government reform of higher education: follow-up

HC 274-i and -ii Published on 1 May 2013

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House of Commons

Business, Innovation and Skills Committee

Government Reform of Higher Education: Follow-up

Oral and written evidence

Tuesday 12 June 2012 and Wednesday 4 July 2012

Rt Hon David Willetts MP, Minister for Universities and Science

Ordered by The House of Commons to be printed 12 June 2012 and 4 July 2012

7 5

Business, Innovation and Skills Committee

The Business, Innovation and Skills Committee is appointed by the House of Commons to examine the expenditure, administration, and policy of the Department for Business, Innovation and Skills.

Current membership

Mr Adrian Bailey MP (Labour, West Bromwich West) (Chair) Mr Brian Binley MP (Conservative, Northampton South) Paul Blomfield MP (Labour, Sheffield Central) Katy Clark MP (Labour, North Ayrshire and Arran) Mike Crockart MP (Liberal Democrat, Edinburgh South) Caroline Dinenage MP (Conservative, Gosport) Julie Elliott MP (Labour, Sunderland Central) Rebecca Harris MP (Conservative, Castle Point) Ann McKechin MP (Labour, Glasgow North) Mr Robin Walker MP (Conservative, Worcester) Nadhim Zahawi MP (Conservative, Stratford-upon-Avon) The following members were also members of the Committee during the parliament. Luciana Berger MP (Labour, Liverpool, Wavertree) Jack Dromey MP (Labour, Birmingham, Erdington) Margot James MP (Conservative, Stourbridge) Dan Jarvis MP (Labour, Barnsley Central) Simon Kirby MP (Conservative, Brighton Kemptown) Gregg McClymont MP (Labour, Cumbernauld, Kilsyth and Kirkintilloch East) Nicky Morgan MP (Conservative, Loughborough) Chi Onwurah MP (Labour, Newcastle upon Tyne Central) Rachel Reeves MP (Labour, Leeds West) Ian Murray MP (Labour, Edinburgh South) Mr David Ward MP (Liberal Democrat, Bradford East)

Powers

The Committee is one of the departmental select committees, the powers of which are set out in House of Commons Standing Orders, principally in SO No 152. These are available on the Internet via www.parliament.uk.

Publication

The Reports and evidence of the Committee are published by The Stationery Office by Order of the House. All publications of the Committee (including press notices) are on the internet at www.parliament.uk/parliament.uk/bis. The Reports of the Committee, the formal minutes relating to that report, oral evidence taken and some or all written evidence are available in a printed volume. Additional written evidence may be published on the internet only.

Committee staff

The current staff of the Committee are James Davies (Clerk), Amelia Aspden (Second Clerk), Josephine Willows (Inquiry Manager), Peter Stam (Inquiry Manager), Ian Hook (Senior Committee Assistant), Pam Morris (Committee Assistant), and Henry Ayi-Hyde (Committee Support Assistant).

Contacts

All correspondence should be addressed to the Clerk of the Business, Innovation and Skills Committee, House of Commons, 7 Millbank, London SW1P 3JA. The telephone number for general enquiries is 020 7219 5777; the Committee’s email address is [email protected]

List of witnesses

Tuesday 12 June 2012 Page

Rt Hon David Willetts MP, Minister for Universities and Science, Department for Business, Innovation and Skills

Ev 1

Wednesday 4 July 2012

Rt Hon David Willetts MP, Minister for Universities and Science, Department for Business, Innovation and Skills

Ev 13

List of written evidence

Supplementary written evidence submitted by the Department for Business,

Innovation and Skills Ev 27

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Business, Innovation and Skills Committee: Evidence Ev 1

Oral evidenceTaken before the Business, Innovation and Skills Committee

on Tuesday 12 June 2012

Members present:

Mr Adrian Bailey (Chair)

Mr Brian BinleyPaul BlomfieldKaty ClarkRebecca Harris

________________

Examination of Witness

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

Q1 Chair: Good morning, Minister, and thank youfor agreeing to come before the Committee. Just forvoice transcription purposes, could you introduceyourself?Mr Willetts: David Willetts, Minister for Universitiesand Science.

Q2 Chair: Thank you very much. Earlier in the yearyou wrote to me saying that the response to theNovember Committee report would be provided“immediately after the Queen’s Speech”. Whatstopped you giving the report then?Mr Willetts: I should apologise to the Committee forthe series of delays in responding to this Committee’sreport, which, of course, was published last year andwhich we have been considering very carefully. Wehad, first of all, of course, the need to wait to see whatthe collective decision would be on whether therewould be legislation in the Queen’s Speech. After theQueen’s Speech we needed to finalise our response tothe Committee’s report, and then our advice was alsothat it would have been bad practice to have producedthe report during the recess. So there have been aseries of reasons for the delay, but I do unreservedlyapologise to the Committee because I know it hasmeant that it has been both a long time since thisCommittee’s report and it has also meant that, sadly,this Committee has had not enough time to considerour response, which we produced the day theCommons was back after the recess.

Q3 Chair: I find your response amazing: that youconsider it would be bad practice to publish theresponse during recess. If that is bad practice, I cannotthink what practice would be any better. Youpublished the report the afternoon prior to this Sessionwith you, when there is a key piece of BIS legislationgoing through the Commons and inevitably memberswould be involved in that. Why did you not send itthrough during the recess?Mr Willetts: Our advice was that in the past we hadbeen criticised and advised not to publish material forthe Commons during the recess, but I fully realise ithas meant this Committee is now facing this inquirywith limited time to have seen our response.

Ann McKechinMr David WardNadhim Zahawi

Q4 Chair: The fact is that we received it at a timewhen it was too late for us to adequately consider thatresponse in the questions that we put to you today. Ifind that quite astonishing. It does convey theimpression—and I think this is how members of theCommittee have perceived it—of playing games withthe Committee.Mr Willetts: I have accepted the responsibility for thedelays, and I have tried to explain to the Committeethe reasons for the delays, but I do not accept thatcharge because we in BIS greatly respect the views ofthis Committee and we consider them very carefully.I suppose the question is the timing—and I do notclaim any expertise on the parliamentary proprieties—but our advice was that publishing during the recesswould not be the correct way to proceed.Of course, as soon as this Committee summoned me,I was very happy to come along, but once there wasthe recess and then this session on Tuesday, inevitablythere was going to be a squeeze. I have tried to explainto the Committee the reasons for these continueddelays, but I do not accept that we would play gameswith this Committee.

Q5 Chair: You wrote to me on 22 May, saying—andI quote—that, “I look forward to explaining how weintend to move forward on the vision for the sectorwhen I appear before the Select Committee in June.”What was to stop you in that letter saying exactlywhen it would be published?Mr Willetts: I am not sure that at that point we hadan agreed publication date. The process was that therewas a set of decisions about the contents of theQueen’s Speech. The Queen’s Speech was thenpublished, and in the light of the decisions on theQueen’s Speech we then took the decision—which Iam sure some of the Committee will wish to questionme on—that now our aim is to move steadily forwardwith our reforms, working without new primarylegislation. That approach I then, obviously, neededto clear collectively with colleagues in Government,which takes time. Then, at the end of that clearanceprocedure, there was a recess, and our understandingwas that releasing documents to CommonsSelect Committees during the recess was frownedupon. I am not sure if I could find a text of “Erskine

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Ev 2 Business, Innovation and Skills Committee: Evidence

12 June 2012 Rt Hon David Willetts MP

May”, but that was our understanding. Then wereleased it on the first day back.You are quite correct—that, sadly, also overlappedwith the Second Reading of a BIS Bill, but that is thechronology of events that has brought us here. Theone thing I would absolutely assure the Committeeof—and I understand the Committee’s frustration—isthat at no point have I or any of my colleagues in anyway wished to play games with this Committee. Thatis the narrative of what happened, when and why.Chair: You have explained the chronology of it, butwhat I do not think you have given is an adequatereason why the difficulties the Department was in andthe potential ways of addressing them could not havebeen communicated to me and this Committeebeforehand.Now, I am going to deal with some of the details ofyour response in a moment, but I do feel it appropriateat this point to bring in the lead Conservative member,Brian Binley, on this, because I know that he sharesmy strong feelings and I think they are reflected in allmembers of the Committee.

Q6 Mr Binley: Thank you very much, Chairman.Good morning, Minister. You will know there hasbeen a history between your Department and thisCommittee with regard to what might be consideredan undervaluation of the role of Select Committees,and it is in that light—rather than just in one incidentof a report being much too late for consideration—that this Committee has viewed this matter. Can I askwhy you did not understand that this Committee couldnot possibly do its job of holding the Government toaccount, bearing in mind the late arrival of this report?Mr Willetts: There are clearly lessons from thisepisode that we need to reflect on. First of all, I wouldlike to assure you that BIS—and all of the Ministersin BIS—do take this Committee’s deliberationsseriously, and that is reflected in the substance of theresponse that we are making to the Committee’sreport. If I were taking steps back, and I am veryhappy to reflect further on this and discuss it with theCommittee, we either had a mistaken understandingabout the recess—and, as I said, our advice was thatpublishing in recess was not something thatParliamentary Committees particularly welcome—or,in coming here on the Tuesday, the day after the endof the recess, we could have perhaps given theCommittee more time to consider. I am sure there arelessons here for improving communications betweenBIS and the secretariat of this Committee to ensurethat misunderstandings like this do not happen again.I will take delivery of ensuring we try to avoid suchmisunderstandings in future.

Q7 Mr Binley: Can you understand, Minister, thatwhen you say that all Ministers in your Departmentdo take the Select Committee seriously, this episode,when conjoined with what appeared to be a decisionhaving been made over an appointment—and I do notwant to go into the Les Ebdon matter again; that isdealt with and done; the man is there; he has animportant job to do; and we will scrutinise him inthat role. You will know that there were very seriousconcerns that a decision had been made before a

matter was put to this Committee. Do you understand,in the light of those serious concerns, that this adds tothe view that there is a feeling amongst the BISMinistry that this particular scrutiny role does notmatter anywhere near as much as it should and isnowhere near as important as it should beconsidered—and, indeed, it might even be considered,when collectively put together, to be a contempt ofParliament in that respect?Mr Willetts: There are two very different issues there.First of all, of course, when it came to the OFFAappointment process, we did explain in our responseto the Committee that it has not been the position ofthis Government—or the previous Government—thatthe process in which appointments like the OFFAappointment are brought to the Committee wasintended to be binding. What we did do was pauseand reflect on this Committee’s advice. I have to saythat one of the advances the coalition has made is thatthis Government brings more appointments beforeSelect Committees for them to give their views onthan has ever happened in the past.Today we are dealing with something very different,which is an unfortunate series of accidents of timingthat I have tried to explain to the Committee. I thinkwe do need to reflect on how we can improve theliaison between the secretariat and my Department toensure we avoid this happening ever again, but I hopewhen it comes to the substance the Committee willsee we have reflected and tried to address verythoroughly the points of substance in the Committee’sreport of last autumn.

Q8 Mr Binley: Then can I suggest one final point?There is a view in this Committee that thisCommittee’s work is not taken anywhere nearseriously enough by Ministers. From the findings Ican conclude from this Committee, that is the case,and we need good relationships together, which meansmore discipline from your Department. Would youtake that message back?Mr Willetts: I certainly understand. We do absolutelyneed to show and behave in such a way as to ensurethe Committee understands that the views of thisCommittee are always taken into account and aretaken very seriously by BIS. We are very happy towork with this Committee to remove anymisunderstandings.

Q9 Mr Binley: My question was a little more thanthat: will you take it back to the team of Ministers inBIS and make the point forcefully on our behalf?Mr Willetts: I will certainly report this and discussthis with my ministerial colleagues.Mr Binley: I am grateful, Minister.

Q10 Chair: There are two further issues that I wantto tease out to establish clarity on. First of all,regarding the documents published yesterday, thereare basically two: there was the Government Responseto the White Paper consultation; and, secondly, theGovernment response to us. The response to thisCommittee was not being published by theDepartment. That is, if you like, our responsibility—indeed, we have done that—and I think it is perfectly

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reasonable to argue that the response to the Committeeas a private response, which we could then decide topublish or not, could have come to us during therecess, separate from any issues about theGovernment response to the White Paper. Had yousent that response to the Committee, it would haveenabled us to research and further our pre-SelectCommittee deliberations today. I can see no reason atall why it is bad practice to send a Governmentresponse to a Committee for members to considerduring the recess, prior to a questioning session ontheir return.Mr Willetts: Mr Chairman—and this could be inwhatever form the Committee wishes; perhaps youand I can have a separate direct discussion—what Itake away from this is that I am committed, as are allmy colleagues in BIS, to making sure that ourrelationship with this Committee works properly.There are lessons we need to learn from this incidentabout what is explained when, what documents aresent over when and how timings of hearings are set inrelation to timetables for the publication ofdocuments. I am very happy to do everything I can toensure that we work together in future in a way thatenables this Committee to carry out properly itsscrutiny role, because we do respect and value thework this Committee does.

Q11 Chair: Affirmations about your good faith donot actually answer the question. Why was theGovernment response not sent to the Committeebeforehand for our consideration?Mr Willetts: We saw the set of documents as a singlepackage, but, as I say, we are getting into deep watershere about what exactly is to be sent to Committeeswhen, and I think the best thing is for us to takedelivery of the challenge set by this Committee—thatwe should try to ensure that incidents like this do nothappen again. I absolutely undertake to do that.

Q12 Chair: The other issue is, quite honestly, of the46 recommendations and conclusions we set out inour report, which were you unable to respond tobefore yesterday?Mr Willetts: One of the questions that we had toaddress was the implementation of our reforms withor without a Bill in this Session, so there arequestions—and I do not want to pre-empt lines ofinquiry the Committee might have—on how, forexample, one approaches the regulation of alternativeproviders. You need to wait for the collective decisionabout whether or not there is going to be a place inthe parliamentary timetable for legislation. In the lightof the decision of colleagues—and I fully understandthat—about how we proceed, what we then needed todo was respond to the Committee’s challenge and setout, as I personally think we can, a way forward thatachieves many of the objectives that the Committeeset out in their report last autumn without primarylegislation. That, in turn, then requires collectiveclearance and that, then, in turn, can be published forthe Committee.That, as I say, was the timetable, and that is a verygood example of how we have absolutely shown acommitment to achieve some of the objectives the

Committee has laid out without requiring primarylegislation. If there had been a slot in theparliamentary programme, it would have been a ratherdifferent approach, but I think we can achieve thesame objectives without primary legislation.

