Conditions that may be required to be imposed by English funding bodies

Higher Education Bill – in a Public Bill Committee at 9:30 am on 2nd March 2004.

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Photo of Mr Tim Collins Mr Tim Collins Conservative, Westmorland and Lonsdale 9:30 am, 2nd March 2004

I beg to move amendment No. 2, in

clause 23, page 9, line 12, leave out paragraph (b).

Photo of Roger Gale Roger Gale Conservative, North Thanet

With this it will be convenient to discuss the following amendments: No. 79, in

clause 23, page 9, line 16, leave out paragraph (c).

No. 56, in

clause 23, page 9, line 25, leave out subsection (3) and insert—

'(3) A condition under this section must provide, in the event of a failure by the governing body to comply with the requirements specified in subsection (1), for the imposition by the funding body on the governing body of any financial requirements determined by the funding body in accordance with principles specified by the Secretary of State in the condition under section 22.'.

No. 53, in

clause 23, page 9, line 30, leave out

'required by a direction under section 35(1)(a)'

and insert

'determined by the funding body in accordance with principles specified by the funding body in accordance with principles specified by the Secretary of State in the condition under section 22'.

No. 54, in

clause 23, page 9, line 34, leave out from 'requirements' to 'determined' in line 35.

No. 4, in

clause 23, page 9, line 38, leave out paragraph (b).

No. 5, in

clause 23, page 9, line 43, leave out paragraph (c).

No. 55, in

clause 23, page 9, line 46, leave out

'required by a direction under section 35(1)(a)'

and insert

'determined by the funding body in accordance with principles specified by the funding body in accordance with principles specified by the Secretary of State in the condition under section 22'.

No. 215, in

clause 23, page 10, line 25, at end insert

'and different basic amounts may be prescribed in respect of different courses'.

No. 264, in

clause 23, page 10, line 25, at end insert

'and no different basic amounts may be prescribed in respect of different courses'.

No. 57, in

clause 28, page 13, line 23, leave out

'the Director (as defined by section 29(1))'

and insert

'the funding body (as defined in section 22(2))'.

No. 62, in

clause 30, page 13, line 38, leave out 'Director' and insert 'relevant authority'.

No. 63, in

clause 30, page 13, line 39, leave out 'his' and insert 'its'.

No. 64, in

clause 35, page 16, line 2, leave out 'Director' and insert 'relevant authority'.

No. 65, in

clause 35, page 16, line 2, leave out from 'institution' to 'has' in line 4.

No. 66, in

clause 35, page 16, line 4, leave out 'that requirement' and insert

'a condition under section 23'.

No. 67, in

clause 35, page 16, line 5, leave out 'Director' and insert 'relevant authority'.

No. 68, in

clause 35, page 16, line 6, leave out from beginning to 'impose' in line 7.

No. 69, in

clause 35, page 16, line 9, leave out 'he' and insert 'the relevant authority'.

No. 70, in

clause 35, page 16, line 13, leave out 'Director' and insert 'relevant authority'.

No. 72, in

clause 38, page 17, leave out line 11.

Photo of Mr Tim Collins Mr Tim Collins Conservative, Westmorland and Lonsdale

This is the second group of amendments on this clause, and is part of a sequence of amendments that have quite properly been grouped together. Earlier in our proceedings, the Minister said that the official Opposition were indulging in a series of acts of legislative striptease. Some of the subsequent amendments involve unpicking and seeking the removal of certain elements of the clause. We did not debate those elements when we discussed the other group of amendments, but they are, none the less, important matters.

Amendment No. 2 would strike out subsection (1)(b). In other words, it would remove the provisions that specify that

''in respect of any qualifying force, the qualifying fees in respect of any academic year which begins during the grant period at a time when no English approved plan is in force in relation to the institution do not exceed the basic amount''.

Other amendments in the group would strike out other elements in subsections (3)(b) and (c). I dare say that the Minister will say that the Bill would be technically defective if these provisions were to be struck out. I am sure that it would be, but it is hardly the task of the official Opposition to make the legislation workable when we are fundamentally opposed to it. The amendments are intended to be probing, but they also give us the opportunity to start to explore some of the Bill's important terminology.

The very important phrase ''approved plan'' appears for the first time in subsection (1)(b), which amendment No. 2 would strike out. We know from later provisions, such as those in clause 31, that approved plans are to be set up by a new organisation, which, at various stages in the deliberations before the legislation was published, was referred to as the office for fair access but will now be called the director of fair access to higher education. It is therefore appropriate at this stage to indicate the Opposition's fundamental unhappiness with the idea of approved plans being imposed on higher education institutions, particularly as those plans are designed to further what it is difficult to see as anything other than social engineering. HE institutions should not be compelled to adopt particular policies relating to admissions, but should

be encouraged to continue the good work that many of them are already doing towards improving access and equality of opportunity for access. The Government are going down a damaging pathway by requiring these to be imposed by approved planning processes.

We hope we will have the opportunity to discuss some of these measures later in our debates, and I do not want to pre-empt those discussions, save to ask the Minister for clarification about the academic years specified in the provisions that amendment No. 2 and other amendments would strike out. Are academic years intended to be absolutely uniform throughout the country, or is there intended to be a distinction between those institutions that have slightly different start and end points for academic years? Is this intended to be a single statutory provision? When he responds, would he elaborate on whether approved plans as such have been widely welcomed in the academic community?

As far as the official Opposition are concerned, while we are in no doubt—there is no point in pretending otherwise—that the legislation overall has been welcomed by many vice-chancellors, it is also the case that we have found widespread concern and opposition within the academic community to language relating to approved plans and all that that involves of state intervention and the possibility of state control. There are widespread worries that this is the start of a slippery slope towards direct political intervention in admissions policies, a process that many academics believe started with the Chancellor's ill-judged attack on the university of Oxford over the case of Laura Spence. Many took the view that Oxford university had been placed in an impossible position, since the Chancellor did not specify which other equally or better qualified candidates should have been left out in order to make place for the individual to whom he chose to attach his political affections.

Within this group, we will also be looking at two extremely interesting amendments moved by the hon. Lady the Member for Campbell, sorry, the hon. Member for Cambridge (Mrs. Campbell)—though I am sure it is only a matter of time before the constituency wishes to change its name to that of its esteemed Member of Parliament—and by the hon. Member for Ceredigion (Mr. Thomas). On the face of it, these amendments are intended to have entirely opposite effects. That may or may not be the intention of the hon. Members. As they are presently worded, the amendments are obviously entirely contrasting. The hon. Lady would insert the words

''different basic amounts may be prescribed in respect of different courses.''

The hon. Gentleman is saying:

''no different basic amounts may be prescribed in respect of different courses.''

Given that the hon. Members share a similar objective and a concern about the principle of variability—before you become concerned, Mr. Gale, I do not intend to elaborate on that again—it seems surprising that they should have come up with wording that is so entirely distinct. It is possible that neither of the two

sets of wording can achieve what they want or that one of the sets of wording achieves what they want. However, I cannot see how both of them can achieve what they want. I look forward to the elaboration from the hon. Members as to why they have chosen to introduce the wording that they have.

It is inherent in the concerns of some members of the Committee—though not of the official Opposition—about the principle of variability that they believe it would be desirable to place some wording in the Bill, perhaps at the point where the hon. Members for Cambridge and for Ceredigion have suggested—clause 23 line 10 page 25. However, both forms of wording cannot possibly be accepted together, and it is impossible for both sets of wording to have equal validity and success in achieving their objective. We look forward to seeing the reasons why they want to set out the amendments in the way that they do. If they are intended to rule out or restrict variability for the reasons that have been explained in previous debates, they are unlikely to attract the support of the official Opposition.

