In recent days it has become increasingly clear that the Government cares more about generating red tape than it does about whether university students have enough to eat. What’s brought this into focus are two announcements from the Department for Education, one about the rate of uplift to undergraduate student maintenance loans and the other via a mini consultation with sector leads on proposals to increase the fees that the Office for Students (OfS) can charge universities. The disparity between the two is striking.
The 2.8% uplift in maintenance loans for next year is way below current inflation levels and even further below the inflation level for food, which is probably of most relevance to students and stood at 13.3% in December. The Russell Group, the Institute for Fiscal Studies (IFS) and others have highlighted how the lack of any mechanism to adjust loan levels for unexpected hikes in inflation means students will be up to £1,500 worse off next year. And this cut will be baked in for the future. This week, the House of Commons Library concluded that the effective 11% cut over two years is larger than any real cuts seen in student support going back to the early 1960s. In the meantime, a £15 million boost from the Department for Education to university hardship funding this year sounds positive until you divide by the number of students this is supposed to cover and realise it might buy each student a couple of lattes at best.
The Welsh Government seems more in tune though, announcing it will increase student maintenance support by 9.4%, although again this only relates to the next academic year.
What makes the Westminster decision even more difficult to understand is that these are loans that ultimately will be repaid by the majority of students. In addition, the level of support available to students tapers off according to family income, while the lower parental earnings threshold for receiving the maximum loan amount (currently £9,706, rising by 2.8% to £9,978 per year for students outside of London and living away from home) has been frozen in nominal terms at £25,000 since 2008, even as average earnings have risen significantly. In December 2022, the Institute for Fiscal Studies reported that had the threshold increased with earnings it should now be closer to £35,000.
So, by not increasing the loan or the parental earnings threshold in line with (or even close to) inflation, the Government seems intent on actively working against some of the key objectives it has set the Office for Students, including to protect students’ interests when events have a material impact on their ability to continue to study, and to ensure that access, success and progression are not limited by background.
I would contend that a huge leap in inflation is likely to have a material negative impact on students and especially on those from a low-income background. An ONS survey of students published in November showed that three-quarters were already concerned about the cost-of-living impact on their studies, a quarter had taken on additional debt (for example on credit cards) and 15% were already in major financial difficulties. What this means is that universities are left to pick up the pieces, finding tens of millions of pounds of their own money to help students with the cost-of-living.
At the same time, the Department for Education is proposing the Office for Students charge universities between 13% and 15% more for their annual registration fees. With the Office for Students currently raising around £25.9 million per year from these fees, a 13% rise would increase this by nearly £3.4 million to just under £29.3 million.
It’s a frankly bizarre move given the perspective of the maintenance loan uplift, and also because it is not clear if the Office for Students has actually asked for this level of increase. Instead, the 13% figure seems to be coming more from political angles and linked primarily to responsibilities the Office for Students may get if and when the Higher Education (Freedom of Speech) Bill becomes law.
Of interest then is to consider what the extra £3.4 million per year of universities’ money will buy the Office for Students.
Its latest Annual report lists staff as the main cost (£24 million) against total income of £29 million and operating expenditure of £27.7 million. Nearly 90% of Office for Students’ costs therefore relate to staff, of which they had 377 full time equivalents in 2020/21. With a rough average cost for each staff member of around £64,000, the extra £3.4 million could mean something like 48 additional staff to deal with free speech. In other words, a couple of infantry platoons worth of free speech enforcers may be on their way to a university near you in the not-too-distant future.
Is this really the biggest current priority for the DfE, and for a regulator that is supposed to be looking out for students?
The Impact Assessment for the Free Speech Bill (signed off by Michelle Donelan last summer) indicates the Office for Students would only need a Free Speech Champion at Director level plus 5-to-10 staff to fulfil its new duties at a total annual cost of £0.5million to £0.8 million. From this, one might presume £0.8 million per year could cover the initial set-up, with £0.5 million as the ongoing cost.
It is difficult to see how the cost has now quadrupled.
We’ve been clear with Department for Education that, before any increase in the Office for Students’s fees is considered, the regulator should demonstrate clearly how this extra funding will bring genuine benefit to students and how it plans to show that it is itself operating in the most efficient and effective way.
It must also demonstrate much better how its work has helped students before a fee increase can be justified.
In fact, when the Office for Students’ fees mechanism was introduced in 2019, the Impact Assessment envisaged that ‘asking providers to contribute to the cost of the OfS would give them an incentive to hold the regulator accountable’ and ‘challenge the efficiency of the regulatory system’.
It also anticipated the OfS regulating 507 providers at a cost of £30.6 million in 2022/23, with a linear increase in cost as the projected number of registered providers rose to nearly 570 in 2028/29. Yet the Office for Students’ Register today reveals the number is now around 410. That neat linear relationship between providers and cost suggests the cost of regulating 410 providers should be around £22.8 million, nearly £5 million less than the Office for Students’s current operating expenditure.
Instead of bumping up its fees then, the Office for Students should be cutting them, and substantially. The calculations show that even if it is pressed by the Government to create an army of free speech warriors costing £3 million a year, it should still be able to do this and return £2 million a year to universities through a registration fee cut.
And while Parliament wrestles with the closing stages of the Free Speech Bill, maybe it should instead put a little more effort into scrutinising existing legislation and the priorities of the Government, its departments and the regulator with respect to students as they try to stay focused on their studies while their maintenance loans run out.