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Alan Johnson: I was responding to a specific suggestion to have a blanket increase in tuition fees, and I was making a point not only about the variable quality of universities and courses, but about the greatly varying amounts that graduates can expect to earn having gone through university. There is a huge gap in earnings between students who take degrees in medicine and architecture and those who take arts degrees. That is the principal point about variable fees.
Mr. Rendel: Will the Minister give way?
Alan Johnson: I will give way once more, and then I want to make progress.
Mr. Rendel: I am grateful to the Minister for giving way again. Will such differential fees involve charging more for courses such as medicine, where we are desperate to get more students?
Alan Johnson: We will not set the fees; that will be a matter for the universities. That is exactly the point of introducing funding that the universities can use to deal with their problems and needs, rather than using the Liberal Democrat proposal, where the money would come from the taxpayer and be distributed centrally, so higher education would have to take its chances in getting a proportion of that money.
What unites the Liberal Democrats and the Conservatives is their opposition to our proposals to provide long-term financial certainty for higher education by giving universities greater freedom to gain access to new funding streams, principally through the graduate contribution scheme from 2006.
I do not believe that the Liberal Democrats support expansion at all. Indeed, their leader suggested that there should be a small reduction in the number of people going to higher education. Whatever the level of expansion and the need for additional funding, they certainly believe, as a point of principle, that the taxpayer ought to provide every penny and that graduates should make no contribution whatsoever.
Mr. Willis: I appreciate that the hon. Gentleman was not present when my right hon. Friend the Member for
Ross, Skye and Inverness, West (Mr. Kennedy) made his speech, but he was making the point that the distribution of students in higher education will change and that there may be a reduction, for example, in students taking honours degrees, as more students take vocational routes, with the Government's proposals for foundation degrees. That seems perfectly reasonable, and it would be found in any market, about which the Government seem so keen.
Alan Johnson: I have not detected wild enthusiasm in the Liberal Democrat party for expanding higher education. We want 50 per cent. of student-age youngsters to be in higher education. The Liberal Democrats have not given a figure, although the Select Committee asked them to give a figure for the expansion in higher education that they want. We are absolutely committed to expansion, and I doubt whether the hon. Gentleman will clarify whether his party supports such expansion, given the moveable feast that is its policy on the issue.
The Liberal Democrats certainly believe, along with Her Majesty's official Opposition, that none of the money that goes into university education should come from graduates. They believe that graduates should make no contribution whatsoever, but I believe that that ignores two central issues. First, given that we will soon be spending £10 billion a year on higher education, if any additional taxpayers' money were to be available, it would surely be better spent in pre-school and early years education and in other parts of the sector, where the social inequalities that have been mentioned—I will come back to them—take root.
Secondly, the money would be distributed from the centre. It would not give universities the financial freedom that they need to fund their plans and unleash their power to drive world-class research, innovative knowledge transfer, excellent teaching, high-quality, greater and more flexible provision and fair access.
For those reasons, we propose to give universities the freedom to set their own tuition fee between £0 and £3,000. That will provide a direct and predictable source of additional revenue. Universities will set the level of the fees, and will have more control over the additional revenue. The arrangements that we propose, including the graduate contribution scheme, are progressive rather than regressive.
Mr. George Mudie (Leeds, East) rose—
Dr. Evan Harris (Oxford, West and Abingdon) rose—
Alan Johnson: Just one second.
The existing up-front fee will be abolished. Neither parents nor students will pay any fees—graduates will pay them. Students from households with a combined income of below £20,000 will have £1,100 deducted from any fees, and will receive a new, non-repayable maintenance grant of £1,000.
Repayments will commence only when a graduate is earning at least £15,000 a year, and will be calculated on the basis of 9 per cent. on earnings above that new threshold. As a result, a graduate on £18,000 a year will
pay £5.20 a week. The hon. Member for Harrogate and Knaresborough argued that the Government do not accept that not all graduates go into highly paid jobs. We accept that completely, which is why graduates will not pay any money until they are earning at least £15,000. If they dip below £15,000—for example, if a woman takes maternity leave—they will not pay. As there is no real rate of interest, the debt would not accumulate.
Mr. Mudie: I have some sympathy for my hon. Friend, who is new to the office, as I was an Education Minister for a short time. I would advise him not to believe the nonsense that he has been asked to read out. He should have a close look at what he is reading. Given his industrial experience and his constituency, is he really telling the House that working-class kids will be encouraged to go to university? They are not encouraged now because of the fear of a £9,000 debt, and we are projecting a debt of £21,000. Under that policy, does the Minister think that kids in working-class estates will be queuing up to go to university?
Alan Johnson: I wrote these words myself, but that is neither here nor there. I take full responsibility. I would not be in this post or proposing this policy if I felt that it would damage the ability of working-class kids to go to university. I reject completely the arguments that have been advanced. The ability of working-class kids to go to university has more to do with them attaining the necessary qualifications. [Interruption.] I accept that there are other issues, but that is where it starts.
This is a progressive policy. For those who advocate a graduation tax, this is the best graduation tax without the downside. It is closely linked to earnings. Countries with similar systems have a far greater ratio of working-class kids going to university.
Andrew Selous (South-West Bedfordshire) rose—
Alan Johnson: I shall give way to the hon. Member for Oxford, West and Abingdon (Dr. Harris).
Dr. Harris: The Minister must be aware of the academic research on debt aversion. He should be aware that his Department commissioned research from Professor Callender at South Bank university, which showed that the most significant factor dissuading working-class students from poorer backgrounds who had the qualifications to apply was the fear of debt. On the basis of that research, his policy of top-up debt can only deter the people whom he claims he wants to help.
Alan Johnson: I am fully prepared to accept that a wealth of research exists on these issues. I also accept that I have not read every single piece of research. I have read an important statistic, however, that once youngsters from working-class backgrounds get to the stage of acquiring two A-levels, nine out of 10 of them go on to a university education. That is extremely
important because it is at the heart of this whole issue. I shall return to it later in the speech, because it was an important part of the hon. Gentleman's contribution.
Mr. Stephen McCabe (Birmingham, Hall Green) rose—
Alan Johnson: I shall give way to my hon. Friend the Member for Birmingham, Hall Green (Mr. McCabe).
Mr. McCabe: On the point that was just mentioned, I can understand people's anxiety about debt, but the research is hypothetical in relation to a potential debt in the future. Were the argument wholly accurate, would it not also follow that during the 1960s and 1970s, when there were full grants, children from working-class backgrounds would have made up a majority of entrants to university? Why did they represent such a small proportion?
Alan Johnson: My hon. Friend makes an important point. In addition, under the proposals, we are abolishing upfront fees: neither students nor parents will pay, but graduates will pay at a very advantageous rate.
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