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Baroness Blatch: My Lords, Section 44(2) of the British Nationality Act 1981 says, among other things, that,

That is the point made by my noble friend. The decision of whether or not to grant an application for a certificate of naturalisation as a British citizen is at the discretion of the Secretary of State. I can also say that Section 44(2) is lifted from Section 26 of the Nationality

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Act 1948. The Secretary of State was first exempted from having to give reasons for granting or refusing certificates of naturalisation in the Nationality Act 1870. So it is a very long and well-established tradition.

Lord Cledwyn of Penrhos: My Lords, will the noble Baroness note that, if these two brothers come to Wales and open a couple of shops like Harrods, we shall give them the Order of St. David?

Baroness Blatch: My Lords, that is noted.

Lord Avebury: My Lords, if we now believe in open government, is it not time that the provisions which the noble Baroness read out were reviewed? On the one hand, if the reasons why the Secretary of State does not have to explain why he has refused nationality are to do with embarrassment to the applicant if the reasons were revealed, could not the reasons be revealed by agreement with the applicant? If, on the other hand, the Home Secretary declines to give reasons due to the fact that he does not wish to open a front for possible litigation by the aggrieved person, is that not a very bad ground for maintaining secrecy?

Baroness Blatch: My Lords, I have given the history of this piece of legislation. I can say that almost all governments have visited and revisited this aspect of it and have decided that the discretion should be the Home Secretary's and that reasons can be withheld. If the noble Lord believes that the law should be changed, then it would be up to Parliament to consider that. I believe that there are very good reasons why that discretion should be left to the Home Secretary. There are often very good reasons why the reasons are not made public.

The Earl of Lauderdale: My Lords, does my noble friend agree that British nationality is a privilege to be cherished and that it is not something to be obtained either by bullying, blackmail or endeavouring to interfere with British processes?

Baroness Blatch: My Lords, I agree absolutely with my noble friend. The granting of nationality is an extremely serious issue. It is right that it should be considered properly and that there should be an appeal system which allows the decision to be challenged. It has been challenged and my right honourable friend has been found to have acted lawfully in this case.

Lord Dubs: My Lords, accepting that the Home Secretary can use the British Nationality Act as a reason for not explaining why a particular grant of nationality has been refused, what are the reasons for not explaining to the people themselves why they have been denied nationality?

Baroness Blatch: My Lords, there may be many. It may be the way in which the information about them has been sourced; it may be about protecting other people or national security. There may be all kinds of reasons. But the fact that the law, as it has been visited and revisited, has allowed it to be a discretion on the part of the Home Secretary, and as it states quite

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explicitly in the Act that reasons need not be given, I believe that my right honourable friend has exercised his right under the law.

Lord Richard: My Lords, of course one accepts that the Home Secretary exercised his right under the law. The question is whether or not he will reconsider it and exercise his right under the law again. Is the Minister aware that the refusal of the Government to reconsider this matter is viewed by many people as verging on the spiteful against these two men and that the Government should think hard about it?

Baroness Blatch: My Lords, I profoundly disagree with what the noble Lord has just said. An application was made; it was rejected; it has been challenged, and my right honourable friend has been found to have acted lawfully. We have no plans and indeed no reason to reconsider the matter. It is of course open to the two Mr. Al Fayeds to reapply. We normally recommend that at least two years should elapse since the last application. If they wish to reapply nothing that has happened hitherto will impede proper consideration of their application.

Lord Monkswell: My Lords, in his first supplementary question, the noble Lord, Lord Spens, said that "misleading" had been legitimised. I can only presume by that that he meant that the rejection last week by a vote in the House of Commons of the Scott report, which found that the Government had misled Parliament, effectively legitimised "misleading"--or, as someone described it, telling porkie pies. Can the Minister say what steps the Government are taking to correct that impression that may have been conveyed to the British people?

Baroness Blatch: My Lords, that was a thorough distortion of what the Scott report said and has absolutely no relevance to this matter. The court has found that my right honourable friend acted lawfully, and that is an end to it.

