I beg to move amendment No. 287, in

clause 41, page 18, line 41, after 'to', insert

'the provision of higher education in'.

Before we kick off, Mr. Gale, I seek clarification about clause stand part. It seems to me that dealing with the essence of the amendment will bring us quite close to the subject area that would be covered in a clause stand part debate. I seek your guidance on that.

The hon. Gentleman makes a fair point: this is the only amendment to the clause that has been selected for discussion. I am happy to accommodate a clause stand part debate as part of the debate on this amendment. That would seem to make eminent sense.

While I am on my feet, for the convenience of Members, I should inform the Committee that at 5.35 pm I intend to suspend the sitting until 6 o'clock. I suspect that that will accommodate a Division on the Floor of the House. I believe that there is likely to be one Division only, but if there is a second, the Committee will resume 15 minutes after its start.

Thank you for that clarification, Mr. Gale. I begin my remarks with an apology to the Minister. He is right to say that I cast false aspersions on him this morning. He rightly reminded the Committee about the important debate on Welsh issues that took place when we discussed clause 21. However, it is a shame that when I sought to raise the issue of fees in relation to Wales, the Chairman at that time, Mr. Hood, said:

''We are not discussing the levels of fees at present; we are discussing the plans. I ask the hon. Gentleman to stay in order.''—[Official Report, Standing Committee H, 12 February 2004; c. 126.]

When the Minister was questioned about a number of issues in relation to Wales, he said:

''That question has nothing to do with the amendments that we are debating. We are talking about the meaning of a plan.''—[Official Report, Standing Committee H, 12 February 2004; c. 138.]

The Minister is right: we have had a debate about the meaning of a plan in Wales. Sadly, however, I waited in vain to hear more of his eloquent contributions and to debate with him as we went through later clauses, including clause 25, which gave the Assembly powers to impose conditions around fees; clause 26, on conditions that may be required to be imposed by the Higher Education Funding Council for Wales; clause 27, on the actions that the Assembly can take; and clause 28, on the definition of ''the relevant authority'' for Wales. I continued to wait in vain as we discussed an amendment to prevent potential injustices affecting English students in Wales, Welsh issues

relating to clause 31, and Welsh regulations in clause 38. Perhaps the Minister understands why I am so disappointed not to have heard his views on those important issues, and why I welcome this belated chance to address at least some of the issues of student support in Wales. I simply regret that we have not been able to do more to debate the fundamental change that is taking place, which certainly deserves full consideration by this Committee.

Clause 41 deals with the provision of student finance support to students living in Wales. It is central to the future of student support in Wales, not least because the Secretary of State clearly stated on Second Reading that he considers the reappearance of grants, and the positioning of grants at the heart of policy in Westminster and the Assembly, as an integral part of the introduction of top-up fees and the package that we have been debating throughout this Committee. The devolution of grant finance—the right to set grants and the right to offer loans in Wales—is therefore integral to our debates and an integral part of the Government's decision to devolve those powers to Wales. The Secretary of State said of the grants:

''This £3,000 package will ensure that no student qualifying for the higher education grant will be any worse off as a result of variable fees, and many will be better off.''—[Official Report, 27 January 2004; Vol. 417, c. 173.]

In debating this clause, it is extremely important that we understand the impact on students in Wales of the Government's proposals and the Assembly's current position on fees. We must also understand the effect on the financial position of Welsh students when the Assembly takes over the power to offer grants to students. There might be injustices on Welsh campuses if different cohorts of students are in different financial positions as they go through their studies. We might even see a situation similar to that in Scotland, where English students pay higher fees than their counterparts in Scotland. It is a completely unjust situation in which they must resource themselves much more substantially than students from Scotland who are studying at the same universities. What happens to students in Wales as a result of the Government's changes to the student support package is an extremely important matter that the Committee needs to consider carefully.

I look forward to understanding clearly the Under-Secretary's rationale for such changes. In the past 12 months, the hon. Gentleman and I have debated Welsh devolution on three occasions: in debates on the Health (Wales) Bill and on the Health and Social Care (Community Health and Standards) Bill, which introduced foundation hospitals, and now in connection with the Higher Education Bill. His views were well summed up by his comments in Committee on 12 February 2004 when, perhaps expressing a little exasperation at having to deal with such arguments, he said:

''In the interests of supporting devolution—God help us and protect my sanity''.—[Official Report, Standing Committee H, 12 February 2004; c. 138.]

The Under-Secretary's recourse in such debates is always to say that we must protect devolution and that

everything is about the devolution settlement. I hope, this afternoon, as we debate devolution of the power to set the student support package, that the hon. Gentleman will tell us why it will be of benefit to the people of Wales and how their position will be improved by such measures.

On many occasions, I have said that when they devolve powers to Wales, the Government create duplication, inconsistencies and, above all, cost. Undoubtedly, I will make a similar argument now. Will the hon. Gentleman explain what benefit this Bill will deliver to the people of Wales? Rather than base his argument simply on a theory of devolution and that being a good thing, will he say what tangible, practical benefits the measure will bring to Wales? Surely that should be the benchmark by which to measure whether the House should devolve a power to the Welsh Assembly.

My hon. Friend may care to note that one tangible benefit that arises from the transfer of such matters to the Welsh Assembly is that it has decided that top-up fees will not be introduced until 2007. Does he agree that it is unlikely that the Under-Secretary will cite that as an advantage?

That is indeed unlikely, and my hon. Friend makes an important point. The Welsh Assembly Government have made a virtue of publicly stating their determination to keep to their manifesto commitments slightly more clearly than others whom we have encountered during our proceedings.

When deciding whether it is appropriate to devolve a power to the Welsh Assembly, the Committee and the House should ask the fundamental question: what practical benefit will the people of Wales derive from such power? Will it genuinely improve their material situation, or is it simply being done for ideological reasons? Will the Under-Secretary set those questions at the heart of his remarks? In previous debates he has not dealt adequately with the practical benefits of change; I hope that he will do so today.

