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Mr. Laws: The Liberal Democrats wish Mr. Varney and his colleagues all the best in managing the new merged organisation, once the House gives its final approval. It will be quite a job to put together two large organisations of that kind, which, as the Paymaster General indicated earlier, account for about one in five of all civil servants. When we first discussed the matter before Christmas, the Paymaster General and the Economic Secretary acknowledged that the way in which the two organisations are put together raises major issues, which future legislation must address. Perhaps some of those issues will be more controversial than the issues addressed by the Bill.

Like the hon. Member for Chichester (Mr. Tyrie), the Liberal Democrats thank the Paymaster General and the Economic Secretary for the constructive way in which they have dealt with the Bill and responded to concerns on issues such as the oath, which was raised by a number of hon. Members, including my hon. Friend the Member for Torridge and West Devon (Mr. Burnett).

Some big concerns remain about whether the Bill's strategic objectives are likely to be delivered and whether adequate processes are in place to monitor progress. The Paymaster General has indicated that one of the Bill's objectives is to close the tax gap to reduce compliance costs and the costs of running the merged organisation. No doubt the Treasury Committee and other organisations will do their best to monitor the Government's performance in the future. I look forward to reading the exchanges between members of the Treasury Committee and the Chancellor of the
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Exchequer, which are sometimes, although not always, insightful. I shall see whether the current members of the Treasury Committee can do a better job of extracting information from the Chancellor than I managed during my time as a member.

Martin Taylor's submission to the O'Donnell report included several well made points. On Report, I referred to his point about the need to focus on closing the tax gap as the major strategic objective, and he also made this powerful statement:

The big strategic aims such as closing the tax gap, which will be a priority for any Government in the next Parliament, reducing compliance costs, improving customer service and lowering the cost of running the organisation are achievable only through a simplification agenda.

Many hon. Members have followed the current Chancellor of the Exchequer's Budgets over the past seven years, and the simplification of the tax system has never been an obvious theme. We are yet to find out how many more Budgets this particular Chancellor will make over the next few years and whether he, too, will experience a realignment of job opportunities. We hope that whether the current Chancellor of the Exchequer continues in his post or there is a new Chancellor from another party or another part of this Government, they will put the simplification of the tax system centre stage, because without that the Government's great ambitions for the new merged department will surely not be realised.

7.49 pm

Mr. Fallon: I, too, wish the Bill well. It is bigger than the one that we started with. I suppose that it would be unkind to say that it seems to grow every time we see it as the draftsmen remember that they have failed to include Scotland—or Northern Ireland, or police provisions. The real question is whether it is a better Bill. In that respect, I am disappointed that some of our amendments, with exception of that on restoring the oath, were not accepted.

As my right hon. Friend the Member for Wells (Mr. Heathcoat-Amory) said, these two organisations are both large but very different. There are no inherent reasons why they cannot be merged; that is why the Treasury Committee originally recommended it. Such mergers have happened in many other modern countries that now have unified tax authorities.

However, I, like my hon. Friend the Member for Chichester (Mr. Tyrie), counsel against too much hyperbole. The Paymaster General spoke of world-class organisations and said that she had the greatest confidence in them. I am not so sure. I prefer the scepticism of my hon. Friend the Member for Chichester to the optimism of the Paymaster General. As I have argued throughout the passage of the Bill, we still have not been given any clear cost-benefit analysis of the merger. The Revenue has not been sitting still for years—it is already undergoing the convulsive change of the Treasury turning it from a department that simply and patiently used to collect tax into one that
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administers benefits—not without the odd hiccup. I am not wholly convinced that it is ready for the scale of the change that is to come.

In the world of business, mergers do not always proceed according to plan in terms of delivering deep and rapid synergies. I am always a little sceptical about a merger that is planned for strategic reasons rather than on the basis of a clear-cut benefit analysis. That is why new clause 1, in particular, would have been a safeguard allowing the House to return to the matter in two years' time. However, the Select Committee will take up the challenge issued by the Paymaster General. I hope that we will subject David Varney and his colleagues, whom we wish well, to regular scrutiny.

