Oral Evidence

Taken before the Business, Innovation and Skills Committee

on Tuesday 22 March 2011

Members present:

Mr Adrian Bailey (Chair)

Mr Brian Binley

Paul Blomfield

Katy Clark

Mr Dan Jarvis

Simon Kirby

Ian Murray

Mr David Ward

Nadhim Zahawi

_______________

Examination of Witness

Witness: Lord Browne of Madingley, FRS FREng, Chairman, Independent Review of Higher Education Funding and Student Finance, gave evidence.

Q1 Chair: Good morning Lord Browne, and thank you for agreeing to come before the Committee. Just before we start, could I ask you to give your name and title, just for transcription purposes and voice levels?

Lord Browne of Madingley: Certainly. My name is John Browne, Lord Browne of Madingley.

Q2 Chair: Thank you. I am going to start with a somewhat philosophical question. What do you think universities are for?

Lord Browne of Madingley: In my view, universities are for two things: first, to promote the discovery of new knowledge in civilisation; and, secondly, to promote the understanding of that knowledge through teaching and communication.

Q3 Chair: That was a somewhat philosophical reply. Can you tell us in detail?

Lord Browne of Madingley: I am afraid it was a philosophical question.

Q4 Chair: What role do you think it has in, in effect, providing the knowledge, balance and skill sets for the needs of the economy and society that it serves?

Lord Browne of Madingley: Well, very great. I think it is reasonable to say that a more highly educated society-a society that is incentivised to innovate and create more people who participate in the education that comes from research and innovation-is a society that grows better, is more fundamentally rooted and creates stability and more economic activity for every member of society. So it is a very important driver in today’s context of the future of the economic and financial strength of any nation.

Q5 Chair: Some commentators have suggested that your review was driven by an ideology or a particular view of higher education. Do you agree, and if so, what was that view?

Lord Browne of Madingley: No, I do not agree. We were not charged with coming up with an ideology. Rather, we were charged with coming up with a sustainable way-and I do stress that-of financing universities and providing support for students. Support for students and financing higher education is what we went about trying to do. We set ourselves three particular areas to work on. One was participation-making sure that that was appropriate and didn’t go backwards after tremendous strides had been made over many decades in this area. Secondly, it was important that the quality of higher education would always rise, which is given by the very fact that there is more knowledge, more competence and more competition. So, quality had to go up. Thirdly, whatever system we came up with had to be sustainable-in other words, it would not be pulled up by the roots, with the roots inspected every two to three years, which had been happening, because that is destabilising for just about everybody. Every transition any system goes through, whatever that system is, is very destabilising for those involved in it. We were asked to look at something that was long lasting to get to a degree of stability. I suppose, in that area, we had to look to see what was the right and proper role for the different people and different participants in higher education.

Q6 Chair: Can I just pursue that? You seem to imply that, in effect, you wanted a model that had long-term sustainability, but you also implied that previously there had been, if you like, non-sustainable models. Really, the post-Dearing proposals have sustained for quite a long time, and whilst they may have been tweaked, I would have thought that the basic model was fairly adaptable.

Lord Browne of Madingley: I think there were several changes in the way in which, post-Dearing, the development took place. After all, the late Ron Dearing did, to the best of my knowledge-if I remember this correctly-recommend that there should be a system where no fees were paid up front by students. In adopting his report, fees were made to be paid up front by students. So there were several changes to get, I think, to some of the points that even Ron Dearing had made.

Q7 Chair: Yes, but the model was sustained for quite a long time, with variations in the amount, obviously.

Lord Browne of Madingley: Well, I leave it to you to judge your own view of the definition of a model, but I would say that there have been many changes over the last decade or so.

Q8 Mr Binley: I think there is a general view that the work you did is absolutely vital for future well-being-not only of universities, but of our nation and commercial well-being. My question is across the party political piece. This is not a party political operation in any sense at all. Are you saying, in the crudest possible terms, that the drive to increase the market for university students was not matched by the genuine thinking necessary to finance that growth?

Lord Browne of Madingley: Everything is related to everything in this area, it seems to me. When we were looking at our task, we realised about 25% of the way through that if you change one part of the system-whether that is finance, participation, quality, regional scope or a whole variety of things-something changes somewhere else. So, in thinking through a system that had, over the last half century, gone from 5% of 18 to 23-year-olds going to university, as I think it was, to somewhere approaching 45%, we realised that things had to be looked at afresh. In addition, very importantly, I think we had all modelled or captured in our own minds this idea that a student was a woman or a man of about 18 who would go away from home to a higher education institution and stay there for three to four years. Actually, that is not 40% of students. They are much older, they are working, and they are studying part time. They are doing something really very important for the economy and for themselves. Either they have not had the chance to go early on through particular circumstances, or they have not had the desire because no aspiration was created in them at school or, simply, they did the wrong thing. But fully 40% of students do not fit the standardised mould. I say that just to show that you have to think about these changes over time and how they might change in the future. As people work longer, they will probably need to be re-qualified more often.

Q9 Ian Murray: I just wanted to look again at this word "sustainability" in terms of the conclusions of the report. Is it the case, in your view, in terms of sustainability, that the state should not contribute at all to universities unless the money has been fully recouped from the graduates themselves? If you were to draw a spectrum of full public funding to absolutely no public funding, would it be that the universities, in terms of sustainability, would be at the "no public funding" end of the scale and the funding would come directly from graduates?

Lord Browne of Madingley: Absolutely not, and that was not the conclusion of the report either. I stress that these are recommendations; they are not policy emissions. Our recommendations were in effect to look at the unique role of the state in this area-which was, in fact, to provide loans, not to universities, but to individual students themselves-and to recognise that these loans will not necessarily be paid off. In fact, between 30% and 40% of them will be written off in one way or another. That is correct, because people go to university and their circumstances change. They might conclude they wish to do a job that has tremendous appeal to them, but is not paid more than £21,000 a year, or they may come in and out of the work force in order to have children. A variety of things like that happen. They might actually decide just to go and pursue something very personal outside the work force. You can think of hundreds of examples. It is therefore right and proper that the state should make that happen. We view that the cost is at least that of providing the means that other people would never provide for people to access university-that was one. Our second point was on providing additional support for certain subjects that are deemed from time to time to be strategically important or vulnerable. Our final point was to provide much more additional support for subjects that are very expensive which, if they were not put on a more level playing field with other subjects, people would be put off from, or there would be a bias in the way in which people took up the subjects. Those are examples of the things we thought were very important that were kept as part of the duty of the state.

