A look inside Labour’s higher education inbox

A particularly odd feature of the Westminster parliamentary system is that as soon as the champagne has worn off after the election, a new government suddenly takes over responsibility for running the country.

The civil service has been working with the main parties on their policies and post-election plans, anticipating that some of them will need to be implemented immediately, while Labour has already suggested it plans to schedule a Royal Speech for mid-July and extend the current session of Parliament to get work started on key bills.

But whatever their aspirations for policy delivery in these early months, all new ministers will face a significant number of unresolved issues and hanging policy agendas that may require early decisions. Here are just some of the agendas and challenges that the new Labour administration will inherit in higher education.

University Financial Sustainability and Student Funding

In the case of higher education, the FT’s revelation in May that the failure of universities had prompted Sue Gray’s “blacklist” of the serious challenges likely to face the new government came as a strange sort of relief, in the sense that Labour understood the problem, even if it had not said directly what it intended to do about it.

In the absence of a fully developed policy agenda for higher education from Labour, the issue of how the party will respond to the risk of institutional default has become a major issue in the pre-election debate in the higher education sector. In the Wonkhe case, Mark Leach speculated that Labour might introduce fees to ease the immediate pressure on the whole sector, and Debbie McVitty has worked with colleagues at Mills & Reeve to develop an immediate action plan to stabilise the handful of institutions currently in danger.

The other side of the coin of university sustainability is of course the cost pressures on students, which, if unaddressed, will continue to result in loss of engagement and learning, and a depressing student experience for an ever-increasing proportion of the student body. In the run-up to the election, Jim Dickinson shared research from our Belong student survey platform that revealed the impact of financial hardship on the whole experience. Increasing the size of the maintenance loan in real terms would provide some temporary relief, but the wider issue that rising attendance costs continue to exclude those without easy parental income remains.

Tests

The UK’s science base remains a world leader, and investment in R&D has increased under the Conservatives, but attracting additional private sector investment remains elusive. Labour will not cut core research investment, but as long as the party adheres to the fiscal constraints of Conservative spending plans, there will be little room for increased funding. Last year’s Nurse review of the research landscape left open the question of whether the sector would prefer to pursue fewer, better-funded programmes, or maintain a broader portfolio where funding is currently well below costs. If Labour is to avoid further exploding the research deficit, it will need to either fund less better, change the funding profile, including looking at the effectiveness of QR, or effectively stimulate non-government research funding.

This could mean reassessing the impact of R&D tax breaks, as these have mainly benefited the largest companies, reassessing whether freeports and investment zones are in line with Labour’s planned industrial strategy, and strengthening pro-university spin-outs. The new UKRI postgraduate deal and Tickell’s review of the research bureaucracy remain current policy agendas that Labour will need to address. Beyond Labour’s existing commitments to implementing ten-year budgets for research institutions, there is the small matter of strengthening the UK’s R&D relationship with the EU and internationally, as Horizon Europe 2028 comes into play.

Foreign students

A fall in international student numbers this year following changes to government policy on students bringing dependants and a review of the system by the Migration Advisory Committee have made universities’ difficult financial situation even worse. More generally, a sense among international applicants that the UK is not a particularly stable or friendly political environment for international study may do more harm in the long term than the immediate impact of these policies.

The sector is optimistic that Labour will act to address the issue of stability and friendliness first, with some kind of early public statement that the UK is “open for business” and that efforts will be made to attract international ambassadors from key countries such as India. There may be immediate benefits in terms of the contribution to university finances and the wider contribution that international students make to GDP, but Labour may also be cautious about how a full welcome of international students might affect its first few months. In the medium term, the sector will need to provide some assurances about sustainable international recruitment and there may be a refreshed international education strategy. But stopping the bleeding will be the first priority.

Student mental health and well-being

Nottingham Trent Vice-Chancellor Edward Peck remains at the head of the DFE’s Student Mental Health Taskforce, tasked with continuing its specific work on preventing student suicide and more general guidance on good practice for institutions. Labour will have to decide whether to close down the taskforce, support it to complete its work or strengthen it. Despite being set up by Conservative Higher Education Minister Robert Halfon, the taskforce is not particularly aligned with any political party’s platform, so it would be a bit rude, not to mention a waste of everyone’s work, to scrap it, especially on such a sensitive subject.

