UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE
To be published as HC 274-ii

House of COMMONS

Oral EVIDENCE

TAKEN BEFORE the

Business, Innovation and Skills Committee

Government reform of higher education: Follow-up

Wednesday 4 July 2012

Rt Hon David Willetts MP

Evidence heard in Public Questions 65 – 166

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Oral Evidence

Taken before the Business, Innovation and Skills Committee

on Wednesday 4 July 2012

Members present:

Mr Adrian Bailey (Chair)

Mr Brian Binley

Paul Blomfield

Katy Clark

Julie Elliott

Simon Kirby

Nadhim Zahawi

________________

Examination of Witness

Witness: Rt Hon David Willetts MP, Minister for Universities and Science, Department for Business, Innovation and Skills, gave evidence.

Q65 Chair: Thank you, Minister, for agreeing to come before us again. For voice transcription purposes, could you introduce yourself?

Mr Willetts: I am David Willetts, Minister for Universities and Science. Once again, I regret that the Committee did not have enough time before we last met properly to study all the documents we have published. So I am very happy to be here to go through them in more detail. I am also pleased that that is something we have already pursued since the last session; Vince Cable has written to you, suggesting a rather closer level of interaction in the future. I hope that is helpful.

Q66 Chair: Yes, it is worth saying on behalf of the Committee that we do recognise that the attendance from Ministers in the Department has been very good indeed. I am quite happy for that to be put on the record. When you came before us last month we were commenting on the absence of a Bill. You said that, had there been a slot in the parliamentary programme, it would have been different. Can you tell us: was the absence of the Bill due to lack of parliamentary time or was it that you did not have agreement on the Bill?

Mr Willetts: The White Paper is agreed Government policy. We are very keen to implement the White Paper. There is obviously a lively discussion about slots in the legislative programme, as that tends to be oversubscribed, with more people trying to get legislation in than there is room. There are a whole host of considerations but one of the main ones was that we were challenged to be ingenuous and smart in making sure we really needed legislation and on the extent to which we could achieve the objectives of the White Paper without new primary legislation. In the exchanges with the Committee last time it became clear that we can secure a lot in the White Paper, although not everything, without legislation at this stage. Down the track, I believe legislation will be necessary at some stage.

Q67 Chair: We will go into that in a moment. From my reading of the Queen’s Speech and the programme there is not an excessive number of Bills, certainly compared with previous parliamentary programmes, so it seems a little odd. Did you actually have a Bill that could have been put forward, had a slot been found?

Mr Willetts: There had been some drafting by the parliamentary draftsmen but it had not reached the stage of a full draft Bill before they downed quills. Some work had started but, if and when there is a decision to go for a Bill in a subsequent session, there would still be a lot more drafting work to do. Of course, meanwhile, we can be learning. The higher education system is going through a big programme of change and there is still a lot we can learn from the experience of the next 12 months.

Q68 Chair: So what it amounts to is that there was not a Bill ready anyway.

Mr Willetts: There was not a full draft of a Bill, no. Only some work had been done.

Q69 Paul Blomfield: I would like to ask about this issue of the reasons for the Bill not being brought forward, which have been many. One of the ones you said in your response to us was that, because you cannot yet know the full effect of the new funding arrangements, you cannot yet be clear what form of regulatory framework is appropriate, therefore you are not going to legislate. Presumably, if it is not appropriate to legislate it will not be appropriate to bring in changes by any other measure because you will still not know.

Mr Willetts: As I said a moment ago, it is a rapidly changing situation. We can achieve a lot without legislation, but having the extra flexibility of seeing how the situation pans out is an advantage. It does not mean you do not do anything. What we are endlessly trying to judge, and something I feel responsible for, is how much change the sector can take. We want to see reforms in higher education, we want to advance an agenda and we do not want to sit on our hands and do nothing. On the other hand, the level of change expected has to be reasonable. I think we have the balance about right. We have to be regulating and using our existing powers during that process of change. We cannot just do nothing.

Q70 Paul Blomfield: The reason for not legislating was that you were uncertain what change was appropriate. Isn’t bringing forward nonlegislative change covered by the same logic?

Mr Willetts: There were lots of reasons in this collective discussion. There was a whole host of considerations within Government. One was the pressure of parliamentary time in any given session. One was how much we all thought we could do without legislation. Another was whether, if you wait to see how the system pans out it might help you construct legislation in the future. They are all legitimate arguments and they are all weighed in the balance.

Q71 Chair: You did say, "In the long run, at some point we will need to embed these changes in primary legislation". Can you tell us what changes will need to be embedded in primary legislation?

Mr Willetts: Although there is quite a lot we can do without legislation, there are some specifics that require legislation such as, but not only, more flexibility on the legal framework for governance, especially of the post1992 institutions, which I think inherited in legislation an excessively prescriptive set of rules about the exact structure of their governing bodies. I would have quite liked to have liberalised that, but there are other examples as well. So there are some specifics that clearly require legislation. More widely, as we move to a model in which the money goes with the student and there is less power of the purse in the hands of HEFCE, I would envisage that, down the track-and it does need to be done in the next 12 or even 24 months-we would be more explicit about HEFCE becoming a regulatory body, rather than a spending quango. My view is that, in the future, it has to be clear that it is a regulator. It can do a lot of regulating already using the powers it has but down the track that should be set out in primary legislation. I cannot say it is essential that we have that new model this year or next year. We can do a lot without it.

Q72 Chair: It seems rather odd to me that here you have policies being implemented that will require legislation, yet you are implementing them without legislation. Are you saying that they are only short-term measures, or what?

Mr Willetts: You say "require legislation". If a policy requires legislation to be implemented and cannot be implemented without legislation then we follow the law. We would only do it if we needed primary legislation. However, there are lots of things we can do that do not require legislation. There are a small number of things that do require legislation and we cannot do without legislation. I gave some examples: governance is one; a full level playing field with alternative providers is another. Meanwhile we can do a lot. Throughout I have accepted, and I have been very frank with this Committee, that this exercise began with the public expenditure round in the summer of 2010. Although the rationale for what we are doing goes way beyond saving public money, the origins were in a public expenditure exercise. Decisions had to be taken on public expenditure and I think people, by and large, have understood that. That is why there were some financing decisions before we had the White Paper. You could argue that in an ideal world, the order there would have been different but we are inheriting the realities of the most important challenge we faced.

Chair: I think we have argued that.

Mr Willetts: I am operating in the real world and we have always had to take these things in. My view is that we have, by and large, got the balance right. We are continuing to deliver reforms; we are not imposing unacceptable strains on the sector, but there is momentum and we are maintaining momentum.

Q73 Chair: Is there going to be a Bill in the 2013 session?

Mr Willetts: Who knows; I simply cannot say at this stage.

Q74 Chair: You have just said that some of the measures will need to be embedded in legislation and yet you cannot say that there will be a Bill in the 2013 session, which will take us into 2014 and very near the next general election. Does that mean there will never be a Bill?

