Higher Education Act 2004
Encyclopedia
The Higher Education Act 2004 (c 8) is an Act
of the Parliament of the United Kingdom
which introduced several changes to the higher education
system in the United Kingdom
, the most important and controversial being a major change to the funding of universities, and the operation of tuition
fees, which affects England and Wales
and Northern Ireland. University funding is a devolved matter
for Scotland
under the Scotland Act 1998
. After complex and controversial debates, the Higher Education Bill received Royal Assent
on 1 July 2004.
was free up to and including university courses. However, shortly after coming to power, the Labour Party under Prime Minister
Tony Blair
abolished the student maintenance grant system and introduced an up-front fee fixed at just over £1,000 per year for all university student
s. Up to a quarter of this fee was waived for the poorest students, but many maintained that education should remain a free public service, and that the system would place students in unnecessary levels of debt. The government, however, insisted that fees were the best means of providing university funding. At the same time, they stated that their aim was to increase the proportion of students going on to Higher Education to 50% by 2010.
In the years that followed, it became clear that the original fixed fees of around £1,000 per year were still not providing enough funding, leading to proposals of what are often referred to as top-up fees. The idea was that universities would be able to "top up" the fees to a level that more accurately reflected the funding they needed. However, widespread protests led the Labour Party to make a manifesto
pledge at the 2001 general election
not to introduce such a system.
In 2003, a new set of proposals was drafted, which were denounced by some as breaking that promise. Although the government tried to create a compromise that would raise the necessary funds in a fair way, the issue remained highly contentious. Despite vocal opposition within his own party, Tony Blair claimed that this proposal was the only way to secure the necessary funds, and the issue was seen as a key test of his leadership. The initial vote in the House of Commons
, on 27 January 2004, came a day before the result of the Hutton Inquiry
, and it was predicted that a bad result from one or both would lead to Blair's resignation as Prime Minister. The Bill was passed at the first vote, known as second reading, by 316 votes to 311, with 71 Labour MPs voting against.
The Bill faced further opposition as it progressed through Parliament. There was some controversy regarding the appointment of mainly loyalist MPs to the Standing Committee
assigned to review the Bill. Of the 16 Labour MPs on the committee, only one voted against the government at second reading, and one abstained, suggesting that little criticism was likely during this stage. It then returned to the floor of the Commons for the Report stage. The main opposition to the bill from Labour backbencher
s concerned the "variable" or "top-up" fees, therefore an amendment tabled at Report stage to remove references to these variable fees appeared to have some chance of succeeding. In addition, some backbenchers were promised further concessions and changes to the Bill, and therefore voted in favour at the second reading. If these promises had been felt to have been broken, these members might well have vote against the Bill at third reading.
Additionally, if the Bill had been successfully passed at third reading, it would have moved to the House of Lords, where the Government did not have a majority, and where for this particular Bill, the Salisbury Convention
– according to which legislation included in the manifesto of the ruling party should not be opposed – would not have applied. This is because the policy was not included in the Labour party manifesto in 2001 – and some would argue it went against the line reading "We will not introduce top-up fees and have legislated to prevent them". Therefore, it is quite possible that the Lords would have rejected the bill outright, which would have meant that the government would have had to table the Bill again in the next session of Parliament, and would possibly have had to use the Parliament Acts 1911 and 1949
in order to force it through Parliament and gain Royal Assent
. Alternatively, the Lords could have passed a "wrecking amendment" which would have needed to be reversed by the House of Commons.
and Wales
.
A key player on this side of the argument is the Russell Group of Universities, who have argued that they should be able to charge much increased fees in order to differentiate themselves from smaller universities. This attitude has proved unpopular, as a two-tier system of this kind is widely seen as unnecessary and damaging. The levels called for by this group far exceed the maximum rate currently proposed.
Further to this argument, it is argued that since studies show that most graduates earn more during their career than non-graduates, it is logical that they should be the ones to pay for this opportunity, not the public at large. Critics, however, have suggested that if this is the case, they will pay more income tax
anyway, and that this would be a fairer source of the money. Some have also pointed out that the country as a whole benefits from an increased level of expertise, and therefore it is in everyone's interests to pay for higher education.
