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Mrs. Margaret Ewing (Moray): Hear, hear.

Mr. Wallace: So did the hon. Lady's party. We did so because we believed that there was no scope for income tax cuts when vital sectors to the country's future such as higher education were being forced into crisis. Moreover, we are on record as having expressed a willingness to increase tax by a penny in the pound to fund further investment in education, including a commitment to lifelong learning in the tertiary sector.

That will not be enough, however. We were the first party to propose individual learning accounts which students could debit while they were at university and pay back at an affordable rate once they had reached a fixed earnings threshold using the national insurance contributions system. The Government would still cover fees and contribute to maintenance and there would be a partnership between Government, employers and students. Individual learning accounts would allow individuals to build up entitlements so that they could access what they had banked to take opportunities for reskilling and retraining later in adult life. The scheme has the advantage of securing additional funding for tertiary education and helping to alleviate student poverty.

That is not a particularly easy answer--indeed, there are none--but I hope that the Minister is prepared to take a step forward by acknowledging the scale and immediacy of the problem that has been highlighted by so many involved in higher education and let us know how he and his colleagues propose to address it.

1.43 pm

The Parliamentary Under-Secretary of State for Scotland (Mr. Raymond S. Robertson): I congratulate the hon. Member for Orkney and Shetland (Mr. Wallace) on securing today's debate. As he said, it follows some useful debates we had last session on school education and further education. I note that the hon. Member for Angus, East (Mr. Welsh), who initiated one of those debates, is in his place. I find it alarming that no Opposition Front-Bench Members felt that it was a sufficiently important topic to warrant attending the debate.

Before I respond to the specific points that the hon. Gentleman raised, let me make a few general remarks about higher education in Scotland. During the past decade and a half, the Government have given high and increasing levels of support to the higher education sector. We have done so through the grants made by the University Grants Committee, the Universities Funding Council and the funding councils, and through research councils and the fees element of student awards.

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Total public expenditure on higher education in Scotland, including student maintenance awards, increased by some 25 per cent. in real terms between 1991-92 and 1995-96. The current figure is approximately £1 billion. I am sure that the hon. Gentleman will agree that that is a huge sum of money. As he said, the support is more generous than it is in England. The annual public expenditure on teaching an undergraduate student in a higher education institute is 10 per cent. higher in Scotland than in England. That support has funded a revolution in higher education, a spectacular increase in student numbers, a massive increase in the range, size and diversity of organisations and ever-widening access.

It is appropriate to refer to some of the measures of our achievement. The participation rate of our young people has broken through the 40 per cent. barrier--a level of attainment that we did not expect to reach until at least the year 2000. The number of people over 21 entering full-time higher education has increased by more than 200 per cent. since 1984-85. That represents a massive increase in opportunities for Scots of all ages. It is also good news for the economy, as the hon. Gentleman said.

The proportion of the total work force holding higher education qualifications has doubled in the past decade to 20 per cent. We can safely say that Scotland has a world-class system of higher education and research. If that is measured by the number of published papers, Scotland ranks an astonishing 16th in the world. On a per capita basis, it ranks third in the world. Its reputation for quality and excellence continues to attract large numbers of overseas students. The number has grown by 100 per cent. since 1984-85, and I am sure that it has helped to attract inward investment to Scotland.

The hon. Gentleman spoke about the exciting university of the highlands and islands project. It is a revolutionary educational concept and I thank the hon. Gentleman for acknowledging the wholehearted support that my right hon. Friend the Secretary of State for Scotland has given the project. The UHI will extend access to higher education for many people for whom opportunities are presently limited. It is also an important element in our strategy to restore prosperity to the highlands and islands. The region stands to receive an important economic boost as the project gathers momentum over the next few years. Three colleges in the hon. Gentleman's constituency will participate: Orkney college, Shetland college and the North Atlantic Fisheries college, which I was fortunate enough to visit last month.

The Government are giving concrete support to the project in numerous ways. We have provided resources to upgrade video-conferencing links and to support curriculum and staff development in the colleges. We have allowed expansion of higher education provision in the network colleges in the current academic year and beyond and we have approved a first degree specifically developed by the colleges in the UHI project at Lewis Castle college in Stornoway. The Scottish Office is ready to consider what further support can be given.

The project is pursuing a wide range of funding possibilities, including PFI. The decision of the Millennium Commission to meet half the capital costs was an important and significant vote of confidence in the project. We look forward to the UHI project developing in close partnership with the rest of the higher education sector in Scotland, and the existing universities that

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already provide services for the highlands and islands have much to offer in assisting the developers of the project.

Mrs. Ewing: The Minister said that Lewis college had already been given provision for a degree. Does he expect that other degrees will be accredited by the Scottish Office in the next year?

Mr. Robertson: We are willing to consider them as and when they come to us. The fact that one has been accredited does not mean that that will be the end of it. I hope that more will come on stream in the next academic year. That is a matter for the institutions, but we would do nothing to prevent it.

The hon. Member for Orkney and Shetland mentioned the committee of inquiry into higher education. The Government's decision to establish an independent inquiry showed the value that we attach to higher education. Throughout the western world, the ever-increasing demand for higher education has raised fundamental questions about its future size, shape and, most importantly, funding. We wanted Sir Ron Dearing to take a long, impartial look at those issue to try to chart a way forward for the next 20 years.

