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Mr. Willetts: One area where the current pressures are most severe is in the delivery of higher education in further education. Because universities are under financial pressure, some are retrenching and withdrawing support for higher education courses that are delivered in local further education colleges. We very much regret that trend, which is something to which my hon. Friend the Member for South Holland and The Deepings (Mr. Hayes) may refer in his speech at the end of this debate-if he succeeds in catching your eye, Madam Deputy Speaker-because higher education in further education is a cost-effective and flexible form of provision.
Mr. Willetts: The Chairman of the Children, Schools and Families Committee is very active; I will give way to him a second time.
Mr. Sheerman: The hon. Gentleman and I share a love of history-I know that he is very much an admirer of Michael Oakeshott-but will he cast his mind back over the true history? History with things wiped out is not good history, and when Mrs. Thatcher was Prime Minister she wiped out apprenticeships. That should certainly be recognised. This Government have been rebuilding the apprenticeship system over a number of years, and, before the hon. Gentleman leaves further education, I should mention that we have also rebuilt 60 per cent. of the FE estate. Is that not a commitment to FE?
Mr. Willetts: The Chairman of the Select Committee has just revealed his guilty secret to the House, which is that he was a student of Michael Oakeshott, for which reason I am prepared to forgive him a lot. However, his account of what has happened to apprenticeships is tendentious. As the structure of the British economy changed, and as there were fewer manufacturing jobs available, there were fewer manufacturing apprenticeships. We put in place a reform of apprenticeships, with more modern apprenticeships, but under this Government we now have a decline in their number.
If the Chairman of the Select Committee is interested in the figures, I have here the Government's latest statistics on post-16 education and skills. I can tell him that the number of people in apprenticeships in the first quarter of 2009 showed a decline on the figures for the first quarter of 2007-08. There is now a downward trend in apprenticeship participation, and if we are to reverse it, we need the policies that my party has put forward-policies for easing the bureaucratic burdens on companies taking on apprentices, offering a fairer deal for post-19 apprenticeships and helping small businesses take on apprenticeships. That is the way forward, not the decline that is happening under this Government.
Frank Dobson (Holborn and St. Pancras) (Lab): Does the hon. Gentleman not agree, as a man allegedly of great intellect, that there has been a massive increase in the number of apprenticeships available, compared with the situation that the Labour Government inherited in 1997?
Mr. Willetts:
What has happened is that the Government have redefined apprenticeships, so that level 2 qualifications -GCSE-equivalent qualifications-are now also called
apprenticeships. If we look simply at level 3-equivalent apprenticeships, which is what apprenticeships used to be-in other words, if we look at apprenticeships that are the equivalent of A-levels-we see that the history of the past 10 years is nothing like what the right hon. Gentleman claims. In reality, there has been a decline in level 3 apprenticeships, which has been offset by the redefinition of level 2 qualifications as apprenticeships. That, I am afraid, is a classic example of this Government failing in the real world but then redefining how their performance is measured so that they appear to be doing better than they really are.
However, what I want to focus on, alongside our proposals for new apprenticeship places and more training places at colleges, is the problem that universities will face this summer with the surge in applications and, if anything, a decline in the number of university places. Indeed, it would be interesting if, when the Minister speaks in this debate, he can confirm the figures attributed to the Higher Education Funding Council for England showing that there will be an absolute fall in the number of university places this summer. We have come up with a proposal to bring extra cash into the system to enable this summer's places crisis to be eased, and we have proposed a discount for the earlier repayment of student loans. With £30 billion of student debt outstanding by this summer, we would need only 1 per cent. to be paid back early, bringing in £300 million, to enable us to pay for 10,000 fully funded university places over three years. That would be an attempt to tackle a crisis facing young people this summer before having an opportunity to receive Lord Browne's report, which we hope will put forward proposals for the long-term reform of higher education funding.
Dr. Brian Iddon (Bolton, South-East) (Lab): The hon. Gentleman is talking about a discount of 10 per cent., and comparing that with the Australian and New Zealand schemes, where the discount is 20 per cent. Has he seen the figures calculated by millennium plus, which reached the conclusion that his policy will not raise the amount of money that he is claiming?
Mr. Willetts: I am surprised by some of the claims made by millennium plus, because our estimates are extremely cautious. We require only 1 per cent. of the outstanding stock of student debt to be repaid earlier to generate the cash needed for our policy, and that is a cautious assumption.
However, I have heard the objections of the Government, and want to take a few minutes to go through them, because I do not think that they are well founded. We had the opportunity to hear what the Minister's concerns were in last week's debate on higher education organised by The Guardian. I want to do him the credit of going through his four contentions and seeing whether any of them stand up. The first is that our policy is supposed to be
"Regressive, benefiting only the very wealthiest graduates,"
the argument being that only wealthy graduates will wish to repay. The key feature of our proposal is to enable more university places to be offered. The crucial point is that the extra applications this year are from students from black and minority ethnic backgrounds, students from poorer backgrounds and students from families without a history of going to university. The 10,000 extra places will benefit students who, given
their backgrounds, would otherwise be unlikely to go to university. The key test is the purpose for which the money is used. In this instance, it is being used for a purpose about which Conservative Members care greatly: improving social mobility and opportunities in this country.