I hope that I am wrong about this, and I want to be very clear that I wish the staff and leadership of the new merged organisation all the best for the future.

Question put and agreed to.

Bill accordingly read the Third time, and passed.



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Tuition Fees

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Heppell.]

7.53 pm

Mr. Parmjit Singh Gill (Leicester, South) (LD): Thank you, Madam Deputy Speaker, for allowing me to speak on the very important issue of university top-up and tuition fees, which affects hundreds of thousands of young people around the country and, in many cases, their parents. It is of particular concern in my home city of Leicester. Its educational strength is a major attraction, and there are approximately 40,000 students at its two universities, Leicester and De Montfort, making up about 14 per cent. of the city's population. Since both universities are in my constituency, I have a large proportion of resident students, many of whom regularly share their concerns and, in many cases, their anger at the prospect of paying fees. I want to raise several of those concerns with the Minister.

The debate is on the eve of the first anniversary of the vote to secure Second Reading of the Higher Education Act 2004, which was passed by only five votes. That Act represented a major U-turn for the Government. Three years earlier, the then Secretary of State for Education and Employment, the right hon. Member for Sheffield, Brightside (Mr. Blunkett) had given assurances in the House that top-up fees would not be introduced. He said:

Indeed, the Labour party manifesto in 2001 pledged:

That promise was made in response to concerns expressed that tuition fees were the start of a slippery slope, which would lead to top-up fees. My constituents' subsequent experience confirms that it was a well-founded fear.

I recently spoke to youngsters outside Crown Hills college, a local school in my constituency, about their aspirations. I was alarmed to hear that some of them would have gone on to study but for the debts that they would incur. Perhaps the Minister will respond by saying that students can repay their loans after completing their studies, but the fear of debt can be as dangerous as debt itself. Many potential students in Leicester are deterred from even applying to study further. That was confirmed by the presidents of the student unions at Leicester university and De Montfort university, Richard Treffler and Chris Higham.

Surely the Minister recognises the deterrent effect, as the Minister for the Arts, who was formerly Secretary of State for Education and Skills, rightly recognised in 2001. She said:

Yet I can assure hon. Members that the Government have failed to tackle the fear of debt acting as a bar to higher education. At the universities of Leicester, the students are increasingly concerned that, with one
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promise abandoned by the Government, there is a strong likelihood that, in a few years, the current cap of £3,000 will be lifted and the door will open to a deregulated fees market.      Will the Minister assure the House and the young people whom I represent that that will not happen?

Early last month, I talked to some teenagers on the Eyres Monsell housing estate in my constituency, where a low proportion of youngsters go on to study in higher education. They had a negative view of studying further. Again, reference was made to student fees. That position is reflected in research that the Higher Education Funding Council for England published this month on participation levels in higher education from 1994 to 2000. The report examined closely the participation in higher education of youngsters aged 18 and 19 from both advantaged and disadvantaged areas. It is worrying that the report found substantial regional differences in that participation, with young people in some regions being 50 per cent. more likely to enter higher education than their peers in others.

Analysis of constituencies revealed further worrying trends. In some constituencies, fewer than one in 10 young people enter higher education whereas in others, more than half do so. Those analyses consistently showed a deep division in the chances of young people's going to university, based on where they live. Poverty undoubtedly plays an important part in those regional differences and the prospect of student fee debt does not help to encourage young people into further education. Whatever financial help the Government may be assuring students that they will receive, the problem is one of deterrence.

Is the Minister aware that some disadvantaged constituencies in Scotland, where students are not subjected to tuition fees, have young participation rates nearly twice as high as the very low rates found in similarly disadvantaged constituencies in England? Furthermore, figures released recently show that, while applications to Scottish universities are increasing, that is not the case in England. Will the Minister come back to this issue in his response?

