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Baroness Blackstone: My Lords, I was going to deal with that later, and indeed I will. Eventually, when the then government were absolutely up against it because there was a revolt of the vice-chancellors, they set up the Dearing Committee. Unfortunately, they were in office for 18 years and failed to provide adequate funding for the universities. There was a per capita cut of 40 per cent. over that period. I really do not think that the noble Baroness has a leg to stand on.

The Government recognise that, as the Dearing Committee found, the further improvement and expansion of higher education cannot be afforded on the basis of current funding arrangements. Other sources of funding for higher education have to be found. But the question is: who should fund universities? In the Dearing Committee's view, which the Government have endorsed, the costs should be shared between those who benefit from higher education.

Of course, the country as a whole benefits from higher education, socially, culturally and economically; and so the taxpayer bears the major burden of funding higher education. The taxpayer will continue to bear the major financial burden, even after the introduction of the new funding arrangements.

But it is not just society as a whole that benefits from higher education. Students themselves stand to benefit, not only from the personal enrichment that higher

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education brings but also the financial advantages of higher salaries that graduates on average earn, as I said earlier today. But we also recognise that there need to be safeguards for students, in return for the financial contributions that they will make. We have made clear that the Government will ensure that the savings are used to improve quality, standards and opportunities for all in further and higher education. As universities stand to benefit from the new funding arrangements that we are proposing, so they too must be prepared to accept a little restraint in the fees that they charge students.

Too few Members of your Lordships' House speaking in today's debate seem to recognise that basic fact. However, most universities do. But that is all that Clause 18 requires from universities--a little restraint in the fees that they charge home and EU full-time undergraduates and students on courses which lead to a qualification for teacher training.

The noble Baronesses, Lady Young and Lady Blatch, said that we were legislating for the future here. I must remind the House again that we are only talking about a reserve power. The Government hope never to have to use that power. It is true that there are other countries in the world where the Government do not become involved in controlling higher education fees for students. Some of our universities may look with envy particularly at American universities with their larger resources and long to be able to charge fees in the same way as they do.

I must say that I often looked with envy at them. I have been a Fellow at Harvard University and at the University of California at Berkeley. Of course, they are extremely well funded. But our higher education system has long been fundamentally different from the American and heavily dependent on government funding. I understand that the noble Earl and his noble friends are not seeking freedom for universities from government funding: quite the contrary, they wish to increase that dependence. Yet they seek a free market in the level of tuition fees that universities may charge beyond a certain minimum threshold. I believe that the noble Lord, Lord Beloff, is much more consistent in his argument. He wants a completely free market and his argument stands up much better than that put forward by the noble Earl, Lord Russell.

However, a completely free market is totally at odds with our system of student support with which, if I may point out to the noble Lord, Lord Baker, there has been nothing comparable in the United States. If the noble Earl wishes universities to benefit from a national system of grants for institutions and loans for students, then he needs to recognise that it may not be compatible with a market system where universities are free to charge what they like without any government regulation, even in reserve. As long as we in this country value--as I believe we do--a national system of grants and loans, then the Government must be able to balance the needs of universities and students, as well as taxpayers. The current Bill does just that; indeed the Government's new funding system will provide substantial additional funds for our universities. Noble Lords opposite might perhaps recognise that. Perhaps

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there ought to be just a little more optimism about the negotiations that we have to have on these matters. A little more optimism would go a long way.

I understand the concerns of the noble Lord, Lord Walton of Detchant. However, there is a great deal of flexibility for universities to raise funds from a vast variety of other sources. Many of them do that. I speak from personal experience as I spent huge amounts of my time raising funds from a whole variety of other sources. We are in no way imposing a straitjacket, to use the term that I think was used by the noble Baroness, Lady Young.

It has long been the case that if universities wish to accept public funds they need to accept that there may be conditions attached to those funds. One cannot have it both ways. We have sought to minimise those conditions. All that Clause 18 does is to give the Secretary of State a reserve power to place conditions on grant through the higher education funding councils to control, if necessary, the level of fees that universities charge to home and EU full-time undergraduates and students on courses of initial teacher training.

We have made amendments to clarify the fact that conditions cannot apply to overseas students, or to part-time or postgraduate students other than those on courses of initial teacher training. We have made clear that the only penalties that might be imposed on an institution that decided to impose top-up fees would be financial ones and that imposing some other penalty would be absolutely out of the question. We have brought forward amendments to make clear that conditions could not single out courses of initial teacher training by subject or all other courses at any particular level by area of study or research. Later this evening we shall bring forward amendments to the definition of fees in Clause 20. Taken together, these amendments put beyond doubt that it will not be within the power of any Secretary of State--whether current or future--to control top-up fees in order to interfere in a university's academic affairs.

