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Oral evidence Taken before the Education and Skills Committee on Thursday 12 June 2003 Members present: Mr Barry Sheerman, in the Chair __________ Witnesses: Mr Phil Willis, a Member of the House, Principal Liberal Democrat Spokesman for Education and Skills, and Baroness Sharp of Guildford, a Member of the House of Lords, Liberal Democrat Spokesperson for Education and Skills, examined. Q820 Chairman: Can I welcome Phil Willis and Baroness Sharp. Phil was a distinguished member of this Committee - slightly before I became the Chair but I think you had served under two Chairs, was it, Phil, or was it just Margaret Hodge? Mr Willis: No, two, and Malcolm Wicks. Q821 Chairman: Thank you very much for helping the Committee by coming before us. You know we are writing up at this moment our response to the government's Higher Education White Paper, and in order to get it as comprehensive as we could we decided that we would like to hear from you and be able to ask you a few questions about Liberal Democrat policy as it is very distinctive from the government's, and Her Majesty's Opposition has also changed its position on the fundamental area of student finance, but really today is asking you about the Liberal Democrat position and how that will impact on the future of higher education. In a sense we are not here to put you in the hot seat or to start a party political fight; we just want to improve our capacity for writing a good report. Do you want briefly to say anything to start off? Mr Willis: Briefly, Chair. First of all, can we thank you personally but also the Committee for the opportunity to come along and share some of our views and we do so in the spirit of which your invitation has been offered. Baroness Sharp has been leading for the party our review of higher education, and I think it is important, rather than just simply having a "yahboo" reaction to the government's White Paper, that all political parties take that challenge up that the government has laid down and say how we are going to address some of the very key issues which need to be addressed. Quality, Diversity and Choice was a document which we sent to the Committee. Just to give you the status of that document, it is a working document in progress and is certainly not the completed response to the government's White Paper, nor in fact is it a detailed response as far as our own policy is concerned. We are changing as a result of consultation and, indeed, like the government's response to the White Paper we hope that as a result of the consultation many things will change, and certainly we expect things to change too. I gave the Committee Clerk a new paragraph 6 last night which is our response as a result of looking at some of the government's proposals particularly on the funding of the £1,000 grant, and I will come back to that in a second. We are delighted as a party that you, Chairman, decided to take up this issue with the Select Committee of post 16 student support, and we want to emphasise our support for your view, and indeed the government's view, that unless we sort out post 16 staying on rates and incentivising students staying on beyond 16 then the rest of what we are doing is, quite frankly, fairly meaningless. It is important that ultimately we get a good solution from that and we believe the government is well on its way to financing good solutions there. It is wrong, however, to simply look at student support in isolation from the higher education product. We agreed with the government that it is not just the student support system that needs to be reorganised: we need to change the way in which higher education is offered and the way in which it is delivered, and to have a higher education system fit for purpose is right at the heart of what the Liberal Democrats are currently trying to do. We therefore have examined what we want from our higher education system, how it can be delivered, how it should be paid for, and, crucially, who should pay for it. In our proposals we have sought to introduce a far more flexible higher education product that reflects the 21st century rather than the 20th century. If you have had an opportunity to read Quality, Diversity and Choice it is a product based on a modular unit accreditation system akin to that of Open University and, indeed, as offered in most American universities where credit accumulation has been the norm now for nearly fifty years. We believe that a new product must recognise that the majority of future students will study part time and not full time: that they will study incrementally - not just simply because of cost but convenience too: that increasingly students will want to earn and learn: that increasingly they will access part or all of their education via the internet: and increasingly they will take up different segments of time to complete their studies. One of the criticisms which I hope your Committee will address in the White Paper is that it does nothing to address that new model of delivering higher education to a totally different market than existed perhaps ten or twenty years ago. Inevitably who pays for it will be significant and we, like Professor Barr's article in The Guardian this morning, do find it offensive to say you can increase participation by reducing student numbers to the level of 36 or 38 per cent which we had ten years ago. We accept the principal findings of Universities UK's document, and indeed the government's proposals, that higher education needs greater resources and we have tried within our proposals to make up to £2 billion available to the higher education system, although final figures will depend on the outcome of our restructuring proposals. The money would