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Lord Bach: My Lords, we have many speakers in this important debate. Because there are so many speakers, noble Lords are limited on the whole to six minutes. I hardly need to remind noble Lords that when the clock indicates the figure six they are then starting the seventh minute. Therefore noble Lords should aim to sit down when the clock indicates the figure six.

5.16 p.m.

Lord Morris of Castle Morris: My Lords, noble Lords would not think it if they read the newspapers, but there are more important matters requiring attention in our universities than the medical school quota for Magdalen College, Oxford. That incident was neither typical nor emblematic, and the sooner it is forgotten the better.

I also find myself profoundly unimpressed by any suggestion from noble Lords on the Benches opposite that this Government have not made spectacular improvements on the torpor of their predecessor in providing for universities. I think of four aspects in particular. First, thanks to the measures which this Government have introduced, access to all universities is now much wider and easier than it was under the previous administration. Secondly, student numbers have expanded in each of the last two years, this year

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by nearly 5,000. Thirdly, research funding has increased by £1.4 billion since the last Comprehensive Spending Review. Fourthly, there has been an extra £1 billion for higher education in this Parliament, an 11 per cent real terms increase.

These are notable successes, and there are more to come, but, like the noble Lords, Lord Norton of Louth and Lord Renfrew of Kaimsthorn, I want to draw your Lordships' attention to that one deeply debilitating fact of university life: the exponentially increasing, incessant demand for information, statistics, reports, corporate plans, strategic plans, revised financial projections and so on, which strangle research and weaken teaching. Much of this demand comes from the funding councils and their progeny, and so it cannot be resisted, postponed, or consigned to what computers call "trash", because if any institution does not fully, fairly and immediately comply its grant stands in peril. Perhaps I may offer just two examples.

One great northern university has just endured and survived its "Continuation Audit" by the QAA. This happens to every university every five years. To prepare for it, and to undergo it, occupied a substantial part of the senior management team for most of this year and required a continuous correspondence and assemblage of information. The best result that the university can hope for is a statement that its teaching is jolly good, the worst result that it needs to improve. It is widely believed--I hope that my noble friend will be able to tell your Lordships whether or not it is true--that no department in a British university where departmental teaching quality is rated on a scale from nought to 24 has yet scored less than 20.

In another well-known southern university the Faculty of Mathematics was audited last year and had to set aside one entire lecture theatre to accommodate all the box files of information demanded by the inspectors, and there is no evidence that any of it was ever looked at.

It is true that the QAA itself has been uneasy about the havoc it has created in one university after another, and it hopes to move to a "lighter touch" system in two years. But two years is a long time and a "lighter touch" can mean anything or nothing.

Quality assessment of university teaching is a very difficult art and the QAA certainly needs all the help it can get. This is the problem throughout the whole system. The English Funding Council has a long history of appointing non-experts. It has taken its responsibilities very seriously and demanded to be informed before it takes decisions. Quite right! But its forebear, the University Grants Committee, was made up of experts in university education. They did not need to be taught what questions to ask because they probably knew most of the answers. Universities trusted them, although we also feared them. A UGC visitation under the chairmanship of Sir Peter Swinnerton-Dyer, or Sir Edward Parkes, or the late and much lamented Lord Dainton, was an experience few of us will ever forget or recover from. But, above all, it was assessment by our colleagues and peers and we trusted them.

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In the 1990s, the Conservative government developed a rooted objection to appointing experts to anything. So trust was lost and we in the universities had to teach our grandmothers to suck eggs before the government graciously informed us how much money we could have. Things are better now than they were in the 1990s, but the Secretary of State could, if he were so minded, improve university governance even more by appointing experts--academics actually doing the job--to the funding councils and their subsidiaries to break up their bureaucratic log-jam and liberate the universities.

Meanwhile, the universities will, of course, respond to all government demands, though with a rich mixture of compliance, scepticism and contempt; or, as T.S. Eliot so notably put it, remembering the words of Nehemiah the Prophet,

    "The trowel in hand, and the gun rather loose in the holster".

5.21 p.m.

Lord Weidenfeld: My Lords, first, I congratulate the two maiden speakers on their contributions. They were thoughtful and stimulating, but in particular constructive and concrete.

I want to deal with one aspect of the debate centring on the alleged elitism at Oxford; that is, its damaging impact on foreign opinion. Even allowing for the fact that some ministerial utterances might have been made in the heat of the moment and that they did not imply a deliberate denigration of standards at Oxford nor a lack of recognition of the need for having world-class universities in this country, there is no question that the whole atmosphere surrounding the debate, the soapbox tone of some of the media, has triggered a serious suspicion abroad, especially in Europe, that there may be something rotten in the affairs of Britain's centres of excellence.

Perhaps I should declare my interest and say that for 10 years I have been actively involved in the development of European studies at Oxford. I am in continuing touch with philanthropic foundations and other sources of sponsorship, especially in Germany. I can assure your Lordships that this debate has harmed Britain's image and that a distorted picture has gained credibility that the British Government, no less, are not only dissatisfied with recruitment methods, but also with standards of teaching and the future prospects of our oldest and best-known universities.

I assure your Lordships that voices abroad--actual and potential sponsors--suggest that perhaps the United States offers not only better career prospects and intellectual resources, but also a calmer atmosphere and public acknowledgement and recognition. As your Lordships may know--and the noble Lord, Lord Dahrendorf, spoke of it most knowledgeably--there has been a soul-searching debate and discussion in most European countries about declining standards of tertiary education. Yet in Germany, Italy, Spain and Austria--to name those countries of which I can speak with personal experience--there is an acerbic and self-castigating criticism about such issues as the size of classes and

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universities are described as "knowledge factories". But it is the tutorial system of Oxford and Cambridge, and indeed the congenial atmosphere of about a dozen other British universities, which are constantly held up as desirable examples to follow. In fact, today the number of foreign students in Oxford is constantly growing. There are now more German undergraduates in residence than Americans. At the same time, the fact that the number of postgraduate American students is constantly growing confirms the perception that even undergraduates from the leading Ivy League colleges feel that they can greatly profit from postgraduate study and research at Oxford.

As for the charge of Oxford's deliberate discrimination in favour of applicants from more affluent social backgrounds and public schools in this country or their equivalent abroad, I am sure that other noble Lords will share my experience that that is wholly unfair. I happen to have first-hand knowledge of the exact inverse version of the Laura Spence case, which must not be allowed to become the Dreyfus affair of British academe. The son of one of the best-known philanthropic families on the Continent and benefactors of Oxford, who could prove excellent academic references, applied for admittance to one of Oxford's poorest colleges and was rejected. Soon afterwards, he was accepted by one of America's leading universities and three years later graduated summa cum laude. The exact opposite.

It is greatly hoped that the debate, for which I am grateful to the noble Lord, Lord Baker, will defuse the situation and that the Minister will allay some of our misgivings. But it is important to realise that after such acrimonious discussion some damage remains. It is damage in the form of bitterness in the academic community, damage abroad and, not least, a residual sense of confusion among potential applicants from state schools as to whether they are after all wanted at Oxford and Cambridge.

But, as has been stated in the debate by several noble Lords, the root cause of the whole vexed question remains the need for a radical overhaul of secondary education; the levelling up, not down, of standards and social accessibility. Ultimately, the whole controversy strikes at the very root of the problem of academic freedom; the freedom of a university to choose the best human material and offer the best teaching resources for the brightest and the best, as befits a truly meritocratic society.

5.26 p.m.

Baroness Park of Monmouth: My Lords, I have two concerns today. The first is to set the record straight about the government-created myth of Oxford's exclusive class-based culture. Nothing could be further from the truth. The other is my growing concern about whether our children have much hope of being truly educated at all if the plethora of management organs are to have their way--from the Quality Assurance Agency, which wishes to replace first and second-class degrees with "records of achievement"--rightly repudiated by the CVCP--to the Stockport College, Manchester, which in a remarkable set of rules for staff

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and students (Equal Opportunities, Politics into Practice) has barred the word "history" because "some find it sexist". As the dictionary defines "history" as:

    "a continuous methodical record of important or public events",

deriving from the Greek historia, I found that difficult to understand until I realised that for the writers of the rules of this temple of the new erudition, "history" is "his story". It should presumably be "her story".

However, my main concern is the perception of Oxford, that infinitely valuable place. The Chancellor of the Exchequer approvingly quoted The Times' view that the class system remains entrenched in British education. I agree, but it is not to be found in Oxford and Cambridge, whose elitism is a quest for excellence rather than a social evil, but among all too many teachers in the schools.

Had I not won a state and county scholarship, I could not have gone to Oxford from my excellent state secondary school in London, for we had no money. It had never occurred either to my teachers or to me that I should not try for Somerville and I found not a few other state scholars in my year. However, when I became Principal 40 years later, I met candidates who had been actively discouraged by their teachers from applying on the ground that Oxford was not for them. One gifted entrant, when she came up, came only to say that she would not be staying. Her teachers, who had not wished her to apply for Oxford, had dubbed her publicly as a class traitor when she won her place. More, they had visited her parents the week before she came up to warn them that once she had gone to Oxford they would not be good enough for her; they would not see her again. She was the first of her family to go to university and their distress was such that she felt she could not stay. I persuaded her to invite her family up soon to meet her friends and share her experience with them. She did so, to good effect, and she stayed, doing extremely well and going on to a highly successful career.

Although I encountered a similar prejudice on other occasions, as did many of the undergraduates who, in my day, visited comprehensive and inner city schools to talk about Oxford, I hope that, with the exception of the Chancellor and some others, that inverted snobbery is less prevalent today. However, it is still part of the problem. The issue is not the failure or refusal of Oxford to admit well-qualified candidates from the state sector; as many noble Lords have said, it is the failure of many such candidates to apply.

One reason for that is still money. Despite anything that the prospectus may say, many potential entrants believe Oxford to be more expensive than other universities and the fees to be higher. They are not. Neither is it a failure by the university and the colleges to go out to the schools to tell them what Oxford can offer. Even in my day, 20 years ago, we had open days, a scheme for undergraduates to visit schools and regular dinners for school teachers, and I visited and spoke to many schools.

Today, the campaign to encourage state schools to send their children to Oxford takes a massive amount of the time of tutors, overworked and monstrously

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underpaid as they are, and those whom they teach. In Somerville alone, the JCR admissions officer, a second year student reading law, has just returned from a tour of the North East, organised and funded by the Oxford University Students Union and the university as part of the Target Schools Scheme. With a group from other colleges, she visited schools and talked to sixth-formers and to teachers, answering questions and describing the interview process, which rightly she regards as helpful, not inimical. Last year a similar visit took place to Birmingham schools.

The university, OUSU and the colleges all produce a great deal of literature for candidates, including a special booklet on interviews, to make the process yet more transparent and to reassure. Under the access scheme, undergraduates, particularly those from ethnic minorities, visit inner city comprehensives which have never sent anyone to Oxford.

However, I believe that the most urgent group to target and educate may be the teachers, and Oxford tries hard to reach them. The Sutton Trust runs a teachers' in-service week, but the colleges have important initiatives of their own. The difficulty is to persuade teachers to come. That may be a problem which relates both to time and money but, even so, the response is disappointing. Somerville runs an annual conference for teachers from state schools, each year focusing on a particular subject. The last, at Easter, was on the impact of the most recent post-A-level reforms: 2,493 invitations were sent, asking for written comments from any who could not attend. Two hundred replied and 70 came. Some felt reluctant to attend an elitist institution.

