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Mr. Clarke: The short answer to that question is the very rapid pace of change in the global economy and the impact of a large number of universities working very directly in that context.

I conclude from those facts that it is fair to ask students, when they have graduated, to make a contribution to the cost of the university education from which they benefit. For example, I believe that that is just because the labour force survey suggests that individuals with higher education qualifications currently earn on average about 50 per cent. more than those without. I expect the fee regime that the Bill will put in place to provide at least £1 billion a year to universities—a significant sum and one that would allow an increase of about 30 per cent. in the funding of teachers.

I put it to right hon. and hon. Members on both sides of the House, but particularly to Conservative Members that one of the most significant implications of the Bill being defeated today would be that universities would be stripped of the resources that they need to address the challenges of the future. Moreover, if the Conservative proposals were ever to be put in place, all the income currently generated from fees would be lost—as well as that from any increase. One Tory Front Bencher is reported as saying, "We want all universities to be largely financially independent and some completely financially independent." That can only mean the complete removal of public financial support, which would utterly destroy our universities and take hundreds of thousands of student places away from our universities and from people who aspire to go to university.

Llew Smith (Blaenau Gwent) (Lab): Will the Secretary of State explain how it is that we can always find moneys to go to war—including the £7 billion to go to war with Iraq—and that we can always find moneys

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to spend on nuclear weapons of mass destruction but we cannot find money to provide and support a system of free higher education?

Mr. Clarke: I am of the view that the national security of this country is important and that international threats such as terrorism must be dealt with and addressed. I acknowledge that takes resources, but it is a false choice to suggest that there is a straight trade-off in the way that my hon. Friend implies.

I believe that our proposals for university funding meet the needs of the country. I report with pride the verdict of the OECD, published earlier this week, that the UK graduate contribution scheme could be a role model for other countries in Europe that may also have to consider the adequacy of their higher education systems in a modern knowledge-driven economy.

Mr. Graham Allen (Nottingham, North) (Lab): From the studies made by my right hon. Friend, what conclusions has he reached in respect of the reduction in the number of students that would occur if the Conservative proposals were adopted? Does my right hon. Friend agree with Universities UK that 410,000 fewer students would attend university?

Mr. Clarke: I do accept those estimates. The fundamental fact that the Conservatives have not been prepared to face up to is that the result of their policies would be a massive reduction in numbers, certainly of the order of hundreds of thousands of students. The political strategy set out by the Leader of the Opposition is to stop the Bill today to create space to introduce that policy.

I said that the first main feature of the Bill deals with the need to get increased resources for universities. The second major feature is the establishment of the Office for Fair Access.

Lynne Jones (Birmingham, Selly Oak) (Lab): Universities UK says that there is a shortfall of £2 billion a year in higher education funding. According to the Institute for Fiscal Studies, the measures will raise £950 million for the universities, but will cost the Treasury £1 billion in terms of up-front money for loans. How will the measures fund the universities in future? How will they solve the funding crisis in the long term?

Mr. Clarke: We are putting more money in from the taxpayer and the Exchequer, courtesy of my right hon. Friend the Chancellor, and will continue to do so. We are putting more money in through the fee regime, which we have described. I acknowledge, and have always done so, that that does not completely fill the gap that my hon. Friend spoke about. But the question that she must answer is how taking out an income stream enables us to reach any solution whatever? If she decides to vote against the Bill tonight, she must face the consequences—there will not be any more money for universities beyond what we have already allocated to meet those needs.

Mr. James Paice (South-East Cambridgeshire) (Con): On the subject of the money that all the right hon. Gentleman's concessions will cost the taxpayer, he is already on record as saying that that will have to come

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out of the education budget. Can he tell the House clearly whether or not that money will be taken from money that would otherwise be going in grant in aid to universities?

Mr. Clarke: Yes I can. No, it will not, as I have told Conservative spokesmen on a number of significant occasions.

I turn to the Office for Fair Access, which is a significant development in the Bill. We need to be candid about the reality of the situation facing our universities. It remains the case that one in four working-class young people who achieve eight good GCSE passes do not go on to higher education. It remains the case that 19 per cent. of young people from the lower socio-economic groups enter higher education, compared with 50 per cent. of young people from middle and upper groups. That has not changed over the decades. In 1960, 27 per cent. of upper groups went to university, but only 4 per cent. of working-class students. There has been an expansion of numbers in the meantime, but the key issue is the fact that the massive, vicious class differential in our higher education system has remained consistent. We must attack that.

Mr. Gerald Kaufman (Manchester, Gorton) (Lab): Is my right hon. Friend aware that Father Connolly of the Society of African Missions in my constituency wrote to me yesterday? He said:

Father Connolly is an independent man who knows about poverty in Africa. He said—[Interruption.]

Mr. Speaker: Order. I must hear what the African missionary said.

Mr. Kaufman: Father Connolly said:

Mr. Clarke: First, my right hon. Friend is quite correct. Secondly, the hilarity among Opposition Members about poverty and access to higher education has been a characteristic of their conduct in government and opposition. I urge my hon. Friends to take the opportunity provided by the Bill to ensure that the appalling obscenity of the deep class difference that affects people who go to our universities is addressed and attacked. That is what the Office for Fair Access is about.

David Taylor (North-West Leicestershire) (Lab/Co-op): Does my right hon. Friend not agree that an access regulator with fewer teeth than a Glasgow granny, as well as a financial package for the working class that is broadly neutral in relation to the present position, are not great incentives if we are to remedy the deplorable position to which he rightly drew attention on working-class participation in higher education, particularly in the Russell group of universities?

Mr. Clarke: My hon. Friend is right. We have discussed the fact that getting high-quality schools for

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those communities is essential. He is right that we need financial packages such as the education maintenance allowance. He is right that we need a student support package of the kind that we are introducing in the Bill to encourage people from working-class families to go to university. However, above and beyond that, we need an Office for Fair Access with teeth, specifically to address the unacceptable disparity between social classes in applications to our greatest universities.I am not surprised that the Tories laugh, because for the first time in history we have decided to stifle the old approach. It is critical to end that disparity, and we are determined to do so.

Mr. Patrick McLoughlin (West Derbyshire) (Con): As I understand it, under the proposals that the right hon. Gentleman is putting before the House today, in a few years' time there may be a position in which two people who, having graduated from university, are on exactly the same income but pay different levels of taxation. Where is the justice in that?

Mr. Clarke: The hon. Gentleman is wrong, but I am happy to discuss the matter with him in Committee—[Interruption.]

Mr. Speaker: Order. I do not want the hon. Member for Blaby (Mr. Robathan) to shout at the top of his voice. I do not want him to shout at all.

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