Select Committee on Education and Employment Fourth Report


Funding mechanisms to encourage access

  54. HEFCE allocates additional funds to support the recruitment and retention of students from under-represented groups. These funds recognise the additional cost of providing for such students and offer an incentive for their recruitment. For 2000-01 £24 million will be allocated to universities for this purpose. This additional funding represents a supplement of 5 per cent for each undergraduate entrant from neighbourhoods with lower than average participation rates. Additional funds are available for students with disabilities, totalling £7 million in 2000-01. The funding methodology also provides additional funding for part-time students and full-time mature students, at a five per cent enhancement to the revenues received by the university.[53]

55. Higher education institutions which have demonstrated success in widening access are given priority in the allocation of additional student numbers by HEFCE. Institutions must provide evidence of recruitment, progression and achievement rates when bidding for additional student places. In the most recent round of bidding for additional places, 17,948 of the 20,743 places allocated were for bids to widen access.[54]

56. A number of special funding streams from HEFCE are currently available to support partnerships, innovation and developmental activity to promote wider access to higher education.[55] These include a programme to promote regional partnerships between higher education, schools and community groups to improve progression to higher education by students from disadvantaged backgrounds; a programme to improve progression from further education to higher education for disadvantaged groups; and a fund to improve the provision for disabled students in higher education. HEFCE also administers on behalf of the Department for Education and Employment a summer school programme for students prior to applying for higher education. In academic year 2000-01 funding available from HEFCE for programmes to widen access totalled £160 million.

57. HEFCE has recently issued proposals for additional expenditure to raise the aspirations of students to enter higher education, encourage institutions to recruit students from a wide variety of backgrounds and ensure that students have the best possible chance of succeeding in higher education.

58. Baroness Blackstone, Minister for Higher Education, argued that it was not necessary to skew higher education funding to require universities to pursue widening access initiatives. She told the Sub-committee that it was necessary to provide universities with the resources required for outreach work and for the additional costs that there may be for recruiting students who do not come from family backgrounds where there is a tradition of going into higher education.[56] The Minister confirmed that the funds available for widening access were in addition to the core funding disbursed by HEFCE, and would not "in any way" reduce the money available for teaching or research.[57]

59. It has been suggested that the financial incentives to widen access to higher education do not adequately recognise the additional costs that institutions incur in meeting the needs of 'non-traditional' students. A discussion paper presented to the September 2000 Conference of the Committee of Vice-Chancellors and Principals (now Universities UK) argued for an increase in the 'access premium':

    "Current Government access policies are reflected in HEFCE's allocation of most of its funding identified for improving access by payment to institutions of a 5 per cent premium within the block grant for young students from identified areas of low participation. This approach rewards actual access achievements and leaves discretion over funding to institutions. SHEFCE (the Scottish Higher Education Funding Council) supports improved access through selected short-term projects. It is CVCP policy that access funds should be 'mainstreamed'. The main issue is whether the arbitrary premium of 5 per cent for young students from low participation neighbourhoods, together with payments for mature and part-time students, is sufficient to meet particular retention needs and to provide a sufficient incentive to all institutions. It has been suggested to us that given the level of current staffing ratios, a premium of at least 10 per cent for relevant students would be appropriate—particularly for those admitted with limited entry qualifications. This is estimated to cost, on the basis of the current 5 per cent premium, approximately £25 million per annum".[58]

60. This may not, however, be enough. A radical way to encourage real change in universities' approach to increasing the diversity of intakes would be to increase very substantially the per capita funding for students from relatively disadvantaged backgrounds. This would capture the attention of higher education decision makers and encourage them to put social diversity at the heart of their strategy. Such a move would require careful study, but we believe that it deserves careful consideration.

61. Data collected by UCAS, and research such as that undertaken by the Four Counties Group of universities, improves understanding of the reasons for low levels of participation and provides a stronger basis for undertaking a further range of initiatives. We welcome the Government's moves to tackle under-representation in higher education from inner city areas, particularly through the Excellence in Cities programme. We recommend that the Government should consider whether the performance of individual schools and colleges in supporting wider access to higher education should be subject to a similar process of performance indicators and benchmarks as all higher education institutions.