We are determined that the distinctive contribution of Scottish higher education should not be overlooked by the committee of inquiry. That is why we were determined to establish a Scottish standing committee. We were delighted that Sir Ron Garrick agreed to chair it. I understand that the Dearing inquiry is making good progress. The Government are assisting by providing factual briefing material to inform the debate. The Scottish Office is providing material to the Scottish standing committee.

I do not want to pre-empt the inquiry's conclusions, but I must put firmly on the record the fact that the Government believe that there is no need to make students contribute top-up fees for the cost of tuition and we have no plans to introduce such a system. Such fees would put students from less well off families at a disadvantage. Scotland's track record of encouraging those from less well off backgrounds into higher and further education is second to none. We shall do nothing to change that. It is up to individual institutions to consider such options in the light of their circumstances. The terms of reference of the committee of inquiry cover funding, and it would be premature to speculate on what recommendations it might make.

Mr. Wallace: Will the Minister clarify what he means when he says that it is up to individual institutions to consider such options? We support his categorical opposition to top-up fees. Does his reference to "such options" mean fees?

Mr. Robertson: As the hon. Gentleman knows, the institutions are autonomous bodies. They are entitled to pursue that course of action, but the Government do not believe that the financial pressures are such that any institution in Scotland need do so and we would deplore such a decision. I am delighted that COSHEP has publicly distanced itself from the concept of top-up fees.

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Since 1992, the Government have had no direct role in determining pay in higher education. Pay negotiations for all academics are in the hands of the Universities and Colleges Employers Association. Universities are autonomous institutions and the Government do not intervene in their internal affairs. It is for them to consider what is necessary and affordable to recruit and retain academic staff. We believe that a pay review body for higher education would fetter institutions by imposing externally determined settlements on their biggest single cost--salaries.

The Dearing committee will consider the principle that higher education institutions should be able to recruit, retain and motivate staff of the appropriate calibre. The committee may therefore consider the arguments for and against a pay review body. The Government will consider any recommendations carefully.

The Government have presided over a massive increase in opportunities for Scots of all ages to enter higher education. More Scots than ever are now studying in our universities and colleges. Two statistics highlight the growth in opportunities. First, the number of students entering full-time higher education has more than doubled since 1980-81--a remarkable 43 per cent. of young Scots entered higher education in 1994-95, compared with a participation rate of only 17 per cent. in 1980-81. Our expenditure plans will allow those record numbers of higher education students to be maintained.

Secondly, lifelong learning is becoming more and more of a reality in modern Scotland. Between 1984-5 and 1993-94, the number of over 21-year-olds entering full-time undergraduate courses increased by 215 per cent. Our institutions are now more responsive than ever to students' needs. Flexibility and adaptability are their watchwords. The number of part-time students entering higher education grew by 21 per cent. between 1984 and 1995.

Scottish institutions are at the forefront of the information revolution. The broad bands for highway links now in place in Scotland will transform the delivery of higher education and extend access, particularly in remote areas.

The hon. Member for Orkney and Shetland mentioned our success in attracting overseas students. I am sure that he agrees that Scottish higher education is a magnet for students from all over the world. The number of overseas students on full-time higher education courses in Scottish institutions has grown by more than 100 per cent. since 1984-85.

Scottish higher education institutions are also generating real wealth for Scotland in other ways. Their international export earnings totalled £140 million in 1993-94. They lead the field with 20 per cent. of export market share, according to the Scottish Council for Development in Industry/Scottish Trade International 1996 survey.

Higher education is vital for the skills and flexibility that Scotland will need to compete successfully in the 21st century. It is therefore pleasing that Scotland has maintained its traditional strength in the key areas of science, engineering and technology. The number of full-time equivalent students on such courses in our higher education institutions has increased by more than 50 per cent. during the past decade. It is also vital for the economy that universities and industry co-operate in many

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areas. That message is now well understood. The total income from external research grants has more than trebled in real terms since 1980.

The hon. Member for Orkney and Shetland made representations about this year's public expenditure survey. He has been in the House longer than me and he cannot expect me to give anything away at this stage. We have listened carefully to his representations and to those of COSHEP, the CVCP and the Association of University Teachers. I met representatives of the AUT during the summer, and my right hon. Friend the Secretary of State will receive further representations this week. No doubt all those bodies will put the same case as the hon. Gentleman. It is only normal at this time of year that all those concerned with the outcome of the public expenditure survey make representations. We have listened to those representations. Later this month, the hon. Gentleman's expectations will be either fulfilled or dashed. It would be wrong to give anything away.

I am well aware of the views of many in the higher education community on resourcing and other issues. I give the hon. Gentleman a commitment that we shall listen carefully to all the representations made over the next few weeks. The Government believe that we should keep public expenditure and taxation levels as low as possible. We have set firm limits on overall public expenditure levels within which our decisions on priorities are made.

At least the hon. Member for Orkney and Shetland and his party are honest about the issue. They have said that they would increase taxation specifically for education. That is an honest position, unlike that of the Labour party.

Priorities have to take account of important demographic and other changes, particularly the needs of an increasingly elderly and dependent population, which makes particular demands on health care, social work and social security services. If more is to be spent on higher education, we must look at all possible sources of funding. We believe that it is desirable to find new ways of funding

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higher education if there is to be continued expansion and change. I mentioned the private finance initiative earlier, and ways of encouraging private funding of research.

There is a widespread view that we have reached an important crossroads in higher education. We need to consider the role and purpose of higher education, how it should be delivered and how it should be funded. That is what the Dearing inquiry and Sir Ron Garrick's Scottish committee are all about.

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