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Pete Wishart (North Tayside): Loth as I am to become involved in debating English-only legislation,

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may I ask the Secretary of State to confirm that there is an impact and consequence for Scottish education funding? If the Government take the route of charging students for funding, there will be a lower increase from central funding, which will have a significant impact on the Scottish allocation of education funding through the Barnett formula. Will he confirm that that is the case? Has he made any assessment of the cost to Scotland?

Mr. Clarke: The funding of education in Scotland is a matter for the Scottish Parliament and Executive. None the less, I acknowledge that, as there is a UK system of higher education, whatever we do has very significant implications for universities in Scotland, as well as Wales. The answer to the hon. Gentleman's question is that I am discussing with Scottish Executive colleagues and others precisely how we can do these things in the most effective way.

Dr. Brian Iddon (Bolton, South-East): Does my right hon. Friend remember that it was a Conservative Government who cut the budget of my university, which trains scientists and engineers, by a massive 42 per cent. in a single blow?

Mr. Clarke: My hon. Friend is absolutely right.

The Conservatives' proposals would mean not only fewer resources and students, but less independence for universities, as they are saying that they will remove the independent funding stream that universities want in order to develop their operations in an effective way. That is why the Conservative proposals are opposed by almost every university leader in this country; those people know that the proposals are an arrow at the heart of their independence and their academic freedom in deciding how they move forward. It is extraordinary that the Conservatives should have made those proposals. Perhaps that is why so many Conservative Back Benchers and Members of the other place do not support what their Front Benchers are about.

The fundamental issue is equity. I shall give the House the figures. When we look at the amounts of money per student that we spend at different levels of education, we see some very revealing figures. In nursery education, the annual cost of a three-year-old place is about £1,750; for a four-year-old, the cost is about £3,500. In primary education, the figure is £3,230; in secondary education, £4,060; in first and second-year further education, £4,350; and in higher education, £5,360. That hierarchy of spending has been very well established for many years. It is based on saying that we should spend more money on people who are higher up the system in the educational hierarchy and less on those who are at the bottom.

That policy is socially divisive in many ways, which is why this Government have been trying to spend more on under-fives and primaries. As we make those spending commitments, we are putting more positive effort into allowing children from all backgrounds to succeed and move forward. The Government have made that commitment and we will continue with it. The very important appointment of my hon. Friend the Minister for Children is a recognition of the priority that we attach to that issue.

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Every Secretary of State, whether from the Conservative party, the Liberal Democrats or elsewhere, will face resource allocation choices in deciding whether money should go to the youngest or oldest end of the age range. The fact is that the arithmetic that I have just given leads to a conclusion. The difference between what the state spends on a student who leaves school at 16 and does not do anything further in education and on somebody who graduates is almost £25,000. That is what the state puts in. I defend that position, as I think that the state should support it, and the overwhelming majority of support is for teaching costs. However, is it really so inequitable that individuals who have benefited from that education and will be able to earn on that basis later in life should make some contribution towards it?

The Conservatives propose to increase that differential even more, so the issue is whether a graduate should contribute to that situation. Our proposals say that parents do not have to pay, because the fees are going back afterwards. Students do not have to pay while they are in college. Graduates have to pay—this is what our proposals have in common with a graduate tax—from the extra resource that they have. If the hon. Member for Ashford thinks that it is inequitable that the state should pay the cost per student that is currently paid by the taxpayer and that it is unfair to ask graduates to contribute to the costs, I ask him how much more unfair it is for that money to be contributed by non-graduates for the education of those very same graduates. Is it just or fair for us to say that a non-graduate should pay for the education of such people, but that graduates themselves should not? I do not think that that is fair or that it is the right way for us to proceed.

I turn now to debt—a very serious issue to which the hon. Member for Ashford devoted some time. As I have said from the outset, there are genuine concerns about the fear of debt, as my hon. Friend the Member for Preston (Mr. Hendrick) pointed out. It is a fair subject of discussion; we have discussed it with the Select Committee and we will continue to take it forward. As Professor Barr argues, the issue is one of payroll deduction, but that does not mean that it is any less frightening. None the less, it is important to put the matter into some sort of perspective. Over a 40-year period, a current graduate will pay about £850,000 in income tax and national insurance contributions. That is a lot of money. They will also spend about £500,000 on food, and they pay those costs in a very direct way. Alternatively, somebody who stopped paying for 20 cigarettes a day would pay off £10,000 of student debt in 11 years with that money. Survey data show that single householders on average earnings spend an average of £36 a week on recreation and culture, which compares with the £8 or £9 a week that we are talking about in relation to the repayment.

I do not deny that the debt is a serious and frightening thing for some people, but it is important to get it into perspective in terms of lifetime costs and to ask whether such an investment is worthwhile. It is also important to put it in the context of the range of protections that we have placed in the system. The repayments are income-contingent, so nobody pays if they are earning less than £15,000 a year, and that moves up in a direct process. We have put in protections for students from the poorest

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families, for whom we are waiving the fees at their current level. We are discussing offering bursaries as part of the project for universities that charge higher fees. The hon. Member for Ashford would abolish that. We have established a £1,000 grant on top of the loan to enable students from the poorest families to go to university. There is no up-front fee. We have moved the situation forward. In a pretty substantial contribution, we have said that there is a zero real rate of interest on the debt, which means that, unlike a mortgage or a car loan, it does not grow. Will the hon. Member for Daventry clarify the Conservatives' position on that? The hon. Member for Ashford was reported in The Guardian—I do not take it as gospel—as saying that they are going to remove the subsidy on the interest on student loans. In other words, the Treasury would no longer—

Mr. Damian Green: Will the Secretary of State give way?

Mr. Clarke: Fine—I welcome the clarification.

Mr. Green: I can happily confirm to the Secretary of State that that part of the report was inaccurate.

Meanwhile, may I ask him to clarify his own position? He said that the poorest students will not pay the existing part of the fees. Does that mean that they will pay the top-up part of the fees?

Mr. Clarke: On the hon. Gentleman's first point, I have never been misquoted in The Guardian myself, so I do not quite understand his problem, but I am grateful for his clarification. I was not sure what the policy was, and I thank him for setting it straight.

As for our position on fees, I repeat that it is our policy to waive the fees at their current level of £1,100 for students from the poorest families. That will continue. Through the Office for Fair Access, we are discussing with universities bursaries that would enable the balance between that £1,100 and a higher fee, if it were charged—say, £3,000—to be paid through a bursary regime. I am not in a position to make an announcement about that yet, but it is an important and positive development that meets many of my hon. Friends' concerns.

We are observing a Tory policy shambles of the most extraordinary kind. Only just over a year ago, the hon. Member for Ashford said on the GMTV programme:

Why has his position changed? The only explanation comes in remarks by the vice-chancellor of Buckingham university, which is a private university set up by the hon. Gentleman's friend Margaret Thatcher when she was Prime Minister. The vice-chancellor asked:

That is the truth of it. They came up with a little stunt and thought that they would campaign on it, but they did not think it through or imagine that anybody would analyse it. I welcome the debate, as we want to analyse it. The truth is that the Conservative record is one of never facing up to the challenges that the British university system faces. We are facing up to those

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challenges. Although they involve difficult choices—I acknowledge that absolutely—we are laying a foundation for universities to expand and develop and to play their role in our national society and economy. The Conservatives are utterly failing to do so.

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