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Mr. Willis: The hon. Gentleman seems to have difficulty understanding—and I understand that—that there is a fundamental difference between two elements of the university charge, if I may call it that. I will explain carefully. As a party, we have always steadfastly believed that tuition should be free at the point of delivery up to level 4.

We accept, and indeed we accepted in 1997—[Interruption.] The Minister for Children must stop getting so excited. We accepted in 1997 that students would have to make an increased contribution towards their living costs, apart from poorer students who obviously need support—we think that that is the right distinction.

Mr. Damian Green: Will the hon. Gentleman give way?

Mr. Willis: I am going to make progress. I am sorry to disappoint my colleagues.

In 1997 our universities suffered a funding crisis following year-on-year cuts by the Conservative Government. Per student funding fell from £7,720 in 1989 to £5,080 in 2002, a reduction of £2,500 per student. That shortfall is the basis of the crisis in our university system, so the House should not forget those year-on-year cuts.

Even more stark is the decline in the element of gross domestic product spent on higher education: down from 1.33 per cent. in 1981 to 1.16 per cent. in 2002–03, despite a doubling of student numbers. There is not a company anywhere that could deal with that sort of funding differential and still be able to maintain quality and standards. During Labour's first term in office, we saw a further 7 per cent. real-terms cut in expenditure, despite the introduction of tuition fees.

Of course, there is a funding crisis, but getting the Government to quantify that crisis is near impossible. The former Minister for Lifelong Learning and Higher Education was asked on numerous occasions, particularly by the hon. Member for Isle of Wight (Mr. Turner), to quantify the higher education funding gap that we needed to bridge. She declined to answer. We asked the Secretary of State the same question at a sitting of the Select Committee on Education and Skills. He, too, declined to answer. How on earth can one have a funding system that is based on filling a gap that the Government themselves will not identify?

Universities UK has made a compelling case for investment in university infrastructure, teaching and research facilities, and huge investment in science and technology and information technology. Many Labour Members would accept that that investment is needed, although the sum in their mind might not be the same as that identified by Universities UK. In the absence of Government figures and analysis, however, the £9.94

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billion funding that Universities UK has called for is a good indication of the shortfall, of which roughly £1.5 billion is recurrent revenue expenditure.

We also have evidence, from the Bett commission, that academic salaries and conditions are in need of a drastic overhauling. In fact, our academics are some of the worst paid people to be found anywhere in the education service. And of course, the Government have set an ambitious yet arbitrary target for expansion, through to 2010.

Kevin Brennan (Cardiff, West): Will the hon. Gentleman clarify what Liberal Democrat higher education funding plans are predicated on, in terms of a target for the number of students in higher education?

Mr. Willis: I will be perfectly frank with the hon. Gentleman—we do not accept the arbitrary target of 50 per cent., but we have predicated our spending figures on it because the Government have indicated that their spending will be based on it. I say quite straightforwardly that we hope that it will be exceeded; indeed, research presented to the Select Committee last week suggests that by 2010, the Government will achieve their 50 per cent. target with absolute ease. [Interruption.] The hon. Member for Altrincham and Sale, West (Mr. Brady) says from a sedentary position that this is the first time that we have had that information, but that is what the independent research suggests and I hope that it is right.

We must also consider—[Interruption.] I am sure that the hon. Member for Cardiff, West (Kevin Brennan) is desperately interested in listening to my response, rather than in just muttering. We must also consider the product that we are delivering to our students. As I hope that the hon. Gentleman and certainly the Labour Front Benchers will agree, the product that we offer to students must be more relevant to this millennium than to the 1960s and the post-Robbins era, for example. The real challenge for all the political parties is not simply to provide more funding, but to re-engineer a product that is fit for the 21st century.

Mr. David Chaytor (Bury, North): Will the hon. Gentleman give way?

Mr. Willis: No, I want to make some progress; I shall come back to the hon. Gentleman later.

If we are to have a world-class higher education system and to meet the expansion that everybody, with the exception of the Conservatives, says that the country needs, the investment has got to be paid for. The issue at the heart of today's debate—the stark choice—is: who should pay for tuition, the students or the state? Sorry, I am wrong—there is a third way: the Conservative way, which was devised during a recent bonding session in Chesham, in Buckinghamshire. [Interruption.] I did say

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"bonding", not bondage. [Interruption.] I thought that it was just Conservatives who got excited about that. It appears—

Mrs. Angela Browning (Tiverton and Honiton): May I confirm, Mr. Deputy Speaker, that I think that the hon. Gentleman was right the first time?

Mr. Deputy Speaker (Sir Michael Lord): Order. Thankfully, that is not a matter for the Chair.

Mr. Willis: The hon. Member for Tiverton and Honiton (Mrs. Browning) is wasted, as ever. It appears that the Conservative policy—[Interruption.] This is worth listening to. It would appear that by reducing student numbers to 1993 levels, by not allowing any expansion of student numbers from poorer backgrounds, and by keeping funding for universities constant at 2003 levels, the Conservatives can create a world-class higher education system. No wonder the hon. Member for Ashford refused to attend the Select Committee, or that, when we asked the House of Commons Library to comment on the Conservatives' proposals, it said:

Nor is it any wonder that Professor Barr, of the London School of Economics, said the following in calculating the loss of 150,000 university places in his latest research:

That is the truth: it is offensive to say that we are going to pull up the ladder and not expand places. The very people who will be denied access to university are young people from poorer backgrounds.

The Conservatives now have to answer, in the debate, the question of what will happen to the 150,000 people who would be denied a university place.

