Higher Education Bill

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Alan Johnson: I agree with my hon. Friend. To be fair to them, the Opposition quoted the right figures. The student income and expenditure survey showed that average student debt is now £8,500 or £8,600. However, Claire Callender's analysis showed that 26 per cent. of them paid an average of £800 up front for

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the existing fee. The view that parents are paying the existing fee is wrong. It is onerous on students, which is why getting rid of up-front fees will be so beneficial.

Finally, I shall say how we shall deal with poor students. My hon. Friend the Member for Cambridge spoke about the length of time that they have to repay and referred to 33 years. She will be aware of the 25-year cap. That is important because of the suggestion made by others that the onus will be on the student to go into a high-paid jobs rather than the public services. That is an understandable concern, but the increase in the threshold, the 9 per cent. repayment system and the 25-year cap will mean that those who spend their whole working lives on the equivalent of £17,000 will repay a grand total of £4,500 for their loan, their grant and their fees. The Government will write off £10,500, so it is an important safeguard.

Chris Grayling: Will the Minister give way?

Alan Johnson: No. I must make progress.

My hon. Friend the Member for Nottingham, North raised an important point about how student choice will be affected. We do not believe that it will have an adverse effect, as it is not opening up a market but putting on a cap of between £0 and £3,000. The Select Committee said that if we were to go down that route—it was not recommended—it would be better to have a bigger gap. We think that it is the right balance; there is not a huge field. We do not think that it will affect students' choices. That is why the argument about opening a market in further education is spurious, although that sector is important. We have a market now in higher education for part-time students, overseas students and postgraduates.

Universities are good at ensuring that they do not set a limit that would prevent them from getting customers to study part time. Part-time students are a huge issue—I know that we shall debate the matter separately—but they pay unregulated up-front variable fees and always have done. There is no evidence that youngsters on part-time courses do not pursue the courses that they want. I shall look at the concerns in more detail later, but this is not a serious concern for us given the evidence, both from those in this country who operate in an unregulated market, and from those in New Zealand, Australia, Canada and other countries that have a similar variable fee system. My hon. Friends the Members for Aberavon (Dr. Francis) and for Bury, North dealt with that point carefully in interventions.

The other question is the effect on modern universities. My hon. Friend the Member for Cambridge argued her case eloquently. I am sorry that the hon. Member for Harrogate and Knaresborough is not with us. I understand the reasons and we all wish him well; I know that he will be back on Tuesday. The hon. Gentleman spoke of a letter published in The Guardian from modern university vice-chancellors. We can all quote letters, but they always seem to be to The Guardian. The five vice-chancellors were Peter Knight of the university of Central England; Geoffrey Copland of the university of Westminster; and the vice-chancellors of Sheffield Hallam university, of Liverpool John Moores

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university and of the university of East Anglia—modern universities, with all the street cred that it implies. They said:

    ''Universities must have the right to vary the fees charged to full-time students . . . It is ridiculous to pretend that every course in every institution should or could command the same price. Why should a university be forced to charge £3,000 if it believes that a fee of, say, £1,500 is appropriate?''

They then give some examples.

If one were looking for a philanthropist in that area, there is no one better than Sir Peter Lampl of the Sutton Trust, who has dedicated his whole life to the issue of kids from poor backgrounds going to university. He is a well known businessman, and the Sutton Trust is highly respected. He says:

    ''We strongly believe that the variable fee is the only sensible and equitable option for university funding. There are different costs and benefits associated with different degree courses at different institutions and the fee structure must be able to reflect this.''

That is our simple argument on this point. We are not trying to make life difficult for ourselves. We are saying that one can just about get away with a fixed, rigid fee when it is down at £1,000.

I understand why my right hon. Friend the Home Secretary did not do what we are now doing, which is carrying out the Dearing recommendations. He took another route because the economy at that time meant that we did not have the finances to pay fees up front and wait years to get the money back. We had to have up-front fees, which meant that £1,000 was about the most that we could get away with charging. That was made rigid: universities could not charge more or less. We think that £3,000 is the right amount to charge, for all the reasons that my hon. Friends the Members for Southampton, Test and for The Wrekin have given. I think that my hon. Friend the Member for Cambridge agrees, because we need that money to go to universities in addition to the £3 billion from the taxpayer. Our argument is simply this: why must we insist? It is top down. The amount is £3,000, but universities can charge less, and there are various ways in which that can be done. My hon. Friend the Member for Bury, North eloquently explained that universities could do that through discounts, perhaps by offering £1,000 off here and there to fill courses; they will need to do that.

