House of Commons - Innovation, Universities and Skills

Select Committee on Innovation, Universities and Skills Third Report

4 Implementation

58. The Government and HEFCE have put in place a number of transitional measures to allow institutions to adjust to the new funding arrangements for fees. Transitional protection will mean that no institution will lose money in cash terms against its 2007-08 baseline allocation over the next three years. That protection would exist even if those institutions did not successfully attract a single additional student and, as the Minister pointed out, was provided "on the back of an expansion of the higher-education budget".[105] On timing, he made the point that implementation would be phased and that in 2008-09 only 0.2% of the overall higher-education budget would be affected.[106] Professor Eastwood from HEFCE considered that higher education institutions would have "ample opportunity to make adjustments in provision, recruitment and additional student numbers".[107]

59. The higher education sector had concerns about the adequacy of the transitional arrangements. Although Professor Gourley from the OU said "we will manage the first three years with the safety netting", she considered that the three year safety netting would still "cause damage", particularly after the safety net was withdrawn.[108] She said that the problem was magnified for the OU because the ELQ changes would take 29,000 students out of the OU's system which was a serious part of its business.[109] Of particular concern was what happened after the safety netting ended because the OU created courses over a longer period of time than "ordinary institutions".[110] More time was therefore needed to re-design its courses to adapt to the loss of ELQ students. The NUS was concerned about the viability of courses. It pointed out that ELQ students were taught in the same lecture theatres as other groups of students, and if this funding was cut then it could damage the viability of other courses and therefore have an impact across the sector on those first-time students as well.[111]

60. In his evidence, Professor Latchman from Birkbeck College posed a number of questions on the transitional arrangements which he said have not been answered:

While core grant activity will be safety netted, will the net also cover the widening participation element of grant?
Is the capital allocation for buildings going to be maintained even though that has an element of student numbers in it?
Will any additional resource attracted by co-funded students reduce the safety net?[112]

61. The detailed operation of the safety net is not clear. The Government needs to explain in detail how the safety net will work so that institutions can adequately plan their finances for the period of the transitional arrangements. In particular, the Government must clarify the points raised by Professor Latchman.

62. In our view three years is an adequate period for transitional arrangements and the higher education sector as a whole could not reasonably expect a longer period. It should give most higher education institutions enough time to make adjustments to their courses and to attract first-time students to fill gaps left by withdrawal of ELQ funding. We recommend that this be the subject of a short, sharp, interim review by HEFCE, with whatever recommendations to Government prove necessary.

63. We recognise that additional measures may be needed to assist those higher education institutions particularly badly hit by the withdrawal of funding for ELQ students and recommend that the Government provide for such additional measures.

Exemptions proposed by HEFCE

64. As part of the September 2007 consultation, HEFCE sought views on exemptions from the withdrawal of funding for ELQ students.[113] The list offered drew directly on earlier arrangements to restrict support to students taking second undergraduate degree courses, in particular the Education (Student Support) Regulations 2007[114] and the Student Fees (Qualifying Courses and Persons) (England) Regulations 2007.[115] In summary, these regulations provide that students who already have a degree from a UK institution are not eligible for a loan to pay their tuition fees unless they are studying for a postgraduate course in teacher training or taking certain two year courses.[116] Loans for living costs are only available for students studying designated courses: social work, initial teacher training, medicine, veterinary surgeon, architect, landscape architect, landscape designer, landscape manager, town planner or town and country planner.[117] There are also exemptions for students on courses leading to qualification to practise as a nurse, midwife, social worker or in other related healthcare.[118] The September 2007 package of exemptions uniquely added an exemption for Strategically Important and Vulnerable Subjects (SIVS),[119] subjects that have an importance either to the economy or to the welfare of society. SIVS cover:

a) science, technology, engineering and mathematics;

b) area studies and related minority languages, including:

Arabic and Turkish language studies and other Middle Eastern area studies, former Soviet Union Caucasus and central Asian area studies;
Japanese, Chinese, Mandarin and other far eastern languages and area studies;
courses relating to recent EU accession countries, especially those in Eastern Europe and the Baltic states.

c) modern foreign languages;

d) land-based studies;

e) quantitative social science; and

f) Islamic studies.

