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Earl Russell: My Lords, if the Minister does not want to abolish parental contributions, does he propose to introduce compulsion that parents should pay them?

Lord Whitty: My Lords, we expect, as has been the case for many years in regard to both grants and loans, that parents should make that contribution.

In deciding to support the Dearing Committee's recommendations--

Lord Peston: My Lords, perhaps I may interrupt my noble friend. I take it, then, that my noble friend is saying that 18 year-olds are not adults and are not to be treated as adults for tax purposes, and that we are living in the past. We have discussed this matter. He does not

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have to answer; I am merely making a little trouble. When we come to the Committee stage we can go into all these matters in some detail. However, I must state my position; namely, my great desire for the Government, of which I am a great supporter, not to be stupid.

Lord Whitty: My Lords, so far as parental contributions are concerned, I understand my noble friend's point. We are maintaining the situation as it is. That is the essence of our policy. However, it is a much more progressive policy. Compared with those who do not obtain qualifications, graduates receive about 20 per cent. more than the equivalent age cohort. So at £24,000 a year, they receive £4,000 more than an equivalent non-graduate. Out of that we are asking people to repay about £100 a month. That does not seem unreasonable.

We have adopted the Dearing Committee's recommendations, with three very important safeguards, which also ought to appeal to my noble friend Lord Peston but which he does not seem entirely to have accepted. Tuition will continue to be free for the one in three dependent students who come from lower income families. His concern about the marginal student is addressed directly and explicitly in that area. Moreover, while some full-time students will pay up to £1,000 a year, no family will have to pay a higher up-front bill than under the present arrangements; and there will certainly be no increase above the rate of inflation.

Our proposals will mean more money for universities. We have made clear that the savings will go to universities--

Baroness Blatch: All of them? My Lords, I apologise profusely for having spoken from a sedentary position, but the noble Lord said something important. We have all been very concerned about this point. Will the money, pound for pound, that is collected through tuition fees be returned to the home university of the student?

Lord Whitty: Yes. We have already made the commitment in the £165 million we have ploughed back into university education.

My Lords, concerns were expressed by the noble Lord, Lord Tope, the noble Earl, Lord Limerick, the noble Baroness, Lady Park, and others about the administration of the system. We are currently considering the Dearing Committee's recommendations for a student support agency and we expect to make an announcement shortly. We have to weigh the potential gains in terms of efficiency and simplicity against the benefits of building on the existing systems and the expertise within local authorities.

The noble Baroness, Lady Young, and the noble Lord, Lord Tope, raised questions regarding the application rate by students in the light of the slightly misleading publicity about the changes. It is as yet too early to make an overall assessment of the effect. If there has been a reduction in applications, it follows an upward blip last year in applications for entry into

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college this year which resulted from some earlier miscommunication of what was intended. The two will cancel each other out, in our opinion.

The noble Baroness asked about the student loans Bill. I need to clarify this point because the noble Lord, Lord Tope, raised it at an earlier stage. The student loans Bill will amend the current student loans legislation--that is, the 1990 Act--to allow the existing student loan debt to be sold to the private sector. Loans to students who entered the higher education system before 1998 will continue to be made under the existing legislation, including the new Bill. That means that the 1990 Act, together with the 1997 Bill which we debated last week, will remain on the statute book for the purposes of those students who are already in the system for at least another five or six years.

Lord Tope: My Lords, I am grateful to the Minister for trying to clarify this point. My recollection is that the effect of the final words in the Bill before us tonight is to repeal the whole of what will become the student loans Act 1997. I understood the Minister to say just now that it would be effective for another five years. We have recognised tonight that the process of the Bill will take some time, but I suggest that we might have finished it within five years.

Lord Whitty: My Lords, as will become clear as we debate the Bill and other Bills, there will be saving provisions which will maintain in force the provisions relating to students already within the system.

I was asked a number of detailed questions on the position with regard to student loans. The noble Lord, Lord Addington, asked whether the Government accept the Dearing recommendations about disabled students. The Government have announced that disabled students' allowances will continue as grants and that from 1998-99 they will not be means tested. We are currently considering a recommendation that these allowances should be extended to other areas.

The noble Lord, Lord Soulsby, asked about self-financing systems, particularly for veterinary students. We have no intention of using the powers to control the levels for students for whom no public financial support will be available.

I was asked about medical and dental students. The NHS will continue to provide income-related bursaries for living costs and we shall meet students' tuition fees and contributions for periods in excess of four years.

A number of concerns have been expressed which are perhaps better addressed during the course of the Committee stage of the Bill. I emphasise that the move in relation to tuition fees will provide a system whereby we shall have a progressive means of paying for those fees and which will ensure that the least well-off families will benefit from it and that the money thereby saved will come back to higher education. I believe that that deserves the support of the whole House.

I come on to another area of principle which relates to top-up fees--Clause 18 of the Bill. Many noble Lords, with varying degrees of passion, argued against the inclusion in this Bill of a power for the Secretary of

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State to control top-up fees. An allegation was made that my noble friend Lady Blackstone had previously opposed them herself. She assures me that, even when in a previous capacity, she always opposed the principle of top-up fees.

The reserve power that we require in this Bill to control top-up fees is a power we hope we never have to use; but we need to have it in reserve. We are not seeking a power to set university and college fee levels. We are seeking a reserve power to require, as a condition of public grant, that universities and colleges limit the fees that they charge to students. This is in no way a clause that attacks academic freedom in any meaningful use of that word. Universities will remain responsible for deciding the courses; they will retain their essential freedom to decide which students to admit, which staff to appoint and what to teach students.

Earl Russell: My Lords, does the Minister understand that it is not possible to decide the content of the course if one has no say in the cost?

Lord Whitty: My Lords, the question is whether Parliament has the right to impose conditions on the public purse's grant to an academic institution. If that is regarded as an abuse of academic freedom, then I do not understand the use of the word.

I must proceed. I have taken many interventions and I need to proceed. I do not believe that academic freedom is the issue under Clause 18. But I need to reiterate why we oppose top-up fees. We have to introduce this clause because home full-time undergraduates need reassurance. They and their parents need assurance that tuition will continue to be free for students from low income families, and that tuition fees for students from middle income families will be kept at an affordable level. They need an assurance that parents are not expected to contribute more than at present. Above all, they need to be sure that both entry and choice of higher education will be on the basis of academic merit and not on the ability to pay.

Our view on that matter was set out well before the general election. In our document on lifelong learning we made clear our views that, while top-up tuition fees for students would represent an immediate source of income to institutions to offset their problems, the introduction of such fees at the point of access would be an unfair and unsustainable solution. We stick with that view. It is not in any sense an attempt to undermine university autonomy. We respect universities' autonomy and do not intend to attack academic freedom.

Perhaps I can speak briefly about the resources that arise from this. The Government need to be able, if necessary, to control the top-up fees that universities may consider charging. Principally, we are referring to home, full-time undergraduates and postgraduate certificate of education students. It is not in any sense our purpose to control fees generally for part-time students, for postgraduate students, for board and lodging charges or for overseas students to whom we have given no direct financial support.

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I repeat my noble friend's words. Officials have discussed the scope of this clause with the Committee of Vice-Chancellors and Principals and we have taken a close look at the current drafting. We are prepared to try to clarify this through an appropriate amendment at Committee stage to ensure that safeguards are built in and that our intentions are clear. I hope your Lordships will accept that commitment. We will look at it again at Committee stage.

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