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Clause 23 — Duty of Secretary of State to Impose Condition as to Student Fees, etc

Orders of the Day — Higher Education Bill – in the House of Commons at 2:49 pm on 23rd June 2004.

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Lords amendment No. 3.

Photo of Sylvia Heal Sylvia Heal Deputy Speaker

With this the House may consider Government amendments (a) and (b) in lieu of the Lords amendment.

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

The Government have considered carefully the Lords amendment on gap years. We cannot accept it for technical reasons, but we accept the principle behind it. In combination, our amendments in lieu would achieve the same policy intent, but in a more tightly drafted way.

We have previously argued that the decision on whether to exempt gap year students in 2005 from higher fees is more properly a question for individual universities than for the Government. The point of variable fees was to give universities flexibility to respond to a perceived threat. However, we have been swayed both by the arguments in this House and the other place and by the stance taken by the universities themselves. They have made it clear through their support for the Lords amendment that they support a sector-wide response on this particular issue and are content for the Government to legislate.

By providing the protection in the amendments, we avoid the risk, however small, that some students will choose to forgo a gap year in 2005, thus placing extra pressure on places in the higher education system that year. The advantage to students of putting the provision into the Bill is certainty about the fee regime and the student support package to which they are entitled no matter which university they attend. The students will qualify for the same student support arrangements that will exist for students who began their courses before 2006 but are still studying in that year. That includes eligibility for a deferred loan to pay their lower standard rate fees, eligibility for the £1,000 grant and fee remittance of approximately £1,200.

The Government amendments in lieu also address the situation of the very small number of students who, because of a successful appeal against their A-level results, miss out on a university place in 2005 and have to start instead in 2006. We might fairly describe that as an enforced gap year.

I shall say a little about how our amendments in lieu differ from the Lords amendment so that right hon. and hon. Members may be confident about the need for them. First, the Lords amendment includes a reference to "years", which we have replaced with "academic year", in line with the rest of that part of the Bill.

Secondly, the Lords amendment refers to "designated" courses. To be sure that we cover a broader group of students who might wish to take gap years in 2005, the Government amendments refer to "qualifying" courses, which are the subject of separate regulations and which is the correct description of courses for which student support is available.

Thirdly, we have structured the Government amendments to reflect the structure of the rest of part 3 of the Bill—that of an access plan, with the associated right to charge higher fees, linked into the condition of grant in clause 23(1). Our amendment would mean that an access plan cannot allow a higher education institution to charge higher fees to gap year students in 2006, which would make matters watertight.

Fourthly, the Lords amendment contained no provision for sanctions should a higher education institution seek to charge higher fees to the gap year cohort. Those are the very students whom the amendment sought to protect, but it provided no enforcement arrangements. The amendments in lieu correct that by making it clear that clause 23(1)(b) and the sanctions contained in clause 21(3)(b) will apply to that cohort.

Finally, the Lords amendment was based on the first set of regulations that we made in 1998 when a similar arrangement applied, rather than on the regulations as subsequently amended.

Photo of Phil Willis Phil Willis Shadow Secretary of State for Education and Skills, Education & Skills, Shadow Spokesperson (Education)

We are grateful to the Minister for the way in which he has dealt with this issue. Will he confirm that for a student who goes up to university in 2006, the old fee regime will apply to all three years, or to four or five years for, for example, a medic or an architect? Alternatively, will just the first year be covered, after which they go on to the higher fee regime?

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

It applies to all the years—three for a traditional honours degree course, or four for chemistry and so on.

Photo of Mrs Anne Campbell Mrs Anne Campbell Labour, Cambridge

I am interested in the fee to be charged to the gap year student, the way in which eligibility for a grant is affected and the debt repayment terms, which are advantageous for many students. Will the new conditions applying to grants, fee repayment and so on apply, or will the old conditions pertain?

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

As always, my hon. Friend makes her point clearly, and it is an important point. We will treat the students as if they started their university course in 2005. They cannot have the best of both worlds. They will have the lower fee, the fee remission of £1,200 will continue and they will have access to the £1,000 grant: they will not have access to the larger grant of £2,700. However, if students felt strongly about that, they could take their gap year, reapply to university and become part of the 2006 intake. In that sense, they do have the best of both worlds. The arrangements mean that the 2005 position will be retained in all senses, including the student support package.

I was explaining about the two sets of regulations. The amendment in the other place would amend the original regulations from 1998, but we changed those regulations in 2000. The regulations differ in the way in which they treat students who change courses between acceptance by a university and the start of the courses a year or more later, either because the original course for which they were accepted no longer exists or because they have decided to take a different course. The second set of regulations is a little less restrictive on what students are allowed to do when changing courses if they are still to qualify for the concession. I am sure that hon. Members would want us to replicate the regime that worked well in 1998, and that is what the amendment in lieu would achieve.

Photo of Mr Simon Thomas Mr Simon Thomas Chief Whip, Spokesperson (Agriculture; Culture; Environment; Heritage; International Development; Sustainable Energy; Transport)

I welcome the Minister's comments, although the provisions will apply only to students in England. They will apply to students from Wales who study in England, but we do not yet know what will happen in Wales on the introduction of top-up or additional tuition fees. The National Assembly may introduce them at a later stage, but it has not yet decided to do so. As we need primary legislation to address the issue of gap year students in England, will the Assembly be able to address the issue as it desires under this legislation or will we need another dose of primary legislation here? Is the Minister confident that the Bill gives sufficient powers to the National Assembly to deal with the issue of gap year students in Wales when that matter arises?

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

Sometimes when I cannot immediately think of a response to a question, inspiration strikes, amazingly, when I sit on the Front Bench for a few minutes. I hope that by the end of the debate I will be able to give the hon. Gentleman the answer to his question.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education)

The date in the amendments in lieu is 1 August 2005, but that may mean that they do not affect those students who secure a place through the clearing system. If they do not achieve the grades that they expected, but obtain a university place none the less later in August or in September through the clearing system, would they be excluded from the exemption that the amendments in lieu provide?

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

I hope not. We have tried hard to ensure that the exemption applies to students who make their applications in the traditional way and the minority of students who wait for clearing before they make an application. I would have thought that those students would be covered. I understand his point about 1 August, and I may be able to provide a more considered response to that question by the end of the debate.

I urge the House to reject the Lords amendment, in the best possible spirit, and accept the amendments in lieu.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education)

I welcome the Government's decision to accept the principles behind the amendments that were first tabled by me and my hon. Friends, and then by our colleagues in the other place. In the spirit in which the Minister rightly paid tribute to his colleague, Baroness Ashton, for the work that she did, I congratulate Lord Forsyth, who did a tremendous job on this Bill. Many sixth formers should feel great gratitude to him, because his work has contributed to the concessions that the Government are making this afternoon. Those concessions are enormously welcome for those sixth formers and others who have been concerned about the issue.

