Student Finance

– in the House of Commons at 3:31 pm on 23rd June 2003.

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Photo of Phil Willis Phil Willis Shadow Spokesperson (Education) 4:22 pm, 23rd June 2003

I beg to move,

That this House
calls on the Government not to allow universities to introduce top-up fees.

I welcome the Minister for Lifelong Learning, Further and Higher Education to his place and wish him well in his post, which has so far claimed five ministerial lives. It seems a poisoned position, but we wish him well.

My father was a Burnley postman who was prevented from taking his place at the grammar school in Burnley in 1917 on the basis that his family were too poor to buy him a uniform. That was the reason why he did not go to the school. However, my father, who has since died, knew only too well the true value of education and it was his proudest moment when I was not only the first in our family not to leave school at 15—that is what people did in working-class Lancashire mill towns in those days—but the first to go on to higher education. If this debate is about anything—

Photo of Phil Willis Phil Willis Shadow Spokesperson (Education)

It was a shame; the hon. Gentleman is absolutely right.

Photo of Phil Willis Phil Willis Shadow Spokesperson (Education)

I am sorry.

If this debate is about anything, it is making sure that no student with talent is denied access to university on the basis of poverty or fear of debt. Access for students from under-represented groups must be one of the core issues that we address in this debate. It is one of the fundamental reasons why the Liberal Democrats, some Conservatives and, I suspect, the vast majority of Labour Members oppose the introduction of top-up fees and the escalation of student debt. It is why 139 Back-Bench Labour Members have voiced their opposition by signing early-day motion 2, which was tabled by Paul Farrelly, and why four Cabinet members, including two former Secretaries of State for Education and two other Ministers, went on record condemning the very thought of such an idea.

The Secretary of State for the Home Department, who was then Secretary of State for Education and Employment, said in answer to a question about top-up fees—

Photo of Phil Willis Phil Willis Shadow Spokesperson (Education)

I shall just finish the quotation first. On 23 March 2000, the then Secretary of State said:

"I, and the House, have specifically ruled out top-up fees."

He continued:

"Anything that discourages open access to all universities and their departments in this country is, in my view, wrong."—[Hansard, 23 March 2000; Vol. 346, c. 1105-06.]

His successor as Secretary of State, now the Minister for the Arts, Estelle Morris, wrote in The Guardian on 4 October 2001:

"I recognise that for many low-income families fear of debt is a real worry and could act as a barrier to higher education."

During the Government's first term of office, Baroness Blackstone, the Minister responsible for higher education, told the Select Committee on Education and Employment:

"It is no part of our policy to promote or introduce top-up fees. I cannot make my position, and that of the Government, clearer."

In this Parliament—within the past year—the Chancellor of the Exchequer was quoted at a breakfast meeting with journalists as deriding the idea of top-up fees as a "ridiculous idea". In November 2002, in The Guardian, the former Secretary of State for International Development said that in her view university top-up fees are "a really bad idea".

Even the current Secretary of State for Education and Skills said on the day that he was appointed that he was "generally anti" top-up fees and that

"I prefer a graduate tax myself".

So what has changed? Why is he now so determined to push through a policy that he must know is not only deeply unpopular in this House, but is likely to be counterproductive for the core objectives of the Labour Government? The Times Educational Supplement affectionately refers to the Secretary of State as a rhino. It is time that he stopped charging and listened to those who describe the effects of a policy that will be quite disastrous.

Photo of Patrick McLoughlin Patrick McLoughlin Opposition Deputy Chief Whip (Commons)

The hon. Gentleman is explaining how various members of the Cabinet have expressed their opinions on the matter. May I take him back to his reference to the early-day motion and the number of Labour MPs who signed it? Will he be surprised if those Labour MPs do not vote in the Lobby in which he intends to vote? Is he aware that two weeks ago, when we had a debate on post offices, several Labour MPs who had signed an early-day motion on that subject nevertheless voted against the motion under debate?

Photo of Phil Willis Phil Willis Shadow Spokesperson (Education)

I thank the hon. Gentleman. I will of course be equally surprised when Mr. Green, who speaks for the Conservative party, and who said on 19 January,

"I don't mind the principle of differential fees", jumps camp and votes in favour of the motion.

Photo of Phil Willis Phil Willis Shadow Spokesperson (Education)

I am still trying to deal with the previous intervention.

I believe that those 139 Labour MPs signed that EDM as a matter of principle—that is, the principle of their opposition to top-up fees. I hope that they do come into the Lobby tonight to vote with us. If they fail to do so, they will have failed on that issue of principle.

Photo of Damian Green Damian Green Shadow Secretary of State for Education

I am grateful to the hon. Gentleman for giving way, since he purported to represent my views. I feel that I should draw his attention to Liberal Democrat News of 30 May 2003. It is a publication that I read sporadically. This edition is particularly interesting because it makes the following thoughtful point:

"Damian Green's idea of getting rid of tuition fees, and financing the move by scrapping plans to extend the number of students even further, has a lot to be said for it."

I always welcome support from Liberal Democrat News, and I hope to get it from the Liberal Democrat Front-Bench spokesmen, as well.

Photo of Phil Willis Phil Willis Shadow Spokesperson (Education)

May I say to the hon. Gentleman that that was a most unfortunate intervention, because I shall now put into my speech a section on his policy? I know that he searches far and wide for policy initiatives, but Liberal Democrat News was one place to which I did not think he would go.

Photo of Mr Simon Thomas Mr Simon Thomas Plaid Cymru, Ceredigion

My colleagues and I will support the hon. Gentleman's motion tonight, but I am interested to know where his party is now going on tuition fees. In Scotland, it has followed the path of an endowment-type scheme. In Wales, before the coalition came to an end, there were different thoughts on the issue. Mention has also been made of a graduate tax. Will the hon. Gentleman tell us exactly what alternatives are available, because universities in Wales, in particular, are faced with a funding bind?

Photo of Phil Willis Phil Willis Shadow Spokesperson (Education)

The hon. Gentleman makes a fair point. Our existing policy is based on what we have done in the coalition in Scotland. We are very proud of our achievement in getting rid of up-front tuition fees—[Hon. Members: "Up front?"] If Conservative Members read Liberal Democrat News as avidly as their Front-Bench spokesman says they do, they will know that no student in Scotland pays tuition fees, full stop. [Hon. Members: "Up front."] Neither up front nor back front. There are two elements to student finance in Scotland: the tuition fee, which is free, and the maintenance grant, which is contributed to by an endowment for all students. That is a fair policy, and I compliment my colleagues in Scotland and the Labour Members of the Scottish Executive on having introduced it.

In answer to Mr. Thomas, there is quite rightly a debate taking place in Wales on what is right for Wales. When I gave evidence to the Select Committee—which the Conservatives refused to attend because, of course, they have no policy to discuss—I suggested that, given the Secretary of State's proposal in the White Paper of a £1,000 grant, we should consider rolling that grant into our grant arrangements in England. If the hon. Member for Ceredigion will be patient, I will come to that issue later.

Photo of Phil Willis Phil Willis Shadow Spokesperson (Education)

I will give way to the hon. Gentleman, who is incredibly courteous to me on all occasions.

Photo of John Bercow John Bercow Conservative, Buckingham

I am extraordinarily grateful to the hon. Gentleman for giving way. He is offering a typically spirited denunciation of the Government's ill-thought-out policy. Given, however, that his own party's internal briefing document—reproduced, appropriately enough, in The Guardian on 17 January this year—hints that Liberal Democrat policy will be to provide maintenance grants to people only if they study close to home and preferably take only two-year foundation courses, does the hon. Gentleman not see the narrowness of the ambition of Liberal Democrat thinking? Why does he not recognise that people ought to be able to decide their courses on the basis of personal choice rather than financial affordability?

Photo of Phil Willis Phil Willis Shadow Spokesperson (Education)

My goodness, the hon. Gentleman is sinking to new lows! His Front-Bench colleagues say that the Conservatives want to deny 150,000 students the opportunity to go into higher education and that, by 2010, they want another 250,000 to be denied that opportunity, yet the hon. Gentleman says that we should not be considering how to deliver higher education policy. The hon. Gentleman should not believe everything that he reads in the newspapers because, if he does, he will be a very disappointed gentleman. One in two of our students—1 million students—study part-time and, virtually without exception, they study locally. The offer that they get locally should be as good as the offer that they get anywhere else in the United Kingdom. If they wish to go away and spend three years at a distant university, they should have the right to do that.

However, that does not negate the fact that the Government and indeed the political parties should be fighting to ensure that every local university has a first-class offer to make to its students. The origins of the great civic universities of Leeds and Manchester were based in their local students. That is where we should be looking, rather than replicating a public school boy-type education of three years for everyone.

Several hon. Members:

rose—

Photo of Phil Willis Phil Willis Shadow Spokesperson (Education)

I am sorry. I want to make some progress.

Photo of Tim Boswell Tim Boswell Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson (Work and Pensions)

I shall seek to intervene only once. The hon. Gentleman can perhaps clear up a confusion that has been worrying me for some time in relation to the graduate endowment liability, or whatever it is going to be called, in Scotland. If he were to go on holiday this summer and to pay for his holiday with, say, a Barclaycard or whatever—I make no particular endorsement of that card, although I have one myself—he would not pay until he came back home, so does he think that he would not have to pay at all?

Photo of Phil Willis Phil Willis Shadow Spokesperson (Education)

The hon. Gentleman seems to have difficulty understanding—and I understand that—that there is a fundamental difference between two elements of the university charge, if I may call it that. I will explain carefully. As a party, we have always steadfastly believed that tuition should be free at the point of delivery up to level 4.

We accept, and indeed we accepted in 1997—[Interruption.] The Minister for Children must stop getting so excited. We accepted in 1997 that students would have to make an increased contribution towards their living costs, apart from poorer students who obviously need support—we think that that is the right distinction.

Photo of Phil Willis Phil Willis Shadow Spokesperson (Education)

I am going to make progress. I am sorry to disappoint my colleagues.

In 1997 our universities suffered a funding crisis following year-on-year cuts by the Conservative Government. Per student funding fell from £7,720 in 1989 to £5,080 in 2002, a reduction of £2,500 per student. That shortfall is the basis of the crisis in our university system, so the House should not forget those year-on-year cuts.

Even more stark is the decline in the element of gross domestic product spent on higher education: down from 1.33 per cent. in 1981 to 1.16 per cent. in 2002–03, despite a doubling of student numbers. There is not a company anywhere that could deal with that sort of funding differential and still be able to maintain quality and standards. During Labour's first term in office, we saw a further 7 per cent. real-terms cut in expenditure, despite the introduction of tuition fees.

Of course, there is a funding crisis, but getting the Government to quantify that crisis is near impossible. The former Minister for Lifelong Learning and Higher Education was asked on numerous occasions, particularly by Mr. Turner, to quantify the higher education funding gap that we needed to bridge. She declined to answer. We asked the Secretary of State the same question at a sitting of the Select Committee on Education and Skills. He, too, declined to answer. How on earth can one have a funding system that is based on filling a gap that the Government themselves will not identify?

Universities UK has made a compelling case for investment in university infrastructure, teaching and research facilities, and huge investment in science and technology and information technology. Many Labour Members would accept that that investment is needed, although the sum in their mind might not be the same as that identified by Universities UK. In the absence of Government figures and analysis, however, the £9.94 billion funding that Universities UK has called for is a good indication of the shortfall, of which roughly £1.5 billion is recurrent revenue expenditure.

We also have evidence, from the Bett commission, that academic salaries and conditions are in need of a drastic overhauling. In fact, our academics are some of the worst paid people to be found anywhere in the education service. And of course, the Government have set an ambitious yet arbitrary target for expansion, through to 2010.

Photo of Kevin Brennan Kevin Brennan Labour, Cardiff West

Will the hon. Gentleman clarify what Liberal Democrat higher education funding plans are predicated on, in terms of a target for the number of students in higher education?

Photo of Phil Willis Phil Willis Shadow Spokesperson (Education)

I will be perfectly frank with the hon. Gentleman—we do not accept the arbitrary target of 50 per cent., but we have predicated our spending figures on it because the Government have indicated that their spending will be based on it. I say quite straightforwardly that we hope that it will be exceeded; indeed, research presented to the Select Committee last week suggests that by 2010, the Government will achieve their 50 per cent. target with absolute ease. [Interruption.] Mr. Brady says from a sedentary position that this is the first time that we have had that information, but that is what the independent research suggests and I hope that it is right.

We must also consider—[Interruption.] I am sure that Kevin Brennan is desperately interested in listening to my response, rather than in just muttering. We must also consider the product that we are delivering to our students. As I hope that the hon. Gentleman and certainly the Labour Front Benchers will agree, the product that we offer to students must be more relevant to this millennium than to the 1960s and the post-Robbins era, for example. The real challenge for all the political parties is not simply to provide more funding, but to re-engineer a product that is fit for the 21st century.

Photo of Phil Willis Phil Willis Shadow Spokesperson (Education)

No, I want to make some progress; I shall come back to the hon. Gentleman later.

If we are to have a world-class higher education system and to meet the expansion that everybody, with the exception of the Conservatives, says that the country needs, the investment has got to be paid for. The issue at the heart of today's debate—the stark choice—is: who should pay for tuition, the students or the state? Sorry, I am wrong—there is a third way: the Conservative way, which was devised during a recent bonding session in Chesham, in Buckinghamshire. [Interruption.] I did say "bonding", not bondage. [Interruption.] I thought that it was just Conservatives who got excited about that. It appears—

Photo of Angela Browning Angela Browning Vice-Chair, Conservative Party

May I confirm, Mr. Deputy Speaker, that I think that the hon. Gentleman was right the first time?

