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For those who do aim high, fees are being trebled—to the highest average fees of any public university system in the world, and all because this Secretary of State decided to cut the higher education teaching grant by 80%, to make most students pay the whole cost of their higher education and to embark on a bizarre ideological experiment devised by the Minister for Universities and Science. It was always a bad idea, but these Ministers have implemented it with truly staggering incompetence: they have lost control and are making it up as they go along. Instead of being open and honest about finances and open and honest about their future policies, they are resorting to veiled and not-so-veiled threats, planning the biggest ever interference in the autonomy of universities.

Mr Graham Stuart (Beverley and Holderness) (Con): If a Labour Government had been re-elected, would tuition fees have risen?

Mr Denham: We have made it quite clear in every debate since the Browne report was published that it would be unrealistic to say that higher education budgets would be untouched by the deficit reduction that we would have had to introduce. However, we have also pointed that if, for the sake of argument, the reduction in higher education spending had been in the order of 10% to 20%, as faced by most public services, we would certainly not have been talking about tuition fees above about £3,800—and certainly not the £9,000 that this Government are implementing.

Since Parliament voted to treble tuition fees in December, Ministers have ensured through their actions that record numbers of disappointed students will be turned away from university this year, with perhaps 150,000 applicants missing out on places. More of the students across England who are studying hard for their A-levels today will be rejected than ever before, because tens of thousands are rushing to avoid the trebling of fees, and because Ministers have already cut 20,000 places for 2012 from the number that Labour had planned for 2010—and that is before any more cuts that may be in the pipeline.

On 3 November, the Minister for Universities and Science told the House:

“We… are… proposing a basic threshold of £6,000 a year, and in exceptional circumstances there would be an absolute limit of £9,000.”—[Official Report, 3 November 2010; Vol. 517, c. 924.]

That was the solemn promise on the basis of which the House was asked to treble fees. The Minister did not say, “Most universities will charge £9,000 or as near as makes no difference”; he said that £9,000 would apply “in exceptional circumstances”, and that is not going to happen. Of the universities that have made declarations, 71% have declared fees of £9,000 and 85% have declared fees of £8,000 or more.

The Minister continues to live in a world of his own. In March he was saying of arts and humanities degrees:

“Most institutions should only need to charge £6,000—or perhaps a bit more once inflation has been accounted for.”

So where are those £6,000 arts and humanities degrees in the most sought-after universities? Where, for that matter, are the £6,000 arts and humanities degrees in less sought-after universities? The truth is that the Minister and the Secretary of State have lost control of the system through their own incompetence. They have created a system in which there is every incentive for universities to charge high fees and virtually no incentive

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for them to charge low fees, and it is young people who will pay the price. Some will be put off university altogether, while those who go to university will face 30 years of debt repayments, with middle-income graduates paying more money and a larger proportion of their incomes than the wealthiest. They will still be paying off their student debt when their own children have started university.

The Minister is now trying to say that what matters is the average once the reduced fees for some students have been taken into account. How disingenuous can you get? When the Minister promised fees of £9,000 “in exceptional circumstances”, I do not believe that a single Member of the House thought, “Oh—that means that most universities will charge most students £9,000, or as near as makes no difference.” That is not what Members thought; they thought that he meant “in exceptional circumstances”. I do not think they thought that middle-class, middle-income students would have no choice but to pay close to £9,000 a year no matter which university they chose to go to. The Minister’s failure to admit that he got it wrong does him no credit.

Mr Sam Gyimah (East Surrey) (Con): Given that universities that charge £9,000 will have to satisfy fairly stringent access requirements, will they not be helping the very students whom the right hon. Gentleman says we should be helping?

Mr Denham: That argument is worthy of further examination, and I assure the hon. Gentleman that I will be dealing with it in due course, at—I hope—not too much length. It gets worse.

Jeremy Corbyn (Islington North) (Lab) rose—

Mr Denham: Ministers have consistently claimed that fees above £6,000 will be allowed only if tough access agreements are in place. Before I say more about that, however, I will give way to my hon. Friend the Member for Islington North (Jeremy Corbyn).

Jeremy Corbyn: I am sure my right hon. Friend realises that the universities that have not raised their fees to £9,000, such as my own London Metropolitan university, are giving themselves a large financial problem which is resulting—in the case of the London Met—in the loss of possibly as many as 10,000 student places over the next three years, a large number of redundancies, and a loss of access to higher education for students from working-class backgrounds. That is the perverse effect of the Government’s strategy of effectively trying to privatise higher education.

Mr Denham: My hon. Friend has underlined a point that I have already made. Individual institutions have had to make their own choices, but this was a system in which almost every incentive for the vast majority of institutions was to raise fees, and there were almost no incentives to lower them. Given the number of professors of game theory in the universities of England, one would have thought that Ministers could have got a few together and asked them, “What will you do, in practice, if we introduce a system like this?” Every single one of them would have replied, “We will make the fees as high as we possibly can.” The Minister and the Secretary of

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State are just about the only people with any connection to higher education who are surprised by what has happened.

Of course, Ministers have consistently claimed that fees above £6,000 will be allowed only if tough access agreements are in place. When Cambridge university announced it wanted a fee of £9,000 per year, the Deputy Prime Minister—the man who promised no fee increases—exploded, stating:

“They can say what they like. They can’t charge £9,000 unless they’re given permission to do so. And they’re only going to be given permission to do so if they can prove that they can dramatically increase the number of people from poorer and disadvantaged backgrounds who presently aren’t going to Oxford and Cambridge.”

That sounded pretty clear, but what has Cambridge actually proposed? Its current access target under the current fees policy is to reach 60% to 63% of state school students—not, we should note, poorer or disadvantaged state school students, just any state school students including those from selective schools. What has it proposed in the new access agreement? It has proposed that the target should be not 60% to 63% of state school students, but 61% to 63% of state school students. As the Financial Times put it:

“Cambridge basically reckons it can triple student fees and placate the Government by adjusting the bottom of its target range for state school pupils by one percentage point.”

Does anybody in this House believe that Cambridge will not be allowed to charge £9,000?

The Secretary of State’s guidance to the Office for Fair Access did not request that OFFA take into account past performance on benchmarks or widening participation, nor could it legally have done so. It will be many years, at best, before OFFA can possibly judge whether the new access agreements have been complied with and made any difference to access. Will the Minister for Universities and Science tell the House today how long he expects it to be before OFFA could feasibly sanction any university for failure to comply?

It is obvious that these bungling Ministers thought OFFA had powers it simply did not have. When The Times asked Sir Martin Harris, the director of OFFA, whether Ministers had been aware of his limited powers when plans to treble the cap on fees were approved by Parliament, he replied:

“I think that the powers of OFFA became clearer as this debate went on.”

That is a tremendously polite way of saying, “They didn’t understand what they were talking about,” and he went on to say, for the avoidance of doubt:

“It is very important that everybody understands that OFFA is not a fee regulator.”

Tory peers made sure of that in 2004. In another place, they passed amendments that ensured that Labour’s fees legislation could not allow the very interference that the Tory-led Government are now threatening.

Of course, in theory OFFA can reject an access scheme, but only a stupid and incompetent vice-chancellor would run that risk. Universities just need a rational plan for school outreach work, and bursaries or fee waivers for some students; if they get that right, OFFA’s powers to limit fees to £6,000 collapse, and the university is free to charge up to £9,000. That is the second reason why £9,000 is becoming the norm, not the exception.

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The cynical talk of tough access agreements is raising false hopes among students, and now the finances are unravelling. The permanent secretary at the Department for Business, Innovation and Skills recently appeared in front of the Public Accounts Committee, and he was asked by my hon. Friend the Member for Walthamstow (Stella Creasy) about the consequences of fees higher than an average of £7,500. She asked:

“You have a gap, haven’t you, that you are going to have to plug”?

The permanent secretary replied: “Yes.”

The Secretary of State has already made it absolutely clear how he will respond. He told the Higher Education Funding Council for England conference:

“Government essentially has two ways of dealing financially with collective over-pricing: either cutting the teaching grant or student numbers.”

So there will be more cuts in teaching grant, or even more cuts in student numbers beyond the cut of 20,000 from the total Labour planned for September 2010 and the number he will allow in 2012-13.

Frankly, the Government are all over the place on this. On the one hand the permanent secretary says there is a problem, and the Secretary of State says he may cut student numbers or the teaching grant. On the other, he says there is not a black hole. The House of Commons Library has published estimates of the financial shortfall at average fee levels above £7,500. Ministers say they do not recognise the Library figures, so will the Minister guarantee to the House today that the average fee will be no more than the £7,500 first promised? If he cannot guarantee that, will he tell the House what the black hole will be, and how he is going to balance the budget?

That is not the only question about finances, because the whole fiasco has been driven by the Secretary of State’s claim that he needed to sacrifice higher education to cut the budget deficit. There are increasing concerns that the policy will not save any public money. The cut in teaching grant has to be set against the massive increase in the level of student debt that has to be written off because of loans that will never be repaid. London Economics, million+ and the Higher Education Policy Institute are among the organisations that have pointed out that quite small changes in assumptions about future graduate earnings or the rate of non-repayment would wipe out any savings. Yesterday, the director of the Office for Budget Responsibility wrote to me confirming that the OBR will re-examine the Government’s assumptions once all the universities have set their fees.

As it has become increasingly clear that fees approaching £9,000 will be the norm, Ministers have constantly threatened to enact new laws to stop them. In their guidance to the Office for Fair Access, these Ministers said that

“if the sector as a whole appeared to be clustering their charges at the upper end of what is legally possible, and thereby increasing the pressure on public funds, we will have to reconsider what powers are available, including changes to legislation, to ensure there is differentiation in charges.”

They have talked of cutting all university places by 5% to 10% and then auctioning them off to the lowest bidder, including foreign-owned private universities. They have also talked of strengthening OFFA’s legal powers, but part of this disgraceful situation is that they make threats but they will not publish any details.

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So I ask the Secretary of State and the Minister for Universities and Science whether, having said that they are prepared to legislate to stop universities charging high fees, they will stop hiding behind weasel words and tell us what they actually propose to do. Will there be an auction of student places? Is OFFA going to be given powers to set fees or impose quotas for students from different backgrounds? There are people on both sides of the House who would like to have the answer to that question. Does the Minister have any idea how he would get such a policy through the House of Lords, given that the Lords insisted on explicitly limiting OFFA’s powers in 2004? It really is not good enough for the Secretary of State and his Minister to keep making it up as they go along.

The Minister said that he would double the level of student loans available for study at private universities and he has made it clear that he wants more competition from private universities, but he has not set out how they will be regulated, how quality will be maintained or how the problem of fraud, which is being investigated by congressional committees in the USA, will be avoided—this involves the same companies he wants to expand their activities here. Once again, veiled threats are being made in panic as Ministers lose control of the system, but we are being given no details, no substance and no openness. It is not good enough to keep this House, future students and universities in the dark about what they plan to do.

Let me turn now to another aspect of Government policy that is becoming clear. The Secretary of State and his Minister plan to force tens of thousands of students from squeezed-middle homes to pay a levy to cut the fees of other students, often those from similar backgrounds. In a typical access scheme—hon. Members can go on websites to look at these—a student with two working parents both on £24,000 a year will pay a full £27,000 a year in fees, but that will include a £3,000 levy to cut the fees of the student from next door with one working parent on £24,000 a year. So two graduates with the same degree from the same university starting the same job will start their working life with as much as a £9,000 difference in their level of debt. How many of our constituents will think that having two hard-working parents should be a disadvantage that stays with someone for 30 years?

