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I beg to move,
That this House
notes with regret the emerging consequences of the passage of the Higher Education Act 2004;
believes that fees and expanding student debt create significant disincentives for those considering university entry, particularly from less well-off backgrounds;
congratulates the efforts of those in the House of Lords who achieved significant concessions during the passage of the Higher Education Bill, particularly for part-time students;
regrets that Her Majesty's Official Opposition has completely ignored the needs of part-time students in its new policy;
notes that Conservative proposals ask students to pay for the abolition of tuition fees through higher interest payments on their loans, leaving them no better off;
further notes the conclusion of the Institute of Fiscal Studies and others that Conservative proposals penalise the poor in order to subsidise the rich;
notes the recent Times Higher Education Supplement/Opinion Panel Research opinion poll of students which finds that 47 per cent. support the Liberal Democrats, 20 per cent. support Labour and 23 per cent. are backing the Conservatives;
and therefore calls for the immediate abolition of all tuition fees, the re-introduction of maintenance grants of up to £2,000 for students from low-income homes, and the development of a higher education system which brings together universities, further education and e-learning, opens up routes to vocational and technical as well as academic qualifications, and makes it easier for those who wish to study part-time.
It is a pleasure to speak to a packed House on the important issue of higher education. I should like to begin by welcoming the Minister for Lifelong Learning, Further and Higher Education, Dr. Howells, to the Front Bench in his new role. When I first came into the House, he was the Minister for Lifelong Learning, and was incredibly courteous to those of us who were starting our careers here at the time. We remember that, and thank him for it. If today's announcement by the Secretary of State for Education and Skills on post-result applications to higher education is a measure of the Minister's immediate influence, we welcome that, too. The Schwartz committee's recommendations, which have been so swiftly accepted by the Secretary of State, represent an important step towards encouraging university applications from the less traditional groups.
Will the Minister use his influence to dovetail the proposals of the Schwartz committee with the forthcoming proposals by Mike Tomlinson? It is crucial that those two strands of policy development sit together. Schwartz talks almost exclusively of post-A2 level entry into higher education, while Tomlinson shifts the emphasis to four-level diploma entry, with an emphasis on vocational as well as academic credits. I see that Mr. Sheerman is in his place, and I wonder whether this is an issue that the Education and Skills Committee could also look at. It would be sad if two separate silos, each of which placed an emphasis on trying to get under-represented groups into higher education and to further their education, could not come together. Schools, colleges and universities need a single, integrated entry system, and there is a danger, if we adopt the Schwartz system, that we might prejudice what is proposed later by Tomlinson. I hope that the Minister will take that on board.
We wish the Minister well, however. When I looked at the Guardian Unlimited website this morning, a most unusual fact was revealed to me: the Minister was the Liberal Democrat spokesperson on industrial development between 1995 and 1997! That was a fact that I did not know, but I am sure that the Minister will reap huge rewards from having represented us on that vital brief during those two years.
Such surprises are the magic of the House of Commons, but few surprises can rival the announcement last week that the Conservatives at last have a policy on higher education. It has only been six years since the passing of the Teaching and Higher Education Act in 1998, three years since the Prime Minister launched his review, two years since the White Paper was published, one year since the current legislation was published and three months since it received Royal Assent. However, we welcome their announcement.
I have to confess that I was as nervous as a schoolboy with his first top-shelf magazine when I read the Conservatives' policy. Would it live up to expectations? That was the key question. I am delighted that Chris Grayling has now joined his colleagues on the Front Bench, because it was he who stung me in Committee when I challenged him to tell me when the Conservatives would reveal their plans for higher education. He boldly replied:
"I can assure him that when we publish our policy he will be immensely jealous of it, as it will be much more attractive than the one that either he or the Government propose."—[Official Report, Standing Committee H,
I am glad that the hon. Gentleman has hon. Members' support. However, the initial verdict on his party's policy has not exactly been encouraging.
"deeply regressive, benefiting merchant bankers at the expense of nurses and teachers".
I am quite sure that when the hon. Gentleman has the opportunity to speak, he will comment on the Liberal Democrats' policy, but I am talking about his party's six-year plans for higher education.
"a regressive response to the funding crisis in higher education", and the Association of University Teachers has said that it "could prove a disaster" and that it is "highly regressive". NATFHE has commented:
"This elitist policy would reverse efforts to widen participation in higher education."
Frankly, there is not much to be jealous of, so far.
To be fair to the Conservatives, however, despite the dodgy use of figures, the lack of published sources in their report and the misleading use of the Government's explanatory notes to the Bill, the proposals deserve, and are getting, detailed consideration. I wish to help them in that regard today. Perhaps Mr. Collins could explain why, when using the range of figures from the explanatory notes, he took the lowest figure for fee income and the highest for savings from loan subsidies. That is hardly the research on which to base a credible policy after seven years.
But surely the Conservatives' glaring, unforgivable omission of any mention of part-time students was not a result of sloppy research. Given that 50 per cent. of university students study part-time, that omission is more than a minor oversight. I well remember the hon. Member for Epsom and Ewell saying in Committee that
"the absence of greater focus on part-time studies in the White Paper, the absence of a part-time dimension to the Bill, and some of the shortcomings that the Bill represents for the part-time sector are greatly to be regretted."—[Official Report, Standing Committee H,
Those were nothing more than crocodile tears, because there is nothing in the Conservatives' proposals for part-timers. Indeed, had it not been for the assiduous work of my noble Friend in another place, Baroness Sharp, who persuaded the Government to include some provision for part-timers and to ensure that the Office for Fair Access—OFFA—considered access arrangements for part-time students within university plans, I doubt whether the Government would have acted at all.
May I ask the Minister, who I know values part-time study greatly, whether he will extend the proposed review of funding at Birkbeck and the Open university to all mainstream universities, rather than just those two institutions?
Will he guarantee that any assistance rightly offered to Birkbeck and the Open university will be offered to mainstream universities, too? That is a relatively small commitment, but it would send out a strong signal to part-time students and to mainstream universities that that mode of study is valued and supported. The failure of the Conservatives to address that and other key issues means that they have missed a glorious opportunity to cash in on disillusionment with Government policy and to make an important contribution to the debate.
The Higher Education Act 2004 represents a significant departure for British higher education. It enshrines a system in which access depends on ability to pay, not on ability to learn, and on tolerance of £30,000-plus debts. It is extraordinary and irresponsible for Labour Ministers to admit that students will graduate with significant debts, and to boast that students will just have to live with that, at a time when the debt culture in our society is viewed as dangerous and unsustainable.
On the close examination of Opposition policies on higher education and the question of student fees, will the hon. Gentleman reflect on whether a such a policy can be described as providing free higher education when proposals exist to impose commercial repayment rates for student loans at 2 per cent. above base rate, I believe? Does he consider that to be a free higher education system?
I thank the hon. Gentleman for that point, because that is the crux of the Conservative party's policy. The short answer to his question is absolutely not. What is more pernicious is that to get those funds into universities, that commercial rate of interest is charged on the poorer students, who must pay the greatest amount, because they must borrow the most. That is a classic sheriff of Nottingham policy, imposed by the Conservatives.
Before my hon. Friend moves off student debt and the prospect of debt, has he seen the figures that came to me in a parliamentary answer just before the summer, which showed that for the first time in the past 10 years, there was a drop in the percentage of people across Greater London going on to university? That fall was evident in two thirds of education authorities. Does he have any explanation as to why, suddenly, in London, not only are we not moving towards the Government's target but away from it?
I thank my hon. Friend for his question. It is interesting that in some of the poorest communities in places such as Barking, Islington and particularly Lambeth—which I know because I live there—in which fewer than 20 per cent. of students now go on to higher education in a city that offers the widest range of higher education institutions, we are seeing such an alarming drop. For Ministers to say that that is nothing to do with tuition fees and top-up fees is fatuous.
The Liberal Democrats consistently argued that tuition fees and top-up fees would be a significant disincentive to potential students, particularly those from less affluent backgrounds, and not simply a disincentive to go to university, but, crucially, a disincentive to attend the top universities. That was the clear and categorical conclusion of the Government's research, commissioned from Professor Claire Callender of South Bank university. The findings were given additional impact by the report, "The Missing 3,000" published by the Sutton Trust in August, which concludes:
"While 45 per cent. of independent school students who obtained the equivalent of an A and two Bs go to a leading university, only 26 per cent. of state school students achieving the same grades do so."
Are Ministers saying that that is not partly due to debt and the fear of debt? If so, they are burying their heads in the sand.
The hon. Gentleman will recall that, during the Committee stage of the Higher Education Bill, he and I had quite a few debates about the factors that were influential in determining whether students go to university. Does he agree that there is a perception that it is more expensive to go to Oxford and Cambridge than to many other universities? That is blatantly untrue; in fact, the reverse is true. The level of subsidy and number of bursaries available at Cambridge university make it a much cheaper university for those who have the right qualifications.
The hon. Lady is right that we have debated these issues regularly. Does she think that adding a £3,000 a year top-up fee creates a fair access policy? I do not care how much is given at the other end. If £3,000 is charged up front, my goodness, let us not pretend that students are getting a different, better provision.
Our research shows that the proportion of English school leavers applying to go to university has fallen—
I will gladly withdraw it. The fact is that, although the student who is charged £3,000 does not have to pay it on that day, it is still added to their account. Whether it is paid on the first day, or at the end of three years, when the debt is £9,000, is irrelevant. Let us remember that a Labour Government in 1998 introduced tuition fees, having said that they would not do so in their 1997 manifesto, and a Labour Government introduced top-up fees, having said that they would not do so, and having legislated against it in 2001. Let us not have crocodile tears from Labour Back Benchers about those fees.
Our research shows that the proportion of English school leavers applying to go to university has fallen in each of the past two years. According to Universities and Colleges Admissions Service figures, if the number of 18 to 20-year-old applicants in England had kept pace with demographic trends, an additional 12,250 would have opted to go to university over the past two years, but they have not done so. The Government can hardly claim that six years of tuition fees, and the prospect of top-up fees, have been a triumph for social inclusion.
But what are the alternatives? Will either the Liberal Democrat or Conservative proposals expand educational opportunities for less affluent and under-represented groups? As opposition parties, we have a duty not just to criticise but to propose credible alternatives. The Liberal Democrats not only proposed but published our higher education proposals in "Quality, Diversity and Choice". Copies of our documents were sent to Ministers for perusal in advance of debate on the Higher Education Bill, and the costings were analysed and verified not only by the Government but by the Higher Education Policy Institute as correct. Hon. Members might disagree with our proposals on where we would raise our money, and where we would spend it, but the Liberal Democrats are the only party that guarantees students that they will not pay tuition fees or top-up fees and that poorer students will get grants, which will be paid for out of progressive taxation—a philosophy and a concept that the Labour party has abandoned totally as it faces the 21st century.
The Conservatives, however, have totally failed to meet the test of credibility. The analysis of their proposals by the Institute for Fiscal Studies is devastating. As was pointed out earlier in relation to the intervention of Dr. Whitehead, the poorest 30 per cent. of students, who are entitled to a full grant and bursaries under the Government scheme, will pay 25 per cent. more in loan repayments under the Tories' proposals. The Higher Education Policy Institute confirms the IFS view that women, those taking career breaks, for whatever reason, and those in low-income employment, particularly in the public sector, would be particularly disadvantaged. Significant numbers of students will never pay off their debts, because the interest on them will rack up to a point at which it will be impossible to pay them off.
The proposals include no calculation of how that debt will be written off. Students taking longer courses in medicine, for instance—[Interruption.] The hon. Member for Epsom and Ewell is trying to intervene from a sedentary position. A tiny figure is included in the Conservative proposals, but they include no calculation of the number of students who might not repay their debts. They are, in fact, based on the Labour party's proposals—and for all their faults, those involve a simple tax on the outstanding amount which will depend on a person's income. No real interest is added.