Q10 Ian Murray: Am I right that you said that 30% do not pay the loans back?

Lord Browne of Madingley: It is 30% to 40%. I think it is about 36%, on average, but I can check that.

Q11 Ian Murray: Is the natural conclusion to draw from that, then, that the system is unaffordable?

Lord Browne of Madingley: No, I do not believe it is. Obviously, you would have to ask the Government how they will balance all calls on the Exchequer. But one has to say that there is a role here, and that there is a cost for making this happen. We believe that we have identified, at least, the cost which is sustainable.

Q12 Ian Murray: Sorry, I do not mean not affordable to the Treasury; I mean not affordable to the student, if 30% to 40% will essentially have these written off. Does it not suggest that the system is unaffordable if 30% to 40% essentially default on the payments they have to make?

Lord Browne of Madingley: Not at all, no, because others will pay back the loans-some very fast and some more slowly. This is a modelling analysis, if you will, of the distribution of graduate pay, and the demographics as we see them developing going forward. Broadly similar results were identified by the review team using BIS modelling techniques and also by the IFS (Institute of Fiscal Studies), which came up with very similar answers.

Q13 Katy Clark: A major plank of the proposals seems to involve what are called new providers, and there is a fear that what this means will be private companies coming in and calling themselves universities, but really looking quite different from what we have traditionally understood universities to be, perhaps with a greatly reduced range of subjects and a far more commercial than academic orientation. How would you respond to those who have very serious concerns about this as a direction for higher education?

Lord Browne of Madingley: In the report we simply said that they had to qualify for the right standards and that they had to be admitted with the right standards for granting degrees. Therefore, they should compete. It sort of happens now. Obviously, the University of Buckingham is a private institution and the BPP has been admitted as a university college-that has taken place now. It seemed to us that it was right and proper insofar as they hit the right quality standards and those standards are maintained.

Q14 Paul Blomfield: May I just ask a supplementary on the point you made to my colleague a moment ago? You said that you felt it was necessary for the state to provide support for STEM subjects because you were worried that costs might put off students. Were you not worried that trebling the cost of fees would in itself put off students, and particularly those from debt-averse families in which nobody had previously participated in higher education?

Lord Browne of Madingley: We observed several things. Again, I think in the bulk of the evidence that is available on the website, and which is part of this report, we concluded a couple of things about how people went to university. The first is that we felt that the really deep understanding of what happens to you when you go to university needed to improve-in other words, what you were really doing. Secondly, the ability to afford to live at university was very important. That was why we recommended that the so-called maintenance grant went up. We did believe that if the information was correctly communicated-and I do stress correctly communicated-these loans, which are not up-front loans like credit card loans or mortgages but are contingent payment loans, would be viewed as part of a very different system. Payment is made only if you earn over £21,000 and via a small percentage, inflated with wages for ever. I just note that 40% of all students who are actually in part-time education pay their fees up front, and that does not seem to put people off. You really have to understand it. Obviously I have no role in this at all, as my commission, as it were, expired on 10 October last year, but people still do come and talk to me and give me both good and bad comments. However, I am struck by the number of people who still think that a student loan is something that a parent has to take out. That is not true. A loan is only taken out by the student and is only payable by the student when the student can afford to pay it, so it is a very different situation.

Q15 Paul Blomfield: Can I just press you on the specific point that you, in answer to my colleague, obviously felt that high fees would put students off STEM subjects? Did you not think that that would apply more widely to other subjects?

Lord Browne of Madingley: Let us be clear: the subvention for the STEM subjects actually goes to the university, not to the student, so that the university neither does not offer the subject, nor reduces support.

Q16 Paul Blomfield: I understand the system. I am just interested in the thinking that led you to ensure that there was support for STEM subjects, but not for others.

Lord Browne of Madingley: Well, quite simply, there is support for every subject.

Q17 Paul Blomfield: But to keep fees at what you described as a level that would not put people off-

Lord Browne of Madingley: Quite simply, it was to keep the playing field broadly level for all subjects-that is why. It was to make it not impossible for people to climb barriers that could be so high that they would put people off.

Q18 Mr Ward: I would like a discussion in more detail about the difference between the perception of the proposals and the reality of them. However, to begin with, I worked in universities for 25 years-up until the day I came here-and two things were evident. First of all, there was a very large increase in the number of students. Secondly, there was a great reduction in the resource available per student, staff-to-student ratios and other resources. Leaving to one side the contentious issue of who should pay, was that something that you identified for the sector as a whole, and was there an issue of quality and sustaining quality for the sector, particularly in terms of international comparisons?

Lord Browne of Madingley: We found no evidence that quality had been sacrificed. We wanted to make sure that that would be the case going forward, and that, in a competitive environment, people did not trade off quality for volume, for reasons that are obvious. We just wanted to make sure that did not happen. We wanted to make sure that that was the case going forward, so quality was a very important plank in what we did. We stressed again and again that minimum standards of quality had to be maintained, but that the only way of driving quality itself was to provide the right level of competition among different higher education institutions within the country, and also from those institutions outside the UK. It is very clear, for example, that as time is going by, there are institutions offering undergraduate, and certainly Masters, degrees that are taught in English in places that are not in England or America. Competition is very important to keep quality up. The reason we applied that is because, after a lot of analysis of research work that had been done previously, we found no work that gave us any comfort that you could actually measure quality in advance of taking a degree.

Q19 Chair: I was rather puzzled when I saw the figures for the spend on your budget. There was actually a sizeable under-spend in your research budget. Whilst that might well reflect commendable frugality, I am a bit concerned. Are there any areas about which you feel, in retrospect, that you should have explored but did not, and did you have adequate time to deal with all the issues you had to?

Lord Browne of Madingley: Chair, I am afraid that I have never, ever seen my budget, because that was handled by an official. If I may say so, I do not actually know what you are talking about.

Q20 Chair: We will happily provide you with the figures. I must say, that is perhaps an interesting way of managing government budgets. We might look at it again in future.

