HC Deb 05 February 1997 vol 289 cc1117-24

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Peter Ainsworth.]

10.30 pm
Mr. George Walden (Buckingham)

I have instigated this somewhat intimate debate—[Interruption.] It will be intimate in a moment. I have instigated the debate since it is one that would not occur naturally. That is because the condition of our universities is something that Parliament instinctively avoids. [Interruption.]

Mr. Deputy Speaker (Mr. Michael Morris)

Order. I ask hon. Members to carry out their negotiations elsewhere.

Mr. Walden

Higher education faces severe problems—the students know it, the academics know it, the vice-chancellors know it, the media know it and Members of Parliament know it. But the subject cannot be openly debated in the House of Commons, because the solutions are as unpalatable to the public as they would be to their parliamentary representatives. The public are not anxious to hear the truth about higher education, and we in this House are in no hurry to tell it to them. In that sense at least, the cover-up over the state of our universities is fully democratic.

I have seen the recently published Government evidence to the Dearing review—published, I believe, only yesterday—and I see no mention there of what I consider to be the realities about funding. Yet whatever they say in public, I doubt whether either the Government or the Opposition believe that the present position on funding is sustainable. The Dearing review will be a handy means of procrastination and obfuscation during the election period—which is why, it can be assumed, it was welcomed by the Opposition.

I make no criticism of my hon. Friend the Minister of State for using the existence of the review to postpone, rather than to seek to answer, questions. In his position, I would no doubt do the same. But someone has to win the election—whether or not they come to regret it—so it is worth putting on record the position as one Back Bencher sees it. Should my hon. Friend the Minister chance to agree with any part of this speech, let me assure him that I fully understand why he will not feel able to say so.

Schools need more money. Universities need more money. It goes without saying that neither of them will become better at education merely by having it, and that cash is a necessary but by no means a sufficient condition of their prospering. Nothing I say this evening should be seen as distracting from that self-evident central truth. Nowhere can so much money be spent to so little effect as in education. Yet that assuming we know what we are about in the classroom or lecture hall, adequate funds are needed for reasons to obvious to spell out.

It can safely be assumed that the Dearing review will not be so irresponsible as to conclude that the Government of the day should give the universities the cash they ask for. In any case, that would be a waste of breath, since no Government would do so. Nor is there a case for any more state money. Seen internationally, our universities are far better funded than our schools.

If money is to be made available for education, it should go to the schools, and be made conditional on changes of educational practice and philosophy. Our universities would then benefit to the extent that they would not find themselves in the position of acting as remedial institutions, which they do now to a far greater extent than they are ready to acknowledge in public.

My preferred solution to the cash crisis in universities is for students to contribute to tuition fees, through a graduate tax of some description. I see no long-term alternative. When, as Minister with responsibility for higher education, I was asked whether loans for maintenance were the thin end of the wedge, I was wary of denying it, because that is exactly what it seemed to me that it would be.

The debate has moved on since then—outside Parliament, at least. The Committee of Vice-Chancellors and Principals has come up with imaginative and realistic proposals in its evidence to the Dearing review, which includes the words: It may therefore be necessary for all students to make a contribution towards the cost of their tuition as well as their maintenance. This private payment would be in addition to funding council grants and tuition fees made to Universities under current funding arrangements. Since I was a little rude about the vice-chancellors in a book that I published recently, I should like to take this opportunity to retract those criticisms, and to praise them for their contribution to the Dearing review.

Not so many years ago, I was spat at while selling the notion of loans for maintenance. Now, opposition to the principle of loans has dried up, along with the expectoration. It is encouraging that the Committee of Vice-Chancellors and Principals was not mobbed or vilified for taking the logic of loans to its predestined conclusions.

When I spoke at a recent debate at the London School of Economics on the subject, the atmosphere was as civilised as the treatment of the issues was constructive. Nicholas Barr and Iain Crawford especially are to be congratulated on their work in this field, as is Professor John Ashworth, the former director, for daring to put the issue on the agenda.

I do not approach the problem in a spirit of market dogmatism. I have no metaphysical belief in the market—like democracy itself, it is simply the best way that anyone has thought up for getting things done—and am happy for Government to subsidise the arts, broadcasting and higher education to the extent that is sensible. But to promise to pay full tuition fees in perpetuity for a million or more students at the level necessary to maintain the traditional quality of our universities is not sensible, because, given other priorities, it cannot be done.

The consequence of spreading available funds increasingly thinly will be a dilution of standards in what was once, by international comparison, the best part of our educational system. We have done two things that, taken together, will prove a terrible blow to the quality of our higher education: we have tripled the number of students without providing the means, and we have expanded universities on the basis of inadequate schools.