My fear, and that of my party, is that those taking longer courses such as medicine, dentistry and architecture—who are already grossly disadvantaged by the Government's proposals—would find their debts soaring as commercial interest rates were added to loans taken out in the first years of their studies. Or is the hon. Member for Epsom and Ewell saying that loans taken out by medical students during the first three years will be exempt from interest until those people start earning more than £15,000? Perhaps that could be clarified later.
In short, the Conservatives are asking the poorest to pay extra so that the rich will not have to pay any fees. That is a classic Conservative policy: tax the poor to give to the rich.
What about investment? Will the Conservative proposals mean extra investment for our universities?
The hon. Gentleman is demonstrating very eloquently how sharply to the left of the Government his party stands on these matters. Given the huge funding gap that undeniably exists in higher education, and his and his party's stated opposition to all student payment, can he explain how he would tackle the very real problem of recruitment and retention of the highest quality staff, and how he would stop the brain drain of high-quality academics to the United States?
I am grateful to the hon. Gentleman, who is always incredibly courteous in his interventions. I have long enjoyed debating with him.
Let me give a simple answer to the hon. Gentleman's first question. Every single member of our party was elected on the basis of a pledge that we believed in social justice—that we actually believed in what we said in our manifesto—that we wanted to see students from lower social groups gain access to university, and wanted to see those with the necessary qualifications and ability go there. That is what we stand for. What we do not stand for is telling those students after winning seats in a general election "Now we are going to change our minds, and send you out of university with huge debts of £30,000." Nor will we say, as Conservative Front Benchers have said, that we will add commercial rates of interest to the debts of the poorest students who must take out the largest loans.
I am proud of what our party is doing. I am proud that we are saying that to pay for that, and for social care for the elderly, we will tax the 1 per cent. who are the wealthiest in the land, earning more than £100,000 a year, and make them pay a little more. I am not ashamed to tell the hon. Gentleman that I believe in social justice, and that I believe in progressive taxation to pay for it.
The hon. Gentleman's second point is important, and has been made constantly by us and by the Government. We believe that our universities do need more money. Academic salaries cannot remain at their present level. We cannot have PhD research students working on less than £8,000 a year, which has been happening in many of our universities. We must stop that drain.
We believe that we must match the amount—roughly £1.1 billion—that the Government say they would provide in top-up fees. The hon. Member for Epsom and Ewell has said that he will do more or less the same. It is the assumptions made by Conservative Front Benchers that I now wish to examine. We need to arrive at a fair balance.
Will the Conservative proposals mean extra investment? The Conservatives make two claims: that their proposals will not cost the taxpayer an extra penny, and that their policy will generate an extra £21 billion of investment for universities over 20 years. If it does not come from the taxpayer, where will the £21 billion come from? For one thing, £9 billion of it does not exist at all. It will supposedly be generated by the universities themselves in endowments. If the Liberal Democrats had said "We are going to magic £9 billion which does not exist", you would have roared. Well, you would not, Madam Deputy Speaker, because you are too polite; but the House would have.
After seven years, we hear this proposal to magic £9 billion. Let me tell the House what it actually means. It means the provision of £500 million a year for the next 20 years—and it assumes that private giving to our universities will rise to the level experienced in the United States, not in 20 years' time but on day one! Many of our universities are struggling to receive even meagre amounts, but because this will be a Conservative Government, they will flood the universities with money on day one.
Well, let us take the Thomas report. [Interruption.] A lot of sedentary interventions are being made.
The hon. Gentleman is probably being a little unfair on the Conservative party. He may recall that in its last manifesto, the foundation sum for every university that was to be magicked out of another sort of proposal was far more extreme and far more magical than this. The Conservatives' present proposal brings us slightly closer to reality.
The hon. Gentleman is most unkind. I thought that we should just forget that episode. The idea that every one of Britain's universities could be endowed by the sale of Channel 4 struck me as immensely fanciful, although it was very exciting at the time.
The hon. Member for Epsom and Ewell mentioned the Thomas task force. He was right to do so. Its report on voluntary giving to higher education states
"The potential for growth is significant . . . if higher education can raise its share of donations to the proportion seen in the USA, the sector would receive £600 million annually."
That is the basis on which the proposals come to us. The report goes on, however, to make it clear that that is an aspiration—perhaps one that could be achieved in 20 years' time. Our universities need the money now. The idea that they could generate income on the scale imagined and in the time scale suggested by the Conservatives is an illusion worthy of their backer Paul Daniels.
People give money to universities in the United States because they are seen as independent institutions—independent of the state, and requiring support from civil society. Does the hon. Gentleman think it likely that people in this country will give money on any reasonable scale to institutions that they see as state-owned, state-run and state-controlled?
The hon. Gentleman is partly right. The trouble with basing the UK model on the US model is that the original bases are totally different. With the exception of a very small number of British institutions, our universities depend almost entirely on state funding for not just teaching but research. Although a small, elite set of Russell group universities are already bringing in significant amounts of additional resources, the vast majority of British universities are not capable of being independent from the state, certainly in the short term. The idea of their receiving donations such as those described in the Thomas report is therefore illusory and fanciful.
If the hon. Gentleman is saying that all our universities should be independent institutions—there is a fair argument in that—and that we need to think about how to create them, I believe that some of them could move in that direction over 20 to 25 years. However, if we are thinking about the US, outside the Ivy league and other more prestigious state universities, a significant amount of higher education is supported at a very local level and is certainly not supported by huge voluntary giving.
I come back to the Thomas report, which makes it clear that it is talking about an aspiration. Having established that £9 billion of the £21 billion promised by the Conservatives does not exist, it follows that a further £9 billion out of the total is also an illusion, since it is promised only as matched funding from the proposed student loans corporation. Some of our poorest universities, which prove unable to raise any of those resources, would, under the Conservative proposals for matched funding, not get any money. The new universities in particular, which are contributing the most in terms of expansion and have the largest number of part-time students, would lose out. How much money goes to universities depends entirely on how much they can raise themselves, and the most prestigious institutions are the ones most likely to benefit since they will find it easier to generate funds.
With university income dependent on an institution's ability to raise matched funding and expansion almost entirely dependent on our mainstream universities, the Conservatives are proposing a redistribution of resources based on prestige, not need. Perversely, while the Conservatives have rightly criticised Government proposals for increasing student debt, their own proposals to provide extra investment depend critically on the poorer students taking out the maximum loans on which they will have to pay the maximum interest and accrue the maximum debt. If that is not a classic Conservative proposal, I do not know what is. Their detachment from reality is truly classic.
For the Liberal Democrats, our fundamental criticism of both Conservative and Government proposals for higher education is the poverty of their vision of what higher education should be about. For both, our universities are to become little more than high-class employment exchanges, where degrees are valued by their market currency, where students are consumers and minority academic courses are to become the province of the wealthy.
I want to finish.
When the Secretary of State said,
"I do not mind there being some medievalists around for ornamental purposes, but there is no reason for this state to pay for them",
I thought that he was being light-hearted. He was not: he was defining new Labour's utilitarian vision for higher education. By contrast, the Liberal Democrats are a party holding true to its liberal past and the liberal promise to expand and not restrict the horizons of human imagination. That means a higher education system that caters for diversity through diversity and one that brings together universities, the further education sector and e-learning.
We as a party have set out our proposals and said how we will pay for them. Under our proposals, no students would end their university days with debts for fees and top-up fees. Next year the electorate will have a decision to make—whether to support two parties that have put our students into debt, or a party that wants to invest in them.
I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof:
"welcomes the passage of the Higher Education Act 2004;
approves the further steps the Government is taking to widen participation, including the establishment of the Office for Fair Access, and enhanced bursaries;
welcomes the improvement in support for part-time students being introduced by the Government, including the first ever grant package available from this autumn;
rejects the Liberal Democrat policy of abolition of tuition fees, depriving universities of a dedicated income stream;
congratulates the Government on maintaining fair and affordable loan repayment terms and rejects the policies proposed by the Official Opposition which would require those graduates who can least afford it to pay the most for their higher education;
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;
congratulates the Government on record levels of investment in higher education, to almost £10 billion by 2005–06, with a 9 per cent. increase in research funding to 2007–08, additional income from variable fees, and further increases in Government funding to be announced shortly;
looks forward to the introduction of a £2,700 maintenance grant for new students from 2006 alongside the improved student support package available from fee deferral, increased maintenance loans and loan write-offs for new students after 25 years;
and welcomes the impact these policies will have on encouraging students from less well-off backgrounds to consider entering higher education."
I am delighted that we have the opportunity to debate higher education today. It is certainly one of the keys to the country's success and it happens to be a subject close to my heart, especially since last Thursday afternoon when I gained this appointment. I am grateful, too, for the opportunity to respond to Mr. Willis, and I look forward to hearing the speech of Mr. Collins. Both Members invariably make thoughtful and helpful contributions, and the contribution of the hon. Member for Harrogate and Knaresborough was no exception.
All in the House now agree that higher education needs additional funding. That is at least an improvement on last year's position when the Liberal Democrats and the Government both shared that view, but the official Opposition took the view that funding and student numbers in higher education could and perhaps should be cut. So higher education needs more funding: the question is how, and who pays. The Government's position is clear and we spent much of last year debating it. The Opposition parties also have proposals to answer that question, and we have heard one of the parties expound them at length today. I shall argue that they are proposals, but not necessarily workable alternatives.
The Government have three main priorities in their higher education reform programme.
May I congratulate my hon. Friend on his new post? He has a hard act to follow, but I am sure that he will live up to it. Given that universities need more money, what does he think of the Liberal Democrat proposals to abolish the Department of Trade and Industry and therefore the science research funding? How will that help universities and where will the Liberal Democrats get the extra money from?
I would not want the Minister to go away intrigued, without having an answer to the question. Of course the Liberal Democrats would not abolish the science budget. It would be transferred almost entirely to the Department for Education and Skills, which is where we believe it should be based. That is the interface with our university structure and that is what we believe should happen.
I am grateful for that intervention, but I have to say that I did not share that perception when the proposals for the Department of Trade and Industry were first introduced. One assumed that that part of the DTI's budget would be scrapped, so I am glad to hear that it will not be. One wonders how many other parts of the DTI budget will not be scrapped either. However, this is a time for constructive debate and moving forward together. I am sure that the House will not want us to rake over that sort of question, which was dealt with admirably in last Wednesday's Prime Minister's Question Time.
We have three main priorities in our higher education reform programme. First, we want to expand and widen participation. The country's needs, now and in the future, will depend on the knowledge and skills of our people. All the evidence shows that the need for graduate level skills will increase and that we are wasting too much talent, with too many of those born into less advantaged families still feeling that university is not for them, whatever their ability.
Secondly, we want to give universities the freedom and resources to compete successfully in the international market—and it certainly is an international market, which is becoming increasingly difficult for universities the world over. We need to give institutions the financial security and stability to allow them to back our world-class researchers, invest in infrastructure and provide first-class teaching and services to students.
Finally, we need to make the system of financial support for students fairer by abolishing the requirement to pay fees up front, providing for fair and affordable repayments for graduates, and helping students from poorer backgrounds with additional grants.
This is a coherent strategy for reform, as set out in last year's White Paper, and the Higher Education Act 2004. The goal is to provide access to world-class higher education for all those with the potential to benefit. I shall look briefly at some Opposition policies, in the hope that we can have a constructive debate about them.
As we have heard, the Liberal Democrats would fund higher education entirely from taxpayers' money, through a new supertax. They have said how much of that supertax they would spend on higher education, but they have not been clear about how much higher education needs to expand, or how future expansion would be funded. When the Liberal Democrat spokesman sums up the debate, I should be very interested to hear his thoughts on that.
