Commons Sitting of 21 July 1997

Preamble
The House met at half-past Two o'clock
PRAYERS
[MADAM SPEAKER in the Chair]
Oral Answers to Questions
  CULTURE, MEDIA AND SPORT

    Millennium Projects
    Ms Blears: To ask the Secretary of State for Culture, Media and Sport what assessment he has made of the long-term value of the millennium projects. [7496]
    The Secretary of State for Culture, Media and Sport (Mr. Chris Smith): The Millennium Commission's legacy will include projects all across the country worth about £3 billion. These range from new art galleries and science centres to hundreds of village halls and community greens. The commission's millennium awards for individuals will also provide opportunities for thousands of people to achieve personal aspirations while putting something back into the community.
    Ms Blears: As the Secretary of State is aware, we recently launched the construction of the national landmark millennium project for the arts in Salford—the Lowry centre—a unique combination of the performing and visual arts which brings together creativity and imagination in a way never done before. It will create 6,500 jobs in Salford. Will the Secretary of State tell the House what he considers to be the long-term benefits of the Lowry centre?
    Mr. Smith: My hon. Friend is absolutely right to draw attention to the enormous benefits that will come from the Lowry centre. It is one of 12 landmark projects across the country. It will provide jobs, entertainment and education, and it will provide a major new resource for the people of her area. I very much welcome the development of the Lowry centre, as I am sure she does, too.
    Mrs. Virginia Bottomley: I was very pleased to have been at the launch of the Lowry centre. Will the right hon. Gentleman confirm that there has always been bipartisan agreement on the Millennium Commission and that there was always an Opposition Member on it? Does that not make all the more disgraceful and deplorable the six months of shenanigans over the major event—the millennium exhibition at Greenwich—which have achieved no change in the five conditions apparently set out but merely jeopardised the project and made sure that Mr. McCormack has to work even harder for his very substantial commission?
    Mr. Smith: I pay much tribute to the role that the right hon. Lady played on the Millennium Commission in
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    developing the various landmark projects around the country, but I pay rather less tribute to her question. The millennium exhibition at Greenwich will be going ahead. It was important that we reviewed the position, as we said we that would immediately on coming into office, and the review is now complete. We have identified a number of aspects of the exhibition which will be fulfilled, such as having a permanent legacy and its being completed at the cost prepared for it. I am delighted that the right hon. Lady's colleague, the former Deputy Prime Minister, is now the Opposition nominee on the Millennium Commission.
    Mr. McNamara: Is my right hon. Friend aware of the leaks in the newspapers last week about threatened cuts to provincial projects for the millennium? Is he aware that in many areas the projects will not only bring about regeneration but will create jobs, have a very important educational, scientific and cultural interest and, in Hull, create an international centre for marine studies? Will my right hon. Friend confirm, first, that no specific decision has yet been taken by the Millennium Commission and, secondly, that no money is being shovelled out of the provinces to the capital, thus favouring the capital at the expense of the provinces?
    Mr. Smith: I can indeed confirm those two points. There was some inaccurate reporting in the newspapers last week, not for the first time, about these matters. The Hull project to which my hon. Friend refers and, indeed, a wide range of other projects are still under active consideration for round 3 of the Millennium Commission's work. The proper detailed appraisals are going forward in the normal way and announcements about them will be made in three or four months' time.

    Works of Art
    Mr. Fearn: To ask the Secretary of State for Culture, Media and Sport if he will make a statement on plans to encourage local authorities to sell minor works of art, purchased by past local authorities, which have not been on public display for over 20 years. [7497]
    The Minister for Arts (Mr. Mark Fisher): That is a matter for local authorities to decide. Disposals from museum and gallery collections need special care, and I hope that any local authority would take into account the guidelines issued by the Museums and Galleries Commission.
    Mr. Fearn: I do not want the family silver to be sold off, but would the Minister consider giving a directive to local authorities? Local authorities have works of art in their vaults and rooms, many of which have not come out for 50 years. I have been to several museums in the north-west, where many works of art have never been uncovered and lie rotting. Local authorities now have air conditioning and various other things to do. There should be a directive saying that a local authority could sell such works or bring them out for viewing by schools. There would then be some direct remuneration to the authority.
    Mr. Fisher rose—
    Madam Speaker: Order. I have not heard a question yet.
    Mr. Fearn: I asked about a directive.
    Madam Speaker: Do you want a directive or do you not want a directive? I am sure that the Minister can make a small response.
    Mr. Fisher: I hope that the hon. Gentleman is wrong to say that works of art are rotting. I am sure that directors of museums all over the country make sure that everything in their collection is well preserved. The hon. Gentleman has made an interesting point. We want to ensure that anything held by a museum is as widely accessible as possible, particularly to young people. There is great potential for work with schools and communities. However, I have no evidence that the basements and stores of local authority museums are stuffed with undiscovered treasures. I will seek the views of the Museums and Galleries Commission and the Local Government Association. The MGC has laid down very good guidelines for local authority museums.
    Mr. Alan Clark: I hope that the Minister will not issue a directive. Which guru will judge what is a minor or major work of art? The purpose may be to raise money, but, as the Minister well knows, it is not long since paintings from the Alma-Tadema and pre-Raphaelite schools were regarded as worthless, but now they are fetching millions. If such a directive were issued, in about 20 years all the Lowry paintings in the museum mentioned by the hon. Member for Salford (Ms Blears) would be swept out and put on the market.
    Mr. Fisher: I assure the right hon. Gentleman that the MGC guidelines are adequate for the time being. I shall not issue a directive. I am glad that the right hon. Gentleman has learnt so well from his distinguished father and understands how fashions and valuations vary. Sir Denis Mahon often picked up now priceless Guercinos for his magnificent collection, recently at the National Gallery, for very small sums in the 1930s. Hon. Members on both sides understand how such matters change.
    Madam Speaker: If I call Sir Patrick Cormack, do you think that I might get a question rather than a comment?
    Sir Patrick Cormack: Does the hon. Gentleman agree that there is no greater deterrent to potential donors than museums carelessly disposing of their assets?
    Mr. Fisher: I entirely agree.
    Madam Speaker: Well done.

    Millennium Projects
    Mr. Skinner: To ask the Secretary of State for Culture, Media and Sport how much has been allocated by the Millennium Commission to projects to mark the millennium. [7498]
    Mr. Chris Smith: The Millennium Commission has allocated £993 million to 111 capital projects and a further £19 million to 13 partner bodies making millennium
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    awards to individuals. In addition, a grant of £400 million has been agreed for the new millennium experience at Greenwich, giving a total allocation to date of £1.4 billion.
    Mr. Skinner: Why has the proposal for Cresswell Craggs in my constituency not been allocated any money? It is the northernmost part of the hemisphere that relates back to the ice age. Can we really expect to sustain an expenditure of £400 million for the polystyrene dome at Greenwich? It will probably cost double that before it is finished, now that we know that a tube station has found its way into the middle of it. Will my right hon. Friend bear in mind the fact that he may not be able to find money for hospitals and other things that would mark the millennium in a much more decent fashion for millions of people around the country? He should remember the song about the folly of years gone by, in which the man who had once built a tower to the sun asked:
    "Brother, Can You spare a Dime?"
    Mr. Smith: As I suspect that my hon. Friend knows, the Cresswell Craggs application was made to the heritage lottery fund and not to the millennium fund. There are a number of problems outstanding in connection with that project, not least of which is the fact that the land was privately owned and on a short lease. If my hon. Friend wishes to discuss the prospects for that project further at any stage, I shall be delighted to meet him to do so. I should point out to him, however, that decisions on such matters are the responsibility of the distributory bodies and not of the Government.
    In relation to my hon. Friend's point about the millennium exhibition at Greenwich, I simply point out that about 2,500 new jobs will be created during construction and a further 5,000 during the life of the exhibition. In addition, the British Tourist Authority has estimated that some £500 million of overseas revenue will be drawn into Britain as a result of the exhibition. That estimate is almost certainly very low.
    Mr. Collins: Might not one appropriate way to mark the millennium have been to include the word "tourism" in the Department's new name, as tourism is the largest industry for which the right hon. Gentleman now has direct responsibility?
    Mr. Smith: I draw the hon. Gentleman's attention to a press release issued by the British Hospitality Association, one of the major representative bodies in the tourism industry, in which the association says that:
    "a name is only a name. What is far more important for the association is that we have such good relations with the Department, which we are determined to build on".
    I whole-heartedly agree.

    Industrial Heritage (Museums)
    Yvette Cooper: To ask the Secretary of State for Culture, Media and Sport what assessment he has made of the role of museums in preserving the industrial heritage. [7499]
    Mr. Fisher: The industrial heritage is of immense importance to the understanding of our past. Museums clearly have a central role to play in its preservation.
    Yvette Cooper: Is my hon. Friend aware of the vital contribution made to our national industrial heritage by

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    the national coal mining museum in the Wakefield district not far from my constituency? Does he agree that the children of Pontefract and Castleford mining families have a great opportunity in that underground museum to learn about their industrial and social history? What can be done to safeguard the future of the national coal mining museum?
    Mr. Fisher: Yes, I know of the excellent work of that museum, which I have visited on more than one occasion. My hon. Friend is, of course, right to say that such museums are extremely important, especially for children in understanding the past of their region and where they came from.
    My hon. Friend asked about safeguarding the museum's future. I am glad to say that the previous Government provided some money. The Museums and Galleries Commission and local authorities, together with the private sector, have contributed to the museum. The heritage lottery fund has offered 75 per cent. of the development costs of £1.3 million to see whether a way forward can be found for funding the museum.
    My hon. Friend will, however, understand that mining museums have problems over and above other museums. Just to keep the underground site going, before one begins to consider the work of the museum, costs £340,000 a year. That is an additional cost over and above any educational, conservation or interpretive work. That is a major barrier. I am sure, however, that the director of the museum will continue the constructive dialogue that she has had with me and with others over the past few years. We are anxious to try to find ways forward so that the museum can prosper.
    Mr. Maude: How does the Minister reconcile his two apparently conflicting policy objectives—that admission to the great museums, including the industrial heritage museums, should be free to the public, and that museum trustees should be free to set charges if they wish? Will he reassure trustees that his Department will not discriminate against those who decide, in pursuance of their public duties, that charges are the right policy for their museum?
    Mr. Fisher: The right hon. Gentleman is right to say that trustees of museums have always decided and will continue to decide whether a particular museum charges for admission. There is no conflict between that duty on trustees and the Government's determination to pursue ways of ensuring the widest possible access for members of the public to the national collections—I emphasise that we are speaking of the core collections of the national museums, which have been collected with public money and maintained with taxpayers' money from all over the country. The two objectives are not in conflict.
    Mr. Derek Foster: I commend my hon. Friend's extraordinarily imaginative and progressive decision to give national recognition to the Bowes museum and the Beamish open air museum, both in the county of Durham. May I invite him to go further and to work in his Department to unlock the fund raising that would assist those two museums to enhance the superb work that they are already doing?
    Mr. Fisher: I am glad that my right hon. Friend finds those decisions imaginative. It is surprising how people
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    find imaginative the work that benefits them and their constituencies. I am sure that that is shared throughout the House. My right hon. Friend is right to say that the Bowes museum is one of the great museums in this country. To anyone who cares about museums, it is hardly surprising that it was at the top of the list of the first wave of designation. That makes a premier division for museums. In asking how we can add value to that, my right hon. Friend raises an important point that we are currently considering. That must be the way forward for designating museums. They are benefiting from the added status. We must now consider and discuss with them how to add value to that status.

    British Academy of Sport
    Mrs. May: To ask the Secretary of State for Culture, Media and Sport if he will make a statement on the British academy of sport. [7501]
    The Minister for Sport (Mr. Tony Banks): I have visited all three sites and had discussions with the UK Sports Council and officials. I hope to make an announcement in September.
    Mrs. May: Does the Minister recall that on 9 May, referring to the location of the British academy of sport, he said that there was no firm decision in his mind, but that it would not take him long to work it out. If a week is a long time in politics, what on earth is four and a half months? Why has it taken the Government so long? Why have they been sitting on the fence, given that the Minister of State visited the sites fairly soon after the election? What has got in the way of his coming to the House with a decision earlier than September?
    Mr. Banks: The hon. Lady obviously has problems grasping the theory of time. The Government have been around for only nine weeks and I have been doing this job for only eight weeks. I have not yet made Minister of State, and I doubt whether I will, but I will settle for Parliamentary Under-Secretary. We have survived for a long time without a British academy of sport and it is essential to get it right. I have inspected the three sites, but it is a very difficult decision. I do not want to make a decision in such haste that I shall have to repent at great leisure. The decision will be made, and it will be made in the best interests of sport in the United Kingdom.
    Mr. Grocott: In agreeing with my hon. Friend that it is important to get the decision right, may I draw his attention to the excellence of the submission from the central consortium, and the widespread support for that submission from both the east and the west midlands? Does he agree that one of the reasons why it is such a strong application is that it consists of a number of centres of excellence, including Lilleshall on the boundaries of my constituency? I know that my hon. Friend has been travelling around seeing as many centres as possible. When Chelsea are away at Aston Villa, for instance, and he has good reason to be in the west midlands area, may our hon. Friend the Member for The Wrekin (Mr. Bradley) and I invite him to come and see the work being done at Lilleshall, which I am sure will enable him to reach a speedy and correct conclusion?
    Mr. Banks: And I know which decision my hon. Friend thinks would be the right one. There are three

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    excellent sites: that is the purpose of having a shortlist and what makes the task more difficult. Each site has some advantages and some disadvantages, and all three sites have proponents as strong as my hon. Friend. I assure him that no site is yet ruled out, and none will be ruled out until we rule out two when we take the final decision.
    Mr. Hawkins: Does the Minister agree that, whichever site is chosen, it will be important to continue the previous Government's policy of regional academies for sport in addition to the national academy? Does he agree that the two unsuccessful bidders should immediately be invited to become regional academies? May I further ask the hon. Gentleman whether, as a new Minister, he feels comfortable working in a communist-style ministry of culture?
    Mr. Banks: Once the central academy is set up, the need for regional centres will be essential. On the last part of the hon. Gentleman's question, when I ran the arts and recreation department on the Greater London Council I was referred to as the snarling tsar of culture. I am happy where I am.