Mr Gyimah: Will the right hon. Gentleman briefly explain to us how his proposal of a graduate tax can address the challenges in higher education that he has so eloquently highlighted?

Mr Denham: I am flattered by the hon. Gentleman’s remarks. No system of student payment for the cost of higher education makes easy the problem of an 80% cut in teaching grant. The fundamental problem we face is that the Government have decided to make most students pay the entire cost of their higher education. The great advantage in a system of repayment of moving towards a graduate tax is that it is fairer; it ensures that what people pay is better related to what they are able to earn as a graduate. But nobody should be under any illusions: the fundamental problem we are dealing with is not the choice between a graduate tax and a fees system; it is the choice between slashing higher education teaching grant by 80% and not doing so.

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Catherine McKinnell (Newcastle upon Tyne North) (Lab): Does my right hon. Friend share my concern about a matter that was brought to my attention by a constituent? She is so concerned about the level of fees that her children will have to pay for the rest of their lives if they go to university that she is looking into retiring early to prevent them from being burdened with them. That could be an unintended consequence of this policy across the board—people could be incentivised not to work.

Mr Denham: Although this does not apply to the case that my hon. Friend raises, she has touched on an issue that will need to be examined in greater detail on another occasion. It has long been an oddity that the incomes declared to the Student Loans Company by those applying for loans appear to be rather low if they are set against the statistics about the social class from which people come. There is a financial incentive for minimising declared income when applying to the student loan system, and we must acknowledge that that was present to a degree under our system, too. Any sensible person will have real concerns that as fees rise towards £27,000 for a typical degree, with possible significant differences in the maintenance awards available and significant fee advantages for declaring a lower income, the temptation creatively to declare household income, shall we say, may well rise.

I think that it is a tragedy if, in a legitimate way, people take a household decision that takes somebody out of the labour market to enable somebody to take advantage of such opportunities. I am just flagging up this point without developing it further, but there is an issue here that the whole House will have to consider in the years to come.

Nick de Bois (Enfield North) (Con): Does the shadow Secretary of State not understand that he is fuelling fears for those who wish to go university by constantly referring to what students have to pay? They do not. In the words of a former Home Secretary, it is graduates who pay and who benefit. That is the difference. I suggest that the right hon. Gentleman thinks carefully about the damage that he is doing to the potential of young individuals.

Mr Denham: With due respect to the hon. Gentleman, I shall read back to him directly the words I spoke before I took those interventions: two graduates with the same degree from the same university starting the same job will start their working life with as much as a £9,000 difference in their level of debt. That is an accurate representation of the system that there will be and of the current system, in which, as Government Members do not understand, fee repayments start after graduation. The issue, however, is that students—those planning to go to university—are being told that they will be responsible in most courses for footing the entire cost of their university education. That is undoubtedly true.

Andrew Bridgen (North West Leicestershire) (Con) rose

Margot James (Stourbridge) (Con) rose

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Mr Denham: I am going to make a little more progress, because I am aware of Madam Deputy Speaker’s strictures about time and I need to draw to a close very quickly.

Let me complete the point I was making about the unfairness that is being introduced into the access system. Labour’s progress on social mobility must be maintained—[ Laughter. ] There is laughter from those on the Government Benches, but let me remind Ministers and the House that under the previous Labour Government the proportion of students from disadvantaged backgrounds going to university increased every single year after the changes we made to higher education. We will wait to see whether this Government can maintain that progress.

These Ministers have put the burden unfairly on the shoulders of hard-working squeezed middle families and the Commons Library suggests a significant risk of no overall increase in money spent on widening access because schemes such as Aimhigher have been scrapped and the widening participation premium is in doubt. That risks the worst of all worlds: middle income students and their families being asked to pick up the tab, with no increase in spending on widening access.

Simon Hughes (Bermondsey and Old Southwark) (LD): First, will the shadow Secretary of State confirm that, under Labour, a widening of participation did not occur in the Russell group universities? Secondly, if he is concerned about those on middle incomes, is not the answer for him to say that universities should offer no fee waivers, because if there were none, the inequity that he suggests will follow would not happen?

Mr Denham: This is bizarre. The right hon. Gentleman is the Government’s access tsar, but he is asking, “Why do not we all agree that there should not be any fee waivers?” Because it is a requirement of the national scholarship programme that there should be fee waivers. That is the scheme that he has advocated, designed and developed.

The right hon. Gentleman has been as guilty as anybody of raising false hopes about what the Government’s policies are going to do. It was he who said there was going to be

“a really tough regime that does not allow any college or university to charge more than £6,000 unless it is in exceptional circumstances”.

The truth is that he is one of those who have no understanding of how the system operates. I hope that further progress is made on widening participation, including in the Russell group universities. However, nothing that Ministers have set out, and nothing that the right hon. Gentleman has said, matches the rhetoric that he has been putting all over the newspapers. He has played a role in trying to persuade the media in this country that the Government are serious about social access while doing absolutely nothing to deliver on that. He should be ashamed of the role that he has played. He knows that he should have voted against the measures in the first place but he was bought off with a title and he has done nothing to deliver on the responsibilities he has been given.

The Government have broken their promise on the level of fees. They have made claims about access they cannot deliver and they have based their arguments on savings that may never materialise. They said that they wanted to set universities free but they are planning the biggest attack on university autonomy in history, and

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the sad truth is that all this was not only predictable, but was predicted. From the outset, the Opposition have said that the Government’s policy was unfair, unnecessary and unsustainable. We called for a delay in the fees vote and said that the House should not vote before the Government were clear about how they would control student numbers and how private providers would be regulated. We wanted them to give details about the cost and fairness of the new loans system and to be clear about having an independent assessment of the effect of their measures on social mobility, but they ignored us and four months later they have still failed to answer those crucial questions. In January, the Minister for Universities and Science told the House:

“We are consulting students, universities and other experts and will publish a White Paper in the early part of this year.”—[Official Report, 13 January 2011; Vol. 521, c. 421.]

It is nearly May and there is no sign of this White Paper.

England’s higher education system is not perfect, but it is widely recognised as one of the best in the world. That is not just because of the quality of its world-class research institutions but because of the diversity and quality across the whole higher education system. No one should be afraid of having an honest debate about how it can be made better, but it is so important to all our futures that it needs competent Ministers who are capable of protecting all that is good about it.

Public concern about the Government’s NHS reforms has at least forced a temporary period of reflection on that policy, but no such luxury exists for students and universities, which are on a tight timetable to introduce the new system for 2012-13. The Secretary of State must act now, so will Ministers tell the House today what action will be taken to deliver the promise that fees of £9,000 will be charged only in exceptional circumstances? Will they legislate and if so how and when? Will they promise that there will be no further cuts to student numbers and no further cuts to spending on the teaching grant, research or public funding for widening participation? What will they do to deliver the wild promises of widened participation and improved access? Will they strengthen the powers of the Office for Fair Access to set fees or to impose quotas? If the measures, which are the biggest interference in university autonomy in history, are rejected, what will they do? If the Minister for Universities and Science cannot answer these questions, the House must conclude that he and the Secretary of State have lost control of the policy for which they are responsible.

4.44 pm

The Minister for Universities and Science (Mr David Willetts): I welcome this opportunity for us to set before the House the Government’s approach to higher education and to clear away the farrago of confusion, misplaced speculation and plain old-fashioned errors that we have just heard from the shadow Secretary of State.

I congratulate the right hon. Gentleman on one thing: his sheer audacity in standing in the Chamber and denouncing cuts and financial black holes, when he was in the Cabinet of a previous Government who got our finances into the crisis that the coalition inherited. So yes, we are having to take some tough and difficult measures, but that is because, as always, Labour left behind a mess and then denounced us for clearing it up.

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Sheila Gilmore (Edinburgh East) (Lab): Some months ago the Minister indicated in the House, in response to a question from me, that his proposals were not to do with the deficit, but were to do with a new way of providing for the financing of higher education, yet he introduces his speech by referring to the deficit.

Mr Willetts: I will turn to that point as I develop my argument. I hope the hon. Lady will accept that the Government whom she supported left behind a fiscal crisis. We were borrowing £120 million a day and were heading for the largest budget deficit in the G20. In fact, the position was so bad that the previous Chancellor had set out proposals for bringing down the deficit by reducing public spending. It is an irony that the Opposition called this debate in the very month when the previous Government’s spending cuts would have started to take effect—£14 billion of cuts planned for this financial year by the previous Chancellor, £16 billion of cuts that we are implementing.

As the shadow Secretary of State knows because he was in the Government at the time, it is clear from the pre-Budget report of December 2009 that there was a commitment to £600 million of cuts from the higher education and science and research budget. It was never explained what those were to be. As we know from the work done by the Institute for Fiscal Studies when it tried to assess Labour’s plans when the previous Government left office, there were to be reductions in public expenditure that the IFS estimated as a 25% reduction in the budget of the Department where the Secretary of State and I serve. So we inherited a mess that we have to sort out.

Hugh Bayley (York Central) (Lab): The question is not whether the deficit needs to be reduced, but whether the decision to impose cuts of 80% on universities is the right way to do it. How will students benefit when they pay three times as much in fees but get less spent on the quality of their education in our universities?

Mr Willetts: Let us turn to that. Given that we face a crisis in the public finances, and given that even the previous Government had planned £14 billion of saving, how does one best deliver those in a departmental budget which I do not think any of the three parties represented in the House said could be exempted from reductions? Fortunately, the previous Government set in train an exercise that helped tackle precisely that problem. In November 2009 they commissioned Lord Browne to review the financing of higher education, and they made perfectly clear the wide range of options that they wanted him to look at.

Mr David Lammy (Tottenham) (Lab) rose

Mr Willetts: I will give way in a moment to the right hon. Gentleman, not least because of his role as a Minister in the previous Government, but I hope he will accept that Lord Browne’s report was commissioned precisely so that when public expenditure had to be saved, the finances of higher education would be examined.

Mr Lammy: The right hon. Gentleman knows that the higher education review was indicated in the Higher Education Act 2004, some years before the deficit.

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Mr Willetts: It was made perfectly clear—[ Interruption. ] Let me quote from the very first sentence of the terms of reference of Lord Browne’s report. It was to

“analyse the challenges and opportunities facing higher education and their implications for student financing and support. It will examine the balance of contributions to higher education funding by taxpayers, students, graduates and employers.”

So, the previous Government left us a deficit, recognised that they needed to make £14 billion of savings and set up an inquiry under Lord Browne to look at how universities should be financed in those circumstances—almost in the same month, incidentally, that we had the plan from the right hon. Member for Edinburgh South West (Mr Darling) for large reductions in public spending.

After considering Lord Browne’s report, which took him a year to produce and in which time he took a large amount of evidence, the coalition has adopted a strategy that, although not in every respect his strategy—[Hon. Members: “Ah!”] I do not know why Opposition Members react with such glee; in many ways, we have improved on the strategy that Lord Browne put forward. The fundamental proposal in the report that the previous Government commissioned is the one that we are now implementing in order to put the finances of higher education on a stable footing.

Tristram Hunt (Stoke-on-Trent Central) (Lab): Will the right hon. Gentleman give way?