We are dealing with a set of changes that might create minefields in several areas. The most fundamental point is that we are not dealing with two separate systems of higher education. Suggestions have been made that that is what the Assembly Government aspire to, but the practical reality is that we are a single country that witnesses great flows of students. We just have to look at the mix of study patterns for Welsh students to realise that it is not a matter of saying, ''Well, this happens in Wales and that happens in England, so we will draw a line between the two and we will have two separate systems.'' In Wales, in 2001–02—the last year for which figures are available—there were 59,685 full-time students: 43 per cent. were English-domiciled, and 55 per cent. Welsh-domiciled. There were 43,055 part-time students attending higher education institutions in Wales: 81 per cent. were Welsh, as one would expect, given the nature of part-time study, but even in that sector, 18 per cent. of the students were English.

Let us consider individual institutions. I have referred before to the university of Wales, in Aberystwyth, where 68 to 70 per cent. of undergraduates are from England. The figure varies across Wales and is much higher at the university of Glamorgan, where 77.9 per cent. of students are from Wales and 12.6 per cent. from England.

That demonstrates that the situation is very fluid and that students exercise choice. Students from Wales do not see themselves as Welsh students for the purposes of higher education. Like any other students, they rightly look at all the available options and decide where to go without regard to whether an institution is in Wales. Interestingly, I suspect that the higher percentage at the university of Glamorgan reflects a pattern that is typical of some more modern universities. Even so, a substantial block of English students come to Wales, because they have that as the best option for them.

In the Bill, we are giving the Assembly the power to set different grant levels and to have a Welsh loan regime, so we must give full consideration to the implications of that.

The hon. Gentleman is making a point that he has made before. Such powers have been devolved to Scotland and Northern Ireland, and both have made their own arrangements as regards grants and other matters. Why does he think that there would be a problem in Wales, when, to all intents and purposes, none has appeared in Scotland or Northern Ireland? What is so peculiar about Wales? Does he think that Scotland and Northern Ireland should not have such powers?

The Minister helps me move on to my next point. I have no intention of moving too far from the issue of Wales, Mr. Gale, but you will understand that a comparison is necessary to explain why I have great concerns about the Welsh situation.

Scotland has an entirely separate regime and some extraordinary anomalies have emerged, which do a huge disservice to the United Kingdom as a whole. The Minister will be aware that an English student attending a Scottish university is liable to pay fees, whereas a Scottish student attending a Scottish university is not. That anomaly had led to what is, by any measure of common sense, a complete absurdity. European Union laws require us to provide comparable access—[Interruption.]

Order. I am being as tolerant as I can, but I cannot have two hon. Members talking at the same time.

EU law requires Governments to provide people from any part of the EU with equal access to higher education. That has led to the absurd situation that it is less expensive for a student from eastern Europe to attend a university in Scotland than it is for a student from England. Whatever the aspirations of hon. Members who created the devolution settlement, I cannot believe that that was

an intended consequence. In considering the Welsh situation, therefore, it is important to understand what we are doing.

Does my hon. Friend agree that it is interesting that the Minister says that Wales should be treated the same as Scotland? If it had been, it would have its own Parliament and be responsible for the provisions before us, so we in Westminster would not be considering them at all.

That is absolutely right. My hon. Friend also highlights the fact that whereas we have the opportunity while considering the Bill to address the question of consistency of provision for United Kingdom students in United Kingdom universities, we no longer have the power to address that issue in relation to Scotland. We can still do something about it in Wales. That is why it is extremely important that we understand what we are creating here.

I have a number of questions for the Under-Secretary of State for Wales. First, what does he expect to be the eventual mix of the cross-border fund? What does he expect to be the situation for Welsh students attending English universities and English students attending Welsh universities in respect of the provision of grants and the fees charged, which the Government say those grants are designed to offset? What rules do the Government expect to apply? What financial support will be provided by the Department here to English students attending Welsh universities? What support will be provided by the Assembly to Welsh students attending English universities? What reassurances can he give the Committee that in setting up these new structures we will not see the anomalies that I have just described in relation to Scotland, which no hon. Member would consider sensible?

The second issue I want to touch on is funding and funding support. The Welsh Minister for Education and Lifelong Learning, Jane Davidson, made an interesting comment on 23 January when she said that there would be pros and cons to devolving more higher education powers to Wales. She is probably right. She said:

''As education minister I'm quite keen to have full powers over all aspects of higher education because we can take the decisions that are right for us in Wales''.

But, and the but carries with it significant issues for higher education in Wales, she added that she would not be happy to have the powers without the corresponding money from central Government that is currently provided for every student. There is a bill attached. Wales would like to have these powers, but it would also like some money to enable it to take over the responsibilities.

It would be helpful for the Committee to understand the financial implications for the Exchequer of making those changes and what the Ministers expect the balance of responsibility for funding to be after these changes are enacted. That is particularly important given issues in relation to grants. On 13 January, Jane Davidson said in her statement to the Welsh Assembly:

''More students would benefit from the HE grant to be introduced by DfES on an England and Wales basis from September 2004. Welsh domiciled students who begin their courses

in Sept/Oct 2004, and who would have qualified for the maximum £1,500 under the current ALG scheme,''—

the Assembly learning grant—

''would get the £1,000 HE grant plus an additional £500 ALG top-up. From the transfer of functions in 2006, only the ALG would be available in Wales.''

The implication is that there may be a funding gap between money that would come from the DFES under the current scheme and additional grant money that would have to come from the Welsh Assembly under the changes proposed in the Bill. Is there a funding gap? Will the switch in responsibilities that gives the Welsh Assembly the right to set its own grants and to take over the grant regime place a strain on other Welsh Assembly budgets? As the Assembly does not have the power to levy its own taxation, it cannot raise that money additionally from the Welsh taxpayer; it would have to take it from other budgets. It would be helpful to get the Under-Secretary's clarification on that point.

My next point on funding concerns the potential for a double whammy for the Assembly after the transition. To appreciate this double whammy, one needs to recall that the Assembly has said that it does not plan to introduce variable top-up fees until at least 2007. That will be at least one year on, and potentially more. By the time that it has legislated and introduced the fees, we could be talking about two to three years before a new fees regime was introduced in Wales.

The question of funding issues between English and Welsh universities therefore arises. In theory at least, the Assembly will face an issue with Welsh universities. As the Under-Secretary will be aware, they have raised concerns about the fact that although their English counterparts will be able to levy top-up fees after 2006, they will not be able to. They are concerned that their recruitment and investment as well as the quality of education that they can provide may be disadvantaged and that they will suffer relative to their English counterparts.

