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A further area of grave concern is the extent to which the cuts to the higher education budget themselves have a direct effect on the further education sector. I wonder whether the Minister could update your Lordships on authoritative concerns voiced to us that cuts in funding have seen universities taking back from FE colleges places which they had originally awarded to them. I hope that he will also be able to say whether HEFCE will be able to fund, directly, higher education modules in FE colleges.

We on these Benches think it is important to acknowledge that, while there is a need for cuts, there is still room to improve and innovate. Several outstanding contributions from noble Lords on the Cross Benches who are directly involved in academia showed us clearly that they are committed to this and have clear thoughts on how to do it. We have more than a million young people in this country not in any kind of work, education or training. Rather than allowing confusion about funding policy and cuts to allow fewer opportunities to be provided, we must instead create more options. As my noble friend Lord Baker said, that is why we have pledged to provide an extra 10,000 university places, funded by early repayment of student loans

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incentivised by discount, as well as an extra 100,000 apprenticeships and other training places. We have also pledged to provide 100,000 extra FE places over two years by allocating our NEET fund to increase FE college and other training places for those who have been on jobseeker's allowance for six months.

We are very grateful indeed to my noble friend Lord Baker for the work he and his colleagues have put into reviving the concept of the technical college. We intend to embrace this idea with enthusiasm. To make sure that vocational and technical education meet the needs of modern business, we will set up technical academies across the country, starting in at least the 12 biggest cities, and we will free schools from regulatory restrictions so that they can offer workplace training that engages young people who currently drift away from formal education.

I am afraid that to answer my noble friend's question about removing higher and further education from the business department is well above my pay grade, but I will enthusiastically take it back to my senior colleagues. I very much hope that the debate today will draw attention to the true facts. It is only by admitting that changes need to be made that we can hope to lessen the appalling consequences of these cuts. This is why we have long called for an independent review of higher education funding and student finance, so we look forward to the results of the review to which my noble friend Lord Patten, the right reverend Prelate the Bishop of Leicester, the noble Lord, Lord Krebs, and others have referred and which is now under way.

Universities and colleges are facing an undeniably tough financial situation, so it is vital that the Government rise to the occasion. We need not more confused messages but clear and definite policy.

4.33 pm

The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Lord Young of Norwood Green): My Lords, I, too, thank the noble Lord, Lord Baker, for giving us the opportunity to debate this vital issue. I cannot help feeling a little bit like the noble Lord, Lord McNally, engaging in this debate among these education titans. I do not describe myself as an oik, but having left school at 15 with only a few City and Guilds I suppose that I am probably in that category. However, I will do my best. I also feel as if everybody here has turned up for a really good show and the understudy is performing. I declare a deep, long-lasting and passionate interest in education throughout my life.

The noble Lord, Lord Baker, realises from his own years as Secretary of State for Education and Science that questions around funding often generate more heat than light. The past few weeks have certainly borne that out, especially since my right honourable friend published his grant letter to the Higher Education Funding Council for England.

I indeed recognise that there are concerns within the further and higher education sectors at present, and I welcome this chance, if not to allay them, then at least to place them in their proper context. That context is, of course, the tough decisions that have been forced on this country by the global recession, which were acknowledged by some noble Lords, but not all.

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Let me first remind your Lordships of this Government's record on student numbers, on increasing participation and on improving the skills base of this country. The achievements of the past 13 years are substantial. I do not accept that it was a joint achievement. I shall focus on where we picked up from the previous Administration. The salient details on investment in FE and HE since 1997 are as follows. We have increased public spending on HE in England by 25 per cent in real terms. That represents a real commitment to higher education. On the watch of the noble Lord, Lord Baker, and those of his successors, public spending per student actually fell by no less than 35 per cent. That is a little statistic that somehow seems to be affected by collective amnesia on the part of the Opposition.

Likewise, since 1997 more than £6 billion in capital funding has rectified the poor state of many university buildings, including laboratories and other facilities essential to maintaining our research base. These are now state of the art, and their scientific output is world class. We took a tough decision on introducing variable tuition fees because we wanted to put in extra money and not to have an arbitrary target. We wanted to extend the opportunity of higher education to many more young people than previously. We are putting an extra £1.3 billion each year into universities' coffers, and I remind your Lordships that this money is fully additional. It has not been matched by reductions in public funding elsewhere.