    Film Industry
    Mr. Jim Cunningham: To ask the Secretary of State for Culture, Media and Sport if he will make a statement on the progress made by the film review group. [7502]
    The Minister for Film and Tourism (Mr. Tom Clarke): Following the film review group's first meeting on 3 July, co-chaired by Stewart Till of Polygram and myself, the six specialist sub-groups have been established and are drawing up detailed work plans for their specific areas.
    Mr. Cunningham: What effect will the Budget have on the deliberations of the film review group, especially on the future of the film industry?
    Mr. Clarke: The film tax concessions in the Budget were warmly received by the whole industry. Both the industry and my right hon. Friend the Chancellor accept that the concessions will provide the opportunity to improve the capacity of the UK film industry, increase the number of skilled workers in film and production and ensure that we have strategies to build on those skills and talents. That is how the industry will respond, thus justifying my right hon. Friend's confidence in it and its in him.
    Mr. Nicholls: First, I welcome the fact that the Minister has shown more enthusiasm today for his brief than when he recently spoke to the all-party film group, when he made it clear that his indignation at not being in the Cabinet was not greatly reduced by his films portfolio. Will the Minister take this opportunity to say that he would reject any suggestion by the film review group for the Government to join the Eurimages project, which has so far failed to secure the widespread distribution of European films and has instead used substantial sums of public money to pile up a European film mountain of films that are unwatched and may prove unwatchable?
    Mr. Clarke: I had planned to welcome the hon. Gentleman back to the Dispatch Box, but I trust that he
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    will have a higher regard for fact and veracity on future occasions. I am delighted with my job and I regret that he will never be able to say that. Given the excitement in the industry and the splendid work that the film review group is doing, he might have been more constructive. He might have paid tribute, for example, to Colin Leventhal, Channel 4's director of acquisition, who heads the subgroup on finance, or to the sub-group considering skills and new jobs. The hon. Gentleman has come naked of ideas to the Opposition Dispatch Box, and that is why he will never enjoy himself as much as I do at the Government Dispatch Box.
    Mrs. Betty Williams: Surely the financial aspect of film production and distribution should be the main area of concern. Will the members of the film review group be able to address that matter?
    Mr. Clarke: The groups, including the main group, have been working extremely hard and have considered that issue. I wish to make it clear, however, that, despite the excellence and the comprehensive nature of the main group and the sub-groups, those who are not in membership are very welcome to make a contribution in evidence, either in writing or in person. I include in that an invitation to my hon. Friend.

    Cable Television Companies
    Mr. Fabricant: To ask the Secretary of State for Culture, Media and Sport when he next plans to meet cable television operators to discuss their future expansion plans. [7503]
    Mr. Fisher: My right hon. Friend has already met the Cable Communications Association and had a wide-ranging discussion on broadcasting policy issues.
    Mr. Fabricant: Will the Minister join me in congratulating the cable companies on their multi-hundred million pound investment in cabling up Britain? I include in that ComTel, which is cabling up Lichfield. Does the Minister think that cable companies—which provide not only television but telephony services—would have made that investment if they had thought that British Telecom would be able to compete with them, given that BT already has a network in the UK? When will the Government be in a position to say whether BT will be competing with the cable companies, which currently have great doubts about continuing their investment?
    Mr. Fisher: I agree that the cable companies have done well. They have invested £7 billion so far and are on their way to a projected investment of £12 billion. They have installed more than 2 million telephone lines, which has sharpened competition with BT. The Government are committed to lifting the broadcasting restrictions on BT and to treating BT and the cable companies on a fair and equitable basis. There are many issues to be considered, and I cannot give the hon. Gentleman a firm date on which any such decision will be made.
    Mr. Maxton: Does my hon. Friend agree that the customers are more important than the cable companies and that we should ensure that customers get the maximum benefits of cable television as quickly as

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    possible? Does he understand, therefore, that his failure to give BT a much earlier right to broadcast has disappointed some of his hon. Friends?
    Mr. Fisher: My hon. Friend will know that these things are under discussion with BT. As he says, the television and telephony services to the public are crucial. The hon. Member for Lichfield (Mr. Fabricant) should take up with the cable companies why they are not making greater penetration into television and broadcasting, as fewer than a quarter of the houses they pass are taking up the opportunity of television services. We want high-quality television services and more opportunity for telephony services in the interests of the consumer.

    Media Ownership
    Mr. Gale: To ask the Secretary of State for Culture, Media and Sport if he will make a statement on the regulations governing media ownership. [7504]
    Mr. Chris Smith: We have no proposals to revise media ownership restrictions at present, but the subject will be considered as we develop revised proposals for regulating the converging broadcasting and communications industries.
    Mr. Gale: It was a genuine question, and I am saddened that the Secretary of State was unable to give a firm assurance. In the light of the Independent Television Commission's award of digital transmission systems to British Digital Broadcasting—and the opportunities that that creates for British Sky Broadcasting to provide and decode programmes—and in the light of the Mirror Group's territorial ambitions in television, particularly in Scotland, does the right hon. Gentleman think that it is time to look seriously in the public interest at cross-media ownership to ensure that the public are guaranteed fair and reasonable access to news and information? Will he conduct a review?
    Mr. Smith: First, I always expect genuine questions from the hon. Gentleman. Secondly, I agree that it is the public and their interests that must come first. That is why the key principles in any such discussion must be plurality of voice, diversity of ownership and quality of content. Any regulatory regime must ensure that those principles are maintained.
    Mr. Maude: When the Secretary of State considers the issues of media ownership, will he give some thought to the arrangements for appointments to the part of the media that the Government own—Channel 4? Will he say something about reports in the newspapers that the ITC has been ordered not to renew the contract of the current chairman of Channel 4, Sir Michael Bishop, on the basis that he is a Conservative supporter, despite the fact that both the previous chairmen, who were appointed by Conservative Governments, were prominent Labour supporters? Will the Secretary of State confirm that his action, apparently saying that Sir Michael would be reappointed over his dead body, is all of a piece with the Minister for Sport's intemperate remarks about Lord MacLaurin becoming chairman of the Sports Council?
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    Will the Secretary of State grow up a bit and understand that these are serious people who give a lot of their time for the public service in good faith and do not expect to be abused in this way by new Labour?
    Mr. Smith: I pay warm tribute to the work of Sir Michael Bishop as chairman of Channel 4, particularly his work in fighting off the depredations of the previous Government, who threatened to privatise it. In that respect, I recall that the right hon. Gentleman, in a previous incarnation, was busy doing commercial work proposing precisely the same thing. I should say, however, that the ITC, which is responsible for recommending the appointment to the chairmanship of Channel 4, subject to ratification by the Secretary of State, will proceed to public advertisements for the position in the normal way, as is appropriate under the Nolan procedures.
    Ms Abbott: When the Secretary of State looks at cross-media ownership, will he bear in mind the fact that many of us on the Government Benches are also concerned about the issue? Media lobbyists can always give persuasive reasons why their privileged position should continue, but there is no evidence—certainly looking back over the past 20 years—that cross-media monopoly has increased diversity or increased the service to the public.
    Mr. Smith: I agree entirely with my hon. Friend. The point that she makes is important. What we need to do, in relation to regulation of the media industries, is ensure that plurality and diversity are protected while, of course, the needs of the media industries and their aspirations to make their way in a global communications world are considered. Striking the right balance is important, but in all this the needs of the viewer and listener must come first.
    Mr. Clifton-Brown: Does the Secretary of State agree that regulation in the media industry could be improved? If so, would he cut the number of regulatory bodies? Is he planning to replace Oftel—the Office of Telecommunications—with an "Ofcom" regulatory body? Would he consider merging the Monopolies and Mergers Commission with the Office of Fair Trading, for media purposes
    Mr. Smith: Matters relating to the OFT and the MMC are for my right hon. Friend the President of the Board of Trade. However, in a world in which broadcasting and telecommunications increasingly converge, it makes sense to look seriously at the regulatory regime. That is precisely what we are doing with our colleagues in the Department of Trade and Industry. We will come forward with considered proposals in due course.

    National Lottery
    Ms Dari Taylor: To ask the Secretary of State for Culture, Media and Sport what plans he has to reform the national lottery. [7505]
    Mr. Tom Clarke: My right hon. Friend will make a statement later this afternoon on the Government's proposals for reforming the lottery.
    Ms Taylor: I hope that I will hear this afternoon that local applications are given equivalent consideration to

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    applications made by quangos, if not more consideration. My question relates to my constituency, in which the Butterwick trust, a charity, wishes to open a hospice for dying children—anyone who goes through that period knows how traumatic it is. However, the trust has been turned down three times, and we know not why. It is important that the trust should know why.
    Secondly, there is a commercial venture, proposed by Teesside development corporation, for a tele-ski development which nobody wants. Indeed, no local wants it. The question is clear: are people who put forward commercial ventures—quangos, non-representative of local communities—to be given precedence over local people?
    Mr. Clarke: I am grateful to my hon. Friend for drawing to the attention of the House concerns that many hon. Members on both sides of the House share. She will know that those decisions are taken—if the proposals are submitted individually—by a body that is independent of the Government. I assure her that the Government believe in the people's lottery and, therefore, we are concerned about obtaining a genuine public response. My hon. Friend and the House will not be disappointed when my right hon. Friend the Secretary of State makes his statement in, I hope, a few moments.
    Mr. Brooke: What is the Minister's current definition of additionality?
    Mr. Clarke: I wonder whether the right hon. Gentleman is planning to contest the Glasgow, Govan constituency, or is he asking a question relevant to a Department that he once headed? Well though I understand his worries about additionality, I do not recall that he did much about it when he was in government. If the right hon. Gentleman manages to catch your eye when my right hon. Friend makes his statement, Madam Speaker, I am sure that he will not be disappointed.
    Mr. Maclennan: Does the Minister not recognise that less than a quarter of the money raised by the lottery for good causes has been distributed to those causes and that, in some cases, additionality has been helped by the Foundation for Sport and the Arts, whose position under the present Government's policies appears to be as parlous as it was under their predecessors? Is the right hon. Gentleman aware that the 27 per cent. pools betting duty, as opposed to the 12 per cent. duty on the lottery funds, will drive the Foundation for Sport and the Arts into the ground and that it has done more good in its lifetime than any of the national lottery causes have for the arts?
    Mr. Clarke: The last question is a matter for the Chancellor of the Exchequer.
    On the main question about additionality, clearly in the eight weeks or so that we have been in government, we have tried to give thought to various important matters including that one. I invite the hon. Gentleman to be a
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    little more patient. In a few minutes, he will find out that that problem is tackled in the White Paper and my right hon. Friend the Secretary of State will be happy to give his response.

    Digital Television
    Mr. Fraser: To ask the Secretary of State for Culture, Media and Sport what representations he has received concerning the Independent Television Commission and digital television; and if he will make a statement. [7506]
    Mr. Chris Smith: The recent award of licences to operate digital terrestrial television multiplexes was a decision which was, by statute, entirely for the Independent Television Commission. I have accordingly received no representations concerning that decision, although some opinions have been expressed to me about its possible implications.
    Mr. Fraser: Does the Secretary of State agree that the licence fee for digital television should be higher than that payable for terrestrial television?
    Mr. Smith: No, I do not necessarily agree with that proposition. Those, of course, are matters for further debate and discussion. The BBC's licence fee arrangements are in place for the next four years—agreed by the Government of the day, whom the hon. Gentleman now supports from the Opposition side of the House. I see no reason at this stage to move to a higher licence fee.
    Mr. Gordon Prentice: Does my right hon. Friend recognise the frustration felt by people in north-east Lancashire, who are fed up with being treated as country cousins, with no Channel 5 and very little cabling? To cap it all, digital terrestrial and digital audio, which will roll out across the country next year, will touch only 60 per cent. of the population. What does he have to say to people in north-east Lancashire who will be left behind by that? We all pay the licence fee. Surely, digital terrestrial and digital audio should reach 99 per cent. of the population, not just 60 per cent.
    Mr. Smith: I agree entirely that that must be the aim. Indeed, if we progress properly and speedily with the introduction of digital terrestrial television, we will be able to expand it to a much greater extent than that envisaged by my hon. Friend in making his point.
    Mr. Green: The Secretary of State will be aware that Channel 4 has been awarded one of the digital multiplexes. In the light of an answer that I received from the Treasury two weeks ago, merely saying that if Channel 4 were to be privatised the amount raised would depend on the means of sale, will he take this opportunity to state unequivocally, once and for all, that the Government have no intention of privatising Channel 4?
    Mr. Smith: The hon. Gentleman is slightly incorrect in that the multiplex has been awarded jointly to Channel 4 and Channel 3. I can confirm that we have no intention of privatising Channel 4; nor, indeed, does his party, which did not propose that before the general election.

