My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In so doing, I declare an interest as pro-Chancellor of the University of Birmingham.

The Question was as follows:

To ask Her Majesty's Government how much worse off the universities would be if they received no income at all from tuition fees rather than the fees set out in the January white paper; and whether there is any viable alternative for financing higher education other than the raising of tuition fees.

My Lords, the Government considered alternatives, but concluded that variable fees were the only viable option for securing the level of investment that our universities need while giving them the freedom to respond to student demand. The white paper proposes that universities with approved access agreements should decide their own fees up to a maximum of £3,000. We cannot pre-judge or pre-empt those decisions. However, if all institutions charged the £3,000 maximum, gross tuition-fee income would be over £2 billion.

My Lords, although I thank the noble Baroness for that Answer, does she agree that the Government may not be making a lot of progress in getting across to people that their proposals in the white paper involve the abolition of all up-front tuition fees that currently exist? Would she also agree that the area in which the White Paper is most effective is the level of the maintenance grant?

My Lords, I am grateful that the noble Lord appears to agree with at least part of what the Government propose. It is very important to get the message across, and we are doing all we can, but the change in higher education fees is hugely important in that students will of course not pay up-front fees. That is particularly important for lower-income families. In terms of the maintenance grant, we are looking very carefully at all the issues to support those students most in need. It is perhaps worth reiterating that 41 per cent of students will not pay fees.

My Lords, will the Minister quantify the cost of setting up the access regulator's office, and of meeting the expansion of up to 50 per cent of the cohort into university?

My Lords, that question is slightly wide of the mark of the information that I have before me. In our proposals, I believe that we have made it clear that OFFA will be very small and measurably organised, in order to make sure that we have the right kind of access agreements in place. In terms of our 50 per cent target, which I believe is the right target, we have made sure that within our overall costings and fundings we are able to pursue it fully with our university colleagues.

My Lords, have the Government considered the difference between the £2 billion that the noble Baroness suggested that the universities might gain from the scheme proposed by the Government, and the cost of the elaborate scheme that they are proposing alongside it for long-term lending, interest free, to students until they are earning a given sum? That will cost a great deal of money. How does it compare with the £2 billion?

My Lords, it will of course depend on the individual arrangements set up by students. In all the discussions, we have talked to those involved already in determining the kind of loans that students have—the Student Loans Company—and in making sure that we have systems that will be viable and operational. Therefore, I do not believe that there is a comparison. It is also worth saying that, of course, the income from variable fees will be paid to the institutions themselves, which will enable them to have the kind of autonomy of decisions that they have requested.

My Lords, is the Minister aware that a 50 per cent tax rate charged on those earning more than £100,000 would yield well over £4 billion? Is she further aware that 82 per cent of those who earn more than £100,000 have benefited from a university degree? Following the maxim that those who have benefited shall pay, which is one that the Government are now pursuing, is there not therefore some logic in raising the extra revenues required from such a source of tax?

My Lords, my understanding of the Liberal Democrat proposals is that, of the £4.5 billion that would be raised, £2 billion would be spent on giving a council tax reduction to all those who are council tax payers, and that the rest—£2.5 billion—would indeed be available. However, the difference between the Government's and the Liberal Democrats' proposals is, first, that those who go to university pay back what they have in a sense borrowed in order to pursue the course. We believe that to be more equitable. Also, higher education institutions themselves will get the funding, not the Government. Many in the higher education sector would probably find that a rather attractive proposition. Furthermore, the money goes to the Exchequer without the guarantees that it would always be available for higher education. If one is raising money for higher education, it is important to ensure that it gets there.

My Lords—

My Lords—

My Lords, it is the Bishops' turn.

My Lords, would the noble Baroness agree that the increase in tuition fees, even if delayed beyond graduation, has the danger of discouraging people from precisely the backgrounds that she would want to encourage entering higher education from doing so?

My Lords, the right reverend Prelate refers to perception of debt, which is an important factor in all our debates. It is of course why the office of the regulator is so important to ensure that universities do all that they can, building on their very good practice, to reach out to those students to demonstrate to them the real importance and value of a university education. However, the fact that fees are paid up-front at the moment is, in my view, a bigger deterrent.

My Lords, why was the question asked by my noble friend Lady Blatch treated as wide of the Question? Will the noble Baroness kindly write to my noble friend on the front bench with an answer to her question?

My Lords, the noble Baroness would agree that I have never failed to write to her on any question that she has asked me in this House, and this would be no exception. The information that I have before me relates specifically to tuition fees and not to the cost of setting up OFFA.

My Lords, would the noble Baroness, having accepted that there is a legitimate concern that fees will deter students who might otherwise want and be able to come to university, accept that a more efficient, simple and perhaps clearer form of regulation of the universities in the matter than the rather complex and unclear office of the regulator currently proposed would be to come to an agreement with the universities to set aside a proportion of the money raised from those fees for scholarships for needy students?

My Lords, the noble Lord makes a very important point. Discussions are ongoing with universities as to what else might be done to ensure that we have the right arrangements. The question of bursaries or scholarships is being very actively discussed at present.

My Lords, the Question clearly asks,

"whether there is any viable alternative for financing higher education other than the raising of tuition fees".

My noble friend may not agree with the alternative, but will she concede that it is viable to raise the money through general taxation as an alternative?

My Lords, we could fund many things within government by raising levels of taxation, but I wonder when my noble friend would agree that we had raised the level of taxation to the point where many people would be unprepared either to vote for the Government or to wish to pay it. The question faced by governments in ensuring that we have the right kind of economy, can support our young people through education, have a good health service and transport systems, and so on, is all about balancing different priorities. I ask him to consider whether, were we to have an increase in general taxation, he would want us to give it as a No. 1 priority to the universities.