Also, there are no guarantees that the funding would be forthcoming if other priorities emerged, and quite a few other priorities have emerged already in the Liberal Democrats' plans. The hon. Member for Harrogate and Knaresborough gave us some comfort when he said that his party would guarantee that HE would get the money. I am sure that we will all remember that in the months to come. However, his party has also guaranteed to provide free long-term care for the elderly, to cut council tax by £100, to cut taxes for the lower paid, to fund an increase in pensions, and to provide £500 million to abolish dental charges. Therefore, whether HE would really get the money is open to question.
I will in a moment, but in many ways that is the nub of the problem. Being centrally dependent on the state means that HE has to take its chances with other competing priorities in public spending decisions. The record shows that that does not work out well in the long term.
Before I give way, I remind the hon. Member for Harrogate and Knaresborough that we may have arrived at our current state precisely because of that strict dependence on central funding. For example, throughout the 1990s there was a very large reduction in unit funding for HE, which fell by 36 per cent. in real terms between 1989 and 1997. I know that the hon. Gentleman is passionate about education, and that he was very concerned about that fall in unit funding.
The Minister asks how we would fund HE, and our answer is clear: we would do it by means of progressive taxation. He asks what we would do about the future expansion of universities. Is it the Government's default approach that they will get any extra money that is needed from the student, and not from any other source?
Part of the money comes from students, as I am sure the hon. Gentleman knows, but the taxpayer gives huge subsidies to the universities, and that will continue. My argument is that the benefits that accrue from obtaining a degree—largely at taxpayers' expense but with some contribution from students—make it just about the best investment in the future that anyone can make. I should be very interested if the hon. Gentleman were to say that he disagreed with that.
We have to remember two things: first, not everyone goes into HE—currently, just 43 per cent. of 18 to 30-year-olds do so; and secondly, going into HE confers substantial benefits, both social and financial, as I just hinted. In particular, the average rate of return to people who have a degree is very substantial, and evidence from the Organisation for Economic Co-operation and Development shows that, in the UK, it is among the best in the world.
It is therefore fair to ask those who benefit from HE to contribute to the costs. I remember being shocked, in 1997, when I read the report by Sir Ron Dearing, as he was then. The report spoke about the need for a contribution from students, but I belong to the generation that received what people called "free education". It was not free, of course, but was paid for by the other kids in my village who did not go to grammar school or university. I was lucky, but they were not, and they paid for me.
I agree with the Minister that some graduates are likely to gain some financial advantage from going to university, but that should not be exaggerated. Has he forgotten that many graduates would probably have entered well-paid jobs even if they had not gone to university? They would have started earning sooner than those who started university, and their lifetime earnings would have been larger as a result. I agree that there should be wider participation in university education, but has the Minister also forgotten that as the number of people who go to university increases, the difference between the average salary of those who go to university and those who do not decreases? He should not exaggerate the case.
I apologise to the House if I have exaggerated the case. I did not mean to do so, and the hon. Gentleman is right to remind me of those matters. However, as a general rule, it is true that, on average, graduates will have considerably larger lifetime earning than others. It is also worth bearing it in mind that in future we as a nation will not earn as large a part of our national income from manufacturing industry as was the case with previous generations. The nuts-and-bolts jobs that used to sustain many parts of the country are disappearing, and almost every prediction of future employment that I have read suggests that we need more and more skills of the sort that are taught in many of our universities these days. If we do not take that seriously we will have big problems. However, I take the hon. Gentleman's point.
The advantage of the Government's policy—that is, fees supported by income-contingent loans—is that the graduate still pays through the tax system, but that the universities are much more masters of their destiny, with an independent source of revenue. I very much agree with Mr. Jackson, who intervened earlier to say how the great American institutions get money in and sustain their income. We have a good deal to learn in that respect.
I know little about these matters at present, and the hon. Gentleman knows much more than I, but I am very interested in the courses offering general access to university that are going on in and around Berkeley. They seem to be growing as a consequence of at least some of that income being sustained, and at a high enough level to allow experiments with other forms of higher education. Perhaps we will have time in this afternoon's debate to touch on what we call foundation degrees and work-based degrees. We have a good deal to learn from the Americans about that as well.
Another aspect of the Liberal Democrats' policy needs to be examined. Under their proposals as I understand them—I am sure that the hon. Member for Harrogate and Knaresborough will correct me if I am wrong—students would study at home for their first two years.
The hon. Gentleman shakes his head, but I shall string together a couple of questions for him, to check what his party's proposals are. First, what would their proposals mean for students who come from poorer backgrounds, or from parts of the country without an older university or one built in the 1960s? Would their ability to study at the best universities—I realise that that term is dubious— become a lottery based on where their parents live?
I am grateful to the Minister for allowing me to respond on that point. I realise that he has much reading to do in his early days as a Minister in the Department for Education and Skills, but I recommend that he read the Liberal Democrat policy document entitled "Quality, Diversity and Choice". It looks at HE and its relationship with further education and it recommends moving to a system based much more on credit, as is the case in the US, with a much more mobile student population. We do not want students to stay at home, in the strict sense, but we accept that the reality now is that roughly every other student is part time. Almost all of those part-time students study from home, and we must recognise that they are a very important part of the equation. Of course that should not preclude students from being able to apply to the most prestigious universities for the courses that they want to follow, but we should not say either that people who study at their local university are being offered an inferior product.
If the Government say that, they are doing a huge disservice to mainstream universities, which offer a remarkable product, given the resources that they have available.
I take that point, Madam Deputy Speaker, and I shall be guided by you.
I would be the last person to imply that one would receive an inferior education from a university that used to be a polytechnic. My patch contains the university of Glamorgan, which is a superb institution, many of whose students live at home. The hon. Member for Harrogate and Knaresborough makes an interesting point. If many thousands of students decide that they want to live away from home, it throws up questions about the financial model that he talks about.
I shall deal briefly with the Conservatives' proposals, although I should have liked to deal with them at length. Perhaps we will have an opportunity to do so at some stage in the future. The Conservatives have said that they will keep our income-contingent repayment scheme. We need to follow the logic of that carefully, to see how income-contingent repayments would work with high interest rates. Income-contingent repayments are not like a mortgage. How much one pays in regular monthly payments depends on what one earns, not what one owes. People pay in proportion to their income above a threshold. So if someone is on low earnings, their repayments are low. If someone earns less than the threshold, the repayments stop altogether. That means that the loan takes longer to repay. With our system, that is not a problem, because the interest we charge just matches inflation. It does not matter if someone takes longer to repay: they only ever repay what they borrowed in real terms.
However, with real rates of interest, it is very different. If someone takes a long time to repay, because their earnings are lower, the interest racks up and they pay back a lot more. If someone takes a career break, perhaps to start a family, the interest really begins to mount up. Two years ago, we exemplified some revealing case studies for the Education and Skills Committee and I hope that hon. Members will take a look at them. If interest rates were about 8 per cent., a low earner with a £10,000 loan who took a career break could easily have to repay £60,000, or six times what they borrowed. In contrast, a city earner with high earnings and no career break would repay just £15,000. It is hard to see how that is fair.
Under the Conservative proposals, where would the money come from? It would not come from high earners. They would repay their loans quickly, so the burden of high interest rates would not fall on them. In fact, the extra money would come from medium and low earners, especially anyone unfortunate enough to take a career break. They would take the longest to repay and thus would bear the greatest burden of that policy. What impact would that have on widening participation? Greater interest rates would mean greater risks for the individual. Those less sure about entering higher education—the very ones we are encouraging to think about it—would be put off in their droves.
Do the Conservatives' sums add up? We have identified at least three serious holes in the arithmetic. They have underestimated by £400 million the likely fee income by using data from 2003–04 instead of estimates for 2009–10. They have underestimated by £300 million the income lost the to the Exchequer if the student loan debt book is given away. Nor do the Conservatives' proposals make any provision to deal with the unfortunate consequences of high interest rates, and the cost of writing off loans for policy reasons. That is not tenable, and putting it right could cost another £400 million. So the Conservatives' sums are out by as much as £1 billion a year. Their new policy is grossly unfair, and the sums do not add up. I shall leave for another day the question of whether the Conservatives' proposals are actually feasible to implement. We have two different proposals from the Opposition parties, but as I said at the beginning, neither is a practical alternative.
Everyone in this House knows and values the contribution made to national life by Lord Dearing. He has done great work in education for this and for previous Administrations. All have valued his independent approach. His committee of inquiry on higher education, in 1996 and 1997, espoused the principle that students should contribute to the cost of their higher education, and that led us to the introduction of fees in the first place. I remember it well because I took the Bill through the House and, temporarily, I was the most hated man in Britain. I am sure that someone took over from me fairly quickly. The logic of that conclusion is as strong today as it was then, if not stronger. Students should make a contribution, but it is better if they do so as graduates, and that is what our fee deferral plans allow for. Of course they must also contribute in a fair and affordable way. That means avoiding the shockingly regressive proposals from the Conservative party, which would have those who benefit least from their higher education paying the most.
Let me begin by adding my words of congratulation to the new Minister on his appointment. I do so warmly and for two reasons. The first is the cause of the vacancy—the deserved promotion of his predecessor. I am delighted that my recommendation that he should be promoted to the Cabinet, which I made on the record in the House some months ago, did not blight his chances. He engaged admirably with both Government and Opposition Members and thoroughly deserved his elevation. The second reason is that I enjoyed the exchanges I had with the new Minister when we both had responsibility for the Transport portfolio. He is a thoroughly nice and decent person and, like his predecessor, he is one of those Ministers who genuinely engages with the points made to him. I wish him well in his new job.
I do not doubt for a moment the passion or sincerity of Mr. Willis, who opened this debate in his characteristically robust fashion. He clearly genuinely cares for the future of higher education and for the life chances of our students. I hope that he would accept that he does not have a monopoly on concern over such issues. We may, and do, differ on the best means of securing our objectives, but we all wish to see a stronger financial position for our universities and an affordable pathway ahead for our students.
All three parties have now set out their policies for funding higher education. We all acknowledge that our universities are badly underfunded and have been for many years, both before and since 1997. We all agree that unless that is reversed major damage will be done to this country's academic and economic standing, that universities therefore need a substantial annual extra injection of cash, and that that should be found in ways that ensure fair and equitable access to higher education, but there are important differences between us, too.
The Government believe that the way forward is to impose top-up fees. That is a clear and open breach of Labour's 2001 manifesto, which stated:
"We will not introduce 'top-up' fees and have legislated to prevent them."
Well, now they have legislated to bring them in. The Government's plans do not make sense for taxpayers, who will have to pay out £1.1 billion extra every year in order to give universities an extra £900 million a year, for students, who will face far higher debts under Labour's plans than under either of the other two alternatives, or for universities, which will face political control of their income, the creation of the widely loathed university access regulator, and no guarantee at all that Labour's second version of fees will be additional to, rather than a substitute for, existing grant. After all, Labour's first version of fees was clawed back in its entirety by the Treasury.
There is an intellectual argument for unrestricted fees and a genuine market mechanism, and that is what some vice-chancellors and others would like to see.
That is not what the Government legislation offers—indeed, Ministers have specifically ruled it out. Many of those who most enthusiastically support fees do so because they want, and hope, to see fees of not £3,000 a year but £5,000, £10,000 or even £15,000. Ministers cite some of those who hold that view in support of their case for fees, but then they turn round and tell their Back Benchers that, of course, there is no question of fees rising above £3,000 a year for many years. Somebody somewhere is being badly deceived.
Then there are the Liberal Democrat proposals. They agree with us that there should be no fees but believe that more money for universities should be provided by raising income tax, at a time when every other G7 country is cutting it. While the rest of the world is following the UK's example of the 1980s and realises that lower tax rates, especially at the top, generate more revenue, increased investment and stronger competitiveness, the Lib Dems want to return to the days of the 1960s and 1970s when Chancellors revelled in asserting that the rich should be squeezed until the pips squeak. As both Abraham Lincoln and John Kennedy recognised, we do not make the poor rich by making the rich poor.