    Football
    Mr. Coaker: To ask the Secretary of State for Culture, Media and Sport what plans he has to assist the campaign to host the soccer World Cup in England in 2006. [7507]
    Mr. Banks: The Government are committed to attracting major sporting events to the United Kingdom and are giving full promotional and diplomatic support to the Football Association's bid to host the 2006 World cup. I am chairing a co-ordinating group of FA, Premier League, Sports Council and Government officials to ensure that we focus the campaign as much as possible.
    Mr. Coaker: Is my hon. Friend aware of the tremendous support throughout the country for bringing the World cup to England in 2006 and of the great boost that it would be for soccer? Will he comment on the ways in which football clubs and supporters might work with the Government to assist in his campaign to bring the World cup here?
    Mr. Banks: I certainly agree with my hon. Friend that it would be an enormous boost to British football, and indeed to tourism and to the country as a whole.
    My hon. Friend asks what clubs and supporters can do to assist the Government, the FA, the Premier League and others in getting the 2006 World cup here. I would say to him and to all football supporters that they should be on their best behaviour, especially when travelling in Europe next season for the various European competitions. I shall be travelling with my club, and I can assure the House that I shall be on my very best behaviour. If football fans laid off the lager and were a little more Gauguin than Gazza, that might assist us enormously.

  LORD CHANCELLOR'S DEPARTMENT

    Public Defenders
    Mr. Fabricant: To ask the Parliamentary Secretary, Lord Chancellor's Department what is his policy in respect of public defenders. [7528]
    The Parliamentary Secretary, Lord Chancellor's Department (Mr. Geoffrey Hoon): Any criminal defence services funded by legal aid would have to be independent, adequately resourced and of the right quality to play an effective part in a criminal justice system. We have not ruled out the possibility of engaging employed solicitors, or indeed solicitors under specially designed contracts for particular kinds of work, if those would be the most suitable arrangements in all the circumstances.
    Mr. Fabricant: As the hon. Gentleman and his Department have expressed some concern about the quality of the Crown Prosecution Service and the solicitors employed there, what assurance can he give that, if he were to go ahead with a public defender system, he would be able to ensure that solicitors of the highest calibre were employed, and not simply those who were unable to get jobs elsewhere?
    Mr. Hoon: In setting up publicly funded services, we would guarantee lawyers of an appropriate quality and
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    standing. We intend to adopt the most appropriate system for delivering legal services, according to the nature of the work in question. We have not ruled out the possibility of having employed lawyers; indeed, there is likely to be a pilot scheme in Scotland in due course which will allow us to test precisely the quality of the service that is made available.

    Woolf Report
    Mr. Hawkins: To ask the Parliamentary Secretary, Lord Chancellor's Department what is his Department's policy towards the recommendations contained in the Woolf report on civil justice. [7531]
    Mr. Hoon: My noble Friend the Lord Chancellor has invited Sir Peter Middleton to review current proposals for reform of civil justice and legal aid systems. He is to produce an interim report by September. The Lord Chancellor, however, has made it clear that, in the meantime, he wants the preparatory work to continue, to preserve the planned implementation date of October 1998 as a realistic option.
    Mr. Hawkins: In the light of that reply, and given that the Woolf report was one of the most thorough investigations ever undertaken into any part of the justice system, what on earth do the hon. Gentleman and the Lord Chancellor think that Sir Peter Middleton can tell them that the Woolf report has not already told them?
    Mr. Hoon: In the first place, the Government were elected on a commitment not only to review the Woolf report but to examine, at the same time, proposals for the reform of legal aid. We consider it appropriate and necessary to consider both aspects of planned reforms as part of a thorough review. The Lord Chancellor has made clear his support for the spirit of Lord Woolf's recommendations, which are designed to deliver a quicker, simpler and cheaper civil justice system. The purpose of Sir Peter's review is to ensure that we are on the right track.
    Mr. Garnier: How does the Department intend to reconcile the differences between its policy on the Woolf report and the decision in the Witham case?
    Mr. Hoon: I have said that we will carefully examine the review following Sir Peter's report in September. It will then be appropriate to consider his recommendations in the light of any decided cases.

    Legal Aid
    Mr. Baker: To ask the Parliamentary Secretary, Lord Chancellor's Department if he will extend the provision of legal aid to cover defence from libel actions. [7532]
    Mr. Hoon: There are no plans at present to extend the scope of the legal aid scheme to include defending libel actions. Successive Governments have taken the view that the outcomes of such cases are uniquely difficult to foresee and that, even if the general mechanisms against

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    unmeritorious proceedings could be strengthened, they would still not provide an effective safeguard against the potential waste of public money.
    Mr. Baker: I am disappointed by that reply. I hope that the Parliamentary Secretary will incorporate consideration of extension in the review of legal aid. Does he recognise that libel actions, and the threat of them, have been used by people such as Robert Maxwell to inhibit freedom of speech and abuse the course of law? Would it not be fairer to ensure that those who wished to publish articles could not be subject to unfair actions for libel from people who want only to shut them up?
    Mr. Hoon: After the previous Lord Chancellor's Question Time, the hon. Gentleman kindly sent me a copy of various documents produced by his party, one of which referred to the Liberal Democrat proposal that legal aid should be available for libel proceedings.
    The hon. Gentleman also suggested a defence of offering to make amends. First, such a defence is included in the Defamation Act 1996, which provides for an offer to be made by defendants where certain circumstances are satisfied. Those procedures are not yet in force, but we are carefully considering whether they might appropriately be introduced. Secondly, it is possible for plaintiffs to bring proceedings in the small claims court, so long as the award is not more than £3,000.
    Mr. Skinner: Listening to the Liberals over the past eight or nine weeks, I get the impression that they have spent their 1p on tax about 11 times. How can the hon. Member for Lewes (Mr. Baker) raise such cases, given the present limits on legal aid, when some people who take out compensation claims against employers cannot get legal aid because the employers argue that they have not got enough money to pay out compensation? Surely that should get priority over what has been put forward by these tinpot Liberal Democrats.
    Mr. Hoon: My hon. Friend is, as ever, understated in his response. He knows that Sir Peter Middleton is examining all aspects of legal aid and, in particular, ways to extend legal advice and assistance to those who do not presently enjoy their benefit. Only last week, we approved a further extension of existing pilot projects to allow the Legal Aid Board to support, for example, advice and assistance in advice agencies. That may well give legal advice to people who have not previously enjoyed its benefit in the cases to which my hon. Friend referred.
    My hon. Friend also commented on the total cost of legal aid and the financial wisdom of extending it. I have made such points to the House before, but they bear repetition. Legal aid expenditure has trebled since 1989 and is still one of the fastest-growing areas of Government expenditure. Its cost doubled between 1990 and 1996. Those are significant factors that any responsible Government must take account of in considering the cost and extent of legal aid.
    Mr. Hogg: Would the hon. Gentleman be at all reassured to learn that his substantive answer is broadly supported on the Conservative Benches? Most Conservative Members believe that it would be a mistake to introduce legal aid in terms of either promoting a libel case or defending it. That said, will he consider the
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    possibility of alternative funding methods, such as a contingency fee fund? I make a distinction between a contingency fee fund and contingency fees.
    Mr. Hoon: I am grateful for the right hon. and learned Gentleman's support—or at least I think I am. The purpose of Sir Peter Middleton's review is to consider all aspects of the ways in which we can support those who need high-quality advice and assistance. I have received several suggestions—not least from the Bar—that useful work could be done exploring a practical contingency fee system.
    Mr. Michael Jabez Foster: Before offering an extension of legal aid that would benefit the few, will the Minister consider the higher priority of reducing current court fees, which were imposed by the previous Government, and which are denying the many access to the courts?
    Mr. Hoon: My right hon. Friend the Lord Chancellor made a statement on that question recently in another place. He said—I hope that my hon. Friend will agree—that it is not so much court fees that deter people from going to court as the cost of lawyers who appear in such cases. If my hon. Friend is concerned about those people of lesser means—I suspect that he is—I refer him to a series of exemptions and qualifications that allow those in receipt of benefit, for example, to have their fees waived. There should be no reason why court fees should prevent anyone from accessing courts and justice.

    European Convention on Human Rights
    Mr. Greenway: To ask the Parliamentary Secretary, Lord Chancellor's Department what assessment he has made of the additional sums his Department will need to implement his proposals to incorporate the European convention on human rights into domestic law. [7534]
    Mr. Hoon: Work is already in progress within the Lord Chancellor's Department to assess the likely practical impact of incorporation of the European convention on the work of the courts, the provision of legal aid and the need for judicial training. However, a financial assessment of the proposals has not yet been completed.
    Mr. Greenway: How do the Government intend to protect judges from political interference and to protect Parliament from the judges when the convention is enshrined in United Kingdom law?
    Mr. Hoon: The judges will be protected from political interference in the way that they have always been protected from such interference under our system: selection decisions will be based on choosing the most ably qualified candidate for the position. That has always been the approach in our system, and it will continue. We shall incorporate the convention, on which work is still under way, in a manner that is entirely consistent with the doctrine of parliamentary sovereignty.
    Mr. David Heath: Will the Minister confirm that, although the Gracious Speech says that the main provisions of the European convention will be

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    incorporated, the Government intend to incorporate the whole convention? If there are to be exceptions, will the Minister tell us what they are and why they will exist?
    Mr. Hoon: The Government intend to incorporate all the provisions of the convention. The words in the Gracious Speech refer to those protocols that have not yet come into force.

    Legal Aid
    Mr. Malins: To ask the Parliamentary Secretary, Lord Chancellor's Department when he expects to announce changes in legal aid for immigration work. [7538]
    Mr. Hoon: Sir Peter Middleton is reviewing all aspects of the provision of legal aid, including the procedures by which legal aid is granted. He will produce a preliminary report in September.
    Mr. Malins: The Minister will be aware that legal aid costs are spiralling upwards all the time. Is he further aware that the United Kingdom Immigrants Advisory Service is extremely cost-effective when providing legal help regarding immigration matters? Given that the service is cheaper and usually more efficient than solicitors, will the Minister ensure that the immigrants advisory service gets a fair shout when he considers legal aid for immigration cases? In that way, money could be saved and the public would probably be served better.
    Mr. Hoon: I have some sympathy with the hon. Gentleman's point of view. The Government believe that there should be sufficient publicly funded services to
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    provide access to advice and assistance for asylum seekers and other immigrants who wish to remain in this country. In due course, the Government will make specific proposals on how that will be achieved.

    Magistrates Courts
    Mr. Edwards: To ask the Parliamentary Secretary, Lord Chancellor's Department if an appeal has been lodged against the proposed closure of Monmouth magistrates court. [7539]
    Mr. Hoon: No.
    Mr. Edwards: I thank the Minister for that answer. When he receives such an appeal, I urge him to give it serious consideration. Many people in my constituency are signing a petition to ensure that Monmouth magistrates court is kept open. Should the magistrates court in Monmouth be closed, it would cause considerable inconvenience to defendants, witnesses and victims, who would have to travel long distances to other courts.
    Mr. Hoon: I shall endeavour to give my hon. Friend a fuller response. The policy of the Lord Chancellor's Department is that decisions whether to close magistrates courts remain entirely a local issue, subject to the rights of appeal prescribed in law. Magistrates courthouses are not Crown property: they are owned or leased by the paying authority on behalf of the magistrates courts committee. Under section 56 of the Justices of the Peace Act 1997, the Lord Chancellor's responsibility in relation to magistrates courts is limited to hearing appeals in a dispute between the magistrates courts committee and its paying authority over a proposed court closure.

National Lottery
3.30 pm
The Secretary of State for Culture, Media and Sport (Mr. Chris Smith): With permission, Madam Speaker, I should like to make a statement about reforming the national lottery. I am today publishing a White Paper, "The People's Lottery." It will be available in the Vote Office when I have finished speaking.
The Government's priorities are health and education. We said that we would reflect these in our plans for reforming the national lottery, and that is what we are doing today. The White Paper takes forward the plans outlined in our election manifesto and in the details that we published in "The People's Money" on 23 April. Both received the endorsement of the British people on 1 May.
I believe that the package of proposals that we are publishing today will mark a turning point in the fortunes of our national lottery. It will make it even more popular and even more relevant to people's daily lives.
It is less than three years since the first tickets were sold, yet in that short time the lottery has become a tremendous success. Nine out of 10 adults play at least occasionally. There have been 180 million winning tickets: 360 of them for more than £1 million.
The lottery has already raised more than £3.5 billion for good causes. By the time the current licence ends, we expect that it will have raised £10 billion. Thanks to the initiative and hard work of those who have been involved in developing projects, and the lottery distribution bodies, funds have already been committed to more than 24,000 projects throughout the United Kingdom. The large multi-million pound projects may attract most attention, but I suspect that the smaller proposals will make the most difference to many people's lives—such as the grant of some £2,000, featured in the White Paper, for a summer arts festival for children predominantly from low-income families in Norfolk.
I welcome that success. The proposals in the White Paper are about building on it. We shall introduce the legislation needed to give effect to aspects of these proposals later this year.
The proposals in the White Paper fall under four headings. The lottery is paid for by the people and, as it develops, we intend that it should better reflect the people's priorities. First, we will set up a new good cause—the New Opportunities Fund. It will support specific initiatives, additional to core programmes funded through taxation, to support our priorities of health, education and the environment.
Subject to Parliament, the fund will begin its work next year with three initiatives: two helping to raise standards in schools and one promoting better health. Other initiatives will follow—for the environment, as well as for health and education.
The new fund will come on stream in 1998 and, by 2001, the fund will be supporting programmes of activity outside the school day involving at least half of all secondary schools and a quarter of all primary schools. Activities will range from extra coaching in basic literacy and numeracy to new opportunities for creative and sporting education and structured play—fun as well as learning—helping parents who work, and raising school standards. By 2001, the fund will also have trained some
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half a million teachers and 10,000 public librarians to help children and adults learn throughout their lives using new technologies.
The new fund's health initiative will be a network of healthy living centres throughout the United Kingdom. They will provide a wide variety of facilities and services, in different ways and to help different groups, but all with the same fundamental aim of preventing illness and promoting good health. In designing the detail of those initiatives and delivering money to projects, the new fund will work closely with bodies expert in the relevant fields, in each part of the United Kingdom.
The financial success of the lottery will enable us to set up the new fund alongside the existing good causes. In 1994, the lottery was forecast to raise £9 billion for good causes in the period up to 2001. We now expect it to raise £1 billion on top of that. It is from that extra £1 billion that we will find initial support for the New Opportunities Fund.
We will continue to allocate the bulk of the proceeds of the lottery to the existing good causes. I pay tribute to the work that the distributing bodies have already done—some fine examples are included in the White Paper—and I want them to build on their success. That is the second main theme of the White Paper.
Excellent as the distributors' record has been, it has been limited by some aspects of the framework within which they have to operate. Those constraints are at the root of the concerns expressed about lottery distribution—the lack of a clear overall strategy, the uneven geographical allocation of grants, the failure of some activities to get enough help from the lottery, and the feeling that decisions are remote and unaccountable.
The Bill will contain measures to help us to work with the distributors to tackle the constraints. I want to encourage a debate, involving the distributors and everyone else with an interest in making a success of the lottery, about the way in which distribution will work within the new framework and the extent to which we can make progress in the same direction before the legislation comes into force. Among the main issues on which I am consulting are how the existing distributors can provide even more support for our priorities of health, education and the environment; the contribution that they can make to regeneration; how, through delegation and working together, they can meet needs better; and how they can bring decision making closer to the grass roots.
I now come to our third main proposal. It is a major part of our vision of a lottery for the people. We will use part of the £1 billion of extra lottery money to establish the National Endowment for Science, Technology and the Arts. NESTA will help to ensure that the fruits of the outstanding talents with which our nation is blessed benefit our own country rather than others. It will encourage the development of an environment that fosters creative talent and innovation, and allows them to flourish for the benefit of the country, its economy and its people. In doing so, it will support my central objective of promoting the creative industries.
NESTA will have three simple objectives: to help talented individuals to develop their full potential in the creative activities and industries and in science and technology; to help to turn creativity and ideas into products or services that are effectively exploited with rights protected; and to contribute to the advancement of

