Teaching and Higher Education Bill [H.L.]

HL Deb 22 January 1998 vol 584 cc1613-78

3.32 p.m.

The Minister of State, Department for Education and Employment (Baroness Blackstone)

My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.

Moved, That the House do now again resolve itself into Committee.—(Baroness Blackstone.)

On Question, Motion agreed to.

House in Committee accordingly.

[The CHAIRMAN OF COMMITTEES in the Chair.]

Clause 16 [New arrangements for giving financial support to students]:

Baroness Maddock moved Amendment No. 81: Page 11, line 9, at beginning insert ("full time or part time").

The noble Baroness said: This amendment also stands in the name of my noble friend Lord Tope. Its purpose is to ensure that, in regard to financing, part-time students are treated equally with full-time students. I tabled the amendment partly because the Liberal Democrats believe strongly in the principle behind it, and partly because of a strong personal belief. As a mother who returned to part-time higher education, I was fortunate in being able to afford the fees and to continue my course. I make a plea to the Committee at this early stage. If we believe that the family and the nurture of children is important, this must represent important progress in helping mothers to carry out both tasks: to stay at home with their children as well as having the opportunity to further their careers and return to work in our present flexible labour markets.

I remind the Committee that the Government have expressed a belief in "lifetime learning", as have many of us. If they genuinely believe in lifetime learning, they have here a wonderful opportunity to put that principle into practice.

A third of all students at United Kingdom universities study part-time. It is expected that the growth in demand will continue as more flexible means of studying come about. The Government have committed funding for what they believe will be an additional ½ million students in what they describe as lifetime learning by 2002. They admit that the numbers of part-time students will increase significantly.

At Second Reading, during discussion on the Dearing Report, the message came through strongly that many noble Lords were concerned about evidence of inequality of treatment in funding as between full-time and part-time students. The proposals that we are now discussing relate to a new funding scheme. It is obvious that this new scheme will be geared to the needs of full-time students, and mostly those in the 18 to 21 age group.

Part-time study attracts students who would not otherwise enter higher education. It attracts many who are not in that age group I mentioned. However, the new funding system will continue to discriminate unfairly against part-time students, not only in the categories I have mentioned, but particularly against the low paid. I ask the Committee to examine carefully the consequences of some clauses in the Bill for those who have been in work or who are in low paid jobs, and particularly for those with children. How will the legislation marry up with social security legislation? There is strong evidence that it will be very difficult for many people, particularly those with children, to have an adequate living.

I am aware that the Government have already made some concessions in making sure that part-time students have extra income. Extra government money will be available to help the poorest students on part-time courses with tuition fees. The Government have also examined methods of making sure that help will be available for people who lose their jobs while attending a part-time course. In addition, they have examined the possibility—indeed I believe it is likely to happen—of helping part-time students who are presently not eligible for access funds. The Government have said that they will look into the matter.

The final report of the Dearing Committee pointed out that the funding of students in part-time education was possibly not a priority, since many of those students' course fees were paid by employers. That conclusion was based on certain research. However, since the report's publication other research has come to light which reflects particularly on Open University students. Subsequent work in that area suggests that the true figure is only 50 per cent. of students with course fees paid, whereas the Dearing Report indicated a much higher figure.

In relation to Open University students—it is important to note that the Open University is the largest provider of part-time undergraduate study in the United Kingdom—the report indicates only 22 per cent. in work and receiving help with their fees. I ask the Government to reconsider this issue. I and my colleagues believe that the Government's proposals will have a greater impact on part-time numbers than was originally expected. We believe that many students contemplating the choice between part-time and full-time study will look less favourably on the part-time option. This will particularly affect women who wish to be at home looking after their children; they may be tempted to try to do a full-time course. I know from experience that trying to study when one has young children at home is extremely difficult. We should examine closely whether the Government have got their proposals right on this issue.

A fall in the number of part-time students has a knock-on effect on higher education institutions. There is already some indication that that is happening. In addition, it will be difficult to encourage people into lifetime learning if the only choice open to them is full-time courses.

The Dearing Committee was attracted to the principle of levering up support for part-time students but thought that at this time, taking account of the figures, it was not necessary. I hope that I have demonstrated that there are very good reasons why we should look at the figures again and reconsider the matter. A report shows that the cost to the Government of extending loans to part-time degree and sub-degree level students would be only an extra 0.5 per cent. of expenditure in this area each year in the short term and an extra 1.5 per cent. in the long term.

I hope that the Government will look closely at this matter. We all have a commitment to lifetime learning. Studies show that particular groups will be affected. We believe in equality of opportunity for all and there is no area in which this is more important than access to education and higher education. Dearing concluded that there was not a good argument for spending the money at this time; I believe that subsequent studies have proved that that is not the case. I believe above all that equality of opportunity, particularly for women in this country, is paramount. I beg to move.

Lord Renfrew of Kaimsthorn

I rise at the earliest opportunity to raise what I believe to be an important procedural point. So far as I am aware, no draft regulations for these parts of the Bill have been placed in the Library. My noble friend Lady Blatch raised this point at Second Reading and said that it was the convention of this House—though it may not be an infallible one—that draft regulations are placed in the Library. I have in my hand the Ninth Report of the Select Committee on Delegated Powers and Deregulation. As I understand it, this debate is concerned with that report as well as with the Committee stage of the Bill. There may be issues to address later; I am aware that my noble friend Lady Blatch will propose an amendment on affirmative procedures.

In relation to Clause 16, the ninth report states, under the appropriate rubric "Henry VIII clauses": everything of importance will be in the regulations". Where are the regulations? In the following paragraph the report goes on to say: We invite the House to consider whether the subject matter of the regulations under section 16 is so important that the bill should be amended to require affirmative procedure for the first regulations". There I begin to touch on the amendment that my noble friend Lady Blatch will move at a later stage. I should like the Minister to give some explanation as to why we have a Bill so unsatisfactory in form that its whole content is in regulations, as is stated in the ninth report, but we do not have even draft regulations available in the Library, in accordance with what I understand to be the usual convention of the House.

3.45 p.m.

Lord Peston

The noble Lord, Lord Renfrew, will remember that we devoted some hours on Tuesday to rowing about regulations. Looking at other amendments, I have the suspicion that we could well spend the rest of today doing the same thing. The noble Lord's protest has already been made—I will not go so far as to say it has been made ad nauseam, but certainly at length. Secondly, I understand that my noble friend the Minister will intervene; I hope she will do so at an early stage. I believe that there is now a fair amount of documentation in the Library covering this matter.

I have some sympathy with the amendment that I was under the impression we were debating. I hope that we shall not be constantly sidetracked, as we were on Tuesday, from discussing substantial matters because people wish to go through this continual ritual of complaining about regulations. I do not want to stop people making their protests. Quite the contrary; I have made them many times myself. However, the fact is that there is a substantial body of serious matter before us, including the specific amendment, and I for one should like to be able to take part in debating that and other amendments.

Baroness Blatch

I am sorry that the noble Lord finds this tiresome. Let me make him a firm promise that there will be many, many hours of debate on the Bill while we try to elicit some real information from what is a very skeletal Bill. I repeat, and will continue to repeat throughout the course of the passage of the Bill, that the Bill is skeletal. We are not having an indulgent debate about an educational issue but are here part of the process of making legislation. When making legislation, dots, commas and the meaning of particular words are very important indeed.

The noble Lord, Lord Peston, referred to the amount of information in circulation. I have never known such a plethora of information as that which is coming out of the DfEE and have never known such a degree of confusion about such documentation.

There has always been a tradition of this House, certainly once Second Reading has passed, that when any documentation is produced from a department every Member who speaks in a debate receives copies of that documentation. I certainly followed that tradition to the letter when I was on the other side of the House. I suspect that there are Members here this afternoon who are not even aware of some of the documentation that is available. The Library has no procedure for informing Members that information is available. Some Members will therefore be speaking today in a vacuum. Because of that vacuum there will be a great deal of concern.

Another point with regard to regulations is that there is a great deal of concern about a number of Bills. One Bill which will receive Royal Assent next week will be repealed when this Bill has passed through Parliament. I have never known such a crazy way of legislating. There is also concern about the saving provisions. It is provided in the Bill that the whole of the 1962 Act will be repealed in its entirety. However, we are then told that there are some savings provisions, and there are some allusions to those. Many Members of this House do not know about that. It is an incredibly complex subject. Each time we have asked the questions we have received different answers.

My noble friend Lord Renfrew wishes to know precisely what this will mean for students who have already made their choice this year to go to university and for those who are holding back because they are fearful of what these provisions may mean and are waiting to know what they will have to borrow, what they will have to pay on the first day of term and whether they will have to pay it all in one go and find money up front. These questions are material and important for students and their families and also for others. I have been talking to colleagues in local government who do not have information about their role. They have lots of circulars that are being published, but they do not know precisely what will be in the regulations. My understanding is that the regulations are to be put before this Chamber in February. If so, then the information contained in those regulations must now be available in some form and would in fact be helpful to Members of this Committee as we discuss this Bill.

Baroness Blackstone

Perhaps it will be helpful if I put the noble Baroness right on one point. The regulations will not be put before the House in the month of February. She is a little confused. I wrote to try to explain the position. What will be available is the standard document that students always receive in the month of February. That sets out clearly what the position is for loans and grants. That will be available in the month of February.

That document will provide, as it always does, all the information that students need to make decisions. When we talk of regulations, we talk of a highly technical document. In my long experience of working in higher education I have never met a student who reads the regulations. They are extremely complex, technical and hard to understand. I have difficulty in understanding them, as I am sure do other Members of the Committee. That is not documentation that students need in order to be clear about what their position will be.

That document will be placed in the Library and in the Printed Paper Office as soon as it is ready. Perhaps I can make clear that we also place other information in the Library in time for the Committee stage of this Bill. The noble Baroness, Lady Blatch, says that many people do not know that. All I can say is that when I was the principal Opposition Front Bench spokesman on education I always told my colleagues who were likely to speak in the Committee stage of the Bill what was available. That is reasonable. As the Minister, I cannot know who will be speaking on the opposite side. When, in Opposition, I received a letter from Ministers I passed it on and informed others. That is the only sensible way to proceed.

Perhaps I can say also to the noble Lord, Lord Renfrew—confirming what my noble friend Lord Peston said—that we had a long debate on this topic. I recognise that it is frustrating in some senses for people who are taking part in the debates on legislation that we cannot always have the regulations ready. But I must correct one thing that the noble Lord said. He said that it is normal for regulations to be ready when a Bill is being debated. That just is not true. I can quote many examples over the past 18 years, including education Bills in which I was involved, when the regulations were not only not here when we were debating a Bill in Committee, but they were not even complete when we reached Royal Assent. That was normal, particularly in relation to complex, specific and detailed regulations of the kind we are dealing with today.

Baroness Blatch

Perhaps I can come back to the noble Baroness. The progress report on new students' support arrangements in higher education says that publication of the 1998 mandatory award regulations will be in February. That appears in the timetable at the back of the document. It goes on to say that by July there will be further publication of the student loan regulations. There is therefore a set of regulations imminently due. We are almost in February and do not know what they contain.

I take the point made by the noble Baroness that it is not common for everybody to read the technical details of regulations. Students are interested in the regulations that will set the arrangements to which they will be obliged to conform in this coming September-October. It is the regulations that set the detail in law, after which the department produces a lay explanation of what that means to parents, students, LEAs and so forth.

There is, therefore, a real interest in the regulations, given that they come first. The legislation comes first and what it means to the people whom it affects follows. We are simply saying that we are discussing the legislation that will set the framework for the regulations and need to discuss what is to go into those regulations in order to make sense of these debates.

Baroness Blackstone

I want to be helpful to the noble Baroness and clarify the position. The regulations that will come out in February are based on exactly the same provisions that existed last year. There may be some minor amendments to them, but they have nothing to do with the changes that are being brought about in the Bill. Those will involve the second set of regulations to be published in July.

The regulations that the noble Baroness says are now in draft, are in draft; the noble Baroness is correct. But they will not provide the additional information for which she is asking because they relate to the provision of maintenance grants for students and are built on exactly the same provisions that we had last year, the year before and the year before that.

Earl Russell

I was about to make a speech in support of the amendment tabled by my noble friend Lady Maddock in relation to part-time students. Perhaps I can say to the noble Lord, Lord Renfrew of Kaimsthorn, and others who are concerned with the regulations, that there will be opportunity to discuss that issue on the next group of amendments. I hope not to take up too much of the time of the Committee but it takes two to make progress. I hope I may say that we have an amnesty in that direction.

The point in regard to part-time students is that this is part of a general change in the way the world is organised. The Prime Minister, speaking at the TUC conference, memorably referred to the flexible labour market as the "real world". There is a good deal of evidence to suggest that the labour market is changing in that direction. There is also considerable evidence to suggest that the social security system needs to change substantially in that direction to accommodate part- time work.

That is all part of a general change in the way the economy and society are run. It is part of a general change, as my noble friend pointed out, in the way parents care for children. The sharing of care between parents is a much more common situation than it was. My point is that education cannot be left out of that pattern of change. Because the part-time system is becoming more common everywhere else, it inevitably must become more common in education also. That is something on which the Government must be prepared to reach an accommodation. I strongly support my noble friend's amendment and am glad that she tabled it.

Lord Peston

Perhaps I too can join in the debate on this amendment. I should like to say from these Benches that at least one of us is extremely sympathetic to the ideas in the amendment, though I wait to hear what my noble friends have to say. Those of us who have been interested in the economics and financing of education, as I have for a long time, feel that the full-time and part-time distinction in financing has always been anomalous. It has been difficult to find any logical basis for it.

The position has got worse over the years, partly for the reasons explained by the noble Baroness, Lady Maddock, and the noble Earl, Lord Russell, but also because what is called a "full-time" student has completely changed. Though I am officially retired, because I am not quite sane I agreed to teach a lecture course this year. When I was making arrangements for the tutorial classes I was told "You cannot have classes on a Thursday because that is the day the students go and do their jobs".

When I was a student, full-time students worked every day of the week. That position has long since changed. It is a matter of fact—echoing what has already been said—that the full-time/part-time distinction is difficult to make. Even if one could define "part-time" it has never been obvious to me that those people who are often the most enthusiastic and devoted students should receive no state support. This is a point my noble friend always made against me. I do not like tuition fees. As my noble friend pointed out, part-time students are always being stuck with tuition fees.

As we enlarge our methods of finance it cannot be right that part-time students should not have access to loan finance. Those are my remarks of sympathy. But I believe it is all a complete waste of time. What drives everything in this area as in all other areas of government behaviour is public expenditure constraint. Therefore, though it is useful for us to place on record that we favour all this, I cannot see, within the current restraints on public expenditure, that there is any possibility of change.

If one were to be completely honest, when one is given a public expenditure restraint one must say what one's priorities will be. Much as I support the noble Baroness, whatever the cost—the noble Baroness quoted the figure as a percentage of the budget—I am not clear that if that money were available I would devote it to this purpose. However, I felt it right to add support to the ideas put forward in the hope that over the years, as we produce a more rational system of student finance, we will include in it part-time students. That is probably the reason for tabling the amendment in the first place.

4 p.m.

Baroness Carnegy of Lour

I suppose that if the main points were settled and on the face of the Bill, we would know whether part-time students were covered. At the moment we do not because, as I understand it, this is contained in regulations. So the noble Baroness, Lady Maddock, is trying to sort that out. But the debate would not be necessary if this was on the face of the Bill.

What the noble Lord, Lord Peston, has just said is, of course, true. I understand very well that budgetary constraints are a problem but, having been on the governing body of the Open University for 12 years until quite recently, I know that the number of people who can study depends upon the level of the fees; and the level of the fees, of course, depends upon the government grant. That is self-evident. The Government should not take it for granted that the number of students is necessarily constant. Indeed the Minister well understands the position of part-time students because she ran extremely ably a college which had only part-time students. Student numbers will not necessarily continue at the same level as costs go up. There is a market level beyond which students are not willing to pay, and the Committee will understand that. I have not checked the figures but of the order of 100,000 students are taking undergraduate Open University courses, to name one institution. Many of those people struggle to pay their fees. They pay a lot of money over a period of five or six years, but they struggle. Some drop out and have to return later; some drop out altogether because of the level of fees.

So if the Government do not help part-time students with their fees at all, and if the fees have to be paid by the students, as they are now, the Government will have to watch very carefully that the part-time population of students in this country does not begin to drop. That would have a very bad effect on the labour market, as the noble Lord, Earl Russell, would agree. That is something which must be watched closely. I do not think I have to tell the noble Baroness that but it may be necessary to tell the Treasury, and I hope that she will.

The Earl of Limerick

I would like to remind the Committee of an interest I declared on Second Reading as chairman of the governing body of one of the new universities—one which, as it happens, apart from the institution in which the noble Baroness served for so long, has just about the highest proportion of part-time students in the country.

There are two points to make. First, the importance of professional courses, education and continuing education, is being more widely recognised and is something which we must strive to support. Secondly, reference was made to the falling proportion of students receiving financial support for part-time courses. That is true. However, the other factor is that employers are increasingly unwilling to give students time off for part-time education and keep their noses much tighter to the grindstone, expecting them to work long hours. They are cutting down their own staff the whole time. Therefore, anything which mitigates against the encouragement of part-time education is doubly to be deplored.

Part-time education has been relatively disadvantaged over the years by the funding methodology that we have adopted. Therefore, I have great sympathy for the amendment before us. I hope that it might be possible to move at least some way towards redressing this balance and give more support to those undergoing part-time education on a continuing basis.

Lord Dormand of Easington

I hope that the Committee will forgive me if I intervene to repeat most of what my noble friend Lord Peston has said, and also what the noble Lord, Earl Russell, said in his contribution.

Things have changed very much indeed. There is no question about the number of part-time students. Perhaps I can give another example. The number of mature students now exceeds the number of those under the age of 21 who attend a college or university. Although that does not directly relate to this amendment, it does support the fact that things do change and are changing in education in the same way as they are changing in other areas.

