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10.44 pm

The Minister of State, Department for Education and Employment (Mr. Eric Forth): I warmly congratulate my hon. Friend the Member for Buckingham (Mr. Walden) on bringing this important debate to the

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House, and on the way in which, through his writings and speeches, he has persistently sought to focus attention on the issue. He has made an important contribution to generating debate on the difficult issues involved in the funding of higher education.

My hon. Friend will not be surprised that I cannot agree with all that he says about the state of higher education. In many ways, we can be justifiably proud of our higher education system and its achievements over the past 17 years. Hon. Members know the figures, because they are often quoted, so I shall be brief. The number of students has doubled since 1979; some one in three of our young people enjoy the privilege of higher education, compared with one in eight all that time ago; our spending plans allow for that record level of participation to be maintained.

Nor can I agree with what my hon. Friend said, or perhaps hinted, about the possible adverse impact of expansion on standards. I believe that it can be shown that expansion has been achieved without evidence of a loss of quality. For example, on entry standards, the average A-level points score for students entering with GCSE A-levels has remained the same for the past six years, at 18 points.

The Higher Education Funding Council for England's quality assessments confirm that quality is being maintained. Universities and colleges have continued to offer a high-quality service, while achieving significant reductions in unit costs. New patterns of teaching, new methods of organisation and increased use of technologies offer scope for further productivity improvements. Those are achievements for which our universities, colleges and students deserve great credit.

The UK has the highest graduation rate for bachelor degrees in the European Union. That reflects lower wastage, and greater efficiency in our higher education system. The skills audit commissioned in the second competitiveness White Paper confirmed the UK's strong international position on higher education qualifications.

I do not say that we can be complacent--the skills audit also showed that our competitors are not standing still--but it is worth noting that the number of newly qualified graduates gaining first degrees each year has doubled since 1979. More than one third of those are the science, mathematics and engineering graduates who are so vital to our international competitiveness. The UK is near the top of the Organisation for Economic Co-operation and Development league for science and engineering graduates entering the young work force, ahead of Germany and the United States.

My hon. Friend has talked about expanding universities on the basis of inadequate schools. I contend that standards in our schools are improving all the time, with more young people than ever getting good school-leaving qualifications: 1996 saw the best ever GCSE and A-level results. We are determined that GCSE standards should be maintained, and have introduced a wide range of measures to secure rigour and standards.

Sir Ron Dearing's 16-to-19 report mapped out an agenda of action to strengthen the rigour and standards of A-levels still further from 1998. We have placed the quality of teaching and learning and the standards of qualifications at the very centre of our education polices.

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We accept that it is paramount that quality in higher education is maintained, and that standards remain of the highest.

My hon Friend expressed concern about the prospect of what he has called a "mass, low-quality system" of higher education, and has written:

I am sure that he would not expect me to agree.

My hon. Friend will recognise that universities are responsible for maintaining degree standards. The available evidence suggests that they take that responsibility seriously. Last year, with our encouragement, the Higher Education Quality Council embarked on a series of studies on academic standards known as the graduate standards programme. The HEQC has published a number of reports of specific studies within this programme during 1996, and will be publishing an overall report on the programme next spring. We have also been working with the CVCP and the HEFCE towards a single quality assurance agency.

I turn now to funding. My hon. Friend says that schools and universities need more money. Let me remind him that, notwithstanding the generally tight controls over public spending, the 1996 Budget allows for an increase in planned spending on schools, colleges and universities in 1997-98 of £875 million compared with 1996-97. That includes an extra £100 million in each of the next two years for higher education.

Total public spending on higher education in the United Kingdom, including student support, is now more than £7 billion. Total support for students through grant and loan increased by 2.5 per cent. for the year 1997-98, in line with forecast inflation, following rises of 2.6 per cent. and 2.5 per cent. in the previous two years.

But my hon. Friend is right to identify funding as a key issue for the future. Total public spending on higher education--more than £7 billion--represents 20 per cent. of total education spending, which is a substantial share of available resources. As my hon. Friend said, there is a limit to what the taxpayer can be asked to afford.

The future funding of higher education is, of course, one of the issues currently being considered by the national committee of inquiry into higher education led by Sir Ron Dearing, which is due to report this summer. The committee is considering questions such as: what are the purposes of higher education, and how have they changed? We have encouraged the committee to consider how higher education's links with the wider community, and in particular its role in lifetime learning, can be enhanced.

How should the appropriate participation rate in higher education be decided? Do standards acquired by graduates meet the requirements of the modern world? Crucially--this was the key question raised by my hon. Friend--who should pay for education, and how? I shall say more about the committee's work later.