Mr Willetts: Let me just develop this point, because crucially the best way to save money is not to go for reductions in the teaching grant per student, as that simply means a lower-quality experience for students in our universities; instead, the aim is to provide universities, as the teaching grant is reduced, with an alternative source of income from fees and loans which does not involve students paying any money up front.

Hugh Bayley rose—

Mr Willetts: I am just going to carry on explaining the basic finances of the measure, because they are so important and the Opposition clearly do not understand them. The point is about lending students money to pay fees. For example, if we lend them £1,000, we can reasonably expect, on the basis of outside forecasts, about £700 of that to be repaid, so we account for the £300 of the loan that is written off—that will not be repaid—but know that we will get approximately £700 back. That is the financing model in Lord Browne’s report, which the Labour party commissioned, and that is what enables this coalition to save money for the Exchequer, to continue with high levels of finances and to ensure that students do not have to pay any money up front. That is an excellent combination of policies at a time when money is tight.

Tristram Hunt: I am grateful to the Minister for giving way as he digs himself ever deeper and reveals the fallacy of the sums involved. The whole point of the Browne review was that it would introduce a market in higher education, but, if we strip away the teaching grant and everyone charges £9,000, we do not have a market. That is why the policy is such a car crash.

Mr Willetts: I will move on to that stage of the argument in a moment, but let me just explain to the hon. Gentleman why this measure, which is not mine

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but that of the report commissioned by the Government whom he supported, is very straightforward, simple and absolutely the right way to tackle the challenge of financing higher education at a time of fiscal crisis. It enables us to save money for the Exchequer, because the money that goes into universities is lent to students and is not a grant, and at the same time we ensure that universities are well financed.

The shadow Secretary of State sounded as if he was willing to contemplate large reductions in the amount of resource going to universities, but that would affect the quality of students’ education. On our estimates, the cash going to universities rises from about £9.2 billion in 2010-11 to £10 billion in 2014-15, so we save money, there is more resource going into universities and, crucially, at the same time the money is accompanied by reform.

Several hon. Members rose

Mr Willetts: I give way to my hon. Friend the Member for Beverley and Holderness (Mr Stuart).

Mr Graham Stuart: Will my right hon. Friend nail the misinformation, peddled not least by Opposition Front Benchers, about the increase in fees putting people from lower-income backgrounds off going to university? The truth is that the payments per month will be lower under the new system, that those who earn lower amounts will pay less, that the new system is more progressive and that Opposition Front Benchers, who cry crocodile tears for caring about those from the lowest incomes having access to a university, are scaremongering and providing misinformation. Will he please put them right?

Mr Willetts: That was an excellent intervention. After this debate, I hope that Members on both sides will agree to commit ourselves to visit, between now and the summer, the secondary schools and colleges in our constituencies and explain to them that not a single young person is going to have to pay up front for their higher education. They will repay only if they are earning more than £21,000 a year and that means that their monthly repayments under our proposals will be lower than under the system we inherited from the previous Government.

Dr Eilidh Whiteford (Banff and Buchan) (SNP) rose—

Mr Willetts: I will accept the hon. Lady’s intervention, especially if she makes that commitment.

Dr Whiteford: Last month, the BBC published figures from the accountants Baker Tilly. They suggested that a student who borrowed £39,000 to complete their higher education would end up paying back something in the region of £83,000. What does the right hon. Gentleman make of those figures?

Mr Willetts: I am afraid that I do not recognise those specific figures. We are talking about a system whose powerful logic is simple—no student pays up front, a point that my hon. Friend the Member for Beverley and Holderness correctly made.

Graham Stringer (Blackley and Broughton) (Lab) rose—

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Mr Willetts: I need to make some progress because this is not simply a matter of finances, important though they are. It is essential that the measures be accompanied by reform. Above all, that means a focus on the quality of the teaching experience for students. Many students, and their parents, come away from university not convinced that they had the teaching that they needed during their time in higher education. The third challenge, therefore—as well as saving money for the public finances and ensuring that proper financing gets into our universities—is to focus on improving the quality of the teaching experience. We do not achieve that by—

Angela Smith (Penistone and Stocksbridge) (Lab): Will the Minister give way?

Mr Willetts: I am responding to the point made by the hon. Member for Stoke-on-Trent Central (Tristram Hunt); it is an important stage in the argument. The money must be accompanied by reform that puts teaching up front and enables students, for the first time, to choose the course and university that they believe will best meet their needs. That is why the Secretary of State and I are absolutely committed to ensuring that it is easier for universities to escape from the shackles of the detailed quotas and restrictions set, university by university, in the system that we inherited from the previous Government. One of our highest priorities is to ensure that our reforms also improve the quality of the student experience. That will be at the heart of our White Paper.

Graham Stringer: Will the Minister explain how the quality of education will improve? Due to his miscalculations about the number of universities charging £9,000 and the structure of the students who will be going, there will be a huge deficit. That will lead to cuts in universities or in the number of students going to universities.

Mr Willetts: Let me deal briefly with that point. A fortnight ago, the Labour party was claiming that there was a £1 billion shortfall; last week, apparently, the shortfall was £450 million. We simply do not recognise those figures. We will see in autumn next year exactly what students are paying and how much they choose to borrow; they do not necessarily even need to borrow the full amount of fees that they face. That will be a decision for them. At that point, we will assess the financial situation that we face, but we see no reason to amend the broad estimate that we put before the House last autumn.

Angela Smith: Given what the Minister has just said, will he guarantee that there will be no cuts in quality or numbers in higher education?

Mr Willetts: We have a set of proposals that ensures that increasing resources will go to our universities, so, absolutely, I see no reason why quality should suffer. Indeed, I believe that as we liberalise the system in the way that the Secretary of State and I wish to, we will see improvements in the quality of the student experience. I do not see any need for a reduction in student numbers; on the figures that we have in front of us, I do not believe that that will be necessary.

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I want to deal with another point made by Labour Members. There is so much confusion and misapprehension on their part that there is a large amount to sweep away.

Mr Gareth Thomas (Harrow West) (Lab/Co-op): Will the Minister give way?

Mr Willetts: I wanted to move on to the improvements that we have made to the Browne plan, but of course I give way to the shadow Minister.

Mr Thomas: Will the right hon. Gentleman distance himself from the Secretary of State’s comments at the Higher Education Funding Council for England conference when he threatened universities with either more cuts to the teaching grant or further cuts to student numbers?

Mr Willetts: We will obviously have to keep a very close eye on the situation. When one looks behind the headline figure of the £9,000 fee, there are so many waivers and special arrangements that the average fee will be significantly lower than that. Given the evidence that has so far come through, we do not recognise the so-called figures for fiscal black holes that are being perpetrated by Labour Members. I suggest that they calm down and wait until the autumn of 2012 when we see what students are actually paying in fees when they arrive at their universities.

Mr Thomas: The right hon. Gentleman was asked a very straight question—does he, or does he not, agree with his Secretary of State, who clearly threatened universities at the HEFCE conference with either further cuts in teaching grant or further cuts in student numbers? Does he agree with him—yes or no?

Mr Willetts: I am always in agreement with the Secretary of State. The position that he was describing related to options that would be necessary if the financial position was very different from the one that we estimated last autumn. On the basis of the evidence that we have, we do not believe that that will be the case.

Margot James: Does my right hon. Friend agree that university costs should be looked at very closely, just as with every other kind of public sector institution? Lord Browne found that the average fee was £6,000 if one took into account efficiencies that universities could make in relation to what would be the break-even point compared with what they currently enjoy in terms of funding.

Mr Willetts: My hon. Friend is absolutely right. We look forward to the report that Ian Diamond is preparing on precisely how we can improve efficiency in our universities.

Mr Andrew Smith (Oxford East) (Lab): Will the Minister give way?

Mr Willetts: No, I am going to make some progress because Members in all parts of the House wish to speak and I have a lot more ground to cover.

We have not only taken on Lord Browne’s proposals in the report commissioned by the previous Government as their way of reforming the finances of our education system, but tried to improve on those proposals. The

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crucial way in which we have done that is by improving the repayment terms for graduates. A very important feature of the new system is that instead of the repayment threshold of £15,000 that was left to us by the previous Government, we propose a threshold of £21,000. The only way in which people pay for higher education is as graduates repaying their loans, so the level of threshold and the amount of the repayment that they make is crucial. Under our scheme, a care worker graduating in 2016 with a £20,000 starting salary would repay nothing. Under Labour’s £15,000 repayment threshold, that care worker would have been repaying £37.50 a month. Under our scheme, an accountant graduating in 2016 with a £25,000 starting salary would repay £30 a month. If the repayment threshold had remained at £15,000, that accountant would have been repaying £75 a month.

The crucial figure that matters for young people thinking about the cost of their higher education is how much they will have to repay. Under our scheme, their monthly repayments will be significantly lower. That is why the Secretary of State and I are confident that these reforms are the right way forward and are genuinely progressive. We are discharging our obligation to future generations in exactly the way the shadow Secretary of State set out at the beginning of his speech. That is the crucial challenge and we believe that our reforms rise to it.

That is not just my view or that of the Secretary of State, but the view of bodies that have scrutinised our financing proposals. The Institute for Fiscal Studies said that

“the Government’s proposals are more progressive than the current system or that proposed by Lord Browne.”

The OECD endorsed the coalition’s policy:

“The increase in the tuition fee ceiling is reasonable and should pave the way for higher participation in tertiary education”.

Mr Barry Sheerman (Huddersfield) (Lab/Co-op): Can the Minister quote any vice-chancellor of any reputable higher education institution in this country who has said that the Government’s record in their first year of office has been good for higher education in this country?

Mr Willetts: I have been at many events with university vice-chancellors at which they have all accepted that, given the circumstances that we inherited and faced with the policy options of reducing teaching grant, reducing student numbers or implementing Lord Browne’s proposed changes in student finance, we took the right decision. I am confident that we have improved on Lord Browne’s proposals by making the repayment threshold more progressive.

Let me quote someone who is not a vice-chancellor, but who is perhaps still treated with a degree of respect by some Opposition Members, namely Lord Mandelson. The new postscript to his excellent memoirs, which I commend to Opposition Members, states:

“When the university fee debate came up before the Lords, for example, there was a large part of me that felt I should weigh in.”

I am sure that there was. It goes on:

“It was I, after all, who had set up the Browne Review”—

the Labour party seems to have forgotten that—

“into what future changes were necessary to ensure proper funding for universities in the best and fairest way, for both them and their students. When I did so in November 2009 I assumed, as the

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Treasury did, that the outcome would have to include a significant increase in tuition fees. I felt that they would certainly have to double in order to offset the deficit-reduction measures that we too would have implemented had we won the election. The alternative would be a disastrous contraction of higher education.”

Those are the words of the previous Secretary of State, and I take them as an accurate account of what was in the minds of Labour Ministers when they set up the Browne review.

Andrew Bridgen: I remind the Minister of the words of Professor Steve Smith, the president of Universities UK, who said that the coalition Government’s higher education policies

“will bring in the resource needed to allow students to go to university regardless of their financial circumstances, provide financial sustainability for universities, and ensure that we can maintain the UK’s international competitiveness in terms of undergraduate education.”

Mr Willetts: Absolutely. That is the view of Universities UK, and, as I have explained to the House, it holds that view because in the difficult circumstances that we inherited from the previous Government, we have taken the correct strategic decisions.