Despite a more mature debate outside the House, student contributions to fees are still treated by many as immoral. By that yardstick, many of the best foreign universities operate on an unethical basis. The best moral guide to the question is still that provided by Lord Robbins. When he rejected loans as undesirable in 1962, he made an important proviso. As higher education continued to expand, he said, and more women entered, the time would come when there would have to be an experiment with student loans. He gave three reasons: social equity, distributive justice, and the need to encourage a sense of financial discipline and self-reliance among the students.

Contrary to folklore, for that is all it is, there is no ethical difference between loans for maintenance and contributions to fees. Lord Robbins's wise arguments about equity apply to both. In his time, there were 200,000 students. Now there are over five times as many, of which nearly half are women. A fivefold expansion is surely enough to trigger what could be called the Robbins caveat on student finance in an era of expansion.

The same arguments that applied to loans apply to contributions to fees. Yes, higher education benefits society, but it also benefits the individual. Seen that way, the equitable solution is simple. Why not split the cost?

We are told that many people would be prepared to pay more taxes if that meant ensuring for themselves and their children a better quality of higher education. Such a position is presented as evidence of civic virtue; it is nothing of the kind. The minority would get more money for themselves from the public, the majority of whom do not, and will never, receive a university education.

For those who insist that people would be only too ready to pay more taxes, a graduate tax would be the ideal opportunity to do so. Not only would their itch to swell Treasury funds be assuaged, but they could be assured that the proceeds would go directly to higher education rather than, say, to nuclear submarines. For that reason, among others, the case for the tax knows no natural political frontiers.

At this point, the objection is made that a graduate tax would dissuade people from aspiring to higher education. The middle classes are notoriously resourceful in defending their interests, but that is one of the most cynical and least intelligent defences of the status quo that I have heard.

The idea that the overwhelmingly middle-class student body must continue to receive free tuition out of solidarity with its less fortunate brothers, many of whom do not make it to university at all, is cant of a high order. There is something a little indecent about students and parents from well-to-do families using the poor as a human shield against contributing to the true cost of their own privileged education.

The argument does not wash. The point of a graduate tax is that it would be payable only after a graduate had secured a job that was well enough rewarded to enable him or her to contribute, and the objection that the tax would put off the poor neglects the real source of inequality in access to higher education: poverty of aspirations and inadequate education at lower social levels. Children who are born in dismal places tend to go to dismal schools, with dismally low expectations of what they can achieve. People at that level of society are not privileged enough to get into a state about university fees.

It will nevertheless be maintained as a last line of defence that some people from modest backgrounds have an in-built fear of getting into debt. Such people exist, and one understands their fear, but the force of that argument depends on our readiness to base the entire financial structure of our universities on the irrational apprehensions of an unfortunate minority. We should not base policy on such fears; we should try to dispel them.

Student contributions to fees would have academic as well as material benefits, of a kind alluded to by Lord Robbins. At a time when there appears to be some uncertainty about what higher education is for—that, too, needs to be addressed by Dearing—a graduate tax would concentrate minds usefully.

I am sure that the Opposition would agree that the tax would give students a stakeholding in their institution and make them more demanding about the teaching and quality of their courses, and their intellectual content and utility. Few students will get indignant about a mediocre course of dubious use to themselves or the world if someone else is paying. Many more would wake up to their responsibilities if they were contributing to the cost.

I will not say that things cannot go on as they are. Things are going on as they are, and can go on as they are pretty well indefinitely. There is no reason why British higher education should not go on sliding gracefully downhill for many years to come, assuming that we are prepared to contemplate a mass, low-quality system of the kind that the French have found themselves historically saddled with.

Not all academics feel it politic to tell the truth about what is happening to standards, but there are distinguished exceptions. On his recent retirement from Manchester university, Sir John Mason said: The present system which allows any student with minimal qualifications to follow any course or mixture of courses without regard to intellectual or vocational quality, utility, social or economic need, and at the taxpayers' expense, is unsustainable … The decision to expand higher education before attending to the schools was like adding an extra storey to a house with crumbling foundations. Baroness Warnock recently said openly what everyone knows to be true: that A-level standards are at risk, to the point where some of our universities could end up as little more than sixth-form colleges.

As a former Minister with responsibility for higher education, I must accept my mite of responsibility for some of what has gone wrong, but one should never forgo the luxury of being right after the event.

In fairness to myself, and, above all, to the late and sincerely lamented Lord Joseph, it was understood at the time that the question of student fees would one day have to be faced. He made a typically gallant and naturally foredoomed attempt to do it.