The Assembly has made suggestions, which the Under-Secretary could perhaps confirm, that it will seek to compensate the Welsh universities for the gap between their financial situation and that of English universities that will exist after variable fees are introduced. That is a potential funding issue. On top of that, there is the issue of Welsh students in England, who will have to pay top-up fees. Less well-off students will receive grants and the Assembly will have to provide a subsidy to the student loans system to enable those students to pay their fees. Additional grants and additional loan subsidies for students domiciled in Wales who attend English universities post-2006 will impose significant additional costs on the Assembly.

There is a danger that, on the one hand, there will be an extra bill for Welsh universities because of the disadvantage that they say they will suffer through being unable to levy fees and, on the other, that there will be the cost to the Exchequer in Wales of subsidising the loans to Welsh students to pay top-fees and providing grants to less well-off students. Will the Under-Secretary address that question?

As I mentioned a moment ago, the Welsh Minister for Education and Lifelong Learning has expressed concerns about whether financing will be made available for taking on responsibility for the areas set out in clause 41, or whether there will be gap. In a year in which public spending is under pressure, what does the Under-Secretary expect the Assembly's position to be? If it has to find additional money for grants and loan subsidies, what will its situation be?

The next issue that I would like to raise concerns the situation in 2006. The Welsh universities expect that when the new fee regime has been introduced in 2006, making it cheaper to go to university in Wales than in England, there will be a rush of students applying to Welsh universities. That creates a financial issue on the grant front.

My understanding—the Under-Secretary will correct me if I am wrong—is that the grant regime will be fully in place by 2006. Therefore, in theory there will be a significant cost to the Assembly budget and to that of the Department for Education and Skills because of grants made to students attending Welsh universities. The grants will leave them better off, because they will not have the additional burden of paying fees in that year. Therefore, is there not an extra cost to the taxpayer in paying grants in that year that are explicitly set out by the Secretary of State as having been introduced to compensate students for the introduction of top-up fees, when in Welsh universities there will not be any top-up fees in that year?

The grant goes straight into the students' pockets, which is nice for them, but because their student loan amounts will remain constant and they will receive the grant, those students will end up better off through their university years in cash terms and in terms of the availability of finance to them than their counterparts in English universities and those who attend subsequently. Can the Ministers address the issue of 2006 and set out for us what the position will be for those students?

The fourth point that I want to raise with the Minister is about bursaries in Wales. In a response to a question from the hon. Member for Cardiff, Central (Mr. Jones) in January, the Minister said:

''Fee deferment is an integral part of the new package of student support for which the HE Bill provides. English domiciled students studying in Wales will be eligible for loans for fees from the Department for Education and Skills on the same basis as English domiciles studying in England.

Bursary provision by English HEIs will be directly connected with the terms of access plans with the Director of Fair Access which permit them to charge variable fees. The Welsh Assembly has said that it will not introduce variable fees during the lifetime of the second Assembly, therefore Welsh Higher Education Institutions will not need to provide access bursaries on similar terms to those being provided in England.''—[Official Report, 26 January 2004; Vol. 417, c. 30W.]

The Government's proposed overall student support finance package is designed to mix together grants and bursaries in a way that provides compensation for the introduction of fees to those from less well-off families. However, the package is balanced by the introduction of the access regulator. Given that variable fees will not have been introduced

in Wales in 2006—although the core of the student support package is in place—if institutions do not need to provide access bursaries on similar terms to those provided in England, will the access regulator have a remit in 2006, or will that be introduced only later when bursaries and fees kick in?

The last issue that I want to explore with the Minister are the specific exclusions in section 22 of the 1998 Act referred to in clause 41. With regard to Welsh devolution, that clause specifically sets out a number of areas that are excluded:

''In relation to Wales, the functions of the Secretary of State under section 22 of the 1998 Act (arrangements for giving financial support to students) are hereby transferred to the Assembly, except so far as they relate to the making of any provision authorised by subsection (2)(a), (c), (j) or (k), (3)(e) or (f) or (5) of that section.''

Referring back to the 1998 Act, there are exclusions that relate to the criteria for determining an eligible student and the means-testing process whereby one decides which students are eligible for a level of student support. The relationship between grants and incomes is prescribed, and reference is made to the bankruptcy position and the collection process. All of those are excluded. Some of them make logical sense. Excluding the collection process is logical because that process for student loans is carried out through the Inland Revenue system, which applies to all parts of the United Kingdom. Why that element of the 1998 Act is not being devolved to the Welsh Assembly is logically explicable.

I listened carefully to the Minister's earlier comments about bankruptcy. It makes sense that the rule should apply across the United Kingdom. I am not sure about Scotland, but I see no reason why it should not be kept centrally. The Minister will understand that I am in favour of retaining common powers across the UK, and certainly across England and Wales, but it would help to understand the Government's reasons for deciding that some of the powers of section 22 of the 1998 Act should be devolved to the Assembly, and some not—including the determination of ''eligible student'' and means testing. I mention that particularly because Wales is distinctive in that it is a lower-cost part of the UK. In many ways it is also a lower-income part of the UK, although I do not have figures to hand for average incomes in Wales.

Sitting suspended for a Division in the House.

On resuming—

When we broke for the Division, I was in the middle of remarks probing the Minister about the exclusions set out in clause 41 to the various conditions in sections 22(2) and (3) of the 1998 Act. I had said that I was content with and fully understood the rationale behind the collections and bankruptcy systems. I had expressed my general approval that such powers were being devolved, and thought it would be helpful to the Committee to inquire about the context for retaining some of the clause's elements

at Westminster. In particular, I was interested to understand from the Minister what prompted the Government to retain centrally the power to determine an eligible student when it came to the power to issue a grant or loan. I was slightly surprised by that. I welcome common provision, but the risk is that inequalities will exist anyway through other provisions of the Bill.

On the question of means-testing, income levels in Wales reflect its particular economic situation. I was saying to the Minister when we suspended that, although I do not have the figures to hand, my understanding is that average incomes in Wales are lower than elsewhere in the United Kingdom. It is therefore valid to question the Minister about the decision not to have locally based means-testing of grant provision. It would be helpful to the Committee, as a matter of record, if he could explain his position on those issues.