The flaw in the Government's original proposals was that anyone leaving school in the summer of 2005 and deciding not to take up their place for a year—as many thousands of young people do—would be forced to start university under the new funding regime, with £3,000 fees, rather than under the old regime with £1,125 fees. Any hon. Member who has visited a school sixth form recently—I have and I am sure that others have done so—and has asked those in the lower sixth, who will be those affected by the issue, about their intentions for 2005 will know that many have decided to go to university straight away and miss out on a gap year. Indeed, the specialist gap years organisation Gap Year Fairs says that the soundings that it has taken in sixth forms suggest that as many as three quarters of those who would normally take a gap year had decided against doing so because they wanted to avoid the higher fee regime that will be in effect from 2006.

It was not only those planning to take a gap year for the potential experience who were set to lose out as a result of the Government's plans. People do not take a gap year only for the experience. There are many students who work to raise money for their university costs, and they would have also lost out. I await with interest the Minister's clarification on the issue of clearing, because many people only obtain a university place through the clearing system after 1 August. Others find that their results were much better than they expected, so they take a gap year, reapply for a place and start university a year later. I hope that the Minister will address the problem faced by young people in that position. Some, for example, expect to get three Cs, apply for a university course that is realistic given their abilities and then discover that their results are better than that. What will happen to those people? Does the amendment take their situation into account?

The Government have rightly identified in the amendment the situation of those who appeal against the grades that they have been given. They are also at risk of losing out. I welcome the fact that that has been addressed. What made the situation particularly absurd was that when this same situation arose back in 1998 when university fees were first introduced, the Government did allow transition arrangements that ensured that no student would lose out financially by having a gap year. However, when we debated the issue in Committee and on Report both the Minister and Labour Members were unconvinced. The Minister said that those affected this time had had plenty of notice—three years' notice, he claimed—but no doubt they are the same students who were told at the time of the last general election that the Government would not introduce top-up fees.

Mr. Allen was even more dismissive. He said in Committee that the amendments we were putting forward were for just one group of people in society, and that for many of his constituents a gap year would be working in the shop of the same name to save money for university. Actually, he is right, and the amendments in lieu will make it easier for those of his constituents fortunate enough to go to university. We look forward to more of them doing so. The change will give them the opportunity to work and save money, if they believe that that is the right approach for them.

Photo of Graham Allen Graham Allen Labour, Nottingham North 3:15 pm, 23rd June 2004

I was alluding to the fact that as I represent the constituency that sends the fewest young people to university, most of my constituents do not have the privilege or pleasure of going to university and therefore do not have to make onerous decisions about gap years. Unless the Conservatives come to power and remove the £3,000 grant that will apply to most of the youngsters in my constituency, more and more will probably take up that option and will face the dilemma of what to do in their gap year.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education)

In that case, I hope that the hon. Gentleman will welcome the changes made to the Bill as the result of our debates on the issue, which will mean that those in his constituency who plan to take a year out to save for university will now have the opportunity to do so in 2005.

Of course, even when the issue reached the other place, the Government were still lukewarm. The Minister in the Lords—getting warmer—had accepted that there was a problem but said that it should emphatically be left to the universities to do something about it. Happily, their lordships disagreed and the Minister for Lifelong Learning, Further and Higher Education has now accepted that they were right.

Their lordships disagreed because they realised that the proposals would have an impact not simply on students but also on universities. Without the amendments that the Government are proposing today, the next application year—2005—would have been a nightmare for universities. Students who would normally have gone to university in 2006 would have started a year early; tens of thousands more students than usual would have been trying to get into university; and people would have been turned away by universities because there were not enough places. Those students would also have been losers without the amendment.

What an irony if the Government had refused to accept the wisdom of our arguments. It is hard to see how the view of the Minister and the Secretary of State could have been squared with that of the Chancellor of the Exchequer, because 2005 is the international year of the volunteer and the Chancellor sees that as a big opportunity to encourage young people to participate actively in helping the developing world and to get involved in worthwhile causes. Recently, he even held a summit at No. 11 Downing street to bring together all kinds of voluntary organisations, to encourage young people to use 2005 as the opportunity to do their bit in the voluntary sector. He talked about the importance of volunteering and of young people offering to volunteer. He talked about students using their gap year to do good work as volunteers. The focus was all on 2005: the international year of the volunteer—the very same year in which the Secretary of State and the Minister had planned to scrap the gap year for so many young people. What nonsense it would have been if the Government had not agreed to this concession today.

I congratulate the Minister on his belated conversion to our arguments, or perhaps it should be on his decision to succumb to the pressure from No. 11. Either way, those affected will not mind. All the groups of young people to whom I and other Members have spoken will greet the decision with a sigh of relief. It will be hugely welcome. The last time I visited a sixth form in my constituency, I asked for a show of hands from those students who had decided not to take a gap year in 2005: hands went up all over the hall. On that day, I promised those students that we would carry on fighting the battle for them. Thanks to the efforts of our colleagues in another place, the Minister has agreed that we were right and we have won. For that, we, and especially those sixth formers, should be grateful. I congratulate the Minister; we shall be delighted to support the amendments.

Photo of Mr David Rendel Mr David Rendel Shadow Minister (Higher Education), Education & Skills

I, too, am delighted to support the Government's proposals. We are very pleased that they have changed their mind. As the Minister and others in the House who have been attending to the business know, we have been fighting on the issue for a long time—almost since the suggestion in the White Paper that such a problem might arise. At that time, charities organising gap year placements for young people immediately began writing to us to explain that they felt it might cause them great danger, and that some of them might go to the wall, were there to be one single year when nobody would take a gap year. I am therefore delighted that the Minister has decided to go along with the wishes of many Members about gap years.

There is no question but that the Government's original plans would have been bad for the tens of thousands of students who wanted to take a gap year in 2005; they would have been bad for the charities, as I pointed out; and they would have been bad for organisations that have come to rely on the voluntary help of gap year students, especially in third-world and deprived countries. The plans would also have been bad for the universities. It came as no surprise when the Minister said that the universities had been pressing for change; without exception, every vice-chancellor to whom I have spoken has told me that they prefer gap year students. On the whole, they tend to be the best students and are obviously more mature than some of those who do not take gap years. They tend to make the best possible use of their university education. The change will benefit the universities, too, so I am delighted that it will be made.

The most important reason for the change and the one that made the Government's previous position untenable, as I have said on many occasions, is the effect on students who come, in the main, from less traditional university backgrounds and the poorer areas of the country. They would have been excluded from university because in that one year many more applicants—many from the independent schools and the richer parts of the country—would not have taken a gap year and would thus have pushed out some of the more marginal students from less traditional backgrounds. It was for their sake that the change was so necessary. It is also in line with the Government's efforts to widen access to universities.

Photo of Mrs Anne Campbell Mrs Anne Campbell Labour, Cambridge

Given that universities are under some obligation to try to increase the number of students from non-traditional backgrounds, I fail to see why a glut of applications in any one year would mean that the less traditional students were less likely to get places than those from the independent sector.

Photo of Mr David Rendel Mr David Rendel Shadow Minister (Higher Education), Education & Skills

If the hon. Lady studies the statistics she will see that, on the whole, students from less traditional backgrounds and from the poorer parts of the country tend to get into university with rather lower grades than some of those from the independent schools, who tend to take a gap year. At present, almost by definition, a student taking a gap year will have high A-level grades; they would not try to take a gap year unless they were sure that they would be accepted for a deferred place. In order to be accepted for a deferred university place, one almost certainly has to have better grades, so on the whole gap year students will inevitably push out the more marginal students with lower A-level grades. That is why the original plans would have been bad for inclusivity.

