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Mr. David Rendel (Newbury) (LD): It is nice to follow my hon. Friend the Member for Southwark, North and Bermondsey (Simon Hughes). It is the first time that I have done that, and I am pleased to have that opportunity and to welcome the Minister again to his new position. I had a chance to do that yesterday in Committee and I am glad to do so today on the Floor of the House. I look forward to further debates in the next few weeks and months.

I start by making one point about Conservative policy that has not yet been raised. It is an interesting issue, and I hope that Conservative Members can answer my point. The Conservative party states in its paper that under its scheme the average debt with which graduates end their university careers will be lower by £9,000 than under the current Labour scheme. I take the difference to be caused by the fact that, under the Conservative scheme, students will not have to take out a loan to pay three times £3,000 of tuition fees, which they must do under the Government's top-up fee scheme. That is the only logic that I can perceive behind claiming that the debt would be £9,000 lower. If that is the only difference, Conservative Members appear to be assuming that the amount of the loan that is taken out for normal living costs will be precisely the same under both schemes—
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some £10,500 on average at the end of a normal undergraduate career. That means that the Conservatives have failed to increase the figure by the extra interest that they would charge before the student begins to pay off the loan in the April of the year after graduation. That implies a subsidy.

Chris Grayling: I am delighted to say that the models that we put together and published last week include interest on the debt that accrues at university under both the Government scheme and our own.

Mr. Rendel: I am delighted to hear that, but I am a little surprised, because the difference between the figures given is only £200. That implies that the amount that the Conservatives have accepted as the extra interest on the debt in the period before it starts to be paid off is only £200. Given that the real rate of interest that the scheme implies is some 4 per cent., and that the undergraduate is expected to borrow approximately £3,500 a year, only £200 seems a small amount of interest. I cannot get the sums to add up. The figure should be closer to £1,500. Some questions remain.

Another aspect of the Conservative scheme is that it raises the maximum amount that can be borrowed by students. Conservative Members must therefore assume that at least some students will take out more than they are allowed under the Labour scheme. Surely that implies that the average loan will be greater, and therefore a greater average amount must be repaid. There are therefore two fundamental concerns.

Mr. Collins: I would like to make it clear that the extra amount that students could borrow would not displace money that they were borrowing at 3 per cent. interest. It would displace money that they are presently borrowing at credit card rates, which can be anything up to 18 or 20 per cent.

Mr. Rendel: I understand that point. Nevertheless, the amount that the average graduate could borrow would be higher under the Conservatives' scheme, and would therefore take longer to pay off.

I would like to turn briefly to some of the points that have been raised during the debate. When we talk about the extra money to be raised through income tax on earnings above £100,000, we have made it clear again and again that that money would pay for three things, and three things only: the higher education changes that we intend to make; free personal care for the elderly; and some help for local authorities to keep down their council tax bills. Those are the only things that will be paid for out of that money.

Several hon. Members have mentioned the difference between the United States and elsewhere, and how US universities have been able to encourage a lot more private endowment. My hon. Friend the Member for Harrogate and Knaresborough (Mr. Willis) made the important point that public spending on higher education in the US represents a higher proportion of gross domestic product than it does here: roughly 0.9 per cent., compared with 0.7 per cent., according to figures produced by the Organisation for Economic Co-operation and Development. That makes it clear that it is the public commitment to higher education—the fact
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that the public authorities demonstrably believe in the importance and value of higher education—that encourages the extra endowment from the private sector. To suggest, therefore, that endowment from the private sector could take the place of public funding would be fatal, as it would almost certainly lead to a reduction in the endowment coming in, rather than an increase.

I made a point in an intervention on the hon. Member for Westmorland and Lonsdale (Mr. Collins) about the bureaucracy involved in his national scholarship scheme. He simply did not answer my question, so I shall raise the matter again. If the Conservatives introduced a national scholarship scheme, someone would have to administer it, and the amount of bureaucracy would be far worse if it had to do be administered on a student-by-student basis. Each student who gained a place at university would have to ask the university exactly how much money was involved, then apply to someone—it is not clear who—to ensure that they got that money to give to the university. It would be a hugely bureaucratic system, and I suggest that it would cost an awful lot more than the current one.

