Higher Education Bill

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Chris Grayling: I listened carefully to the hon. Gentleman's comment about bursaries. Surely he must accept that the levels of bursary being talked about by universities like Exeter and Cambridge are select and small in number? His comments do not address the Wolverhampton question, about what happens to those universities that happen to have a much higher proportion of people who fall within the lowest third of income groups and which will have to find substantially higher levels of resource to provide the kind of compensation to those students that the Government are talking about.

Alan Johnson: That does not, but the letter to OFFA does. The letter to OFFA, the Secretary of State's statement on Second Reading and everything else make it absolutely clear that those universities that have a good social-class mix, such as Wolverhampton and Coventry, are not the problem. They would say that they do not have the same problem as universities that have a very small proportion of youngsters from working-class backgrounds. Everything makes it clear that we expect the regulator to pay more attention to those universities where there is not a good social-class mix than those where there is. The whole point about not going down the route of a prescribed 33Ž1/3 per cent, or even 10 per cent, is that universities that do not have a good record on social-class mix will be putting much more than 10 per cent into this. They will be doing that quite willingly, incidentally, in the sense that they agree that there is an issue. Anyone who reads the Russell group's literature, published last November, can see how intent those universities are at getting the best students from all backgrounds. There will not be any hostility there, although there certainly would be if we prescribed a certain amount as the amendments suggest.

Mr. Boswell: Can we go back to the point about universities with a very high proportion of students from a non-traditional background? The Minister is suggesting through his guidance to OFFA that 10 per cent of fee income should be made available for bursaries as a minimum requirement. The rest would be discretionary. Institutions like the ones that I have indicated have a very low taxable fees base, but there is a very big requirement because there are probably a lot of students who come from very low-income families. Can the Minister assure the Committee that there will be enough money raised by every institution to meet the requirement the Government are setting for that institution?

Alan Johnson: We will speak more about that later, but the hon. Gentleman is wrong to say that we are saying that the universities have to provide 10 per cent. Our letter to OFFA says that there should be up to £300 to bridge the gap. We are not mentioning percentages.

Mr. Boswell: Ten per cent. of the fee.

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Alan Johnson: We must remember that if there is no £3,000 fee, there is no gap. If the fee is below £2,700, the student will receive more in grant than they have to pay in fees. The problem comes only when the fee is higher than £2,700. That was not always the case, because when the debate started last January, there was a £1,000 grant and a £850 gap, which was up to £3,000 when fee remission was included.

Mr. Boswell: I am either puzzled or ignorant. Is the Minister saying that if fees of less than £2,700 are charged in an individual case, there will be no requirement to make any proportion available to the bursary scheme? To put it another way, will any fee income between £2,700 and £3,000 automatically be reserved for the bursary scheme?

Alan Johnson: Yes. The hon. Gentleman is right that there would be no obligation to provide the £300. As he will see from the letter, which we have tried to distribute so that people can get a feel for the system, if universities are charging anything more than £1,200—that is, if they need an access agreement—they will be obliged to put something into widening support. That support could be for disabled students, for example. All universities are keen to do that. They say that they will be able to use the extra money to do more to widen participation on different levels.

Mr. Allen: One way that I use to understand an extremely complicated system is to use an example from my constituency. Would it be true to say that youngsters from families earning less than £15,900 will receive at least a full £2,700 grant and, if the fee levels are appropriate, a minimum £300 bursary and that, in addition, other specific institutions will give far more than the bursary? To help us explain that to our constituents, will the Minister undertake to write to the Committee to list the current universities—it could be four, 20 or 50—that have committed to provide an additional amount above the £2,700 and detail what they have committed? We will then be able to give our constituents the good news that their grant may in effect amount to £4,000, £6,000, £8,000 or even more in certain institutions.

Alan Johnson: I undertake to write with the latest position, as there have been some recent developments—I think that Surrey university announced something a couple of weeks ago.

I want to make one final point on my hon. Friend's amendments. It is not a reason to reject them, but I was taken with his comment that he wanted the provisions in the Bill so that we could put it in front of students to clarify the issue. If we put the Bill in front of anyone, it is hardly likely to clarify the situation, but I understand his point.

Mr. Clappison: What is the threshold for the requirement of the £300 bursary?

Alan Johnson: The threshold is the same as for the £2,700 maintenance grant—the income of £15,900. The threshold is for the poorest students and highest fee, which is the requirement set out in the letter to OFFA.

