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15 May 2007 : Column 214WH—continued

The hon. Member for Wrexham alluded to the funding gap between Welsh and English universities as institutions. Again, I can express concern about that as my party’s spokesman on higher education in England,
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but it is for the Welsh Assembly Government to decide how to spend the block grant that it receives from the UK Treasury, and the choices that it makes in the Cardiff Welsh Assembly are fundamentally a matter for politicians there. Perhaps the hon. Gentleman should influence his Labour colleagues in Wales—if they are still in government—to invest rather more in higher education than they have over the past eight years of devolution.

At many events in this place, I have anecdotal conversations with Welsh vice-chancellors and principals, and many of them have told me that the Welsh Assembly Government are not giving higher education in Wales due attention. Historically speaking, that is rather peculiar, because investment and belief in education have always been fundamental in Wales, and there has always been enthusiasm for investment in education. I did a history degree at Bristol university, and my dissertation was partly about the foundation of the university of Wales and the Welsh people’s huge enthusiasm for providing the initial funds to set up Aberystwyth, Bangor and Cardiff. It is a pity that that enthusiasm is perhaps no longer felt with enough fervour by politicians in Cardiff.

Ian Lucas: The investment is happening in higher education in Wales, but as the hon. Gentleman said, the Welsh Assembly Government have chosen to invest in providing support for the student fee contribution—the £1,800 that he mentioned. Welsh institutions are spending the money, but money cannot be spent twice—there is not a bottomless pit. That might be why the funding that the Government give directly to higher education institutions in Wales is lower. The difficulty for the Liberal Democrats is that, yet again, we have no suggestion of where the money they talk about will come from.

Stephen Williams: I thank the hon. Gentleman for his intervention, but this is not the time for me, an MP who represents an English seat, to reopen the issue of the Welsh general election that has just taken place and—

Mr. Bill Olner (in the Chair): Order. I can assure the hon. Gentleman that he will not be doing that.

Stephen Williams: I am happy to be bound by your ruling, Mr. Olner, and I have no intention of going down that road anyway.

Of course, students, whatever their nationality, face further complexities, and bursaries are a good example. The financial section at the back of different universities’ prospectuses now needs to be ever larger. There are complex tables about what sort of bursary students might expect to receive, covering funding from the university’s own endowment-giving or alumni sources, which is fine, and the £300 minimum bursary that all universities must now offer as a result of the Higher Education Act 2004. Following that Act, it was expected that a market would eventually develop in fees, but that has not happened, because most institutions, with the exception of one or two, such as Leeds Metropolitan, have charged right up to the cap. However, a market has developed in bursaries, and it is now hideously complicated for a student to weigh up what subject they might do at what institution and what support they might get from that institution.

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The situation is also not very egalitarian around the country. One reason why institutions such as Oxford and Cambridge, where my hon. Friend the Member for Cambridge (David Howarth) and I spent most of yesterday, can award generous bursaries to students from disadvantaged backgrounds is that relatively few apply and are accepted for places. However, a post-1992 university, which might take in a lot of students from its locality, which has done a great deal of work in widening participation and which draws in many students from poorer social and economic backgrounds, will have the same pot of money available to it and will therefore be unable to offer such a generous bursary, even though its students will clearly have the same need as those at other universities. I therefore wonder whether the bursary market that has developed is delivering equity for students from different family backgrounds at different institutions.

My hon. Friend the Member for Cambridge rightly mentioned the role of employers in university funding. It is now 10 years since the Dearing report, which recommended a tripartite approach to university funding. Lord Dearing recommended that money come from the state, and that funding has continued. He also recommended that the student or graduate should contribute, and that contribution has increased over the eight years since tuition fees were introduced. Finally, he recommended that employers step up to the plate and make a contribution, but that part of the report has not received sufficient policy attention from the Government. I therefore invite the Minister to expand on the Secretary of State’s comments in his funding letter of 11 January 2007 to the Higher Education Funding Council, which is reproduced as a final appendix on page 41 of the Library debate pack. In paragraph six of his letter, the Secretary of State invites HEFC


Will the Minister expand on what the Government are alluding to? Are we really starting to ask employers to make a greater contribution to higher education?