The sad thing is that such meetings should provide an excellent way to dispel misunderstanding, such as the all too prevalent view that no candidate who has not been specially coached to deal with esoteric interviews can hope for a place. Overworked teachers are likely to be reluctant to take on that extra burden and to offer special treatment to one or two candidates in a large sixth form; nor do they understand that the interview gives a candidate far more chance than pure paper selection to make an individual mark which has nothing to do with special coaching and everything to do with character and personality.

Experienced tutors can learn a great deal from interviews. I remember that our chemistry tutors admitted someone despite a bad performance in the entrance exam because they perceived her real quality and found out that she had had, at a time of much upheaval in school, nine supply chemistry teachers in one year.

The universities do not need lessons in how to tell schools and teachers what they have to offer. However, something needs to be done urgently to kill the myth of exclusive elitism based on class. One of the problems is that far too few teachers in the state schools today come from Oxbridge. In 1978, 8 per cent went on to teacher training; in 1988, the figure was 3.7 per cent; and in 1998, 2.7 per cent. Therefore, there is no Oxbridge memory in the schools, and that seems to me to be a terrible pity. If the Government want to

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see more candidates from state schools applying for Oxbridge, and for Oxbridge to survive, they might try some really well-funded action: support for academics, scholarships and action to enable teachers to come and listen to the facts rather than the cheap and profoundly ignorant rhetoric of some Ministers who should--particularly a former Chancellor of Edinburgh--know better.

5.33 p.m.

Baroness Uddin: My Lords, I rise to draw your Lordships' attention to the plight of the higher education of children in Tower Hamlets. I want to thank the noble Lord, Lord Baker of Dorking, for initiating the debate. I believe that a brief glance at his record during his time as Secretary of State for Education shows that he did very little to enhance the plight of Tower Hamlets students. I even went so far as to have a brief glance at his memoirs, The Turbulent Years: My Life in Politics, which failed to mention the matter.

I have spoken to graduates in Tower Hamlets in that regard and their view is that the problem begins well before the higher education stage. In that regard, I agree entirely with the maiden speech of the noble Baroness, Lady Walmsley, which I enjoyed greatly. The students believe that education remains a lottery. Many of them believe in the ideal of equal educational opportunity--everyone should have an equal chance and their educational qualifications should be based on merit, ability and effort. Thus, if a person works hard, he or she should make it, regardless of ethnic or social background.

Equality of opportunity for all may be the ideal on which the British education system is based. However, it is certainly not the reality, in the experience of pupils with whom I talked. The debate, which largely has been dominated by an analysis of education, concerns the factors which affect the educational attainment of students in schools. Explanations have ranged from stressing the importance of socio-economic and political will through to the home, culture and school. If one compares the most improved school in my area with those which have not improved, the explanation of poverty and socio-economic circumstances does not stand up to scrutiny. Further examination needs to be made of the role of good head teachers and teacher teams, which can make a difference.

It is now more than a decade since the publication of the final report of the committee of inquiry into the education of children from ethnic minorities, widely known as the Swann report. The previous government introduced the market principle into the education system, in which graduates from areas such as Tower Hamlets never entered the equation.

The achievements of ethnic minorities taken together are shown to be similar to those of the white population. However, that is misleading when one considers the most recent Policy Studies Institute survey which reveals that, while some ethnic groups are doing better than white students, Afro-Caribbean

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groups are under-achieving. Pakistani and Bangladeshi pupils are performing no better, although Bangladeshi girls are outsmarting their young men.

The role of prejudice and racism in that complex pattern is understated. In relation to the differing achievements of certain ethnic minority pupils, some research suggests that social class, gender and ethnic origin all play important roles. The Oxford debate illustrates that. However, the relative significance of those factors is not always clear. The factors affecting British Bangladeshi pupils have been highlighted as poverty and fluency in English. However, studies have shown that that explanation does not apply once the pupils become proficient in English at GCSE and A-level.

In Tower Hamlets, 30 per cent of Bangladeshi girls and 25 per cent of Bangladeshi boys achieved five A to C grades, compared with 21 per cent of white girls and 18 per cent of white boys. It is claimed that where the home background is not English, pupils are held back. The Swann report found that that was a factor in a small number of cases. If it is suggested that bilingualism continues to hinder our young people in entering higher education, what explanation can be given for pupils who do well in primary schools and much better in secondary schools?

Graduates say that the answer lies, sadly, in a lack of expectation in many institutions, as well as in the guidance and support that they receive in the higher education institutions. Graduates to whom I spoke said that they felt that the whole education system was stacked against their success. The few who succeed do so because of their own and their families' persistence. Many who succeeded said that it was due also to the individual efforts of exceptional teachers, who made the difference between their success and others' failure. They spoke also of the lack of guidance that they received about possible career paths.

That was borne out by the recent admissions from the Civil Service, the police, the fire services and the NHS. Even in the private sector there is a disparity in the treatment of ethnic minority candidates and recruits. The graduates say that it is only the educational establishment and local authorities which have not caught up with their responsibilities to provide equal treatment and equal opportunity.

A number of projects have been set up in the community to address the continuous failures of the statutory educational establishment. They are projects such as Keen Student, Supplementary School, People into Management, network graduate forums and summer universities. I declare an interest in that I have some involvement in those projects. I must admit that we have elites among us, and I have certainly spoken to some. It appears that if they come from Tower Hamlets, even when they have the elite experience of Cambridge and Oxford, elitist organisations do not necessarily wait in the wings with offers of employment. Locally, the drop-out rate remains as alarmingly high as gainful employment is low, and yet we are blessed with thousands of jobs on our doorstep.

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I should like to see a radical examination of the whole system of education in Tower Hamlets. I want to know why our Government are prepared to settle for less in our educational establishments.

One of the central ideas of the Lawrence report is that the focus of racial equality must take into account institutionalised racism, which is defined as a collective failure. It is the cultural, institutional and professional assumptions and practices--formal and informal--which our children encounter that have such a dramatic effect and impact during their lifetime. The institutionalised racism within education is certainly more detrimental than what happens in one-off incidents.

Racial equality must mean seriously changing the level of achievement of children from ethnic minorities. It is not about changing attitudes or organisational culture, but simply the delivery of education. Some 10 or 20 years ago I would have tolerated and welcomed a debate about policy and long-term planning and constraints of resources; now it is not acceptable, either to me or to the graduates to whom I have spoken.

For me, the Lawrence report says that it is the responsibility of all institutions to be accountable to the race agenda. Education cannot hide from its responsibilities. If we continue to ignore what is happening on our doorsteps, I am afraid that higher education will continue to fail not only my children but my grandchildren.

5.41 p.m.

Lord Skidelsky: My Lords, I shall do my best to match the lightning speed of the noble Baroness, Lady Uddin. Debates in Parliament on the state of public services nearly always revolve round a single topic--money. Certainly, that has been the major theme of our discussion today. This threnody for impoverishment has been coupled with another--that is, the lament for vanished independence. Universities and their teachers complain of a growing weight of regulation, and I endorse everything that my noble friend Lord Renfrew said about this earlier in the debate. They are constantly being assessed for their research and teaching capacities, sometimes, it seems, by methods borrowed from Stasi, but which, in reality, are the methods of bureaucracies the world over. According to the results of these researches, money is allocated by organisations known only by their acronyms.

I should like to stress particularly the connection between underfunding and independence. Underfunding and over-control are not separate; they are twin sides of the same coin. That connection has to be understood if we are to make further progress in the discussion. The brutal truth is that a cash-strapped paymaster is always a hard taskmaster. The increased control is directly connected to decreased funding as governments try to squeeze more value for money out of a shrinking unit of resource.

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Worse still, if the Government pay, why should they not tell universities who to admit and what to teach? In future, grants to so-called elite universities are to be tied, so we are authoritatively told, to their success in achieving the Government's preferred social mix.

The Chancellor's recent clumsy attempt to make a class-war issue of the Oxford selection system compels us to focus on the real issue in the debate as I see it--that is, not money but independence. Should universities be regarded as autonomous institutions or as agents of the state? This question is constitutional; it is about the way power is distributed in our society. The question, "What is to be done?" matters less in this instance than the question, "Who is to decide what is to be done?". For anyone who stands for university autonomy, for anyone who believes that in the institutions of civil society lie the best protection of individual freedom, there can be only one answer. Universities must wean themselves off their present dependence on the state. That also happens to be the surest way of replenishing their coffers.

What does this involve in practice? It means, above all, that universities would set tuition fees at any level their markets could take. The right to charge a market price for one's services is a fundamental condition of a free economy and a free society. It was only in the communist world that such rights were systematically denied.

The predictable response to this is that any step in this direction will deny young people from poor families access to university education. There is something in that argument, but there is also a great deal wrong with it from an economic point of view. There is no reason why the borrowing power of poor students should be any less than that of better off ones. A university degree confers an earnings advantage which accumulates to £400,000 on average over a working lifetime, irrespective of parental background. To secure such a return on most investments one would have to borrow about £100,000. By comparison, to borrow £30,000 for an investment in a university education is an astoundingly good buy.

Of course, that is not the end of the story. For various technical reasons, banks would need to be insured against the risk of default, and both the Government and the universities might wish--I would support this--to provide bursaries to ease the passage of poorer students into university life. Governments would also continue to finance research of national importance. All that I take for granted. Simple changes in the charity laws would enable the universities to tap large additional sums of private money--the lack of which was lamented by the noble Lord, Lord Baker--as they do in the United States.

However, none of this will come to pass unless some universities are prepared to go to the Government and say, "Unless we can agree a new constitutional settlement between the universities and the state, we will renounce the block grant altogether and resume our freedom of action." A bold step. Integral to any such settlement the universities may seek would be a "charter of freedom", which would include the right to

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set fees without penalties--I emphasise, "without penalties"--the right to retain absolute control of their own admissions, and the right to regulate their own standards.

Will any of the universities have the courage to do this? Probably about half a dozen of the top universities could do it if they could agree on a policy, agree to pool their resources and agree to launch a massive appeal for what I would call an "Independence Fund". Unless some such effort is made, the universities will never escape from their present state of slow strangulation.

My object in saying this is not that half a dozen of the best universities should go into the private sector, but to force the Government to understand what should be the proper relationship between the state and the university system. It is one thing to sell one's birthright for a mess a pottage, but when the mess is too mean to nourish life, it is time to start remembering what one's birthright was and to start on the difficult task of reclaiming it.

5.47 p.m.

Lord Plant of Highfield: My Lords, I, too, should like to thank the noble Lord, Lord Baker, for his prescience in initiating this debate. I declare an interest: for 33 years I have been a university teacher, including five-and-a-half years, until January of this year, as Master of St Catherine's College, Oxford.

In my short speech I want to say a little about centres of excellence--or, if you like, elite universities--and to say something about access, on which the controversy over the past two or three weeks has focused attention.

I am all in favour of centres of excellence or elite universities. They are not identified or determined by ministerial or bureaucratic fiat; they arise out of the talent of the individuals within them--poorly rewarded though it is at the moment--and through the innumerable decisions arising from the research assessment exercise, the policies and priorities of medical charities, funding councils and so on. It is undoubtedly the case that over the past 10 years or so an Ivy League, or whatever one wants to call it, of top-ranking universities, which are able to attain international standards of excellence across a whole range of academic disciplines, has emerged. It seems to me that that is vital to the industrial, business and scientific future of the country.