The Minister's second objection, which we have just heard from the hon. Member for Bolton, South-East (Dr. Iddon), was that our proposed scheme would not generate anything like the sums needed to provide 10,000 additional fully funded places. As I have said, the scheme already operates in other countries. Obviously the specific circumstances of countries differ, but early repayment reward schemes operate in Australia, New Zealand and Canada, and in all those countries they generate substantial extra early repayments. We need only 1 per cent. to be repaid early to fund our scheme.
The Minister's third objection was not expressed in a particularly coherent way. He said:
"The interest on the amount saved invested instead over the period of the loan repayment by the graduate would outweigh the benefit of the discount by far."
I think that, translated, that means that in the Minister's view it would cost more for the repayment to be made earlier, and that he would prefer to receive a flow of income from the interest receipts from the loan over a period of years. My understanding is that he did not want to end up losing interest on the amount that would otherwise have been repaid gradually. However, he is proposing his own sale of the student loan book. The Government have taken powers to sell it. Indeed, given some exchanges during the Committee stage of the Sale of Student Loans Bill, it seems that they may have envisaged selling it at a discount-a larger discount, I rather suspect, than the 10 per cent. that we propose.
It is all right for Ministers to sell the student loan book early at a substantial discount on a wholesale model, but as soon as we, in true Conservative manner, give individuals the ability to choose whether to repay early with a 10 per cent. discount, apparently it is suddenly a bad return. All that we are doing is offering a retail individual option alongside the wholesale option which, as we know, Ministers have been discussing with banks. I would welcome an assurance from the Minister that in no conversation with the banks has he ever considered a discount of more than 10 per cent. for the sale of the student loan book. I strongly suspect that he has considered a substantially larger discount, and I therefore do not think that he is well placed to make that objection.
Clive Efford (Eltham) (Lab) rose-
Mr. Willetts: I look forward to hearing the hon. Gentleman's response to that.
Clive Efford: The hon. Gentleman cited the Australian scheme. Will he confirm that it has proved unpopular and has not realised the funds for student numbers that he suggested would be forthcoming, even given a 20 per cent. discount?
Mr. Willetts:
I do not think it is true that the Australian scheme is unpopular. What we are talking about is individual choice. We are not compelling anyone to take this option; we are simply offering it as a choice for
individuals. Individuals in Australia, New Zealand and Canada may wish to take advantage of it, and we will ensure that it is also available to individuals here in the United Kingdom.
Martin Horwood (Cheltenham) (LD) rose-
Mr. James Plaskitt (Warwick and Leamington) (Lab) rose-
Mr. Willetts: I will give way to-
Madam Deputy Speaker (Sylvia Heal): Order. It is for the hon. Member for Havant (Mr. Willetts) to decide to whom he will give way.
Mr. Willetts: I am trying to make some progress, Madam Deputy Speaker. I will give way to the hon. Member for Eltham (Clive Efford), but I must then make some progress.
Clive Efford: The hon. Gentleman cannot get away with what he has said. The Australian scheme is not generating the income that he suggested his scheme would generate, even with a 20 per cent. discount. Does he accept that, and, if so, does it not undermine his argument?
Mr. Willetts: I do not accept what the hon. Gentleman says. We looked carefully at the Australian scheme, the New Zealand scheme and the Canadian scheme. Of course there are differences between them-no country's student loan system is exactly the same as that of another country-but all three provide the same option, and we are ensuring that British people will no longer be deprived of that option. The assumption that 1 per cent. of £30 billion-£300 million-will be repaid early with a 10 per cent. discount is extremely cautious, and that would enable us to fund 10,000 extra university places this summer. Otherwise, according to the figures that we understand the Minister to be considering, there would be a fall in the number of places at the same time as a surge in the number of applications.
The Minister must explain to young people throughout the country why he is willing to contemplate a doubling of the number of people applying for university places who will not be able to secure them. We believe that our scheme will help to tackle that crisis, alongside our extension of apprenticeships and training places at colleges. Between them, our proposals add up to a coherent approach. We intend to ensure, at a time of high employment under the present Government, that this summer young people have an opportunity to take up further education and training opportunities.
Rob Marris (Wolverhampton, South-West) (Lab) rose-
Mr. Willetts: I propose to make some further progress with my speech.