My hon. Friend the Member for Cambridge rightly said that the undoubted salary benefit to graduates of accessing education is now more in the balance given that the debt that they will incur is now augmented by increased fees. The Government’s evidence for drawing firm conclusions about the policies that they have implemented and those that they might be contemplating is still rather flimsy. We do not yet know for certain which of the shifts in behaviour that my hon. Friend mentioned might be taking place. We do not know whether students are deciding to do business studies rather than classics because they think that such courses will be more commercial and more attractive to employers when they graduate. I saw the hon. Member for Henley (Mr. Johnson) rushing to meet the Roman soldiers who were outside Parliament yesterday to stand up for ancient history, and I agree with him that it is important to preserve such things. Merchant banks and firms of chartered accountants, such as the one that I worked for, want to employ people with trained minds who can think critically for themselves and argue a case, and students are better able to get those skills from a history,
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classics or law degree. However, students are now thinking about the commercial viability of their courses and might take courses that they might not otherwise have taken because of the financial arrangements.

Mr. Boris Johnson: The hon. Gentleman makes a good point about the necessity to make it clear to students that the humanities also offer lucrative prospects. However, is it not also our duty to make it clear to students that science—the numbers have gone down in the past, although the Minister will no doubt correct me and say that they are booming—is also a lucrative path for them to take?

Stephen Williams: Absolutely. My hon. Friend the Member for Cambridge and I heard anecdotally from an admissions tutor at Cambridge about a conversation with a parent who wondered whether their daughter should take physics or business studies. She was scheduled to get four As, including physics, and was an ideal candidate for a physics degree, but she thought that business studies might be more appropriate because of the debt and everything else.

Shifts are therefore taking place in subject choices, which is bad enough, but there are also likely to be shifts in location. It is a question not only of the cross-border issues at the heart of this debate but of whether the pattern of access to higher education, from which all of us here probably benefited—with people going away to study—will become completely different.

I went to Bristol from south Wales. It was a completely different environment from that of the mining village in which I grew up, and my life is completely different now. I have even largely lost my Welsh accent. Will students from more disadvantaged backgrounds now study closer to home, because that will reduce their subsequent debt? Increased fees, which augment the debt, might lead to that shift in behaviour.

Looking to the future, I am sure that the Minister hears from many vice-chancellors of their desire for the cap on the £3,000 fees to be lifted. I know that the Government will hold a full review in 2009. Of course, if the cap is lifted in England, the chances are that there will be even greater financial pressures affecting the ability of the Welsh Assembly Government and the Scottish Executive to maintain the differential, and that investment in those universities will change as a consequence.

My hon. Friend the Member for Cambridge also mentioned research. Of course, the Department of Trade and Industry made an extremely short-sighted decision to lop £68 million from the research councils’ budgeted income—income for which they had already budgeted, which they had allocated to research projects, and which they will now have to claw back. That decision cuts investment in tomorrow to finance the industrial mistakes of the past. At present we have a UK-based research funding council system, which is, at least, able to invest in Scottish and Welsh universities. I hope that that will continue.

I thank the hon. Member for Wrexham for introducing the debate. He rightly said that not enough attention has been given to the anomalies that are now arising between the three nations and one Province of
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the United Kingdom. Those issues need to be teased out much more in the future.

11.52 pm

Mr. Boris Johnson (Henley) (Con): I, too, congratulate the hon. Member for Wrexham (Ian Lucas) on calling the debate and on putting his finger on a difficult political problem, which will not get easier, and which will start to come up the political agenda as we move towards a further reform of higher education finance, for reasons that I shall go into in a minute. He has only scratched the surface of the problem, but he is right to draw attention, first and foremost, to the need for strong and stable public finance for higher education. That is certainly something to which my party is firmly committed. Higher education is good for the country. Universities UK says that it generates £45 billion a year, and I do not quibble with that. It is a wonderful thing. It is a great motor of social mobility and, as the hon. Members for Cambridge (David Howarth) and for Bristol, West (Stephen Williams) both said, it is a great thing in itself. We thoroughly support the expansion of higher education and we want to ensure that it is funded properly.