Mr. Peter Duncan (Galloway and Upper Nithsdale) rose—

Mr. Willis: I want to make some progress.

If those young people are going into vocational programmes, where is the money? We cannot simply say that we are not going to allow them to go to university because we want them to go into vocational programmes—and then not provide the money. In view of the highly controversial research, published this week, by Libby Aston of the Higher Education Funding Council, what will happen to the additional 250,000 young people who will have level 3 qualifications by 2010, but, under Conservative proposals, will not be allowed to go to university? I hope that the Conservative spokesman explains the position. Still, enough of that.

Mr. Duncan rose—

Mr. Willis: We await explanations, but we shall get back to reality.

Mr. Duncan: I am grateful to the hon. Gentleman for giving way, albeit somewhat belatedly. He mentioned fairness, but does he believe that his party's policy in Scotland is fair when a graduate who achieves the

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massive income of £10,000 a year, pays a marginal tax rate of 42 per cent. on incremental pounds beyond that level?

Mr. Willis: The hon. Gentleman is a unique Conservative, coming from Scotland, but let me tell him that I am proud of what my colleagues achieved in Scotland. In all honesty, I tell him that when Andrew Cubie first made his proposals—he said at that time that we needed a high threshold of repayment, suggesting £20,000—I would have supported them in their totality. I am sure that all hon. Members would recognise, however, that the cost of that proposal would have been exorbitant. Every Executive, including the Scottish Executive and the Welsh Assembly Government, have to live within the means at their disposal. Interesting proposals were produced and I compliment those who produced them; I am delighted that we were part of that.

The Liberal Democrats' fundamental objection to top-up fees is threefold: first, because the income cannot be regarded as additional income; secondly, on account of the increase of student debt and its adverse effect on all students; and, thirdly, for their effect on access. The issue of additionality is important. There is a belief that the Government will simply use the new income from students as replacement income, as we have seen since the introduction of student tuition fees. At a recent Select Committee, on 19 March 2003, the Secretary of State said that

That is what the current Secretary of State said. However, some of us recall that the former Secretary of State for Education and Employment, the right hon. Member for Sheffield, Brightside (Mr. Blunkett), said to the House on 23 July 1997 on the subject of introducing tuition fees that

Yet what has gone into our universities since 1998 is not additional funding, but replacement funding. The Government grant has been reduced, virtually pound for pound, in relation to the student contribution. Will the Minister for Lifelong Learning, Further and Higher Education make it clear, now or in his summing up, that all income from top-up fees will be additional? We need to know whether it will be additional or replacement money. If he cannot or will not confirm that top-up fees will offer additional revenue to universities, he should realise that that will inevitably mean all universities charging the full fee of £3,000, because if they do not, they will actually lose grant. The Minister must respond to that point. Whenever I visit universities—and I am sure that the same applies to other hon. Members who visit them—I find out that they intend to charge the full £3,000.

The second principal objection concerns debt. The average debt at present is £12,000, but that would rocket to £21,000 with even the poorest students having to find £2,000 a year in top-up fees. Our concern about debt is shared by university vice-chancellors, who see more students struggling with it. Indeed, a recent NUS survey showed that the principal reason for students dropping

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out of university is debt. Professor McKenna, from the university of Ulster, said in his written submission to the Education and Employment Committee that

He adds that

It is important, too, to consider the impact of debt on the future economic decisions graduates will make, on careers, family, mortgages, pensions and their ability to go into business. Perhaps the Minister can tell the House if he has had any discussions with financial institutions to discuss how student debt will impact on graduates' financial status.

Our third and deepest concern about top-up fees remains their impact on access. The White Paper on higher education openly admits:

I am sure that we would all agree, irrespective of our political beliefs. The question for the Government is how the introduction of top-up fees will improve that unacceptable situation. The Secretary of State's argument is that deferring the fee to after graduation will be sufficient to remove the disincentive to study, but there is an ever-lengthening list of research that says otherwise.

The Joseph Rowntree Foundation's report "Socio-economic disadvantage and experience in higher education" concluded that

Factors identified as lying behind that difficulty included

Prof. Claire Callendar at the South Bank university, in her report "Attitudes to Debt" came to almost the same conclusions:

What more needs to be added to that damning analysis of the Government's policy?

The Secretary of State is right to challenge the effective Opposition as well as the Conservative Opposition to say how we would do things differently. We have laid out clearly, in our policy document "Quality, Diversity and Choice", that we believe that higher education should be paid for through a tax rate of 50 per cent. on taxable incomes over £100,000. We believe in redistribution: those who have the most money should make the greatest contribution. We reject the farcical idea that graduates earn £400,000 extra during their lives. That figure is based on a work force survey in 2001 that made no direct comparisons with people with level 3 qualifications. The Government are trying to get 50 per cent. of people into higher education, but they persist in the nonsensical notion that all graduates become high earners. The research demonstrates that students coming out of Oxbridge

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with arts degrees have no higher an earning capacity than students who left education with two A-levels. The situation is different for different groups of students.

David Beckham might not be a graduate, but he is one of the most highly paid individuals. Yet without graduates who are able to mend his foot when it gets broken, look after his money, design his wife's clothes, deliver his children and complete his transfer to Real Madrid he would be the poorer. Put simply, this is a debate about whether or not we want to encourage a world-class education system or to return to a class-based education system where students choose universities based on their ability to pay, and universities are judged by the level of their fees. If the latter is the vision of the future of higher education after six years of a Labour Government, God help students coming through our schools at present.

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