Higher Education Bill

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Jonathan Shaw (Chatham and Aylesford) (Lab): Does my hon. Friend not agree that the police, schools and hospitals will always come before universities, so the 35 per cent. cut about which we have heard is far more dramatic? To sustain universities into the future, we need to have a sustainable revenue source.

Mr. Mudie: As my hon. Friend the Member for Warwick and Leamington will confirm, I try to be a hard-headed finance fellow when I am allowed to attend the Treasury Committee and am not put on a Standing Committee. I accept the point that my hon. Friend the Member for Chatham and Aylesford (Jonathan Shaw) makes.

This is my starting point with regard to universities. If, in 1997, the universities had said that they were in a crisis, I would have believed them, and even if they had said that in 1999, I would have believed them, because we ran on with the Conservative's budget for two years. However, in the 2002–05 spending review we gave the universities the biggest settlement in their history. It is interesting that Labour Members say that that was not enough, because that was not how we sold the spending review. In our speeches in the Chamber about our approach to universities we did not say that—we talked up our support for universities. The Minister is proud of that £3 billion investment. It was a magnificent start. We are doing this—[Interruption.] Yes, I hear the mutters of ''start'', but we are discussing this Bill, which is considered controversial by half of Parliament. It is controversial in Labour party terms, and controversial because it brings a market into higher education three months before the next spending review.

I understand from attending the Treasury Committee that the next spending review will not be as generous as the last one. However, no one can attack the Chancellor, the Labour Government or the Cabinet for not going in the right direction. We are slowly rebuilding the services.

I will take notice of the mutters, because they are asking exactly what I want to ask the Minister. I asked the question of the Prime Minister at Chequers and the Chancellor of the Exchequer in the Treasury, and I even asked a certain Mr. Balls. The trouble is that I got three different answers, and if one asks the question of the same fellow twice he gives a different answer again. It is lovely that we have such a reasonable, honest and straightforward fellow as the Minister in the Committee until at least 5 o'clock, because we might

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get some straight answers. The answer that we need is to the question: what is the funding gap that we are chasing? We need to know, because no one has told us. Dearing told us in the 1997 report that it was £8 billion to £9 billion, but those figures were not broken down as to infrastructure.

I make the point again that when the Minister responds he must talk about serious money and serious public budgets. If someone were to ask a local authority what its housing stock needs were in budget terms, it would say billions, but it would never get billions. The same would be true for social services, or any other part of the public sector. The Minister is a former trade union official and will have put many such cases for how much his members needed. One can ask, and one never underplays the asking. However, the universities asked for £8 billion and received £3 billion, and they are impertinent enough to be back for another £9 billion. I do not think that the Minister believes that because he is too hard-headed, but we are all in the dark. That was the point made by the hon. Member for Harrogate and Knaresborough.

3.15 pm

I find it deeply offensive and objectionable being lectured to, perhaps even in this Room, by members of the Cabinet about the hard decisions that have to be taken. Some of us were taking hard decisions in the '80s when those same Cabinet members were running with the Trots that made us take hard decisions, and I will name names if they look pensive. When we were fighting Thatcher we took hard decisions, but the first thing we needed when pressed to take a hard decision was the facts on the table.

We are heading down the road whereby students, who metamorphose into graduates—

Kali Mountford (Colne Valley) (Lab): They do.

Mr. Mudie: Yes, they metamorphose like butterflies into graduates, and free debt is not a worry to a graduate but it is to a student.

The start to making a hard decision is knowing what the required decision is. We should barrack the hon. Member for Harrogate and Knaresborough for saying ''I will fill the gap with this.'' We do not know what the gap is. The worry is that we will wonder why we put in a fee increase of £3,000. I think that it is obscene and needs rethinking. Questions must be asked of an increase of 130 per cent. in an inflation age of 2.5 per cent.

I am a hard-headed finance man; I ran Leeds city council. When the Minister stands up and says, ''This is the basis for the decision. This is the gap,'' I want to know to what extent the £3,000 increase fills that gap. Another mystery is that we do not officially know—I asked three people and got the same answer each time—what net income will be raised by the £3,000 increase. If the 130 per cent. increase completely meets the deficit, why is the Minister putting the increase on future students? Would it not be more equitable to share that fresh burden with the Exchequer? I am pragmatic about students making contributions, but if the Government want to put part of the burden on them, we must know on what basis.