I have set out our approach to higher education. What was striking in the speech of the shadow Secretary of State was the complete absence of how he believes higher education should be financed in tough times. What was particularly noticeable was the absence of any reference to what we understand to be the preferred policy of his party leader, namely a graduate tax. We are still waiting to see the move to the graduate tax, which we understand is now the view of the shadow Secretary of State. Of course, the last Labour Government produced a helpful document on the subject entitled, “Why not a Pure Graduate Tax?”, which sets out clearly some of the issues surrounding a graduate tax. We are still waiting to hear whether the shadow Secretary of State advocates it.

Of course, our proposals involve a capped graduate tax, which has a threshold of £21,000 and a rate of 9%, is linked to the university that one went to, and is extinguished when one has discharged the cost of one’s higher education. That is the right way of delivering a graduate tax to pay for higher education. I would be very interested to hear from the shadow Secretary of State whether he believes that that system should be improved in some way. Does he prefer a model of graduate tax with, perhaps, a lower threshold and a lower rate?

Lilian Greenwood (Nottingham South) (Lab): Will the right hon. Gentleman give way?

Mr Willetts: No, I am going to make some progress on this important point.

Would the shadow Secretary of State prefer a model with a 3% tax for graduates? That is one possibility, but of course it would bring low earners into the burden of graduate tax, whereas they will be exempt from it under our proposals. It would have another significant defect, because whereas we can collect student fees from people across Europe, there is no way in which a graduate tax could be collected from a graduate who has been educated in Britain and then goes to live abroad.

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Once again, the memoirs of Peter Mandelson are very clear on this point, and we now know where the Labour party’s policy comes from. He writes:

“To be fair to Ed”—

he is referring to the current Labour leader”—

“from his days in the Treasury when we were first introducing the top-up-fees scheme in government, he shared Gordon’s preference for an alternative graduate tax”.

So it was Gordon who wanted a graduate tax—that is where this bold, new Labour idea comes from. The memoirs continue that the current Labour leader held that view

“even when our research concluded that it was simply unworkable.”

That is what Peter Mandelson says. Labour’s research showed the defects of a graduate tax, and we are still waiting to hear from the shadow Secretary of State what his policy is on such a tax.

The position is clear: the Government have a plan for financing higher education in tough times. We are financing it in a way that continues healthy support for our universities and enables us to save funding for the Exchequer at the same time. We are doing that without any cuts to student numbers or to the teaching resources going to universities, without any burden on students when they are at university and while improving the regime for graduate repayments after they have left university. That is why our plan is realistic, sober, reformist and progressive. We believe it is the right way forward, and in the absence of any constructive proposals from the Labour party, we remain convinced that ours is the correct strategy.

Several hon. Members rose

Mr Deputy Speaker (Mr Nigel Evans): Order. This is a popular debate, and an eight-minute limit has been put on Back-Bench speeches, with the usual two-minute injury time allowance for interventions.

5.12 pm

Lilian Greenwood (Nottingham South) (Lab): I am grateful for the opportunity to speak in today’s debate, as I am very worried about the Government’s plans for higher education and their impact on many of my constituents and the city I represent.

I was deeply concerned when the Government announced their intention to raise the cap on fees, and like every Opposition Member I voted against that rise. I did so not just because of my pledge during the general election campaign but because I felt that the Government were rushing through their plans without proper thought and consultation. Like many Members, I felt that fees of £6,000, £7,000 or £8,000 would deter many bright and able students from low and middle-income families from applying to university, or from applying to the university or course that would best suit them. As university after university has announced its intention to charge fees of £9,000, my concern has only deepened. Far from being the exception that the Prime Minister promised, £9,000 fees are becoming the norm. Why? It is because universities have to fill the huge hole left by the cut in the teaching grant.

Mr Graham Stuart: Will the hon. Lady confirm for the benefit of her constituents that the monthly payment that each of them will have to make will be lower under the new system than it was under the previous system?

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The monthly payment will be lower at all times. The bad news is that people will have to pay for longer, but the payments will be more affordable and people will have to pay only when they are earning £21,000. Her constituents need to hear that so that they are not put off. I hope that she agrees.

Lilian Greenwood: The concern that many of my constituents express is that they will have to pay back at least three times more than they would if they were a student now or had been recently.

Stella Creasy (Walthamstow) (Lab/Co-op): One difficulty is that we do not know the real rate of interest that will be charged. When we debated the Education Bill, Opposition Members proposed measures that would enable us to find out what those interest rates would be, but Government Members, including the hon. Member for Beverley and Holderness (Mr Stuart), voted against such a process, so we simply cannot tell how much the bills will be for our constituents.

Lilian Greenwood: My hon. Friend is absolutely right. The fact is that many of my constituents who are considering going to university are terrified at the prospect of paying back debts of £30,000 or £40,000. That is about not just how much they have to pay, but how long they have to pay for. I am sorry that the Minister would not take my intervention, but under a graduate tax system, surely those who earn more would pay more.

Nick de Bois: Will the hon. Lady give way?

Lilian Greenwood: No, not at the moment. Under the Minister’s scheme, those who earn the most will pay less, because they can pay their loans off quickly, before they have substantial amounts of interest to pay on top.

Sir Martin Harris, the director of the organisation charged with improving access to higher education, says that there is a “real risk” that teenagers from low-income homes will feel unable to attend university, which makes me even more convinced that this Government’s policies are not properly thought through.

Mr Graham Stuart: Will the hon. Lady give way?

Lilian Greenwood: No—I am not taking another intervention.

Unfortunately, my concerns were further confirmed when I recently met staff from Nottingham and Nottinghamshire Connexions services. Careers advisers were not only demoralised by cuts to their service when young people most need advice and guidance to help them to make difficult choices, but deeply concerned about the impact of Government policies on the teenagers whom they are committed to assist. They told me that fee increases are having a clear impact on many young people, and that many young people in Nottinghamshire feel that they can no longer afford to study for a degree.

The problem is heightened by the increase in youth unemployment. Young people are worried not only that they will rack up debts of £30,000 or £40,000, but that they may not even be able to secure a job at the end of it. It was particularly sad to hear a member of staff of the Aimhigher campaign, which supports young people from disadvantaged backgrounds who have the potential

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to go on to higher education, tell me that it has become increasingly difficult to convince such young people that university is for them.

Young people and their parents frequently bring this issue up on the doorstep. On Monday afternoon, a constituent asked me how he could afford to send his children to university.

Andrew Bridgen: Will the hon. Lady give way?

Lilian Greenwood: No. I have already taken several interventions.

My constituent was in work and owned his own home, and his children would not qualify for bursaries. He understood the importance of learning as a worthwhile investment in their future, but like many middle-income parents he felt that higher education was becoming out of reach for his children. The Government talk a great deal about widening access and ensuring that more young people from lower-income families go to our top universities, and about improving the chances of those in state schools, which are admirable aspirations, but they have done nothing to ensure that those things happen.

I fear not only the impact that the fees increase will have on our young people from low and middle-income families, but the impact that those policies will have on Nottingham. As many in the House will know, Nottingham is home to two excellent universities that attract students from all over the country, and indeed the world. The university of Nottingham and Nottingham Trent university make a huge contribution to our city and are vital to our local economy. Our city’s most successful businesses tell me that one of the main reasons for locating in Nottingham is the availability of highly educated young people. Although residents may on occasion wish that there were fewer students in the local neighbourhood, they also know that our universities are vital to the city’s economy and future financial success.

Last week, I spoke to a senior member of staff of Nottingham Trent university. She expressed concern that the increase in fees represents a threat to our ability to attract the brightest and best students to Nottingham, and reported that many young people and their families are considering studying close to home because they feel that they cannot afford the costs of living away on top of fees.

Anna Soubry (Broxtowe) (Con): Has the hon. Lady met the vice-chancellor of Nottingham university? If she has, will she confirm that he supports the Government’s policy?

Lilian Greenwood: I have met him, and he is in favour of an increase in fees, but unfortunately the people of Nottingham, and prospective students, do not agree with him, and I am rather more concerned about representing them.

I was speaking about a senior member of staff at Nottingham Trent university who said that many young people and their families are considering studying closer to home. They are limiting their choice of university for financial rather than educational reasons, which has implications not only for individual students who feel unable to choose the university that is right for them but for the universities, particularly those in areas of high

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supply. The east midlands is a net importer of students, and therefore might expect to suffer disproportionately if more students choose to study close to home. What analysis have the Government made of this problem, what discussions have they had with local enterprise partnerships on its impact, and how do Ministers expect any reduction in the number of students coming to the east midlands to affect local and regional economic growth?

It is increasingly clear that in their rush to secure a deeply unpopular rise in fees as soon as possible after the election and before the next one, Ministers failed to come up with a coherent plan for higher education. Six months after the fee rise, we still have no higher education White Paper. The Department’s spending plans, based on average fees of £7,500, are in disarray, and measures sold to the electorate as necessary to save money are likely to cost the same or more. On top of 80% cuts in teaching grants, universities now face the threat of further cuts in grants or student numbers. The impact on local economic growth is uncertain, and young people and their families are paying the price of this Government’s incompetence. It is no wonder they feel so let down by the Business Secretary and his colleagues. I have no doubt that we will see quite how let down they feel when next week’s election results deliver the verdict on 12 months of the miserable compromise that is the coalition Government.

5.22 pm

Mr Rob Wilson (Reading East) (Con): It is a great pleasure to follow the hon. Member for Nottingham South (Lilian Greenwood), who spoke passionately in defence of students in her constituency. I do not intend to speak for long—I hope to keep to five or six minutes.

I make no apology for continuing to support and vote for the policies of the Government, because I am in no doubt that the medium and long-term strengths of our higher education sector will be substantially improved by the measures we have taken so far—and, I hope, will continue to take. It is true, however, that over time we will need to make further changes in some areas. Nevertheless, the Opposition and the shadow Secretary of State have got this one wrong. As Lord Mandelson has shown, even many members of the Labour party believe that mistakes are being made. In particular, the analysis of the role of the Office for Fair Access is wrong. But I will come to that later.

My first observation concerns student numbers. One of the fundamental strengths of the new system is that it empowers students by making money follow their choices, so that universities are incentivised to raise the quality of their courses and of the student experience in order to attract students and generate income. Professor David Eastwood, vice-chancellor of the university of Birmingham and a member of the Browne review, recently emphasised that the

“key policy imperative is to say that numbers will follow informed student choice”.

He has argued that expanding higher education places to meet demand would force down fees at less popular universities and cost the taxpayer less. I believe that he is probably right.

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Mr Denham: The hon. Gentleman makes an important point, but does he accept that the Government have not told us how they intend to allocate student numbers—or indeed whether we will have a model in which the money follows the student or whether numbers will be centrally allocated, as they are at the moment? The Opposition called for that information before December, so does he share my regret that Ministers have completely failed to answer that question? Indeed, the lack of an answer means that we do not know whether the hon. Gentleman’s point is valid or not.

Mr Wilson: I thank the right hon. Gentleman for making that point, because there are certainly questions still to be answered, which is something I will come to.