The hon. Member for Westmorland and Lonsdale also seems to have a conflict between two ideas. One is that it would be entirely up to the universities to give places to whomever they wanted, and that they would then be able to get scholarships to pay for those places; and the other is that a minimum proportion of those scholarships would be allocated to certain subjects. Quite how that would be administered, alongside the universities having complete freedom to give places to whomever they wanted, in whatever subjects, I fail to understand.

A fundamental point about the Conservatives' policy is illustrated by the fact that the hon. Gentleman failed to answer the criticism made by the Minister and my hon. Friend the Member for Harrogate and Knaresborough that the Tories' scheme would inevitably involve money being taken from the poor and given to the rich. That would happen because the poorer graduates—those in less well-paid jobs—would take much longer to pay off their debts, so the bulk of the money that would replace the current fees would come from them.

Mr. Collins: Will the hon. Gentleman confirm that under his proposals there would still be loans that had to be repaid at the end of they day? Under his scheme, someone who went into a well-paid job could pay off their loan faster than someone who went into a less well-paid job.

Mr. Rendel: Yes, but since the increase is only to be at the rate of inflation, there would be no real effect there. That is clearly an important difference.

There have been various claims that the Tories were going to pay the capital amounts demanded by universities, and that we were not. Because of the possible early introduction of our higher rate of income tax, we would be providing a lot more money to the universities than the current Labour scheme, and the Conservatives are quite wrong to pretend that that is not the case.
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The most fundamental criticism to be made about the Government and the Conservatives involves their lack of vision about higher education in general. Ministers come up with only one answer to the question, "What is higher education for?" They say that it is there to serve the needs of the economy by creating a skilled work force. They believe that the kinds of study that are not deemed economically useful and fail to meet a consumer demand are not worthy of support. We agree that higher education is vital for the economy, but we do not believe that knowledge is valuable for that reason alone: it is of intrinsic worth both to the individual and to society as a whole. We regret that Labour and the Conservatives are now uniting around the position that the value of studies is determined by the number of student customers that a course can attract, or by some centrally determined test of economic usefulness.

Let me give one example of how the position now taken by the Government and by the Conservatives can be spectacularly short-sighted. How many people were arguing before 11 September 2001 that there was an urgent and pressing need to train more people who can understand and converse with the Muslim world? A recent report by the British Society for Middle Eastern Studies argued that we are not training enough people with knowledge of the middle east and competence in Arabic. Clive Holes, professor of the study of the contemporary Arabic world at the university of Oxford, argues that we are seeing

That is the logic of the market as envisaged by the Secretary of State and the Conservatives.

There is now a significant divide in politics on the future of higher education. The choice is between those who want to tax learning—whether through fees or interest rate charges, which applies to both the other main parties—and those who believe that it is the duty of public policy to ensure that every individual is able to expand the humanist wall that we need in our community. The Conservatives are advocating a policy that unashamedly redistributes wealth from the poor to the rich—socialism for the wealthy—and the Government, too, have promoted a policy that disadvantages the less affluent. Their desperate war of concession and reassurance during the Higher Education Bill debates, promising grants and bursaries all over the place, was a tacit admission that that is the case. If tuition fees and top-up fees are so benign in their consequence, why did Ministers decide that all those sticking plasters were necessary?

The Liberal Democrats therefore have nothing of which to be jealous in the other two parties' policies. Our position is principled and consistent with our party's values and history. It is also popular with students, university staff and parents, which cannot be said of our opponents' policies. One of the most striking comments in recent days was that of the National Union of Students president Kat Fletcher, who said:

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A policy that is principled and popular and will create a higher education system fit for the 21st century is a policy that we will be proud to take to the country.

Let there be no doubt: this will be one of the deciding factors of the general election. Both Labour and Conservative will be standing on platforms that make those who go to university pay for the costs of the education they receive. We have a different answer. Because society as a whole benefits from the highest levels of education, the cost of that education should be met from taxation, and in particular, we would replace fee income with taxation of earnings above £100,000. As a result of the chasm that differentiates our policy from the policies of both the other two parties, we are looking forward to the next election with relish.

3.53 pm

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