This is where I simply underline what my noble friend said. It really is a matter of public expenditure. The Government have said that they will remain within the restraints of the former government for two years. That seems to be a reasonable length of time in which to say whether this system will work. I have no doubt—I think I have no doubt—that after two years the present Labour Government will look at the whole matter again, when we might be able to meet the kind of suggestions that are being made in this amendment.

Baroness Lockwood

I too have a great deal of sympathy with this amendment and I am sure that my noble friend on the Front Bench has a great deal of sympathy for it too. During the 20 years that I have been in this House I have consistently argued for part-time education to be treated on the same basis as full-time education. I think it is still the principle which I shall support. But we have to look at the situation that we are in. We came to power and inherited a situation where higher education is in the middle of a funding crisis of dimensions that we have not known in the past. I must say I think it is rather strange for Members opposite who have been in power for the best part of those 20 years to be now arguing for part-time education to be covered.

I agree entirely with my noble friend that it is a matter of priorities. I hope that in the foreseeable future the Government—it may not be two years because we shall have to cope with many problems—will be able to bring before the House another Bill which will put part-time and full-time students on the same basis. I do not know what my noble friend will say in reply to this debate, but I hope that she will give us some hope for the future. I think that we have to take our priorities as they come.

Lord Beloff

It would seem to me that there is great force in the argument for public expenditure, and clearly if more money was to go to part-time students—and I think it should—it would have to come from elsewhere in the higher education budget.

I remind the Committee that we hear many reports of students who begin full-time education and give it up after a period because they find they are unsuited either to higher education itself or to the particular course they have chosen. Should some way not be found of minimising this factor of waste and would that not save money which could go to part-time students? I would go a little further and say that some, at least, of the courses are in themselves wholly unsuitable for higher education. The noble Lords who heard me speak before will know what I have in mind, but I do think there is fat in the higher education budget which could be squeezed in order to meet what, I agree with the noble Earl, Lord Russell, is essentially a part of changing the form of society and of education.

Baroness Blatch

I agree with the noble Baroness, Lady Lockwood. There has been widespread sympathy across all Benches for extending into this area because of some of the difficulties. But it has always been a matter of priorities. At this stage the issue being addressed is the crisis in higher education, which was precisely why Dearing was commissioned in the first place with all-party support. It is rather a pity that the Government have deviated from Dearing's recommendations.

However, I have to say this to the noble Baroness, Lady Lockwood. I would have liked to have sat where the noble Baroness, Lady Blackstone, is sitting and received that degree of understanding about this issue. I can remember being pilloried by the noble Baroness, Lady Blackstone, the noble Lord, Lord Peston, and others, who called us an uncaring and unthinking government simply because we argued at the time that it was a matter of public expenditure and a matter of priorities. Indeed, the noble Baroness supported keeping benefits for students and extending them to part-time students. I remember an impassioned plea from the noble Baroness using her position as Principal of Birkbeck College to give an incredibly forceful speech about the plight of many students there. All I would add is that we will support the Government when they say it is a matter of priorities, but there is a real will, when funds are available, to extend into the area of part-time students.

Baroness Blackstone

Perhaps I may take that last point first. I cannot believe that I ever wanted to pillory the noble Baroness, Lady Blatch. What I readily admit to is making passionate speeches about the value of part-time higher education.

Perhaps I may explain to the Committee the difference between this legislation and the legislation brought in by the previous government of which the noble Baroness, Lady Blatch, was a distinguished member. Under the legislation of the previous Conservative Government, it was completely impossible to make available support for part-time students. It was categorically ruled out. However, under this legislation, we are making it possible, at some future date, to provide support for either full-time or part-time students.

Clause 16(2)(d) provides for regulations for prescribing categories of attendance on courses which are to qualify for any purposes of the regulations. That is one of the advantages of having some flexibility in relation to regulations. To come back to what was said earlier, if we were to try to put all of this on the face of the Bill, we would have had to exclude, for reasons I shall explain in a moment, part-time students. But we do not have to. I hope very much that at some future date it will be possible to do something for them because I genuinely sympathise with all the arguments put forward.

In considering this amendment it is important to bear in mind that the Bill is intended to create a framework which will enable us to provide adequate support for all students in both further and higher education. As drafted, the Bill enables the Secretary of State, if he so wishes, to make grants or loans available to part-time as well as full-time students. Clause 16(2)(d) enables him to prescribe in regulations the categories of attendance which will qualify. In that sense, if I may say so to the noble Baroness, Lady Maddock, the amendment is unnecessary. But it is, in a sense, a probing amendment designed to elicit general views.

Baroness Carnegy of Lour

Can the Minister tell us whether it is the Government's intention in regulations to confine the Bill to full-time students?

Baroness Blackstone

No, it is not the intention to confine anything to any particular category of students. It is our intention, as I shall explain in a moment, for the time being to accept the Dearing recommendation in relation to part-time students.

I should like to develop further what I said at Second Reading in response to the request of the noble Baroness, Lady Maddock, that loans should be made available to part-time students. The Government do not at this stage intend to extend the loan scheme to the generality of part-time students. While we recognise the immensely valuable nature of part-time higher education, we agree with the Dearing Committee's conclusion—this was said by my noble friend Lord Peston—that extending loans to part-time students should not be a priority at present.

As the committee pointed out, a high proportion of part-time students are in employment and are therefore able to support themselves, although I accept, as the noble Baroness, Lady Maddock, and others have said, that many of them do not have their fees paid by their employers. I know that from my own experience. Means testing access to loans for all part-time students would involve a great deal of effort of a nugatory kind, given that so many of them are in employment, many of them in jobs that pay more than would justify the provision of a grant or loan.

We have carefully studied the report to which the noble Baroness, Lady Maddock, referred. It was commissioned by the Open University. However, while the 1.5 per cent. per annum additional costs that she cited may appear modest at first glance, they would amount to some £147 million in 1995-96 prices by the year 2015-16. That is a quite substantial sum of money by any standards. As my noble friends Lord Dormand of Easington and Lord Peston said, given the public expenditure constraints under which we are working, it would at this stage be very difficult to justify extending the loan scheme to all part-time students.

In answer to the noble Baroness, Lady Carnegy, I see no reason why part-time student numbers should drop. Part-time students have always had to make a contribution towards tuition costs and have had to cover their maintenance costs. Their position will not be any worse under the new legislation; in fact, in some respects it will be better. I remind the Committee that we have taken alternative steps to ensure that those part-time students who might experience financial hardship are not disadvantaged. Unlike the previous government we will be extending eligibility for access funds to part-timers from 1998-99 so that part-time students in serious financial difficulty will be able to go to their university and ask for support from the access funds. They were never able to do that previously. It means that the Open University, with which I know the noble Baroness, Lady Carnegy, has had a long association, will get access to those funds in a way that did not happen before.

Moreover, our funding package for the sector for 1998-99 included £2 million for fee remission for part-time students in higher education who are unfortunate enough to lose their jobs. I know from my own experience that a part-time student may start a course with a quite well paid job but then loses that job for a reason which is completely out of his or her own control and finds it difficult to continue with the course. We want to avoid that and we are providing some funding to help them. We are currently consulting interested bodies on the criteria for fee remission in those circumstances.

I reassure the noble Baroness, Lady Maddock, that we are also considering with colleagues from the Department of Social Security the Dearing Committee's recommendation that the Government should review the interaction between entitlement to benefits and part-time study. Currently, unemployed people may study part-time while receiving the jobseeker's allowance, subject to their meeting certain eligibility conditions. We will be reviewing these rules on study for the unemployed in the light of the work skill pilots that we have introduced and of early experience of the new deal. We are also looking at ways to ensure that there are no financial disincentives to part-time study by those on low incomes. In summary, the amendment is unnecessary since Clause 16, as drafted, already achieves the desired effect. So I hope that the noble Baroness, Lady Maddock, is therefore able to withdraw her amendment.

Baroness Carnegy of Lour

Before the noble Baroness sits down, there is one point which I do not believe she quite picked up as regards what I said about the Open University. The level of fees there is directly related to the grant from the Higher Education Funding Council. I believe that is pretty obvious. So I was suggesting that the Government should make sure that the funding council keeps an eye on the level of grant. I have not discussed this with the Open University, but it is an obvious point that they keep an eye on the funding so that the market response of people to the level of fees, which they have to pay in their entirety, as the noble Baroness said, does not damage the number of people taking courses. It is very important in the context of this discussion.

Baroness Blackstone

Of course the Government will always keep their eye on the level of grant provided by the Higher Education Funding Council for all universities, including the Open University.

Baroness Maddock

I thank the Minister for her long and helpful reply. As she said, under this legislation it is possible to provide funds for students who are in higher education studying part-time. However, the fact is that, as the legislation stands, it is not going to happen yet. That is something the Minister has clarified today. I thank Members of the Committee for their support for the proposition that part-time students have equality of funding with full-time students. I hope that the Minister can, at some stage in the proceedings, give some idea as to when the Government might activate Clause 16(2)(d) to mean that money will be forthcoming to part-time students. But for the moment I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

4.15 p.m.

Earl Russell moved Amendment No. 82: Page 11, leave out lines 13 and 14.

The noble Earl said: In moving this amendment I shall speak also to Amendments Nos. 83, 85, 87, 88, 92 and 94. Amendment No. 86. in the names of my noble friends on the Front Bench, has a substantive policy point to make and I shall leave that to them.

I believe that the noble Lord, Lord Peston, was slightly cutting a corner in trying to draw a distinction between substantive policy issues and technical issues of regulation. The point about a regulation-making power is that one needs to discover two things about it. First, what the Government at present intend to do with it and, secondly, what they are taking the power to do, and could do in future without further legislation, were they to change the policy intention.

In putting down these amendments it was my object to find out what substantive points I might need to raise at Report stage and without probing them I do not believe I can know that. So the antithesis between the drafting matters and matters of policy is a lot less complete than it might appear.

As always, I want to ask three questions about regulation-making powers. What is the extent of these powers? Perhaps I may clarify a little. I am not asking the Minister to imagine six impossible things before or after breakfast. I am asking her a technical, drafting question. When these powers were drawn up, what barriers were put regarding the form of the drafting? Very often there are barriers to the scope of a clause, as drafted, in another clause on which it depends or in terms within it, which a layman—and I count myself among them—does not spot. It is important to know that. Very often one may be reassured by it. Secondly. I want to know the present policy intention. Thirdly, I want to know why the Government are setting out to do it in this particular way.

These are questions of some substance. I raised on Tuesday the question—I admit that I had not given notice of the matter because I only decided to do it that way at that particular moment—what are the powers under which tuition fees are being introduced? I was asked that question by noble Lords all round the Library this morning. I could not answer them.

To get through Clause 16 we need to know an answer to that. It illustrates the point that one needs to know what could, hypothetically, be done under the powers. We need to know the intention. As a legislative Chamber of Parliament, and as a revising Chamber, we need to address the question as to how we might change the Government's intention because, after all, when we are acting as a revising Chamber, that is what we are here for.

I am reminded of the phrase that the noble Lord, Lord Kilmarnock, used about the Education (Student Loans) Bill in 1990 as regards the difficulty of making amendments purchase on the slippery surfaces of this Bill. Frameworks are all very well when they are seen internally from within the great sanctuary; but in the world outside the great sanctuary what is flexibility to the Minister may be restrictions to others.

With those preparatory remarks, in these particular amendments I hope that I may address what powers the Government are taking and why. Amendment No. 82 deals with the power to make regulations, for determining whether a person is an eligible student in relation to any grant or loan available under this section".

I believe that I can understand why the Minister wants to do that by regulation. But I want to check the extent of the power. Are there any other powers in any other Act which limit how those powers are exercised or could it be used for absolutely anybody without restriction?

Amendment No. 83 refers to prescribing the maximum amount of any such grant or loan available to any person. Here again, it is a fairly far-reaching power. I can understand why a regulation-making power is needed. Where one needs an annual uprating I concede, and I have always conceded, that one needs a regulation-making power. But am I right in construing this clause as meaning that the Government could raise or lower the prescribed amount as much as they like? Obviously, the Treasury would create a limit on raising it, but I do not see any limit to lowering it.

I need to probe the powers, as regards Amendment No. 85, with some care. That deals with terms and conditions which may be prescribed by the Secretary of State for any grant to be made available under the section. Do the terms and conditions relate exclusively to repayment or would it be possible, under terms and conditions, to impose other conditions relating to other things; to categories of student or to place any specific requirement in academic terms on the student? Are these powers simply related to repayment? I hope to hear that they are simply related to repayment. The same point about terms and conditions applies to Amendment No. 88.

Amendment No. 87 creates a power to require the, grant to be suspended or terminated in any such circumstances".

If I have correctly understood the word "such"—and this is one of the things I ask—it appears to refer to terms and conditions not yet made. So it is, as they would say in the Latin grammar, in the future perfect. That means that there is a double uncertainty about what is meant here. Again, I would like some explanation of the real meaning.

Amendment No. 92 deals with the ability to prescribe a rate of interest. There is another amendment dealing with that so we do not need to spend long on it. But as I understand the wording, it allows the prescribing of a rate absolutely without ceiling and without a floor. I should like to know whether that understanding is correct.

Amendment No. 94 deals with a power in regulation to make certain provision as the Secretary of State considers necessary or expedient in connection with the recovery of amounts due from borrowers. I should like to know the extent of that. It is my understanding that regulations cannot create a power to imprison and that that can be done only by primary legislation. But there are other methods of debt collection such as the calling in of bailiffs. To what extent can that be done?

For the moment those are sufficient specific questions. I believe they illustrate the point that the framework method of legislation makes parliamentary control rather difficult. There is a real risk that if it went too far it might make Parliament redundant and I for one would regret that. I beg to move.

4.30 p.m.

Lord Renfrew of Kaimsthorn

This is an opportunity to take further a point discussed earlier which the noble Earl, Lord Russell, dealt with so systematically. It would be a matter for regret if my words moved the noble Lord, Lord Peston, further towards the condition of ad nauseam to which he referred earlier. However, having taken the opportunity to re-read the remarks on this subject two days ago, I note that the noble Lord himself contributed no less than four times to one amendment and may have made a contribution to his own indisposition in that respect.

I seek the reaction of the Minister and the Committee to a statement relating to Clause 16—not in relation to some earlier clause that other noble Lords may have discussed two days ago—in the 9th Report of the Select Committee on Delegated Powers and Deregulation: We invite the House to consider whether the subject matter of the regulations under Section 16 is so important that the Bill should be amended to require affirmative procedure for the first regulations, but to allow Ministers the option of using either the affirmative or the negative resolution procedure for subsequent regulations, thereby enabling the negative procedure to be used for amending regulations unless they included new matter of significance". That seems to me exceedingly good sense. It relates to this clause. I ask the Minister to comment on the proposal. I shall listen carefully to what she says but unless by her eloquence she persuades me that the proposal in the report is superfluous I shall table such an amendment at Report stage, assuming the noble Earl, Lord Russell, has not already done so.

Lord Tope

I shall not contribute further to the indisposition of the noble Lord, Lord Peston, whether or not it is self-imposed. I shall be brief. Amendment No. 86 in my name and that of my noble friend Lady Maddock is identical to Amendments Nos. 85, 87 and 88 in the name of my noble friend Lord Russell. As so often happens, my noble friend has said all that I wish to say in pursuing his identical amendments. I wait to hear the Minister's answers to the points that he put so well.

Lord Peston

I thank the noble Lord, Lord Tope, for saying that this set of amendments is the same as the single amendment. I worked out that to go from Amendments Nos. 24 to 28 and then to Amendments Nos. 29 and 30 to 33 was the same as going directly from Amendments Nos. 24 to 33. I would have thought that even my honourable friend the other Minister in the Department for Education would be able to do that much arithmetic. I am glad to have that reassurance.

If it is believed that there should be regulations as a method of dealing with these matters, then surely the Committee agrees that regulations of precisely this kind must be in the Bill. There must be regulations in the Bill which enable one to decide who should get grants and loans and all the other bits and pieces. I take it that the noble Earl, Lord Russell, and the noble Lord, Lord Renfrew, seek to repeat that they do not want it done by regulation. I agree with the noble Earl that the decision as to what is substantial and what is technical is not an easy one. Since he did not say anything about the actual content I took it that he did not want this to be done by regulation.

Earl Russell

It is not quite that simple. If one concedes the need to have regulations—I concede it in principle but have an open mind in relation to this clause—one must still consider whether it should be done by these regulations. Until I have an answer to that I have no opinion on the question.

Lord Peston

If it is conceded—I do not suggest that those who do not want regulations should concede it—that it is to be done by regulation, I am not persuaded that these should not be the regulations. If I were writing regulations I believe that I would need regulations that covered precisely this ground; otherwise, I would not end up with a scheme for grants and loans.

I look forward to hearing what my noble friend says. The noble Baroness, Lady Blatch, rightly said that there is an enormous amount of documentation. I have read the documentation. I find it very hard to say that a suitable background has not been given to us for debating the matter without seeing the precise regulations. In trying to be both sensitive to the views of others and supportive of the Government, the simple logic is that if it is to be done by regulations, given that we have been informed about the content of some of these regulations, and if these amendments are carried—although I am sure the noble Earl is merely seeking clarification—we will have to have regulations of this kind conditional on having regulations.

Earl Bathurst

On the way home last night my cab driver told me that in London a cab driver had to undertake three years' training, which is not far off a period of higher education, with no vacations. There is no financial assistance given to those who train for such professions. Would the amendment of the noble Earl—perhaps the noble Baroness can deal with the existing arrangements within the Bill—provide financial help to cab drivers for such training?