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Mr. Clappison: So is it right that for incomes above £15,970 there will not be a requirement for the bursaries that the Minister has described?

Alan Johnson: There will not be a bursary. There will be an element of grant and a requirement on the university to provide something, but it will not be the £300 bursary.

The other interesting point is that Cambridge university's £4,000 bursary is available further up the income scale than our £2,700—up to a family income of about £36,000 or £37,000. I understand the hon. Gentleman's concern, but lots of universities are talking about working, and will be encouraged to work, not just inside the thresholds and tapers that we set centrally—although they will have to do that for the £300, as I explained—but beyond that to help the people who are just over the threshold, whom many hon. Members have mentioned.

Mr. Rendel: Is the Minister aware of the remark that Professor Nicholas Barr made at a Social Market Foundation event the other day? Whether or not the 10 per cent. is set aside by the universities, as the Minister suggested, Professor Barr said that university funding will become more even between the more prestigious and less prestigious universities. As he put it, the Government will pass the fees that the elite universities introduce on to less prestigious universities. He went on to say that one could assume that that would happen if one assumed that Governments in the future would be sensible. In other words, he regards that as the only sensible way to behave. Does the Minister believe that that is how this Government will behave in future?

Alan Johnson: What Nick Barr described is exactly what is going to happen and what, in fact, I was just describing. Universities that do not have a good social and class mix will put much more of the extra fee income into widening participation, because they have a bigger problem to resolve. The concern, particularly of the modern universities, is that the system would work the other way round.

Mr. Collins: In fairness to the hon. Member for Newbury, I do not think that that was his point. He was not talking about redistribution of income within the student population of one university, but a predication that money would be transferred from one class of universities, say, the Russell group, to other classes of universities. Does the Minister expect that to happen?

Alan Johnson: No, I do not expect that to happen, although, incidentally, it would happen under the proposal for a national bursary scheme to which I am speaking, which is why we oppose the amendment. The money that comes into the universities of Wolverhampton, Hull or Exeter should be distributed to the students of that university. Slices of that money should not be taken away and put into a national bursary scheme, because that would breach the principle, and be both bureaucratic and unpopular. Universities UK is against a national bursary scheme, which, I am pleased to say on record, we also oppose. Although I have enormous respect for Nick Barr, he is not a member of the Government. The number of

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people whom the hon. Member for Newbury bumps into at Oxford dinners is amazing.

Amendments Nos. 252 and 144 are about the RPI plus 0.5 per cent., but, as hon. Members have pointed out, they state a minimum, not a maximum. Although they are wrong, I understand why my hon. Friend the Member for Nottingham, North tabled them. HEPPI—the higher education pay and prices index—is the higher education version of RPI, although it is more. However, we are not going down that route, because we think that RPI is sensible. In any case, I am sure that my hon. Friend would accept that setting a floor rather than a maximum would give future Governments a loophole to increase the figures, theoretically, by any amount.

Mr. Allen: Actually, those amendments were a sneaky way of doing away with the cap entirely, but as I have been found out I shall be very pleased not to press them.

Alan Johnson: On to the meat and gravy—amendment No. 82, which, it has been said, is the controversial issue.

My hon. Friend the Member for Cambridge deserves all the accolades that she has received in this debate and I shall add a few more. She has spoken on the issue with eloquence, intelligence and, at all times, a graciousness that does her credit. Incidentally, her argument is not designed to please the students in her constituency. The argument is not whether we should have fees or not have fees, which is something that people sometimes get confused about, but whether we should have a system in which universities are allowed to charge between £0 and £3,000 or whether each would have to charge £3,000, £4,000, £5,000 or any other amount for each student in each subject. That is the real debate.

5.15 pm

There is no argument on the Government side of the House about how much money the universities need and how desperately they need it. My hon. Friend's argument coalesces around an important paper that my hon. Friends the Members for Southampton, Test (Dr. Whitehead) and for The Wrekin (Peter Bradley) produced, which argued cogently that, to raise the same amount of money, the fee needs to be set at £2,500, but for the purposes of this debate, it could be £3,000. The hon. Gentleman is not arguing to please an interest group in Cambridge, but it is still a difficult argument.