Lord Browne of Madingley: Of course, I want to remind you that we were independent. We were not part of any government, and we fiercely kept our independence.

Q21 Chair: But you had to have a government budget.

Lord Browne of Madingley: I think anything we wanted to do probably would have been paid for. We were very careful about how we spent public money, and we asked people to do work for us pro bono. We saw no reason why we shouldn’t. The other thing that we were struck by was the huge amount of work and research that has been done in higher education. Actually mining what people had already done was an amazingly worthwhile thing to do. Of course, much of that had been paid for by public money previously, so it seemed to us to be a good idea to use it efficiently. We did commission all sorts of research, as we needed. For example, we commissioned London Economics to look at different higher education systems around the world on a consistent basis, so we looked at 13 of them to make sure that we understood what was going on, whether we could find best practice, whether there was something that we wanted to avoid, and whether there were any myths that we should dispel, certainly in amongst the members of the panel. I will remind you that the members of the panel had to come together and have a common and shared understanding of the problem we were dealing with, which meant getting rid of some of the myths and preconceptions before we could start our work. We did quite a bit, and I think you can see that in however many-I have forgotten-megabytes of information there are on our website. This report is designed to be a very short summary of what we actually did.

Q22 Chair: Would you have done more if you had had more time and you had known that you had more money?

Lord Browne of Madingley: No, we would not.

Q23 Nadhim Zahawi: Thank you, Lord Browne, for coming here to give evidence. Before I start my questions, I just want to ask you about a technical point. You mentioned that 36% in the model will be students who will not pay back the loans, and that the model had been done by the BIS Department modelling team as well as the IFS. Can I ask you what the tolerances around that model are-that is where does the model break?

Lord Browne of Madingley: Let me say immediately that, as I think was expected, I did not do the modelling myself, and in fact a set of analysts who work for BIS today-I think they work in different roles-were part of our team. We were quite concerned to make sure that the results were broadly stable, and I think our best test was the comparison of the BIS analysis with what IFS did. The assumptions decks were drawn up differently; they weren’t aligned assumption decks. I think that is really quite an important test. If two people with two different reasonable set of assumptions can come up with broadly the same answer, that means it is not a bad piece of simulation.

Q24 Nadhim Zahawi: I hear you, but government models are notoriously inaccurate. It does make you feel a bit more confident that two different analyst teams have come together to the same place from different points of view. Really, my question is: what was the tolerance? Is it a 20% tolerance or is it a 5% tolerance? Where are we on the tolerance at which the model would break and the Government would have to find additional funding?

Lord Browne of Madingley: Well, again, the answer is that it is actually quite a narrow range because of the vast sample sizes that were being dealt with.

Q25 Nadhim Zahawi: What is the range for the tolerance?

Lord Browne of Madingley: I cannot remember; I think you would have to ask BIS directly for these answers.

Nadhim Zahawi: Maybe we will go back to BIS, Chair.

Lord Browne of Madingley: Whatever models say, it is always important to recognise, as I think you are saying, that they are just a bunch of numbers. That is true for all forecasts of all things, I would say. I say that as an engineer by background. I think you therefore have to take the model and look at the process around it and the procedure you are using to take into account different eventualities. That was why in the proposed processes of this report there were several things that kept expenditure controllable. The first was the levy. As the fee went up, a proportion went back to the Government. That meant that people were charged more-they had to pay for people who weren’t charging so much because their risk was going up. The second was at the bottom level, which is the admission of numbers, and related to very minimal standards of ability to learn. Those two things kept the number of people and the cost of the people under broad control. It was very important for us to bring together something that had a degree of certainty in a very uncertain world.

Q26 Nadhim Zahawi: As a chemical engineer I get that, but it is still important for the Select Committee to know what the tolerance is around that.

Lord Browne of Madingley: I think you need to ask the analysts for that.

Q27 Nadhim Zahawi: In a speech on 30 November, Vince Cable referred to having spoken to you to ask you to look at making the funding system more progressive. Can you tell the Committee a little more about what that conversation was about?

Lord Browne of Madingley: Let me say that he was not the only person to come and ask us to do a variety of things. I would say that we were brought together under a Labour Administration and we carried on through a coalition Administration. We had plenty of people come and ask us to do things, and we agreed to listen to all of them and did what we thought was right. We did not necessarily agree with them and we did not necessarily disagree with them, either. Dr Cable asked me for a couple of things. He asked me to look at the graduate tax. It turned out we were already looking at that anyway, because the NUS had provided two or three different versions of that to us, and we were obviously going to examine it. Secondly, I think he suggested that we looked at progressed progressivity. We were, again, already looking at that. Obviously, that is why we had the £21,000 threshold for repayment. We were looking at different rates at which we would have repayment schedules modelled, but we did not want to make any changes that were not absolutely essential, and we felt that we had got to that point. So, did his request actually make us change what we were doing? It might have reminded us to look again, but I do not think it changed the drift of our work.

Q28 Nadhim Zahawi: When did that conversation take place? Do you remember?

Lord Browne of Madingley: I cannot remember.

Q29 Nadhim Zahawi: Your answer implies that there was no change of reference. Did you feel there was a change in the terms of reference of your review after that conversation?

Lord Browne of Madingley: I do not think so at all. We maintained our terms of reference as published in the report. We continued with these terms of reference.

Q30 Nadhim Zahawi: The Government have obviously chosen not to adopt all your recommendations. What do you think of the system they propose instead?

Lord Browne of Madingley: It is too early to tell, because we have not yet seen a White Paper, which I think contains the bulk of the recommendations. This report is not about a fee cap; it is about rather more than that. The debate has been around the fee cap and certain aspects of widening participation and fair access-only certain aspects of it; not the bulk of it-so I think one has to wait until we look at the White Paper before assessing how it went overall. My sense is that in this, again, we were not charged with drawing up legislation; we were charged with providing a report of recommendations. Obviously we support the recommendations we made-if we didn’t, we would not have made them. If we had supported another set, we would have made those, so we support what we said, but they are recommendations.

Q31 Nadhim Zahawi: So let me just push you a little bit further on that, in terms of your opinion being independent. What problems do you foresee due to the gap between your report and what the Government are actually adopting?