Meanwhile, government investment in colleges for post-16 learners, including capital investment, rose by 57 per cent, again in real terms, between 1997 and 2009. Despite the problems in the FE capital programme-and I acknowledge that there were problems-the £3.4 billion that we have committed since 2001 has redeveloped more than half the country's college estate. That contrasts starkly with the reality before 1997. That is another statistic that the noble Lord, Lord Baker, conveniently glides over. There was no capital budget for FE colleges at all. Back then, the National Audit Office, not the Government, found a crumbling infrastructure no longer fit for modern educational purposes. That was the legacy which we inherited from the previous Government.

Funding for apprenticeships is at its highest-ever level and stands at more than £1 billion this year for people aged 16 and over. There were barely 65,000 apprentices left when we came to power. Since then, more than 2 million people have begun apprenticeships, more than a quarter of a million are now in apprenticeships and there is a completion rate of something like 71 per cent. We have invested more than £5 billion in Skills for Life since 2001, which has gone a long way towards eradicating the national scandal whereby adults without basic literacy or numeracy skills were left to sink or swim.

The impact to date of these unprecedented settlements is clear. There are 2 million students participating in higher education in England this year, including more students from state schools than at any time in our history. There are more students from black and minority ethnic backgrounds, more from low-participation neighbourhoods, and thousands more who are able to say with pride, "I was the first person in my family to

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go to university." I experience that when I visit universities. That represents real social mobility and real achievement by this Government. Somehow, again, there is collective amnesia and no real acknowledgment of that. Similarly, there are more part-time and mature students than ever before, and more students studying maths, engineering and science-the very people we need in order to remain competitive in the global economy.

Apprenticeships have taken their rightful place at the heart of our vocational training system. Since 2006, almost 1 million qualifications have been gained in the workplace through Train to Gain. I remind your Lordships that the honourable friend of the noble Lord, Lord Baker, the Member who represents Havant in another place, has said that his party would abolish Train to Gain. What a lost opportunity for ordinary working people that would be. I am proud of the way in which we have broadened the social make-up of the student body, of how we have made it easier for people to go on to university from their local college, and of how millions more people have the skills necessary to enjoy rewarding careers.

I will not detain your Lordships with a prolonged explanation of why we are not proposing overall funding increases for HE and FE next year. Like other countries, we have come through difficult times. It has cost an enormous amount of money to shore up our economy and protect our people against the worst effects of the deepest recession in my and other noble Lords' lifetimes. FE and HE institutions have played a prominent part in bringing us through the recession, and it is right that we acknowledge that today. However, we must stabilise public finances. This will be a salient feature of spending settlements for some time to come. It is right that HE and FE should be asked to shoulder their fair share of the burden of reducing the public debt. I stress "fair share", as did my right honourable friend when he spoke on this subject a few weeks ago.

I will put this in context. In relation to FE, for the 2010-11 financial year, £3.5 billion will be allocated by the Skills Funding Agency for FE colleges and training organisations to deliver high-quality and relevant FE and skills training to an estimated 3.4 million adults. I remind noble Lords that this is an increase of 2.9 per cent on last year. We will focus on improving value for money by purchasing only high-quality training and by maximising the contribution towards training from businesses and individuals where they see the highest private returns. Government investment in colleges for post-16 learning, including capital, increased in real terms by 57 per cent from 1997 to 2008-09. This covers all funding to colleges, including capital investment.

The noble Lord, Lord Patten, talked about funding per student. Somewhere else, he said, "We doubled the number by halving the investment". Perhaps I may remind him of that. Funding per student has been maintained in real terms, while student numbers have increased by 250,000-24 per cent-since 1997. We have introduced more funding streams for universities: not just fees, but voluntary giving and endowments, which were suggested by one or two other noble Lords.

The view was expressed that we are biased towards STEM. We do not dictate to universities what courses they put on: it is up to them to play to their strengths.

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We have some of the best arts institutions in the world, and that will continue. However, this year HEFCE decided to set aside £10 million for allocation in 2010-11 to support STEM subjects.

We are not cutting numbers with these efficiency savings. I remind noble Lords that the Government have provided extra money to finance a growth in student numbers. We have allocated an extra 40,000 student places for the three years between 2008-09 and 2010-11. Numbers are still rising. However, we must get this in perspective. We have never had a situation where everybody can get into university: it has always been a competitive scenario.