be raised, and we are the only party which is actively proposing this, not through a student tax but through a progressive income tax with a 50 per cent rate on incomes over £100,000, and we would use that money to meet all the costs of the debt proposals which is £350 million, the abolition of the existing tuition fee income of £430 million, to deal with the new higher grant of £300 million which we want to introduce which would leave around about £800 million to fund key priorities of building maintenance, IT support, libraries, etc. We accept the overwhelming evidence presented to your Committee and to the government that access to higher education is significantly affected by the fear of debt, and we accept too that the White Paper does seek to address this issue by the partial restoration of grants up to £1000. We wish to go further and to match what students get in Scotland of £2100 though, as we have announced today, we do not believe that the endowment process in Scotland should be replicated in England, and you might want to ask about that later. We would scrap the existing tuition fee and we would legislate to prevent universities charging top-up fees for all the reasons which the government gave during the passage of the Teacher and Higher Education Act in 1998. So we believe, then, that higher education is an entitlement to all students who achieve the necessary standards for access; we believe that tuition in principle should be free at the point of delivery paid for by the state; that maintenance is a variable cost and should largely be met by students and their families with the aid of income contingent loans, and that access should be incentivised through maintenance allowances to support students from less affluent backgrounds. Q822 Chairman: Baroness Sharp, I did not mention that you are also a very active of the Parliamentary University Group. Mr Willis: And a distinguished academic. Q823 Chairman: Of course, from the London School of Economics. Baroness Sharp of Guildford: And the University of Sussex. Q824 Chairman: Moving on to the questions, Phil, in one sense there has been very much agreement on the main Dearing principles, that of the three main contributors to higher education there should be a balance between society through taxation from employers and from those who benefit from higher education. How do your proposals fit into that in terms of getting the balance right? Mr Willis: We would not disagree with Dearing's proposals in 1997 in terms of that balance between government individuals and employers. If we take employers first, what Dearing found a great deal of difficulty with was how you lock employers into paying their share. I know that Dearing did consider at one time a levy on graduates in the workplace and that was rejected, and we as a party would reject that too, (a) because I think it is difficult to levy; it would be seen as a tax on jobs; and it would be a disincentive for employers to use graduates. Q825 Chairman: What if it was done a different way, if there was a levy on any company over a certain size obviously that did not reach their target in terms of a percentage of their turnover devoted to research and development? This is another way that some people have suggested - that a percentage of that company's turnover would either be exempt up to that percentage of investment in R&D or, if you were not up to that, then you paid into a levy that was distributed to universities for research and development? Mr Willis: I think that is an attractive proposition on the surface, Chairman, but it is one that when you look more closely you would find it incredibly difficult to legislate for. You would have to decide what size of company would fall into that bracket and also it pre-supposes that those companies who do not employ graduates do not get the benefits from, if you like, graduate education in its broader sense from society. What interests me most about that question is that when we have looked at the skills strategy which is emerging and which will be produced in July now, I understand, not the end of this month -- Q826 Chairman: I am told it has slipped by a week. Mr Willis: I think if it has been improved we do not mind that - but I think it is a real issue that we have to address throughout the whole of, if you like, the skills issue. We as a party looked very carefully, indeed it was our policy up until 2001, to have a training levy imposed and we dropped that because we did think that was going to be a tax on jobs and we do not want that. Dearing came to the conclusion ultimately that you have to incentivise employers into the training market and what the skills strategy hopefully will do is give those incentives particularly to small and medium sized companies to invest not simply in graduates but throughout their work force. Interesting statistics from the work force study demonstrate that most companies invest something like five times as much in a graduate employee as in non graduate employees: they already get a fairly good, if you like, deal. Q827 Chairman: But what about the Dearing three-legged stool? If we take income tax and the taxpayer for granted, what about the person that gets the advantage of five extra years' education? Mr Willis: Well, fundamentally this is where we part company with the government, and indeed the Conservative position, and perhaps even your own Committee's view. First of all, we have to accept that students who stay on to do their three, four or five years do lose earnings during that time. Secondly, we reject, and indeed your Committee has not taken any evidence which shows, that the so-called graduate premium bandied about during the White Paper exists and will exist when we have over 50 per cent