Photo of Michael Lord Michael Lord Deputy Speaker (Second Deputy Chairman of Ways and Means)

Order. Thankfully, that is not a matter for the Chair.

Photo of Phil Willis Phil Willis Shadow Spokesperson (Education)

Mrs. Browning is wasted, as ever. It appears that the Conservative policy—[Interruption.] This is worth listening to. It would appear that by reducing student numbers to 1993 levels, by not allowing any expansion of student numbers from poorer backgrounds, and by keeping funding for universities constant at 2003 levels, the Conservatives can create a world-class higher education system. No wonder the hon. Member for Ashford refused to attend the Select Committee, or that, when we asked the House of Commons Library to comment on the Conservatives' proposals, it said:

"We couldn't understand the logic".

Nor is it any wonder that Professor Barr, of the London School of Economics, said the following in calculating the loss of 150,000 university places in his latest research:

"The Tory proposals are offensive to anyone who cares about fairness".

That is the truth: it is offensive to say that we are going to pull up the ladder and not expand places. The very people who will be denied access to university are young people from poorer backgrounds.

The Conservatives now have to answer, in the debate, the question of what will happen to the 150,000 people who would be denied a university place.

Photo of Phil Willis Phil Willis Shadow Spokesperson (Education)

I want to make some progress.

If those young people are going into vocational programmes, where is the money? We cannot simply say that we are not going to allow them to go to university because we want them to go into vocational programmes—and then not provide the money. In view of the highly controversial research, published this week, by Libby Aston of the Higher Education Funding Council, what will happen to the additional 250,000 young people who will have level 3 qualifications by 2010, but, under Conservative proposals, will not be allowed to go to university? I hope that the Conservative spokesman explains the position. Still, enough of that.

Photo of Phil Willis Phil Willis Shadow Spokesperson (Education)

We await explanations, but we shall get back to reality.

Photo of Mr Peter Duncan Mr Peter Duncan Conservative, Galloway and Upper Nithsdale

I am grateful to the hon. Gentleman for giving way, albeit somewhat belatedly. He mentioned fairness, but does he believe that his party's policy in Scotland is fair when a graduate who achieves the massive income of £10,000 a year, pays a marginal tax rate of 42 per cent. on incremental pounds beyond that level?

Photo of Phil Willis Phil Willis Shadow Spokesperson (Education)

The hon. Gentleman is a unique Conservative, coming from Scotland, but let me tell him that I am proud of what my colleagues achieved in Scotland. In all honesty, I tell him that when Andrew Cubie first made his proposals—he said at that time that we needed a high threshold of repayment, suggesting £20,000—I would have supported them in their totality. I am sure that all hon. Members would recognise, however, that the cost of that proposal would have been exorbitant. Every Executive, including the Scottish Executive and the Welsh Assembly Government, have to live within the means at their disposal. Interesting proposals were produced and I compliment those who produced them; I am delighted that we were part of that.

The Liberal Democrats' fundamental objection to top-up fees is threefold: first, because the income cannot be regarded as additional income; secondly, on account of the increase of student debt and its adverse effect on all students; and, thirdly, for their effect on access. The issue of additionality is important. There is a belief that the Government will simply use the new income from students as replacement income, as we have seen since the introduction of student tuition fees. At a recent Select Committee, on 19 March 2003, the Secretary of State said that

"the fees give more of a guarantee to universities of their future funding than any other alternative of money going to universities."

That is what the current Secretary of State said. However, some of us recall that the former Secretary of State for Education and Employment, Mr. Blunkett, said to the House on 23 July 1997 on the subject of introducing tuition fees that

"the entire objective in taking our difficult decisions has been to put higher education on a firm footing for the next two decades."—[Hansard, 23 July 1998; Vol. 298, c. 958.]

Yet what has gone into our universities since 1998 is not additional funding, but replacement funding. The Government grant has been reduced, virtually pound for pound, in relation to the student contribution. Will the Minister for Lifelong Learning, Further and Higher Education make it clear, now or in his summing up, that all income from top-up fees will be additional? We need to know whether it will be additional or replacement money. If he cannot or will not confirm that top-up fees will offer additional revenue to universities, he should realise that that will inevitably mean all universities charging the full fee of £3,000, because if they do not, they will actually lose grant. The Minister must respond to that point. Whenever I visit universities—and I am sure that the same applies to other hon. Members who visit them—I find out that they intend to charge the full £3,000.

The second principal objection concerns debt. The average debt at present is £12,000, but that would rocket to £21,000 with even the poorest students having to find £2,000 a year in top-up fees. Our concern about debt is shared by university vice-chancellors, who see more students struggling with it. Indeed, a recent NUS survey showed that the principal reason for students dropping out of university is debt. Professor McKenna, from the university of Ulster, said in his written submission to the Education and Employment Committee that

"the white paper has failed to find any remedy to the situation where many thousands of students have to work thirty hours a week to fund their education, yet are still deemed full time students."

He adds that

"it is a recipe for second class citizenship, inside and outside higher education."

It is important, too, to consider the impact of debt on the future economic decisions graduates will make, on careers, family, mortgages, pensions and their ability to go into business. Perhaps the Minister can tell the House if he has had any discussions with financial institutions to discuss how student debt will impact on graduates' financial status.

Our third and deepest concern about top-up fees remains their impact on access. The White Paper on higher education openly admits:

"The social class gap among those entering higher education is unacceptably wide."

I am sure that we would all agree, irrespective of our political beliefs. The question for the Government is how the introduction of top-up fees will improve that unacceptable situation. The Secretary of State's argument is that deferring the fee to after graduation will be sufficient to remove the disincentive to study, but there is an ever-lengthening list of research that says otherwise.

The Joseph Rowntree Foundation's report "Socio-economic disadvantage and experience in higher education" concluded that

"Students from disadvantaged backgrounds were more likely to prematurely reduce their levels of participation within Higher Education, by dropping out of courses or by forgoing the opportunity to progress to more advanced courses."

Factors identified as lying behind that difficulty included

"A fear of debt".

Prof. Claire Callendar at the South Bank university, in her report "Attitudes to Debt" came to almost the same conclusions:

"Debt aversion deterred entry into HE and had the greatest impact on the participation of the very groups that the government most wants to attract into HE."

What more needs to be added to that damning analysis of the Government's policy?

The Secretary of State is right to challenge the effective Opposition as well as the Conservative Opposition to say how we would do things differently. We have laid out clearly, in our policy document "Quality, Diversity and Choice", that we believe that higher education should be paid for through a tax rate of 50 per cent. on taxable incomes over £100,000. We believe in redistribution: those who have the most money should make the greatest contribution. We reject the farcical idea that graduates earn £400,000 extra during their lives. That figure is based on a work force survey in 2001 that made no direct comparisons with people with level 3 qualifications. The Government are trying to get 50 per cent. of people into higher education, but they persist in the nonsensical notion that all graduates become high earners. The research demonstrates that students coming out of Oxbridge with arts degrees have no higher an earning capacity than students who left education with two A-levels. The situation is different for different groups of students.

David Beckham might not be a graduate, but he is one of the most highly paid individuals. Yet without graduates who are able to mend his foot when it gets broken, look after his money, design his wife's clothes, deliver his children and complete his transfer to Real Madrid he would be the poorer. Put simply, this is a debate about whether or not we want to encourage a world-class education system or to return to a class-based education system where students choose universities based on their ability to pay, and universities are judged by the level of their fees. If the latter is the vision of the future of higher education after six years of a Labour Government, God help students coming through our schools at present.

Photo of Alan Johnson Alan Johnson Minister of State (Education and Skills) (Lifelong Learning, Further and Higher Education) 4:55 pm, 23rd June 2003

I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof:

"congratulates the Government on its plan to abolish up-front tuition fees and to raise the threshold for repayment of loans from £10,000 to £15,000;
endorses the further steps that the Government is taking to widen participation amongst students from deprived backgrounds—the establishment of the Office for Fair Access, the introduction from 2004–05 of a £1,000 grant for students from the poorest backgrounds and better support for part-time students;
welcomes the sustained investment in higher education through annual increases of 6 per cent. in real terms over the next three years;
and recognises the need to maintain UK universities at the forefront of world research and to equip the UK workforce with the high level skills needed to compete in the global marketplace."

I thank Mr. Willis for ensuring that I have this opportunity to celebrate my first week in my new job at the Dispatch Box, and for his kind comments. He is a fellow Yorkshire MP, and he has a great heritage—I have found out that his father was a postman—so I hope that the debate will not be the end of a beautiful friendship.

We have the prospect, in fact, of a further debate on the same topic on a motion from the Conservative Opposition on Wednesday. May I note that it is always comforting for a Johnson to stand opposite a Boswell? Historically, the two clans have got on, and I look forward to working in my new brief and to jousting with Mr. Boswell over the coming—I hope—months and years.

The Liberal Democrats at least accept the need to increase investment in higher education, but they are not willing to accept that the graduates who benefit from university education should make any contribution whatsoever. Meanwhile, the Conservative Opposition oppose extra investment, deny any need for expansion and wish to remove £430 million of existing revenue, thus abolishing up to 80,000 university places and 13,000 lecturers. We accuse both Opposition parties of ducking fundamental issues at the heart of the debate, because those issues are too difficult and too controversial.

The principal issue is how we can ensure that our world-class universities—ancient and modern—are properly equipped to succeed in the increasingly dynamic and competitive international environment in which they operate today. The hon. Member for Harrogate and Knaresborough argues that with 43 per cent. of the relevant age group now in higher education, we can finance the sector in the same way as we did 40 years ago when only 6 per cent. of students enjoyed a university education. The Liberal Democrats say that we should fund existing numbers through higher taxes, that we should fund future expansion through higher taxes, and that, for good measure, we should provide housing benefit and income support to students during the summer holidays—also, I presume, through the same higher taxes.

I take issue with a number of detailed points made by the hon. Gentleman about the figures and with some of the misinformation emanating from the Liberal Democrats. For the moment, however, let me deal just with the issue of principle at the heart of the debate.

Lord Dearing chaired the National Committee of Inquiry into Higher Education that was set up by the previous Government, with bipartisan support, in 1996. His report, published in 1997, was probably the most comprehensive examination of the subject since Robbins in 1962. On funding, Lord Dearing said that there should be a balance. Funding should come from society through taxation, from employers through the cost of continuing education and training for their employees, and from those who benefit from higher education. Specifically, he said:

"There is widespread recognition of the need for new sources of funding for higher education. We have concluded that those with higher education are the main beneficiaries through improved employment prospects and pay. As a consequence we suggest that graduates in work should make a greater contribution to the costs of higher education in future."

I know Lord Dearing; he was the chairman of the Post Office, and I jousted with him on many occasions. He is by no means an elitist who does not want to expand higher education to youngsters from working-class backgrounds. After the most rigorous examination, analysis and appraisal, conducted by an esteemed committee, he made that very fair assessment about future funding.

The Government do not argue that the taxpayer should not make a significant contribution; we do not argue that students should meet the cost of their tuition. We are increasing funding to the sector by 6 per cent. in real terms in each of the next three years. We have halted, and begun to reverse, the 36 per cent. real-terms fall in funding per student that the previous Conservative Government presided over between 1989 and 1997. By 2005–06, we will be spending £10 billion a year on higher education, which is equivalent to £400 a year paid by every income tax-payer in England—whether they went to university or not. We are not proposing to change the situation: the labourer will continue to subsidise the lawyer; the postman will continue to subsidise the philosopher.

Photo of Mr David Rendel Mr David Rendel Liberal Democrat, Newbury

Does the Minister accept that there is no correlation between the introduction of tuition fees and the expansion of funding for higher education?

Photo of Alan Johnson Alan Johnson Minister of State (Education and Skills) (Lifelong Learning, Further and Higher Education)

No, I do not accept that; nor do I accept that the evidence shows that the introduction of tuition fees has put children from working-class backgrounds off entering higher education—a point that I shall discuss later—just as, if we look back 30 or 40 years, when there were full grants and no tuition fees, I do not accept that there is any indication that it was easier for children from working-class backgrounds to go into higher education.

UK public-supported financial aid to students is the highest in the Organisation for Economic Co-operation and Development, and that will remain the case if our new funding proposals are adopted. With a record like that, and given the political minefield that we need to cross, the temptation is to do nothing.

Photo of Mrs Anne Campbell Mrs Anne Campbell Labour, Cambridge

I am grateful to my hon. Friend for giving way, especially as I missed his opening remarks owing to my attendance at a Standing Committee.

Many Labour Members accept the need to get extra finance into the higher education sector, but will my hon. Friend consider the proposal, set out in my early-day motion 994, that tuition fees should be raised across the board instead of being differentially charged by universities? That would certainly achieve his objective of raising money and would do away with the differential aspect of top-up fees.

Photo of Alan Johnson Alan Johnson Minister of State (Education and Skills) (Lifelong Learning, Further and Higher Education)

I appreciate my hon. Friend's interest in this matter and her contribution to the debate. After all my seven days in the job, my assessment is that we broke through a voodoo curse in January, because we accepted in our White Paper and in our statement that universities vary, that the quality of their courses varies and that there is a diverse system out there. To introduce a flat-rate system would be unfair, especially to students who may be following a less expensive course, and it would create more problems than it would solve. However, I appreciate that my hon. Friend's argument is different from that being pursued by the two Opposition parties and I shall certainly consider all the points carefully.

Photo of Tim Boswell Tim Boswell Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson (Work and Pensions)

In the light of what the Minister has just said, if a situation were to arise—as I anticipate it might—where the majority of higher education institutions wanted to charge top-up fees in order to support their finances and the differential element were to occur in practice, would he be concerned about that and would he feel the need to look into it?