Lord Browne of Madingley: Well, I come back to this one point: everything is a system. In this case, it is a rather intimately linked system. Changes in one area mean that you are therefore required to think through the consequences-unintended consequences-around the rest of the system. Changes in the way in which fees are levied, changes in the way in which they are paid back, changes in the way in which participation takes place and changes in the number of students coming in all make differences that need to be thought through. That is why I genuinely think that until you see the White Paper, it is premature to say what actually is going to happen here.

Q32 Nadhim Zahawi: As you quite rightly point out, it is a system, and if the Government tinker with the system because of politics, the law of unintended consequences then comes into play. The Government should actually be careful what they wish for when they begin to tinker with what, as you quite rightly outlined, is a complex system. Do you have any fears?

Lord Browne of Madingley: I am always very reluctant to give advice to politicians, because that is what you do-I do not do that. I think that is important. I come back again and again to this point: in my view, and I believe in the panel’s view, we need a system that is sustainable. It is not right and not appropriate to have a system that can work for a couple of years, after which we do it all over again. All change is very tough, in my experience. It destabilises everybody and it never appears fair to everybody, so there is the fair and the unfair, just by definition. You want to minimise the number of times you do that, it seems to me. That was why, when we were asked to look at something that is a sustainable system, we thought that was a very good idea. I think I would be sad, simply as a citizen, to see that the system was not sustainable for the future and was simply consigned to the inevitability of producing another report and another idea every two or three years.

Q33 Nadhim Zahawi: Are you seeing signs of those dangers?

Lord Browne of Madingley: I don’t know yet. Again, I need to see what is going to happen in the totality of the ultimate legislation that will make all this work.

Q34 Chair: One point on this independence issue. You say that you were totally independent, and yet you used the BIS departmental model basically to assess different options. Do you not feel that in some ways it has perhaps compromised your independence?

Lord Browne of Madingley: Not at all. We did quite a lot to make sure this independence was both symbolic and real. The team was moved out of the BIS building in 1 Victoria Street to Kingsgate House, which was pretty well emptied-ready, I think, for some other activity. We sat on what was not a very nice floor, but it certainly did us. I did not want to have any senior civil servant or Minister just wander by the team and have a little chat, and for that little chat to then be interpreted as instruction, so we moved people out. We obviously used the BIS model because to reinvest in that would have been a destruction of value, I think. But we used it; they didn’t-that was the important thing. The people operating it were two analysts who were part of our team. All the papers were independent. Of course they were all publicly accessed, but we were very clear that we were, insofar as was possible, independent of a Government Department.

Q35 Mr Binley: Lord Browne, you were telling us that you thought very carefully about the comprehensive model that you were proposing, where each piece was interdependent on the other. You have made that point very sizably. What advice did you give to the Government in that respect when you delivered your report? It seems to me that if one or two pieces of the jigsaw are missing, that could be a rather serious issue. What advice have you given to the Government to say, "Look, for God’s sake, recognise that this whole thing hangs together?"

Lord Browne of Madingley: We gave the advice to the Government, very publicly, in the foreword to the report, which basically said-and you can read it again-that, "You should not underestimate the work needed. It is a system." It also said that we should not lose sight of the powerful role that higher education will play in continuing to build the greatness of this nation. All the advice that we gave was contained in the report. Remember, please, that we delivered this on 12 October and we were disbanded by that evening, so we do not exist, and we did not exist then. The same advice went to all parties as well, very importantly.

Q36 Mr Binley: I understand that was there, and that is why I think we want it on record, because it is a very important part of what you are saying to us.

Lord Browne of Madingley : I hope that the direct recommendations will remain in the foreword, and we obviously stand behind that.

Q37 Paul Blomfield: Lord Browne, your proposals, even more than the final settlement that the Government are taking forward, would have created a US-based system with a completely free market. You said in response to a question from the Chair that London Economics carried out an assessment for you of 13 different higher education systems around the world. I assume that that included the US ?

Lord Browne of Madingley: It did.

Q38 Paul Blomfield: What evidence was there from the US experience that that market drove quality to be improved at every level of the system? Clearly there are some outstanding universities in the States, but is there quality improvement at every level of the higher education system in America?

Lord Browne of Madingley: I do not believe that we have proposed a US-based system-that would be my first point.

Q39 Paul Blomfield: The proposals that you made for no caps on fees would have been pretty similar to the financial model in the States, wouldn’t it, in terms of creating a market?

Lord Browne of Madingley: No, because the critical point here is that students would not have to borrow money to go to university and then have to pay it back in a mortgagestyle way. They were contingent loans payable only on earning power, which is very different from the bulk of the university systems in the United States, so I think there is a very big difference. Secondly, in the system that we proposed, there was to be a higher education council that still retained a degree of discretion-albeit we wanted to cut back some of the discretion-to re-examine a variety of things such as vulnerable subjects and strategic balance. Thirdly, there was to be a universal approach to qualifying people for loans under our proposal. These are very different from the state-by-state variations that you see in the United States. Equally, for the purposes of improving quality, we recommended competition among higher education institutions. That competition could not take place without some boundaries to the competition. This market is not a perfect market; it is prone to failure. Therefore, the failure had to be considered in the regulatory apparatus that we recommended to allow this system to work. I think that that is important. Competition is there for sure, because it drives quality, much as competition is there in the States, but it does break down in lots of places. It certainly has driven quality at the top end; it really has driven it.

Q40 Paul Blomfield: With respect, that is precisely my point. What evidence is there that it has driven quality throughout the system in any of the higher education systems that London Economics looked at for you?

Lord Browne of Madingley: I think in quite a few it seems to indicate that competition has improved quality or is expected to improve quality. Australia and New Zealand are two examples of that, and I think Finland is a third. I forget the details exactly, as it is now five and a half months since I last read about them.

Q41 Paul Blomfield: Was there evidence from looking at those systems that competition and a market in fees had an impact on access for those from lower income families?

Lord Browne of Madingley: Very mixed answers, I would say, because the approach to access is very different here. Again, what is clear is that having no up-front fee, which is the key feature here, is one point. The second point is that there was money given for people to live on, so that maintenance, which is a very expensive aspect of providing student support-and we wanted to make it even more expensive, because we thought it was so important-is given up front in living expenses, combined with real information about what it means to go to university, what you have to do to get there, why you need to aspire to it, and what it would mean to you when you are through the process. These sound easy, but they are difficult to do. But all the evidence-that package of things including all the 160-odd bits of evidence, the many hundreds of hours of oral evidence and our discussions with the stakeholder groups in the advisory council-seemed to point towards the same view that, yes, these were the things that would control access, not actually the fees.