Although the Bill removes the need to pay fees up front - meaning that students may have more spending money while studying - it will still leave them with a greater debt at the start of their careers. While it was predicted that people from poorer backgrounds may be put off from enrolling for a degree because of the measure, the number of young people engaged in higher education has actually risen, most markedly in those coming from poorer backgrounds.
A second line of criticism is that the introduction of variable fees represents a step towards the privatisation of education, and makes degrees into products quite unnecessarily. Although not the intention of the legislation, there is likely to be a perceived trade-off between price and quality when choosing a degree. The strict limits imposed on fee levels limit this in practice, but the concept of competition remains. This is not, however, so relevant today as the vast majority of universities opt to charge the maximum £3,290 (2010 Entry).
Act of Parliament
An Act of Parliament is a statute enacted as primary legislation by a national or sub-national parliament. In the Republic of Ireland the term Act of the Oireachtas is used, and in the United States the term Act of Congress is used.In Commonwealth countries, the term is used both in a narrow...
of the Parliament of the United Kingdom
Parliament of the United Kingdom
The Parliament of the United Kingdom of Great Britain and Northern Ireland is the supreme legislative body in the United Kingdom, British Crown dependencies and British overseas territories, located in London...
which introduced several changes to the higher education
Higher education
Higher, post-secondary, tertiary, or third level education refers to the stage of learning that occurs at universities, academies, colleges, seminaries, and institutes of technology...
system in the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
, the most important and controversial being a major change to the funding of universities, and the operation of tuition
Tuition
Tuition payments, known primarily as tuition in American English and as tuition fees in British English, Canadian English, Australian English, New Zealand English and Indian English, refers to a fee charged for educational instruction during higher education.Tuition payments are charged by...
fees, which affects England and Wales
England and Wales
England and Wales is a jurisdiction within the United Kingdom. It consists of England and Wales, two of the four countries of the United Kingdom...
and Northern Ireland. University funding is a devolved matter
Devolution
Devolution is the statutory granting of powers from the central government of a sovereign state to government at a subnational level, such as a regional, local, or state level. Devolution can be mainly financial, e.g. giving areas a budget which was formerly administered by central government...
for Scotland
Scotland
Scotland is a country that is part of the United Kingdom. Occupying the northern third of the island of Great Britain, it shares a border with England to the south and is bounded by the North Sea to the east, the Atlantic Ocean to the north and west, and the North Channel and Irish Sea to the...
under the Scotland Act 1998
Scotland Act 1998
The Scotland Act 1998 is an Act of the Parliament of the United Kingdom. It is the Act which established the devolved Scottish Parliament.The Act will be amended by the Scotland Bill 2011, if and when it receives royal assent.-History:...
. After complex and controversial debates, the Higher Education Bill received Royal Assent
Royal Assent
The granting of royal assent refers to the method by which any constitutional monarch formally approves and promulgates an act of his or her nation's parliament, thus making it a law...
on 1 July 2004.
Background and political importance
Until 1998, all education in the United KingdomUnited Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
was free up to and including university courses. However, shortly after coming to power, the Labour Party under Prime Minister
Prime Minister of the United Kingdom
The Prime Minister of the United Kingdom of Great Britain and Northern Ireland is the Head of Her Majesty's Government in the United Kingdom. The Prime Minister and Cabinet are collectively accountable for their policies and actions to the Sovereign, to Parliament, to their political party and...
Tony Blair
Tony Blair
Anthony Charles Lynton Blair is a former British Labour Party politician who served as the Prime Minister of the United Kingdom from 2 May 1997 to 27 June 2007. He was the Member of Parliament for Sedgefield from 1983 to 2007 and Leader of the Labour Party from 1994 to 2007...
abolished the student maintenance grant system and introduced an up-front fee fixed at just over £1,000 per year for all university student
Student
A student is a learner, or someone who attends an educational institution. In some nations, the English term is reserved for those who attend university, while a schoolchild under the age of eighteen is called a pupil in English...
s. Up to a quarter of this fee was waived for the poorest students, but many maintained that education should remain a free public service, and that the system would place students in unnecessary levels of debt. The government, however, insisted that fees were the best means of providing university funding. At the same time, they stated that their aim was to increase the proportion of students going on to Higher Education to 50% by 2010.