But while there are these elite universities--and a jolly good thing too--I am sure that we all agree that recruitment to those elite universities should not be based upon a social elite but upon those who have the standards, the merit and the ability to benefit from the education that the universities are able to offer. I think the case for equality of opportunity in relation to access to elite institutions is fairly straightforward. First, they should be open to all those who can contribute to and maintain the standards of the institutions. Secondly, a large share of the funding for universities comes from public money, which is an echo of the point made by the noble Lord, Lord Skidelsky, either by HEFCE or the research councils

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and there should be equality of opportunity to gain access to publicly-funded goods if one has the merit or the ability to benefit from those goods. Thirdly, in a democratic society, each individual has a right to realise, as far as possible, his or her potential. Fourthly, equality of opportunity in the sense of securing the best use of talent is almost a definition of economic efficiency in terms of human resources.

For those reasons I am wholly in favour of equality of opportunity in relation to access to elite institutions. So what degree of equality of opportunity is there at the moment in relation to the top universities? I am sure that all noble Lords have read the Sutton Trust report. The telling point in that report in relation to the 12 top universities is that students from independent schools have a 25 times greater opportunity of achieving places at those universities than those from the maintained sector. Can that be justified on the basis of any principle? It could be justified only if one believed that the recruitment patterns of the top universities mirrored the distribution of appropriate talent among the population at large, and that seems to be factually wrong and frankly absurd. It would make the whole programme of change and trying to raise standards across the range of schools totally pointless. Surely, that cannot be an appropriate principle to justify a disproportionate basis of selection.

What is the appropriate talent base for the top universities? I think it is to be defined as Colin Lucas, the admirable Vice-Chancellor of Oxford University, has defined it; that is to say, in the case of Oxford, those children achieving three As at A-level. How is the talent of those achieving three As at A-level distributed? Two-thirds of those who gain three As at A-level come from the state schools and one-third come from the independent schools. However, taking Oxford University, because it is one that I know, 53 per cent of offers have gone to state school pupils and 47 per cent to private school pupils. That is definitely an improvement on which the university is to be congratulated, but it still falls a long way short of recruiting from that two-thirds of the cohort of state school pupils with three As. I do not believe that the rate of progress is fast enough.

It may be argued by some that private school candidates should be preferred because they perform better when they are in the top universities, particularly in the challenging environment of Oxford and Cambridge. But that is not so. Research undertaken by Professor McNabb of Cardiff University, reported in the Daily Telegraph, has shown that for students with identical A-level scores, those from the independent schools were 20 per cent less likely to graduate with a first class degree. That is a very telling statistic. So there can be no basis for a choice on that assumption.

To echo the point made by the noble Lord, Lord Skidelsky, what can be done? I shall not follow him down the route of privatisation. Quite a lot is being done in Oxford and I believe that the university deserves a great deal of credit for it. I shall not rehearse all those matters again. One very interesting new

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initiative is that pioneered by David Marquand, the principal of Mansfield College, in relation to further education colleges.

The crucial area of concern in Oxford must be the interview. It is difficult to see how the university could manage without the interview because of the large number of well-qualified candidates. While it is entirely right to say, as the noble Baroness, Lady Walmsley, said in her interesting speech, that schools should try to develop communication skills, it is also important that the universities that use interviews in their selection process should offer staff who conduct the interviews of young people, who may lack confidence, a good deal of training in interview techniques. On that basis there could be a real partnership between schools, top universities and the Government in trying to achieve a better representation of those who are undoubtedly well qualified to share in the education offered by top universities.

5.53 p.m.

Lord Blackwell: My Lords, given the many distinguished speakers in this debate, I want to focus on three points: two points of principle, which I invite the Government to endorse, and one specific point on business education aimed at the universities themselves.

The first point of principle I suggest is that the volume of higher education should be based on maintaining high academic standards and not on some arbitrary participation rate. The reality, as my noble friend Lord Baker said, is that participation by young adults in higher education has increased enormously. In the early 1970s it was 15 per cent and now it is over 33 per cent. While we all endorse the principle that all those who can benefit should have access to higher education, it stands to reason that participation cannot continue to increase indefinitely without, at some stage, standards being reduced and students being admitted who may well be better served through work-related training and further education. There is nothing magic about the formula of a three-year degree course in higher education which means that everyone ought to aim for that as their route into adult life.

The funding crisis, to which a number of noble Lords have referred, is, I believe, partly a consequence of the pressures of funding the growth in the past and the desire to continue to fund growth in the future. That desire for growth is understandable on the part of those in the institutions, but the consequence has been a reduction in the funding per student referred to by my noble friends Lord Baker and Lord Norton. Not only does growth cause funding problems; it can also lead to pressures to reduce standards in order to fill the vacant places that universities fear they may have at the end of the UCAS process.

While I am concerned that the Prime Minster has set out the target of driving participation up to 50 per cent without any particular basis on which to justify that

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number rather than any other number, I am also concerned that that may worsen the funding pressures without benefit. Funding may be achieved only by reducing standards and, rather than setting an arbitrary target, I would like the Government to reaffirm the principle that the criteria should be to maintain the current and historic high standards of higher education and to determine volume according to the number of students who are able to meet those standards.

The second principle is that whatever volume of higher education we provide in this country, admission should be based on open meritocracy and not on arbitrary quotas or social engineering. I believe that meritocracy against consistent high standards is the only fair basis for selection. To include or exclude people just because of the schools selected for them by their parents is to be unjust to children who have worked just as hard as any others to reach the standards expected of them. Equality of opportunity is becoming a much abused term. It can be interpreted to justify almost any intervention, so rather than talk about the equality of opportunity I suggest that we need a ladder of meritocracy that allows young people who have ability, aspiration and motivation to advance on an equal basis whatever their backgrounds.

As the noble Lord, Lord Dearing, and others have pointed out, trying to shape that ladder at the stage of selection to university is too late. Lowering standards in order to allow more people over the bar is not the answer. It has to start at school level. It is a tragedy that over the past 30 or 40 years we have destroyed so many outstanding selective grammar and direct grant schools that gave so many people the chance of rising up that ladder of meritocracy. I know that many other noble Lords in the Chamber have taken advantage of that ladder in the past. I speak as someone who had the immense benefit of an LEA-funded place at a direct grant school, a full maintenance grant at Cambridge and a private scholarship for postgraduate study.

School standards is the subject for another debate, but I would like reassurance from the Government that they will not put pressure on universities to distort admission standards away from meritocracy and standards of excellence to try to meet other social objectives. I also ask the Government, in the light of the evidence that we have accumulated over the past two years, to look again at the policy of fees and loans. I believe that there is evidence to show that that policy plays a significant factor in discouraging applicants from disadvantaged groups to rise up the ladder of meritocracy.

My third point is slightly different and more specific. I should like to ask universities to give more attention to business studies in their agenda, thus raising the professional status of business careers. I think that we would all accept that the quality of business in this country depends critically on the quality of leadership. We need to have the best graduates to have a choice of business-related studies that are seen as intellectually challenging as courses in science, law and the arts. I do not believe that it is the

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Government's role to regulate this. I agree with my noble friend Lord Skidelsky and others who favour more independence for universities. Having myself benefited from postgraduate business education in the United States--and seen the demand that there is for such education in that country--I believe that UK higher education institutions have been somewhat remiss, compared to the US, in being slow to adapt and recognise the academic validity of university courses and research in areas such as financial markets, marketing, logistics and organisational development and other areas of the curriculum covered in many US universities. It is up to the UK universities--I think particularly of Oxford and Cambridge--to embrace business degrees as a primary offering for talented and motivated students at both undergraduate and graduate level.

There have been encouraging developments at Templeton at Oxford and the Judge Institute of Management Studies at Cambridge, but there is a lot more that can be done to put business-related studies on an equal academic basis. I look forward to further progress in that area.

Finally, I join other noble Lords in thanking my noble friend Lord Baker for providing the opportunity for this debate. I look forward to the Government's response on the issues that have been raised.

6.1 p.m.

Earl Russell: My Lords, I, too, should like to thank the noble Lord, Lord Baker of Dorking, for introducing this debate and proving--not for the first time--that gamekeepers make the best poachers.

I have been over these issues, I think, in every debate in which they have come up since I made my maiden speech on the noble Lord's education Bill in 1988. I do not like boring the House. I do not think, frankly, that I have the hope necessary to go around that course again, so I shall confine myself to one issue: widening access to the universities. I have not spoken at length before on this subject because I still believed that we and the Government had our hearts in the same place. I must declare an interest as a serving university teacher. I also wonder whether I ought perhaps to declare an interest since I have a distinct suspicion that Miss Laura Spence may be my cousin. My great grandfather Spence happened to be a Sunderland docker, so the possibility is slightly more than purely theoretical. But hypothetical interests, like hypothetical questions, do not require answers.

Listening to this debate, I am reminded of a remark made by the noble Lord, Lord St John of Fawsley. He warned the government, "Do not lose the universities. If you lose the universities you will lose the future". It was the voice of Cassandra, and so it proved. That warning needs to be repeated. I do not suppose that it will be any more use now than it was then, but one must try.

I have noticed that the anger created by the Chancellor of the Exchequer's remarks is most intense among colleagues and postgraduates who are themselves from working-class backgrounds, because

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they think that his objective is not to help them but to use them as a political football. Of course, it is the nature of footballs that they get kicked.

The device of the whipping boy who was whipped for the king's misdeeds when the king was tried is well-known. There is a widespread suspicion within the academic community that the Chancellor of the Exchequer is using universities as a whipping boy for faults which are his.

There has been talk of incentives to encourage universities to admit more people from a wider range of backgrounds. It really is not needed. If you listen to essays--as I do 12 to 14 hours a week--you do not need an incentive to listen to more interesting essays, any more than your Lordships need an incentive to listen to interesting speeches rather than boring ones. I think that that is in the wrong place. I have observed the broadening of access over 45 years. I see two variables. One is the question of getting people to apply. That appears to me to depend first and foremost on the amount of money available for student support. The Minister knows my view that the amount of student support available is very far from sufficient. This is not just a matter of tuition fees; it is basic maintenance. Tuition fees are merely the lid on the poisoned chalice. Frankly, if I were asked tomorrow by someone aged 18, who could not depend on substantial financial support from his parents, whether he should go to university, I should feel it my duty to advise against it. That is a sad thing to have to say.

That is the first matter that must change. The other is that the quality of the schools must change. For most of my life the gulf between public school education and state school education has been narrowing. But since about the middle of the 1980s it has been widening very rapidly. This is first and foremost a matter of resources. What I notice over and over again in interviews is the complete absence of a school library. What I look for in an interview is someone who can argue between two conflicting views on the basis of evidence. One cannot do that if all one has heard are dictated notes from one teacher in which the distinction between fact and opinion is by no means as clear as one would wish.

One cannot select students just on their A-levels. I once marked 36 A-level scripts from one school. The only way that I could tell the difference between them was by the spelling mistakes. It is like selecting junior Ministers for preferment on the hypothesis that they write their own speeches. You need to question them off the brief.

The noble Baroness, Lady Warwick of Undercliffe, mentioned objective tests. When I was at Yale I sat the scholastic aptitude test before administering the graduate entrance programme. I was relieved to discover that I could just scrape into the department whose graduate programme I was in charge of. One of the questions was entirely about baseball. Cultural bias in objective tests is by no means unknown. There is really no substitute for an interview and an adequate school library. What the Government need to do in

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this field, as in so many others, is to spend a little more and control a little less. If that message is not heeded we shall remember this as a debate not about the success of fee-paying schools but the success of a fee-paying university.

6.7 p.m.

Baroness Carnegy of Lour: My Lords, the noble Earl has made some very wise remarks, as he so often does. Scotland has been mentioned only once during this debate. It was mentioned by my noble friend Lord Baker. He made the point that Scotland might be the place where the first university breaks free from the stranglehold of the public sector, the stranglehold which my noble friend Lord Skidelsky described so well. I am inclined to agree. I believe that Scotland might be the place to do this.

