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Mr. Collins: We are making progress. Only a few minutes ago, the hon. Gentleman described as fanciful the Thomas report recommendation urging that higher education should move towards endowment income of £600 million a year. Now he makes a strong case in favour of that, and I agree. Universities already have an income stream from private sources, and I think his intervention implied that that should be increased. That is very much part of our proposals.

We also believe that both Labour and Lib Dem plans sadly fail to address the grave need faced by our universities not only to boost day-to-day income—all three parties have proposals for that—but to deal with the serious capital repairs backlog and, especially for our best universities, to begin to match the huge endowment funds available to their competitors overseas. The Conservative vision avoids those problems and rises to the challenges.

We propose no fees, either up front or after graduation. Teaching for future generations in higher education should be free, as it was for everyone lucky enough to go to university before Labour came to office in 1997. There should be no means-testing for access to student loans, reversing the Government's mean-spirited attempt to pretend that joint parental income of £25,000 or £30,000 a year somehow makes families rich.

A welcome element of the Government's proposals, which we intend to retain, is the introduction of a £1,500 a year student grant for those from the most
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disadvantaged backgrounds. Under our proposals, that grant would be available according to exactly the same terms and for exactly the same number of students as the Government propose. That, together with the abolition of fees, will ensure that access depends on ability to learn, not ability to pay.

In that context, I regret the fact that last week at Prime Minister's Question Time, the Prime Minister asserted that the Government were providing assistance to poorer students worth £2,700 per annum, while the Conservatives proposed to provide only £1,500 per annum, and that that was somehow less. Let us be clear. Both we and the Government propose a maintenance grant of £1,500 a year, but their plans provide for an additional £1,200 to pay fees. We would get rid of fees for everybody, so students would not need £1,200 to help to pay the fees. Nor do we believe in a taxpayer subsidy on interest rates on student loans. We would remove an expensive and unjustifiable item of public expenditure. Doing so would generate more than enough resources to replace every penny of fee income for universities.

Dr. Whitehead: I have listened carefully to what the hon. Gentleman is saying about fees. He appears to believe that fees will continue to be charged up front and remitted, on the basis of the Government's proposal to introduce up-front grants for poorer students of £2,700. In fact, after 2006, up-front fees will no longer exist, so it is not possible to claim that a good proportion of the Government's proposed grant for poorer students will be earmarked for fee remission. It will simply be money in the pocket for university students to assist them with the costs they will encounter, so I hope that the hon. Gentleman will withdraw his suggestion.

Mr. Collins: Unlike many of us who are in the Chamber, the hon. Gentleman did not serve on the Standing Committee that examined the Higher Education Bill. Had he done so, he would have heard the then Minister for Lifelong Learning, Further and Higher Education say again and again and again—as indeed the Secretary of State said again and again and again—that it was all right for the Government to introduce fees of £3,000 a year because there was a £3,000 a year package to deal with the consequences of the fees. The Government said that that would be organised by having a grant of £1,500, which would be retained under our proposals, £1,200 to help students pay off the fees in due course, and £300 of remission or bursaries administered by the higher education institutions. We would retain the £1,500, but we would get rid of the fees, so people would not need the £1,200 provided by the Government that, as Ministers repeatedly state, was intended to help to compensate poorer students for the consequences of introducing fees.

Our other proposals include the outright abolition of OFFA—the university access regulator—and the removal of most of the HEFCE bureaucracy, setting universities free from political correctness and the form-filling culture alike. We will transfer the existing student loan book to the ownership of the higher education sector, giving it a major new asset, a guaranteed and
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independent future income stream and the ability to raise £3 billion in capital in the next five years. Moreover, our plans will provide universities with £500 million a year over 18 years in matching funds for contributions to endowment funds—a massive boost to those who are competing for the best minds with the Ivy league.

Mr. Rendel: The hon. Gentleman says that he would get rid of a lot of bureaucracy by abolishing both OFFA and HEFCE. I understand that he would also introduce—if he gets the chance to do so—a national scholarship scheme, under which presumably every student would need to administer, either for themselves or by another mechanism, the money going from them to the university to pay for their fees. A vast extra bureaucracy would be needed to deal with that per student, rather than per course, as is done at present.

