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Lord Sanderson of Bowden: My Lords, I declare an interest as a member of the court of Napier University in Edinburgh. The court of Napier is not impressed by the Government's arguments on this issue. It had hoped that the recent sizeable vote in your Lordships' House would have persuaded the Government to think again.

It is not a question of money, although that is certainly part of the issue we are debating today. As the noble Lord, Lord Shore, said, what is important is that it is positive discrimination and that cannot be tolerated. That is why, if the Government are not going to weaken on this issue, I advise your Lordships to resist.

Viscount Waverley: My Lords, is any Labour Back Bench Peer going to be supporting the Government on this point?

Lord Dearing: My Lords, while the Back Bench Labour Peers make up their minds, perhaps I may offer myself once again as the villain of the occasion. I have listened with respect and admiration to the speeches. I confess that when I left your Lordships' Chamber after the last debate I wondered whether the solution to the dilemma might be for the Secretary of State for Scotland to find the £2 million to enable the one year's charge to be forgone for students of Wales, Northern Ireland and England. I found that an attractive solution.

I then read the speech by the Secretary of State for Scotland in another place on 1st July when he explained that he was not persuaded that it was a good policy to do that. If I recall the essence of his argument, it was that there are 33,000 applicants for places at Scottish universities from England, Wales and Northern Ireland. If I remember rightly, there are about 4,000 to 5,000 places normally taken. The Secretary of State's conclusion was that out of the 33,000, there will surely be enough to fill 4,000 to 5,000 places. He did not think that Scottish universities would be short of entrants in consequence. Therefore, it seemed to him, as I read his argument, that Scotland would not gain from spending that £2 million which I had envisaged as being the answer.

I would describe what we are discussing as a bizarre anomaly. The second element in the equation is whether a concession of £2 million by the Secretary of State for Scotland, if he were so minded, could be offered without making a similar concession to all those students in England, Wales and Northern Ireland who also take a fourth year. On what grounds could that be done? If, as a

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matter of principle--and the principle is being debated--there should be equality for all our young people, that would mean an additional cost of £27 million.

Looking at the three political parties which gave evidence to my committee, I asked myself whether money is plentiful. The resounding answer is that it is very scarce. Is it therefore in the interests of the Secretaries of State responsible for England, Wales and Northern Ireland to allocate £27 million for that purpose rather than for other needs which exist?

In education, there is real devolution, and rightly so. Countries have their distinctive traditions. Scotland has a very great and proud one. In my reports I have often advocated adoption of Scottish practice. However, to turn to those other countries, what is Northern Ireland's greatest need? Do your Lordships know that, not through choice but through lack of places, 40 per cent. of students have to leave Northern Ireland to find a place in a university. The pressing need there is for the capital to greatly enlarge its university establishment. It also needs money for research.

I turn next to Wales. In that country, the level of funding per student is lower than in England and 10 per cent. lower than in Scotland. One is concerned about that. Is the level of funding adequate for the students we have? And then there is the need for research to support the Welsh economy.

In England there is a crisis over funding for research. World-class quality research is in peril because, over the years, the funding has not been provided. In addition, the participation rate, as in Wales, is now only just over 30 per cent. In my view, it is very much in the national interest to follow Scotland's example and push that figure up to 45 per cent. I agree again that the Secretary of State for Scotland has been very wise because I believe that 40 per cent. of those places are at sub-degree level to meet the need for high-level technicians in our economy.

Therefore, there is an issue of principle. Can one do this for Scotland without doing the same for England? Perhaps the Secretary of State for Scotland, had he been so minded, might have differentiated but he was not willing to do so. Therefore, there is an issue of principle for your Lordships to consider; namely, equity. Is what I would describe as a bizarre anomaly under which 354 students from other parts of the European Union have a free fourth year sufficient cause for spending £27 million? My position would be that if a Secretary of State for Scotland had been prepared to find the £2 million and the students' union had recognised that in equity that should not be offered to students going to institutions in England, Wales and Northern Ireland, I should vote for the amendment. But, as a matter of equity, were that not so, I should find it very difficult to do so.

Earl Russell: My Lords, I congratulate the noble Lord, Lord Dearing, on rising in place of Labour Back Benchers. But before I turn my attention to him, I should like first to take up the remarks made by the noble Lord, Lord Barnett, to whom I listened with great care, attention and, as always on Treasury matters, with respect.

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I understand that privilege is now being claimed by another place for the first time because it is the first time that it is sending the matter back to us. I agree with the noble Lord that where privilege is claimed, that is normally taken as sufficient. But it is worth continuing to the second half of the sentence in the Companion which states:

    "But they",
that is, this House,

    "may offer amendments in lieu of amendments which have been disagreed to by the Commons on the ground of privilege".
Those words are perfectly clear and unambiguous. It says that we are well within our rights in doing what we are doing now. Those words in the Companion echo exactly the words on page 803 of Erskine May. If another place wants once again to insist on privilege, it may do so. But it has not yet done so.

The noble Lord, Lord Dearing, addressed his argument very largely to an assumption of a cost of £27 million. As my noble friend Lord Steel of Aikwood said, that was not our intention and never was. It is not the effect of the present amendment. The noble Lord, Lord Dearing, asks how we should address that distinction. Between England and Scotland, there is a clear distinction on ground on nationality. If you are going to condemn discrimination at all, discrimination on the ground of nationality is one of the clearest ones to condemn.