Lord Peyton of Yeovil: My Lords, does my noble friend agree with me that the explanation of the noble Lord, Lord Monkswell, of what was meant by the noble Lord, Lord Spens, could be quite a time-consuming and perhaps wasteful exercise?

Baroness Blatch: My Lords, I am attracted by the notion put forward by my noble friend. Perhaps I may also say that there was an implicit criticism that my right honourable friend had been dishonourable, and I take issue with that.


3.6 p.m.

Lord Strathclyde: My Lords, after the debate on expenditure in universities and before the debate on developing countries, my noble friend Lord Lucas will, with the leave of the House, repeat in the form of a Statement an answer to a Private Notice Question in another place on the judgment of the European Court of Justice on fishing interests.

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I should like to say a word about today's debates. In the first debate, other than the mover, Front Bench spokesmen and the Minister replying, speakers will be limited to eight minutes and in the second debate to nine minutes. Perhaps I may also remind your Lordships that when the digital clock shows eight minutes, the full eight minutes have elapsed and the speaker is already trespassing on the time of others.

Business of the House: Debates this Day

Viscount Cranborne: My Lords, I beg to move the Motion standing in my name on the Order Paper.

Moved, That the debate on the Motion in the name of the Lord Annan set down for today shall be limited to three-and-a-half hours and that in the name of the Earl of Sandwich also set down for today to two hours.--(Viscount Cranborne.)

On Question, Motion agreed to.

University Funding

3.7 p.m.

Lord Annan rose to call attention to the cuts in current expenditure and in capital (including equipment) grants which have been imposed upon universities; and to move for Papers.

The noble Lord said: My Lords, I want to begin by congratulating the Secretary of State on being a woman. After a series of males, each one more disastrous than his predecessor, it is a relief to have someone who immediately calls in Sir Ron Dearing to review the funding and operations of universities. For 12 years we have had policy for universities made off the cuff. But now I hope that we have someone who wants to listen to those in higher education and hear how they suggest the formidable problems that face government and themselves might be solved.

Sir Ron Dearing's appointment reminds me of the bad old days in industrial relations when a strike would be called, followed by weeks of fruitless negotiation and millions of pounds lost, and then Mr. Jack Scamp was called in to produce a settlement. I never could see why Mr. Scamp was not called in at the beginning of the dispute. So let us be grateful that Sir Ron, the scamp of the 1990s, has been appointed before the vice- chancellors carried out their threat to impose a £300 tuition fee on all students. Let there be no doubt that it was that threat--which the vice-chancellors no more than the Government wanted to carry out--that brought the department to the negotiating table. The Secretary of State has displayed admirable sensitivity in seeing how serious the situation had got; and it is serious.

There seems to be only one thing in which the Government want to be wholeheartedly European and that is to make our universities resemble those on the Continent. There, for instance in Rome, buildings designed for 10,000 students accommodate today 100,000. There students never meet or discuss their

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work with their professors. Is that what we want? For years Britain has been admired for the quality of its university higher education. Foreign students are amazed by the personal attention and tuition they got, and still get, from their teachers. I know this from the German students who for the past three years have lodged with us and studied at the LSE and at the University of Essex. Do we want to throw that away?

I have no doubt that in his reply the Minister will say that universities have to learn how to teach larger numbers of students. Student numbers have certainly increased--since 1979 by 45 per cent. In the past six years recurrent funding per student has declined by 28 per cent. and a so-called "small" class now numbers 25 to 30. The old tutorial system is in danger of collapse. Heads of departments, particularly in science, tell their junior staff that, if they devote time to tutorials instead of getting on with their research and adding to the department's publications list, they will not get promoted.

I remember Lord Robbins, back in the 1970s saying that he thought that perhaps staff/student ratios were a bit lavish. He thought that a ratio of 1:15 would be reasonable. It is now 1:20 as an average, excluding medical schools. In practice, that means a ratio of 1:30, or more in popular subjects. In the management-speak in which the present Permanent Secretary at the department is a master, that would be called an enormous increase in "productivity", having regard to the "down-sizing" of staff.

