Theresa May to announce review into university tuition fees and education funding

The Prime Minister is set to admit students in England face one of the "most expensive systems of university tuition in the world" as she announces a wide-ranging review of funding for further and higher education.

In a speech later, Theresa May will say the system of variable tuition fees for university degrees has failed to create the "competitive market" originally envisaged.

Mrs May is expected to challenge the "outdated attitude" towards technical qualifications, saying many graduates with academic degrees end up questioning their value relative to the size of the debt accrued and the high interest rates on repayments.

:: 'All aspects' of university funding to be looked at

"We now have one of the most expensive systems of university tuition in the world," she will say in a speech in Derbyshire.

"All but a handful of universities charge the maximum possible fees for undergraduate courses.

"Three-year courses remain the norm. And the level of fees charged do not relate to the cost or quality of the course.

"The competitive market between universities which the system of variable tuition fees envisaged has simply not emerged."

An independent chair and panel will support the review as it considers all aspects of post-18 education funding, including whether or not maintenance grants to help with living costs should be reintroduced for the poorest students.

It is also expected to consider how career guidance could be improved to give young people clearer information about future earning potential in certain careers, and what qualifications those careers require.

The review is scheduled to return its findings in early 2019.

One of the areas it will examine is the interest rates charged on student loans, which currently stands at 6.1%, with a top committee of MPs saying such a high level of interest is "questionable".

Speaking to Sky News ahead of the PM's speech, Education Secretary Damian Hinds said he "understands" the concerns raised on the rates, but cautioned: "You can't look at these things in isolation."

Labour's pledge to scrap tuition fees altogether became one of the key issues for young voters at the last election.

Since then, the Government has pledged to freeze the top rate of tuition fees at £9,250, scrapping a proposed increase. But some Conservative MPs want the party to go further.

Mr Hinds defended the system of dividing the cost of university education between the taxpayer and the student, warning Labour's policy of abolition would be "unaffordable".

"It's not progressive and it's not fair," he added.

In a BBC interview on Sunday, Mr Hinds suggested the fees charged should be based on the cost of delivering a course and a graduate's likely future earnings, as well as the needs of the country.

This could mean a reduction in how much those taking arts and humanities courses are charged.

However, former education secretary Justine Greening has warned the Government's review will likely be challenging, given the complexity of defining what constitutes a "beneficial" degree.

Mrs Greening also suggested forcing universities to charge less for degrees considered to offer lower potential earnings could remove the incentive for poorer students to pursue higher-earning careers.

Universities have also cautioned against any move to reduce fees without alternative funding being put in place.

Former higher education minister Bill Rammell, who is now vice chancellor at the University of Bedfordshire, told Sky News "it's students who will suffer" if fees for some courses are reduced without giving universities "adequate" compensation.

He added: "I think if they go down that route, not only will we see a deterioration in the opportunities and experience to students, but we're likely to see the reintroduction of a student number cap, limiting the places that are available to students across the country at a time when we need more people to go to university for their own benefit and the benefit of society as a whole."