I shall touch briefly on one of the issues that is being devolved under clause 41, which is the amount of money to be provided for loans and grants. That devolution is cited in section 22(2)(b) of the 1998 Act, which prescribes

''in relation to any such grant or loan and an academic year, the maximum amount available to any person for any prescribed purpose for that year''.

That is the actual amount of grant or loan that is set. I do not want to probe with the Minister the grant issue because that is clear: there is a budget to allocate to grants and payments to students. However, in the case of student loans and the subsidy to such loans, I should like to understand what the Assembly's position is in relation to the provision of loans, and especially the relationship of decisions taken about the provision of loan allocations to the overall student loan book. Clearly, the potential must exist for a decision taken about loan levels in Wales to have an impact on the loan book that would be different from the effect of decisions taken about different amounts in the rest of the United Kingdom. Is it the Minister's intention that the Assembly will simply be able to provide, for example, an extra £1,000 a year of student loans through the regional allocation budget structure, making budgetary provision for offsetting the cost of subsidising those loans?

In terms of cash provision, as I understand it the way in which the student book currently works—the Minister will correct me if I am wrong—is that the Government borrow a block of cash each year which is re-loaned to students according to the terms of the income-contingent scheme for student loans, and then repaid accordingly. My understanding is that that effectively happens outside the confines of the Government's balance sheet. Nevertheless, in lending the money, the Government have to meet a cash requirement. The Treasury must raise the money to lend to students in the first place.

If a decision were taken in the Welsh Assembly to increase significantly the amount of loan money that is available to Welsh students, what would be the relationship between such a decision and the public sector net cash requirement, which I would expect to remain within the Treasury's remit? In theory, the

Assembly could require the Treasury to raise more cash to lend to students. How will that process work and where will the decision-making powers rest, given that an Assembly decision about the amount of a loan has a direct impact on what the Treasury does—although probably not to a massive extent—and on the Treasury's cash flows?

I want to deal slightly belatedly with the detail of amendment No. 287, the purpose of which is to open a door to the issues that I have been discussing. It was intended to be a probing amendment and was designed to link the clause exclusively to the provision of higher education in Wales. Clearly, it is flawed, which is why it is a probing amendment; it would cause operational problems for the Assembly in the provision of student support to students in universities outside Wales. I am sure that the Minister will pick me up on that. He will understand that my amendment was simply intended to create an opportunity for the issues to be debated. In fact, it had an unintended consequence, which it is worth the Minister addressing in principle, because this is the Higher Education Bill.

On considering the amendments, Universities UK picked up on section 22 of the Teaching and Higher Education Act 1998, which allows regulations to be made on student support in both higher and further education. The effect of the amendment would be to transfer powers on student support in higher education to the Assembly in Wales, but not powers on further education. Universities UK is content with the devolution of powers in higher education as set out in the Bill. However, it is right in saying that the clause specifically transfers powers of student support in further education. This is pretty much the only time that further education is a central part of a Bill that otherwise deals entirely with higher education.

Perhaps the Minister could deal briefly with further education in Wales and with the changes that he envisages happening to the provision of student support in further education as a result of the measure. There has been a separate debate about the cost of and support to those in further education—those doing part-time courses and so forth. What does he expect to happen to the provision of student support to further education in Wales? Does he think that that will have a feed-through effect? Do the Government envisage changes to student support in further education across the board?

This is the one part of the Bill where the Committee may consider why the Government are choosing to devolve powers to Wales and what will be the benefits of the decision to do that. It is also the moment at which the Minister can set at rest some of the legitimate concerns about the potential for disparities between the provision of support to students domiciled in England and Wales, depending on the pattern of higher education that they choose to pursue. I hope that he can lay to rest some of those anxieties, particularly in the context of the obvious injustice that takes place in Scotland.

Let me say that I agree completely with the hon. Gentleman's last sentences. He was right to say that this is the very point in our discussion where we consider why the

Government have chosen to devolve student support in Wales, the way they have chosen to do that and the implications of it. However, the conclusions that I draw will be somewhat different to those drawn by the hon. Gentleman.

I hope that the Committee will reject the amendment. When the hon. Gentleman set out its terms, he was right to explain its unforeseen consequences, which were that in specifying higher education, he removed some additional devolution of further education. The amendment is unfortunate, given that he said that he wanted it to limit student support to students in higher education in Wales. There is a cross-border higher education system between Wales and England, and we need to consider the amendment and the clause in the light of that. The higher education system is shared much more between students who go from Wales to England and from England to Wales than in any other part of the UK. In 2001–02, 53,548 full-time undergraduate higher education students studied at Welsh institutions, of whom 24,163—almost half—came from England. Some 28,671 students were from Wales, and only 714 came from other parts of the UK.

Wales has by far the highest proportion of non-domestic students of any nation or region in the UK studying within its own boundaries. The other correlation is also true: the largest group of non-English students studying at English higher education institutions are Welsh. Again, more than 20,000 Welsh students study in England.

They are very welcome.

As are the English students in Wales, particularly in Aberystwyth and Lampeter in my constituency. Clearly, any consideration of support for students in Wales and England must take into account the fact that many will go from England to Wales and from Wales to England. I therefore agree with the hon. Member for Epsom and Ewell. Plaid Cymru and the Liberal Democrats do not want fees, which is why we voted against them on Second Reading. We would prefer to fund higher education in England and Wales from taxation. That means, of course, the Barnett consequentials fully taking into account the hon. Gentleman's points on funding.

However, we did not win the Second Reading debate. If Plaid Cymru and the Conservatives had known just how much of Scotland was in this Bill, we might have viewed parts of it differently. Nevertheless, the Bill is as it is. Plaid Cymru Members are delighted to see the Minister here, as we are discussing Wales. We are called separatist, but the Under-Secretary of State for Wales is usually the only one who turns up for a discussion on the Welsh clauses: I have been here all along. It is fair to make that remark, because it is used against me whenever I turn up to discuss purely Welsh clauses.