And what has been the reward for academic staff? Since 1979 they have seen their salaries fall far behind those of any other professional group. I am not going to join the Government in bashing school teachers--most of them deserve better than they get. Still their salaries have risen by over 30 per cent. since 1985. Academic staff salaries have risen by 10 per cent. Is that a fair deal? It is simply an indication of how much the Government despise dons. They treat them like petits pions, a low form of life to be sneered at or bullied by the Chancellor of the Exchequer.

On top of that gross unfairness, the Government have added vastly to the paperwork demanded of universities. Indeed, a new monster has appeared, the Higher Education Statistical Agency, which is churning out demands for information never before demanded. Then there is the quality exercise, in which every department receives a visitation every three years and is assessed. The paperwork, the waste of time--time that should be spent on teaching and research--is incalculable.

What about the inspector from a former poly who told a junior lecturer in a prestige London University college that how well she knew her subject was not the concern of the inspector, but she should not stand before her class because it was too "authoritarian".

Skilful heads of department jockey with each other for assembling impressive lists of publications. Anyone who has been a don knows that mere numbers of publications are a delusion. The more entrepreneurial vice-chancellors never miss an opportunity of luring on to their staff by hook, and often by crook, scholars or

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indeed simply writers whose publication record seems to be impressive. The other day a talented consultant at one medical school perfectly reasonably was offered a post as professor at another medical school, but only on condition that he was in post by 31st March. "Why that date?", asked his present employer. It became clear that had he been in post by 31st March, all his publications for the past five years would have enriched the research record of the hiring university and would have deprived the university in which he had been for the past five years of their credit.

I hope in answering this point the Minister will not talk a lot about "accountability". When was there last a complaint about the quality of university teaching or of the devotion of dons to their pupils in the old universities? I challenge the Minister. There have been complaints, we know, of bad teaching in some primary and secondary schools. But when were there similar complaints of universities? Let us have chapter and verse.

I would not dispute that some departments need visitations. But do the pre-1970s universities require this? Once a university has been audited and found in good shape, can it not be left alone for, say, seven to 10 years? It is not likely to get all that better or all that worse during that time.

What does the Secretary of State expect from Sir Ron Dearing? I hope she will ask him to do what he did when he examined education between 16 and 18. I mean by that to issue a general principles paper by December of this year which can be sent to all interested parties for consultation.

I do not think there is any doubt that Sir Ron will have to propose a different balance in finance between the state, employers and graduates. Every quality newspaper now accepts that students must make a contribution to their own fees. They, or their parents, may not be able to make it at the time when they are undergraduates, but something like a contribution by those who have graduated must come about. I recognise that some will question whether someone such as myself who graduated in 1938 should now be required to pay this tax or whether it should be levied upon those who graduated post-1960. Speaking for myself, I would willingly pay such a tax provided it was hypothecated and guaranteed to be used for higher education and not disappear into the maw of the Treasury. I can imagine that the Treasury will refuse that because it always declines to accept anything which is hypothecated.

Above all, Sir Ron must bring other government departments such as the DTI and the Department of Health into these matters. When universities are cut, the staff of the hospitals of the Secretary of State for Health are affected. Posts have to be frozen and consultants' posts cut. I am told that there are at least 17 cases in which essential work in hospitals will be curtailed because of the present cuts.

There are now 105 universities and it seems to me inevitable that there will have to be two clusters, one of which will be full research and teaching universities and the other teaching universities whose courses are linked to professional institutions, though that would not

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inhibit a particular department gaining support for research from industry or even indeed from the Higher Education Funding Council.

Government policy is so full of paradoxes. They came into office determined to cut bureaucracy, yet they add layers of bureaucracy in the universities. They create opt-out secondary schools and special technical schools, but they abolished the distinction, without any consultation, between universities and polys--and what is more, threw a considerable sum of money at those new universities as an indication that they were now in the top league.

