Higher Education Bill

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Mrs. Campbell: Last November, my right hon. Friend the Chancellor of the Exchequer announced in the pre-Budget report the introduction of geographically differential pay across the public sector. He also talked about a stronger local and regional dimension for the pay review bodies. That encompasses the principle that I am asking the Minister to take on board this afternoon. He is arguing strongly against that principle, but all I am saying is that it has already been accepted in another Department.

Alan Johnson: That reflects back to a point made by my hon. Friend the Member for Stalybridge and Hyde: the answer is to look at increasing the prosperity of the country as a whole. That is very much part of the regional agenda. The initiative announced by my right hon. Friend the Chancellor of the Exchequer in last year's Budget was to get retail price indices on a regional basis.

I was a trade union negotiator and remember that we had a dispute about a similar issue in the late 1980s, because places such as Cambridge and other areas did not qualify for London weighting. We introduced something called the difficult recruitment area supplement. The Chancellor made the point that such issues need to be examined much more closely, and he will produce those indices every four or five years rather than annually. However, for us to meet the terms of the amendment, we would need annual indices, because we reassess the entitlement to the grant every year of a three-year degree course or every two years if it is a foundation degree, so I do not think that that helps the argument put forward by my hon. Friend the Member for Cambridge.

The alternative to the system that I quoted, which has its problems and is very expensive, would be to set up those different levels. That would open up the prospect of someone in my constituency or other constituencies not qualifying for the full grant on an income of under £15,000 a year, because the whole basis of that argument is that there would be a different scale, and qualification for the full grant might occur at a lower level. That would create much more antagonism than already exists. I am not saying that the people of Hull, West and Hessle were chairing me round the streets because of the Higher Education Bill, because, although many of my constituents support it,

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it is not top of their agenda. However, there would be outrage in my constituency and in others if we went down the route suggested.

On the amendment, the question of where the boundary is set is a real issue. A situation could arise in which a student or a family moves just down the road, crosses a boundary and thereby loses or gains their grant or finds that their grant decreases between one year and the next. That would be a real problem. There is no reliable measure of regional variations at present; the Chancellor might produce one eventually, but even if he were to do so, I do not know whether it would be produced annually.

The point has already been made about variations within regions that are as big as those between regions. We did not just pluck that concept from the air; it was demonstrated by a very detailed analysis carried out by the Joseph Rowntree Foundation. The hon. Member for Westmorland and Lonsdale was right that the process would come down to ward level, with all the complications that that would involve.

As my hon. Friend the Member for Bury, North said, there is no means test applied by Government anywhere else, as far as we are aware. There is no means test or variation of that kind for tax credit, nor is there a variation for benefits. In the summer, we are rolling out the education maintenance allowance nationwide. My hon. Friend the Under-Secretary is responsible for that. It is horrendous to think of having to introduce such a measure for the education maintenance allowance, which we would have to do if we introduced it for grants for higher education. That would cause huge difficulties.

My hon. Friend the Member for Stalybridge and Hyde spoke about the disparities between the regions. However, another problem with the amendment is that it would create losers among exactly the sorts of people whom we are trying to encourage into higher education. If one examines the percentages of those entering higher education in conjunction with the cost of living index, there is an interesting dichotomy. For instance, London, which we would seek to help with this, has the highest density of people entering higher education—almost 24 per cent. The money that we would be taking away would come from Yorkshire, where there is the lowest density of those in higher education—19.7 per cent. That neatly flips the chart right round; it is an opposite equation. Those that would benefit from the amendment tabled by my hon. Friend the Member for Cambridge would be those from areas where the percentage of people entering higher education was highest, and vice versa. That is an important point.

I want to pick up on a couple of points that have been raised in an excellent debate. First, I want to chastise the hon. Member for Westmorland and Lonsdale who made the point that the Government's policy did not evolve smoothly, but through messy negotiation. It is right that my hon. Friend the Member for Cambridge, who by and large was not thrilled with variable fees, played a role in making representations about the issues of student support. However, so did my hon. Friends the Members for

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Bury, North and for Nottingham, North and many other hon. Members who supported us and who would have voted with us all along on the basis of the principle of the Bill. They were continually raising points about the need to get the fee remission rolled in with the grant and to increase the grant. Therefore, we ought to set the record straight. Yes, there were people who were hostile to the whole concept, and they spoke to Government and persuaded us. However, others who were absolutely in line with the concept did the same thing. We listened to all sides of the argument, but this was a particular issue on student support that united everyone on these Benches.

James Purnell: Will my right hon. Friend tell me whether the Conservative party's policy had a strong influence on his evolution of the policy?

Alan Johnson: In terms of how it evolved, it told me the roads not to go down. Conservative hon. Members, in particular the hon. Member for Daventry (Mr. Boswell), were telling me at one stage that I had a difficult hand to play. I think that the Conservative's policy is the most difficult hand to play.

The other point that I wanted to make was that the hon. Member for Newbury (Mr. Rendel) made a telling contribution. However, my hon. Friend the Member for Cambridge intervened and pointed out that the Liberal Democrats did not begin with a policy of a national minimum wage, and that is an issue. We have a national minimum wage, and the logic of going down this route is that we should not. The Liberal Democrats had a policy of a regional minimum wage, and they stood at the 1997 and 2001 elections on that policy. It was abandoned.

I had ministerial responsibility for the minimum wage and I remember the hon. Member for Twickenham (Dr. Cable) telling me that the Liberal Democrats had seen it work to such a degree that they admitted frankly and openly that they were wrong. I have every hope that the same procedure will be gone through by the Liberal Democrats on tuition fees and student contributions when the Bill goes through and that, after a couple of years, they will see, like a blinding flash, that that was the route to go down.

Mr. Willis: The right hon. Gentleman is always so generous with his barbs. We changed our position on that, in exactly the same way as the Government have changed their position since 1998—the Teaching and Higher Education Act 1998 introduced up-front fees and so on—and, of course, since the manifesto of 2001.

The hon. Member for Cambridge needs some support on the legitimate issue that she has raised about regional variations. All political parties, with the exception of the Conservatives, are examining the matter, and whether we like it or not, the Chancellor is right to examine those regional indices. If one examines what has happened in Scotland and Wales as a result of the Barnett formula, they can do other things because they receive, in terms of their percentage of regional GDP, an additional sum of money. I do not think that it is fair to chastise the hon. Lady totally, because there is room for manoeuvre in using the region as a method of finding a different

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solution to some of the problems. That has been proven in Scotland and in Wales, by the Welsh Assembly.

Alan Johnson: I am not chastising my hon. Friend the Member for Cambridge—quite the opposite. It is my duty to point out the flaws in approach. I support decentralisation and regionalisation. I believe that the answer lies in that, in improving the economy throughout this country and in ensuring that the success in some regions is reflected throughout our country. However, we in government will continue to reflect on these real problems, and we understand the concerns. However, the amendments would create more problems than they would solve.

4.15 pm

James Purnell: I should like to comment on the point about reflecting on regional variations, and the suggestion from my hon. Friend the. Member for Nottingham, North that perhaps the issue currently being discussed could be incorporated into a commission's thinking for further reflection. If the Minister goes down that route, will he assure those of us from northern constituencies that issues such as how to retain graduates in our constituencies in the north once they have been to university will be considered so that there is a balanced view of regional equality?

Alan Johnson: My hon. Friend raises an important point—and I think that another important point will come from another hon. Friend.

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