The year 2006–07 is the one in which things could go very wrong for English students in Wales and for Welsh students in England. The Under-Secretary is probably here to talk about that year, because it remains part of his responsibilities before full devolution takes place. I have been in a quandary

for much of our proceeding because I have wanted to comment on many Opposition motions and amendments while knowing in my heart of hearts that they would not apply to Wales.

Clauses 25, 26 and 41 relate to devolution. It needs to be put on the record that clause 41 devolves powers, but that clauses 25 and 26 provide the detail of the devolution, and it is regrettable that we did not have the opportunity to debate them in detail. Nevertheless, devolution issues arise again under this clause. During the Committee's consideration of the implications of OFFA, including the regional variations to which the hon. Member for Cambridge referred and the remarks made by the hon. Members for Nottingham, North and for Leeds, East about widening participation, I was very aware that what was being said and passed in Committee related directly to England, but not to Wales.

We have to thank the Minister for the benefit of seeing draft regulations for England. They have allowed a more intelligent discussion and better decision making, which is welcome. I have not seen it in other Committees, but I recommend it.

The point is that there has not been a similar debate on regulations for Wales. The National Assembly decided to address the issue of tuition fees and maintenance grants post-2006 after a review of the effect of grants and fees on higher education in Wales. It will do so by reconvening the Rees commission, which will report to the Assembly on the effect of grants on student debt, on incentives, on participation and so forth. On her website, Teresa Rees makes it clear that

''Devolution of student support will potentially bring a wide range of benefits for Welsh learners. It will mean freedom to devise and implement a tuition fee regime and student support system to suit Wales.''

It is interesting that she is looking to tailor a tuition fee regime and student support system to suit Wales. She is not considering that Wales should not have tuition fees. That is a matter of regret to me and, I think, to Liberal Democrat Members of the Welsh Assembly. In other words, we will de facto have tuition fees in Wales post-2007. The only question is how and when, and in what shape they will come.

Does the hon. Gentleman not understand my concern that, as many young people choose to cross the border in both directions, the creation of a new fee and student support structure for higher education in Wales risks creating injustices on campus of the sort that I said existed in Scotland? That surely cannot be to the benefit of students in the United Kingdom.

I understand the hon. Gentleman's perspective. I would not use the term ''injustices on campus''. I accept that a new system may lead to differences on campus—some students will be supported differently from others, and some will be paying under a different fee regime—but, as the hon. Gentleman said, that is true now under the Scottish

system. It will be more obvious in Wales because we have a greater number of English students, and a greater number of Welsh students go to England. I do not accept that that should be characterised as injustice, but until we have clarity from the National Assembly Government about what system they intend to introduce, students in Wales and England will be somewhat blind about where their future lies, what courses they may wish to undertake and how they may be sustained and maintained on those courses. The hon. Gentleman is right to highlight that point—a point to which the Minister should reply.

Does the hon. Gentleman support the fact that students from England pay a higher level of fee to attend university in Scotland, and could therefore do so in Wales, than students, for example, from eastern Europe?

We have to justify that; that is what devolution means. As the hon. Gentleman is pressing me on the point, I must remind him that, in its submission to the Richard commission, the education committee of the National Assembly said that it wanted to see those powers extended to Wales. The Conservative members of that committee did not demur from that opinion. [Hon. Members: ''It is devolution.''] Exactly so. That is my point.

In the last National Assembly elections, the Conservative party welcomed the devolution of those powers to the National Assembly. It is this end of devolution that does not seem to be working so well for the Conservatives—they seem not to know what the Cardiff end thinks of such matters. I am sure the hon. Gentleman's views are genuinely held, but they should be addressed to the Conservative leader in the National Assembly, who until recently supported such moves.

There is a practical point that can be best addressed through a couple of questions to the Minister. I shall focus on 2006, when the new regime will come in. What will the situation be for a student living in Wales and choosing to attend an English university in 2006? That student might go to a university with an access plan agreed with OFFA that means that a full £3,000 fee can be charged. However, the National Assembly might not yet have agreed its student support system in the light of a full tuition fee system. Therefore, for at least one year, if not longer, that student will attend an institution where a £3,000 fee is levied under OFFA, because of the access plan, but there is no corresponding £3,000 to be paid to the student in support.

I hope hon. Members follow that hypothetical situation. For the purposes of argument I am assuming that the student would have been eligible in England for the full £3,000, which is the element of grant plus bursary that matches the £3,000 tuition fee. If the student comes from Wales, the £3,000 support will not be there to attract them to attend the English institution. That might deter Welsh students from going to places that offer the best courses for them, and persuade them to accept second best. As a graduate of a Welsh university, I am not saying that they are second best, but students want to go where the best courses are. Some courses are available only in

England or in Wales, and some are taught better in some institutions than in others. Students will choose to go where the best course is.

The converse can also be argued. What happens to an English student who chooses to attend a Welsh university in 2006? If they attend a course at an English university, they might pay full tuition fees of £3,000 under an access regime and receive the £3,000 support. However, by attending a Welsh institution, there will be no OFFA, no access plan, and nothing has been decided as to whether Wales will adopt that structure. The Bill devolves powers to enable a National Assembly to have access plans and a body such as OFFA in the Assembly, but no decision has been taken as to whether that will happen.

We must debate the matters on the basis of what we know today. An English student studying at a Welsh institution will be entering an institution without an access agreement. That institution might still charge the £1,000 tuition fee—it would have no right to charge more under the Bill—but what student support will the student receive? Will they be able to receive the full £3,000 support, even though they attend a Welsh university without an access agreement, or will they receive a minimum of support? What will that minimum support be? That is an important question for any English student seeking to study in Wales post-2006. Will the support match the tuition fee in England, or will it differ because Welsh universities will not have an OFFA-agreed access arrangement?

I would not call those examples injustices, but I would call them problems and anomalies that we must iron out. We need clarity. Throughout the Committee it has been constructive of the Minister to produce the draft regulations. They have enormously helped most members of the Committee to understand how students in their constituencies would be supported or otherwise as they enter further education. I know that the regulations have persuaded some Government Members to support the Bill. I remain against the Bill in principle, but I must ask the Under-Secretary of State for Wales what will happen to the students whose situation I described? Those matters must be explained.

