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Baroness Park of Monmouth: I strongly support the amendment too. When one looks at the plan, it says that family income will be considered without regard to the number of children. It is likely that there will be two or even three clever children in a family which is earning around £20,000 a year. That sounds like a lot of money, but it will be impossible for them to pay for three children. They may be poor hill farmers or small businessmen struggling to keep going. Not only does it mean that they cannot do it; it is probable that the children will not ask them to do it because they will feel it is a gross infliction upon the parents, knowing their other circumstances. It is vital that students should be considered adult for the purposes of this argument and assessed on what they have, not on what their parents have.

Lord Davies of Oldham: I first declare an interest as chair of the Further Education Funding Council, but I have an even deeper interest in seeking to extend opportunity to all our young people who can benefit from courses in higher education.

The nature of the anomaly which has been identified is being discussed without any real appreciation of the problems which higher education faces and which the Government are under a signal obligation to meet. When this Government came into office, higher education was in deep crisis in terms of the shortfall of resources it needed. For three years, there had been a freeze on the numbers going into higher education. That restriction on opportunity has bitten deeply upon people as they increase their qualifications in our society. It is a block which the Government are under a moral obligation to raise. In doing so, they must produce resources, as Dearing identified. And they must produce them quickly.

No one thinks that tuition fees are of themselves a good thing. Of course not. But when resources are needed in higher education, the Government had to attend to the issue against the background of an additional £165 million having been put into the sector this year. But if tuition fees are to be introduced, what is being argued here today? Of course, my noble friend Lord Glenamara argues quite clearly that tuition fees ought not to have been introduced and therefore the resources should have come from elsewhere. Perhaps he thinks they ought to have come from the same direction that the Liberal Bench suggests, increases in taxation. All I can say is that in terms of the demands upon taxation represented by the Liberal Party's arguments,

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and particularly one earlier on which suggested that we could assimilate the whole strategy for part-time students on the same basis as higher education, we would be talking of increases in income tax of many pence in the pound.

The other argument appears to be that tuition fees, if introduced, should have no means-test attached; in other words, that young people from well-off backgrounds, who can afford to pay tuition fees, should be on the same basis as young people from poorer backgrounds who cannot afford to pay. That cannot be right. I am sure that we will have arguments later on during our debates today, but if the argument is to be that the danger is that there are deterrents involved--

Baroness Blatch: I am grateful to the noble Lord for giving way. Does the noble Lord think it fair, if he is concerned about rich students versus poor students, or rich families versus poor families, for the poorest of the students to lose the maintenance grant completely and have to borrow the whole of it when richer students have half the grant paid for them and only borrow half of it?

Lord Davies of Oldham: I recognise that as far as poorer students are concerned they are to be faced with a proposition by the Government that their repayments will be over the course of a lifetime's career activity and not, as at the present time, where they are faced with circumstances in which they have to repay on a mortgage style repayment within five years. So I have no doubt that there is no deterrence to students from poorer families on the Government's improved scheme with regard to maintenance. But there may be--and it will be suggested on many sides that there is--a deterrent involved in the tuition fee obligation. That is exactly why the Government have introduced a means-tested arrangement which ensures that students from poorer backgrounds will not be expected to pay. I will give way to the honourable gentleman.

Lord Mackay of Ardbrecknish: Is the noble Lord trying to argue that students from poor backgrounds will be put off by having to borrow a thousand pounds but they will not be put off by borrowing £4,000? Furthermore, will the funding council be attempting, by other means, to encourage universities to increase the number of poorer students they take against the background of the disincentive being imposed upon them by his Government?

Lord Davies of Oldham: The trouble with that proposition is that it seems to be presumed on the position that the present system is both equitable and fair and not any restriction on people entering higher education. The present system puts very severe obligations upon people in terms of repayments. What is more, the present system has resulted in a situation in this country where, over the course of 35 years of the operation, first of all of the maintenance grant introduced in the early 1960s, and then subsequently with the last government's reform to the combination of maintenance grants and loans, the participation rates of people from poorer backgrounds in our society have

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scarcely increased at all as a proportion of the student bodies. So we still have circumstances remarkably similar to those of the 1960s, that the vast majority in percentage terms of people who enjoy higher education in this country come from better-off backgrounds.

Why, therefore, should it not be obligatory upon the Government to secure funds for higher education to impose a tuition fee which brings in the necessary resources but at the same time to have a means-test to ensure that it protects the least well-off in our population.

6.15 p.m.

Earl Russell: The noble Lord, Lord Davies of Oldham, is of course quite right that higher education has been in a deep financial crisis. But anyone who knew only his speech might have been forgiven for believing that that crisis disappeared on 1st May and they all lived happily ever after. It is not that simple. There is still a deep financial crisis. All the evidence reaching people inside higher education is that it is likely to get worse rather than better.

The noble Lord then drew attention to the decision of this Government to lift the cap on student numbers. Would he agree that he is introducing tuition fees, or his government are, to pay for lifting that cap before they have solved the financial crisis?

Baroness Perry of Southwark: I really feel that the noble Lord, Lord Davies, is turning the world upside-down when he thinks that somehow we are increasing access opportunities for poor students by taking away from them the full maintenance grant that they used to receive.

