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Lord Whitty: My Lords, the noble Baroness asked that we repeat some assurances that she was given at earlier stages of the Bill when these matters were raised. At various points there seems to have been some confusion as to how the present system of funding of higher education works and perhaps some of our assurances were not as clear as she would have liked.
Let me make clear now to the noble Baroness that the money which students pay directly to universities and colleges in tuition fees will remain with the instituions. That is the first point. The second point is that 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 the fee in full or at all, will also remain with the institutions. It will of course be for universities and colleges themselves to decide on how to use those resources.In relation to the original amendment of the noble Baroness, Lady Blatch, and the first part of the amendment of the noble Lord, Lord Tope, that is a sufficient and clear assurance that the objectives of those amendments will be met. I therefore do not believe that those parts of the amendments are necessary. Nor can I accept the rather more complex implication of the second part of Amendment No. 66, which is to disregard the fee income for the purposes of calculating the grant for the higher education funding councils.
A large proportion of fee income will continue to come from public funds. Therefore, while universities and colleges will receive £1,000 for every home or EU full-time undergraduate new entrant in Autumn 1998--either from the students, their families or local authorities--by no means all of that will be new money. Local authorities have long paid tuition fees on students' behalf to universities and colleges and will continue to do so. But we estimate that the total contribution will be just over £1 billion in England alone. We clearly cannot leave such a large sum of taxpayers' money out of account when calculating the level of the other channel of public funds for higher education; that is, grant to the HEFCE.
Nor can the funding council leave out of account the fee income received by institutions. That is primarily because it needs to ensure some fairness in funding across institutions where the aim is to fund similar activities at similar rates. As a result, it will be necessary for the funding council to make adjustments to the grant it provides to ensure that some institutions do not lose out in consequence and that others do not gain unfairly. Institutions should not depend for their income on the level of income of their students and therefore the degree to which students are required to meet their own costs.
The aim is that universities and colleges should receive similar support in grant and fees to fund similar activities. Obviously institutions receive more funding, for example, to educate a medical student than a law student because of the extra costs involved. But all institutions, broadly speaking, should receive similar amounts to teach medical students on the one hand, and broadly similar amounts to teach law students on the other. That will require some adjustment rather than disregarding the level of contribution from the students themselves. That fairness of outcome--the noble Lord, Lord Wallace may call it socialism; I call it fairness and common sense--is certainly the approach that we will adopt in the allocation of funds.
For the coming year, following the crisis in the funding of higher education to which everybody referred, we have already announced a package of measures which, as a result of these changes, will allow an extra £165 million to be spent on higher education in 1998-99. Universities and colleges will receive directly £130 million of that and there will be £40 million basically on access packages. The higher education
sector will therefore benefit fully from the money derived from students' contributions to tuition fees, which is approximately £130 million; that is, it will benefit to a greater degree than the saving that we acquired as a result of that by allowing £165 million to be spent on education. That also refutes the suggestions that were made that we are robbing the higher education sector to provide funds for further education. We make no apology for applying further funds to further education, but that has not come out of the savings that we have made on the higher education side.We have been asked to give undertakings for subsequent years. We are not in a position to give cast-iron undertakings in relation to future years. The reply of my noble friend to the noble Lord, Lord Dahrendorf, related to next year. We are, as noble Lords will be aware, in the middle of a comprehensive spending review. It would be unrealistic for noble Lords to expect me to pre-empt decisions on public expenditure for future years or to put undertakings relating to future public expenditure decisions on the face of the Bill. However, the savings over time will be substantial and higher education will benefit seriously from those savings.
As far as concerns the amendments, to leave out of the reckoning fee income for the purposes of calculating the grant for the higher education funding councils would prevent those councils making the adjustments that are needed to create a fairness of outcome for the institutions, one compared with another. Nor would it be right to place on the funding councils restrictions which would in themselves lead to unfairness in the way in which they allocate grants in the process which they adopt for allocating them.
This has been a somewhat complex response to what is a complex issue. I hope it has cast some light, if not total light, on the way in which these allocations will take place. Given those explanations, I hope that the noble Baroness will be prepared to withdraw the amendment.