I do not intend to defend discrimination between subjects, which is what we have with the English fourth year. But where there is a discrimination in terms of subject, it is at least a discrimination in terms of what people are actually doing. People doing different things are treated in different ways. While I do not like that, I do not see in it the clear iniquity which I see in discrimination on the ground of nationality.

The noble Lord, Lord Dearing, said also that the Scots would continue to be able to fill their places. That may well be true. But it is a vital principle of academic selection that you should select on academic merit. Why should we be discouraged from doing that?

For the third and, I hope, the last time, I wish to raise the question of whether what the Government are doing is contrary to European law. I accept fully that it is not contrary to European law to discriminate between your own subjects. Discrimination between English and Scots is not contrary to European law. But discrimination between the English on the one hand and people from Rotterdam, Cologne, Dusseldorf, Umbria, or wherever, bears an appearance of being contrary to Article 7 of the Treaty of Rome. The Minister told me in Committee that he was confident that that was not so. I still await an explanation of his confidence. If I do not receive it, I shall conclude that either the Government are not confident, as they allege, or they do not give a tinker's cuss whether or not what they do is contrary to European law.

I would regret either of those conclusions. It is not often in this House that amendments are carried by a majority of 123. It is not often that we move to send amendments back to another place a second time. However, the argument in this case is so clear and the

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content so small that this seems to me to be one issue on which this House may well press another place to think again. It is small enough for us to pass. As I was told when I arrived in this House, we are the Mrs. Mops of the legislative process. This is the dust behind the door which, in puckish mood, I wish to sweep away, and I see no reason why I should not.

If noble Lords were not allowed to change something as small as this, then I wonder whether the Government really want a revising chamber because it is no good having a revising chamber which only revises when you want it to.

I remember in 1990 my noble kinsman Lord Stanley of Alderley introduced an amendment to bring in dog registration. The then Prime Minister, the noble Baroness, Lady Thatcher, formed the opinion that dog registration is socialism. This House knows a good deal about dogs. It was not persuaded. My noble kinsman set out to ask the House to think again, and the noble Baroness, Lady Thatcher, was so disturbed by this that she made a Minister who had just got off an aeroplane in Tokyo for an important international meeting come straight back to London in order to vote my noble kinsman down. That, I am told, is one of the moments which led people to decide that the noble Baroness's time had come, as six weeks later it had. It took the noble Baroness, Lady Thatcher, 10 years to get to that point; the present Prime Minister has done it in one.

4 p.m.

The Parliamentary Under-Secretary of State, Scottish Office (Lord Sewel): My Lords, the amendments are being debated in one group so it will be helpful for me to indicate now that the Government assume that the noble Lord, Lord Mackay of Ardbrecknish, intends the amendments to be taken as a package and that, accordingly, if Amendment No. 64G is passed, the Government will take that as a decision also in favour of Amendment No. 123G.

The substance of today's debate is a product of the fact that the United Kingdom does not have a single, uniform education system, and long may that be the case.

There is diversity, and the Government rightly rejoice in that diversity. But diversity has the potential to create anomalies, and that is essentially what we are debating today.

The English school system articulates primarily with the English higher education system. The Scottish school system articulates with the Scottish higher education system. In England, transfer from school to university takes place after the two-year 'A' level course. I hope that the noble Lord, Lord Mackay of Ardbrecknish, listens carefully to my next words. In Scotland, transfer from school to university takes place after Highers, which are single year courses. Of course, many Scottish students, my own children included, stay on for a sixth year, but in doing so either add additional Highers to the batch they took in the fifth year or follow the single year Certificate of Sixth Year Studies. They do not follow an integrated two-year progressive course. That is a fundamental difference between the two systems.

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It is because of these differences that the two education systems produce two lengths of honours degrees: in England the traditional honours degree, following a two-year A-level course has been a three-year course, while the honours degree in Scotland, after Highers, has been obtained over four years. That was recognised by the Garrick Committee, the Scottish committee serving the committee of the noble Lord, Lord Dearing. Its report stated:

    "The two frameworks are different, most notably at the level of, and articulation with, school-level qualifications. This has a concomitant effect upon the rest of the higher education system in Scotland".

Clearly a difficulty arises with the introduction of charging for tuition fees. Prior to that it was not, I accept, a great concern. If nothing had been done to recognise that disarticulation between the two systems, then the English student attending an English university would have been charged £3,000, while the Scottish student attending a Scottish university would have been charged £4,000 for the same final qualification, an undergraduate honours degree. That situation would have been iniquitous: there is total agreement across the House on that point. That was the anomaly that both Dearing and Garrick recognised.

The Garrick Report, in recommendation 29, stated:

    "We recommend to the Secretary of State for Scotland that, if a graduate contribution is introduced, the Secretary of State should ensure that the contribution from Scottish graduates for qualifications gained in Scotland is equitable with the contribution for comparable qualifications gained elsewhere in the UK".

Dearing supported that position. Garrick and Dearing recognised the anomaly; they proposed an equitable solution, and that is precisely what the Government have sought to include in the Bill.

Our proposal, as we have heard this afternoon, has the support and endorsement of the noble Lord, Lord Dearing. I ask noble Lords to reflect upon the highly analytical and persuasive contribution that the noble Lord has made to the debate.

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