Lord Glenamara

The simple fact remains that this Bill, when it becomes law, will be the means by which tuition fees are imposed on very large numbers of young people. A considerable financial burden will be imposed on graduates at work. There is no mention of that in the Bill. I have been in Parliament for 47 years. This is the most skeletal Bill I have seen in that time. It tells one nothing at all. This morning I obtained from the Library every word that is available from the Department for Education and I am still no wiser. We are legislating for something which we know nothing about. It is a lunatic situation. It is really a contempt of Parliament to legislate on something so important which will affect many young people and place on them enormous financial burdens at the beginning of their working lives and for there to be no mention of it in the Bill. I protest about the way the Government are proceeding.

The Earl of Limerick

The problem raised by the noble Lord, Lord Glenamara, is known to most noble Lords. I am quite familiar with the dilemma of detailed regulations and the difficulty of producing them at a certain stage. Whether or not students read detailed regulations, there is one group of people who will certainly do so with great care and attention. I refer to the governing bodies responsible for the maintenance, solvency and good management of universities.

I am always prepared to accept that I am dimmer than others, but I have shared this problem with others. I have so far received no enlightenment as to how cash will flow as a result of the fees—a point I was intending to raise later, but it is as well to do it on the Floor now. We need enlightenment on that point. There is a Motion later on the Marshalled List, that Clause 18 do not stand part. I am sure that we shall receive all sorts of information on the way to reaching that Motion, but how we can be informed is a serious point. If the Minister were able to comment positively on the suggestion made by my noble friend Lord Renfrew, that the first time regulations, which will govern the way all universities will behave for many years, are brought forward, they should be subject to the affirmative procedure, that would be helpful. If that were conceded, we should all find it easier to make progress.

Baroness Blatch

During the debate on the 1992 Act, which introduced student loans, there was this kind of spirited debate. I remember the Minister, the noble Baroness, Lady Blackstone, making an important point, and it took me until Third Reading before I was able to convince my department that it was something that we should concede to her. It was the Government's intention at that time, when introducing the loan scheme, that it should never go beyond the point of 50 per cent. grant and 50 per cent. loan.

The noble Baroness gained the support of most of this place, and indeed myself. The department accepted that that should be the case, and that if there were to be any deviation from that principle and intention Parliament itself should take a view about it. There are two major introductions for students which will impact on every student in the land, neither of which will be on the face of the Bill. We are therefore, as I said earlier, having to debate in a vacuum.

The first proposal is complete abolition of the grants for maintenance system, and the second is that students should contribute to tuition fees. It is unfortunate that, given the tradition of this place, we do not vote against secondary legislation: we cannot properly debate those two major changes which will materially affect students.

I apologise for what might be irksome to many Members of the Committee who are listening to this pedantic debate. We are frustrated by being unable to discuss in detail those matters, because the Bill just takes powers to the Secretary of State to do what he will following the Bill. We shall be discussing later whether tuition fees should be pegged. There is nothing in the Bill about that. Tuition fees could go the way of Australia, where they just go on rising as a percentage of the average cost. The matter is important. Many of us feel a genuine frustration, because we should be having a fundamental debate about the introduction of those two policies.

Lord Quirk

Could I add to the pedantry briefly, and echo, in particular, what the noble Baroness, Lady Blatch, and the noble Lord, Lord Glenamara, said. I am one of those who has been frustrated by being unable to find what I want in the Bill, but at least there is reference in departmental papers to some relative scale of tuition fees to be charged; that they should bear a relationship—as yet unspecified and as yet to be agreed—to the average cost of courses.

A couple of the amendments that the Committee will be discussing later use that phrase which derives from a DfEE document. I hope the Minister can at some point explicate what is meant by, "average cost of courses"; whether it is an average on the individual fees in the whole range of fees, or whether it is an average of the total cost of courses to institutions. The difference is obviously vast, depending on the number of students taking the course. That kind of average is extremely sensitive to variation.

4.45 p.m.

Baroness Blackstone

We are at the moment discussing a group of amendments tabled by the noble Earl, Lord Russell, and the noble Lord, Lord Tope. It is difficult to make sensible progress if Members of the Committee keep coming up with issues that will be debated on later amendments. We have to be orderly and have a sensible discussion, otherwise we cannot make progress. I want to be helpful. We shall be all over the place. There is no point in having a system in which Members of the Committee are asked to put down amendments in advance if, when we come to the Committee stage, they take no notice of the programme we have before us for discussing those amendments.

We are coining to a discussion on the whole issue of the affirmative procedure, and my noble friend Lord Whitty or I will answer the question asked by the noble Lord, Lord Renfrew, when we get there. The same applies to issues raised by the noble Earl, Lord Limerick. We shall try to deal with the point when we reach the appropriate amendments.

I return to the amendments tabled by the noble Earl. I shall begin by answering a question he put about the power under which we can charge tuition fees. It is in the Education Act 1962. Fees were means tested from 1962 until the 1970s. Many of us may have forgotten that, but that is the case.

The noble Earl has tabled a number of amendments which would have the effect of removing key regulation-making powers from the Bill. Amendment No. 86, tabled by the noble Baroness, Lady Maddock, and the noble Lord, Lord Tope, would have the same effect. The noble Earl explained that his purpose in tabling the amendments is to challenge whether it is appropriate to use secondary legislation for the purposes envisaged in the Bill, and to seek to establish what are the limits of the powers; that is, what use a future Secretary of State might, in theory, be able to make of them. Those are important points. I hope that I can reassure the noble Earl.

In order to do so, I hope that the Committee will forgive me if I am somewhat longer than usual. It is probably worth being a little longer than usual so that we can all be clear. I acknowledge that the powers in Clause 16 are drafted in fairly general terms. There is no getting away from that. We have taken that approach to allow flexibility to respond to changing circumstances, including, in particular, the changing nature of post-compulsory education; for example, as the Dearing Committee made clear, we face a challenge to become a genuine learning society.

As the system adapts to meet that challenge, the distinctions, for example, between different modes and levels of study, will become increasingly blurred, as Members of the Committee have already said. It would not make sense to refer to those concepts on the face of primary legislation which we intend to be on the statute book for a number of years. That is why Clause 16(2) provides, for example, for the rules determining eligibility for support to be set out in regulations.

Similarly, we must remember that we are dealing with maintenance as a long-term loan. It would be shortsighted—would it not?—to imagine that technical changes will not be needed to the administrative mechanisms over the next 30 to 40 years. It is inevitable that changes will be needed from time to time, not least to keep pace with any changes in the administration of the tax system. For example, any move towards greater self-assessment would have a knock-on effect on the arrangements for repaying student loans. It would clearly not make sense to amend primary legislation every time there was a technical change to procedures of this kind. I believe that that is well understood in this Chamber.

In addition, it would be wholly impractical to include on the face of the Bill all the detail of the new arrangements. By definition, any system of financial support embracing large numbers of people needs to take account of a wide variety of individual circumstances. The new repayment arrangements will need to be linked into the tax system and make separate provision, for example, for the employed, the self-employed and those not liable for UK tax. The result will be detailed and complex provisions which are precisely the kind of thing which it is appropriate to set out in regulations. The current mandatory awards regulations, for example, are 36 pages long. It would be quite inappropriate to incorporate all this detail into primary legislation, even if one could be confident that no changes would be required for a number of years. In practice, of course, changes are needed annually—not least to uprate the levels of support available—as I am sure the noble Baroness, Lady Blatch, will confirm from experience.

The noble Earl is concerned about the possible misuse of these powers. I should like to make two points here. I am not sure whether I can reassure him. It is difficult because he feels strongly about the matter. First, flexibility is not necessarily a bad thing. The current drafting of the Bill would enable either this Government or a future one to make more generous provision for students than is currently envisaged; for example, to extend the loans scheme to part-timers, postgraduates or further education students; to increase the level of support available; or to reduce the repayment burden on graduates. That is surely not the kind of flexibility which the noble Earl would wish to curtail.

I accept that a future Secretary of State could, on the other hand, make less generous provision. He could not stop providing support to students altogether, since Clause 16(1) requires him to make regulations governing the payment of grants or loans to students. But he could, for example, reduce the level of that support or restrict the categories of students to whom it is available.

This is where my second point comes in. The fact is that these powers are no more open-ended than the powers under which the current student support system has been operating for over 35 years. The 1962 Act requires local authorities to make grants to certain students, but it says nothing for example about the level of those grants. And the Student Loans Act 1990 does not even require the Secretary of State to arrange for the making of loans: it merely enables him to do so, as I am sure the noble Baroness, Lady Blatch, will confirm.

Baroness Blatch

I am grateful to the Minister for giving way. She might be relieved to know that I agree with almost everything she said; certainly the case she is putting for secondary legislation. However, the previous legislation provided for the extent to which loans should go. The 50-50 arrangement was codified and agreed by both Houses of Parliament on the insistence of the noble Baroness. Would it not have been possible to provide in this Bill for the introduction of tuition fees and the abolition of the maintenance grant and introduce all secondary legislation thereafter? If that is the case, I agree with the Minister. She is saying that regulation-making powers are not open ended. I am afraid that they are. If they allow the Government to dispense with the 50-50 arrangement and for the introduction of tuition fees they are very open ended indeed.

Baroness Blackstone

I accept that the 1990 Act provided for a 50-50 arrangement. I am aware of that and remember our debates. However, the suggestion was then made that progress in moving towards 50 per cent. loans would be longer than was the case because the Government, of which she was a Member, wished to have the flexibility to make the changes in terms of the proportion of student support by either loan or grant as they wished. I remind her that they left that open and moved faster towards 50 per cent. loans than they stated at the time. As regards this Bill, it is important that we understand the proposal clearly. We have set it out and we announced it in Parliament when the Dearing Committee reported. It is a manifesto commitment to abolish maintenance grants. We could not have made the position clearer.

Baroness Blatch

This is a serious point. Manifestos do not substitute for the sovereign power of Parliament. It is for Parliament to determine whether tuition fees are introduced. It is for Parliament to decide whether the 50-50 loans agreements should be broken to make way for the abolition of grants. All we are saying is that we should be given an opportunity at this stage to discuss the primary legislation and to use a vote, rather than dealing with issues in secondary legislation when this House debates them but does not vote against them.

Baroness Blackstone

I am sorry, but I have difficulty in understanding the noble Baroness's point. She has tabled a later amendment on the matter. It would be helpful if we could confine our discussions to the amendments in the groupings. When we reach the relevant amendments, I shall listen carefully to what she says about whether it is right to abolish maintenance grants.

What is being proposed in Clause 16 is nothing new. The current system of enabling legislation and annual regulations has worked well for 35 years without any of my right honourable friends' predecessors abusing the powers in the way the noble Earl fears. Any such abuse would in any case be open to legal challenge on the grounds of unreasonableness.

I should add that we have already included one key safeguard in Clause 16; a provision which would in practice require any increase in the level of contributions to fees above the rate of inflation to be subject to affirmative resolution. That answers a point made earlier by the noble Baroness, Lady Blatch. As I indicated at Second Reading, we also hope to amend the Bill to limit the rates of interest which can be charged on loans. I am not convinced that any further safeguards are necessary.

Concerns have been expressed that we do not yet know exactly what will be included in the regulations. It is not possible to produce draft regulations at the present time because some of the fine detail—for example, on how the new collections mechanism will work—is still under consideration. Nor would one normally expect to see draft regulations at this early stage in the Bill's passage through Parliament. However, the Government have made their intentions very clear, not least in the progress report which was placed in the Library at the end of last week.

The noble Earl addressed his comments to a number of specific points. Perhaps I may take a little time to deal with them. He asked what provision we intended to make in regulations made under Clause 16(2)(a), which will determine who is an eligible student. We have made clear that we intend to retain the present criteria for deciding which students will receive support. This will mean that full-time undergraduate students on designated higher education courses, plus students on part-time and postgraduate courses of initial teacher training, will normally be entitled to receive grants towards the cost of their tuition and loans for maintenance. I am afraid, therefore, that cab drivers doing "the knowledge" will not be eligible. Clause 16 would enable us to extend this support to students in further education or to the generality of part-time or postgraduate students, but we have no current plans to do so. Such students will, however, continue to be eligible for support towards the costs of their study on a discretionary basis.

The eligibility criteria for student loans and for support for fees under the existing arrangements are currently set out in annual regulations and summarised in the progress report, to which I referred earlier. While we have no plans to change the criteria for the 1998-99 academic year it is likely, as I have already indicated, that changes will be needed over time to take account of changes in the system of post-compulsory education. In a dynamic environment, it is important that the Government are able to respond flexibly to changing demands. The power to deal with issues relating to eligibility in regulations will enable us and future administrations to do so.

The noble Earl asked about the power to set maximum levels of support available to students under Clause 16(2)(b). The maximum amounts of grant and level to which students are entitled are currently set out in annual regulations. We are proposing no change in this respect. I am sure the Committee will agree that it is entirely sensible to make such provision in secondary legislation, given that the amounts will be adjusted routinely each year to take account, for example, of inflation. We have made clear, however, that the value of maintenance loans will be broadly equivalent in real terms to that of the current student support package. As I have mentioned, provisions elsewhere in the Bill will place limits on increases in the amount of grant which is payable towards fees; and by extension to the level of contribution which individuals and their families are expected to make.

The noble Earl asked about the provisions in Clauses 16(2)(e) and (f). These provisions give the Secretary of State the specific power to set out in regulations the terms and conditions attaching to grants. There is nothing sinister about these powers, which broadly mirror powers in the existing legislation. Indeed, our intention is to impose terms and conditions which are broadly the same as those applied to mandatory awards currently. We need in particular to be able to ensure that grant continues to be paid only for as long as a student is attending an eligible course. So we need to be able to prevent the payment of further instalments where a student has dropped out of, or been required to leave, his or her course. We may also wish to provide for grants paid to help with living costs—for example, to students with dependants—to be repaid, in full or in part, in circumstances such as these. It is clearly right to protect taxpayers' money in this way.

5 p.m.

Earl Russell

I seek a small amount of clarification. I accept what the Minister is saying but I am interested in what sort of terms and conditions could be imposed. Does that relate only to eligibility as a student and to repayment, or could that clause be used to impose other terms and conditions upon grants? Is there any restriction as to type?

Baroness Blackstone

I believe that the terms and conditions element is largely related to the issues which the noble Earl has just raised. However, I cannot predict what may happen under regulations in five or 10 years' time. That is the whole point of having some flexibility. I hope that the noble Earl will accept that.

The noble Earl asked about the power to specify in regulations under Clause 16(2)(g) the terms and conditions attaching to loans. That power is clearly essential: one cannot make a loan without specifying the terms on which it is made. Clause 16(3) describes in more detail the kinds of terms and conditions we have in mind; for example, interest rates, repayment terms and deferment and cancellation arrangements. In addition there will be various more technical points. For example, we will want to be able to require borrowers to inform the Student Loans Company if they leave their course early, or if they change their address.

We have made clear our intentions in relation to the terms on which the new loans will be made. Students are aware of those. The key terms—for example, in relation to interest rates and repayment terms—have been widely publicised. Further details are included in the progress report on the new arrangements to which I referred earlier. That report also explains that a working group involving officials from my department, the Inland Revenue and the Student Loans Company has been set up to consider the fine detail of the new arrangements and that further details will be published in due course.

We believe that it is entirely appropriate for provisions of this kind to be set out in regulations, rather than on the face of the Bill. As I explained earlier, there will be a great deal of technical detail and we will need the flexibility to respond to changes in circumstances—for example, future changes in the way the tax system operates. On one key point—interest rates—it remains our intention to clarify the position on the face of the Bill. But with this one exception I am clear that the only sensible way of setting out the detailed terms and conditions attaching to grants and loans is to do so in regulations. That is, of course, the case under the current arrangements. I hope that the noble Earl will withdraw his amendment.

Earl Russell

I thank the Minister for that long and careful reply. I hope it will not seem ungenerous if I ask for just one more piece of information which I do not believe will cause her any trouble; that is, the section and subsection of the 1962 Act under which tuition fees are imposed.

The noble Baroness talked throughout about flexibility. I am reminded of the story of the American who received a gas bill for 0 dollars and 0 cents. He explained to the gas board that he could not possibly pay that; there was no way he could do it. After the umpteenth exchange he was told, "Yes, we see your point but we hope you will send us a cheque for this amount because our computer won't take 'no' for an answer". Therefore, he sent a cheque for 0 dollars and 0 cents. He then received a letter from his bank saying, "This cheque may well have satisfied their computer but it has caused real chaos in ours". Therefore, the flexibility may satisfy the noble Baroness while causing real chaos for us.

There is a balance to be struck here. I take the point about changes in the tax system but I hope that the noble Baroness also takes the point about parliamentary control.

The point made by the noble Baroness, Lady Blatch, about the introduction of tuition fees and the abolition of the maintenance grant was well taken. If it took us outside the technical wording of the amendment, that is because, on both sides of the argument, we have had to address general questions about the regulation-making power.

The view of the Renton Report and the Hansard Society Report Making the Law from Lord Rippon of Hexham is that the broad general principles must be in primary legislation so that the House can address them.

Having listened to the noble Lord, Lord Glenamara, I am not certain that that principle has been observed in this Bill.

There is a long history of tension between this House and this department on this subject. We shall get on a great deal faster in future if some attempt can be made to improve communication between us on this point. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 83 not moved.]

Baroness David moved Amendment No. 84: Page 11, line 23, at end insert— ("( ) prescribing the administrative arrangements for the payment of grants or loans to eligible students;").

The noble Baroness said: In speaking to this amendment, I should like to speak also to Amendment No. 89. Amendment No. 84 is a probing amendment, the purpose of which is to enable the Minister to make an announcement on the new administrative arrangements for the new system of student support.

The Bill does not describe the detailed arrangements for the administration of the new student support arrangements. LEAs currently administer the system of mandatory and discretionary awards in England and Wales and in the short term will be responsible for implementing the new student support system in HE in 1998-99 and 1999-2000. On Second Reading, the Minister indicated that an announcement would be made shortly about those administrative arrangements in the light of discussions with representatives of LEAs, the Student Loans Company and other interested parties.