With a fixed, rigid system, universities will have to abandon courses if they cannot attract students on to them. Our argument, which was also expressed by Bob Boucher, the vice-chancellor of the university of Sheffield, at a meeting in the House, is that we should not force universities covertly to pretend that we have a fixed system when, in reality, we have a variable-fee system—with all the bureaucracy that that would entail—when we could simply agree to have a variable-fee system. If all vice-chancellors at all universities decide that we should have a fixed fee on all courses, which my hon. Friend the Member for Cambridge expects would end up being £3,000, that is fine, but we should give them the choice. Why should we insist on welding a rigid, fixed £3,000 fee on to that diverse sector? That is the only reason why we argue for variability, and that is why we say that there

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should be a fee of £3,000, but that universities should be allowed to charge less.

There is no hidden agenda to set the fee at £3,000, but quickly move to something else. Variability is an important principle simply because students should be able to choose between courses at the rates that the universities want to charge, and not with us insisting that they should all charge the top rate.

Jonathan Shaw: After speaking to many vice-chancellors, did not the Secretary of State tell the Select Committee that vice-chancellors expected there to be a lower-rate fee for the foundation degrees that we are all keen to see, not least to widen participation in vocational qualifications?

Alan Johnson: That is an important point, which is also relevant to the argument that took place on Tuesday about vocational degrees. A large part of our expansion will be in foundation degrees, which are two-year vocational sub-degrees. Again, that is in accordance with the Dearing recommendations. With fixed fees, universities would have to charge £3,000 for those courses; otherwise one is arguing for variable fees. If one wants to introduce a system of discounts, one is arguing for variable fees.

5.45 pm

Mr. Mark Francois (Rayleigh) (Con): The Minister says that there is no hidden agenda, and argues that the Government want variable fees in order to allow some institutions to charge less. I do not cast any aspersions on his personal honour, but the real heart of this is that the Government have already fundamentally broken their word twice—over the introduction of tuition fees and now over top-up fees. [Hon. Members: ''No.''] All the Labour Members who are mumbling know that they have. When the Minister says that there is no hidden agenda, no one believes him, and that is why he and his Government are in the mess that they are. They can give all the guarantees they want; the problem is that no one believes those guarantees because they have become worthless.

Alan Johnson: I will ignore that intervention. I will come to the issue of manifesto commitments in due course; the Committee should not worry about that. However, let us keep this constructive and important debate centred on the contribution of my hon. Friend the Member for Cambridge, which had far more quality than that intervention.

The Dearing report recommended that the Quality Assurance Agency for Higher Education be set up and it has been. My hon. Friend was concerned that quality will be driven down. The QAA has made great strides and has become extremely important in the short time that it has been around; it is absolutely inconceivable that it would allow quality standards to slip. Its job is to ensure that does not happen, irrespective of levels of fees charged, and I expect it to continue to do that as well as it has.

Another argument that many vice-chancellors of modern universities have made is that they are successful at attracting international students in areas where there is a market. Middlesex university, for

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instance, has the second highest number of overseas students. Let us consider what universities such as De Montfort in Leicester do when it comes to law. They can compete, but many resent the idea that they cannot. Others have concerns about the effect of the measure. However, their having to command a higher price because they could not justify that price by choice of students is the wrong way for us to go.

The right way is to look at how the measure works in the early years of its implementation. My hon. Friends the Members for Cambridge and for Leeds, East and other Members can rest assured, because we will have an independent commission three years after the introduction of variable fees. The Committee has seen the terms of reference.

Incidentally, my hon. Friend the Member for Leeds, East made an important point about linking student support to the fee. The terms of reference published by my right hon. Friend the Secretary of State state that the commission will have to consider:

    ''Student support arrangements, including those for those from the poorest backgrounds as well as those above the threshold for government support.''

It will also have to consider:

    ''What changes should be made to the arrangements for student support in order to ensure that students from the poorest family backgrounds on the most expensive courses receive support at a level equivalent to the maximum level of fees.''

My hon. Friend the Member for Leeds, East raised an important point about how we will continue to keep those two in train. As well as looking principally at whether variable fees have had the effect that my hon. Friend fears—as do many others on our Benches and also a minority of vice-chancellors—the independent commission will enable us to consider matters at an early enough stage to change tack if we need to.

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