Q13 Chair: In your response I still have not beenable to identify any concrete reasons or any concreteconclusions that could not have been put to us beforeyesterday.Mr Willetts: As I say, I tried to offer the Committeeone example of an area where the way forward couldonly be finally set out in the light of the Queen’sSpeech, so I am not sure I can add much to that. Thatwas the constraint that we faced. There were severalissues—and I am very happy to go through them—where we thought that how we proceed withoutlegislation is something we should explain to theCommittee fully, and we could only finalise ourresponse in that way and clear it with colleagues postthe Queen’s Speech.

Q14 Chair: Yes, post the Queen’s Speech is onething; the day before we have this session—threeweeks, maybe four weeks after the Queen’s Speech—is another. The substantive point about why yourresponse did not come prior to yesterday has notbeen addressed.Mr Willetts: As I say, I thought I had tried to addressthat to the Committee, because we first of all neededcollective clearance within Government after thedecision was taken to make as much progress aspossible without legislation and then—and perhapsthere was a misunderstanding here, and I apologise ifthere was—the view within the Department was thatthe document should then be provided after the recesswas over.Again, as I said earlier, Mr Chairman, it seems to methat there is a case for both our officials in BIS andyour secretariat—and perhaps you, me and theSecretary of State—getting together just to try to ironout any misunderstandings so as to avoid anythinglike this happening in future.

Q15 Chair: Given the fact that there are a number ofpolicies that have not been determined anyway, Ireally cannot see any reason why your response to ourCommittee report could not have been sent at leastduring the recess at the latest and, quite frankly, theimpression that is given is that the Department at besthas been shambolic in its approach and, quite frankly,at worst is playing games with the Committee. Youhave denied it, and I accept your responses in goodfaith.What we want to do with this particular session is aska number of questions that we feel are appropriateto ask at this time. Obviously, embedded within yourresponse to the Committee’s report are a whole rangeof issues that we will wish to explore in greater detailbut have not had the time to do at this point, and wewill therefore be inviting you back to discuss those ingreater detail in the very near future.Mr Willetts: I am sure it is something we can all lookforward to, Mr Chairman, and I will be at theCommittee’s disposal.




Mr Binley: Mr Chairman, may I just take up a pointwith you? That is the offer made by the Minister foryou to meet with the Secretary of State and theMinister in order to create a more amicableinterchange and relationship, because it is importantto both our jobs. Can I ask that we might pursue that?Chair: Yes. Certainly, from my perspective, I am verywilling to do that, as indeed I have always been. It isjust that, shall we say, the departmental response hasnot always been as helpful as both I—as Chair of theCommittee—and the Committee would wish. Can wenow move on to bring in Paul Blomfield.

Q16 Paul Blomfield: Thank you, Chair. If I could, Iwill move us on from the specifics of the timeline ofyour response to the Committee—but only a little—to talk about the timeline in terms of the Department’sresponse to the consultations. The consultation on theregulatory framework closed last October and theconsultation on the White Paper a month earlier. Whydid it take until yesterday to respond to thoseconsultations?Mr Willetts: The main reason is the one I gaveearlier—that how we move forward depends cruciallyon the decision on whether or not there is legislationin this Session, which affects issues in the consultationdocument as well. We were only able to finalise ourapproach post the Queen’s Speech. Obviously, we hadbeen doing contingency work, but we were only ableto finalise our approach and go for collectiveclearance on that after the final outcome of theQueen’s Speech. As I said, I think what we have beentrying to do—with all of the documents taken as awhole—is show how it really is possible to makeprogress in tackling a lot of the issues that thisCommittee has identified in its report without primarylegislation in this Session.

Q17 Paul Blomfield: I am a little bit puzzled. Theconsultation that you had on early repayment penaltieshad a comparable number of responses and wassimilarly integral to your overall strategy, but youwere able to respond to that consultation four monthsearlier. Why was that?Mr Willetts: That was a specific decision.

Q18 Paul Blomfield: There were a number of otherspecific decisions you could have responded to earlier,weren’t there?Mr Willetts: Yes, but it was one that was alsoparticularly relevant for universities that wanted tofinalise prospectuses, have all of the information andbe available for prospective students as they startedapplying to universities.

Q19 Paul Blomfield: Minister, with respect, therewere other issues on which universities were alsoseeking clarity earlier.Mr Willetts: This was one that was specificallyidentified by several universities and others as an areawhere prospective students would like to know whatthe regime would be as they went round theapplication process.

Q20 Paul Blomfield: Were there no other issues thatuniversities were seeking earlier clarification on?Mr Willetts: I do recall that, in particular, being raisedin several conversations as a particular area ofconcern.

Q21 Paul Blomfield: You mentioned in yourresponse to us that, because you are not introducingchanges to primary legislation at this stage, you willnow be seeking to move your reform agenda, whichis a very substantial agenda, forward throughnon-legislative means. Are you not concerned that thisraises questions in terms of transparency,accountability and the role of Parliament in overseeingwhat you yourself have described as a very significantchange to our higher education system?Mr Willetts: I accept that it is very important to havescrutiny, and that is why the one part of the discussionwe just had that I objected to was the claim we wereplaying games with the Committee, because I actuallythink this Committee has a crucial role in scrutinisingsomething of considerable public concern, but onecannot bring forward primary legislation in order tohave scrutiny over policy. The fact is there are lots ofother ways Parliament can scrutinise polices; detailedinterrogations by Select Committees are a crucial partof that. We believe we can make a lot of progress indelivering our reforms without primary legislation.

Q22 Paul Blomfield: It was your original intention tointroduce primary legislation. That was your ambition,wasn’t it?Mr Willetts: I think that, in the long run, at some pointwe will need to embed these changes in primarylegislation, yes, but in fact one of the points theCommittee made in the report last autumn was theproposal of a more incremental approach. We thinkwe can make a lot of progress with the legalframework we already have. We think there arepowers left by previous Governments that have notbeen used the way they could: for example, the powerto designate courses in alternative providers, where,when you look at the legal framework we havealready got, I have to say that in the past that wasalways a very passive process. I think we could bemuch more activist in the designation of providers.You can use existing legislation; you do not alwaysneed new legislation.

Q23 Paul Blomfield: You are not necessarilyintending to move more incrementally, are you? Youare simply aiming to do what you were otherwisegoing to do through primary legislation without it.Mr Willetts: Well, we have the challenges that we arerising to. We have got the regulatory framework ofthe QAA and HEFCE, and we think that can be usedvery effectively. We do not measure progress in thisGovernment by the amount of laws that we pass. Ifthere are existing laws that can deliver objectives—and indeed sometimes you find powers that have notbeen used as actively as they could have been—it isnot of itself a good thing to create new laws.As I said, I do accept that down the track, at the rightpoint, when we have seen how this is playing out,there will be a need for primary legislation to embed




some features of this new structure in law, but I donot think anything is being lost by not having a Billthis Session. It gives us time for further reflection andit also means, as I said, that we can use existingpowers provided by existing legislation perhaps moreeffectively than they have been in the past.

Q24 Paul Blomfield: Thank you. You also said inyour response to us that it would be inappropriate tolegislate now because you do not know the full effectof the new funding arrangements. When do youanticipate that you will know the full effect of the newfunding arrangements?Mr Willetts: Obviously, 2012–13 will be the first yearin which we see new students go through the system,so some of the particular challenges that thisCommittee has put to us at various points can then beanswered. For example, the Committee has said in thepast that you wanted to see a kind of modaldistribution of fees faced by students. That was aperfectly understandable request, which, again, we inBIS have reflected on because we respect the viewsof this Committee. The fact is that for that, you needto know how many students are paying which fees.We will not know that until they have arrived atuniversity; through the Student Loans Company andother data sets, we will actually know what hashappened.A second example would be the volume of studentloans. I have shared our estimate with this Committeebefore. It is no more than an estimate. The way wehave done the calculation is to assume that 90% ofstudents will take out an average loan of £7,500. Thatis not a fee assumption; it is a loan assumption. It willbe in the course of 2012–13 that we find out whetherthe kind of total for loans implied by that calculationis roughly there or a bit higher or a bit lower. Thatkind of information will become available and, goingback to our previous discussion, I absolutelyundertake to share that information with theCommittee promptly and to be very willing to comeback to this Committee and be re-scrutinised about itwhen those points of information that the Committeehave asked about become available.

Q25 Paul Blomfield: Just one final question fromme: what other outstanding issues, variables orinformation stop you bringing forward legislation atthis stage that you might not have mentioned so far?Mr Willetts: It is the eternal debate about allocation ofparliamentary time: we are always trying to squeeze aquart into a pint pot. There was also the very fairchallenge, which is not just for BIS, that the PrimeMinister has set for lots of Departments: before yourush to legislate, be clear whether you cannot achievesome of your objectives using the powers of existinglegislation. He does not measure the success of thiscoalition by how many laws we pass. That was achallenge we were set and I think it is a challenge wehave risen to.

Q26 Chair: Could I just, shall we say, record thatyou quoted our report as saying that reform should beintroduced in an incremental way. Could I just readyou the appropriate recommendation? It says,

“Successful delivery of these reforms is a keycomponent of providing a prosperous highereducation sector. Therefore, we strongly believe thatthey should be implemented as a package and not in apiecemeal way as both students and universities needcertainty in the new system if they are to makeinformed decisions. We therefore urge theGovernment to ensure that its delivery programme hassufficient flexibility to accommodate a laterimplementation to deliver its reforms. To do so wouldbe seen as a strength both for Government and forthe sector it seeks to reform.” I would not necessarilyinterpret that conclusion as justifying an incrementalapproach.Mr Willetts: That is a fair point, Chairman. Lookingback to some of our previous exchanges, I guess mypoint was—as I think I have explained to thisCommittee before—that through the publicexpenditure decisions we took in the CSR in 2010 wehad to move ahead rapidly with the decision on feesand grants and the implementation of that, which hasmeant, inevitably, the finance decision got detachedfrom some of the other decisions that we are stillworking through.

Q27 Mr Ward: There has been a discussion aboutthe inferences for the future regarding primarylegislation or existing legislation. There have been anumber of measures built in to ameliorate the effectof increased tuition fees, in terms of nothing up front,£21,000 and so on. If I sign up for a 25-year mortgage,I know—even if it is variable rate, I know what thevariable rate will be based upon—what I am signingup to for 25 years. We have a change in the systemand there is some uncertainty in the system; on anindividual graduate basis, does a student know whatthey are signing up for in 20 years’ time in terms oftheir commitments and responsibilities?Mr Willetts: We have tried to set out clearly thecoalition’s approach here and the framework of feesand loans. Of course, under successive Governments,in the letter that every student gets there are somewords to the effect that Governments reserve the rightto change the terms of the loans. That is a text thathas always been there for students, but we have noplans to change the framework we have explained tothe House of Commons and set before thisCommittee.

Q28 Mr Ward: Does that mean no?Mr Willetts: I read lots of accounts of how, forexample, the RAB charge, which we have estimatedat 30%, is going to be very different, and thereforethat is going to create a fiscal crisis that requireschanges. Our view remains—although nobody canknow—that the RAB charge is going to be at about30% and, indeed, we have had those estimateschecked by the OBR and the IFS have done theirestimates. Some of the things I read suggest that weare going to have to make some sudden change ofcourse because it is a problem; I do not think it is aproblem. We have set out our plans, but there isalways that health warning that successiveGovernments have put on the letter the prospective




student gets, and I would be irresponsible if I did notsay that statement is there and always has been there.

Q29 Ann McKechin: Mr Willetts, I wonder if youcould clarify some further points regarding theseissues around legislation. Are all of the regulatorychanges dependent on the funding arrangements? Forexample, are the statutory changes to OFFA andHEFCE subject to these restraints, or are you able tocontinue with some regulatory changes that will notbe?Mr Willetts: I think that is another example of whatwe can do without legislation and what would requirelegislation. What we can do without legislation isincrease the staffing of OFFA. We can shift from amodel in which universities were sending in theiraccess proposals on, I think, a five-year basis toannual scrutiny, because we realise there is publicconcern about whether students from poorerbackgrounds might be put off from applying orwhatever. They go together, so you have morefrequent interaction of OFFA with universities, withan annual process of access proposals going forwardand more staff in OFFA to assess those proposalsbecause there is a greater volume of work. We can doall that.There was a thought that the penalties available toOFFA should change and there could be otherpenalties, which at the moment are either to refuseuniversities permission to have fees higher than£6,000—described vividly to this Committee in aprevious session with words I may or may to repeat—or a fining power. I think the current legislation has afine of up to £500,000. In the White Paper we diddiscuss whether there should be other penalties. Youcould not add other penalties without primarylegislation, so that part of it would require primarylegislation and with no primary legislation we are not,therefore, envisaging any big change in the penaltyregime for OFFA, but we can make the scrutinymore effective.

Q30 Ann McKechin: You are saying, in effect, thatsome of the regulatory changes are not dependent onfunding arrangements.Mr Willetts: Correct.

Q31 Ann McKechin: I think it would be helpful tothe Committee if your Department clarified to uswhich of the regulatory changes are not dependent onthe funding arrangements and which are, becauseobviously when we next meet with you it would behelpful if we could have that distinction. Is theregulatory framework to incorporate for-profitproviders dependent on funding arrangements?Mr Willetts: By the way, I prefer to call themalternative providers because they come in all sortsand sizes. There are charities and social enterprisesand there are some that are commercial entities, butthey are newcomers to the system. For them, when itcomes to quality control, which is very important—and I understand the lively debate about that—thecurrent structure, which we inherited from theprevious Government, was that any organisationseeking to have courses designated for public support

for students has to be validated by a university. Youcannot just set up a course; it has to have a parentuniversity that is validating it. Part of the role of theQAA is to make sure that those validationarrangements are effective.I have read of, and there is a lot of debate about,the case of the University of Wales, and whether itsvalidation arrangements were satisfactory. One thingthat we can do is say, there is this framework inplace—and to be fair to the previous Government,they left this framework behind—let’s be absolutelysure that the QAA is checking that the validation ofcourses by alternative providers is properly beingdone by HEIs.Secondly, there is, as I said, this power to designatecourses. Hitherto, the designation task, as we see it,was done pretty passively. We have, over time—andwe are going to go further—become much moreactivist about whether or not courses should bedesignated. We can say, before we designate a course,“We need this information about the financial strengthof your institution.” We are proposing to say in futurethat as part of course designation you have to acceptthat you come within the framework of numbercontrols. That goes back to a designation power thatis already in the legislation, which we believe we canuse more actively than has been done hitherto.

