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8 Jan 2008 : Column 235

Several hon. Members rose

Mr. Denham: I shall take one more intervention, then I shall make progress.

Robert Key (Salisbury) (Con): I am grateful to the Secretary of State, who is being typically accommodating, if I may say so. If he cannot give such a commitment, can he at least say that he is prepared to consider putting on the exempted list theology and theology for ministry courses, which would have such a profound impact on all the religions in this country?

Mr. Denham: I do not want to be drawn into a topic-by-topic discussion of the list, because we have not yet received the report from the HEFCE. The point that the hon. Gentleman makes was made earlier. I acknowledged that there was an issue to be debated and I do not think that I should say more, because we genuinely have not taken decisions but we recognise the breadth of opinion.

Having set out the issue of principle, I turn to an equally important issue—practice. Can the change be made without the damage that some are claiming? It will undoubtedly mean change for every higher education institution. For some, including the Open university and Birkbeck, the change will be greater than for others, but the approach proposed by HEFCE is designed to ensure that institutions can respond, and that they are protected while they do so.

First, transitional protection will mean that no institution will lose money in cash terms against its 2007-08 baseline over the next three years. That protection would exist even if those institutions did not successfully attract a single additional student. Secondly, as I said, a range of courses are protected from the change. Less than a third of the ELQ budget will be reprioritised over the next three years. Thirdly, clear incentives are proposed to enable institutions to further protect existing funding and attract additional funding.

Courses that attract employer co-funding are protected and will continue to attract ELQ funding. Over the coming years we need to expand the number and range of employer co-funded provision. The Minister for Lifelong Learning, Further and Higher Education recently announced an additional £100 million of co-funded higher education courses over the next three years. Employer take-up of that money will obviously be greatest where higher education institutions offer the courses that employers want to those employees who need to retrain on a part-time basis, who need to be able to study flexibly and who need to be able to study from home. Not only can the Open university and Birkbeck bid for those funds, but the way that they operate and the education that they offer means that they are particularly well placed to develop the higher education that employees, employers and the wider economy need.

Fourthly, the HEFCE proposes to increase the targeted allocation for part-time students. The proposal is intended to maintain part-time courses that might otherwise be affected. Finally, there are some specific institutional issues. The Open university, for example, has piloted a number of schemes to widen participation through work with parents and grandparents, and it has done work on the provision of online materials. It provides opportunities for disabled students to access higher education. There are opportunities to review with the
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HEFCE how the funding model can better and more explicitly reward these valuable activities.

Cash protection, protection of a wide range of key courses, opportunities for increased employer co-funding, and improved support for part-time courses will together enable institutions to respond to a change that is being phased in over three years.

Mr. Mark Todd (South Derbyshire) (Lab): What response has my right hon. Friend had from employers to the opportunities that he is proposing for co-funding partnerships?

Mr. Denham: We currently have 15 highly successful pilot schemes of co-funded courses with funding from employers and funding through the HEFCE. That is the basis on which the much larger sum has been committed.

The hon. Member for Havant rightly referred to the enthusiasm of the director general of the CBI for the development of such co-funded courses. Unfortunately, the hon. Gentleman deliberately misquoted by running together two quotes from the director general of the CBI slightly out of context. The director general of the CBI said:

I am therefore confident that institutions will be able successfully to attract new funding from employers for a wider range of courses relevant to the labour market.

Rob Marris: My right hon. Friend will be aware of the interest of the Minister for Science and Innovation in the university of Wolverhampton, which is headquartered in my constituency. I spoke to its vice-chancellor today. She told me that, even with the protections to which my right hon. Friend refers, it would lose, under the proposals, 6.5 per cent. of its grant—£2.4 million a year.

I am talking about the most accessible mainstream university in the country. Due to the deprivation of the local economy, trying to get co-funding from employers, as the university has been trying to do, is difficult. I urge my right hon. Friend to be careful of some of the consequences of a proposal the broad thrust of which I strongly support.

Mr. Denham: Obviously, I do not have the detailed information about the institution mentioned by my hon. Friend. However, I will make this additional point: institutions should not forget that the £100 million that is being reprioritised from ELQ is available to higher education institutions to attract new students. An institution such as Wolverhampton will be able to bid for that money to extend the opportunity for higher education to those in the deprived area that my hon. Friend mentioned who have never been to university.

