Baroness in Waiting/Government Whip (Baroness Blake of Leeds) (Lab)

My Lords, unfortunately, my noble friend Lady Smith is unwell, so I shall speak to the draft Higher Education (Fee Limits and Fee Limit Condition) (England) (Amendment) Regulations 2026. To begin with, I should take this opportunity to explain that within the Explanatory Note there was a discrepancy, in that the percentage increase for 2026-27 was stated as 2.7%, whereas it should be 2.71%, and the percentage increase for 2027-28 was stated as 2.8%, whereas it should be 2.68%. I can reassure Members that a correction slip has been arranged. I thank the Secondary Legislation Scrutiny Committee for its scrutiny of the draft regulations. This statutory instrument, which was laid in draft on 5 February, will increase the limits on tuition fees that higher education providers can charge students studying undergraduate courses at approved fee cap providers in the 2026-27 and 2027-28 academic years. The SI preserves the fee limits for lower-fee foundation years at 2025-26 levels for 2026-27 and 2027-28. A separate SI making changes to maximum fee loans and student support for the 2026-27 academic year was laid before the House on 12 February. As many Members have previously acknowledged in this House, our higher education sector is one of our country’s most valuable strategic assets, one that we should feel proud of and endeavour to protect, so that future generations of students can continue to benefit from it. Our higher education sector is admired across the globe. International students from all over the world choose to study here, making an enormous contribution to the sector, to the economy and to society as a whole. Our universities are home to world-leading research across a broad range of sectors including clean energy, digital technologies and life sciences. The Government have set out a clear vision for the future of the sector in the Post-16 Education and Skills White Paper—a vision for a sector that drives economic growth, delivers a world-leading, high-quality experience for all students, provides national capability and increases the UK’s international standing, while also delivering regional impact for everyone who lives in this country. There have been countless examples heard in this House about how providers are anchors in their communities, helping to break down barriers to opportunity, supporting local businesses, strengthening social cohesion and delivering important local jobs as well as outreach. Higher education providers transform the lives of the students who attend them, not only by enabling them to boost their incomes and progress in a career that they choose, but by enriching their lives through new experiences and allowing them to develop life skills, grow their networks and experience new perspectives. However, this House has spoken at length about the challenges the sector faces. A growing number of providers are facing financial challenges. Analysis from the Office for Students from November 2025 suggests that, without mitigating action, 45% of providers could face a deficit in 2025-26. Indeed, English providers are contending with a number of financial pressures, one of which is the £1.7 billion aggregate loss on domestic teaching and the need for providers to draw on other income to cover it. Such challenges have been unaddressed for far too long, and seven years of frozen tuition fees plus overly optimistic strategic and financial planning and potential issues with governance have contributed to the financial challenge facing providers. The Government took the immediate action needed and responded by increasing fee caps for the 2025-26 academic year and by also making reforms to the Office for Students. But the Government must go further to ensure that our higher education sector is put on a secure footing, to allow it to face the challenges of the next decade and to ensure that all students receive the world-class education they deserve. Government and the sector have a shared interest in fully realising the benefits of higher education for students, taxpayers, the economy and wider society. Government has a responsibility to ensure that the higher education sector is suitably funded, and the sector has a responsibility to ensure that it delivers the best value for students and maximises its contribution to our economy and society. This SI is intended to put our higher education sector on a more secure footing and provide greater certainty over future funding, so the sector can focus on delivering quality provision. It will mean that, for the 2026-27 academic year, from 1 August 2026 onwards, tuition fee limits for undergraduate courses will increase by 2.71%, and for the 2027-28 academic year, from 1 August 2027 onwards, by a further 2.68%, in line with forecast inflation, based on the RPIX inflation measure. This means, for example, an increase from £9,535 to £9,790 for a standard full-time undergraduate course in 2026-27, and an increase to £10,050 in 2027-28. Increasing fees for the next two academic years will mean that providers have greater certainty and can focus on delivering the Government’s ambition for a more specialised and more efficient sector that is better aligned with the needs of the economy. This will provide long-term certainty over future funding for the sector. We will then legislate, when parliamentary time allows, to increase tuition fee caps automatically for future academic years. These annual increases in fees, linked to inflation, will balance the need to give the sector stability with fairness to students and taxpayers. I understand that this may raise concern about the affordability of higher education for students, but the Government are committed to ensuring that higher education is open to all who have the ability and desire to pursue it. The student finance system removes upfront financial barriers and provides additional support to those with the greatest needs, so that higher education is open to all. The Government are already making improvements to the student finance system that we inherited. To help students from disadvantaged backgrounds progress and excel in higher education, the Government are reintroducing targeted, means-tested maintenance grants of up to £1,000 per year, from academic year 2028-29. The Government have also committed to future-proof our maintenance support offer by increasing loans for living costs with forecast inflation every academic year from 2026-27 onwards. The OfS has consulted on its future approach to quality. It will continue to hold providers to account for the outcomes that they achieve for their students, and this Government will ensure that only high-performing providers are able to charge the top rate of fees. Eligible students can continue to apply for upfront fee loans to meet the full cost of their tuition. It is also important to remember that student loans come with a range of unique protections designed to support borrowers throughout the lifetime of the loan. Unlike commercial loans, student loan repayments are calculated solely on a borrower’s earnings, not on the amount borrowed or the rate of interest applied. Any outstanding balance, including interest, is cancelled at the end of the loan term, with no detriment to the borrower, and student debt is never passed on to family members or descendants. The Government’s ambition is to have a more sustainable, more specialised and more efficient sector, which aligns with the needs of the economy. It is vital that higher education continues to contribute to closing the gap between people from disadvantaged backgrounds and their peers. The Government want to recognise each provider’s unique contribution and encourage them to capitalise on their comparative advantage. The Government are not going to force this specialisation; it is clear that the diversity of the sector is a strength, but each provider needs to be clear on its distinctive role in the system and move away from a one-size-fits-all approach. Each provider needs to be well run, collaborating with others to deliver the best value for students, and to operate as efficiently as possible. In December, the Government announced reforms to the research excellence framework—the REF—to ensure that it better supports curiosity driven research, government missions, industrial strategy priorities, innovation and commercialisation. It will also reduce administrative burden and encourage greater collaboration and specialisation across universities. At the same time, the Government will protect and grow quality related research funding and redirect some UKRI funding toward areas of strategic national importance, while addressing sustainability challenges in the sector. To conclude, this SI will put our higher education sector on a more secure footing, enabling it to continue to deliver the world-class higher education that current students and those in future generations deserve. I beg to move.