My Lords, we propose to allow higher education providers to charge tuition fees of up to £3,000 per year, subject to approval of an access agreement by the Office for Fair Access. From 2006–07, the requirement to pay up-front fees will be abolished; graduates will be able to repay fee loans through the graduate contribution scheme.
My Lords, I thank the Minister for that clear and informative Answer. First, I declare an interest as a member of the council of Sussex University, where we are in principle supporting the idea of contributions to tuition fees being paid after graduation out of salary. Will the Minister look at two particular points? First, will she look at increasing the maintenance grant in order to give more help to academically qualified students coming from lower income families? Secondly, will she look at improving the tax status of donations to universities so that in the American manner some of the newer and younger universities in particular might be able to increase their endowment funds out of which bursaries can be granted?
My Lords, I am grateful to the noble Lord for his overall support. On his second point, my right honourable friends the Chancellor of the Exchequer and the Secretary of State for Education and Skills will look at all the ways in which they can enhance the opportunities of going to university.
On the maintenance grant, the noble Lord will probably know that from the academic year 2004–05 we are bringing back a maintenance grant for our poorer students, which will be on top of the normal maintenance grant and will be worth up to £1,000. We believe that that is a contribution. In our discussions on the arrangements with OFFA we shall consider maintenance grants too.
My Lords, are the Government aware of the huge communication difficulty with students from poorer families who come from a strongly debt-aversive culture? The media appear to have grabbed this ball and the Government need to get it back and get the message across.
My Lords, I am grateful to the right reverend Prelate. He has made such a statement to me on several occasions. It is a point well made. In ensuring that we offer real opportunities to all our students it is important that they understand the difference between what we are proposing and the perception of what we are proposing. For the first time they will not pay fees up front; they will be able to pay them back later. Of course, they will repay them only once they are earning £15,000 plus. I accept that we have more to do to communicate that message.
My Lords, is the Minister aware that by shifting the burden of fees from an up-front payment to a post-graduation payment the Government are, in effect, incurring considerable loans that will subsidise universities? Such loans will amount to about £30 billion. What will be the cost to Her Majesty's Government of servicing those loans?
My Lords, it will be contingent on how many students take out the loans. Perhaps I may give an example that I hope will assist the House. If 50 per cent of higher education institutes charge £3,000 and 50 per cent charge the standard fee, and if 80 per cent of students take out those fee loans, the loan that would be advanced would be between £1,040 million and £1,075 million and the cost to Government would be £415 million.
My Lords, can my noble friend say whether the needs of mature students will be considered? They loom very large; they number perhaps a third of the student body of some universities. Does my noble friend agree that they have been casualties of recent policies and tend to be excluded in discussions on this matter?
My Lords, my noble friend is right. We do not focus on them enough. I shall personally ponder that point as I am aware that I do not talk much about mature students. Many mature students are part of our part-time student cohort. We are introducing opportunities for part-time students to have assistance with their fees and costs.
My Lords, on past record, the quantum of funding from Government plus the tuition fee has not resulted in a discernible increase in income for the universities. What guarantee can the noble Baroness give that the income from the proposed £3,000 top-up fees will be truly additional?
My Lords, we have set out our future spending plans for universities. We are well aware that the contributions that the universities seek come from the state and, of course, from those who benefit from universities. I can give that assurance. In determining one's position on such issues it is important to consider what universities are looking for. They are looking for a clear recognition of their needs from the Government and I believe that the Government understand that well. But they also want to ensure that the additional income that they can receive from the additional fees is, in a sense, available to spend. Within the arrangements that we are considering and within the terms of OFFA, we shall ensure that universities have the kind of autonomy that they wish to have.
My Lords, I declare an interest as Chancellor of the University of East London. Are the Government aware of the HEFC proposal that will take more than £1 million away from modern universities that serve people from racial minorities and that that will affect four out of five universities in the London area?
My Lords, I am not aware of the specific point that the noble Lord makes in terms of the London universities. We are very keen to ensure that we have active participation by the university sector to ensure that we have the highest possible calibre of students. We recognise that some of our students need to be supported by better communication, as the right reverend Prelate said, and by other factors to attend university. I believe that is the fund to which the noble Lord refers and we are keen to see it supported by all universities.
My Lords, is the Minister aware that, even before the introduction of any tuition fees, the student loan is so far from maintaining students as to create a severe inequity in terms of parental bank balances between students already at university, to the extent that perhaps one should advise those estranged from their parents not to go to university at all? Is she further aware that putting additional debt on students can be only an incentive to go for only high-salaried jobs and would be nothing but an obstacle to further teacher recruitment?
My Lords, I am not sure that I understand the noble Earl's point about students estranged from their parents. It is important that we find ways of encouraging all students who wish to go to university to do so. I shall pick up that point in writing and seek clarification from the noble Earl.
On high-salaried jobs, we have said that those who do not earn salaries of £15,000 plus will not pay back anything. That does not have a penalty attached to it. I am pleased to say that our teaching staff are able to earn substantially more than that.
My Lords, I suggest that we hear from the noble Lord, Lord Dormand, who has been trying to ask a question.
My Lords, despite what the Minister says and despite what the Government say and do, does the noble Baroness agree that in the present circumstances there are literally hundreds of young people who are capable of taking a university degree who will simply not be able to afford to go to university? Unless there is a fundamental change, a very serious situation will arise affecting young people who wish to go to university.
My Lords, at the moment having to pay fees up-front is a deterrent for young people who may wish to go to university and it is something that they have to consider. The fundamental point relating to our proposals is that no one pays until after they have completed the course and the fee repayment is contingent on earning the salary that I have identified of £15,000 plus. I believe that that is a realistic way of accepting that we need to fund universities properly and well. We need to look to those who will benefit from university provision, but we need to do it in a way that accepts and appreciates that we want people to benefit when they feel they are able to do so.