Q32 Ann McKechin: In effect, certain of theinteractions between your Department and thenon-university sector—and we have described it asfor-profit providers but, as you said, it mayincorporate a wider range—will be subject toregulations, which you can go ahead with just nowrather than relying on the funding. Is that what youare saying?Mr Willetts: I am sure this is something theCommittee will want to scrutinise further, but weactually think we have got a designation power thatdoes not even, we believe, necessarily require moreregulations that have to be brought before this House.The way the legislation is written is that the Secretaryof State designates courses. We believe the Secretaryof State can publicly say, as we come to take adecision on the designation of courses, “We needknow from you the following information: x, y andz,” which, I have to say, was not previously beingrequested or collected.

Q33 Ann McKechin: I understand, obviously, thechange in attitude in your Department, but clearly,when the Committee prepared its report, it was on thebasis that a substantial piece of primary legislationwas coming before this House at some point this year.That is no longer going to be the case, so I think theCommittee, in order for us to do our proper job ofscrutiny, needs to know the areas in which you thinkyou already have the legislative powers and you donot need to do anything further; the areas in whichyou think you need to amend the secondarylegislation; and the areas covered simply byagreements between your Department and institutions,or in policy. Yes, you can do it by this alternativeway but, as you will be aware, Mr Willetts, from yourexperience as a Minister—and as I recall from being




a Minister as well—it is also much more complicatedand more difficult for the public and for thisParliament to follow the train of thought and to makesure it is joined up.Mr Willetts: I would, of course, be very happy toshare that kind of assessment with this Committee.The only health warning I put in is—going back tothe example I gave of quality and validating—that isan area where we have asked HEFCE and the QAAto make sure that this validation power is properlybeing used. They can come back to us. They maycome back to us and the QAA simply say, “Yes, wehave the legal powers we need; we do check thatuniversities are properly validating alternativeproviders and we are going to be more energetic aswhistleblowers if there is a concern about validation.”They could come back and say that. They might comeback and say, “We actually think that we need somefurther powers,” in which case we would obviouslyconsider it very carefully and that might be secondarylegislation or something in a putative future Bill. As Isay, these are matters where we are advancing forwardincrementally and so some of this is still open forconsultation.

Q34 Ann McKechin: It is still a work in progress.My final question is really on that point. What do youthink the timescale is in terms of bringing forwardlegislation for the regulatory system? Clearly, yourDepartment must have some idea, if you are out inconsultation with these bodies such as HEFCE andOFFA, about what additional powers you might need.You are waiting for them to come back with evidence.I am sure that you have some sort of provisionaltimetable to which you are working to say, “Well, weare going to give them three months and then we willconsider and make a decision.” I think the Committeewould appreciate some idea, given that we are nolonger going to have primary legislation, of what sortof timetable your Department is now working to.Mr Willetts: I am very wary of setting a timetable. Iwould not like to make a commitment to thisCommittee that I then fail to honour. I am going to beparticularly cautious, therefore, but obviously we havegot several areas out for consultation. There are notquite as many as I have read in some of the blogs overthe past 24 hours, but we are asking HEFCE and theQAA, particularly, to advise us on various things, andI will, again, happily keep in touch with thisCommittee regarding our progress.Chair: Could I make it clear, Minister, that theCommittee is quite understanding when theDepartment can give us a good reason why a timetablehas had to be extended or cannot give a response? Itis when we do not get an explanation that it is notvery tolerant.

Q35 Ann McKechin: I think an indicative timelinerather than—if I could put it this way—a bindingtimetable would be helpful in terms of transparency,because it is not just this Committee but, veryimportantly, the many students and higher educationinstitutions that are dependent on the operation ofyour Government and the decisions your Departmentmakes. I think we have a level of transparency on the

public record, and an idea of the cohesive plan thatyour Department is working to would assist everyone.Mr Willetts: We will try to provide the Committeewith that sort of note.

Q36 Nadhim Zahawi: Minister, your responsestates, “We have asked OFFA and HEFCE to worktogether to develop a shared strategy on highereducation access and student success and examinehow total investment might be best targeted to delivermost effectively.” It goes on to say that theGovernment is committed to reviewing theintroduction of the National Scholarship Programmefrom 2012 to 2013 in advance of the full programmebeing in place for 2014. The White Paper was subjectto a consultation exercise and the NationalScholarship Programme will be reviewed over thenext year. Why have OFFA and HEFCE only nowbeen asked to develop a shared strategy on access?Should this not have been commissioned last year?Mr Willetts: For the National Scholarship Programmethere is a group in existence, which I chair, that hasbeen involved in designing it, and we have said allalong that we will want to consider how it works inthe first year. On the access budget, the fact is thatfor the first year OFFA—very tightly staffed and verybusy—was focusing on the immediate task in hand: ithad over 100 detailed access proposals sent in fromuniversities. OFFA went back and asked quite a fewuniversities for further information. That process wassimply working through the 100 individual proposalsfrom universities; it absorbed all of the time andenergy of OFFA. Now that first round is over. Iunderstand your point very much; we simply did nothave the capability. The access agreements all had tobe agreed first.Now I think it is the right moment to take a step back.We are talking about a significant amount of funding.We are talking about £150 million by the end of threeyears for the National Scholarship Programme. We aretalking about access funding; HEIs have estimatedthat they will be spending £620 million on access by2015–16. Then, of course, there is HEFCE’s ownwidening of participation—part of the teaching grantof £140 million. If you put all of that together, now isabsolutely the right time and that is one of the reasonsfor the modest increase in staff at OFFA. Of course,overall, BIS is reducing staff.We now think that if you add this up you are talkingabout £900 million, and now that we have got all ofthese initiatives in place, as the evidence comes inabout what works and what does not, I think it willbe very useful. We may find summer schools areincredibly effective; we may find summer schools areincredibly expensive and ineffective, but I hope, overtime, OFFA will have more and more evidence aboutwhat works and what does not, and can draw on thatevidence when advising universities about how theyshould use these very large sums of money.

Q37 Mr Ward: Have you identified any likelysubstantive differences between Aimhigher and whatmay result from these proposals coming forward?Mr Willetts: I think it is a bit early to say. Anotherchallenge, incidentally, where I think we do need to




do more and to do better—although I think some ofthe Aimhigher work was not always effective—is this:if the University of Sheffield puts in an enormouseffort to communicate with students andcomprehensive schools in Yorkshire, as a result ofwhich more people apply to the University ofBirmingham, that is good work by the University ofSheffield. We are very keen for universities as a wholeto see this as a shared enterprise, and there are someinitiatives in which universities do come together onaccess agreements. There are different accessagreements but they come together by spending somemoney on those types of transnational initiatives, andthat is another area where I would hate to seefragmentation and where we may be able to learnsome lessons and improve for the future, alwaysrespecting universities’ power ultimately to decidewhom they admit to their university.

Q38 Mr Ward: First of all, can you give me a bit ofinformation, please, on the Student Finance Tour?Who was responsible for delivering that? Maybe youcould also give us some information or details on howthe 2,000-odd schools and colleges were identifiedand selected.Mr Willetts: I think we approached all schools andcolleges with people who would be applying foruniversity, and I think some of them, for whateverreason, did not want to participate but most did. I amtrying to find the figures for the Committee, but I thinkwe reached approximately 2,000 schools and colleges.

Q39 Mr Ward: Some 150,000 young people wereidentified. We have seen the survey data, which areimpressive. The number of parents was actuallyaveraging around about four per institution, whichwas really quite low, I would have thought.Mr Willetts: Yes. One of the areas in which we wantto do better next time is with parents. I think we focusso much on reaching 18-year-olds, and although I sayit myself, I take some comfort from the UCAS figures.They were not perfect but, if you allow for the slightshrinkage in that cohort, we had a decline inapplications of about one percentage point. I think thatwas quite encouraging. Yesterday, we started theStudent Finance Tour for the new round. It started on11 June over a six-week period, finishing on 26 July.We aim to get to 12,000 parents this time around onthe Student Finance Tour, which I think is a significantimprovement on the number we managed to reachlast year.

Q40 Mr Ward: Who delivered the programme?Mr Willetts: Sorry, I have now got the exact figures.Last year we reached 1,956 schools and colleges,152,000 students and 8,400 parents. What we aim todo this year is to get to 12,000 parents. We hope toget to significantly more students—they may notphysically be in the session; but schools and collegeswith 360,000 students—and for the first time we aregoing to try to reach students in Year 9, who are justtaking the crucial decision about GSCEs, not just inYears 12 and 13. As to the exact name of theorganisation that ran the Student Finance Tour, I amnot sure I can recall it. I will happily write to the

Committee. I have met the excellent group of recentgraduates that were deployed last year and they werefantastic. They were recent graduates and were able,in a very straightforward way, to tell teenagers whatit was like to go to university. They were also armedwith factual information about how the StudentFinance system would work. I have not yet met thisyear’s recruits.

Q41 Mr Ward: There is some evidence that if theinformation is provided by someone other than theGovernment it is more accepted or acceptable. Is itseen as being impartial and independent?Mr Willetts: Yes. That, sadly, is something that all ofus in politics have to be aware of, and it is better if itis independent; and, as I said, these are recentgraduates who give an unvarnished, direct account.We have also had excellent advice and support fromMartin Lewis and his group, who, again, haveoperated independently of Government. They have notcleared text with Government. They have beenoperating independently, and our view is that theseinitiatives—the Martin Lewis initiative and theStudent Finance Tour—combined with a modestspend on advertising are part of the reason why wehave ended up with a very modest fall in applicationsto university this autumn compared with the previousyear. I think young people realised they do not haveto pay up front to go to university.

Q42 Mr Ward: There is obviously a big effort thathas gone into this in terms of the necessity of a newscheme and people understanding that. Is that to besustained? I know there is a tour planned for thissummer; is the intention that that will be an annualtour?Mr Willetts: I think that is our hope. One would hopeeventually that this would just become part of thenormal functioning of a school or college, and theunderstanding of the system would be widespread.When we evaluated the last year’s tour, we receivedincredibly good feedback. That is why we are runningit again, and I would envisage we should run it for athird year. Perhaps I can report some of the responsesfrom the evaluation of the first year’s tour: 95% hada greater understanding of Student Finance after thepresentation; a shift from 82% to 86% in the numberof tour participants reporting they were intending togo to university. We fielded recent graduates who arelocal to the schools and colleges in which theypresented, so they felt a connection with the presenter.We have tried to make this work; we have got a moreambitious one for year two, and I would expect wewould have one in year three.

Q43 Mr Ward: You could say that is a sad reflectionof the lack of information they had before this point.Mr Willetts: I think it is frustrating for all of us—andI have to say that the previous, Labour Governmentmust have gone through this—because no student hasto pay up front and, in many ways, we have a graduatepayment scheme that is quite close to a graduate tax.Obviously the payments are linked to the actual costof higher education and the payments go to a directorin the individual university. If there is one thing that I




hope all of us from all the different political partiesrepresented around this table agree on, it is that itwould be a tragedy if any young person was put offfrom going to university by the belief they have topay up front when they do not have to.

Q44 Mr Ward: Lastly, within that tour, is there anyspecial effort made to make contact directly with thosefrom socially deprived backgrounds?Mr Willetts: I do not know about that. I am not awareof that as a feature. I think we did actually aim it atall schools and colleges, although some of thosedecided not to participate. We intended it as ageneral offer.

Q45 Mr Binley: Can I turn to financial statementson student loans, Minister? We acknowledged, as youknow, in our report to you that some form of annualstatement of student loans was essential for graduates,but we recommended that the government and theStudent Loans Company give serious consideration tothe form of the statement and the supportinginformation. In other words, we wanted that statementto be as clear and understandable as possible, bearingin mind some of the nonsense that comes from thisplace, Minister, that you will well know of. Given thatparticular fact, we are concerned that your responseintimated that the Student Loans Company is currentlyworking on the design of the statement ofaccompanying information. Why has it taken so longto design? It really is not the most difficult form ofstatement to decide upon, is it?Mr Willetts: No. I think it is important that studentshave that kind of information. There are some issuesabout exactly how it should be presented, but yes, Irather agree with you.

Q46 Mr Binley: Can you kick them?Mr Willetts: I have a good working relationship withthe Student Loans Company.

Q47 Mr Binley: So you can kick them.Mr Willetts: I do regularly hold them to account fortheir performance. I have to say that, compared withthe situation three years ago, their performance hasbeen transformed for the better, but I will certainlyundertake to put that item on the agenda for my nextreview meeting with the SLC.

Q48 Mr Binley: I am very grateful. Could you, then,tell us when that statement might be finalised, havingalready had some communications and conversationswith the Student Loans Company?Mr Willetts: I think I had better report back to theCommittee after I have had my meeting with theStudent Loans Company on that, but I very much taketo heart the point and we will try to expedite that.Mr Binley: I am most grateful, Minister.Chair: I am sure the comments from my Committeecolleague will, shall we say, help you accelerate thatprogress.

Q49 Mr Binley: I am not going to apologise forbusiness language; it is the world I worked in for mostof my time and I would never have been a diplomat,

Minister. Can we now go on to the Government’slong-term aspiration for Student Finance? TheCommittee recommended that the Government set outits long-term aspiration, but the response we got wasa bit weak, in truth, and I am sure not the responseyou would ideally want to give. It seemed to suggestthat you were taking some cover behind the2015 Spending Review. Can you provide us with anymore detail than you have in your response withregard to your long-term aspirations for highereducation funding in the context of improving publicfinances?Mr Willetts: I see the White Paper that we producedlast year as our strategy for higher education, and itis, I think, already achieving a lot. It has enabled usboth to save public spending, which was necessary,but to do it in a way that is fair and progressivethrough graduates paying more. We have set out afinancial framework within that White Paper. I do notbelieve we need a further White Paper; the WhitePaper is the vision. I sense I am not helping. Is there aspecific set of questions you think we need to answer?

