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Mrs. Shephard: I am most intrigued by the hon. Gentleman's suggestion. It is obvious that education must be paid for, which is why I keep reiterating the figure of £7 billion--21 per cent. of the total education budget. That is worth thinking about for a moment, because that money directly benefits 1.5 million people, the broader economy and research, as compared with the 6 million schoolchildren who benefit from the remainder of the budget. Yes, education must be paid for.

I agree with the hon. Gentleman that, on higher education issues more than any other, hon. Members' views are coloured by their own generation's experiences. Because the House encompasses hon. Members of many different generations, the generational baggage they bring varies. However, I do not think that I would go as far as the hon. Gentleman and insist on all hon. Members attending a higher education establishment for a refresher course.

It is very difficult to obtain dispassionate views on the state of higher education, and that will be one of the committee of inquiry's starting points.

Mr. Nigel Forman (Carshalton and Wallington): Is my right hon. Friend aware that this is a timely and appropriate moment for her to take stock of the big

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questions, which must include both the finance and the future role of post-compulsory education? I deliberately say "post-compulsory" education, because the old adjective "higher" is no longer the most appropriate word to use. In that context, will my right hon. Friend do everything she can to ensure that Sir Ron Dearing has access to the widest possible range of advice and input, as that will benefit the result of his findings?

Mrs. Shephard: I agree that we need to ensure that the best possible range of information and advice is given to the committee of inquiry. As I said, we shall consult on its membership, but, knowing Sir Ron Dearing's ways of working, I think that the expertise made available to the committee will go far beyond its immediate members.

Mr. Alan Howarth (Stratford-on-Avon): I add my welcome to the right hon. Lady's decision to establish the inquiry. I particularly welcome her appointment ofSir Ron Dearing--there is no one wiser or better fitted to undertake the task. I am pleased that the right hon. Lady is asking Sir Ron Dearing to include in his purview further as well as higher education.

Whatever the outcome of the inquiry and the debate on the most appropriate use of the £7 billion of expenditure on higher education, according to the present pattern and plans--under which I understand there is to be a 5.1 per cent. squeeze on unit funding by 1996-97 and a9.4 per cent. squeeze on overall higher education funding by 1998-99--we are liable to witness some damaging effects on the academic system. Those effects will include unfilled academic posts, libraries and laboratories that are not brought up to date, academic staff who are so overstretched by teaching and administration that they are unable to pursue scholarship, and impoverished students. Will the right hon. Lady do all she can in government to ensure that the squeeze on the academic system is at least relaxed, until we have been given Sir Ron's recommendations and have had time to consider them?

Mrs. Shephard: I have already made it clear that we are working closely with the sector to help it to take advantage of private finance initiatives in respect of capital. We are closely in touch--full stop--with those in the sector on all aspects of their budget and general working. Universities have been efficient in absorbing efficiency savings that we have demanded of them, on which I congratulate them. There is clearly a division between the immediate, with which we are closer in touch, and the bigger and broader questions, on which we hope we shall receive their full co-operation--I have no reason to believe otherwise. The hon. Gentleman, who, after all, was closely involved in abolishing the binary line, will understand that it must be right to look at the issues of consolidation, continued expansion and demand-led expansion, while at the same time considering how they might be financed.

Several hon. Members rose--

Madam Speaker: I cannot give a commitment to the House, but I want to try to call every hon. Member who wants to speak, as this is an important statement. There is another statement to follow and hon. Members could help me enormously by making their questions and answers brisk.

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Sir David Madel (South-West Bedfordshire): Will the inquiry have a close look at the relationship between industry and universities, and will it also look at training methods for university lecturers and teachers?

Mrs. Shephard: Yes, Madam Speaker.

Madam Speaker: Thank you. That is very helpful.

Mr. Harry Barnes (North-East Derbyshire): It is not the Government's normal approach to set up such inquiries,or, where there are inquiries, to adhere to their recommendations. It is even more unusual for those on our Front Bench to agree. Would it not therefore have been appropriate to have the draft terms of reference, so that we could all see whether the right action was being taken?

Can we be assured that those of us who may have different views on education from those that are normally expressed by the Government have opportunities to present our views on continued education, lifetime education and access to higher education for people with abilities but without formal qualifications?

Mrs. Shephard: The terms of reference have been placed in the Libraries of the two Houses. They will, as I have made clear, be subject to consultation, and the hon. Gentleman's concerns will be part of that.

Mr. Bernard Jenkin (Colchester, North): As the Member who represents the university of Essex, I emphasise the view expressed by hon. Members on both sides of the House that finance is the crunch issue of Sir Ron Dearing's inquiry. Can my right hon. Friend confirm that we want universities to remain non-state, private institutions, and not become entirely beholden to the taxpayer and to the Government?

Mrs. Shephard: I entirely agree that one of the great strengths of our system is the essential independence--both financial and academic--of our higher education institutions. Many of them have done marvellous work in diversifying and in responding to the needs of employers, industry and enterprise, and to the challenge posed by competition overseas. All those questions will be considered by the committee of inquiry, which I am sure will want to consider best practice.

Mr. D. N. Campbell-Savours (Workington): May I remind the Secretary of State that it is some nine months, if I might modestly say so, since I published and launched the document "The Case for the University of the Lakes", which was the product of four and a half years' work? Will the inquiry draw upon the application of developments in information technology, and especially the use of an electronic library linked to a multi-campus university, which is essentially the concept behind the university of the Lakes?

Mrs. Shephard: Yes.

Dr. Ian Twinn (Edmonton): I join in the all-party support for my right hon. Friend's statement. Does she agree that the success of the Conservative expansion of higher education has been due to the magnificent response of universities and their staff, and the positive way in

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which they have adapted to the challenge of expansion? Will she ensure that quality of staff and students is maintained by considering the way in which universities are funded, so that they get continuity, not Treasury stop-start funding?

Mrs. Shephard: That is an important matter. I pay tribute to the way in which the whole sector has taken advantage of the greater independence given to it by the Government--not to mention the increased funding--and turned itself into a sector of flourishing and diverse institutions. One thing that concerns me is career structure for academic staff, and I hope that the committee of inquiry will consider that.

Mr. Andrew F. Bennett (Denton and Reddish): When does the Secretary of State hope that the inquiry will be completed? Does she realise that, in the interim, she must do far more to raise the morale of today's students and academics than offer them an inquiry?

Mrs. Shephard: I have already described the work that we are doing to cope with the current situation, with the Committee of Vice-Chancellors and Principals and others. I expect the inquiry to report in early summer 1997.

Mr. David Lidington (Aylesbury): Will my right hon. Friend invite Sir Ron to consider whether all courses now offered reach the standards that one would expect of a university course, and consider the approaches to university teaching that, in its experience, produce the best results and the highest quality?

Mrs. Shephard: I hope that the assurance of quality will be at the heart of the work of the committee of inquiry.

Mr. Max Madden (Bradford, West): As the Dearing inquiry will not report for a long time, will the Secretary of State urgently look into the hardship that is being caused to students with disabilities, including blind students, who now have to pay VAT on the information technology that they require for their studies? That seems to be an unfair imposition on students who used to be exempt from VAT on such purchases. I hope that the Secretary of State can intervene quickly, to ensure that that hardship is not allowed to continue.

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