This may be an opportunity to place on record the slight disappointment that some members of the Opposition felt with the press release issued at the end of last week by the hon. Member for Newbury (Mr. Rendel), in which he said that he had listened—carefully, I am sure—to the lengthy debate, in the course of which it was repeatedly expressed that the official Opposition object to top-up fees but not to variability. However, he attempted to confuse the issue by implying that because we had not voted in support of some amendments, we were somehow supported top-up fees. It has been made clear in our deliberations that the official Opposition are entirely opposed to top-up fees. I hope that no similar confusion will arise.

Photo of Roger Gale Roger Gale Conservative, North Thanet

Order. I would not want the hon. Member for Daventry (Mr. Boswell) to go too far down this road because that debate has already been concluded. He may continue provided that his contribution relates to the amendment.

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

I shall be very brief. Mathematics has been of concern to the Committee, and the only point at which the issues of whether fees are charged and whether they are made variable coincide is at zero.

Photo of Mr Tim Collins Mr Tim Collins Conservative, Westmorland and Lonsdale

My hon. Friend, as ever, makes a powerful point. The key consideration before us in terms of the amendments grouped with amendment No. 2 relates to the

''Condition that may be required to be imposed by English funding bodies''.

That is the short title of clause 23. Our concern, which is reflected in our wish to strip away some portions of the clause through amendments Nos. 2, 4 and 5, is that not only do we have a strong presupposition against the imposition of approved plans relating to admissions and access, but we worry about the practical implications for the working relationships between higher education institutions and the higher education funding councils.

If the councils s are designed to be enforcement mechanisms under the provisions of clause 23, there is all the distinction in the world between organisations whose primary function is to provide financial support and guidance and funding streams for higher education and organisations that suddenly become constrained to become, in effect, police officers and enforcers who are designed to impose political will and objectives.

Before the Minister objects to the idea that there should be a prohibition on any conditions being imposed by the councils, of course it is the case that they both now and in the future—as in the past—have been designed to solicit evidence that money is granted on conditions that are fulfilled. The conditions previously imposed could not really be described as either political or party political. They relate to evidence that research has been carried out of sufficient quality into the matters for which funding has been provided.

Universities have—as the Minister pointed out earlier—provided the appropriate number of courses for the appropriate number of students given the level of funding with which they were provided. Under the measures in the clause that would be struck out by our amendments, we are entering new territory. We are saying to the higher education councils that they are to move into the heart of one of the most sensitive of all the political debates surrounding higher education: that the councils should be the direct instrument for the imposition of the Secretary of State's will as expressed through OFFA or the director of fair access to higher education and that the higher education funding councils should therefore become, on a scale relatively unprecedented since their creation, an instrument of—I hate to put it so aggressively, but I fear that it will be seen in this way—negativity and perhaps even conflict. That is regrettable, because there will be spillover.

Inevitably, human beings' discussions are affected by the tone, nature, content and outcome of their recent discussions with each other. If the higher education funding councils have become part of the process whereby a political or social agenda is being imposed on HE institutions, it is difficult, if not impossible, to believe that subsequent conversations involving the higher education funding councils and the HE institutions would not be coloured by the nature of previous discussions.

The Opposition believe that the higher education community would suffer from the imposition of this social engineering agenda and that the working relationships, on which so much in higher education depends, may be irretrievably damaged as a result. I am sure that the Minister will be the first to say that all sorts of attempts will be made to ensure good will and to ensure that amicable relationships are preserved, but we are concerned that choosing to make the Higher Education Funding Council for England, in particular, an instrument of this particular provision makes it possible, even likely, that important working relationships will be damaged.

It would be helpful if the Minister could address the wider and very important issues relating to the reasons for having approved plans, and if he could say why it is appropriate for HEFCE to impose them. I know what he will say, because he said it earlier and it is perfectly fair and practical; if we are going to have enforcement mechanisms—perhaps not the phrase that he would have used but a fair paraphrase—over institutions that are independent and not nationalised, very few tools other than financial penalties are available to Government. However, that is not the same as saying that HEFCE should be the imposer of those penalties. After all, HEFCE receives funding from the Department, and it is at least plausible that HEFCE should be kept separate if penalties are to be imposed. I stress again that we are not at all in favour of penalties. There should also be more scope for the Department to be seen to be the instigator of action rather than hiding behind the skirts of a very important and respected institution. It would be interesting to hear the Minister's response.

The clause is the heart of the Bill, so it is important to have sufficient time to debate the subsequent groups of amendments that have been tabled to it. The hon. Member for Nottingham, North seems to believe that any speech, other than his own, that is longer than 10 or 12 minutes is excessively lengthy, so I do not intend to prolong my remarks beyond saying that I hope that the Minister will address these issues and those relating to the practical consequences of amendments Nos. 215 and 264. As I said, it is unlikely that the official Opposition will support either of them, but I would be very interested to hear which of the two amendments the Minister believes secures the objective of stopping variability.

Photo of Mrs Anne Campbell Mrs Anne Campbell Labour, Cambridge 10:00 am, 2nd March 2004

I believe that I will pass the Nottingham, North test this morning, partly because my voice will give out if I go on for much longer.

I listened carefully to the remarks made by the hon. Member for Westmorland and Lonsdale, but have no clearer idea of what Conservative policy is on fees. I gather that the Opposition are opposed to top-up fees. Apart from that, however, no policy has emerged from the speech or the amendments.

I wish to speak to my amendment No. 215; I cannot speak for the hon. Member for Ceredigion, because I have no idea what he intends in amendment No. 264. We did not collaborate when tabling our amendments.

It is important that graduates should contribute to the cost of their higher education when they can afford to. It is a progressive policy that the Government introduced in 1998 in the teeth of opposition from students. However, I believe that it is right. I believe also that any policy that involves a hefty contribution from the state or even total funding would be regressive, and I could not support it.

I am not clear what the Conservative or Liberal Democrat parties want. Their policies are clear, but taxpayers' money could be spent in ways that would contribute far more to social equality than what they suggest. Their remarks are often opportunistic, designed to get students on board, but without thinking of the general public who will have to pick up the tab.

I lost the argument last week on the variable fee. I accept that the majority of right hon. and hon. Members do not agree that variability could be damaging. However, it leaves me with a problem: I do not understand the relationship between the fee and the cost of the course, or any other relationship that may be considered. I understand that it is not intended that there should be a relationship between the fee and the cost of the course, or between the fee and the potential earning power of the graduate. For instance, graduates who are expected to earn good incomes could be charged more for some courses than for others. Another factor could be the scarcity of graduates in particular subjects. If the proposals go ahead, we will probably finish up with a mixture of all those things.

Photo of David Chaytor David Chaytor Labour, Bury North

Would my hon. Friend not accept that, although she says that she does not understand the relationship between the factors that she has identified, the whole point is that there does not need to be a fixed relationship between them? The relationship should not necessarily be determined by the state, the Department for Education and Skills, and not even by HEFCE. It should be a matter of judgment for each university.

Photo of Mrs Anne Campbell Mrs Anne Campbell Labour, Cambridge

My hon. Friend states his views, but we probably disagree. It seems to me that it would be helpful to know the basis on which a fee was to be charged. That is the point of my amendment. Indeed, even if I do not answer his point directly, it will become clear that we disagree fundamentally.

I understand that once a university has been given the go-ahead to set a fee other than the basic fee, it will have the freedom to set it anywhere within the £0 to £3,000 range. I tabled my amendment after speaking to some of my constituents who are students at Anglia polytechnic university. They are concerned that some universities may become involved in a bidding-down war. They are worried that APU may decide to charge less for some of its courses—and not because of a scarcity of graduates or because those courses cost less to run, and not because graduates in particular subjects cannot expect to earn as much money, but simply because other universities are attracting more students. If that is the case, those courses will become cheaper. My students are concerned that that will undermine the value of the courses that they are now studying, so that when an employer asks an applicant what class of degree they have—a first, a 2.2, a 2.1—they may also ask, ''And how much did you pay for your degree?'' That is a worry to students. I should like the Minister to explain how he intends to overcome that fear among the students at APU.

