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Lord Smith of Clifton: My Lords, I declare an interest as vice-chancellor of the University of Ulster. I believe that there are many distinguished former vice-chancellors, but I believe I am right in saying that, since the noble Baroness took the Queen's shilling, I am the only vice-chancellor within the meaning of the Act in your Lordships' House.

I should like to raise two matters, one a moral point and the other a more prosaic consideration. First, the present Government are not averse to levying windfall taxes. I should have thought that we might have been invited to consider a graduate windfall tax of, say, £3,000 for those of us who graduated between 1948 and the present. That would perhaps have given us the high moral ground.

Secondly, I turn to more prosaic considerations. I am gratified that other Members of your Lordships' House have raised practical difficulties. One can have an objection to fees as a matter of principle. Like the noble Lord, Lord Renfrew, I do not have that particular hang-up. I object, however, to the system that is to be introduced. The universities are to be asked to take on additional tasks. They have to collect the fees and invoice for them. If they stagger the payments the costs will rise with each invoice. They must have liaison with local education authorities. They also have to devise means tests for non-UK/EU students. Therefore, there will be more administrators and fewer teachers.

Mr. Frank Dobson accused the previous Government of creating too many managers and administrators and not enough doctors and nurses in the National Health Service. The present Government are in danger of doing precisely the same with regard to higher education. Universities will have to chase up debtors which give rise to additional cost. I should like to know precisely what the cost of this new administration and bureaucracy will be. I hope that the noble Baroness will be able to disprove my cynical accounting. I believe that it will cost £1,000 a year and that there will be no net gain to the higher education budget.

We are told that the funding councils will tweak their formulae to provide more money to pay for this administration. I suspect that that money will be top-sliced from the higher education budget and that therefore there will be less for engineering, English, economics, chemistry and so forth. I should like reassurances that my cynical accounting is not as bad as I think it is.

The situation has become a farce, rather like an Aesop's fable. Vast machinery will have to be put into place for a measly £1,000. That is not commensurate

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and does nothing to give a net increase in the money going to higher education, as the Dearing recommendations intended.

In the past 10 years the task of a vice-chancellor has been difficult. I shall not dilate on it to any great extent for fear of bringing tears to your Lordships' eyes. However, I offer a contrast between the role of a vice-chancellor during the past decade and power station managers in Mongolia at the height of Stalinism. I thought that there was not much to choose, but I fear that if the system is accepted we will be able to show that Mongolian power station managers had a better time than vice-chancellors do now.

Baroness Blatch: My Lords, the noble Lord, Lord Desai, criticised the present system of higher education funding for students as being biased against the middle classes. Perhaps I may point out to him--

Lord Desai: My Lords, I said that the system was biased in favour of the middle classes. It subsidises them; it is not against them.

Baroness Blatch: My Lords, I am sorry, I thought that I said "biased in favour". If I did not, that is what I meant. The noble Lord said that the system was biased in favour of the middle classes. Perhaps I may tell him that the package before the House is biased against students from lower income families. That is indisputable if one looks at the burden on relative students--those from wealthy families and those from low income families--as they leave universities. The burden on students as a result of the Bill will be considerable and will without doubt disadvantage students from lower income families.

The noble Baroness, Lady Lockwood, stated that the applications to universities have risen and not fallen. I do not know her source--

Baroness Lockwood: My Lords, I thank the noble Baroness for giving way. I said that at my university, Bradford, the number was slightly up. I asked the Minister to give the exact figures covering the whole country.

Baroness Blatch: My Lords, that is wonderful for the University of Bradford, but I understand that the numbers are down all over the country, albeit by a small percentage. The category of student that is most affected by applications to universities is mature students. Those numbers are down considerably. My university, Teesside, where I was recently awarded a doctorate, is very worried about applications because its number is down.

On the basis that the Dearing Report was commissioned with all-party agreement, and it was agreed that more resources were needed in education, we backed the recommendations. However, it must be said that the Government's package as a whole is not acceptable to my noble friends on these Benches. The overall burden for a student borrowing all of his maintenance costs and having to find £1,000 to pay for

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tuition will act as a deterrent to many young people, particularly those from low income families. There is no question about that and there is evidence for it already.