I am concerned that the restrictions on student numbers will mean that we fail to realise the full benefits of competition in the higher education sector, which would have encouraged universities to achieve greater efficiency and offer more value for money. As a recent report by Tim Leunig for the think-tank CentreForum put it,

“because government restricts the number of students that each university can take, this is not real competition”—

and indeed, it is not. I am sure that my right hon. Friend the Minister will agree that the Government must devise a system in which universities and courses that are popular and economically important can expand, if necessary at the expense of unpopular courses and institutions. Does he therefore share my concern that capping student numbers will threaten one of the key benefits offered by the Government’s reforms? What further action does he propose to take to ensure that courses that students want to take, at a price that they want to pay, can expand at the expense of courses that they do not want to take, at prices that they do not want to pay? In these difficult times the Treasury is keen not to spend more on subsidies for students than it absolutely has to, which provides the Secretary of State and the Minister with a big challenge if they want real competition in the higher education sector. If the Minister cannot convince the Treasury that removing the cap on student numbers will reduce overall HE costs, there will be no genuine market in HE.

However, I hope that the Government are thinking creatively about seeking micro-solutions to the problem. In particular, I would recommend that they look at three areas that are perhaps worthy of further consideration. The first is how we encourage private sector institutions to enter the HE sector and offer degree courses. There is no reason why they should not be allowed to enter the sector and overcome any real or perceived barriers to entry, which can easily be removed. Secondly, the further education sector needs to be encouraged to offer more degree and higher education courses. The changes that we have made in the HE sector offer huge opportunities for FE colleges to offer high quality, affordable, specialist courses. Once again, we can look across the Atlantic at what is happening in the US community college system as an example of the model that we need to strive to follow in this country.

Mr Graham Stuart: My hon. Friend is making a powerful speech, the content of which I agree with. Does he agree that many FE colleges are now delivering the quality that should enable them to confer degrees, rather than being dependent on universities, which in

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times of financial uncertainty tend to reduce what they allow FE colleges to do? We need to give them freedom if they are to compete properly in the market.

Mr Wilson: Indeed I do agree with that. There are some fabulous FE colleges that could easily deliver high quality higher education degrees.

Thirdly, if we are to have a Treasury-imposed affordability limit on student numbers, we need to think more creatively about how we tease the best out of a more limited market system. As I have said, we need to encourage the best high-quality, sought-after courses that students actually want to take. We have to design a system that allows good universities with good courses to expand, and poorly performing universities with poor quality courses to decline, or at least take action to improve their offering.

Mr Willetts: My hon. Friend is focusing on the crucial issues of how we get more competition and choice into the system. I assure him that these are absolutely the issues that we will focus on in the White Paper.

Mr Wilson: I am grateful to my right hon. Friend for that reassurance.

Let me turn quickly to my other point about the Office for Fair Access. As Professor Eastwood rightly argued, more higher education places should mean more social mobility. Although I welcome any constructive suggestion to increase social mobility and opportunities in this country, I am concerned that a heavy-handed attempt to do so would risk another cornerstone of our university system, which is academic freedom.

In a commendable feature of the Higher Education Act 2004, OFFA was given a legal duty

“to protect academic freedom including, in particular, the freedom of institutions…to determine the criteria for the admission of students and apply those criteria in particular cases.”

The first guidance letter issued by the Labour Secretary of State in October 2004 confirmed that the Government’s priority was financial support for the poorest students, and noted that

“institutions that generally attract a narrower range of students may want to put more money into outreach activity to raise aspirations”.

The guidance also made it clear that institutions’ admissions policies and procedures were outside OFFA’s remit.

This Government’s new guidance to the director of fair access is much more aggressive, and I believe that it has clear and serious implications for universities’ admissions policies. It instructs OFFA that it

“will want to ensure that each institution is making sustained and meaningful progress towards a more balanced and representative student body, reflected year on year in its own benchmarks, measures and targets.”

Under the February 2011 guidance letter, if an institution is deemed to have seriously or wilfully breached its access agreement, OFFA can decide not to approve or renew the agreement. That would remove the institution’s right to charge its students above a basic fee level. I understand that a fine of up to £500,000 is also available.

The message to universities, via OFFA, appears to be that unless they make progress each year towards achieving a “more balanced and representative” student body,

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they can expect OFFA to set much more onerous obligations and require them to devote more of their resources to outreach and financial support. In addition, they could be fined. So, while the Opposition call for new powers for OFFA, will the Minister confirm that the Government remain committed to protecting the academic freedom of universities, and that they have no plans to interfere with university admissions policies through access agreements?

Mr Willetts: I can give that assurance. We have no plans to change the legal framework guaranteeing the freedom of universities to run their own admissions procedures.

Mr Wilson: I thank my right hon. Friend for that assurance, but the legal framework is slightly different from the access agreement. I do not have time to go into that now, however.

I agree with the Russell group when it argues that too few poorer pupils are getting the right grades and that the achievement gap according to socio-economic background is getting even wider. It also argues that the most effective way to get low income students into the best universities is to help them to improve their academic performance at an early stage. It is in the schools that we should be looking to change things, not in the universities. As I have said, I am passionately committed to raising aspirations and spreading opportunities more widely in our society, but it would be far better to tackle the real cause of unfair access to higher education—too few poorer children achieving the right grades at school—than to bring the Government into conflict with the legal duty to protect university independence and academic freedom.

5.33 pm

Mr Adrian Bailey (West Bromwich West) (Lab/Co-op): I welcome the fact that the Minister admitted that these proposals have been driven by the need to cut the public sector deficit, rather than by any wider educational considerations. Borrowing to give grants to universities counts as public borrowing, whereas borrowing to make loans to students does not, because that is offset, at least in part, by an income stream. This is an accountancy smoke and mirrors exercise, on which the Minister has based one of the most seismic changes in educational funding imaginable. At the end of the day, if the figures are wrong, it will still be the taxpayer who foots the bill. If the loan obligation is higher than expected, that will present problems. If the income, in return, is lower than expected, that will present additional problems. On the basis of the evidence that we have seen so far, that is the situation that is emerging.

Mr Andrew Smith: Was my hon. Friend struck, as I was, by the failure of the Minister, who declined to take my interventions on the point, to address the issue put to him by our right hon. Friend the Member for Southampton, Itchen (Mr Denham)—that at the Public Accounts Committee, his own permanent secretary had said that at the current level of fees, universities faced a cash funding gap, which could be plugged only by cutting the teaching grant further or by cutting numbers? Is not that the mess they have left us in?

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Mr Bailey: Yes, my right hon. Friend anticipates one of my later points. Both the Higher Education Policy Institute and, by implication, the Office for Budget Responsibility have recognised that issue.

Let me make it quite clear that from my personal perspective I have always believed that graduates should make a contribution to their education. There is a legitimate debate—it should have been had before these proposals were introduced—about the appropriate balance of benefit between an individual and the country’s economy and about what the appropriate obligation for payment should be between the individual and the state. That has to take place, obviously, within the constraints of affordability.

Andrew Bridgen: The hon. Gentleman comments on the allocation of payments and the contribution that graduates should make to their education, but was that not the entire function and purpose of the Browne report, which has been taken into account?

Mr Bailey: Yes, it certainly was and I was just coming to that. We should have had a White Paper, followed by a full debate, which would have enabled the Government to put forward their proposals and the Opposition and others to probe them. A range of educational institutions —there are an enormous number of them—would have been able to contribute their expertise. What we have had, however, is this seismic shift in Government funding, carried out without adequate research and debate.

I spent 10 years on the Government Benches listening to lectures from Conservative Members about the dangers of hasty legislation and the unintended consequences that almost inevitably arise from it. If ever there was a case in point, I honestly think this is it. Hasty legislation, or hasty regulation in this case, is usually bad legislation, or regulation.

The lack of research and work done highlights a number of issues. The first is the setting of the fee levels. The Minister’s hopelessly optimistic estimates, on which the financial model was predicated, have been demonstrated as completely incorrect. The repayment implications are considerable. A whole range of expert research has been done to demonstrate that the income stream on which the Government predicated their financial model will not be met. There will therefore be a long-term financial liability, possibly an expanding one, that the Government will have to meet.

Another issue that could and should have been explored far more comprehensively if we had had a White Paper is of course the role of the Office for Fair Access. When Ministers were pressed on the setting of the level of tuition fees, they seemed to ascribe to OFFA powers that were completely beyond it, as my right hon. Friend the Member for Southampton, Itchen (Mr Denham) said in his opening remarks. The fact remains that OFFA is an organisation of four people, to whom responsibility was attributed by the Deputy Prime Minister for setting the tuition fee levels of all universities. That is totally beyond their resources, and they could not do it anyway, because they do not have the legislative basis to do so. This could and would have been teased out in a full and open debate of a White Paper, but by virtue of the Government’s actions it has been precluded.

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The outcome is that the figures in the financial model do not appear to stack up. I mentioned the potential long-term financial implications earlier. As the Minister has acknowledged, the options are to cut funding for universities further and to reduce student numbers. I believe that if tuition fees averaged £8,000 per annum, it would be necessary to reduce the number of students going to university by 17,000 in order to stay within the model. There is actually a third option: the Government could change graduates’ repayment conditions. I think that that would open another can of worms, and would provide the basis for further research to assess the possible outcome.

Mr Graham Stuart: Will the hon. Gentleman give way?

Mr Bailey: No, I will not give way again.

A reduction in student numbers is inevitable, either because the Government decide to ration them or because of the deterrent effect of the higher fees on student recruitment. I should like the Government to make it clear whether, if the figures indeed do not stack up and the average fees exceed £7,500, they will limit student numbers. I do not know the answer and I am not sure that the Government do, but I should welcome their opinion none the less.

I should also welcome some sort of statement on when we will see the White Paper so that we can debate the issues further. It was originally to be published in January, we were then assured that it would be published in June, and I understand that in subsequent speeches to the civil service the Minister has referred to the summer. It is a bit like Billy Bunter’s postal order. I pressed the Secretary of State on the matter in the Select Committee this morning, and even then he would not give a commitment that the White Paper would be published in June. What I should like him to do today is tell us when it will be published, and whether it will deal with questions raised not just by me but by a range of Members about the funding implications of the current proposals.

Other countries recognise the value of higher education and the number of graduates who make an economic contribution. Other countries, even those that have suffered from the same sort of financial problems that we have experienced during the recession and are subject to the same sort of financial constraints, are investing more in higher education. The long-term implication of not getting this right and reducing the number of graduates is very serious indeed. On the basis of the picture that is emerging at the moment, I think that we are in danger of having fewer graduates, of damaging our economic growth, and of adopting a financial model that will make our public sector deficit far worse in the long term.

5.43 pm

Simon Hughes (Bermondsey and Old Southwark) (LD): I am grateful for the opportunity to speak in what is a timely debate, four and a half months or so after the House took a decision on the future financing structure for universities. As the House knows, it was not a decision with which I, or the majority of my parliamentary party colleagues, agreed. It was proposed by the Government after negotiation between the two coalition

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parties, and after they had read the Browne report commissioned by the last Labour Government. But the House made that decision, and I believe that the issues to be addressed now are, as the hon. Member for Nottingham South (Lilian Greenwood) said, the issues that are in the minds of the students whom she represents—indeed, those whom we all represent—in the minds of their families, and in the minds of future students.

I want to make four brief comments. I want to talk about the future as opposed to the past, about the cost to future students, about whether the fees being announced by universities are justified, and about what we and they should do in the months between now and the time when the system begins to operate. First, I ask Labour Members and other colleagues on the Opposition Benches to change their rhetoric from today onwards, after they have had this debate, because it is not the amount of the fee that is going to determine the cost to the student. The key question for young people and their families is: what will it cost me if I go to university? The new proposal has many improvements over the last and the present systems. First, as everybody has agreed, the monthly repayment will be less for everybody. Secondly, the starting point for repayment is higher: it is £21,000, not £15,000. Thirdly, for everybody who pays it will be a progressive system under which people pay more for the privilege of a university education according to their ability to pay more. It is therefore fundamentally different from a system—

Several hon. Members rose

Simon Hughes: Labour Members should calm down for a second. It is fundamentally different from a system under which we pay the same irrespective of our earnings.