Q50 Mr Binley: I think one of the problems withhigher and further education has been the lack ofability to consolidate, to settle down, to give people areal understanding on an ongoing basis of where theyare going to be, so that parents, when they look at thechild’s education when the child is eight, nine and 10,can have some understanding. That is the angle I amcoming from. I wonder whether you can give morecomfort to those parents.Mr Willetts: I think that is fair. One of the things Islightly regret, looking back on the White Paper, isbecause we had to tackle a set of financing issues,wider reforms about information and empower thestudents, we probably did not do as much on thevision of what universities offer to the country, whatuniversities offer the individuals who go there, whythey are, as people quite rightly say, of public value,and why the experience of going to university istransformational for many individuals. We could riseto the challenge of setting out that vision moreexplicitly, perhaps in a speech or some otherdocument, because I believe that and the coalitionbelieves that. I hope that would also include somesense of what students can expect in the future.However, we think we have a financial framework, asset out in the White Paper, that will be sustainable forthe long term and we think can deliver that.

Q51 Paul Blomfield: Very specifically, on that lastpoint, thinking of businesses and other organisations,wouldn’t it have been more sensible to sort out thevision first?Mr Willetts: I have always been clear in my ownmind, as have my employees, that universities are ofgreat value to the nation, but, as we have discussed inthis Committee before, that value comes in manyforms. When the coalition took office, the immediateissues we faced were about public spending andfinance. We had to set out public expenditure plans inshort order, and that in turn involved a set of financingdecisions. Therefore, the White Paper focused onthose financing decisions. Because we had to focus on




those finances, it does not mean we are reductionistand think that a university is no more than a kind ofelaborate finance mechanism with a graduatecontribution at the end of it. A university is a muchmore worthwhile experience than that.

Q52 Paul Blomfield: I do seem to recall, in thedebate we had in 2010, you were at pains to point outthat your reforms were not simply driven by aresponse to the financial crisis but were an attempt todevelop a new model for higher education. Wouldn’tit have been helpful, just thinking about how otherorganisations go about strategic planning, forGovernment to learn some fairly fundamental lessons:get your vision right first, get all the stakeholders tobuy into it, and then put the strategy in place?Mr Willetts: There were, indeed, other aspects to thereform. Using the change in finance to drive a set ofreforms in higher education that essentially give fargreater power and more information to students andprospective students, with more money going to theuniversity the student chooses, is all right. I have triedin successive speeches and on other occasions to makeit clear that this is part of a wider vision of university.The fact that so much of the White Paper was aboutthe plumbing does not mean that we do not understandthe architecture. But, inevitably, the White Paper waslargely about the financial planning, because thosewere decisions we had to take that autumn.

Q53 Katy Clark: When was the Higher EducationPublic Information Steering Group tasked withlooking at information on the relationship betweenfees and the cost of courses?Mr Willetts: That was one of the decisions we took inthe White Paper. This is the idea of a kind of counciltax-type breakdown of where your money goes, whichI think they are still working on. But that is somethingwe put into the White Paper.

Q54 Katy Clark: I understand that organisation isdue to report back by September of this year. What isthe timetable for you to publish your response and acton any recommendations?Mr Willetts: The sooner that information can beavailable to students, the better. I undertake to reportpromptly to this Committee after we have receivedtheir report.

Q55 Rebecca Harris: Last November, thisCommittee recommended the use of private sectororganisations to provide comparison websites for keyinformation sets. Your aim, I know, is to ensure thatall information data are available for prospectivestudents and private sector organisations from thisSeptember. The question really is, why is this takingso long?Mr Willetts: I would rather that data had beenavailable earlier. A lot of useful work has been done.The fact is, however, these key information sets andthe information that is being requested is a radicaltransformation of the information available tostudents. Not all of it was already being collected.Universities had to agree a kind of harmonisedstandard for this information. It is a big change, is

what I would say, but an excellent group has beenworking on it. I regularly press for progress. We aretrying to get more information, for example foremployability, on professional bodies that recognisecourses. We are getting more information aboutdifferent assessments used by year of study. So thereis a lot of extra information. It would have been greathad it been available a year ago, but I think we are ontrack for September this year.

Q56 Rebecca Harris: That was my follow-up: doyou think we will make September?Mr Willetts: I believe we are. Of course, as soon as itis out, we can have a range of alternatives. I want tosee innovation in how the information is presentedand analysed, and I believe there will be socialenterprises and perhaps commercial groups that wantto provide a mobile phone app to help analyse the datain a way that is user-friendly.

Q57 Rebecca Harris: Your response to theCommittee also goes some way to accepting ourrecommendation on the introduction of kitemarking ofcourses. When do you expect the industry group onthat to report?Mr Willetts: I would have to confirm to theCommittee. I believe that is also in the autumn, as partof this exercise, but perhaps I can send the Committeereliable advice on that.

Q58 Rebecca Harris: Depending on that forecast,what would be the likely timetable, do you think, onthe introduction of kitemarking?Mr Willetts: That should be happening in the courseof the academic year 2012–13. Some institutions arealready doing it. There is a subtle distinction betweenaccreditation and kitemarking, but we have alreadyhad events here, in the House of Commons. Therewas an excellent event when the Society of Biologyaccredited a first set of university courses, broadly inbiological sciences. I have not completed the processof working through all of them, but what I particularlyvalued was that some of the universities that hadapplied to have the accreditation from the Society ofBiology had not secured it. They had done the thingproperly: they had gone round to individual coursesto ask, “Is this biological science course one that willpass muster so you can get a job in a lab or apharmaceutical company?” Not all of them had passedmuster. As we want it to be a serious exercise wherea group of genuine experts from a learned society orperhaps a company go round and look at whathappens on the individual courses, it will take time,but I know there are already examples of it happening,and I believe there will be more in the course of theacademic year 2012–13.

Q59 Rebecca Harris: Does that imply that you donot envisage that it will require legislation to enforce?Mr Willetts: No, I do not believe that will requirelegislation.

Q60 Chair: Earlier on, in your response to NadhimZahawi, you said—and I think it is a fair summary—that in effect OFFA did not have the capacity to carry




out the National Scholarship Programme consultationexercise until relatively recently. I think that raises theissue of capacity with OFFA. Are you actuallyproposing to strengthen it, both with additionalresources and possibly complementary changes to itsstatutory responsibility?Mr Willetts: I apologise if I have misled theCommittee, but what I was particularly thinking ofwith OFFA was the access agreements—where theywere so busy going through the individual accessstreams with individual universities and agreeing theirparticular programmes. The time has now come forthem to step back.

Q61 Chair I understand that fully. The implication isthat they did not have enough staff to do both.Mr Willetts: It is true that organisation has been verybusy. I cannot remember the exact timescale, but weenvisage that the number of staff in OFFA shouldincrease threefold or fourfold. I think some of this hasalready happened, but it has got a significant amountof extra work. It is looking, as I say, at these accessagreements annually. We have asked OFFA andHEFCE together to assess overall what is mosteffective in the wide range of initiatives that are nowhappening. That does require extra staff. Within anoverall reduction in staffing in BIS, we are shiftingresources into OFFA.

Q62 Chair: Broadly I would welcome the commentsyou make, but would prefer a greater definition ofthem in future, and if you could enlighten theCommittee, that would be helpful. With regard toconsultation—or further consultation—we all acceptthat in principle it is a good thing; what is not so goodis when you implement the policy before having donethe consultation. In your response, you list a numberof consultations and reviews. I will just go throughthem. HEFCE is supporting a review of voluntarygiving; the Government has initiated a feasibilitystudy to assess a potential monetisation of theolder-style, mortgage-style loan book; HEFCE hascommissioned two research studies on postgraduateneeds; there will be a review of the key informationsets in late 2012; the Student Loans Company andUCAS will be establishing a working group on asingle application portal and integrated applicationprocess; there is to be a reconvening of the StudentCharter Group to review student charters; the reviewof the National Scholarship Programme and otherforms of student support will be undertaken in relationto the strategy on social mobility; HEFCE isreviewing the transparent approach to costings; thereis to be a review of the existing student support and acourse designation scheme for alternative providers.The Department will be consulting, later this year, onthe process of applying student number controls toalternative providers who have courses designated forstudent support purposes; it will also review, updateand improve the full suite of application guidance fordegree-awarding powers and university title; and itwill be looking at options for giving HEFCE greaterresponsibility in some regulatory processes. That is ahell of a lot of reviews and consultations. When do

you estimate that all this evidence-gathering will beconcluded?Mr Willetts: If I may say so, that is a list of highereducation policy issues. Higher education policy is notsimply determined by me and a small group of civilservants in BIS. It is an area where there are importantexecutive responsibilities with our education fundingcouncil, the Student Loans Company and others.Essentially, that is just a list of ongoing policy work.I started noting down key information sets, which Iwas just asked about by Rebecca Harris: we have thefirst 17 key information sets. I do not want that tobe the last word. There may be other crucial bits ofinformation that should be added and some things thatprove to be more useful than others. What that says isthe key information sets, as they appear in Septemberof this year, will continue, we hope, to be improved.Regarding SLC/UCAS, we are sharing publicly thatone of the challenges we have laid down is: a lot ofprospective students complain about the fact that theywork all the way through UCAS in an applicationprocess, and then have to start over again with thefinances with the Student Loans Company. TheStudent Loans Company is under the Government;UCAS is an independent body. We have asked the twoorganisations to work together to see if there cannotbe a rather easier transition, so they share some of thedata. The National Scholarship Programme has not yetbeen implemented; we have always said that it willcome in in 2012, and then we have to look at whatworks and what does not. Regarding the informationsets and tracking data, there is a feeling amongstuniversities that this is onerous data collection. So Ihave asked HEFCE to work with the universities tosee if they can slim down the data they request.So, I am unapologetic about that. That is a list ofserious higher education policy work that carries onunder this Department and is worth while, and weshare it in public. It can be dressed up as a review orconsultation, but essentially I think the more thatpeople know these are the issues we are addressing,and this is what I have tasked the different externalbodies to work with us on, the better for public policy.

Q63 Chair: Are you concerned that a lot of the issuesyou spoke about, particularly around the NationalScholarship Programme and so on, are actually partof a package that should have been introduced whenthe changes in tuition fees were implemented, and ineffect the core driver has been the tuition fees, andthe packages that should be in place to mitigate anypotential problems arising from them have not beenput in place?Mr Willetts: The National Scholarship Programmewill be available from this autumn, at the same timeas the new fee regime comes in.

Q64 Chair: There are whole issues—and this relatesalso to other means of support for students—that havenot yet been decided on. Would it not have beensensible to do that consultation before you introducedthat particular element of change?Mr Willetts: I do not know quite where the Committeeis coming from. We try to consult; we try to beexplicit about that. I do not know whether we are




being criticised for not consulting enough or forconsulting too much, but we try to share publicly; wetry not to be secretive. If there are areas I have askedthe Student Loans Company or HEFCE—which havea direct relationship with Ministers—or outside bodieslike UCAS to look at, we share that information withthis Committee and more widely, and quite rightly so.Chair: The key problem is that, of course, studentshave to make a decision well in anticipation of theintroduction of them, and that information was notactually readily available. I suppose I welcome thereview of that, because at least we will be able to

measure some of the consequences of that particularpolicy.On that note, Minister, I think we will conclude thecurrent round of questioning. Obviously, there aremore detailed areas of questioning we would wish toenter into after we have had a chance to examine theresponses you have given to our report. We will takethat up in the very near future, at a time to be agreed.I thank you for coming before us today. This is theend of the first half, if you like, and the second halfwill commence in due course. Thank you very much.

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Wednesday 4 July 2012

Members present:

Mr Adrian Bailey (Chair)

Mr Brian BinleyPaul BlomfieldKaty Clark

________________

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 tocome before us again. For voice transcriptionpurposes, could you introduce yourself?Mr Willetts: I am David Willetts, Minister forUniversities and Science. Once again, I regret that theCommittee did not have enough time before we lastmet properly to study all the documents we havepublished. So I am very happy to be here to gothrough them in more detail. I am also pleased thatthat is something we have already pursued since thelast session; Vince Cable has written to you,suggesting a rather closer level of interaction in thefuture. I hope that is helpful.

Q66 Chair: Yes, it is worth saying on behalf of theCommittee that we do recognise that the attendancefrom Ministers in the Department has been very goodindeed. I am quite happy for that to be put on therecord. When you came before us last month we werecommenting 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 theabsence of the Bill due to lack of parliamentary timeor was it that you did not have agreement on the Bill?Mr Willetts: The White Paper is agreed Governmentpolicy. We are very keen to implement the WhitePaper. There is obviously a lively discussion aboutslots in the legislative programme, as that tends to beoversubscribed, with more people trying to getlegislation in than there is room. There are a wholehost of considerations but one of the main ones wasthat we were challenged to be ingenious and smart inmaking sure we really needed legislation and on theextent to which we could achieve the objectives of theWhite Paper without new primary legislation. In theexchanges with the Committee last time it becameclear that we can secure a lot in the White Paper,although not everything, without legislation at thisstage. Down the track, I believe legislation will benecessary at some stage.

Q67 Chair: We will go into that in a moment. Frommy reading of the Queen’s Speech and the programmethere is not an excessive number of Bills, certainlycompared with previous parliamentary programmes,so it seems a little odd. Did you actually have a Billthat could have been put forward, had a slot beenfound?Mr Willetts: There had been some drafting by theparliamentary draftsmen but it had not reached thestage of a full draft Bill before they downed quills.

Julie ElliottSimon KirbyNadhim Zahawi

Some work had started but, if and when there is adecision to go for a Bill in a subsequent session, therewould still be a lot more drafting work to do. Ofcourse, meanwhile, we can be learning. The highereducation system is going through a big programmeof change and there is still a lot we can learn from theexperience of the next 12 months.