The funding of Scottish universities is now a devolved matter. Scottish universities must nevertheless be part of this debate because much of what the Scots Parliament decides for them affects United Kingdom and other students, not just those resident in Scotland. It also affects universities themselves elsewhere in the UK, and indeed Scots who choose to study with them. It must be part of this debate.

Of all the matters that must most concern this Westminster Parliament, the most important I believe must be what is happening in Scotland on student fees and support. The anomalies created by the Government's decisions before devolution are well known to your Lordships, but the decisions since are compounding the unfairness. Following the elections to the Scots Parliament, the Liberal Democrats, with 17 of the 129 seats, agreed to govern in coalition with Labour on condition that student fees were abolished. The Cubie committee was set up to see how that could be done. It produced 52 recommendations and some 40 of those were accepted by the Scottish Executive, at an estimated extra cost of £50 million. A discussion paper was also produced asking for views on matters still undecided.

Cubie's central recommendation was no more up-front fees for Scots students in Scotland but that after graduation, once a person was earning £25,000 a year, £3,075--the equivalent of fees elsewhere--would be paid into a graduate endowment fund. That maintained the all-United Kingdom principle, established hitherto, that a degree confers earning power, so those who benefit are asked to contribute.

The Scottish Executive has abandoned that principle and indeed all equity with the rest of the United Kingdom. It has decided that only £2,000 will be paid on graduation. That will be due on a wage as low as £10,000, except for students from the poorest families who will pay nothing at all, however high their salaries turn out to be, except maintenance. How much the compounded unfairness of all this will deter students from elsewhere in the United Kingdom from coming to Scotland, where they will have to pay full

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fees, or how much it will deter Scots from going south to universities where they will pay full fees too, remains to be seen.

Andrew Cubie has said publicly that he believes that the fear of having to repay £2,000 on a £10,000 salary, in addition to any maintenance one may have paid with a loan, will certainly deter some Scots within Scotland from applying to university at all. It has been pointed out to me that because of the various starting dates within the scheme it will be financially advantageous for better off students to go to university immediately, even if they were not going to go in this coming year, while it will pay the less well off to wait a year. They may, in the meantime, of course, decide not to apply at all. That is hardly a good start for Scotland.

I want to ask the Minister a question on one other point to do with the Cubie report because I think it one which is particularly important for her. The Cubie committee has made a number of important recommendations on student maintenance and cost of living expenses for students. They would affect the benefits system. The benefits system is a reserved matter, dealt with by this Westminster Parliament. Have the Minister and her colleagues here at Westminster begun to look at those recommendations? The matter is fairly urgent because the Scottish scheme is a package and it will not work unless those recommendations play a part. I should be grateful if the Minister could tell me whether she and her colleagues have begun looking at those recommendations, because the benefits system will have to be considered by the Department of Social Security. If she cannot do so, would she be kind enough to write to me?

6.13 p.m.

Lord Hunt of Chesterton: My Lords, I am grateful to the noble Lord, Lord Baker, for introducing this debate. My recent experience of higher education in the United Kingdom and abroad has been as a professor and as a recruiter of excellent men and women graduates, as chief executive of the Meteorological Office and director of a consulting science-based company in Cambridge. I declare these interests. I have also been involved in discussions about the content and standards of degrees as president of the Institute of Mathematics and its Applications.

As a result of government policy and by their own efforts, UK universities are now graduating more students per head of population than most other countries in the world and are attracting increasing numbers of overseas students to the UK for courses that cover a wider range of basic and applied subjects than is available elsewhere. The universities should also be commended on having undergone the same remarkable managerial transformation as other parts of the public service in the UK. With almost no training in management, accountancy and so on, academics running departments in universities now know the cost of staff, equipment, buildings and the income they generate from teaching and research. As a result, many decisions about staff duties as between

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teaching and research, appointments, salaries and resources are taken quickly and at the level of the department.

One has only to compare with other university systems in both America and Europe to see why our universities are quite efficient and spend relatively much less on administration. The structure we now have in the UK is broadly sustainable, and I trust that the Government will not be changing it radically. I do not believe that the evidence supports the conjecture of the noble Lord, Lord Baker, that the organisation of the better funded American universities has much to teach us. I know where I would rather be a professor, and fill up fewer forms.

However, if universities are to increase further the number of students being graduated while improving standards, more resources are needed especially for the infrastructure of the buildings, libraries and scientific equipment, and for staff salaries. Here comparison with North America would show that most libraries in state universities there are better resourced than those in many leading UK universities. As for the state of some buildings in our universities and even teaching hospitals, your Lordships would not want to see them.

Because of low salaries, outstanding scholars and teachers are leaving or are not entering universities. Their levels are not competitive with those in the Civil Service, let alone the private sector, and yet most academic staff are working a 50 to 55 hour week, as recent surveys indicate, with no overtime payment. On the Continent there is generally a connection between academic and Civil Service salaries. Surely that provides a reasonable basis for comparison. The Bett report endorsed the concept of a general salary structure with local and personal variations. I hope that the Government will provide more funding and guidance than they have hitherto.

As a result of managerial reform, the Treasury can be assured that public money is spent responsibly. Average student/staff ratios have increased from about 9:1 up to 17:1 over the past 20 years and therefore it will be very difficult for universities to find further 1 to 3 per cent efficiency savings per annum, as they are being urged to do by the Government. As with other organisations in the public and private sectors, such further savings can come only from structural changes. In the university that would mean significant changes in teaching methods. All those concerned with universities, including the Government, need to consider this question. For example, will it lead to less tutorial work and more large lecture classes such as are standard in American universities, including the very best?

Whichever solutions are reached, it is essential for the UK economy that our graduates are as good as those in other countries. But we should not forget, as perhaps we have today, the higher ideals of university education to form graduates who will lead fulfilling lives and contribute and provide leadership to society.

To meet international and European standards in science and engineering, many UK universities have introduced four year degrees. Nevertheless, some

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foreign governments, multinational companies, academics and professional engineers have expressed concern about the level of certain first UK degrees, and also about the level of UK professional qualifications in relation to those on the Continent. Considerable ingenuity and leadership will be required by the Quality Assurance Agency and the professional institutions to introduce different and appropriate levels of technical qualifications. The comments of the noble Lord, Lord Trefgarne, are quite applicable.

At the same time as increasing the number of students, the Government Chief Scientist, Sir Robert May, has pointed out that scientific research in UK universities is world- class and very cost effective. That is helped by the research assessment exercise, which has been criticised during the debate. It encourages staff to re-energise their research careers and also redefines the roles of those not engaged in research.

As for funding of research, the substantial recent increase provided by the present Government was an essential first step in slowing the relative decline of the total volume of UK research in universities. Nevertheless, there remains concern about the future position of UK research, as other countries, especially the United States, are increasing their funding of scientific research faster than here, especially in almost all fields of science, engineering and medicine. It is worrying that, as the Royal Society noted, there is a planned reduction in research by government departments and agencies. This source of funding plays a crucial role in stimulating applied research and high technology industry in the United States.

In the United Kingdom the research community agrees with the noble Lord, Lord Baker, that a good proportion of government revenue from new developments in science and technology, such as licensing of wavebands for mobile phones, should be ploughed back. Games theory and economic research at University College London helped the Government devise the ingenious arrangements for the bidding process. This is a clear example of the ever-wider role that universities are having in our society. This will flourish, provided they have the resources and encouragement from supporters everywhere, including, of course, in this House.

6.20 p.m.

Lord Chilver: My Lords, this debate has already identified a score or more of serious concerns from all sides of the House about the state of higher education in the UK. Before adding to those concerns I should like to preface my remarks by referring briefly to the international scene in higher education.

In that world scene there is a progressive movement towards a greater diversity of both institutions and styles of higher education. This is leading to the wider accessibility of higher education involving new forms of communication and research. One of the most significant recent developments is the setting up of world universities on the Internet. These new universities offer access to very large numbers of

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students from many countries at very low cost. Such universities are truly international and can operate freely across national boundaries.

Across the world higher education forms the apex of the tertiary system of education. Leading institutions of higher education are those which exercise autonomy in their policy directions, manage their own affairs and enjoy intellectual freedom in their work. Autonomy and intellectual freedom lead to high qualities of academic achievement in the forms of knowledge and science which are universally valid.

It is often argued that higher education in any country is a key force in that country's economic development. Among the present members of the European Community, Denmark and the United Kingdom have comparable participation rates in tertiary education of between 45 per cent and 50 per cent. At the same time, GDP per head of the population of Denmark is 70 per cent greater than it is in the United Kingdom. While there is no direct correlation between the levels of tertiary education and simple economic indicators such as that, it is entirely proper for an intelligent society to seek to understand why the same quantum of tertiary education at least appears to be so much less effective in the UK than it is in Denmark in economic terms.

That having been said, the arguments for the progressive expansion of higher education are strong. Not least at the highest levels, higher education plays a key role in raising the general educational standards, through the dissemination of ideas and knowledge.

Over the past few decades higher education in the UK has evolved considerably. Across the universities the balance of income between government and non-government funds for some of the leading institutions has changed markedly. The non-government funding of universities in teaching research rose to £2 billion in 1997-98 and it continues to grow. Unfortunately, the bureaucratic control that government have over the universities as a whole tends to a uniformity of the institutions concerned rather than encouraging innovation. I have already mentioned as an example of innovation the development of major world universities on the Internet. It would seem that there is no major initiative in Britain at the present time to encourage universities and others to explore these Internet possibilities seriously. So much for the Government's priorities of both education on the one hand, and the e-world developing around us on the other.

If central control of leading institutions of higher education is continued, there is a serious danger that the standards in some of our leading universities will be affected adversely and their roles in the international scene will be impaired. An alternative for those institutions which are only partly dependent on government funds is to give them more autonomy from central bureaucracy to enable them to develop as European and international leaders in higher education.

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6.26 p.m.

The Earl of Longford: My Lords, my main excuse for offering a few thoughts today is that I want to say something about the polytechnics.

Before coming to that subject, I should like to speak about Oxford, so beloved by so many of us who were there, and resented, I am afraid, by some people who were not. At any rate, I should like to say a few words about Oxford as an old Oxford don, Oxford father, Oxford husband, Oxford grandfather and so on. I certainly can claim to be, if nothing else, an Oxford person.

I want to say two things about Oxford. First, in all the years I have known it, I have never known it to have any prejudice against people who came from humble backgrounds. I shall mention only one person, who, it may be said, was rather exceptional: Professor A.L. Rowse, who came from one of the poorest areas of Cornwall. Many other examples could be given.

I leave open tonight--although we shall have to return to it again and again in these debates--the question of how far an advantage should be given to people with disadvantaged backgrounds. If some rather feebler version of the late Professor Rowse arrived on the scene in a competition for the last place with someone like myself, with a background of Eton and Oxford, and we were about equal, should the place go to him? If in fact I were a little ahead of him, should it still go to him? If we are to try to secure a higher proportion of people from state schools, we may have to give a positive advantage.

After all, people do not pay thousands of pounds for the so-called best schools without expecting some advantage. They certainly get one. The noble Baroness the Minister may not have the figures, but no doubt there are figures showing the ratio between teachers and pupils in state schools compared with the private schools. The only ones that I have investigated suggest that the ratio of teachers to pupils in the private sector is about twice as good as in the public sector. That would not apply to every school, of course, but by and large it is so. People pay a great deal to gain an advantage for their children. Should we then discount that? I leave that question open.