Mr Willetts: These decisions are taken a year at a time. I am confident that we can deliver a lot of reform using the powers we have. The areas where you would need primary legislation are not such priorities that the reforms are unworkable without them. My view is that we can make this reform system work.

Q75 Mr Binley: I just want to press you a little further on this. I genuinely am grateful that you have given us so much time; that says a lot about your interest and concern for this Committee. We are grateful for that. We all know that bidding for Bills is the name of the game that you play with your colleagues. Can I ask if you will be thinking about bidding for a Bill in 2013, which puts the onus on your wish, rather than what other people might think who are slightly above your pay grade?

Mr Willetts: The advantage we will have in the next bidding round is that we will have a bit more evidence about how the system is working and how effective the powers we can deploy from previous legislation are proving. Our case will depend on the experience of the next six to 12 months.

Q76 Chair: You said before this Committee that you will "use existing powers provided by existing legislation perhaps more effectively than they have been in the past." You have also talked about a "time for further reflection". If this is possible and the whole process started in 2010, why did you not implement them earlier?

Mr Willetts: We have already done some things. To take one example, when it comes to the designation of alternative providers-and of course that had been going on under the previous Government; it wasn’t some new thing-when we arrived in office, the designation process involved providing a copy of the prospectus, a document from the validation body that shows they are validated and a course timetable. That was it. I was surprised at how little information was being requested, so last year we already asked for a lot of extra information, such as details of governance arrangements, details of any legal actions involving the organisation in the past three years, copies of the last three years of annual accounts and details of policies and procedures relating to student complaints. We have already done all that. As I said to this Committee the other week, in the future we will be going further. We are looking at how we can have stronger requirements on quality assurance. So we have already been using these powers; we are not suddenly looking at them now; but there is even more we can do.

Q77 Chair: Do you think this model of implementing legislation before you pass it could be used in other areas?

Mr Willetts: We have produced a White Paper. Of course, Government in Britain is bound by the law. We are not implementing policies for which there is not a legal base. We will only do things for which there is a legal base either through votes in Parliament, such as over the change in fee levels, or in existing legislation. It would be completely unacceptable to try and do things where there is not a legal power. The question is where you actually need extra legal powers to do things. That is what we are discussing.

Q78 Chair: Are loans for FE going to be implemented, or regulation for them be brought before the House?

Mr Willetts: That is a matter for my colleague but I believe the intention is to provide a further statement to the House on that before the House rises.

Q79 Chair: So you are going to do it before the House rises?

Mr Willetts: I think the intention is to provide a statement to the House with the Government’s intentions before the House rises.

Chair: That is interesting. I appreciate that it is not your area, but I shall say that we will watch the timing of that with interest.

Q80 Simon Kirby: You have said that areas that might need legislation are a moving feast and it is difficult to be entirely accurate at this early stage. Can you give us some idea of which areas of both primary and secondary legislation might be appropriate?

Mr Willetts: There are some examples. One example I refer to is that, especially for universities that became universities in 1992 or afterwards, the Education Reform Act 1988, as amended by the Further and Higher Education Act 1992, does actually set out quite a restrictive regime for higher education corporations and how they should be governed. We discussed this in the White Paper and we think there are arguments for increasing their freedoms in key areas such as governance and dissolution. That would require legislation. Secondly, if you were to go to a full-blown level playing field, with alternative providers, they are not fully under the ambit of a single regulatory body in the way I would envisage they will be when HEFCE becomes that regulator. You can use the designation power to achieve a lot of that by other means, but it would be a lot tidier if you had a single regulatory power. That would be a second example.

Q81 Simon Kirby: That is interesting. If there are elements that are quite restrictive, that is somewhat at odds with your previous assertion that it was possible to bring about these changes without legislation. It is a conflicting message, Minister.

Mr Willetts: Let me try again. There is a lot that we can do without legislation; there are some things for which we do require legislation; I recognise we cannot do everything. I have given you two examples of that but I have a third example: OFFA. There are some things we can do with OFFA without legislation. I know this is very delicate territory for this Committee and I am going to walk very carefully.

Mr Binley: It is in the past, Minister.

Mr Willetts: We are increasing the staffing of OFFA very significantly so that it can properly scrutinise and review the access agreements being submitted by all these higher education institutions on an annual basis. What we cannot do is change the range of penalties that OFFA can impose. That would require primary legislation and there may be some Members who are relieved we cannot change those powers. So there is the fining regime and this rather draconian power of taking away the ability to charge fees above £6,000. We floated ideas in the White Paper about whether there could be a wider range of penalties available for OFFA. That would require legislation. So I am being frank with the Committee. You can identify some areas where primary legislation would be necessary but those are not so profoundly significant that we are giving up on higher education reform in the interim. Meanwhile, we are getting on with an ambitious programme, increasing the number of places that are contestable every year, giving more information for students and proper powers over alternative providers.

Chair: We will be covering those in a minute, Minister.

Q82 Simon Kirby: Thank you; that is reasonably clear now. Can I ask you what feedback you have received from HEFCE, OFFA and the QAA, specifically on the need for further regulatory work to enhance their remit?

Mr Willetts: They are all thoroughly professional bodies. I have communicated with them and they understand what we expect them to do within the framework of existing law. They are absolutely up for that challenge.

Q83 Simon Kirby: Does that mean they have given you no feedback? Have they not suggested ways their challenge can either be made easier or harder?

Mr Willetts: They are perfectly able to work within the framework of legislation. In fact, something else that is happening, which does not require legislation, is that we are trying to create a more coherent group of regulatory public bodies. There was an idea in the Browne Report, which we have not implemented, of legally making them all one. But you can get a bit more sharing of information through OFFA, QAA and HEFCE working more closely together. I think they are working more closely together and that is a good thing.

Q84 Chair: You said in your earlier remarks that some elements of OFFA’s potential sanctions would have to be legislated for. Since you are undergoing a period of further reflection with HEFCE, QAA and OFFA, is this the sort of thing you have had feedback on?

Mr Willetts: There has certainly been a very lively debate about what OFFA does and how it should do it. I cannot recall a particularly high volume of responses to the White Paper on the kind of penalty regime. As I said, that is the main reason we require primary legislation. I do not recall a large number of proposals in that area.

Q85 Chair: Have you had any feedback from the others on any other issues?

Mr Willetts: The main feedback has been that OFFA was very busy trying to handle that first round of access agreements last year. That is why we have taken the decision to increase the staffing. There is a view now that the time has come to step back and start assessing what works and what does not, which I understand. That is why, in our most recent letter, Vince Cable and I have asked HEFCE and OFFA to start evidence-gathering on what works and what does not. Remember that this is still early days. The first set of new students have not yet secured admission under the new regime; they will arrive in the autumn of 2012. I am very keen to discover some further evidence on this endless debate about fee waivers versus bursaries; how valuable summer schools are; and how much social mobility you secure in a meritocratic way with an extra foundation year for some students. These are all ideas being trialled in access agreements and I really think it is a fantastic opportunity to improve the quality and have more evidence-based policy to see how these play out, which work and which do not.