Higher education is not, however, being funded properly at present, in the sense that the unit of resource has gone down considerably. As the Minister will confirm, anyone who goes to universities and talks to students about what kind of deal they are getting will sometimes encounter a good satisfaction rating—the students are happy—but will often meet students who say they are not getting a fair suck of the sauce bottle: they do not get enough teaching, class sizes are too big, and the student learning experience is not what they have come to expect. Particularly now that we are asking students to pay their fees, they are becoming more and more consumerist, and they deserve a better deal.

We need to think creatively. I welcome the cross-party note that the hon. Member for Wrexham struck. He is right, because the issue is so sensitive politically that there is a risk that it can become acrimonious. We all need to think creatively about ways of getting more money into higher education. The right hon. Member for Oxford, East (Mr. Smith) is of course right to say that endowments offer great hope. I welcome the recent proposals by the outgoing Prime Minister; I hope that the incoming Prime Minister will develop them. The Minister nods, which is all to the good, and we should support that idea.

I do not necessarily agree with the slightly defeatist note that is sometimes struck, although it is a valid point that some universities do not have the alumni base that others do, and therefore find it difficult to raise funds in the same way. That does not mean that we should discourage that route. Let us remember what American universities have achieved in a short space of time. They have fantastically increased the amount of money that they pull in, and we should think—in a revenue-neutral way, as I am not allowed to make any spending commitments—about the possibilities. For example, it might be possible to adjust the gift aid arrangements to make them more like the American system, where the giver has more of a direct sensation of giving. In America people can write out a cheque with more noughts on it than they can using the British system. It is a cosmetic change, admittedly, but I
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wonder whether it has a role in the psychology of giving that seems to be so prevalent in America.

I wonder, also—and I know that the Minister has thought about this and that the Higher Education Funding Council is already working on it—whether it is possible to be more relaxed with universities about how they spend the money that they get. Might it be helpful in some cases to break down some of the barriers between the various budget lines that HEFC sets out? Is it possible to smash some of the jam jars so that vice-chancellors just get more of their money in a single wodge, rather than having to bid constantly for this or that penny packet of money? There are arguments both ways, and different vice-chancellors would give different answers about it, but that seems superficially an attractive way to go, because it would involve trusting universities more and allowing them to get on with developing their operations as they see fit.

We should also, of course, develop funding for part-time students. If we could get the holy grail of some kind of income-contingent, revenue-neutral system of funding part-time students, which did not discourage business from contributing, we should go that way. We also need to think—as we are doing—about getting money from the beneficiaries of higher education. That was the importance of the 2004 reform, against which the hon. Member for Wrexham voted; and we should look honestly at the results of the reform. I do not think that the gloomsters have been proved right. It is perfectly obvious that numbers going into higher education—certainly in England—have gone up. I know that the Liberal Democrats sometimes dispute that, but the figures are 7.2 per cent. up this year in England. I think that I am right in saying that that effect is happening in the lower socio-economic groups.

Stephen Williams: I am sure that the Minister will be pleased at the hon. Gentleman’s helpful points, but does he acknowledge that the largest group of applicants to the Universities and Colleges Admissions Service is those defined as unknown? That group is growing, because students do not say what background they come from. The evidence that the number of students from lower socio-economic groups is growing is flimsy.

Mr. Johnson: I would say that I am grateful for the intervention, but I am not really. The hon. Gentleman is clutching at straws to vindicate a point that was convincingly demolished by the increase—surge—in applications this year. He should execute a complete U-turn and drop his opposition.

To come directly to the point, the position in England is not replicated in Scotland, where, admittedly from a higher base, the number of applications has gone down by 1.2 per cent.

David Howarth: Would not it be fairer to look at figures across two or three years, since in England there was a great decline in applications and then a great increase? There were two factors: the introduction of a new system, which always causes uncertainty, and underlying demographic changes. People’s chances of becoming a student are still pretty much what they were before the change happened.

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Mr. Johnson: One could not call the 2006 figures a sharp decline, as they were substantially up on the 2004 figures. The Liberal Democrats must move on from this point. They have lost the rubber; they should give up the argument, move across and start supporting a constructive, creative and socially progressive way of getting more money into universities.

