Examination of Witness (Questions 40-59)
14 JANUARY 2004
RT HON
CHARLES CLARKE
MP
Q40 Jonathan Shaw: Well, there we are,
we live in that world, Chairman. You have said in the past that
you accept the principle. You have said in the past that there
are financial and practical issues and you are examining them.
Can you shed some light on that? What have you examined?
Mr Clarke: Essentially, the logic
of a pound is a pound is a pound, whether you call it fee remission
or HE grant, is a powerful logic and that is why we are looking
at the case that you describe, precisely to bring together fee
remission and the HE grant so that a student can effectively choose
whether they spend their pound on reducing the fee costs or on
maintenance or whatever they want to do. That is a powerful argument,
in my opinion. There are some quite difficult issues to address,
however, as you go down that course. The first is the public expenditure
implications because if you move in that area, there are some
public expenditure implications in the costings that we operate
and what we do partly for the reason Valerie Davey raised about
the question of how you fund fee remission in relation to those
situations or not. There are some complicated aspects about how
you treat EU students in this approach which means there are some
different issues that arise, and there are some issues about whether,
if you were to keep the overall public expenditure costs at the
same level, the only way to do that would effectively be to reduce
the student loan for students who took the money in those circumstances,
which is effectively what happens in Scotland. Now, there are
downsides to all of these options which is why I was qualified
in what I said to the House, though I think the principle is right.
Now, just on process, we are intending to publish right at the
beginning of next week a discussion paper addressing these precise
points, giving quantifications and details so that colleagues,
including the Committee, Mr Sheerman, if you wish to do so, can
look at our estimates as dealing with these things in a direct
way, and then to have a discussion about those things to see how
we deal with it. It is not easy and I do not want to imply that
it is easy, although I do think that the principle is the right
direction to go, but we have been conscious all the time that
if we put forward a package in the round which essentially cost
more and essentially we just threw money at the problem, we would
not create the solution that we need to do right across the range,
so I have to be conscious of the public expenditure considerations
of this change. I hope that when I publish the paper, as I say,
at the beginning of next week, which I will obviously circulate
to the Committee on Monday or Tuesday of next week, that we will
be able to have a more substantial discussion on how we might
proceed in that way.
Q41 Jonathan Shaw: What could that discussion
lead to? Could it lead to what I am talking about, a change in
the Bill during committee stage?
Mr Clarke: Yes, it could. Well,
it could lead to change at the time the system was introduced
in 2006, provided that the Bill was carried at Second Reading,
as I said to one or two of my colleagues. In the event that we
did decide to go down this course, we do not require primary legislation
to choose this course rather than the other course, I think I
am right in saying, so it would be a question of the form of secondary
legislation that we were dealing with.
Q42 Jonathan Shaw: So what you are saying
is that this matter is not likely to be resolved by Second Reading,
but it could be during the committee stage?
Mr Clarke: In terms of the Government's
approach to it and where we think we could be, yes.
Q43 Jonathan Shaw: So before Royal Assent,
Parliament would have a clear idea that you would roll up that
remission fee and it would all be one grant?
Mr Clarke: I could imagine that,
but I do not want to give a wrong impression, Mr Shaw. It is not
a straightforward question. It is not simply saying that we take
the £1,200, we take the £1,500, slam it together and
that is an easy option—
Q44 Jonathan Shaw: Well, it is.
Mr Clarke:— because there
are implications in public spending terms. I am not at liberty
to say that we will put more public spending into it by this change
that we have got and we, therefore, would need to look exactly
at how we would meet the public spending implications of doing
that, for example, by reducing access to the loan to people who
had taken that option and so on. Now, I am not committing to any
particular course of action relating to that, but I am saying
that the principle is a right one of a pound is a pound is a pound,
but the practical knock-ons are quite serious to address. That
is all I am trying to say.
Q45 Chairman: But, Secretary of State,
people give evidence to this Committee and sometimes hide behind
a kind of fog or cloud of public expenditure implications and
we would like those to be spelled out whether it is from yourself
or from the Treasury.
Mr Clarke: That is the assurance
I can give you, Mr Sheerman, and the Committee, that the purpose
of this paper I am talking about will not just use vague phrases,
but it will say, "This is how we have had to deal with it.
We are going down this course".
Q46 Jonathan Shaw: Just quickly on foundation
degrees, have you had any discussion with universities and vice-chancellors
about the costs? What are they saying to you? What are they going
to fix fees at for foundation courses?