Photo of Tim Boswell Tim Boswell Shadow Minister, Home, Constitutional & Legal Affairs, Shadow Spokesperson (Business, Innovation and Skills), Shadow Minister (Constitutional Affairs)

But does the hon. Gentleman not acknowledge that gap year organisations are anxious to increase the number of their participants from the less privileged socio- economic groups for reasons of balance, so Government supporters should not misinterpret the amendment as being class-slanted?

Photo of Mr David Rendel Mr David Rendel Shadow Minister (Higher Education), Education & Skills

Absolutely. I entirely accept the hon. Gentleman's point and I hope that I was not misleading the House by what I said. I certainly accept that it is extremely important to widen the group of people from whom those who take gap years are selected. We should try to give everybody that opportunity whether or not they come from traditional university backgrounds and whether they are rich or poor. The effect of a gap year on a young person is equally beneficial whatever their background, so I entirely accept the hon. Gentleman's point.

The Government advanced two arguments against our original proposal. One has already been mentioned—that students had long enough to think about the situation. I found that argument slightly hard to understand, because the longer students had to think about it, the more likely they were to realise that taking a gap year was a bad idea. They would be more likely to refuse to take a gap year, thus causing the problem to get worse. I did not understand why having a long time to think about that would help the Government's original point of view.

Despite being grateful to the Minister for the change that he has made, I cannot resist teasing him a little by pointing out that his other argument was that, in practice, a lot of people would be so attracted by the new regime that they would all suddenly go on gap years instead of those who wanted to do so under the old regime. Given the move he has made, perhaps he now accepts that that is a load of nonsense. It is certainly a load of nonsense, given the survey that we undertook in my constituency and that of my hon. Friend Mr. Willis, which clearly showed that the number of those who want the new financial regime is negligible. We found one person, out of some 300, who wanted to take a gap under the new regime. I hope that we have laid that one to rest at last.

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

I just want to make a few remarks. If I entered into the debate, I should be arguing from a previous position: much of the debate has been about the arguments that I was putting before I was persuaded to go down this route. So it would be perverse to go through all those arguments again, but Chris Grayling tempted me to do so by over-egging the pudding. I think that "The Dambusters March" was bursting out at the end in terms of the huge achievement.

The hon. Gentleman made an important point about the cut-off date of 1 August, and I was hoping for some further time to inspire me to respond. Such places must be offered before 1 August 2005, so clearing places offered before that date would be covered. Why? The reasons are, first, that that was the case in 1998, so we used that date, and secondly, that date was included in the Lords amendment. So the triumph in the Lords that he mentioned contained that date, but that gives me some cause for concern for the reasons that he gave.

Given the point about university flexibility, however, the universities could still recognise that there was unfairness. Looking back to what happened in 1998, when they would not have had such discretion—they would still have had to charge the £1,000 fee—we can be safe in agreeing to that part of the Lords amendment, replicating what we did in 1998, but I need to make some further inquiries, and if we find some problems we can ask the sector to resolve them itself.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education) 3:30 pm, 23rd June 2004

I ask the Minister to bear in mind two factors. First, A-level results do not come out until mid-August, so it would be impossible for students to go through the clearing process before 1 August. Secondly, I remind him that the amendments that we tabled in the House set a cut-off date of 1 April 2006, which would have allowed the whole clearing process to be completed in plenty of comfort before unconditional offers were generated by the following year's A-levels. If it is possible for him to reconsider and make any necessary modification before the Bill receives Royal Assent, assuming that there is a little bit of further debate in the Lords, it would be appreciated.

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

That is a very sensible point, and it allows me to say a few words before I take the next intervention.

Photo of Phil Willis Phil Willis Shadow Secretary of State for Education and Skills, Education & Skills, Shadow Spokesperson (Education)

Such a concession was given in the 1998 legislation—the wording is the same as that included in that legislation—and reference was made to the offer of a place on a qualifying course, as is stated in paragraph (a). In fact, that does not affect the clearing process, provided that the application reaches the Universities and Colleges Admissions Service in time. Students can be offered a place that is conditional on achieving certain grades. If they do not achieve those grades, the offer remains, but students go into the clearing system thereafter. I had not considered the difficulty until it was mentioned by Chris Grayling, and it arises with those people who do not apply at all before they get their results and who, depending on their results, apply for a place and ask for a gap year. A very small group of students is involved, but it would be worth covering them during whatever deliberations the Minister can have.

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

I am genuinely grateful to the hon. Gentleman for making that point, which clarifies one of the aspects raised by the hon. Member for Epsom and Ewell. I recognise that a small minority is involved, which includes a charming girl who works in my office who did not fill in an UCAS form and waited until clearing to apply to university. I will take advantage of the time that we have before the Bill returns to the other place to find out whether we need to do anything differently, but I re-emphasise that that date was used both in 1998 and in the Lords amendment.

My hon. Friend Mr. Allen had replayed to him the very valid points that he made in Committee about who takes gap years and how we can help youngsters from poorer backgrounds to receive the benefit of a gap year, even though they may not go on to university. The Under-Secretary of State for Education and Skills, my hon. Friend Mr. Lewis, reminds me that we have been operating a pilot scheme precisely to discover whether we could provide 18-year- olds from poorer backgrounds with the opportunity to do voluntary work in that way. I guess that it could be said that we are bringing gap years to the people, using that pilot. Those points were worth mentioning.

Mr. Rendel made two points during his little tease. I should say, just to set the record straight, that we argued that the gap year provision was essential in 1998, because the legislation was put before Parliament in 1997 and became law when students would have already signed up and made commitments to their gap years. The circumstances now are different, not because students have had longer to think about it but because they knew what was coming, unlike the students in 1997–98, who had no idea that a fees regime would be put in place.

There was some logic to the argument that there might be students who wanted to start in 2006 because of the package available at that point. What I had not realised is that, in a fit of outstanding generosity, we were going to abolish all up-front fees from 2006. Many Labour Members understood that students who took a gap year and started in 2006 would get the new regime of deferred fees, whereas those starting in 2005 would have to pay £1,000 up front for every year of their course, which would usually last three years. However, we said in the White Paper that there would be no up-front fees after 2006—we had already made that decision and started work on that basis. In a sense, that makes the argument advanced in Committee by Opposition Members that there would be a gap year problem stronger. However, students who start in 2005 will pay £1,000 up front for one year, and the £1,000 fees for the following two years of an average course will be deferred. We had not appreciated our own generosity in that respect.

I should apologise to Mr. Thomas, because the thought that entered my mind when I was listening to him was, "We are not absolutely sure." Higher education institutions in Wales could decide to act collectively.