I apologise at this stage for the fact that I will not be able to address every point made by noble Lords in what I thought was a stunning debate. I will address one key point that emerged in the course of the debate. My noble friend Lord Mandelson, the First Secretary of State, talked about seeing this not just as a challenge but also as an opportunity. There has been a dichotomy here, with one group of noble Lords saying that the cuts put at risk the whole of higher and further education, and others saying, somewhat more candidly, that we have the opportunity to modernise and could offer more flexible approaches in higher education. We may be talking about two-year degrees or other more flexible approaches. I was grateful to my noble friend Lord Puttnam for reminding us of the reaction to the original proposals for the Open University: "Heaven forfend; it is the end of proper higher education as we know it". Of course, it was not: it was an outstanding success. No one should tell us that higher education institutions do not have a propensity to offer a more varied and flexible agenda. We know that it is being offered by some institutions. Others should look at them and try to adopt best practice.

I am conscious of the time, so I will do my best to limit my remarks but at the same time pick up on more points. As I said, despite the savings of £340 million, total investment in training places for adults will increase by 2.9 per cent-a figure that I have already given-reaching a total of £3.5 billion.

I also remind the House that business spending on adult skills has always dwarfed public spending. It is right that we continue to encourage employers to make that investment and to reap the benefits in terms of the profitability that we know it brings. The skills strategy that we published at the end of last year highlights the greater emphasis that we are placing on skills in emerging sectors, such as low carbon.

On the HE side, finances are again in a much better place than they once were. In addition to the figures that I cited earlier, universities are now considerably better at generating their own income. In fact, total university income in 2007-08 was around £23 billion-some 39 per cent higher than five years earlier.

We would describe these savings of about 5 per cent for 2010-11 as modest efficiency savings, and we believe that universities or higher education institutions can rise to this challenge. HEFCE has already taken the decision to try to ensure that, when it comes to front-line teaching and so on, the cuts will amount to only 1.6 per cent. I think that I have already covered the situation in relation to student places and the fact that their number will grow again in 2010-11.

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I take the opportunity to reassure the noble Lord, Lord Ramsbotham, that in fact we are going to spend £3 million extra on education in offender institutions. Therefore, we have increased the budget there. I do not necessarily say that that satisfies all his aspirations, but it is moving in the right direction.

Comments to the effect that these savings will cause the ruination of the sector are inaccurate. Or they should be, so long as universities continue to manage their finances prudently, to diversify their sources of income, as we have consistently encouraged them to do, and to seek efficiencies where they do not affect an institution's core business. In any event, they must be seen in the context of that 39 per cent rise in university income.

A number of noble Lords expressed concern about research funding, and I want to give some reassurance on that. There are two relevant ring-fenced budgets for science and research: the science and research budget of £4 billion and HE research funding of £1.9 billion. Total investment in research funding will rise to a record level of £6 billion by 2010-11. As I said, that is made up partly by the science research budget and the HEFCE QR budget. The science research budget will have more than doubled in real terms by the end of the CSR7 period compared with 1997. We still have a world-class research base, second only in the world to the US for research quality, and we lead the G8 for research on productivity papers and citations per pound of public funding.

I understand the concerns expressed by noble Lords about the number of student places. As I said, the 2009 admissions round was tough for everyone concerned-for applicants and their families, for universities and for UCAS. This year, too, there may be significant numbers of qualified young people leaving school or college at the age of 18 who cannot get a place at university. However, it is far too early to say for certain what the situation will be. In most years, the proportion of applicants who gain a full-time undergraduate place is around 80 per cent. Not everyone gets the right grades and some will choose other options. I also point out that students expect a good-quality experience at university and, looking at the measures in the National Student Survey, we can see that we are fairly steady at about 80 or 81 per cent. Unsustainable growth is in no one's interest. Over time, it would undermine the quality and the high international standing of our system.

The future funding of universities is clearly a significant issue, which is why we have asked the noble Lord, Lord Browne, to consider all aspects of university funding in his independent review of student finance-he will report on his findings in the autumn-and that is why we are asking HE institutions to consider diversification and different forms of provision. Employers are telling us that further expansion of campus-based, full-time, three-year degree courses are not necessarily the answer. Clearly, that traditional model has served and continues to serve us well; it is popular with students and parents alike. However, we have to explore other options such as part-time, two-year foundation degree courses and three-year honours courses which are delivered intensively over two years or which can expand. I was grateful for the contribution from the

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noble Lord, Lord Butler, and his analysis of the need for change. Employers are looking for flexible options which are manageable in and around working hours and many potential students want the same.