The Minister will be aware of the research published last year by my hon. Friend the Member for Newbury (Mr. Rendel), which contradicted the statement made in Parliament on 14 July 2004 by the Minister responsible for higher education. The Minister cited the latest Universities and Colleges Admissions Service figures in support of his contention that tuition fees and top-up fees did not deter potential students from participation in higher education. The figures in my hon. Friend's research demonstrated that the proportion of school leavers opting for university was on the decline, not increasing as the Government claimed.

My hon. Friend stated that the proportion of young people in England applying for higher education was failing to keep pace with demographic trends. According to the UCAS figures highlighted by the Minister, the number of 18 to 20-year-olds applying to go to university had increased by 2.8 per cent. in 2004, compared with 2002. However, the population in that age group in the United Kingdom increased by 6.1 per cent. in the same period. Those figures were taken from the Government's own actuarial department. If the number of applicants had kept pace with the increase in population in that age group, there should have been an
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additional 8,190 young people opting to go to university in 2004. When my hon. Friend added that figure to the fall of 4,060 in the number of expected applications in the previous year, he concluded that a total of 12,250 young people had dropped out of the process over the two-year period. The Prime Minister failed to give an explanation for the decline in the proportion of English school leavers applying to university when my hon. Friend put those findings to him at the time.

It is unfortunate that an increasing number of undergraduate students are having to take on employment to help to finance their studies. One student who visited my surgery recently on a different issue told me that he was working late nights and often could not get up in the morning to attend his lectures. He was only in his second year, but he was already £7,000 in debt. How can that be good for his education or, indeed, his whole experience of university life, which should include a healthy mix of extra-curricular activities?

Research commissioned by the Minister's own Department highlighted some worrying findings on that same issue. I refer to the 2002–03 student income and expenditure survey conducted by Professor Claire Callender of South Bank university in London. That provided a survey comparative with the one conducted in 1998–99. The survey found that more students worked over the academic year, and worked longer hours, than in 1998–99. In 2002–03, 58 per cent. of students worked during term time, up from 47 per cent. in 1998–99.

Most worrying of all was the finding that the anticipated average debt on graduation had increased by two and a half times since 1998–99 to £8,666. This was largely explained by the complete replacement of mandatory grants by student loans. These statistics do not take into account the introduction of top-up fees, which means that debt on graduation will now be significantly higher. These figures might not frighten the Minister, who earns a substantial salary and no doubt benefited from a free university education, but for an 18-year-old, they can be a deeply distressing matter of concern.

One of my constituents, Mr. Geoffrey Lewis, is the British Medical Association's representative in Leicester. He has told me of the BMA's deep concerns in relation to top-up fees deterring students from wider social backgrounds from participating in higher education. He expressed his concern that the BMA already knows that fear of debt is a major disincentive for younger people with no family history of university attendance, in particular young Afro-Caribbean people.

Returning to figures published by UCAS, Mr. Lewis highlighted to me the very worrying trend that two thirds of medical students are from managerial or professional white-collar backgrounds, compared with only 10 per cent. from skilled trade, semi-skilled or unskilled occupational backgrounds. Top-up fees, in addition to the extra costs inherent in studying medicine, will surely move things away from, not towards, the policy of the Government and of universities of widening access to higher education.

There is also an impact of debt on students' mental health. In 2001, the report from Higher Education and
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Research Opportunities in the United Kingdom on the cost of borrowing highlighted the impact of student debt on health. It concluded:

That highlights the fact that those with excessive debts

It also highlights the fact that any further increases in fees will make those problems significantly worse.

Little wonder that voter apathy levels are so high among young people. We encourage them to work hard at school and college, but then—under this Government—tax them at university. Everyone in society benefits from well-qualified, highly educated people living and working here. We see the benefits through economic prosperity and the UK being at the cutting edge of scientific and technological developments. We also see the benefits through having highly skilled public servants such as doctors, nurses and teachers.

I still feel great privilege and honour in serving the people of Leicester in the House, but if I were a Labour MP I would feel ashamed—

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