The argument among Labour Members is not whether fees should be charged, and I shall deal with that issue now, as it was raised earlier by the hon. Member for Harrogate and Knaresborough. Post-Dearing, Cubie, Rees, the Select Committee and the OECD report, things have moved on. The argument about whether students should make a contribution finished in 1998; the question now is how they should make that contribution. That has been the debate among Labour Members, which Opposition Members have joined in, perhaps for the first time. I do not think that we have had a debate in Parliament on that matter.

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I say to my hon. Friend the Member for Leeds, East that Parliament would not have debated the matter if we had lost the vote on Second Reading. The point of getting the Bill into Committee is to consider it in detail and have a long debate on whether we should have a fixed fee. It is a controversial issue among Labour Members, but not in the country. The controversy there is about whether students should pay, and whether the fee should be £3,000. That is the debate, and it is very healthy—sometimes, depending on where one is. I am thinking of a meeting that I had at the London School of Economics.

We have heard on various occasions that the Bill would sail through if only the Government would say that every student would have to pay £3,000 on every course at every university. If we did so, every Labour Member would be with us, we would have a big majority and we could get rid of a lot of aggravation—my hon. Friend the Member for Cambridge finished her speech on the matter, although she did not use those words. However, people are suspicious. They ask why the Government are not doing that, because it would be so easy. They ask what is so important about the principle of variability. That is why we must spend some time, even at this late hour, going through the issues.

My hon. Friend the Member for Cambridge highlighted the main issue, which was the subject of her early-day motion 994 a year ago, which was very clear. It stated that

    ''differential fees will deter students from low-income backgrounds from applying to the top academic institutions.''

The debate has continued about the effect on universities in the future and so on, but the early-day motion highlighted the main issue. As she said—it is part of her unfailing graciousness—it is fair to say that the present student support level cannot still be the issue that concerns Labour Members. I accept that Opposition Members do not want fees anyway.

When the early-day motion was tabled, we proposed a £1,000 grant, and a £1,200 fee remission—that will be the figure in 2006—carried over from the present system, and there was an £800 funding gap. My right hon. Friend the Secretary of State said last March, well before I had my present job, that we would try very hard to see how we could bridge that gap. I understand the concern; we are moving from a fee matched by the support package to a situation in which that would be the case only for a fee of up to £2,200.

With the introduction of the education maintenance allowance, which is very important for all the good reasons cited by members of the Committee, widening of participation has not only to do with applications or admissions to universities, but goes right through the system. One of the big problems is the drop-out rate at 16: only Greece, Mexico and Turkey have a worse record in the OECD. From this summer, a 16-year-old from a poor background will receive £1,500 per year to stay on at school to obtain at least two A-levels or a level 3 qualification to go to university. So there will be an educational maintenance allowance of £3,000, a

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grant of £8,100 over three years and a £11,100 non-repayable grant over a five-year period. Concentrating solely on university education, there is the £2,700 grant, if we mean the top academic institutions—that is a useful euphemism; I have heard others that are not so good—as well as a £4,000 bursary from at least three institutions, and a £3,555 loan. That totals £10,255 per year, plus an extra £1,000 for studying physics.

We can argue a lot about what such a package does—I shall do so later—but we cannot now seriously suggest that the terms of the early-day motion that attracted such support last April have not been met. Indeed, the hon. Member for Newbury made me think on Tuesday that perhaps we had not been as clear as we should have been, and I have written to him, because he requested that on Tuesday. I should tell him and the hon. Member for Harrogate and Knaresborough again that the grant replaces the loan. That is certainly the case in Wales, with the Assembly learner's grant. In Scotland, where the Liberal Democrats are in coalition Government, the grant replaces almost all the loan. There is only about £50 left. In Northern Ireland, the last legislation that the devolved Assembly passed before power returned to Westminster was to introduce a £1,000 bursary that entirely replaces the grant. That is not the case with our proposal.

One of the benefits of the long debate is that I was able to read Hansard. On Tuesday, the hon. Member for Newbury seemed to be under the impression that the grant is paid for three years and then added to the total that is repaid later. However, the whole £3,000 bursary is non-repayable. There will be some loan substitution, when the fee remission is rolled in: our best estimate is that it will be £855, and I do not expect it to be much different from that. However, because the loan will go up from 2006, that will leave £3,555. That is an incredibly important package, and whether it came from pressure from my hon. Friend the Member for Cambridge, or from anywhere else, we were always very keen to address the problem. We have addressed it, and I hope that I have dealt with the issue.

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