Photo of Alan Johnson Alan Johnson Minister of State (Education and Skills) (Lifelong Learning, Further and Higher Education)

The hon. Member for Harrogate and Knaresborough raised a similar point when he talked about all universities putting a £3,000 fee on all courses. We should be extremely concerned about that, but we do not believe that it will happen. We believe that the proposals will create a marketplace, but the situation outlined by the hon. Member for Daventry would be a matter for concern.

Photo of Graham Brady Graham Brady Shadow Minister (Education)

The Minister says that it would be unfair if students paid more than was spent on their courses. Does he accept that less money is currently being spent on some social science courses than is being taken from the students in their tuition fees and that that will get worse under the Government's proposals?

Photo of Alan Johnson Alan Johnson Minister of State (Education and Skills) (Lifelong Learning, Further and Higher Education)

I am advised by colleagues who know much more about such things than I do that that is simply not true, but doubtless I shall be able to respond when I have been longer in the job.

We are also convinced that higher education must expand to meet the rising skill needs of the knowledge-driven economy, and we therefore plan to work towards a seven percentage point increase in the participation rate of young people in higher education by 2010.

Photo of Mr Peter Bradley Mr Peter Bradley Labour, The Wrekin

My hon. Friend mentions the fact that the White Paper recognises the variable quality of universities. Can he explain how introducing top-up fees will close the gap between the best and the worst of those universities; or is that not the purpose?

Photo of Alan Johnson Alan Johnson Minister of State (Education and Skills) (Lifelong Learning, Further and Higher Education)

I was responding to a specific suggestion to have a blanket increase in tuition fees, and I was making a point not only about the variable quality of universities and courses, but about the greatly varying amounts that graduates can expect to earn having gone through university. There is a huge gap in earnings between students who take degrees in medicine and architecture and those who take arts degrees. That is the principal point about variable fees.

Photo of Mr David Rendel Mr David Rendel Liberal Democrat, Newbury

I am grateful to the Minister for giving way again. Will such differential fees involve charging more for courses such as medicine, where we are desperate to get more students?

Photo of Alan Johnson Alan Johnson Minister of State (Education and Skills) (Lifelong Learning, Further and Higher Education)

We will not set the fees; that will be a matter for the universities. That is exactly the point of introducing funding that the universities can use to deal with their problems and needs, rather than using the Liberal Democrat proposal, where the money would come from the taxpayer and be distributed centrally, so higher education would have to take its chances in getting a proportion of that money.

What unites the Liberal Democrats and the Conservatives is their opposition to our proposals to provide long-term financial certainty for higher education by giving universities greater freedom to gain access to new funding streams, principally through the graduate contribution scheme from 2006.

I do not believe that the Liberal Democrats support expansion at all. Indeed, their leader suggested that there should be a small reduction in the number of people going to higher education. Whatever the level of expansion and the need for additional funding, they certainly believe, as a point of principle, that the taxpayer ought to provide every penny and that graduates should make no contribution whatsoever.

Photo of Phil Willis Phil Willis Shadow Spokesperson (Education)

I appreciate that the hon. Gentleman was not present when my right hon. Friend Mr. Kennedy made his speech, but he was making the point that the distribution of students in higher education will change and that there may be a reduction, for example, in students taking honours degrees, as more students take vocational routes, with the Government's proposals for foundation degrees. That seems perfectly reasonable, and it would be found in any market, about which the Government seem so keen.

Photo of Alan Johnson Alan Johnson Minister of State (Education and Skills) (Lifelong Learning, Further and Higher Education)

I have not detected wild enthusiasm in the Liberal Democrat party for expanding higher education. We want 50 per cent. of student-age youngsters to be in higher education. The Liberal Democrats have not given a figure, although the Select Committee asked them to give a figure for the expansion in higher education that they want. We are absolutely committed to expansion, and I doubt whether the hon. Gentleman will clarify whether his party supports such expansion, given the moveable feast that is its policy on the issue.

The Liberal Democrats certainly believe, along with Her Majesty's official Opposition, that none of the money that goes into university education should come from graduates. They believe that graduates should make no contribution whatsoever, but I believe that that ignores two central issues. First, given that we will soon be spending £10 billion a year on higher education, if any additional taxpayers' money were to be available, it would surely be better spent in pre-school and early years education and in other parts of the sector, where the social inequalities that have been mentioned—I will come back to them—take root.

Secondly, the money would be distributed from the centre. It would not give universities the financial freedom that they need to fund their plans and unleash their power to drive world-class research, innovative knowledge transfer, excellent teaching, high-quality, greater and more flexible provision and fair access.

For those reasons, we propose to give universities the freedom to set their own tuition fee between £0 and £3,000. That will provide a direct and predictable source of additional revenue. Universities will set the level of the fees, and will have more control over the additional revenue. The arrangements that we propose, including the graduate contribution scheme, are progressive rather than regressive.

Photo of Alan Johnson Alan Johnson Minister of State (Education and Skills) (Lifelong Learning, Further and Higher Education)

Just one second.

The existing up-front fee will be abolished. Neither parents nor students will pay any fees—graduates will pay them. Students from households with a combined income of below £20,000 will have £1,100 deducted from any fees, and will receive a new, non-repayable maintenance grant of £1,000.

Repayments will commence only when a graduate is earning at least £15,000 a year, and will be calculated on the basis of 9 per cent. on earnings above that new threshold. As a result, a graduate on £18,000 a year will pay £5.20 a week. The hon. Member for Harrogate and Knaresborough argued that the Government do not accept that not all graduates go into highly paid jobs. We accept that completely, which is why graduates will not pay any money until they are earning at least £15,000. If they dip below £15,000—for example, if a woman takes maternity leave—they will not pay. As there is no real rate of interest, the debt would not accumulate.

Photo of George Mudie George Mudie Labour, Leeds East

I have some sympathy for my hon. Friend, who is new to the office, as I was an Education Minister for a short time. I would advise him not to believe the nonsense that he has been asked to read out. He should have a close look at what he is reading. Given his industrial experience and his constituency, is he really telling the House that working-class kids will be encouraged to go to university? They are not encouraged now because of the fear of a £9,000 debt, and we are projecting a debt of £21,000. Under that policy, does the Minister think that kids in working-class estates will be queuing up to go to university?

Photo of Alan Johnson Alan Johnson Minister of State (Education and Skills) (Lifelong Learning, Further and Higher Education)

I wrote these words myself, but that is neither here nor there. I take full responsibility. I would not be in this post or proposing this policy if I felt that it would damage the ability of working-class kids to go to university. I reject completely the arguments that have been advanced. The ability of working-class kids to go to university has more to do with them attaining the necessary qualifications. [Interruption.] I accept that there are other issues, but that is where it starts.

This is a progressive policy. For those who advocate a graduation tax, this is the best graduation tax without the downside. It is closely linked to earnings. Countries with similar systems have a far greater ratio of working-class kids going to university.

Photo of Evan Harris Evan Harris Liberal Democrat, Oxford West and Abingdon

The Minister must be aware of the academic research on debt aversion. He should be aware that his Department commissioned research from Professor Callender at South Bank university, which showed that the most significant factor dissuading working-class students from poorer backgrounds who had the qualifications to apply was the fear of debt. On the basis of that research, his policy of top-up debt can only deter the people whom he claims he wants to help.

Photo of Alan Johnson Alan Johnson Minister of State (Education and Skills) (Lifelong Learning, Further and Higher Education)

I am fully prepared to accept that a wealth of research exists on these issues. I also accept that I have not read every single piece of research. I have read an important statistic, however, that once youngsters from working-class backgrounds get to the stage of acquiring two A-levels, nine out of 10 of them go on to a university education. That is extremely important because it is at the heart of this whole issue. I shall return to it later in the speech, because it was an important part of the hon. Gentleman's contribution.

Photo of Steve McCabe Steve McCabe Labour, Birmingham, Hall Green

On the point that was just mentioned, I can understand people's anxiety about debt, but the research is hypothetical in relation to a potential debt in the future. Were the argument wholly accurate, would it not also follow that during the 1960s and 1970s, when there were full grants, children from working-class backgrounds would have made up a majority of entrants to university? Why did they represent such a small proportion?

Photo of Alan Johnson Alan Johnson Minister of State (Education and Skills) (Lifelong Learning, Further and Higher Education)

My hon. Friend makes an important point. In addition, under the proposals, we are abolishing upfront fees: neither students nor parents will pay, but graduates will pay at a very advantageous rate.

Photo of Angela Browning Angela Browning Vice-Chair, Conservative Party

This is a bondage-free question. Has the Minister made any assessment about the 2005 intake? The increased fees are due to kick in in 2006, but we are already receiving representations that many students who would otherwise have taken a gap year in 2005 will not do so, which will lead to a massive increase in applications in that one year. How will he ensure fairness and justice for the 2005 intake?

Photo of Alan Johnson Alan Johnson Minister of State (Education and Skills) (Lifelong Learning, Further and Higher Education)

First, I appreciate that the prospectus needs to be ready 18 months in advance, but we are giving plenty of notice that the measure will not be introduced until after the next general election—until 2006. If we can avoid the problems to which the hon. Lady refers in any other way, as she raises pertinent points, we shall look to do so.

The proposed arrangements, including the graduate contribution scheme, are progressive rather than regressive. I have dealt with the arrangements for repayment. As Professor Nick Barr of the London School of Economics has pointed out, although we are talking about this as debt, it is in fact payroll deduction: it will be paid through the tax system. It is not like a credit card debt. It is important that we look at it in that way.

The regime is not pernicious or regressive. Part-time, overseas and postgraduate students—who make up around 50 per cent. of the student population—already pay such variable fees and always have done. As part of our proposals, we will give assistance to part-time students for the first time.

There is one issue, which has already been raised, which unites me with the hon. Member for Harrogate and Knaresborough. I do not doubt his commitment to bringing more talented youngsters from working-class backgrounds into higher education, and I hope that he will not doubt my passion to see access widened. He makes the assertion that these proposals would deter youngsters from poor families. The first point to make, which was raised by my hon. Friend the Member for Birmingham, Hall Green in an intervention, is that students from a middle-class background were three times more likely than those from manual and unskilled backgrounds to go to university 30 years ago when there were no fees and a generous, non-repayable grant, and they are still three times more likely to go to university now with a £1,100 upfront tuition fee and no maintenance grant. There has been no deterioration in the position since tuition fees were introduced.

The reasons for this social gap are varied and complex. We do not contend that they are related to university admissions policy. All the evidence indicates that the principal problems concern raising achievement and stimulating and supporting work to widen the range of applications.

Photo of Alan Johnson Alan Johnson Minister of State (Education and Skills) (Lifelong Learning, Further and Higher Education)

Not yet. I shall do so later.

Acknowledging that students from low-income backgrounds and their families will be concerned about the affordability of studying for a degree, we have proposed that higher education institutions should enter into an access agreement with the new office for fair access before being allowed to charge variable tuition fees.

The agreement will cover a five-year period. It will set out the level of the fee and the courses to which the fee applies, and encourage applications from people with disadvantaged backgrounds. In particular, it will record how universities propose to extend bursaries and other financial agreements that they offer. Higher education institutions will also be asked to show how they intend to provide financial advice to prospective students and to explain to them the financial support that they can expect to receive. That will ensure that the graduate contribution scheme and improved student support are not introduced at the expense of our parallel ambition to widen access. Indeed, the concentrated focus with co-ordinated activity at all levels offers a real opportunity to resolve a problem that has blighted our society for too long.

Photo of Roger Williams Roger Williams Liberal Democrat, Brecon and Radnorshire

Has the Minister's Department made any assessment of the arrangements in Wales and Scotland that have led to greater access for students from poorer economic situations? Perhaps he can explain that in terms of the water?

Photo of Alan Johnson Alan Johnson Minister of State (Education and Skills) (Lifelong Learning, Further and Higher Education)

I am advised that that has not been the case in Wales. I shall examine the situation in Scotland, but Scotland has always had far greater participation in higher education by youngsters from working-class backgrounds.

Photo of Alan Johnson Alan Johnson Minister of State (Education and Skills) (Lifelong Learning, Further and Higher Education)

I shall not give way just yet.

Our policy is one of expansion, investment and widening participation. The Liberal Democrats' policy, according to evidence given to the Select Committee on Education and Skills by the hon. Member for Harrogate and Knaresborough the week before last, represents work in progress. When the hon. Gentleman walked into Committee Room 11 to appear before the Committee, he had a policy of providing a £2,000 endowment grant. By the time he left the Committee Room, it had vanished.

Earlier, there was an interesting exchange about what the endowment grant is. Hon. Members will recall that it is the £2,100 fee paid by students in Scotland after they graduate. It is described as an endowment but it is not entirely dissimilar to the graduate contribution scheme that we plan to introduce. The Liberal Democrats say that charging graduates is wrong, but support charging them £2,100 after they graduate. They call it an endowment fee and say that it will go toward student maintenance grants. It is a non means-tested fee that is payable by all students when they graduate in Scotland, but we are told that there is a huge difference between that and the progressive system that we are introducing in England.

The original policy of the hon. Member for Harrogate and Knaresborough, which we saw in a Liberal Democrat policy document in January, was to increase the figure from £2,000 to £3,000 in England. It was then reduced to £2,000 in the Liberal Democrats' response to the White Paper in March. In June, the proposal vanished completely.

Photo of Alan Johnson Alan Johnson Minister of State (Education and Skills) (Lifelong Learning, Further and Higher Education)

The hon. Gentleman says that that did not happen, but the Select Committee's verbatim report suggests that it did.