Furthermore, as we have already heard, Lib Dem plans would leave universities wholly and solely dependent for their income on the good will of the Treasury. Universities would have no independent revenue stream, no insulation against the ups and downs of the economic cycle, and no protection when funding higher education becomes a less fashionable cause than it is today.
Both Labour and Lib Dem plans conceal an unhealthy obsession with class. The Lib Dems want to wallop the rich through taxes, and Labour believes there are too many middle-class people at our top universities. Only Conservatives believe that working hard and doing well are not sins for which people's children should be punished.
Does my hon. Friend agree that it is patronising, and merely Lib Dem wailing, to continue to consider as statistically tied to his low-earning parents a student who is over 18, has left home and is probably about to earn more than the national average?
I very much endorse my hon. Friend's point. The issue of fairness has already come up and it would not be going too far to say that earlier the Minister issued a challenge—I do not think he objects to that claim—when he said that it was the responsibility of those of us who disagree with the Government's plans to explain how ours would be fairer. To pick up my hon. Friend's powerful point, we do not believe that it is right for a dustman's son who becomes a merchant banker to be treated better by the system than a teacher's son who becomes a teacher. That is inherent in the Government's plan but not in ours.
The hon. Gentleman said that the only way to make universities independent is to ensure that they have their own funding stream, but surely as long as the Government are giving anything towards the cost of universities their overall funding will always be dependent on a Government decision as to how much the Government portion of that funding will be.
The hon. Gentleman seems to be saying that as long as the Government hand over even a penny to universities they might as well hand over 100 per cent. of the funding and control universities' income. I do not agree. Indeed, it would seem that his own colleague does not agree, because if I understood the hon. Member for Harrogate and Knaresborough correctly, he said earlier that he could see a scenario, albeit over a long time—I think he spoke of a period of 20 years—in which the top universities would become more independent. If he thinks that is desirable and possible, we should welcome progress in that direction. Although the Government's method is not the same as ours, both we and the Government agree that it is sensible to give universities some form of income that is not dependent simply on the view taken by the Chancellor of the day.
The hon. Gentleman briefly alluded to the fact that the Government believed that too many middle-class students are in higher education. The Select Committee has taken much evidence on that subject over the past two or three years and the message that has constantly come from the Government is not that there are too many middle-class students but that too few students of ability across the classes are entering higher education. If he ponders that, I think he will agree that it is a better interpretation.
I always enjoy interventions from the hon. Gentleman, who is a distinguished Chairman of the Select Committee. However, it is always important in the House to listen very carefully to what we each say. In fact, I said that Labour believe that there are too many middle-class people at our top universities. That is an unarguable interpretation of Labour's view, because our top universities neither want to expand nor are capable of significantly doing so. Thus the Government's proposal—to change the social mix of those who attend our top universities—would mean that to put some other categories in, some of those currently there would have to come out. That is the logical and unavoidable consequence of what the Government are doing. His point about wider access to higher education as a whole is valid, but I chose my phrase carefully, and he must accept that it is a fair interpretation of the Government's view on the matter—indeed, it is the only logical one.
First, may I thank the hon. Gentleman for the generous comments he made at the beginning of his speech? Does he agree that under previous Conservative Governments and under two terms of the Labour Government no legislation has prevented any university from raising money privately? In fact, the systems are not mutually exclusive and many universities raise funds privately, especially Oxford and Cambridge, which have a proud tradition in that regard. The United States pays more of its gross domestic product to its universities than we do, so I do not understand how increasing the state's contribution to higher education would prejudice giving.
We are making progress. Only a few minutes ago, the hon. Gentleman described as fanciful the Thomas report recommendation urging that higher education should move towards endowment income of £600 million a year. Now he makes a strong case in favour of that, and I agree. Universities already have an income stream from private sources, and I think his intervention implied that that should be increased. That is very much part of our proposals.
We also believe that both Labour and Lib Dem plans sadly fail to address the grave need faced by our universities not only to boost day-to-day income—all three parties have proposals for that—but to deal with the serious capital repairs backlog and, especially for our best universities, to begin to match the huge endowment funds available to their competitors overseas. The Conservative vision avoids those problems and rises to the challenges.
We propose no fees, either up front or after graduation. Teaching for future generations in higher education should be free, as it was for everyone lucky enough to go to university before Labour came to office in 1997. There should be no means-testing for access to student loans, reversing the Government's mean-spirited attempt to pretend that joint parental income of £25,000 or £30,000 a year somehow makes families rich.
A welcome element of the Government's proposals, which we intend to retain, is the introduction of a £1,500 a year student grant for those from the most disadvantaged backgrounds. Under our proposals, that grant would be available according to exactly the same terms and for exactly the same number of students as the Government propose. That, together with the abolition of fees, will ensure that access depends on ability to learn, not ability to pay.
In that context, I regret the fact that last week at Prime Minister's Question Time, the Prime Minister asserted that the Government were providing assistance to poorer students worth £2,700 per annum, while the Conservatives proposed to provide only £1,500 per annum, and that that was somehow less. Let us be clear. Both we and the Government propose a maintenance grant of £1,500 a year, but their plans provide for an additional £1,200 to pay fees. We would get rid of fees for everybody, so students would not need £1,200 to help to pay the fees. Nor do we believe in a taxpayer subsidy on interest rates on student loans. We would remove an expensive and unjustifiable item of public expenditure. Doing so would generate more than enough resources to replace every penny of fee income for universities.
I have listened carefully to what the hon. Gentleman is saying about fees. He appears to believe that fees will continue to be charged up front and remitted, on the basis of the Government's proposal to introduce up-front grants for poorer students of £2,700. In fact, after 2006, up-front fees will no longer exist, so it is not possible to claim that a good proportion of the Government's proposed grant for poorer students will be earmarked for fee remission. It will simply be money in the pocket for university students to assist them with the costs they will encounter, so I hope that the hon. Gentleman will withdraw his suggestion.
Unlike many of us who are in the Chamber, the hon. Gentleman did not serve on the Standing Committee that examined the Higher Education Bill. Had he done so, he would have heard the then Minister for Lifelong Learning, Further and Higher Education say again and again and again—as indeed the Secretary of State said again and again and again—that it was all right for the Government to introduce fees of £3,000 a year because there was a £3,000 a year package to deal with the consequences of the fees. The Government said that that would be organised by having a grant of £1,500, which would be retained under our proposals, £1,200 to help students pay off the fees in due course, and £300 of remission or bursaries administered by the higher education institutions. We would retain the £1,500, but we would get rid of the fees, so people would not need the £1,200 provided by the Government that, as Ministers repeatedly state, was intended to help to compensate poorer students for the consequences of introducing fees.
Our other proposals include the outright abolition of OFFA—the university access regulator—and the removal of most of the HEFCE bureaucracy, setting universities free from political correctness and the form-filling culture alike. We will transfer the existing student loan book to the ownership of the higher education sector, giving it a major new asset, a guaranteed and independent future income stream and the ability to raise £3 billion in capital in the next five years. Moreover, our plans will provide universities with £500 million a year over 18 years in matching funds for contributions to endowment funds—a massive boost to those who are competing for the best minds with the Ivy league.
The hon. Gentleman says that he would get rid of a lot of bureaucracy by abolishing both OFFA and HEFCE. I understand that he would also introduce—if he gets the chance to do so—a national scholarship scheme, under which presumably every student would need to administer, either for themselves or by another mechanism, the money going from them to the university to pay for their fees. A vast extra bureaucracy would be needed to deal with that per student, rather than per course, as is done at present.
The hon. Gentleman and I genuinely disagree about that. Our proposal is indeed to abolish OFFA outright and to get rid of the bulk of HEFCE. We do not propose to abolish HEFCE in its entirety. I must tell him that a number of vice-chancellors support us—not least a gentleman to whom I wanted to refer earlier who has written a very positive piece in The Guardian this morning: Dr. Peter Knight, the vice-chancellor of the university of Central England. In a piece that I slightly blush to quote at length because it is so very friendly towards us, he says that he welcomes our proposals to cut bureaucracy. As a vice-chancellor, he does not believe that those proposals will be subject to the disagreements and difficulties that the hon. Gentleman has identified.
Our plans will involve much less debt for students, who would, on average, have to pay back £7,000 less than under the Government's proposals. I listened carefully to the Minister when he tried to say that high interest rates are worse than low interest rates, as people must pay more. He seemed to leave out a major element in the calculation: under our proposals, students would not have to pay fees, so their debts would be £9,000—about half what they are now—and the vast majority would have a substantially better package than under the Government's proposals, given the amount that they would have to repay and the time that it would take them to repay it.
We, and we alone, have come up with proposals to tackle the major capital and endowment needs of universities. The Conservative party is offering substantially more to universities than either the Labour party or the Liberal Democrats, who are essentially offering, as we do, an annual increase in income, but unlike us, are not offering additional capital or a major new asset for the higher education sector. We, and we alone, believe that universities should be free to set their own admissions criteria, to pick their own students and to choose their own spending priorities.
No wonder that our plans have been welcomed by Professor Michael Sterling of the Russell group. There was a time, not many months ago, when Labour Members used to pop up and ask—I confess that it was an awkward question—whether we could name a single vice-chancellor who supports the Conservative approach to higher education. I can certainly name at least one, and there are rather more than that these days. I do not claim that it is yet all of them, but a number of them are much more positive about our proposals than ever before.
I commend to the House the excellent article written by Dr. Peter Knight in today's edition of the Education Guardian. As I say, it would be embarrassing to quote all of it because I regard none of it as other than deeply flattering, but his bottom line is that the Conservatives
"abolished fees, cut bureaucracy, slain a few unpopular dragons such as the Office of Fair Access and come up with proposals that address the funding needs of universities. The circle is well and truly squared, absolutely brilliant and actually credible."
The choice is clear: massive debt under Labour; tax rises under the Liberal Democrats; or the best deal possible for students, universities and taxpayers under the Conservatives. Labour breaks its promises. Liberal Democrats know that they will never have to keep their promises. The Conservatives will deliver on our promises.
I always have an interesting role in such debates: as Chairman of the Select Committee on Education and Skills, I try to refrain from getting too much into the party slagging-off match, which we have had previously. This has been quite a healthy and robust debate, and it has been conducted in much better temper than some of the debates that I have been privy to over the past three years. I want to look—reasonably objectively, I hope—at some of the issues that have been rather missed out today.
I warmly welcome my hon. Friend the Minister for Lifelong Learning, Further and Higher Education to his new post. We on the Select Committee are looking forward to an early appearance by him before the Select Committee. As he knows, he will take over his predecessor's engagements, and within a month, he will be coming to the Wilson Room to meet us.
I find days like this a little embarrassing: you were once a student of mine, Madam Deputy Speaker, and the Minister shared a room with me in the House for many years. I know as many secrets about him as he does about me, so if I scrutinise him too hard on the Select Committee, I may regret it, but I genuinely welcome him to the post. He is very knowledgeable about education and higher education. I am sure that, as he becomes as immersed in higher education as he was in the railways—can people be immersed in the railways?—he will become a formidable repository of knowledge about Government policy.
I wish to push my hon. Friend on one issue. Some of us strongly supported the Government's view on flexible fees. At the time of the debate, he will remember that the Secretary of State for Education and Skills and many others who spoke for the Government urged support for the policy on the basis that OFFA would have very strong powers to ensure something that the Select Committee recommended in its report on access to higher education more than two and a half years ago. I refer to greater powers for HEFCE to set benchmarks for fair access, based on ability, to all the institutions, using the long-tried method of setting benchmarks and finding out whether colleges and universities would meet them. If they did not meet them, or did not show that they had plans to do so, they would not able to charge increased fees.
During the press conference held by OFFA yesterday, apparently, it was said almost as an aside that there would be no relationship between OFFA and universities and colleges having to meet any targets at all. I should be happy if the Minister would clear that up either in his winding-up speech or by intervening on my speech now. Is there such a relationship any longer; or, in effect, has OFFA been neutralised in that respect?