62. There is clearly a place for short-term initiatives. We recommend that focused schemes similar to the Education Action Zones recently established by Government, should be set up for higher education. These would co-ordinate activities of schools and colleges, the Learning and Skills Councils, the Connexions Service and other relevant agencies in the zone. Each zone would have partner higher education institutions, acting on behalf of the higher education sector as a whole, not just to promote access to a single institution. Funding such initiatives would provide incentives for both students and institutions to raise aspirations and widen access. Such zones would not be established on a permanent basis, but would receive funding until what can be called the 'culture of non-participation' in higher education in their areas had been eradicated or at least substantially diminished. As part of this recommendation, we also suggest that close consideration should be given to linking such zones to existing Educational Maintenance Allowance pilot schemes, which would enable outcomes to be more closely monitored.

63. It has to be asked, however, whether additional funds for specific, time-limited initiatives, valuable and welcome as these may be, will always ensure that efforts to enhance access are seen, not as a short-term response, but as an on-going responsibility. Furthermore it is important that institutions should not incur financial and reputational penalties if their retention rates fall as a result of taking risks in accepting students from backgrounds hitherto under-represented in higher education. Under proposals from HEFCE to widen access,[59] it is proposed that institutions where less than 80 per cent of the student body is taken from state schools would be eligible for support from a new £6 million per year funding stream. Eligible institutions would be expected to demonstrate commitment from their own funds to the process. We believe that this new money, paid to those institutions that currently fail to recruit students from lower socio-economic groups, rewards those who fail rather than succeed. We prefer such funding to be added to the participation premium.

64. These considerations lead us to make a number of linked recommendations. We recommend that:

  • Immediate consideration should be given to raising the existing 5 per cent 'participation premium' to at least 20 per cent.

  • In reviewing the funding regime for future years serious consideration should be given to raising the per capita premium for students from low participation neighbourhoods by as much as 50 per cent.

  • Participation premiums should be continued for each year the student is registered in order to encourage retention. Part of the premium for the second and subsequent years of a course should be front-loaded and paid to institutions in the first year, in order to help resource the additional teaching and pastoral support which some students from non-traditional backgrounds are likely to need.

  • Where appropriate at least some of the money provided by Government to support programmes that will increase the proportions of students from social groups IV and V should be built into funding baselines, with institutional success in enhancing participation carefully monitored.

  • More should be done to address under-representation from areas other than inner cities, including areas of rural deprivation.

  • HEFCE should encourage research into the so-called 'hot' spots where, despite relatively severe levels of deprivation, participation rates in higher education are high, to identify factors which account for success in these areas.

How financial arrangements may impede access

  65. The National Union of Students told the Sub-committee that the multiplicity of funding sources deterred some students from considering higher education. Students were required to piece together their financial support, including student loans, access funds disbursed by individual universities, different bursaries and child care allowances.[60] The Committee of Vice-Chancellors and Principals suggested that successive studies had indicated that prospective students did not have a very clear understanding of the cost of higher education. They argued that there was continuing confusion over the means testing arrangements, especially over eligibility for support. In their view, more work had to be done both by the DfEE and other agencies to ensure that greater understanding of what the costs of higher education are and how they can be met.[61]

66. Professor Gareth Williams of the Institute of Education argued that simplifying the funding system would not in itself alleviate that problem.[62] He cited the extremely complicated system of student support in the United States, countered by each university employing advisers to guide students to the best financial package, taking account of the loans and grants that are available. He argued that the most effective way of promoting access to further and higher education would be to target any additional funds on the relatively small groups of students and potential students who could be shown to face particular barriers to pursuing their education. Professor Williams told the Sub-committee he would be reluctant to see a significantly greater share of the money available for higher education being used for general student support, as opposed to some of the many other urgent needs of the sector. He did not believe that financial aspects were the central issue in trying to achieve improved access results.[63] Professor Maggie Woodrow told the Sub-committee that her research for the Committee of Vice-Chancellors and Principals[64] showed that the absence of a maintenance grant for lower income student groups was a key concern for Vice-Chancellors, members of staff in universities, schools, parents and indeed students themselves.[65]