Q42 Paul Blomfield: Following on the Chair’s theme about the opportunities that there were within your research, you were tasked in the terms of reference with looking at postgraduate education, but in your report, I have to say, you fairly lightly dismissed that whole area. Now, given your comments this morning that the whole higher education system is entirely interrelated, and that a decision taken in one part has a consequence in another, many Vice-Chancellors to whom I have spoken are deeply concerned about the impact of the new funding regime on postgraduate-taught courses, for example. Do you not think it was a mistake to fail to look at that area?

Lord Browne of Madingley: No, I do not, because I think we were asked more precisely to work with Professor Adrian Smith’s review of postgraduate study. That was actually what we were tasked to do-not to examine postgraduate study, but to look at Professor Adrian Smith’s work on postgraduate study. We did, and we concluded, at that stage, that there was no evidence base for us to do much more other than to say, "We should now examine and watch carefully what is going to happen in the future as the undergraduate system is changing."

Q43 Paul Blomfield: So you had no discussion within your committee about the impact on postgraduate taught?

Lord Browne of Madingley: We had plenty of discussion, and it was unclear. We were worried about how to divide postgraduate taught and postgraduate research. We concluded in the end that the less done the better in this area, for the time being. It seemed to work, and we wanted to watch and wait before anything else happened.

Q44 Paul Blomfield: The Secretary of State clearly made his views known to you about the direction of much of your work. Did he concur with your decision not to examine postgraduate education in the way that the terms of reference suggested you might?

Lord Browne of Madingley: We did not ask him. We did not ask either Secretary of State who looked after us-neither Lord Mandelson nor Dr Cable. We did not ask them any questions about the terms of reference. We looked to see what we could do. We were given a deadline of the autumn of 2010, and I think October was late enough in the autumn, verging on winter, for us to have to finish. I will remind you that we were working with a small unit from BIS, and with seven volunteers who were the members of the panel.

Q45 Chair: Could I just ask you about the issue of public opinion? There have been press reports that your recommendations were based on the results of one opinion survey carried out by Opinion Leader. What are your comments about that?

Lord Browne of Madingley: The results certainly were not based on that. If I can recall this correctly-although I cannot quite recall-we did some testing to see how to communicate it, and what the impact of these recommendations were.

Q46 Chair: Did you look at any other comparable organisation or do any other alternative research?

Lord Browne of Madingley: We did a lot of research. We also relied on other people’s research, of which there is a vast bulk, some of which is indicated in our website.

Q47 Chair: How much weight would you say you put on that particular piece of work by Opinion Leader?

Lord Browne of Madingley: I do not think we put any undue weight on any one piece of evidence or another. Like any programme, there is a vast amount of research that we have to look at in the whole, rather than in the specific.

Q48 Ian Murray: To go back to Mr Blomfield’s questions about quality, is there a danger, by creating a market in higher education, that prestige becomes a cipher for quality, and that there is a march to the top of any fee structure to create prestige at the expense of quality?

Lord Browne of Madingley: This is a theoretical question, and I have to give you a theoretical answer.

Q49 Ian Murray: It is not quite theoretical, because there are non-Russell Group universities that have already indicated that they will charge the top level of fee as instructed by the Government. I know that you had suggested something slightly different, with a totally open top end, but non-Russell Group universities are doing that, and it was envisaged by the Government that it would be only top Russell Group institutions that would charge. There is already a march to the top, so is that being done for prestige at the expense of quality?

Lord Browne of Madingley: That I do not know, because I have not asked the universities what is in their minds when doing this, and it would perhaps be a good thing to ask them why they are doing such a thing. Again, I think that most people would argue, and most studies show, that people migrate to a cap if you have one. Not having a cap puts a very different decision-making process in front of the people who are charging for their services.

Q50 Mr Jarvis: Lord Browne, I would like to ask you a couple of questions about the Student Finance Plan. First, can I ask who you think loses out under the Student Finance Plan?

Lord Browne of Madingley: Compared with what, Mr Jarvis? I think that is the question.

Q51 Mr Jarvis: You now have the luxury of looking back on the work that was done. When you revisit that work, do you think that there is any particular sector or any particular group of people that has lost out?

Lord Browne of Madingley: No, I do not. I actually think there are probably more winners than losers, notably part-time students. Also, the earning power of students has to be bigger before they pay back. In the last proposals-the devil is in the detail-it was £15,000 indexed with inflation, but wages usually go up faster than inflation. There are gaps, but they usually go up. We recommended that the £21,000 was indexed with wages, not with inflation, and that is quite important. It is very expensive, as well.

Q52 Mr Jarvis: You said more winners, but there seemed to be an acceptance that there were some losers.

Lord Browne of Madingley: I cannot think of them, other than saying that there has to be a proportionate rebalancing of who gets to pay what, so successful students pay more. But on the other hand, if they are successful, I do not see why they are losing.

Q53 Mr Jarvis: Your proposed Student Finance Plan is predicated on some institutions charging above £6,000 in order to fund the up-front government costs via the levy. How many institutions would need to charge fees of more than £6,000 to make the system viable?

Lord Browne of Madingley: Under our proposals, if everyone charged £6,000, it would also be fine. It was very much about a deep understanding in each institution of how they wish to choose to use their cost base. It is a more complicated question to answer than first seems to be the case, because many of them do two things-research and teaching-and it is very difficult to get a proper allocation of costs between the two.

Q54 Mr Jarvis: I just wanted to ask you about whether the economic modelling that was done took into account the different earning profiles of men and women?

Lord Browne of Madingley: Yes, absolutely. Again, you would have to get the detail from the analysts, but as a result, it is the case that fewer women pay back the full amount of the loan. That is correct, I think, because many people take time out. Women do take time out of their earning stream to have children and raise a family. They may do that; some may not. So there are many, many different reasons why, but in general women will pay back less than men.

Q55 Mr Jarvis: Also on the modelling, did you carry out any other impact assessment, for example on the impact on disabled or mature students?