On further education and what we have described as Backing Young Britain, I shall direct your Lordships to the broader effort which the Government are putting in to help young people through the recession, funding extra advanced apprenticeships for 19 to 30 year-olds up to 35,000 over the next two years. We need a modern technician class working in the space sector, in renewable energies, in nanotechnologies, deploying around £100 million to support around 160,000 training places in those areas.

Unfortunately, I do not have time to answer all the questions which were raised in what I thought was a very diverse, interesting and important debate. I thank all noble Lords who participated. Those questions which I have not been able to answer here I shall answer in writing.

4.51 pm

Lord Baker of Dorking: My Lords, I thank all Peers who have spoken in a debate of outstanding quality. A debate of such quality is almost a justification for this House. Had it taken place in the House of Commons it would not have been of this quality.

Certain things have come out of the debate, such as diversity of provision, the humanities at Oxford, religious studies from the right reverend Prelate, philosophy and social sciences, alongside great pleas for development of the STEM subjects. There is also diversity of funding. The next Government will have to devise totally new funding for universities. The Browne review is only half the answer. If it comes up with uncapped fees and need-blind and so on, that will not be enough because, with the way that we fund student loans, that will mean a direct increase in the PSBR and no Government will accept that. I am glad to say that our shadow Ministers are thinking about all sorts of other schemes to do that. The best advice for all universities is: put not your trust in Governments for funding; they always let you down; they will never give you enough, not even a Conservative Government.

I was delighted to learn from my noble friend Lord Patten that, when I was Secretary of State, the unit fund per student was £1,500 more than it is today. I did not know I was so good. I am very pleased to note that figure, but we did rather better than the Minister has made out. Universities must be supported and protected and that has to come from funding. I thank everyone who spoke in the debate.

Motion withdrawn.

Employment Relations Act 1999 (Blacklists) Regulations 2010

Copy of the Order
6th Report from the JSCI

Motion to Approve

4.53 pm

Moved By Lord Young of Norwood Green

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The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Lord Young of Norwood Green): My Lords, now for something completely different. For a country proud of its tradition of tolerance and fairness, the blacklisting of trade unionists should be anathema. It is the sort of outdated practice we had hoped to leave behind long ago. It is underhand and unfair; it is discriminatory; and it blights people's lives. Workers have a fundamental right to join trade unions if they wish. There is also a fundamental right for trade union representatives and other members to participate in their union's activities. Trade union representatives are the unsung heroes of the trade union movement. These volunteers provide valuable support for millions of workers and help to create safe, fair and productive workplaces. No one should lose out because of their union role.

We have long had legal protections in place to safeguard trade unionists from discrimination. These legal protections fulfil our international obligations to guarantee freedom of association, and are widely accepted as essential for good industrial relations.

For many years, it appeared that the protections were broadly sufficient. The last known blacklister-the Economic League-was exposed and its work terminated in the early 1990s. We had hoped that with its demise we had seen an end to that style of industrial relations. Sadly, that was not to be.

In March last year, a large-scale and clandestine vetting system was discovered in the construction industry, run by an organisation called The Consulting Association, or TCA. Through painstaking work, the Information Commissioner found evidence that 40 construction companies had engaged with TCA's secret vetting system, containing details of some 3,300 people, many of whom were trade union activists. That vetting system had been systemically used to deny gainful employment to those listed.

TCA was successfully prosecuted by the commissioner for breaching data protection law, and it was shut down. Its proprietor, Mr Ian Kerr, was fined £5,000, and 15 enforcement notices were issued against TCA and some of its user construction companies to stop them collecting and using personal data for vetting purposes.

We have to ensure that that clear breach of rights can never happen again. That is why we are introducing the draft regulations. We believe that trade union blacklisting should be made expressly unlawful as a matter of principle. We should not rely on more general legislation, such as the Data Protection Act 1998, to achieve that effect. The regulations build on that legislation, extending it to ensure that we send a clear signal to employers and compilers that activities associated with such lists are wrong, damaging and unlawful. They provide clear and targeted remedies for individuals and trade unions. Blacklisting represents an aggravated form of discriminatory behaviour. In recognition of that, the employment tribunal is empowered under the regulations to award £5,000 as the minimum level of compensation, so most complainants should be able to receive higher compensation under the regulations than they would if they relied on existing protection under trade union law.

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