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public education about—and awareness and appreciation of—the areas with which NESTA is concerned. Those objectives will be set out in the forthcoming Bill, but, once established as a trust independent of Government, NESTA will determine for itself its priorities and activities. Its first task will be to map what support and provision already exists, so that its own activities complement existing publicly and privately funded programmes.
Finally, the White Paper outlines our proposals to make the lottery itself a more efficient and transparent operation. As we have made clear, we will seek an efficient not-for-profit operator. In the White Paper, we invite proposals to meet the twin objectives of maximising the return to good causes and removing unnecessary profit. Within the framework that we set, the licence will go to the bidder who will deliver the greatest return, while running the lottery efficiently, transparently and with propriety. So that the selection of a new operator is seen to be independent and objective, we will appoint a panel to assist the director general in his choice, including people with expertise in business, lottery distribution and the views of consumers.
We want to ensure that the director general has the full range of powers necessary to ensure that the operator complies with its licence. The Bill will, therefore, contain provision for him to fine the operator where serious licence breaches occur.
I look forward to the widest possible consultation on our proposals, with contributions from right hon. and hon. Members, and everyone else with an interest in building on the lottery's success, in the consultation period that is now beginning. To help everyone to participate, a summary of the proposals is available in a leaflet that will be distributed widely throughout the country in the coming weeks.
A new good cause for health, education and the environment; a reform of lottery distribution; NESTA to unlock people's potential; and better operation and regulation—this White Paper sets out to enable the national lottery to become even more successful and to become truly a people's Lottery.
Mr. Francis Maude: First, I congratulate the right hon. Member on a substantial change in his tune from what we have heard from him and from other Labour spokesmen previously. The White Paper contains the most remarkable, and justified, paean of praise to the success of the national lottery. On page 27, it says:
"Our lottery"—
my hon. Friends will note that it has now become "our" lottery—
"has, in a short time, become one of the most successful in the world. Compared to other lotteries around the world, it gives most to good causes and Government and"—be it noted—
"least to the operator; independent research showed that the UK Lottery's annual ticket sales were the largest of all world lotteries and that it returned the highest amount and percentage to the good causes and Government."
That is what we have been saying for some time and it is nice that the right hon. Gentleman has been persuaded of the rightness of what we have been saying. It would also have been nice if, during his remarks, he had had a word
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of praise for those of his predecessors whose vision it was to set up the lottery and to achieve the remarkable success, which he has justly praised.
I sympathise with the Secretary of State because he has been rolled over by No. 10 and forced effectively to abandon the manifesto pledge that the next lottery contract should be on a not-for-profit basis. Does he now accept that it was a dogmatic and destructive pledge, that what he now proposes in the White Paper goes a long way from it, and that the formulation in his statement sounds to most of us like a restatement of the formulation that currently exists? The pledge was at odds with Labour's vaunted conversion to free enterprise and the profit motive. We welcome the effective abandonment of that commitment.
Does the Secretary of State agree with the Prime Minister, who apparently said in a letter to the right, hon. Gentleman's office that
"the policy must maintain the incentives for the operator to work efficiently"?
Does that not amount to the profit motive that currently operates? Does not the word "maintain" give the game away—that these incentives currently operate and have contributed to the current success? It would be good to hear the Secretary of State accept that overtly.
Does the Secretary of State accept that, on page 28 of the White Paper, the formulation he uses attempts to justify the continued existence of that manifesto pledge, clinging desperately to life by its fingernails:
"A private operator which had no check on the profits it could make might damage public confidence in the Lottery—people might even stop playing"?
Does he not accept that that is precisely what he has been arguing is the case now— that there is no check on the profits and that that will destroy confidence? It has not: public confidence in the lottery has not been damaged. It has increased and, as the Secretary of State said in his statement, the lottery proceeds are now greater than were originally projected. Therefore, he has already defeated his own argument.
What does the Secretary of State mean by the suggestion that yet another quango should be set up to monitor the Office of the National Lottery's handing out of the new contract? Is not that yet another case of new Labour, new quangos? The Minister proposes that the operator should be liable to financial penalties if it does not meet the terms of its licence. If the lottery is to be genuinely operated on a not-for-profit basis, does he accept that those financial penalties will, effectively, come out of the money for good causes?
Finally, does the Secretary of State accept that the creation at this stage of further good causes amounts to a breach of the principle of additionality to which the Labour party attached such importance when the legislation was going through the House? For example, does he recollect the amendment that was moved in Committee by the official Opposition spokesman and which stated
"that the amount raised by the National Lottery after the deduction of taxes and operating expenses shall be distributed solely and only to causes where it can be demonstrated that they would not otherwise be funded out of taxation or other national or local government revenues."—[Official Report, Standing Committee A, 16 February 1993; c.142.]
The Labour party was even tougher on additionality than the Conservative Government proposed to be. Today's proposals amount to a significant volte face.

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Does the Secretary of State accept that the contention occasionally made by the Government that the midweek draw is somehow a bonus which entitles them to raid proceeds in this way bears no examination? The right hon. Gentleman knows that the sums for good causes, projected over the period of the lottery, always included an uplift for scratch cards and/or the midweek draw. That has always been part of what was anticipated. Fudge it how he will, the harsh message is that hundreds of charities and groups the length and breadth of the country will be told that the Government have grabbed the money for themselves.
Did not the Prime Minister give the game away in the letter that his office sent to the Secretary of State which stated that
"a key question will be finding ways of re-orientating the lottery to provide more support for projects that reflect the Government's policy objectives, such as health, education and the environment"
How will the Secretary of State explain to the Deputy Prime Minister that the Aqua science museum in Hull is now under threat? How will the Minister of Agriculture, Fisheries and Food take the news that the facelift for Whitehaven, to be funded by the Millennium Commission is now under threat? Is not the reality the fact that the only Cabinet Minister who is smiling as a result of this turnaround will be the Chancellor of the Exchequer? Of course, that is an unusual event and perhaps we should celebrate it on its own.
Labour has a black hole in its public finances of its own making, and it has been created by excessive public spending commitments beyond what the public finances can afford. The Government have got themselves into a mess and, as so often, they try to extricate themselves by going on the grab. The Secretary of State has been rolled over by No.10 and the Treasury. The people's lottery is becoming the Government's lottery, and that illustrates what we have always contended—that Labour cannot keep its hands off other people's money.
Mr. Smith: Oh dear, Madam Speaker. I had expected somewhat better than that.
The right hon. Gentleman says that there has been a substantial change of tune. There has not. We are today publishing proposals to put in place precisely what we told the electorate during the election we would do. When the original lottery legislation was passed by the House, it was supported by hon. Members on both sides of the House and was not simply the province of the then Government.
The right hon. Member said that the Government have somehow abandoned our not-for-profit objective. Although I gave him several hours to read the White Paper before I made the statement, clearly he has not read page 28, which precisely states that we maintain that objective. The goal must be to maximise the return to good causes. The current lottery operator, by the end of the term of its franchise, will have made upwards of £500 million profit. Our determination is to achieve a better deal for good causes when the franchise is renewed than is provided by the current lottery operation.
The right hon. Member said, "new Labour, new quango." I am astonished that he does not think that it is sensible that the lottery regulator should have advice from
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the business world, lottery distributors and consumers in reaching the important decision on who should run the lottery in future.
The right hon. Member drew attention to the matter of the midweek lottery draw. I draw his attention to page 8 of the White Paper, which specifically spells out how the money that is additional to the overall lottery—which is available because of the midweek draw—will enable us to keep our commitments to the current distributors and to add the new good cause that we are proposing today.
The right hon. Gentleman said that, somehow, there is a black hole in the public finances. I should draw his attention to the fact that my right hon. Friend the Chancellor of the Exchequer, managed to find in the Budget that he announced only a few weeks ago £3.6 billion of extra resources for health and education.
The right hon. Gentleman said also that no other Cabinet Members are smiling. Perhaps that is why, in the press packs that we will issue later today, there are supportive press releases from my right hon. Friends the President of the Board of Trade and the Secretary of State for Education and Employment.
The right hon. Gentleman made two points that have some importance. The first was the importance of holding fast to the additionality principle. The amendment tabled by my hon. Friends in Committee provided a very good definition of additionality—for which the right hon. Member for Cities of London and Westminster (Mr. Brooke) was asking in today's Question Time. The important aspect is that the lottery is providing support for those projects that are not the province of the Exchequer and the taxpayer—a principle which is enshrined in everything that we propose in the White Paper.
Finally, the right hon. Gentleman said that the Government are taking money off good causes. We are not taking money off good causes. In our proposals for health, education and the environment, we will make additional money—which is available because of the midweek draw—available to equally good, if not better, causes.
Helen Jones: May I welcome the Secretary of State's announcement that more money will go to health and education projects, and tell him that that will be particularly welcome to people in the Orford ward of my constituency—who applied to the national lottery for money to establish a one-stop shop, including health projects, and were turned down despite being in one of the borough's most needy areas? In the light of that example, will he provide more details of how such projects will be able to apply for such grants?
Mr. Smith: I am grateful to my hon. Friend for her remarks, and I can tell her that an application from that particular area would be extremely welcome to the New Opportunities Fund, as and when it is established in our proposed legislation.
Mr. Robert Maclennan: In his remarks, the Secretary of State drew attention to what he described as the lack of a clear overall strategy. Does he not accept, however, that his White Paper—far from providing a clear overall strategy—is endorsing the thinking of Tom Lehrer that, "You can get

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away with it by sprinkling a little bit over each part of the banana split"? It seems remarkable for him to say it is not the province of the Treasury and the taxpayer to deal with medical matters that will be covered by the proposals in his White Paper. Is it not strange that he boasts that preventive medicine is to be one of the new beneficiaries of his proposals, and that the new methods of teaching and encouraging teacher training are regarded as not suitable to be paid for by taxpayers and the Treasury? What limit will he put on the erosion of the national lottery by his Cabinet colleagues, who no doubt all have other good causes for which they cannot find taxpayers' money?
Will the Secretary of State confirm that he still regards himself as the custodian of culture, the media and sport, because the White Paper certainly contains no awareness of the fact that the lottery's problem has been the lack of take-up by existing good causes, with less than a quarter of the money held for them being distributed to them? Surely, the money held should be turned to good account and be used, not just spread ever more thinly.
Mr. Smith: The lack of take-up is exactly one of the problems we seek to address in chapter 2 of the White Paper on reforming the existing distribution of lottery funds. It is precisely the lack of a clear overall strategy and the absence of power for lottery distributors to be proactive—at the moment, they have to sit and wait for applications to come in—that have led to the uneven geographical distribution and, in many cases, to the lack of ability to tackle real problems in deprived areas as we would wish.
The point about the health and education projects is precisely that they are not part of the core health and education services which, rightly, have to be a continuing part of the responsibility that we all bear as taxpayers.
Mr. Dennis Skinner: On the question of Camelot making about £2 million a week profit, will my right hon. Friend give us an assurance that the proposal for a non-profit scheme will hold fast? However, may I enter a caveat? I keep hearing Branson's name—Mr. Goody Two Shoes. There is something about that fellow that I just cannot cling to. He seems to have his finger in every pie, and I would not trust him with the lottery, either—he would be making some money for himself if he got hold of it.
Mr. Smith: I refer my hon. Friend to page 28 of the White Paper where we set out precisely what we propose and invite public comment on such issues. Richard Branson, Camelot or anyone else would be very welcome to apply post-2001 to run the lottery, provided they do so in accordance with the framework that we will put in place in the legislation later this year.
Mr. Robert Key: Of course the Secretary of State is right to review the way the lottery works—that was part of the original Act—but is he aware that not one of the Labour warriors who fought the Bill in Standing Committee is present today? Those who fought on the principle of additionality day after day in Standing Committee are not here—they are no doubt ashamed to see that the Government have been rolled over by the Treasury. The right hon. Gentleman speaks fondly of people's aspirations for the lottery, but is he aware—if he
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is, he has not mentioned it—that their aspiration is to win? That is what the national lottery, and its success, is about, but his proposals will mean that people are less likely to win and that the lottery will no longer be the most successful national lottery in the world.
Finally, does the Secretary of State agree that, apart from the Treasury, the only winners will be Vernons, Zetters and Littlewoods? Good luck to them, but it is back to those days.
Mr. Smith: The winners will be the British people. They said to us during the election campaign and afterwards that they want part of the money that they spend on their lottery tickets to go to good causes in health, education and the environment. That is what the White Paper proposes.
Dr. Tony Wright: I congratulate my right hon. Friend on his excellent document. The essential element of the lottery is randomness. Would it not be sensible to introduce a random element into the way in which the money is paid out, as well as the way in which it is paid in? I speak for an area that has had a lousy distribution of lottery proceeds. When the qualifying criteria are met, the bids are in and the priorities are determined, we could have a lottery to decide on the winners and losers. Instead of getting infusions of largesse from anonymous distribution committees, local communities would see the intervention of Lady Luck and would get as much excitement from the moment of distribution as from the moment of paying in.
Mr. Smith: Normally, I agree with my hon. Friend, but I do not follow him entirely in his argument today. One of the problems with lottery money distribution at the moment is that it tends to be random, in response to the applications that happen to have been submitted. We believe that a more strategic view can and should be taken by the distributing bodies. That is why we have proposed changes.
Mr. Richard Page: The Secretary of State will be aware that the lower the operator's percentage, the more money there is for good causes. Camelot, which is based in my constituency, has proved that by securing hundreds of millions of pounds more for good causes than there would have been if another licensee had been selected, particularly one that was not for profit. The right hon. Gentleman says that he wants a not-for-profit operator. What will he do if, when the licence is up for renewal, a for-profit operator offers the lowest operating percentage? What would win—Labour dogma or good causes?
Mr. Smith: The key principle has to be to maximise the fund for the good causes. That is why we set out in the White Paper how we believe that the present arrangements can be improved on.
Ms Gisela Stuart: I am delighted that NESTA funds will be available for talented young people. Will young creative artists in my constituency, particularly dancers, who have been unable to get further education funds so far, benefit from the proposals?
Mr. Smith: A scheme was put in place by the previous Government to give some assistance to dance and drama