Baroness Perry of Southwark: My Lords, before the Minister sits down, perhaps he can clarify something for me. I think he said unequivocally that no money from the higher education savings--the private fee money--will go to further education. Why is it then that on 19th December in another place his honourable friend Dr. Howells, in an answer to a similar question, said:
- "the introduction of private contributions to tuition fees for higher education will mean an extra £125 million for higher education institutions, plus £4 million to allow for a modest increase in students on sub degree courses mainly in FE colleges. In addition some £15 million of the higher education savings has been allocated to the further education sector".--[Official Report, Commons, 19/12/97; col. 365.]
Can he explain the apparent contradiction in that quotation?
Lord Whitty: My Lords, the £16 million allocation to further education does not come from the charging of tuition fees. The total saving which arises from the saving of tuition fees is £130 million. In total, the extra
money going to higher education will be £165 million. A small element of double counting on the sub-degree courses will probably to some extent take place in the further education sector, but that is a very small amount of double counting. In other words, the benefit of all the changes to the higher education figure is greater than the saving on tuition fees. The allocation to further education referred to in that announcement relates to the changes in the loan system and not to the saving on tuition fee contributions.
Baroness Blatch: My Lords, this is as clear as mud. I agree with the noble Lord when he says that moneys paid by the state for those students who are exempt from paying the tuition fees is not new money. It comes from within the state system. Money paid for parts of the £1,000 for those students who are subject to means testing, where it is paid by the local authority, is not new money. It is money from within the system. So I accept that. Money paid in part by students themselves who are means tested but still qualify to pay part of the fees and all of the £1,000 paid by one-third of the students who are subject to paying the full amount is totally new money. It is money that is not there now and it is money that will be there as a result of these changes.
What the noble Lord has said has not made anything clear beyond 1998-99. The red herring in this debate has been, and continues to be, the £165 million. As I understand it, the £165 million has been found from restructuring the way in which grant is paid on a term basis rather than on an annual basis, or vice versa. There has been some restructuring of how that money is paid and it has thrown up a one-off saving of £165 million. The Government, in the kindness of their heart, have decided that that money shall go to higher education. It is not linked, although from time to time the noble Lord says, in passing, that the new money, which sometimes is £125 million and at other times is £130 million, is a sum of money that is exceeded by the £165 million. I would also argue that it is subsumed by £165 million because, as I understand what the noble Lord said, higher education is not going to receive additional moneys of £165 million plus £135 million from tuition fees in 1998-99.
What the noble Lord has not said and what the noble Lord, Lord Tope, and I wish to achieve by these amendments, relates to the additional money. It would be helpful if the noble Lord will confirm for clarification at the Dispatch Box tonight the situation as regards the money that is derived from £1,000 paid in full by one-third of the students and the parts of £1,000 paid by other students. What does that total in new money? Is that £130 million? If so and if the noble Lord cannot agree in principle that that will be treated year on year--whatever is commensurate with the number of students paying it--and that it is guaranteed and considered to be additional money, disregarded for the purposes of funding higher education, then we do not get the assurances we are asking for.
The noble Lord says that he is continually giving the assurances that we seek. There has not been an assurance that this money will not be considered replacement money, substitute money, displacement
money, for that which is already in the system. For example, if the Chancellor comes down rather heavily in terms of a settlement for the higher education sector--it will not happen this year because it would be difficult presentationally for the Government, and may not even be next year or this side of the election--are we going to find over time, in the medium to long term, that the money provided by students has simply disappeared into the system? Will we find that additionality no longer applies and therefore the rationale for the proposals expounded by the noble Baroness and the noble Lord? It has been stated constantly that this money will be additional and will be spent exclusively and in its entirety on higher education. We seek much firmer assurances than the noble Lord has given tonight.11 p.m.
Lord Whitty: My Lords, I repeat that the money paid directly by students--a proportion of which the noble Baroness refers to as new money--will remain with the institutions. I thought that I had made that clear, but the noble Baroness does not regard it as satisfactory. I do not believe that noble Lords would expect me to pre-empt the outcome of public expenditure decisions on what the totality of expenditure will be on the higher education system in future years. We have a comprehensive spending review under way. In any case, as with all governments, public expenditure decisions are taken year by year.
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