On the other hand, the remit of the taskforce is very narrow given the scale of the challenge, and although it has not been specifically flagged up, Labour may have its own plans for student mental health and wellbeing. The best guess is that there will be a political agreement whereby the taskforce completes its work with the support of the new Higher Education Minister, but is politely warned not to make any recommendations or advice to the government that might conflict with Labour’s plan.

Continuing education entitlements and preparatory years

The Continuing Education (Higher Education Fee Caps) Act 2023 provides for the implementation of the Continuing Education Entitlement (LLE) by giving Ministers the power to set the price of a single academic credit. These powers may be useful to the new government, but the likelihood of immediate implementation of LLE seems low given previous delays in implementing the Student Loans Company, which address wider systemic issues, and the aspiration in the Labour manifesto for a more holistic consideration of the post-16/higher education system.

The 2024 Annual Statutory Instrument, which confirms the fee caps, would be the first to be issued under the new legislation. It would also be the one to enact the planned reduction in foundation year fees in OfS Price Band D. There is a possibility that Labour would quietly not reduce foundation year fees, which would provide some relief to institutional finances.

franchise

The lack of government oversight has left a “back door into the student loan system open to organised fraudsters”, the House of Commons Public Accounts Committee found earlier this year. The committee’s investigation follows a report by the National Audit Office that found the proportion of detected student loan fraud cases involving franchisees had risen from four per cent to 45 per cent in just two years.

This is a technical issue, but not necessarily a particularly problematic one politically: it is likely that a Labour government would be more willing to take action than a Conservative government, given that it can simply blame the system’s failures on the previous government. However, it may have a direct impact on specific institutions that have relied on franchise income to survive lean times. The committee’s recommendation that an indicative limit be set on the proportion of fees that awarding institutions can recover from franchise agreements is also unlikely to be particularly popular.

Pensions

From April 2024, employer contributions to the Teachers’ Pension Scheme (TPS) have increased by five percentage points in England and Wales, to 28.68%. The corresponding schemes for Scotland and Northern Ireland are seeing increases of three and four percentage points respectively. For those modern universities that are required to contribute to these pension schemes for their academic staff, this represents a significant increase in costs.

Following an unsuccessful campaign by the Westminster government last autumn to cover the increased costs of higher education institutions – as it had done for schools and colleges – in March Universities UK and the Universities and Colleges Employers Association (UCEA) wrote to the then Higher Education Secretary asking for a review of universities’ participation in the scheme. There was no public response from the Department for Education before the election, but such a review – if it were to be carried out under a future government – ​​would face strong opposition from trade unions.

This suggests that the new government will have a serious problem, as the cost of pensions will put financial pressure on the institutions affected. It is clear that the whole scheme is very expensive, but a Labour government would be unlikely to interfere with teachers’ pensions.

Freedom of speech

Key provisions of the Higher Education (Freedom of Speech) Bill, in particular the new OfS complaints scheme, will come into force in the summer, and consultation on its implementation has already closed. While the new government has no legislative agenda, passing a scheme that has been criticised at every stage as being at best a hammer to crack a nut, and in practice probably unworkable, poses a risk to the Labour administration that an early test case will cause something of a media storm – especially if it involves a conflict between free speech and protected characteristics.

With pro-Palestinian camps still thriving on university campuses, Alice Sullivan’s review of the science of gender and gender identity due to be published later this month, not to mention the introduction of a new duty by the OfS to tackle gender-based harassment and violence, there are a number of potential flashpoints that will keep the Director of Free Speech very busy.

The risk for the government is that the free speech issues at universities will drag the government into the kind of culture war that the previous government relished and this one will want to avoid like the plague. Trying to dismantle the provisions of the bill would be quite expensive in terms of time and political capital, so the best hope is that nothing too controversial happens when the program launches in August.