No money is lost under the system; there will be a reward for the institutions best able to attract and offer higher education to people who have never had the chance to go to university. It is true that we are not carrying out a central allocation of funding. We wish to incentivise institutions to reach out, get to those students and draw them in. The money is there and it
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will be available for the institution that my hon. Friend mentioned to bid for, as it will for others.

To summarise, to handle the transition there is cash protection, the protection of a wide range of key courses, opportunities for increased employer co-funding, improved support for part-time courses and the ability to bid for all the funds that are being reprioritised. That is why I am confident that institutions will be able to respond in the next three years.

Mr. Sheerman: What would my right hon. Friend say to the constituent who wrote to me this morning? As an 18-year-old, he had done a chemistry degree at Manchester and then served nearly 32 years as a probation officer—not a high-earning occupation. He was looking forward to taking an interesting degree when he retired at 60, to stimulate him in his retirement. Under these rules, will such a thing be impossible for most older people?

Mr. Denham: As my hon. Friend well knows, in the past three years we have reprioritised funding, across the education system, from informal learning towards the qualifications and skills most directly needed in our economy. My hon. Friend will be familiar with the fact that that has happened in further education.

I recognise the value of educational opportunities pursued purely for benefit and individual gain. In the next few weeks, my Department will launch a new consultation on the future of adult learning in the 21st century. I want that to range from the leisure course in the local community to higher levels of education. I hope that my hon. Friend will take what I have said as an acknowledgement of his point and a suggestion that how we have met such need in the past may not always be how we will meet it in future. But yes—we need to find ways to meet that need, and in the next few weeks my hon. Friend will hear more about that from me and my Department.

Mark Durkan (Foyle) (SDLP): The Secretary of State said that there is a three-year time scale for a number of elements on the menu of protections that he has identified. However, he has not mentioned any time limitation on protections for key courses and strategically important and vulnerable courses. Clearly, however, the Open university and others are briefing that those are also subject to a three-year time limitation. Will the Secretary of State take it from Members that we are not comforted and that three-year protections that work on a downward curve are no significant reassurance?

Mr. Denham: I am particularly concerned about suggestions that £30 million or £31 million is at stake at the Open university, as though the money will disappear from its budget tomorrow. Such suggestions assume a much wider reprioritisation than we propose at the moment and an absolute cut-off of transitional protection after three years. The HEFCE consultation merely covers the comprehensive spending review period, so none of those things should be taken for granted and our proposals should be assessed on the merits that we have put forward.

As I said at the Open university, that university has some 200,000 students. It would need to recruit 3,000 extra students in each of the next three years to make up what would be the shortfall for the next three years.
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That is the reality; it is not the impossible task described by many this evening.

Mr. Todd rose—

Mr. Denham: I shall take one further intervention, but then I must come to an end as many Members wish to speak.

Mr. Todd: The Government have to take account of a number of criteria in deciding how to allocate funding, and my right hon. Friend has referred to some of them. May I refer to others, such as the aptitude and will of the student to take advantage of the opportunity and complete the course? One of the critical issues is whether the resources allocated will end up delivering a qualification.

Mr. Denham: We have extremely good completion rates in higher education. If my hon. Friend is suggesting that the next group of students, out there in the community as adults who did not go into higher education after they left school, are not up to it and unlikely to succeed, he and I have a major disagreement. I believe that it is perfectly possible for higher education to attract the equivalent of 20,000 full-time students successfully and for those students to complete courses as well as anybody else.

I should draw to a close.

Mr. Edward Vaizey (Wantage) (Con): More! This is quality stuff.

Mr. Denham: I am grateful to the hon. Gentleman for recognising that.

Let me be clear. Ministers and the HEFCE recognise the challenge to many higher education institutions of changing their ways of working to respond to the new priorities. It will take time to change and develop new partnerships. The transition needs to be carefully managed; institutions need proper protection.

I also recognise that no two institutions are the same. Birkbeck is already working with HEFCE to see how to respond most effectively. I hope that the Open university will do the same.

Mr. Willetts rose—

Mr. Denham: At the very last moment, I shall give way to the hon. Member for Havant.

Mr. Willetts: The Secretary of State was talking about protection for the institutions. The Open university cites the figures that he disputes not because it has invented them—they are HEFCE’s own estimates of the long-term steady state position that there will be at the end of the changes. Transitional support before getting to that end-term state is not sufficient; it does not tackle the fundamental problem. Will the Secretary of State clarify exactly what he is talking about?