65. In January 2008 HEFCE Board endorsed the September 2007 package of exemptions, subject to the following changes:

a) to review annually the levels of demand in exempt and protected subjects, and other subjects which might in future have key economic or social significance, but at this stage not to exempt additional subjects;

b) to give further consideration to exempting students in receipt of the Disabled Students Allowance; and

c) to exempt students studying in Northern Ireland with the OU.[120]

66. During our questioning of him, a further concession was made by the Minister when he informed us that he would ask HEFCE to consult with interested parties, and respond within two months, on the training of theologians and religious teachers.[121] We welcome the immediate review of support for those studying theology as an ELQ and recommend that the Government exempt those studying theology as an ELQ from the withdrawal of funding.

67. A major criticism running through the representations we received was the inconsistencies in the exemptions. For example:

Those with responsibility for teaching pharmacy (not exempted) could see no reason why pharmacy, especially given the shortage of pharmacists, should be treated any differently to the health-related subjects that were exempt.[122]
Christian theological institutions questioned why they were not exempt when Islamic Studies were.[123]
Those with responsibilities for Computer Science, Computing and IT argued that since IT was a strategic subject and the level of provision fell short of demand from employers, it should have Strategically Important and Vulnerable status and be exempt.[124]
The Council for the Mathematical Sciences was concerned that the ELQ policy would undermine the Government's targets for increasing the number of specialist teachers in SIVS by introducing disincentives to retraining or up-skilling in these areas.[125]
The Association of Business Schools argued that list of SIVS was neither meaningful nor a fair basis on which to protect ELQ funding as it conflated two very different sets of issues—national importance and market demand—and it did not include for example, management and leadership development, which the Government itself (via the Council for Excellence in Management and Leadership) had accepted as being of major strategic importance to improved productivity and international competitiveness.[126]
The Tavistock and Portman NHS Foundation Trust asked why nurse-qualifying courses were exempt but continuing professional development programmes for all mental-health professionals, including post-registration nurses, were not listed as exempt.[127]
Bodies representing psychiatrists and psychotherapists considered the withdrawal of ELQ funding to be in conflict with the Department of Health's emphasis on continuing professional development and the acquisition of skills to facilitate transfer across levels in the workforce and pointed out that previous study and experience was a requirement for certain studies and that, if courses were not exempted, it would have a serious effect on higher education institutions' ability to offer affordable courses.[128]
The Royal Veterinary College considered it essential that unless the exemptions included students studying for a first registerable veterinary surgeon qualification the progress it had made to facilitate graduate entry to its professional veterinary degree would be undermined.[129]
Conservatoires UK said that the training process for performers at the highest level required several years of postgraduate study, and because the professions these students entered were supported by public subsidy, co-funding from employers was unrealistic and that a consequence of the ELQ policy would be that the best students would seek more affordable training outside the UK, thus undermining the reputation of UK higher education in these areas.[130]
The British Association for Applied Linguistics was concerned that the ELQ proposals would impact on those wanting to change careers in response to global market developments, in particular to upgrade their qualifications in applied linguistics and related subjects.[131]

68. In the time made available to it by the Government, HEFCE appears to have had little choice other than to use the exemptions provided in the Student Support and Student Fees regulations with an exemption for Strategically Important and Vulnerable Subjects bolted on, both elements of which were designed for other purposes. The result is unsatisfactory. We cannot see, for example, why the Government was prepared to make a special exemption for theological students[132] but not others. The exemptions were also originally designed before the Leitch Review was published. We conclude that the exemptions proposed by the Government are inconsistent and unsuitable for determining state support for the fees of ELQ students. We conclude that the Government ought to have asked HEFCE to design exemptions from the withdrawal of funding for ELQ students that aligned with the Leitch review to focus on students and courses likely to provide the greatest benefit to the economy or to meet skills shortages. Of the alternatives offered, by Birkbeck College for example, we conclude that the best case could be made for part-time students following courses that lead to re-training and hence value to the economy. Given the proposed policy of the Government, there is, however, no feasible alternative to the subject-specific basis for exemptions.