One problem is that the National Assembly Government have not made a statement of principle or policy on the matter. They have kicked the business into the Rees commission and into a post-2006 situation. In principle, I support that. Of course it is right that the Assembly and Assembly Government should choose how to run the system, but that is bad decision making and bad public policy making. It is not helpful that we do not know what an English student studying in Wales or a Welsh student studying in England will receive in support or can expect to pay in tuition fees after 2006.

The simple fact is that at least 45,000 students—those domiciled in Wales and studying in England or domiciled in England and studying in Wales—do not know what the situation will be in 2006–07 because we cannot marry what is happening in England with what may happen in Wales. All that we can do is take a best shot and assume, as does the statement that I read out, that there will be some form of tuition fee system in

Wales and some form of student support grant alongside it.

I have two final points. First, I commend the National Assembly Government for what they have done to date on student support. As the Committee may know, they were the first to reintroduce a grant—in this case, a learning grant—which has been an example to the rest of the United Kingdom. In particular, I like to think that that decision has been useful in the Government's decision to reintroduce grants to England, and that deserves to be put on record.

Secondly, will the Minister explain why the devolution settlement has been approached in the way that it has? Members who have read the Bill and considered the statements made by Ministers will assume that the Bill devolves support for students in higher education institutions to the National Assembly, and in a broad sense, it does. However, if we consider the detailed architecture of the Bill, we can see that student support is devolved to the National Assembly in a particular context. It is not a full assumption of devolution over all student support and charging mechanisms. It is the assumption of devolution over a particular set.

In other words, if the Assembly decided to change the present system of tuition fees and support for students, it could do so only along the same lines as England. It may vary the amounts and elements of the tuition fees, and the access plans may be different, but all the elements of the Bill's architecture for England will have to be present in Wales. There will have to be variable tuition fees if anything happens to increase the basic tuition fee, and there will have to be student support linked to those tuition fees. There will have to be access plans and a version of OFFA, although it may be incorporated within the Assembly body or the Higher Education Funding Council for Wales—we do not know, as the Assembly has complete control over that. To continue the architecture analogy, the doors and windows may be in different places, but the basic infrastructure must be the same.

Matters could have been different. There could have been a simple devolution so that the Assembly was in complete control of a student support system and tuition fees. That may have meant that it would have followed a different path from that detailed in the Bill. As such, it is appropriate to invite the Minister to explain the thinking behind the method of devolution that the Government have chosen, compared with any other.

In conclusion, my party will support the element of devolution, but we feel that there are important questions, including those raised by the hon. Member for Epsom and Ewell, about the effects of the new system, particularly in the first couple of years when there is not a similar scheme in Wales running parallel to the scheme in England. As this is the first opportunity to discuss the subject, it is also important that the Minister takes some time to explain why the Government have chosen the system of devolution that they have.

We have had a lengthy and important debate with useful contributions and valid points from hon. Members. I shall deal first with the amendment and then the wider issues that have been raised.

The amendment would limit the powers transferred to the Assembly to those relating only to higher education. It would result in the Secretary of State retaining the power to provide financial support to further education students in Wales. That is a reason to resist the amendment.

The functions relating to student support that the clause would transfer to the Assembly are not new. They are currently exercised in England and Wales by the Secretary of State under sections 22 and 23 of the Teaching and Higher Education Act 1998. The hon. Member for Epsom and Ewell will be aware that the equivalent functions are already exercised in Scotland and Northern Ireland by the respective devolved Administrations. We propose a tidying up of the devolution settlement concerning higher education. The Assembly already exercises the majority of Executive powers in the areas of higher and further education and the transfer of the remaining functions will allow it to exercise power on a whole-system basis over student support and higher education functions. The only functions that will not transfer to the Assembly relate to the collection of repayment of tax, which rightly remains a reserved matter.

The amendment would restrict the transfer of functions to the Assembly to those under section 22 of the 1998 Act which relate to higher education, leaving the Secretary of State with the functions in relation to financial support for further education students in Wales.

I have been following the Under-Secretary's argument carefully and he said that this is a tidying-up exercise to bring the situation in Wales into line with that in Scotland and Northern Ireland. As he recognises, the Government legislated back in 1997–98 for a distinction between Wales and Scotland and Northern Ireland. Can he explain what has changed since 1998? Is there likely to be a continuing process of further transfers or is this a one-off?

If the hon. Gentleman were to reflect on what the Government have done in the past few years, he would find that there has been a continual progression of transfer of certain functions to the Assembly, all provided for under the Government of Wales Act 1998. For example, there has been a Bill to devolve responsibility for the fire service to the Assembly. That is not uncommon and is a practice that the Government have followed during the past few years.

The anomaly is that one element—responsibility for student support—has been retained in the Department for Education and Skills. We think that it is better to transfer it to the Assembly, which has responsibility for all other aspects of higher education, so that it will have the complete package and complete responsibility.

I cannot understand what use the Secretary of State would make of such a power if we accepted the amendment. It would not be logical. To separate in an arbitrary way certain of the Secretary of State's functions under section 22, transferring some to the Assembly while reserving others, would be inconsistent and impractical. Why should the Assembly not have the same powers over higher and further education as the devolved Administrations in Scotland and Northern Ireland? The amendment is ill-conceived and poorly thought out. I accept that it is an attempt to probe the Government's thinking and I urge the hon. Member for Epsom and Ewell to withdraw it.

On the wider issue of the clause, it is a milestone in the devolution settlement in Wales. It will put the Assembly on the same footing as the Northern Ireland Assembly and the Scottish Executive with regard to responsibility for higher education. The transfer of the remaining functions will allow the Assembly to exercise powers on a whole-system basis over student finance and further and higher education policy. Again, that will bring it all under one responsibility.

The clause allows for the tidying-up of the present devolution settlement. It will create a more streamlined and effective policy-making environment in Wales and should, therefore, be welcomed. As I said, the Assembly already has responsibility for most education services and the clause will transfer to it certain functions relating to student support. Those functions are not new and are currently exercised by the Secretary of State under sections 22 and 23 of the 1998 Act. The Bill provides an enabling framework of legislation that will give the Assembly powers to determine which student support and finance arrangements are appropriate to Wales, as the hon. Member for Ceredigion said.