Photo of Phil Willis Phil Willis Shadow Spokesperson (Education)

I know that the hon. Gentleman is new in his post but surely literacy must feature large in its remit. May I explain the situation, because it is very simple? In Scotland, students may apply for a maintenance grant of up to £2,100. In England, the Government propose to introduce a £1,000 grant. Our latest policy document, which I was asked to present to the Select Committee, as I have done, suggests increasing that amount to £2,100 to match what students receive in Scotland, and says that, rather than having an administrative charge of more than £200 million, it would be far better simply to give students that money. That seems to be sensible.

Photo of Alan Johnson Alan Johnson Minister of State (Education and Skills) (Lifelong Learning, Further and Higher Education)

As I said, the policy changed, as is clear in, I think, paragraph 6 of the report presented to the Select Committee. That was one policy that changed in the work in progress.

It was also Liberal Democrat policy to increase the threshold for repayment of student loans from £10,000 to £13,000. When they read our White Paper with the proposal to increase the threshold to £15,000, they followed suit. That smacks of making it up as they go along. It also shows that they aim to imitate the left in some parts of the country by matching one element of Labour's progressive package and to outflank the Tories by following their agenda of no graduate contribution whatsoever, irrespective of how that affects their costings.

Worse than that is the misrepresentation by the Liberal Democrats of the issues at the heart of the debate, in particular social fairness. Just over a fortnight ago, the leader of the Liberal Democrats, Mr. Kennedy, made a speech entitled "Labour is failing the poorest on education". It was based on a central tenet, highlighted in their press release. The right hon. Gentleman said that six years ago 17 per cent. of students from socio-economic groups D and E went to university and that today the figure is just 8 per cent. The main feature of his speech was to state:

"One of the greatest indictments against the Labour government is that the proportion of students going into higher education from the two lowest economic groups"—

D and E—

"has fallen since Tony Blair came into office in 1997."

One of the greatest indictments of the Liberal Democrats is that they cannot get their figures right.

The Liberal Democrats compared two separate sets of figures. Perhaps the hon. Member for Harrogate and Knaresborough will correct me if I am wrong, but as my right hon. Friend the Secretary of State explained in a letter that he immediately sent to the leader of Liberal Democrats—he has yet to receive a reply—when a proper comparison of the proportion of people from economic groups D and E who attend university is made, it is clear that it has increased slightly, by 1 per cent. Hon. Members should remember that that is since 1997, after the introduction of tuition fees. The Liberal Democrats' main contention is that tuition fees have affected the number of poor students going into higher education.

In the same speech, the right hon. Member for Ross, Skye and Inverness, West also said that income per student has continued to decline since Labour came into power. It has not. When we came into office, it was £5,059. It is currently £5,155 and it will be £5,338 by 2005–06. Perhaps with the benefit of that fresh information, in the moveable feast that passes for Liberal Democrat policy making, Liberal Democrats will arrive at a point where they drop the dogma, ditch the opportunism and face up to the hard facts. Their policies cannot guarantee extra resources for universities. They do not promote an expansion in higher education, so they jeopardise economic growth in the knowledge-driven economy of the 21st century. They would squander the huge advances that we are making in all parts of our education service. It is a fiscally irresponsible cop-out from the problems that our White Paper seeks to address.

Photo of Tim Boswell Tim Boswell Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson (Work and Pensions) 5:28 pm, 23rd June 2003

I am sure the House will be relieved to know that I do not propose, unless severely provoked, to speak at length. There are two reasons for that. The first is that my hon. Friend Mr. Green and I will deploy our thinking at greater length on Wednesday. The second, and very good, reason is that in no sense do I wish to deny Back Benchers the opportunity of expressing their thoughts. I should like to hear from a number of them, especially those on the Labour Benches, if not today, then on Wednesday.

I confirm that the official Opposition have no problem with the Liberal Democrat motion.

We shall support it in the Lobby, although keen students of the Order Paper will note that our amendment, which was not selected, indicates that in crucial respects it does not go far enough. I am reminded of Sherlock Holmes's remark about the Bradshaw railway timetable, whose language, he said, was

"nervous and terse, but limited."

It would be remiss of me not to begin by mentioning the appointment of Alan Johnson as the new Minister for Lifelong Learning, Further and Higher Education. We have had fruitful dealings in the past on matters of employment law, which I always enjoyed, and I have watched his progress with interest. He has some associations with Ruskin and, I believe, is an alumnus of that college.

Photo of Tim Boswell Tim Boswell Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson (Work and Pensions)

The hon. Gentleman is denying it, but I would have no problem with such a claim because nearly all of us, as well as the great bulk of the university sector, are seriously interested in promoting access for able people. It would be daft if the universities disabled themselves by not drawing on all the talent that they can. Because of our concern about the substantial deterrent posed by some of the Government proposals we are supporting the Liberal Democrat motion. However, I am sure that the Minister will enjoy his challenging post, and the attributes that he needs for it are a readiness to listen and a basic sympathy with all those involved in the sector. To put it a little less delicately, as there are over 1.5 million students in higher education alone who, together with their parents, partners and families, make up a constituency of over 5 million people, he had better listen to what they say.

Photo of Mrs Anne Campbell Mrs Anne Campbell Labour, Cambridge

I am a little puzzled by the hon. Gentleman's remarks, particularly about access. If the Conservative party intends to increase access, which is the Government's policy, I welcome that. However, can the hon. Gentleman tell me whether its current policy means increasing access or, in fact, reducing numbers and limiting access?

Photo of Tim Boswell Tim Boswell Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson (Work and Pensions)

With great respect—and I shall seek to develop this point later—the hon. Lady is confusing numerical participation with access, which is at the heart of the difficulties in the Government's policy.

May I offer a firm prediction as someone who has done the Minister's task in the past? If he is at all disposed to dig in—and I fear for the higher education sector if he is—he will be deluged with classical analogies, which will be used for different reasons. I intend to abuse one to illustrate what he will probably be asked to do by his colleagues in government. Like Odysseus, he will be lashed to the mast so that he cannot hear the sirens who, in this case, are entirely right. The Labour vessel will go straight down the whirlpool, will founder and be lost without trace. However, I shall pursue those analogies no longer, if only in the interests of time.

To pick up some of the points that have been made, I very much echo what my hon. Friend Mrs. Browning said about the gap year. I hope that the Minister will apply himself to that concern. He sought to reply to a written question of mine the other day, but he did not quite do justice to the serious issue of the bunching of student numbers. Picking up a remark of Mr. Willis, who opened the debate, I remind the Minister that the settlement of Mr. Blunkett, who was Secretary of State for Education and Employment in 1997, was meant to last for at least 20 years, but wore out and rusted up in five. The Minister needs to be aware of that, and should be sceptical as to whether his proposals will provide a firmer, long-term basis for proceeding, as he has claimed. I am concerned about one point that he exposed and did not answer adequately—whether or not the decision to charge top-up fees would be in the hands of universities.

He seemed to think that that was all right, but almost in the same breath he said that Ministers would be extremely concerned about it. He cannot have it both ways. Either it is up to the universities to make that decision, or it is not.

My final point in commenting on what has passed so far is that if a graduate went through, as people might have done a few years ago in the days of City bonuses, to a top rate of income tax at 41 per cent., including the 1 per cent. national insurance surcharge, and they were then faced with the repayment of their student loan at 9 per cent., the sum marginal rate by my book would be 50 per cent. That figure may have a certain resonance, in view of recent events. That is by way of initial welcome and warning to the Minister.

The Government amendment to the Liberal Democrat motion is disappointing. I am not at all encouraged by their ability to pat themselves on the back quite so bluntly. There is in the amendment, for example, a reference to abolishing upfront tuition fees. If the Government introduce a measure and then say, "This is outrageous. We are going to take it away", they should not expect the thanks of the electorate for doing so.

Then there is the self-praise for raising the threshold for loan repayments from £10,000 to £15,000. The Minister should reflect on the fact that that figure is still lower than the repayment threshold was under the Conservative scheme—much derided by Labour—that preceded it, when it was 85 per cent. of average earnings, let alone the figure that it would now have reached. Again, Ministers should not pat themselves on the back.

The amendment goes on to refer to the Office for Fair Access. In responding to Mrs. Campbell, I mentioned the radical Government confusion between participation and stimulating access.

Photo of Steve McCabe Steve McCabe Labour, Birmingham, Hall Green

I confess that I, too, am suffering from that confusion. The hon. Gentleman says that we should not confuse participation with access, but does it not follow logically that if we cut the numbers, some children from somebody's family will be denied a place? That is an access issue, whoever one is.

Photo of Tim Boswell Tim Boswell Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson (Work and Pensions)

Ah—so it could be anybody. That is interesting. If I were to give the hon. Gentleman a lecture, I would point out to him, with respect, that possibly sometimes against the better judgment of the Conservative Government, for whom I was not doing the job in the very early 1990s, the expansion went from about 10 or 12.5 per cent. of the cohort of young people to 33 per cent., almost in the twinkling of an eye—within two or three years. That was the biggest expansion there has ever been.

Photo of David Wright David Wright Labour, Telford

Will the hon. Gentleman give way?

Photo of Tim Boswell Tim Boswell Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson (Work and Pensions)

No. If there is to be a curtailment of the expansion plan, and if we are to be able to take out the Mickey Mouse degrees, as they were so elegantly described by the Minister for Children, I should have thought that there was ample scope for everyone who was qualified, deserved it and would benefit from a higher education to be able to attend, and that is before one even starts on drop-out.

Several hon. Members:

rose—

Photo of John Pugh John Pugh Shadow Spokesperson (Education)

Curbing the Mickey Mouse degrees sounds a fine idea, but are the Conservatives proposing quotas for university departments or telling universities what courses they may or may not run?

Photo of Tim Boswell Tim Boswell Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson (Work and Pensions)

I am sure we shall be able to achieve our objectives in a way that will not damage the interests of higher education, and it will reflect quality in a way that is not always evident at present.

The introduction of a £1,000 grant, for which Labour praises itself, is a lower grant than the Government were bequeathed in 1997. Interestingly, the Liberal Democrat figure of £2,000, when reduced to real terms, is also not much higher than the figure left in 1997. Labour goes on to congratulate itself on an annual funding increase of 6 per cent. in real terms. We have all seen what a real-terms increase in school funding means. We know what it means in further education, and I forecast that the same will happen in higher education.

Photo of David Wright David Wright Labour, Telford

Will the hon. Gentleman give way?

Photo of Tim Boswell Tim Boswell Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson (Work and Pensions)

No. I have given way a number of times, and I respectfully said that I wanted to get on with my speech.

We are told that Labour wants the university sector to be at the forefront of research. I agree with that. It wants a reference to high-level skills, but it will be clear from recent comment, including by the Learning and Skills Council, that crucial national shortages are at levels 2 and 3—the craft and technician level. I should like briefly to quote this week's edition of The Economist, which refers to two main parts of the Government's higher education policy:

"To get people to pay more of the costs of their university education and to get more people to go there. New figures suggest that the second part of the policy may be undermining the first."

It is interesting that the Liberal Democrats have confined their remarks to top-up fees. They had every choice; they could have raised tuition fees, but they decided not to do so. Perhaps that position is one advance on the Governments amendment, which does not mention top-up fees at all. I am not sure whether the Government are proud of that or sorry about it. Of course, the Liberal Democrats' principles—I shall have occasion to return to this issue—would enable them to propose different policies in different parts of the United Kingdom, although they now seem to be trying to coalesce them. There is nothing magical about Liberal Democrats proposing different policies for different parts of the United Kingdom. In my experience, they are happy to propose different policies in each constituency if they feel that that is to their electoral advantage.

Without embarrassing the Liberal Democrats too much by reverting to the past, and although this is not the immediate subject of the debate, I should like to remind them about the famous 1p on income tax. I happen to live next to the River Cherwell, a tributary of the River Thames. We all know that water that comes out of the tap in London will have been recycled three times since it started out in the tributary below my house. I have a horrible feeling that that may be exactly the way in which the money is to be raised to finance their notional schemes.

Photo of Angela Browning Angela Browning Vice-Chair, Conservative Party

Is this not another case of loaves and little fishes? The same thing happened with regard to the extra 1p on income tax. For years, the Liberal Democrats made spending pledges against that policy, which they subsequently ditched. They are now going to introduce what I suppose must be known as the Neath tax, as they intend to charge an extra tax on those earning more than £100,000, and are making yet another spending pledge that has to be set against that increased tax. Again, the figures do not add up.

Photo of Tim Boswell Tim Boswell Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson (Work and Pensions)

I was about to make the same point. A distinguished Cabinet member, the Secretary of State for Wales and Leader of the House, Peter Hain, who has a lot of jobs to do for the Government, was lobotomised when he tried to say the same thing on Friday and was not allowed to say it. Looking at the hon. Member for Harrogate and Knaresborough, I am delighted to see that there is no sign of his having been lobotomised yet. Perhaps his party is committed to a plurality of views. More seriously—we need not go into what might be termed the control freakery on either the Labour or Liberal Democrat Front Benches—it was very interesting that a number of other Labour Members attacked the said Cabinet Minister on the grounds of his economic ineptitude and the incompetence that had been shown in the matter. I believe that both the political analysis and economic calculations that drove the suggestion of a 50 per cent. rate are equally suspect.

Before somebody fantasises the opposite, it is important to point out that in historical terms, Conservative Governments have never charged tuition fees to students. Incidentally, they have also offered maintenance grants to students. When I was Minister with responsibility for higher education a decade ago, we did not charge students. I may say to the House—I do not think that this will be generally known—that we carried out a desk study long before Dearing into whether or not we should do so. The study showed that, provided that growth in numbers was restrained, we could hold the line and not charge. I think that that is an interesting point, and it is the judgment that we made when we considered the matter.