Several hon. Members rose

Simon Hughes: I will of course give way in a moment, although I am trying to be brief as many colleagues still want to speak.

Under the new system, the cost for those who earn £22,000 a year—which is just above the threshold—will be £90 per year or £7.50 a month; that will be the cost of their university education.

Mr Lammy rose

Simon Hughes: If the right hon. Gentleman will forgive me, I shall give way in a moment.

Those who earn £25,000, which is just above the average wage, will have to pay back £360 a year, or £30 a month. Those who earn £41,000 a year—which is much more than the average wage, let alone the average graduate wage—will have to pay £150 a month. These sums will be deducted from their salaries, in the same way tax is deducted. Those who earn £71,000, which is more than a Back-Bench MP earns, will pay £375 a month.

The first and most important step is to get the message across that there are no up-front fees—no fees when students are at university, and no fees for part-time students at university. They will pay only when they have the money to pay. In that respect, it is therefore not a debt in the normal sense; rather, it is a repayable sum contingent on income. I shall now give way to the former higher education Minister.

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Mr Lammy: First, let me say to the right hon. Gentleman that £375 a month is a lot of money to our constituents. Secondly, he knows that not a single Member of this House would accept the new terms if their mortgage company were to ring them up and say, “I’ll treble your mortgage, but you’ll pay a lower monthly sum.” That is why students think it is patronising to suggest that this is a good deal.

Simon Hughes: The right hon. Gentleman and I have many concerns for the same sorts of people in our communities, and I respect what he has done in that regard, but most of our constituents do not earn £71,000 a year. They will not be earning that amount, and he and I do not earn that much as Back-Bench MPs.

Mr Lammy: They want to earn that much.

Simon Hughes: Yes, they may want to, and people in this country understand that if they earn more they will pay more to the state and pay more back into the system. That is fair Britain; it is not fair Britain if they pay the same amount for a service they have received irrespective of their earnings. Of course there are issues about perception—and they are big issues, which is why I did not vote for the policy—but I hope the right hon. Gentleman agrees that we now need to concentrate on the cost to the individual who will graduate in 2015 and later. If we start getting that message across, we will be helping young people to go to university, not hindering them, and our prime obligation now is to encourage, not reduce, access.

Mr Chuka Umunna (Streatham) (Lab): The right hon. Gentleman’s constituency and mine share a local university: London South Bank university. May I ask him two questions? First, does he accept that the concerns expressed on this side of the House about the new regime and its deterrent effect on students are not, as it were, crocodile tears, but, rather, reflect real concerns that are felt not least in both of our constituencies? The worries about what this proposal will mean for students and their families have been raised by my constituents, and I am sure they have been raised by the right hon. Gentleman’s too.

Secondly, does the right hon. Gentleman accept or buy into the principle that higher education should be a partnership between government and the individual? If so, how does he explain the 92% cut in the teaching grant, the 60% cut in the capital grant and the 50% in the innovation grant for London South Bank university from the Government?

Simon Hughes: That was a lot of questions and I shall try to answer them briefly. Of course I share a concern about perception, which is why I took on this job. By the time I have carried it out and given my final report to the Prime Minister and Deputy Prime Minister at the end of June, I hope—I have been working with Ministers to make sure this happens—that we will have the right messages coming out about the real cost in the future in a way that encourages people to go to university rather than discourages them.

On the hon. Gentleman’s second issue, the Government have to take responsibility for the tough spending decisions, as they have done. There were other choices they could

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have made, but if the choice was reducing the money going from the state to universities or reducing the money going to fund apprenticeships for people who do not go to university, I, on behalf of my constituents and his, believe that it may well be better to fund those who go to further education college and have apprenticeships, rather than spend the money on people who will be earning £71,000 a year.

Mr Thomas rose

Simon Hughes: If the shadow Minister will excuse me, I will not give way for a moment.

My second point is what now is the issue for universities that have submitted to OFFA their case for wanting to go above £6,000 with any fee. There is an issue as to whether the Government were justified in saying that £9,000 would be the fee only in exceptional circumstances, as that appears, on the basis of the incomplete evidence, not to have been an accurate prediction. Some questions need to be asked, not least about the advice that Ministers were given about what the prediction should be, but there is also clearly something wrong with the universities’ response. It is not just us saying that, because the principal of Queen Mary college, a part of the university of London in the east end, said:

“I think we could say, based on the brief press releases, the possible implication or inference could be that £9,000 fees have not been based on any calculation of cost but on perception of status.”

Universities should not be charging above what it costs them to deliver a course, but many appear to have forgotten that. They appear to be taking an opportunity which they should not be taking. The money is also there for one more thing, which is to make sure that access is improved as a part of widening participation, and universities will be watched to make sure that they are really delivering.

Mr Thomas: On that point—

Simon Hughes: I cannot give way at the moment, but let us see whether I can do so a little later.

I hope that next year when future OFFA guidance is given by the Secretary of State that fee waivers will not be allowed and indeed will be excluded. I do not think it is logical to state, “You don’t have to pay fees up front or when you are there” and then to say, “But actually we are going to give you a mechanism for you not paying the fees at all.” If we are really going to support students from poor families, the money should go towards the accommodation and living costs, which is where the real bill will apply and where the credit card debts will accrue. I hope that we will not be trying to pretend that reducing fees is the most useful thing for students who may not have to pay them or much of them at all.

Thirdly, I hope that Sir Martin Harris and OFFA will be extremely rigorous. The hon. Member for Reading East (Mr Wilson) made the point that powers are now in place and OFFA is able to make sure that each institution has to make sustained and meaningful progress, year on year, on its own benchmarks, measures and targets. OFFA is entitled to say to universities that they cannot have fees above £6,000 and I hope that it will be

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robust. If widening participation processes are not in place, I hope that OFFA will say so, and some universities may have to be told that they cannot go above the limit. I wish to make two final points and if I still have some time remaining, I will give way.

The Russell group, in particular, must do much better. It did not improve on widening participation under Labour and it must change its interview and recruitment process. At the moment, those universities are being far too subjective, particularly Oxbridge. Harvard does not have the people who are going to do the teaching doing the recruiting; it has selection on a needs-blind basis and it is one of the best universities in the world—other places are the same. The Russell group has no excuse now for not changing its process of recruitment, and if it does not do better I sincerely hope that the Government will make conditions that will require it to do so in future.

Finally, we need much better requirements on universities to give satisfaction to students. That should be written into the system in future and should be part of the preconditions for higher fees to be charged.

Several hon. Members rose

Mr Deputy Speaker (Mr Nigel Evans): Order. In order to get greater participation, the time limit is now being reduced to six minutes.

5.55 pm

Paul Blomfield (Sheffield Central) (Lab): It is illuminating to follow the right hon. Member for Bermondsey and Old Southwark (Simon Hughes). His transformation from critic to passionate advocate is part of the extraordinary nature of the road that the Government have been travelling along with this policy. It is almost surreal.

As a new Member almost a year ago, I expected that the Government would put forward policies with which I disagreed, but I had expected that they would at least be carefully considered, carefully evaluated, thoughtful and mindful of their impact. That was not so. The Minister for Universities and Science said earlier that the Government have a plan, but it seems that that plan is increasingly shaped not by Ministers but by events that they do not control and, at many levels, do not understand. Broken promises, conflicting statements and policy shifts: only when the dust settles will we find out the plan, with the publication of the repeatedly delayed White Paper.

Assurances were given to the House when we debated the Government’s plans back on 9 December, but those assurances have proved worthless. Indeed, had the House known then what we know now, who is to say, given the discomfort of some of those on the Government Benches at that time, what the outcome would have been? I recall the right hon. Member for Bermondsey and Old Southwark, in particular, seeking reassurance that £9,000 fees would be exceptional. Let me remind him what the Business Secretary said. He gave the right hon. Gentleman a clear pledge—huh, a Liberal Democrat pledge—that he would not allow the

“migration of all universities to the top of the range.”—[Official Report, 9 December 2010; Vol. 520, c. 547.]

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Consistently, the Prime Minister and other Ministers gave assurances that £9,000 fees would be exceptional. So where are we? We have seen precisely the migration that the Secretary of State said that he would not allow. Far from being the exception, £9,000 fees are the norm.

We were told at one stage that fees would average £7,000, then that they were calculated at £7,500, then that they might average £8,000. Now we find that the average fee is likely to be just £360 short of £9,000, at the very top end of the range. It did not have to be like this, however. The situation became inevitable because the Government decided to cut the undergraduate teaching grant by 80% without considering the impact or listening to those who knew what it was likely to be. From the outset, vice-chancellors were clear, including many of those who had been browbeaten into supporting the Government’s proposals, that fees of about £8,000 would be needed for their institutions simply to stand still.

Mr Lammy: Does my hon. Friend agree that the 80% cut and effective withdrawal of the state from higher education and the funding of arts, humanities and social sciences—there is no other country in the developed world that has made that kind of departure in higher education—will have catastrophic effects in the future?

Paul Blomfield: I completely agree. Back in December, the Minister for Universities and Science made the point that this was not about deficit reduction, as my hon. Friend the Member for Edinburgh East (Sheila Gilmore) reminded us earlier, but about changing the shape of our system. We stand only with Romania among OECD countries in cutting higher education, and we should be ashamed of that.

As universities have looked more closely at the figures, university councils and governing bodies have exercised the responsibility that they have a duty to exercise by setting the fees that their institutions need. It appears that many in government expected universities to fall into line with their picture of them, with Oxbridge setting fees at £9,000 and other universities ranking themselves where they fitted into the system. But those in government did not understand that university governing bodies would recognise their responsibilities to their students and the communities they serve and would set the fees that they need.

What about widening participation? I stress that this is not simply about Oxbridge. We should credit universities across the sector with the achievements on widening participation that my right hon. Friend the shadow Secretary of State has mentioned. Back in February the Deputy Prime Minister pledged in a BBC interview that Oxford and Cambridge would be given permission to charge £9,000 fees only

“if they can prove that they can dramatically increase the number of people from poorer and disadvantaged backgrounds”

who attend. In the past few days, it has become clear that Cambridge is not in a position, or is not intending, significantly to increase access for poorer students. What are the Government going to do about that? Will they tell Cambridge that it cannot have its £9,000 fees or will they tell the Deputy Prime Minister that he is going to have to confess to another broken promise?

What about the involvement of the private sector? The Minister for Universities and Science confirmed to The Times on Monday that, out of the crisis he is

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creating for the higher education sector, he expects there to be a bigger role for private sector providers. He has already prepared the ground by awarding university college status to BPP, which is part of the Apollo Group, which is currently being investigated by the United States Higher Learning Commission for deceiving prospective students. Where is the accountability for private sector higher education institutions? They do not face the same requirements on quality, access and numbers, and on the Government’s intentions in relation to the private sector we have had nothing but silence.

In December, the Business Secretary was quoted as saying of the Government:

“There is a kind of Maoist revolution happening in lots of areas like the health service, local government, reform, all this kind of stuff, which is in danger of getting out of control.”

What he failed to say was that the greatest chaos was unfolding in the area for which he is responsible.