In the years that followed, it became clear that the original fixed fees of around £1,000 per year were still not providing enough funding, leading to proposals of what are often referred to as top-up fees. The idea was that universities would be able to "top up" the fees to a level that more accurately reflected the funding they needed. However, widespread protests led the Labour Party to make a manifesto
Manifesto
A manifesto is a public declaration of principles and intentions, often political in nature. Manifestos relating to religious belief are generally referred to as creeds. Manifestos may also be life stance-related.-Etymology:...
pledge at the 2001 general election
United Kingdom general election, 2001
The United Kingdom general election, 2001 was held on Thursday 7 June 2001 to elect 659 members to the British House of Commons. It was dubbed "the quiet landslide" by the media, as the Labour Party was re-elected with another landslide result and only suffered a net loss of 6 seats...
not to introduce such a system.
In 2003, a new set of proposals was drafted, which were denounced by some as breaking that promise. Although the government tried to create a compromise that would raise the necessary funds in a fair way, the issue remained highly contentious. Despite vocal opposition within his own party, Tony Blair claimed that this proposal was the only way to secure the necessary funds, and the issue was seen as a key test of his leadership. The initial vote in the House of Commons
British House of Commons
The House of Commons is the lower house of the Parliament of the United Kingdom, which also comprises the Sovereign and the House of Lords . Both Commons and Lords meet in the Palace of Westminster. The Commons is a democratically elected body, consisting of 650 members , who are known as Members...
, on 27 January 2004, came a day before the result of the Hutton Inquiry
Hutton Inquiry
The Hutton Inquiry was a 2003 judicial inquiry in the UK chaired by Lord Hutton, who was appointed by the Labour government to investigate the circumstances surrounding the death of David Kelly, a biological warfare expert and former UN weapons inspector in Iraq.On 18 July 2003, Kelly, an employee...
, and it was predicted that a bad result from one or both would lead to Blair's resignation as Prime Minister. The Bill was passed at the first vote, known as second reading, by 316 votes to 311, with 71 Labour MPs voting against.
The Bill faced further opposition as it progressed through Parliament. There was some controversy regarding the appointment of mainly loyalist MPs to the Standing Committee
Standing Committee (UK)
In the British House of Commons, public bill committees consider Bills – proposed Acts of Parliament. The House of Lords does not have such committees, as Bills are usually considered by the House as a whole....
assigned to review the Bill. Of the 16 Labour MPs on the committee, only one voted against the government at second reading, and one abstained, suggesting that little criticism was likely during this stage. It then returned to the floor of the Commons for the Report stage. The main opposition to the bill from Labour backbencher
Backbencher
In Westminster parliamentary systems, a backbencher is a Member of Parliament or a legislator who does not hold governmental office and is not a Front Bench spokesperson in the Opposition...
s concerned the "variable" or "top-up" fees, therefore an amendment tabled at Report stage to remove references to these variable fees appeared to have some chance of succeeding. In addition, some backbenchers were promised further concessions and changes to the Bill, and therefore voted in favour at the second reading. If these promises had been felt to have been broken, these members might well have vote against the Bill at third reading.
Additionally, if the Bill had been successfully passed at third reading, it would have moved to the House of Lords, where the Government did not have a majority, and where for this particular Bill, the Salisbury Convention
Salisbury Convention
The Salisbury Convention is a constitutional convention in the United Kingdom which puts forward that the House of Lords will not oppose the second or third reading of any government legislation promised in its election manifesto.Following a landslide Labour general election victory in...
– according to which legislation included in the manifesto of the ruling party should not be opposed – would not have applied. This is because the policy was not included in the Labour party manifesto in 2001 – and some would argue it went against the line reading "We will not introduce top-up fees and have legislated to prevent them". Therefore, it is quite possible that the Lords would have rejected the bill outright, which would have meant that the government would have had to table the Bill again in the next session of Parliament, and would possibly have had to use the Parliament Acts 1911 and 1949
Parliament Acts 1911 and 1949
The Parliament Acts 1911 and 1949 are two Acts of the Parliament of the United Kingdom, which form part of the constitution of the United Kingdom. Section 2 of the Parliament Act 1949 provides that that Act and the Parliament Act 1911 are to be construed as one.The Parliament Act 1911 The...
in order to force it through Parliament and gain Royal Assent
Royal Assent
The granting of royal assent refers to the method by which any constitutional monarch formally approves and promulgates an act of his or her nation's parliament, thus making it a law...
