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Mr. Phil Willis (Harrogate and Knaresborough): Will the Minister give way?
Margaret Hodge: If the hon. Gentleman will allow me, I shall make my second attack.
It was interesting that the Liberal Democrats did not make a commitment to widening participation in and access to higher education. That is the basis for everything on our agenda for universities.
Mr. Willis: What is the difference between paying an endowment at the end of an undergraduate's course of study and a graduate tax, which would be paid into the same pot?
Margaret Hodge: All the systems reflect a contribution from the student—as a student or a graduate; directly or through the family—towards the cost of higher education. That principle is accepted by all parties.
Mr. Jon Owen Jones: I thank my hon. Friend for giving way, unlike the hon. Member for Newbury (Mr. Rendel). Does she agree that it is disingenuous of a party that campaigned on honesty in taxation to talk about getting rid of student tuition fees without mentioning the
fact that the policy was to be financed through graduate endowment payments? Where is the honesty in taxation in that policy?
Margaret Hodge: I completely concur with my hon. Friend's views. Liberal Democrat policies show little honesty, rigour or ability to add up.
Mr. Don Foster (Bath): The Minister clearly does not understand the system in Scotland. It is therefore vital to place on record the fact that the money that students in Scotland pay after they have graduated is used as a contribution to increase maintenance support for students. It is not used to pay for tuition.
Margaret Hodge: With great respect, the hon. Gentleman is being rather too clever. Students are worried about the total cost of their education, which comprises tuition and maintenance: simply renaming the contribution from individuals before or after they have graduated is beside the point.
I should like to set out our ambitions to try to give the debate some coherence. We have said that by the end of the decade we want half of our young people to have the opportunity to benefit from higher education by the time they reach the age of 30. That is a tough and challenging ambition, but that target is part of our wider policies for higher education. It encapsulates many of the values that underpin our general approach to government. If we are to maintain and enhance capability and competitiveness in our economy, we need to improve the skills and capabilities of individuals in the labour market.
Expanding higher education is not, as has been suggested by some, about dumbing down degree standards. Far from it; it is about raising attainment and qualifications levels so that we enjoy the appropriate and necessary skills that we need in the labour market to boost growth and prosperity. Indeed, it has been calculated that a 10 per cent. increase in the proportion of the labour force in higher education would raise the gross domestic product per person by about 3.3 per cent.
Mr. Edward Davey (Kingston and Surbiton): The Government reformed the student finance system only three or four years ago. Why, therefore, does the Prime Minister feel the need for a review?
Margaret Hodge: I can answer that easily. The hon. Gentleman focuses on one element of a much broader policy, which I shall discuss. Any sensible Government would monitor their policies to ensure that they work precisely as they envisaged. I believe that the Liberal Democrats agree that it is appropriate for students or their families to make a contribution towards the cost of higher education because of the benefits that they gain through it. That did not happen before we introduced our reforms.
Our economic goal is closely linked with our social objective. We do not perceive economic prosperity and social inclusion as competing ambitions. On the contrary, we shall achieve our economic objectives only if we ensure opportunity for all our young people to develop their full potential. Nowhere is exclusion a harsher reality than in higher education. The facts make grim and stark reading.
Despite the rapid expansion in student numbers in the past decade, the proportion of young people from lower-income backgrounds who go to university has remained stubbornly low. My hon. Friend the Member for Bury, North (Mr. Chaytor) rightly made that point earlier. Those whose parents come from an unskilled or manual working background have just over a one in 10 chance of getting to university. Those whose parents happen to prosper in the professional classes have a three in four chance of getting to university. It is a 13 per cent. chance for those who are less well-off, but a 73 per cent. chance for those who are better off. That is the measure of the challenge that we face and the inequality that we are considering. That is the enormity of the gap in opportunity that we are trying to tackle.
Closing that gap is at the heart of our determination to widen participation. Our aim must be to challenge all the barriers that inhibit access to higher education and to create an intellectual élite, who have access to higher education through their ability.
Adam Price (East Carmarthen and Dinefwr): Does not evidence show that removing the maintenance grant has had a greater impact than the abolition of tuition fees on less well-off students? The National Union of Students has produced evidence to show that the average debt for less well-off students has increased from £6,000 in 1997 to £12,000 in 2000.
Margaret Hodge: The proportion of people from lower-income backgrounds who participate in higher education has not altered since the introduction of the new student arrangements. I wish that the matter was as simple as the hon. Gentleman suggests.
We must deal with every barrier that prevents children from lower-income backgrounds from enjoying the experience and benefits of higher education.
That challenge is particularly important to me. I know from my constituency how huge a mountain we have to climb. In Barking, only 3.5 per cent. of my adult constituents have a degree or equivalent qualification. The constituency has a lower participation rate than any other constituency in the country. I therefore understand how difficult it is to tackle the complex barriers that inhibit participation.
I also know, however, what a difference higher education can make to the lives of individuals, as well as to their communities and the economy. A degree does buy a better income. Indeed, all the evidence shows that, despite a rapid growth in the number of graduates, the graduate premium in earnings has been maintained. A graduate will, on average, earn 35 per cent. more than the work force as a whole. A graduate is half as likely to be unemployed as someone without a degree. Moreover, a graduate is likely to stay healthy for longer than a non-graduate.
Diana Organ: I am delighted to hear that we are keen to ensure that those who formerly encountered barriers are given an opportunity to enter higher education, but are not good further education sectors particularly important in that regard?
Margaret Hodge: Further education can certainly make an important contribution to ensuring that young
people obtain prior qualifications, and, perhaps, spend the first years of their higher education in an environment to which they are accustomed. As we expand higher education, much of it is indeed being delivered through further education.
Mr. David Laws (Yeovil): Liberal Democrats are delighted to learn that the Government are to conduct a review of student finance. What perceived deficiencies in the existing system will it seek to remedy?
Margaret Hodge: As I told the hon. Member for Newbury, it is sensible and good practice to review whether one's policies are working properly.
Margaret Hodge: I must get on with my speech. If the hon. Gentleman has a new point to make, no doubt it will arise later.
Higher education remains a very good investment for students, which brings me to an important principle that we have already discussed today. Given the personal financial benefits that accrue to graduates, it must be right for them to contribute to the cost of their higher education. That principle was courageously established by my right hon. Friend the Member for Sheffield, Brightside (Mr. Blunkett) when he introduced his radical reforms of student funding and support in 1998. We will not shift from it as we conduct our review—properly and responsibly—to establish whether the reforms are working effectively.
It might be helpful to recall the context of the 1998 reforms. In 1997, when Labour took office, there had been a massive 36 per cent. cut in unit funding for students; the previous Conservative Government—whose members are not listening very carefully at the moment—had imposed a cap on student numbers; and our universities had been starved of proper resources for their infrastructure, teaching and research.
Chris Grayling (Epsom and Ewell): Will the Minister acknowledge that, over the 18 years of Conservative government, the opportunities to attend university that she considers so important expanded dramatically? In 1979, only about 10 per cent. of young people went to university; by the time Labour took office, the figure had risen to about a third.
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