University Finance

Part of the debate – in the House of Lords at 5:17 pm on 27 November 2002.

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Photo of Lord Desai Lord Desai Labour 5:17, 27 November 2002

My Lords, the only interest I have to declare is that I have been teaching for 38 years in the British higher education system. I bear witness to the steady deterioration in the physical, spiritual and moral standards in the sector. When I started, I had 15 tutees; I now have 37. When I joined, the pay of university academics was roughly in line with Civil Service pay; now it is about 40 per cent behind.

The per capita allocation that the noble Lord, Lord Baker, introduced has been cut by 37 per cent. As the noble Lord, Lord Butler, said, if we go on like that, we shall resemble not so much the railways as continental universities—people come from them to us. Why we subsidise EC students is beyond me, but I shall not go into that.

To friends of mine who want to continue the present system on the grounds that it is fairer to the poor—it is not, but I shall come to that later—I have one response to give: they must tell me exactly where the money will come from for universities to be able to meet the shortfall that was ably pointed out by my noble friend Lady Warwick. If you want us to stay like this, give us the £10 billion or shut up.

Exactly five years ago there occurred the Second Reading debate on the Teaching and Higher Education Bill. At that time we had introduced a small fee, which—again I agree with the noble Lord, Lord Butler—was inadequate. I said then, "In five years time we shall return to this matter because this will not solve the problem". What we did in 1997 was wrong in two respects: first, the fees charged for those who could afford to pay were far too low; and secondly, means testing was far too stringent so that very few ended up paying. We then made a mess of the maintenance grant. Those three factors almost simultaneously made it inevitable that we should have to return to this problem.

The US system is much more diverse, equitable and has much greater access. I would ask all noble Lords to ponder on the paradox of the US system, which is not like ours. It is very much dependent upon students paying their own way and is much fairer than our system. For 35 years I have heard the same argument: "If we change anything, the poor will not get access". The middle classes are clever; they always use the poor to justify their own subsidies. For 35 years, access to universities for working class people has not improved very much. But the middle classes have never had it so good. When I first joined the sector there were no fees and there were still no working class students. There were 100 per cent maintenance grants and no fees. Where were the working class students? They were not there. As the noble Lord, Lord Baker, said, that is because of our secondary school system being the way it is.

There are two problems. First, we confuse uniformity with equality, and, secondly, when we give subsidies we do not discriminate. I shall take the second point first. We give everyone a subsidy, including the very rich middle classes. That is partly because we are too afraid to implement a proper means test which would benefit only the poor, and partly because the fees are too low.

I believe we should make everyone pay the going rate—I would prefer an income-contingent loan system—and then take our entire current budget which is used for tuition fees and put it into a fund for bursaries. There should be zero subsidies. We could finance up to one-third of our students with full bursaries if we stopped the indiscriminate giving of subsidies to undeserving middle classes. We must be tough minded. The middle classes are good at political rioting. We should not pander to that.

We confuse uniformity with diversity. We think that "one size fits all" is a great egalitarian notion. It would be much better to allow different universities to charge different fees. We should let universities choose what they want to charge for whichever course. The state should give subsidies only to the deserving and should let them choose their university. If people want to become doctors, they can pay £12,000 because they will recoup that in future income. People's ability to pay does not depend upon their parents' income but on their future life-time income. The criterion of future life-time income is a much less unequal method by which to judge university students than is their parents' income.

The principle would be that the current funds used to subsidise students should be used only for bursaries for deserving students—deserving in terms of both their future income and their merit—and that universities charge whatever they want to charge. That means that people will make their own choices; get into whatever level of debt they choose; and pay from their future income on an income contingent basis. That would remove the problem of elitism or social class. If a university is offering a good course—be it an old or new university—it can choose the price it wants to charge and meet the demand.

What is happening now is that by charging a single price we have to ration. Such rationing results in bad education. I use the words "bad education"; I do not have the responsibility of my noble friend Lady Warwick who has to defend her patch. Who gets such bad education? People from lower income classes and ethnic minorities. They go to ghastly universities. I can say that and do not have to be diplomatic.

Research is underfunded. A little more has been done for natural sciences by my right honourable friend the Chancellor. However, research in social science and humanities is underfunded. HEFCE gives only £10 million to English universities. If that could be increased, or even doubled to £20 million, that would be much better. It could be strictly monitored through a research assessment exercise.

Finally, I shall make one more wild spending proposal, for which I hope my noble friend will forgive me. It concerns maintenance grants. For a long time I have believed that the way to tackle maintenance grants is for every undergraduate in full-time education to be eligible for the jobseeker's allowance in term time. So, for about 30 weeks, every undergraduate can claim JSA if they so wish. That would solve the problem. With that I shall sit down.