OFFA has certainly not been neutralised. It is a very powerful body. Indeed, Chris Grayling and I discussed the issue yesterday in Committee when debating the regulations for OFFA. He complained to me in vigorous terms that OFFA was far too swingeing and powerful and had too many weapons in its arsenal. I am sure that my hon. Friend will take from that my reassurance that, where transgressions take place if universities charge higher fees than they may have set out in their prospectuses and where that breaks the access agreement and plan, OFFA will be able to act very decisively.
I thank my hon. Friend very much. I hope that his comments have put the issue to rest. I will look at his words with some interest in the cold light of day tomorrow.
I wish to move on by saying that most of the Schwartz recommendations that we read this morning are to be welcomed. Indeed, many of them paraphrase the report on access that the Select Committee produced two and a half years ago. Certainly, we strongly recommended post-qualification access. We could not see the sense of admitting people to university on the basis of predicted results.
That leads not only to confusion but to injustice in terms of who gets into which institutions. We believe that such a change, which has been widely welcomed by vice-chancellors and many others in the sectors, should be speedily addressed. Many recommendations have been made and they include one from an influential Committee chaired by one of my predecessors, Chris Price. It proposed just such a change.
Does the hon. Gentleman agree that the Secretary of State's support for the Schwartz proposals for making applications after the results are known would bring forward in the school year the A2 examinations and the vocational level 3 examinations? The time that staff have to teach students post-16 is getting narrower, and the universities and the examination system, rather than the teaching and learning profession, must bend to that.
The hon. Gentleman is absolutely right. There will be teething problems and things can be done better or worse. Sensitivity and give and take between universities and schools and colleges are important in getting things right. However, I think that he and I share a view about the principles involved in assessing students.
In the evidence that we took and in our trips to elite institutions on the west and east coasts of the United States, the Committee found that universities there were able to judge a candidate in the round using four or five different criteria. We felt that using just the straight A-level results was too blunt an instrument to judge a student accurately. We believe that a SAT score, college examinations, the submission of a piece of work and a teacher's report add up to four or five different factors that could be weighed before a student was accepted into a college. It is interesting that the one thing that bound the six elite universities that we visited was the fact that they did not believe in interviews. I remember—I am sure that my hon. Friend Valerie Davey does too—that one president told us, "If we wanted more people like us, we'd interview."
By and large, I welcome the Schwartz proposals. They move in the right direction, and it is important that we get things right. Select Committees have consistently agreed on an all-party basis that ability should determine who gets into any university. There should be no equivocation about that, and there should be no special selection for minority groups if that overrides ability. Ability must be the criteria, but a perceptive way of judging ability must be the absolute priority.
This is a debate about higher education and, in a sense, the debate about flexible fees and top-up fees—whatever one wants to call them—has obscured some of the most important issues that came out of the higher education White Paper and some of the issues that the Government have still not answered. I am sorry to address this point to the Minister on his first day at the Dispatch Box in his new job, but when we consider what gave rise to the debate, we realise that it was not just Dearing. We know that the Dearing report made a great contribution to the debate, but the Universities UK analysis of what was needed to equip universities for a new generation of competition against many global competitors also represented a significant milestone.
We should also maintain the secret of higher education success in this country. I say to the Minister and to those on the Opposition Front Benches that the key to our success in higher education, when compared with other university systems in mainland Europe, has been our emphasis on excellence not only in research but in maintaining the quality of undergraduate education. Indeed, the Select Committee has consistently emphasised—I believe this passionately—the need for a relationship between teaching and research in the same institution. That relationship has been long forgotten and abandoned in most of our neighbours in Europe, and they have certainly suffered from that. Because of that, many people in the other 24 member states of the European Union would come here for an undergraduate education as well as a postgraduate education if they had the choice, the mobility and the language skills.
Although we have obviously had our differences in the course of the debate, I thoroughly endorse what the hon. Gentleman is saying at the moment. I hope that it will be possible for us to find a cross-party basis on which to build on what he has said about the commitment to excellence and the relationship between teaching and research. They are fundamental to the United Kingdom's strength now and in the future. He is quite right about that.
I thank the hon. Gentleman for that. He may not like what I shall say in a moment, but I will try to make my remarks not too party political. The Universities UK review said that there was a £8.79 billion resource gap for higher education. Hon. Members will realise that the Select Committee had a close look at the White Paper and I wish that people would read and re-read the Select Committee reports. We could have saved a lot of money on the Schwartz inquiry if they had been read thoroughly. As I said a couple of weeks ago about the exam results, if people had considered our recommendations about examinations and A-levels, they might have saved themselves some trouble.
The Select Committee put its finger on the problem in our evaluation of the White Paper. We said yes to flexible fees and agreed that Dearing was right. Higher education needs diverse sources of income. That is healthier for universities. I am a governor of the London School of Economics and we are quite good at finding other sources of income because we are a global brand. However, that is much more difficult for Huddersfield university or even the university of Birmingham. There is no doubt that an institution is more able to find sources of income if it has international alumni with a tradition of giving. The LSE has been lucky and assiduous in that regard. Some institutions are better than others at finding funds.
Money from research institutes, foundations and alumni is all very good. Given the tradition of our country, I expect expectations to ratchet up. Mr. Willis is probably right. Expectations should not be set too high, because the culture of giving is very different and all the work that I have done suggests that it takes a long time to turn that culture round. It is beginning to change, but not that quickly.
We want diverse sources of funding, but more than that we need secure funding for research. The Select Committee said that the research part of the White Paper was more important than the discussion about, and the proposals for, undergraduates paying something towards their education. That issue and the funding gap have not gone away. The work that I have done suggests that, even on the most optimistic estimates, flexible fees and top-up fees will bring in £1.5 billion. That is a ballpark figure. Let us be generous and say that it is £1.79 billion, but that still leaves a £7 billion gap.
The hon. Gentleman will surely remember that the Universities UK analysis of the UK funding gap was broadly divided into two parts: £3 billion worth of capital, which is addressed by our policy, and £5 billion that was revenue grant over three years and not over one.
I am not talking about Conservative party proposals. We will evaluate them as time goes on. My remarks are addressed at all three parties—and the governing party, in particular. There is still a large gap in higher education resources and budgets.
That is of great concern to vice-chancellors owing to its impact on capital and the deteriorating state of some of our universities. I visit schools all the time, and they are looking pretty good these days because of investment in new buildings and modernisations, but I have visited universities with severely out of date equipment and buildings, which worries me greatly. I am directing my comments mainly at the Minister at the moment because we seem to be living in an era in which we like to avoid such difficult questions. Yes, it seems to be all right that we will get more money from flexible fees, but there is cap on that for a significant time, so such large sums of money will not come only from student contributions.
I think that my hon. Friend the Member for Bristol, West will agree that there has been tremendous investment in pre-school and school education across the piece and an increase in educational maintenance allowances, but money becomes thinner as one moves up the age range because spending on higher education is significantly less, although we welcome the fact that it has grown. We want to meet the challenge of staying at the top on research and our research-rich universities—that is the proper euphemism that we use these days if we do not want to call them the best universities—but big science is enormously expensive.
The Committee also criticised the White Paper for the way in which research funding was being focused on fewer universities. All the evidence that we took was pretty unanimous in suggesting that taking away research money from research departments with a rating of 3 or 4 continues to be a disaster and that we will reap the dividends of a lack of investment in such institutions as time goes on. Sir Richard Sykes, the provost of Imperial college, said that he wanted research investment to be concentrated on a handful of universities. We asked him if he meant a handful to which he said, "Yes, five." That would mean that most research universities were concentrated in London and the south-east and that there would not be even one premier research university in each of our regions. As a Welsh Member, I am sure that the Minister could not accept that. The Committee's report suggested that we must have at least one premier research university in each of the country's regions.
The Committee also commented on evidence taken regarding a lack of investment in lower-ranking universities. The pattern of research success shows that many innovations come from aspirant universities that are struggling to move from 3 ratings to 4, 5 and beyond. The Government have not tackled the resource gap and the other parties have not addressed it significantly. Our attention has been taken off the matter because of our debate on higher education top-up and flexible fees. During that debate, vice-chancellors and others in the sector said, "Whatever you think about this debate, isn't it wonderful to have higher education on the front pages of every newspaper—even the tabloids?" Yes, it was, but we need a genuine debate about fundamentals, and we were partly taken off track by the obsession with student contributions.
Let us get back to considering the overall role of universities in our society and the fact that universities are the largest employers in most cities and towns where they are found. The fate of communities rests more on their local universities than anything else, and that is true of York, Huddersfield, Oxford, Cambridge and London, with its 34 institutions. Imagine the impact on research, education and the way in which universities contribute to our economy if they were taken out. That consideration brings us back to a more holistic approach to what universities mean for our society.
It is uncomfortable for the Government and all of us to consider investment for universities merely in terms of how much money is going in, because we must also consider more and more the quality of what is coming out. I have been one of the greatest opponents of talk about Mickey-Mouse degrees and easy courses. I have never found such a degree because they do not exist. Students are not daft and will not join a bad course in a British university that would not lead to employment or something worthwhile.
No; I am coming to the end of my speech.
I am worried that universities might be turning out rather one-dimensional people. Although they may be good at their subjects, their education is less broad and well balanced than previously. When I talk to students in the United States, where I have taught as a visiting lecturer in Cornell university for many years, I find a greater breadth and depth across the piece than in our students. We must think about the quality and dimension of our university education and consider whether we are turning out what used to be called well rounded and multi-dimensional individuals. To be elitist, such people used to have an understanding of the arts, philosophy and a broad range of subjects. We did not just turn out social scientists, mathematicians, chemists, doctors and dentists. All our parties must consider the people whom we are turning out.
On the night before John Smith died, I heard him make a moving speech, part of which questioned the way in which the educational system no longer seemed to turn out enough people who wanted to enter public service. I must say that he was talking towards the end of the Thatcher era. He thought that too many people who left education wanted to be have a high income with a job in the City. He talked about the need for people to be motivated towards public service—albeit properly rewarded—and dedicated to giving something back to the country in which they lived and to which they owed much. As we talk about higher education in the coming months before the election, I hope that that tone can be inserted into the debate.
It is always a pleasure to follow the Chairman of the Select Committee and I shall endeavour to be briefer than he was.
We are all grateful to the Liberal Democrats for offering the obscurity of one of their Supply day debates to enable the House to discuss the current state of, and future prospects for, higher education. That is especially useful now because we are plainly in the run-up to a general election, but we have not yet reached a point at which strategies and policies are set in stone, so there is still time and an opportunity for all parties to reflect on what is said in today's debate, as I am sure that they will want to do.
I feel today an optimism about the prospects for our universities that I have not felt since the late 1980s when the Conservative Government in which I served took the first steps down the road on which the Government are making such good progress. We have reached and passed a historic turning point. With luck and good leadership, we will move steadily towards the high-quality, large-scale, diverse and accessible higher education that Britain needs as global competition intensifies and the new knowledge economy unfolds.
There are a number of people whom we have to thank for this happy development, and I would like to mention them. Most immediately, there is the Secretary of State and the former higher education Minister, Alan Johnson, now deservedly promoted. I wish his successor all success; as has been said, he has a hard act to follow. The Secretary of State and his former junior Minister picked up a difficult brief and delivered on it with a combination of charm and brutality that has been widely admired. Above and beyond them, however, there are two other important figures whose role also deserves acknowledgement.
In the first place, obviously, there is the Prime Minister, together with his immediate advisers. They deserve the credit for recognising that a radical change in direction was needed and for giving the strong and courageous lead that was required. Then there is the Chancellor of the Exchequer. It is customary nowadays to dwell on differences between No. 11 and No. 10; indeed it was said at the time that there were differences between them on the question of university fees. I shall return to that in a moment. However, it is important to recognise what the Chancellor has personally contributed to the more hopeful university scene that now lies before us.