. Alternatively, the Lords could have passed a "wrecking amendment" which would have needed to be reversed by the House of Commons.
Details of the proposed changes to funding
The Act incorporates several key changes to the financial arrangements of higher education students, including many additional terms that were added to convince those who opposed earlier drafts. The changes took effect in 2006, and apply to EnglandEngland
England is a country that is part of the United Kingdom. It shares land borders with Scotland to the north and Wales to the west; the Irish Sea is to the north west, the Celtic Sea to the south west, with the North Sea to the east and the English Channel to the south separating it from continental...
and Wales
Wales
Wales is a country that is part of the United Kingdom and the island of Great Britain, bordered by England to its east and the Atlantic Ocean and Irish Sea to its west. It has a population of three million, and a total area of 20,779 km²...
.
- Up-front fees to be replaced by an income-linked deferred payment. Instead of having to pay each year while studying, students are to be loaned the funds by the government and repayments will be made out of income once the graduate is earning more than £15000 per year. The loan is charged at the Retail Prices Index (United Kingdom)Retail Prices Index (United Kingdom)In the United Kingdom, the Retail Prices Index or Retail Price Index is a measure of inflation published monthly by the Office for National Statistics. It measures the change in the cost of a basket of retail goods and services.-History:...
rate.- The payment rates will be entirely earnings based, so that as a graduate's salary fluctuates, so will their fee payments. If their salary falls below £15000, no payments will be taken.
- Additionally, any amount of a student's fees still outstanding after 25 years will be cancelled.
- Fixed rate of £1125 to be replaced by variable fees between 0 and £3000. Since different courses cost different amounts of money to run, it is argued that students should pay different levels of fees. Under the new system, universities will be able to set the level of the fees for each course, within a given range.
- Although the change does represent a significant increase in the level of fees, some universities had called for much higher rates - in some cases up to £12000 a year. Furthermore, the top rate cannot be increased without a motion being passed in both Houses of Parliament, and the government has promised not to propose such a motion before 2009, assuaging fears that it would rise dramatically soon after the legislation was passed.
- In order to charge more than the basic amount (equivalent to the current fixed rate), a university will have to produce an appropriate "plan", which may have to include details of how students from poorer backgrounds will be encouraged to participate. These plans will be subject to approval and review by a new body called the Office for Fair Access (OFFA, see 'Other Provisions' below).
- Increased levels of financial aid. As part of the "package" of this reform, increased government grants, and bursaries set up by the universities themselves, will be put in place in such a way that the maximum allowance will equal the maximum fee - i.e. £3000 - for the poorest students. Presently, this will come from several sources, making it hard to understand, but plans to combine the various elements may still be introduced during the committee stage.
Arguments in favour of the proposals
The principal argument in favour of a new funding system is that British universities are currently critically underfunded, and an increased level of fees will result in a cash injection and prevent them collapsing. Additionally, much is made of the need for British institutions to be internationally "competitive" in terms of quality and resources, and that this is impossible to achieve without a reform of their funding.A key player on this side of the argument is the Russell Group of Universities, who have argued that they should be able to charge much increased fees in order to differentiate themselves from smaller universities. This attitude has proved unpopular, as a two-tier system of this kind is widely seen as unnecessary and damaging. The levels called for by this group far exceed the maximum rate currently proposed.
Further to this argument, it is argued that since studies show that most graduates earn more during their career than non-graduates, it is logical that they should be the ones to pay for this opportunity, not the public at large. Critics, however, have suggested that if this is the case, they will pay more income tax
Income tax
An income tax is a tax levied on the income of individuals or businesses . Various income tax systems exist, with varying degrees of tax incidence. Income taxation can be progressive, proportional, or regressive. When the tax is levied on the income of companies, it is often called a corporate...
anyway, and that this would be a fairer source of the money. Some have also pointed out that the country as a whole benefits from an increased level of expertise, and therefore it is in everyone's interests to pay for higher education.