Photo of Mr Simon Thomas Mr Simon Thomas Chief Whip, Spokesperson (Agriculture; Culture; Environment; Heritage; International Development; Sustainable Energy; Transport)

I am grateful to the Minister for thinking about the matter. Let me put my concern on the record, in the hope that he will find time in his busy schedule to reflect on it. It seems to me that if the National Assembly wants to help gap year students in Wales after the introduction of tuition fees, what will be needed is primary legislation passed by this place, not regulations made by the Minister. Had the measure been in regulations, the National Assembly would be able to act because the matter would be devolved, but it appears in primary legislation. I want the National Assembly to be able to deal with the matter in Wales, if it wants to. The Minister suggests that a voluntary agreement might suffice, but I would appreciate it if he considered the matter in detail.

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

I shall of course reflect on that important point.

In conclusion, I urge the House to reject the Lords amendment and to accept the amendments in lieu.

Lords amendment disagreed to.

Government amendments (a) and (b) in lieu of Lords amendment No. 3 agreed to.

Clause 27

Sections 22 to 26: supplementary provisions

Lords amendment No. 4

Photo of Sylvia Heal Sylvia Heal Deputy Speaker

With this it will be convenient to take Lords amendment No. 2 and the Government motion to disagree.

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

What the two amendments have in common is that they would have an impact on the funding delivered to higher education. I hardly need to remind the House that providing HE institutions with a sustained income stream to address the funding gap in higher education is one of the principal reasons why we have introduced variable fees with a cap of £3,000 to replace the current system of fixed up-front fees of about £1,000. The Government believe that we should give universities greater freedom and flexibility to charge fees within the prescribed limits. The Lords amendments are an odd combination, professing to understand the value of additional fees income to universities on the one hand while taking a substantial chunk of that money away with the other.

Lords amendment No. 2 would not only stop universities charging higher fees, but abolish all fees after the third year. Not only would it remove the universities' ability to increase fees in the fourth year and beyond but it would take away the fees that they already receive in that period, which raises questions about whether universities would want to continue to run longer courses. They might prefer to close those courses rather than run them without fees. Key courses to be affected include medicine, dentistry, veterinary science, architecture, engineering, modern language courses in which students spend a year abroad, and sandwich courses in which students spend a year working in industry. All those courses are strategically important for the country.

Abolishing fees beyond the third year would be a major disincentive to universities to offer those long courses. The other place hoped that the amendment accepted on Report would protect such courses, but in fact it would jeopardise them. Third Reading was interesting because it demonstrated that their lordships realised what they had done and were concerned about it. A parallel amendment that would have had the same effect in Wales, for instance, was not pressed to a vote, demonstrating the inconsistency of their actions. An amendment seeking to make the Secretary of State pay for the costs was defeated because it was accepted that there is only one pot of money and, come what may, the higher education sector would end up paying for that ill-considered proposal.

As for costs, it is difficult to be precise because fees are variable and we do not know yet what universities will charge, but we estimate that Lords amendment No. 2 would cost universities £130 million to £180 million a year, depending on the level of fees charged and the proportion of students on longer courses. As hon. Members will know, we have asked Sir Alan Langlands to conduct a review, "Gateways into the Professions", which will look at the relevant disciplines. Under the amendment, however, his work would be made much harder, with institutions closing such courses before the review was complete.

Photo of Tim Boswell Tim Boswell Shadow Minister, Home, Constitutional & Legal Affairs, Shadow Spokesperson (Business, Innovation and Skills), Shadow Minister (Constitutional Affairs)

Is it not virtually inconceivable that Sir Alan Langlands would propose limiting the time required for students to reach professional standards on such courses to three years? I do not necessarily accept the argument but the logic appears to be, either do part of the course in three years or do not do it at all.

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

I accept the hon. Gentleman's point, but Sir Alan Langlands is not looking at changing the length of courses. His role is to look at best practice in both public and private sectors in "Gateways into the Professions" to see what institutions and the Government are doing, and to spread that best practice. The amendment, however, would take £60 million away from universities immediately, so universities that believe there is a funding gap would have that gap extended and their reaction might well be that they could no longer sustain certain courses.

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

Some of my old friends and colleagues in the House of Lords have great experience of university matters, including funding. I am therefore surprised by the amendment, which is damaging to university finances, as we heard in evidence from the Higher Education Funding Council in the Education and Skills Committee. The British Medical Association produced some extraordinary figures when we debated the Bill in the House on a previous occasion. Are those figures accurate, and is the medical establishment still making those claims?

Photo of Alan Johnson Alan Johnson Minister of State (Education and Skills) (Lifelong Learning, Further and Higher Education) 3:45 pm, 23rd June 2004

I have not heard too much about the matter since that extraordinary figure—I met the British Medical Association to discuss it—of a debt of £64,000. That has never been justified or substantiated. It seems like "think of a number and double it", literally—Barclays was talking about a debt of £32,000 or £33,000. Although medical students will obviously incur a greater cost because of the length of their course, £64,000 was incredible. My hon. Friend makes a valid point. I do not know whether those arguments were used in the debate in the other place, but if they were, it may have been one of the reasons why many noble Lords regretted the decision they had made and sought, unsuccessfully, to rectify it last night.

We should recall, too, that the less money universities have in fee income, the less money they can recycle in the form of bursaries and grants to their students, so the amendment militates against widening participation.

Photo of Graham Allen Graham Allen Labour, Nottingham North

That point was made many times in Committee. Youngsters who currently cannot get to university because there is no support for them would get a £3,000 a year grant—that would apply to most families in my constituency. On top of that, if the universities were properly financed, as my right hon. Friend says, they would receive an additional bursary from the university. Will he write to me and other colleagues and list the universities that are offering such a bursary or, if he cannot answer immediately, will he place that information in the Library? We heard eight or nine examples in Committee, and I am sure that as time has gone by, more universities must be offering more bursaries to assist students from non-traditional backgrounds—that rather patronising expression, which to me means working-class kids—get to university? Will my right hon. Friend tell us if there has been progress?

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

I am pretty sure that there have been no more announcements. The university of Surrey was the last one. That is not surprising because the system that many universities have to go through to determine those factors can sometimes be rather time consuming—I will not use the word "tortuous".

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

There speaks the voice of experience. I would not take the fact that there have been no further announcements as a sign that other universities will not offer the same.

A student studying medicine at Cambridge who comes from the background that my hon. Friend Mr. Allen mentioned would receive a £7,000 package—£3,000 from the state and £4,000 from the university—for the entire length of the course. Under the amendment, the student would stop building up fees after year three of the course, but would still get the Government support and the bursary support—without the money being switched, incidentally. The likely result is that the university, which has control over the bursaries that it offers, would reduce the bursary.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education)

The Minister is speaking about people from non-traditional backgrounds. He will recognise, I am sure, that the son or daughter of a teacher who chooses to do a six-year veterinary course in London will run up £3,000 a year in fees plus another £6,000 or £7,000 a year in living costs. Over six years that comes to £60,000. However, the son or daughter of a dustman who goes on to become a merchant banker will get substantial support from the state. The Minister must therefore understand what a problem his proposal represents for those who are on middle incomes in the south-east.

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

That reminds me of an argument that I heard from a medical student on television addressing the Prime Minister round about last February. I was interested in what medical students—not the Government—said about such arguments in the BMA's magazine, BMA News. The whole page was full of critical letters. In one of them a medical student at St. Andrews university wrote:

"Medical students are in the fortunate position of being almost guaranteed a large income over their lifetime, paid for by the taxpayer.