Since 1999, there has been steady growth in the funding of higher education. Above all—I know this from my constituency, which has so much science in it—the Chancellor, with Lord Sainsbury, has recognised the importance of investing in scientific research, and it is right to pay tribute to him for that. It is said that the Chancellor's concern about the fees policy related to two key issues: equity and accessibility, and the efficiency and effectiveness of university governance. Those are perfectly reasonable concerns, but I believe that experience will show them to be unwarranted. Let me explain why.
As the stream of income paid by students increases, many universities will reach a "tipping point" at which their overall income from sources other than the Higher Education Funding Council will give them a real sense of responsibility for shaping their own future. As that happens, I believe that they will sharpen up their act and improve their internal governance in ways that no amount of Government exhortation and interference, of which we have had so much over the last two decades, can possibly hope to achieve.
The concern about equity and accessibility will be met in the same way. Under the new policies, the universities will have a serious economic incentive to recruit and retain students. That will do more for equity and accessibility than 100 regulators. The Chancellor is known to be committed to evidence-based policy. I urge him to keep an open mind about the working out of the new policy, and I urge the Government as a whole, in framing their manifesto, to seek to retain the political flexibility to respond speedily to the positive evidence of success that I firmly expect to emerge in the new Parliament.
So much for the Chancellor's concerns. Let me just mention two of my own concerns. The first, I know, is shared by the Secretary of State. Perhaps the biggest challenge now facing many universities is the introduction of the new two-year vocational degrees, with rising take-up for them and a high-quality learning experience for those who go into them. The chief justification for the massive expansion of higher education is that it will expand the skill base of the new knowledge economy more effectively than older forms of work-based vocational training. It is critical for the universities and the country that that expectation is met successfully.
Turning to my other concern, I do not know whether the Secretary of State shares it, but it has an important bearing on the decisions that he will have to make soon about the Tomlinson proposals for the future of school qualifications. My concern is this: for many years, since as long ago as when I was a Minister, it has been fashionable to say that British education does well by the most academically gifted but lets down the rest. There may indeed have been some truth in that claim, and of course it is right that opportunities for every type of student should be increased and expanded. But there is a danger that we may make the mistake of taking for granted the quality of our offering to the brightest students. In a world economy that competes not only in skills but in brains, the whole country will suffer if we do not challenge and stretch our best young brains.
That something is awry is very evident. We can see it very clearly if we look at the figures for the proportions of A grades at A-level in hard subjects that are achieved by students in the independent sector. Until 2000 the statistics on that were presented in a more transparent way than they are currently, and they showed that in that year the proportion of such students from independent schools was in the range between 42.1 and 46.1 per cent. in maths, chemistry, physics and biology. That is to say, in those subjects almost half the A grades at A-level went to students in independent schools. Yet the independent sector educates only 7 per cent. of our young people. There is clearly a lack of real academic challenge and aspiration in the state sector. There is a danger that the Tomlinson proposals will make the situation even worse and perhaps widen still further the academic gap between the public and the private sectors. To coin a phrase, we need academic challenge and aspiration "for the many, not the few".
It is right that I should say a few words, in conclusion, about my own party's recent announcement of its policy for higher education. My message is simply this: it is still not too late to think again. There are two main elements in what is proposed, and both involve a regrettable sleight of hand. The Conservative party proposes to introduce vouchers for higher education. That is presented as a great boost to university freedom, but in any voucher system, or system of per capita funding, the critical questions are, "Who fixes the numbers of vouchers and their value?", and "Can the vouchers be topped up?" Since our universities already admit their own students and their teaching funding is already based on student numbers, there will be nothing new in them administering a voucher system; in fact they already do something of the kind. But as compared with the Government's policy, the Conservative proposals, I fear, represent a step back in terms of university freedoms.
The effect of the Government's policy will be to enable each university to fix the value of its voucher for all its students and for each course, by allowing a top-up subject only to an upper limit. By contrast, the Conservative proposals will retain a system in which the centre decides both the number of the vouchers and their value. That will in practice mean the state deciding, first, how many students there should be in total; secondly, how many students there should be at each university; and, thirdly, how many students will be admitted to each course. The paradox is that the Government's policies represent a real liberalisation of higher education, while the Conservative proposals represent a real move back to "big state, small people".
The second Conservative proposal is to commercialise the student loan system by charging a positive rate of interest for student loans, and to use the revenue from that to fund universities. I welcome the advocacy of a positive rate of interest; the idea was proposed by the Select Committee. The current level of taxpayer subsidy to graduates is not justified by any evidence that it really supports access. But the Conservative proposal envisages, on the one hand, an increased charge to graduates, and, on the other, the use of the funds arising from that
"to improve the teaching infrastructure of universities".
It does not, as advertised, retain the principle of free higher education.
The fact is that a surcharge will be applied to the repayment of loans for student maintenance, and that revenue will be used to pay for university teaching. The proposal thus smuggles in a graduate contribution to university teaching costs—to use a phrase with which the shadow Secretary of State will be familiar, it smuggles in top-up fees "through the back door". As compared with the Government's much more transparent policy, that indirect approach is again to the detriment of university freedoms. Because the vehicle for the new charge is to be the financing of the student loan book, the sums arising will have to be centrally administered. The Conservative proposal is that that will be done at arm's length from Government by way of a new charitable foundation. But I do not think that there would be much difference in practice between such a foundation and the funding council system. The real difference between the Government's policy and the Conservative proposals is that the Government are giving an initiative to the universities, working from the bottom up, while the Conservatives would retain top-down resource allocation from the centre. Once again, it is a question of "big state, small people".
To conclude, the future of our universities is not a central issue in electoral politics. Nevertheless, their strategic importance in the new global knowledge economy is immense. We look to the universities as a prime source of intellectual innovation and increasingly as a vehicle for flexible skills training. As things stand, it is clear that the Government understand that fundamental point, but I fear that that cannot yet be said of either of the two Opposition parties.
It is always a pleasure to follow Mr. Jackson, who is forthright and clear on a subject about which he knows a great deal. It is a matter of regret all round that he does not appear to have been centrally involved in the construction of his party's new higher education policy. Perhaps it would have been different if he had been.
We have concentrated this afternoon on the details of higher education policy. I suspect that as we move into a general election campaign the significance of such detail will be forgotten, but it is extremely important, as hon. Members have said, that we get it right, because it will allow students to know whether they can afford university fees, and pay them in reasonable instalments over a period of time. As my hon. Friend the Minister said, payment should allow for career breaks and other personal choices. The detail of our policy will allow universities to plan their funding, tuition and research requirements in the medium and long term. That is the essence of recent debates in the often difficult passage of the Higher Education Act 2004, which made considerable progress in closing the gap, acknowledged by everyone, between the funding requirements of higher education tuition and research and student contributions. Under the new system, students will be able to pay those contributions from their future income and universities will have an income stream to meet their requirements. I agree with my hon. Friend Mr. Sheerman that that does not lead automatically to a closure of the gap, and I suspect that in future there will be a substantial debate about universities' research requirements. Nevertheless, as a result of the passage of the amended Act and the changes that it will introduce, the detail of the long-term situation is much clearer.
Another hidden issue is access for students who have never considered going to university before. The proposals from both Opposition parties that we are considering this afternoon resile from the notion that about 50 per cent. of young people should go to university. It has been suggested that that figure was plucked out of thin air, but that is not true. According to projections, in future, about 50 per cent. of 18-year-olds leaving school or college will have the qualifications to go to university. The Opposition parties, however, would tell those students that, even though they have the qualifications to do so, they cannot go to university, which undermines a fundamental principle of higher education that the House should espouse. We must enable school leavers to go to university so that on graduation they can contribute to our economy and society. If we start to pick and choose students to reduce their overall number we will let those people down.
In contrast to the Government's detailed policy on higher education, the proposals of the Opposition parties are bottles of snake oil, albeit two very different ones. The Conservative bottle is an enormous jeroboam. The ingredients of that concoction, however, do not add up, as has been said. Asking students to repay loans at commercial interest rates would make an unacceptable connection with a mortgage. Students will not have the choice of taking a career break and there will be no allowance for people who do not earn enough money to pay off the loan. As a result, the clock will be ticking on the interest that they have to pay and, as analysis shows, the money to be repaid will pile up. The idea of throwing out the loan book to match funding for endowments is absurd. The loan book, however, is a means of providing loans for students in the long-term. If we sell that long-term future to achieve a short-term fix for university funding we will simply find that the sums do not add up. The only conclusion to be drawn is that the books can only be made to balance by a radical contraction of student numbers, and that is the problem at the heart of the Conservative proposals.
The Liberal Democrat proposals, as I said, are a different kind of snake oil, although it may be unfair to characterise them as such. They are a medicine that works in its own right, but the problem is that the same bottle of medicine has been promised to every single person in the GP's practice. My hon. Friend the Minister outlined a number of Liberal Democrat proposals that flow from the 50 per cent. tax increase that they would introduce. A little while ago, I attended a debate in the Chamber on Liberal Democrat proposals for local income tax in which they said that they could achieve the transition from council tax to local income tax by means of their 50 per cent. tax increase. They would introduce a cut in council tax, free long-term care for the elderly and various other things, including higher education reforms, some costed, others not, that go far beyond their central pledge to abolish tuition fees.
The Liberal Democrats propose loans to cover maintenance, the reintroduction of maintenance grants of £2,000 a year for poor students, and free eye tests and prescriptions for students. They would like to restore housing benefit to students during the summer holidays. They want to pay fees for part-time students who, they say, will also be eligible on a pro rata basis for means-tested loans and grants. In addition, they would like to put more funds at the disposal of individual universities to help meet cases of unexpected hardship.
Perhaps as a result of those additional internal uncosted commitments, Mr. Willis, whom I greatly respect for the tenacity and thoughtfulness of his contributions—
I am paying a straightforward compliment to the hon. Member for Harrogate and Knaresborough, not a barbed one. I imagine that it was precisely because of that thoughtfulness and commitment that he circulated a memo to members of his party last year, pointing out that there was a hole of between £1.5 billion and £2 billion in the Liberal Democrats' commitments that would need to be filled.
The Liberal Democrats also seem to suggest not just that a number of students would study near their homes, but that, in the words of their leader, normally students would study at universities near their homes. That runs contrary to the idea that access means students have access to all courses on the basis of their qualifications, wherever those courses are. In an economy where the elite universities attracted the movement of students, most universities did not. A state college system would cut directly across the idea of access, which we consider important.
Perhaps the hon. Gentleman has forgotten that there are now as many part-time students as full-time students. As almost all those part-time students are studying from home, it is true even now that the majority of students are studying from home.
Yes, I take the hon. Gentleman's point. It is true that a number of students are studying from home, and that a number of students who are doing full-time courses go to local universities. I take issue not with that fact, but with the apparent notion enshrined in the Liberal Democrat proposals that it would be normal to study at home—that pretty much everybody would study at home or at their local university. That is a considerable bridge over which Liberal Democrat policy leaps.
I have heard it said several times today that the majority of students study at home. I have not seen that statistic and I should be interested to know whether it is legitimate. If a party believes that most students should stay at home and study rather than go away, it may suit that party to present that as the current situation. I should like to know the legitimacy of the statement that most students in higher education study at home. I have not seen it for myself.
Neither have I. As I granted Mr. Rendel, it is accepted that a substantial number of students, particularly part-time students, study at home. I have looked at the figures for students studying locally in my own city, at Southampton institute and Southampton university. There is an increasing trend, but it is by no means normal for students to study at home. It is by no means the case that most students study at home. As my hon. Friend says, to make that claim in order to bolster a policy that would greatly enhance that number is a bridge too far.