Q68 Chair: So what it amounts to is that there wasnot 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 thisissue of the reasons for the Bill not being broughtforward, which have been many. One of the ones yousaid in your response to us was that, because youcannot yet know the full effect of the new fundingarrangements, you cannot yet be clear what form ofregulatory framework is appropriate, therefore you arenot going to legislate. Presumably, if it is notappropriate to legislate it will not be appropriate tobring in changes by any other measure because youwill still not know.Mr Willetts: As I said a moment ago, it is a rapidlychanging situation. We can achieve a lot withoutlegislation, but having the extra flexibility of seeinghow the situation pans out is an advantage. It does notmean you do not do anything. What we are endlesslytrying to judge, and something I feel responsible for,is how much change the sector can take. We want tosee reforms in higher education, we want to advancean agenda and we do not want to sit on our hands anddo nothing. On the other hand, the level of changeexpected has to be reasonable. I think we have thebalance about right. We have to be regulating andusing our existing powers during that process ofchange. We cannot just do nothing.

Q70 Paul Blomfield: The reason for not legislatingwas that you were uncertain what change wasappropriate. Isn’t bringing forward non-legislativechange covered by the same logic?Mr Willetts: There were lots of reasons in thiscollective discussion. There was a whole host ofconsiderations within Government. One was thepressure of parliamentary time in any given session.One was how much we all thought we could dowithout legislation. Another was whether, if you waitto see how the system pans out it might help youconstruct legislation in the future. They are all

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4 July 2012 Rt Hon David Willetts MP

legitimate arguments and they are all weighed in thebalance.

Q71 Chair: You did say, “In the long run, at somepoint we will need to embed these changes in primarylegislation”. Can you tell us what changes will needto be embedded in primary legislation?Mr Willetts: Although there is quite a lot we can dowithout legislation, there are some specifics thatrequire legislation such as, but not only, moreflexibility on the legal framework for governance,especially of the post-1992 institutions, which I thinkinherited in legislation an excessively prescriptive setof rules about the exact structure of their governingbodies. I would have quite liked to have liberalisedthat, but there are other examples as well. So there aresome specifics that clearly require legislation. Morewidely, as we move to a model in which the moneygoes with the student and there is less power of thepurse in the hands of HEFCE, I would envisage that,down the track—and it does need to be done in thenext 12 or even 24 months—we would be moreexplicit about HEFCE becoming a regulatory body,rather than a spending quango. My view is that, in thefuture, it has to be clear that it is a regulator. It can doa lot of regulating already using the powers it has butdown the track that should be set out in primarylegislation. I cannot say it is essential that we havethat new model this year or next year. We can do a lotwithout it.

Q72 Chair: It seems rather odd to me that here youhave policies being implemented that will requirelegislation, yet you are implementing them withoutlegislation. Are you saying that they are only short-term measures, or what?Mr Willetts: You say “require legislation”. If a policyrequires legislation to be implemented and cannot beimplemented without legislation then we follow thelaw. We would only do it if we needed primarylegislation. However, there are lots of things we cando that do not require legislation. There are a smallnumber of things that do require legislation and wecannot do without legislation. I gave some examples:governance is one; a full level playing field withalternative providers is another. Meanwhile we can doa lot. Throughout I have accepted, and I have beenvery frank with this Committee, that this exercisebegan with the public expenditure round in thesummer of 2010. Although the rationale for what weare doing goes way beyond saving public money, theorigins were in a public expenditure exercise.Decisions had to be taken on public expenditure andI think people, by and large, have understood that.That is why there were some financing decisionsbefore we had the White Paper. You could argue thatin an ideal world, the order there would have beendifferent but we are inheriting the realities of the mostimportant challenge we faced.Chair: I think we have argued that.Mr Willetts: I am operating in the real world and wehave always had to take these things in. My view isthat we have, by and large, got the balance right. Weare continuing to deliver reforms; we are not imposing

unacceptable strains on the sector, but there ismomentum and we are maintaining momentum.

Q73 Chair: Is there going to be a Bill in the 2013session?Mr Willetts: Who knows; I simply cannot say at thisstage.

Q74 Chair: You have just said that some of themeasures will need to be embedded in legislation andyet you cannot say that there will be a Bill in the 2013session, which will take us into 2014 and very nearthe next general election. Does that mean there willnever be a Bill?Mr Willetts: These decisions are taken a year at atime. I am confident that we can deliver a lot of reformusing the powers we have. The areas where you wouldneed primary legislation are not such priorities thatthe reforms are unworkable without them. My view isthat we can make this reform system work.

Q75 Mr Binley: I just want to press you a littlefurther on this. I genuinely am grateful that you havegiven us so much time; that says a lot about yourinterest and concern for this Committee. We aregrateful for that. We all know that bidding for Bills isthe name of the game that you play with yourcolleagues. Can I ask if you will be thinking aboutbidding for a Bill in 2013, which puts the onus onyour wish, rather than what other people might thinkwho are slightly above your pay grade?Mr Willetts: The advantage we will have in the nextbidding round is that we will have a bit more evidenceabout how the system is working and how effectivethe powers we can deploy from previous legislationare proving. Our case will depend on the experienceof the next six to 12 months.

Q76 Chair: You said before this Committee that youwill “use existing powers provided by existinglegislation perhaps more effectively than they havebeen in the past.” You have also talked about a “timefor further reflection”. If this is possible and the wholeprocess started in 2010, why did you not implementthem earlier?Mr Willetts: We have already done some things. Totake one example, when it comes to the designationof alternative providers—and of course that had beengoing on under the previous Government; it wasn’tsome new thing—when we arrived in office, thedesignation process involved providing a copy of theprospectus, a document from the validation body thatshows they are validated and a course timetable. Thatwas it. I was surprised at how little information wasbeing requested, so last year we already asked for alot of extra information, such as details of governancearrangements, details of any legal actions involvingthe organisation in the past three years, copies of thelast three years of annual accounts and details ofpolicies and procedures relating to student complaints.We have already done all that. As I said to thisCommittee the other week, in the future we will begoing further. We are looking at how we can havestronger requirements on quality assurance. So wehave already been using these powers; we are not

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suddenly looking at them now; but there is even morewe can do.

Q77 Chair: Do you think this model ofimplementing legislation before you pass it could beused in other areas?Mr Willetts: We have produced a White Paper. Ofcourse, Government in Britain is bound by the law.We are not implementing policies for which there isnot a legal base. We will only do things for whichthere is a legal base either through votes inParliament, such as over the change in fee levels, orin existing legislation. It would be completelyunacceptable to try and do things where there is not alegal power. The question is where you actually needextra legal powers to do things. That is what we arediscussing.

Q78 Chair: Are loans for FE going to beimplemented, or regulation for them be brought beforethe House?Mr Willetts: That is a matter for my colleague but Ibelieve the intention is to provide a further statementto the House on that before the House rises.

Q79 Chair: So you are going to do it before theHouse rises?Mr Willetts: I think the intention is to provide astatement to the House with the Government’sintentions before the House rises.Chair: That is interesting. I appreciate that it is notyour area, but I shall say that we will watch the timingof that with interest.

Q80 Simon Kirby: You have said that areas thatmight need legislation are a moving feast and it isdifficult to be entirely accurate at this early stage. Canyou give us some idea of which areas of both primaryand secondary legislation might be appropriate?Mr Willetts: There are some examples. One example Irefer to is that, especially for universities that becameuniversities in 1992 or afterwards, the EducationReform Act 1988, as amended by the Further andHigher Education Act 1992, does actually set out quitea restrictive regime for higher education corporationsand how they should be governed. We discussed thisin the White Paper1 and we think there arearguments for increasing their freedoms in key areassuch as governance and dissolution. That wouldrequire legislation. Secondly, if you were to go to afull-blown level playing field, with alternativeproviders, they are not fully under the ambit of asingle regulatory body in the way I would envisagethey will be when HEFCE becomes that regulator.You can use the designation power to achieve a lot ofthat by other means, but it would be a lot tidier ifyou had a single regulatory power. That would be asecond example.

Q81 Simon Kirby: That is interesting. If there areelements that are quite restrictive, that is somewhat atodds with your previous assertion that it was possibleto bring about these changes without legislation. It isa conflicting message, Minister.1 Response to the White Paper technical consultation

Mr Willetts: Let me try again. There is a lot that wecan do without legislation; there are some things forwhich we do require legislation; I recognise we cannotdo everything. I have given you two examples of thatbut I have a third example: OFFA. There are somethings we can do with OFFA without legislation. Iknow this is very delicate territory for this Committeeand I am going to walk very carefully.Mr Binley: It is in the past, Minister.Mr Willetts: We are increasing the staffing of OFFAvery significantly so that it can properly scrutinise andreview the access agreements being submitted by allthese higher education institutions on an annual basis.What we cannot do is change the range of penaltiesthat OFFA can impose. That would require primarylegislation and there may be some Members who arerelieved we cannot change those powers. So there isthe fining regime and this rather draconian power oftaking away the ability to charge fees above £6,000.We floated ideas in the White Paper about whetherthere could be a wider range of penalties available forOFFA. That would require legislation. So I am beingfrank with the Committee. You can identify someareas where primary legislation would be necessarybut those are not so profoundly significant that we aregiving up on higher education reform in the interim.Meanwhile, we are getting on with an ambitiousprogramme, increasing the number of places that arecontestable every year, giving more information forstudents and proper powers over alternative providers.Chair: We will be covering those in a minute,Minister.

Q82 Simon Kirby: Thank you; that is reasonablyclear now. Can I ask you what feedback you havereceived from HEFCE, OFFA and the QAA,specifically on the need for further regulatory work toenhance their remit?Mr Willetts: They are all thoroughly professionalbodies. I have communicated with them and theyunderstand what we expect them to do within theframework of existing law. They are absolutely up forthat challenge.

Q83 Simon Kirby: Does that mean they have givenyou no feedback? Have they not suggested ways theirchallenge can either be made easier or harder?Mr Willetts: They are perfectly able to work withinthe framework of legislation. In fact, something elsethat is happening, which does not require legislation,is that we are trying to create a more coherent groupof regulatory public bodies. There was an idea in theBrowne Report, which we have not implemented, oflegally making them all one. But you can get a bitmore sharing of information through OFFA, QAA andHEFCE working more closely together. I think theyare working more closely together and that is a goodthing.

Q84 Chair: You said in your earlier remarks thatsome elements of OFFA’s potential sanctions wouldhave to be legislated for. Since you are undergoing aperiod of further reflection with HEFCE, QAA andOFFA, is this the sort of thing you have hadfeedback on?




Mr Willetts: There has certainly been a very livelydebate about what OFFA does and how it should doit. I cannot recall a particularly high volume ofresponses to the White Paper on the kind of penaltyregime. As I said, that is the main reason we requireprimary legislation. I do not recall a large number ofproposals in that area.

Q85 Chair: Have you had any feedback from theothers on any other issues?Mr Willetts: The main feedback has been that OFFAwas very busy trying to handle that first round ofaccess agreements last year. That is why we havetaken the decision to increase the staffing. There is aview now that the time has come to step back andstart assessing what works and what does not, whichI understand. That is why, in our most recent letter,Vince Cable and I have asked HEFCE and OFFA tostart evidence-gathering on what works and what doesnot. Remember that this is still early days. The firstset of new students have not yet secured admissionunder the new regime; they will arrive in the autumnof 2012. I am very keen to discover some furtherevidence on this endless debate about fee waiversversus bursaries; how valuable summer schools are;and how much social mobility you secure in ameritocratic way with an extra foundation year forsome students. These are all ideas being trialled inaccess agreements and I really think it is a fantasticopportunity to improve the quality and have moreevidence-based policy to see how these play out,which work and which do not.

Q86 Chair: Could you give the Committee theinformation once you have acquired it from theconsultations?Mr Willetts: I am always happy to share that kind ofinformation with the Committee.

Q87 Katy Clark: You set yourself a target ofSeptember this year to introduce what you call a fairand sustainable higher education funding system. Willall aspects of these reforms be in place by thatdeadline?Mr Willetts: The financing funding changes will be inplace by then, yes.

Q88 Katy Clark: One of the things you haveparticularly focused on is providing a more generouspackage of financial support for low-income studentswho wish to attend university in 2012–13. Can youtalk us through that and what the main elements ofthat package will be?Mr Willetts: I see that, first, as the increase in themaintenance grant for them. Secondly, of course, likeall students they will benefit from the fact that therepayment threshold is higher; it has gone up from£15,000 to £21,000. Thirdly, there is a NationalScholarship Programme, which provides extraresource that can go into bursaries and other supportmechanisms.

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

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

Q90 Katy Clark: Is all the funding for that now inplace?Mr Willetts: Yes, it is all being delivered as part ofthe CSR.

Q91 Chair: What level of information do studentswho will be starting their university career inSeptember this year have about this?Mr Willetts: The students starting this year werebeneficiaries of our first student finance tour, whichprovided a lot of information on finance for students.We are working on providing further information inthe future for prospective students. Already, we havebeen seeing improvements in the quality ofinformation available.

Q92 Chair: My concern is that you will have acohort of students starting in September who mayhave made decisions on their choice of university onthe basis of certain levels of financial support, butwhich may be amended for the following year. So youcould have two successive cohorts of students at auniversity based on different financial supportmechanisms.Mr Willetts: I suppose you are thinking of a universitythat decides they want to spend the NationalScholarship Programme in a different way in yeartwo. To some extent universities do have that freedom.The main thing is that students have to be providedwith accurate information in advance. What auniversity cannot do is change the regime and havepeople not informed. In general I think the qualityof information is getting better. Today we heard anexcellent initiative, which is exactly what I wanted tosee happening, of a new website being launched byWhich?, in which the NUS is also playing a role, toprovide free, independent information and highquality advice to help prospective students choose theright course and university. That is exactly the kind oftransformation of information we wanted to see.Chair: I actually agree with you. I think the qualityof information is getting better. The problem is thatthe slowness of the Government’s delivering oncertain support programmes means students are stillnot able to make such informed decisions. Indeed, astime goes on, the next cohort of students may take atotally different set of decisions because of changes tothe regime. We do not know about the StudentPremium and so on yet.