As hon. Members will be aware, the Assembly has yet to decide whether to introduce variable fees. Its final decision will be informed by an independent review, which is to be undertaken by Professor Teresa Rees. The Assembly's Minister for Education and Lifelong Learning has invited Professor Rees to produce a report containing the relevant evidence to inform future policy decisions by the Assembly and the Higher Education Funding Council for Wales on student support and the financing of the higher education sector. The report is due to be completed by May 2005, with an interim report on variable fees in February 2005. It will make the necessary recommendations to the Assembly.

I am grateful for that information, but how can the report possibly take full account of the impact of tuition fees, which I understand is its purpose, if it is published before they are introduced in England?

If the hon. Gentleman bears with me, I shall touch on the review's more detailed work.

It is hoped that Professor Rees and her colleagues will begin their work on the report following the passage of the Bill, assuming that Parliament approves it and that it gains Royal Assent. Naturally, the Assembly will want to respond to the Rees review as

soon as possible. That will be in the interests of the higher education sector and students in Wales. The transfer of the functions before us will allow the Assembly to respond fairly rapidly once Professor Rees's report has been published, and the Assembly will decide which line it wants to take.

The Minister says that the measures will allow for the creation of a separate Welsh regime for student finance and support. Does he favour extending the situation that exists in Scotland to Wales? A student from England who attended a Welsh university would then be liable to pay higher fees than a student from another part of the European Union, such as eastern Europe.

The hon. Gentleman is not entirely clear about what is happening in Scotland. He is right that Scots who attend Scottish universities pay no fees and that English students do, but the Scots have to pay the Scottish graduate endowment after graduation, and so would any EU student in the same situation. He is drawing on an incorrect assumption.

It is simple arithmetic. The current basic fee is £1,125 a year. Over three years, it would amount to £3,375, and the graduate's contribution is £2,000. An English student would, therefore, pay more than a student from another part of the European Union to attend university in Scotland.

We will have to disagree about how we approach the issue. I do think that the hon. Gentleman is correct.

Our proposals are logical and consistent and will meet the needs of the Assembly and Wales. The Assembly has made it clear that it welcomes the devolution of responsibility for student support and tuition fee policy, and the clause provides for that. Without the clause, key decisions affecting Wales and Welsh students would continue to be taken by the Department for Education and Skills in England.

The current arrangements for student support and finance are incompatible with the broader devolution settlement for Wales, and our proposals will put that right. The hon. Gentleman and I have debated the matter several times, and he referred to it earlier. However, the clause excludes the transfer to the Assembly of certain functions relating to the collection and repayment of taxes. It has been interesting to listen to him because, as the hon. Member for Ceredigion pointed out, his policy seems to diverge somewhat from that on which his party fought the Assembly elections in 2003.

The Conservative manifesto for those elections said that if they were to gain power in Wales—just imagine that; we will see the second coming first—they would lobby the United Kingdom Government to devolve power to the Assembly to determine policy on tuition fees and to ensure that Welsh universities were not financially disadvantaged. That was their policy at those elections, which is quite different to what the hon. Gentleman says now.

The true intentions towards higher education in Wales were made clear by the hon. Member for Leominster (Mr. Wiggin), the Conservative Front-

Bench spokesman on Welsh matters. He told the Welsh Grand Committee:

''Opposition Members believe that the number of available places for students should be reduced.''

He added that they hoped to reduce the

''number of places or, to put it at its worst, the number of opportunities for people who leave school.''—[Official Report, Welsh Grand Committee, 16 December 2003; c. 49.]

Clearly, that is the official policy of the Conservatives.

Before the hon. Gentleman gets too carried away, will he also accept that the Labour party in Scotland has a no fees policy?

That is devolution. I am a little surprised by the hon. Gentleman's remark because at least his party has been consistent in its approach to devolution throughout the United Kingdom. Our devolution system is asymmetric; it is not the same across the kingdom and we accept that it works in different ways for different parts of the United Kingdom.

Will the hon. Gentleman therefore explain why he believes it appropriate for the Conservative party to have the same political views in Westminster and Cardiff when that it is not appropriate for his party?

It is perfectly proper that within the devolution settlement my colleagues in Cardiff have not ruled out variable fees. They have said that they want the review by Professor Rees and that they will then take a decision. The clause puts in place a mechanism whereby the Assembly can have variable fees should it wish to do so. It is a matter for the National Assembly. It is difficult for the Conservatives to understand the devolution settlement, but that is how it works in practice and it is working very well. I hope that hon. Members will excuse me if I am unable to cover all the points raised, but I will write to ensure that they receive a proper response.

The Minister for Education and Lifelong Learning in the Assembly, Jane Davidson, asked Professor Rees to conduct a review. Its aim is to produce a report by May 2005, together with the relevant evidence designed to inform the Assembly and HEFCW's decisions about the future of policy towards student support and higher education financing in Wales. She will also be asked to make recommendations to the Assembly about the applicability of variable fees in Wales.

The remit is wide. It states:

''Taking account of the work of the Independent Investigation into Student Hardship and Funding in Wales which reported in 2001, and developing that work as necessary, the Study will advise the Minister as regards: the shape and responsiveness of the existing student support system and the impact on learners of changes since the previous independent investigation; the most appropriate use of the newly transferred student support powers particularly in relation to supporting access for the least advantaged learners; the applicability of the devolved tuition fee powers to Wales; the opportunities offered by the transfer of these functions both for access and participation in higher education; the opportunities offered by the transfer of these functions to support the delivery of public services in Wales''.

There are a host of other points that I can easily make available.

The hon. Member for Epsom and Ewell made several important points. He talked about the cost of the Assembly's commitment to have no tuition fees in Wales in the life of the present Assembly. The Assembly has said that it will meet the additional costs of not introducing fees. It has already made that decision. The Assembly Cabinet and the Administration have decided that they can fund that decision and that it gives them time to carry out the Rees review.

I am conscious that hon. Members will want to say other things before we wind up. It might help if I write to them on a number of other matters that were raised, as I am conscious of the time pressures. I am grateful for the their comments and will ensure that they get a full response.

Having carefully considered the Under-Secretary's responses to my amendments and his comments on the clause, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 41 ordered to stand part of the Bill.