of students as graduates. We also reject, as was clearly identified at the No 11 briefing two weeks ago, that even students going to the so-called Russell Group only have something like a £22,000 graduate premium during their working lifetime, so we have to be sceptical about the additional benefits purely to those graduates. But our response is quite simple: that if the government is right - and I think overall they clearly are, that graduates earn perhaps 17 per cent on average more - then they pay more tax, and that is right and proper, and our belief is that the more people earn the more they should contribute to the general welfare of society which includes education. With respect, David Beckham might not be a graduate but he is one of the most highly paid individuals, but without highly paid graduates who are able to mend his foot when it gets broken, or look after his money - and, indeed, design his wife's clothes - he would be all the poorer, so everybody gains from having well trained, highly educated graduates within our society. Baroness Sharp of Guildford: Also, if I might say so, it is rather tough on young graduates who are at the lower end of the earning bracket to be charged what is a very high marginal rate of tax with the repayment system, the 9 per cent marginal rate of extra income tax on those earning £15,000 plus. It is quite tough; you want to catch them when they are earning rather more. There is also the question of why those of us who benefited from a very much more generous regime of free tuition fees and grants for residential accommodation should pay nothing at all. Q828 Ms Munn: I want to pick up one issue which is slightly to the side of this: I am interested to hear you saying that you accept the issue of maintenance loans and them being income contingent. One of the big arguments that Nick Barr puts forward, and you have already mentioned him this morning, is that part of the problem we have is the way people perceive the money that they have borrowed, and they see it as a debt. Given the importance of getting more people into higher education, do you agree that it is important to portray it differently and to look at it, as he says, not as a total global sum, a debt, which can get scary but to look at it more as a payroll deduction - obviously you are arguing about the level of that but to look at it more as a payroll deduction - and if you do agree with that will you be going out to try to sell that as part of your policy? Mr Willis: Do I call you Meg? Ms Munn: Yes that, is fine. Q829 Chairman: Amongst colleagues, I think first names are fine. Mr Willis: I have a great deal of admiration for Nick Barr's work because I think it is thorough and he makes you think about many of the issues we perhaps do not want to address. There is an initial attraction to his proposals which he gave to one of the earlier Select Committee's findings and which he partially repeats in The Guardian this morning that if the state is going to subsidise loans significantly then, if we could use that subsidy in some other way, we could incentivise even more students to go or give them larger loans or grants, and there is some credence in that. Where I disagree fundamentally with Nick Barr is that simply relabelling what undoubtedly is a debt and is likely under the government's proposals to be a huge debt somehow, by putting it as a payroll contribution which changes the identity of that in the minds of the students themselves, is quite frankly farcical. Whilst I would be delighted to sell, and hopefully always will sell, higher education irrespective of the costs as something which is worthwhile and I have never ever tried to do other than that to put students off going to university, I do believe that students who finish university with debts of £21 or more thousand as is proposed by the White Paper will regard that as a debt irrespective of how it is dressed up. The second flaw in Nick Barr's argument, if I might say so, is the financial institutions themselves, and it would be interesting if your Committee had had the time to deal with the financial markets and the financial institutions to see how they would regard a student leaving university with debts of £21,000 because getting credit, getting mortgages and investing in pensions are all taken into consideration in terms of a student's creditworthiness. I have spoken to financial institutions to try and persuade them of the argument in terms of the benefit of Nick Barr's proposal but in reality, if they are lending money, they are lending it against a person's creditworthiness, and I have seen nothing yet which persuades me that the debt which students leave university with will be regarded as anything other than debt by financial institutions or by students themselves. Q830 Ms Munn: All I am concerned about, and at this point leave aside the wider arguments of the merits of Nick Barr, is if we say to students, and Charles Clark quoted that £21,000 was the top, "You are going to have £21,000 worth of debt", then there is the risk for the poorer students that that is off-putting. If you say to somebody, "When you are earning this amount so much will come off your pay, and that will stop at a certain point", that is significantly different, and it is like they are going to go out and get a mortgage of £100,000 which is five times what you said. Do you not accept there is a benefit to putting it across in that way? Mr Willis: Of course, I would accept that there is a benefit, and all of us if we are honest around this Committee room dress up whatever we think is our message in the finest clothes we can find. I would not disagree with that. But in reality our policy is totally at odds with what you are saying and what Nick Barr is