---

Baroness Ashton of Upholland: My Lords, we debated these issues at great length in Committee, as the noble Lord, Lord Phillips, said. We considered the extent to which it was appropriate for legislation to tie the hands of future governments and prevent them determining their spending priorities in the light of circumstances. I argued then, as I shall argue again this evening, that primary legislation is not the right place for a financial commitment of this nature.

I appreciate the strength of feeling in your Lordships' House. However, I should say to the noble Lord, Lord Forsyth, as I think he would recognise, his position in support of the amendment is given in light of the fact that the Bill would not be a way in which a Conservative government would pursue education policy in future. Noble Lords may believe that all my words about the track record of this Government in trying to support the sector are true, and that somehow by voting for the amendment they would tie the hands of a future Conservative government. However, I do not believe that would be the case, as I do not believe that a Conservative government would go in this direction on education policy.

When the noble Lord, Lord Phillips of Sudbury, described the amendment in Committee, he compared it to the provisions of a Finance Bill. It is of course true that a Finance Bill binds the hands of successor governments, but they are an annual event and can therefore readily be changed to reflect the priorities of the government at the time. This amendment would inevitably tie the hands of a government for an indefinite period. Of course, that is precisely the point of what the noble Lord is trying to achieve. However, I question whether that is a reasonable objective.

The amendment goes further than looking at the funding for higher education, by ensuring that the new fee income is additional and guaranteeing that public funding for higher education cannot decrease in future. The previous amendment, which we discussed in Committee, included a phrase about exceptional macroeconomic circumstances. I expressed some concern about what that might mean in practice for higher education. I note that the phrase has now disappeared. While that eliminates some of the definitional uncertainty, it leaves the amendment even harder to implement. Even if there were some major and significant financial pressures on a government, the effect of the amendment would be that higher education above all other priorities would be protected.

Our debates in Committee also touched on some of the other practical difficulties inherent in the amendment. The noble Lord, Lord Dearing, highlighted some unintended consequences that might arise. For example, although the current version of the amendment talks of the average funding over the previous three years, a government might still be very reluctant to provide a one-off injection of funding to meet someperceived need: that would increase
 
8 Jun 2004 : Column 218
 
the average and could therefore be unsustainable in the future. The result could be that the funding might be kept at the lowest level permissible under the Act, irrespective of whether additional funding might have been available in any one year. That cannot be in the interests of the sector.

I also raised the issue of whether the amendment would apply at the level of the whole sector or whether it would need to apply at an institutional level. If it is the latter, then noble Lords may readily see that there would be significant practical difficulties, not least in the fact that funding could not be amended if the pattern of provision at an institution changed.

There are also issues about the flexibility that the sector might enjoy. At present, HEFCE allows institutions to change their student numbers and pattern of provision within tolerance bands. If the amendment were passed, and we were bound to ensure that the unit of funding remained at a certain level, we would need much more stringent control over student numbers, and indeed student numbers within specific funding categories. Otherwise, we could find ourselves in breach of the Act if, in good faith, we set our funding at a level which would ensure that the requirement was met, but the sector subsequently over-recruited or recruited into more expensive courses than anticipated.

We need to bear it in mind in thinking this through that universities make offers to students for places based on their predicted rather than actual grades and institutions are obliged to meet those offers. Even with the best intentions, therefore, it would be difficult for an institution to hit exactly a target for student numbers. The complexity and unfairness that the proposal would introduce would be unmanageable.

I want to pick up another couple of points from Committee that I did not deal with. I can confirm for my noble friend Lady Warwick that the Chancellor's Budget Statement about how the funding per student will increase over the spending review period did not include the student support provided to those students. This is good news for the sector. We are committed both to increasing the unit funding paid to institutions and to increasing student support, where the new package of grants and the payment of loans for variable fees will be of significant benefit to students. In other words, they are not at the expense of one another.

I can also confirm that, following my discussion with the noble Lord, Lord Phillips, for which I am grateful, and further discussions with Universities UK, my right honourable friend the Minister for Higher Education has written to Universities UK proposing the establishment of a working group to produce a new definition of unit costs. That would, of course, be published in the annual departmental report in the usual way. That may go some way to considering the issues that the noble Baroness, Lady O'Neill, would have raised if she had spoken to her amendment. It would provide a clear means of
 
8 Jun 2004 : Column 219
 
demonstrating the additional funding being put by the Government into the sector over and above tuition fees. In other words, it deals with the issue of transparency, which noble Lords have been concerned about.

The Government's commitment to the future funding of higher education is clear. I cannot accept the amendment or offer to bring back an amendment of my own, but I can confirm again that income from tuition fees will be additional and that with Universities UK we shall develop more transparent accounting and reporting arrangements, which would enable your Lordships' House to see how we have delivered against those commitments. On that basis, I ask the noble Lord to withdraw his amendment.

Lord Phillips of Sudbury: My Lords, I am grateful to the Minister as always for her politeness, clarity and attempt to bridge the unbridgeable. It is pretty obvious that this is a whole-sector amendment and not an institution-by-institution one, so that query on her part can be laid to rest. Also, I fail to understand why the annual Finance Bill could not have a clause in it amending this formula if the particular circumstances prevailing required it. Therefore, it is simply not the case that the amendment, if brought in, would be there forever.

The Minister talked of complexity and unfairness. There will be unfairness if the Government or any future government resile on the undertakings given or otherwise wheedle their way out of them because they have other fish to fry and other priorities to pursue. It may be a factor in our low level of GNP funding of higher education that we do not have something like this amendment in our legislation. I believe that the provision, while not perfect, would work and could be refined over time. It should be in the Bill, for all the reasons that noble Lords have given. Therefore, I wish to test the opinion of the House.