At that time, about a decade go, neither Parliament nor the country was ready to contemplate the truth. Everyone favoured expansion as a matter of conscience, and to ask who was going to pay for it was to sully their ideals with base materialism. Now that we have seen the results on our campuses of the peculiarly distasteful brand of high-toned evasion that afflicts much of our national debate on education, perhaps it is permissible to raise the question again.

10.44 pm
The Minister of State, Department for Education and Employment (Mr. Eric Forth)

I warmly congratulate my hon. Friend the Member for Buckingham (Mr. Walden) on bringing this important debate to the House, and on the way in which, through his writings and speeches, he has persistently sought to focus attention on the issue. He has made an important contribution to generating debate on the difficult issues involved in the funding of higher education.

My hon. Friend will not be surprised that I cannot agree with all that he says about the state of higher education. In many ways, we can be justifiably proud of our higher education system and its achievements over the past 17 years. Hon. Members know the figures, because they are often quoted, so I shall be brief. The number of students has doubled since 1979; some one in three of our young people enjoy the privilege of higher education, compared with one in eight all that time ago; our spending plans allow for that record level of participation to be maintained.

Nor can I agree with what my hon. Friend said, or perhaps hinted, about the possible adverse impact of expansion on standards. I believe that it can be shown that expansion has been achieved without evidence of a loss of quality. For example, on entry standards, the average A-level points score for students entering with GCSE A-levels has remained the same for the past six years, at 18 points.

The Higher Education Funding Council for England's quality assessments confirm that quality is being maintained. Universities and colleges have continued to offer a high-quality service, while achieving significant reductions in unit costs. New patterns of teaching, new methods of organisation and increased use of technologies offer scope for further productivity improvements. Those are achievements for which our universities, colleges and students deserve great credit.

The UK has the highest graduation rate for bachelor degrees in the European Union. That reflects lower wastage, and greater efficiency in our higher education system. The skills audit commissioned in the second competitiveness White Paper confirmed the UK's strong international position on higher education qualifications.

I do not say that we can be complacent—the skills audit also showed that our competitors are not standing still—but it is worth noting that the number of newly qualified graduates gaining first degrees each year has doubled since 1979. More than one third of those are the science, mathematics and engineering graduates who are so vital to our international competitiveness. The UK is near the top of the Organisation for Economic Co-operation and Development league for science and engineering graduates entering the young work force, ahead of Germany and the United States.

My hon. Friend has talked about expanding universities on the basis of inadequate schools. I contend that standards in our schools are improving all the time, with more young people than ever getting good school-leaving qualifications: 1996 saw the best ever GCSE and A-level results. We are determined that GCSE standards should be maintained, and have introduced a wide range of measures to secure rigour and standards.

Sir Ron Dearing's 16-to-19 report mapped out an agenda of action to strengthen the rigour and standards of A-levels still further from 1998. We have placed the quality of teaching and learning and the standards of qualifications at the very centre of our education polices. We accept that it is paramount that quality in higher education is maintained, and that standards remain of the highest.

My hon Friend expressed concern about the prospect of what he has called a "mass, low-quality system" of higher education, and has written: degrees rain down like confetti in a mass, underfunded system of suspect quality". I am sure that he would not expect me to agree.

My hon. Friend will recognise that universities are responsible for maintaining degree standards. The available evidence suggests that they take that responsibility seriously. Last year, with our encouragement, the Higher Education Quality Council embarked on a series of studies on academic standards known as the graduate standards programme. The HEQC has published a number of reports of specific studies within this programme during 1996, and will be publishing an overall report on the programme next spring. We have also been working with the CVCP and the HEFCE towards a single quality assurance agency.

I turn now to funding. My hon. Friend says that schools and universities need more money. Let me remind him that, notwithstanding the generally tight controls over public spending, the 1996 Budget allows for an increase in planned spending on schools, colleges and universities in 1997–98 of £875 million compared with 1996–97. That includes an extra £100 million in each of the next two years for higher education.

Total public spending on higher education in the United Kingdom, including student support, is now more than £7 billion. Total support for students through grant and loan increased by 2.5 per cent. for the year 1997–98, in line with forecast inflation, following rises of 2.6 per cent. and 2.5 per cent. in the previous two years.

But my hon. Friend is right to identify funding as a key issue for the future. Total public spending on higher education—more than £7 billion—represents 20 per cent. of total education spending, which is a substantial share of available resources. As my hon. Friend said, there is a limit to what the taxpayer can be asked to afford.

The future funding of higher education is, of course, one of the issues currently being considered by the national committee of inquiry into higher education led by Sir Ron Dearing, which is due to report this summer. The committee is considering questions such as: what are the purposes of higher education, and how have they changed? We have encouraged the committee to consider how higher education's links with the wider community, and in particular its role in lifetime learning, can be enhanced.