I pass on to the polytechnics. If on the last day, which may come rather sooner for me than for some others present, St. Peter asks me "Did you do any good down there?" I shall reply "At least I was the first person in Parliament to propose that the polytechnics should be made universities". It is particularly appropriate to discuss polytechnics today, because the noble Lord, Lord Baker, will go down in history as the man who turned the polytechnics into universities. It was Lord Baker who did it, but he is too modest to talk about it.

Everybody seems to refrain from talking about the polytechnics and instead discusses the universities and whether ethnic minorities have a chance in them. They neglect the fact that in the University of Westminster, for example, almost half the students come from ethnic minorities.

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We must pay attention to the polytechnics. In 1992 they were put on more or less the same footing as the older universities. They were given the power to grant degrees, and they are now called "universities"; they are not "polys" any more. All that is a great step forward. However, we may wonder what the result has been, and so far as I know no one has produced any kind of expert measurement of comparative performance.

Most people will agree--I hope everyone here will agree--that the polytechnics have been a great success. I hope that includes the Minister who, in my eyes, is the most distinguished educationist of any Minister of the Crown that I can remember since my old warden, H.A.L. Fisher, who was a leading academic and then became Minister for Education in the government of Lloyd-George. If that is her opinion, I hope that she will say so clearly. The old polytechnics still have a bit of an inferiority complex, and that is understandable. So I hope that the Minister will say some encouraging words to them.

I may be a little biased in favour of the University of Westminster. It did me the honour of making me an honorary doctor, and I am sure allowance will be made for that. But no one can deny that it has received many marks of approbation. Only the other day it won the Queen's Award. I am sure everyone will agree that it is a first class university. We have not heard much about that in the recent discussions. No one pays tribute to the work of polytechnics and they are ignored. So I hope that my noble friend will rectify that.

Are the polytechnics now on the same footing as universities? They do not believe so and nor do I. I have been briefed by the University of Westminster and do not apologise for that. I wrote to the Minister mentioning the improvements it would like to see made. I shall not trouble to go through them tonight; the question of funding becomes extremely technical. But, having studied the issue again after all these years, I feel that the polytechnics are at a disadvantage in certain respects in regard to funding. So I hope that the Minister will at least say that the Government will give that aspect careful consideration.

We are talking about higher education in this country. The great advance in my eyes stems from 1992 when the noble Lord, Lord Baker, turned the polytechnics into universities, and we have gone on from there. I hope that, when the Minister winds up, she will give full credit to them.

6.32 p.m.

Lord Oxburgh: My Lords, I, too, congratulate the noble Lord, Lord Bernstein, and the noble Baroness, Lady Walmsley, on their eloquent contributions to our discussion this afternoon. And I, too, must declare a personal interest. I speak from the sharp end as the Head of Imperial College. Before that I was head of a Cambridge college and before that, worst of all, I was an Oxford admissions tutor. Just in case anyone should imagine that the efforts by Oxford to broaden access are recent, as well as I can calculate, it was 35 years ago that my noble friend noble Lady Warnock,

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who was in her place earlier this afternoon, and I were dispatched by the Oxford college admissions office in a hired car to go and sell the message of Oxford to state schools around the north of England.

We are at the end of a decade of great achievement during which British universities have expanded at a rate unprecedented in the world. The student capacity of the system has more than tripled in less than 12 years. That has allowed the UK to reach the levels of higher education enjoyed by its main industrial competitors.

The system is performing well. It has captured approximately one quarter of the world market for students who study overseas. As was remarked, that yields around £2 billion a year in overseas earnings. That figure is welcome but, above all, it indicates that although higher education is available more cheaply elsewhere--notably in the United States and Australia--our universities offer good value. That is the only international measure of quality and value for money that we have.

International comparisons of university research such as those carried out by Sir Robert May, show that our research universities are among the international leaders and, for the funding they receive, give astonishing value. That research leads to new products and new businesses--in the case of Imperial, at the rate of around one a month. But all that success is precarious. That is partly because of the highly centralised and regulated way that we manage higher education in the UK. There are echoes of the command economies of the former Eastern Bloc, where government determine the number of home students a university may enrol, and fines it if it strays over or under that number. Further, they decide unilaterally what universities are to be paid in respect of each student, and for many universities that accounts for most of their funding.

The trouble is that that unit of resource has been reduced relentlessly year on year under governments of all complexions. While the overall level of funding for higher education has increased because of expansion, Treasury and DfEE figures show that, in real terms, universities today receive 50 per cent less for each student taught than 50 years ago. Some of that pressure was undoubtedly justified. Some universities were not well run. They are not all well run today. But neither is every business nor--dare I say?-- every government department. But I wish to argue that the level of funding today is such as to seriously threaten the long-term viability of the system.

Why is that? Although part of the reductions have been taken up by genuine improvements in efficiency, the most immediate effect has been the reduction in staff-student ratios, which simply means that students receive less personal attention. Staff salaries have declined, as we heard earlier this afternoon. Less obviously, but no less seriously, many institutions have chosen to defer items of long-term maintenance and renovation of infrastructure in preference to serving their students less well. And to a degree, the apparent solvency of our university system is in that

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way spurious. It may well be asked whether all that can be solved with IT and the technologies. The brief answer is that they allow us to do things differently and more flexibly, but in most cases not more cheaply.

Although all universities are affected by those difficulties, it is the leading research universities that perhaps feel them most acutely. In every respect they have to compete not just nationally, but internationally, for staff with competitive salaries and, more importantly, with research facilities. Whether we like it or not, those are the flagships of our system. Unless an institution has private endowments or private patronage, I can say from personal experience that it is difficult to fulfil that role at present levels of government resource.

I am frequently invited to visit the campuses of overseas institutions with whom we both compete and collaborate. I must confess that all too often I am ashamed to issue a return invitation because I know that our general facilities compare so badly and that we show up as the poor relation.

There is no absolute measure as to how much a country should spend on its universities, but if at least in part the purpose is to help the country compete internationally, a comparison with the expenditure of competitor nations is of some interest. As has already been pointed out, the most recent OECD figures show that, as a percentage of GDP, the UK spends less than half the OECD average per student. Those who find that comparison uncomfortable will say that the figures are inaccurate. That is true, but the difference between our expenditure and that of our competitors is so glaring that the inaccuracies pale into insignificance.

So, where does that leave us? Although the Government have put additional and welcome money into university research, like their predecessors, they appear deaf to pleas that the university system is under-funded. Universities have achieved increases in productivity that would be the envy of many businesses. They have demonstrated that they are internationally competitive in every respect, and that they offer good value for money. They have generated new sources of income. But they are poorly funded by comparison with their competitors, and they simply do not see how they can make ends meet now. They also carry an increasing burden of un-costed bureaucratic scrutiny.

If the Government do not believe the universities' case, it is for them to say what evidence they would accept as proof that the universities are bleeding to death. The relentless reductions of the past three decades must be reversed.

6.40 p.m.

Lord Lucas: My Lords, if the Government were to go down the route proposed by my noble friend Lord Baker--and it is one that I find extremely attractive in principle--what else would they have to do? There are at least a few areas where the Government would have

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to make great improvements in what they and the universities do. Indeed, perhaps the Government ought to be doing those things in any event.

First, there is the matter of the provision of information for students. Students now have a large financial interest in universities. Certainly, if my noble friend's proposals were to come into effect, they would probably have a rather larger financial interest in paying for their courses and a differential one between universities. But even with the current state of affairs, they deserve much better information than is now available.

Information on courses--a pretty basic requirement, one would have thought--is, by modern standards, currently provided in an extremely poor form. To obtain detailed information on courses, the student has to pay a very large sum of money; it is not freely accessible over the Internet. It is only available on a private basis from one particular firm. Moreover, when that information is received, it is not well linked with universities' own sites. And when you access those sites they are not well linked with what their professors get up to, their research papers and what the actual experience is of students doing certain courses.

Any web-based company trying to sell such a product would provide more and better information to students regarding courses in which they were interested. The Government should ensure that that is integrated so that someone seeking, for example, to take chemistry could easily access such information and do so from home and over the weekend. In that way, students could find out what the courses were like, who would be teaching them, and so on.

Secondly, there are some good publications that cover the sort of "beer and sandwiches" life at universities, so the Government need not worry about that. But following on from what the noble Lord, Lord Plant, said, there is much to be done on value added. It is clear from some studies that A-levels are not the be-all and end-all determinant of how people do at university. Universities ought to be taking a leaf out of the book of what is done in secondary schools, and even in primary schools. They should be using a decent value-added system to get a handle on what it takes for students from particular backgrounds to do well on a particular course. It would certainly be a great source of information for admissions tutors and should be provided to students so that, when entering a certain course, they have an idea of what they are likely to get, and what the university's history is in producing degree results for the calibre of students to which they feel they belong.

Thirdly, I turn to prospects. At the end of the day, universities are about going on into later life. There should be much more information about what university students taking particular courses go on to achieve. It ought to be possible to see lists of those who attended certain courses during each of the past 10 years, what they are doing (where such information is provided) and perhaps establish links to former students and hear comments from them. That would be an immensely valuable resource for students who

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were judging whether a particular course was suitable; for example, whether it produced the sort of results required.

If one looks at further education and considers some of the better colleges that are linked with industries--Farnborough is one that I visited--such information is available to students. They know exactly where all the old alumni are because, by now, they are the people who are recruiting the new students when they come out and, indeed, often before they come out of college. That sort of quality of information ought to be available to students now. It would certainly be needed if the universities were independent.

We should also have good information provided by the Government in terms of quality assessment. Much has been said about how the present systems feel from a university point of view. Looking at them as a user, I have to say that they are useless. They provide nothing of use to students. I do not know of any school that makes use of its output in any integrated way. What we have is a number of simplistic indicators, which really mean very little, and a formulaic approach to reporting that is obscure and really does not give a feeling of what the course and its quality are like as an experience. People and good admissions tutors rely on their own experience and on person-to-person contact. The reports produced at such great effort and expense amount to nothing when it comes to informing students. Again, there is a great deal that could be done using the world-wide web. In that way you can display information in all its variety and depth and make it available to students. We do not need to have this "condensation" and formularisation, which appears to be the present approach.

Moreover, we need to take a much more radical approach towards securing student access. It is quite clear that access to the best universities and courses must be open to everyone. I believe that that should be done by allowing the universities to choose what fees they wish to charge, while saying that, above a certain level--the level at which the Government provide funding--they can only charge such fees by lending the students the money to pay them. That would operate on a similar basis to the student loans scheme.

Universities would have no difficulty in funding the bulk of that cost from the commercial market. That is something the Government should have done ages ago; and, indeed, something that they would have done ages ago if it were not for the dead hand of the Treasury. They should put the whole business of the student loans scheme out to the private sector. It is an enormously valuable loan resource; an index-linked asset just waiting for the life insurance industry to take it, but the Government will not let it go. If individual universities were lending the money to students, they would be re-financing that in the City as rapidly as possible. That would be a source of finance for universities that would not harm the ability of poor students to get to university.

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6.47 p.m.

Lord Sheppard of Liverpool: My Lords, opening up access to higher education is not simply about Oxford and Cambridge, important as they are. It is important that there should be universities with the resources to pursue research as effectively as competitors in other countries. Those universities need the ablest students who want to come to them and believe that they can find entry.

There is an issue, as the noble Lord, Lord Plant of Highfield, illustrated, arising from the Sutton Trust report. What needs to be overcome in many schools is not prejudice but a fear of failure among teachers. Some schools have simply never thought that they could win places. So, the present debate can be very creative if more schools feel that they can encourage able young people to try. Of course, some of the universities are at the top of the pyramid, but to expand opportunities means putting building blocks in place all the way up from the ground and at every level in the pyramid. I want to speak about opportunities rather closer to the ground. The changes of recent years offer excellent education to vastly increased numbers of students. Successive governments should take credit for that development. The noble Lords, Lord Bragg, Lord Dahrendorf and Lord Oxburgh, all pointed out the real success that we should celebrate but also referred to the increased burden that coping with greater numbers has laid upon so many university teachers. We should accept that there are limits to the quality that they can achieve without greater resources.