Q93 Paul Blomfield: I have a related but slightlydifferent question. In the absence of embedding thekey conditions of the student funding system inlegislation, what guarantees do we have for the futurethat a government might not fundamentally change theregime without parliamentary scrutiny?Mr Willetts: The structure within which we areoperating is the structure of the previous LabourGovernment’s changes of 2005–06. We have kept that




basic structure of a loan to a student that they do notpay up-front but they repay after graduation whenthey 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 thisParliament but the Commons voted to change thefigures in that structure and it was done by aparliamentary vote. In some ways we have kept thatmodel. One of my arguments is that the best guaranteeagainst radical change is that all three political parties,when faced with the question of how to finance highereducation in tough times, have ended up with a rathersimilar conclusion: that you can reasonably expectgraduates to make a larger contribution, but it has tobe done on a fair and progressive basis. I think we areahead of the debate in many other countries and theyare beginning to have precisely this debatethemselves. For all three parties it has been a ratherpainful process, but after all three parties have endedup with this type of conclusion I think it is now prettywell embedded.

Q94 Paul Blomfield: This is not the place to havethis discussion, but we would probably have somedisagreements about what was progressive in what wemight propose compared with what you have comeforward with. Taking one particular point, the 30 yearwrite-off, as I understand it, at the moment, could beremoved by the Government at some point withoutrequiring any parliamentary decision, yet that is a keyselling point of your proposal.Mr Willetts: I would not like to give the Committeean authoritative statement on that. I thought 30 yearswas in the Labour legislation but I would like to checkthat and give you an authoritative answer.

Q95 Paul Blomfield: What discussions are going onabout the sale of the loan book and what guaranteesthere are to retain the essential characteristics of thesystem if that occurs? If that does occur, would anybenefits be reinvested in higher education?Mr Willetts: I am grateful for the opportunity to bringthe Committee up to date on this. What we are lookingat now, and what has priority, is that the remainingmortgage-style loans could be sold. Of course, thatwould be on the basis of no change in the terms forborrowers. Those are essentially loans outstandingfrom the 1990s, which come with quite highoperational cost for the Student Loans Company. Theyare quite complicated and difficult to administer. Aswell as getting some receipts it would be good for theStudent Loans Company not to have thatresponsibility and pass it on to someone else. Themore recent income-contingent loan book is lookinglike much less of a priority at the moment.

Q96 Paul Blomfield: So if the portion you aretalking about selling off were sold off, would theproceeds be reinvested in higher education?Mr Willetts: They all count as assets of theGovernment and if they are disposed of they are usedto reduce the liabilities of the Government. So, I donot think there is any particular claim that BIS as aDepartment would have on them.

Q97 Paul Blomfield: Would you be making the casefor it?Mr Willetts: Who knows what happens in the privacyof the ministerial Committees?

Q98 Chair: I want to move us on to the StudentPremium 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 earlierabout implementing some policies sooner. That cohortof students starting in September 2012 will have acertain level of financial support: bursaries, feewaivers and so on. Would they have had thatinformation when they applied to go to the universitythey eventually go to?Mr Willetts: Yes, they would have done. One of thereasons we have had to move fast is that we have beentrying to get the information out in sufficient time forprospective students. The cycle does start very early.I know from previous Committee meetings that wehave sometimes been criticised for this, but one of thereasons we had to make specific announcements onwhether there would be early repayment penalties orwhether we would move from AAB to ABB was thatuniversities had to know that so they could properlyexplain the regime and get the prospectuses out forpeople who would be visiting universities from now,with a view to applying over the next few months togo in 2013. So we needed to announce in early 2012the regime that would affect students arriving inautumn 2013. That is a key part; that is why we havevery long lead-in times here. It is right; people doneed to know.

Q99 Chair: So would they have known what feewaivers and bursaries would be available?Mr Willetts: Universities have some discretion inareas like the National Scholarship Programme, butwe tried to get out the framework for the NationalScholarship Programme so universities knew wherethey were and what they could do. I don’t knowwhether universities were able to take all theirdecisions in time for the printing of the prospectus; Icannot guarantee that in every case. We are veryaware of the need, as there is an 18-month time scale,for these decisions to be out early in the year beforestudents arrive at the university. It is an 18 monthforward roll-out.

Q100 Chair: Could I just summarise, and if this isnot a fair reflection no doubt you will tell me? Youhave provided a framework for support but the detailsmay not have been available for every student goingto every university at the time they made theapplication.Mr Willetts: Some of those decisions would have beenat the discretion of universities and I don’t know atexactly what point they would have made thosediscretionary decisions.

Q101 Julie Elliott: A number of press reports havehighlighted proposals for a Student Premium forhigher education, along similar lines to the PupilPremium. Under what criteria will the StudentPremium be allocated to students?




Mr Willetts: What we have asked HEFCE and OFFAto do is look at the wide range of schemes developedas part of access agreements, to check that money iswell spent. There are always ideas around for how wecan simplify the system. We have not yet had the firstyear where students have been in receipt of a NationalScholarship Programme. We have just reconvened ourNSP working group to start getting views on all this.So it is too early to say exactly whether and how thiswould be changed. After 1,000 flowers are blooming,we need to discover the flowers that are bloomingmost beautifully and then to favour them. Work isongoing but no final decisions have been taken yet.

Q102 Julie Elliott: What are your thoughts on thekinds of criteria? You must have an idea of what youare looking at.Mr Willetts: I can share with the Committee some ofthe trade-offs we face. One argument, which Iunderstand, is that prospective students aged 15 or 16,especially those coming from families without ahistory of going to university, need to have as muchinformation as possible and a clear line of sight aboutthe financial support that will be available foruniversity. If we make that clearer and starker, thatwould be a great gain. On the other hand, when youlook at UCAS figures, if anything, the place wherethere has been more of a fall in applications has beenamongst mature and part-time students. Maybe that iswhere you should put more of your effort. I can justdraw the Committee’s attention to the considerationsbecause none of us has yet reached any firm viewabout the correct way forward. We are spending a lotof money on this, and that is a good thing, and wewant to make sure we spend it most effectively.

Q103 Julie Elliott: Have you been looking atwhether it will provide funding for a reduction intuition fees or whether it would provide more moneyfor living costs? Has that come into the equation?Mr Willetts: That is endlessly discussed. The fact isthat all previous assessments I am aware of fromOFFA and others have failed to reach a conclusionabout the balance between fee waivers and bursaries.They have not conclusively shown that one is a betteruse of public funding than the other. I notice that theNUS, who have complained in the past about fees,now seem to be less worried about fees and prefermoney to be in students’ pockets in bursaries ratherthan fee waivers. There are different views and, as Isaid, there are good examples where the evidence isnot conclusive yet as far as I know.

Q104 Julie Elliott: Have you considered how thischange in funding will affect universities’ funding oftheir own outreach and access programmes?Mr Willetts: That is a very fair point. We need tomake sure some of this money is spent by universitieson programmes like that, and we need to maintain thatcommitment. Although this argument is often lookedat through the prism of social background, there areother aspects we must not lose sight of—for example,disabled students. Disabled students need extrasupport: for example, with a blind student the amountof resource you need to put behind them to ensure

they properly benefit from the student experience isclearly greater. Some of these programmes help withservices like that. I always try to say we should notjust think of this through the social class andbackground prism; we should make sure we haveproper resource to help students in thosecircumstances. That requires funding to reach them orthe university responsible for them.

Q105 Paul Blomfield: I would like to frame thequestion I asked you in the Chamber a couple ofweeks ago in a slightly different way. Will anyfunding for a Student Premium be additional funding,or will it come out of existing grants?Mr Willetts: The origins of this debate are that thetotal amount of funding is substantial. The question iswhether you can communicate it more vividly to givepeople greater assurance of what it means for them.This goes back to the Chairman’s line of questioningon whether prospective students know where they are.So, in 2012–13—and there is some overlap here; it isnot a completely additive list—we have the wideningparticipation premium from HEFCE of £140 million,we have retention and other funding from HEFCE of£224 million, we have the National ScholarshipProgramme at £50 million, and we have estimatedaccess 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 behelping people with access to university, loweringdrop-out rates, helping people who, for whateverreason, have a disadvantage, such as disabled studentsor students from tougher backgrounds. We have toabsolutely be sure that this £900 million is moneyeffectively spent and communicated. That is thechallenge, 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 PrimeMinister’s Student Premium is introduced, it will becoming from one of those budgets you have justlisted.Mr Willetts: This is an analysis of how those packetsof money are being spent.

Q107 Paul Blomfield: I think I understand thatanswer. So you would recognise that there will bewidespread concern within higher education if thisheadline policy was funded by diminishing thewidening participation programmes, wouldn’t you?Mr Willetts: The question is how you best have animpact on widening participation. The DPM isabsolutely committed to widening participation. Whatwe all want to do is have the maximum impact onparticipation. I fully understand that, when you diginto the detail of this £900 million, you discover thereare lots of distinctive and useful things that it does.

Q108 Julie Elliott: How will the Student Premiumand the National Scholarship Programme worktogether? Will they be complementary, with oneoffering 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 arelooking at at the moment. As I say, we have recentlywritten to HEFCE and OFFA, and I am pretty sure Ireleased the letter at the time, asking them to startlooking at the effectiveness of these differentelements. No decisions have been taken, though; thisis an exercise to review the spend. No final decisionshave been taken on how, in what way and if it isnecessary they are changed.

Q109 Chair: You say the scholarship programmewill basically be completed in October 2012. Willstudents going to university in September be able toaccess that?Mr Willetts: Yes. The funding starts in 2012–13.Again, I cannot speak for individual universities’exact arrangements but the funding is available forstudents starting at university for the academic year2012–13.

Q110 Chair: So students would have known therewas going to be a National Scholarship Programmebut they would not have known, when they applied,how that applied to them personally.Mr Willetts: I am trying to remember the exactchronology. The size of the National ScholarshipProgramme was announced well before those studentswere having to make their decisions. As I was sayinga few minutes ago, the exact process whereby anindividual university then had £2 million of NSPfunding, which they had to decide how to spend, andwhen that was all available for a prospective studentto see, I could not vouch for because time was tight.The overall announcement on the NationalScholarship Programme was made in good time.

Q111 Chair: I understand that, but the announcementthat there is so much money nationally spent on aprogramme does not help an individual when theywant to know exactly how much it is going to affectthem. The point I am getting to is that there will be acohort of students going to university in Septemberwho may or may not receive support, but they willhave had to make decisions on their higher educationchoices without full knowledge of exactly whatsupport they would qualify for.Mr Willetts: They will have known all the key factsabout the fee regime. We put a big effort into tryingto explain all that. I fully accept that, in a range ofways, I would like prospective students in the futureto have more information. They will not have knownthe exact employability outcomes from individualcourses, which is exactly the kind of informationstudents are entitled to expect, and we are making realprogress in having all that available this autumn. Iwould love for it to have been available two yearsago, but it has required a lot of hard pounding andpractical work to get all this information available. Wecommitted to it in opposition and are delivering itnow; the more rapidly the better. So there is apermanent process of improvement. It will always bepossible to look back and say that it is a pity thatprevious generations of students did not have this

information, but we are absolutely working flat out sothat 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 ofthe changes in funding was that this was part of apackage. You had one part of the packageimplemented very quickly and another partimplemented very slowly.

Q112 Paul Blomfield: I think we are on commonground here, Minister, in having concerns about theimpacts of changes in undergraduate funding onaccess to postgraduate study. Could you update us onwhat progress you and HEFCE have been making onreviewing funding for postgraduate study and whenyou plan to publish any findings?Mr Willetts: The most important progress we havemade, which I very much welcome, is that HEFCEhave now made it clear that their funding allocationfor taught postgraduate provision in 2012–13 is goingto 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 beenmaintained, and HEFCE have provided an additional£35 million of postgraduate research degreesupervision support. So we have been able tomaintain, or even in some cases improve, the fundingfor postgraduates. There is a concern, which Iunderstand and hear a lot, for students who have builtup “debts”, although we all know it is a kind ofgraduate contribution scheme: will that affect theirwillingness to take on postgraduate courses? It willtake several years for the evidence to build up on that,but we are monitoring it and HEFCE hascommissioned specific research on areas such as thekind of information that postgraduate taught studentsneed. We confirmed in our 2012 grant letter that wewanted HEFCE to continue to monitor that.

Q113 Paul Blomfield: In your response to our reporton this issue you said, “We recognise that someuncertainty around postgraduate provision remains.BIS will continue to work closely with HEFCE tobetter understand the underlying evidence. HEFCEhas considered the Committee's recommendation andhas confirmed that it will publish reports as this workprogresses.” When will the first report be?Mr Willetts: I cannot give the Committee any dateson that, but as soon as they are available of course wewill share them with the Committee.2

Q114 Paul Blomfield: Could you share, in advance,when we might expect them?Mr Willetts: Yes. If there is any more informationabout the time scale for any reports becomingavailable I will happily write to the Committee if thereis any extra information I can share with you.

Q115 Paul Blomfield: Have you made any furtherassessment of the impact of undergraduate feeincreases on postgraduate applications? We share aconcern that, in the increasingly competitive graduate2 Supplementary written evidence submitted by the

Department for Business, Innovation and Skills




marketplace, people are distinguishing themselves indifferent ways but one of the critical ways is taughtpostgraduate programmes. It would have a significantnegative impact on social mobility if, in the newterrain, those only became available to those whocould afford them through personal means. We arealready seeing some of the career development loansavailable commercially diminishing in number.Mr Willetts: I do hear that anxiety and I never dismissthe messages I get from the sector, but I would pointout that graduates, after our reforms, will face lowermonthly repayments than graduates do currently. Sothe starting point is that your repayment threshold ishigher and your repayment obligations monthly arelonger; you will be paying back for longer. So whenyou think about a postgraduate balancing the PAYEdeductions from their earnings or income and whetherthey can afford to stay on, once you understand theway the reforms work, if anything, we are loweringrepayment obligations. Then there was the anxietythat HEFCE’s grants would be reduced. In 2012–13HEFCE are able to show that they can maintain them,and I commend them for this. I know there is thisanxiety but we need to monitor it carefully and needto see exactly what happens and what the problemis, if anything. At the moment there is anxiety andanticipation. HEFCE knows we need to monitor it; wehad Adrian Smith doing an exercise on it and theBrowne Review said we need to look at it, but wehave not yet seen any evidence that these effects arefeeding through in any way.