Q86 Chair: Could you give the Committee the information once you have acquired it from the consultations?

Mr Willetts: I am always happy to share that kind of information with the Committee.

Q87 Katy Clark: You set yourself a target of September this year to introduce what you call a fair and sustainable higher education funding system. Will all aspects of these reforms be in place by that deadline?

Mr Willetts: The financing funding changes will be in place by then, yes.

Q88 Katy Clark: One of the things you have particularly focused on is providing a more generous package of financial support for low-income students who wish to attend university in 2012-13. Can you talk us through that and what the main elements of that package will be?

Mr Willetts: I see that, first, as the increase in the maintenance grant for them. Secondly, of course, like all students they will benefit from the fact that the repayment threshold is higher; it has gone up from £15,000 to £21,000. Thirdly, there is a National Scholarship Programme, which provides extra resource that can go into bursaries and other support mechanisms.

Q89 Katy Clark: And all of that is in place now or will be in place by September.

Mr Willetts: The National Scholarship Programme starts then. It will take time to build up. The higher maintenance grant starts in the autumn of this year. The higher repayment threshold applies for students arriving from this year.

Q90 Katy Clark: Is all the funding for that now in place?

Mr Willetts: Yes, it is all being delivered as part of the CSR.

Q91 Chair: What level of information do students who will be starting their university career in September this year have about this?

Mr Willetts: The students starting this year were beneficiaries of our first student finance tour, which provided a lot of information on finance for students. We are working on providing further information in the future for prospective students. Already, we have been seeing improvements in the quality of information available.

Q92 Chair: My concern is that you will have a cohort of students starting in September who may have made decisions on their choice of university on the basis of certain levels of financial support, but which may be amended for the following year. So you could have two successive cohorts of students at a university based on different financial support mechanisms.

Mr Willetts: I suppose you are thinking of a university that decides they want to spend the National Scholarship Programme in a different way in year two. To some extent universities do have that freedom. The main thing is that students have to be provided with accurate information in advance. What a university cannot do is change the regime and have people not informed. In general I think the quality of information is getting better. Today we heard an excellent initiative, which is exactly what I wanted to see happening, of a new website being launched by Which?, in which the NUS is also playing a role, to provide free, independent information and high quality advice to help prospective students choose the right course and university. That is exactly the kind of transformation of information we wanted to see.

Chair: I actually agree with you. I think the quality of information is getting better. The problem is that the slowness of the Government’s delivering on certain support programmes means students are still not able to make such informed decisions. Indeed, as time goes on, the next cohort of students may take a totally different set of decisions because of changes to the regime. We do not know about the Student Premium and so on yet.

Q93 Paul Blomfield: I have a related but slightly different question. In the absence of embedding the key conditions of the student funding system in legislation, what guarantees do we have for the future that a government might not fundamentally change the regime without parliamentary scrutiny?

Mr Willetts: The structure within which we are operating is the structure of the previous Labour Government’s changes of 2005-06. We have kept that basic structure of a loan to a student that they do not pay up-front but they repay after graduation when they are above an earnings threshold at a rate of 9%. We kept that structure and the Commons voted on it. It was one of the more dramatic votes of this Parliament but the Commons voted to change the figures in that structure and it was done by a parliamentary vote. In some ways we have kept that model. One of my arguments is that the best guarantee against radical change is that all three political parties, when faced with the question of how to finance higher education in tough times, have ended up with a rather similar conclusion: that you can reasonably expect graduates to make a larger contribution, but it has to be done on a fair and progressive basis. I think we are ahead of the debate in many other countries and they are beginning to have precisely this debate themselves. For all three parties it has been a rather painful process, but after all three parties have ended up with this type of conclusion I think it is now pretty well embedded.

Q94 Paul Blomfield: This is not the place to have this discussion, but we would probably have some disagreements about what was progressive in what we might propose compared with what you have come forward with. Taking one particular point, the 30 year write-off, as I understand it, at the moment, could be removed by the Government at some point without requiring any parliamentary decision, yet that is a key selling point of your proposal.

Mr Willetts: I would not like to give the Committee an authoritative statement on that. I thought 30 years was in the Labour legislation but I would like to check that and give you an authoritative answer.

Q95 Paul Blomfield: What discussions are going on about the sale of the loan book and what guarantees there are to retain the essential characteristics of the system if that occurs? If that does occur, would any benefits be reinvested in higher education?

Mr Willetts: I am grateful for the opportunity to bring the Committee up to date on this. What we are looking at now, and what has priority, is that the remaining mortgage-style loans could be sold. Of course, that would be on the basis of no change in the terms for borrowers. Those are essentially loans outstanding from the 1990s, which come with quite high operational cost for the Student Loans Company. They are quite complicated and difficult to administer. As well as getting some receipts it would be good for the Student Loans Company not to have that responsibility and pass it on to someone else. The more recent income-contingent loan book is looking like much less of a priority at the moment.

Q96 Paul Blomfield: So if the portion you are talking about selling off were sold off, would the proceeds be reinvested in higher education?

Mr Willetts: They all count as assets of the Government and if they are disposed of they are used to reduce the liabilities of the Government. So, I do not think there is any particular claim that BIS as a Department would have on them.

Q97 Paul Blomfield: Would you be making the case for it?

Mr Willetts: Who knows what happens in the privacy of the ministerial Committees?

Q98 Chair: I want to move us on to the Student Premium and the National Scholarship Programme, but before I do so, can I get something totally clear? This is in the context of the argument I had earlier about implementing some policies sooner. That cohort of students starting in September 2012 will have a certain level of financial support: bursaries, fee waivers and so on. Would they have had that information when they applied to go to the university they eventually go to?

Mr Willetts: Yes, they would have done. One of the reasons we have had to move fast is that we have been trying to get the information out in sufficient time for prospective students. The cycle does start very early. I know from previous Committee meetings that we have sometimes been criticised for this, but one of the reasons we had to make specific announcements on whether there would be early repayment penalties or whether we would move from AAB to ABB was that universities had to know that so they could properly explain the regime and get the prospectuses out for people who would be visiting universities from now, with a view to applying over the next few months to go in 2013. So we needed to announce in early 2012 the regime that would affect students arriving in autumn 2013. That is a key part; that is why we have very long lead-in times here. It is right; people do need to know.

Q99 Chair: So would they have known what fee waivers and bursaries would be available?

Mr Willetts: Universities have some discretion in areas like the National Scholarship Programme, but we tried to get out the framework for the National Scholarship Programme so universities knew where they were and what they could do. I don’t know whether universities were able to take all their decisions in time for the printing of the prospectus; I cannot guarantee that in every case. We are very aware of the need, as there is an 18-month time scale, for these decisions to be out early in the year before students arrive at the university. It is an 18 month forward roll-out.

Q100 Chair: Could I just summarise, and if this is not a fair reflection no doubt you will tell me? You have provided a framework for support but the details may not have been available for every student going to every university at the time they made the application.

