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21 Oct 2008 : Column 7WH—continued

9.53 am

Mr. Bob Laxton (Derby, North) (Lab): I congratulate my hon. Friend the Member for Sittingbourne and Sheppey (Derek Wyatt) on obtaining this Adjournment debate this morning. My hon. Friend has opened up a few interesting issues and probably set the odd hare or 30 running, given his views on major restructuring of the higher education sector here in the UK. He is a bit like Don Quixote, tilting at windmills, but I am not inclined to be like Don Quixote’s faithful friend and companion, Sancho Panza, as I do not share his view about the requirement to go for, or even a suggestion that we should go for, a major upheaval in the HE sector. In fact, I think that that is the sort of idea that would blow up into a holy or unholy row among people in the HE sector, if it were to be implemented.

I was very interested in the intervention from my hon. Friend the Member for Norwich, North (Dr. Gibson), who is on my left in every way. He raised the issue of research funding for universities. May I say to the Minister that—well, I can say to him what I like, I suppose.

Mr. Bill Olner (in the Chair): In parliamentary language, of course.

Mr. Laxton: I am telling the Minister the obvious, I suppose, because he knows his role better than I do. In December, he will be making decisions about the allocation of £1.9 billion of research funding to universities, and I believe that that allocation will be announced by the funding council in January 2009. It is important that he understands the role of universities such as my local
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university, the university of Derby, in driving research and innovation that is of relevance to the local, regional and national economy, and that he ensures that the university receives a research funding allocation that improves—hopefully, considerably improves—on the 2002 outcome, which of course was the last time that a similar decision on research funding was made.

This forthcoming allocation is crucial as it will determine the majority of the public funding for research in the university of Derby for the next five years, for the period from 2009 right through to 2013. It was a previous Minister who made the decision in 2002. Nevertheless, when that decision was made, 76 per cent. of the £1.4 billion that was allocated went to just 19 of the UK’s 120 universities, as a result of a Government decision to fund only research of international significance.

I have no argument about the HE sector funding areas of international significance and, of course, they should continue to fund such areas. However, the 2002 decision meant that the university of Derby received only £306,000 for 2008-09, which was made up of nearly £300,000 of collaborative research funding and £6,800 in quality-related research funding, even though the university is a key driver of innovation in the local and regional economy.

Therefore, I am extremely concerned that the Minister ensures that excellent research of national significance as well as research of international significance is recognised in the 2009 decision and that we are able to invest in the research infrastructure of universities to respond to local and national needs and to new and emerging markets in the period between 2009 and 2013.

9.57 am

Stephen Williams (Bristol, West) (LD): I have been called to speak somewhat sooner than I expected; in fact, I was still preparing my notes.

We should first congratulate the hon. Member for Sittingbourne and Sheppey (Derek Wyatt) on securing the debate and on giving us a thought-provoking and perhaps trenchant introduction.

We live in politically fluid times, and it seems that John Maynard Keynes is reborn with enthusiasm across many parties. He was, of course, one of the greatest Liberals of the 20th century. It also seems that the spirit of Milton Friedman is alive and well in Sittingbourne and Sheppey, and there seems to be an internal debate going on in the Labour party about which direction it should be pursuing, including in higher education. It seemed to be the hon. Gentleman’s position that there should be a free market in higher education, including in fees, with different fees at different institutions, and probably for different subjects as well, and also that a new elite group in UK higher education should be introduced.

However, I point it out to the hon. Gentleman that one of the inevitable consequences of a market is failure. If there is genuine competition, the natural economic result of it is that an institution will fail. Although he said that membership of the Russell group club should be halved, he did not give us any idea which institutions he would downgrade or close.

David Taylor: The hon. Gentleman is suggesting that markets create failures, and I think he is relating that comment to institutes of higher education, but markets also create winners and losers among the students
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themselves, and is it not increasingly the case that the losers are students from working-class backgrounds who typically leave university with debts that are almost 50 per cent. more than those of their middle-class counterparts? Does that not damage social mobility and is it not the role of my party and the hon. Gentleman’s party to reduce inequality rather than to accentuate and expand it?

Stephen Williams: I thank the hon. Gentleman for that intervention. I agree that lack of social mobility should trouble progressives of whichever party. It is certainly something that drives me as I put forward policies in this area for the next general election. He rightly says that people from poorer backgrounds who have accessed higher education face great challenges because of the debt burden—it will increase over the next few years—that they will face when they graduate, but I am more worried about the untapped pools of potential of students from poorer backgrounds that are not accessing higher education at all. That is the big challenge that faces all of us who want to ensure that everyone who is able to do so can access and benefit from higher education.