On a point of order, Mr. Gale. Given that we have only 10 minutes left, it seems appropriate to ask whether this is the right time for hon. Members to comment on the process that we have gone through to note the fact that the Committee is coming to an end. Does anyone wish to comment on that? [Interruption.]

The hon. Gentleman is generous in seeking to create an opportunity for hon. Members on both sides of the Room to comment on our proceedings. The only way in which they can do that is to make a point of order. Whether the Chair will find those in order or spurious is, of course, a wholly different matter.

On a point of order, Mr. Gale. I am sorry if Labour Members think that that is an unprecedented or unusual request because it is normal for the Committee to take a brief moment at the end of our proceedings to reflect on our discussions, and this Committee has had a particularly useful series of debates.

As far as Conservative Members are concerned, it is a matter of record that we regret the fact that, with the knife due to fall in barely five minutes, half the clauses and all the schedules have not been debated. None the less, I genuinely want to put on the record through you, Mr. Gale, the appreciation of all Conservative Members and, I suspect, hon. Members on both sides of the Committee, for your chairmanship and that of Mr. Hood. Throughout proceedings, you have had a light touch, been witty and humorous, but also effective.

I also note that this Committee has had more high-quality and involved debates than any of the other Committees in which I have participated since my election to this place in 1997. Contributions, especially from the Minister of State and the ministerial team, have been of a high quality. Throughout our

proceedings he has sought to engage with the arguments and not to steamroll anyone. He has provided factual information when requested and clarifications when sought. To pay tribute to him, he has done that in response to comments by hon. Members on both sides of the Committee, not just Labour Members. Although the contributions of the other two Ministers were, perhaps understandably, slightly briefer, they also conducted themselves admirably throughout.

Conservative Members appreciate the unusual fact that there have been some extremely high-quality contributions from Labour Back Benchers. Normally in Committees, for reasons that we understand and which apply whichever party happens to be in government, Government Back Benchers are discouraged from saying anything. That is to be regretted. Almost every Committee member has made a speech. As a result, we have had a thorough airing of many issues.

Unfortunately, I conclude my comments by saying that there have been no major changes to the Bill as a result of our deliberations. That will be disappointing for a number of Members who said on Second Reading that they were content for the Bill to proceed to Committee in the expectation that significant changes would be made. Those changes have not occurred, but that has nothing to do with how the Committee has been handled.

I conclude by thanking you, Mr. Gale, and, through you, the Minister, for the way in which he handled himself, which is a model for other Ministers dealing with other legislation.

Further to that point of order, Mr. Gale. I, too, thank you on behalf of the Liberal Democrats. We send our best wishes to Mrs. Hood, who is not well. I also thank Mr. Stevenson for the cameo part that he played this morning.

I take exception to the remarks of the hon. Member for Westmorland and Lonsdale: a major change was made today, and to belittle it is a disgrace. However, I echo his comments about the ministerial team, particularly the Minister of State. I have served as a Committee member on every education Bill since 1997. To see draft regulations in Committee was enormously helpful. I hope that it serves as a pattern for the future. I also thank the back-up staff—the civil servants—for the way in which they supported the Committee.

I thank enormously the Committee Clerk, who is back with us. He helped the Opposition parties with amendments, and the speed with which he was able to produce them contributed greatly to the quality of debate. They were well thought out.

Finally, and unusually, I thank Conservative Front-Bench spokesmen. They engaged splendidly in debate. Although we may not agree on all matters, we were engaged in genuine debate on real issues throughout our deliberations. I am sad that it should have come to an end so soon.

Further to that point of order, Mr. Gale. I express my thanks to you and your co-Chairmen, Mr. Hood and Mr. Stevenson; from now

on, you will be known as Patience, Wisdom and Sagacity. It was a good example of how Committees should be chaired, and you, Mr. Gale, played your part in ensuring that the Committee stage was enjoyable.

I thank the Committee. Hon. Members engaged assiduously in a line-by-line examination of the Bill, which was a credit to the parliamentary process. I thank the hon. Member for Westmorland and Lonsdale—he is almost my hon. Friend—for his kind and generous comments. The Opposition Front Bench teams have been superb, and their engagement in debate is a credit to them.

The one discordant note was on the programming motion and the timetabling of debates. I know what Opposition Members think about knives, but I have a funny feeling that if the Committee had not used those arrangements, we might just have reached clause 23 by now. The knives allowed us to deal with OFFA and Welsh devolution, which is important.

The hon. Members for Westmorland and Lonsdale and for Harrogate and Knaresborough were right to say that, unusually, most Committee members have engaged in our debates, apart from the two splendid Parliamentary Private Secretaries, who have to swear a Trappist vow of silence. All hon. Members spoke or intervened in what were high-quality debates. It was a tremendous experience. We spent eight hours debating one controversial subject of fixed versus variable fees, and another four hours debating Ofsted—I mean OFFA.

I thank the Minister for that last-minute concession.

I also thank all those—the Door Keepers, the Clerk, the officials and everyone else who has worked so hard—for helping the Committee to work smoothly and effectively. I thank my fellow Ministers. I also thank the hon. Members for Harrogate and Knaresborough, for Newbury and for Ceredigion—I want to include every political party.

Finally, some warm Piesporter and stale Pringles may be available at a function that is being arranged at the Department for Education and Skills. Everyone will receive an invitation and we will be able to celebrate once again, over something more suitable,

the superb performance by the members of Standing Committee H.

I have considered those three points of order carefully; I conclude that none of them are matters for the Chair.

It being four minutes to seven, I now have to dispose of the rest of the Committee's business, which means that I do not have time to thank hon. Members for their kind comments, which I am sure will be read by Mr. Hood and Mr. Stevenson. Nor do I have time to do as the Chairman normally would, which is to convey my own thanks to the Committee for its courtesy and good humour, and to the officers of the House, without whom we would not be able to do the job. Unhappily, time does not permit me to do any of that.

It being five minutes to Seven o'clock, The Chairman proceeded, pursuant to Sessional Order D [28 June 2001 and 6 November2003] and the Order of the Committee [10 February and 2 March], to put forthwith the Question already proposed from the Chair.

Question agreed to.

Clause 42 ordered to stand part of the Bill.

The Chairman then proceeded to put forthwith the Questions necessary to dispose of the business to be concluded at that time.