Photo of David Wright David Wright Labour, Telford

Has the hon. Gentleman seen the report by Professor Barr about the £1.6 billion funding gap in the Conservative party's current proposals? Indeed, no investment is proposed for vocational training, which his party is also proposing to enhance.

Photo of Tim Boswell Tim Boswell Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson (Work and Pensions)

I am interested in that. I do not necessarily have to agree with Professor Barr about everything, not least the fact that he does not think that loans function as a kind of tax. I would say to the hon. Gentleman that we all need to reflect hard on the contingent liability on the Treasury of the uplift in student loans that will be required to finance the increased tuition fees. Only last week, the Minister for Lifelong Learning, Further and Higher Education gave me a commitment that they will be financed in full by additional student loans. That liability is not fully charged for because it has zero real interest, so there is an effective interest rate subsidy of some 3 per cent. It is rolling up into a gigantic contingent liability that will sink some of the Government's expansion plans. That is quite apart from this week's speculation in The Times Higher Educational Supplement.

I return to the Liberal Democrat motion. The Liberal Democrats claim to have scrapped tuition fees in Scotland by the simple expedient of saying that they have done so. In their alternative Budget, they pledged that there would be no tuition fees or top-up fees. The motion says nothing about tuition fees, although we have had a certain amount of discussion about the subject.

Photo of Tim Boswell Tim Boswell Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson (Work and Pensions)

The hon. Gentleman says that it is about top-up fees. He could have had a debate on the whole range of student finance, but for some reason he was diffident about tuition fees. I do not know why.

If the hon. Gentleman wants to talk about top-up fees, let me in return talk about Scottish graduate endowment liabilities. In my view—and I have heard no adequate argument to the contrary—that is like paying for one's summer holiday with one's Barclaycard. One pays in the end, and usually ends up paying a little bit more on top. Conservative Members believe that student debt, which the Secretary of State admitted is likely to average £15,000 to £21,000—of course, that excludes any additional private debt—will be unsustainable. It will be particularly difficult in cases where there is more than one child in a family and the parents feel obliged to make a contribution towards their education and in cases where courses are expensive or protracted for academic reasons.

The whole paraphernalia of notional tuition fees and rebates according to income has already become impossibly complex. It brings in very little in real terms—less than half its nominal yield—and is an example of a Government chasing their own tail. We therefore propose radical plans to abolish all fees, including top-up fees. It is estimated that that would cost £700 million. We would take the hard decision to abolish the 50 per cent. target and accept that some of the less successful higher education activity might be curtailed. We would definitely abolish the Office for Fair Access, because that function should be carried out by the institutions, which are well committed to that objective. We would put a fresh thrust behind vocational education. As my hon. Friend the Member for Ashford said, Liberal Democrat News provided a ringing endorsement of our policies in the shape of Jonathan Calder's article, which explained that my hon. Friend's idea of

"getting rid of tuition fees, and financing the move by scrapping plans to extend the number of students even further, has a lot to be said for it."

I agree. It is useful to have allies on occasion.

If we stay with Labour policies, we will have a tax on learning. We will not have lifelong learning, but at least half-lifetime debt.

If we were to support the Liberal Democrats' ideas without further equivocation, we should be copping out on the hard choices, and we should not be able to resource individual courses adequately. I give them credit, however, for seeing that the Government's fees policy will not work, and we shall give them our electoral support in the Lobby tonight.

Photo of John Bercow John Bercow Conservative, Buckingham

Will my hon. Friend accept that, in seeking a philosophical justification for the admirable commitment to the abolition of the 50 per cent? participation target, he need look no further than the wise words of R. H. Tawney, who said:

"Equality of educational provision is not identity of educational provision", and suggested that doing the best for every young person did not mean, and ordinarily should not mean, doing the same for every young person.

Photo of Tim Boswell Tim Boswell Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson (Work and Pensions)

I am immensely reassured to have that endorsement from my hon. Friend, and I do not have too much difficulty with the words and wisdom of R. H. Tawney. I genuinely feel that one of the built-in difficulties in the Government's present stance is that, by concentrating on the target of getting 50 per cent. of young people into higher education that they are driving forward, they are both making a judgment and distorting or devaluing the offer that is made to the other 50 per cent. of young people, who also need to have their skills, aptitudes and talents developed.

Photo of Tim Boswell Tim Boswell Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson (Work and Pensions)

I will give way to the hon. Gentleman, not least—this is a dreadful thing to have to admit—because I happen to know that he was taught by my mother-in-law.

Photo of Huw Irranca-Davies Huw Irranca-Davies Labour, Ogmore

Indeed. The hon. Gentleman will also be aware that I taught in an institution that was not an ivory tower institution but one that was proud of its record of expanding greatly the number of people from disadvantaged backgrounds who came into it. If he believes in supporting that kind of student and encouraging their access to higher education, and if he is also arguing the case for restricting the numbers—for whatever reason—how many students from middle-class or better-off families will he cut out of the system to encourage students from communities such as mine to come forward?

Photo of Tim Boswell Tim Boswell Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson (Work and Pensions)

That is an interesting question. I would say to the hon. Gentleman that I am not in planning mode, now or ever, but we need to make arrangements whereby students of ability can go forward to the kind of education that is most appropriate for them. Students of lesser ability might perhaps not be encouraged or gulled into going on expensive enterprises round the country which do not enhance their career or other prospects. This is a desperately serious matter.

Photo of Tim Boswell Tim Boswell Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson (Work and Pensions)

I have given way to the hon. Lady once. I must now conclude my remarks.

When this debate has run its course, although we might not have seen the colour of the Government's proposed legislation, it will fall to the next Conservative Government to discharge their historic responsibilities. We can, we will and we must offer a fair deal for students, and we need to get out of the disastrous hole into which the present Government are leading us.

Photo of Gordon Marsden Gordon Marsden Labour, Blackpool South 5:52 pm, 23rd June 2003

Brevity can be a virtue in motions that are put before the House, but that is not always necessarily the case. I am afraid that it is not the case for either of the motions tabled by the Liberal Democrats today. The Minister for Lifelong Learning, Further and Higher Education, whom I warmly welcome to his new appointment, made the point that we have to consider the context when deciding on the solutions in a complex financial situation.

It is worth reminding the House of that context. It is one in which university lecturers and professors have seen their pay rise a third as fast as that of the rest of the work force in the past 20 years, in which staff-student ratios have almost doubled in that time, and in which we have up to an £8 billion backlog in terms of infrastructure and repairs. I would remind hon. Members that this is an integral part of the debate about student finance, because there is no point in improving access or getting equitable funding arrangements for students if the universities and institutions to which they go cannot do the business for those students. That needs to be taken on board in relation to everything that we say and do.

Something had to be done, and I would like to quote what my right hon. Friend the Secretary of State said when he introduced the White Paper:

"Putting off the difficult choices will not help universities (who have suffered drift for too long), it does not help students (who want a better and fairer system of finance), it does not help parents (who are currently having to find money up front)."

All those issues have to be addressed in the current situation. If there were any doubt as to the seriousness and urgency of that, an audit from HSBC shows that more than one in five British universities are in financial trouble and risk being closed or taken over. That research uncovered a growing gap between the rich and poor institutions. It said that a few well-known ones were forging ahead and capturing international research income, but that others, mainly former polytechnics, were finding it increasingly hard to balance the books. The Government need to take that research on board for two reasons. First, it gives some justification to the fees regimes that they are now proposing; and secondly, it gives a warning about the restriction, in terms of sheep and goats, in relation to higher education teaching and research. I shall return to that issue later.

What has been the response of the Opposition parties in this situation? We shall hear more from Conservative Front-Bench Members in the debate on Wednesday, but what we have heard already is rather sad and depressing. In fact, they have gone for the worst sort of incoherent The Daily Telegraph populism.

Photo of David Heath David Heath Shadow Spokesperson (Home Affairs)

The hon. Gentleman was saying a few moments ago that the problem was that the rich, expensive top-quality universities had plenty of money, and that the old polytechnics were falling behind, yet we have heard the Minister say that it is precisely those rich, expensive top-quality universities that will have the top-up fees, and that the others will not. How does the hon. Gentleman believe that that is going to improve the situation?

Photo of Gordon Marsden Gordon Marsden Labour, Blackpool South

With respect to the hon. Gentleman, that is not my recollection of what the Minister said. The important point is that we need pluralistic funding mechanisms that address the problems, especially those of the post-1992 universities to which I have referred.

The Conservatives have come up with a rather weak and sad prospectus, and I do not intend to dwell on it at length except to say that, having given a sort of green light—albeit without funding—to the expansion of the old polytechnics in the post-1992 university settlement, they now propose a sentence of death on those universities, because even if their figures added up, the effects of their proposals would be catastrophic. The number of university places under threat would be 90,000 at the moment, and probably 150,000 over time, representing a 20 per cent. drop overall. Indeed, Mr. Green, who is not in his place at the moment, said as much in his press release of 30 May, when he stated:

"Under the Conservatives, the university sector would be smaller."

Photo of Andrew Selous Andrew Selous Conservative, South West Bedfordshire

Does the hon. Gentleman accept that introducing a specific hypothecated tax on learning is bound to have a disincentive effect? Does he further accept that we already have a form of graduate tax in this country? It is called income tax.

Photo of Gordon Marsden Gordon Marsden Labour, Blackpool South

With respect to the hon. Gentleman, he does not yet know what I am going to advocate. I was not aware that the Conservatives were proposing to introduce a hypothecated tax on learning. I thought that they were proposing to scrap a whole series of fees, which would have a catastrophic effect on the funding of the system and the students.

Let me turn to the Liberal Democrats' motion, and to the speech by Mr. Willis, for whom I have great respect, having served with him on the Select Committee. His party has produced an ambitious list of the things that we could expect from a Liberal Democrat utopia, including the abolition of top-up fees, changes to the grant system, and all sorts of funding suggestions. The kindest thing to be said about the proposals—as the Minister noted earlier—is that they are a moveable feast. The question of how these things should be funded must also be addressed.

The hon. Member for Harrogate and Knaresborough began the process in an interview with ePolitix on 30 December. I do not know whether it was seasonal good will that was enthusing him at the time, but what he said then was somewhat different from what he has said before the Select Committee and in the House today. In that interview, he said:

"We don't accept the premises on which the government is going into this review; that you have to find billions of pounds and there has to be significantly more students going to university."

With respect, that is not what he has been telling us today.

Let us look at the figures that have come from the Liberal Democrats. The 50p tax rate for earnings above £100,000, which was in their alternative Budget in February, was supposed to produce £4.5 billion, £2 billion of which was to be devoted to abolishing tuition and top-up fees, but at the same time there was a section that dealt with the reintroduction of grants, which was not costed. By the time the leader of the Liberal Democrats took up the theme in the June lecture, the extra money from that tax rise had shrunk to £4 billion. Now we do not have a specific figure on higher education's share. There is merely a commitment that a substantial part of that expenditure will be on higher education.

When the hon. Member for Harrogate and Knaresborough appeared before the Select Committee on 12 June, he was questioned by two members of the Select Committee. There was a discrepancy between what he said the cost of getting rid of tuition fees would be—£436 million—and what the leader of the Liberal Democrats said in his speech, it would be which was £700 million. We must look with great concern and some scepticism at the figures that have been bandied around by the Liberal Democrats.

Photo of Phil Willis Phil Willis Shadow Spokesperson (Education)

Just to clarify that point—Mr. Boswell mentioned the figure in his remarks, too—it was the Secretary of State who estimated that, by the time the new Government policy came in in 2005–06, the cost of getting rid of tuition fees would be £700 million.

Photo of Gordon Marsden Gordon Marsden Labour, Blackpool South

Obviously, as the hon. Gentleman said in his evidence to the Select Committee—I cannot find the exact phrase—the process is an evolving one. Perhaps the unkindest thing that could be said about the Liberal Democrat proposals is that they have to win a general election and to form a Government in order to put them into operation. I do not have a crystal ball; I do not know what the result of the next general election will be—but charity and a love of fantasy allow me to entertain another possibility. It is that what the Liberal Democrats have in mind is something rather dramatic, something along the lines of what the conservative fundamentalists in the United States believe in: a second Liberal coming, where we will all be instantly enraptured in a Liberal Democrat paradise where all those things would take place.

Photo of Gordon Marsden Gordon Marsden Labour, Blackpool South

The hon. Gentleman says, "Hallelujah." He will be familiar with the Book of Revelation. We can envisage the scene of the four and 20 elders robed in white and crowns of gold, among them Asquith, Gladstone and Lloyd George. The hon. Member for Harrogate and Knaresborough would be there too, with his harp and golden bowl of incense. All together they would be intoning the words, "Holy, holy, holy is the immortal penny that is to be spent and spent and spent again to create the Liberal new Jerusalem."

That is a lovely image to conjure up. Perhaps in that enraptured state, as Mrs. Browning said, we can expect a new miracle of the loaves and the fishes. Perhaps the hon. Member for Harrogate and Knaresborough will be going around with his basket of funding, taking us round and bringing far more money back at the end of the day, as the parable had it.

Photo of Gordon Marsden Gordon Marsden Labour, Blackpool South

I will stick to the day job and return the hon. Gentleman from heaven to earth and to the cruel realities of the Select Committee, where my hon. Friend Valerie Davey questioned Baroness Sharp of Guildford and the hon. Gentleman on what was going to happen to that funding. It is instructive to repeat the exchange. My hon. Friend said:

"I have two points. Can I ask specifically is this extra tax, the 50p plus, going to be hypothecated for higher education, all of it?"