Dr. Gibson: The hon. Gentleman may remember that it was mentioned in the debates on charging students for going to university that bursaries would be given as well. Professor Claire Callender has just written a book that shows quite clearly that working class students get less support and help than was intended in the original plans, yet Oxford and Cambridge—it is no secret that they would like to be private if they could get away with it, and they might yet—can give huge bursaries just to show how concerned they are that people get a fair crack of the whip. Indeed, working class students do not get a good choice or a crack of the whip.

Stephen Williams: The hon. Gentleman is, of course, correct. When the Government introduced variable fees in 2004, they may have expected there to be a market in fees, but what has evolved is a market in bursaries, which I do not believe was predicted at the time. It is incredibly difficult for a 17 or 18-year-old contemplating where they will pursue their future studies to understand that market, and there is a growing consensus that perhaps there should be a national bursary scheme with national criteria to ensure that money is going where it is genuinely needed and that it will make a difference. I am studying that policy initiative carefully.

Higher education faces many challenges over the next decade or so. The CBI said recently that 42 per cent. of the jobs that we would expect to find in the economy of 2020, if it is possible to predict the economy that far ahead, are likely to need a graduate-level qualification. That is broadly in line with what Lord Leitch said in his 2006 report, but we know that only 29 per cent. of the current work force are educated to degree level, so a step change is needed to ensure that our work force have skills for a knowledge economy.

Much of the growth in learning is likely to come from part-time study by people who are currently in the workplace. One reason for that is that there will be a big demographic change over the next few years, and fewer young people from the traditional 18-to-21 age group will go into higher education. The sector will need to do
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much more to ensure that adults who are in the workplace can study part-time. As the hon. Member for North-East Milton Keynes (Mr. Lancaster) said, that means a step change in how we fund part-time higher education and a reversal of some retrograde decisions that the Government have made recently, in particular on equivalent and lower qualifications.

It is hard to predict how our economy will evolve over the next decade. We could not have predicted 10 or 15 years ago some of the jobs that are currently available, or that there would be degree programmes to meet the demands of jobs such as those in gaming. When I was applying for my university place, the computer game was Pac-man, which was played with just two fingers on a watch or on a black and white television console. I would have been astonished if someone had told me that 20 years later many universities would be offering degrees in gaming. None the less, that is the case, and who knows where we will be in 2020? It will be essential that existing graduates are able to reskill, which is why the ELQ decision was a bad one.

The world is increasingly competitive, and it is essential that the UK maintain the position in higher education that it currently enjoys. As the hon. Member for Sittingbourne and Sheppey rightly pointed out, we face challenges not just from our traditional competitors—North America, Australia and, increasingly, Europe—but from the emerging economies of China and India. It is all the more essential that we invest in our STEM subjects—science, technology, engineering and mathematics—and in the people who will teach those subjects and inspire the youngsters who take them up in the future.

The UK must be open to the world’s best academics and students, and that requires a joined-up approach right across Government so that the Treasury or the Home Office does not throw obstacles in the way of academics accessing our universities.

In the 2001 and 2005 general elections, the Liberal Democrats opposed the introduction of tuition fees. The Labour Government decided to introduce them, despite indicating in 1997 that they would not, and then increased them after 2001, despite expressly saying in 2001 that they would not do that. We fundamentally disagree with the starting point—where we are now—but, obviously, it is my duty to comment on where the Government are going.

The hon. Gentleman mentioned the prospect of the fee cap being raised.

Mr. Laxton: I am interested that the hon. Gentleman thinks that it is his duty to comment on where the Government are going. I would have thought that it was more his duty to comment on Liberal Democrat views on student fees.

Stephen Williams: If the hon. Gentleman is patient, I will give him an indication of that, but there is a world of difference between a party in government saying at a general election that they will not do something and then, when they win the election and retake office, doing it, and an Opposition party saying at one general election what its position is vis- -vis the Government of the day and then, between elections, thinking about what it might say at the next general election to meet the circumstances of the time.

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Dr. Gibson: May I follow up the point made by my hon. Friend the Member for Derby, North (Mr. Laxton)? The hon. Gentleman is making a cheap jibe. In fact, the argument in 2004 was that tuition fees would not be installed in the system until after the 2005 general election. There were arguments against that, but that was the guarantee from the Government. Things changed in the new manifesto.

