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Mr. Allen: Will my right hon. Friend make it clear in terms of repayment of fees that no student and no parent, rich or poor, will pay anything? Graduates will repay the fees, and do so at the rate of £5.25 a week when they are on £18,000 a year and at only £25 a week when they are on £30,000 a year. As my hon. Friend the Member for Lewisham, West (Jim Dowd) said, on an interest-free loan, everybody can realise what a great deal that is.

Alan Howarth: I am greatly looking forward to my hon. Friend's speech.

Variable fees are fairer to students than flat-rate fees. This infamous marketisation will mean, within the strict limit that the Government are imposing, a dynamic of accountability that will help to ensure the responsiveness of university departments to their students. It would plainly be unfair if the Department for Education and Skills, like so many "Gosplanners", were to impose a single tariff for every university course whatever its academic level, quality, cost, popularity and value in the marketplace. I welcome the new powers for the Welsh Assembly, but I urge my Assembly Member colleagues to reconsider their position on variable fees.

I am pleased that my right hon. Friend intends to move towards abolishing the means-testing of student loans. That, too, will be fair to students because it will confer on them financial independence from their

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parents and therefore treat them as young adults, like their peers who left school and went more or less straight into paid employment.

The policy is fair to taxpayers as well as students. Everyone gains from excellent universities, which are the trustees of our civilisation and inherit, transmit and develop our culture. They ensure that we continue to have a worthwhile life of the mind. Whitehall, in its obsessive materialism and instrumentalism, often ignores that. Whitehall validly recognises, however, that, without more university education, we will be less prosperous. Universities are therefore a public good and the Government are right to plan to increase expenditure on higher education and envisage that five sixths of funding for universities should derive from general taxation. The income from top-up fees will be only one sixteenth of the amount that the taxpayer will provide. That contrast has not been sufficiently noted.

Equally, it is right that taxpayers should not be required to pay for all the increase in funding for universities. Graduates enjoy a large personal benefit culturally and materially from their higher education. Eighty-two per cent. of taxpayers have not been to university. I cannot ask my constituents in disadvantaged wards of Newport, East to foot the bill for all the private and personal gain of university students.

Mr. Rendel: Will the right hon. Gentleman give way?

Alan Howarth: No. Any extra revenue from taxation available for education should go towards improving education from infancy onwards. Precisely because we want more people from disadvantaged backgrounds to go to university, our priority for public expenditure must be pre-university education so that we raise aspirations.

My right hon. Friend's policies are fair, too, to the universities. The Government are providing significant financial relief. Top-up fees may bring in £1 billion; a £3,000 fee is a 30 per cent. increase in funding per student; and £1 billion represents 10 per cent. of planned public expenditure on the universities—a significant proportional increase.

The financial plight of the universities as it is, even after the Government's important improvements in funding since 1997, remains dire. Libraries and laboratories are miserably and stupidly underfunded, buildings are dilapidating, staff-student ratios have drastically deteriorated, the findings of the latest research assessment exercise were not honoured and, most unjustly and foolishly of all, academic salaries have become a pittance.

The extra £1 billion from top-up fees comes, of course, on top of the Government's commitment to increase public spending on higher education by 6 per cent. a year in real terms over the next three years, rising to £10 billion in 2005–06. Although that increase falls short of the £10 billion over three years for which Universities UK has—reasonably enough—bid, it will make a big difference. And it is only fair. Universities trebled student numbers in 20 years while maintaining standards in teaching; in 20 years, too, funding per student fell by 40 per cent.; research ratings improved while funding failed to keep pace; academic salaries all

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but stood still while average earnings in the United Kingdom rose by almost half. No group of workers has increased its productivity more or been so poorly rewarded. Against that record, some of my right hon. Friends should be wary of castigating the universities for poor management.

Top-up fees also have the virtue that they bring a small enhancement of independence to universities. My right hon. Friend the Secretary of State should aim further to increase their independence. The White Paper spoke of the desirability of new endowments. While the Conservatives can dream their dreams, the Government should at least lay the foundation for the long-term creation of endowments. We cannot revert to the vision of that brief moment in the history of the universities—the 25 years between the Robbins report of 1963 and the Education Reform Act 1988—of a fully state-funded system, underwriting students to live and study away from home. We know, too, however, that even as the state has withdrawn from that commitment, it has multiplied its intrusions into the affairs of universities, with a change to the legal status of tenure, the Secretary of State's ever more detailed and prescriptive letters of guidance to the Further Education Funding Council and bureaucratic Pelion piled on Ossa.

Now the Bill creates an Office for Fair Access. Its purpose is unexceptionable; the state has legitimate claims to make, but I find the notion of a regulator for universities disquieting. I hope that my right hon. Friend ensures that OFFA operates with the lightest touch and, that as the Government increase the financial independence of universities, they will become less dirigiste, trust the universities more and allow them scope as free centres of knowledge, thought and teaching.

3.39 pm

Mr. Michael Jack (Fylde) (Con): I find it somewhat odd to speak in a debate in which the Government of the day include two former presidents of the National Union of Students who, when they stood on those conference platforms and made their speeches defending the interests of students, would not have dared for one moment to advance proposals such as those that have found their way into this Bill. It seems in a way that they have sold out for a mess of pottage, which I find deeply distasteful and disappointing.

In their White Paper "The Future of Higher Education", the Government rightly say

I agree with those two sentences.

Mr. Allen: On a point of order, Mr. Deputy Speaker. Is it not a convention that when a Member names or implies the name of another, the Member in question is allowed to respond to an accusation made in that way?

Mr. Deputy Speaker (Sir Alan Haselhurst): I am grateful to the hon. Gentleman for speaking on the basis of his long experience of procedural matters, but I have not as yet observed a breach of the convention to which

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he refers. The right hon. Member for Fylde (Mr. Jack) was engaged in a quotation. The convention is certainly correct, but it is up to him whether to observe it in due course.

Mr. Jack: I am grateful to you, Mr. Deputy Speaker.

In answer to a parliamentary question that I asked about the rate of return to the United Kingdom in respect of investment in higher education, the Minister for Children, the right hon. Member for Barking (Margaret Hodge) said that the social rate of return on higher education for men and women entering at 18 was between 9 and 11 per cent. That is a superb rate of return.

The White Paper points out that the more that is put in, the more the nation gains. That is why investing in its brightest and best is the right thing for the nation to do, and why it is wrong to do as the Bill does and put barriers in the way of access to higher education for talented young people.

Mrs. Lorna Fitzsimons (Rochdale) (Lab): After being named, I had given up hope.

As one of, in fact, six former presidents of the NUS present in the Chamber, all of whom support the Government's proposals, I can safely say that I am on record as supporting a graduate tax when I was president.

Mr. Jack: The two former presidents to whom I was referring are the Foreign Secretary and the Secretary of State for Education and Skills, who, unlike the hon. Lady, were of my vintage.

Let me say a little more about the rate of return to the nation. The House of Commons Library has calculated for me that graduates who, by definition, are earning more are paying more in taxes. There is already a tax differential of some £2000 a year between what a graduate pays in tax and what a non-graduate pays. On that basis, the nation is earning a very good rate of return on its investment in graduates.

I believe that, as a point of principle, it is right for the nation to invest in its brightest and best for all our good. The young lady who tackled the Prime Minister on "Newsnight" asked whether the dustman would not be glad that she, a doctor-to-be, had used her skills and talents to provide the cure that he needed without being deterred from entering the profession—like many graduates who wish to become medical students—by talk of £60,000 of debt.

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