Arguments against the proposals
The most common criticism of the proposals is that increasing tuition fees will increase the level of debt graduates will have when they leave. Organisations such as the National Union of Students have argued that students are already under too much financial pressure, and that this will make things worse, not better. Many students have had to take up part-time work in order to pay living costs while studying, and this has been shown to have an adverse effect on their results.Although the Bill removes the need to pay fees up front - meaning that students may have more spending money while studying - it will still leave them with a greater debt at the start of their careers. While it was predicted that people from poorer backgrounds may be put off from enrolling for a degree because of the measure, the number of young people engaged in higher education has actually risen, most markedly in those coming from poorer backgrounds.
A second line of criticism is that the introduction of variable fees represents a step towards the privatisation of education, and makes degrees into products quite unnecessarily. Although not the intention of the legislation, there is likely to be a perceived trade-off between price and quality when choosing a degree. The strict limits imposed on fee levels limit this in practice, but the concept of competition remains. This is not, however, so relevant today as the vast majority of universities opt to charge the maximum £3,290 (2010 Entry).
Other provisions in the Bill
The Higher Education Bill also includes several less well-known provisions:- Creation of an Office for Fair AccessOffice for Fair AccessThe Office for Fair Access is a non-departmental public body responsible for ensuring that any university or higher education institution in England which plans to charge variable tuition fees starting with the academic year 2006/7 has in place an acceptable plan to promote equitable access among...
(OFFA) to oversee the approval and review of universities' plans with regards fees. - Transfer of additional powers to the Welsh Assembly, including a separate equivalent to OFFA and the right to organise both student support and tuition fees independently.
- A new body for dealing with student complaints which universities will be legally bound to deal with.
- An Arts and Humanities Research CouncilArts and Humanities Research CouncilEstablished in April 2005 as successor to the Arts and Humanities Research Board, the Arts and Humanities Research Council is a British Research Council and non-departmental public body that provides approximately £102 million from the Government to support research and postgraduate study in the...
equivalent to existing Science and Technology Councils, as a replacement for the current Arts and Humanities Research Board. This is the only aspect of the Act to directly affect ScotlandScotlandScotland is a country that is part of the United Kingdom. Occupying the northern third of the island of Great Britain, it shares a border with England to the south and is bounded by the North Sea to the east, the Atlantic Ocean to the north and west, and the North Channel and Irish Sea to the...
and Northern IrelandNorthern IrelandNorthern Ireland is one of the four countries of the United Kingdom. Situated in the north-east of the island of Ireland, it shares a border with the Republic of Ireland to the south and west...
Section 52 - Commencement
The following orders have been made under this section:- The Higher Education Act 2004 (Commencement No. 1 and Transitional Provisions) Order 2004 (S.I. 2004/2781 (C. 116))
- The Higher Education Act 2004 (Commencement No. 2) Order 2004 (S.I. 2004/3255 (C. 145))
- The Higher Education Act 2004 (Commencement No. 3) Order 2005 (S.I. 2005/767 (C. 32))
- The Higher Education Act 2004 (Commencement No. 4) Order 2006 (S.I. 2006/51 (C. 1))
- The Higher Education Act 2004 (Commencement No. 1 and Transitional Provision) (Wales) Order 2004 (S.I. 2004/3144 (W. 272) (C. 136))
- The Higher Education Act 2004 (Commencement No. 2 and Transitional Provision) (Wales) Order 2005 (S.I. 2005/1833 (W. 149) (C. 79))
- The Higher Education Act 2004 (Commencement No. 2 and Transitional Provision) (Wales) (Amendment) Order 2006 (S.I. 2006/1660 (W. 159) (C. 56))
- The Higher Education Act 2004 (Commencement No. 3) (Wales) Order 2011 (S.I. 2011/297 (W. 50) (C. 13))
- The Higher Education Act 2004 (Commencement No. 1) (Scotland) Order 2005 (S.S.I. 2005/33 (C. 3)