The hon. Member for Newbury may not have stated that students would normally attend a college or university near to where they lived or worked, but his leader, Mr. Kennedy, stated that in a speech to Liberal Future on
Whether or not one agrees with everything in the package proposed by the Labour Government, the policy is clear for students and universities. It is clear about access and the long-term future of universities, students and access. My concern this afternoon is to contrast that with two policies that, in varying ways, mortgage the future for the present. We need look no further than the extraordinary quote in the motion—I have not seen many such quotes in motions—which states that the
"Times Higher Education Supplement/Opinion Panel Research opinion poll of students . . . finds that 47 per cent. support the Liberal Democrats, 20 per cent. support Labour and 23 per cent. are backing the Conservatives".
That would largely explain the wildly over-extensive and substantially uncosted prospectus that the Liberal Democrats are presenting to students. Those who do not look at the detail may be taken in by it. It may be a clear election ploy to try and enhance the support of those people, but because the debate is all about details, it is essential to stick with the details. Those who look at them will realise that we should not mortgage the future of higher education for quick fixes. We should make sure that higher education is funded not just for current students who are voting in polls organised by The Times Higher Education Supplement, but for students in the next 30, 40 or 50 years who may benefit from their university and benefit the country, and for universities of which we can be proud.
I appreciate the chance to take part in the debate and will do my best to be brief, as one or two others still want to get in. Some of my remarks derive from the time when I occupied the Front-Bench position now held by my hon. Friend Chris Grayling as shadow higher education spokesman, before I became batman to two successive leaders of the Conservative party—though a batman with no aspirations to climb on to a ledge of the palace. Some of my remarks are sourced from my continuing fellowship of the Industry and Parliament Trust and Universities UK. I am grateful to the universities of Holloway, Kingston and Bristol and to Imperial college London for the access they have given me over the past couple of years, though I stress that the opinions I express and the comments I make are mine, rather than theirs.
I warmly welcome the Minister to his position. We have known each other as friends for many years. He has always carried out his ministerial duties ably and competently—it says in my notes—and I see no reason why that should not be the case in his present position. We know that he will put into it all his endeavour and effort.
I strongly welcome the debate, as much as I welcome the change and development that have taken place in higher education since the 1960s. That more people go to university now is obviously good news, and that universities are different in their style and in what they provide for both graduates and undergraduates is also to be welcomed. Universities are not as they were. In most respects, that is to be welcomed, although one or two things are not so good and candid friends need to say so.
There are many issues in higher education that we could debate on the basis of the motion, but I shall deal with a theme that has emerged from one or two comments. My hon. Friend Mr. Jackson first raised it and it is a point not truly brought out in the motion or the amendment. My colleagues have a better grasp of the issue—that is, the independence of the higher education sector.
The Liberal Democrat motion and the Government amendment imply that higher education is and will remain almost solely a creature of Government. Higher education and Government should, of course, form a partnership. The nation has expectations and interests of which higher education must take account, but a too close, too dependent relationship between higher education and Government is not a good thing.
I shall pick out a couple of examples of that relationship being overdone in this country. The regulation and direction of funding through the Higher Education Funding Council has been commented on. Although they may be improving, universities still complain, and they are right to do so on occasion. Not only is the task of applying for funds time-consuming and frustrating, but almost all funds come with strings. Universities long for a system that rewards their professionalism and integrity with earned autonomy by which they can use money to fit in with their long-term plans and aspirations. Subsequent irresponsibility can be punished, which is what random inspections are for, but more trust and autonomy would be warmly welcomed.
I therefore welcome my hon. Friends' development of our ideas for greater autonomy by changing the funding mechanism for universities and encouraging more voluntary giving. Voluntary giving raises some challenges, which are set out in the excellent paper prepared by Professor Eric Thomas of Bristol university earlier in the year. If we could get the £600 million to which he and my hon. Friends refer, which works out at £400 per student, it would be of great assistance.
Of course, money will not come in equally to all institutions, and I recognise the fears expressed on that point, but two things follow. First, as Professor Thomas makes clear, endowment and voluntary income does not replace money from students or taxpayers, so room exists to correct imbalances, if they occur. Secondly, and most importantly, we cannot and should not expect all universities to receive equal resources, because they are not all equal, in the sense that they do not all tackle the same role in a modern higher education sector. Some can and must conduct blue-sky research. Some want to run courses for the sheer hell of it, and some students take those courses for the same reason.
The Secretary of State for Education and Skills made some unfortunate remarks suggesting that education for its own sake is not valid and that universities should be more vocationally driven. We are right to reject that proposition. Somebody, somewhere should defend education for its own sake, and it should be the Secretary of State. This country needs a tier of universities that receive wholehearted support and that are recognised as being of world stature. They must compete internationally and draw the best researchers and teachers here in order to deliver the highest quality skills to our students, which benefits everyone. Such universities are likely to be better funded than others.
Not all universities can fulfil such a role, and others of them may perform different jobs with a degree of excellence: teaching may take precedence over research; care for students who need the greatest help may be of the highest quality; and relationships with particular industries may ensure that a university supplies a niche market. Individual departments of excellence can and do flourish in virtually all universities, and a system that enables those individual jewels to be recognised and supported is required.
No; Simon Hughes wants to speak.
Not recognising the difference between universities and seeking to hold back those of the highest intellectual and research capacity because not all are equal is bogus and likely to inspire a complete breakaway by a handful of universities from the rest, which would be to no one's advantage. Greater autonomy will lessen that risk.
Who goes to the university is the second area in which the Government threaten independence. My message to the Government is simple: leave it to the universities. All universities that I have visited in the past three years are searching for the best students, and no admissions tutor is unaware of the effort required by a student from a difficult background to achieve top grades at a school that may not have everything. Universities know how to make allowances and do not need the Government to set quotas for them.
The more the Government go on about that matter, the more likely it is that individual injustices will take place: youngsters will not be judged on their merits, individual rights will become subordinated to group rights and public confidence in the honesty and integrity of the admissions system will be fatally compromised. The issue is not unrelated to the Government's aspiration for more people to go to university, which is good, and their 50 per cent. quota, which is not good.
Interfering with independence is dangerous in two respects. First, continued emphasis suggests to the nation that only higher education is worth having and that those who pursue further education, and even those who learn on the job, are somehow second class, as are those who teach such courses. I absolutely reject that notion. We cannot truly talk of "parity of esteem" for post-16 destinations if we give such an impression.
Secondly, a quota increases the likelihood that someone will be encouraged to take a course they do not want, in a university that they do not want to go to, in order to fulfil the quota and ensure that a university stays in business. That neglect of the interests of the individual student, who is considered as a commodity to fill a quota, is sad and wrong.
The pressure on universities to widen and increase access and to make allowances for quality runs the risk of taking the spotlight off secondary education, which my hon. Friend the Member for Wantage mentioned, and its responsibility to ensure the best outcomes and grades for its students.
The problem of ensuring that a strong group of applicants from disadvantaged backgrounds is ready for higher education is not solely the responsibility of the universities, and their efforts to address that are helped substantially when secondary schools act in partnership with them and increasingly support such efforts.
Let us take on the next phase of higher education. Let us give universities as much autonomy as we can and a light regulatory regime. Let us give students the sort of support that my hon. Friends propose by ensuring that they do not pay fees, cutting their debt and enabling them to borrow enough to live on at university—a message that was missed out of the Government's original White Paper. I strongly support my colleagues' package of measures, which is designed in the best interests of universities and students.
I am conscious that we are coming to the end of the debate, and I am grateful for just a few minutes to put one substantive point to the Minister, whom I too welcome to his post.
My constituency does not have a great tradition of higher education: that was not generally what people from the old boroughs of Southwark and Bermondsey did. The one notable exception was the great teaching hospital of Guy's, which won prizes around the world and had dental and medical schools that were pre-eminent for a century. After that, things moved on. We had Borough polytechnic, which became South Bank polytechnic and is now London South Bank university, which is doing very well in terms of widening access. We have students living in premises south of the river who go to the London School of Economics and Westminster university.
I was prompted to make this contribution by figures that alarmed me when I got them from the then Minister in July; I mentioned them in my intervention on my hon. Friend Mr. Willis. They suggest that something is badly wrong as regards opening up access and encouraging people to go on to higher education in London, our capital city. I have since asked questions relating to the other parts of England, and those figures will be available when we come back after the next break.
The figures show some worrying trends that I want to put to the Minister. They relate to the 32 London boroughs—the City of London is excluded—and cover the years 1996 to 2003, the last year for which figures are available. In the past year, 20 of the 32 boroughs experienced a decline in the percentage of students going on to higher education. Four local authorities—this is not a party political point—have experienced a decline over the whole period, which means that a smaller percentage go to university now than in 1996. They are Camden, with a 4.5 per cent. drop; Hammersmith and Fulham, with a very small 0.5 per cent. drop; Kensington and Chelsea, with an 8.5 per cent. drop; and Richmond, with a 1 per cent. drop.
There are huge variations in the level of attainment. In two boroughs, only 12 per cent. of school leavers go on to higher education: Barking, which is a traditional working-class area, but an outer London borough; and Hackney, an inner-city borough with all the educational problems that we have heard about. At the other end of the scale is Harrow, where more than 40 per cent. of students go on to higher education. In 1996, the figure was about 30 per cent.—there has been a huge increase in that relatively affluent borough.
Six local authorities have experienced good increases since 1996 in the numbers of students going on to higher education. When I list them, hon. Members will see that, again, I am not making a party political point. They are Harrow, with 9 per cent.; Newham, with 8.5 per cent.; Redbridge, with 9 per cent.; Waltham Forest, with 8 per cent.; Wandsworth, with 8 per cent.; and, I am pleased to say, my own borough of Southwark, with 8 per cent.
Those are the best performers. Overall, however, the London figures have started to turn down rather than up for the first time in seven years. For the first time, we have an indication that people in Greater London are not going on to higher education—I am not referring to the 50 per cent. target to which the Government aspire—because the figure for the capital is less than 25 per cent.
The best conclusion that I can reach—I do not draw on a great amount of research; I am happy for the Government to conduct the research—ties in with conversations in my constituency and anecdotal evidence that I have picked up across London. More and more people say that they will not go to university because of the cost and risk of debt.
I am not trying to bolster my party's case for the sake of it. As a London Member of Parliament who hopefully knows the subject relatively well, I simply want to share the fact that the evidence on the ground suggests a worrying trend. If that is the case, although we have the Higher Education Act 2004, the orders have not been laid and I hope that the Government can think again, not only about whether they insist on breaking their earlier commitment but about whether it would be wise in the foreseeable future to increase the contributions that students are asked to make to tuition fees. There is a danger that the people who need university most may be most put off and that the opportunity for widening access to which we all say that we aspire may not be fulfilled.
It is nice to follow my hon. Friend Simon Hughes. It is the first time that I have done that, and I am pleased to have that opportunity and to welcome the Minister again to his new position. I had a chance to do that yesterday in Committee and I am glad to do so today on the Floor of the House. I look forward to further debates in the next few weeks and months.
I start by making one point about Conservative policy that has not yet been raised. It is an interesting issue, and I hope that Conservative Members can answer my point. The Conservative party states in its paper that under its scheme the average debt with which graduates end their university careers will be lower by £9,000 than under the current Labour scheme. I take the difference to be caused by the fact that, under the Conservative scheme, students will not have to take out a loan to pay three times £3,000 of tuition fees, which they must do under the Government's top-up fee scheme. That is the only logic that I can perceive behind claiming that the debt would be £9,000 lower. If that is the only difference, Conservative Members appear to be assuming that the amount of the loan that is taken out for normal living costs will be precisely the same under both schemes— some £10,500 on average at the end of a normal undergraduate career. That means that the Conservatives have failed to increase the figure by the extra interest that they would charge before the student begins to pay off the loan in the April of the year after graduation. That implies a subsidy.
I am delighted to say that the models that we put together and published last week include interest on the debt that accrues at university under both the Government scheme and our own.
I am delighted to hear that, but I am a little surprised, because the difference between the figures given is only £200. That implies that the amount that the Conservatives have accepted as the extra interest on the debt in the period before it starts to be paid off is only £200. Given that the real rate of interest that the scheme implies is some 4 per cent., and that the undergraduate is expected to borrow approximately £3,500 a year, only £200 seems a small amount of interest. I cannot get the sums to add up. The figure should be closer to £1,500. Some questions remain.
