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Lord Tope: I rise to support what the noble Baroness, Lady Blatch, said and to speak specifically, in view of the hour, to Amendment No. 116, which seeks very much the same objective. The amendment has two purposes. First, it is designed to ensure that revenues collected as a result of student tuition fees are retained by the institutions for the sole purpose of the provision of higher education courses; and, secondly, it requires that those revenues should be disregarded in the calculation of grant made available to the funding councils and thus constitute additional resources for higher education institutions. We are at one on this point. I agree with the noble Baroness, Lady Blatch, that, however it is achieved, it is a very important point.

There is no assurance anywhere in the Bill that money raised by the tuition fee contributions of students will remain within the higher education sector. This point has been pressed time and again. As the noble Baroness has just said, we are still not clear about that.

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There is a fear that it will provide the basis for commensurate reductions in money allocated to the funding councils for higher education. Consequently, there are fears that the imposition of tuition fees will not result in a real increase in resources for higher education institutions. That has been mentioned previously in debates on this Bill and I am certain that we shall return to it. I support Amendment No. 115 and propose Amendment No. 116. I am not too anxious how we achieve the result, as long as we do so.

Baroness Perry of Southwark: My name is also down to Amendment No. 115 and I support what my noble friend Lady Blatch said. As I understand it from a reply given in the other place by the Minister's colleague, Dr. Howells, for 1998-99, the introduction of private contributions to tuition fees for higher education will mean an extra £125 million for higher education, plus £4 million for sub-degree courses mainly in FE. In addition, some £15 million of the higher education savings have to be allocated to the FE sector. Much as I support further education--I have taught in FE and have the greatest respect for it--I do not see why students in higher education should be asked to contribute to the education of their younger brothers and sisters, or whatever, in further education.

This is not a tuition fee. It is a tax. It is a poll tax on any student entering a university, requiring that student to pay £1,000 which then goes back into the Treasury maw. At least for 1998-99 we have some promise that it will go back into further and higher education but, beyond that, we are not promised anything--nor are the students, yet for a student £1,000 is a lot to pay in additional tax.

Earl Russell: Perhaps I may add one point without detaining the Committee. I am beginning to understand the Minister's difficulties about the additional money. Her problem essentially arises from parliamentary sovereignty. She seems to be saying that she cannot commit future parliaments and future Chancellors of the Exchequer. I understand that, which is why the element of hypothecation, which is included in both amendments, may turn out to be vital. If I know anything about Whitehall theology, I suspect that somewhere in the margin of the Minister's briefing are written the words "Treasury Minute 1919". I am aware that the Treasury Minute of 1919 on hypothecation is regarded in Whitehall as holy writ, but I do not think that it applies to these amendments. As envisaged, I can see very few virtues in the tuition fee, but this is one: it is not actually government revenue, it is a fee paid to the university; and if it is not government revenue it is entirely outside the scope of the Treasury Minute. I hope that that thought might open a few Whitehall minds.

The Earl of Limerick: It is very late, but one has to take one's opportunities. The purpose of the first subsection of Amendment No. 115 is clear: it is to ensure that governing bodies shall be entitled to receive the full amount of any fees or grants in respect of fees payable to the university in respect of tuition by or on behalf of any student.

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Since Second Reading, I have taken quite some time over this and I hope that I now understand the way the system works. The amendment would mean that the two parts of the £1,000 (whether paid by the student--lucky the universities that receive it in full and upfront from the students!--or, on means-testing, by the local authority) will remain with the university, but that is not what is going to happen. It will happen in the first instance but then, as I understand it, the local authorities will put in their bill to the DfEE for the amount they have had to pay by way of subvention to the students. So the £1,000 in its entirety, however it is divided between the two elements, remains with the university. But then comes the kick in the tail; namely, the LEAs will claim back the amount they have contributed from the Department for Education, which presumably will take that into account in the amount that it decides to devolve to the funding council.

The estimated sum is £130 million of extra money. I use the term "extra" advisedly and not the term "new" money, because the new money will be a greater sum. The impact of that will be twofold. First, it will impact differently on different universities. Some of them--lucky old things--will have 100 per cent. of students who can pay their £1,000 and not miss it, if such there be. However, other institutions, like mine, will have few people who will do other than apply for means-testing. Therefore, the £1,000 sum will impact differently on different universities. I hope to hear that that will be taken into account through the funding council so that one is not penalised in financial terms for teaching many means-tested students, when a good part of the thrust of this Bill is to get more such students into higher education. I hope I can take that assurance for granted, but I should obviously like to hear it.