Lord Browne of Madingley: On mature students we certainly did. We looked at questions to do with the financing of part-time students. There was a lot of modelling done in that area. Again, some of that modelling was also done by London Economics for one of the mission groups-which one, I cannot remember, I am afraid. For disabled students, we did not.

Q56 Mr Ward: In terms of affordability-I understand it is around about £45 a month less under the new proposals, within 9% of the £6,000-why is this such an unpopular policy with so many people? What have the Government done wrong?

Lord Browne of Madingley: I do not know how to answer the question. It is the case that 60% of students are better off under these proposals than they were under the conditions prevailing until these results were put out, but I think nobody understood that. I think the communication of what is a very complicated situation needs to be expanded. I was quite struck that when the panel came together, with a pretty reasonable cross-section of people, none of us really understood how the system worked. We had to spend a lot of time educating ourselves on how the present system worked. We came with a lot of misunderstanding, and I really do think that people still have a large amount of misunderstanding. People have plenty of things to deal with, and this needs to be brought forward to them as something that they really need to concentrate on, if it is relevant.

Q57 Mr Ward: But I think in your report, if I remember rightly, you say that one of the barriers to people, particularly those from deprived backgrounds, getting into higher education now is the complexity of the system, and that this is actually a simpler system.

Lord Browne of Madingley: That is right; it is a simpler system. We tried to outline a nested way of managing this, effectively through one portal, to make this all happen, but whether that is going to be adopted or not, I think we have to wait and see. However, one can simplify the system.

Q58 Ian Murray: Since your review, Lord Browne, the Government have published figures. You have made a great play this morning of this threshold of £21,000 per annum in 2015-16. I believe London Economics assumed that inflation would be running at 2.2%, but of course it is far higher than that at the moment. Given the way in which inflation is running, the £21,000 in 2015-16 will probably be the equivalent of about £18,500. Was that your intention?

Lord Browne of Madingley: No, our intention was that it would be £21,000 and that it would keep going up with wages.

Q59 Ian Murray: May I just press you a little bit on that? Again, you have made great play of the £21,000, in terms of increases. A £15,000 threshold is currently in place, and again following increases at 2.2% inflation, which is quite low, that threshold would be worth more than £19,000 in 2016. What would be your response to the Government’s tinkering with those figures, because that is diluting what you have put together?

Lord Browne of Madingley: I think you have to ask the Government. Again, I am not particularly up with exactly what the Government are doing to this. I am very clear that what we proposed was a quantum change in the way in which this was to happen, and importantly we wanted to make sure that it kept going up with wages, rather than simply general inflation, because as long as the economy is healthy, wages tend to go up more strongly than inflation.

Q60 Ian Murray: But you would agree that it is a dilution of the progressiveness that you have explained already?

Lord Browne of Madingley: If it is the case I am not aware; I have not followed the detail.

Q61 Ian Murray: But £18,500 is less than £21,000, Lord Browne.

Lord Browne of Madingley: It always is, in mathematics.

Q62 Ian Murray: So there must be a dilution. I wonder if I can go on to talk a little bit about the UCAS points system and the eligibility for student finance, and how that would work. What led you to use UCAS points as the measure of aptitude in terms of the system?

Lord Browne of Madingley: It did not come out in quite the way you put it. The first thing to think of is a practical way of how to control numbers without allocating numbers. Anything to do with direct allocation from the centre-so saying, "University A you have 10; University B you have seven; and University C you have eight"-seems to be a system that is prone to have to be re-looked at every so often. We therefore needed something with a degree of balancing in it that made sense to everybody, so UCAS points looked like the right way to go-not, I may say, to rank order, but simply to provide a minimum threshold where a minimum amount of success in education indicated that you could go to university. If the UCAS points did not do that, there was probably something wrong with the UCAS points, because they are used for this very purpose right now, so we thought it was simply an extension of today. What we discovered, however, was something quite interesting. At the time of the report, there were 3,000 different level 3 qualifications that could get you into a university. However, only 1,000 of them had UCAS points attached, so there were 2,000 different qualifications that did not have UCAS points. We were inquiring about how, therefore, they were used in the admissions process, and the answer is "discretionary", which is also fine, provided it is done consistently. So we said, "Well, maybe we should get all of these things attached to UCAS points," and we discussed that with UCAS, and indeed there is a process under way at the moment to get most of them done. There was a debate, which I think is not over-relevant, about whether or not you could-to use very pejorative words-equate cake decorating to nuclear physics. In my mind, I think that is the wrong question. It is about attaching the right understanding of points to each. This process is going on. We believed it was very possible to make this work, and to allow a little discretion-with 10% of the entrants-for things to be done in a different way.

Q63 Ian Murray: If there is a march to the top in terms of fees, that obviously creates a liability for the Treasury in the short term until repayments are made by graduates. Is there not a risk that, under the proposals, future Governments could use the UCAS points system to control taxpayer liabilities in the student finance system?

Lord Browne of Madingley: Yes, there is a good chance that the standards keep going up right at the very bottom, minus the 10% discretionary numbers, but I would remind you that under the proposals we made, there is also control at the top, which is the levy. I think to control the lower end without controlling the upper end would unbalance the system.

Q64 Ian Murray: So the levy that you proposed would, essentially, have compensated the Treasury for institutions that charge at the upper end in order to take pressure off the public purse?

Lord Browne of Madingley: That is right.

Q65 Ian Murray: Therefore you are conceding, Lord Browne, that there could be confusion between fiscal and academic imperatives when dealing with the UCAS system for access to student finance.

Lord Browne of Madingley: I am actually not conceding anything; that is actually what the report says very clearly. The control of numbers at the bottom and the question of how many students go through the system, provided the top is controlled, has to be a budget matter. The Government of the day may decide that it is not a budget matter, but other Governments may decide that they need to put a budget to it, in which case this was a way to create the budget and keep improving the lower end upwards, minus the 10% for the discretional.

Q66 Ian Murray: Did the work that you conducted involve any research at all into the profile of UCAS points and whether potentially wealthier students would have greater access to points accumulation, and whether therefore, without controlling the top as well as the bottom, any change in government policy to use the UCAS system to control entry into university in terms of numbers could disproportionately affect poorer students?