saying: that we feel that, in terms of funding higher education, the principle should be you do it through progressive taxation and you do that because it means that those who have the greatest ability to contribute do so, rather than when they are students who in that crucial period between leaving university and the next ten years when they are taking on a job, taking on mortgage payments, perhaps getting married or having a partnership and children where expenses are very tight indeed, which is when they are going to be hammered most. The other thing Nick Barr has not explained, and I would be delighted if somebody could explain it to me because I have not seen the figures, is that if you add a 3 per cent real interest rate to bring it up to the public sector borrowing levels, what happens to those students who take career breaks? What happens to women having time out having children? Does the interest rate rack up at the same time because, if you are so doing, then the actual debt will accelerate at an enormous rate particularly after five years? Baroness Sharp of Guildford: It would be easier to consider it in terms of just something that you pay back over time if it were a much lower rate. The 9 per cent repayment rate is very high for those on those levels, so we looked at the solution of a graduate tax of 2 per cent but when you get that you find that with a loan of that size you do not pay it back. It takes an absolute age to pay it back at something like 2 per cent because it is accumulating also at a 2 per cent rate on income tax. We also came to the conclusion looking at this that it effectively was a 2 per cent premium on income tax over the whole of a person's life, and you might just as well put it on income tax but we wanted it to be on higher rates of income tax because it was progressive, rather than on general rates of income tax. Q831 Mr Turner: Phil, on the graduate premium you gave a figure of 17 per cent as the average and in your paper you acknowledge, as anyone would, that the earnings gains are not equally distributed. You also expressed scepticism about what would happen if you got a 50 per cent participation rate. Do you have any more feel for how many people are not benefiting in pure financial terms from going to university and who those people are? Mr Willis: That is an interesting question and much of the analysis which has been done talks about broad categories of students. What we found interesting when we looked at this question was, for instance, art students; that students who studied a range of arts and social sciences at university, including the Russell Group, did not achieve the sorts of graduate premiums and even had a less or equal premium to students who left with Level 3 qualifications, so I think we have to be very careful about applying across a whole group of students either from a particular type of university or, indeed, from universities generally, that there is an average premium which can be applied to the norm because clearly it does not. The other groups which you have to look at, which I am sure the Committee has done, is people working within the public sector particularly people within the Health Services where now if you look, for instance, at a group of people who are the laboratory technicians who are doing cervical smears and things of that nature within our hospital service, often are graduates but often are getting derisory low pay so I think we have to be careful about applying those premiums. My argument is, and I think most people accept this, that the more graduates you have the less you can have as a premium. Q832 Mr Turner: Could you name, perhaps afterwards, any research that supports the assertions you make? Mr Willis: We are quite happy to let the Committee have a note on the research we have used to form those conclusions. Baroness Sharp of Guildford: I do think that there is a difference between the average and the marginal here. As far as this is concerned, there are some graduates such as those from LSE who go into the City who get an enormous premium, and others at the margin who get almost no premium, or even a negative premium on what they do.
Q833 Jonathan Shaw: You have said in your paper that you do not share the Government's anxiety to raise the age or the participation rate for 50 per cent of 19 to 30-year-olds because you believe that this will evolve. Mr Willis: Yes. Q834 Jonathan Shaw: Evolve to what? Mr Willis: Well, I think you have answered the question because we rejected the 50 per cent target because I think most of the Committee would recognise that this was a target which was set by Tony Blair without any particular evidence as to why it was 50 per cent, why it should not have been 50 per cent or why it should not have been more. It was an arbitrary target which was set. David shakes his head and no doubt he will give me chapter and verse as to the huge amount of evidence which went into producing this target. My response to you is that when you actually look around the first world and you actually look at European participation rates in higher education and US and Canadian participation, they are higher than ours. They are not only higher than ours, but they are higher than the target which the Government has set partly because they have different ways of looking at higher education and different ways of delivering higher education, but I do not believe that we should be high-bound by any specific targets. I think the students who achieve or adults who achieve a Level 3 qualification or its equivalent and who have the capacity and ability to benefit from higher education should not be denied access to it by an arbitrary target either higher or lower than the current levels that we have. Where I