This issue is particularly relevant in Scotland, where numbers have gone down. The Scottish did not go for the English solution and they have something approaching a crisis in their university system. There is a brain drain of academics going down to England, and there are considerable redundancies in the faculties of Scottish universities—I hope that we are allowed to talk about Scotland even though it is a devolved Administration. Dundee has had to lay off 100 lecturers, Strathclyde is laying off 250 and Glasgow 230.

If one reads the Scottish papers, as I do, one will know that Scottish academics are looking longingly at the alternative English system that was created as a result of the devolution arrangements. They are urging Scottish politicians to go down the English route, and are becoming more and more vociferous in saying that their competitive position is not sustainable and that they want to replicate the situation here. Unfortunately, something terrible has happened in Scotland: they voted for the hon. Member for Banff and Buchan (Mr. Salmond), who takes an even more regressive position than that which was taken by the previous Administration. He says that he will get rid of all kinds of repayment and will reinstitute the grant, which will further increase the disparity between the English and Scottish systems.

Ian Lucas: Does the hon. Gentleman agree that one advantage of devolution is that it enables us to compare different systems and see which works best? We can look at the evidence and then follow a particular route as a consequence. It will be to the advantage of the devolved Administrations to work towards a single UK model by consensus.

Mr. Johnson: One might just as easily gain the same advantage by looking at many different countries. However, I see the hon. Gentleman’s point. This is a difficult problem and it is going to get sharply worse. Some time this summer, the Government will appoint a commission. The word on the street is that the person who will run it has already been designated by the Minister. I do not know whether that is true; there is a studied blankness on the Labour Benches. One way or another, a commission will be appointed this summer to look forward to 2009 and to begin work on a review of higher education financing in England.

I do not want to prejudge the review in any way, but I will say that we all want an equitable system that allows universities as much freedom as is compatible with widening access and ensuring that people from poorer, non-traditional backgrounds are not deterred from going to university. We want progressive reform that gives universities more freedom to make their own financial arrangements, within reason, if that is possible. One imagines that at some stage in the next Parliament, a Bill will come before Parliament, as it did in 2004, setting out the arrangements by which that might happen in England. The background to such a
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Bill will be very different from that in 2004, because by then the disparity between the funding arrangements in England and Scotland will be even worse, and Scottish academics will be looking with ever more longing eyes at the English system and worrying that their competitive position is being further eroded.

David Howarth: I cannot let the hon. Gentleman move on without putting to him the obvious, Scottish academic, point of view. Funding for research in Scotland is considerably more generous than it is on this side of the border, so the academics who are looking longingly across the border might be looking the other way.

Mr. Johnson: The hon. Gentleman makes a fine point about research, but if he were to read the Scottish papers and look at the redundancies in Scottish faculties, he would not speak quite so glibly.

Given the widening competitiveness gap between Scottish and English universities, one has to wonder whether the 59 Scottish MPs should be allowed to vote on these issues in this Parliament. English MPs have no corresponding say over those questions in Scotland, and the motives of those Scottish MPs will be mixed, to say the least. Will they vote for a system that allows English universities to have a yet greater competitive advantage and so disadvantage universities in their own constituencies? Should we allow a Bill to be drawn up that will take account of those Scottish motives, when it will affect only English universities in English constituencies. I do not think so.

It is all very well to have two or three different systems of university funding in this country, but it is not right to have one group voting on another group’s system if the other group is not allowed to vote on the first group’s system. That fundamental injustice is going to move up the political agenda, and it will be extremely difficult to solve unless the Government move towards the system that the Opposition advocate, of having English votes for English laws. Under no circumstances would a Scottish Conservative MP vote on a higher education funding Bill that did not affect his constituents. The most elegant, logical and natural solution is for the Minister to pledge now that no Scottish MPs shall vote on the future financing arrangements of English universities.

The problem is not insoluble, and the hon. Member for Wrexham was right to raise this issue. His comments are timely and prescient, and he is right to point out the difficulties of having several university finance systems in a united kingdom. I look forward to joining his cross-party effort to sort the problem out.

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