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students, using lottery funds. We supported that scheme when it was launched. It is now bedding in and we want to see how it progresses before we make any changes. The development of NESTA will enable talented youngsters in many fields to develop their talents and turn their skills into careers.
Mrs. Virginia Bottomley: The right hon. Gentleman is right to pay tribute to all those in the distributing bodies and elsewhere who have made such a success of the lottery. Is he aware, however, that almost every lottery in other countries is the responsibility of the Finance Department? Earlier today, the right hon. Gentleman talked about the importance of resisting good advice from the Treasury on, for example, the privatisation of Channel 4. Today, he has not resisted the Treasury's advice. The additionality principle is breached, the jackpot winners are the Treasury and the successful lottery that we have known will be seriously damaged by the White Paper.
Mr. Smith: The additionality principle has not been breached.
Mr. Harry Barnes: I hope that the moves on health, education and the environment mean that there will be a fairer distribution of lottery funds, because those elements are important throughout society and need to be responded to. Under the current arrangements, not a single one of the 41 grants from lottery funds for sport that have been provided so far in Derbyshire has been given to north-east Derbyshire or Chesterfield. That is an unfair arrangement. I am pleased that measures are proposed in the White Paper that will begin to tackle that problem.
Will my right hon. Friend look at the scam that is being perpetrated on punters in the lottery by many organisations? Systems are being sold that are supposed to increase people's chances of winning the lottery. That is not on. People are having the wool pulled over their eyes and something should be done to stop it.
Mr. Smith: I agree entirely with my hon. Friend about those who try to convince people that they have a system for giving a better chance of winning the lottery. Self-evidently, that cannot be the case and it is unacceptable for people to make that claim.
There are three changes in lottery distribution that will achieve the objectives that my hon. Friend seeks: first, the emphasis on health, education and the environment; secondly, the ability, through the changes to distribution, to ensure that regional imbalances in lottery distribution are addressed; thirdly, the ability of different lottery distributors to come together in order to target assistance in the arts, sport, heritage, charities, health and education at areas of particular deprivation. That will be of considerable benefit to many parts of the country.
Mr. Peter Brooke: If, as was demonstrated earlier this afternoon, one of the Secretary of State's junior Ministers patently does not know what his current definition of additionality is, why should the rest of us have any confidence in it?
Mr. Smith: The principle of additionality is very clear. It is that the lottery should not be used for expenditure on
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matters that are properly the province of the Treasury and the Exchequer. That principle is enshrined in every paragraph and page of the White Paper.
Mr. Vernon Coaker: How will the leaflets that explain the White Paper be made available to the public? I believe that once the public become aware of what the Government propose, far from decrying it, as Conservative Members would have us believe, they will welcome it when they see the money that will be made available for a variety of projects. Will my right hon. Friend ensure that the leaflets are available in places where people can easily get them, such as supermarkets, doctors' surgeries and health centres, because it is the Government's wish to consult widely with people? If we are to do that, we must make the leaflets easily available.
Mr. Smith: I thank my hon. Friend for his question. We are printing 2 million leaflets which will be available widely across the country at every lottery distribution point and in public libraries. I am sure that my hon. Friend is right to say that the public will warmly welcome our proposals. When we proposed precisely these measures during the election campaign, they produced an enthusiastic response from the public. I am afraid that Conservative Members seem to have forgotten that an election took place on 1 May and that the people gave their verdict.
Mr. Peter Viggers: Another day in the life of this Government and another media illusion. I congratulate the right hon. Gentleman on the presentation of a mean, tricky and nasty little statement. First, yet again, he trashed those responsible for the enormous success in financial terms of the lottery. Secondly, he has announced a plan to steal part of the proceeds to pay for part of the Government's proper expenditure plans. Is not it true—my right hon. Friend the Member for Horsham (Mr. Maude) put his finger on the issue—that, after today, it will be significantly less the people's lottery and much more the Government's lottery?
Mr. Smith: No.
Fiona Mactaggart: I welcome my right hon. Friend's commitment to extending lottery funds to innovation in health and education, but may I ask him whether he has he spoken to the Ministers in charge of those Departments about what happens when a project is no longer innovatory—when it has proved its worth and value? That is one of the difficulties that private charities have to face, and it will be a challenge to the Government, to which I have not yet seen an answer.
Mr. Smith: My hon. Friend, unlike many Conservative Members, puts her finger on a serious and pertinent point. Yes, the aim of the New Opportunities Fund is to support innovation in health and education. That is the whole answer to the point about additionality raised by Conservative Members. Of course, once innovation has bedded in, it becomes accepted and part of normal life. Our aim in everything that we are doing is that the initial funding should be just that, and that the healthy living

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centres and after-school clubs should become self-funding in due course, after the initial tranche of money has gone in.
Mr. Tony Baldry: The Secretary of State will be surprised that Conservative Members are amazed that he should think that public health and teacher training are not legitimate matters for the public expense and for the Treasury. Is not the concern about all of this that there will be a blurring of the legitimate boundaries of what should come out of public funding and departmental expenditure?
There will be little rejoicing in Oxfordshire that there is to be more money for teacher training at a time when, as a consequence of the capping of Oxfordshire, the number of classes of more than 30 will go up considerably, and little rejoicing that there is to be more money for public health, when centres such as the Rivermead rehabilitation centre and Ritchie Russell house are threatened with closure because of the lack of funding to Oxfordshire health authority.
Mr. Smith: The hon. Gentleman has clearly completely missed the work that my right hon. Friend the Secretary of State for Education and Employment is doing in reducing class sizes throughout the country. On the other point that he makes, a one-off exercise in teacher training for information technology, and the development of out-of-school clubs, is not, in any reasonable person's book, core Exchequer expenditure on education services.
Mrs. Linda Gilroy: I welcome my right hon. Friend's statement. My constituents in Plymouth, Sutton—which, on the index of local conditions, includes the poorest ward in England—will greatly welcome his commitment to health projects, education projects and regeneration. Will he say a little more about how he intends to ensure that the distribution agencies deliver and reach all parts of the country, but especially areas such as my constituency where there is such a need for regeneration?
Mr. Smith: One of the ways in which we seek to improve the distribution mechanisms not just of the New Opportunities Fund that will be established, but of the existing lottery distribution bodies, is to ensure that they take into account the regenerative possibilities that come from investment in the arts, sport, heritage and charitable and voluntary endeavour in an area, as well as the health and education projects that we propose.
Ms Roseanna Cunningham: Given that one of the main criticisms—to which the Secretary of State did not refer—of the national lottery at present is the allocation of extremely large sums to what are seen as white elephants or to projects that apparently benefit only a few individuals, where in his statement is there any indication that he will look again at the basis on which awards are made?
Mr. Smith: I draw the hon. Lady's attention to chapter 2 of the White Paper, where we set out precisely how we intend to go about doing that. We stress the importance of decision making nearer to the grass roots, the importance of
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small-scale rather than large-scale projects, and the importance of lottery money being able to support people and activities, rather than just buildings.
Mr. Barry Jones: I welcome my right hon. Friend's statement—yet another election promise kept. Does he guarantee that there will be more local, small-scale and after-school projects in Wales? Does he know of my astonishment that the recent application by the Sea Cadets of Connah's Quay on the River Dee in my constituency was thrown out? All they were asking for was the renewal of the tumbledown, damp and disgraceful building, in which they carry out their excellent operations. How will that rejection help my constituents, the Sea Cadets?
Mr. Smith: I regret that I cannot give my hon. Friend a specific answer on the question of the Sea Cadets' project. I can tell him that, throughout the country, including Wales, more local, out-of-school clubs and projects will become available to the people through the changes that we propose in the White Paper. I find it somewhat astonishing that the Conservative party should find it remarkable that a party should seek to keep the promises that it gave to the electorate during an election.
Mr. John Greenway: Will the Secretary of State be a little more forthcoming than he was in his reply to the hon. Member for Birmingham, Edgbaston (Ms Stuart) about finding more money to support dance, drama, horticulture and agriculture students? In a week in which it is widely predicted that the Government will announce the end of maintenance grants and the charging of fees for students in universities, would not it make much more sense to use lottery money for education and opportunity to support students rather than teachers being trained?
Mr. Smith: I am astonished that the hon. Gentleman does not think that the training of teachers is important. Any question of grants and fees for students is a matter for my right hon. Friend the Secretary of State for Education and Employment, who will make a statement later this week on the subject. The present scheme for dance, drama and other students was introduced by the previous Government and has been in operation for about three months. I want to see how it works before making hasty proposals to change it.
Mr. David Lock: May I congratulate my right hon. Friend on his fresh thinking on the lottery? I particularly congratulate him, as a London Member of Parliament and one who appreciates the high arts, on his acceptance that there may have been a south-east tilt in lottery applications and distribution in recent years. I hope that the review and any mechanisms for future distribution of lottery money will ensure that the people's priorities are reflected in the people's lottery and, especially, that people in the regions outside the south-east get a fair crack of the whip in future schemes.
Mr. Smith: I thank my hon. Friend for his compliments. I observe in passing that some parts of London have not done as well as some of the high-profile

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projects in the heart of the capital city, but I can confirm that the people in the regions can expect to benefit from the proposals that we have put forward today.
Mr. Patrick Nicholls: Is it not a fact that we have been treated to a thoroughly miserable statement this afternoon? The Secretary of State has come to the Dispatch Box and said that teacher training and public health are no longer core functions of the Government, but can instead be supported by gambling. We have seen the Secretary of State squirming with unease, because he loathes the profit motive totally and yet is driven to the conclusion that the profit motive has provided the most successful lottery in the world.
We were promised a cheerful fairy tale this afternoon, but it has turned out to be a tale of two muggings. First, the Secretary of State has been mugged by the Chancellor and thoroughly rolled over and caned for his pains. More
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important than the indignity that the Secretary of State has suffered is the mugging of the people's lottery. The people's money has been raided by an incompetent Government, who, when faced with hard, genuine choices about public finances, have reneged on the promises and undertakings that they have previously given—on the arrogant assumption that the public will never spot the difference. The public will spot the difference, and the Opposition will make sure that they do.
Mr. Smith: That summation—if that is what it was meant to be—bore precious little resemblance to our exchanges this afternoon. The statement and the White Paper will enable the people of this country to get what they have long demanded: support from the national lottery, alongside the existing good causes, for innovative projects in health, education and the environment which add to the public's health, education and aspirations. That support will not replace the core responsibilities of the Exchequer and will put in place the people's priorities in the people's lottery.