I suggest something that might be regarded as an interim solution. I have considered the evidence from Australia. Since 1989, Australia has also had tuition fees, which are repaid after graduation through the tax system. After the Labour Government fell in 1996, the Conservatives in Australia introduced variable fees. They raised fees by 122 per cent. and cut repayment thresholds. Australia's higher education contribution scheme has three bands of charges, according to the type of subject studied. One of the bands is for arts degrees, another is for maths and engineering degrees and the last is for vocational degrees. Adopting such a system would overcome some of the problems with a fixed fee that my right hon. Friend the Minister mentioned in his winding-up speech last Thursday.

I am aware that Australia has just decided, rather controversially, to change its system and adopt one much more like what the Government propose. However, I maintain that, because of the difficulties with adopting a variable scheme in one step, my proposal might be a good interim solution to see how regulated variable fees with different charges for each band would work in practice. I am sure that that would overcome some of the problems and fears that I have mentioned. We have a great deal to learn from the experience of how the Australian system has worked.

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

The hon. Lady's proposal is interesting. However, the most expensive courses, say, physics, applied engineering—chemical or mechanical—and perhaps medicine and veterinary science, now attract the fewest students, particularly those from the lowest socio-economic groups. How on earth would her proposals resolve the problem, which I want resolved, of attracting such students to such courses? Will not such students be attracted to courses with the lowest levels of fees?

Photo of Mrs Anne Campbell Mrs Anne Campbell Labour, Cambridge

The hon. Gentleman makes a valuable point, for which I am grateful, as he gives me an opportunity to explain in more detail what I intend. If there were three bands of charges, the Government would have to explain clearly why they were putting a subject into a particular band. That would not necessarily have to relate to the cost of the course, but the reason for the decision would have to be given. For instance, as I think my right hon. Friend the Minister mentioned, there is a need to attract more students on to foundation degrees, because we need more people to study and acquire construction skills. For that reason, the Government could put foundation degrees in the lower band, even though such courses may be quite expensive to run. The relationship would be clear, whereas with a free-for-all among universities the situation would not be very clear because universities would be able to charge without stating the reasons why they want to charge a particular fee for a particular course.

Photo of Graham Allen Graham Allen Labour, Nottingham North

I am following closely what my hon. Friend is saying, and there is a great deal of logic to her suggestion if the market and the number of people going to university remain static. However, would she accept that many people on the fringe of going to university decide not to go, for one reason or another?

We can incentivise those people, perhaps with lower course fees. They tend to be people who are doing an HND in further education and can take the next step to degree level. We can look at that as a broadening of the catchment of the market. Her strong arguments are less strong in the light of an expanded market than they are in the light of a static one.

Photo of Mrs Anne Campbell Mrs Anne Campbell Labour, Cambridge

I accept what my hon. Friend says. It is important, in some cases, to attract students to a degree course, whatever that degree course is. My ultimate concern is that a university system will be produced where students from high-income backgrounds will go to Oxford and Cambridge and those from low-income backgrounds will tend to go to the ex-polytechnics and the modern universities. I do not think that that would be a healthy system, and it is not one that I would want to support or encourage. We have some incentives for the students about whom my hon. Friend has spoken so eloquently both today and on previous occasions; the student support package provides good incentives to those students to go into higher education. It should not be necessary to make targets of those students when setting the fee system unless there is a shortage of graduates in those areas.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education)

I am listening to the hon. Lady's remarks with great interest. Surely the universities will face a challenge given the enormously differing costs of providing each individual course. Under the scheme that she is advocating, there might be no real relationship between the freedoms prescribed and the cost to the university of running the course. In consequence, the more costly but less popular departments might be driven out of business.

Photo of Mrs Anne Campbell Mrs Anne Campbell Labour, Cambridge

We know that the course fee is well below the real cost of the course. We can ascertain that by looking at the fees that are charged to foreign students by universities such as the LSE, for example, where I think that in many cases students are charged somewhere between £10,000 and £15,000. That is well in excess of any fee that will be charged. There is not much of a relationship between the fee and the cost of the course. It would be up to the Government to make sure when they are setting the fee that they could compensate the universities adequately if they decided to charge less for the subject area of any particular course.

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

I am delighted to have a chance to speak on this group of amendments, not least to the amendments that I tabled along with my hon. Friend the Member for Harrogate and Knaresborough, namely amendment No. 56 and the amendments within this group that fall between amendments Nos. 53 and 72.

This debate is the first opportunity that the Committee has had to discuss whether the new institution, OFFA, should come into being, and that is particularly true when it comes to these amendments. They therefore have a slightly different aim, perhaps, from the amendments moved by the official Opposition a moment or two ago. For that reason, I hope that—whether or not those amendments are

withdrawn, Mr. Gale—you will nevertheless allow us to have a separate vote on amendment No. 56, if the Minister decides not to accept it. I very much hope that he will, but have some doubts as to whether he will do as I would wish.

I do not wish to speak very much about the other amendments, except to comment that we were at first inclined to support amendment No. 2—a Tory amendment—until we looked at it a bit harder. I am not quite certain from the hon. Member for Westmorland and Lonsdale's speech whether this was his intention, but the amendment seemed to be intended to free up universities completely from any form of control. It seems that it would give them the power to set fees more or less wherever they wish. The hon. Gentleman gave some indication at least that that was not what he really meant, but it seemed that his amendment would perhaps have that effect, and we were concerned about that possibility.

It is also arguable that, rather than simply removing all control over plans and the fees that universities can set, what is unnecessary about the Government scheme is the institution of a new body—OFFA—to take control of that part of the new scheme.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education) 10:15 am, 2nd March 2004

With reference to the Secretary of State's comments last week, when he indicated that fines of some £500,000 might be levied on institutions that did not meet his guidelines, does the hon. Gentleman accept that this part of the Bill is the most significant occasion where that provision will be set out in law?

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

Yes, I accept that, but I am no clearer about what the Conservatives wish. Other Conservative Members will have the chance to clarify, and we may then decide that we would like to support that amendment after all. At present, I am dubious about whether it would have the effect that we would like.

Some of our amendments in this string refer to later clauses—others have been selected on later clauses, which also affect our view on OFFA—but for the moment it will be sufficient for us to try and pass amendment No. 56. If we get that, I hope that a number of the other amendments will become consequential.

The real issue is who should monitor the effect of the plans and impose any financial penalty. It is our view that HEFCE and the Teacher Training Agency should be the bodies that do the monitoring and impose any financial penalty. Even in clauses 22 and 23, HEFCE will be given the duty of imposing conditions and penalties for non-compliance, or where no plan is agreed. HEFCE already has a considerable part to play in this. The only real issue is to what extent OFFA will have a part as well.

Clause 31(1) says, in effect, that OFFA must monitor the maximum fee for each qualifying course. That could be a very major job, and one of our concerns is whether the Government are suggesting

sufficient funding for OFFA to do it. The Government are claiming that there will not be that much to do because most of the institutions will simply give an assurance each year that they have met the requirements and are in compliance with their plans. OFFA would then not have much to do—but it could be a very big job indeed. That is a concern about passing such duties over to OFFA from HEFCE.

The whole point of introducing this new institution, OFFA, is to ensure the success of the Government's widening participation aims, which we share. There are three parts to widening participation: recruitment, outreach and retention. One of the interesting aspects of the Government's current scheme is that, although they seem to intend to pass over to OFFA recruitment and outreach, HEFCE will still be responsible for retention. Why is a differentiation made between the different aspects of widening participation? If HEFCE will still be responsible for retention, why should it not also be responsible for outreach and recruitment? Why must we set up a new bureaucracy to differentiate between them?