The Government are now understood to have made a decision in relation to the arrangements for 1999-2000. The Minister is expected to confirm that for that year the LEAs will have a continuing role in administering student support arrangements alongside the Student Loans Company and a new central unit established within the DfEE which will take over from the LEAs the means-testing of EU students wishing to study in England and Wales.

The Government's position regarding subsequent years—that is, from 2000 to 2001—is rather less certain. This issue needs to be clarified as a matter of urgency. It would be helpful if my noble friend the Minister could confirm how and when any decision could be anticipated in the area.

Is it correct that the DfEE will be establishing in February a steering committee to manage the introduction of the new arrangements which will draw on the expertise of a committee which will advise on the precise allocation of responsibilities between LEAs, SLC and DfEE's central unit? Will the committee be making a thorough review of the current means-testing arrangements with a view to simplifying the system wherever possible? The review is expected to be completed by the end of September.

To a limited degree the announcement which is anticipated from Ministers on administrative arrangements for 1999-2000 can and will be welcomed by LEAs and others. An announcement about 1999-2000 only will not, however, enable the 172 LEAs in England and Wales to plan effectively for the future. It would appear that the present uncertainty for current and prospective students, their parents and families will continue in the short term at least pending any clarification by Ministers of the process they anticipate for reaching decisions on the administrative arrangements beyond 2000-2001.

I hope that my noble friend the Minister realises the importance of resolving uncertainty as soon as possible, and indeed the real advantages and value of opting decisively for continuity of service through locally accountable LEAs. LEAs are pleased to work in partnership with the Government in implementing the significant changes to the current system of student support and also in helping to determine what other improvements might be progressively introduced from 1999-2000 onwards. It is far from satisfactory that uncertainty is expected to continue in this critical area in relation to 2000-2001.

I turn now to Amendment No. 89. Its purpose is to seek clarification of the progress made in establishing the ministerial advisory group on the new arrangements to replace discretionary awards. The enabling approach in the Bill, which gives very wide-ranging powers to the Secretary of State, is also noteworthy in relation to the powers which LEAs currently have to make discretionary awards. The Government are taking the opportunity in this Bill to discontinue discretionary awards made under the 1962 Act, as they feel that the current arrangements are inadequate and need reforming. In December 1997, the Minister invited Councillor Graham Lane, Chairman of the Education Committee of the LGA (the Local Government Association) to chair an advisory group to provide advice on what new arrangements might be introduced to replace discretionary awards.

The Further Education Student Support Advisory Group has so far met on two occasions and a detailed programme of meetings has been agreed on a fortnightly basis up to the end of March when the group is required to report back to the Minister with detailed recommendations. Although the Minister may not feel it appropriate to comment on the detailed discussions in the advisory group, particularly since they are evidently still at an early stage, it might be helpful if she could confirm for the official record details of the group's membership and terms of reference, and set out what work the group has already initiated in terms of collecting information and comments from interested parties to inform its deliberations. If that is too much for my noble friend to do today, perhaps she could place a note in the Library about it.

The Minister has already indicated that she would not intend, to leave LEAs without a power to make awards to students in exceptional circumstances and at their own discretion", in the future. Could the Minister confirm that that is still part of the department's policy pending further consideration of the recommendations of the advisory group and subsequent consultation by Ministers on detailed proposals before any new changes to student support arrangements in this area are implemented for the future?

The point of both amendments is to find out rather more about what is going on for the sake of the LEAs. They have a certain amount to do at the moment and they very much want to know how much they will be expected to do in the future. After all, they have to make arrangements about the number of staff they employ and so on. The process of means testing for grants is really quite a considerable job. I beg to move.

5.15 p.m.

Baroness Blatch

I rise to express my support for the plight of LEAs in particular. I believe that they are at a very real disadvantage. There is one aspect of means testing which I know is taxing their minds very much. I know that there is a sentence in the latest progress report which says that the Department for Education and Employment will give substantial help in means testing European students from other EU countries.

Means testing a young Italian applying to come to a university in this country with the added complication of applying to study in Scotland rather than in England, will be most difficult. Unless one is automatically and entirely to rely on what the family puts in the application form, any verification system will be extremely bureaucratic or even costly. For example, will we have DfEE officials going on interesting trips around France, Italy, Spain or Germany? It will make it the most incredibly difficult task.

However, for the moment, the responsibility will rest with local authorities. If that goes wrong and we discover that there is a great deal of malpractice going on, it will be exceedingly difficult for local authorities to deal with it. I have singled out only one element, but there will also be a twin-track system. I make the assumption here that any second-year, third-year or fourth-year student in the system at present from 1998 will in fact receive the larger maintenance grant. Although I know that they will not have to meet any tuition fees, my understanding is that they will receive the 50-50 split of loan and grant. In other words, local authorities will be means testing for the existing system and means testing for the £810 maximum amount of grant for new students, in addition to means testing families for the degree to which they pay all, part or none of the tuition fees. There is a real job and a real challenge here for local authorities. For that reason, I wish to support the noble Baroness, Lady David, in her amendment.

Baroness Park of Monmouth

I should like to add my strong support for the amendment, principally because I am most concerned about the anxiety which is to be found among all students and prospective students regarding the lack of clarity on what is going to happen. I refer especially to the respective responsibilities of the LEA, the Student Loans Company, and others. If loans are to be paid termly, for example, there is very great scope for problem and delay. Is the Student Loans Company now fully organised and able to respond to students? Moreover, will it be accessible and effective? The LEAs are local and accessible but, as I understand it, they are no longer to have the responsibility in the long run for paying grant cheques.

I am particularly concerned about the mayhem that could occur and the blow to student morale if students are unable to get through, not once a year but every teen to the Student Loans Company to secure their loans. At present, in Scotland, the Student Awards Agency, which deals with payment of grants, is the subject of an inquiry because some grants which were due in October last year have still not been paid. As with the Student Loans Company, students telephone the agency and receive no answers. Telephoning costs money. The student union in Aberdeen, for example, has helped to pay for telephone calls and even helps students to fax their increasingly urgent inquiries.

Another aspect which concerns me very much is that, hitherto, students coming up could count on the maintenance grant as some money while they sorted out everything else. If they are to lose that, and unless they arrive with everything completely sorted out on the loan side, they will be in desperate straits. I therefore feel that it is extremely important that those aspects of the situation should be cleared up as soon as possible.

Lord Tope

I should like, first, to express my support for the amendment. I want very much to support what the noble Baroness, Lady David, said in moving it. Perhaps on this occasion I may do so as a leader of an LEA, although I forget what the description was of an LEA—perhaps "a beleaguered LEA". If this is to happen, the sooner that LEAs are clear about their role and responsibilities, the better. It is not surprising that students and prospective students are ringing up their LEAs to find out what is happening. The fact that LEAs are not in a position to tell them in detail simply adds to the pressure and stress of students, of parents and indeed of the staff of LEAs.

As I believe is well-known to Members of the Committee, LEAs are undergoing a considerable amount of change and innovation in one way or another at this time. A lack of early clarity adds to the stress that students feel. As soon as the Government are in a position to give clear instructions to LEAs it will be appreciated by all concerned, not least, I suspect, the Government.

Lord Walton of Detchant

In reply to the amendments raised by the noble Earl, Lord Russell, the Minister said that special arrangements would be made for students reading for a postgraduate certificate in education. It has been reported that similar concessionary arrangements will be made available to medical students in the final year of a five-year course.

Will extended concessionary arrangements be made for medical and dental students, and perhaps some architectural students, who may be studying on a six-year course?

Baroness Blackstone

To deal with the specific question by the noble Lord, Lord Walton of Detchant, yes, special arrangements will be made for fifth and subsequent years.

My noble friend Lady David made clear that these amendments are designed to elicit a statement of our plans for the future administration of the system. I am very pleased that I am able to oblige.

The Dearing Committee argued for the establishment of a single student support agency to replace the functions currently performed by local education authorities. There are attractions in setting up such a body rather than continuing to rely on more than 160 LEAs. In most cases their performance has been perfectly adequate, although there have been exceptions and some LEAs appear to operate much more efficiently than others in this area. But there must be doubts about whether an essentially executive function needs quite so many local delivery agents.

But there are arguments the other way. LEAs have been doing the job for many years, as Members of the Committee have said, and have built up a lot of highly specialist knowledge; and the Dearing Committee was not able, in the very short time it had to examine a huge range of topics, to look at the issue in detail. Furthermore, as the committee recognised, the priority must be to implement the new arrangements, in particular those for new fairer loans. The next couple of years will be transitional ones.

We have therefore decided that during that period we shall continue to use LEAs and the Student Loans Company to deliver the new arrangements. LEAs will conduct the means test and the student eligibility checks. They will therefore have a key role to play for at least the remainder of this Parliament.

The Student Loans Company will be expected to pay loans on time—that is very important—so that students have the money they need in order to live.

We shall be setting rigorous performance standards for LEAs and a new specific grant regime will be based on those standards. We shall involve LEAs and other interested parties in devising the detail of the new arrangements. Our priority will be to ensure that students and others receive a high level of service.

Once the system has bedded down we shall review the arrangements and look, in more detail than the Dearing Committee was able to do, at the best way of administering the student support system. We shall aim to complete that review in 2000. We shall make an announcement about the terms of reference and nature of the review shortly.

Perhaps I may say this to my noble friend Lady David. As regards the other review taking place on discretionary grants, I shall put a note in the Library which sets out the membership, terms of reference, and so on. They are already publicly known, and I can certainly do that. I also confirm that it is the Government's intention to leave with LEAs the power to make awards on a discretionary basis.

I should add that no amendment will be needed to the Bill to facilitate the new arrangements. Although the power to make grants and loans will rest with the Secretary of State, he will be able to delegate certain functions to LEAs and the SLC under Clause 16(7). The first of these amendments is not therefore necessary: regulations will in any event prescribe administrative arrangements insofar as it is necessary to regulate in this area.

The noble Baroness, Lady Blatch, raised the issue of means testing for EU students. It has been decided that it would make more sense if, from the beginning, there was a small central unit in the Department for Education and Employment taking on that work rather than that 160 LEAs should undertake it separately. I confirm that the intention is to do that in 1998-99 rather than in the subsequent year. I do not think that civil servants in the department will need to travel around Europe in order to do that work. I believe that through other means they will be able to acquire information about the tax regimes of European Union countries.

The clause as it currently stands would also enable the Secretary of State to make regulations under which he could pay grants to students in exceptional circumstances, such as exceptional financial hardship. It would be difficult, however, if not impossible, to make regulations that specifically addressed the potential needs of every student facing financial difficulties. I have listened carefully to representations by local education authorities that they should continue to have a discretion to offer financial support to students in exceptional circumstances. As I have already said, I agree that such discretion is needed. The primary legislation already exists to permit my right honourable friend the Secretary of State to make regulations allowing authorities this discretion. The Education Act 1996, Section 518, provides for the Secretary of State to make regulations which empower local education authorities to grant allowances in cases of hardship. In view of this existing power, the second of these amendments is also unnecessary.

I hope that the information I have provided is what is sought by my noble friends and that they will therefore be able to withdraw the amendments. I am very confident that the local education authorities will be able to rise to the challenge—a number of Members of the Committee have referred to it—and I know that the LEAs are anxious to do so.

Lord Peston

Leaving aside the European Union question, the Minister said that LEAs will be dealing with the issue until the year 2000. Did I understand the noble Baroness to say that what will happen after the year 2000 is still open? I believe that that is what she said. Is there not a slight problem? If LEAs are to handle the matter—as the Minister said, it is not an easy matter—they will have to invest in systems. If they are no longer to deal with it after two years, there will be less of an incentive to invest in those systems.

Can we be assured that the LEAs will be given good notice? I appreciate that the department has problems. I do not change my views on tuition fees, which is another matter. But, given the other pressures on them, can we be assured that the LEAs will be given as much notice as they will require? Will they be asked suddenly, "Can you keep going?"; or will they be told, "We don't need you any more"? The answer has been left out of the reply.

Lord Wallace of Saltaire

I am concerned about the European dimension. The students I taught this morning included students from Finland, Sweden, Germany, France, Italy, Spain and Portugal. A small central unit in the Department for Education and Employment seems to raise a large question. One talks about knowledge of tax regimes in other European Union states. That also raises questions.

Last week, for other reasons, I read cases heard in the European Court of Justice on payment of fees to students from different countries operating across boundaries within the European Union. It seems to present a potentially classic case and we shall find ourselves before the European Court of Justice if we are not careful. Alternatively, we may find ourselves up against questions about the way in which tax regimes are interpreted in different states.

Universities have discussed this issue. How does one demonstrate that a student from northern Greece is who he says he is without investigating in great detail? I wish the Minister to be aware that a small central unit may get us into potentially extremely deep waters as we try to impose a British system on students who come from 14 other countries.

5.30 p.m.

Baroness Blatch

Perhaps I may add to that point. A rather technical exercise is undertaken in this country to calculate residual income, on the basis of the commitments that an English, Scottish, Irish or Welsh person has in terms of taxation, national insurance, mortgage payments and so forth. It is the most incredibly complicated system. If one is to rely entirely on what the student or his or her family says by way of submitting an application and everything is taken as read because there is no sophisticated verification system, I see great problems building up.

Sadly, I also foresee a kind of resentment building up on the part of students at home, who may see that all sorts of tortuous processes are gone through to verify whether a parent is working, whether everything is being declared that should be declared and so on, and yet see almost none of that taking place for an EU student, simply because it is difficult, because the system is bureaucratic and information is hard to get hold of.

I wish to refer to the question put by my noble friend Lady Park of Monmouth. Like the rest of us, my noble friend is very concerned that in this new world in which students will be living, the only money they will have in their hands come the beginning of term will be money they may have received through the loans system. The latest document from the DfEE states: In September new students will begin applying for loans following the start of their courses". That is inconsistent with the reply given to my noble friend by the Minister. As my noble friend knows, and certainly I know, having seen my own children through the system, as students arrive at university landladies and landlords expect money in advance for rent and other things. Moreover, students will have some expenses to meet simply in order to eat and to live during the first weeks of their course.

A very large number of young people in this country will be unable to turn to their parents for help. They will be unable to turn to them for the sort of sums they will need to put down as advance rent. Therefore it is important that they have this money in their hands, as a loan—especially those who are borrowing 100 per cent. of the moneys they will need for maintenance. That point is not covered in the documentation.

Baroness Carnegy of Lour

Will the noble Baroness tell the Committee whether any changes will have to be made in Scotland in implementing this provision? In Scotland local authorities are not involved: there is an agency. Will that agency have to be enormously enlarged, and will there have to be an extra unit for overseas students? I could put this point when we discuss the Scottish provision under clause stand part. However, it might save time if the noble Baroness could answer now. I see that the Scottish Office Minister, the noble Lord, Lord Sewel, is sitting at her side.

Lord Walton of Detchant

I agree with noble Lords who said that the problem of means-testing overseas students will bristle with difficulties. I wonder how a central unit in the department will deal with the kind of case that I recall from my former university, of an overseas student who applied to the hardship fund but made the mistake of parking his BMW outside the window.

Baroness Blackstone

A number of questions have been raised. To return first to the point made by my noble friend Lord Peston, yes, of course we will give local education authorities ample notice of any change in the system. We ought to be clear that the means-testing regime which presently applies to grants and will apply to tuition fees will be exactly the same. There will not be two different sets of means-testing. The same eligibility criteria will apply. I wish to be clear on that point.

On the issue of means-testing students from the European Union, we are required under EU law, as I am sure the noble Lord. Lord Wallace of Saltaire, is aware, to treat EU students in exactly the same way as we treat UK students. So it is necessary to have a means-testing regime for tuition fees for European Union students if we are to have it for UK students.

Lord Mackay of Ardbrecknish

I have listened to the argument with some interest. Is it not possible that we could argue before the European Court that a student from a European Union country would not, in his or her own country, receive help from the government? In many countries students do not; they are very much on their own and dependent upon their parents. Yet if they come to this country, they will receive help. That would seem illogical enough even for lawyers at the European Court to understand!

Baroness Blackstone

Far be it from me to comment on the logic or otherwise of lawyers in European Union courts. The legal advice that we have received is that we cannot change this provision, at least not for the foreseeable future. We have to accept European Union law and abide by it in this particular respect.

Yes, of course I accept the point made by various Members of the Committee. This is a technical and difficult area, and I do not under-estimate the difficulty. Nor do I under-estimate the strengths of DfEE civil servants in being able to sort out the matter. I am sure that they will be able to do so.

It is also the case that the vast majority of European Union students studying in the UK come from families whose incomes are much higher than would qualify them for the sort of support referred to by the noble Lord, Lord Mackay of Ardbrecknish; namely, exemption from fees. We know that that is the case. After all, such students do not receive any support for maintenance in this country. In most European Union countries they would live at home. If they can afford to pay to live in the UK, away from home, it is very unlikely that they will be eligible for exemption from tuition charges.

Baroness Blatch

I wish to make two points. First, I imagine it would be unlawful to make the assumption that if someone comes from an EU country he or she can afford tuition fees, and therefore the exercise of means-testing has to be undertaken. Secondly, I wonder whether the noble Baroness will tell us for the next stage of the Bill what the verification system will be for EU students.

Baroness Blackstone

It would be unlawful to make an assumption if someone applied for exemption in relation to a fee. But I suspect, and hope, that those EU students whose parents' incomes are well above that which will qualify them for exemption from a fee will not apply. They would be wasting their own time as well as that of everybody else. We shall be making available all the information that we possibly can to applicants from the European Union, setting out what the eligibility will be. There may be people who think that some way or other they can get round the provision. I do not deny that. That is why it is important that the central unit to be established is extremely well-informed and operates effectively in carrying out the means-testing. I made the point in order to provide some reassurance. We should not imagine that every EU student coming here to study will apply for exemption.