It is reasonable that we should make a small contribution towards the cost of our own education if we can afford it."

Another wrote:

"Does"—

I will not mention the girl's name, but the reference is to the person who made the criticism—

"not realise that she is about to enter a very privileged profession, enjoying a good income and job security? Maybe her next seminar should be on humility."

The argument about dustmen and so on is well dealt with in that exchange.

Photo of Phil Willis Phil Willis Shadow Secretary of State for Education and Skills, Education & Skills, Shadow Spokesperson (Education)

I accept the Minister's point, but will he accept that the professions that require more than a three-year degree—in particular, medics, dentists, architects and vets—are currently dominated by the higher socio-economic groups, particularly ones and twos, and by white, middle-class males? What difference will his proposals make to getting people from all backgrounds, irrespective of their race, creed, colour or financial background, into our hospitals, architectural practices and veterinary surgeries? I cannot find a justification or argument for the envisaged debts on five-year courses attracting people from the lowest financial backgrounds.

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

I am being tempted into a Second Reading debate about the whole question, but the hon. Gentleman raises an important point. In the 36 years of free higher education post-Robbins and pre-Blunkett, the social class gap widened rather than narrowed for all courses, including medicine and architecture, so free higher education with maintenance grants did not close the social class gap. The hon. Gentleman argues that the introduction of variable fees, which will be deferred until after graduation and which all students will pay following the change from fee remission to grants, will inhibit the resolution of the social class gap problem on longer courses, but the majority of Labour Members and I take the view that that is not the case.

If some aspects of the package were different, the hon. Gentleman's argument might be correct, but when the bright, working-class kid, about whom we have spoken on many occasions, reaches the qualifying, attainment stage when they are 18 years old, they are as well-equipped as someone from a more middle-class background to realise the benefits from studying medicine, architecture or veterinary surgery—incidentally, veterinary surgery is hugely over-subscribed, and there is no sign that fees will make any difference.

Such young people can make that decision, particularly if they come from the background that my hon. Friend the Member for Nottingham, North mentioned, which means that they will receive a £3,000 grant and a bursary from the university. For such students, the fee will be deferred and will be repaid on the basis not of what they owe but of what they earn, and the threshold on repayment will be higher. The regulator will ensure that institutions encourage applications, so universities will become more encouraging and welcoming to applicants who think that they will feel like misfits.

We are also providing extra money to expand places and to allow 50 per cent. of 18 to 30-year-olds to have the benefit of a university education rather than 44 per cent. Mr. Willis speaks with passion and from the same perspective as me and other hon. Members, but we disagree about that issue. I am convinced that the solution does not lie in the amendment. There may be an argument about whether fees are appropriate, but to say that, irrespective of the profession, longer courses should not involve fees after year four is not the solution.

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

I do not want to make my right hon. Friend's life difficult, but it is important to clear up some factual points. Mr. Willis is wrong to describe medicine as a white, middle-class male profession—he is certainly wrong on gender when it comes to current recruitment. How big is the difference between long courses in dentistry and in medicine, where the fifth and sixth years are paid for by the NHS, and veterinary medicine?

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

The student pays. I am pretty sure that we provide no assistance in those circumstances.

Photo of Mr David Rendel Mr David Rendel Shadow Minister (Higher Education), Education & Skills

I declare an interest as someone who is married to a GP. Mr. Sheerman is right that many of our medics, especially those who enter medical schools nowadays, are female. Does not that counter the Minister's point that all medics may pay much more in fees but will ultimately earn good salaries? Many will not get good salaries because they will take part-time work, at least while they have families. Their salaries will not necessarily be that good. If they marry people who do not earn much, they may have to get a mortgage to buy a surgery as well as a home. They may be in difficult circumstances.

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

That is a valid criticism of some of the loan repayment schemes but not of the measure. The new system is income-contingent. If, for any reason, salaries drop below £15,000, graduates will pay nothing back. There is no real rate of interest and no money is clocking up. Debt is always called in at some stage; under the proposed system, it is never called in. Indeed, after 25 years, it is forgiven. I do not therefore accept the hon. Gentleman's points but the difference of opinion at least reinforced the point of my hon. Friend Mr. Sheerman that the gender balance is much better in the medical profession, although there are other aspects to consider.

Photo of John Randall John Randall Conservative, Uxbridge

The Minister is presenting some reasonable views. The fact that I can understand them is good if a little worrying. I took a four-year language course, starting a language from scratch. What is the incentive under the new system for someone to study a language at university, which is not one of those taught in school, if the course lasts four years? Are we not in danger of providing a disincentive to people to learn other languages?

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

No. There are problems with specific modern languages but the Langlands review has been set up to consider such issues, among others.

I do not claim that hon. Members' have not made relevant points about some professions but that the amendment is a blunderbuss that tries to resolve all problems by simply providing for no fees, removing £60 million from the universities immediately and between £130 million and £180 million by 2006. That is not the solution.

We should have a system whereby courses are accessible and attractive, whatever their length. That needs to be achieved by a proper method of targeted recruitment incentives not by a centralised, blanket, inflexible approach such as that in the amendment. We already have a flexible system that allows us to target support at the subjects and students that most need it, without inflicting financial damage on universities.

Significant measures already exist to support students on longer courses. That reflects the importance that the Government attach to such courses and the need to encourage entry into the professions to which they lead. For example, fees are paid for medical students in their fifth and sixth years of study. They also receive means-tested national health service bursaries for those years. We have been over that ground previously in Committee and on Report and I shall not repeat the details of other incentives that we have put in place.

Evidence shows that the incentives work. We have more teachers with qualified teacher status in our schools now than at any time since 1984. Applications to medical schools in the United Kingdom have increased dramatically since 1998, as has the total number of students who study medical courses. Places on veterinary science courses are heavily over-subscribed.

The amendment would create curious anomalies. I shall give two examples. Students who repeat a year, perhaps because they failed parts of their course, would effectively be excused from paying a fee for the extra year. That would be unfair. Let us consider students on sandwich courses, whereby they spend a year out, often in paid employment in industry. They are charged only a half-rate fee in the year out because they get less from their institution but the amendment would give them a free year as well as the reduced-rate sandwich year.

Photo of Tim Boswell Tim Boswell Shadow Minister, Home, Constitutional & Legal Affairs, Shadow Spokesperson (Business, Innovation and Skills), Shadow Minister (Constitutional Affairs)

As time presses, and without prejudice to the general arguments that we had in Committee on policy, but in the real world where the Government can sometimes get their way even if we do not believe that they should, will the Minister at least undertake to consider, in any brokering with another place, a compromise, which would freeze the commitment beyond year three at the existing fee? That would remove the difficulty of the argument that he has deployed but provide at least a limited income to the university without getting people into racking up additional commitments. That is the genuine concern of everyone who supports the amendment.

Photo of Alan Johnson Alan Johnson Minister of State (Education and Skills) (Lifelong Learning, Further and Higher Education) 4:00 pm, 23rd June 2004

I never like to be difficult with the hon. Gentleman, but the answer is no. I see no point in considering that proposal at all, but it was a nice try. Neither do I think, incidentally, that the noble Lords would expect me to consider it, particularly after the debate that they had last night about trying to find the funding for this gap.