The Government responded to that issue in their consultation on the White Paper. In the draft guidance on the director of fair access, they stated:

''We do not think that HEFCE should be asked to take on the dual role of funder and regulator in this area; the potential conflicts in such a role may not have been fully appreciated.''

They appear to be concerned that the new body, whichever it may be, should not fulfil both responsibilities, but that appears to contradict their guidance in the DFES paper, ''Widening participation in higher education'', in which they state:

''In the higher education White Paper, we suggested OFFA also having a role in relation to non-completion of courses''.

That is retention. It continues:

''However, on reflection the Government believes that the job of promoting action to bear down on non-completion is best undertaken by HEFCE. Moreover, HEFCE will retain responsibility for the institutional funding formula, including any premia to compensate for the additional costs of recruiting and retaining students''.

That implies that it makes sense for HEFCE to retain responsibility in at least one area—that of retention—in which it also has responsibility for funding. It is odd, therefore, that the Government use possible conflict of interests as an argument against HEFCE also having responsibility for outreach and recruitment. They cannot argue to keep in retention for the very reason that they say that recruitment and outreach should be ruled out.

In summary, we believe that it would be necessary—

Photo of Mr Tim Collins Mr Tim Collins Conservative, Westmorland and Lonsdale

I thank the hon. Gentleman for giving way. I could tell that he was concluding his remarks and I wanted to clarify something. He has helpfully explained the rationale behind his amendments. As I understand it, he is saying that if the Committee and Parliament were to decide to go down the route of having approved plans, it would be better done through HEFCE than a separately standing OFFA. Is it his view, and that of his party, that it is desirable to have a statutory process for approved plans?

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

We are perfectly happy with the idea of having plans. We believe that it is important to have some control over the use of taxpayers' money, and we are happy to have the plans, as currently happens to a large extent. Of course, the precise detail of the plans is laid out rather differently in the Bill. It is already HEFCE's job to make sure that the universities have a widening participation. We want that role to continue, but we believe that our way of doing that—keeping those duties within HEFCE, rather than setting up a new body—would be less bureaucratic and less costly. We agree with the assertion of the hon. Member for Westmorland and Lonsdale that the whole idea is almost certainly a sop to the Chancellor, following his unfortunate remarks in the Laura Spence case.

I conclude by saying that—rather unusually, but happily for us—Universities UK seems to have some sympathy with our view on the amendment. I am sad to say that such circumstances are almost unique, so it is nice to be in agreement for once.

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

I rise to comment briefly on this matter. I may be able to draw on some of my previous experience as a Minister, although I shall not bore the Committee with a long set of tales about that.

My hon. Friend the Member for Westmorland and Lonsdale set out well the fact that the essential point is that of principle: the creation, or otherwise, of approved plans. That is a matter of some generality, rather than one for specific amendments, which I do not intend to speak to at length—except to portray a certain prejudice that goes back to the very days that I started in politics, when the national plan was all the vogue in 1966.

I distinctly remember the day that I started as a junior political researcher and hearing the late, lamented George Brown describing his national plan in terms that suggested that he intended to run the economy in a way that no other economy had been run before—and my word, he did.

I will not go on about that, but simply make the point that I have a strong suspicion of phrases such as ''approved plan'', and not because I believe that the conduct of the universities is shambolic. If universities' own academic plans are second-guessed by some regulatory body, it will be inimical, rather than supportive, to the overall planning process or the achievement of objectives. I believe that passionately. In other words, the establishment under clause 29 of the director of fair access will make it more difficult for universities to exercise their judgment in cases such as that of Laura Spence. It is better for the universities to do their own planning. There are tremendous virtues in plurality, and their record has been broadly positive. That is all that I want to say about planning as a matter of principle.

Photo of James Purnell James Purnell Labour, Stalybridge and Hyde

Is there not a contradiction between the hon. Gentleman's position, which I believe is held as a matter of principle, of supporting the freedom of the universities on planning and the point made by the hon. Member for Wantage (Mr. Jackson) on Second

Reading that it is contradictory to oppose having tuition fees, with the money going directly to universities?

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

I am grateful to the hon. Gentleman for his question, as it enables me to win a small bet with myself. I wondered which Labour Member would raise that point in Committee.

I am unashamed about my position, which I regard as principled. I do not think that universities should charge tuition fees. In my time—if I may use shorthand—they were able to do so, but chose not to. We now propose that they should not be able to do so, but it is incumbent on my hon. Friends, myself and those who may contribute to the formulation of policy to ensure that universities are adequately resourced for the delivery of the undergraduate courses that they provide in the regulated sector.

Photo of Jonathan R Shaw Jonathan R Shaw Labour, Chatham and Aylesford

How does the hon. Gentleman foresee that universities might be funded?

Photo of Roger Gale Roger Gale Conservative, North Thanet

Order. That would be way outside the scope of this group of amendments.

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

I agree with your point, Mr. Gale, but there will be a time when it will be possible to share that with the hon. Gentleman, who is fair minded.

There is an inherent contradiction in the directorship of fair access, which we may explore if we are able to debate clause 29, as I hope that we will. Is the director responsible for access or the conduct of the universities, including their courses? I have received some uncharacteristically equivocal material from the Minister about that, in response to my questions about whether we are talking about simply the gateway, or what happens when people are in university—the retention rate, which the hon. Member for Newbury rightly said is important. There are some real difficulties but they are, in a sense, for a later debate. The essential point remains that individual institutions should have the freedom to plan and, above all, there should be no tampering with their exercise of their academic freedom.

I shall refer specifically to the Further and Higher Education Act 1992 for a moment. Although I did not take it through the House, I remember, as it rings in my ears thereafter, the proper fuss made in another place by the late Lord Beloff, who insisted—rightly, on reflection—on the passage into law of a section that underwrote academic freedom and made it clear that no funding condition that trespassed on that could be imposed.

I now come to the operation of HEFCE and practice. In those years, now a decade ago, Ministers were self-denying in their conduct with HEFCE, which was seen as a barrier between them and the institutions that it funded, which was quite proper.

It happens that as a Minister for a period of some two and a half years I never attended a HEFCE meeting—although of course I regularly talked to the chairman and indeed the chief executive of the funding council— and I certainly did not seek to interfere in its decision making. Maybe the would-be Ministers on the Government Benches would like to reflect on an anecdote. The only occasion when I appeared at HEFCE was in the morning, when I sat quietly and listened to its deliberations and made it clear that I would not interfere in them. The price of that is that around 8pm I was reshuffled to another Department. Those who interfere may yet live to regret the consequence—not that I minded the other Department.

We now come to the serious issue of what might be termed the creeping evolution of HEFCE into an instrument of control, and how it is to be operated. I have to say to Ministers in all humility that all I hear of the higher education sector over the past few years—it is not necessarily exclusive to the present Government—is that there has been a tendency to fiddle, to interfere more and more. That has not been done by formal ministerial edict but by the creation of small pots of money, incentive funds and so on, for which institutions have had to bid with a greater level of intrusion into their day-to-day activities and plans. That is unfortunate; the free-standing and buffer role of HEFCE is important and it is important that it should not be compromised by anything in the Bill.

That brings me to the concerns of my hon. Friend the Member for Westmorland and Lonsdale about the policeman role of HEFCE in the matter, and to the overall operation. I am troubled by the fact that HEFCE is in effect and formally under clause 23 acting as a reference agency to check whether the plan is in place and whether it is still valid and being enforced; and if not, to stop the cheque. That is a rather mechanistic process.

The Minister needs to explain further to the Committee the relationship between his wishes and any directions he may wish to give to HEFCE, and in turn the relationship between HEFCE and the director of fair access. If one turns for example to the enforcement clause 35 in relation to England—and, even more complicated and difficult to unpick, clause 36 in relation to the enforcement of plans in Wales—there are, to use a phrase that may be familiar to him, three parties to the marriage and it may be growing rather crowded. There is the Minister, HEFCE—or the funding body—and the director of fair access.