Baroness Sharp of Guildford replied, "No." My hon. Friend asked:

"It is approximately £2 billion?"

The reply came:

"No, it raises £4.5 billion."

My hon. Friend said

"But half of it approximately is going to higher education?"

The reply was:

"Yes. Insofar as we have identified a source of funding, this is what has been done, but it is not necessarily being hypothecated directly to it."

There we have it—no ring-fencing, no hypothecation, no guarantees whatever. The hon. Member for Harrogate and Knaresborough and Baroness Sharp of Guildford are back in the holy city being ambushed by the 10-headed and seven-horned beast of the apocalypse in the shape of Matthew Taylor, who will dash the cup from their lips, take the golden bowl away and use it to fund some of the other utopian schemes that the Liberal Democrats are putting forward. The reality is that a lack of ring-fencing and a lack of hypothecation will always jeopardise any substantial initiatives that are brought before the House to improve funding through the general taxation purse. That is also an argument against a graduate tax. A graduate tax, even assuming that it were to generate substantial sums in a short period, would always be hostage to the slings and arrows of electoral fortune. It would always be hostage to whatever position the Treasury, whatever party were in government, were to take.

Photo of John Bercow John Bercow Conservative, Buckingham

It is extremely generous of the hon. Gentleman even to envisage the scenario of a Liberal Democrat Government, given that he has explained how tortuously unco-ordinated their position on tuition fees is. May I put it to him in a cross-party spirit that probably the best and most succinct summary of the Liberal Democrats came from Harold Macmillan? He said that the Liberals had some good ideas and some original ideas, but unfortunately their good ideas were not original and their original ideas were not any good.

Photo of Gordon Marsden Gordon Marsden Labour, Blackpool South

I find it difficult to better what the hon. Gentleman has said on that point.

To return to the graduate tax, the estimates of what we would receive in income from it do not take into account what would happen to people who move abroad, self-assessment and people in self-employment. I personally have always entertained grave concerns that we would have the same problems in extracting money via a graduate tax as we had in extracting contributions from the self-employed under the Child Support Agency. That point needs to be taken on board.

I do not want to be entirely unkind about the Liberal Democrats and their proposals, because they have some good thoughts and good points. When he came before the Select Committee, the hon. Member for Harrogate and Knaresborough said that in the 21st century the Liberal Democrats would like to see a far more flexible higher education product

"based on a modular unit accreditation system akin to that of the Open University . . . We believe that . . . the majority of future students will study part time and not full time: that they will study incrementally . . . that increasingly they will access part or all of their education via the internet".

All that is true and reasonable, but the Government recognise that, too. You, Madam Deputy Speaker, will be aware that there is an old proverb:

"If wishes were horses, beggars would ride."

The trouble is that the horses that the Liberal Democrats would send students and university staff on would be skin-and-bone nags. They have not produced a single argument today that justifies the funding process that they are attempting to foist on the House. There have to be mechanisms that guarantee both equity and increasing university funding.

How do the Government's proposals stack up in that respect? It is not appreciated sometimes that they have already seen off some of the wilder ambitions of the Russell group, if one remembers the figures that were quoted by the head of Imperial college of £10,000 and £12,000. That is important. We cannot risk replicating the educational apartheid that existed between grammar schools and secondary moderns in our universities with educational apartheid between the Russell group universities and the new universities.

On abolishing upfront fees, that is an excellent thing to do.

Raising the fees threshold to £15,000 is a start, but it is not enough. Before the last general election, the Select Committee recommended a figure of £20,000, which the Government would do well to revisit. Nor, for that matter, are grants of £1,000 enough; we should look seriously at a linkage with at least the education maintenance allowance rate. Dr. Anna Vignoles, research fellow at the London School of Economics centre for the economics of education, made an interesting suggestion earlier this year:

"The solution is better targeting of more generous grants for the poorest students. Some poor students might also have their first year's tuition fees paid to provide them with a university 'taster'."

That suggestion is worth taking up. Indeed, NATFHE has also argued strongly for a linkage with the education maintenance allowance.

Progress has been made in the White Paper in respect of part-time students. The National Institute of Adult Continuing Education rightly pointed out—indeed, Mr. Boswell did so as well—that part-time students in this country have never previously received financial support. That point needs to be taken on board in terms of what the Government are doing through the White Paper. More needs to be done for postgraduates and part-timers. I caution the Government against assuming that foundation degrees will solve everything. I doubt whether they will, and one needs to bear it in mind that they are a means to an end. They are a start; they are not a way of getting the 50 per cent. involvement rate on the cheap.

The suggestion that there should be a definitive split between research and teaching needs to be looked at with great concern—one cannot predicate and ring-fence achievement in that way at this time. It is perfectly possible for one university to do far better than another in terms of a particular department. The point is underlined by statistics released in just the past two or three weeks, which reveal that Oxford Brookes university's research assessment exercise grading for history was higher than Oxford university's.

If we are to have top-up fees, they must offer additional revenue, and extra money for higher education must be ring-fenced. We need to go further on funding, and the challenge is one for the Treasury. I have made suggestions about extra funding via a leisure technology levy, a higher education challenge fund, greater tax-exempt donations, and a pound-for-pound tax relief. The Government need to take all such suggestions on board if they are to persuade Members of this House, who are rightly concerned about what the impact of the introduction of top-up fees on their cohort will be.

In 20 years as a part-time teacher for the Open university and in 12 years as a magazine editor, I dealt with all sorts of students and their various conditions, and also with academics. I, too, was a first-generation university student, and I participated in the Select Committee that produced two reports before the last general election that looked carefully at the entire issue of student access and retention. That process has taught me that this is a complex situation that is not amenable to simple headline solutions. The Tories would definitively shut down the life chances and opportunities of thousands of students as a result of their new proposals. The Liberal Democrats, by not having a coherent higher education policy, would risk doing so as well, through the law of unintended consequences.

I am not pretending that the Government's White Paper is perfect—it is not—but it offers a reasonable first stab at a coherent narrative for 21st century higher education. It needs to be refined and revised, so that top-up fees in particular are not seen as a permanently escalating institution. Once universities are in a position to access additional funding, the scope for top-up fees should tapered down, rather than up. However, for the time being the White Paper is the only coherent show in town. Anyone who wants to challenge its premises will have to come up with a much more coherent and carefully costed alternative than the elastic finances and windy rhetoric that the Liberal Democrats and the Opposition Front Benchers have offered us today.

Photo of Mr Peter Duncan Mr Peter Duncan Conservative, Galloway and Upper Nithsdale 6:14 pm, 23rd June 2003

I am very grateful for the opportunity to contribute to this debate. I am not a regular participant in education debates in this Chamber for the obvious reason that Scottish education is largely devolved to the Scottish Parliament. This issue does affect me, however, as I have children in education in Scotland who may well attend a higher education institution in England; indeed, I myself attended the University of Birmingham.

My main aim this evening is to identify the hypocrisy behind the Liberal Democrats' education policy. We in Scotland have a long track record in education; indeed, we have an education system of which we are rightly proud. However, recent changes to student finance and support tell us much about the way in which politics is moving today, particularly in Liberal Democrat circles. In attending a Liberal Democrat Opposition day debate in which they seem to have implied that, if the Government were mistaken enough to introduce top-up fees, a subsequent Liberal Democrat manifesto would offer a commitment to removing them, how could I not comment on their commitment, given in 1999, to abolish tuition fees in Scotland? In their manifesto "Raising the Standard"—an inappropriate title, if ever there was one—the Scottish Liberal Democrats said that

"we will . . . abolish tuition fees for all Scottish students at UK universities".

Not only do Scottish students at Scottish universities pay de facto tuition fees after graduation; Scottish students at non-Scottish UK universities still have to pay Labour's £1,000 a year tuition fees.

Photo of John Pugh John Pugh Shadow Spokesperson (Education)

The hon. Gentleman began his speech by saying that its entire thrust is to examine Liberal Democrat policy on tuition fees. Is he aware that the subject for debate is in fact top-up fees, which are not Liberal Democrat policy?

Photo of Mr Peter Duncan Mr Peter Duncan Conservative, Galloway and Upper Nithsdale

I am grateful to the hon. Gentleman for his observation. I am aware of the substance of the Liberal Democrat motion—indeed, I referred to it in my opening remarks. I am also aware that we are also debating the Government's amendment to the motion, which does refer to tuition fees. In analysing the Liberal Democrats future education policy, it is particularly relevant to their prospects to establish how reliable they are in implementing manifesto commitments. That will be the thrust of my examination in the next few minutes.

The Liberal Democrats' main message to the people of Scotland in 1999—in fact, it was one of very few messages—was that if elected and put into power, they would abolish tuition fees. The simple fact, as I shall explain, is that they did no such thing.

The proceedings of the Scottish Parliament do a lot to crystallise exactly how the Liberal Democrats failed to act. During two separate votes in the Scottish Parliament, they had the opportunity to support the Scottish Conservative party and the Scottish National party, which sought to abolish tuition fees full stop. In the light of their 1999 manifesto commitment—

"we will . . . abolish tuition fees for all Scottish students at UK universities"— one would have thought that they could support such a proposal. However, things do not always work that way in Liberal Democrat circles. Instead, they voted with the Labour Executive to force through the graduate tax and to continue with tuition fees in Scotland. The graduate endowment liability looks like tuition fees, breathes like tuition fees and feels like tuition fees; indeed, it is tuition fees.

Photo of Mr David Rendel Mr David Rendel Liberal Democrat, Newbury

Does the hon. Gentleman accept that tuition fees pay for tuition and go to the universities, and that none of the money from the graduate endowment goes to the universities?

Photo of Mr Peter Duncan Mr Peter Duncan Conservative, Galloway and Upper Nithsdale

I am grateful to the hon. Gentleman for that intervention, but the simple fact is that the Liberal Democrats undertook to abolish tuition fees as part of their manifesto commitment and blatantly failed to do so. Such behaviour is bringing politics into disrepute. It is, I regret to say, an inevitable consequence of proportional representation and gives politicians a very bad name. The Labour-Liberal Executive—

Photo of Steve McCabe Steve McCabe Labour, Birmingham, Hall Green

I am extremely grateful to the hon. Gentleman for giving way, and happy to hear his exposition of the inconsistencies of Liberal-Democrat Front Benchers. However, could he explain how Mr. Green could say in January 2002 that he did not

"mind the principle of charging differential fees . . . If it's true that the Government is going back to abolish up front fees, and say that everything should be paid back by the individual student afterwards, that's fine by me."?

Does not Mr. Duncan find that slightly inconsistent with the policy now espoused by his party?

Photo of Mr Peter Duncan Mr Peter Duncan Conservative, Galloway and Upper Nithsdale

I am grateful to the hon. Gentleman, but we are talking about two separate matters. I was talking about a manifesto commitment written in black and white in "Raising the Standard". Ongoing consultation as a means of developing Opposition policy is not the same: we are talking about two significantly different matters.

What has the Liberal Democrat about-face in Scottish education policy left us with? Obviously, we have the continuing failure of the Labour-Liberal Democrat Executive, who have failed Scotland, but they have also failed Scottish students. I mentioned in an earlier intervention on Mr. Willis that Scottish students face, on graduating, a marginal tax rate of 42 per cent. How can a party that has sought to increase access contemplate the unfairness of such a marginal tax rate for Scottish students who find themselves in a job with an income of £10,000 a year? My other major criticism of the Liberal-Democrat volte-face is that they forgot about the Cubie report and the £20,000 minimum income level, and did a deal in smoke-filled rooms behind closed doors—the appalling circumstances in which Liberal Democrats frequently find themselves throughout the country.

Scottish students at English universities still face the £1,000 tuition fees, which I find unacceptable, particularly when my constituency is so near the border at Carlisle. Many of my constituents have family who attend universities in England, and they face having to pay that tuition fee. It is a position that the Scottish Conservatives in the Scottish Parliament would have rectified by awarding a Saltire scholarship, which would have given Scottish students the ability to have the fees reimbursed at the time wherever they chose to study.

I should like briefly to raise an issue brought to my attention by a constituent, which I believe is particularly significant in respect of top-up and tuition fees—namely, the effect on longer running courses. My constituency was devastated two or three years ago by the foot and mouth outbreak, which highlighted a shortage nationally of veterinary surgeons or others able to undertake immediate research into outbreaks and epidemiology. Those are exactly the sort of courses that require longer study and an in-depth follow-up degree. In some cases, a degree course can take many years longer than the average short-term degree, which the Liberal Democrats would have us accepting throughout the length and breadth of the United Kingdom. Scottish degrees are often four years in comparison with the three years of English universities. What we are seeing amounts to a disincentive to continuing study, and the result of those policies will be truncated education and consequent worsening economic benefits being passed on to my constituents and others throughout the UK.

Photo of Andrew Selous Andrew Selous Conservative, South West Bedfordshire

Does my hon. Friend agree that for many young people, the prospect of accumulating up to £20,000 in debt is bad enough in itself, but when we align that with the fact that they will also take on significant liabilities in respect of a mortgage, it will be far too much for many?

Photo of Mr Peter Duncan Mr Peter Duncan Conservative, Galloway and Upper Nithsdale

I am happy to acknowledge that. It is ironic that the hon. Member for Harrogate and Knaresborough criticised the Government for deferring top-up fees, but then said that it would not do any good in any case. He said that research—an ever-lengthening list of research were, I believe, his actual words—shows that those fees create debt and disincentive. Absolutely! That is why giving in, doing the deal in Scotland and continuing to levy tuition fees has been revealed as a shameful abrogation of the responsibility to implement what appears in manifestos, when given the opportunity to do so. Saying time and again that tuition fees have been abolished in Scotland does not make it so, and will be exposed for the falsehood that it is.