That is why, in the interests of fairness, we on these Benches wish to address the greatest financial cost to students; that is, their maintenance costs. We would prefer maintenance costs for students from low income families to be retained at the 50/50 arrangement.

I wish the Government to note that many aspects of the application of tuition fees give rise for concern. I refer, for example, to the Government's objection to any limit on the percentage of fees to be met by students in the future. All amendments to that effect have been rejected. The Government have failed to support any amendment to the Bill which will ensure that higher education exclusively benefits from the income from tuition fees and that, for the purposes of funding higher education, fee income will be disregarded in order that the income from fees will be genuine additional funding.

The noble Lord, Lord Glenamara, referred to a graduate tax. I understand his point that in principle he would not agree with it but that it would be better than the proposals before us. There is a widespread view that there is to be a graduate tax. In fact, many students and some people from schools have said to me that what is proposed is a graduate tax. People are being told, "Don't worry about how much you borrow. It is irrelevant". The Government's information has not penetrated into the minds of many families and their young offspring who are contemplating going to university.

The noble Lord, Lord Tope, talked about the provision of free tuition being broken for the first time. The point has already been made by the noble Baroness, Lady Lockwood, but I expect that the Minister will disabuse the noble Lord of that view. I hope that the noble Lord, Lord Glenamara, will agree that when tuition fees were paid the number of students was very small indeed. Furthermore, the amount paid in real terms, even as a percentage of today's prices, was also very small indeed. However, it was the noble Lord, Lord Glenamara, who in about 1976 rejected the recommendation to his government that the tuition fees should be retained. They were rejected then and have not been reintroduced until now.

For the reason I have given, it is with reluctance that I cannot support the amendment. However, depending on how the Government respond to other amendments tabled today, should there be no move whatever, and bearing in mind that the overall package is not acceptable, on Third Reading one will have to reconsider tuition fees in the context of the dogged rigidity of this Government.

Baroness Blackstone: My Lords, I hope that Members of your Lordships' House will accept that it would be exceedingly difficult for me to pick up every single point made in what has turned into something of a Second Reading debate on some specific amendments, as was said by the noble Lord, Lord Baker. The noble Lords, Lord Baker and Lord Renfrew, and the noble

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Baroness, Lady Blatch, made points about maintenance grants. It would be better if we deal with those when we discuss one or more later amendments.

However, I will give an immediate answer to the noble Lord, Lord Renfrew, who asked about the package and how much additional funding will be gained as a result. By the year 2015 to 2016 there will be additional money coming in from fees of between £450 million and £500 million. Furthermore, there will be between £550 million and £600 million from the switch from grants to loans. I hope that that information is helpful to the noble Lord.

Noble Lords on the Liberal Democrat Benches raised many issues which, as I intimated, are not particularly relevant to the amendments before us. In fact, in some senses they are a long way away from them. They and other Members of your Lordships' House made a number of points which seem to me to be relevant to later amendments. It would be right for me to address the amendments on the Marshalled List since I cannot be sure whether Members opposite intend to divide on them. I believe that I need to explain to the House what would happen if there were to be a Division and the amendments were placed on the face of the Bill.

The amendments would have far-reaching implications and would run counter to the fair funding arrangements for higher education which this Government intend to set in place. They would have the effect of requiring higher information to be free to all home students whether studying full or part-time, whether qualified to first degree level or not, and whether in paid employment or not.

Perhaps I may remind the House of the guiding principle underlying the Dearing Report, a principle which this Government have endorsed; that is, that the costs of higher education should be shared among those who benefit. On average, graduates earn 20 per cent. more than those without degrees. In other words, they see their earnings rise by as much as £4,000 for every £20,000 of earnings. It is only fair that individuals who stand to benefit so much from higher education, compared with those who have not had the rich opportunities that it offers both at the time and in terms of the impact later on their lives, should also have to share some of those costs.

These amendments, taken together, would require the state and the taxpayer to bear the full costs of higher education at all levels, including those who will stand to earn the highest salaries. For example, they would mean that a clerical officer at the lower end of the earnings scale, who had never benefited from higher education, would be subsidising a highly-paid city executive who had embarked on an MBA course.

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