Mr. Collins: The hon. Gentleman and I genuinely disagree about that. Our proposal is indeed to abolish OFFA outright and to get rid of the bulk of HEFCE. We do not propose to abolish HEFCE in its entirety. I must tell him that a number of vice-chancellors support us—not least a gentleman to whom I wanted to refer earlier who has written a very positive piece in The Guardian this morning: Dr. Peter Knight, the vice-chancellor of the university of Central England. In a piece that I slightly blush to quote at length because it is so very friendly towards us, he says that he welcomes our proposals to cut bureaucracy. As a vice-chancellor, he does not believe that those proposals will be subject to the disagreements and difficulties that the hon. Gentleman has identified.

Our plans will involve much less debt for students, who would, on average, have to pay back £7,000 less than under the Government's proposals. I listened carefully to the Minister when he tried to say that high interest rates are worse than low interest rates, as people must pay more. He seemed to leave out a major element in the calculation: under our proposals, students would not have to pay fees, so their debts would be £9,000—about half what they are now—and the vast majority would have a substantially better package than under the Government's proposals, given the amount that they would have to repay and the time that it would take them to repay it.

We, and we alone, have come up with proposals to tackle the major capital and endowment needs of universities. The Conservative party is offering substantially more to universities than either the Labour party or the Liberal Democrats, who are essentially offering, as we do, an annual increase in income, but unlike us, are not offering additional capital or a major new asset for the higher education sector. We, and we alone, believe that universities should be free to set their own admissions criteria, to pick their own students and to choose their own spending priorities.

No wonder that our plans have been welcomed by Professor Michael Sterling of the Russell group. There was a time, not many months ago, when Labour Members used to pop up and ask—I confess that it was an awkward question—whether we could name a single vice-chancellor who supports the Conservative approach to higher education. I can certainly name at least one, and there are rather more than that these days.
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I do not claim that it is yet all of them, but a number of them are much more positive about our proposals than ever before.

I commend to the House the excellent article written by Dr. Peter Knight in today's edition of the Education Guardian. As I say, it would be embarrassing to quote all of it because I regard none of it as other than deeply flattering, but his bottom line is that the Conservatives

The choice is clear: massive debt under Labour; tax rises under the Liberal Democrats; or the best deal possible for students, universities and taxpayers under the Conservatives. Labour breaks its promises. Liberal Democrats know that they will never have to keep their promises. The Conservatives will deliver on our promises.

2.34 pm

Mr. Barry Sheerman (Huddersfield) (Lab/Co-op): I always have an interesting role in such debates: as Chairman of the Select Committee on Education and Skills, I try to refrain from getting too much into the party slagging-off match, which we have had previously. This has been quite a healthy and robust debate, and it has been conducted in much better temper than some of the debates that I have been privy to over the past three years. I want to look—reasonably objectively, I hope—at some of the issues that have been rather missed out today.

I warmly welcome my hon. Friend the Minister for Lifelong Learning, Further and Higher Education to his new post. We on the Select Committee are looking forward to an early appearance by him before the Select Committee. As he knows, he will take over his predecessor's engagements, and within a month, he will be coming to the Wilson Room to meet us.

I find days like this a little embarrassing: you were once a student of mine, Madam Deputy Speaker, and the Minister shared a room with me in the House for many years. I know as many secrets about him as he does about me, so if I scrutinise him too hard on the Select Committee, I may regret it, but I genuinely welcome him to the post. He is very knowledgeable about education and higher education. I am sure that, as he becomes as immersed in higher education as he was in the railways—can people be immersed in the railways?—he will become a formidable repository of knowledge about Government policy.

I wish to push my hon. Friend on one issue. Some of us strongly supported the Government's view on flexible fees. At the time of the debate, he will remember that the Secretary of State for Education and Skills and many others who spoke for the Government urged support for the policy on the basis that OFFA would have very strong powers to ensure something that the Select Committee recommended in its report on access to higher education more than two and a half years ago. I refer to greater powers for HEFCE to set benchmarks for fair access, based on ability, to all the institutions, using the long-tried method of setting benchmarks and finding out whether colleges and universities would meet them. If they did not meet them, or did not show that they had plans to do so, they would not able to charge increased fees.
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During the press conference held by OFFA yesterday, apparently, it was said almost as an aside that there would be no relationship between OFFA and universities and colleges having to meet any targets at all. I should be happy if the Minister would clear that up either in his winding-up speech or by intervening on my speech now. Is there such a relationship any longer; or, in effect, has OFFA been neutralised in that respect?

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