Lord Browne of Madingley: Yes, we did look at quite a lot of this. I cannot recall precisely all the studies we did, but some of it is indicated in the report. We were very concerned to make sure that entry to university was not directed by the type and nature of school that you went to, but by the type and nature of person you are.

Q67 Simon Kirby: Lord Browne, we have heard about numbers and widening participation. Is widening participation about numbers-about more students-or is it about the right students?

Lord Browne of Madingley: It is about the right students. Widening participation and, in particular, fair access are about the right students. That is about making sure that students are not put off or prevented from going to the universities of their choice for reasons that do not relate to their aspiration and capability. That is important. Widening participation is about getting the right students, but equally remembering that getting the right students does not necessarily mean we have got to the right point at the moment. I do not know whether we are right or wrong. It is just that a lot of nations seem to educate more people through higher education institutions than we do, and they are quite successful nations.

Q68 Simon Kirby: What I am trying to explore is whether we should be obsessed with numbers, because you are saying on the one hand that other nations have higher numbers than us but, if I may say so, you are contradicting that by saying that it is not about numbers, but about the right students.

Lord Browne of Madingley: Allow me to separate two things. It seems to me that first we must do things that do not put people off going to higher education institutions if they have the desire and the capability. That is really important. I believe a lot is being done in that area, but not enough. There are many cases that we saw in the evidence Sir Martin Harris gave us where people were basically put off from going to certain universities because of where they came from, and that is simply wrong. The widening of participation is a matter of how much the nation can afford, which is very important. However, on balance, I think all the evidence shows that the higher the educational quality of the nation, the better off the nation generally is. I think that that is demonstrated through data from various sources, such as the OECD.

Q69 Simon Kirby: Can I ask you about the evidence that you took in terms of asking students what they themselves were looking for in a university course? How much weight we should put on what students are looking for?

Lord Browne of Madingley: We did quite a lot of work, especially in these consultation groups that we set up, and also with the NUS and other people, about what it is that people want to see. There was a strong feeling that even when fees had gone up in the recent past, the student experience had not improved, so students asked, "Why are we paying? Surely it should be better." They had some good points to make. We started on the basis that, of course, students have to choose to go somewhere anyway today, so students make a choice right now. Therefore the question was: can they make a better choice by being given better information, better advice-how you actually use the information-and much better guidance? What does it all mean, and where should you go? Different levels of that information, advice and guidance are relevant to different ages, so we thought that it was very important that this was improved in all schools. It looked very good in private schools, but it did not look so good in some of the publicly-funded schools, so this had to be improved.

Getting the right information to the student does actually, I believe, get the student to make the right choice. People look at different bits of information. It is about all costs, for example in terms of how much it costs to live in some place. If you are interested in being employed, it is about whether the degree that you are taking does, on balance, actually get you a good job or not. I think that there is a lot of evidence that people are certainly guided, but they are perhaps guided by the wrong information. For example, we found a very large number of people who had taken forensic science. We are not quite sure why, because many of them were unemployable as a result of that, but the students were probably heavily influenced by television programmes.

Q70 Simon Kirby: Presumably your recommendations will change the choices that students make, because you have added an extra dimension to that choice, haven’t you, and that is a financial and market-driven choice?

Lord Browne of Madingley: Yes, it will be one factor. Again, in our system, which is a complete system, they would have to balance that against what they wanted to do with the qualification they would obtain. Was it to get entry to research or a job, or simply to satisfy themselves and to be more rounded people?

Q71 Ian Murray: One of the most successful courses at the University of Edinburgh in terms of employment is history. On the analysis that you have just given, not many people who would do that course are looking to be historians, so how do you balance that particular dilemma for students who do such courses in terms of the costs of the choice they make and what they do later on in life?

Lord Browne of Madingley: Forgive me, Mr Murray, but I do not believe I said anything that would deny people doing what is a very successful course. Incidentally, we did not deal with Scotland, so this is not relevant to our report.

Q72 Ian Murray: But the recommendations are, and they have significant consequences for Scotland.

Lord Browne of Madingley: No, they are only for England.

Q73 Ian Murray: Yes, but the Government’s decisions will have significant knock-on effects in Scotland.

Lord Browne of Madingley: Those are outside our terms of reference. With the right information, advice and guidance, people would be able to see very clearly what those who have gone through those successful courses were doing and why they were successful. There are plenty of courses like that.

Q74 Chair: What you actually say in your report is "Students are best placed to make the judgment about what they want to get from participating in higher education." Well, in view of the evidence that you have given today about those applying for courses on forensic science, just as the number of opportunities in that particular profession is diminishing, do you stand by that statement?

Lord Browne of Madingley: Absolutely, because I think the context of this report is that that is provided that they get the right information, advice and guidance. That is the context that is set out within this report, not, I think, the specific phrase you used. I stand by that absolutely. Information, advice and guidance of the highest quality are exactly what students need, and that should start at the age of 13.

Q75 Chair: I do not think that anyone would contest that students at 17 or 18-or even before that-need advice and guidance, but do you think we can always trust students to make these decisions at that age?

Lord Browne of Madingley: If I may say so, I think we can trust them as much as any other group, provided they are given the right guidance. I think they are very wise, because they are very focused on what they are doing. I think all of us make better choices if we are given the right balanced guidance, and I think that is important. This is obviously given to people in fee-paying schools and in some publically funded schools, but not all. We did speak with the Department for Education about this. We would very much like to have seen much greater emphasis on providing information, advice and guidance to students, and also on making sure that the data they were using to drive the information-so, data first, information second-were basically uniform and comparable. We made some recommendations in that area in our full report.

Q76 Mr Ward: You spoke to employers and got feedback from them. What was the view of employers about the general business awareness of graduates?

Lord Browne of Madingley: It depended on what it was that they were recruiting, and that was important. Obviously, if they were doing business studies, I think people were recruiting people who were clearly very business-aware. But I think they were recruiting people who they could see at least appreciated areas outside their own speciality, without taking away from the depth of that speciality. We visited many universities, but on one visit-I think it was to Manchester University-we saw a programme that was being taught to undergraduates that did just that, so regardless of what you were studying, you became much more aware of business, social responsibility and a variety of things like that. I think that that is important. I used to be a very large employer of people, and I would say that I would much prefer someone who was very well educated in a specific subject. Afterwards, we would then spend a lot of money giving them the business awareness on the job.