67. Baroness Blackstone agreed that the system of student finance was complex, but did not agree that it was getting more complex.[66] The funding system had to be complex if it were to provide support for the full range of students' needs. The Minister referred to the guides produced by the DfEE for students about the financial support available. The DfEE had recently produced a revised leaflet which tried to set out the support system in a way that was accessible to all people.[67] The Minister argued that the new system of student support had only recently been put in place for England and Wales, that it was working, and it was too early to start making fundamental changes.[68]

68. We agree that the new system of financial support for students attending university in England and Wales is not excessively complex. However, it is essential that information about financial support available to students is readily accessible, clear, unambiguous and presented in such a way as to encourage enquiries and applications, and attention needs to be devoted to ensuring that existing arrangements meet these criteria.

69. As the student body becomes more diverse, different support schemes will be needed to meet varied financial requirements. Not all potential applicants seem to realize that fee contributions are means-tested, and that between 40 and 50 per cent of all students will not be called upon to make such contributions. The test of any set of arrangements is the extent to which all students are able to use the varied sources of support to match their needs. This should be closely monitored. Aspects which may form part of this monitoring should include the extent of students' financial hardship, the amount of paid employment taken up in term-time and in vacations during a student's higher education, the extent to which information about fees and support arrangements influences the propensity to apply, and eligibility for and take-up of each source of financial support.

70. Whether we like it or not, there is evidence that students still do not fully comprehend the financial obligations that the pursuit of higher education will entail. Many are confused as to whether they will have to pay tuition fees nor what actual level of debt they will be incurring by the end of their period of study. This is a period of significant change in the arrangements for students' financial support. We recommend that the Department for Education and Employment, working with individual universities, should monitor closely and report on the operation of the new financial support arrangements. We are particularly interested in the possible impact of those arrangements on the number of applications from potential students with no family tradition of going to higher education.

71. The repayment of student loans for students domiciled in England and Wales will begin when the graduate's income exceeds £10,000. The repayment will be 9 per cent of income above £10,000 until the loan is repaid. An alternative scheme was proposed by the Cubie Committee (see Annex 1), which recommended that contributions to the proposed Graduate Endowment scheme would begin once the graduate's income exceeded £25,000. The Scottish Executive chose not to set up an alternative loans scheme to run alongside the existing student loans company repayment arrangements. Changes to the existing scheme would be a matter for the Westminster Parliament. We believe that the income threshold for repayment of student loans in England and Wales, and also in Scotland and Northern Ireland, places too great a burden on graduates' income, and that the income threshold should be raised.

53  Ev. p. 87, paras 9-11. Back

54  Ev. p. 87, para 13. Back

55  A number of special initiatives were previously available to promote wider access to higher education, funded by the HEFCE and its predecessor bodies. These initiatives are detailed in Ev. p. 90, Annex B. Back

56  Q. 1099. Back

57  Q. 1101. Back

58  Discussion paper from the Funding Options Review Group, chaired by Sir William Taylor. CVCP, September 2000. Back

59  Funding for widening participation in higher education: new proposals 2000-01 to 2003-04, HEFCE, 2 November 2000. Back

60  Q. 90. Back

61  Q. 111. Back

62  Q. 239. Back

63  Q. 222. Back

64  CVCP, From Elitism to Inclusion, May 1998. A second phase of this research was commissioned by the CVCP, Standing Conference of Principals, the Council for Industry and Higher Education and all the higher education funding bodies for Scotland, England, Northern Ireland and Wales (See CVCP Press release, 19 June 2000). Back

65  Q. 227. Back

66  Q. 267. Back

67  Q. 265. Back

68  Q. 263. Back

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