The noble Lord, Lord Dearing, recognised in his report the strength in the variety that higher education has to offer. He said that there were different missions and centres of excellence. My inquiries this week in the world of higher education in Liverpool have informed me that there has been a sea change and that there is much of which the Government can be proud. For example, I understand that the Teacher Training Agency pays £6,000 to PGCE students for their fourth year. That has made a significant difference to teacher recruitment.

I also understand that the funding council monitors postcodes to assess grants for higher education establishments, which I am delighted to hear, as I hope are other noble Lords. The Government should make such steps more public. Sometimes I think that the Government want to do good by stealth and not let too many people know about it. We should not be coy about affirmative action that opens up opportunities. I was glad that the noble Lord, Lord Baker of Dorking, did not shrink from speaking about a programme of positive access.

I hear that the result of monitoring postcodes is that different institutions now chase students from Toxteth. I hope that they do not simply want the money but realise that they are giving opportunities to people with great intelligence which in former generations has been wasted. That seeking of students shows that government policies can make a real difference.

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My involvement in higher education has been to chair--boxing and coxing with Archbishop Derek Worlock--the council of what has become Liverpool Hope, building on long established Catholic and Anglican colleges. The most recent development has been to establish "Hope in Everton" which is a £20 million development in the north end of inner city Liverpool. Accommodation for PGCE students is on the spot. It introduces them to inner city schools where it is hoped many will make a career. Liverpool Hope also works in partnership with sixth form colleges in the North West, developing a network of Hope colleges that bring higher education within the reach of more people.

Having seen much of life in areas of high unemployment makes me an enthusiast for "second chance" learning. I know that the Minister shares that enthusiasm. Further education colleges provide a key bridge on which personal confidence is built. Colleges such as Liverpool Hope and many universities open doors for mature students who had never imagined themselves with degrees. Many noble Lords will, like me, have attended graduation ceremonies, for example at Liverpool John Moores University or the Open University. Plainly, many who receive awards are the first in their families to do so and bring special insight and experience as mature students to their education. I hope that we can all rejoice at such developments.

6.52 p.m.

Lord Dixon-Smith: My Lords, I feel some trepidation in taking part in this debate as an East Anglian in what seems to have been very much an Oxford affair. I am grateful to my noble friend Lord Baker of Dorking for an opportunity to improve and continue my education.

I intend to approach this subject from the bottom up rather than from the top down as most speakers have done. My experience of higher education began more than 30 years ago when I became a governor of what was then a technical college and school of art. I mention just one formative incident from that period. The college sought someone to be head of department in what had then become an institute of higher education. One applicant had left school at 14. He had only one degree; a PhD. We could not resist the temptation to interview him. He explained that he had been invited to lecture at a university at both undergraduate and postgraduate level. A year later the academic authorities invited him to attend an interview which he attended with some trepidation. He said that he was a little bothered that perhaps he was not fulfilling their expectations. The authorities said that the problem was not his but rather theirs. They were rather embarrassed that someone was lecturing at postgraduate level who apparently had no formal academic qualification. They invited him to submit a thesis. He said that when he did there were three people in the country who were qualified to mark it, and he was one of them!

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The important thing to note from that incident is that university education is vitally important and not just for those leaving school. It has continuing relevance much later in people's lives. It is gratifying to note that there is so much more opportunity today for mature students. The institution I have mentioned still takes people in their late 20s and early 30s off the streets, so to speak. After taking the standard course some are awarded a first class honours degree and undertake important research work.

The Institute of Higher Education was formerly controlled by local authorities, as indeed was all public sector higher education in former times. However, in the mid-1980s institutions could escape that control if they had a sufficient proportion of public sector higher education students. They were allowed to incorporate. The institution with which I am involved incorporated at one minute past midnight on 1st April of the relevant year. One minute later it amalgamated with another institution. The noble Lord, Lord Baker of Dorking, will recognise that process. A few months later we scraped over the hurdle of 4,000 full-time students in higher education and became a polytechnic. In the early 1990s the law was changed and that institution became a university, although not willingly as it rather enjoyed being a polytechnic. The polytechnics became universities as, particularly abroad, no one understood the distinction between a polytechnic and a university. That was something to do with the Common Market, and we all know where that gets us!

Today that institution has 20,000 students and is doing well. It is a good regional university. The institution came about because it was able to escape the controls which were formerly imposed by local government. Today university funding and quality control have reasserted the intrusive controls from which the university with which I am involved escaped just a few years ago. The annual fight for funding takes up more and more time in administration. The Quality Assurance Agency charges huge sums of money. A single audit for a single department now costs the university £350,000. We have several of those audits every year. That money would be far better spent on students and student facilities.

Real problems exist. The plea of the noble Lord, Lord Skidelsky, that universities should stand on their own feet and become independent, has real resonance at the present time when the system--disregarding the simple matter of funding--is becoming too intrusive and is exercising too much control. The noble Lord, Lord Baker of Dorking, called for boldness of action in the development of the university sector. I lived through a process of continuous change. We did not expect to end up as we have; we always expected to trip up. However, we got there. But having done that, it is sad to find that the system is now slipping back into the controlling, intrusive and awkward system from which we thought we had escaped.

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6.59 p.m.

Lord Desai: My Lords, I thank the noble Lord, Lord Baker, for initiating the debate. I missed the debate that took place in December but I am glad to be able to attend this one.

Oxford has an elitism problem; I have never heard the like. A careful study of Prime Ministers since 1945 will show that if you want to become a British Prime Minister you should either have an Oxford education or none. There has never been a Cambridge-educated Prime Minister, and the LSE has only made it with Jim Hacker. Therefore, we all have a right to complain.

I, like Laura Spence, applied to go to a British university 40 years ago--it was at Peterhouse. I was not interviewed because I was in Bombay at the time. I did not get a place and I do not know who was luckier. I did get to the United States of America, where I had full tuition and a full fellowship. The point about the Laura Spence case is not elitism but that there are universities which can fund students fully. We have failed, not because of the type of schools which people attend, but because we have failed to tackle that problem.

While the going was good--and I started my university life here in 1965 when it was--we did not worry about money at all. Students and teachers did not worry about money. Money was always there. Then something went wrong. In my first 15 years I did not worry about money, although salaries started to be frozen in the 1970s. The noble Baroness, Lady Thatcher, when she was Secretary of State for Education, started asking how we spent our time. We had to keep diaries. All politicians think that university professors are lazy, so they want us to account for our time. They cannot understand that thinking is very hard work. Try it some time; it is very hard. Ever since then there has been a tremendous deterioration in our facilities, salaries and so on.

As many of my noble friends and other noble Lords have said, we still have a very good higher education system. There is a crisis in the technical, "medical" sense. At this point we have to think about how the system should develop. I shall concentrate on two major possibilities.

One is to take the current system, stop any further efficiency gains and bootstrap it up. It will cost a lot of money, just as in the NHS, because of the neglect of the past 20 years. Like the noble Lord, Lord Baker, I have amnesia and I forget who was in power most of the time while the money was being cut, but we will let that go. The money has been cut. The unit of resource was £8,000. If one wanted to restore that, plus inflation, it would come to something like £12,000. To go from the present level to £12,000 will not be done quickly; it may not even be necessary. It will take something like 10 years.

We shall need a bold plan to restore the funding of higher education, on the current basis of access or improved access, and with low fees and so on. We could do that. That is one plan.

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The other plan proposed by the noble Lords, Lord Baker and Lord Skidelsky, says that we should go the private route. I shall briefly wear my economist hat and consider that option. I think that option has great attraction. In the American system a diversity of tuition fees are charged and there is diversity of quality. Indeed, there is a lot of independence, though not a little bureaucracy. As my noble friend Lord Hunt pointed out, there is a lot of form filling in American universities as well.

What will it cost? The noble Lord, Lord Skidelsky, said banks will have to be made to be bolder in lending money and so on. We know that capital markets are imperfect. Banks do not give loans on future income. If they have to be made to do that, we need supporting mechanisms. Income-contingent loan arrangements to guarantee interest payment is one possibility. For example, as the noble Lord, Lord Baker, said--and I find this an attractive suggestion--if currently £3 billion is being spent on roughly 1 million students (these are broad numbers) each student has an entitlement of £3,000. The Government provide £3,000. One could say that in a new private system anyone can have up to £3,000 as a floor. One may choose to spend less than that and to go to a cheaper university. One may go to an expensive university. But one cannot have more than £3,000. One could bootstrap it in that way and take out an interest-free loan over the period, or whatever.

I should like to know whether these are the lines along which the Opposition are thinking. I should like the noble Baroness, Lady Blatch, to say whether that is official policy which the Opposition will propose in their next manifesto. It would make for a very interesting debate were the Opposition to put forward a privatisation plan with a loan policy of that kind and were my noble friend Lady Blackstone to go in to bat for the current system of bootstrapping. That would make a very interesting debate which would be very welcome.

7.5 p.m.

Baroness Sharp of Guildford: My Lords, I well remember the bombshell that hit us at the LSE--as I suspect does the Minister--when the noble Lord, Lord Desai, arrived in 1965. I was "gobsmacked" then and I remain "gobsmacked" always by what he has to say.

I should like to begin, as have others, by congratulating the noble Lord, Lord Baker, on initiating what I think has been a very thoughtful and valuable debate.

We have also been privileged to hear two excellent maiden speeches, one from my noble friend Lady Walmsley--and I warm very much to what she said about the two Cs, communication and confidence--and the other from the noble Lord, Lord Bernstein.

I, like many others, also have to declare an interest. Until last year I was a member of the academic staff at the University of Sussex and I retain a part-time appointment at that university. That university has an admirable record in encouraging access from a very wide diversity of backgrounds.

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We have had a very wide-ranging debate, covering a vast number of issues in the higher education field. For someone having to wind up, it is always somewhat difficult to know what to say and what to pick out. I want to pick out three issues that have arisen and talk about them. I want to pick up the point made by my noble friend Lord Dahrendorf about praise for our universities as compared to what he called the "shambles" on the Continent. Then I want to look at the issue of scientific research which, because I come from the Science Policy Research Unit in Sussex, is an issue in which I am particularly interested. Finally, I want to turn to the issue of access that runs through the whole of the debate for many people.

The noble Baroness, Lady Warwick, talked about our universities as being one of Britain's best kept secrets. I do not think it is a secret. I believe that our universities are one of our best and bravest institutions in this country that have served us incredibly well. This is well known. It is why, as the noble Lord, Lord Oxburgh, said, we have students flocking to the United Kingdom to participate in our universities. Perhaps there is one aspect that is secret. Why do students flock? I shall give your Lordships one example as to why they flock. The University of Sussex has many exchange programmes. I have taught on a number of occasions classes with exchange students. I well remember a French student being absolutely overwhelmed by the fact that in the group of about eight students I was taking--and she called me Margaret rather than Madame Professeur--we had an equal exchange of views. I would listen to what she had to say and participate. She said to me that that was so different from France, that in France there are separate staircases so that the lecturers do not have to rub shoulders with the students. It is the friendly tutorial system which is actually at the root, the secret, of our success.