In all seriousness, it is terribly important, both in terms of getting what the Minister wants delivered and in terms of the legal and audit trail for the process that who is responsible for which activity is properly articulated and understood from the start. Otherwise, we are into judicial review, recriminations, lack of clarity and a possible ending in tears.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education) 10:30 am, 2nd March 2004

My hon. Friend is making an extremely powerful point. We must be aware that there are lessons from elsewhere in public services, where an

unintended consequence of reform has been that individual institutions are subject to multiple inspections for different reasons within their overall remit. The bureaucratic burdens that that creates within the institution are enormous. Does he agree that there is a risk in creating the interfaces that he describes of universities having effectively to do much more administratively, to face in a different direction, as they will be asked to do?

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

I very much agree that that is a risk. The more bodies there are, the more interfaces there are—by definition—and the more potential for friction between those various bodies and the greater the potential burdens on the higher education sector. I hope that it will be clear in the Minister's mind—and he can make it clear to the Committee—how the decision making will work. There will be, I presume—and there should be—a dialogue between Ministers and the director. Ministers will be able to make their approach clear and the director in turn will be able to respond.

The director will need to have clear lines of communication, at arm's length from, but obviously related to HEFCE. The Minister may want to comment on how the structure and funding of the office of the director within the overall HEFCE support framework will work. It needs to be made clear what will be at arm's length and what will not, and HEFCE will need to be in a position to act as gatekeeper on the imposition of those requirements on the institution and, to put it bluntly, to stop the cheque if required.

HEFCE's conditions are usually general, although they may have specific application. For example, if there is a fund for which anyone, all institutions, may bid, those that do so will have to comply with the conditions and may or may not get the award, and in terms of their base-load funding there are formulae with which the Minister is thoroughly familiar. However, in this case, HEFCE is acting as a specific enforcement agency not in relation to accountability or accountancy, but in relation to the operation of the plan, and therefore it is becoming more institutionally specific and more interfering. That is why I have reservations related both to practice and to principle. In his response, the Minister cannot necessarily deal with the matters of principle, but I hope that he will think long and hard about how to resolve the issues of practice, which could cause difficulty.

Photo of James Clappison James Clappison Conservative, Hertsmere

I should like to speak specifically to amendments Nos. 55 and 56, which were tabled by the Liberal Democrats. I listened carefully to the thoughtful speech made by the hon. Member for Newbury. I agree with the objective of the amendments: to remove OFFA from the picture. I also agree with the generality of many of his comments and arguments, although there was one important point with which he did not deal sufficiently, which affects my attitude towards the plans.

I also had some sympathy for the objective of an earlier amendment that was tabled by the Liberal Democrats, to which I do not want to hark back.

However, it is relevant to this amendment in so far as it would have made provision for an ombudsman to ensure fairness in university admissions. I am also sympathetic to the proposition that universities should do, and should be encouraged to do, as much as they can to cast their nets wide in seeking applications from students with the relevant academic ability. I am confident that universities already do that, but there would be no harm in encouraging them to do it.

I would feel less strongly about the provisions if I felt that they concerned such matters alone. However, I believe that the provisions that would establish OFFA, and the director of fair access, as we are now supposed to call him, actually go much further than that.

One of the reasons why I have sympathy for amendments Nos. 55 and 56 is that I do not hold in high regard what is said to be the independence of the director of fair access. My hon. Friend the Member for Daventry made some important points about academic freedom. He was intervened on—a perfectly fair intervention was made—but Government Members would do well to heed his wise words in recognising the difference between variable fees and questions relating to university admission. Whom a university chooses to admit is surely, beyond peradventure, part of academic freedom.

I have entertained doubts about the independence of the director of fair access since the Government made the initial announcements. I wonder how far the provisions would involve Ministers interfering in the vital question of academic freedom through the agency of OFFA or the director of fair access. To be fair, the Government have always said that they would send the head of the new body—the director of fair access—an initial letter setting out the director's statutory duties and how those are to be performed. The Minister has helpfully supplied us with a copy of the statutory guidance that will be sent by the Secretary of State to the director of fair access. That sets out clearly the degree of prescription in the letter, which will have statutory force, which leads me to question whether OFFA will be independent in any sense. That is important for amendments Nos. 55 and 56, because they would take OFFA out of the picture. The director of OFFA will operate under statutory guidance from the Secretary of State. The amendments raise a fundamental question.

One reason why I want to keep OFFA out of the picture as much as possible is its ability to put financial pressure on universities. That link between finance and universities' compliance with the director of fair access causes me great concern. We know that some pressure will come from the £500,000 fine, which has received a certain amount of publicity. Serious though that is, it is only part of the pressure that OFFA can exert on universities under the provisions of subsection (3)(c). The director may issue directions with which HEFCE must comply. That provision would be removed from the Bill by amendments Nos. 55 and 56. The other, more serious sanction is for the director to refuse to renew an institution's access agreement. Without such an agreement, a university would be unable to charge a variable fee.

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

I think that I am right in saying that the university would be unable to charge any fee, including a basic fee. However, it is always open to an institution to go private and bust the whole system, if it is determined to do that.

Photo of James Clappison James Clappison Conservative, Hertsmere

That is not something that I necessarily want to happen. It is one feature of the American system, which we seem to be moving towards in many respects, that I am less envious of—although I am envious of some other aspects.

Will the Minister confirm whether it would be lawful for a university to charge an access fee under the provisions to which the amendments relate? That may happen if there is a breach, but if universities do not comply with the director and do not have their plan approved, they may not be able to charge a variable fee. As my hon. Friend the Member for Daventry rightly said, universities, HEFCE and the director of fair access will discuss the situation, and higher education institutions are bound to have it in mind during all stages of the marriage of three parties that has been created. The parties to the marriage will talk, whether or not, as my hon. Friend said, there are too many people in it.

The higher education institutions will want to know what they have to do to meet the requirements that are made of them. How will they be judged, and how can they jump through the hoops put in front of them by the director of fair access through HEFCE in order to receive the funding that they naturally want? How can they meet the conditions that are referred to in the clause and that the amendments would remove?

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

As ever, the hon. Gentleman is making a thoughtful contribution. However, is the situation not even worse? In reality, the powers to instruct HEFCE and OFFA are held by the Secretary of State. It will work entirely at the discretion of the Secretary of State, so there is an even greater irrelevance to it.

Photo of James Clappison James Clappison Conservative, Hertsmere

The hon. Gentleman has cut to the chase. The Secretary of State is the hand that is operating through both the director of fair access and HEFCE. I disagree with the hon. Gentleman on one point, to which I will come later, but one reason why the amendments would be advantageous is that they would make things more transparent. If we removed one body from the process, we could see exactly where everything was coming from. That would also remove a lot of unnecessary expense and bureaucracy.

There is a more serious point that the hon. Gentleman should take into account. We need to ask what the director of fair access will interfere with. To answer that, we need to consider how universities and higher education institutions will be judged. What objective do the Government have in mind? I have always been suspicious about that, and I have been following the debate for some time. Ministers have from time to time given the assurance that their concern, and their objective, is to ensure that applications come from as wide a source as possible. As I have said, many people would say amen to that. However, those assurances, together with other things

that Ministers have said, and things that have sometimes slipped out by way of commentary on their motives, lead me to think that there is rather more to it.

Ministers, including the Secretary of State, have from time to time given the reply that the measures are to be concerned with applications, not admissions, but I regard their statements on admissions as a ministerial add-on to give cover for something else that they are trying to do. An advantage of seeing the draft guidance, which is very important to the clause and the amendments, is that we now have a statement from Ministers, through the statutory guidance, about what hoops the Government expect universities to jump through to obtain OFFA's approval. It is there in black and white, beyond peradventure, in the draft letter of statutory guidance.