6.3 pm

Andrew Bridgen (North West Leicestershire) (Con): The future funding of higher education was one of the immediate issues, like that of the budget deficit, that had to be addressed after the months and years of drift at what I can only describe as the fag end of the previous Labour Administration. If we had not addressed it we would have risked reaching a point of decline in further education from which we would have been unable to climb back. Hon. Members should have no doubt that doing nothing was certainly not an option. The previous Government recognised that, which is why they commissioned the Browne review in November 2009. The review’s remit was to investigate the balance of contributions to universities by taxpayers, students, graduates and employers and to consider how much students should be charged for attending university.

If our universities are to compete in the global economy, they need to be well funded. With a huge budget deficit, one cannot argue that when other Departments are facing cuts, the further education budget could be in any way immune. However, the increase in tuition fees proposed by the coalition Government does not, as the shadow Secretary of State has claimed, signal a wholesale withdrawal of state support for higher education. Under the current system, higher education is funded 40% by the student and 60% by the state, and under the new regime it will be funded 60% by the student and 40% by the state. That is far from the wholesale withdrawal of state funding. The fact that fees are to be capped means that there will be no up-front payments for students. No one will pay anything back until they are earning at least £21,000.

Tristram Hunt: Will the hon. Gentleman confirm that that £21,000 figure is at 2016 money, so in current terms the figure is £15,900? Once someone earns more than £15,900, they begin to pay back.

Andrew Bridgen: I would need to check the hon. Gentleman’s figures, but the sum is considerably more than the current level. The bottom 20% of earners will pay back considerably less in total, and those earning less than £25,000 will pay back less than £1 per day for their university education. That is a progressive repayment system. The Government are working on ways to help

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students from the most economically disadvantaged backgrounds by reducing the fees that they will have to pay back.

In opposition to this, we have the puffed-up inaction of the Labour party and the support given by the Leader of the Opposition and the shadow Chancellor to the idea of a graduate tax, which is not a solution to higher education funding. It would provide no guarantee that universities would receive the additional funding raised. There is no mechanism for former students to repay early, and it would not allow any differentiation between a student from a lower income background and one from a higher income background.

Margot James: Does my hon. Friend think that is why so many senior members of the last Labour Government disagreed with a graduate tax, including Alan Johnson, Lord Adonis, the former Prime Minister, Mr Blair and Lord Mandelson, as quoted by the Secretary of State?

Andrew Bridgen: My hon. Friend makes an excellent point. The Opposition are split on the matter for obvious reasons. A graduate tax is not the solution. A considerable number of graduates would pay substantially more than the cost of their course. In addition, there would be a large funding gap in the short term. The Browne review estimates that if all new students from 2012 paid a 3% graduate tax which would start at £8,000, not £21,0000, the tax would not provide sufficient revenue to fund higher education until 2041-42.

With the reckless spending habits displayed by the previous Government, universities would have much to fear if they had to rely on a graduate tax, which would inevitably fail to raise sufficient money, in contrast to the up-front and stable tuition fee income, which will allow universities to spend money as they see fit, rather than being subjected to constant Government interference.

The policies of the previous Government discouraged part-time students from studying, as they are expected to pay tuition fees up front and had no access to student loans. The fact that part-time students will have equal access to student loans will give more opportunity to those who may wish to study later in life, and will give universities a more balanced age range of students. Hon. Members should be aware that more than 250,000 students are studying at the Open university, and they will all be better off under the present Government’s policies. Given the need to retrain in a rapidly changing world, I welcome this.

The changes being bought in by the coalition Government will result in a higher standard of teaching being maintained, a higher completion rate of degree courses as a result of an informed and considered decision-making process, and students from poorer backgrounds being given a better opportunity to make the right decisions. This can only help universities by having students on the right courses.

We should also consider what the Opposition would call the ideological argument—whether universities should be dependent on the Government for their finance. The Browne review argues that a graduate tax would weaken the independence of universities, which would become entirely dependent on the Government for their funding.

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It argues that its own proposals would force universities to improve standards to compete for students. Under the coalition policies, the relationship of universities with students would rightly become more important than their relationship with Government.

Paul Farrelly (Newcastle-under-Lyme) (Lab): I fought against a market system under our last Government. We agreed a reasonable compromise, but not without a fight. On the Opposition Benches there was no fight. We knew where the Liberals used to stand. Can the hon. Gentleman tell the House where his party’s manifesto mentioned a trebling of tuition fees and an 80% cut to teaching grants to universities?

Andrew Bridgen: The policies are fair. There is increased fairness, increased opportunity and stability of income, and it is my firm belief that the coalition’s policies will allow our universities to prosper.

I am a graduate, and I had a full grant in my day, but in those days 4% of the school-leaving population went to university; last year, the figure was 43%. That is a considerably different proposition, and I remind the hon. Gentleman that in my constituency 84% of people are not graduates. An average graduate will over his lifetime earn in excess of £100,000 more than a non-graduate, so, if we are talking about fairness, is it fair that my non-graduate taxpayers should subsidise the earnings of those who have had the benefit of a university education? They will have that benefit not for the 30 years that they might pay back their student fees, but for all their working life, and I hope the hon. Gentleman remembers that.

To those who say that the system will not work, I say “Look at America”, where for decades the fees system has resulted in the country having eight of the world’s top 10 universities. If Oxford and Cambridge universities are to remain in the top 10 and other UK universities are to have any chance of breaking into the top 10, we need that stability of funding.

The increased tuition fees will create an expectation and demand for quality teaching among students, and with the proposed changes to A-level marking, which I support, students will apply with actual rather than predicted grades, helping state students to go to the best universities, reducing the drop-out rate and ensuring better results for students all round.

Fairness, opportunity, quality and stability are the hallmarks of this coalition policy on higher education funding, and these tough long-term decisions will secure the future of our nation’s universities, our graduates and our undergraduates.

6.11 pm

Roberta Blackman-Woods (City of Durham) (Lab): The Government are purposefully and quite unprecedentedly shifting the burden of the costs of university tuition from the public purse on to the shoulders of individual graduates, moving away from the assumption that both society and the student should bear the costs of university education. It is notable that the right hon. Member for Bermondsey and Old Southwark (Simon Hughes), who is not in his place, simply refused to engage with that point when he spoke earlier.

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The Business Secretary announced to Members in Parliament that a fee cap of somewhere between £6,000 and £9,000 would be introduced, and that fees would be £9,000 only in exceptional circumstances—that £9,000 would be an exception, not the rule. The announcement was much repeated elsewhere, but we know that, of those universities that had made their plans public by last week, the average fees will be £8,678.36—so just marginally less than that £9,000 figure.

We also have to bury the myth that students will pay less under the Government’s proposals. It is true that monthly outgoings, in some circumstances and for some students, might be less, but graduates will pay back their loans for much longer and at an interest rate that has not been fully determined. This is despite the fact that the independent Office for Budget Responsibility said in November and reiterated more recently that increasing tuition fees and funding student loans in 2015-16 will require the Government to borrow £10.7 billion, compared with the £4.1 billion that they borrowed in 2010-11, a point that was excellently made by my right hon. Friend the Member for Oxford East (Mr Smith).

In the context of such sharply rising fees, it is worth looking at some international comparisons. What is happening elsewhere in higher education? A recent article in The Economist on American fees reported that annual tuition and fees averaged £1,639 at two-year colleges, £4,595 at public four-year colleges for in-state students and £7,246 at public four-year schools for out-of-state students—all substantially less than the fees proposed for students in this country.

The situation gets worse if we look at Canada.

Dr Whiteford: I remind the hon. Lady that she does not have to look so far from home to find students who do not have to pay fees, because education is an investment in their future.

Roberta Blackman-Woods: Indeed. The hon. Lady makes an excellent point; we should always refer to what is happening in the devolved Administrations as well.

In 2007-08, the fees in the Canadian system were £2,866 and in Australia they were £2,600. What has been proposed for this country is absolutely out of line with our competitor countries across the board. According to quite a conservative estimate, the debt that a student will accrue, if they have to pay the £9,000 maximum and then accommodation and living expenses, could amount to about £48,000. If they then went on to do a master’s and a PhD, the student could come out with a debt of £70,000-plus. That is extraordinary.

Mr Lammy: On that excellent point, is my hon. Friend as concerned as I am that the plans will lead to catastrophically low levels of UK students deciding to go on to postgraduate study? Is she concerned that our university sector is actively recruiting abroad—notwithstanding the visa requirements imposed on it—and that we will therefore educate international students but deny that to students from this country?

Roberta Blackman-Woods: Indeed. My right hon. Friend has made a number of excellent points. It is interesting that we have heard nothing from the Government parties and nothing from the Minister about the impact

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of the proposals on postgraduate education in this country. The House will have to return to that issue in due course.

Graduates could be incurring extraordinarily high debts. The Government simply have no electoral mandate to do what they have done; it was not in any of the manifestos or in the coalition agreement. The costs are being pushed on to students because of the massive 80% cut being made to the university teaching grant. That does not fall uniformly across all universities; it hits hardest the universities with high numbers of students studying arts-based subjects. We simply do not know what the impact will be on the longer-term career aspirations of our students, but we need to continue to develop jobs in the creative industries. That is important for my region of the north-east, but it is also important across the board.

I am also really concerned that the Government do not seem to be paying any attention whatever to the possible deterrent effect of the proposals. There is an increasing constellation of evidence showing that an increase in tuition fees—particularly to the levels proposed —puts off people from applying to university. An Ipsos MORI survey last year of 2,700 11 to 16-year-olds showed that even marginal increases in tuition fees had a significant deterrent effect on participation among young people. Some 17% of the young people who responded said that they were unlikely to go to university if tuition fees increased to £5,000, with 46% saying that that they would not go if fees were increased to £10,000 a year. If the Government dispute those findings, they need to come up with alternative findings of their own. They have simply not commissioned research into the issue.

The Government say that they are remedying the situation with the national scholarship programme and tuition fee waivers, but we know from work that million+ has carried out on the national scholarship programme so far that it is over complex and that students simply do not know what will be available to them. The information about the programme is not available in an easily accessible format. That could lead to a postcode lottery.

We know, of course, that all these changes are part of a wider trend, with the scrapping of the education maintenance allowance and the future jobs fund, which helped to get young people into jobs. The Government are deliberately engineering a situation where the life opportunities of young people will be increasingly worse than those of their parents, and that is simply a disgrace.

Several hon. Members rose

Mr Deputy Speaker (Mr Nigel Evans): Order. The wind-ups are going to commence at 6.40 pm so we have only 20 minutes left. I still have 11 people on my list, so can we please show great time restraint in speeches and interventions?

6.20 pm

Lorely Burt (Solihull) (LD): I have been listening carefully to the debate so far, and the remarks made by Opposition colleagues make me feel as though I have been transported into some sort of alternative reality. This is a reality where the Labour Government did not introduce up-front tuition fees in the first place, one year after Tony Blair had promised not to in 1997; where they did not introduce top-up fees two years after they had promised not to in the 2001 Labour manifesto;

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where they did not go into the last election having commissioned the Browne review; and where Lord Mandelson did not say, this very March, that had Labour still been in government it would have needed to double tuition fees, at least. So we will not be taking any lessons from Labour Members this afternoon.