Stephen Williams: I was referring to the 2001 manifesto, which included a phrase that was often used in the 2001 general election:

As the hon. Gentleman well knows, within two years legislation was introduced to bring in top-up fees.

Dr. Gibson: In 2005, after a further election.

Mr. Bill Olner (in the Chair): Order.

Stephen Williams: Thank you, Mr. Olner.

I wish to return to raising the fee cap and introducing a market in higher education. As the Higher Education Policy Institute stated recently, if the fee cap were to be raised, there would be further cost pressures on the Treasury because of the increase in the cost of subsidising the real rate of interest on maintenance and fee loans. Whatever path the Government pursue, whether to put more money directly from Treasury funds into higher education or to pass the cost on to students, there will be a direct cost to the Treasury if the current regime of subsidising loans is to pertain. Given that choice, it would seem preferable for further investment in higher education to come from general taxation rather than from pushing further costs on to the most recent graduates.

The system needs some stability. I know that the Government will have a review in 2009, but there have been many changes in the past five years, whether in the fee regime that we have just discussed or in the maintenance support that is available to students. Some stability would be welcome. The new system needs to bed down so that we can genuinely understand what difference it is making and not have to make fundamental decisions in 2009 from a low and flimsy evidence base.

Mr. Lancaster: I am sorry for not following the hon. Gentleman exactly, but is it still the Liberal Democrat position to oppose top-up fees?

Stephen Williams: Yes, if that was not clear.

As the National Union of Students reminded us recently in its excellent report “Broke and Broken”, the recommendation of the Dearing report in 1997 was that graduates who benefit from higher education should perhaps make a 25 per cent. contribution to the cost of their study. But in some liberal arts subjects, the contribution of about £3,300 a year that graduates will make is already close to what the taxpayer contributes to the cost of their study. There is no scope, certainly in this sector, for asking graduates to contribute more.

Several hon. Members, including the hon. Member for Derby, North (Mr. Laxton), mentioned the distribution of funding. The hon. Member for Sittingbourne and Sheppey implied that there are too many universities in the sector, with 120 institutions, ancient and modern,
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competing for income. Analysis by Grant Thornton, one of my former employers, has shown that the share of income is becoming ever more concentrated among the Russell group family of universities.

Will the Minister say what he thinks of the recent report from Million+, which calls, at least in the area of research funding, for a certain proportion of the research budget to be set aside to allow for a contribution to new universities to ensure that they are able to nurture their talent and to grow a new research base that is more evenly spread around the English regions?

Universities could take up other sources of income. Endowments need to grow. For that to happen, a cultural change is required, with all of us giving to our former universities. Next year, Bristol university celebrates its centenary and will, no doubt, hold an appeal in association with that to which I will certainly be a contributor.

I shall end by mentioning the Government’s review. It would be interesting to hear the Minister say when he expects the various strands to come to a conclusion. I believe that the intention to have a review was part of the deal made with Labour Back Benchers in 2004, the idea being that in five years there would be a review of the new system. Perhaps at that time they did not contemplate either the existing economic situation or the political timetable for a general election, which is likely to be held during 2009 or 2010. When does he expect the review to produce some firm policy conclusions, so that all three parties can ensure that the issue is debated sensibly at the next general election?

I hope that the review will be open-minded and not merely a justification for raising the fee cap. It will need to look at who benefits from higher education and who participates in it, and at the different modes of study, to ensure that all generations are able to participate. It should not be representative only of the sector and industry, but should generally involve young people. The UK Youth Parliament is keen to be involved in this issue.

Hon. Members should thank the hon. Member for Sittingbourne and Sheppey for introducing such a stimulating discussion. Our united purpose should be to ensure that British universities are funded fairly and that they keep us at the forefront and in the front rank of the world’s universities.

10.13 am

Mr. Rob Wilson (Reading, East) (Con): I, too, congratulate the hon. Member for Sittingbourne and Sheppey (Derek Wyatt) on securing this important debate, which I welcome because this is a good time to discuss student finance.

I also congratulate the hon. Gentleman on his interesting and informative opening speech. He argued for excellence in universities, which is surely right. He has a view on how we achieve that with the three-tier system that he spelled out. He also spelled out clearly the growing international competition and the threat to our continued prominence in the sector globally. We will have to return to that point regularly in the coming years.

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