We are told by Ministers—and this has the force of the Secretary of State behind it—

''I would expect that OFFA would expect the most in terms of outreach and financial support from institutions whose records suggest that they have furthest to go in securing a broadly based intake of students.''

That sentence is very important. I have always believed that it is in universities' interest to seek applications from as wide a range of sources as possible, especially sources that may not have sent students to those universities in the past. I am not aware of any evidence today—and I should be interested to hear it from anyone who wanted to produce it, including the Minister—of any university failing to do what it reasonably can to promote applications from as wide as possible a source. If there is any such evidence, let us hear it.

Photo of Tim Boswell Tim Boswell Shadow Spokesperson (Business, Innovation and Skills), Shadow Minister (Constitutional Affairs) 10:45 am, 2nd March 2004

I warmly endorse my hon. Friend's line of argument about the fact that universities already apply themselves effectively to the matters in question. However, does he not also want to note, for the benefit of the Committee, that the draft guidance emanates, as I understand it, from the Secretary of State? It is of course a matter for the Secretary of State's judgment whether institutions are compliant. There is no objective test, which is what puts the wind up me.

Mr. Clappison rose—

Photo of Roger Gale Roger Gale Conservative, North Thanet

Order. I have been listening carefully to the debate, as hon. Members would expect. While the hon. Gentleman returns fleetingly and occasionally to the amendments before the Committee, he has embarked on a rather wider debate on the fundamentals of OFFA, which will be debated later in the Bill, and to which, indeed, he has tabled amendments. I am conscious of the fact that my grouping of the am0endments has to some extent promoted that approach. Nevertheless, I do not want

to encourage a further debate on the broader principles of OFFA at this stage, because they will come up later.

Photo of James Clappison James Clappison Conservative, Hertsmere

You are right, Mr. Gale, and I was trying hard to confine myself to the amendment, because the important point about it is that it takes the process out of the hands of the director of fair access and puts it into the hands of HEFCE, which will operate under clause 22 rather than the provisions relating to the director general of fair access.

The director's operations are given force by clause 23, which requires HEFCE to give effect to directions made by the director of fair access. Amendments Nos. 55 and 56 would remove that: the director would no longer be in a position to impose such a requirement. My point is about what would be guiding those requirements: the statutory guidance given to the director of fair access. We cannot debate the amendments without considering what the director of fair access would require of HEFCE, and we cannot do that without studying the statutory guidance.

You are right in your judgment, Mr. Gale, and I shall make the relevant point later on, but in order to look at the guidance in question, as I am trying to do, one must take into account the fact that there is a fundamental distinction between what universities can do to encourage applications, and those whom they actually admit. We shall discuss that distinction later, but it is relevant today as well. Universities can encourage applications, but they cannot control them. They cannot determine where those applications can come from. Universities are being judged not on their generation of applications but on outcomes, in terms of admissions. That is made as clear as it could be in the statutory guidance. They are being judged not on applications but on outcomes and on their records, which suggests how far they must go to secure a broadly based intake of students.

What is a broadly based intake of students? That is an interesting question. I am sure that we all have a fairly good idea of what the answer might be, and we shall perhaps hear some more about it from Ministers. We have an idea of which universities are intended, but perhaps he can assist us by being more particular, instead of giving us a general nudge. Which universities does the Secretary of State have in mind? Are there some specific universities in mind—or am I just guessing? I think that we all know what the Secretary of State is getting at, but perhaps Ministers will find it in themselves to tell us in more detail just which universities are intended, for the sake of informing our debate and the wider public debate.

Photo of Graham Allen Graham Allen Labour, Nottingham North

I wonder whether the hon. Gentleman wishes to appear complacent. I am sure that he does not, but could he say whether, in pursuing his argument, he is really satisfied with the long-term statistics, which show very little variation in the number of people from certain socio-economic classes? I understand that I have to use that term instead of ''working class''. I am not asking him for a solution, but does he not at least accept that there is a problem that needs to be addressed?

Mr. Clappison rose—

Photo of Roger Gale Roger Gale Conservative, North Thanet

Order. I appreciate that to some extent I am the author of our misfortune, but I really must ask the Committee to come back to the amendment that is before us. The debate that hon. Members are having will be held later, provided that we create the opportunity to reach that point in the Bill.

Photo of James Clappison James Clappison Conservative, Hertsmere

I shall not go down the route that the hon. Gentleman suggested, much as I am tempted. Briefly, I sympathise with what he is trying to do, but he is going about it in entirely the wrong way and would do better to consider how we can raise the standards for children in schools. Universities are desperate to recruit people from just the sort of backgrounds to which he referred. However, that is a wider debate that I do not want to go into now.

The amendment would take the Secretary of State's hand, operating through the director of fair access, out of university funding through HEFCE. The Secretary of State should not issue guidance about admissions directly to universities, nor should he judge them on admissions or put financial pressure on them. Universities cannot control those admissions. They can try to encourage applications, but the only way in which they can control the outcome, jump through the appropriate hoops and secure the broadly based intake to which the Secretary of State has referred is by discriminating on admissions.

That is an interference with outcomes and admissions, and is not simply an attempt to encourage applications, which we all want and on which I agree with the hon. Member for Nottingham, North. The proposals in question are about something else altogether. We shall come to that debate later, but for now I should like the director of fair access to be taken out of the picture. I would prefer the matter to be left to HEFCE, but I would want neither HEFCE nor the director to operate under the sort of statutory guidance in question. I want things to be more transparent and unnecessary bureaucracy to be removed, but above all else I would like to remove financial pressure on universities to determine their admissions systems other than strictly in accordance with the principle of academic merit. I am afraid that pressure is being brought to bear. If the amendment will do anything to take that out, I will listen to it very sympathetically.

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

I will avoid getting dragged into a general issue of principle here, because we will have that debate on other amendments, but it is important to outline how we intend to proceed.

We have to determine whether there is a problem with access, and if there is, what we can do to solve it. That is a more general issue, but the one thing that everybody contributing to this debate has said is that they agree with the principles of widening access and achieving a better social class mix in higher education.

We have not had the amendment from the hon. Member for Ceredigion that the hon. Member for Westmorland and Lonsdale was predicting. The basic

issue is HEFCE versus OFFA, and I will try to concentrate on that. First, though, can I just get this matter out of the way at the start: the hon. Member for Westmorland and Lonsdale mentioned that there is no obligation on the Opposition to ensure that their amendments are effective, and that his amendments were probably technically defective. Indeed they are.

Amendments Nos. 2 and 4 were rather curious. I thought that this was going to be a debate about abolishing fees, but I understand that there was another amendment, No. 1, that you rightly ruled out of order, Mr. Gale, which left these as a rather strange hybrid. Amendments Nos. 2 and 4 taken together would create a situation whereby, if there is no plan and no agreement, fees are unlimited. At present, there are two caps in the regulation that we envisage: £1,200—as the current basic amount will be by 2006—if there is no plan, and £3,000 if there is a plan. Amendments Nos. 2 and 4 would remove the first cap, and because the higher cap does not apply to higher education institutions without a plan, the result is that no plan means unlimited fees. Hon. Members need to bear in mind that mildly controversial effect of the amendments.

The second group, amendments Nos. 79 and 5, would remove any obligation to abide by the general provisions of the access plan, which covers almost everything except the fees: the bursaries, the outreach, the milestones and so on. Making those amendments would mean that if an institution wanted to increase its fees it would still need an access plan, but it would have no obligation to abide by that plan. That is why those two amendments are also technically deficient.

However, they are probing amendments, so in the spirit in which they were moved, let us move on to the substance of the contribution from the hon. Member for Westmorland and Lonsdale.

