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Dr. Lynne Jones: I understand the hon. Gentleman's point, and I have some sympathy with it. The fact is that, according to Barclays' student survey, on average, parents give £631 to their children at university in excess of the parental contribution. It is clear that students from poor families are not receiving that money, so those from affluent backgrounds are receiving far more than £631. The reality is that rich families will not allow their children to start off life in debt, but poor families have no choice.

Mr. Foster: I have some sympathy with the hon. Lady's view. I do not think that anyone can remove all the inequalities in society. It is a great pity that the hon. Lady makes that point yet supports a Government who are not prepared to change income tax regulations. We proposed helping to remove inequality by increasing the upper rate of income tax in order to support those who are less well off. I am delighted to see that the hon. Lady supports that move, even if her colleagues do not.

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The second test is: will the proposals provide extra funds to meet the current crisis in education? The answer is again no. The current loans system will not begin to make savings until 2015. However, the admittedly better income-contingent scheme proposed by the Secretary of State will not make a cumulative saving to the Treasury until 2092. Worse still--I do not think that this point has been picked up elsewhere--the new scheme may increase public spending because students will need to borrow more and a better repayment system will encourage them to do so.

At present, 63 per cent. of students take up the option of a student loan. If that figure increases to 90 per cent., for example, lending will increase by £375 million. Furthermore, if 100,000 of the Prime Minister's additional 500,000 students go into higher education, that 10 per cent. increase in students will require a 10 per cent. increase in funding for our universities, which will amount to another £700 million. We do not know where that money will come from, and the Government's proposals do nothing to solve the immediate crisis.

My third question is: will the proposals avoid other problems and inequalities? Sadly, the answer is again no. As the shadow Secretary of State pointed out, we have witnessed the chaos regarding the gap year students, where there were all the signs of the Government's hastily cobbling together a set of proposals. I warn the Secretary of State--I am delighted to see that the Under-Secretary of State for Education and Employment, the hon. Member for Pontypridd (Dr. Howells), is by his side--that the problem in relation to gap year students continues. Even in the Government's latest publication, the Secretary of State says that he will write to all students about his proposals. I hope that when he does so, he will put right an error in his own document. The latest document states:

The Secretary of State surely recalls, however, that the A-level results were not even out by 1 August, so not a single place could have been confirmed. The Secretary of State looks puzzled. Perhaps the Under-Secretary of State will pass him a copy of the letter that he has been sending to many worried parents about that, in which the Under-Secretary puts right the omission in the Secretary of State's document.

Other problems that have arisen show that Ministers are creating policy on the hoof--for example, the recent decision on the discounted fee rate for trainee teachers, and the different discounted rate for trainee doctors and dentists. Perhaps the best example of all is the one raised by the shadow Secretary of State concerning the Scottish students, although I must tell the right hon. Gentleman that his defence of the European Union during his remarks on that may well oblige him to consider leaving the shadow Cabinet.

As the shadow Secretary of State rightly pointed out, Scottish students in Scottish universities get their fourth year free, as do students from other EU countries, but not students from England, Wales and Northern Ireland. Presumably they have opted out of the EU. The position was beautifully summed up by one Scottish principal, who said that an Umbrian from Italy would pay £1,000 less than a Northumbrian from England. That is the real confusion.

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The problems are not over, and the Secretary of State will have to address them. On the question of up-front fees with no loan, what happens when parents fail to make up the contribution as, sadly, many do? Will there be court cases like the one currently going on in Scotland, in which a student is suing his mother? While they wait for the court judgment, will students be out on their ear? Will our universities have to set up huge debt collection departments?

Mr. Blunkett: I am intervening so that we do not start with the hares running. The balance that we have achieved between the maintenance and the fee structure is such that people are not being asked to contribute more as a result of the means testing of the family than they do at present. I would be grateful if the hon. Gentleman would concede that that is the case, and that therefore we are not imposing some additional, theoretical burden that makes it more difficult for families to contribute than it is at present.

Mr. Foster: I concede that point to the Secretary of State, but the mechanism for the collection of the money is now quite different. There is an additional layer of bureaucracy, with the student being responsible for making that payment, in addition to the local education authority fee contribution. That increase in bureaucracy concerns me.

Perhaps the Secretary of State will intervene and clarify another matter relating to the EU regulations. As he knows, we must treat all our EU partners the same. That means, presumably, that we must have a mechanism for checking on parental incomes for means-testing purposes--for example, the income of the doctor in Dortmund or the fishmonger in Frankfurt. Can the Secretary of State tell the House how he intends that to take place?

Mr. Blunkett: No, I am not answering questions.

Mr. Foster: The Government's plan seemed to be that they would hit the ground running, but if they want to do that, they should plan the route first.

The proposals for means-tested tuition fees fail all the tests, and they are profoundly wrong in principle. My party believes that education should be free and available to all. The Secretary of State knows that many in his party and in the Trades Union Congress agree with me. The Secretary of State rightly picked up my comments about Mr. Gerry Malone in Winchester, then cited various other Tory Members who disagreed with Tory policy, but he should not forget that there is equal division within the ranks of the Labour party.

At the recent Labour party conference, several constituency Labour parties tabled motions against tuition fees. Many Labour Members know that fees are wrong. Some spoke out at the rallies on Saturday. Some have signed early-day motion 361 calling on the Government to abandon their proposals. The recent Harris opinion poll discovered that 45 per cent. of Labour Members opposed fees, 12 per cent. did not know and only 34 per cent. were in favour of the Government's proposals.

Ms Margaret Hodge (Barking): Is the hon. Gentleman contradicting what he said in 1995 in a Liberal

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consultation paper on higher education, and later in 1996 in Liberal Democrat News where he stated:

    "Leaving aside the extra resources that we want to spend on other areas of education. . . such an approach"--

which is an approach not means-tested--

Mr. Deputy Speaker: Order. I think that the hon. Lady is one of those who is seeking to speak later. This is not helping the debate along. Will she bring her intervention quickly to a close?

Ms Hodge: I have been told to ask the hon. Gentleman: is he not a hypocrite?

Mr. Foster: It is frightening how the Labour party has to operate. It asks various hon. Members to ask questions, but does not give them a proper briefing. If the hon. Lady had done her homework, she would know that 18 months ago the Liberal Democrat party changed its policy position. We did it openly and honestly, in a public debate within our party. We made it clear in the resolution that we passed at that time, which I will quote to the hon. Lady, that we would

as, sadly, her party will not do--

    "part-time courses."

I am not a hypocrite. I am someone who is willing to change his mind when he discovers that he has got it wrong.

Of course the Liberal Democrats believe that our universities need extra funding. There are three beneficiaries--the state, employers and the student. We believe that all three could pay a little more. Students should pay more, through the remaining maintenance grants being turned into loans, as the Government propose, but not through fees. Employers could pay a little more into the system, and the state could do so too, out of general taxation.

Our proposals for a three-way funding partnership have widespread support. They would help to widen access, provide much needed money immediately and avoid the numerous problems that the Government are creating. They would also end the divide between part-time and full-time students.

There is another way in which additional funds for our universities could be found--by changing the current inappropriate accounting rules for student loans, which treat lending as spending. If we can instead treat the element of student loans that will be repaid, less administration and subsidy costs, as an investment in the creation of human capital, we could put that money on to the public sector borrowing requirement and reduce the money in the departmental control total, thereby freeing money to be spent on education.

I know that the Secretary of State has been pressing hard for that change. We give him every support to achieve that. We applaud him for the work that he is doing, but I cannot applaud his stance on means-tested tuition fees. They are a charge too far. They are a student poll tax, and we oppose them.

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