When Sir Toby Weaver persuaded Mr. Crosland to create the polys, he envisaged them as a cheaper form of higher education because the polys made no pretence at being research institutions. In fact today unit costs at a number of the old polys are higher than those in the old-established universities.

And what has happened to the Department of Education and Science? It is now the Department for Education and Employment. Science has been turned out and made to walk the streets of Whitehall like a whore. At last she has been picked up by the Department of Trade and Industry. It is as if Jane Austen had been told to lodge with Casanova. It is ridiculous because for years scientific research has been angled towards industry. What is needed now is protection for the fundamental research that has to be done if new applied research is to be developed from it.

The problem before us this afternoon is not so much what should Dearing recommend; it is what is to be done between now and 1999, when such recommendations as Sir Ron makes may be implemented, so as to enable universities to weather the storm caused by a cut of 6 per cent. this year, 5 per cent. next year and 5 per cent. the year after that, and a cut of 47 per cent. in the capital and equipment grant. Capital grants are used to buy equipment. It will mean that books cannot be bought for the library or equipment for the extra students in the labs. At Durham the grant is sufficient only to upgrade IT equipment--nothing else.

The Government say, "Go out and find benefactors under the private finance initiative". But you cannot get private finance to fund the repair of fume cupboards which have been condemned by an inspector from the Department of Health. I wonder whether the department realises just how large a contribution the private sector already makes to universities. Consider Sheffield university, a fine old but not unrepresentative civic university. Today 47 per cent. of its income comes from private sources. Per contra some of the newest universities get 94 per cent. of their income from the taxpayer via the HEFC.

When the HEFC sends universities their allocations for next year the wizard Merlin will not be needed to predict what will happen. Vacancies will be frozen. Worse still, more students will drop out. I am sure that the Government will blandly answer all questions in this House by saying to a noble Lord who airs any grievance that he should not address them but the HEFC. In 1994-95, 21,000 students, 20 per cent., left universities without qualifications for academic reasons. That rate of drop-out was unheard of 10 years ago.

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Incidentally, perhaps the Minister can tell me why it is that the Scottish and Welsh universities have been cut less than the English universities. Is it hoped that the noble Lord, Lord Cledwyn, will cross the Floor of the House in gratitude?

This afternoon I have spoken out of character. Noble Lords who have heard me speak over the past 30 years know that I always play the part of Bottom:

    "I will roar you as gently as any sucking dove; I will roar you as 'twere any nightingale".
Nearly always I have been a blackleg among vice-chancellors because I thought the universities were selfish in the days of their prosperity, did little to help the government reduce their expenditure and were indifferent to the plight and standards in the schools. But today I speak in anger. I beg to move for Papers.

3.22 p.m.

Lord Renfrew of Kaimsthorn: My Lords, as a university teacher may I declare an interest that I hope is more than just pecuniary? Like all of us, I owe a debt to the noble Lord, Lord Annan, for initiating the debate today. University education in this country is now in a state of crisis. This is odd, because there are many positive things that can be said. First, the reputation of our universities stands high. Secondly, the higher education sector has expanded by 100 per cent. since 1979. Thirdly, there have been so-called efficiency gains of some 28 per cent. over the past four or five years. The per capita investment in each student from public funds compares favourably with that of most industrialised nations. There is a reasonably coherent system in place to make available cheap loans to help students pay their maintenance. We know that a thorough review by Sir Ron Dearing's committee is expected by September 1997.

Of course, the crisis arises from the swingeing cuts that have been recently announced. These cuts come after the 28 per cent. so called efficiency gain--that is to say, the reduction in unit funding, over the past four years. On the university and tuition side--recurrent funding--the cuts announced amount to a 4.7 per cent. squeeze in real terms in the coming year, rising to 9.4 per cent. in real terms by 1998-99 in relation to last year's funding. On top of that, capital grants will be down 47 per cent. by 1999. These are savage cuts. Some universities may be bankrupt before Sir Ron Dearing's reforms can take place, which will not be before 1999. One has to add to that the plight of individual students. Here I talk about student maintenance. For example, at current rates, a four-year science student who begins his or her studies this October will have a loan of £7,811 by the year 2000 on graduation, to which one must probably add inflation. If on an average salary, the student will be expected to pay off that loan within five years.