The Dearing inquiry will be looking at a range of proposals for meeting the future cost of higher education, including my hon. Friend's proposal that the cost of tuition should be met by students themselves through a graduate tax. I am aware that there are many proposals on the table--including the CVCP's, to which my hon. Friend referred. It would be wrong for me to try to

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pre-empt the inquiry's recommendations. At this stage, nothing is ruled out, nothing is ruled in. But I should like to offer a few comments on my hon. Friend's thoughts, by way of points that should be borne in mind.

My hon. Friend said that the concept of student loans has been widely accepted. The Government's policy is to seek to spread the cost of student maintenance more equitably among the taxpayer, parents and graduates themselves.

The student support package has more than held its value since 1990, when loans were introduced. Grant and full-year loan together are 59 per cent. higher in cash terms, and about 16 per cent. higher in real terms in 1997-98 than they were in 1989-90. The arrangements remain generous on any international comparison. But I also contend that there is no evidence that the introduction of student loans has had a deterrent effect on participation. The introduction of loans has, if anything, improved the position of students, by reducing their reliance on assessed parental contributions and replacing those with a guaranteed loan facility.

Whether or not charging for tuition would have any deterrent effect on participation requires further examination. Student income and expenditure surveys show that the majority of students now in higher education now come from social classes C1, C2, D and E, in contrast to the position in 1988, when students from those groups were in the minority. It is important to consider the likely impact on such entrants of any move towards charging students the cost of their tuition and collecting it through a graduate tax.

We need to be clear about the difference between a graduate tax and a system under which student loans are collected through the tax or national insurance system. Under a graduate tax, graduates would pay additional tax throughout their working lives, regardless of the cost of their education. The complexity of administering a graduate tax and the resultant cost would be significant for employers as well as for the Government. Without careful structuring, it is possible that such a tax regime could act as a disincentive to participation in higher education.

The option of collecting loans via the tax or national insurance system was looked at in some depth when the current loans scheme was being set up. The Government concluded that the current system of payments by direct debit to the Student Loans Company was superior.

Current repayment terms are income contingent: those earning less than 85 per cent. of national average earnings pay nothing. We must expect the Dearing inquiry to consider the implications of this and many other proposals for meeting the costs of tuition in future, and to make recommendations.

In the short term, the Government do not believe that top-up fees are either necessary or desirable, particularly in the light of the additional funding I mentioned. I am

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glad that the CVCP has encouraged its institutions to defer any decisions about charging top-up fees until after Dearing has reported.

I said that I would return to the Dearing inquiry. Much has changed in the 30 years since the Robbins committee completed the first major review of higher education, and we can no longer rest on the old assumptions. It is recognised that we now need to consider afresh the purpose of higher education, what its objectives are, and how it should best develop to meet those needs.

Those fundamental questions prompted us to start a public debate. We wanted a broad national perspective, so we consulted widely on the purposes, size and shape of higher education for the year 2000 and beyond. We sought the views of the higher education community, its students and those in industry and elsewhere who employ graduates and use the findings of university research.

Responses to the review showed a shift in emphasis towards the role of higher education in providing skills for employment, and exposed the full scale of the choices facing higher education. That is why, early last year, the Government set up the Dearing inquiry. We have asked the committee to make recommendations on how higher education should develop to meet the needs of the United Kingdom over the next 20 years.

I know that many people see future funding as the principal issue for the inquiry to deal with, but it will be important for the committee to consider how the shape, structure and size of higher education should develop before looking at funding options. Indeed, a proper consideration of funding issues can only be predicated on a full and prior analysis of the purpose of higher education, of what proportion of young people should receive initial higher education, of how long it should last and what form it should take, and of how the needs of mature people and of employers should be addressed.

Our economic success will increasingly depend on improving our knowledge, understanding and skills. Higher education has a vital role to play in raising the levels of the nation's skills and competitiveness, thus enhancing our capacity to generate wealth and to improve our quality of life. That is why issues of the future size, structure and funding of higher education are so important, and why I am grateful to my hon. Friend for raising them tonight.

I doubt that I have entirely satisfied the purpose of the debate. I hope that the content and spirit of what I have said show my hon. Friend that his questions have in no way been ignored or dodged. We are taking a structured approach. We have entrusted Sir Ron Dearing and his colleagues with the enormous responsibility of responding to the questions that we have posed them. In that way, we can take the issue forward and approach the questions raised by my hon. Friend, albeit at a slower pace that he may wish.

Question put and agreed to.

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