The Minister of State, Department for Education and Employment (Lord Henley): My Lords, the Budget settlement for universities confirmed plans for recurrent expenditure announced in the 1994 Budget. However, planned capital funding was reduced by about 40 per cent. compared with previous plans. Universities are being encouraged to use opportunities offered by private finance to maximise the value of taxpayers' money.
Lord Ashley of Stoke: My Lords, I declare an interest as Chancellor of Stafford University. Is the noble Lord aware that the Committee of Vice-Chancellors and Principals was fully justified in describing the capital funding cut as "catastrophic"? That is especially so as the cut will be some 52 per cent. in the next three years and it followed a 25 per cent. cut in funding for students. That is a tremendous cut to the universities. There is no doubt that the effect of the cuts will be damaging to the fabric of British universities. It will impose enormous strains on students and staff and leave Britain trailing behind her competitors. So could we have a complete change in the whole system?
Lord Henley: My Lords, I am aware of the views of the Committee of Vice-Chancellors and Principals. My honourable friend Mr. Forth met members of the committee a week ago, on 11th January. I think that the description of the adjustments to expenditure on universities as "catastrophic" is rather overstating the case. The simple fact is that we spend of the order of £35 billion a year on education in the United Kingdom, some £7.5 billion of which goes on higher education. We now send of the order of 30 per cent. of all 18 year-olds to university compared with 13 per cent. 16 or 17 years ago. That is a record of which we can be proud. It compares well with that of other countries. If noble Lords or the Committee of Vice-Chancellors wish to see yet further expansion in universities, they must say from exactly which budgets they will take the money.
Lord Campbell of Croy: My Lords, is my noble friend aware that some vice-chancellors feel that they are being presented with two possible courses? The first is to borrow the extra money required to carry on as before--and from my noble friend's original reply, it sounds as though that course may be favoured by the Government, but it some cases it may be difficult or unwise. The second course would be to reduce student numbers. Are the Government happy to see one or other of those courses adopted?
Lord Henley: My Lords, we do not think that it will be necessary for universities to reduce the numbers of students attending them. As I said, we have seen a fairly dramatic increase over the past 15 years to over 30 per cent. of the relevant age group. I repeat, that if anyone feels that the figure should be expanded, they must say where the money will come from. It is obviously open to universities to borrow and many have done so in the past. It is quite right that they should look to that avenue as a possibility and also at the possibility for a private finance initiative.
Lord Annan: My Lords, will the Minister say which universities are clamouring to admit more students, now that they know what their budget will be in the next three years? Surely that is absolutely untrue.
Lord Henley: My Lords, I do not believe that I said anything untrue. What I said was that the numbers of students had increased dramatically over the past few years. It is now of the order of 30 per cent. of that age group. We recognise that there will probably have to be a period of stability over the next few years. I am trying to make clear that if noble Lords, universities or whoever it is, wish to see a much greater expansion in numbers at universities, they must say how it should paid for.
Lord Merlyn-Rees: My Lords, commendably the Government have increased the number of university students, particularly in the new universities. However, if the amount of money available to deal with them has not been increased, is that not rather foolish?
Lord Henley: My Lords, the amount of money has increased over the years. It has not done so as fast as the number of students because we have sought efficiency gains from universities, as we have from many other sections of society. I am grateful that we have seen efficiency gains produced by the universities. That is part of the reason many universities have been able to take on more students.
Lord Morris of Castle Morris: My Lords, will not the cap on student admissions, which was also announced in the Budget, make the Government's participation target of 33 per cent. of school leavers entering higher education by the year 2000 absolutely impossible to attain?
Lord Henley: My Lords, I do not necessarily believe that to be the case. We have said that we wish to see a period of stability. We have also announced that in due course we shall come forward with a review of higher education. As I made clear, anyone who wants to see
Lord Henley: My Lords, that was a target that we set for sometime after the year 2000. At the moment we are looking for a period of stability. We are many years away from 2000 at the moment. As we announced, we seek a period of stability in the numbers attending university, and that is quite right.
Lord Callaghan of Cardiff: My Lords, on another aspect of the problem, is the Minister aware that in a number of universities where students are dropping out, it is often alleged that it is because of financial difficulties caused by the loans? Will he make inquiries into that? The drop-out rate of students, caused either by that or some other reason, is alarming.
Lord Henley: My Lords, we have seen evidence of increased drop-outs but we have seen absolutely no evidence--despite what some will say--that it is caused by financial hardship. It occurs on some occasions. Perhaps for the benefit of the noble Lord and the House I may give a few figures from some BMA research on student expenditure. We find that the average medical student--and I imagine that this is true of most students--spends of the order of £37 a week on accommodation; about £22 a week on food; £3.60 on clothes; £2.70 on text books; £1.10 on equipment; and £18.60 on what is described as "social expenditure". I imagine that that accounts for beer and skittles. I do not believe that that is evidence of hardship.
Lord Ashley of Stoke: My Lords, vice-chancellors are not given to hyperbole like some politicians; they are reserved in their comments. They are outraged by the cuts and their cumulative effect. The reality is that many of our universities have shabby buildings and over-crowded campuses. This House must decide between the words of the vice- chancellors working at the coal face, as it were, and the Minister trying to placate the Treasury. The reality is that we are failing our universities and we must change the system.
Lord Henley: My Lords, I stick to what I said. I think that there was a degree of exaggeration from the vice- chancellors. They have seen a small cut in capital amounting to £150 million. At the same time, we have increased expenditure on schools by £878 million. I believe that everyone would accept that schools have a slightly higher priority at this time.
The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish): My Lords, the Government's most recent estimate of the United Kingdom's net contribution to the European Community Budget is £3.5 billion in the present financial year and £2.9 billion in the coming financial year.
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