I have just come from having three weeks of interviewing prospective mature women students, many of whom come from very deprived backgrounds. They are, of course, unhappy about the £1,000 fee. Many of them will be able to obtain loans for that on a means-testing arrangement but they are extremely unhappy to have lost almost £2,000 a year maintenance grant which before, coming from deprived backgrounds, they would have had. That has made access for the deprived student infinitely less attractive and less easy.

I fear very much for the opportunities that there are for poorer students from places like my old university in South Bank where people from Lambeth and Southwark, from very deprived backgrounds, were able to come in on full grant, and for my present college in Cambridge where we take very many students from deprived backgrounds as mature women. I promise you that when they discuss with us the financial arrangements for their time as undergraduates they are dismayed entirely by the fact that they will end up with a loan of over £5,000. And that is on top of the loans they are already taking for their maintenance, which to many of these women is a total deterrent.

Baroness Blatch: May I say to the noble Lord, Lord Davies of Oldham, that he has just made a comparison between a poor student under the new system and a poor student under the present system.

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Under the present system they receive 50 per cent. grant, take out a 50 per cent. loan and have no tuition fees. They do not even start to repay the loan until they are earning 85 per cent. of the national average wage which is £16,750, give or take a penny or two.

A student under the new system will start by borrowing the whole of the maintenance fees and, depending upon the income of their parents, may or may not be responsible for some of the tuition fees, and will start to pay back at £10,000. A person under the new system, the repayment scheme, earning £12,000 a year, will pay the equivalent of 1.5 pence in income tax for the whole of their working life. In fact, if there was not a cut-off point at 65 they would pay it for 83 years.

Lord Whitty: We have had a wide-ranging debate on this amendment, much of which will no doubt come up again later if we are not careful.

I recognise that this is a fundamental principle of the Liberal Party policy to education. I recognise also that on occasions the Liberals sound as if they are arguing that a single measure can possibly rectify all the anomalies of previous systems of student support and the other social problems that have arisen.

But I have to say to the Liberal Benches and to others who have supported them that there are fundamental objections to this, both in terms of principle and in terms of cost. The provisions in this clause will enable us, contrary to what has been said, to target support for fees and for maintenance to those who most need it. There is a clear case for relating the level of support to family income. If we did not do so, any new arrangements would disproportionately deter the poorest and benefit the better off.

Our aim throughout has been to encourage access to higher education from those sections of society that are currently under-represented. I do not believe that these proposals will have the consequences that the noble Baroness, Lady Perry, was referring to.

Parental means-testing for fees will ensure that students from the least well-off backgrounds will not have to contribute at all. Means-testing loans will mean that these students will have access to the maximum funds available for living costs. Since the loans themselves will be highly subsidised, this also means that the largest subsidies will go to those from the poorest backgrounds. This is a progressive system of income support--substantially more progressive than the one it replaces.

On the issue of costs, making available support for fees and loans for living costs without regard to the income of the households from which the students come would be both regressive and extraordinarily expensive. All sides of the Committee have referred to the need for more resources for the higher education sector. But this amendment would cost about £700 million per annum in the short term. That is money we can ill afford to divert from the higher education system. It would not be right to reduce the support available to the poorest students in order to give additional support to those from a background of middle class incomes.

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While I agree that there is a certain ambiguity in the reference in Dearing, to which my noble friends Lord Glenamara and Lord Desai referred, it is also the case that the Dearing Committee recommended maintaining the parental and spouse's contribution. I know that there is a point of civic rights and I acknowledge that 18-year olds are, for most purposes, regarded as adults, although, as the noble Earl, Lord Russell, indicated, the precise age varies according to the area we are talking about. They are legally adults but in most cases they are not individually financially independent. Their parents generally can continue to support them not just by contributing to their grant but in a whole variety of other ways. That is recognised, and has been recognised for decades in our system of student support and is recognised in the systems of student support in almost every country in Europe.

Despite the high-flown ambition of some of the contributions to the debate, we are in essence not changing the existing system. We are not making worse the situation which previously existed. The new arrangements have been carefully designed so that parents and spouses will have to pay no more, whatever their income, whatever the number of children and whatever the nature of the student. I acknowledge the existence of the problems to which the noble Earl, Lord Russell, and others referred, in terms of parents and spouses refusing to pay towards the cost of their child. Those cases occur now. However, what we propose will not increase the incidence of such cases. To spend £700 million on trying to address such cases will not avoid those tensions. Under these proposals, no one will be asked to spend more. Indeed, the improvement on the present situation is that all students will have access to larger loans and they will be repaid in most cases over a longer period related to their future income and in fairer terms than under the present loan provisions. That will be irrespective of their pre-existing family circumstances.

Our proposals build on the existing and generally accepted principle in our society that students' families should, where they can, meet a proportion of their costs. Where they cannot, we make provision for those poorer students. However, our proposals do not impose any additional burden on either parents or spouses. I therefore recognise the point the Liberal Democrat Party is urging on us, but it is wrong in principle and would divert much needed funds from the higher education system. I therefore urge the Committee to reject the amendment.

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