I make no apology for focusing on the past record of the Liberal Democrats in implementing manifesto commitments. If they insist on continuing their proposal to reverse Government policy on top-up fees, I trust that their past record in Scotland will be held in no small measure as a predictor of how likely they are to reverse that policy in future at UK level.

Photo of Paul Farrelly Paul Farrelly Labour, Newcastle-under-Lyme 6:25 pm, 23rd June 2003

Before I start, I should like to mention something close to my heart, which I have mentioned previously: the debate has run for two hours, but mine will be only the third contribution from a Back Bencher, which I believe is disgraceful. The House should provide more opportunities for Back Benchers to participate in debates.

Photo of Michael Moore Michael Moore Shadow Minister (Foreign and Commonwealth Affairs)

The hon. Gentleman might consider raising that matter with the Leader of the House, who told us last Thursday that he would make his best endeavours to ensure that Government statements would not be allowed to eat into Opposition time. He has failed in those endeavours at the first opportunity that he has had to protect the time allowed for Back Benchers to speak.

Photo of Paul Farrelly Paul Farrelly Labour, Newcastle-under-Lyme

I would prefer to encourage Front Benchers to keep their remarks briefer.

I, too, welcome the Minister for Lifelong Learning, Further and Higher Education to his new ministerial post. I start by congratulating the Government on abolishing upfront tuition fees and on raising the payback threshold for student loans, which are both welcome. I also congratulate them on increasing university funding and on recognising that we need to maintain our universities as among the best in the world.

Today, however, I particularly congratulate the Government on tabling an amendment that makes no reference to top-up fees whatever. It is a masterpiece of drafting. If the omission is a hint that the Government are having second thoughts about top-up fees, it would be the most welcome development since we started the debate last autumn. It would show that the Government were sensitive to concerns and that they had not lost their political antennae. It would also show that the Government were listening to the Labour party, both in the country and in the House.

If I may correct Mr. Willis, not 139, but 180 Labour Members—a clear majority of our Back Benchers—have put their names to motions that say that top-up fees should not be introduced and that the genie must certainly not be let out of the bottle to allow different universities to charge different prices.

Photo of David Chaytor David Chaytor Labour, Bury North

If my hon. Friend's argument is that top-up and differential fees should not be allowed, is he saying that the value of a degree from each university is exactly equal in terms of the life chances that it brings?

Photo of Paul Farrelly Paul Farrelly Labour, Newcastle-under-Lyme

I shall answer my hon. Friend's point as I progress with my remarks.

As the Minister for Lifelong Learning, Further and Higher Education limbers up for his new role, I fear that I should not allow my optimism to get the better of me. However, the omission that I mentioned means that the Government hardly demonstrate a resounding feeling of confidence in the central plank of their university policy. By winning the vote on the amendment tonight—I am sure that they will—the Government cannot conclude that they have the House's support for top-up or variable tuition fees. Several Labour Members who oppose that policy have told me that they will vote with the Government tonight for the very reason that the amendment does not refer to top-up fees.

The drafting is so motherhood and apple pie that I cannot bring myself to vote against it. I could almost support it, save for one important part of the wording. The text asks us to endorse

"the further steps that the Government is taking to widen participation amongst students from deprived backgrounds".

The proposal to reintroduce student grants is welcome. Attempting to support part-time students better is also welcome. We are also offered an Office for Fair Access—a toothless tiger, perhaps, but at least an indicator that we are still concerned about access. However, a Government who put access and equality in education at the top of their agenda should do all those things in any case, without introducing a market-based policy of top-up fees, which will work in exactly the opposite direction.

Photo of David Chaytor David Chaytor Labour, Bury North

My hon. Friend mentioned part-time students. Is he also arguing that there should be no differential fees for part-time students? What does he estimate would be the cost of that?

Photo of Paul Farrelly Paul Farrelly Labour, Newcastle-under-Lyme

I am addressing my remarks to the broad mass of undergraduates, and I hope that my hon. Friend will understand that.

Photo of David Chaytor David Chaytor Labour, Bury North

Will my hon. Friend give way again?

Photo of Paul Farrelly Paul Farrelly Labour, Newcastle-under-Lyme

No, I have already given way to my hon. Friend twice.

The Government are investing in primary education, and ensuring that kids get A-levels in secondary education, so that they can go to university, but I cannot support the Government on top-up fees because they will make it harder for kids to get to the university of their choice—based on merit, not means—in the future. We just have to look at the evidence. For example, the US has an entrenched multi-tier system, with community colleges, public universities and private universities, including the Ivy League. The cost of going to Ivy League universities is some $40,000 a year. Funnily enough, their much trumpeted bursaries notwithstanding, Ivy League colleges have by far the lowest proportion of students from modest backgrounds. Even so, those private universities are the very institutions that supporters of top-up fees seek to emulate. In the US, the reality is that many poorer students with the necessary qualifications are simply priced out of the market. And many who do go into higher education can afford only two-year, cut-price courses at their local community colleges.

Another example comes from Canada. When medical schools in Ontario, for instance, increased fees drastically from 1997, the number of students from poorer backgrounds—and there were not that many to start with—fell by a third.

When my hon. Friend Margaret Hodge had the brief, she told the Education and Employment Committee in February that

"it is very difficult when you are opening up the market to variable fees to know how the market is going to respond."

Well, if the concern is to widen participation, that is hardly the best basis on which to base root and branch reform of universities. In fact, it is not difficult to predict how the market will respond. The evidence is there, plain as daylight, from overseas.

Photo of Mark Hendrick Mark Hendrick Labour/Co-operative, Preston

Is not my hon. Friend giving extreme examples from the US and Canada? When he and I were at university, probably only 10 per cent. of people went into higher education. Now it is 50 per cent. and it is clear that that cannot be financed purely through income tax. Is not my hon. Friend making a distorted argument?

Photo of Paul Farrelly Paul Farrelly Labour, Newcastle-under-Lyme

There are alternatives, and I wish that we could debate them. I am not giving extreme examples. They are mainstream examples, and I encourage my hon. Friend to read the research. Indeed, I will provide him with it after the debate.

What will happen here is that leading universities—Oxbridge and the Russell Group—which already take the lowest proportion of children from poorer backgrounds, will become ever more the bastions of the better off. With access in mind, how do the Government justify their policy? First, they point to the proposed Office for Fair Access. But OFFA will not set targets and will not interfere with admissions. So in the face of market forces, OFFA will be more like King Canute. Unlike its historical namesake, it will not have to build a dyke to keep the Welsh out, because top-up fees will do that for it. Remarkably, the debate about OFFA has achieved at least one thing so far. Following the assault from the Daily Mail, Bristol last week scrapped its internal state school targets.Participation has already narrowed, not widened.

Secondly, the Government point to the £3,000 price cap. What price that the cap goes pretty quickly, once the principle is conceded? The cries are already out there. Cambridge was one of the elite to oppose top-up fees, but then last week, its outgoing vice-chancellor called on the Government to double them to £6,000. The views of Sir Richard Sykes of Imperial college, the man who gutted the Wellcome drugs company, are well known. He has said:

"To come here is not a right, it's a privilege."

He has called for annual fees of more than £10,000, so he is right: it would be a privilege, and just for the privileged.

To try and recover some of the ground, the Government have also switched their ground. They say that students should be prepared to pay more to go to elite universities, because they will earn more afterwards. That sounds fair and logical, but it is dangerously logical. If we had a system that deterred students from poorer backgrounds because of price and debt, we would have a different bunch of kids going to university, earning more and paying it back afterwards.

When my hon. Friend the Member for Barking still held the higher education brief, she said, only last month:

"If potential students thought and acted rationally, then they would be willing to invest more in universities that offered them a better return on their investment."

That is more dangerous logic. Students should act rationally? When I was at school, I was fighting pressure to go out and get a job, working nights and weekends to prove a point and stay on at school so I could go to university. That was not thinking rationally. When my head teacher mumbled something about me being Oxbridge material, I did not understand a word. I had never heard of the place. So, rationally, I looked at a map, but I could not find it there either.

Photo of Eric Joyce Eric Joyce Labour, Falkirk West

With respect, my hon. Friend did make a rational choice. He went to Oxford and ended up with a fairly successful career.

Photo of Paul Farrelly Paul Farrelly Labour, Newcastle-under-Lyme

All I can say is that it happened somehow.

In summary, I cannot support an amendment that sidesteps the heart of the controversy and seeks to endorse steps towards widening participation at the same time as introducing a system that will narrow it. However, until my right hon. Friend the Secretary of State responds to the consultation on the White Paper and we see whether he is prepared to make concessions to our concerns, I intend to abstain. I congratulate him on the way he has carried on the debate. He has been relentless in doing the rounds, and I dare say that he has had more wine and no cheese evenings this year than he can remember. But the proof will be in the listening. There are alternatives. We should debate them, and be given the information to do so. I hope that the Government will listen and change their policy on top-up fees.

Photo of John Pugh John Pugh Shadow Spokesperson (Education) 6:36 pm, 23rd June 2003

We began this debate with a harrowing tale of poverty in Burnley, and I cannot rival that story from my hon. Friend Mr. Willis. However, I have put four children through university recently, so I speak with some experience.

I hope to appeal to the good sense of Labour Members. That may be regarded as a futile endeavour, either because I lack good arguments or—less plausibly—because they lack good sense. Opposition days tend to follow a ritual in which Opposition parties seek to cause embarrassment by moving a motion more attractive than Government policy. Generally, party loyalists, assisted by avuncular and friendly advice from the Whips, tend to grit their teeth, ignore what is said and vote as they are told. However, this is not quite one of those occasions. Today, we are assessing and testing how stubborn the Government will be. A small revolt this evening and the Government will barely pause for breath and press on. A larger than usual revolt and the Government will begin to hesitate, prevaricate and develop a collective amnesia about the policy and its date of implementation. A large revolt on top-up fees will be embarrassing, with bad headlines tomorrow. However, headlines are temporary, and effects of bad policy are more permanent.

Photo of Mr Tony McWalter Mr Tony McWalter Labour/Co-operative, Hemel Hempstead

The hon. Gentleman mentions bad policies. Surely it would be a bad policy to leave universities radically underfunded?

Photo of John Pugh John Pugh Shadow Spokesperson (Education)

The Liberal Democrats are in no way proposing to do that. My concern tonight is top-up fees. Labour Members will have to stand alone at the hustings in two years, justifying top-up fees and tuition fees. That is a headache that not even a party loyalist wishes to face. Temporary embarrassment today is a reasonable trade off against serious embarrassment at a later date.

Top-up fees are no part of the ideology of the Labour party generally or of new Labour. They are not an irreversible plank of Government policy. The Chancellor will not commit suicide if we reverse that policy. I am sure that he could fill the hole that the removal of top-up fees would leave, even if he does not follow the Liberal Democrats' suggestions. It could be said that I am appealing to the low motive of electoral survival, but I ask Labour Members what the high motive is. What is the argument for top-up fees based on political idealism or on socialism?

We all agree that the universities need to be well funded to compete internationally, but the Government are claiming that the only solution is that some should be allowed to charge. That is to assume that all universities will not end up charging, which is not something that Labour Members are at all comfortable with. What will happen is that the most prestigious educational institutions will charge more and it will cost more to study at them.

In sum, the most prestigious education will be less affordable. Prestigious education should be affordable, but Labour is arguing that it should be less so. Whether tacit or explicit, that is the philosophy behind top-up fees. It is not socialism or equal opportunity; it is disguised in part by talk about access regulators and support for poorer students, but the reality is that prestigious courses will become less affordable.

Photo of Mrs Anne Campbell Mrs Anne Campbell Labour, Cambridge

I am a long-standing opponent of top-up fees, but I must say that I would find it much easier to support the Liberal Democrat motion if I knew what their total policy was. To pick out one little bit of policy and to concentrate on it is to try to confuse both the House and the electorate. It is not telling us how the Liberal Democrats would get extra money into higher education.

Photo of John Pugh John Pugh Shadow Spokesperson (Education)

The hon. Lady must make up her mind whether she accepts the principle behind top-up fees and whether she expects those fees and tuition fees to damage her electoral success.

Essentially, the premise on which top-up fees are based—the only ideology or principle on which they are based—is that prestigious education makes people wealthy: go to the right universities and end up richer. That is the credo of philistines who take the view that if prestigious education does not make a person wealthy, it is not in fact prestigious education. It is a matter of empirical fact, and I shall not dispute it, that graduates from Russell universities have more overall earning power. They will end up earning more than average, but they will also end up paying more tax than average.

The principle still dogging top-up fees is that they make prestigious education less affordable while it is not necessarily more lucrative. Russell group undergraduates will do better financially than most, but the reason for that is not necessarily the fact of their going there. Part of the reason will be that, having gone there, they are part of a family that is upwardly mobile and that helps and supports them in every conceivable way. Perversely, the effect of top-up fees will be to make those universities more elitist and less effective. At the end of the day, Labour party members must decide whether they accept the principle that the best education in this country should become progressively less affordable.

Photo of Mr David Rendel Mr David Rendel Liberal Democrat, Newbury 6:42 pm, 23rd June 2003

We have had an interesting debate, demonstrating a lot of angst in the Labour party on top-up fees, which is no surprise. We have long known that a number of Labour Members agree with the sort of policies that the Liberal Democrats have proposed. If one or two, such as Mrs. Campbell, do not know the rest of our policy, I can only say that many Members on both sides have explained it at great length. They have obviously gone to great lengths to find out what Liberal Democrat policy is, even to the extent of reading LibDem News. I am delighted to learn that the only party political paper still in existence is so well read by hon. Members.