Lord Wallace of Saltaire

I strongly agree with the Minister that most of the students who come here are not among the poorest classes. I wish, however, to make two points. Will the Minister assure the Committee that the small central unit so designated will at least consult with other EU member governments as early as possible as to how such a scheme might be managed? The British Government have an unfortunate record of pushing matters through without consulting other governments first, and then discovering that there are large problems and obstacles to be faced. The DfEE has not always been the most internationally-minded department.

Secondly, the precise reason that I was reading through the ECJ cases last week was that it seems to me the law is not entirely clear on this whole matter. There are some interesting questions that the British Government ought to be considering as we and other governments move forward on university financing. There is a mess that has to be sorted out. Whether or not the legal advice is entirely clear, some of us are seeking additional legal advice on the matter.

Baroness Blackstone

Officials in my department will, of course, consult with the governments of other EU countries in order to obtain the best and most up-to-date information. I also take the second point made by the noble Lord, Lord Wallace of Saltaire.

Perhaps I may return to one or two other points. The noble Baroness, Lady Blatch, raised the question of what happens to students on day one. Perhaps I can remind her that this autumn students will still be in receipt of grants, and their grants will be available from day one. From 1999, when the grant is to be abolished, it will be vital that the Student Loans Company has paid the loan from day one. That is what I said before, and that is what we intend to do. The noble Baroness's point related to the position in 1998, which is slightly different.

The Student Awards Agency for Scotland currently carries out the functions of the LEAs in relation to student awards. The intention is that it will continue to do so for home and EU students. There should thus be no significant difference in the scale that is required.

Earl Russell

The Minister sets me thinking when she talks about imposing means tests on an equal basis across the EU. As things stand at present, that will he affected by exchange rates. My noble friend Lord Avebury has asked me whether the means test will rest on the exchange rate at the time of application or the rate when the money is to be spent. There can be a considerable difference. Is the Minister here setting up a system which will not be viable—unless, as my noble friend suggests to me. we do it all in euros?

Baroness Blackstone

My understanding is that the Liberal Democrats are in favour of moving towards a more federal Europe and the introduction of the euro. If their wishes on this matter are granted, we shall not he faced with this problem for very long. Yes, of course, there are problems of detail about the exact date on which the exchange rate is set for this purpose. I cannot answer the question; the matter is still being looked into. In answer to the noble Baroness, Lady Blatch, I shall try to provide more information about how the scheme will work in this respect. I very much hope that my noble friends will be able to withdraw their amendments.

Baroness David

I should like to thank the noble Baroness, Lady Blatch, for her support as far as LEAs are concerned and other noble Lords and Baronesses who have spoken about these two amendments—even though the EU did rather take over. If we moved to a single currency fairly quickly, that would clearly be a great help in this respect.

I thank my noble friend for her reply. Once she had reassured my noble friend Lord Peston that LEAs would have plenty of notice of what would be expected of them, her answer to me was satisfactory. I thank her and withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 85 to 88 not moved.]

Lord Tope moved Amendment No. 90: Page 11, line 35, at end insert— ("( ) For the purposes of subsection (2)(c), "circumstances" shall not include the income or other financial resources of the person's parents or spouse.").

The noble Lord said: I shall speak briefly in moving this amendment, partly so that we can make some progress this evening and partly because my noble friend Lady Maddock has some important things to say. In speaking briefly, I do not wish in any way to indicate that we regard the amendment as unimportant. On the contrary, it is fundamental to the Liberal Democrat approach to student funding.

We regard people who reach the age of 18 as independent adults, not as dependent children. That is a fundamental point and is the purpose of the amendment, which provides that in assessing these matters the income of a student's parents or spouse should not be taken into account.

In almost all other aspects of life people are regarded as adults once they reach the age of 18. They can vote, fight for their country and enter into contracts. But when it comes to going into higher education, they are still treated as dependent children. We know that many parents are generous in their support of their children while they are at university. Many are willing and able to be so; but that is not always the case. Many parents do not meet their contributions. However, that is not the point. The point is that a person who is 18 should be treated as an adult in his or her own right, and the system of student funding should recognise that. We wish to see the amendment put into the Bill as a fundamentally different way of approaching student funding, recognising people aged 18 as adults, as they are in other situations. I do not imagine that, in the perhaps unlikely event of an 18 year-old applying to a bank or a building society for a mortgage, he or she will be able to obtain a higher mortgage because of his or her parents' income. The same should apply in the education system. My noble friend Lady Maddock will add to the points I have made. With some passion, I beg to move the amendment.

5.45 p.m.

Baroness Maddock

I rise to give my wholehearted support to my noble friend in the proposition that students should be treated as economically independent at the age of 18. There are three reasons why I believe this is a sensible proposition.

First, it would deal with the problem of assumed income, which is often not received by students from their parents. Figures show that almost one in three students do not receive the money that government and others assume they will receive from their parents.

Secondly, it would make it much simpler for students to deal with social security benefits. We heard earlier from the Minister that she is looking carefully into the interaction between this legislation and social security legislation.

Thirdly, it would deal with the muddled situation that exists today with regard to the age at which students become independent. Here I speak from personal experience. My elder daughter was in higher education for two years and decided to give up her course and go out to earn her living. She has now decided that she wishes to go back to university. She is 21 but is not considered independent, although she has been leading an independent life for two years. If she had gone on to work for another couple of years, she would be considered independent of her parents. It is difficult for students going in and out of courses. Students are not always sure what they want to do when they leave school and may choose a course which is not suitable for them, as my own daughter did. I believe the amendment would deal with some of the problems and anomalies that arise.

This proposal to ensure that students are considered independent at 18, together with our earlier proposal that part-time students should be treated the same as full-time students with regard to fees and our later proposal that all students should have their fees paid, would make the job of dealing with this legislation and the administration that will ensue much simpler, not only for the Government but also for local education authorities and higher education institutions.

For those reasons, I hope that the Minister will look favourably upon this amendment and give us some indication as to where the Government stand on whether, perhaps sometime in the future, they will look seriously at this proposal.

Lord Desai

I am in some difficulty here. I grant that people who are over the age of 18 are responsible for themselves and should be treated as such. However, in charging the education fee of £1,000 we have taken to means testing in relation to the resources of the parents. That is my understanding; but I may be wrong.

In an ideal world, peopled by economists and a few of their friends, one would only judge people in terms of their future income and not by their parents' income or anything else. Eligibility for the grants should be on the grounds of future income; therefore, all grants should be loans against future income and they should be collected by the Inland Revenue. That is in an ideal world, but we do not live in an ideal world.

We cannot have an inconsistent treatment of students as between tuition fees and maintenance grants. That is the dilemma. Maintenance grants are actually consumption loans which are terrible things. One cannot say that for the consumption loans the students are going to be treated as adults, responsible for themselves, and all will qualify, more or less, and then say that when it comes to tuition fees they do not qualify because the parents are supposed to pay. In that case they would lose out both ways.

The world is not consistent and therefore we will have to live with this anomaly, that students cannot be treated as responsible adults as far as this Bill is concerned at the present time.

Lord Quirk

Is it not the case that after the passage of this Bill maintenance grants will not be paid; it will all be on the basis of loans? Therefore, it is possible to treat tuition fees and loans on precisely the same basis.

The amendment proposed by the noble Lord, Lord Tope, and the noble Baroness, Lady Maddock, stands and seems to me to be perfectly logical. The problem is that the justification for having (c) in here is to protect the poor, to ensure that the poorer student will get to university and, a fortiori, if one is going to protect the poor there has to be some way of unprotecting the unpoor, or, as one would have said until last week, some kind of affluence test.

The fact remains that the worst off under the present system is the student of the parent who is affluent but who either does not feel able, or simply refuses, to pay for the reasons that the child, who may be 20 or 21 years old, is an adult and they therefore say, "Why should I?"

We have a real dilemma here. I hope that the Minister will be able to clarify this. We are in the position, surely, where affluence will affect both the ability to pay tuition fees and the ability to get a loan.

Baroness Perry

I strongly support this amendment, most particularly the part of the amendment which refers not just to the student's parents but to their partner. Unfortunately—and I hesitate to say it in this male-dominated House—there are still many men who refuse to support their partners, despite the fact that their income has been taken into account in determining the amount of the £1,000 fee which the woman student has to pay. It does give enormous power to the man in question if he is able to say, "If you are nice to me, I might pay your £1,000 for you; if you are not, I will not." I feel it is quite distasteful to perpetuate a system in which the partner's income should be taken into account, particularly in the case of a woman, in determining the amount of the fees she has to pay.

Unfortunately, there are many women who themselves have limited or no resources and who therefore could be blackmailed in quite an unpleasant way, and who are, apparently, often blackmailed over the issue of the maintenance grant. That will be gone. Everyone will lose that and will get a loan. However, as far as the £1,000 fee is concerned, I very much hope that this amendment will be taken on board by the Government.

Earl Russell

The noble Lord, Lord Desai, always interests the House and he always tends to deal with arguments with which he does not agree by the use of the technique of reductio ad absurdum. That technique is, of course, a revolving door. I agree with the noble Lord that we can never hope to abolish anomalies; I am not that Utopian. What I believe and what I think the noble Lord also believes is that one can occasionally attempt to make the anomalies slightly more logical. The real anomaly in what the Government are proposing is not the charge on the parent but the contrast between the obligation to the student to rely on the parent and the lack of any obligation on the parent to support the student.

I should declare an interest in this amendment. As a serving university teacher I am dealing here with something that takes up a good deal of my working life. It is a constant, recurrent problem.

As I believe the noble Lord knows, I have been asking for quite some time for the age of majority to be referred to the Law Commission because, as with the case of part-time students, we are dealing here with a problem that stretches much wider than the educational world or this amendment. We are regularly developing a gap between the age at which parents cease to be bound to maintain their children and the age at which children are treated as having the rights of adults. That is the gap into which students are now falling.

It is obviously a disadvantage to those from low income households, but it is not only a disadvantage to them. It is a disadvantage to any people whose parents do not think they should be having higher education or, indeed, do not think they should be having that particular sort of higher education. Of course, power is capable of abuse among parents as among any other people who hold it.

Just last night I was talking on the telephone to somebody still in her 30s, who almost missed the chance to get a higher education because her father believed that women should not be educated. It still happens. It was not my first case of this by a very long way. I had hoped by now I would be past meeting it, but not yet.

There are, of course, also people who are estranged from their parents. In the increasingly common situation of fractured families, very often people are not on speaking terms with the parent on whom they are compelled to rely for financial support. That is a situation which creates a great many strains within families. The harm it does is not just the harm of being sometimes without money; it is the harm of a great deal of resentment and tension within the family.

There are people who do not get the money from their parents because they are the less favoured child, sometimes because another child is getting his fees paid at an independent school. That is also within my experience. In these cases there is obviously no justice, no connection between the person's claim to higher education and their actual chance of getting parental support.

During the last recession one of the commonest reasons I found why my pupils were not getting what their parents were assessed to pay for them was bankruptcy which, of course, the parent cannot do anything about. The grant can be reassessed, but it takes a very long time and, as with so many things in this new, flexible universe, there is a very big gap.

Before the noble Baroness, Lady Blatch, leaves the Chamber, I should like to say that I am extremely grateful to her for the trouble she took, when Minister, in regard to grants being assessed more quickly. But not even the noble Baroness's industry and dedication was enough to get the job done properly. There will always be a problem.

It is also true that means tests are inefficient. There will always be people who fall through the net and people whose circumstances are not assessed properly. In particular, with the students' means test, when residual income is assessed it does not properly take account of housing costs. That is based on the mortgage interest tax relief system. It takes account only of the first £30,000 which, as those of us who live in London or the south east know, amounts to practically nothing in terms of a mortgage.

Again, there may be higher as well as lower income people who fall through the net. And an injustice is an injustice, no matter to what sort of person it is done. I hope therefore that we do not assume it is only low income people who are involved. The ultimate objective must be to get higher education to the best people. We will not do it unless this amendment is carried. I am glad to support it.

6 p.m.

Lord Glenamara

This difficulty, so far as it relates to tuition fees, arises because the Government are trying to achieve their objectives in the wrong way. Parental income need not enter the situation at all. Let me remind the Committee that the Dearing Report said: On balance of considerations, we recommend to the Government that it introduces arrangements for graduates in work to make a flat rate contribution of around 25 per cent. of the average cost of higher education tuition, through an income contingent mechanism". When it says, "income contingent mechanism", to whose income does it refer? The way the Government are doing it, it is contingent on the income of the parents and the family home which the student probably left 10 years earlier. Let me give an example. There are two students, John and Jane. John comes from a low income family. Under the Government's proposals, he does not have to pay any tuition fees. Jane comes from a middle-income family. Her parents do not pay the fees and so she must borrow £3,000 towards her tuition fees. Ten years later John, who is a bright boy, has become a barrister, maybe a QC—who knows, he may have married a QC—and will be on a high income, perhaps £100,000 a year. Jane, on the other hand, is a schoolteacher and will earn £15,000 a year if she is lucky. What happens? John, with an income of £100,000 a year, has to pay nothing towards his tuition fees. Jane, with an income of £15,000, must pay off the whole £3,000. That is grossly unjust.

Have the Government thought out this situation? It is ludicrous. Parental income need not enter the equation at all. If the Government wanted to do this, they should have introduced a graduate tax for all new graduates. I would still have opposed it, but it would be logical and fair. It would be collected through the Inland Revenue. But the Government are basing the system on the original parental income and that is a grossly unfair way of doing it. This difficulty therefore arises because of the way the Government are operating the system.

Lord Desai

The Dearing Report must have meant the income of the student. The words "income contingent" must have meant the future income of the student. My colleagues at the LSE have for a long time worked out and argued that a loan system based on income contingent repayments will finance higher education and time and again that has been shown to be so. When I read the Dearing Report I understood "income contingent" to mean the income contingent of the students who enjoyed the higher education.

I agree with my noble friend that the problem is not what is happening to maintenance grants. Indeed, the anomalies of maintenance grants could be eliminated if they were made into loans. An anomaly arises with the tuition fees. If the Government did not press means testing on the tuition fees and everybody paid them, regardless of what they are, all students would pay £1,000 and pay it back from their future income. If that amendment was proposed, I would embrace it. But Amendment No. 90 does neither one thing nor another.

Baroness Blatch

The noble Lord, Lord Desai, says almost exactly what was said by the noble Lord, Lord Glenamara. The noble Lord, Lord Glenamara, made it absolutely clear that if the Dearing package was put before the Committee, he still would not support it. But it makes more sense.

We shall attempt, in the course of the passage of the Bill, to turn this back into a Dearing recommendation. What is incredible is that the income of the parents will be taken into account for £1,000 and yet the students from the poorest families in the land start off life by borrowing almost £4,000 each year they are at university.

We have a scheme that leaves the poorest families and the poorest students with the highest and greatest burden of debt when they leave university. I cannot better the example given by the noble Lord, Lord Glenamara; it is absolutely right. The future income of students may reflect different situations to the backgrounds of the families from which they come. It makes no sense to have a means test for a family for £1,000 and to consider the student economically independent for the purposes of borrowing almost £4,000. This hybrid system has not been thought through.

Perhaps I may read a letter from the University of Aberdeen written by the president of the student council in which he says: The Government's plans appear to be very poorly thought through. Poorer students who will not have to pay the tuition fee will be losing out on £1,685 which they currently receive in the form of grants and will have to borrow that instead while richer students will lose out on £1,000, £685 less per year than their contemporaries. This is hardly fair". That is one aspect. Members of the Committee have given other examples of where there is unfairness. For the student from the affluent family, the family is deemed to be paying part of the loan, whereas the student from the poorest family has to meet the whole of the loan. There are lots of anomalies. It is a scheme which is extremely badly thought through and which will be costly in administration.

Baroness Park of Monmouth

I strongly support the amendment too. When one looks at the plan, it says that family income will be considered without regard to the number of children. It is likely that there will be two or even three clever children in a family which is earning around £20,000 a year. That sounds like a lot of money, but it will be impossible for them to pay for three children. They may be poor hill farmers or small businessmen struggling to keep going. Not only does it mean that they cannot do it; it is probable that the children will not ask them to do it because they will feel it is a gross infliction upon the parents, knowing their other circumstances. It is vital that students should be considered adult for the purposes of this argument and assessed on what they have, not on what their parents have.

Lord Davies of Oldham

I first declare an interest as chair of the Further Education Funding Council, but I have an even deeper interest in seeking to extend opportunity to all our young people who can benefit from courses in higher education.

The nature of the anomaly which has been identified is being discussed without any real appreciation of the problems which higher education faces and which the Government are under a signal obligation to meet. When this Government came into office, higher education was in deep crisis in terms of the shortfall of resources it needed. For three years, there had been a freeze on the numbers going into higher education. That restriction on opportunity has bitten deeply upon people as they increase their qualifications in our society. It is a block which the Government are under a moral obligation to raise. In doing so, they must produce resources, as Dearing identified. And they must produce them quickly.

No one thinks that tuition fees are of themselves a good thing. Of course not. But when resources are needed in higher education, the Government had to attend to the issue against the background of an additional £165 million having been put into the sector this year. But if tuition fees are to be introduced, what is being argued here today? Of course, my noble friend Lord Glenamara argues quite clearly that tuition fees ought not to have been introduced and therefore the resources should have come from elsewhere. Perhaps he thinks they ought to have come from the same direction that the Liberal Bench suggests, increases in taxation. All I can say is that in terms of the demands upon taxation represented by the Liberal Party's arguments, and particularly one earlier on which suggested that we could assimilate the whole strategy for part-time students on the same basis as higher education, we would be talking of increases in income tax of many pence in the pound.