Mr Willetts: Some of those decisions would have been at the discretion of universities and I don’t know at exactly what point they would have made those discretionary decisions.

Q101 Julie Elliott: A number of press reports have highlighted proposals for a Student Premium for higher education, along similar lines to the Pupil Premium. Under what criteria will the Student Premium be allocated to students?

Mr Willetts: What we have asked HEFCE and OFFA to do is look at the wide range of schemes developed as part of access agreements, to check that money is well spent. There are always ideas around for how we can simplify the system. We have not yet had the first year where students have been in receipt of a National Scholarship Programme. We have just reconvened our NSP working group to start getting views on all this. So it is too early to say exactly whether and how this would be changed. After 1,000 flowers are blooming, we need to discover the flowers that are blooming most beautifully and then to favour them. Work is ongoing but no final decisions have been taken yet.

Q102 Julie Elliott: What are your thoughts on the kinds of criteria? You must have an idea of what you are looking at.

Mr Willetts: I can share with the Committee some of the trade-offs we face. One argument, which I understand, is that prospective students aged 15 or 16, especially those coming from families without a history of going to university, need to have as much information as possible and a clear line of sight about the financial support that will be available for university. If we make that clearer and starker, that would be a great gain. On the other hand, when you look at UCAS figures, if anything, the place where there has been more of a fall in applications has been amongst mature and part-time students. Maybe that is where you should put more of your effort. I can just draw the Committee’s attention to the considerations because none of us has yet reached any firm view about the correct way forward. We are spending a lot of money on this, and that is a good thing, and we want to make sure we spend it most effectively.

Q103 Julie Elliott: Have you been looking at whether it will provide funding for a reduction in tuition fees or whether it would provide more money for living costs? Has that come into the equation?

Mr Willetts: That is endlessly discussed. The fact is that all previous assessments I am aware of from OFFA and others have failed to reach a conclusion about the balance between fee waivers and bursaries. They have not conclusively shown that one is a better use of public funding than the other. I notice that the NUS, who have complained in the past about fees, now seem to be less worried about fees and prefer money to be in students’ pockets in bursaries rather than fee waivers. There are different views and, as I said, there are good examples where the evidence is not conclusive yet as far as I know.

Q104 Julie Elliott: Have you considered how this change in funding will affect universities’ funding of their own outreach and access programmes?

Mr Willetts: That is a very fair point. We need to make sure some of this money is spent by universities on programmes like that, and we need to maintain that commitment. Although this argument is often looked at through the prism of social background, there are other aspects we must not lose sight of-for example, disabled students. Disabled students need extra support: for example, with a blind student the amount of resource you need to put behind them to ensure they properly benefit from the student experience is clearly greater. Some of these programmes help with services like that. I always try to say we should not just think of this through the social class and background prism; we should make sure we have proper resource to help students in those circumstances. That requires funding to reach them or the university responsible for them.

Q105 Paul Blomfield: I would like to frame the question I asked you in the Chamber a couple of weeks ago in a slightly different way. Will any funding for a Student Premium be additional funding, or will it come out of existing grants?

Mr Willetts: The origins of this debate are that the total amount of funding is substantial. The question is whether you can communicate it more vividly to give people greater assurance of what it means for them. This goes back to the Chairman’s line of questioning on whether prospective students know where they are. So, in 2012-13-and there is some overlap here; it is not a completely additive list-we have the widening participation premium from HEFCE of £140 million, we have retention and other funding from HEFCE of £224 million, we have the National Scholarship Programme at £50 million, and we have estimated access agreement spending in 2012-13 of about £520 million. It is too crude just to put that together, there is some overlap, but there you have about £900 million. The issue we are looking at is: this £900 million is in all different ways supposed to be helping people with access to university, lowering drop-out rates, helping people who, for whatever reason, have a disadvantage, such as disabled students or students from tougher backgrounds. We have to absolutely be sure that this £900 million is money effectively spent and communicated. That is the challenge, and I am completely up for tackling that. The question is: are we getting the best from the £900 million we are spending in 2012-13.

Q106 Paul Blomfield: So if the Deputy Prime Minister’s Student Premium is introduced, it will be coming from one of those budgets you have just listed.

Mr Willetts: This is an analysis of how those packets of money are being spent.

Q107 Paul Blomfield: I think I understand that answer. So you would recognise that there will be widespread concern within higher education if this headline policy was funded by diminishing the widening participation programmes, wouldn’t you?

Mr Willetts: The question is how you best have an impact on widening participation. The DPM is absolutely committed to widening participation. What we all want to do is have the maximum impact on participation. I fully understand that, when you dig into the detail of this £900 million, you discover there are lots of distinctive and useful things that it does.

Q108 Julie Elliott: How will the Student Premium and the National Scholarship Programme work together? Will they be complementary, with one offering lower tuition fees and the other grants for cost of living, or will there be overlap between the two? How do you envisage them working?

Mr Willetts: These are all issues that people are looking at at the moment. As I say, we have recently written to HEFCE and OFFA, and I am pretty sure I released the letter at the time, asking them to start looking at the effectiveness of these different elements. No decisions have been taken, though; this is an exercise to review the spend. No final decisions have been taken on how, in what way and if it is necessary they are changed.

Q109 Chair: You say the scholarship programme will basically be completed in October 2012. Will students going to university in September be able to access that?

Mr Willetts: Yes. The funding starts in 2012-13. Again, I cannot speak for individual universities’ exact arrangements but the funding is available for students starting at university for the academic year 2012-13.

Q110 Chair: So students would have known there was going to be a National Scholarship Programme but they would not have known, when they applied, how that applied to them personally.

Mr Willetts: I am trying to remember the exact chronology. The size of the National Scholarship Programme was announced well before those students were having to make their decisions. As I was saying a few minutes ago, the exact process whereby an individual university then had £2 million of NSP funding, which they had to decide how to spend, and when that was all available for a prospective student to see, I could not vouch for because time was tight. The overall announcement on the National Scholarship Programme was made in good time.

Q111 Chair: I understand that, but the announcement that there is so much money nationally spent on a programme does not help an individual when they want to know exactly how much it is going to affect them. The point I am getting to is that there will be a cohort of students going to university in September who may or may not receive support, but they will have had to make decisions on their higher education choices without full knowledge of exactly what support they would qualify for.

Mr Willetts: They will have known all the key facts about the fee regime. We put a big effort into trying to explain all that. I fully accept that, in a range of ways, I would like prospective students in the future to have more information. They will not have known the exact employability outcomes from individual courses, which is exactly the kind of information students are entitled to expect, and we are making real progress in having all that available this autumn. I would love for it to have been available two years ago, but it has required a lot of hard pounding and practical work to get all this information available. We committed to it in opposition and are delivering it now; the more rapidly the better. So there is a permanent process of improvement. It will always be possible to look back and say that it is a pity that previous generations of students did not have this information, but we are absolutely working flat out so that every year there should be better information, better presented and in more detail than ever before.

Chair: All that is understood, but the whole basis of the changes in funding was that this was part of a package. You had one part of the package implemented very quickly and another part implemented very slowly.