Q116 Paul Blomfield: Do you understand the basisfor the anxiety? If you take into account the potentialdebt from FE loans, for people who follow that routeinto higher education, you are talking about peoplemounting up very considerable debts. If you take FEloans and HE loans those would be two differentmonthly payments, wouldn’t they?Mr Willetts: No, and this is a very important point. Ialways say: think of the flow, not the stock. Theformula for the FE loan—the 9% of earnings above£21,000—is the same. We are not trying to pile uphigher and higher repayments. Your repayment is 9%of your earnings above £21,000. I had better write tothe Committee to absolutely confirm that. So althoughyou can theoretically add to the stock, in certaincircumstances, it is the repayments that I think arewhat matters and why I see these reforms as muchfairer on people in their 20s. Instead of the front-endloading of the burden, when you are paying back moremonthly in the early years of your adulthood whenyou have all those extra costs, we are spreading itacross 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 deductionsrunning at 9% of your earnings above £21,000 withone in respect of your FE loan and one in respect ofyour HE loan; you put it all together and then deduct9% of your earnings above £21,000. That is a veryimportant point.

Q117 Paul Blomfield: But, putting together your HEand FE loans means you are talking about aconsiderable amount of debt that one wouldreasonably anticipate would disincentivise thosepeople going on to postgraduate taught courses.Mr Willetts: All three parties have gone through thisprocess. Thinking about it as a pile of debt is thewrong way. If a child of ours left university with£25,000 on his or her credit card we would all beabsolutely terrified. If a child of ours leaves universityand people say they will pay £500,000 of income taxduring their working life then, by and large, we acceptthat. We might have a view about the exact incometax rate, but by and large we accept that they are goingto be in work so are going to be paying income tax.The graduate repayment is closer to paying incometax in your working life. It is an addition to PAYErather than some separate debt. We have lowered themonthly repayments.

Q118 Paul Blomfield: But it does remain a debt onan income-contingent loan. It is not graduate tax, is it?Mr Willetts: It is not a pure graduate tax because it islinked to the cost of your education and you can finishpaying it. Unlike a pure graduate tax we can collect itfrom foreigners, when we cannot impose income taxon foreigners. So it has many advantages over a puregraduate tax.Chair: I would love to have a wide-ranging debate onthis but not at this meeting. I am conscious of the factthat Brian needs to go to another meeting very shortlyand I know he has two questions that are very closeto his heart. I will come back to you Paul if you wouldlike to finish off.

Q119 Mr Binley: You are very kind and I apologise,Paul. I apologise for having to leave, Minister; I reallydo. The first two questions are really simple; I thinkwe need some information from you on the last one,though. Your implementation plan states that theconsultation on early repayment will “allow those whowish to pay off their loans early or make voluntarycontributions to do so without undermining theprogressiveness of the system”. That pleases many ofyour supporters who sit behind you on the BackBenches. Are you satisfied that you have achievedthis balance?Mr Willetts: Yes, I think we have and it is fair. Whenwe did the consultation on that it was clear that therewas widespread unhappiness about the idea of earlyrepayment penalty. I very much understood thatconcern and, as a coalition, I think we took the rightdecision.

Q120 Mr Binley: I am going to be slightly morecontroversial now. On university entrance, whilst theappointment of the gentleman in question is in thepast, there are none the less one or two small pointshanging over. The first is in relation to earlyrepayment penalties for tuition fees. That becamepublic at the time of the controversy surrounding theappointment of Mr Ebdon—whom I wish well.Mr Willetts: Good, excellent to hear it.Mr Binley: We shall be watching his progress. ADowning street source implied that his appointment




and the dropping of early repayment penalties wereinterlinked. Do you want to disabuse us of thatthought, or might there be some truth in it?Mr Willetts: I regret some of the controversy on theappointment of Les Ebdon, and we did of coursecarefully consider the Committee’s views on that. Theappointment of Les Ebdon was made during theabsolutely proper processes that are now scrutinisedrigorously from outside. We had separately launcheda consultation on early repayment. This is a goodexample of the concern the Chairman was expressingearlier about the fact that people should know wherethey were before they started the application processfor that year.

Q121 Mr Binley: So you are telling me that therewas no agreement with Mr Ebdon in relation to hisappointment on this question?Mr Willetts: Les Ebdon was appointed to operatewithin the framework of OFFA. The early repaymentissue was not something for Les Ebdon and wasseparate from him.

Q122 Mr Binley: So he had no input into thatwhatsoever?Mr Willetts: No.

Q123 Mr Binley: I rather wished he would havedone actually, but he did not.Mr Willetts: It would have been impossible to havehad a better decision than we did. It was the rightdecision.

Q124 Mr Binley: It is in the past, Minister. Can I goon to ask you the question that caused me so muchconcern when we last met in this Committee? It is thequestion about financial statements. I wanted to knowwhat discussions you and your Department have hadwith the Student Loans Company since we met lastmonth. This whole business of people understandingwhat they are taking on is one that I know you wouldagree with. I know you would want those statementsto be finalised as quickly as possible. Can you updateus on where we are in this respect?Mr Willetts: We are working with the Student LoansCompany on this. I know this is something thatspecifically concerns you. Students only start gettingstatements about their “debts” after they havegraduated. This is available for them as graduates, socurrent students are not getting statements.

Q125 Mr Binley: You are arguing that they work thatinformation out themselves and the statement simplyconfirms that information.Mr Willetts: My understanding is that students do notnormally receive statements until they are liable torepay, which is the April after they leave their course.That is when they get a first communication from theStudent 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 graduatingunder our new scheme with new and better IT, onething we are looking at is making those statementsthat graduates receive as informative and user-friendlyas possible. I checked this because you were asking

about it before, and my understanding is that thecurrent system does not involve currentundergraduates and current students at universitygetting those statements. We are not proposing tochange that.

Q126 Mr Binley: Could you clarify the purpose ofthe statement? I thought the statement was aboutmaking students aware of the liability they are takingon. I know you are arguing it is not a liability butsimply another way of paying income tax, but I amnot quite sure I see it that way. Are you telling methat it is not about informing people of the liabilitythey might be taking on, but it is about giving theman account book when they start repaying?Mr Willetts: There are two things here. Myunderstanding of the way the system currently worksis that it is aimed at, once they start repaying,explaining their repayment obligations. It is a StudentLoans Company repayment calculation. The reasonwhy I referred to this wider reform of IT is that theofficial, overall Government approach to this is thatthe delivery of all public services should be digital bydefault. In other words, there is an assumption that,wherever possible, it should be online. I don’t wantabsolutely to guarantee it to the Committee but I couldwell envisage that as soon as you are talking about anonline system, rather than a letter going out as wecurrently have, it might well be possible for theundergraduate to start accessing their account onlineearlier, before there is any question of repayment. Thisis part of the design of a new system that will comein in 2016.

Q127 Mr Binley: Can I urge you to do that? I amsure that all students are the most responsible ofpeople, but there are some people who lose a little onthe way and they need to know, pretty muchthroughout their university career, what they might bestacking up and in what way that might be working. Ithink there is a real case for ensuring that they havethat information earlier and I think there is a case forensuring their parents are aware of that informationtoo. I am pleased to hear about the website. Can youdo your very best to ensure that it will be available asearly as possible in the cycle?Mr Willetts: As I say, I will undertake to do that. Iunderstand your concern, it is a very fair point, andwe will happily keep you in touch with the work thatgoes on and the redesign of the system.

Q128 Mr Binley: I am very grateful. Will you comeback to us with what information would be containedin that statement so we can monitor that? There are alot of young people out there who are fearful theymight be getting into trouble. I know one or two whohave 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 theinformation out so they understand it is a PAYEdeduction; it is not something they have to pay if theyare unemployed. Something else we refer to in theWhite Paper, which I personally am very keen on, isa statement of financial information like where yourcouncil tax goes. I do think it is very important, for




the consumerist aspect of our reforms—and studentsare not simply consumers but I remain a believer thatthey do have some of the expectations of consumers—that they are entitled to know how their money isbeing spent. A breakdown of the £8,000 or whatevershould show how much is going on accessagreements, how much is going on teaching costs andso on. A breakdown of that information is exactly thetype of information I think students will be entitledto see.Mr Binley: I am reassured by your remarks andwould be grateful if you kept us updated in the way Ihave requested.3

Q129 Chair: You have anticipated most of myquestions on access to information but I would like toclarify one thing. We understand that comparisons ofkey information sets will be of value to prospectivestudents. Do you have a timetable when this will beavailable? Will it be available before the next roundof applications in 2012–13?Mr Willetts: Yes, we want to get this out in theautumn, in September or October. The target was bythe end of September. By that time we expect all theinformation to be available through key informationsets.

Q130 Paul Blomfield: I want to ask about the for-profit sector. In your response to the White Paperconsultation you said you would be introducingmeasures to bring alternative providers into the formalstudent number controls and you will consult later thisyear on the process for applying these changes. Whenwill that consultation close?Mr Willetts: We have asked HEFCE to carry out thatconsultation; I don’t think they have yet produced aconsultation document with a time scale. You refer tothem as for-profits. These are alternative providersthat come in many shapes and sizes. Some of themare social enterprises, some of them are charities andsome of them are indeed for-profit. They are basicallythe new kids on the block; it doesn’t follow that theyare all for-profits.

Q131 Paul Blomfield: I accept that point; I will becoming on to a specific question about for-profits. Willany aspect of the reform in this area requirelegislation?Mr Willetts: A complete, perfectly level playing fieldwould require legislation. There is a lot that we cando without legislation and the most important exampleis being very active in our use of the designationpower—the power to designate courses. We havealready significantly expanded and I have alreadylisted 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 playingfield will remain un-level without legislation?Mr Willetts: It cuts both ways. For example,participating in the OIA, which they can voluntarilydo but there is no legal obligation to, would be one3 Supplementary written evidence submitted by the


example. There is another example that cuts the otherway, because it works in both directions. New,alternative providers getting degree-awarding powersget them for six years, after which they are reviewed.Existing providers get them indefinitely with no powerto remove them. One of the other proposals we had inthe 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 wecan do a lot with the power of designation.

Q133 Paul Blomfield: Do you think there is anopportunity on the OIA—this would be quite asignificant omission—to have discussions withproviders and get voluntary consent before usingpowers to designate?Mr Willetts: Compared with the patterns of behaviourwe inherited, when a large number of designationsalready happened, my view is that we have been farmore energetic in the use of designation power. Wecan advance on the power to designate and use it moreenergetically. The evidence is that we have alreadybeen more energetic and will continue to look at otherways we can use those powers.

Q134 Paul Blomfield: Will alternative providers berequired to comply with the wider participationprovisions, as with the existing providers?Mr Willetts: The students at those providers are noteligible for loans of more than £6,000. So the OFFAaccess regime does not apply in their case.

Q135 Paul Blomfield: What measures would youexpect them to provide to guarantee wideningparticipation or seek to meet those objectives?Mr Willetts: We will see what is possible, but there isa need to try to get information from them about theirstudents. That is a fair place to start. As I said, whenwe arrived, no such information was being collected.There may be more information we can seek fromthem. HESA is like OIA, so it is not something wherethey would be under a legal obligation but, as HEFCEadvances, these are the kind of areas where many maywish voluntarily to participate. As I said, most of thealternative providers of any scale are already in OIA.There may be further things we could require as partof designation.

Q136 Paul Blomfield: Obviously you are quiteenthusiastic about alternative providers entering thesector. What discussions have you had with whatproviders to encourage them?Mr Willetts: You say “enthusiastic”; I do think thehistory of the growth of higher education in Britain isof new providers coming in. The challenge to theoriginal Oxbridge monopoly in the 19th century wasfrom local authorities, and there was UCL as a secularinstitution. Often people were rather sniffy about someof those when they were first created, and they arenow well established parts of the sector. In oppositionI did some work on schools and that is now beingcarried on so excellently by my colleague MichaelGove. I am a believer in opening up the supply sidebut I do not want to tilt the playing field. I just thinkthat, if you are providing a reasonable quality higher




education and if a student is choosing it, providingbasic standards are being met, at that point the studentis entitled to get some financial support.

Q137 Paul Blomfield: You have had activediscussions with alternative providers, though.Mr Willetts: I have had meetings with alternativeproviders, yes.

Q138 Paul Blomfield: Not necessarily now, butwould it be possible to share the meetings you havehad with the Committee?Mr Willetts: I can do it now. Something the coalitionhas done, to our credit, is that we now produce muchmore detailed information than ever used to beavailable before on the meetings Ministers have hadand whom they have met. I try to make myself as openas possible to everyone in the higher education sector.

Q139 Paul Blomfield: On this widening participationissue, what would be required of alternative providers,both in terms of access agreements on wideningparticipation, but also key information sets, beforedesignation of courses?Mr Willetts: We inherited a system where theinformation requirements were very modest. We arelooking at what kind of information requirements wecan have as part of this power to designate, but weare not in a position to give details on that at themoment. These are the kind of areas that HEFCEneeds to think about. We have already advanced a loton financial information. We expect them toparticipate in number controls. We are looking at howthe QAA and the validation regime work. Informationis another thing.

Q140 Paul Blomfield: So you are not expecting todesignate significant additional courses until you haveresolved those issues.Mr Willetts: We are continuing to designate somecourses but we have made it clear to providers—andthese are important opportunities—that we areincreasingly ambitious in what we expect of them inreturn for designation, and quite rightly so.

Q141 Paul Blomfield: When do you think you willbe in a position to share the conclusions of yourthoughts on that?Mr Willetts: The next stage is a HEFCE consultation.These are ultimately HEFCE powers we are talkingabout. HEFCE will be conducting a consultation onwhat extra information they can require, and the aimis to have the new regime sorted out and in place bythe end of the year.

Q142 Paul Blomfield: Do you anticipate how manyof the additional courses will be designated by the endof this Parliament? What is your vision of that?Mr Willetts: I would not be able to say on that. Theinitiative is with the alternative providers, who, as Isay, come in many shapes and forms.

Q143 Paul Blomfield: Can I concentrate on oneshape and form: the commercial providers? Are you

considering exempting for-profit higher educationproviders from VAT?Mr Willetts: I am not aware of that specifically. Whatis the specific VAT angle?