For years the Government have been advised on all sides to have an income-contingent repayment scheme--that is to say, a graduate tax. Neither party has had the guts to grasp the nettle of a new tax. What disturbs me is that the impending crisis, which arises largely from increased student numbers, has been blindingly obvious for at least three years, as noble

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Lords have been telling my noble friends with remarkable consistency. Where is government policy? In September 1993 when Labour produced, and then suppressed, a shadow Green Paper--for which the shadow Minister in the other place, Mr. Jeff Rooker, was dismissed from his position--my right honourable friend, the then Secretary of State for Education, called a press conference. He dismissed it with ridicule with its talk of a graduate tax and the hint that students might be asked to contribute to tuition costs. When Mr. Patten was succeeded by the current Secretary of State the first thing that my right honourable friend did was to commission a study. A few months ago her Green Paper was said to exist in draft. A year later, where is it? Where is government policy?

I wish that I could say better for the party opposite. The then Leader of the Opposition dismissed Mr. Rooker from his position; but what happened to the policy? Indeed, what is their policy? The noble Lord, Lord Morris of Castle Morris, in the Second Reading debate on the Education (Student Loans) Bill two weeks ago, spent some time discussing the Conservative Political Centre's report entitled The Future of Britain's Universities. I am sure that the CPC was suitably grateful. But where was the exposition of Opposition policy? What is that policy? I hope that in four minutes we shall begin to learn.

In his speech the noble Lord alluded to four clear principles on which the Labour Party was alleged to be working: to encourage access; to protect and enhance quality; not to discriminate among students; and to be fair both to students and the taxpayer. Your Lordships will be surprised that he omitted motherhood and blueberry pie, but was there a glimmer of policy among that welter of platitudes? There was none. Is Labour advocating a graduate tax, as Mr. Rooker was said to have done? Sometimes, it sounds like it. I hope to know in three minutes' time. This country has not been well served by the Opposition in the matter of higher education. They have suffered a collective loss of nerve. In the past couple of years successive Ministers of Education have also failed to grapple with these obvious and emerging funding problems. One may harbour the suspicion that officials in the Department for Education have not been energetic in proposing alternative strategies.

If serious lasting damage is not to be inflicted on our universities and student population, something has to be done now. We can expect more from government and from the opposition than drafts of Green Papers which never see the light of day, and more than a committee of inquiry to report in 18 months' time--however welcome it will then be--and to be implemented we know not when. We hope we shall see swift action.

3.28 p.m.

Lord Morris of Castle Morris: My Lords, Mark Antony in Shakespeare's Julius Caesar looks down at the stab wound in Caesar's corpse made by Brutus's knife and says,

    "This was the most unkindest cut of all",

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so giving grammarians the most famous example of the double superlative adjective to achieve emphasis, and your Lordships' House the most "bestest" description of the Chancellor's bloody butchery of universities in his last Budget. The Chancellor's knife removes £107 million from the capital programme, a cut of 31 per cent. at a stroke. Capital expenditure is not simply expenditure on buildings. This cut will affect the purchase power of libraries, will lengthen the backlog of maintenance of properties, compromise health and safety standards and prevent the purchase of vital equipment.

Take engineering, which is essentially an equipment-based subject. One vice-chancellor recently pointed out that funding of engineering in British universities had unquestionably declined relative to the rest of the world. He said that the replacement rate for engineering equipment--normally about three years--would become seven, eight, nine or ten. Computer equipment becomes redundant 50 per cent. in year one; 25 per cent. in year two; and you can write it off after about four years. But no, not in British universities--not any more.