Now I have got that off my chest, it is fair to say that the motion poses some important questions, and it is fair that they should be properly addressed. Let me start with the £9,000-a-year exceptional student tuition fees. At the moment, universities are publishing their maximum fee, not their average fee. Institutions with a “sticker” price of £9,000 will have a significantly lower average fee because of fee waivers. At Oxford, for example, some first-year students will pay only £3,500—about the same as now. At Cambridge, all students from households earning under £25,000 will pay £6,000. At Warwick, students whose family income falls below £25,000 will receive a package of up to £4,500, and their two-plus-two degrees and part-time degrees will have a fee of £6,000, which may be further reduced by an additional fee waiver.

Paul Farrelly: I do not want to make party political points about broken promises, and I shall not, even when those promises were being written while people were planning to break them, because that amounts to hypocrisy and the Deputy Speaker would rule me out of order. However, I have one question. If the Government’s policy is to allow universities to charge the top amount of fees only in exceptional circumstances, is it not incumbent on the Government, the Business Secretary, the leader of the Liberal Democrats and the deputy leader of the Liberal Democrats to define, in percentage terms, what counts as exceptional and therefore what percentage of applications charged the £9,000 fee will be refused?

Lorely Burt: I was trying to be helpful to the hon. Gentleman by explaining some of the examples of how average fees will be lower than that figure.

The motion tries to commit the Government to guaranteeing that there will be no fall in the number of university places. This is another bit of collective amnesia. Labour Members cut places; they promised additional places and then cut the numbers. In 2009, the shadow Secretary of State, who was then Secretary of State for Innovation, Universities and Skills, put a 10,000 cap on the expansion of places, leaving 140,000 A-level students chasing just 10,000 unfilled places at the UK’s universities. That is 14 anxious students for every unfilled place available through clearing and 130,000 willing and able students without a place. They encouraged thousands of hopeful students to apply for university and then slammed the door in their face when they got there. In 2010, they did it again, leaving 150,000 people without a university place, some of whom had six A-levels at grade A. In 2009, they cut the budget of the Department for Business, Innovation and Skills by £1.9 billion, and in 2010, they cut the universities budget by £500 million.

If I may, I will read a quotation from a debate in the other place:

“The Government have made it clear that higher education needs to shoulder its fair share of the burden of reductions in public spending”.—[Official Report, House of Lords, 21 January 2010; Vol. 716, c. 1101.]

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Those were the words of Lord Mandelson in January 2010, when he was Secretary of State for Business, Innovation and Skills. In the same debate, he said that student numbers should be dictated by what is affordable with the resources available. The numbers should not be dictated by a central Government diktat, which says that 50% of young people should go to university. Labour set that target, but quickly realised that it did not know how to pay for it. It was left with a financial black hole and was forced to slash student places to fill it, leaving thousands of students in the lurch. Surely the right number is the number at which every student who has the desire and capability to benefit from university can go. Despite the previous Government’s undoubtedly strenuous efforts, the number of students from poorer backgrounds did not increase proportionately. That is Labour’s legacy on universities.

It is no secret that had the Liberal Democrats won the general election, we would have done things differently. However, I am proud of the coalition agreement, which incorporated two thirds of our manifesto pledges. Sadly, our tuition fees policy fell into the group of manifesto pledges that remain unfulfilled. Working in coalition has its challenges, believe me, but it also has its rewards. One of the rewards was negotiating with Conservative colleagues to make the system that we have ended up with more progressive than the Labour system we inherited. That is not only my view, but that of the Institute for Fiscal Studies. There are no up-front fees for students, graduates will start to pay only when they can afford to, and there will be lower lifetime contributions for the poorest quarter of students compared with the system that Labour left behind. There will also be more support for the Cinderellas of the HE and FE systems, part-time students, who had previously been shunned by a system geared towards full-time students.

In conclusion, it is hard to predict what will happen, given that universities are yet to announce many of the measures such as bursaries and waivers. I have concerns about the number of places and their uptake. As the Minister said earlier, that will be reviewed in autumn 2011 and I greatly hope that the steps we have taken will be vindicated.

6.27 pm

Tristram Hunt (Stoke-on-Trent Central) (Lab): First, I declare my interest as a part-time lecturer at Queen Mary, university of London. I therefore take a keen interest in universities and know slightly more about their workings than some Government Members who have contributed.

I am privileged to represent Stoke-on-Trent Central, in which Staffordshire university sits and many students from Keele university reside. In the university libraries of those great universities sits a book by Tony Travers and Andrew Adonis called “Failure in British Government: The Politics of the Poll Tax”. That wonderful text tells one how not to make Government policy from beginning to end. I am going to write to Andrew Adonis and Tony Travers to suggest a second volume on the introduction of the tuition fee fiasco that we see before us.

Mr Gyimah: When the hon. Gentleman speaks to Andrew Adonis, he should also discuss the graduate tax with him, which he looked at in detail and dismissed when Labour was in government, and which is now Labour policy.

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Tristram Hunt: I thank the hon. Gentleman for that intervention. I am happy to look at that. Personally, I am no fan of the graduate tax.

I, too, am new here, but as I understand it, what happens in this place and in government is that people come up with ideas and then there is a Green Paper, a White Paper, some debate, a decision, and then a policy enactment. What we have here is the imposition of an arbitrary fee level, followed by the scurrying around for a justification, which we have seen over recent months, to make the figures add up.

The Government’s policy is driven by ideology. It is the ghost of Keith Joseph coming back to life. It is neo-liberalism rather than Liberal Democrat politics. However, let us be generous for a minute and argue, as the confused Minister for Universities and Science tried to, that some of it is driven by a desire for deficit reduction. We will leave aside for a second the fact that for every £1 million invested in universities £2.5 million comes back, and we will leave aside the fact, mentioned by my hon. Friend the Member for Sheffield Central (Paul Blomfield), that the only other country deciding to slash spending on universities and science during the recession is Romania. Clearly Ministers are using the Romanian model, when we thought they were interested in a knowledge-driven economy.

If deficit reduction is the strategy, why do the sums not add up? Why will the Government’s plans cost more, not less, over the coming years? Because the Government have got their sums wrong and do not understand how universities work. They thought fees would be £6,000 or £6,500, but why would universities charge that amount when it costs them £10,000, £11,000 or £12,000 to educate someone? At the university of Cambridge, it costs £14,000 to educate an undergraduate. Why on earth would it not charge £9,000 to recoup some of that cost? The incompetence of Ministers has been absolutely breathtaking, and the suggestion of the right hon. Member for Bermondsey and Old Southwark (Simon Hughes) that the problem was advice from civil servants was, I thought, rather grotesque.

And what fees they are! Nine thousand pounds. Every decent university will go for the top rate, so we will go from having some of the lowest fees to having some of the very highest. That represents an ideological decision to withdraw the state from higher education. Only that can explain the decision to cut 80% of the higher education teaching grant. The headline fees will put students off, and for all the guff that we heard about special provisions, when people see the figure of £9,000, it will be very hard to convince them.

Jeremy Corbyn: My hon. Friend must be aware, as I and many others are, that the cuts are wholly disproportionate. We are destroying humanities, arts and language courses all over the country, and we are denying the opportunity of education to many working-class youngsters, because the cuts are in favour of vocational courses rather than pure academic ones. Does he believe that that is selling the whole country short?

Tristram Hunt: I absolutely agree with my hon. Friend. The Government’s attack on humanities has been grotesque from the beginning. Their intervention to try to make the Arts and Humanities Research Council fund big

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society research could not have been more laughable. There will be an effect on history, French and humanities courses.

Mr Barry Sheerman (Huddersfield) (Lab/Co-op): Design, as well.

Tristram Hunt: And on design courses.

I will wrap up so that some of my colleagues can deliver the coup de grâce to these terrible proposals. I end with a point that Government Members clearly have not got their heads around. The figure that people will only pay when they earn more than £21,000 is based on 2016 values. At today’s values, the figure is £15,900. In future, let us have a debate about people beginning to pay back their fees when they are earning that much.

Universities always suffer under Tory Governments. They did in the 1980s and they are again now. The Minister for Universities and Science is like a recherché Keith Joseph, and we need to finish off these terrible proposals.

6.33 pm

Mr Marcus Jones (Nuneaton) (Con): It is always an honour to follow the hon. Member for Stoke-on-Trent Central (Tristram Hunt), even though his arithmetic and his assessment of inflation seem like those of the Labour party of the late 1970s.

Quite often during Opposition day debates, purely partisan posturing overtakes thoughtful and reasoned debate. People put partisan politics before making decisions for the right reasons, even if such decisions have to be taken with a heavy heart. I would not say that I am disappointed by the level of party politics that we have heard, particularly from the Opposition Benches, but I am more than disappointed by the way in which the Opposition have put their points.

Once again, the Opposition have given us no ideas and shown no vision on higher education. They have not acknowledged that Labour introduced tuition fees and increased them on more than one occasion when it was in government. They have also not acknowledged that they instigated the Browne review. Lord Mandelson, the former Business Secretary, now says that when the previous Government instigated the review in 2009, he assumed, as the Treasury did, that the outcome would have to include a significant further increase in tuition fees. Whether that was Labour party policy at the time, you have to acknowledge that the Labour party gave the Browne review its terms of reference—[Hon. Members: “You?”] Sorry, Mr Speaker.

The Labour party no longer acknowledges that it flirted with the graduate tax—Labour Members seem to be in denial. Only one thing is clear: they have no plan for higher education.

Paul Farrelly: Will the hon. Gentleman give way?

Mr Jones: I will not because I want to give other hon. Members an opportunity.

The motion makes important points about fees and how they will be implemented, and I hope the Minister comments on the timetable and on how quickly students and their parents can find out what the true level of fees will be. That is important because a small number of parents and students go to their constituency MPs to

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ask for that information so that they can plan for the future. I understand why the Government want to get things right, but the uncertainty does not help.

However, Labour’s constant politics of fear helps no one. Rather than supporting our young people by engaging in the debate and trying to get things right, Labour Members maintain the party line—a misleading line that fills our young people with fear and dread, putting them on the back foot before they even learn the facts, crushing and stifling aspiration, and certainly not encouraging it.

Aspiration is important, but it needs to be realistic. The most capable, regardless of their background, should have the opportunity to attend university. Under the new system, the Government will help to achieve that for young people. There will be lower repayments for student debts than under the current system, and most of those from underprivileged backgrounds will have the opportunity to get into higher education.

Warwick university—one of my local universities—says that all students whose parents have an income of £25,000 or less will receive a package of up to £4,500 a year to assist with their studies. We must also acknowledge that the Government’s policy involves no up-front fees, and that students will not start paying until they are graduates earning £21,000 a year, rather than the £15,000 a year under the current system. As Labour Members know, monthly payments will also be lower.

That is not to say that the current system or the system that the Government propose are ideal. Young people will leave university with debt, and nobody in the House would wish that on a young person. However, we must be realistic. For many young people, taking on that debt is the path to a career—a good and proper career in which they make a substantial living. We know that young people who go to university earn on average £100,000 more over their career than young people who do not.

That is not to say that university is a success for all. It is not, and many come out of our universities unable to gain employment for many years. Many certainly do not enjoy the glittering careers that they thought they would have when they initially went to university. I know that because I used to work for a firm of lawyers that received hundreds of thousands of applications for training contracts every year—applications for jobs that just did not exist. That is not acknowledged by the Labour party.

To sum up, the proposed new system is not perfect or ideal, but it is a move in the right direction. Social mobility stalled under Labour, but it will begin to improve once again with the measures put in place by this coalition Government.