Mr. Denham: The figure on the HEFCE website assumes—and that is HEFCE’s decision, not ours—a much greater reprioritisation than the Government have proposed or asked the HEFCE to advise us about. That is the reality. The point is very important and I hope that the hon. Gentleman will accept my answer.
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At the end of the three-year period, the amount of money that the Open university would need to make up through all the different sources of students that I have mentioned is about £12 million a year. I have already said how that can be done and set out the number of students involved and the sources of funding available to the Open university to do that.

The Government have been prepared to take difficult decisions, including the introduction of variable fees, to support our world-class higher education system, and I ask the House to support us once more tonight. As Harold Wilson, who with Jennie Lee was the architect of the Open university, once said:

Several hon. Members rose

Mr. Deputy Speaker (Sir Michael Lord): Order. I remind the House that the Government amendment has been moved in a slightly amended form from that printed on the Order Paper, with the substitution of the word “higher” for the word “lower” in line 3.

8.19 pm

Stephen Williams (Bristol, West) (LD): It is with some trepidation that I rise for the first time in my new role, chucked in at the deep end on the second day. I thank the hon. Member for Havant (Mr. Willetts) for his courtesy yesterday in alerting me to this subject. He explained in his introductory speech that the motion is based on an early-day motion. In the past couple of days, I have done several radio interviews based on one of my own EDMs about Bristol Old Vic, which I invite colleagues to sign. People ask what is the point of an EDM; well, this is the point. EDM 317 has now been withdrawn as we are, in effect, discussing it tonight, but the Table Office informs me that 211 Members had signed it. That is the most up-to-date figure, rather than what was printed this morning, and it includes more than 80 Labour Members, some of whom are in the Chamber. I hope that when we troop through the Lobby in just over an hour and half they will have the courage of their convictions to vote for what they signed.

The new Department for Innovation, Universities and Skills is just over six months old, but it has already succeeded in upsetting just about everybody in the sector or outside the sector, including everyone from the director general of the CBI to the National Union of Students—not usually bedfellows. This is a fundamental change designed to introduce £100 million-worth of internal savings in the Secretary of State’s Department. I wonder why he feels the pressure to make those savings.

Mr. Denham: I welcome the hon. Gentleman to his new position, but will he accept that, as I told the House, these are not savings but a reprioritisation from one group of students to another?

Stephen Williams: I thank the Secretary of State for what he thinks is a clarification, and for welcoming me to my post. It is an internal saving or reallocation
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within his Department, and for some parts of the higher education sector it is a cut in their provision, so it is certainly a saving imposed on them.

In his letter to David Young, chairman of the Higher Education Funding Council for England, the Secretary of State says:

The old Department for Education and Skills had its CSR settlement sooner than everybody else, so I wonder why it has taken so long to decide what the strategic priorities are. Of course, that settlement was made before the split and the setting up of the new Department, and I wonder whether this is a casualty of the disaggregation of the old DFES budgets. The change has been rushed through with little consultation. The Department’s predecessor has form in that area, given that it announced, without any consultation at all with the higher education sector, that it was going to give foundation degree-awarding powers to colleges. It announced the decision and let everyone else sort out the details and deal with the implications. Once again, the higher education sector feels bounced. This decision will hurt its institutions financially, as well as individual students, some of whom will surely now decide that they are not going to go on to do an equivalent or lower qualification. That will undermine the Leitch agenda that the Government say that they are trying to achieve.

I understand that some Labour MPs will have probably been getting some hostile correspondence, particularly if they represent relevant university seats, and I know that they have been given some helpful internal Labour party advice, which has also, rather helpfully, been given to me. I have the parliamentary Labour party briefing that has been circulated to help Labour Members to rebut the points that have been made by Liberal Democrats and Conservatives. If you do not mind, Mr. Deputy Speaker, I will quote from it—even though it says that I might be committing an offence by doing so, I believe that I am protected while I do it in this Chamber. There are some choice quotes. [ Interruption. ] I notice that the hon. Member for Milton Keynes, South-West (Dr. Starkey) is laughing; an institution based in her constituency is raising this concern with her and with all hon. Members, so I do not think that it is an amusing matter. The tone of the briefing suggests that this is all a fuss about nothing. It says that

It is less than a third—it is 31 per cent., so it is still a pretty significant amount of money. It says:

Surely that is missing the whole point. Students should be free to make their own decisions on what is necessary for them to increase their employability in the labour market, and if they need to study for an equivalent level qualification or for a lower level qualification, that is the choice that they should make and the choice that the higher education market should offer to them. It seems ludicrous to say that they could go away and study for a masters.

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On the Open university, Labour Members are told to tell us that

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