Q112 Paul Blomfield: I think we are on common ground here, Minister, in having concerns about the impacts of changes in undergraduate funding on access to postgraduate study. Could you update us on what progress you and HEFCE have been making on reviewing funding for postgraduate study and when you plan to publish any findings?

Mr Willetts: The most important progress we have made, which I very much welcome, is that HEFCE have now made it clear that their funding allocation for taught postgraduate provision in 2012-13 is going to be maintained at very similar levels to 2011-12. So, despite all the other changes in the grant regime, they have been able to maintain that. Of course, support for doctoral students has also been maintained, and HEFCE have provided an additional £35 million of postgraduate research degree supervision support. So we have been able to maintain, or even in some cases improve, the funding for postgraduates. There is a concern, which I understand and hear a lot, for students who have built up "debts", although we all know it is a kind of graduate contribution scheme: will that affect their willingness to take on postgraduate courses? It will take several years for the evidence to build up on that, but we are monitoring it and HEFCE has commissioned specific research on areas such as the kind of information that postgraduate taught students need. We confirmed in our 2012 grant letter that we wanted HEFCE to continue to monitor that.

Q113 Paul Blomfield: In your response to our report on this issue you said, "We recognise that some uncertainty around postgraduate provision remains. BIS will continue to work closely with HEFCE to better understand the underlying evidence. HEFCE has considered the Committee's recommendation and has confirmed that it will publish reports as this work progresses." When will the first report be?

Mr Willetts: I cannot give the Committee any dates on that, but as soon as they are available of course we will share them with the Committee.

Q114 Paul Blomfield: Could you share, in advance, when we might expect them?

Mr Willetts: Yes. If there is any more information about the time scale for any reports becoming available I will happily write to the Committee if there is any extra information I can share with you.

Q115 Paul Blomfield: Have you made any further assessment of the impact of undergraduate fee increases on postgraduate applications? We share a concern that, in the increasingly competitive graduate marketplace, people are distinguishing themselves in different ways but one of the critical ways is taught postgraduate programmes. It would have a significant negative impact on social mobility if, in the new terrain, those only became available to those who could afford them through personal means. We are already seeing some of the career development loans available commercially diminishing in number.

Mr Willetts: I do hear that anxiety and I never dismiss the messages I get from the sector, but I would point out that graduates, after our reforms, will face lower monthly repayments than graduates do currently. So the starting point is that your repayment threshold is higher and your repayment obligations monthly are longer; you will be paying back for longer. So when you think about a postgraduate balancing the PAYE deductions from their earnings or income and whether they can afford to stay on, once you understand the way the reforms work, if anything, we are lowering repayment obligations. Then there was the anxiety that HEFCE’s grants would be reduced. In 2012-13 HEFCE are able to show that they can maintain them, and I commend them for this. I know there is this anxiety but we need to monitor it carefully and need to see exactly what happens and what the problem is, if anything. At the moment there is anxiety and anticipation. HEFCE knows we need to monitor it; we had Adrian Smith doing an exercise on it and the Browne Review said we need to look at it, but we have not yet seen any evidence that these effects are feeding through in any way.

Q116 Paul Blomfield: Do you understand the basis for the anxiety? If you take into account the potential debt from FE loans, for people who follow that route into higher education, you are talking about people mounting up very considerable debts. If you take FE loans and HE loans those would be two different monthly payments, wouldn’t they?

Mr Willetts: No, and this is a very important point. I always say: think of the flow, not the stock. The formula for the FE loan-the 9% of earnings above £21,000-is the same. We are not trying to pile up higher and higher repayments. Your repayment is 9% of your earnings above £21,000. I had better write to the Committee to absolutely confirm that. So although you can theoretically add to the stock, in certain circumstances, it is the repayments that I think are what matters and why I see these reforms as much fairer on people in their 20s. Instead of the front-end loading of the burden, when you are paying back more monthly in the early years of your adulthood when you have all those extra costs, we are spreading it across the life cycle. So for most, if not all, graduates, the monthly repayments will be lower not higher, including with FE loans.

I will double check that, but it is my understanding. So you are not going to have two separate deductions running at 9% of your earnings above £21,000 with one in respect of your FE loan and one in respect of your HE loan; you put it all together and then deduct 9% of your earnings above £21,000. That is a very important point.

Q117 Paul Blomfield: But, putting together your HE and FE loans means you are talking about a considerable amount of debt that one would reasonably anticipate would disincentivise those people going on to postgraduate taught courses.

Mr Willetts: All three parties have gone through this process. Thinking about it as a pile of debt is the wrong way. If a child of ours left university with £25,000 on his or her credit card we would all be absolutely terrified. If a child of ours leaves university and people say they will pay £500,000 of income tax during their working life then, by and large, we accept that. We might have a view about the exact income tax rate, but by and large we accept that they are going to be in work so are going to be paying income tax. The graduate repayment is closer to paying income tax in your working life. It is an addition to PAYE rather than some separate debt. We have lowered the monthly repayments.

Q118 Paul Blomfield: But it does remain a debt on an income-contingent loan. It is not graduate tax, is it?

Mr Willetts: It is not a pure graduate tax because it is linked to the cost of your education and you can finish paying it. Unlike a pure graduate tax we can collect it from foreigners, when we cannot impose income tax on foreigners. So it has many advantages over a pure graduate tax.

Chair: I would love to have a wide-ranging debate on this but not at this meeting. I am conscious of the fact that Brian needs to go to another meeting very shortly and I know he has two questions that are very close to his heart. I will come back to you Paul if you would like to finish off.

Q119 Mr Binley: You are very kind and I apologise, Paul. I apologise for having to leave, Minister; I really do. The first two questions are really simple; I think we need some information from you on the last one, though. Your implementation plan states that the consultation on early repayment will "allow those who wish to pay off their loans early or make voluntary contributions to do so without undermining the progressiveness of the system". That pleases many of your supporters who sit behind you on the Back Benches. Are you satisfied that you have achieved this balance?

Mr Willetts: Yes, I think we have and it is fair. When we did the consultation on that it was clear that there was widespread unhappiness about the idea of early repayment penalty. I very much understood that concern and, as a coalition, I think we took the right decision.

Q120 Mr Binley: I am going to be slightly more controversial now. On university entrance, whilst the appointment of the gentleman in question is in the past, there are none the less one or two small points hanging over. The first is in relation to early repayment penalties for tuition fees. That became public at the time of the controversy surrounding the appointment of Mr Ebdon-whom I wish well.

Mr Willetts: Good, excellent to hear it.

Mr Binley: We shall be watching his progress. A Downing street source implied that his appointment and the dropping of early repayment penalties were interlinked. Do you want to disabuse us of that thought, or might there be some truth in it?

Mr Willetts: I regret some of the controversy on the appointment of Les Ebdon, and we did of course carefully consider the Committee’s views on that. The appointment of Les Ebdon was made during the absolutely proper processes that are now scrutinised rigorously from outside. We had separately launched a consultation on early repayment. This is a good example of the concern the Chairman was expressing earlier about the fact that people should know where they were before they started the application process for that year.

