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Dr. Howells: OFFA has certainly not been neutralised. It is a very powerful body. Indeed, the hon. Member for Epsom and Ewell (Chris Grayling) and I discussed the issue yesterday in Committee when debating the regulations for OFFA. He complained to me in vigorous terms that OFFA was far too swingeing and powerful and had too many weapons in its arsenal. I am sure that my hon. Friend will take from that my reassurance that, where transgressions take place if universities charge higher fees than they may have set out in their prospectuses and where that breaks the access agreement and plan, OFFA will be able to act very decisively.

Mr. Sheerman: I thank my hon. Friend very much. I hope that his comments have put the issue to rest. I will look at his words with some interest in the cold light of day tomorrow.

I wish to move on by saying that most of the Schwartz recommendations that we read this morning are to be welcomed. Indeed, many of them paraphrase the report on access that the Select Committee produced two and a half years ago. Certainly, we strongly recommended post-qualification access. We could not see the sense of admitting people to university on the basis of predicted results.

That leads not only to confusion but to injustice in terms of who gets into which institutions. We believe that such a change, which has been widely welcomed by vice-chancellors and many others in the sectors, should be speedily addressed. Many recommendations have been made and they include one from an influential Committee chaired by one of my predecessors, Chris Price. It proposed just such a change.

Mr. Willis: Does the hon. Gentleman agree that the Secretary of State's support for the Schwartz proposals for making applications after the results are known would bring forward in the school year the A2 examinations and the vocational level 3 examinations? The time that staff have to teach students post-16 is getting narrower, and the universities and the examination system, rather than the teaching and learning profession, must bend to that.

Mr. Sheerman: The hon. Gentleman is absolutely right. There will be teething problems and things can be done better or worse. Sensitivity and give and take between universities and schools and colleges are important in getting things right. However, I think that he and I share a view about the principles involved in assessing students.

In the evidence that we took and in our trips to elite institutions on the west and east coasts of the United States, the Committee found that universities there were able to judge a candidate in the round using four or five
 
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different criteria. We felt that using just the straight A-level results was too blunt an instrument to judge a student accurately. We believe that a SAT score, college examinations, the submission of a piece of work and a teacher's report add up to four or five different factors that could be weighed before a student was accepted into a college. It is interesting that the one thing that bound the six elite universities that we visited was the fact that they did not believe in interviews. I remember—I am sure that my hon. Friend the Member for Bristol, West (Valerie Davey) does too—that one president told us, "If we wanted more people like us, we'd interview."

By and large, I welcome the Schwartz proposals. They move in the right direction, and it is important that we get things right. Select Committees have consistently agreed on an all-party basis that ability should determine who gets into any university. There should be no equivocation about that, and there should be no special selection for minority groups if that overrides ability. Ability must be the criteria, but a perceptive way of judging ability must be the absolute priority.

This is a debate about higher education and, in a sense, the debate about flexible fees and top-up fees—whatever one wants to call them—has obscured some of the most important issues that came out of the higher education White Paper and some of the issues that the Government have still not answered. I am sorry to address this point to the Minister on his first day at the Dispatch Box in his new job, but when we consider what gave rise to the debate, we realise that it was not just Dearing. We know that the Dearing report made a great contribution to the debate, but the Universities UK analysis of what was needed to equip universities for a new generation of competition against many global competitors also represented a significant milestone.

We should also maintain the secret of higher education success in this country. I say to the Minister and to those on the Opposition Front Benches that the key to our success in higher education, when compared with other university systems in mainland Europe, has been our emphasis on excellence not only in research but in maintaining the quality of undergraduate education. Indeed, the Select Committee has consistently emphasised—I believe this passionately—the need for a relationship between teaching and research in the same institution. That relationship has been long forgotten and abandoned in most of our neighbours in Europe, and they have certainly suffered from that. Because of that, many people in the other 24 member states of the European Union would come here for an undergraduate education as well as a postgraduate education if they had the choice, the mobility and the language skills.

Mr. Collins: Although we have obviously had our differences in the course of the debate, I thoroughly endorse what the hon. Gentleman is saying at the moment. I hope that it will be possible for us to find a cross-party basis on which to build on what he has said about the commitment to excellence and the
 
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relationship between teaching and research. They are fundamental to the United Kingdom's strength now and in the future. He is quite right about that.

Mr. Sheerman: I thank the hon. Gentleman for that. He may not like what I shall say in a moment, but I will try to make my remarks not too party political. The Universities UK review said that there was a £8.79 billion resource gap for higher education. Hon. Members will realise that the Select Committee had a close look at the White Paper and I wish that people would read and re-read the Select Committee reports. We could have saved a lot of money on the Schwartz inquiry if they had been read thoroughly. As I said a couple of weeks ago about the exam results, if people had considered our recommendations about examinations and A-levels, they might have saved themselves some trouble.