The other argument appears to be that tuition fees, if introduced, should have no means-test attached; in other words, that young people from well-off backgrounds, who can afford to pay tuition fees, should be on the same basis as young people from poorer backgrounds who cannot afford to pay. That cannot be right. I am sure that we will have arguments later on during our debates today, but if the argument is to be that the danger is that there are deterrents involved—

Baroness Blatch

I am grateful to the noble Lord for giving way. Does the noble Lord think it fair, if he is concerned about rich students versus poor students, or rich families versus poor families, for the poorest of the students to lose the maintenance grant completely and have to borrow the whole of it when richer students have half the grant paid for them and only borrow half of it?

Lord Davies of Oldham

I recognise that as far as poorer students are concerned they are to be faced with a proposition by the Government that their repayments will be over the course of a lifetime's career activity and not, as at the present time, where they are faced with circumstances in which they have to repay on a mortgage style repayment within five years. So I have no doubt that there is no deterrence to students from poorer families on the Government's improved scheme with regard to maintenance. But there may be—and it will be suggested on many sides that there is—a deterrent involved in the tuition fee obligation. That is exactly why the Government have introduced a means-tested arrangement which ensures that students from poorer backgrounds will not be expected to pay. I will give way to the honourable gentleman.

Lord Mackay of Ardbrecknish

Is the noble Lord trying to argue that students from poor backgrounds will be put off by having to borrow a thousand pounds but they will not be put off by borrowing £4,000? Furthermore, will the funding council be attempting, by other means, to encourage universities to increase the number of poorer students they take against the background of the disincentive being imposed upon them by his Government?

Lord Davies of Oldham

The trouble with that proposition is that it seems to be presumed on the position that the present system is both equitable and fair and not any restriction on people entering higher education. The present system puts very severe obligations upon people in terms of repayments. What is more, the present system has resulted in a situation in this country where, over the course of 35 years of the operation, first of all of the maintenance grant introduced in the early 1960s, and then subsequently with the last government's reform to the combination of maintenance grants and loans, the participation rates of people from poorer backgrounds in our society have scarcely increased at all as a proportion of the student bodies. So we still have circumstances remarkably similar to those of the 1960s, that the vast majority in percentage terms of people who enjoy higher education in this country come from better-off backgrounds.

Why, therefore, should it not be obligatory upon the Government to secure funds for higher education to impose a tuition fee which brings in the necessary resources but at the same time to have a means-test to ensure that it protects the least well-off in our population.

6.15 p.m.

Earl Russell

The noble Lord, Lord Davies of Oldham, is of course quite right that higher education has been in a deep financial crisis. But anyone who knew only his speech might have been forgiven for believing that that crisis disappeared on 1st May and they all lived happily ever after. It is not that simple. There is still a deep financial crisis. All the evidence reaching people inside higher education is that it is likely to get worse rather than better.

The noble Lord then drew attention to the decision of this Government to lift the cap on student numbers. Would he agree that he is introducing tuition fees, or his government are, to pay for lifting that cap before they have solved the financial crisis?

Baroness Perry of Southwark

I really feel that the noble Lord, Lord Davies, is turning the world upside-down when he thinks that somehow we are increasing access opportunities for poor students by taking away from them the full maintenance grant that they used to receive.

I have just come from having three weeks of interviewing prospective mature women students, many of whom come from very deprived backgrounds. They are, of course, unhappy about the £1,000 fee. Many of them will be able to obtain loans for that on a means-testing arrangement but they are extremely unhappy to have lost almost £2,000 a year maintenance grant which before, coming from deprived backgrounds, they would have had. That has made access for the deprived student infinitely less attractive and less easy.

I fear very much for the opportunities that there are for poorer students from places like my old university in South Bank where people from Lambeth and Southwark, from very deprived backgrounds, were able to come in on full grant, and for my present college in Cambridge where we take very many students from deprived backgrounds as mature women. I promise you that when they discuss with us the financial arrangements for their time as undergraduates they are dismayed entirely by the fact that they will end up with a loan of over £5,000. And that is on top of the loans they are already taking for their maintenance, which to many of these women is a total deterrent.

Baroness Blotch

May I say to the noble Lord, Lord Davies of Oldham, that he has just made a comparison between a poor student under the new system and a poor student under the present system. Under the present system they receive 50 per cent. grant, take out a 50 per cent. loan and have no tuition fees. They do not even start to repay the loan until they are earning 85 per cent. of the national average wage which is £16,750, give or take a penny or two.

A student under the new system will start by borrowing the whole of the maintenance fees and, depending upon the income of their parents, may or may not be responsible for some of the tuition fees, and will start to pay back at £10,000. A person under the new system, the repayment scheme, earning £12,000 a year, will pay the equivalent of 1.5 pence in income tax for the whole of their working life. In fact, if there was not a cut-off point at 65 they would pay it for 83 years.

Lord Whitty

We have had a wide-ranging debate on this amendment, much of which will no doubt come up again later if we are not careful.

I recognise that this is a fundamental principle of the Liberal Party policy to education. I recognise also that on occasions the Liberals sound as if they are arguing that a single measure can possibly rectify all the anomalies of previous systems of student support and the other social problems that have arisen.

But I have to say to the Liberal Benches and to others who have supported them that there are fundamental objections to this, both in terms of principle and in terms of cost. The provisions in this clause will enable us, contrary to what has been said, to target support for fees and for maintenance to those who most need it. There is a clear case for relating the level of support to family income. If we did not do so, any new arrangements would disproportionately deter the poorest and benefit the better off.

Our aim throughout has been to encourage access to higher education from those sections of society that are currently under-represented. I do not believe that these proposals will have the consequences that the noble Baroness, Lady Perry, was referring to.

Parental means-testing for fees will ensure that students from the least well-off backgrounds will not have to contribute at all. Means-testing loans will mean that these students will have access to the maximum funds available for living costs. Since the loans themselves will be highly subsidised, this also means that the largest subsidies will go to those from the poorest backgrounds. This is a progressive system of income support—substantially more progressive than the one it replaces.

On the issue of costs, making available support for fees and loans for living costs without regard to the income of the households from which the students come would be both regressive and extraordinarily expensive. All sides of the Committee have referred to the need for more resources for the higher education sector. But this amendment would cost about £700 million per annum in the short term. That is money we can ill afford to divert from the higher education system. It would not be right to reduce the support available to the poorest students in order to give additional support to those from a background of middle class incomes.

While I agree that there is a certain ambiguity in the reference in Dearing, to which my noble friends Lord Glenamara and Lord Desai referred, it is also the case that the Dearing Committee recommended maintaining the parental and spouse's contribution. I know that there is a point of civic rights and I acknowledge that 18-year olds are, for most purposes, regarded as adults, although, as the noble Earl, Lord Russell, indicated, the precise age varies according to the area we are talking about. They are legally adults but in most cases they are not individually financially independent. Their parents generally can continue to support them not just by contributing to their grant but in a whole variety of other ways. That is recognised, and has been recognised for decades in our system of student support and is recognised in the systems of student support in almost every country in Europe.

Despite the high-flown ambition of some of the contributions to the debate, we are in essence not changing the existing system. We are not making worse the situation which previously existed. The new arrangements have been carefully designed so that parents and spouses will have to pay no more, whatever their income, whatever the number of children and whatever the nature of the student. I acknowledge the existence of the problems to which the noble Earl, Lord Russell, and others referred, in terms of parents and spouses refusing to pay towards the cost of their child. Those cases occur now. However, what we propose will not increase the incidence of such cases. To spend £700 million on trying to address such cases will not avoid those tensions. Under these proposals, no one will be asked to spend more. Indeed, the improvement on the present situation is that all students will have access to larger loans and they will be repaid in most cases over a longer period related to their future income and in fairer terms than under the present loan provisions. That will be irrespective of their pre-existing family circumstances.

Our proposals build on the existing and generally accepted principle in our society that students' families should, where they can, meet a proportion of their costs. Where they cannot, we make provision for those poorer students. However, our proposals do not impose any additional burden on either parents or spouses. I therefore recognise the point the Liberal Democrat Party is urging on us, but it is wrong in principle and would divert much needed funds from the higher education system. I therefore urge the Committee to reject the amendment.

Baroness Maddock

I rise to reply on behalf of my noble friend Lord Tope. I take to heart the Minister's words that we must try to proceed in a logical order. Therefore, my comments will be brief. I wish to reply briefly to the sideswipe from the noble Lord, Lord Davies of Oldham, about funding. Later on, when we come to tuition fees, we shall make quite clear how we would fund what we have in mind. The funding arrangements we propose are based on the work of Nicholas Barr and lain Crawford, who gave evidence to the Select Committee and are considered to be experts in this field.

The whole point of our amendment is that it needs to be looked at in conjunction with the other proposals we have made today, first, about equality between part-time and full-time students; and, secondly, the proposal we shall be putting forward later that all students' fees are paid. This amendment together with our amendments on those proposals would be supported by many people, including students. Finance could be found to make sure that it happened. However, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Blatch moved Amendment No. 91: Page 11, line 35, at end insert— ("( ) Regulations under subsection (2)(b) which prescribe the maximum amount of fees payable for attending a course of higher education shall ensure that the prescribed amount does not exceed 25 per cent of the average cost of courses of higher education.").

The noble Baroness said: I make the assumption, as I rise to move this amendment, that the Government, with their majority, will introduce tuition fees. I have therefore had to anticipate what that might mean for students. There have already been debates concerning the pros and cons of tuition fees but there is a real concern on the part of students about where it will all end. When Australia introduced tuition fees they started off as a relatively small percentage of all the course fees that had to be met. Year by year, the figure has crept up, until now it is a much higher percentage of the average cost of course fees.

The Bill has been brought forward to us in a skeletal state and we have been denied the opportunity to discuss, other than through amendments, the policy of the introduction of tuition fees and the abolition of grants. I therefore believe it is right that Parliament—not the Labour Party, not the Conservative Party and not the Liberal Democrat Party—should determine whether the figure, which I understand to be 25 per cent., should increase or decrease. My amendment seeks to put on the face of the Bill an absolute constraint on the Government not to go beyond £1,000 or 25 per cent. of the average cost of courses. I beg to move.

Lord Wallace of Saltaire

Amendment No. 97 has been grouped with Amendment No.96 and has much the same effect. I merely wish to underline that we are putting down a marker. We are embarking on a major change in the nature of the funding of higher education—the introduction of tuition fees and a contribution to tuition fees. We all know from the Australian experience that once this starts Ministers of Finance are greedy for more and that one slips down that road. I therefore wish to ensure that the level at which the costs of university education are imposed on students should be specified more clearly on the face of the Bill. I understand that there were discussions about whether there should be a flat £1,000 fee or whether the figure should be fixed at 25 per cent.

We are trying to make the best of a bad job. I agree with the noble Lord, Lord Glenamara, that it would have been more satisfactory to have gone down the road of a graduate tax. That would have been less offensive in a whole host of ways. It would have raised questions about who can pay and it would not have been seen to overload the student immediately. However, we have to make the best of the Government's proposals.

We would not be rushing the Bill through at this speed if the two Front Benches had not agreed before the election that the Dearing Report was a way of putting off the debate, knowing that the financial crunch which all the universities, including my own, would be facing in 1998-99 would require immediate action. The purpose of the two amendments is to ask the Government to specify more clearly what proportion of overall university costs they wish to take from students and to require that before they raise that contribution, as we anticipate some future government will, we have a thorough debate.

6.30 p.m.

Baroness Carnegy of Lour

I have met several groups of students and discussed this business with them at some length. One of their fears is that, above all, they do not know whether the proportion will stay the same. It is alarming to face this situation as a student and to wonder whether one can cope with it. An assurance on the matter, preferably on the face of the Bill, would go some way towards alleviating that particular fear.

Lord Desai

Perhaps I may make it clear that, more than at any other time, I am now speaking entirely for myself and do not represent the policy of my party on this matter. This amendment can be passed, but it will not make the slightest difference to the fact that the financial crisis in higher education will not be solved at this stage. Very soon, and within the lifetime of this Parliament, the Government will have to ask for more money because the great British public has decided that it does not want to fund the full cost of higher education. Therefore, we shall have to find ways of passing on the burden to those who benefit from it.

The present government have faced the problem to some extent and proposed the figure of £1,000. People do not like that. If all that income from students, without means testing, were to go to universities, it would not make even a small dent in the financial crisis in higher education. As I said at Second Reading, the true cost of higher education is not £4,000, but £8,000. That is the sum we charge foreign students and that is the real cost. Foreign students subsidise British students. Those students are not from the OECD countries, but from poor countries. We tolerate a situation in which Singaporeans, Malaysians, Chinese and Indian students subsidise British students.

Very soon, after this Bill has been passed, British universities will face further financial problems. No one should kid themselves that this matter will be solved straight away, because very soon ways will have to be found for students to pay a much higher proportion of their education costs than they do at the moment. I hasten to add that that is my view and not that of my party.

Lord Wallace of Saltaire

As an economist, is the noble Lord concerned about the inter-generational dimension of this issue? Some of us talk about inter-generational transfers. But what we are all saying now is that the great British public—namely, all those who went through higher education and were given it free because their parents were paying tax--now do not want to pay tax so that their children can have higher education. Therefore, we are imposing on future generations costs for further education which our parents did not pay. Let us recognise what we are doing.

Lord Desai

Let us get this straight: this is a middle-class subsidy. This scandal has gone on for about 30 years. A very small proportion of the population were subsidised by way of free higher education. The sum of £4,000, after tax, is about £7,000 before tax is deducted. A £21,000 loan was being given to middle-class students. We have concluded that working-class students do not get access to higher education, not because of what it costs, but because secondary school education is lousy. However, I shall not go into that.

The British public is saying, "The majority of us did not have higher education and the majority of us pay tax. How long are we going to continue giving £21,000 to every 18 year-old whose parents put them through A-levels?" It will have to stop. We are just holding back the tide. If we were really sensible and cared about access to higher education, we would say that we cannot continue paying a middle-class subsidy. The full £4,000 will have to be paid by students in higher education. They should take loans of £4.000 for fees with the £4,000 maintenance grant.

I get tired when people say that the British public do not like debt. But many of them have mortgages. People are willing to borrow in order to buy a house, so why should they not borrow for human capital? We have to pretend that everyone is poor and that we should go on subsidising the great British middle class in the comfort to which they are accustomed. It is real welfare dependence. The middle class have a real dependence on the welfare state. That will not stop because the world is not rational. Sooner or later we will have to transfer to a system in which all higher education is fully paid for by the students, financed by loans. If one wants to educate 30 per cent. of the population and not 10 per cent., no society is going to pay for it.

Baroness Blatch

I wish to speak to my amendment. I do not know whether I speak for the noble Lord, Lord Wallace of Saltaire. This is a fascinating debate on where we shall finish up in future. The two amendments in the Marshalled List have been tabled for two reasons. The first is because the Government, through primary legislation, have introduced tuition fees without reference to this House. That has caused great disquiet in the Chamber. Secondly, if at some future date the Labour Government wish to go further and take the £1,000 beyond the 25 per cent. of the cost of the average course, then it is our view—certainly my view—that that should be a parliamentary decision and not simply a sleight-of-hand decision by the Government. I hope that they will at least agree that Parliament should be involved in the debate and be allowed to vote, not simply through secondary legislation, but through primary legislation. Parliament should be allowed to vote, and through my amendment I wish to put that constraint on the face of the Bill.

Lord Glenamara

I support this amendment. I would have preferred the noble Baroness, Lady Blatch, to have included the figure of £1,000 in her amendment instead of 25 per cent. Either that should be done and this amendment passed, or the Government should undertake that any subsequent regulations made under this part of the Bill will be subject to the affirmative procedure. It must be one or the other. The Government must agree to one. We spent the whole of Tuesday meeting implacable rigidity from the noble Baroness. She did not accept anything at all. We ended up with a travesty of a thing called a general teaching council, which was no such thing. Please, can we have just a little flexibility? Will the Government agree to one proposal or the other? They should either give an undertaking that this matter will be subject to an affirmative vote, if it ever comes up, or that they will accept the amendment of the noble Baroness, Lady Blatch.

Earl Howe

I intervene briefly on this amendment to support what my noble friend Lady B latch has said and to direct the attention of the Committee in particular to the difficulties faced by medical and dental students. The needs and unavoidable commitments of that group of students differ in a number of important respects from those of other students. I am very concerned that the introduction of tuition fees on the basis proposed will disadvantage those who undertake a course of study in those subjects and indeed discourage others from taking up such courses.

Medical students have to face five or six years of lost earnings rather than three years. Their academic year—at least from year three onwards—can be up to 50 weeks rather than the standard 30 weeks. That in turn deprives them of the opportunity of supplementing their income through part-time work. The expenses of a medical student on things like reference books, clothing and equipment are at the best of times higher than those typically faced by other students and they cannot be avoided.

Similar considerations apply to dental students. A survey by the British Dental Association has already found that 90 per cent. of newly qualified dentists have debts averaging £9,200 per head. The BDA believes that dental graduates with that sort of level of debt will increasingly have to rely on income from private patients. So the level of debt is further increased by tuition fees. The availability of NHS dental treatment is likely to become increasingly limited.

The Secretary of State has said that the Department of Health will pay all tuition fees from year five onwards for all medical and dental students, and that is welcome so far as it goes. But why should a student of medicine or dentistry be treated differently from a student who studies another discipline and pays three years' fees? It is not only a matter of equity but a question that is likely to impact directly on the numbers of young people who put themselves forward for courses in medicine and dentistry. We are already woefully short of GPs and specialists in other medical disciplines. It is essential not to exacerbate an already severe recruitment crisis. I hope that the Government will look again at this issue. If fees rise it will hit a key group of students disproportionately, and that can only be a cause of great concern.

Earl Russell

The noble Earl raises a serious point. I observe the Minister shaking his head. I hope that it is about something else. We need a supply of doctors and dentists who have much longer courses than anyone else.

Lord Sewel

Will the noble Earl accept that on the basis of my experience in a university which has a medical school medicine is about the most over subscribed discipline? The A-level and other requirements for entry into medicine are the highest of any discipline. There is no problem about lack of applicants.