We have done our best to make clear the limited nature of Clause 18. As my noble friend Lady Lockwood said, the amendments we have brought forward, or are bringing forward today, follow discussions with the CVCP and have been welcomed by it. Indeed its briefing note makes clear that the amendments to Clause 18 address its concerns. I deeply regret the comments made by the noble Baroness, Lady Blatch, which I thought were singularly unfair to the CVCP, which represents the HE sector as a whole. It does that well and with commitment, honesty and integrity. The vast majority of vice-chancellors are opposed to top-up fees. They accept that safeguards on the charging of additional tuition fees are necessary for students. As my noble friend Lady Lockwood said, that also applies to the National Union of Students, which will be deeply disappointed--as will most parents--if the Tory Members of this House and Members of the Liberal Democrats decide that they will support this amendment and remove Clause 18 from the Bill.

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In supporting the leaving out of Clause 18, the noble Lord, Lord Wallace of Saltaire, acknowledges no obligation on the part of universities towards either students or taxpayers. He and his noble friends require either the taxpayer or the student to pay as much in fees as the universities choose to charge. I am surprised that he should take that position. It strikes me as frankly bizarre.

Lord Wallace of Saltaire: My Lords, the Minister might care to answer the point I made. As the Minister well knows, expansion on the Continent has been achieved by allowing quality to decline. However, we have managed to avoid that in British universities by expanding the number of foreign students. As the Minister well knows, many of us involved with universities are currently struggling with the possible impact on next year's finances of the Asian financial crisis. I am not sure whether the Government will give us a rescue package if that turns out to be a disaster. However, the Minister has not addressed the question of maintaining the quality of British universities which was my main concern.

10.30 p.m.

Baroness Blackstone: My Lords, with respect, I have referred to the issue of quality at least three times in responding to the debate. Indeed, the whole purpose of the new system of funding of universities is to do our very best to improve quality. The noble Lord, Lord Wallace of Saltaire, and I share--as I share with the noble Lord, Lord Baker--a wish to improve the quality of higher education in this country.

But it strikes me as, frankly, bizarre--coming from a party which the noble Lord, Lord Tope, said only a week ago was,

    "totally and fundamentally opposed to the imposition of student payment of tuition fees".

So why on earth do he and his noble friends oppose provisions which would control the charging of additional tuition fees? The noble Earl, Lord Russell, often tells us during the course of our debates in this House that he needs to explain to his students-- I understand that--what the Government or this House has decided. How will he explain to them that he was responsible for ensuring that students will be required to pay far more in fees than the Government ever proposed that they should? How would he justify his actions to the thousands of students up and down the country who might, as a result, be prevented from entering higher education?

A number of points have been made about uniformity. We have a diverse system of higher education; and so we should. We have a diverse system through different levels of research funding that relate to the quality of research undertaken by our universities. We have very different proportions of postgraduate students in our universities. We have very different levels of vocational provision in our universities. We have different levels of overseas

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students. Some institutions are specialists and some provide a wide range of courses. Nothing in the clause will alter that diversity.

Perhaps I may say this to the official Opposition. The previous Government, from the Prime Minister and the Secretary of State for Education and Employment down, opposed top-up fees and said so in terms. I think that it is rather surprising that Members opposite are now taking a quite different view within less than a year of leaving government. It was indeed the threat of top-up fees by some universities when they genuinely were at their wits' end as to how they were going to provide the quality we all want and need that led the previous Conservative Government to set up the Dearing Committee; and I am glad to say that the Dearing Committee came up with proposals to prevent the need for top-up fees which the Government are now implementing. Indeed, the Government are finding ways of raising even more money for universities than the Dearing recommendations would have led to.

The noble Earl, Lord Russell, may tell us that he is concerned with protecting university autonomy and academic freedom. But this clause is not fundamentally about academic freedom; and we have brought forward an amendment to make that quite clear. Clause 18 is about offering students safeguards in return for their contributions towards the tuition from which they individually stand to gain so much. It is about offering safeguards to their parents too. It is about achieving a complex balance between the needs of universities for extra funding and for autonomy, between the demands on the taxpayer and the demands on the student.

I believe that with all the amendments that we are bringing forward Clause 18 achieves the appropriate balance. This amendment, on the other hand, would wreck that balance; and I urge the House to resist it.

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