69. We are unclear about the financial consequences of the changes to the exemptions announced by HEFCE in January 2008. We recommend that the Government in responding to this Report clarify the effect that the widening of the exemptions and the provision of additional resources for part-time students will have on £100 million ear-marked for first-time students and whether resources will be taken from other parts of the higher education budget.

Reviews of exemptions

70. In oral evidence the Minister explained that there would be annual reviews of exemptions and that the first review would start in December 2008.[133] Given the concerns expressed about the exemptions and our conclusions about their inconsistencies, we consider that a comprehensive review is needed before December. Such a review should iron out the inconsistencies and put the exemptions on a secure footing. If the review is comprehensive and underpinned with consultation with the higher education sector, employers and interested parties, it could also obviate the need for annual reviews. We recommend that the Government bring forward from December to the summer the first annual review of the exemptions for the withdrawal of funding for ELQ students, widen the terms of the review and carry out a full consultation as part of the review. We further recommend that the Government set out the financial consequences if the proposed reviews extend any exemptions; in particular, will there be offsetting withdrawal of exemptions for other ELQ students?

Policing the arrangements

71. Professor Latchman from Birkbeck raised concerns about the enforcement arrangements for the new policy on ELQs. He suggested that the only way that the policy could be implemented would be to maintain a database of students' qualifications. He argued that, if higher education institutions had to ask students to register whether they had an ELQ, universities would:

spend huge amounts of money on policing this system on behalf of the government because we will have to investigate qualifications, we will have to find out whether those things have been properly recorded, and there will be a huge incentive to students who graduated a number of years ago to lie because there is no national database that you have to check it with.[134]

72. The Minister replied that he would shortly be asking HEFCE for advice and then guidance would be issued.[135] He considered that most people did, and would, obey the rules, but that there would need to be a random checking process. In some cases universities might need to check with the previous employers and previous education establishments to corroborate that particular students did not have a first degree. He accepted that "we will have to do that in a way that we get the balance right between protection and not an overly bureaucratic system".[136] He explained after the evidence session that in all cases HEFCE would work with institutions to audit feasible student numbers and final HEFCE funding would be determined on a basis of audited returns through a robust audit process.[137] Professor Eastwood said that HEFCE would offer good practice guidelines to institutions in March 2008 and confirmed that it would work with institutions to audit numbers, with final funding determined on the basis of audited returns.[138] He too envisaged that there would be "some additional dipstick-type checking mechanism in order to have a robust audit process".[139]

73. We recommend that the Government produce as a matter of urgency comprehensive and clear guidance for higher education institutions and students to ensure that they understand and follow the funding rules on fees for ELQ students. The guidance needs to clarify the responsibilities of higher education institutions, whether they have a duty of due diligence and who should bear the financial consequences for an ineligible ELQ student who either unwittingly or by deception obtains government support for his or her fees.

105 Q 68 Back

106 Q 76 Back

107 Q 118 Back

108 Q 57 [Professor Gourley] Back

109 Ibid. Back

110 Ibid. Back

111 Q 47 [Ms Tumelty] Back

112 Q 55 Back

113 HEFCE, Withdrawal of funding for equivalent or lower qualifications (ELQs) Consultation on implementation, HEFCE Reference 2007/27, September 2007, http://www.hefce.ac.uk/pubs/hefce/2007/07_27/ Back

114 SI 2007/176 Back

115 SI 2007/778 Back

116 SI 2007/176, Regulation 18 (1) Back