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Mr. Tim Yeo (South Suffolk) (Con): I am grateful to the Secretary of State for providing me with a timely copy of his statement.

The policy that the Secretary of State has announced today is a clear breach of a specific pledge given by every Labour Member of Parliament to voters at the last general election. I remind hon. Members that the Labour manifesto in 2001 said:

That promise was made without any qualification whatever. Even hon. Members who read the totality of the Labour manifesto would not have found any hint that that promise applied only to one Parliament.

In the face of principled opposition to the Bill from Members on both sides of the House, including a significant number of Government Back Benchers who

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are less willing than the Prime Minister and the Secretary of State cynically to break their promise to voters, the Secretary of State has now produced a policy that achieves an amazing triple whammy. It is bad for students, it is bad for universities and it is bad for taxpayers. It is bad for students because, in future, the vast majority will pay far more for their education, thus making university education dependent on ability to pay, not ability to learn. It is bad for universities because, for the first time ever, their freedom to decide whom they admit to study will be taken away. There is no certainty that all the money paid by students in top-up fees will become extra income for the universities, which may well remember that when the Government introduced new student fees in 1998, much of the money was later clawed back by the Treasury. It is bad for taxpayers because, for every extra pound that the universities receive, the taxpayer will have to contribute at least £1.25. Even a Government as wasteful of taxpayers' money as the present one may think that that is not good value.

The first question—[Hon. Members: "Hurrah!"]

Mr. Deputy Speaker (Sir Alan Haselhurst): Order. I am sorry to interrupt the hon. Gentleman. The House should listen to the Opposition spokesman in exactly the same—[Interruption.] Order. If the hon. Member for Huddersfield (Mr. Sheerman) wants to teach me to do my job he must find another occasion. The fact of the matter is that the House should listen with moderation and calm. This is a difficult issue and has attracted a great deal of attention. The Secretary of State was listened to respectfully, and so should the Opposition spokesman.

Mr. Yeo: Will the Secretary of State guarantee that Exchequer funding per student will grow in real terms after the introduction of top-up fees? Has the Chancellor of the Exchequer, notable today by his absence from the Front Bench, guaranteed the Secretary of State that that is indeed the case and that there will be no repeat of the previous clawback?

Secondly, if the Secretary of State does not intend to increase the maximum top-up fee that universities can charge, why is that not included in the Bill—adjusted, perhaps, for inflation? As the whole policy is based on breaking one election promise, any assurance the Secretary of State offers on this matter is of little value, especially as his statement today already confirms the very mechanism by which he plans to increase the maximum cap in future.

Thirdly, will the Secretary of State confirm, therefore, that top-up fees capped at £3,000 a year are too low to contribute to the costs of increasing student numbers to the arbitrary 50 per cent. target set by the Prime Minister, and that top-up fees would need to rise to £8,000 or £10,000 a year to make any meaningful contribution to the costs of meeting that target?

Fourthly, what is the cost of the extra concessions the Secretary of State announced today? In particular, what will be the cost of writing off any student loan not repaid within 25 years? Will the right hon. Gentleman confirm that the cost of the concessions that he announced today

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and of any further concessions that he may decide to make during the passage of the Bill raise the cost to taxpayers without benefiting universities? In practice, it would be cheaper for taxpayers if the Secretary of State simply wrote out a cheque to the universities, instead of setting up the cumbersome bureaucracy contained in the Bill, but that of course would not allow him to establish the new access regulator, and thus to be able to control who will enjoy the benefits of university education.

Fifthly, the Secretary of State has said that some universities may retain 90 per cent. of the income received in fees. Will he confirm that that means that other universities will retain less than 90 per cent.? How much less? Seventy per cent.? Fifty per cent.? Will he confirm that the system that he is setting up involves a cross-subsidy between one university and another? Is this the stick that the new access regulator will use to beat universities that refuse to co-operate with the Government's social engineering experiment?

Sixthly, we know that some hon. Members are worried about variable fees and the fact that they create two tiers of universities—those that charge the top fee and those that do not. Is the Secretary of State happy that his policy creates two tiers of students—those willing to incur debts of £30,000 and those who are not? Does he recall saying in the House on 3 December that universities that charge a zero fee for certain courses would encourage people to study those subjects? The right hon. Gentleman thereby, perhaps unwittingly, confirmed that top-up fees would deter some students from taking up the university places for which they are qualified.

The Conservative party will fight this damaging policy every inch of the way. We will oppose the Bill when the Secretary of State finally summons up the courage to bring it before the House for a vote on Second Reading. We believe the Bill breaches the principles that universities should have independence not just academically, but over admissions policy, and that access to university should not be based on ability to pay.

A year after first announcing the policy, the Government have been forced into a series of changes which have made an already flawed policy much, much worse. The Government are destroying the independence of universities, burdening future students with huge debts, and wasting more taxpayers' money. That is wrong in principle, it will be damaging in practice and it must be defeated.

Mr. Clarke: Let me deal with the points that the hon. Gentleman raises. The manifesto was for a Parliament. It is for a Parliament. That is what will be carried through. On the so-called triple whammy, it was almost a triple whammy in the foot, if I may say so, covering up a serious absence of policy on the part of the Opposition.

The hon. Gentleman claimed that our policy was bad for students. It is not. It is good for students. Getting rid of up-front fees will benefit students. Providing proper financial support for students when they are at university is good for students. Expanding places at universities, which the hon. Gentleman wants to close, will be good for students, particularly for those from working-class backgrounds who traditionally have not gone to university.

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The policy is good for universities, as the universities will tell the hon. Gentleman in his interesting cabals with them, because the universities will get the resource they need to provide the quality of teaching to raise standards in this country. It is good for the taxpayer, because in our basic position the taxpayer will be able to benefit from an active economic sector with the universities which generates the current economic strength of the country.

On the hon. Gentleman's specific points, I can give him the pledge he seeks that the Exchequer funding per student will grow, as it has done since we were elected in 1997, and in sharp contrast with the record of the Government whom he supported. We have decided not to write the top-up fee into the Bill, as he suggests, but to allow every hon. Member to vote on any increase in that fee, as I suggested, because of the existing concerns. It would be inflexible to do otherwise.

On the hon. Gentleman's third point, he said that the £3,000 capped fee is too low. That is extraordinary from a party that says that it will introduce a zero fee for everybody and criticises us for introducing a £3,000 cap, which it says is too low. That is an arrow at the inconsistency and dishonesty at the core of the Conservative party's policies.

On the hon. Gentleman's fourth point, the cost of extra concessions, the one that he specifically asked about was the 25-year debt repayment guarantee. The cost of that, we estimate, is about £25 million all together. We think it is reasonable because there are groups of people—I think particularly of those who are parenting, who may go through university and decide to raise families and not go into the workplace, or people who go for vocational work, for example in the Church or voluntary organisations, without significant income—who should be freed from the worry that they have a debt hanging over them for the rest of their life. I believe that policy is right.

It is not the case that there will be cross-subsidy between one university and another. Overall, the fees that are generated will be used by the universities to improve the quality of what goes on at those universities. That is the right way to proceed. On the hon. Gentleman's final point about the zero fee, as I have said many times to him across the House and to his predecessors, money is a factor in any decision that anybody takes. My point is that money is a factor, not the factor. If we are trying to encourage, as we are, foundation degrees, science study, engineering study and sandwich courses, it would be extremely short-sighted to take the view that we should forbid a university trying to encourage people on to those course to use the power to vary fees.

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