Although the hon. Member for Hertsmere (Mr. Clappison) is tempted to go with the Liberal Democrats, the hon. Member for Westmorland and Lonsdale made a very good case for keeping the regulation that we envisage quite separate from HEFCE. I sympathise with a lot of what he said, such as his point regarding HEFCE being political, in the sense that OFFA's role in widening access is political, and HEFCE being used to resolve current access problems. He said that it was wrong to use HEFCE as an enforcement agency, but he did admit that it is used as such in relation to this precise subject. We must ensure that a university does not charge more than what was originally £1,000, is now £1,125, and will be £1,200 by 2006—all these figures have been bandied around, but it is all the same thing—and the job of policing that is HEFCE's. There must be punishments. If Parliament decides that there are to be fee caps, we have to ensure that those caps are maintained. HEFCE does that currently.

Photo of Tim Boswell Tim Boswell Shadow Spokesperson (Business, Innovation and Skills), Shadow Minister (Constitutional Affairs) 11:00 am, 2nd March 2004

While what the Minister says is true, would not he accept that the creation of a new director of fair access will complicate the position? Therefore, in reinforcement of the speech that I made, and points

made by others, it is important that the Minister explain to the Committee how the various components under his proposals will now inter-relate.

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

The hon. Gentleman must be patient because I am leading up to that point. HEFCE's current role is to ensure that the fee cap is maintained. Under our proposals, we tried carefully to separate those two issues. HEFCE's role continues to involve both the basic and the higher fee caps. If the higher cap is breached, it is a matter for HEFCE, as it would be if the lower cap were breached because there was no access plan. We tried hard, recognising the concerns and fears that have been expressed, including by the sector itself, to ensure that OFFA's role concerns the access agreement. Universities will agree to encourage more applications from non-traditional students. There is no question of sanctions because OFFA's original role is to approve a plan. If there is no plan, there is no approval and the university continues to charge £1,200, as it will be in 2006. There can be no possible confusion: there might be controversy, but no confusion about what OFFA does. When an agreement has been reached, OFFA's role—not HEFCE's—is to ensure that the university abides by that agreement, and reports on it annually. The agreement reached between the higher education institution and OFFA must be honoured.

We do not think that HEFCE should perform that function, for some of the reasons set out by the hon. Member for Westmorland and Lonsdale. HEFCE's role as the funder is different from that of a regulator. I agree that we could have tried to merge the two—

Mr. Willis rose—

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

I want to finish with this set of amendments before moving on to the Liberal Democrat amendments.

We could have merged HEFCE and OFFA, but we think that that would have been a mistake. The hon. Gentleman said that HEFCE will be an instrument of negativity and conflict: perhaps it will be, but only in the sense that it is now. It is important for HEFCE to become involved with the question of fee caps. If the access agreement is breached, OFFA then has to report to HEFCE: the two work together, and will be co-located in Bristol at the beginning—they may even remain co-located, but we shall have to wait to see what the director says, once he is appointed.

The Secretary of State made it clear, in his guidance letter, that we do not expect universities to do anything differently from what they do now. They have an agenda of widening participation: that will be subsumed into OFFA, and they will produce the same pieces of paper that they currently produce—no extra paper will be going to Bristol. OFFA and HEFCE will have an obligation to exchange information, so if the access agreement is breached, that would be a matter for the director and OFFA—not HEFCE—although HEFCE punishments, including fines, will be imposed. Unless we make OFFA a funding body, which we think would be a mistake, we think it right

to do it that way. HEFCE has the funds, and controls them. It would be wrong to give OFFA funds purely to avoid involving HEFCE in applying sanctions on access.

Photo of Jonathan R Shaw Jonathan R Shaw Labour, Chatham and Aylesford

The Minister is helping the Committee to understand the process. He talked about an institution breaching the plan. Will he say what sort of institution he has in mind, and the circumstances in which a plan would be breached? Will he also explain what would constitute a breach?

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

First, I do not expect any plans to be breached. Nor do I expect the fee limits to be breached. During the five years in which the current regime with the £1,000 fee cap has operated, only once has there been even a hint of an HE institution attempting to breach the fee cap. In the event, it turned out not to have breached it.

The university would agree to give up-front advertised bursaries of whatever amount. That is part of the agreement. In addition, we do not need a huge police force while we have the National Union of Students to ensure that these things are properly monitored. A plan would be breached if the access regulator discovered that a bursary had not been paid or that the university was not advertising the bursary as it suggested that it would, or if the university agreed to hold a regular summer school with youngsters from a deprived estate in the neighbourhood that did not take place. The regulator would ask why something had not happened. Nine times out of 10 there will be a reason for it.

Careful reading of the letter will show that there are degrees of reaction to any breaches of the plan. Breaching the fee limit and not paying the bursary that a university has promised to pay is far more serious than anything else, and reflects the widening of the participation agenda.

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

The Minister may have just made the most powerful case for us to stay with HEFCE and not to introduce OFFA. The introduction to the Teaching and Higher Education Act 1998 states that there have been no notable breaches. HEFCE has been doing both jobs in acting as a funding council and a policing council to ensure that universities spend money on the things for which they received it. Does the Secretary of State—sorry, the Minister; I am promoting him already—agree that what is being proposed for OFFA makes it a very negative organisation, and that we should be considering not only penalties, but incentives? Does he also agree that HEFCE is the body that can create the incentives for increasing access and widening participation rather than a body that simply waits for breaches of regulation?

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

I am perfectly capable of making a powerful case against my own argument, but I hope that I am not doing so in this case. I do not want to start discussing the principle of OFFA, but I agree that no one has breached the £1,000 fee cap since 1998, and that there has been no change in the mix of social classes gaining access to higher education since 1998. The philosophy behind OFFA, which we will debate

another time, is that we should try to change the social mix while accepting that there is a danger, if we are not careful, of going backwards under a new regime in which universities can charge between nought and £3,000. Members are right to point out that wanting working class kids to go to university and charging £3,000 does not sound right. There are reasons for that, but the regulator is very important in circumstances in which a university can charge up to £3,000.

The Government are putting in a considerable amount of taxpayers' money up front, and we are perfectly entitled to look to public policy to determine how we should approach the issue. If we did not do that, but simply debated on the Committee Corridor increasing the £1,000 fee cap to whatever level—a fixed fee—it would not be the same sort of argument. The Bill places us on different territory.

Photo of George Mudie George Mudie Labour, Leeds East

I may be able to say something to the hon. Member for Harrogate and Knaresborough that the Minister cannot. I may, for example, be a littler ruder. During the past six years, we have pumped in considerable amounts of money to widen social inclusion, but HEFCE has been spectacularly unsuccessful when one considers the 1 per cent. that was mentioned in last week's debate. There is a case for someone coming in who is prepared to do the job and who has that specific remit.

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

I would not go along with my hon. Friend. HEFCE does an excellent job as a funding body. If we look at what has been happening with widening participation, a statistic that I find incredible is that in areas in the Aimhigher programme, the most deprived areas in the country, applications to universities last year increased by 4.5 per cent., against 1.2 per cent. generally across the country. HEFCE is involved in that whole widening participation agenda and I do not accept that it has done a bad job. I accept that there is a reasonable argument to say why not give HEFCE this role. Our argument is that the funding body must be kept quite separate from the regulator. If we are to address this issue that has dogged higher education for at least 40 years in this country, we believe that a regulator is important and that mixing that up with the funding body would be a mistake.

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

Luckily, what he has just said comes back to the point I wished to raise. To be clear, it is the regulator who will make judgments as to whether an access plan has been complied with, and the role of the funding council will be purely mechanistic—to pass on the decision of the regulator to the institution involved. The Minister nods. In other words, there will not be a court of appeal or a second judgment as to whether or not that plan is being complied with, and if there were ever to be any litigation by the institution it would be against the regulator and not against the funding council that stands in the middle.

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

Yes, that is broadly correct. The main aim—if a bursary that should be paid was not—would be for the money to be withheld until the university paid the student what was owed.

