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Mr. Robert Jackson: During my right hon. Friend's visits to Oxford, has she encountered the Higher Education Policy Institute, which has produced papers showing that a reasonable projection is that student numbers will rise to 50 per cent. by the end of this decade? That is a projection, not a target, and it flows from the fact that all Governments—like our own party—are committed to the idea that all qualified young people who wish to enter higher education will be able do so.

Mrs. Shephard: That happens to have been my position. I am perfectly well aware of the existence of the institute and indeed have been in touch with it.

My point is that the Government have a perfect right to aspire to a 50 per cent. participation rate in higher education, but they do not have the right to convey the impression that there is an objective justification for such a target, nor to assume that without such justification they will necessarily carry the day with those who have to foot the bill or, in other ways, accept the consequences. The Government must also accept that since that 50 per cent. expansion is part of the higher education funding crisis—in their terms—they must be able to justify it and persuade others of the rightness of their arguments.

Jonathan Shaw (Chatham and Aylesford) (Lab): In the light of the comments of the hon. Member for Wantage (Mr. Jackson), will the right hon. Lady tell the queue of parents whose children have two or more A-levels that they will not have a university place?

Mrs. Shephard: My point is that admission to university should be based on merit and capability, not on targets set by the Government according to what is politically desirable. That point is shared by many academics, including Professor Alan Smithers of Liverpool university, who has said:

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Those are his words, not mine.

Alan Howarth (Newport, East) (Lab): Will the right hon. Lady give way?

Mrs. Shephard: No, I shall not give way again.

What will the Bill do to address the second problem—that of underfunding—bearing in mind that the Government are in part the author of their own misfortunes? Will its proposals improve the funding position of the universities? Professor Michael Sterling, the chairman of the Russell Group, thinks not. In The Times on 8 January this year, he said:

It is true that he made those remarks on 8 January, and that 26 or 27 concessions have been made since then, but the principle is still a good one.

The cost of the proposals in the Bill will be more than £1 billion, as the right hon. Member for Newcastle upon Tyne, East and Wallsend (Mr. Brown) has confirmed. That cost will have to be met from the higher education budget, because top-up fees will raise less than £1 billion, once the cost of bursaries has been taken into account, not to mention the cost of any further concessions. There could be another one tonight: who can say? The reference by the right hon. Member for Newcastle upon Tyne, East and Wallsend to the nods and winks from the Treasury was most revealing. Perhaps we shall see more concessions based on such nods and winks. What a pity that the representatives of the Treasury are not in the House this afternoon.

The third problem that the White Paper identifies is the low participation rate in higher education among the three lowest socio-economic groups. On this, the Government have to confront their own broken promises. They broke the promise made in the 1997 general election campaign that tuition fees would not be introduced, when they revealed in their response to the Dearing report that they planned to introduced such fees and that, for good measure, they would abolish maintenance grants. In 2001, they promised not to introduce top-up fees, yet the Bill introduces them.

At the same time, graduate student debt is increasing dramatically. A recent MORI poll published in The Daily Telegraph last week found that student debt had risen by 74 per cent. over the past four years, with the average graduate debt standing at £8,000. Quite what kind of blow the Government believe the Bill will strike for higher participation from the three lowest socio-economic groups is not clear, but whatever their belief, it is not shared by university teachers and students. As the president of the National Union of Students has said:

The Bill cannot achieve what the Government said in their White Paper needed to be done. That alone should be enough to persuade any right-minded person to vote against it, but there are other, more fundamental

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objections. Not least is the fact that the Government, having trumpeted their intention to give universities and colleges more independence, are introducing a Bill that will, unprecedentedly, impose financial penalties on institutions that fail to introduce approved admission criteria. This extraordinary control-freakery in pursuit of a social, rather than an academic, agenda has never been seen in this country before. It is to be expected, however, from a Government who have shown time and again, today and during the wider debate, that they regard universities, in part, as instruments of social policy, while ignoring their real role, which is to create and disseminate new knowledge and to preserve and transmit to future generations a body of knowledge inherited from the work of earlier generations.

I accept that universities should, and almost always do, make every effort to disseminate what they can offer to students, provide outreach programmes and preparation courses, and sell their wares across the country. However, if they are to remain the guardians of academic excellence and freedom, they must be allowed to admit on merit alone.

James Purnell: Will the right hon. Lady give way?

Mrs. Shephard: No. The Government are the authors of their own misfortunes. The electorate are repelled by their cynical ditching of their election pledges—not once, but twice. The electorate can see that these proposals will help neither students nor higher education and that they will deter, not encourage, young people from less well off homes to enter higher education. They will also strike a fundamental blow at the independence of universities.

Finally, the Government's inability, despite a majority of 164, to handle their own affairs will not be lost on the voters. The Bill should be opposed.

3.30 pm

Alan Howarth (Newport, East) (Lab): In the early 1990s, as higher education Minister, I thought hard about how to retrieve the universities from what was already a gathering financial crisis. I concluded that we should move towards top-up fees. I was indeed edging in that direction when my Secretary of State, the right hon. and learned Member for Rushcliffe (Mr. Clarke), genially kicked top-up fees right out of play. It is true that they were not practical politics then. The new student maintenance loans were still controversial and the Inland Revenue refused to have anything to do with administering repayments by graduates. Now, more than a decade later, I very much welcome the Bill, as well as the package of student support and funding for the universities, introduced by my right hon. Friend the Secretary of State.

The Government's policy is fair to students. Up-front fees will go and students from low-income households will be vastly better supported by grant, fee remission and bursary. Loans for maintenance will be increased to match average student expenditure on essentials. That means that no one will be unable to afford to go to university.

The loans will carry no real rate of interest. Critics who worry about debt aversion and graduates being locked into additional debt should acknowledge that the

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Government are not plunging students into mortgage-type debt, credit card debt or loan shark debt. There is nothing for students to be scared of in these changes. While graduates are earning less than £15,000 or not earning at all, no repayments will be required. On earnings of £20,000, graduates will repay annually only half what they presently repay. Outstanding debts will be written off after 25 years. It is a very good deal indeed.

Mr. Tim Boswell (Daventry) (Con): The right hon. Gentleman, who shared responsibilities with me at the time he refers to, has mentioned a repayment threshold of £15,000. Would he care to speculate as to what the starting point would be under the mortgage-type loans, which he traduces but which he and I administered under the Conservative Government? Would it not already be more than £20,000?

Alan Howarth: We can certainly say that raising the threshold is a substantial improvement and that the important thing to do is to work towards creating better conditions—more propitious conditions—for people to go to university.

The Government are being fair to students in holding down the maximum annual repayable fee to £3,000. If in due course it is proposed that the maximum fee should be raised in real terms, we will all need to think very carefully indeed in considering graduates' income and expenditure patterns. People need to save more for their pensions while shouldering prodigious mortgage costs, bringing up children and, possibly, caring for elderly relatives. They will have to repay university fees as well as student loans. I hope, for the sake of universities, that the £3,000 maximum fee is eventually increased somewhat, but it must be affordable for graduates.

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