Q121 Mr Binley: So you are telling me that there was no agreement with Mr Ebdon in relation to his appointment on this question?

Mr Willetts: Les Ebdon was appointed to operate within the framework of OFFA. The early repayment issue was not something for Les Ebdon and was separate from him.

Q122 Mr Binley: So he had no input into that whatsoever?

Mr Willetts: No.

Q123 Mr Binley: I rather wished he would have done actually, but he did not.

Mr Willetts: It would have been impossible to have had a better decision than we did. It was the right decision.

Q124 Mr Binley: It is in the past, Minister. Can I go on to ask you the question that caused me so much concern when we last met in this Committee? It is the question about financial statements. I wanted to know what discussions you and your Department have had with the Student Loans Company since we met last month. This whole business of people understanding what they are taking on is one that I know you would agree with. I know you would want those statements to be finalised as quickly as possible. Can you update us on where we are in this respect?

Mr Willetts: We are working with the Student Loans Company on this. I know this is something that specifically concerns you. Students only start getting statements about their "debts" after they have graduated. This is available for them as graduates, so current students are not getting statements.

Q125 Mr Binley: You are arguing that they work that information out themselves and the statement simply confirms that information.

Mr Willetts: My understanding is that students do not normally receive statements until they are liable to repay, which is the April after they leave their course. That is when they get a first communication from the Student Loans Company. As part of quite a wide-ranging change of and improvement to the IT systems, ready for the cohort of students that will be graduating under our new scheme with new and better IT, one thing we are looking at is making those statements that graduates receive as informative and user-friendly as possible. I checked this because you were asking about it before, and my understanding is that the current system does not involve current undergraduates and current students at university getting those statements. We are not proposing to change that.

Q126 Mr Binley: Could you clarify the purpose of the statement? I thought the statement was about making students aware of the liability they are taking on. I know you are arguing it is not a liability but simply another way of paying income tax, but I am not quite sure I see it that way. Are you telling me that it is not about informing people of the liability they might be taking on, but it is about giving them an account book when they start repaying?

Mr Willetts: There are two things here. My understanding of the way the system currently works is that it is aimed at, once they start repaying, explaining their repayment obligations. It is a Student Loans Company repayment calculation. The reason why I referred to this wider reform of IT is that the official, overall Government approach to this is that the delivery of all public services should be digital by default. In other words, there is an assumption that, wherever possible, it should be online. I don’t want absolutely to guarantee it to the Committee but I could well envisage that as soon as you are talking about an online system, rather than a letter going out as we currently have, it might well be possible for the undergraduate to start accessing their account online earlier, before there is any question of repayment. This is part of the design of a new system that will come in in 2016.

Q127 Mr Binley: Can I urge you to do that? I am sure that all students are the most responsible of people, but there are some people who lose a little on the way and they need to know, pretty much throughout their university career, what they might be stacking up and in what way that might be working. I think there is a real case for ensuring that they have that information earlier and I think there is a case for ensuring their parents are aware of that information too. I am pleased to hear about the website. Can you do your very best to ensure that it will be available as early as possible in the cycle?

Mr Willetts: As I say, I will undertake to do that. I understand your concern, it is a very fair point, and we will happily keep you in touch with the work that goes on and the redesign of the system.

Q128 Mr Binley: I am very grateful. Will you come back to us with what information would be contained in that statement so we can monitor that? There are a lot of young people out there who are fearful they might be getting into trouble. I know one or two who have been put off going to university on that basis, which is why I am so keen to press this point.

Mr Willetts: We are absolutely keen to get the information out so they understand it is a PAYE deduction; it is not something they have to pay if they are unemployed. Something else we refer to in the White Paper, which I personally am very keen on, is a statement of financial information like where your council tax goes. I do think it is very important, for the consumerist aspect of our reforms-and students are not simply consumers but I remain a believer that they do have some of the expectations of consumers-that they are entitled to know how their money is being spent. A breakdown of the £8,000 or whatever should show how much is going on access agreements, how much is going on teaching costs and so on. A breakdown of that information is exactly the type of information I think students will be entitled to see.

Mr Binley: I am reassured by your remarks and would be grateful if you kept us updated in the way I have requested.

Q129 Chair: You have anticipated most of my questions on access to information but I would like to clarify one thing. We understand that comparisons of key information sets will be of value to prospective students. Do you have a timetable when this will be available? Will it be available before the next round of applications in 2012-13?

Mr Willetts: Yes, we want to get this out in the autumn, in September or October. The target was by the end of September. By that time we expect all the information to be available through key information sets.

Q130 Paul Blomfield: I want to ask about the for-profit sector. In your response to the White Paper consultation you said you would be introducing measures to bring alternative providers into the formal student number controls and you will consult later this year on the process for applying these changes. When will that consultation close?

Mr Willetts: We have asked HEFCE to carry out that consultation; I don’t think they have yet produced a consultation document with a time scale. You refer to them as for-profits. These are alternative providers that come in many shapes and sizes. Some of them are social enterprises, some of them are charities and some of them are indeed forprofit. They are basically the new kids on the block; it doesn’t follow that they are all for-profits.

Q131 Paul Blomfield: I accept that point; I will be coming on to a specific question about for-profits. Will any aspect of the reform in this area require legislation?

Mr Willetts: A complete, perfectly level playing field would require legislation. There is a lot that we can do without legislation and the most important example is being very active in our use of the designation power-the power to designate courses. We have already significantly expanded and I have already listed some of the extra checks we have introduced. There are more that we will be introducing in future, both on number controls and on quality assurance.

Q132 Paul Blomfield: Which parts of the playing field will remain un-level without legislation?

Mr Willetts: It cuts both ways. For example, participating in the OIA, which they can voluntarily do but there is no legal obligation to, would be one example. There is another example that cuts the other way, because it works in both directions. New, alternative providers getting degree-awarding powers get them for six years, after which they are reviewed. Existing providers get them indefinitely with no power to remove them. One of the other proposals we had in the legislation was that, if there was a real concern, we should have the power to remove those powers. So there are various untidinesses, I accept that, but we can do a lot with the power of designation.

Q133 Paul Blomfield: Do you think there is an opportunity on the OIA-this would be quite a significant omission-to have discussions with providers and get voluntary consent before using powers to designate?

Mr Willetts: Compared with the patterns of behaviour we inherited, when a large number of designations already happened, my view is that we have been far more energetic in the use of designation power. We can advance on the power to designate and use it more energetically. The evidence is that we have already been more energetic and will continue to look at other ways we can use those powers.

Q134 Paul Blomfield: Will alternative providers be required to comply with the wider participation provisions, as with the existing providers?

Mr Willetts: The students at those providers are not eligible for loans of more than £6,000. So the OFFA access regime does not apply in their case.

Q135 Paul Blomfield: What measures would you expect them to provide to guarantee widening participation or seek to meet those objectives?