Photo of Mr Tim Collins Mr Tim Collins Conservative, Westmorland and Lonsdale

The Minister is being genuinely helpful to the Committee. Prior to some of these interventions, he said that—I think that I am paraphrasing him accurately—the Government are not proposing that universities should have to do something materially different from what they are doing now. He praised the participation strategy. He said specifically that no new pieces of paper would need to be submitted by universities and went on to say that one of the purposes of creating the regulator was to stop things getting worse, in response to the public concerns to which he referred. How would the creation of the regulator make things better if universities are not expected to do anything differently from what they do at the moment?

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

When I say that the universities are not expected to do anything differently, probably ''pieces of paper'' was the wrong term. The Secretary of State says in the draft letter:

''Institutions should not be required to collect or supply new data, except those that they need for their own internal management; to impose extra monitoring requirements beyond what HEFCE already requires; or to send identical information twice to HEFCE and to OFFA.''

I am making the bureaucracy point here, not another issue. When we get on to the substantive debate about OFFA's role, I will address that, but at the moment the hon. Member has suggested, if not in his amendment, that the DFES should take on the role of enforcer. That is another choice. The choice is between a Government Department, HEFCE or setting up a separate regulator. We think a separate regulator is the right way forward.

The hon. Member for Westmorland and Lonsdale asked us to make clear the reference to academic years. The academic year means that for the course, so it does allow for the slight variations across the country.

I will come back to the amendments tabled by my hon. Friend the Member for Cambridge, but first let us continue this debate about OFFA. The hon. Member for Newbury made the argument about HEFCE performing this role. He made the point that fees would be monitored for each course, which is not the case. We do not intend that fees should be monitored for each course. We do not intend that there would need to be an access plan for different courses. Our intention is that even if a university wants to charge more than the basic amount for a course, it should nevertheless reach one agreement with the regulator. It should not have separate agreements for each course or each subject heading.

The hon. Member for Newbury asked about responsibility for retention, an important point raised also by NATFHE and others. We made it clear in the letter that HEFCE continues to be responsible for retention; the widening participation agenda stays

with HEFCE. We have not transferred it to the regulator. The regulator's sole remit is access to university. It does not stretch to retention.

Photo of Mr David Rendel Mr David Rendel Shadow Minister (Higher Education), Education & Skills 11:15 am, 2nd March 2004

The Minister may have misunderstood me. I was making the point that he now makes—that retention should be kept with HEFCE. I said that the Minister seems to have negated his argument that other aspects of the widening participation agenda should be separated between HEFCE and OFFA in order to ensure that the funding organisation is not also the monitoring organisation. If it can be kept in the same hands for retention, as part of the widening participation agenda, why cannot the other parts of the agenda also be kept within one body?

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

They could—it is a simple answer—but we do not think that it would be as effective as having a separate regulator. We believe that it would mix up the role of HEFCE. For the reasons given by Opposition Members, we believe that it would damage HEFCE. We believe that it is a role for a separate regulator. I am not saying that it is beyond the realms of imagination that HEFCE could do the job; it could, but we do not think that it should.

Photo of Jonathan R Shaw Jonathan R Shaw Labour, Chatham and Aylesford

Is it not the case that we need a separate organisation because of the task that lies ahead? The Committee has discussed the lack of progress for youngsters from working class backgrounds moving to higher education. However, there is a difference between now and seven years ago. In the 1970s, as many as 90 per cent. of youngsters would have been described as being in that group, whereas it is now only 40 per cent. It is rather like unemployment; as it goes down, those without skills and with no motivation find it harder to get jobs. That is why we need to focus on that age group.

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

I agree with my hon. Friend. He makes the point strongly that widening access is not a peripheral issue but is central to the Bill.

I always enjoy the anecdotes told by the hon. Member for Daventry (Mr. Boswell) about the halcyon days when the Conservative party had a policy on higher education. The F in HEFCE does not stand for fiddling around. The hon. Gentleman spoke about bureaucracy, and about HEFCE having funding pots. He is being unfair. There have been several so-called ring-fenced jam pots—they have now been smashed—but they were not HEFCE's fault. It was an unfair allegation.

The hon. Member for Daventry said that it is unclear who enforces the fee caps, but I hope that I have made that plain. He asked also about the cost. We say in the regulatory impact assessment that the average cost will be £500,000 a year for the whole of OFFA. Much of that cost will arise during the bulge period when the access plans are agreed, but it will be spread over time.

The hon. Member for Hertsmere is concerned about admissions. OFFA will have nothing to do with admissions; it will deal with access, as we said in the White Paper and the widening participation document that we published in the summer. By and large, the problem is not with admissions, but a separate review group is considering some of the problems with improving attainment. The problem of widening access is with applications, as the sector recognises.

The hon. Member for Westmorland and Lonsdale asked how many people in the sector support our policies. I could make a cheap political point and say, ''More than supported the Conservative party's policies—when they had them—on where to go next.'' It is fair to say that there is some controversy about the regulator, but there is no controversy whatever about universities saying that they could do more to improve applications. The Russell group and the 1994 group accept that there is more that can be done.

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

This is a crucial issue. One fundamental challenge is that the plans are for individual universities, but the university sector as a whole recognises that it must work towards widening participation. However, what Oxford university, for example, might do to widen participation is only part of the whole picture, and acceptance of the document should be judged not on applications to Oxford but on attempts to raise the game across the country. I do not understand how OFFA will influence that holistic agenda.

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

As I said to the hon. Member for Hertsmere, OFFA is not looking at outputs but at inputs. The hon. Gentleman quoted the letter from the Secretary of the State, which related purely to bursaries, as we discussed in a previous debate. He said that on the question of how much is dedicated to bursaries, he would expect those universities with a poorer record on the social class mix to go further in terms of the money that they put forward. We debated earlier whether to prescribe 33.3 per cent., or 10 per cent. The OFFA plan is about inputs, not outputs.

Photo of James Clappison James Clappison Conservative, Hertsmere

I have made my case about the financial pressure, and I shall return to it later. The hon. Gentleman appears to be saying that paragraph 2 is only about bursaries, but I respectfully direct his attention to paragraph 6, which relates to access agreements and reproduces the same form of words relating to outcomes rather than applications. It states:

''My general expectation is that you will be robust in expecting more in financial support and outreach activity from institutions whose records suggest that they have the furthest to go in securing a broadly based intake of students.''

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

We are talking about the amount of extra money the institutions get from higher fees that goes towards widening participation. It is not a matter of the access regulator saying, ''Well, you've done everything you said you would do, but your social class mix has not changed, therefore you will be punished.''

That is an important point, which the hon. Gentleman raised—[Interruption.] No, it will not happen. That is the proportion of the extra funds dedicated towards widening participation.

On the amendments tabled by my hon. Friend the Member for Cambridge, we thought long and hard about the banding scheme, which the Australians adopted but are now abandoning. The hon. Member for Harrogate and Knaresborough also drew attention to the problems about the scheme. HEFCE has banding in terms of how much money it puts into different courses. There are four bands and the cost weighting goes up to 4.5, given that the cheapest subjects are 1 for the clinical stages of medicine, dentistry courses and veterinary science—a resource of £12,636. That is a considerable variation, but that is

where we think the banding should be left. There is a technical deficiency that I will not go into, but if we try to include it in this scheme it would run the risk of people thinking that the highest courses will cost the most money. That would institutionalise the proposal, which is why I hope the Committee will reject the amendments.

Photo of Mr Tim Collins Mr Tim Collins Conservative, Westmorland and Lonsdale

This has been a useful and illuminating debate. As the Minister rightly said, we start from a joint proposition to which all members of the Committee agree: we want wider participation and in particular a rebalancing of the social mix—

It being twenty-five minutes past Eleven o'clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order.

Adjourned, till this day at half-past Two o'clock.