When I first went to the University of Sussex in 1981 I was taking what were called tutorial groups of 1:4 and today I am taking tutorial classes, as we now call them, of 1:20. It gives you some idea of the rise in the teacher/student ratio. That is the position now. At Sussex, it is 1:17. That is tough, particularly when there is all the bureaucracy which we have been talking about. Nevertheless, even at 1:20, we are offering those students an opportunity of personal contact with senior members of staff which does not exist in a typical continental university. That is extremely valuable.

Scientific research is another area where Britain is good, as the noble Lord, Lord Oxburgh, made quite clear. Indeed, we excel at it disproportionately for our size. So there is a secret there.

The tutorial system is a secret of the success of our teaching. What is called the dual-support system has been the success of our scientific research. That dual-support system provided two things: first, the surety of core funding with which to employ scientists long-term; and in addition, the specific funds for specific projects

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through the research councils. The combination of those two has led to an excellence of research in this country which is seldom matched elsewhere.

Sadly, that system has been under gross strain over the past 20 years. Nevertheless, Britain remains outstanding in the production of scientific knowledge. Recent research by my own unit, the Science Policy Research Unit, revealed that in 1997, very recently, a typical academic scientist produced an average of 11.2 papers compared with the United States, where the average academic produced only 9.2 papers. Your Lordships may feel that that is not necessarily the right measure by which to look at the productivity of academics, but that is what is being done these days.

The noble Lord, Lord Oxburgh, mentioned Sir Robert May, the chief scientist. Sir Robert is very proud of that productivity. Indeed, he goes around demonstrating what good value for money he gets from his scientists. It must be pointed out to him that if you are paying peanut salaries, that helps in value-for-money terms. It looks good in terms of the number of papers that you receive per pound invested. But he is doing rather well. Scientific productivity in our universities is high and we should be proud of that.

Sir Robert May also likes to talk, as does the Prime Minister, of Britain being the California of Europe. Sadly, we are hardly there, not because our universities are not producing the research but because the business sector lets us down. If business does not invest in research and development and employ scientists and technologists, it cannot make use of the science and technology that we produce. You have to be able to understand what our scientists are saying. Unless people understand what is happening with leading-edge science and technology, that cannot be translated usefully for industry. That is where we fall down.

If your Lordships look at the statistics, you will see that in spite of the growth in recent years and the success of the British economy, over the past five years, expenditure by British industry on research and development has fallen and it is employing fewer scientists and engineers now than it was employing five years ago. That is a shocking record.

That research has shown that, as a result, if Britain were a US state, far from being like California, we should be on a par with Virginia and Oregon, hardly the most innovative of American states.

The report then goes on to point out that things have changed over the past two to three years. In particular, the US, Germany, Canada, France, Finland and Denmark have all made sharp increases in their public sector support for science, as, indeed, has the UK. It acknowledges that. It then goes on to quote a recent OECD report which says that the UK's efforts were "less ambitious" than those of other OECD countries. Of course, the UK had an enormous back-log of neglect over the past 20 years to make good.

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How then do we reconcile high productivity with low investment? Sadly, the report concludes that much of that high productivity today reflects past investments. The average age of academics in British universities is now 48. It concludes:

    "In the current environment of low pay, limited resources, poor morale and casualised labour, the UK researchers may be less productive than their forbears".

I now want to move onto the issue of access about which many noble Lords have spoken in this debate. I fail to understand why the Chancellor was so surprised about the access issue. Over a long period of time, we have had evidence which has linked educational under-achievement with social background. There is no reason why he should be surprised that the 7 per cent of private schools produce 35 per cent of the A-level pupils and 50 per cent of the Oxbridge places.

As many noble Lords have pointed out, the scandal is that so few candidates from our state schools achieve the standards required. As the noble Lord, Lord Dearing, said, the problem lies not only with our secondary schools but also with our primary schools.

Britain alone among OECD countries has seen a falling percentage of its GDP devoted to education. In 1992-93, we were spending 5.1 per cent of our GDP on education. Last year, 1999-00, we spent an estimated 4.6 per cent.

The percentage of children in private schools in this country has remained remarkably stable at between 6 and 7 per cent. That they do so much better than the state schools at GSCE and at A-levels can be accounted for by two factors: first, social class; and secondly, the fact that spending per pupil in private schools is approximately double that in state schools. It is £5,500 per pupil in private schools, compared with just over £2,500 in state schools.

If this Government were really anxious to even out the inequalities of social class, one would expect them to spend more rather than less on those who come from disadvantaged backgrounds. But what have this Government been doing to make universities more accessible? They have introduced tuition fees and abandoned maintenance grants in favour of loans.

Some noble Lords quite clearly understand that if you come from social classes 3 and 4, mortgages of £70,000 or £100,000, let alone the £300,000 that, some while ago, one would have needed for a house in Notting Hill--you would need a lot more--are beyond belief for most of those people. A fear of debt is very deep within them.

As a result, what have we seen? In England, we have seen a drop in applications. In Scotland, where there are no tuition fees, as the noble Baroness, Lady Carnegy, mentioned, we have seen a rise in applications. In addition, with the advent of tuition fees, we are seeing students working many hours overtime.

What is the answer to that? We hear about top-up fees. It would be a supreme irony if this Labour Government, who came to power on the slogan "Education, education, education" ended up

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privatising the lot. Yet that is the way they are going. It is all very well for the Minister to say, as she has many a time, that the issues of university salaries and costs are nothing to do with her. As we have heard today, if our universities are to remain top-rank universities in both research and teaching, they must increase their incomes. I gather that less than 20 per cent of the LSE's income now comes from the state. It is obvious that going private is an option. But as my noble friend Lord Jenkins pointed out, Harvard and Yale are hardly models to be put forward for equitable access. Do we really want to go down the American Ivy League route?

The answer to Gordon Brown's diatribe against inequality lies in his own hands. He should recognise the logic of the Government's actions to date. All the indications of what they are likely to do in the CSR for universities will drive those very universities out of the state sector and reinforce their social elitism.

7.19 p.m.

Baroness Blatch: My Lords, I, too, wish to thank most warmly my noble friend Lord Baker of Dorking for initiating this debate and, indeed, for making such an outstanding and radical opening speech. Given all that has been said so far, from all sides of the House, it is clear that my noble friend was more than justified in returning to a subject that was debated in this House in December last year.

Perhaps I may also associate myself with the much-deserved compliments that have been paid to the two maiden speakers. I remember how daunting that experience can be. Their contributions added greatly to the debate and we look forward to hearing from both of them in the future.

I should like to say to the noble Lord, Lord Desai, that he followed the instructions of the noble Lord, Lord Bach, to the letter. He will have to be very patient, as indeed will all noble Lords, because it is not for me, as a lowly Member of this House, to pre-empt my colleagues in another place.

It is not possible to cover all the aspects of this subject in the time allowed. Higher education in the United Kingdom is, rightly, admired throughout the world. At its best, our higher education certainly competes successfully with the best in the world. In some ways, the underlying theme of this debate has focused on the degree to which that position can be sustained or even whether that reputation is under threat.

As I said in the previous debate, a country is judged on the quality of its education, and in particular on the quality of its higher education. When my noble friend tabled his Motion for this debate, little did he know that the Chancellor of the Exchequer, Gordon Brown, would address the issue of access to universities in such a damaging way. He very unwisely personalised his comments by drawing attention to a particular student who was about to sit her A-levels. Equally unwisely, he attacked the reputation of Oxford University without first checking his facts. He went on to compound the

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problem by engaging his fellow Cabinet colleagues to indulge in various forms of speculative social engineering.

Given all that has been said, the Minister must inform the House today precisely why it was that Mr Brown described what happened at Magdalen College as a "scandal". Despite the fact that Mr Brown claimed that Laura Spence had the best A-level results, the timing of his outburst was not only wrong, but could hardly have been more insensitive. In fact, Laura was about to take her A-levels. The facts are that all 22 applicants for medical places at Magdalen College had 10 starred A grades at GCSE. Anthony Smith, the president of Magdalen, said,

    "the interview, which accounts for a quarter of the marks we give candidates, was the part Laura Spence did best. She performed less well in the written test, the test of observational skills and the structured discussion".

He went on to say,

    "We were not convinced that she had the necessary potential".

Only five places were available for that particular course and a breakdown of the successful candidates shows that three were women, three were from ethnic minorities and two were from comprehensive schools. Where is the prejudice in that? It is also now clear that, had Laura wished to study medicine, places were offered to her at three fine medical schools: Edinburgh, Newcastle and Nottingham. For Mr Brown to criticise the admissions procedures at Oxford, in ignorance, so publicly and using the most intemperate language, was offensive to those who took so much care to recruit the very best students without prejudice as regards their background. I also think that the headmaster of Laura's school, an adviser to the Government, must accept some blame in this matter.

Sadly, the clock has been turned back to old-style class warfare and the politics of envy which at best serves no purpose at all and at worst belies and devalues the real efforts being made by the universities and others, such as Peter Lampl through the Sutton Trust, to widen access for bright students from all backgrounds.

Time does not allow me to refer to an excellent paper written by Colin Lucas, the Vice-Chancellor of Oxford University, where he sets out an impressive catalogue of initiatives designed to improve access from state schools. When I read the paper I could feel only anger at the way in which Mr Gordon Brown had wantonly accused a university where the selection process is thorough, impartial and rigorous.

This is not the first time that we have witnessed the Government's antipathy towards Oxford and Cambridge. It was not so long ago that an attack was launched against college fees, which support the tutorial system. The noble Lord, Lord Puttnam, in a largely agreeable interview last week with me on the radio, said it was because Oxford and Cambridge had behaved so badly. Can the Minister tell the House of what precisely were the two universities guilty? Is that the kind of subjective test for funding that we can now expect to be applied by the Government?

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Under the 1992 Higher and Further Education Act, the Government are prevented from using grant allocation to punish or, indeed, to reward universities on the basis of criteria used for the admission of students. Many have said that we need more applicants from state schools. While that is true, had there been more applicants for places at Magdalen, and had they come from state schools, there would still have been only five places. Therefore, even more young people would have been disappointed.

Do the Government intend to set a cap on the number of independent school pupils or do they intend to fund additional places at the more sought-after universities? Finally, does the Minister believe that Magdalen College did discriminate unfairly against Laura Spence? If not, the college should receive an apology. Does the noble Baroness think that they will receive one?

It is timely to pose some questions about the purpose of higher education. Has expansion in higher education gone far enough, or has it even gone too far? The present target is, I understand, 50 per cent of the cohort. The Chancellor, the great egalitarian Mr Brown, has even predicted more. Are too many students being accepted with inadequate qualifications and a poor aptitude for their courses of study?

What about the expansion of places in further education? My noble friend Lord Trefgarne developed this point very well when he stressed the need for more high quality vocational education. Is the meaning of higher education being redefined by stealth? Is it the intention of the Government to remove the distinction between further and higher education and to create a form of comprehensive post-16 sector?

Whatever are the merits of the "University for Industry", they do little to promote the understanding of the purpose of a university education when young people with very poor education and skills are recruited from hanging around town centre shopping malls into university. The intention to improve the education of such people is laudable and I support it fully. However, to recruit them into a body called a "university" creates a distortion which only devalues a university education as we know it. I have to say that, over the years, much the same has happened to the word "engineer". These are important issues which must be addressed. They have a direct bearing on quality, standards and the pursuit of excellence.

An observer from the higher education sector who sat in the Gallery during the last debate in December commented that the Minister sounded so sanguine about the concerns expressed during that debate. I agree with that remark. As we all know, students were deceived by the Government over tuition fees in the run-up to the general election. The abolition of maintenance grants, together with the introduction of tuition fees, was compounded by the increasingly bizarre Scottish anomaly and is causing much distress. There have been two reports on this. The first was the Cubie report, referred to by my noble friend Lady Carnegy of Lour. As regards the contribution made by my noble friend, I wonder whether the Minister will be

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able to tell the House who will be footing the £50 million costs of the Scottish proposals? Or what will not be funded if that expense is to be met from the normal block grant? Secondly, we have seen the Quigley report.