The first point I want to pick up from the debate is whether the level of fees charged has any effect on the amount of money going into our universities. There has been widespread agreement that our universities are seriously underfunded. We need sources of funds for university research and teaching because the level of funding has sunk greatly, particularly since the big expansion of the universities began. Whatever the Minister may have said—he is new, and we cannot expect him to have read all the facts yet—tuition fees did not lead to any increase in funding for universities. In fact, funding per student fell and continued to fall for some years after tuition fees were introduced.

Four or five years later, the Labour Government, to their great credit, began to put a little more money into higher education. I am all for that. The Liberal Democrats have continued to say that we support the fact that the Labour Government are putting more money into higher education. The point is, however, that there is no correlation between the introduction of tuition fees and more money going into higher education. The two things are quite separate, as is always bound to be the case. Any Government will look at the national cake, try to decide how to divide it between personal expenditure and spending on public services, and then decide how the money for public services can be raised. Some will come from voluntary sources, such as people paying privately for health or education or businesses giving money for research in universities, and some will come from charges, such as charges for education or prescriptions. More will come, at the margin, from taxation. It is inevitable that any Government will decide first how the national cake should be shared, then how the money should be raised. The marginal part of Government revenue will always be taxation.

If the Government know their business at all, the level of fees cannot, therefore, have any real effect on spending in higher education and universities. Indeed, it would be a dereliction of the Government's duty if it were otherwise. The whole purpose of the Government must be to seek the best way to spend the national wealth on behalf of all the people. If that is their prime purpose, they must make that decision before they know how much will be levied in charges, and not afterwards. I fear that the university vice-chancellors who favour top-up fees are sadly deluded in what they think will be the result. The fact that tuition fees made absolutely no difference to the amount of money going into universities demonstrates my point.

I shall talk briefly about Conservative policy, but we shall have another opportunity on Wednesday to tear them to pieces. I look forward to that, and I feel sorry for Mr. Boswell who will presumably have to defend his policies then. For today, I am glad that the Conservatives have come round to our point of view in opposing both tuition fees and top-up fees and in saying that they will never implement top-up fees, if ever they get the chance. I shall be delighted to have their support in the Lobby.

Mr. Marsden felt that top-up fees would help the less prestigious universities. If there is to be a market, however, and the Minister was insistent that the whole business of differential fees would cause a market between the universities, it must be the case that prestigious universities will gain the most in top-up fees because they will be able to raise their fees the highest and charge the greatest fees. Inevitably, the market will mean that the less prestigious universities do least well out of fees. The hon. Gentleman's argument that top-up fees are necessary to help the less prestigious universities is nonsense. I am afraid that that, to my mind, destroyed the whole basis of his speech. I fear that I did not pay much attention to the rest of it, for which I apologise to him.

Differential fees have also been raised, and there seem to be three main disadvantages to those. First, courses such as science and medicine could cost more, in which case we would reduce the student numbers for those courses that are exactly those in which the country needs to encourage more students to participate. What a bizarre use that would be of market forces. Alternatively, courses that cost more, such as science and medicine, will be charged at lower fees, but that, too, would be a bizarre form of market.

Secondly, the posher and more prestigious universities would be able to charge more. That would only widen the divide that is already there between the different resources going to universities. It would drive some universities into the ghetto, and it might drive others into liquidation, a threat that already hangs over some. If the threat worsens, I fail to see how the Government's policy of trying to widen the number of people going into higher education will be advanced.

Thirdly, if there are differential fees, poorer students will inevitably tend to go to the less well-equipped and prestigious universities. What will that do in terms of providing better opportunities for the young people in our country who come from less well-off families? The Minister suggested that he was slightly doubtful about whether the less well off would tend to choose the cheaper universities. I can only point him to MORI's "Student Living" report, which came out earlier this year, and which makes precisely that point. When MORI polled students, a great many said that they would choose a university according to cost if they did not have the money to pay for the most prestigious.

Photo of Mr David Rendel Mr David Rendel Liberal Democrat, Newbury

I am sorry, but we are behind time.

The fourth point is that higher education produces benefits, as most of us accept, for industry, society as a whole and the individual graduate.

We all accept, therefore, that all three should contribute to the costs of higher education. I stress that my party accepts that, because some people deny that we do.

Graduates do not all benefit to the same extent, however. Some receive much more as a result of going to university, yet, as my hon. Friend Mr. Willis pointed out, some people would earn more money over their lifetime if they had never gone to university, but had gone straight out to work. Even graduates in the same subject do not necessarily earn the same amount during their lifetime. Some will go into better paid jobs as a result of getting a degree, but some will be less well paid.

Using income tax to fund our higher education system has the added advantage that those who gain most financially from their degrees pay more, while those who gain least pay less. That is a fairer way. If the burden of repayment falls equally on all those who obtain degrees, whatever their degree may be, we shall inevitably end up with a less fair system than if we funded it through income tax, which is contingent on the income earned throughout a graduate's life. Under an income tax-funded system, the burden is spread more widely, thinly and evenly.

Tuition fees and top-up fees will not in themselves put even one extra penny into higher education. Higher education should be funded by the three sources that benefit from it. They should contribute in proportion to the benefit that they gain.

This evening we have an opportunity for the Labour party to rid itself of the millstone around its neck, an opportunity to support widening participation and the needs of our economy and an opportunity to create a fairer society, which makes the best use of the potential of all its young people.

Photo of Alan Johnson Alan Johnson Minister of State (Education and Skills) (Lifelong Learning, Further and Higher Education) 6:52 pm, 23rd June 2003

With the leave of the House, I shall reply to this interesting debate. I am grateful for all the kind words welcoming me to the Dispatch Box. I do not know whether the debate will be memorable for anybody else, but it will certainly be memorable for me as it has been my first canter around this particular course. It has shown the strong feeling of Members on both sides of the House about an important and crucial issue, whose central features cannot be ducked. They need to be debated.

I shall try to respond as far as I can to the various points that were made. Mr. Willis seemed to be alleging that the White Paper offers no help to full-time students working part-time. Perhaps my understanding was not accurate, but he seemed to be making that accusation. In fact, our White Paper proposals certainly will provide assistance, with the reintroduction of the higher education grant and no upfront fees.

The hon. Gentleman asked whether the additional fee income really would be additional. That is also an important point for Labour Members. My right hon. Friend the Secretary of State for Education and Skills has made it clear that the income will not be taken into account in the Higher Education Funding Council formulae and mechanisms; it will be additional money going into universities. I am happy to repeat that.

Photo of Barry Sheerman Barry Sheerman Chair, Education & Skills Committee

Today, the Select Committee on Education and Skills has been finishing its inquiry into higher education, which is why its members were unable to attend the debate. The Minister will recall that when we recommended that the postcode premium should be increased, we thought that that would be extra new money. It has not been new money; it has been top-sliced from the rest of the budget.

Photo of Alan Johnson Alan Johnson Minister of State (Education and Skills) (Lifelong Learning, Further and Higher Education)

Extra money will be going in during the settlement, however. We are very much looking forward to my hon. Friend's report.

The debate got bogged down for a while on all things Scottish. As great believers in devolution, we accept that different decisions will be made in Scotland and in Wales. A relevant point was made, however, about the comparison of the Scottish grant with the new grant that we plan to introduce, which will be a non-repayable grant of £10,000—[Hon. Members: "£1,000!"]—of £1,000. I am sorry. That was nearly a policy change—I could hear someone falling to the floor behind me.

The English system will be better for poorer students than the Scottish system. Under the Scottish system, £2,100 is removed from the student loan, while in our system, the poorest students do not have to pay upfront tuition fees; they receive a non-repayable £1,000 maintenance grant and up to £1,100 is removed from the variable fees. They will not have to start repaying any of that until they earn £15,000. The £2,100 endowment payment is not income-related, so I think that we have a good case, which we shall make over and over again, that we have a better and more generous system for the poor.

I greatly respect Mr. Boswell, but the policy of Her Majesty's official Opposition is opportunism over integrity. I cannot understand how the party that set up Dearing and supported tuition fees in the House should not only be against the extra funding, which is bad enough, but should also want to return to a 19th-century policy of elitism as we enter the 21st century. That is thoroughly depressing.

The hon. Member for Daventry asked about the repayment threshold, which is another important point. He said that the repayment threshold of £15,000 is still lower than it was under the Tories' loan scheme. However, under the Tories' scheme, when a person's income reached £15,000 they paid back the money with interest big-time. It is not a minor point of detail about our threshold when we say that neither students nor parents will pay the fees, but graduates will. When graduates earn more than £15,000, the rate will be 9 per cent. of the difference between £15,000 and their earnings. The rate of interest will merely keep pace with inflation. That is entirely different from the Conservative scheme.

My hon. Friend Mr. Marsden made an extremely thoughtful contribution from his experience not only as a lecturer, but as a distinguished member of the Select Committee. He rightly pointed out the anomalies in the Liberal Democrat position. He made the point about part-time students being helped and he said that variable fees must be additional. He said that the White Paper is not perfect and that it needs to be refined and revised, but that it is the only show in town.

I wish to dwell on the contribution from my hon. Friend Paul Farrelly, as it goes to the centre of the whole argument. He said that the proposals would discourage youngsters from poor backgrounds and referred to research from America, where about 45 per cent. of youngsters from the poorest backgrounds go to university. I want to make two important points to my hon. Friend. First, there is an incredible statistic that shows that there is an 8 per cent. gap in social classes, but only a 1 per cent. gap in admissions in applications to the Russell group of universities. We need to address some of the points that my hon. Friend makes about being put off going to Oxford, and we have a whole host of recommendations in our White Paper to tackle those issues. Secondly, my hon. Friend mentions America, but we have information from Australia, which has a fee deferral system very similar to what we are producing, showing that that does not deter pupils from poor backgrounds from going to university.

In conclusion, the whole thrust of our White Paper is that, if we do not take action now, our very well respected and thriving university and higher education sector will decline. The institute for employment research shows that 1.7 million jobs will be created in this country between 1999 and 2010. Nine out of 10 of those jobs will require higher education and a graduate education. I know from my previous job at the Department of Trade and Industry that, if we do not take this opportunity to improve and enhance our higher education system and to attract more youngsters, we will damage the future prosperity of this country.

I believe that the three Dearing principles were absolutely right. Mr. Rendel tried very hard to convince us that a contribution from society through taxation is Liberal Democrat policy, because of the argument that the postman and the labourer—non-graduates—ought to make more of a contribution through the tax system, and that the Liberal Democrats support the Dearing principles. However, the tax system will not ensure that the universities can take advantage of that extra funding. If taxes were increased, the money should go to other parts of the education sector.

I am afraid that Liberal Democrat Members cannot suggest that their policy in any way reflects the Dearing report, which very clearly refers to a contribution from society through taxation and a contribution from employers. My hon. Friend the Member for Blackpool, South made an important point about endowment policies representing a long-term solution. That is an important feature of the White Paper, but employers have to make their contribution. As Dearing said, the other important element is that graduates, who benefit from university degrees, should repay using a fair system, which we have proposed. I ask hon. Members to support the Government in the Lobby tonight.

Question put, That the original words stand part of the Question:—

The House divided: Ayes 193, Noes 267.

Division number 244

See full list of votes (From The Public Whip)

Question accordingly negatived.

Photo of Eric Forth Eric Forth Conservative, Bromley and Chislehurst 7:18 pm, 23rd June 2003

On a point of order, Madam Deputy Speaker. It may have come to your attention that, as we deliberate, the Home Secretary is touring the media studios giving his version of the debacle in Windsor castle on Saturday. Is not the Home Secretary intending to come to the House tomorrow to make a statement? Is that not, yet again, a defiance of Mr. Speaker's ruling that Ministers should not tour the media studios before they come to the House of Commons to give an account of themselves? Can you demand that the Home Secretary comes to the House at 10 o'clock tonight to answer questions from Members of Parliament, rather than from television and radio interviewers?

Photo of Sylvia Heal Sylvia Heal Deputy Speaker

I understand what the right hon. Member has said, and I know that there is a great deal of interest in that report in the House and outside. At this moment I am not aware that the Home Secretary is coming to make a statement. I will advise the House immediately if I am informed of the same.

Photo of Mr Paul Tyler Mr Paul Tyler Liberal Democrat, North Cornwall

Further to that point of order, Madam Deputy Speaker. Is it not perfectly clear that the real reason for the Home Secretary's action is to try to distract attention from what has been going on in the House, where there has been a major rebuff of Government policy?

Photo of Sylvia Heal Sylvia Heal Deputy Speaker

Order. I must now proceed with the business to protect the Opposition day debate.

Question, That the proposed words be there added, put forthwith, pursuant to Standing Order No. 31 (Questions on amendments):—

The House divided: Ayes 281, Noes 175.

Division number 245

See full list of votes (From The Public Whip)

Question accordingly agreed to.

madam deputy speaker forthwith declared the main Question, as amended, to be agreed to.

Resolved,

That this House congratulates the Government on its plan to abolish up-front tuition fees and to raise the threshold for repayment of loans from £10,000 to £15,000; endorses the further steps that the Government is taking to widen participation amongst students from deprived backgrounds—the establishment of the Office for Fair Access, the introduction from 2004–05 of a £1,000 grant for students from the poorest backgrounds and better support for part-time students; welcomes the sustained investment in higher education through annual increases of 6 per cent. in real terms over the next three years; and recognises the need to maintain UK universities at the forefront of world research and to equip the UK workforce with the high level skills needed to compete in the global marketplace.'.