The Select Committee put its finger on the problem in our evaluation of the White Paper. We said yes to flexible fees and agreed that Dearing was right. Higher education needs diverse sources of income. That is healthier for universities. I am a governor of the London School of Economics and we are quite good at finding other sources of income because we are a global brand. However, that is much more difficult for Huddersfield university or even the university of Birmingham. There is no doubt that an institution is more able to find sources of income if it has international alumni with a tradition of giving. The LSE has been lucky and assiduous in that regard. Some institutions are better than others at finding funds.

Money from research institutes, foundations and alumni is all very good. Given the tradition of our country, I expect expectations to ratchet up. The hon. Member for Harrogate and Knaresborough (Mr. Willis) is probably right. Expectations should not be set too high, because the culture of giving is very different and all the work that I have done suggests that it takes a long time to turn that culture round. It is beginning to change, but not that quickly.

We want diverse sources of funding, but more than that we need secure funding for research. The Select Committee said that the research part of the White Paper was more important than the discussion about, and the proposals for, undergraduates paying something towards their education. That issue and the funding gap have not gone away. The work that I have done suggests that, even on the most optimistic estimates, flexible fees and top-up fees will bring in £1.5 billion. That is a ballpark figure. Let us be generous and say that it is £1.79 billion, but that still leaves a £7 billion gap.

Chris Grayling: The hon. Gentleman will surely remember that the Universities UK analysis of the UK funding gap was broadly divided into two parts: £3 billion worth of capital, which is addressed by our policy, and £5 billion that was revenue grant over three years and not over one.

Mr. Sheerman: I am not talking about Conservative party proposals. We will evaluate them as time goes on. My remarks are addressed at all three parties—and the governing party, in particular. There is still a large gap in higher education resources and budgets.
 
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That is of great concern to vice-chancellors owing to its impact on capital and the deteriorating state of some of our universities. I visit schools all the time, and they are looking pretty good these days because of investment in new buildings and modernisations, but I have visited universities with severely out of date equipment and buildings, which worries me greatly. I am directing my comments mainly at the Minister at the moment because we seem to be living in an era in which we like to avoid such difficult questions. Yes, it seems to be all right that we will get more money from flexible fees, but there is cap on that for a significant time, so such large sums of money will not come only from student contributions.

I think that my hon. Friend the Member for Bristol, West will agree that there has been tremendous investment in pre-school and school education across the piece and an increase in educational maintenance allowances, but money becomes thinner as one moves up the age range because spending on higher education is significantly less, although we welcome the fact that it has grown. We want to meet the challenge of staying at the top on research and our research-rich universities—that is the proper euphemism that we use these days if we do not want to call them the best universities—but big science is enormously expensive.

The Committee also criticised the White Paper for the way in which research funding was being focused on fewer universities. All the evidence that we took was pretty unanimous in suggesting that taking away research money from research departments with a rating of 3 or 4 continues to be a disaster and that we will reap the dividends of a lack of investment in such institutions as time goes on. Sir Richard Sykes, the provost of Imperial college, said that he wanted research investment to be concentrated on a handful of universities. We asked him if he meant a handful to which he said, "Yes, five." That would mean that most research universities were concentrated in London and the south-east and that there would not be even one premier research university in each of our regions. As a Welsh Member, I am sure that the Minister could not accept that. The Committee's report suggested that we must have at least one premier research university in each of the country's regions.

The Committee also commented on evidence taken regarding a lack of investment in lower-ranking universities. The pattern of research success shows that many innovations come from aspirant universities that are struggling to move from 3 ratings to 4, 5 and beyond. The Government have not tackled the resource gap and the other parties have not addressed it significantly. Our attention has been taken off the matter because of our debate on higher education top-up and flexible fees. During that debate, vice-chancellors and others in the sector said, "Whatever you think about this debate, isn't it wonderful to have higher education on the front pages of every newspaper—even the tabloids?" Yes, it was, but we need a genuine debate about fundamentals, and we were partly taken off track by the obsession with student contributions.

Let us get back to considering the overall role of universities in our society and the fact that universities are the largest employers in most cities and towns where they are found. The fate of communities rests more on their local universities than anything else, and that is
 
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true of York, Huddersfield, Oxford, Cambridge and London, with its 34 institutions. Imagine the impact on research, education and the way in which universities contribute to our economy if they were taken out. That consideration brings us back to a more holistic approach to what universities mean for our society.

It is uncomfortable for the Government and all of us to consider investment for universities merely in terms of how much money is going in, because we must also consider more and more the quality of what is coming out. I have been one of the greatest opponents of talk about Mickey-Mouse degrees and easy courses. I have never found such a degree because they do not exist. Students are not daft and will not join a bad course in a British university that would not lead to employment or something worthwhile.

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