Earl Russell

First, the Minister is unwise to suppose that that is written in tablets of stone. Secondly, the Minister should listen to what the noble Earl has said about private practice. As to the effects of very heavy student debt on professional conduct, I suggest that if he has regard to what has happened to American lawyers he will perhaps be a little less confident than he appears to be at the moment.

Lord Desai

The £9,200 debt for a dentist cannot be a serious matter in relation to the income that can be earned. Doctors and dentists are not at the bottom of the earnings table. The reason why they take five or six years to qualify is that at the end of it they can make more money than the people who pursue three-year courses. It is simple economics: people invest money because they know that it will repay them. A sum of £9,200 is not likely to present a serious problem.

Baroness Blatch

Perhaps I may put a question to the Minister so that he can deal with it when he comes to reply. Would a dental or medical student have to borrow the maintenance for each of the six years? At the moment we are talking mainly about tuition fees. However, would students have to borrow the maintenance money, in which case the sum would not be £9,200 but £4,000 a year for six years and so a great deal more than £9,200?

Lord Whitty

The question just asked goes rather wide of the amendment. To deal with the principle, medical and dental students will borrow for each year although very substantial bursaries are available in medical and dental schools for the later years of the course. The statements of the Secretary of State and two of my noble friends earlier this afternoon have to a large extent addressed the particular problems faced by medical and dental students. We have ranged rather wider than this amendment. Some of the points raised are not wholly irrelevant to the general strategy, but they are fairly irrelevant to this amendment.

It is the intention of the Government that there shall be a maximum annual contribution. In Clause 18 we seek powers to limit the top-up fees. In Clause 16(5) we provide safeguards to ensure that the Government cannot increase grants for fees, and therefore also the contributions towards fees, by more than the level of inflation without seeking the approval of both Houses. That is how we shall control the absolute level, which at the moment is set at £1,000, beyond the increase in inflation. I hope that that will provide the reassurance that a number of noble Lords suggest students and potential students require. To a large extent I believe that it meets the point raised by my noble friend Lord Glenamara. It would require parliamentary approval before the Government increased the maximum level of student contribution above the £1,000 level set at the beginning. It is set at that level because effectively it is 25 per cent. of the £4,000 that is currently estimated to be the average cost of fees.

If we adopted these amendments that arrangement would be complicated. If one seeks to control the maximum level in relation to inflation one cannot also control it in relation to a proportion. I agree that if the RPI and the average cost of fees go up by exactly the same amount the answer is the same. However, if the average cost of fees goes up faster than the RPI and it is controlled by reference to the 25 per cent. it is a disadvantage rather than an advantage to the student. Therefore, we believe that the safeguard relating to inflation which we propose to build into these arrangements, and which would require parliamentary approval if it were to be breached, offers sufficient protection. This would complicate matters and in terms of the precise form of words would be totally unnecessary. I ask the noble Baroness to withdraw her amendment in the light of the fact that the intention behind it is already met by the Government's proposals.

Baroness Blatch

I have no intention of pressing the amendment at this stage but I have every intention to return to the House with this amendment in future.

Amendment, by leave, withdrawn.

[Amendment No. 92 not moved.]

6.45 p.m.

Earl Russell moved Amendment No. 93: Page 11, leave out lines 38 and 39 and insert— ("(a) for any such loan to bear interest at such rates as may from time to time be prescribed by regulations made by the Secretary of State but so that—

1. (i) the interest (which shall accrue from day to day) shall be added to the outstanding amount of a loan; and
2. (ii) the rates shall be such as appear to the Secretary of State to be requisite for maintaining the value of that amount in real terms.

and for the purposes of this paragraph the Secretary of State shall have regard to the retail price index published by the Central Statistical Office, any substituted index or index figures published by that Office or such other index as appears to him to be appropriate;")

The noble Earl said: Amendment No. 93 has been devolved to me. The purpose of the amendment is to introduce what is known popularly as a zero real rate of interest. The noble Lord, Lord Peston, if he were still in his place, would doubtless raise questions as to precisely what a zero rate of interest meant. As I remember from the events of 1990, this is a subject on which he is extremely expert. The general intention is perfectly clear. This provision already exists in the Education (Student Loans) Act 1990 which this Bill repeals while continuing a lot of the main outline. The object is to continue that particular provision. It makes a good deal of difference. A zero real rate of interest is the cheapest credit on the market. Every year I have a great deal of trouble persuading students to take up loans. They all prefer to work in Waitrose or Marks & Spencer rather than take up loans. The fact that it is a zero real rate of interest is rather important in trying to persuade them.

I move this amendment with a certain amount of optimism. Last night I read—a good deal later than I would have liked—the document that the noble Baroness kindly circulated, for which I thank her. I refer to Progress Report on New Student Support Arrangements in Higher Education from 1998/99. In paragraph 5.3 of that document the Government state: Interest rates on loans will, as under the current loans scheme, be linked to the RPI so that borrowers repay in real terms broadly what they borrowed. The Government is considering how best to rule out in primary legislation the imposition of real interest rates, which have no part in its plans, whilst recognising the technical complexities arising from the income-contingent nature of the loans".

Put another way, we are asking the Government to put into the Bill what they already intend to do. I welcome that intention. But why not put it into the Bill? On the previous amendment I drew attention to the fact that the Bill as presently drafted allowed the Government to fix a rate of interest which in cash terms could be anything from nought to 100, even 1,000 per cent. That is a rather extreme form of flexibility. When they intend to do what we ask them to do, why not say so?

I accept that there are technical difficulties because of repayment through the income tax scheme, but I do not believe that they are insoluble, nor do the Government; otherwise, they would not have stated in this paragraph that they intend to do this in primary legislation. What it shows is that the decision to introduce this measure was taken in very great haste after the appearance of Dearing. It was within a matter of hours rather than days, if my memory serves me right.

It looks like a case of legislating rather in haste. I wonder whether, if the Government had delayed the Bill even as little as a couple of weeks, they might have found time to solve that difficulty, and whether they may yet do so before the Bill completes its passage through both Chambers. If the Minister remembers the torrid time that she had last August, she might appreciate that in this area people can be easily alarmed. Were they to put into the primary legislation the provision for which we are asking, some of that alarm would be stilled. I should have thought that that would have been in their interest, as it is in ours, the students, and, as I believe, in the country's. I beg to move.

Lord Whitty

I think that I can be of assistance. I have a number of technical comments which I will skip because the noble Earl already understands the technical problems involved. Let me reassure the Committee that we have no intention of introducing interest rates above the RPI level, and that we wish to bring forward, as early as possible, an amendment which will write in almost precisely what the noble Earl wishes. It will not be in the terms of this amendment, but it will have the overall effect of restricting the ability to charge interest to the RPI. We still have to discuss how to do that. I cannot give a guarantee that those discussions will be completed by Report stage. However, during the Bill's passage we shall bring forward such proposals. In the light of that reply, I hope that the noble Earl will feel able to withdraw the amendment.

Baroness Carnegy of Lour

Will the Government undertake to publish a statement quickly about that matter so that the students will know about it? With all the problems and considerations involved in trying to frame the Bill, the Government are forgetting the students and how they are reacting. They are alarmed about this. Talk about the future and how in the end they will be earning so much more that it does not matter what the interest rates will be, does not comfort them. It would be a great help if it were possible to publish something in simple terms quickly so that the students can understand the matter.

Earl Russell

I agree with what the noble Baroness has just said. I am extremely grateful to the Minister who has said everything that I hoped he might say. I am therefore delighted to be able to beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 94 not moved.]

Baroness Blatch moved Amendment No. 95: Page 12, line 30, at end insert— ("( ) The Secretary of State shall ensure that, in any regulations made under this section in relation to any eligible student for any prescribed purpose for any academic year—

1. (a) the maximum amount of any loan made available to that student is no greater than half the prescribed cost of maintenance for such a student for that purpose for that year, and
2. (b) provision continues to be made for maintenance grants to be payable to such a student, subject to—
1. (i) a maximum amount of half the prescribed cost of maintenance, and
2. (ii) assessment of any contributions applicable in his case.").

The noble Baroness said: This is an amendment about which I feel extremely strongly. I support the recommendation made in Sir Ron Dearing's report. On that I shall quote from paragraph 108 of the summary of his report which states

"We would be particularly reluctant to see any reduction in public subsidies being concentrated on students from the poorest families and even more reluctant to see the funding released by this, and more, being used to increase the subsidies for others".

I suspect that if the students for whom the noble Lord, Lord Davies of Oldham, now has a responsibility which he will be exercising materially over the next few years—I know that it is further rather than higher education—are watching, listening, or read about the debate, they will be deeply depressed by his approach to their plight. At the moment a student from a poor family receives 50 per cent. grant, takes up a 50 per cent. loan, and has no tuition fees. That same student is under no obligation to start paying back that loan until he or she is earning 85 per cent. of the national average wage which at the moment is £16,750. At the age of 50, or 25 years, whichever comes first, the loan is written off.

When referring to parents and students earlier, the noble Lord, Lord Whitty, was right when he said that no parent under the new proposal would be asked to pay any more. But the student at the lower end of the group is seriously disadvantaged by the scheme. How can the Labour Party introduce a scheme which leaves the poorest students with a greater burden of debt as they leave university than students who themselves are more affluent and come from more affluent families? I just do not know. I do not know how Government Members here will justify that to their own colleagues in another place, where I know there is serious disquiet, let alone to the students.

The students will have to borrow the whole of their maintenance, which will be just under £4,000 per year, or will be when the scheme is fully up and running. They will start to pay back their loan when they are earning £10,000 gross per annum. That is almost £7,000 less than the present threshold. I shall give three examples. I could give more, because we have had some actuarial work done on the repayment scheme. Let us take teachers who rise to the middle rank of teaching. If they are earning £12,000 throughout the period—I am not adding anything for interest, because if one adds interest and some or all of the tuition fees the burden is even greater—they would pay the equivalent of 1.5 pence income tax for 83 years. Of course, it will not be 83 years, because there is a cut-off point at the age of 65. That is if they have borrowed £15,000. If a student borrows £12,000, the period comes down to about 65 or 70 years. If a student earns £14,000 he will pay the equivalent of 2.57 pence income tax, and on a £10,000 loan he will pay for almost 28 years; if he borrows £15,000 he will pay for 41 years. On a £17,000 income, which is still modest and still below the national average wage. they will pay the equivalent of 3.71 pence income tax for 23.8 years.

Students under the present system are a great deal better off. If one is going to lose a grant, paid for by the state, which is replaced by a loan, which the students pay throughout their working lives, that is a burden on poorer students which I find almost impossible to justify. I believe that Sir Ron was right. He started by believing that that was the right way to go. Sir Ron and his team looked at the possibility of removing maintenance grants. After a long period of consideration, they came to the conclusion that it would disadvantage students from lower income families. I speak today for those students. He therefore reinstated his recommendation.

Before the ink was hardly dry on that report, the Government came out with a response and set that recommendation aside. They did not merely remove the grant system from students, they added tuition fees. It is that package which we reject entirely. I hope there will be some sympathy for the idea that maintenance grants be retained for the lowest income students. I beg to move.

Baroness Carnegy of Lour

This is a serious matter. It looks as if the Government did not take time to study all the modelling that the Dearing Committee did, which revealed to it that this approach would not work. I do not know whether that is true. The Government made a rapid announcement. They probably had their own reasons for doing that. When it was made, none of us knew what the implications were. Those members of the Dearing Committee whom I know were astonished at the proposal and believed that the report could not have been studied. If that is so, and if the wrong solution has been reached, perhaps the Government should change tack. The situation is sufficiently serious.

The National Union of Students has not concentrated on the problem. I do not know whether that is because of its loyalty to the present Government and of its wish not to make things difficult. All the figures I have were produced by the St. Andrews Student Association. The students at St. Andrews, who are not affiliated to the National Union of Students, believe that the students are being let down by that body. Perhaps the NUS is behaving with a good conscience because it believes that it has a duty to support the Government. That makes an even greater case for the Government to look seriously at the issue.

I am sorry to keep quoting the students at St. Andrews, but the issue is important. They further stated that the previous government did away with housing benefit. The Labour Party were very much against that. I did not like it myself, although with a heavy heart I agreed to it on a number of grounds which existed at the time. Of course, it was in the light of the student funding regime which was then in place.

That regime is being changed to a great extent. The package of fees and maintenance means that even in the first year a badly off student will lose £685 more than a well off student. That being the case, perhaps we should table an amendment on Report to make it possible for students again to receive housing benefit. The short term problems present the difficulty. When a young person first goes to university he or she does not look ahead at how to become a QC. I have no children and therefore I have not experienced these problems. However, I have met young students a number of times and they feel that people will be extremely put off. They also believe that the proposal is immoral.

It is disappointing that new Labour should take such a step. I should be horrified if my own party did so, but I am even more horrified at new Labour doing it. I hope that the Government will look seriously at the problem to see whether they should swallow their pride, look again at the Dearing Report and do something slightly different.

7 p.m.

Baroness Warnock

Having heard the figures produced by the noble Baroness, Lady Blatch, it is impossible for me to remain silent about the two issues which I feared would arise. First, the number of students will decline; it is happening already. The thought of poorer students incurring the kind of debt that has been outlined is a serious deterrent, particularly when firms such as Marks & Spencer provide good training programmes. Pupils can join straight from school and be paid while they are training. With higher education leading students into the kind of debt about which we know, and with the existence of such alternatives, the number of students will further decline.

I worry more about the second issue. The trend of declining numbers entering the teaching profession will continue. The salaries earned even by teachers in secondary schools are extremely low by the average national standard. Recently, I read a job description of a head of department at a not very rich independent school. The maximum salary offered was £21,000, which one would be unlikely to receive until one's 30s or 40s. From what we have heard from the noble Baroness, Lady B latch, the proposal would deter people going into teaching. Large-scale debt would be inevitable for someone from a poor family having to take out the full loan for the entire university career.

We have heard about the distinction between, say, medical students and all others. Almost all science degree courses are now for four years, as are modern language degree courses at most universities. Realistically, the number of three-year degree courses is small. It is not only medical students and dentists who have long undergraduate lives but also architects, vets and others. We must concentrate our minds on whether the aims of encouraging more people into higher education and of recruiting more teachers are compatible with the proposals relating to loans.

Lord Glenamara

I wish to make a point about maintenance grants because people who are not associated with universities do not appreciate the kind of costs that students have to bear. The minority of students who have rooms in universities pay £43.50 a week. If they move out to private accommodation they often pay £50 a week, plus their daily fares to the university. An increasing number are moving out, particularly in my town where some 40,000 students are moving further away from the university. They have to pay their fares home during the vacations and they have to pay for books and stationery. They also have to feed themselves and I am sure that many do not have sufficient to eat. Today, a student in a modern university has high maintenance costs. Therefore, I hope that the Government will look at the amendment favourably.

Baroness Maddock

I believe that the amendment reinstates the previous government's policy of 50 per cent. grants, the rest being taken in loans. The Liberal Democrats have not changed their view of the proposal. We have examined it carefully and have concluded that students' tuition fees should be paid in full and that maintenance should be paid for by student loans.

Like the noble Baroness, Lady Carnegy, I have spoken to many students about the matter. As student numbers increase we must find ways of paying for that. Many of them reluctantly agree with our solution. We on these Benches cannot support the amendment.

Lord Desai

I wish to make an observation regarding the horrific statistics presented by the noble Baroness, Lady Blatch. It is important to remember that the loans are not like mortgages. There is a cut-off point after 65 years. The noble Baroness is telling me that the poorest people, rather than repaying for the required 83 years, will repay for only 40 years. The poorer the student the larger the subsidy of non-payment as regards the remainder of the loan. It is a progressive scheme. The noble Baroness proved that the rich will pay the full amount and the poor will pay half. That is exactly what we want, is it not?

Baroness Blatch

The rich will not pay the full amount. That is the point. The rich will borrow only half of the maintenance grant and the poor will have to borrow the full amount. If you are a medical student from a poor family, you will borrow £24,000, which is the maintenance for each of the six years at university. The noble Baroness is shaking her head but I am not talking about tuition fees; I am talking about maintenance. If you are on a four-year course, you will borrow £4,000 for four years and if you are on a three-year course, you will borrow £4,000 for three years. Therefore, somebody from a low income family may come out of university with a debt of £12,000, £16,000 or £24,000. But if you are a student who comes from a wealthy family, your parents will meet half of the cost and you leave university with only half of that debt but pay the £1,000 tuition fees. Therefore, the burden on the poorer students is greater.

I know what the noble Lord, Lord Desai, is saying, and the way in which the scheme would work if he were the architect of it would be fairer. But this scheme leaves students from low income families with a greater burden of debt. At present, they receive a grant and they will move to a situation in which they have no grant and will have to borrow all the money. They are the only students who will have to borrow all the money; the wealthy students will borrow only half.

Perhaps I may answer the noble Baroness, Lady Maddock. We have spoken to a large number of students. When they were consulted about how they felt as regards paying more of their maintenance grants, they acquiesced in the early stages. They were minded to go along with the Government because they knew that more money must go to the universities. They did so for two reasons. First, they believed that more money would accrue to students in universities. That is not the case. It pays for more students but it is not putting in more money per student.

Secondly, at that time it was not proposed that there would be the introduction of tuition fees and the abolition of grants. Students were surprised by that. They are now having second thoughts about this package which is very dramatic and is having a very real impact on students who come from low income families.

The last point is a matter to which the noble Lord, Lord Glenamara, referred. The Government are sounding extremely generous about helping people in particular from low income families. I know the noble Baroness is very irritated by what I am saying but these are important points and I am speaking on behalf of students who will have that burden to meet. They are told that the Government will meet their tuition fees. However, they are not aware—in particular, those coming from families which do not have a tradition of going to university—that they will have to meet their maintenance costs by borrowing heavily each year at university. That means that they must start to pay off the debt almost immediately on leaving university.