Mr Clarke: I had a discussion
yesterday when, as I said, I was in Liverpool with the Vice-Chancellor
of Liverpool John Moores and Jaguar, with whom they are doing
a project with St Helen's College, and they thought that the foundation
degree for what they are doing, which would also be very valuable
at the end because to work for Jaguar in this area would be important,
they saw figures of the £2,500-type range as being at what
that is fixed at, though I must not speak on his behalf, that
kind of order being the kind of order that might operate. On the
other hand, when you look at some of the types of foundation degree
in other areas, I think vice-chancellors are talking about significantly
lower levels of fee than that which I have described. The reason
why I have been very keen to make the case for variable fees rather
than a fixed-fee regime is, I think, precisely the kind of explicit
discussion between the employer who is sponsoring a foundation
degree and the university which needs to take place; there needs
to be some freedom to decide where to set the fee to deal with
that in the best way.
Q47 Jonathan Shaw: Finally, just something
on the review that you are going to have of the fees, the variable
fees, after three years, what form will that review take and will
it just be OFFA or would you include other bodies? Will you include
the NUS and the AUT?
Mr Clarke: We have taken no decision
on the form of it because we thought it was presumptuous in a
sense to do so because we are some period away from that. It would
work with OFFA, I can say, because we had already required OFFA
in this to review the process, but we do see it as independent,
and that is a point I would want to emphasise more than anything
else. Now, whether it was an individual or a committee, the classic
way, is not something we have taken a view on at this stage. The
role of the Select Committee might be something that might be
of interest to that process as well. We have not taken a view
and I am not going at this stage, which, remember, is a couple
of years at least, more likely four or five years, away from making
a decision, to try and tie the hands in terms of a particular
form of inquiry.
Q48 Jonathan Shaw: But it is a very important
point for many people, how this issue of the variability and all
the thin-end-of-the-wedge arguments that my colleague, Mr Holmes,
put and the concern that many people have. If this commission
was independent and it was made up of all the various component
parts and then reported that to Parliament, do you not think that
that would give some comfort, give some security to those people
who had the concerns, such as Mr Holmes had?
Mr Clarke: I do and of the list
that you just gave there, Mr Shaw, I can commit to the independence,
I can commit to the reporting to Parliament, I can commit to the
participation in the process of the various interests concerned,
but what I am not committing to is a precise committee structure
of a particular form at this stage since I do not want to prejudge
what is really quite a considerable period away exactly how it
would be done. The essence of what you are saying I completely
agree with, that it needs to be independent, it needs to report
to Parliament, it needs to be comprehensive based on proper research
and it needs to work with all the various interests and stakeholders.
I agree with all of that.
Q49 Jonathan Shaw: And would there be
a vote?
Mr Clarke: Within that committee?
Q50 Jonathan Shaw: No.
Mr Clarke: Within Parliament?
Q51 Jonathan Shaw: Yes.
Mr Clarke: It would depend on
the proposition, but there would be the right to a vote, so what
I can guarantee is if there was a recommendation that we abolish
the whole system, there would need to be a vote in Parliament
on it. If there was a recommendation that the system was working
reasonably well and with certain changes that the committee might
recommend, whatever they were, that the cap should be lifted in
any form above inflation, there would be a full vote of every
Member of Parliament.
Q52 Jonathan Shaw: So no lifting of the
cap without a vote in the House of Commons?
Mr Clarke: That is correct.
Q53 Helen Jones: Can we go back to student
support, Secretary of State. In your statement to the House you
said that in your estimation about 30% of students would receive
a full grant and 10% some form of partial grant. Can you clarify
for us how those percentages are arrived at? Are they based on
the current income profile of students in higher education or
are they based on the income profile you would expect in the future
if OFFA succeeds in its work?
Mr Clarke: They are based on the
family income, the income of the family from which the student
comes, so in that sense they are not based on the income of the
student at all, but they are based on the income of the family
from which the student comes. The 30% figure is relatively large
because it combines students from families whose family income
is less than £15,000 with students who are independent students,
ie, mostly mature students going into higher education where we
also feel, for reasons which many colleagues have argued with
me, that it is very important that we encourage independent students
and that is simply, I may say, a continuation of the current practice.
Q54 Helen Jones: So to make sure I have
got it clear, that is based on the family income profile of students
at university currently?
Mr Clarke: Yes.