The Labour party has not come up with a single constructive proposal for this summer. We are looking ahead at a problem that we recognise to be of great concern to young people and their parents. Ours is the party that is proposing more university places, more
apprenticeships and more places at college. All that we get from this Government is a retrospective, historical motion and a set of completely unconstructive attempts to prevent us from presenting a practical proposal for action that would help to tackle the problem.
The Minister for Further Education, Skills, Apprenticeships and Consumer Affairs (Kevin Brennan): The hon. Gentleman says that he proposes to provide more training places. The motion says that as well. Presumably, it would mean abolishing Train to Gain. How would that produce more training places, and how many more does the hon. Gentleman think it would produce?
Mr. Willetts: Our calculations suggest that the Train to Gain budget should be refocused on new opportunities for people who are currently outside the labour market. Too much of it is spent on providing qualifications-not necessarily any extra worthwhile skills or training-for people who are already in employment, and whose skills will not be enhanced by participation in Train to Gain. I refer the Minister to the most recent report from the Public Accounts Committee, which made clear that there is a significant problem of deadweight cost in Train to Gain provision. We will redirect that money to where the need is currently greatest-to extra training places.
Kevin Brennan: Will the hon. Gentleman give way?
Mr. Willetts: I will give way again to the Minister.
Kevin Brennan: I am grateful to the hon. Gentleman for his generosity in giving way. His motion calls for more training places, but he did not respond to my earlier intervention by telling us how many more places he would produce by abolishing Train to Gain.
Mr. Willetts: We have clearly identified 300,000 places over two years-a combination of apprenticeships and training places at colleges. Much of the money is currently being spent on, essentially, giving people paper qualifications without enhancing their underlying skills and without improving their progression through jobs. In any event, those people are already in work. We have made a tough decision about priorities, which is absolutely the right decision in the present circumstances. We have decided that our main priority should be new opportunities for young people: that should be the focus of our efforts.
I hope very much that Ministers will be similarly helpful if my hon. Friend the Member for South Holland and The Deepings or I seek to intervene in order to question some of their own assertions.
We face a crisis this summer, with a declining number of apprenticeship places, further education colleges under severe financial pressure, and a declining number of university places. Conservative Members have been trying to present practical proposals to tackle that problem.
Rob Marris: Will the hon. Gentleman give way?
Mr. Willetts: No. I want to make some progress.
I want to hear from the Minister-indeed, from both Ministers-a bit more information about what is happening now to our college and apprenticeship provision. First, will the Minister confirm that, according to the most
recent estimates that have been reported and according to the Government's own plans, there will be 6,000 fewer university places this summer than last year? Secondly, will the Minister explain why, when I visited Derby college last week, I was told that it was unable to offer as many engineering courses leading to higher national diplomas-an important form of practical training-as it had in the past, because all the money was being spent on foundation degrees? That is a classic example of the way in which the Government work. They transfer the funding for vocational qualifications such as HNDs and higher school certificates to new initiatives such as foundation degrees. That may be worth while in a sense, but it will be done at the cost of fewer opportunities for people to work towards qualifications that are already well recognised and well understood.
Will the Minister explain the following? Students from a sixth-form college approached me recently to say that they had embarked on a two-year A-level course and that at the end of their first year, while doing their AS-level, they had been told that, because of funding pressures, it would not be possible for them to complete their course with a second year and so get the full A-level. The college said that the AS-level was a qualification in its own right and that, sadly, it was no longer able to provide the second year of that A-level course. Does the Minister believe that that is happening in sixth-form colleges or elsewhere in the country and does he have any proposals to tackle the problem?
Will the Minister also confirm that there are significant pressures on the unit of resource of universities? Although he has been strangely reluctant to confirm this figure, does he agree that the Higher Education Funding Council for England grant letter of 22 December 2009 made it perfectly clear that the planned unit of funding, which was set at £4,140 at the beginning of the public expenditure period, had, in constant prices, fallen by 2007-08 to £3,950, a reduction of £190?
We fully understand that times are tight and that very tough decisions need to be taken, and we cannot pretend that all these reductions in provision can be avoided, but we believe Ministers should come to this House and give a coherent overall explanation of what their public expenditure cuts mean for colleges and universities. Instead, we have a drip, drip, drip of information-yet another announcement and yet another bit of a budget cut somewhere. The reductions in funding and provision are undertaken without any proper public explanation of what is being done or why. That makes it much harder for colleges and universities to adjust for the tougher public spending regime, because Ministers never stand up at the Dispatch Box and level with them in a coherent manner about what they should bank on in the medium term because times are so tight. We call Ministers to this House time and again because, above all, what we want from them is a coherent and clear statement of what they are planning and why.
It is good to see that the Liberal Democrat spokesman, the hon. Member for Bristol, West (Stephen Williams), is present, because I must say that his party really does not do much better. In a previous debate on this subject, I spoke about the extraordinary history of Liberal Democrat policy on tuition fees. I am sure that he will understand why I want to return to that fascinating subject.
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