Q77 Mr Ward: I visited a manufacturing business in my constituency yesterday morning and we talked about the issue of young people. They basically said that if young people had mastered maths and English, they would teach them what they needed. Is there a general view from the employers that things have changed in this area over the years?

Lord Browne of Madingley: I think so. This is not included in this report, but it is more an assembly of things that I have heard not only when doing this report but at other times. I would say that people are very concerned, especially in small and mediumsized businesses, about having people who can very quickly adopt and understand business practices although they have studied engineering, chemistry or any other subject. Providing them with as much as possible, very quickly, is very important for employability. The economy still has a large amount of service content in it, and if the productivity of that area is not as good as it is in the United States, for example, one of the reasons might well be business awareness and business management, so I think this is something that should be improved.

Q78 Mr Ward: You looked at alternative options for financing, and considered and rejected a graduate tax. I know there is something in the report, but did you consider any other options that could be combined, such as increased graduate contributions as well as an employer tax?

Lord Browne of Madingley: The purpose of the study of the 13 different countries was to give us a very broad view of all the different systems-lots and lots of hybrid systems. We also looked at the graduate tax. We looked at the graduate tax plus, and the graduate tax plus plus, and there were several different variants of this proposed by the NUS and others in the evidence sessions that we held. In the end, of course, what we have proposed is not a graduate tax, but it has many functionalities that are similar to a graduate tax, without actually being a tax, and that is really quite important. We looked at all these hybrids and, actually, in the end, in order to get something that fits the bill and has a degree of continuity-not for continuity’s sake, but just if there is the ability to have continuity-we came up with the proposals that we made.

Q79 Mr Ward: There is much talk about the progressivity of the proposals that have been subsequently been adopted by the Government. Additional measures have been introduced, particularly those related to free school meals. Was it beyond your remit to look at those measures?

Lord Browne of Madingley: They were. We have looked at all sorts of things, but we really did want to keep it simple. I think it is pretty progressive, and the charts in this book show that it is a pretty progressive system, and much more progressive than the existing system.

Q80 Ian Murray: In terms of whether or not the system is progressive, I think the Government have talked a lot about how they feel that the system is progressive. I don’t think current students and future students feel that way at this particular stage, although maybe that will change, but that is why I wanted to bring you round to the assessment that the Sutton Trust put together. The Sutton Trust, which is an organisation set up by a free marketeer from the City who is very much in line with the free market economy and what that could deliver, said that a fee in excess of £5,000 would significantly damage participation. How would you respond to that particular assessment?

Lord Browne of Madingley: Well, I don’t know actually which of the several Sutton Trust studies this refers to. There was one that was based on questionnaires, and our technical analysis of the questionnaires said that the conditions under which the questions were asked were not appropriate for the answers that were given. In other words, they were asking people questions that they could not actually answer in a way that made full sense.

Q81 Ian Murray: But in the view of your report, fees in excess of £5,000 would not be a significant barrier to participation in higher education.

Lord Browne of Madingley: Absolutely not. It depends on how the context is set for those fees. Again, I come back to what we said. We believe that they weren’t a barrier, provided everything else was done.

Q82 Ian Murray: But you have made it quite clear this morning that your report, in its entirety, will not be taken on by the Government, so the pack of cards could collapse.

Lord Browne of Madingley: I have actually said this morning that it is too early to tell, because we haven’t seen the White Paper yet.

Q83 Chair: May I just conclude with a couple of questions, first on this issue of the graduate tax? Was your decision to reject that based in any way on the evidence you put forward that, at least in the early years, an extra £3 billion of Government funding would be needed annually?

Lord Browne of Madingley: There are several things. It was not only the additional funding needed that made us think, "Why do this if you could do it a different way?" Secondly, however, I think it actually wouldn’t get into equilibrium with the existing system until 2041.

Q84 Chair: So in part it was determined by the extra costs, if you like, and presumably the economic context into which you were bringing these proposals.

Lord Browne of Madingley: Chair, I come back to this point of sustainability. If it cannot actually match the exiting system until-I think-2041, and the present system has been deemed to be unstable, that system, surely, would be more unstable. If it requires more up-front money, it seemed to us, as ordinary citizens, that again it was very unlikely to be stable.

Q85 Chair: Would you have altered your recommendations at all if you had known that the Government were going to cut funding to arts and social sciences at the level that they have done?

Lord Browne of Madingley: No, because we did not recommend cuts to the study of arts and humanities. This is a misunderstanding. The funding goes through the student-

Q86 Chair: I quite realise that you didn’t recommend that, but the point is that in the context of these cuts taking place in combination with the fee structure, it could disproportionately impact on the study of those subjects.

Lord Browne of Madingley: We did everything to make sure that it did not have a disproportionate impact. In fact, we specifically allowed some examples for further funding if subjects became vulnerable. Anything else that the Government did, you would have to ask the Government about, I think.

Q87 Chair: We will, yes.

Just one final question on information and advice for would-be students: what do you feel can be done for students, who, shall we say, in spite of all the good advice, do not follow that advice and do not study courses that are economically relevant?

Lord Browne of Madingley: I just hope that the bulk of students follow the advice. But people don’t follow advice, and I don’t think they have to be students; they can be grown-ups, as well.

Chair: Some students are.

Lord Browne of Madingley: And some grown-ups are not students. But equally, I think you cannot force people. This is about self-determination, surely. It is about the ability to do that with the best information through someone advising you who does not have any other interest other than your own at her or his heart. It seems to me that that is the important thing about guidance, and that is why I believe very strongly that we need to get this right for people.

Q88 Chair: Vince Cable has said "When the Government’s economic policies have produced the successful outcome that we all expect, we can return to the question of how universities can be supported in a more generous way." Do you think that basically compromises the assertion that you have made that you have introduced or recommended a long-term, sustainable model?

Lord Browne of Madingley: We recommended a long-term model. I hope very much that a long-term solution is developed, because that avoids transitions, but I note what the Secretary of State has said.

Q89 Chair: Do you think there may be a more generous student finance regime in the future?

Lord Browne of Madingley: I don’t know. I just very much hope that the economy will be better.

Chair: Thank you very much, Lord Browne. I know you have another engagement, so we will let you get away.