Points of Order
4.19 pm
Mrs. Angela Browning: On a point of order, Madam Speaker. I have given notice of this point of order to you and to the Secretary of State for Education and Employment. May we have some clarification of the procedures of the House? Following requests from hon. Members from all parties, you have commented in recent weeks about the way in which the Government impart information in respect of their decision making which would lead to primary legislation being taken on the Floor of the House.
May I draw your attention to the fact that the Dearing report—which is due to be published this week—was the subject of much media comment at the weekend, particularly in respect of students' tuition fees? In particular, the Radio 4 news bulletins at 8 am and 9 am yesterday stated clearly that the Government have confirmed that they intend to end the principle of free higher education for all and that Ministers have accepted the Dearing review. The bulletins gave the Government's response to a report which has not yet been brought to the House.
If parliamentary procedures are to be changed and such information is to be made available to hon. Members at 8 o'clock on a Sunday morning on Radio 4, I can assure the House that members of Her Majesty's Opposition are ready to man their radios. However, this seems to be a contradiction of the way in which such matters have been brought before the House in the past, and I should be grateful for your clarification.
Madam Speaker: I am ready to respond to the hon. Lady, whom I thank for giving me notice of her point of order. I, too, have carefully examined the media reports to which she referred. It seems clear to me that these were based on very heavy briefing on the contents of a report which, as she points out, has not as yet been published and on the likely ministerial response to it.
The practice of briefing in advance of a ministerial statement by Whitehall sources or ministerial aides has been current for quite a long time. My impression is that, over the past 20 years, it has progressively developed to the point where the rights of the House are in danger of being overlooked. The House is rightly jealous of its role in holding Ministers to account. If it is to fulfil its function properly, it must be the first to learn of important developments in Government policy. I deprecate most strongly any action taken that tends to undermine this important principle, and I am grateful to the hon. Lady for raising her point of order today.
Ann Clwyd: Further to the point of order that I raised with you on Friday, Madam Speaker. Have you had any indication from the Government that they are to make a statement on the reported sale of Hawk jets to Indonesia? It is important that such a statement should be made before the recess so that we are aware of the precise situation, which appears to show a contradiction in Government policy.
Madam Speaker: I have not been told today that any Minister is seeking to make a statement on that matter. I clearly recall the hon. Lady raising a point of order with
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me on Friday, and I am aware of her keen and continuing interest in this matter. Perhaps I might advise her that if she has an opportunity to do so, she might apply for an Adjournment debate before the House rises. There may still be time for that.
Mr. Francis Maude: On a point of order, Madam Speaker. In answering my points earlier, the Secretary of State for Culture, Media and Sport said that I had had the White Paper some hours before he rose to deliver his statement. For the purposes of clarification—and to raise a wider point—I should say that I had half an hour to study the White Paper before he stood up and that I received the statement itself two minutes before he stood up. This makes it difficult to respond in a satisfactory way, and I hope that that will be dealt with satisfactorily by a Government who are prepared to listen to these concerns.
Madam Speaker: I see that there is a Minister from that Department on the Government Front Bench. Perhaps he did not hear the beginning of the right hon. Gentleman's comments, but I am sure that note will be taken of them. The point that was being made was that Opposition Front-Bench Members are receiving White Papers and statements rather late in the day, which gives little opportunity for them to prepare their response.
Mr. Norman Baker: On a separate but connected point of order, Madam Speaker, arising from questions to the Secretary of State for Culture, Media and Sport. There are questions on the Order Paper today, not least No. 3, from the hon. Member for Bolsover (Mr. Skinner), which relate to the millennium, yet the Minister without Portfolio has not been present in the Chamber. I have received a written answer from him to say that he would answer oral questions on matters within his responsibility, in which he specifically includes matters to do with the millennium.
The Minister without Portfolio has not, as far as I know, been in the House to answer questions since 1 May. He has a large budget, he clearly has a lot of power behind the scenes, and he has specific responsibilities for matters that were answered this afternoon—most ably, no doubt—by the Secretary of State. I seek your guidance, Madam Speaker. There is a danger that the Minister without Portfolio is bypassing the Chamber and Parliament and acting in a way that is discourteous to you and to the House.
Madam Speaker: It is not a matter for me which Minister answers questions at the Dispatch Box. There is something known as collective responsibility, and any Minister from that Department may answer questions.
I see the Secretary of State. Is he trying to raise a point of order?
The Secretary of State for Culture, Media and Sport (Mr. Chris Smith): Further to that point of order, Madam Speaker. The questions on the Order Paper today were about the millennium in general; I have responsibility in the Government for the overall celebration of the millennium. If a question is specifically about the exhibition at Greenwich, it will be answered by the

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Minister without Portfolio. Indeed, had we reached a question much further down the Order Paper, he would have been here to answer it.
Madam Speaker: I have the Official Report for 7 July, in which, at column 324, the Minister without Portfolio says that he will answer questions on the millennium dome.
Mr. Baker: Further to that point of order, Madam Speaker. Question No. 18, which I tabled, was specifically about the millennium dome, and we had a reasonable expectation that we might reach it.
Madam Speaker: Order. As the Secretary of State said, we did not reach it. It would be nice sometimes if we could get to Question No. 18. I constantly press ministerial Departments to reach questions that are further down the Order Paper. If we had reached No. 18, the Minister without Portfolio would have answered it.
Dr. Liam Fox: On a point of order, Madam Speaker. You may or may not be aware of many credible sources that now claim that The Scotsman newspaper will publish on Wednesday morning details of the Government's White Paper on devolution for Scotland, a full day ahead of its publication and availability to Members of Parliament. Given what you said in answer to a previous point of order, would not such a deliberate leak in advance by the Government be quite contemptuous of the House and, given this advance warning, does it not fall on the Government to use all their facilities to ensure that such a publication does not happen before the House receives properly the Government's White Paper?
Madam Speaker: I take seriously the point of order that the hon. Gentleman is making, although it is hypothetical. I have no information that any newspaper will publish such information. If it intends to do so, there is nothing that I, as Speaker, can do to stop it. The hon. Gentleman is quite right. It is for the Government, who may well wish to take out an injunction. If the hon.
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Gentleman has evidence—and one needs evidence—may I suggest that he presents it to the President of the Council?
Mr. Ian Bruce: On a point of order, Madam Speaker. First, I declare a financial interest, as I have three daughters currently at university who would, of course, be affected by the leaked proposals to raise additional moneys by loans for tuition fees.
We are about to discuss the Education (Student Loans) Bill, yet we have had leaks over the weekend about proposals on student loans of which the House does not have official knowledge. How can we have a proper debate in the House on that important issue when the Government have leaked information to the press and told everyone else but the House? Surely it would be out of order to speculate what will be in the Dearing report on Wednesday as it has not been published. This debate ought to be postponed until we have seen that report.
Madam Speaker: I have done my best to deal with that matter, which was raised earlier. We must get on with the debate.
Mr. Stephen Dorrell: On a point of order, Madam Speaker. In response to my hon. Friend the Member for Tiverton and Honiton (Mrs. Browning), you made it clear that you deprecated what had happened over the weekend in connection with the Dearing report. In the past few moments, the Secretary of State for Education and Employment has come into the Chamber. Given what you said in your ruling, I wonder if he will take the opportunity to launch an inquiry in his Department as to whether it is true—as reported by the BBC's education correspondent—that Ministers had accepted Dearing's argument and decided on a certain course of action and whether it is true that Ministers gave the BBC that briefing over the weekend. In the light of your ruling, if it is true, the Secretary of State should come to the House to apologise for that fact.
Madam Speaker: I am not prepared to allow debate on that matter. The House has heard how strongly I deprecate those very heavy briefings, given either by Ministers, civil servants or Ministers' aides. I think that that stands in Hansard and I am sure that it will be read by people in the Department concerned and other Departments, who know how much I totally disapprove of what has taken place in the past few days.

Orders of the Day

  Education (Student Loans) Bill
  Order for Second Reading read.
  4.31 pm
  The Minister for School Standards (Mr. Stephen Byers): I beg to move, That the Bill be now read a Second time.
  It may be helpful if I make hon. Members aware that this measure has nothing whatsoever to do with the Dearing report or the Government's response to it. The measures contained in this Bill relate to loans that have been made to students or might be made in the coming academic year under the existing procedures, which will be totally unaffected by any policy changes that might come as a result of the Government's response to the Dearing report.
  Mr. Don Foster: Can the Minister confirm that nothing will be proposed arising out of this Bill that will in any way change the repayment mechanism for students who already have loans of one sort or another?
  Mr. Byers: Yes, I can confirm that.
  Later this year, we will need to produce proposals for regulations concerning repayment as well as many other matters because we will need to put those on a fixed footing, which will mean that we will no longer be able to debate them annually in the House. We will need to freeze, for example, the regulations that affect repayment procedures. Once that is done, there will be no further changes. Recommendations that come out of Dearing, therefore, will not have any consequences as far as those repayments are concerned.
  Mr. Ian Bruce: I am grateful to the hon. Gentleman for trying to put the House straight about the leaks at the weekend. From my reading of the Bill, it would seem that the Government will subsidise any company that decides to buy in the debt portfolio. Is he saying that this legislation will not be affected by any doubling—I suspect that it will be a doubling—of the amount of money being loaned to students, which I assume would be sold on to a financial institution, should the Government decide to double the amount of money going into loans?
  Mr. Byers: Those are two separate and distinct issues. The measure before the House relates to the student loan book and the debt that we intend to sell on to the private sector. The recommendations that result from the inquiry and the Government's response to it will be quite separate, and will be dealt with differently from the measure that we are considering.
  The Bill is before the House for substantial reasons. The previous Government put into this year's and next year's spending programme receipts from the sale of the student loan book amounting to £1.6 billion in this financial year and £1.5 billion in the year 1998–99.
  We made it clear that we intended to stick within the budgets laid down by the previous Administration, so it follows that the receipts that we expect from the student
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  loan debt are necessary to meet the previously published spending plans. Indeed, my right hon. Friend the Chancellor of the Exchequer made it clear in his Budget statement on 2 July that, to meet our spending plans for this financial year, we would expect £1.6 billion from the sale of part of the student loans debt.
  The Government have two overriding objectives. First, we are committed to the development of a wide range of public-private partnerships, because they bring private resources and expertise into the public sector and involve a transfer of risk to the private sector. Selling student loans will transfer to private sector financial institutions the credit risk currently borne by the Government. Those institutions have the experience of managing loans and are better placed to deal with such risks.
  Secondly, the sale will also enable the financial markets to establish a clearer understanding of publicly funded student loans, which could in future encourage financial institutions to play a more direct role in the provision of student support. We are all aware that the previous Government sought to interest the private sector in student loans, which led to the Education (Student Loans) Act 1996. One reason why the twin-track approach proposed by the then Government in that Act failed to capture the banks' and financial institutions' imagination was that most of them did not understand the nature of student loans.
  I understand that that Government's discussions with those bodies that had expressed an interest revealed clearly that they had no understanding of the concept of publicly financed student loans. We hope that the Bill will foster a greater understanding of the nature of the student loans system and that there may be beneficial developments in public-private partnerships as a result.
  Mr. Andrew Welsh: The Minister is explaining how the legislation will help the Government in their finances; how will it help the students in theirs, given the massive amount of student debt and the surprising and disgraceful number of student dropouts that occur as a result of such measures?
  Mr. Byers: A little later, I shall talk about the safeguards that we intend to put in place, to ensure that no student who presently receives a student loan will be adversely affected as a result of the legislation.
  The whole of our education service will benefit from the Bill. We intend to receive £1.6 billion in sales this year and £1.5 billion in the next financial year. If that money were not received, there would be a deficit in the Department's budget; that would clearly have an adverse effect on the service that can be offered, whether in universities, in schools, or in higher or further education generally.
  Mr. Julian Brazier: As we are unlikely to have an opportunity before the summer recess to debate any additional burdens that are likely to be placed on students as a result of the Dearing report, I believe, as someone who represents a constituency with a lot of students, that we must consider the total burden on students and that it would be better to focus on tighter quality controls, as several of us suggested in written submissions to Sir Ron Dearing, rather than imposing tuition fees or other still greater burdens on students.
  Mr. Byers: I can understand why hon. Members want to focus the debate on what might come out of the

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  Dearing report, but I must reiterate that the measures before us today have nothing to do with the recommendations that will come from the Dearing inquiry or the approach that the Government will adopt towards them. I understand the hon. Gentleman's concern. It may help him to know that my right hon. Friend the Secretary of State for Education and Employment intends to make a statement on the Dearing inquiry to the House on Wednesday. That will provide an opportunity for hon. Members to raise such concerns.
  Mr. Phil Willis: Are the £1.6 billion in this financial year and the £1.5 billion in the next financial year net of subsidy? If they are not, how much subsidy does Minister expect to be netted off?
  Mr. Byers: I am afraid that I cannot comment on the level of subsidy at this stage because, as the hon. Gentleman knows, there is a competition, which was started by the previous Administration, for the sale of student loan debt. I will deal later with the power in the Bill to give a subsidy to the purchaser of student loan debt. We cannot say at this stage how much that subsidy will be, but I can say that there is a very strong competition between 20 leading financial institutions, and we intend to ensure that the lowest possible subsidy is achieved through that. It would be inappropriate to comment on the level of subsidy, because we do not want to show our hand to the competing companies.
  The Government were elected on the basis of a manifesto pledge to work within the spending plans already announced for the next two years. That pledge and our pledges on inflation and taxes are designed to create conditions for economic stability and a platform for sustained economic growth. Proceeding with the sale of loans will play a critical role in enabling us to keep that pledge. The public spending plans that we inherited include substantial sales of student loans in this financial year and the next. Given the tightness of those plans, and the need to give priority to our education programmes, as the Chancellor of the Exchequer did in his Budget statement on 2 July, we have decided that we will proceed with the sales.
  To achieve the level of receipts planned by the previous Government, we will need to pay some subsidies to the loan purchasers, but the sales will be made through competitive tendering. As I said earlier, 20 substantial financial institutions have already responded to the first stage of the competition. We intend to accept the most competitive bid. While the scale of subsidies cannot be predicted in advance, we will ensure that we get the lowest possible subsidy required to be attractive to the private sector.
  Before coming to the details of the Bill, it may be helpful to the House if I put them into context. Two measures on the statute book deal with student loans: the Education (Student Loans) Act 1990, and the Education (Student Loans) Act 1996, which introduced the twin-track procedure. Hon. Members might have found it difficult to understand how this measure impacts on those Acts, so I provided in the Library last Thursday a note that clearly showed its effects. I also sent copies to the shadow Secretary of State for Education and Employment and to the hon. Member for Bath (Mr. Foster). I hope that that will be useful in considering the Bill.
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  The Bill is, in many respects, a technical matter. Hon. Members may ask why we need to proceed now and why we should not delay at least until the Dearing report comes out. As I said, the Bill is quite different and distinct from the Dearing report, and it would be a mistake to confuse the two issues. Today, we are considering student loans which were made under the existing regime or will be lent in the forthcoming academic year. Those will be unaffected by any proposals that might come from the Dearing report.
  Many people believe that there are sufficient powers under the 1990 and 1996 Acts to allow my right hon. Friend the Secretary of State to pursue the measures in the Bill. However, experience and, in particular, advice from our private sector advisers and from counsel, as well as feedback from the first stage of competition, have shown that there are substantial gaps in the legislation that need to be filled if we are to achieve a sale that meets the needs of the loan purchasers, the borrowers and the Government.
  The Bill has three main provisions. In brief, their purpose is to make the loans into something that the private sector can recognise, work with and value. Clause 1 is about the power to sell public sector student loans. It amplifies and replaces an earlier power contained in the 1990 Act. In particular, it allows the lender, in this case the Student Loans Company, the power to assign its rights over the loans in question. It also allows my right hon. Friend the Secretary of State to pay subsidies to loan purchasers in such circumstances as he judges necessary in the light of the competition. It also allows us to buy back some of the loans sold and to assign them as necessary to a third party.
  Mr. Robert Jackson: Will the Bill enable future student loans to be dealt with in the way that the Bill provides?
  Mr. Byers: Student loans made available during the academic year 1997–98 will be covered by the provisions outlined in the Bill. In later years, it will depend on the circumstances that arise from any recommendations that come from the Dearing report. We will have to bide our time and wait to see what recommendations the Government will make on Wednesday in the light of the report of the Dearing inquiry.
  Clause 1 also allows the Government to buy back some of the loans that have been sold and assign them to a third party. Our intention in taking this power is to enable the Government to buy back loans that we want to cancel for social policy reasons. For example, it is the policy of the Government to cancel loans where the borrower dies. In such circumstances, we might want to be able to buy back loans assigned to a private sector party. Clause 1 allows us to do precisely that. We do not believe that it would be reasonable to pass such a burden to the private sector. It is a matter of public policy and it is therefore right that that power should reside with the Secretary of State.
  Finally, clause 1 provides for an independent complaints procedure. Currently, borrowers can take complaints about how their loans are administered to an independent assessor, whose rulings are binding. Clause 1 will ensure that borrowers whose loans are sold retain that important right.
  As I said, to achieve the planned level of receipts, it will be necessary to pay subsidies to the purchaser. That is inevitable because student loans are unusual.