I have outlined the key arguments against the amendment, but before I finish, it would be remiss of me not to point out that it is also technically flawed, in that it sets a condition but provides no means of enforcing it. On a more minor note, the term "eligible student" is defined in the student support regulations, not the Bill, so the effect in this context would be ambiguous.

Lords amendment No. 4 would have a significant effect on future decisions about public spending, and should therefore be rejected on the ground of privilege. It would tie the hands of future Governments and prevent them from determining their spending priorities in the light of the circumstances at the time. We are all concerned with the important issue of funding for higher education, but the amendment goes further than ensuring that the new fee income would be additional, and guarantees that public funding for higher education could never decrease, regardless of the needs of other public services.

If we were to accept the amendment, we would be setting a strange and dangerous precedent. We could hardly offer such a guarantee for higher education without recognising the needs of schools, hospitals, and other vital public services. This illustrates the traditional argument against hypothecation; the provision would lead us quickly to a position in which every part of the public sector had its own special case for protection.

Photo of Lynne Jones Lynne Jones Labour, Birmingham, Selly Oak

I agree with the arguments that my right hon. Friend has just articulated, but should not the Government have tabled their own amendments to ensure that higher education spending kept up with other increases in public spending, or with the generality of education spending, to ensure the additionality of the fee income over general Government spending?

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

I do not think that we can do that in legislation. We have given an assurance that we would stand by the sector, and the Chancellor gave that assurance again in his Budget speech in March. It would be dangerous to write such restrictions into the Bill. Incidentally, we are starting a very interesting debate with Universities UK about how better to define the unit of funding to provide greater clarity and a better understanding of how this all works. I do not think that there is a legislative solution here, and it is certainly not the one that my hon. Friend suggests.

Under the terms of the amendment, there would ultimately be no flexibility at all for the Government to determine their spending priorities, and a dangerous precedent would be set. Even if there were major and significant financial pressures on this Government or a future Government, the effect of this amendment would be that higher education would have to be protected above all other priorities. That cannot be right.

Earlier debates in the other place also touched on some of the practical difficulties inherent in the amendment, including potential unintended consequences. For example, the amendment refers to the average funding over the previous three years. That would mean that no sensible Government would ever seek to provide a one-off injection of funding to meet some perceived need, because that would increase the average and could therefore be unsustainable in the future. The result would be that the funding would be kept at the lowest level permissible under the legislation, irrespective of whether additional funding might have been available in any one year. So the amendment would serve only to work against higher education's interests.

To summarise, the first of the amendments should be rejected on the ground that it would deprive universities of funding, and the second should be rejected on the ground of privilege, in that it would tie the hands of any future Government in making decisions on expenditure. I hope, therefore, that the House will join me in rejecting both of the Lords amendments.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education)

We have reached two extremely important parts of the debate and I listened carefully to the Minister's comments. First, Lords amendment No. 4 comes down to the question of trust: do we trust the Government when they say that the money raised from fees will go to universities and will not simply be used by the Treasury as a stealth tax? Secondly, Lords amendment No. 2 deals with concerns about the impact of the proposals on key groups of students doing courses longer than the conventional three years.

I shall start with Lords amendment No. 4. We know that in 1998 student fees were introduced, so the Government told us, as a way to get more money into universities, but despite the Minister's claims to the contrary in Committee, the reality is that the Government clawed back all the money raised in fees by cutting the money they spent in real terms on universities. How do we know this for sure? Because it is here in black and white in the Department's own report, which we need to consider.

Fees were introduced late in the 1998–99 financial year. In that financial year, real-terms funding per student was £5,160. The following year—the figure includes the £1,000 of student contributions—it had fallen to £5,110. So it is absolutely clear in black and white that the money was clawed back. Incidentally, the amount that the Government spend per student is still lower in real terms than at that time and has been increased only courtesy of the student contributions. The Government are contributing less per student than when they took office and less than was contributed by the last Conservative Government.

Photo of Mrs Anne Campbell Mrs Anne Campbell Labour, Cambridge

Can the hon. Gentleman confirm that when the last Conservative Government left office their spending plans for the following two years involved a reduction in that unit cost for university students of 6 per cent. each year? That is what this Government inherited when they took office in 1997. Obviously, they had to put some of that money back, and do so through the introduction of fees.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education)

I am mystified by the Government's pride in following Conservative policies for the first two years of their term of office, particularly when the former Conservative Chancellor said that he would not have followed them as rigidly.

Given all that, it is hardly surprising that there is a little scepticism about what the Government plan to do, particularly when the cost of their proposals is so great for the taxpayer. Taking their own figures from the regulatory impact assessment, the amount that they will have to spend each year in the total student support package to introduce the new system is £1.1 billion. The estimated extra revenue to the universities over and above what they get at the moment, again according to the Government's own figures, is £900 million. It would be cheaper to stay where we are and for the Government to write a cheque to the universities.

Why on earth would the Government go through all the political grief of the past few months? Their majority was almost destroyed in the vote on Second Reading, there has been huge unrest, they nearly lost a flagship Bill—which would have entailed a great deal of embarrassment—and lasting damage has been done to their relations with many of their Back Benchers.

Also, huge damage has been done to the Labour party on campuses. I have been around many universities in the last few months. Members should try to find an active Labour party student branch on campus these days. They would find active Conservative branches, and in a few places they would find active Lib Dem branches, but they would never find an active Labour branch. That has disappeared—it is an extinct species.

Why do all this when it would have been cheaper to write a cheque to the universities? The truth is that many in the university sector believe it to be a precursor to another clawback. That is the only way in which these proposals make economic sense.

Photo of Mrs Anne Campbell Mrs Anne Campbell Labour, Cambridge

To put the hon. Gentleman right, there is an active branch of Labour students at Cambridge university, the president of which is a young lady called Jane Jacks. I thought he might like to know that.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education)

I commend the hon. Lady. It is clear that her stand against the Bill, although perhaps not as complete as that of some of her colleagues, has encouraged those in her own university town to continue to back her. I doubt, however, that they would express support for the Government's policies. I might disappoint her by saying that if she visits many other universities she will find that many of her colleagues are not as fortunate as she.

Why would the Government do all this? Clearly, there is a real fear in the university sector that it is a precursor to a clawback. Indeed, the Association of University Teachers has rightly pointed out that back in 1998, when fees were introduced, the issue of a clawback was raised. The Lords passed an amendment then that did very much the same as the amendment that we are considering today. Ministers at the time said that it was not needed, and that they would not accept it. What happened? They clawed it back. All that the Chancellor of the Exchequer has done is to guarantee funding until 2007–08, which is well before the full impact of tuition fees is even fed through to the universities. The Minister cannot give a commitment beyond that. He could do if he accepted this amendment, but the reality is that people in the university sector are not confident that the same will not happen again.