Q55 Helen Jones: So presumably if the
Government succeeds in what it wishes to do and what we would
all wish it to do, which is increasing the number of students
from low-income families, the number of students receiving grants
and, hence, the cost would go up. Have you made any estimate of
the cost of funding grants and fee remission if the Government
succeeds in what it wishes to do?
Mr Clarke: Well, again we are
in the land of speculation as to what we could achieve, but the
point that you are making is entirely correct, that we would hope
that that figure would increase in the way that you have implied
and that there would, therefore, be a cost implication, but it
depends entirely on your assumptions. Now, we have done some modelling
on this and perhaps I had best say to you, Mr Sheerman, that if
you would like me to, I will drop you a letter on the modelling
around that which has been done.[2]
Q56 Helen Jones: I think that would be
very interesting because it perhaps links up with another point
I want to make. Will the family income level at which a student
becomes eligible for a grant be indexed either in accordance with
inflation or will it be linked to the rise in fees?
Mr Clarke: It will not be linked
to the rise in fees unless there were a recommendation out of
this independent commission we have been talking about that there
needs to be the relationship. In terms of indexation of the actual
level of family income, I think I am right in saying that it is
not our intention to index it at the moment, although again that
is something that we could certainly consider. It is not a significant
aspect of it and it would not be impossible to do.
Q57 Helen Jones: Can I take you on to
bursaries then because in the package of student support that
you announced, you announced that you expected a minimum bursary
of at least £300 for the poorest students, but my understanding
is that the Government believes that rather than have a central
scheme for bursaries, each university will be allowed to set up
its own scheme. I, therefore, wondered if you could tell us whether
universities will be obliged to use the same income levels that
the Government use for grants and fee remissions for their bursary
schemes or will they be able to set bursary schemes that only
come into play at a lower level of family income?
Mr Clarke: There are two points.
The short answer is no, they will not be able to have a different
system and we are saying that every university scheme should be
based on the same definitions of income and the same scales that
are there, but I should be candid and say that we are currently
discussing this with UUK, Universities UK, in order to ensure
that there is agreement across universities on this point. Now,
I do believe there is such agreement and I do believe we will
be there, so I should slightly qualify my answer in that way,
but if the implication of your question is that you do not want
very complicated and diverse systems of bursary operating where
different universities have got different means-testing regimes,
I can say that the Government agrees. I can also say that Universities
UK also agrees with that and we are working together just to make
it go in a way which will be simple and comprehensible to potential
students.
Q58 Helen Jones: You did say in your
evidence that a lot of the problems that students face are about
perceptions and understanding. Do you accept that if we ended
up with a very complicated scheme with different sorts of bursaries
at different universities, that would increase the problems for
students?
Mr Clarke: I do accept that and
I think that is a very serious concern. I have discussed that
explicitly with UUK and I believe we can solve that. Perhaps I
could just say that you mentioned the point about a centralised
system and actually our decision to increase the grant from £1,000
to £1,500 has the effect of having a centralised system which
otherwise would not be there. Many of the earlier concerns of
some universities are actually met by the putting up of the grant
from £1,000 to £1,500.
Q59 Helen Jones: Can I ask you then about
another concern which I think a number of us have and that is
the effect on students from families which may still have fairly
modest incomes, but may be just above the threshold for grants.
Have you had discussions with the universities about whether they
will offer some sort of bursary to those students who just miss
out on qualifying for a grant and, if so, have you done any modelling
on the effect that would have on support available for the poorest
students?
Mr Clarke: There are two or three
things to say there. Firstly, we have had informal discussions
and I think I am right in saying, though I am open to correction,
that the scheme announced by Cambridge does in fact do precisely
what you have just said and allows support for students from poorer
families, but who are not at the very poorest end. Secondly, we
have not done substantial modelling on how that might operate
simply because of the variety point that you made earlier on.
Thirdly, I do think it is important to emphasise that a key issue
for this group is perception because in terms of the actual payment
back of any fees that have been incurred, that is only paid by
people who, after they have graduated, earn enough money to be
able to do so, so it will not be a question of that family you
are describing somehow having to find money in order to deal with
the situation. That would be something for the student after they
have graduated to deal with, so, unlike now, no student going
to university will be in a position where they have got to find
money before they even get on to the campus in the form of the
upfront fee or to find money when they are on the campus because
their maintenance alone is not enough and that state of affairs
is significantly different from now, so the position will be what
you pay back afterwards.
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