Mr Willetts: We will see what is possible, but there is a need to try to get information from them about their students. That is a fair place to start. As I said, when we arrived, no such information was being collected. There may be more information we can seek from them. HESA is like OIA, so it is not something where they would be under a legal obligation but, as HEFCE advances, these are the kind of areas where many may wish voluntarily to participate. As I said, most of the alternative providers of any scale are already in OIA. There may be further things we could require as part of designation.

Q136 Paul Blomfield: Obviously you are quite enthusiastic about alternative providers entering the sector. What discussions have you had with what providers to encourage them?

Mr Willetts: You say "enthusiastic"; I do think the history of the growth of higher education in Britain is of new providers coming in. The challenge to the original Oxbridge monopoly in the 19th century was from local authorities, and there was UCL as a secular institution. Often people were rather sniffy about some of those when they were first created, and they are now well established parts of the sector. In opposition I did some work on schools and that is now being carried on so excellently by my colleague Michael Gove. I am a believer in opening up the supply side but I do not want to tilt the playing field. I just think that, if you are providing a reasonable quality higher education and if a student is choosing it, providing basic standards are being met, at that point the student is entitled to get some financial support.

Q137 Paul Blomfield: You have had active discussions with alternative providers, though.

Mr Willetts: I have had meetings with alternative providers, yes.

Q138 Paul Blomfield: Not necessarily now, but would it be possible to share the meetings you have had with the Committee?

Mr Willetts: I can do it now. Something the coalition has done, to our credit, is that we now produce much more detailed information than ever used to be available before on the meetings Ministers have had and whom they have met. I try to make myself as open as possible to everyone in the higher education sector.

Q139 Paul Blomfield: On this widening participation issue, what would be required of alternative providers, both in terms of access agreements on widening participation, but also key information sets, before designation of courses?

Mr Willetts: We inherited a system where the information requirements were very modest. We are looking at what kind of information requirements we can have as part of this power to designate, but we are not in a position to give details on that at the moment. These are the kind of areas that HEFCE needs to think about. We have already advanced a lot on financial information. We expect them to participate in number controls. We are looking at how the QAA and the validation regime work. Information is another thing.

Q140 Paul Blomfield: So you are not expecting to designate significant additional courses until you have resolved those issues.

Mr Willetts: We are continuing to designate some courses but we have made it clear to providers-and these are important opportunities-that we are increasingly ambitious in what we expect of them in return for designation, and quite rightly so.

Q141 Paul Blomfield: When do you think you will be in a position to share the conclusions of your thoughts on that?

Mr Willetts: The next stage is a HEFCE consultation. These are ultimately HEFCE powers we are talking about. HEFCE will be conducting a consultation on what extra information they can require, and the aim is to have the new regime sorted out and in place by the end of the year.

Q142 Paul Blomfield: Do you anticipate how many of the additional courses will be designated by the end of this Parliament? What is your vision of that?

Mr Willetts: I would not be able to say on that. The initiative is with the alternative providers, who, as I say, come in many shapes and forms.

Q143 Paul Blomfield: Can I concentrate on one shape and form: the commercial providers? Are you considering exempting for-profit higher education providers from VAT?

Mr Willetts: I am not aware of that specifically. What is the specific VAT angle?

Q144 Chair: Buried in the Red Book at 2.186 it says, "VAT: providers of education-The Government will review the VAT exemption for providers of education, in particular at university degree level, to ensure that commercial universities are treated fairly." Whilst I quite understand that you are not a Treasury Minister, given the impact on your Department it is not unreasonable to expect you to know of it and have a view.

Mr Willetts: I think the safest thing is to send the Committee a note on that point, rather than getting into it today.

Chair: We would welcome that.

Q145 Julie Elliott: You originally estimated that the number of AAB+ places would be 65,000. That has now been reviewed and has gone up to 85,000 places. What is your estimate of the effects of lowering the grades to ABB+ on these figures?

Mr Willetts: That adds, approximately, another 35,000. This year it is 85,000 covered by AAB, and next year it is 120,000 covered by ABB. To some extent it may be a process of "grade inflation" coming to an end but there are two things there. If there are slightly more students getting AAB next year than this year, which I am sure would be entirely because of improvements in the excellence of their teaching, then that would be a modest effect. Most of the extra 35,000 comes from going from AAB to ABB.

Q146 Julie Elliott: On what evidence have you based that figure?

Mr Willetts: On information from UCAS and the examining boards about the number of people getting A-levels with those grades. One of the complicating governing factors is that it also includes some equivalent qualifications.

Q147 Julie Elliott: What assessment have you made of the social mix of the students achieving those grades?

Mr Willetts: I do not have any figures to hand. I read some lurid accounts implying these are all people who must have been to independent schools. I do not think that is correct. One of the advantages of moving to ABB means the majority will have had a mainstream state education.

Q148 Julie Elliott: Is any evaluation being done on the social mix of these students?

Mr Willetts: There is some information available and I will happily share whatever information there is with the Committee.

Q149 Julie Elliott: So you will send that to us?

Mr Willetts: Yes.

Q150 Julie Elliott: Thank you. What safeguards are there that increasing the numbers of students in this way will not dilute the quality of education the students receive?

Mr Willetts: I see it in completely the opposite way. In my view, this is absolutely a liberalisation. This means that we are empowering students with that level of qualification to take their funding to the university of their choice, subject to the university wanting and having the capacity to admit them. Where before, HEFCE would tell UCL they had 2,000 places and no more, in future if I choose UCL-and I suspect a lot of their applicants are in this range-they can take on as many suitably qualified students as they think they have the capacity to educate and wish to educate. That is in the interest of the student; it is a good thing. It is a very strong example of how these proposals deliver genuine reform of HE.

Q151 Julie Elliott: Do you not see any impact on other students and other universities with the movement of money into some of the more elite universities, which will inevitably happen as a result that?

Mr Willetts: This is not a conventional market; there is a large public interest; I have to be very careful. It is opening up higher education to create a choice for students, rather like a market. Higher education is not a market; I am not claiming it is simply a market. This is basically saying to all young people that, with more information than they have ever had before, they can choose where they want to study, if they have good grades, and the money will go with them to the place they choose, instead of being allocated by a quango that determines how many people all our universities are allowed to take on. I regard this as clearly and manifestly an improvement.

Q152 Julie Elliott: You did not actually answer what I asked, which was about the impact on other universities and other students.

Mr Willetts: The only way I can understand what you are saying is, if a student really wanted to go to university A and university A really wanted to educate him or her but had a numbers control we had enforced, so instead that student had to go to university B, which was lower down their preferences, in future that student is going to be able to go to university A, so university B loses. Well, the answer is that university B is now competing against university A for that student. My impression, which is mainly anecdotal at the moment, is that that process of competition for the student is entirely beneficial. They have to improve the quality of the teaching experience on offer. They will be offering information about how crowded the seminars are, how rapidly your academic work gets returned, the quality of the teaching experience, and whoever wants that student has to make that offer to the student. That is exactly how the reforms are supposed to work.