Photo of Phil Willis Phil Willis Shadow Secretary of State for Education and Skills, Education & Skills, Shadow Spokesperson (Education)

I am trying to follow the hon. Gentleman's argument. In terms of belief and credibility, throughout Second Reading and in Committee, and throughout Second Reading in the other place, its Committee stage, Report and Third Reading, the Conservative party never once said how it would fund the proposals to get rid of tuition fees and top-up fees and to sustain the level of spending predicted by this Government. We now hear that Mr. Howard will follow Labour's spending plans for the first two years of a Conservative Government, were such a thing to take place. I will support this Lords amendment, but whence would the Conservative party get the resources to meet the pledges that it has made in this House and to the student body?

Photo of Chris Grayling Chris Grayling Shadow Minister (Education)

The hon. Gentleman is right to be interested, and I am delighted that he is. He will have to wait a little bit longer. We in the Conservative party believe that we should get our policies right and have them stick until the general election, and not have to change them a few months later, as his party did in relation to the £100 reduction in council tax. We will get it right, and we will publish our plans when we are ready.

The other part of this debate is equally important. The practical consequences for individual students of what the Government are doing will be extremely severe. Those students who do four, five or six-year courses, many of whom enter professions that are not particularly well paid, will see a huge increase in the burden of cost that they will bear as a result of the Government's measures. The Government have totally failed to understand the impact of their proposals on those key professionals, who are the real losers as a result of this change, and the ones who will really feel the extra costs. Those people will be put off pursuing the professions in which this country needs people.

It is extremely revealing. The Government have admitted this afternoon that this amendment could cost £180 million. We know that the total extra amount that will be raised from top-up fees is £900 million. What the Government are saying is that £1 in every £5—20 per cent. of the extra cost of these measures—is being levied from those who already bear the highest cost from being at university. That is not acceptable.

The Minister made a point about students missing a year. Let me tell him about the student to whom I talked recently who had to give up in the middle of her second year because her father was dying of cancer, and who therefore missed the year. Subsequently, she came back to finish her university course, and was deeply frustrated and bitter that she not only had to pay the fees for the year that she had missed but the fees for the additional year. Does he honestly believe that it is right and proper that someone who must give up their course temporarily in such a situation must pay an extra year's fees in order to complete it? I do not think that that is acceptable.

Photo of James Clappison James Clappison Conservative, Hertsmere

May I respectfully invite my hon. Friend to examine some of the evidence received by the Constitutional Affairs Committee from the legal profession about what it thinks the impact of tuition fees will be? It relates to the decisions of those who enter the profession as to what branch of the profession they choose and what sort of work that they do. In particular, it relates to the effect on the numbers who come into the profession to undertake legal aid work, which is notoriously poorly paid. The fear is that the able students entering the profession will choose increasingly to do highly paid work in City firms, and big commercial work, as opposed to representing people on lower incomes through legal aid work.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education) 4:15 pm, 23rd June 2004

My hon. Friend makes an important and powerful point. It is replicated by another important profession—vets. As the Minister said, vets do not get any support from the Government. The proposals have caused great anxiety in the veterinary profession. He will be aware that the Royal College of Veterinary Surgeons expressed great concern about the White Paper. It said that it would

"deter many young people from applying to study veterinary medicine in the future and deter graduates from entering careers in areas of greatest public interest where salaries are lowest, i.e. in veterinary research, in farm and livestock animal practice, and from rural-based practices in general."

The Minister will remember how serious the shortage of public sector vets was during the outbreak of foot and mouth disease, and how much more difficult it made the task of combating the disease. How will levying higher fees over six years on young vets attract more people into key public sector roles in the veterinary profession? It is madness.

The British Veterinary Association recently carried out a survey on the costs today of going through a six-year course. The study found that 45 per cent. of current veterinary students would seriously have reconsidered even starting had they known how much debt was involved. The report on the study said:

"This is very bad news for the profession and should cause great concern to the Government but nobody seems to be paying attention."

The Royal Institute of British Architects published figures recently estimating average debts of £57,000 if tuition fees at the Government's planned level are introduced. Top-up fees of £3,000 a year, living costs of £6,000 or £7,000, particularly in London, multiplied over a six-year course, comfortably add up to £50,000 or £60,000. That is a massive increase on the previous estimate by the RIBA 18 months ago and represents a powerful deterrent to those wishing to enter the architecture profession. I encourage the Minister to look at the letter in Building earlier this year from a consultant in Kent, which states:

"I want to express my outrage at the government's proposal to increase tuition fees to undergraduates.

With our industry failing to attract and retain bright young graduates, we will be forced to look abroad to find our future leaders.

Consultancies are already faced with a chronic skills shortage and should the government steamroller this proposal through, it will lead to nothing short of an industry meltdown."

How will we find the architects that we need in both the public and private sectors if young architects are deterred through the sheer weight of debt?

The Minister mentioned the medical profession. I commend to him the communication that was sent to all of us by the chairman of the British Medical Association's medical students committee. He said not only that he was concerned about the impact of higher debt on doctors but that he believed that the Government's measures would have a significant adverse effect, as has been mentioned, on efforts to bring people from all backgrounds into the medical profession.

I give the Minister further food for thought. I suspect that he has not really thought about this properly. It was articulated well by Lord Campbell-Savours in the other place. Many of those who do the Government's foundation degrees, a two-year course, and follow through into higher education to finish that experience will go beyond the three years. They will be faced with three, four or five years of costs. The Minister says that he is planning to widen participation. Is it really his intention that those people should end up paying fees over a prolonged period? If he does not believe that will happen, he should just talk to the vice-chancellors of some of the universities offering foundation courses. He will be surprised at the fees that they are planning to charge after the autumn of 2006.

The higher education sector does not trust the Government not to claw the money back, and the professions are profoundly anxious about the impact of the Government's proposals on their opportunity to recruit. Both the amendments drive to the heart of those concerns. They deserve the support of the House and it is to the discredit of the Government that they are so determined to stand against them.

Photo of Phil Willis Phil Willis Shadow Secretary of State for Education and Skills, Education & Skills, Shadow Spokesperson (Education)

These are the two key amendments from the other place. They go to the heart of the Bill and the principles behind it. The Liberal Democrats accept that the Minister and Baroness Ashton have approached the whole Bill with much sensitivity and attempted to address all the main issues. I do not believe that they have won the argument on fees, and we will continue to fight that case, including at the next general election, but it is not a case for today.

The other principle relating to the Bill is that now that the votes on fees in this House and another place have been won, we want to guarantee that the money coming from those fees is additional. The whole principle behind Lords amendment No. 4 is to seek to guarantee additionality. There is no doubt that in another place, Lord Phillips of Sudbury and my noble Friend Baroness Sharp, who did tremendous work on our behalf in the House of Lords, supported by Lord Dearing—who is certainly not a lightweight in these matters, having produced the Dearing report back in 1997—Baroness Warwick, the chief executive of Universities UK, Lord Ricks, and Lord Campbell-Savours all supported the simple principle that additionality must be written in as part and parcel of the legislation.