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  The loan scheme is relatively recent, and there is little track record to allow the private sector to assess the risks involved. The purchaser therefore takes a gamble on the unknown. There is no real interest rate; loans are pegged at the rate of inflation so that borrowers repay only what they borrowed. Additionally, borrowers earning less than 85 per cent. of average income can defer repayments year on year. Those are not commercial loan terms, so the debt cannot be sold on such terms.
  In those circumstances, without a subsidy, loans could be sold only at a fraction of their face value. By paying a subsidy that compensates the purchaser for some of the risk outside the purchaser's control, we will be able to achieve the best return. We shall do everything possible to ensure that the competition between bidders is strong. At the end, we shall accept only the best bid.
  In clause 2, our objective is to freeze the terms of the loans when sold—which refers to the point made just now by the hon. Member for Bath. Loan terms can vary. The most significant core terms are the time and manner in which repayments are made, and the deferment and cancellation rights. If those terms are varied—for example, if more loans are cancelled for policy reasons, or the repayment periods are shortened—it could have a significant and adverse financial effect on the purchasers. Clearly, they are not risks that the private sector can control: companies would price the risk of change into their bids, or expect compensation in full. Either way, there would be a substantial cost to the Government.
  Clause 2 therefore provides that loan agreements must set out in detail the core terms on time and manner of repayments, deferment and cancellation. Those matters are currently discussed annually when we debate the relevant regulations in the House. Once the Bill becomes law and before the sale, we shall make new regulations fixing the core terms for all loans. The terms will therefore be frozen, and loan purchasers will be protected from the financial cost of changes. The act of freezing will also protect borrowers. We shall make sure that the terms are frozen without change to those existing when the loans were taken out. That is one of the safeguards that we shall put in place to protect existing borrowers.
  As to Clause 3, we want to put public loans on an entirely contractual basis, like any other commercial loan. It removes from the lender—the Student Loans Company—and subsequently from the loan buyer, the operation of public law functions. The key point is that, under existing legislation, the loans purchaser must exercise the public law functions by reference to the Student Loans Company. The functions cannot be transferred, and it cannot take any decisions itself. That makes administration complex, cumbersome and expensive—and, frankly, it is doubtful whether the loans could be sold on that basis.
  Clause 3 ensures that buyers are dealing with the sort of loans they understand—loans subject to contract law and to consumer credit legislation—and not public law procedures, such as judicial review. Therefore, the clause removes all public law functions so that the lender and purchaser administer the loans purely as commercial contracts.
  Hon. Members would naturally be concerned if the clause were to mark any reduction in the rights of borrowers, but it will not do so. The borrower will be safeguarded through our sale agreement with the
  712
  purchaser, which will set down minimum requirements as to administration. The borrower will also have the protection of the terms of the loan agreement, which will have specific provisions on the core issues of repayment. Borrowers will continue to have the general protection of consumer rights legislation.
  Clause 4 is a straightforward extension of the provisions to the whole United Kingdom, and the remaining clauses are consequential. However, I draw the attention of the House to two specific issues. The first relates to the rights and the position of existing borrowers—which I know will concern hon. Members—and the second to the future role and function of the Student Loans Company. As far as the existing rights of borrowers are concerned, selling the loans and transferring the risk of default to the private sector inevitably means that the purchaser must take over responsibility for loans administration.
  However, that does not mean that borrowers will be abandoned. We shall introduce a number of important and significant safeguards. We shall specify in the sale agreement with purchasers minimum collection standards that must be adhered to. They will be based on the present procedures adopted by the Student Loans Company. A purchaser's failure to abide by the minimum collection standards could lead to legal action. The borrower will be safeguarded by the terms of the loan agreement and, more generally, by consumer and data protection legislation.
  Student loans are made on generous terms. With the right of deferment and the discretion that lenders have to deal with borrowers who run into financial difficulties, there is no reason why borrowers should default. Those who do must expect to have legal action taken against them, whether their loans are owned publicly or privately. However, such a regime should be sympathetic. We believe that the one presently operated by the Student Loans Company forms the correct basis for introducing our minimum collection standards.
  Nor need there be concern that an unscrupulous private sector party will use information held on student borrowers for his own ends. The Bill states explicitly that no person shall provide or make available to anyone else any information held in connection with the loans if that information is to be used for soliciting custom and services.
  Disabled borrowers are a special case, and they are dealt with as such in the existing legislation. There is considerable discretion to treat them more favourably according to the measures that the House has introduced already. We intend to ensure that they continue to receive such sympathetic consideration.
  We therefore intend that such loans, when identified, should be bought back from the private sector. We shall retain an independent complaints procedure. At present, borrowers can take complaints about the way in which their loans are being administered to an independent assessor, whose rulings are binding. That important right must remain—and, under our proposals, it will.
  The legislation will allow loans to be sold on by the original purchaser. Without this normal market freedom, it is unlikely that we would attract a buyer—certainly, the competition would be limited and the subsidy costs higher. However, our contract with the buyer will provide protection for borrowers by ensuring that the Secretary of State must approve all subsequent sales.

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  Hon. Members may be concerned about the future role of the Student Loans Company. That is a non-departmental public body, and its shares are wholly owned by the Secretary for Education and Employment and the Secretary of State for Scotland. Private sector institutions will have the freedom to choose whom they wish to administer the loans. The purchaser of the debt will have the option to administer the debt himself, to contract it out to a third party, or to use the Student Loans Company.
  If the Student Loans Company is used, it would have to be on the basis of an arm's-length contract. We would ensure, first, that the fee the company charges is without subsidy, thus preventing unfair competition against other prospective administrators; and, secondly, that the fee charged is not connected to collection rates, thereby preventing the Government from re-assuming any of the default risk transferred to the debt purchaser through the loans administration contract. The long-term future of the Student Loans Company will have to considered as part of any changes to student support that emerge from the Dearing inquiry and the Government's response to its recommendations.
  This sale will involve the private sector in an area where we wish to see public-private partnerships develop in the future. Its measures propose to ensure that the interests of existing borrowers are safeguarded. The Bill will guarantee receipts of more than £3 billion in the next two years to support our education plans, based on raising standards, extending access and high-quality provision. I commend the Bill to the House.
  4.58 pm
  Mrs. Angela Browning: I begin by congratulating the Minister for School Standards—particularly on his delivery of information which falls not far short of having to read the telephone directory from the Dispatch Box. We welcome the Bill. Its measures carry on from where we left off, moving to a system whereby private sector lenders take responsibility for the provision of student loans.
  It is our view, and has been for some time, that the Government should not be in the business of lending to individuals. The private sector has a proven record of being much better placed to manage the risks involved, and much more experienced in recovering loans.
  In government, we took action to move in that direction. I promise the Minister that I shall not repeat what he has said page by page, but he made reference to the Education (Student Loans) Act 1996, which sought to enable the payment of Government subsidies to financial institutions in the private sector to facilitate the provision of loans to students in higher education. Under the Act, students would still be able to apply for loans from the Student Loans Company. However, the clear aim was to ensure that most subsidised loans would eventually come from the private sector, with the choice resting with the student.
  Following extensive negotiations with financial institutions, that twin-track, public-private model did not proceed. As a result, the Conservative Government came up with an alternative proposal to sell some of the existing
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  student loan debt to the private sector, and to contract out the work of the Student Loans Company. That proposal is contained in the Bill.
  There is estimated to be about £2 billion in outstanding loans. Selling some of that debt will bring benefits to the Government and to the taxpayer by transferring some of the risk to the private sector.
  We welcome the fact that the Government have decided to press on with the sale of student loan stock. It is a step in the right direction, and we hope that the Government will continue to look for ways of involving the private sector still further in the provision of student loans.
  In response to questions from Conservative Members, the Minister said that there will be a statement on Wednesday on the Dearing report. It would be helpful if he could confirm whether any additional loans or changes to the loans system will be accompanied by a decision on Wednesday on how loans are to be serviced and whether they are to be part of a package that will be passed on for the private sector to deal with.
  Mr. Byers: I have not briefed anyone on the Dearing report, and do not intend to do so now. Hon. Members must wait until the statement on Wednesday afternoon to find our how the Government intend to respond to the recommendations of the Dearing inquiry, and in particular our views on student support in future years.
  5.2 pm
  Mr. Phil Willis: On Friday last, the same cast of hon. Members sat in the Chamber and, despite our differences, we congratulated the Government on producing a White Paper that was a good basis for discussion. I spoke to a number of head teachers in my constituency this morning, and there was also a great deal of support on the ground. The Minister and his team rightly went away on Friday with some satisfaction about a job at least well started.
  Today, the same Minister is at the Dispatch Box attempting to put a brave face on legislation that was cobbled together by the previous Administration to meet cash-limited spending plans. The present Chancellor admits that this legislation
  "is a critical element in meeting the Government's manifesto pledge to work within spending plans already announced for the next two years."
  Our schools will be starved of cash this winter and, at a time when our universities are crying out for resources, the Secretary of State for Education and Employment sees yet another valuable asset snatched from under his nose in the name of financial expediency, because that is exactly what the Bill is about.
  We now know why the Government did not include the Bill in the Gracious Speech. It was not an oversight, as was said in a leak to the newspapers this weekend. It was not included because the Government were embarrassed at having to introduce such unacceptable legislation.
  The Minister and the Labour party when in opposition, together with the Liberal Democrats, condemned the proposals contained in the 1996 Education (Student Loans) Bill as much for their vagueness and lack of detail as for their intention. However, today the script is so similar to that used by his predecessor, the right hon. Member for Bromley and Chislehurst (Mr. Forth), that the