Let me give your Lordships two examples: first, in Sheffield University, where Professor Ian Cooke's department of obstetrics and gynaecology was planned to move to the Royal Hallamshire Hospital in a big new scheme. That is now in jeopardy, because the university's £2 million share of the project is under threat from this recently announced cut. That department is one of the world leaders in the field of molecular aspects of fertility. Its successes in treating infertility are world famous. It will be a calamity if its development is prevented by being forced to work in huts and hovels, anywhere that the vice chancellor can find it.

Secondly, consider the case of the University of Manchester Institute of Science and Technology. UMIST has nothing but departments, some of them world-renowned, whose major expenditure is on scientific equipment. The same is true of Imperial College in London. Yet UMIST's capital grant is cut from £2.8 million to £1.8 million at a stroke and at short notice. As its vice-chancellor said recently:

    "If this capital cut is not reversed in next year's funding round, the Government will be signalling the UK's withdrawal from the international competition in science engineering".
Hard words!

Those two examples can be multiplied by every university in the country, and were there time I would quote the example of the Royal Postgraduate Medical School. But gaily and insouciantly, the Government have suggested to universities that the private finance initiative is the solution to all their problems. The Secretary of State for Wales, writing to the University of Swansea, says so:

    "Planned capital expenditure for higher education has been reduced in line with most other public expenditure programmes. The reduction in provision reflects the policy that capital should, wherever possible, be financed through private finance".
He speaks as if there is some queue of beneficent capitalists waiting to shower universities with money, and asking next to no return for considerable risk. There

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is not, just as there is no queue of banks and building societies eager to finance a student loans service. Surely the student loans Bill before us is now irrevocably doomed when the NatWest has turned down the Government's blandishments?

No, the PFI simply will not solve this problem, and I can tell the Government why. First, universities have to prepare bids, and very significant costs in time and money are required to do so. At all the stages of their preparation, they incur professional charges from accountants, lawyers, architects, engineers, and the like, and all those costs have to be borne by the organisation seeking private finance. I am told that sums of the order of £500,000 can be incurred by universities from public funds without any certainty whatever that the project concerned will go ahead.

Secondly, the PFI is comparatively inefficient. Universities have a long tradition of borrowing from banks to raise funds for capital projects. This can be done quickly because the parties know one another; universities are recognised as good risks, and so they get very competitive rates of interest, often much more favourable than a private developer could obtain. So why bother?

Thirdly, where university buildings are concerned, only things like student residences, sports facilities or catering outlets are even vaguely suitable for PFI funding. Those have a separate income stream, and they can be used intensively throughout the year; but even for residential accommodation normal loan finance is usually better value for money than the PFI. But academic buildings like laboratories, on the other hand, generate no separate income stream, and the only return for private sector investment comes from recurrent funding of the universities themselves. So to use the PFI to fund academic building would simply be a drain on recurrent funding, and such a switch would simply reduce the already ludicrously low unit of resource available for teaching. You cannot rob Peter to pay Paul.

The PFI has been powerfully trumpeted by the Government in recent years. They seem to think that it is the solution to problems created by this 47 per cent. cut in university capital budgets in the three years from now until 1998-99. It is not. PFI applies only to a small section of university buildings, and it is next to useless for equipment. I challenge the Minister here today to explain to the House how the private finance initiative could possibly be used to fund the purchase of an anti-proton storage ring. But the utter irrelevance of the PFI as a solution to the crisis facing universities in the next five years is proved beyond peradventure by its past record.

The PFI's record in universities is not encouraging. People do not want to take it up. Why should its future be different? The CVCP has given due warning: if this cut is not rapidly reversed, major building programmes will be abandoned; there will be massive reductions in library books, computer and other equipment; there will certainly be staff redundancies; and we may see universities facing unmanageable deficits, closure or merger.

The mindless savagery of this 31 per cent. cut in capital expenditure proves beyond doubt the utter bankruptcy of this Government's policy for higher education. In the words of the poet John Donne:

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    "'tis all in pieces, all coherence gone".
No wonder they have run away and left Sir Ron Dearing to sweep up the bits.

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