is Dead - Blunkett is Born? The Future Funding of Higher Education, Wagner L, page 74 Back

44   See Fourth Report from the Education and Employment Committee, Session 2000-01, Higher Education: Access, HC 205, Annex 1, pages xxxviii to xli Back

45   What support is available for mature Scottish students in higher education in 2002-03?, Scottish Executive, February 2002 Back

46   The estimated cost of abolishing student contributions to tuition fees in England and Wales in the financial year 2002-03 would be £270 million in cash terms. This figure represents only a proportion of the full year cost. The full year cost, for academic year 2002-03, would be £410 million in cash terms setting aside any implications for student support HC Deb 29 October 2001 vol 373 col530W  Back

47   UCAS figures have shown an increase in applications from Scottish students to universities in Scotland since the Scottish Executive's decision to abolish up-front tuition fees. [UCAS press release 14 April 2000]. Scottish students would be liable to pay tuition fees if entering higher education in England and this may be a factor in the increase Back

48   Professor Rees is at Cardiff University (University of Wales, Cardiff) Back

49   30 credits are equivalent to a quarter of full time undergraduate academic year Back

50   See the National Assembly for Wales at website Back

51   Education and Skills: Delivering results a strategy to 2006, DfES, 2001 (our emphasis) Back

52   Q 3. The GB age participation index (API) counts home domiciled young (under 21) entrants to full-time higher education expressed as a proportion of the averaged 18 to 19 year old GB population estimated at 33 to 35 per cent in the Department for Education and Skills Departmental Report 2002, Cm 5402, June 2002, Annex M Back

53   Council Briefing, HEFCE, Issue 41, May 2002, page 1. HEFCE projections take into account population growth and the consequential growth in higher education participation Back

54   Q 219 Back

55   Q 229 Back

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