How should the appropriate participation rate in higher education be decided? Do standards acquired by graduates meet the requirements of the modern world? Crucially—this was the key question raised by my hon. Friend—who should pay for education, and how? I shall say more about the committee's work later.

The Dearing inquiry will be looking at a range of proposals for meeting the future cost of higher education, including my hon. Friend's proposal that the cost of tuition should be met by students themselves through a graduate tax. I am aware that there are many proposals on the table—including the CVCP's, to which my hon. Friend referred. It would be wrong for me to try to pre-empt the inquiry's recommendations. At this stage, nothing is ruled out, nothing is ruled in. But I should like to offer a few comments on my hon. Friend's thoughts, by way of points that should be borne in mind.

My hon. Friend said that the concept of student loans has been widely accepted. The Government's policy is to seek to spread the cost of student maintenance more equitably among the taxpayer, parents and graduates themselves.

The student support package has more than held its value since 1990, when loans were introduced. Grant and full-year loan together are 59 per cent. higher in cash terms, and about 16 per cent. higher in real terms in 1997–98 than they were in 1989–90. The arrangements remain generous on any international comparison. But I also contend that there is no evidence that the introduction of student loans has had a deterrent effect on participation. The introduction of loans has, if anything, improved the position of students, by reducing their reliance on assessed parental contributions and replacing those with a guaranteed loan facility.

Whether or not charging for tuition would have any deterrent effect on participation requires further examination. Student income and expenditure surveys show that the majority of students now in higher education now come from social classes C1, C2, D and E, in contrast to the position in 1988, when students from those groups were in the minority. It is important to consider the likely impact on such entrants of any move towards charging students the cost of their tuition and collecting it through a graduate tax.

We need to be clear about the difference between a graduate tax and a system under which student loans are collected through the tax or national insurance system. Under a graduate tax, graduates would pay additional tax throughout their working lives, regardless of the cost of their education. The complexity of administering a graduate tax and the resultant cost would be significant for employers as well as for the Government. Without careful structuring, it is possible that such a tax regime could act as a disincentive to participation in higher education.

The option of collecting loans via the tax or national insurance system was looked at in some depth when the current loans scheme was being set up. The Government concluded that the current system of payments by direct debit to the Student Loans Company was superior.

Current repayment terms are income contingent: those earning less than 85 per cent. of national average earnings pay nothing. We must expect the Dearing inquiry to consider the implications of this and many other proposals for meeting the costs of tuition in future, and to make recommendations.

In the short term, the Government do not believe that top-up fees are either necessary or desirable, particularly in the light of the additional funding I mentioned. I am glad that the CVCP has encouraged its institutions to defer any decisions about charging top-up fees until after Dearing has reported.

I said that I would return to the Dearing inquiry. Much has changed in the 30 years since the Robbins committee completed the first major review of higher education, and we can no longer rest on the old assumptions. It is recognised that we now need to consider afresh the purpose of higher education, what its objectives are, and how it should best develop to meet those needs.

Those fundamental questions prompted us to start a public debate. We wanted a broad national perspective, so we consulted widely on the purposes, size and shape of higher education for the year 2000 and beyond. We sought the views of the higher education community, its students and those in industry and elsewhere who employ graduates and use the findings of university research.

Responses to the review showed a shift in emphasis towards the role of higher education in providing skills for employment, and exposed the full scale of the choices facing higher education. That is why, early last year, the Government set up the Dearing inquiry. We have asked the committee to make recommendations on how higher education should develop to meet the needs of the United Kingdom over the next 20 years.

I know that many people see future funding as the principal issue for the inquiry to deal with, but it will be important for the committee to consider how the shape, structure and size of higher education should develop before looking at funding options. Indeed, a proper consideration of funding issues can only be predicated on a full and prior analysis of the purpose of higher education, of what proportion of young people should receive initial higher education, of how long it should last and what form it should take, and of how the needs of mature people and of employers should be addressed.

Our economic success will increasingly depend on improving our knowledge, understanding and skills. Higher education has a vital role to play in raising the levels of the nation's skills and competitiveness, thus enhancing our capacity to generate wealth and to improve our quality of life. That is why issues of the future size, structure and funding of higher education are so important, and why I am grateful to my hon. Friend for raising them tonight.

I doubt that I have entirely satisfied the purpose of the debate. I hope that the content and spirit of what I have said show my hon. Friend that his questions have in no way been ignored or dodged. We are taking a structured approach. We have entrusted Sir Ron Dearing and his colleagues with the enormous responsibility of responding to the questions that we have posed them. In that way, we can take the issue forward and approach the questions raised by my hon. Friend, albeit at a slower pace that he may wish.

Question put and agreed to.

Adjourned accordingly at three minutes to Eleven o'clock.