would agree with the Prime Minister is that he is absolutely right in saying that in the 21st Century Britain will only succeed, certainly economically, but I think socially as well, by harnessing human capital and that means making sure that more people are educated to a much higher level. Q835 Jonathan Shaw: So the sky is the limit then. What we are trying to understand from you this morning is in terms of the credibility of the policies you are putting forward and that is about how you are going to pay for those. You cannot simply say that there is not going to be any cap or that the sky is the limit without saying how you are going to do it. Your 50 per cent, your tax, how far does it go? How far does the additional taxation that you are proposing go in terms of the number of students or have you not done that calculation? It is a reasonable question, is it not? How many students can you get? Can you get 52 per cent, 53 per cent? When will you need to raise more taxation? Baroness Sharp of Guildford: What we have done at the moment because we have been looking over a three-year period, over a three-year period what we were assuming is that the current full-time equivalent number of students is 1.1 million at the moment and those are full-time equivalents. Of that, about 800,000 are full-time students and the rest are part-time students working in different ways, and we are looking at both full-time and part-time. What we are assuming is that the model which we are currently proposing will pick up both and that at that level the roughly 2 billion, which is the 50 per cent rate of income tax on those earning over £100,000, now yields about 4.5 per cent. Of that, we would anticipate immediately approximately 2 billion into the higher education field. That will more than cover the cost of providing the fee element within higher education there. In fact the precise cost is something like £450 to replace the £1,000 fees. For the remaining students we have costed out at probably somewhere in the region of an extra £500 million, so that you are looking at somewhere at the moment, if we tot up those figures initially, of about £1.3 billion, but leaving some leeway there. Mr Willis: I think it is an academic question. It is an interesting question, but an academic question in the sense that what we are presuming, and I think it is what the Government has presumed within its White Paper, is that the current method of delivering higher education will be on a post-Robbins model or even a post-1992 new universities model which is predicated on a three-year boarding school-type graduate programme. I fundamentally believe that that is not the way in which we will see the expansion of higher education in this millennium. Q836 Mr Chaytor: In your document you give the cost of reimbursing universities for the loss of tuition fees in the current financial year as £436 million. Mr Willis: Yes. Q837 Mr Chaytor: In your Party Leader's speech of June 4 he said it is £700 million. Can you explain the difference? Mr Willis: Well, I am here to talk about our document. What the Leader said, I will give you again a written reply as to where he got that particular figure from. Q838 Mr Chaytor: In your document you say that the cost of restoring the grants would be £280 million and that was with the Scottish endowment repayment. Mr Willis: Yes. Q839 Mr Chaytor: In the supplementary document which you have circulated where you say that the agenda has moved on and now you are not going for the Scottish endowment repayment and fully funding the £2,000 grant, you estimate the cost as £300 million, so it was £280 million when students were paying £2,000 back, so how can it be only £300 million when it is fully funded? Mr Willis: That is a valid question and my apologies for not having a clear answer to that in the documentation. Going back to the 2001 election in which ----- Q840 Mr Chaytor: Have you got a clear answer now? Mr Willis: Yes, I have. You would not expect me not to have a clear answer. It was just Jonathan's question ---- Q841 Mr Chaytor: You are just buying time now! Mr Willis: No, I am not buying time. In the 2001 election manifesto in fact our policy was predicated on what was happening in Scotland and that the cost of introducing a very modest benefit programme and indeed the cost of servicing the endowment system in Scotland to pay the £2,000 grants was in fact in total roughly £280 million, of which £39 million was the benefits package and the rest of it was servicing that loan. Since then, two things have happened. First of all, the Government has in its White Paper introduced, and indeed given indicative funding for, a £1,000 grant and they say to give 30 per cent of the students a sliding scale in terms of the £1,000 grant would cost £300 million, so we have calculated that £300 million in and I think that it is pretty reasonable to do that. Therefore, in order to double it, we actually need another £300 million, so that is where that costing comes in. The logic, David, which I am sure you would accept, is why would you continue with a system which cost you £236 million to service when in fact you could put that money directly into a grant, and so that is a practical reason for changing from that endowment system to one that is in fact giving the money directly to students. Q842 Mr Chaytor: In your Leader's speech on June 5, he says that students would normally attend a college or university near to where they lived and worked and in your policy document you make no reference to that, so could you explain to us how you are going to require students normally to attend a college or university near to where they live and work? Could you tell my constituents whose sons and daughters have got four grade As