My other point is really a budgetary point; namely, that governing bodies are responsible for the solvency of their institutions, and that includes budgeting which they require on their own account. Even if they did not require it on their own account, it would be required by the funding council. At the moment we are conducting that budgeting on a series of assumptions of which we are quite uncertain. Our budgets rest on shaky and possibly quite unsound ground. What is lacking--perhaps this could be addressed in the near future--is any form of funding model, whether that be in the form of examples or parameters. It would be an enormous help to the sector if there were some basis on which institutions could test their assumptions against a model and begin to see how it might affect them, because they are having to make some fairly fundamental plans about what they do in the near future. Behind that lies a point of public accountability as regards the institutions adopting prudent plans. If that could be arranged it would take us forward. I should be happy to be involved in that.

Baroness Blackstone: I am afraid I shall have to disappoint the noble Lord and the noble Baroness with regard to their amendments. They are unnecessary. The money which students pay directly to universities and colleges in tuition fees will in any case remain with the

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institutions. So, too, will the contributions that local authorities pay on students' behalf, if the assessed income of students and their families means that they do not have to pay all or any of the fee.

I can reassure the noble Earl, Lord Limerick. Of course the institution, like the one whose governing body he chairs, which has many such students, will not in any way be worse off than the institution that has many students who are paying the full fee. There will be no problem in that respect. It will be for universities and colleges themselves to decide on how to use these resources. Amendment No. 115 in the name of the noble Baroness, Lady Blatch, is therefore unnecessary, as is the first part of Amendment No. 116 in the name of the noble Lord, Lord Tope.

The proposal in the second part of Amendment No. 116 to disregard fee income for the purposes of calculating grant for the higher education funding councils, on the other hand, goes a little too far. A large proportion of fee income will continue to be paid from public funds. Thus, while universities and colleges will receive £1,000 for every home or EU full-time undergraduate new entrant in autumn 1998--either from students, their families or local authorities--not all of this will be new money, as I think the noble Earl, Lord Limerick, was aware. Local authorities have long paid tuition fees on students' behalf to universities and colleges and will continue to do so. I should explain to the noble Baroness, Lady Blatch, that those fees do not necessarily or normally cover the whole cost of tuition. That is covered by grant, which is paid through the Higher Education Funding Council.

We estimate that the contribution from public funds for fees in 1998-99 will be just over £l billion in England alone. We clearly cannot leave such a very large sum of taxpayers' money out of account when calculating the other channel of public funds for higher education, which is the grant to HEFC.

Nevertheless, I would like to give some assurance about funding for higher education. I did so as regards an earlier amendment. In future the new element will be the student's own contribution to fees. As I said before, we estimate that these will amount to £130 million in England in 1998-99 after allowance has been made for costs of some 5 per cent. for collection and default. As I have also said, we have already announced a package of measures allowing an extra £165 million to be spent in higher education in 1998-99.

I now turn to the point about further education raised by the noble Baroness. I do not believe it right to suggest that we have robbed higher education to pay for further education. The funding package we have announced for higher education for next year means that institutions of higher education will fully benefit from the money derived from student contributions to fees. The sector as a whole will receive an increase in funding, including the student support access package, greater than the amount that we expect will be raised by the introduction of tuition fees.

The bulk of the additional funds for further education next year have come from savings brought about by a drop in unemployment and not from this particular

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source. Incidentally, the fact that we have been able to make savings derived from the drop in unemployment reflects the success of our policies.

I make no apologies for putting extra money into further education next year. Our initial response to the Dearing Report made clear that the savings from the new funding arrangements will be used to improve quality, standards and opportunities for all in further and higher education.

I return to the specific amendments before us. As I explained earlier, it would be wrong to leave out of the reckoning fee income for the purposes of calculating grant for the higher education funding councils. All public funds must be taken into account when assessing the needs of higher education. Given the assurances that I have just made and that all fees paid by or on behalf of students will remain with higher education institutions, I hope that the noble Lord and the noble Baroness will withdraw their amendments.

12.30 a.m.

The Earl of Limerick: I hope that the noble Baroness will forgive me. I believe that she partly misunderstood my point. I recognised and explicitly said that I understood that £1,000 per student will come to the university in whatever mix between students and local education authorities. That is the direct result. I was talking about the indirect result. My local authorities will have a much bigger recoupment claim on the DfEE than the local authorities from universities with a predominance of rich students. In consequence, would there be a knock-on effect in terms of what the Higher Education Funding Council might allocate to universities in such different positions?

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