On Question, Whether the said amendment (No. 21) shall be agreed to?

Their Lordships divided: Contents, 98; Not-Contents, 88.

Division No. 4

CONTENTS
Addington, L.
Alderdice, L.
Alton of Liverpool, L.
Arran, E.
Astor of Hever, L.
Attlee, E.
Avebury, L.
Barker, B.
Bradshaw, L.
Bridgeman, V.
Bridges, L.
Brittan of Spennithorne, L.
Brookeborough, V.
Brougham and Vaux, L.
Buscombe, B.
Butler of Brockwell, L.
Campbell-Savours, L.
Carnegy of Lour, B.
Cohen of Pimlico, B.
Colwyn, L.
Courtown, E.
Craigavon, V.
Crathorne, L.
Dean of Harptree, L.
Dearing, L.
Dholakia, L.
Dundee, E.
Falkland, V.
Forsyth of Drumlean, L.
Fraser of Carmyllie, L.
Garden, L.
Goodhart, L.
Greengross, B.
Hamwee, B.
Harris of Richmond, B.
Higgins, L.
Hodgson of Astley Abbotts, L.
Hooper, B.
Howe of Idlicote, B.
Inge, L.
Jenkin of Roding, L.
Jopling, L.
Kimball, L.
King of Bridgwater, L.
Laird, L.
Layard, L.
Lindsay, E.
Linklater of Butterstone, B.
Livsey of Talgarth, L.
Lyell, L.
MacGregor of Pulham Market, L.
McNally, L.
Maddock, B.
Maginnis of Drumglass, L.
Mancroft, L.
Mar and Kellie, E.
Masham of Ilton, B.
Miller of Chilthorne Domer, B.
Monson, L.
Montrose, D.
Mowbray and Stourton, L.
Noakes, B.
Northover, B.
Norton of Louth, L.
Oakeshott of Seagrove Bay, L.
O'Neill of Bengarve, B.
Park of Monmouth, B.
Peel, E.
Perry of Southwark, B.
Phillips of Sudbury, L. [Teller]
Puttnam, L.
Rawlings, B.
Redesdale, L.
Renfrew of Kaimsthorn, L.
Rix, L.
Roper, L.
St John of Fawsley, L.
Scott of Needham Market, B.
Seccombe, B. [Teller]
Selborne, E.
Sharp of Guildford, B.
Shutt of Greetland, L.
Skelmersdale, L.
Smith of Clifton, L.
Stewartby, L.
Sutherland of Houndwood, L.
Thomas of Walliswood, B.
Vinson, L.
Wallace of Saltaire, L.
Walpole, L.
Walton of Detchant, L.
Warwick of Undercliffe, B.
Watson of Richmond, L.
Wilcox, B.
Williams of Crosby, B.
Williamson of Horton, L.
Wilson of Dinton, L.
Winston, L.

NOT-CONTENTS
Ahmed, L.
Alli, L.
Amos, B. (Lord President of the Council)
Andrews, B.
Archer of Sandwell, L.
Ashton of Upholland, B.
Bach, L.
Bassam of Brighton, L.
Blackstone, B.
Brennan, L.
Brooke of Alverthorpe, L.
Brookman, L.
Brooks of Tremorfa, L.
Burlison, L.
Carter, L.
Chandos, V.
Clarke of Hampstead, L.
Clinton-Davis, L.
Corbett of Castle Vale, L.
Crawley, B.
Davies of Coity, L.
Davies of Oldham, L. [Teller]
Desai, L.
Dixon, L.
Donoughue, L.
Dubs, L.
Elder, L.
Evans of Parkside, L.
Evans of Temple Guiting, L.
Farrington of Ribbleton, B.
Filkin, L.
Gale, B.
Gavron, L.
Gibson of Market Rasen, B.
Gilbert, L.
Golding, B.
Goldsmith, L.
Gordon of Strathblane, L.
Goudie, B.
Gould of Potternewton, B.
Graham of Edmonton, L.
Grocott, L. [Teller]
Hayman, B.
Hilton of Eggardon, B.
Hogg of Cumbernauld, L.
Hollis of Heigham, B.
Howarth of Breckland, B.
Howells of St. Davids, B.
Hoyle, L.
Hughes of Woodside, L.
Hunt of Chesterton, L.
Hunt of Kings Heath, L.
Janner of Braunstone, L.
Jones, L.
Kirkhill, L.
Lea of Crondall, L.
Lipsey, L.
McIntosh of Haringey, L.
MacKenzie of Culkein, L.
Mallalieu, B.
Massey of Darwen, B.
Merlyn-Rees, L.
Mitchell, L.
Morgan of Huyton, B.
Nicol, B.
Patel of Blackburn, L.
Paul, L.
Pendry, L.
Pitkeathley, B.
Plant of Highfield, L.
Radice, L.
Randall of St. Budeaux, L.
Rendell of Babergh, B.
Rooker, L.
Scotland of Asthal, B.
Simon, V.
Stone of Blackheath, L.
Taylor of Blackburn, L.
Temple-Morris, L.
Thornton, B.
Tomlinson, L.
Triesman, L.
Turner of Camden, B.
Whitty, L.
Wilkins, B.
Williams of Elvel, L.
Woolmer of Leeds, L.
Young of Old Scone, B.

8 Jun 2004 : Column 221

Resolved in the affirmative, and amendment agreed to accordingly.

---