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Mr. Clarke: There is a balance between those two issues. I repeat to the Opposition what I said to my hon. Friend the Member for Cambridge—the level at which the fee is set is a factor that will determine whether or not people take particular courses. It is only one factor in my opinion, but it is certainly a factor.

Those are the issues that every university and every individual student will have to assess. There are a number of factors to consider, but I am trying to point out—I was happy to do so when replying to my hon. Friend the Member for Cambridge—that universities

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would be able to vary their fees both upwards and downwards as they saw fit. They cannot do so under the current system.

Dr. Brian Iddon (Bolton, South-East) (Lab): Will my right hon. Friend give way?

Mr. Clarke: No, I shall not give way now, but shall do so later, as I want to make a little progress.

I want to address the central argument that the universities need more money to expand so as to meet the future needs of our society and offer young people genuine opportunities. The fact is that, despite rising student numbers, between 1989 and 1997, universities experienced a 36 per cent. cut in real terms in their funding per student. Since 1997, we have started to reverse that decline, with funding per student increasing by 7 per cent. between 2003 and 2006. Moreover, the backlog in university infrastructure is estimated at about £8 billion, and university salaries have increased by only 20 per cent. since 1980, against 60 per cent. for employees at large. We still need more resources to fund the world-class research on which the international standing of our universities rests. More students are seeking university places at the same time as we, with the country's industry, are developing foundation degrees that tie our universities more closely to the UK's economic needs.

I conclude that universities need more money. At this very first stage of the argument, unless the hon. Member for South Suffolk reversed policy in his interview this morning, we part company from the Conservatives. Their policies completely ignore current funding problems and deny the existence of a problem. Even more amazingly, they want to remove even the existing money from universities. They want to abolish fees altogether, immediately robbing the sector of up to £430 million. The direct effect of that reduction is that the sector would shrink by, we estimate, about 100,000 places. Moreover, in the long term, without the income from variable fees, a further 150,000 potential students—a total of 250,000 altogether—would be robbed of aspiration and opportunity. That is not fair, and it would create great bitterness and alienation in the younger generation.

I am delighted that the hon. Gentleman has resiled from his previous remarks, and said that since graduates generally enjoy above-average incomes it is entirely fair that they contribute to part of the cost of their higher education. I wonder whether his colleagues will do the same. After the last general election, the new shadow education Minister, the hon. Member for Epsom and Ewell (Chris Grayling), said in the House of Commons on 25 October 2001:

Rather more sharply, the former Secretary of State, Lord Baker, described the Tory position in The Daily Telegraph on 7 October as

The former Conservative party chairman, Lord Patten, described the Conservative position on top-up fees as "intellectually disreputable and pusillanimous".

Those Tories understand the meaning of Conservative policy. I must tell Tory Members of Parliament in all seriousness that, if that policy is

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retained, it is their duty to explain to their constituents that hundreds of students who want to go to university from every school in their constituency will not be permitted to do so as a result of the policies of the hon. Member for South Suffolk. We are therefore clearly divided from the Conservatives at the outset. If they want policies that address the issues of the future they need to think a good deal harder.

Pete Wishart (North Tayside) (SNP): Is the Secretary of State prepared to concede that, if top-up fees are introduced in England, there will be a negative impact on the university sector in Scotland? Does he not think that it would be a disgrace for Labour Members such as his right hon. Friend the Secretary of State for Health, who is sitting next to him, to support a measure that has been rejected in Scotland in the full knowledge that it would have a negative impact there?

Mr. Clarke: First, all Members of this House are equal and should be treated as such. Secondly, and even more importantly, when the Scottish Parliament took its view on these matters, as it is entitled to do, it did not hear people from England saying that it could not do this, that or the other, because we accepted the logic of devolution. I say to those in the Scottish Parliament and to those who support it, as I do, that it is necessary for it to acknowledge that, in precisely the same way, it is the responsibility of this Parliament to take the decisions that it needs to take on these matters.

Dr. Iddon: I am grateful to my right hon. Friend for giving way. Bearing in mind the fact that we are going to broaden the A-level base, possibly to five subjects, and especially taking into consideration the fact that this Government signed up way back in 1999 to the Bologna agreement on harmonisation of higher education across Europe, which will probably result in a three-year plus two-year plus three-year bachelors, masters, doctorate degree structure, how does he propose that the Government should fund four-year or even five-year degree courses? Will not that result in even more debt for students?

Mr. Clarke: My hon. Friend is correct to make that point. The Bologna process was most recently discussed in September at a conference in Berlin, at which the Government were represented by the Under-Secretary of State for Education and Skills, my hon. Friend the Member for Bury, South (Mr. Lewis). There was very substantial discussion at the conference about the points my hon. Friend makes. It is appropriate to point out that the conclusion of the Bologna process is that other European countries are looking at our higher education system and its relative efficiency, and thinking about how they can move in our direction. For example, the average student in Germany does not graduate until they have reached the age of 28 and four months, which is an extraordinary state of affairs. Other countries look at the three-year, two-year, three-year system that my hon. Friend describes and ask how they can get to that position and achieve this country's levels of course completion, which are high by comparison with those of many universities elsewhere.

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I agree that the Bologna process is important and that we need to consider it, but the twist that I put on the point that my hon. Friend makes is the acknowledgement by other European countries that they need to be moving towards our system, rather than the other way around. A number of other countries, including Italy and France, have variable fees, so they also face issues that they are considering in the same way.

Mr. Chaytor: Does my right hon. Friend share my confusion about Conservative policy? Given that the Conservative party continually reiterates the importance of devolving management to schools, hospitals and universities and refers to the autonomy of the managers of those institutions, how can it seek to take away from the management of universities the key decisions and the key ability to raise their own revenue? Why are the Tories supporting a command economy?

Mr. Clarke: My hon. Friend makes a powerful point. I am confused by the Conservative position. There is a serious point about what he said: I do not believe that the Conservative position is sustainable even within that party and on its Back Benches. I believe that it will have to address the issue in a very serious way.

I come now to the second pillar of the Government's case. It is reasonable that, in addition to resources for university courses that come from taxation, including from graduates, it is also necessary to have a direct contribution from graduates. The lion's share of resources for universities will obviously come from taxation, which is right, since society as a whole benefits from the quality of our universities, but I think that it is right that graduates should also contribute.

The reason, in fairness, is very simple to state. We already spend an average of £5,300 a year on every university student, compared with £1,800 a year for every three-year-old student or £3,200 a year for every primary school child. Universities already get the largest share of the taxpayers' money that is spent on education. The Government believe that priority for new investment must go to areas in which we can make the greatest impact on promoting equality and social justice, which I believe are in under-five and primary education. That is where any extra resources that we have should be focused, so as to equip our country for the future.

Tom Levitt: I firmly endorse my right hon. Friend's final point. Does he agree that it is not the size of the fee or even its variability that will open doors to access as far as this policy is concerned, but its deferral? I echo the point made by my hon. Friend the Member for Bury, North (Mr. Chaytor), who said that that principle should be extended to further education as well. Indeed, I said the same thing in a speech in this place last Wednesday night.

Does my right hon. Friend also agree that debt repayment really would be an issue if people faced the same interest rates that they faced under previous Tory Governments? The fact is that our plan will work because our management of the economy, unlike that of the Conservatives, will keep interest rates low.

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