Q153 Chair: Is not the logic of that policy that students who do not get ABB+, as it now is, actually have less choice than those that have the qualification?

Mr Willetts: I do not see that there are losers in this policy. There are some who clearly gain and there are others for whom it is neutral. Insofar as this competition gets universities in general to focus on the quality of the teaching experience, I hope it would be a benefit that feeds through more widely. There are indeed limits to how far we can go on the tariff policy; I recognise this issue. There are some students in places outside the tariff policy but they do not lose, they just do not participate fully in the benefits.

Q154 Chair: Do you not think that those universities that can attract the ABB+ students are going to clean up on that market and expand their provision, thereby both reducing the capacity of other universities to provide for them and indeed reducing the opportunity for those that do not have that level of qualification?

Mr Willetts: We are encountering a fundamental philosophical difference. I think universities should get students by the quality of their offer, not by students not being able to get to somewhere else and having to settle for an alternative. One has to be so careful in this respect; this is not like a normal commercial market, but this is one of the good features of competition and choice.

Q155 Chair: If you are a university vice chancellor planning capacity for the future, this introduces an element of uncertainty that really makes life very difficult.

Mr Willetts: I accept that it is an element of uncertainty. That is correct. It is why we had very careful discussion. This goes right back to where we were at the beginning on how much change the sector can take and how we manage through this process of very significant reform. That is why we have gone from AAB to ABB: we are moving at it steadily. I am very conscious that there is a limit to how much change the system can take. Equally, we want to maintain momentum. These are serious reforms. These are interests of students and we have to get on with it. We are trying to get the balance right.

Q156 Julie Elliott: I want to come back on what you are saying. You clearly view this as benefiting students at the higher academic level. My concern is for the students who are not achieving that level but are perfectly able to go to university and complete degree courses at the other universities. As the Chair said, there is an impact on vice chancellors planning their offer, the broadening of the curriculum, and the education offered to other people. You were unclear whether you had done any evaluation of the social mix of the more able students. Have you done any academic work on the social mix of the lower grade students and the impact this policy, of opening up the higher end, is having on the lower end? In my view that is just as important.

Mr Willetts: One of the reasons we have kept it quite high up the tariff level, at AAB or ABB, is that these are students who are already going to university. We are simply empowering a group of students who in almost all circumstances were going to university anyway. There was an argument about access arrangements. Again, I salute HEFCE for their initiative: they set aside 20% of places-even at universities where almost everyone who was going was getting AAB-they set aside a student number limit of at least 20% of their limit for 2011. So there would still be a margin for contextual, data-based offers. So that specific angle, which is the only one I can identify where you can argue there would be a risk, has been specifically addressed in the HEFCE arrangements for student admissions through reserving places.

Q157 Nadhim Zahawi: There was a fairly even split between universities and further education colleges in the take-up of the 20,000 margin places. Is that what you had expected?

Mr Willetts: It was a decision by HEFCE. From memory there were about 35,000 places proposed. I trust their judgment. I think there were slightly more in FE. I will find the figures but if I remember correctly it was about 9,000 to 11,000. That seemed to be reasonable to me.

The exact figure actually is that 143 further education colleges received allocations of at least 9,547 places. So there were a lot of FE colleges.

Q158 Nadhim Zahawi: Do you have details on how many institutions charged the maximum sum of £7,500 for courses?

Mr Willetts: I do not have that information to hand. If we have it, I will send it to the Committee.

Q159 Nadhim Zahawi: Our report recommended that you monitor the social mix of higher education institutions to guard against polarisation within the sector. Is this something you will be willing to do or would do?

Mr Willetts: I see this as the kind of thing that OFFA can do. We will have this information as part of the Government’s wider work on social mobility. Access to university does matter. One of the reasons for the 20% reserve core was to make it clear there was scope for access arrangements, even at the most competitive universities that were having lots of applications from AAB students.

Q160 Nadhim Zahawi: Your response was a bit light on detail about your proposals for off quota places. What details can you give us on this policy?

Mr Willetts: I am afraid that I cannot share much more information on that with the Committee at the moment. As soon as there is further information or analysis I happily will share it. With so much else going on I don’t think there is much more I can add to what I have said before on off quota.

Q161 Nadhim Zahawi: Do you think you can introduce this through non-legislative means or does it need primary legislation?

Mr Willetts: There is currently an arrangement where there are so-called closed courses, usually linked to an employer, and I don’t believe you would require primary legislation for more universities to set up such closed courses. That does not require legislation. If you wanted to go beyond that you might require legislation.

Q162 Paul Blomfield: We had a very positive discussion with Lord Green about our visit to Brazil and talking about the opportunities for trade. In the course of that, one of the issues we discussed was student visas. In the course of his reflections on where we are as a country now was the recognition that there is work to be done on rebuilding a brand and rebuilding the message about our openness for international students and the opportunities for them to study here in the light of the Government changes on visas. Would you agree with Lord Green?

Mr Willetts: I always agree with Lord Green. He is an excellent man who is an ornament to the Government. We do accept, going around the world, that there are some places where, partly due to briefing from some of our competitors, people have the idea that there is a cap on the number of students. There is no cap on the number of legitimate students who are properly qualified and want to come to Britain and study. We are very proud of the fact that there is no cap and I take the opportunity, whenever I am on an overseas trade mission, to get that message across.

Q163 Paul Blomfield: I anticipate that you might share our concerns on this. There is a problem that, if you include students in the net migration figures, if we as a country were successfully able to grow our share of a growing international student market, it would conflict with the Government’s other objectives in relation to the immigration cap. Therefore, it would seem to be more sensible to take students out of the net migration figures.

Mr Willetts: Whenever we have looked at this we have always been absolutely clear that there is not and should not be a cap on the number of overseas students.

Q164 Paul Blomfield: Is it not true that you are effectively capping them? If you have a total migration cap and you include students in those numbers, then there must be cap on students.

Mr Willetts: Where we have made progress is through the problem of bogus colleges, bogus courses and inadequate skills. I have found universities themselves accepting that it would be very bad for the reputation of British universities if you could turn up at a class and find some of the people participating in class did not have sufficient English.

Q165 Chair: Minister, we understand that, but the basic question is about figures. If you have no cap on student numbers, including on student migrants, but you have a cap on the overall level of migrants, then one policy objective conflicts with another and they seem to be incompatible.

Mr Willetts: We have always made it clear that there is no cap on student numbers. It is very important both for Britain’s position in the world and for the success of this dynamic export that we maintain that position. The coalition as a whole is committed to maintaining that.

Q166 Chair: I would not wish to put words in others’ mouths but I think, on a consensus basis, this Committee would be fully supportive of that. Do you have any other points you wish to make on this issue Paul?

Paul Blomfield: I understand the Minister’s predicament in answering the question as fully as I might like him to.

Chair: Thank you for your contribution, Minister. We obviously will be publishing a report in due course and we look forward to seeing you again in the very near future. Thank you.

Mr Willetts: Thank you very much.

Prepared 10th July 2012