7.15 p.m.

Baroness Lockwood

A few amendments back, the noble Baroness and her noble friends were arguing that parents do not meet their parental contributions. That was being said in relation to earlier debates on student fees. Student fees and maintenance were being brought together on many of the amendments that we have so far considered.

Baroness Blatch

I do not know whether the noble Baroness has heard somebody else say that, but she certainly would not have heard me say it. I am a parent who met my contribution to my children's fees when they were means-tested. Indeed, at this moment, parents are meeting 50 per cent. of students' fees. There are some parents who do not, but I have not prayed in aid for my case that parents are not meeting their obligations to their children. I am talking about parents who are means-tested or—I use the jargon—affluence-tested to the point at which they are not in a position to meet any or all of the fees for their children.

Baroness Lockwood

If the noble Baroness, Lady Blatch, was not making that point, I apologise. But others on those Benches and on the Liberal Democrat Benches too have been arguing that the reason that we should treat 18 year-olds as adults is that one could not always expect their parents to meet the obligations. That has been said around the Committee.

We are now being told in relation to this particular amendment that students who come from less well-off families will bear a heavier burden than students coming from better-off families because the students coming from the better-off families will have to pay only half the cost of maintenance in terms of loans. All I am saying is that we cannot have it both ways. Either parents are meeting their parental obligations or they are not.

But the main point that I want to make on this amendment is that one of the reasons that the British system of higher education has been regarded as more expensive than many of the continental systems of higher education has been because we have been very generous indeed in relation to maintenance grants for students at university and in higher education. We have been more generous to students in higher education than we have been in further education. Parents of students in further education have had to help maintain their children in a way that parents of students in higher education have not been doing.

This particular change in the funding of higher education reflects the principle which is now being accepted widely: that those who benefit from higher education should pay for that higher education. Therefore, maintenance grants are being ended and student loans are being made available for all students, including students in lower income groups. The difference is in the repayment system of the loan which in future will be income-contingent. That means that those who can afford to pay will do so.

The only question that I raise—and it is quite different from that raised by the amendment—is whether £10,000 is the right amount at which repayment should start. But the principle behind this scheme is correct because it means that maintenance of those people who are enjoying higher education, with the opportunity to earn higher incomes in the future, should pay for that privilege.

Lord Pilkington of Oxenford

Perhaps I may add one point which was made on Second Reading by the noble Lord, Lord Glenamara, and myself, and the same point has been made by the noble Baroness, Lady Warnock; namely, the problem of people in teaching carrying that load. I fear that the noble Baroness has glossed over that.

I consulted three banks. They spoke off the record. I put to them the same situation to which the noble Lord, Lord Glenamara, referred on Second Reading; namely, a teacher earning about £20,000 who has a loan of possibly £12,000 plus because, as the noble Lord, Lord Glenamara, said, students often have to pay rent for 52 weeks of the year. The banks said that there was no chance of such a teacher obtaining a mortgage because he might take ill or he might lose his job. Therefore, the only people to benefit from this long-term scheme will be those who become barristers or go into highly paid jobs. It is a positive disincentive for people to go into teaching. Of that there can be no doubt. There will be never the chance of them obtaining a mortgage.

Lord Desai

I do not believe that the noble Lord listened carefully to his noble friend: the teacher will not pay the full loan. No one has to pay the loan; they will only have to pay the flow charges and a certain amount of interest per year. Therefore, by the time they stop paying at the age of 65 they will not have repaid the full loan. There is. perhaps, one criticism. If I were an orthodox finance champion, I might say that the scheme would encourage over-borrowing. Why should I not borrow £32,000 as I am not going to pay it back? I am only going to pay income tax relative to my income, and if I earn very little, I shall repay very little. It is a perfectly sensible proposal. The bank may not like the teacher but the teacher is not going to pay back the loan.

Lord Pilkington of Oxenford

Would that the noble Lord, Lord Desai, was running the bank. I gave a figure of £17,000 a year with a repayment of £630 a year, which is equivalent to 3.7 per cent. on income tax, to three banks. But they were not as generous as the noble Lord; indeed, they said that they would not give a mortgage. So I should work to become a director of one of the big banks and we would all benefit!

Lord Desai

I was only citing the figures put forward by his noble friend. Perhaps they should talk to each other.

Earl Russell

I believe that the noble Lord, Lord Desai, may inadvertently have strengthened the point made by the noble Lord, Lord Pilkington. The noble Lord, Lord Desai, was talking about the amount of repayment, but he raised the spectre of over-borrowing. The noble Lord, Lord Pilkington, talked very strictly about mortgages. Over-borrowing is something which might possibly concern a person who was being asked to lend money for a mortgage. It is quite a serious point. Can the Minister say whether the Treasury has had any consultation with the public service review bodies on the likely effect of the Bill?

Baroness Park of Monmouth

I should like to make a further point. Everyone is saying that, once they are graduates, students will be relatively well paid and that, therefore, they can well afford to repay the loan for their education. All that sounds perfectly sensible in principle. However, at present, students are feeling threatened and anxious. They will try to borrow as little money as possible and to earn as much as possible in ways that no academic wishes them to do; for example, they will go and stack shelves in supermarkets and work in bars. They will try to make enough money so as not to have to borrow too much for the future, especially if they know that they will not be going into the very highly paid professions. The result is that they very probably get a much worse degree than ought to have been the case. Indeed, we shall be turning out, with great pride, people with thirds and lower seconds who will never, therefore, make it in the high-flying professions and we shall have wasted all this effort. It seems to me to be quite mad that that issue is not being considered and that we are going towards a false economy which is against the interests of the country and, above all, against those of undergraduates.

Baroness Blackstone

The amendment strikes at the heart of the Government's policy on student support and raises fundamental issues relating to access to higher education by students from lower income backgrounds. I should point out to the noble Baroness, Lady Blatch, that I was not at all irritated by her raising a number of questions on the issue. However, I see from the noble Baroness's expression that she may not have been referring to me in that respect. Nevertheless, this is a most important matter. I hope that Members of the Committee will forgive me if I give a slightly longer answer than is usual in Committee as I believe it is essential to set the record straight on such a critical point.

There has been some confusion in the debate among those who have contributed regarding the issue of the position of students while they are at university and the issue regarding the position of graduates after they have completed their courses and when they are paying back what they owe. We need to keep those two aspects slightly separate.

I should tell Members of the Committee who have talked about the problems of students while they are at university that, under the scheme that the Government are introducing, students will have access to no less money than they have under the present scheme. Therefore, the suggestion that we, for example, should reintroduce housing benefit for students (which was abolished by the previous government) seems a little odd coming from the Tory Benches. As I said, students will not be any worse off under the new scheme than they are under the present one.

I should also tell my noble friend Lord Glenamara that of course I accept that rents charged by universities are often quite high. But, again, students will not have any less money up front to pay for their rents while they are at university than is the case at present. Therefore, we must be careful in distinguishing two quite different matters.

I should like to correct the noble Baroness, Lady Blatch, on one matter. I recognise that we are discussing very complex issues but, so far as concerns medical students, they will in fact be eligible for 50 per cent. of the cost of their maintenance in years five and six through a bursary scheme. Therefore, they will not be any worse off than they are currently. I believe that the noble Baroness misunderstood the position in that respect. It has been suggested that students are not, and will not be, aware of how much they will have to repay. I should like to reiterate the fact that we have worked very hard to provide students with as much information as we can about the new scheme.

The Government's proposals for an entirely loans-based system are grounded in what I believe to be a very sound principle; namely, that students' living costs should be met out of their future earnings after graduation. I am grateful to the Liberal Front Bench for their support on the matter. As we have consistently made clear, the arrangements for repaying loans will be fairer than under the current scheme. The level of the repayments that graduates are expected to make will depend on their income, as a number of my noble friends said in their interventions, and so will reflect the career success to which their higher education contributed. No student should be deterred from entering higher education by these arrangements. Indeed, I should like to take this opportunity to refute suggestions that our proposals have put students off applying to enter higher education in 1998-99. I believe that that suggestion was made by the noble Baroness, Lady Warnock. It is true that, when the normal deadline for applications expired in December, the figures indicated a year-on-year reduction of 6 per cent. However, that was more than offset by the numbers of students choosing to start this academic year rather than defer until 1998-99. In any case, more recent figures produced in the light of the unprecedented late rush of applications suggests that this figure might be even lower. That is a welcome sign that students and parents have understood the fairness of our proposals.

The noble Baroness, Lady Blatch, asked why the Government have not adopted the Dearing Committee's preferred option of retaining maintenance grants at roughly their present level. The Government share the committee's commitment to access and equity. There have been a number of comments suggesting that perhaps the new Labour Government do not do so, but of course they do. We also share its view that there should be a fairer balance between what graduates pay and what taxpayers pay; indeed that is what these arrangements are about in part. Our proposals build on the committee's recommendations. It is true that Dearing recommended keeping grants and that we are phasing them out, but Dearing also recommended that all students should make a contribution of £1,000 towards fees. Our starting point is that it is right to provide help with fees for those who need it. We will ask only those families who can afford to do so to contribute to fees. Perhaps I may tell the noble Baroness, Lady Carnegy of Lour, that of course we looked at the Dearing modelling before we made any final decision, but we do not believe that grants for maintenance have a place in a modern student support system. Graduates are the main winners in higher education: we believe that they should contribute towards the costs of maintaining themselves through a progressive, common-sense, purely income-contingent system of student loans. As the noble Baroness, Lady Maddock, said, students have largely accepted that fact. The National Union of Students accepted that before the election. It has nothing to do with wanting to support a new Labour Government. It had already believed that that was a fair and reasonable change to make.

It has been argued here that grants promote access, and that loans hinder it. I do not remember the noble Baroness or her colleagues arguing this when they introduced the loan scheme originally. Nor has it turned out to be the case. In the five years before loans were introduced, when students still received support from grant alone, participation among younger students from lower socio-economic groups rose by 2 percentage points, from 8.3 per cent. to 10.3 per cent. So any of us who had fears at that time have been proved to be wrong. I know that the noble Baroness will suggest that I was among them. But before she does so, I have to tell her that my fears were based on the former government's system of mortgage type repayment loans rather than the income-contingent loans that we are introducing.

Lord Mackay of Ardbrecknish

Will the noble Baroness give way?

Baroness Blackstone

I shall not give way. I wish to get on.

Lord Mackay of Ardbrecknish

It is the convention of this Chamber.

7.30 p.m.

Baroness Blackstone

I do not wish to give way; I wish to go on. I shall answer any question the noble Lord wishes to raise at the end, because I may be answering it now.

Between 1990 and 1995, during which time loans were introduced and the proportion of support available through the loan increased, the rise was much greater-7.1 percentage points, from 10.3 per cent. to 17.4 per cent.

Students from less advantaged backgrounds were not put off by the flawed mortgage style scheme introduced in 1990. All the more reason to believe that they will not be deterred by the fairer loans which we are introducing. Loans do not put off students from lower social groups entering higher education.

Nor is it right to suggest that students from lower social groups, having entered higher education, are unwilling to take out loans or will find other ways of supporting themselves rather than commit themselves to a loan—if I may say that to the noble Baroness, Lady Park. The most recent student income and expenditure survey indicates that, in 1995-96, nearly 70 per cent. of students from social groups D and E had loans. That is well above the overall figure.

Participation by lower social groups in higher education remains poor. Of course that is of great concern. But the evidence shows, crucially, that this cannot be put down to finance. The reasons students enter higher education are more diverse and complex than that, as are their backgrounds and circumstances. The rapid rise in participation all over the developed world is testament to that.

Yet I believe, and the facts suggest, that there is one fundamental factor which governs a young person's choice to enter higher education. That is having the school qualifications which universities demand. Students must have the opportunities to study for them and be helped to attain them. But survey after survey shows that students from lower social groups are either not getting those opportunities or are not succeeding in exploiting them. This is where students from lower social groups are disadvantaged and why I believe that they are not entering higher education in the numbers they should be. For example, analyses of the youth cohort studies suggest that students from higher social groups on average achieve higher A-level points scores that those from lower social groups. They also show that young people from lower socio-economic backgrounds are less likely to go on to A-levels after compulsory schooling and have higher sixth form drop-out rates. In other words, numbers of students from lower social groups going on to do A-level and similar programmes, completing them and coming out with good grades are comparatively low. Of course we must do everything we can to put that right. Indeed, the measures that we are introducing to create excellence in schools are about trying to do just that.

The key challenge is to get young people from poorer backgrounds onto the launch pad. Once they get to that point—once they achieve good A-level results—the proportions going on to higher education are very similar for different socio-economic groups. Student funding issues are secondary, but it is obviously vital to ensure that the financial package is adequate in particular for those with extra needs. That is why we have also taken specific action to encourage less well-represented groups to enter higher education.

First, as I have already explained, we are targeting basic support towards those students who need it. Less well-off students will receive free tuition and the full basic support available towards living costs.

Secondly, we are increasing the support available to students who find themselves in difficulty, either because of their circumstances or unforeseen problems. The access funds are there to provide extra help if students find they need it. They will be doubled for 1998-99, and extended to part-time students, as I have already said. A new £250 supplementary loan will be available. The sum of £5 million has been set aside for this for next year.

Thirdly, we are making special provision for students in particular circumstances. The disabled students' allowance will continue to be paid as grant and will no longer be means-tested. The other supplementary allowances which relate to students' personal circumstances—for example for students with dependants—will also continue as grants. We plan to convert some of the course-related allowances—for example, for extra weeks' attendance—to supplementary loans from 1999-2000. But I can assure Members of the Committee that broadly the same levels of support will be available to students while they are attending their course as in previous years. I believe that this is the key issue.

Of course, our proposals are aimed at generating additional resources for investment in further and higher education. I am sure that Members of the Committee do not need to be persuaded of the case of making this investment. By moving to an entirely loans-based system we shall be able to achieve greater savings, and so make more funding available for universities and colleges. At the same time, students will be assured of the support they need while they are studying, and will only be asked to contribute to the costs of their higher education once they have graduated and are earning enough to do so—and I must emphasise that again in response to noble Lords who spoke of graduates on low incomes.

In summary, this amendment would have the effect of perpetuating a student support system which is inconsistent with our aim of securing greater opportunities for participation in quality higher education. Most importantly, it would mean that fewer resources were available for much-needed investment in universities and colleges. I therefore urge the Committee to reject the amendment.

Earl Russell

Before the noble Baroness sits down, perhaps I may ask her to be a little less certain that present figures indicate that loans do not deter students. I advise all my first year pupils to take the loan. But I find the idea that higher education is supported by grants is so deep in the culture that at least half of them believe that they will be able to get through without taking the loan. Until that assumption goes, we shall not know how much loans deter students. Can we all keep a decent uncertainty for a little longer?

Baroness Blackstone

Of course there are uncertainties when a completely new system of this kind is introduced. But it is slightly dangerous to base assertions on anecdotal evidence. I, too, have much anecdotal evidence that I could give, one way or the other. Like the noble Earl, I have taught students for many years in various colleges of the University of London, just as he has. But we have to consider the proper statistical evidence before us. On 15th December, this year's applications were 6 per cent. down. However, we had an increase of 6 per cent. more than was anticipated in the numbers entering in October 1997.

On that basis, and on the basis of more recent statistics which suggest an even smaller decrease, I think that we can be reasonably confident. But of course I take his point.

Baroness Blatch

After what the noble Baroness said, I think all students ought to thank the Government for what they are doing and go away happy with no concerns at all!

Not only are students coming to me and my colleagues, and no doubt to Members on the other Benches, but so, too, are the noble Baroness's own colleagues both in this and in the other place, exceedingly disquieted by the proposition that there should be such unfairness in the scheme.

The noble Baroness addressed many other issues in the course of responding to the amendment. My amendment refers to the proposal's unfairness to young people from low income families. An enormous amount of money is to be saved. Grants are simply to be taken away, and all those grants accrue to the Treasury. It is a Gordon Brown proposal. There has been much talk about what will happen to the income from tuition fees, but no guarantee has been given that the money, ring-fenced, will come back into the higher education system. We are talking about billions, not millions, of pounds.

The noble Baroness said that broadly the same level of support will be sustained for students. I am afraid not. A student who at present qualifies for a 50 per cent. grant, which he or she has no responsibility to repay moves to a 100 per cent. loan, which they have full responsibility to repay. That is not "broadly sustaining the present system".

The noble Baroness talked about how much help is being afforded to students. Help is being afforded to students for £1,000 of their financial obligations. Four thousand pounds is being ignored completely. They have to borrow and repay £4,000; they may receive help with £1,000.

I wish to ask a straight question as to there being some guarantee. If money is saved from the abolition of grants, will that money accrue to higher education pound for pound? If it does not, I return to a point I made at another stage of the debate—namely, it turns out to be a tax, not a charge.

Finally, may I employ the example used by the noble Lord, Lord Glenamara, and return to "John and Jane". The reason the system is unfair is that John, from a high income family, ends up, after a three-year course, with a debt of £9,000. Jane, from a low income family, ends up after a three-year course with a debt of £12,000. However they pay the money back, whether or not it is income contingent, the person from the low income family leaves university with a greater burden of debt. I cannot believe that anyone can support that proposal.

Everyone is looking expectant in relation to the amendment. The debate has been wide ranging, and there is much support for it around the Chamber. There is a lot of support for the amendment in another place, too; Members believe that there should be some fairness in the system. I wish in particular to read the noble Baroness's remarks. I would like answers to the straight questions that I have set out. Therefore, just as I will reflect on this amendment between now and the next stage of the Bill, I hope that the noble Baroness will, too. I hope that we shall use all our energies in this place to make sure that students from low income families are not left with an unfair burden of debt at the end of their time at university. Meanwhile, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Haskel

I beg to move that the House do now resume. In moving the Motion, I suggest that the Committee stage begin again not before 8.45 p.m.

Moved accordingly, and, on Question, Motion agreed to.

House resumed.