Q144 Chair: Buried in the Red Book at 2.186 it says,“VAT: providers of education—The Government willreview the VAT exemption for providers of education,in particular at university degree level, to ensure thatcommercial universities are treated fairly.” Whilst Iquite understand that you are not a Treasury Minister,given the impact on your Department it is notunreasonable to expect you to know of it and havea view.Mr Willetts: I think the safest thing is to send theCommittee a note on that point, rather than gettinginto it today.4

Chair: We would welcome that.

Q145 Julie Elliott: You originally estimated that thenumber of AAB+ places would be 65,000. That hasnow been reviewed and has gone up to 85,000 places.What is your estimate of the effects of lowering thegrades to ABB+ on these figures?Mr Willetts: That adds, approximately, another35,000. This year it is 85,000 covered by AAB, andnext year it is 120,000 covered by ABB. To someextent it may be a process of “grade inflation” comingto an end but there are two things there. If there areslightly more students getting AAB next year than thisyear, which I am sure would be entirely because ofimprovements in the excellence of their teaching, thenthat would be a modest effect. Most of the extra35,000 comes from going from AAB to ABB.

Q146 Julie Elliott: On what evidence have youbased that figure?Mr Willetts: On information from UCAS and theexamining boards about the number of people gettingA-levels with those grades. One of the complicatinggoverning factors is that it also includes someequivalent qualifications.

Q147 Julie Elliott: What assessment have you madeof the social mix of the students achieving thosegrades?Mr Willetts: I do not have any figures to hand. I readsome lurid accounts implying these are all people whomust have been to independent schools. I do not thinkthat is correct. One of the advantages of moving toABB means the majority will have had a mainstreamstate education.

Q148 Julie Elliott: Is any evaluation being done onthe social mix of these students?Mr Willetts: There is some information available andI will happily share whatever information there is withthe Committee.

Q149 Julie Elliott: So you will send that to us?Mr Willetts: Yes.5

4 Supplementary written evidence submitted by theDepartment for Business, Innovation and Skills

5 Supplementary written evidence submitted by theDepartment for Business, Innovation and Skills




Q150 Julie Elliott: Thank you. What safeguards arethere that increasing the numbers of students in thisway will not dilute the quality of education thestudents receive?Mr Willetts: I see it in completely the opposite way.In my view, this is absolutely a liberalisation. Thismeans that we are empowering students with thatlevel of qualification to take their funding to theuniversity of their choice, subject to the universitywanting and having the capacity to admit them. Wherebefore, HEFCE would tell UCL they had 2,000 placesand no more, in future if I choose UCL—and I suspecta lot of their applicants are in this range—they cantake on as many suitably qualified students as theythink they have the capacity to educate and wish toeducate. That is in the interest of the student; it is agood thing. It is a very strong example of how theseproposals deliver genuine reform of HE.

Q151 Julie Elliott: Do you not see any impact onother students and other universities with themovement of money into some of the more eliteuniversities, which will inevitably happen as a resultthat?Mr Willetts: This is not a conventional market; thereis a large public interest; I have to be very careful. Itis opening up higher education to create a choice forstudents, rather like a market. Higher education is nota market; I am not claiming it is simply a market. Thisis basically saying to all young people that, with moreinformation than they have ever had before, they canchoose where they want to study, if they have goodgrades, and the money will go with them to the placethey choose, instead of being allocated by a quangothat determines how many people all our universitiesare allowed to take on. I regard this as clearly andmanifestly an improvement.

Q152 Julie Elliott: You did not actually answer whatI asked, which was about the impact on otheruniversities and other students.Mr Willetts: The only way I can understand what youare saying is, if a student really wanted to go touniversity A and university A really wanted to educatehim or her but had a numbers control we hadenforced, so instead that student had to go touniversity B, which was lower down their preferences,in future that student is going to be able to go touniversity A, so university B loses. Well, the answeris that university B is now competing againstuniversity A for that student. My impression, which ismainly anecdotal at the moment, is that that processof competition for the student is entirely beneficial.They have to improve the quality of the teachingexperience on offer. They will be offering informationabout how crowded the seminars are, how rapidlyyour academic work gets returned, the quality of theteaching experience, and whoever wants that studenthas to make that offer to the student. That is exactlyhow the reforms are supposed to work.

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

Mr Willetts: I do not see that there are losers in thispolicy. There are some who clearly gain and there areothers for whom it is neutral. Insofar as thiscompetition gets universities in general to focus onthe quality of the teaching experience, I hope it wouldbe a benefit that feeds through more widely. There areindeed limits to how far we can go on the tariff policy;I recognise this issue. There are some students inplaces 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 universitiesthat can attract the ABB+ students are going to cleanup on that market and expand their provision, therebyboth reducing the capacity of other universities toprovide for them and indeed reducing the opportunityfor those that do not have that level of qualification?Mr Willetts: We are encountering a fundamentalphilosophical difference. I think universities shouldget students by the quality of their offer, not bystudents not being able to get to somewhere else andhaving to settle for an alternative. One has to be socareful in this respect; this is not like a normalcommercial market, but this is one of the goodfeatures of competition and choice.

Q155 Chair: If you are a university vice chancellorplanning capacity for the future, this introduces anelement of uncertainty that really makes life verydifficult.Mr Willetts: I accept that it is an element ofuncertainty. That is correct. It is why we had verycareful discussion. This goes right back to where wewere at the beginning on how much change the sectorcan take and how we manage through this process ofvery significant reform. That is why we have gonefrom AAB to ABB: we are moving at it steadily. I amvery conscious that there is a limit to how muchchange the system can take. Equally, we want tomaintain momentum. These are serious reforms.These are interests of students and we have to get onwith it. We are trying to get the balance right.

Q156 Julie Elliott: I want to come back on what youare saying. You clearly view this as benefiting studentsat the higher academic level. My concern is for thestudents who are not achieving that level but areperfectly able to go to university and complete degreecourses at the other universities. As the Chair said,there is an impact on vice chancellors planning theiroffer, the broadening of the curriculum, and theeducation offered to other people. You were unclearwhether you had done any evaluation of the socialmix of the more able students. Have you done anyacademic work on the social mix of the lower gradestudents and the impact this policy, of opening up thehigher end, is having on the lower end? In my viewthat is just as important.Mr Willetts: One of the reasons we have kept it quitehigh up the tariff level, at AAB or ABB, is that theseare students who are already going to university. Weare simply empowering a group of students who inalmost all circumstances were going to universityanyway. There was an argument about accessarrangements. Again, I salute HEFCE for their




initiative: they set aside 20% of places—even atuniversities where almost everyone who was goingwas getting AAB—they set aside a student numberlimit of at least 20% of their limit for 2011. So therewould still be a margin for contextual, data-basedoffers. So that specific angle, which is the only one Ican identify where you can argue there would be arisk, has been specifically addressed in the HEFCEarrangements for student admissions throughreserving places.

Q157 Nadhim Zahawi: There was a fairly even splitbetween universities and further education colleges inthe take-up of the 20,000 margin places. Is that whatyou had expected?Mr Willetts: It was a decision by HEFCE. Frommemory there were about 35,000,6 places proposed.I trust their judgment. I think there were slightly morein FE. I will find the figures but if I remembercorrectly it was about 9,000 to 11,000. That seemedto be reasonable to me.The exact figure actually is that 1437 furthereducation colleges received allocations of at least9,5478 places. So there were a lot of FE colleges.

Q158 Nadhim Zahawi: Do you have details on howmany 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.9

Q159 Nadhim Zahawi: Our report recommendedthat you monitor the social mix of higher educationinstitutions to guard against polarisation within thesector. Is this something you will be willing to do orwould do?Mr Willetts: I see this as the kind of thing that OFFAcan do. We will have this information as part of theGovernment’s wider work on social mobility. Accessto university does matter. One of the reasons for the20% reserve core was to make it clear there was scopefor access arrangements, even at the most competitiveuniversities that were having lots of applications fromAAB students.

Q160 Nadhim Zahawi: Your response was a bit lighton 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 muchmore information on that with the Committee at themoment. As soon as there is further information oranalysis I happily will share it. With so much elsegoing on I don’t think there is much more I can addto what I have said before on off quota.

Q161 Nadhim Zahawi: Do you think you canintroduce this through non-legislative means or doesit need primary legislation?Mr Willetts: There is currently an arrangement wherethere are so-called closed courses, usually linked to an6 Revised by witness: 36,0007 Revised by witness: 1558 Revised by witness: 10,3549 Supplementary written evidence submitted by the


employer, and I don’t believe you would requireprimary legislation for more universities to set up suchclosed courses. That does not require legislation. Ifyou wanted to go beyond that you might requirelegislation.

Q162 Paul Blomfield: We had a very positivediscussion with Lord Green about our visit to Braziland talking about the opportunities for trade. In thecourse of that, one of the issues we discussed wasstudent visas. In the course of his reflections on wherewe are as a country now was the recognition that thereis work to be done on rebuilding a brand andrebuilding the message about our openness forinternational students and the opportunities for themto study here in the light of the Government changeson visas. Would you agree with Lord Green?Mr Willetts: I always agree with Lord Green. He isan excellent man who is an asset to the Government.We do accept, going around the world, that there aresome places where, partly due to briefing from someof our competitors, people have the idea that there isa cap on the number of students. There is no cap onthe number of legitimate students who are properlyqualified and want to come to Britain and study. Weare very proud of the fact that there is no cap and Itake the opportunity, whenever I am on an overseastrade mission, to get that message across.

Q163 Paul Blomfield: I anticipate that you mightshare our concerns on this. There is a problem that, ifyou include students in the net migration figures, ifwe as a country were successfully able to grow ourshare of a growing international student market, itwould conflict with the Government’s other objectivesin relation to the immigration cap. Therefore, it wouldseem to be more sensible to take students out of thenet migration figures.Mr Willetts: Whenever we have looked at this wehave always been absolutely clear that there is not andshould not be a cap on the number of overseasstudents.

Q164 Paul Blomfield: Is it not true that you areeffectively capping them? If you have a totalmigration cap and you include students in thosenumbers, then there must be cap on students.Mr Willetts: Where we have made progress is throughthe problem of bogus colleges, bogus courses andinadequate skills. I have found universities themselvesaccepting that it would be very bad for the reputationof British universities if you could turn up at a classand find some of the people participating in class didnot have sufficient English.

Q165 Chair: Minister, we understand that, but thebasic question is about figures. If you have no cap onstudent numbers, including on student migrants, butyou have a cap on the overall level of migrants, thenone policy objective conflicts with another and theyseem to be incompatible.Mr Willetts: We have always made it clear that thereis no cap on student numbers. It is very important bothfor Britain’s position in the world and for the successof this dynamic export that we maintain that position.




The coalition as a whole is committed to maintainingthat.

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

Paul Blomfield: I understand the Minister’spredicament in answering the question as fully as Imight like him to.Chair: Thank you for your contribution, Minister. Weobviously will be publishing a report in due courseand we look forward to seeing you again in the verynear future. Thank you.Mr Willetts: Thank you very much.


Written evidence

Supplementary written evidence submitted by the Department for Business, Innovation and Skills

19 July 2012

Higher Education

Following my appearance before the committee on 4 July, I undertook to write with some furtherclarifications to some of the points raised by your members.

On Postgraduates—our January 2012 Grant Letter asked HEFCE to provide a first report on the impact ofthe HE reforms in December 2012, and they expect that this will include early advice on the situation of thepostgraduate economy.

Paul Blomfield asked whether consideration was being given to exempting for-profit higher educationproviders from VAT. BIS, Treasury and HMRC officials have been considering this issue over the past fewmonths with a view to identifying potential options that achieve the policy objective of creating a more levelplaying field in the HE sector and which meet EU VAT rules without creating any unintended consequences.Subject to Treasury Ministers’ views, HMRC intends to consult on emerging options later this year.

In my evidence I mentioned that some alternative providers had signed up to scrutiny from the Office forthe Independent Adjudicator, The current position is that two alternative providers have volunteered to joinOIA (IFS and the College of Law). OIA have also been approached by a number of other alternative providersto obtain further information.

I can confirm that if a borrower has both a Further Education (FE) loan and Higher Education (HE) loan,employers will deduct only 9% (never 18%) of earnings above the appropriate threshold. Where the thresholdfor the FE and HE loan is the same, then repayments will be split proportionately across the loans. In certaincases, where the HE loan was taken out before September 2012, the threshold for the HE loan (currently£15,795) will be lower than FE loan repayment threshold (£21,000).

In those cases, employers will deduct 9% of earnings above the lower HE repayment threshold, and it is ourintention that repayments taken between £15,795 and £21,000 will be credited to the HE loan, and theremainder of the repayments credited to the FE loan.

BIS and HMRC officials have been working closely over the past few months to identify a way forwardthat achieves the policy objective of creating a more level playing field in the HE sector and which meet EUVAT rules without creating any unintended consequences. Subject to Treasury Ministers’ views, HMRC intendsto consult on emerging options later this year.

Brian Binley asked me about statements from the Student Loan Company on loan balances. Students wouldnot normally receive statements until they are liable to repay—the April after they leave their course. However,they can access their outstanding student loan balance on-line at any time during their studies. Those who areliable to repay, receive annual statements. We are asking the SLC to review their approach to statements—including providing more detailed information online.

The Committee asked for information on the socio economic background of students attaining AAB or ABB.I should point out that the liberalisation process will also take into account A level equivalencies. HEFCEanalysis shows that AAB accounts for 24% of entrants with known entry grades to full-time undergraduatecourses in 2009–10 and 66% attended state schools. Our policy does mean that those attaining AAB+ willhave a better chance of going to the university of their choice, but the consequences for the number of studentscoming from state or private school should be neutral.

Nadim Zahawi asked about the number of institutions charging £7,500 tuition fees that attracted marginplaces. Margin places were allocated based on average fee levels as specified to HEFCE by the institutionsthemselves in the application process. Four institutions average fee levels were exactly £7,500 in the processHEFCE used to allocate places, the remaining 187 institutions had average fees less than £7,500 per year.

As you know, the Secretary of State and I are keen to ensure that the committee has the opportunity toengage on a regular basis with BIS Ministers and we have asked our Parliamentary Clerk to liaise with theClerk to the Committee to arrange a suitable date for a meeting between Committee members and BIS Ministersand Directors later in the Autumn.

The Rt Hon David Willetts MP

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government reform of higher education: follow-up

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