The fourth-year anomaly has been partially resolved by the Scottish Parliament, although inexplicably the changes for Northern Ireland are not to be introduced until 2002. Why is that? What legislative changes are required to implement those proposals?

However, the matter goes from bad to worse for English and Welsh students. Tuition fees, as an advanced payment, have now been abolished in Scotland and replaced by a postgraduate contribution. This arrangement is to be extended to Scottish, southern Irish and European Union students, but not to English, Northern Irish or Welsh students, even though they are also full citizens of the European Union. The Minister really cannot defend this situation--well, not with a straight face!

This issue was discussed while the then Bill was proceeding through this House. At the time I argued that the greatest unfairness was not that of tuition fees, but the removal of the maintenance grant. Students from the lowest income families now leave university with the greatest burden of debt. There is an irony here. On the one hand, the Government are looking for ways to encourage bright young people from lower income families to go to university, while on the other hand they are actively putting obstacles in their way. In addition to the loss of maintenance grant, the Government have abolished the assisted places scheme. They have waged a malicious war of attrition on grammar schools and the Secretary of State has personally pledged, and subsequently legislated, to outlaw selection by academic ability. However, selection for dance, art, drama, sport, music and technology is acceptable. It is a disgrace and a real blow to our brightest children from poorer homes. What is so unacceptable about academic ability for the purposes of selection?

It is not popular, nor is it in keeping with the courtesies of this House, but it must be said that the degree of hypocrisy shown by the Government is breathtaking when one realises the number of Ministers, including notable Members of this House, who send their children, or indeed went themselves, to the best independent, grammar and grant-maintained schools and Oxbridge colleges and who voted to remove the rungs from the ladder for other bright children.

On a number of occasions I and others have raised the issue of pay in higher education. The Bett report, published some time ago, has been dismissed as being a matter for the universities themselves. However, without some recognition through funding, they are not in a position to respond.

Many eminent people, including vice-chancellors, have warned of a crisis in recruiting the brightest and most ambitious postgraduate students back into

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academic life. The brain drain appears to be with us again and, over time, that will have an impact on standards.

The Government have exacerbated the situation considerably for higher and further education by providing more funding for teachers in schools. I say "schools" because a further manifestation of the teachers' pay awards is the anomaly created for non-school teachers, for example, in the Prison Service, young offenders' institutions and hospital schools.

The Bett report made clear that it will be difficult to sustain a world-class higher education system in the United Kingdom. Some spending commitments arising from the comprehensive spending review have already been announced. Therefore, today would be an ideal time for the Minister to make some commitment in response to recommendations in the report.

The Minister will almost certainly make reference to the record of the previous government, of which I was a member. I shall not argue about there being problems within the sector when we were in government. That is why the Dearing committee was set up with all-party support. Funding and pay were both key issues. It is, however, worth making two more points. First, the Government are now in their fourth year and should be answering for their own record. Secondly, despite cash increases since 1997, the Government are spending only 1.12 per cent of GDP on higher education, compared with 1.23 per cent of GDP in 1979 and 1.19 per cent in 1996-97.

I am grateful to my noble friend Lord Baker of Dorking. His remarks were radical. I am grateful also to my noble friend Lord Skidelsky. There is much in their call for freeing up the institutions. The noble Baroness the Minister concluded her speech in the previous debate on this matter by saying,

    "I do not recognise the rather gloomy picture painted in speeches made by some Members ... Nor do I believe that many vice-chancellors, university staff and students would recognise it".--[Official Report, 8/12/99; col. 1358.]

That does a great disservice to many in the higher education sector who are very concerned. I appeal to the Minister to think again about that comment.

7.32 p.m.

Baroness Blackstone: My Lords, I begin by congratulating the noble Baroness, Lady Walmsley, on her excellent maiden speech. The comments that she made about confidence and communication ring a great many bells with me and my right honourable friend the Secretary of State. We want good state schools to ensure that all young people benefit from being helped in that respect.

I should like also to congratulate my noble friend Lord Bernstein of Craigwell on what was, again, an excellent maiden speech. My noble friend rightly drew attention to the work of our art colleges. These colleges are beacons of success and bring in large numbers of students from around the world. I went to a fashion show arranged by one of them only 10 days ago. Some of it was a bit "whacky", but much was of

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extraordinarily high quality. It is in such schools that many of our designers are trained. Many are taken up not only in this country but by designer organisations all over the world.

We should all thank the noble Lord, Lord Baker of Dorking, for initiating the debate. I always enjoy taking part in debates with him, even when his rhetoric gets a little out of hand as I believe it did once or twice today. As Secretary of State for Education in the latter part of the 1980s and early 1990s the noble Lord was responsible for beginning the largest expansion in higher education places since the Robbins report. It is a pity that the policies of his successors resulted in a stop-start approach to expansion, with the imposition of ceilings on student numbers. We also should not forget that under the previous government funding per student was cut by an extraordinary 36 per cent between 1989 and 1997. That really did tarnish the noble Lord's policy of expansion. I must say to the noble Baroness, Lady Blatch, that if there has been a crisis, it has been due to the policies pursued by the noble Lord's successors. In a sense, the noble Baroness admitted that there had been problems.

I always learn something new from these debates. Tonight, I have learnt that Jim Hacker went to the London School of Economics! I cannot recall exactly whether he was there in my time, or that of the noble Lord, Lord Dahrendorf, or the noble Baroness, Lady Sharp.

We have had a good debate covering a wide range of issues. Noble Lords will understand that I shall not be able to cover all the points raised. I shall attempt to focus on the main points. I shall write to noble Lords about the more detailed matters raised in the debate.

I am glad that some of the speeches addressed wider issues of access and funding than the debate that has raged over the past two or three weeks. I am particularly grateful to my noble friend Lord Longford for his unduly flattering remarks about me and also for giving credit to the excellent work of our new universities, the former polytechnics. I endorse everything that my noble friend said on that subject.

The Government's vision of higher education is clear. We believe that education makes the most significant contribution to improving the lot of our citizens. Through education people acquire knowledge, skills and attributes that they need in order to make a success of their lives. They can earn more, have more satisfying jobs and gain greater benefit even from their leisure. They can engage more easily in the political, social and moral debates that go on every day in their adult lives. That is true of all phases of education, but it is especially true of higher education. Gone are the days when an undergraduate degree was the reward of the privileged few. I congratulate the noble Lord, Lord Baker, on helping to bring that about. Higher education must serve the nation as a whole, either directly through educating increasing numbers to degree level, or indirectly through providing the skilled people on which the growing knowledge economy depends. I make no apology for using the term "knowledge economy". That is why the

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Prime Minister has set ambitious targets to expand higher education yet further so that half our young people will have benefited from higher education by the time they reach the age of 30.

Higher education must be open to all who can benefit from it, irrespective of social class, race, income or the type of school that they attended. Widening participation and opening access mean just that: making sure that no one is prevented from attending university who can benefit from it. That means working on the attainment of all up to age 18. It means making sure that prospective students apply for places and that the admissions arrangements are blind to all factors other than the achievements and potential of prospective students. That must be the basis on which students are admitted.

Many thought that mandatory grants were the key to helping more students from poorer families into higher education; indeed, I believed that myself. The facts are otherwise. The share of places taken up by students from manual backgrounds has remained low. As mandatory grants began to be phased out after 1990, the proportion of students in higher education from the lower socio-economic groups rose from one in 10 to one in six as now. That proportion is still far too low.

That expansion has to be paid for. When higher education was enjoyed by only a few, the taxpayer met the whole bill. Few at the time said that that was unfair but graduates, who have prospects of high earnings, were being subsidised by the general taxpayer, many of whom had not themselves had the benefit of higher education. Perhaps I may say to the noble Baronesses, Lady Sharp and Lady Blatch, and the noble Earl, Lord Russell, that we have reformed the student support system to provide more and better targeted support to those low income students who need it most. The basic system, I believe, is now fairer to students, their families and the taxpayer. We have provided low-cost loans for maintenance which graduates repay through a new income-contingent scheme which links repayments directly to income. We ask students and their families to make a contribution towards their tuition fees if they can afford it. The fee is about one quarter of the full cost. The contribution is means tested. Those students who come from less well-off families do not pay tuition fees. That applies to one third of dependent students now and that figure will rise to about 40 per cent from next year.

For the first time part-time students, who make up 30 per cent--a growing share--of all students, are now eligible for hardship funds. Those on benefits or low income get their tuition fees paid. This year those on low incomes will also be eligible for income-contingent loans of £500 a year.

The noble Lord, Lord Baker, said that I had once accused him of being a mean-spirited Thatcherite. I do not remember making such an accusation. I remember the noble Lord coming to Birkbeck. There was an excellent discussion over dinner during which he made a splendid speech about the role of Birkbeck. Perhaps I may say to him that my old colleagues at Birkbeck are

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absolutely delighted that this Government have at last done something for part-time students. I had asked him to do that; regrettably, he was unable to do so.

There is no evidence to suggest that our arrangements have deterred students from entering higher education, as some noble Lords on the Benches opposite claim. On the contrary, student numbers have increased over the past few years.

To widen access to students from disadvantaged backgrounds we are working with Peter Lampl and the Sutton Trust to expand and develop summer schools for 16 to 18 year-olds in FE and secondary schools. We are introducing opportunity bursaries of up to £1,000. We are also raising the income threshold for the parental contribution from next year which means that a further 50,000 families will not have to meet the costs of tuition fees.

Access and hardship funds are now at around £75 million, not the £45 million quoted by the noble Lord, Lord Baker. They will total £87 million next year which is four times the figure in 1997.

The student support reforms target the maximum support on students from low income families where it is most needed. The noble Lord, Lord Butler of Brockwell, tells me that he wants to pay higher bursaries to low income students to induce them to apply to his college. I fully support such measures, as I support any moves which will improve the chances of the most able state school pupils being able to enter our leading universities. I have already told the noble Lord I would ensure that these new measures did not result in students from low income families paying fees. I was, therefore, a little surprised that he chose to write today an article in the Independent without making that absolutely clear. However, I am grateful to the noble Lord for raising the issue. Where students are in receipt of substantial income their access to government support must be limited. That is a principle long established under successive governments and there is nothing new about it.

I turn to the issue of higher education funding which was raised by a number of speakers. We now spend over £10 billion in the UK on higher education. In 2001-2 higher education will receive an extra £295 million compared with the previous year. That is a cash increase of 5.4 per cent which is on top of an extra £253 million for 2000-1 and £318 million extra the year before that. Of the extra £295 million, over 80 per cent will come from new funding rather than fees. That means that since April 1998 planned funding for universities has increased by just over £1 billion in new money, which is an increase in real terms of 11 per cent.

I am not inclined to take any lessons from the Conservatives about higher education funding. Moreover, during the period that the noble Lord, Lord Baker, was Secretary of State the percentage of GDP going into higher education was less than it is today. The Government have called a halt to the huge 36 per cent cut in funding per student which was experienced under the previous government. We have implemented the findings of the Dearing report and have held the efficiency savings required of the higher education

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sector at 1 per cent. I can reassure my noble friends Lord Hunt and Lady Lockwood that the spending review continues and no decisions have been announced. Reports about efficiency savings of up to 3 per cent are speculation by some newspapers. I can also give my noble friend and others who have taken part in the debate a pledge that I shall fight hard to ensure that the compact that the Government made following the Dearing report is adhered to.

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