Another aspect of the Conservative scheme is that it raises the maximum amount that can be borrowed by students. Conservative Members must therefore assume that at least some students will take out more than they are allowed under the Labour scheme. Surely that implies that the average loan will be greater, and therefore a greater average amount must be repaid. There are therefore two fundamental concerns.
I would like to make it clear that the extra amount that students could borrow would not displace money that they were borrowing at 3 per cent. interest. It would displace money that they are presently borrowing at credit card rates, which can be anything up to 18 or 20 per cent.
I understand that point. Nevertheless, the amount that the average graduate could borrow would be higher under the Conservatives' scheme, and would therefore take longer to pay off.
I would like to turn briefly to some of the points that have been raised during the debate. When we talk about the extra money to be raised through income tax on earnings above £100,000, we have made it clear again and again that that money would pay for three things, and three things only: the higher education changes that we intend to make; free personal care for the elderly; and some help for local authorities to keep down their council tax bills. Those are the only things that will be paid for out of that money.
Several hon. Members have mentioned the difference between the United States and elsewhere, and how US universities have been able to encourage a lot more private endowment. My hon. Friend Mr. Willis made the important point that public spending on higher education in the US represents a higher proportion of gross domestic product than it does here: roughly 0.9 per cent., compared with 0.7 per cent., according to figures produced by the Organisation for Economic Co-operation and Development. That makes it clear that it is the public commitment to higher education—the fact that the public authorities demonstrably believe in the importance and value of higher education—that encourages the extra endowment from the private sector. To suggest, therefore, that endowment from the private sector could take the place of public funding would be fatal, as it would almost certainly lead to a reduction in the endowment coming in, rather than an increase.
I made a point in an intervention on Mr. Collins about the bureaucracy involved in his national scholarship scheme. He simply did not answer my question, so I shall raise the matter again. If the Conservatives introduced a national scholarship scheme, someone would have to administer it, and the amount of bureaucracy would be far worse if it had to do be administered on a student-by-student basis. Each student who gained a place at university would have to ask the university exactly how much money was involved, then apply to someone—it is not clear who—to ensure that they got that money to give to the university. It would be a hugely bureaucratic system, and I suggest that it would cost an awful lot more than the current one.
The hon. Member for Westmorland and Lonsdale also seems to have a conflict between two ideas. One is that it would be entirely up to the universities to give places to whomever they wanted, and that they would then be able to get scholarships to pay for those places; and the other is that a minimum proportion of those scholarships would be allocated to certain subjects. Quite how that would be administered, alongside the universities having complete freedom to give places to whomever they wanted, in whatever subjects, I fail to understand.
A fundamental point about the Conservatives' policy is illustrated by the fact that the hon. Gentleman failed to answer the criticism made by the Minister and my hon. Friend the Member for Harrogate and Knaresborough that the Tories' scheme would inevitably involve money being taken from the poor and given to the rich. That would happen because the poorer graduates—those in less well-paid jobs—would take much longer to pay off their debts, so the bulk of the money that would replace the current fees would come from them.
Will the hon. Gentleman confirm that under his proposals there would still be loans that had to be repaid at the end of they day? Under his scheme, someone who went into a well-paid job could pay off their loan faster than someone who went into a less well-paid job.
Yes, but since the increase is only to be at the rate of inflation, there would be no real effect there. That is clearly an important difference.
There have been various claims that the Tories were going to pay the capital amounts demanded by universities, and that we were not. Because of the possible early introduction of our higher rate of income tax, we would be providing a lot more money to the universities than the current Labour scheme, and the Conservatives are quite wrong to pretend that that is not the case.
The most fundamental criticism to be made about the Government and the Conservatives involves their lack of vision about higher education in general. Ministers come up with only one answer to the question, "What is higher education for?" They say that it is there to serve the needs of the economy by creating a skilled work force. They believe that the kinds of study that are not deemed economically useful and fail to meet a consumer demand are not worthy of support. We agree that higher education is vital for the economy, but we do not believe that knowledge is valuable for that reason alone: it is of intrinsic worth both to the individual and to society as a whole. We regret that Labour and the Conservatives are now uniting around the position that the value of studies is determined by the number of student customers that a course can attract, or by some centrally determined test of economic usefulness.
Let me give one example of how the position now taken by the Government and by the Conservatives can be spectacularly short-sighted. How many people were arguing before
"the gradual loss of a national resource for teaching Arabic and other Middle Eastern languages, and . . . because of the concomitant staff cuts, the loss of expert advice which should be available to government, the diplomatic and intelligence communities, and business."
That is the logic of the market as envisaged by the Secretary of State and the Conservatives.
There is now a significant divide in politics on the future of higher education. The choice is between those who want to tax learning—whether through fees or interest rate charges, which applies to both the other main parties—and those who believe that it is the duty of public policy to ensure that every individual is able to expand the humanist wall that we need in our community. The Conservatives are advocating a policy that unashamedly redistributes wealth from the poor to the rich—socialism for the wealthy—and the Government, too, have promoted a policy that disadvantages the less affluent. Their desperate war of concession and reassurance during the Higher Education Bill debates, promising grants and bursaries all over the place, was a tacit admission that that is the case. If tuition fees and top-up fees are so benign in their consequence, why did Ministers decide that all those sticking plasters were necessary?
The Liberal Democrats therefore have nothing of which to be jealous in the other two parties' policies. Our position is principled and consistent with our party's values and history. It is also popular with students, university staff and parents, which cannot be said of our opponents' policies. One of the most striking comments in recent days was that of the National Union of Students president Kat Fletcher, who said:
"Though the Tories stood by the NUS in our battle over tuition fees, we now recognise that their promises for a fairer funding situation for higher education were merely rhetoric."
A policy that is principled and popular and will create a higher education system fit for the 21st century is a policy that we will be proud to take to the country.
Let there be no doubt: this will be one of the deciding factors of the general election. Both Labour and Conservative will be standing on platforms that make those who go to university pay for the costs of the education they receive. We have a different answer. Because society as a whole benefits from the highest levels of education, the cost of that education should be met from taxation, and in particular, we would replace fee income with taxation of earnings above £100,000. As a result of the chasm that differentiates our policy from the policies of both the other two parties, we are looking forward to the next election with relish.
I am dreadfully sorry, Mr. Deputy Speaker, I wrote that down on my brief in thick black handwriting.
With the leave of the House, I now have about six minutes.
May I begin by wholeheartedly endorsing the support voiced for the intrinsic value of university education, although I must tell hon. Members that I still grind my teeth occasionally at having once lost out in a shortlist to someone who was studying the effects on warfare of horsemanship in 13th-century Castile? I have my doubts about whether my subject of research was much more useful—
It was the coal industry, which the hon. Gentleman will know about.
This has been an interesting and informative debate, which has made clear the depth of feeling in the House about higher education. My esteemed predecessor as Minister, now Secretary of State for Work and Pensions, would have enjoyed the debate, because it has underlined the importance of ensuring that we get this right. I was especially encouraged to hear expressions of support from both sides of the House for maintaining what my hon. Friend Mr. Sheerman referred to as the commitment to excellence in the quality of teaching and research in our universities. He posed some central and difficult questions about how we can ensure that the highest-quality research—the excellence to which we have referred—is funded properly, and located throughout the regions and nations of this country. Our policy remains to concentrate research funding on the best institutions, but we do not propose to take all funding away from 4-rated departments, for example. In 2003–04, there was only a moderate reduction—about £20 million, or 2 per cent.—in the overall research budget of the Higher Education Funding Council for England for such departments. HEFCE will continue to provide £17.5 million in capability funding for departments rated 3A and 3B in 2004–05 to support the seven emerging areas in the next research assessment exercise.
Mr. Jackson highlighted some of the problems with his own Front Bench's proposals. One interested me particularly: the proposal to replace HEFCE's funding arrangements and tuition fees with a voucher arrangement. Let me add to his timely and constructive questions one or two of my own.
The Conservatives do not say how they will control the number of places. At present we do that through HEFCE. If a university recruits too many students, grant will be lost. How will the Conservatives manage with a voucher system? Will they ration the number of vouchers that they hand out? If they do not, they will have written a blank cheque: they will be giving a voucher to anyone who is admitted to university. How can they possibly do that, and control public spending? They will have to ration the vouchers—but how? How can they say who is worthy and who is not? Will that not amount to taking centralised control of the university admission process?
The hon. Gentleman posed those questions in his usual elegant fashion, but I am afraid that none of us has received answers of any description, elegant or otherwise.
Maintaining and building on the success of higher education is essential, not only for students and graduates but for our economy and society as a whole. Just as a successful higher education can bring great benefits, making the wrong decisions, or no decisions at all, could cause great damage. I am confident that the vision set out in the 2003 White Paper, "The Future of Higher Education", and subsequently enacted in the Higher Education Act 2004, is the right vision to deliver successful higher education. It represents a carefully considered and decisive package for reform, and for the creation of a higher education sector that will stand the tests of time and international competition.
My hon. Friend Dr. Whitehead reminded us that higher education plays such an important part in any modern economy that we must be absolutely clear and precise about how we pay for it. He challenged the Opposition parties to give us that precision, because the Government face tough spending choices. The country's future economic success depends on our getting higher education policy right. There can, indeed, be few more important topics. It is not realistic to think that now, with 44 per cent. of 18 to 30-year-olds going into higher education, we can fund it in the same way as we did in the mid-1960s, when Mr. Willis and I went into higher education. Less than 8 per cent. of our cohort did so then. We are living in an entirely different world now—one in which we must get more and more students into higher education.
We accept that going for tuition fees was not an easy option, and, as we were reminded by my hon. Friend the Member for Southampton, Test, it is not a popular one. We do not care to play that game. He was right to cite figures showing the great popularity of the Liberal Democrat policy, but it is a different matter to try to pay for it. In government it is necessary to make real decisions. The Liberal Democrats will never face that opportunity, so they can say what they like. It is, of course, one long wish list.
We think that our policy is the right one, and the only realistic way forward, and so do many of our competitors. In Europe, for example, universities in Germany are pressing the federal Government to change the constitution to allow fees; the Netherlands is already going ahead with tuition fee pilots; and even in Sweden, which has traditionally taken the position of having high public spending financed by high taxation, voices are beginning to be heard from the higher education sector arguing in favour of fees. Then there is the OECD. Its UK economic survey of 2004 praised the Government's approach to higher education, stating that it could provide "a role model" for other European countries.
The message is very clear. If our economy is to remain competitive, our higher education must remain competitive—and that means fees. We either face up to that or we face long-term decline as a nation. Put that way, it is not so tough a choice; it is precisely what we have to do.
Question accordingly agreed to.
Mr. Deputy Speaker forthwith declared the main Question, as amended, to be agreed to.
That this House welcomes the passage of the Higher Education Act 2004; approves the further steps the Government is taking to widen participation, including the establishment of the Office for Fair Access, and enhanced bursaries; welcomes the improvement in support for part-time students being introduced by the Government, including the first ever grant package available from this autumn; rejects the Liberal Democrat policy of abolition of tuition fees, depriving universities of a dedicated income stream; congratulates the Government on maintaining fair and affordable loan repayment terms and rejects the policies proposed by the Official Opposition which would require those graduates who can least afford it to pay the most for their higher education; 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; congratulates the Government on record levels of investment in higher education, to almost £10 billion by 2005–06, with a 9 per cent. increase in research funding to 2007–08, additional income from variable fees, and further increases in Government funding to be announced shortly; looks forward to the introduction of a £2,700 maintenance grant for new students from 2006 alongside the improved student support package available from fee deferral, increased maintenance loans and loan write-offs for new students after 25 years; and welcomes the impact these policies will have on encouraging students from less well-off backgrounds to consider entering higher education.