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The Dearing report talked about the students' contribution being a quarter of their tuition fees. The former Secretary of State, the right hon. Member for Sheffield, Brightside (Mr. Blunkett), confirmed that that was the accepted formula in 1998. I repeat the question, what is the gap? How much will the increase raise—not in the realms of fantasy, but in net terms? So many concessions have been given and withdrawn, so what is the definitive position? If the increase fills the gap, hard talking must be done. If it does not fill the gap, it fills me with horror. I am filled with horror if this method is applauded as a way to fill the gap and give the universities a sustainable income. I would even go as far as to use the words of my hon. Friend the Member for Warwick and Leamington about what universities do with the money.

Future students must be scared stiff. They knew where they stood with the former Secretary of State: their contribution was a quarter of tuition fees. The present Secretary of State has decided that there is a gap and that students should contribute more, thank you very much. No hard-headed trade union official would accept that sort of woolly argument in any negotiation. Let the Minister tell us the figures; let him reassure us that the six-year pledge made by the former Secretary of State will not be broken in another six years when the cap is reviewed. That is the sub-agenda for all the worries. If there is more money to be found, will the Minister come back saying that the gap is still there and that he needs another £3,000 per student? That is a genuine worry.

Mr. Simon Thomas (Ceredigion) (PC): I wanted to intervene on the hon. Gentleman just as he was making the point that I wanted to make. To expand the argument that he has been making very powerfully, if we accept for the sake of argument that the figure from Universities UK of an £8.8 billion gap is correct, and extrapolate from that the number of students paying the full tuition fee, the result is about £1.4 billion. That leaves a significant £7 billion gap, which has somehow to be met. The taxpayer would meet that at some level. Does he share my concern that that shows that the Bill is more important to some people than just the funding aspect? There must be a principle in the Bill that drives it forward, and that seems to be variability and the market. Does he share that real concern about the Bill?

Mr. Mudie: I am grateful for that contribution, because that is exactly the point that I am trying to make. The Government's intention to get a market into education has distorted other parts of the Bill, and the financial contribution is so outrageous that one questions why they are doing it. The point was well made: if the gap is £8 billion, why crucify youngsters in this way? That gap is not going to be plugged just like that. I am a fair man: if we ask students to make that contribution, why are we not matching it, and giving the universities another £1.5 billion? That would introduce some equity. When the Government turn round and hammer the customer, we are on difficult political ground.

Mr. Plaskitt: I caution my hon. Friend about Dearing's figure of £8 billion, and urge him to consider all the component parts within it, because the

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important point about fee income for universities is that it will support their teaching budgets. Has he had the chance to talk to his local universities about how they will use the revenue? I have spoken to half a dozen in my region, and they tell me that their teaching budget will increase by between 20 and 30 per cent. per student. I remind my hon. Friend that that is to be set against the 36 per cent. per student under the previous Administration.

Mr. Mudie: If the Minister was, in his former occupation a trade union official, like me—he was probably more senior than me and ran the place; I was just one of the office boys—and had gone to the employer to say, ''Look, put stamps up 130 per cent.—my members will be very appreciative because it will give them more money,'' that would not have been a serious argument: ho, ho, ho. If we put future graduates' fees up by £3,000 and make them, when they are students, face up to such a debt, that would be serious. Why not make them happier and make it £4,000 or £5,000? There must be a starting point—perhaps by putting Dearing on the table. I am totally pragmatic, but the Committee must know whether there is any firm anchor to what the Government think that youngsters should pay. That is all. It should be backed up with information on which we, and the voters—they are going to be paying it back—can decide whether it is sensible.

I have asked a series of questions, so I shall try to make some progress because I have been stared at, perhaps justifiably. If I read my speech, and it is even more entertaining than what I have said so far, we should all be happy. We have got ourselves tied up with this market. You are experienced in this place, Mr. Gale, and this must make you smile, even though it is hidden behind your hand. I have never before been in a Committee, facing Conservatives, where we have been keener on the market than they are. I sometimes have to scratch my head and wonder what on earth has happened to British politics.

We want to bring in the market. I have listened for days now to the argument that there is market. My hon. Friend the Member for Warwick and Leamington has an economic background. I am not sure whether the hon. Member for Westmorland and Lonsdale does, and if he does I apologise. I might accept a definition of the market from my hon. Friend, but what is the market? What are we introducing? Do we have a market? There are differences. I do not think for a second that Oxford is the same as—I will not mention any other institution, because I do not want to start making comparisons. Every hon. Member is different and every institution is different. Institutions have traditions, history, endowments and research money. They are all different. But that does not constitute a market.

Two infamous individuals are considered to be the architects of our suddenly discovered policy on markets: a Mr. Barr from the LSE and a Mr. Crawford. They may be professors, but I will just call them Mr. Barr and Mr. Crawford. Mr. Barr gave evidence to the Select Committee. It must have been

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hilarious evidence because he does not see a market. He does not even see a publicly funded university system. He sees communism.

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