Why did those peers do that? Why did all those people, with their backgrounds and expertise, all—perhaps with the exception of my noble Friend Baroness Sharp—great supporters of the Government in their own ways, say that we had to have that written into the legislation? That is not simply because we do not believe the Government, although the Bill is a betrayal of the 2001 manifesto. There is a belief that the Teaching and Higher Education Act 1998 was also a betrayal of the statements made by the then Secretary of State for Education and Employment, Mr. Blunkett. He promised at that time that the money from tuition fees would be additional income to our universities. Chris Grayling was absolutely right to say that we have seen not only what is really replacement funding through fees, over the years from 1998 to 2002–03, but a reduction in the percentage of GDP that the state spends on higher education. Had it not been for the introduction of tuition fees in 1998, we would have seen our universities suffer worse cuts than the 6 per cent. cuts that the Conservatives predicted when they left office. Lords amendment No. 4 asks the Government to make it clear that they mean what they say, by being prepared to include that in the Bill.

Why does the Minister persist in the ludicrous argument that he cannot bind a future Government to the spending commitments? This Bill's implications start with a future Government—they are likely to start after the general election in 2005, so these measures will bind a future Government, future generations of students and future universities into those spending commitments.

Photo of Mr Alan Howarth Mr Alan Howarth Labour, Newport East

The hon. Gentleman's position is an assault on the authority of this House, and the arguments that his party and the Conservative party have put forward are arguments to undermine the authority of this House on the occasions in the parliamentary calendar when we vote on estimates. We have the Government's word that the funding will be additional. Of course it is up to the House of Commons to monitor that, but we have the opportunity in our conventional procedures, year by year, to vote on estimates and to hold the Government to account in that respect.

Photo of Phil Willis Phil Willis Shadow Secretary of State for Education and Skills, Education & Skills, Shadow Spokesperson (Education)

I thank the right hon. Gentleman for his intervention, but in this year's Budget speech, the Chancellor of the Exchequer said:

"The settlement will maintain the level of real-terms student funding per head, and ensure that universities receive in full the benefit of additional revenue from the Government's higher education reforms."—[Hansard, 17 March 2004; Vol. 419, c. 335.]

That is a clear statement by the Chancellor that not only will funding be maintained in real terms but the money that the Bill will bring in will be additional resources. Why cannot the Government translate that into a simple clause in the Bill to guarantee it? That is all we are asking for, and all that the hon. Member for Epsom and Ewell, representing the Conservative party, is asking for. That is the principle behind the amendment.

Lords amendment No. 2 deals with the issue of the fourth year. I listened to the debate on Third Reading yesterday in the other place. The Minister is right that the issue of who should pay for the additional resourcing—whether it be £130 million or £180 million—is relevant. I believe that we have the right to know where the resources stipulated in amendments should come from. Clearly, there are two ways of paying: either through the Higher Education Funding Council or by the universities themselves.

Throughout the passage of the Bill, the Government have continually claimed that the introduction of differential or top-up fees will give universities the flexibility to be able to meet their differing circumstances. The Secretary of State, who is now in his place, said when the White Paper was issued last year, that Departments such as the Home Office, the Department of Health and the Department for Education and Skills would engage with the Bill to provide the bursaries and support that students studying beyond three years would require. Yet as the Bill has progressed, we have heard absolutely nothing about that. Lords amendment No. 2 is simply an attempt to make the Government put into practice what they promised in the White Paper and during the Bill's passage. In tonight's vote, I hope that both Lords amendments Nos. 2 and 4 will be supported and the Government's opposition to them rejected.

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

I should like to respond briefly to the main points.

Chris Grayling sometimes damages his own case by the use of hyperbole. There was an argument somewhere, but it was so over-egged that it did not come across. One of the main problems with his position was pointed out in an intervention by Mr. Willis. Her Majesty's official Opposition have no solution to the higher education funding problem, whereas the Liberal Democrats at least have a policy—that the funding should be provided by the taxpayer—and have stuck to it.

It seems that the Conservatives are now taking us back to an endowments policy. That should, perhaps, cheer us up. When Mr. Dorrell was the shadow education spokesman, he welcomed Dearing and supported absolutely what he said. We are now introducing Dearing's recommendations. Then the Conservative policy changed to endowments, which Mr. Taylor described as a "fantasy" rather than a "policy". In the 2001 election, the Conservatives stood on the basis of the endowments policy. Then, however, the position changed and we were told that we needed to cut the number of students attending university. Now that we are going back to endowments, surely the next step should be to go back to supporting Dearing and therefore the principles contained in the Bill. It should be a happy day for us today.

The hon. Member for Epsom and Ewell also said—we have heard it before—that instead of going through all this process, we might as well hand over the £1 billion to the universities. If we did that, it would mean no abolition of up-front fees, no 25-year cut-off point for repaying loans, no maintenance grant—an expanded maintenance grant is an important part of the debate—no increase to the student loan for living costs and no independent sustainable source of income for universities in the long term. Once again, the total funding would depend on the taxpayer. Dearing's national committee of inquiry, set up by the Conservatives when they were in power, eloquently expressed the reason why higher education had run into the funding gap—because it depended constantly on the taxpayer and there were other priorities.

I turn now to the point raised by the hon. Member for Harrogate and Knaresborough. We can argue all we like about 1998, but the truth is that the Conservative Government proposed a funding cut of 6 per cent. Dearing recommended a cut of 1 per cent. We were able to effect a 1 per cent. reduction, but the introduction of fees did not reduce the funding provided by the taxpayer.

I therefore ask the House to reject Lords amendment No. 2, and Lords amendment No. 4, which breaches privilege.

It being three hours after the commencement of proceedings, Madam Deputy Speaker put the Question already proposed from the Chair, pursuant to Order [this day].

The House divided: Ayes 291, Noes 194.

Division number 204 Higher Education Bill — Clause 27 — Sections 22 to 26: supplementary provisions

Aye: 291 MPs

No: 194 MPs

Ayes: A-Z by last name

Tellers

Nos: A-Z by last name

Tellers

Absent: 168 MPs

Absents: A-Z by last name

Question accordingly agreed to.

Lords amendment disagreed to.

Lords amendment No. 2.

Motion made and Question put, That this House disagrees with the Lords in the said amendment.—[Derek Twigg.]

The House divided: Ayes 302, Noes 187.

Division number 205 Higher Education Bill — Clause 27 — Sections 22 to 26: supplementary provisions

Aye: 302 MPs

No: 187 MPs

Ayes: A-Z by last name

Tellers

Nos: A-Z by last name

Tellers

Absent: 164 MPs

Absents: A-Z by last name

Question accordingly agreed to.

Lords amendment disagreed to.

Madam Deputy Speaker then proceeded to put forthwith the Questions necessary for the disposal of the business to be concluded at that hour.

Lords amendments Nos. 6 to 8, 13, 9 to 12, 14, 1, 21 and 25 to 27 agreed to.

Committee appointed to draw up Reasons to be assigned to the Lords for disagreeing to their amendments Nos. 2, 4, 5, 15 to 17 and 19 to the Bill: Chris Grayling, Alan Johnson, Mr. Bob Laxton, Derek Twigg and Mr. Phil Willis to be members of the Committee; Alan Johnson to be the Chairman of the Committee; Three to be the quorum of the Committee.—[Derek Twigg.]

To withdraw immediately.

Reasons for disagreeing to certain Lords amendments reported, and agreed to; to be communicated to the Lords.