at A-Level that they have to go to the nearest institute of higher education? Mr Willis: Can I remove one word from your question because I think it was a crucial word and that is "require". We are not going to require students to study locally. We are not going to require students to take a particular type of degree at all. The logic of what Charles Kennedy was saying in his speech, which I fully support, is that in reality as you look to our mass higher education market where the majority of students will be studying part-time, will be studying incrementally, the overwhelming logic of that is that they are going to study locally. One of the great challenges, I think, for the Government and indeed for all of us is to make sure that the offer locally is as good as anything else in the country for a particular course that the student wants to do. However, we do accept that many students will continue to want to do a complete three-year honours degree programme at a university of their choice because it offers a particular course or a particular slant on a course which meets their particular requirements and for those students that offer should still be available, but they have to recognise that, in so doing, there are additional costs to the student of doing that, which are particularly their maintenance costs, and that actually is an adult decision which students have got to make. Please do not misinterpret what in fact is going to be a reality in terms of your constituents and my constituents that many of them will in fact be having different types of study and so be it. If I look around at Huddersfield University, which is a classic example which has been built virtually entirely on a local offer, if you go to the great metropolitan city universities, they were built precisely to make a local offer and I think that is something we should cherish, not denigrate. Q843 Valerie Davey: I have two points. Can I ask specifically is this extra tax, the 50p plus, going to be hypothecated for higher education, all of it? Baroness Sharp of Guildford: No. Q844 Valerie Davey: It is approximately £2 billion? Baroness Sharp of Guildford: No, it raises £4.5 billion. Q845 Valerie Davey: But half of it approximately is going to higher education? Baroness Sharp of Guildford: Yes. Insofar as we have identified a source of funding, this is what has been done, but it is not necessarily being hypothecated directly to it. Q846 Valerie Davey: You are not changing the level of interest on this extended loan and, therefore, the £800 million from the Government will go up? That is the cost of the loan ---- Mr Willis: Which extended loan? Baroness Sharp of Guildford: The student debt loan, do you mean? Q847 Valerie Davey: Yes. The interest is negligible and if you are not going to raise that, then the cost to the Exchequer is £800 million, so it is going to go up? Baroness Sharp of Guildford: Yes. Q848 Valerie Davey: Can you tell me what the percentage of government income into higher education would be to support the student as opposed to going into higher education itself? Baroness Sharp of Guildford: Sorry? Q849 Valerie Davey: What the Government raises and then puts into higher education? Baroness Sharp of Guildford: You mean what the cost of higher education will be? Q850 Valerie Davey: For the Government to the student, the actual supporting of the student. Baroness Sharp of Guildford: Well, at the moment the average unit funding per student is about £5,000. Q851 Valerie Davey: I am concerned about the percentage. Our concern, as a government, is that when we came into office something like 42 per cent of government funding towards higher education was going to the student, personal to the student as opposed to ---- Baroness Sharp of Guildford: I understand what you mean. No, we have not done that particular calculation. Mr Willis: No, we have not done that calculation, but we have been quite honest in saying that in terms of the additional contribution from the state to the student, it will be £300 million above what the Government is currently proposing in the White Paper. Obviously, in answer to Jonathan's question, if there was suddenly a vast increase in the number of 16-year-olds who are staying on at school in two or three years' time, and I desperately hope that there are, competition for places or indeed competition for funds would increase and we would have obviously to meet that challenge when it arose, just as any government would. Q852 Jonathan Shaw: Following on from Val's point, we have the most generous system. We spend more money as part of the cake on student support, student finance than any other country in the world. Our institutions are desperately in need of this investment and you are choosing to make the cake even bigger. Baroness Sharp of Guildford: The proportion of GDP which goes into higher education is 1.1 per cent in this country, so it is lower than in a lot of OECD countries. It was in 1991 1.3 per cent, so it has actually gone done as a proportion of GDP at a time when if you take the Porter analysis of the competitiveness of British industry, they are saying that we need to ramp up our investment in higher education. We feel that this country can afford to put a greater proportion of GDP into higher education and indeed if it does not, there will not be a higher education sector which will be available for future generations. The actual amount going into student residential support is very small in relation to the total. What we are doing, which is different, is that we are paying the tuition costs out of taxation because we think that this is a cost that the Government ought to meet and needs to meet for future generations. Q853 Valerie Davey: I have lost my thread with the first point, so I will move on to the second. Your total commitment to the higher education student seems at odds with what I have always thought of as your Party's priorities because we are now saying to young people who do not go into higher education that they will pay a full tax when they want to make investment into their future, that they will pay their fees still when they are going into other courses at further or any other education. Mr Willis: We are not saying that at all. Q854 Valerie Davey: Well, the students who come to me, the young people who are here say, "I am not going into higher education, but I'm going to invest in my future, so I'm going to take out a loan", so even the person who has to put the investment into a taxi is paying a huge amount by comparison to the beneficial way in which a student is getting the investment in their career, in their future. Mr Willis: With due respect, we came here actually to talk about higher education proposals, so if you want us to come back to talk about our proposals for 16 to 19-year-olds and indeed for up to Level 3 qualifications and how we will support those students, then we will do that, but that was not the reason we came. I think we have a clear policy which looks at supporting the skills agenda and when in fact Ivan Lewis reported or the Secretary of State reported to the House in terms of the skills agenda, not only have we been supportive of the Government throughout this, as I think the Chairman would recognise, but we want to make a valuable contribution to that. We accept entirely the point you are making, that in fact in terms of one of the greatest challenges for us, and this answers Jonathan's point too, is in fact how are we going to actually support students to increase their skill levels, not simply in higher education, but throughout the whole of the spectrum. Q855 Paul Holmes: The Government argue that an average student debt of £12-15,000 is not a deterrent for students or £21,000 once the student debts increase, and the Liberal Democrats argue that it is a deterrent to students. When this Committee took evidence last year we did get some hard evidence, for example, from Professor Callender and others, but we kept being told by many people that there was not a lot of hard evidence to show debt as a deterrent. Are you aware of evidence now since then, for example, that shows that it is a deterrent? Mr Willis: I think, quite frankly, it beggars belief that your Committee, and I think you are all highly intelligent and focused people, could not believe the evidence which clearly there is. If you look at the work which the South Bank University gave, if you look at the Barclays' debt survey, if you look at the public opinion survey which recently said that 28 per cent of students drop out of university because of actual debts, not just perceived debts, and in particular if you look at the Rowntree Foundation's socio-economically disadvantaged experience in higher education document, it clearly pulls together compelling evidence that debt-aversion is one of the principal reasons that students from lower socio-economic groups do not go into higher education. It is that whole wealth of evidence, and the evidence which is coming out of Australia, Canada, parts of the US, if you do not look at that and take note of it, well, obviously we read or understand things differently. Q856 Paul Holmes: And if we do want to expand it, say, from 43 per cent to wherever we end up, where does that expansion come from? Mr Willis: Well, really we have got to look at this 14 to 19-year-old continuum. Unless we track that, unless we make a different curriculum offer, unless in fact we engage more young people in far more demanding work than is currently the case than simply tests for GCSE, then we will not crack that at all and we will continue to see what we have seen over the last ten years with the numbers of students from lower socio-economic backgrounds going to university decreasing from 17 to 8 per cent and it will go from 8 per cent further down. Q857 Chairman: But is it not the case that if you just allowed the figures to drift up, not only to the 50 per cent target, not only just let them drift up, but you do not have the access regulator or whatever, is there not a danger that you actually will just draw in more, but less able young people from the more affluent middle classes and not achieve the target which I think we all want of getting people from poorer backgrounds? Mr Willis: I think, Chairman, this is one of the issues that clearly we have not discussed this morning, but which goes really to the heart of what we are trying to do as a Party and what I think the Government needs to address too, and that is the whole issue of quality and what in fact are we going to offer. I am at one with the Secretary of State in saying that the offer which we make to many students in terms of the product which they receive is not good enough in terms of the investment they make and the investment the state makes and I am not in favour of simply expanding higher education for the sake of expanding it. It has got to be expanded with demanding entry requirements, demanding quality, demanding courses and intellectual rigour and I do believe that students are capable of that, Chairman, but we have to challenge them in that way and it means rethinking what we do with students at school. Baroness Sharp of Guildford: It is quite interesting that the student: staff ratio at universities is now higher than in further education colleges and in secondary schools. Chairman: Okay. Thank you very much for your attendance, both of you. If there is anything you did not say which you would have liked to have said and want in the evidence, drop us a line. |