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  House could be forgiven for believing that the general election never happened. Like a long-running play, the director merely changed the cast to give the script new life.
  To be fair, I know how committed the Minister is to his portfolio, and I am sure that he is embarrassed at having to introduce the Bill. I do not, therefore, want to cause him any more anxiety than he deserves.
  The Liberal Democrats do not have any philosophical difficulty with the principle of student loans or with the involvement of the private sector. We understand the need to keep the public sector borrowing requirement under control, and we recognise the part that the private sector must play. We have always asked for negotiations to be open and capable of scrutiny, and for there to be a tight regulatory system that protects the students and the taxpayer. Above all, we seek a system that treats all students, both part time and full time, with equality.
  We fully accept that the Government have real difficulties in funding higher education. I have no doubt that, despite the leaks, Wednesday and the following days will be traumatic for the Government as Back Benchers try to wrestle with their consciences. However, we have never supported the current student loans scheme. The Bill fails to meet the criteria for our support, so if there were a Division, we would not support the Government.
  Had parts of the proceeds of this "fire sale" been allocated to our universities to make up for the 28 per cent. cut in funding for students in the past six years, or for the 30 per cent. cut in capital budgets last year, there may have been some justification. As the hon. Member for Angus (Mr. Welsh) rightly pointed out, the Bill does nothing for our universities, which are experiencing a funding crisis. Not a single penny of the £1.6 billion that the Government are hoping to raise this year will go into higher education.
  I may be doing the Government a disservice and our interpretation may be wrong. Will the Minister explain what proportion from the sale of this debt will be reinvested in higher education this year, and what proportion will be used to alleviate student hardship? After all, it is the students who have created the debt.
  Although the Treasury may benefit from receiving £1.6 billion this year and £1.5 billion next year, the taxpayers may not benefit in the long term. Under the Bill, the Secretary of State can make any arrangements "as he thinks fit" to subsidise private sector buyers and to guarantee any losses through default. The Bill contains no details of the extent or the limit of those subsidies, or the cost to the taxpayer of making the portfolio saleable. In short, the Bill enables the Secretary of State to write the private sector a blank cheque.
  One can imagine the howls of dissent from Labour Members if this measure had been introduced by the previous Administration. During the Budget debate, the hon. Member for Bolsover (Mr. Skinner) and his hon. Friends, when they espied the former Chancellor, the right hon. and learned Member for Rushcliffe (Mr. Clarke), in the Gallery, shouted to him, "Come on down, the price is right." This proposal is akin to a game show called "The price is always right, whatever it is."
  To give them credit, the previous Government always hoped that the private sector would take some, if not all, responsibility for student loans, including administration.
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  We know that the private sector was not interested in 1990, and, as predicted, the burden for administration and cost fell on the taxpayer and the universities.
  A further attempt in 1996 by the former Secretary of State for Education and Employment, the right hon. Member for South-West Norfolk (Mrs. Shephard), also failed. Her comments in a press release on 19 December 1996 were most revealing and, if I may say so, characteristically frank. She said:
  "In the event we have not been able to agree a deal which could meet their"—
  the private sector's—
  "requirements at the right price for the taxpayer".
  Now it seems that the right price is any price. The market knows that the Chancellor must meet his cash requirements this year because he has said so. It knows that the cash is required by an arbitrary date because he has said so. The market therefore knows that it can demand whatever subsidies it requires to cover its costs and guarantee its profit margins. It can even build in subsidies to cover default if students fail to pay.
  When the Chancellor said that
  "the size of the continuing subsidies cannot be predicted in advance",
  what he was saying, loud and clear, was that this was yet another opportunity for the City fat cats to profit at the taxpayer's expense. It is rather as though someone wishing to sell a car put an advertisement in the paper stating, "Must be sold by Friday—owner emigrating and needs cash for air fare". That is the extent to which we are in hock to the private sector. Such an approach to the selling of public assets is not only bizarre; it is exactly the sort of approach of which the Labour party would have been extremely critical when in opposition.
  The Liberal Democrats do not believe that the Bill will be in the best interests of taxpayers. Indeed, we believe that the Chancellor has seriously compromised the position. If the Bill is passed, we shall want the National Audit Office and the Public Accounts Committee to examine the arrangements for the sale of the student debt portfolios, and to report to the House before any sale is confirmed. We seek the Minister's assurance that no sale will proceed without that level of scrutiny, and the guarantees for which we ask.
  The third issue that I wish to raise concerns the terms on which loans will continue to be offered. We have long argued—and, indeed, the Labour party argued when in opposition—that the repayment of student loans should be income-contingent. We would favour a system whereby more generous loans were repaid through a national insurance contribution scheme or, in the future, a joint tax and national insurance contribution scheme.
  As the Minister will recall, during the Committee stage of the Education (Student Loans) Bill in 1996, an amendment tabled by my hon. Friend the Member for Bath (Mr. Foster) proposed that
  "the Secretary of State shall be under a duty to ensure that the level of repayments to be made by borrowers is, so far as practicable, income contingent".
  The Minister will also recall a similar amendment tabled by the then hon. Member for Oldham, Central and Royton, Mr. Bryan Davies. Although not pressed to a vote, the amendment received considerable support, and, I understand, formed part of the Labour party's proposals to the Dearing inquiry.

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  On Second Reading of the Bill in 1995, the then hon. Member for Oldham, Central and Royton outlined a number of principles for the future of student loans. He said:
  "any system of student funding should be fair to both students and the taxpayer. That means that it must be efficient and progressive".
  Is that still the Government's position? If so, why have they not taken the opportunity to include changes in the regulations in the Bill? Such changes would have framed future loan repayments, thereby delivering what we believe is essential if we are to attract the next generation of students from poorer homes into higher education—even if it would not have been possible to do the same for existing borrowers.
  That leads me to the fourth and final reason why we believe that the Government should stop and think before proceeding with this "sad and miserable little Bill"—a phrase used by my hon. Friend the Member for Bath, which he insisted that I put in. I refer to the publication of the Dearing report on Wednesday this week. I remind the Minister of what his former colleague the then hon. Member for Oldham, Central and Royton said in the House on 27 November 1995 when discussing the last Education (Student Loans) Bill. He said:
  "He should also recognise that the Government are involved in an extensive consultation exercise on higher education. Why are they rushing to implement one particular measure when a whole range of higher education issues are part of a national debate?"— [Official Report, 27 November 1995; Vol. 267, c.953–57.]
  What has changed? Surely the logic of the position taken on 27 November 1995 is even more apparent now, just two days before the publication of the Dearing report.
  Both the last Government and the present Government acted bilaterally to commission Sir Ron Dearing to examine, among other things, the future funding of higher education. The report will inevitably be controversial, particularly if it suggests that students pay for tuition as well as maintenance. If students are to be expected to make larger contributions to their higher education costs, they will
  "need to be underpinned by an efficient system of student loans that is both cheap for the student and the taxpayer",
  as Tim King said in The Independent on 15 July.
  It is, we think, inevitable that the private sector will be asked to play a significantly greater part in developing such a scheme. We repeat that we have no principled objection to that; but, if the student loan portfolio is to be significantly larger in the future, it may be more valuable to students, taxpayers and the market for the current debt portfolio to be included in a more comprehensive scheme. Surely it is in everyone's interest at least to await what the Dearing report has to say about funding, and to evaluate its proposals, before embarking on legislation.
  The Bill is a short-term expedient which does nothing to resolve the long-term funding crisis in our universities. It does nothing to create a long-term level playing field for our students, and, as such, it does not deserve our support.
  5.14 pm
  Mr. Robert Jackson: I support the Bill, which, I believe, contains hidden depths. On the surface, it looks like a piece of purely technical legislation—so
  718
  technical, indeed, that it has been capable of being carried over from one Parliament to another, and from a Conservative to a Labour Government. Notwithstanding the disclaimers in the Minister's opening speech, however, beneath the surface, it opens the way potentially—I stress the word "potentially"—to a revolutionary improvement in the conditions in which higher education is provided in Britain. That is why I strongly disagree with the analysis that we have just heard from the hon. Member for Harrogate and Knaresborough (Mr. Willis).
  On 27 November 1995, on Second Reading of the earlier, related Bill, I set out something of the background to the legislation as I saw it. The significance of this Bill—the Minister glossed over this point—is that, by privatising the debts of students and former students to the Student Loans Company, it enables that debt to be increased without reference to the public sector borrowing requirement and the limits on public borrowing. That opens the way to a welcome extension of support, through loans, for the many students who are currently excluded, such as part-time and postgraduate students. It opens the way to an extension of student loans to support the payment of tuition fees for higher education. That, in turn, opens the way to an increase in the resources available for higher education—for which the hon. Member for Harrogate and Knaresborough called—after many years of falling per capita costs. Perhaps even more important, it will potentially enable universities to recover a stronger sense of their autonomy and independence, after a long period in which those values have been regrettably eclipsed.
  On Wednesday, the Government will make a statement about the report of Sir Ron Dearing's committee of inquiry into the funding of higher education. The Bill can, I think, be seen as paving the way for that statement—I do not believe that the timing of today's debate is accidental. As the two are thus intimately linked, and as this is almost certainly the only opportunity that I shall have to make a speech on this issue before the autumn, I want to say one or two things about the new regime of tuition fees which at last seems to be coming into view.
  The reports in the press about the Government's intentions are confusing and contradictory. We have already engaged in some discussion of them during points of order. It seems that the Government have decided three main points—first, that there will be a tuition fee; secondly, that this will constitute an additional income for universities; and, thirdly, that the parental contribution to student maintenance will continue.
  If those are indeed the Government's intentions, I congratulate them. It is 10 years almost to the month since, as the Minister responsible for higher education, I attempted to launch a public debate about what were then called top-up fees. I remember a conversation with some journalists—leading to blaring headlines—in which the figure of £500 a year was mentioned. Ten years later, after a period of some inflation, it looks as though the figure will be £1,000. My comment is "Better late than never". If the Government are indeed taking that line, let me say to my right hon. and hon. Friends on the Opposition Front Bench that, after 10 years, it is high time that the nettle was grasped. If that is what the Government are going to do, they deserve and should have our support.

  719
  We should support the Government if they have indeed decided to accept the recommendation of Sir Ron's committee, which envisages a tuition fee of £1,000 a year. I refer my right hon. Friend the Member for Charnwood (Mr. Dorrell) to my speech in the public expenditure debate on 6 March, when I argued against replacing the parental contribution to student maintenance by an extension of the loan scheme. As I explained in that speech, replacing parental contributions by loans would be regressive in terms of social and financial equity. Above all, it would remove the prospect of the universities acquiring access to a new stream of income under their own control and, therefore, of strengthening their autonomy and independence.
  It is that concern with the universities' independence and autonomy that leads me, however, to say to the Government that I hope that the figure of £1,000 that has been bandied about will not be regarded as a flat-rate sum, and that the legislation to enable tuition fees to be paid by loans from the Student Loans Company Ltd. or its successors will be as flexible as possible. The right approach is that which I set out in my speech in March, according to which the Government should indicate a maximum sum that they are prepared to allow the student loan fund to provide for tuition fees, but, beyond that, the Government should not intervene to require a fee at that rate, and only at that rate, to be levied. Indeed, one might argue that, with the passage of the Bill, even such a limitation on the part of the Government would be unnecessary as, with student loans in the private sector representing no additional cost to public expenditure, the Government no longer have any financial interest in restricting the amount of student borrowing and, therefore, of university charging.
  I hope that the Government will disregard the out-of-date view that they have a duty to intervene by fixing a flat-rate fee to ensure that institutions of higher education do not compete with one another. They are already in fierce competition to attract the best students. I hope also that the Government will disregard the view that it is somehow illegitimate to distinguish between courses on the ground of price. There are already huge incentives for students to choose one course rather than another, arising from the different expectations of income after graduation that are held out by different courses—not that any of this seems to be in any way a material factor in influencing student choices. Arguments such as those reflect an outdated and excessively paternalistic concept of the Government's role in relation to students and universities.
  It needs to be recognised that, inevitably, the costs of higher education courses vary considerably. There are some courses—for instance, those provided by the conservatoires of music—that cannot be taught without high-cost one-on-one or small-group tuition. There are also remedial and access courses for the all-too-many students with high intellectual potential that has not been sufficiently developed in our schools. Those also often require one-on-one or small-group tuition, leading to costs higher than the average. Similarly, dare I say it, there are students whose intellectual potential and attainments are such that they, too, will benefit significantly from higher-cost methods of tuition.
  It would be unnecessary and a reflection of an outdated, bureaucratised concept of the relationship between Government and higher education for the Government to
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  insist on any policy that presupposes or tends towards the equalisation of costs in higher education. In this context, I want to make special mention—I hope that the Minister will note this point—of the position of Oxford and Cambridge and their college fees. This is an important question because of its relation to the international stature of those universities and the advantages that that brings to this country.
  The justification of these college fees is, as I have pointed out, that, for certain types of student, in certain specific situations, it may be desirable that higher tuition costs should be incurred. Admittedly, it was always anomalous in the old bureaucratic system, which we are now, I hope, replacing, that this claim was not fairly and squarely measured against other claims through the higher education funding system operated by the University Grants Committee and its successors. There was always, I concede, something suspect about the fact that the Oxbridge college fees were paid, so to speak, out of the Secretary of State's back pocket. But I hope that, in this new era, the Oxford and Cambridge colleges will not now have to pay a penalty for the special dispensation that they have received in the past. It would not be right for the Government simply to abolish their contribution to Oxbridge college fees. And it would be still worse, and probably unconstitutional under the forthcoming Bill of Rights, for the Government to seek to prevent the colleges from charging such fees.
  The proper course is to remit the question of Oxbridge college fees to the higher education funding councils and, at the same time, to leave it to the colleges to charge fees at their own discretion, using the private sector loan scheme that the Bill will open up.
  I know that one of the concerns here relates to equality of access to Oxford and Cambridge and, indeed, to all our institutions of higher education. But, again, it would be an example of outdated thinking to conclude from the admirable principle that access should be open equally to all on merit, that the only way of doing that would be by equalising the financial terms for all courses. As I suggested in my speech in March, the right way for the Government to address this issue is for them to say to higher education institutions that, as they benefit and will continue to benefit from substantial taxpayer funding, the Government expect them to continue to operate, under a new regime of tuition fees, what the American private universities call a "means-blind" system of admission. Admission to universities, including our world-class universities, must be strictly on academic merit—and I hope that I need not add that that does not mean that their admission policies should be determined by any sort of quota system.
  Behind and above all these technical details, there stands a high principle that I believe the Government wish to honour. That principle is that there is, indeed, such a thing as "society" and that there is and needs to be a wide range of flourishing, independent and diverse "intermediate institutions" between the state and the individual—intermediate institutions of which the university is not the least important.
  Our universities are, in legal form, free and independent private corporations. For some few recent decades, they have chosen not to charge fees to their United Kingdom students. That period is now coming to an end and the Bill opens the prospect of a return to higher education funded in part by student tuition fees.

  721
  The period during which universities relied only on the Government and taxpayers' money as a source of funding was a period in which, despite many great achievements, the independence and, consequently, the morale of our universities steadily declined. If that trend were to continue, the consequences would be dire for a society such as ours that increasingly depends on knowledge and its expansion. That is why the Bill and the policy that I hope will be announced on Wednesday could represent what I called earlier a revolutionary improvement in the outlook for our universities. I look forward with keen anticipation and with high hopes to the Government's statement later this week.
  5.27 pm
  Mr. Andrew Welsh: I agree with the hon. Member for Wantage (Mr. Jackson) that intellectual need and educational attainment should be the guiding factors, but the heavy price now imposed on individual families militates against that. Listening to the Minister for School Standards, a Labour Member, it was almost as though I was listening to a Conservative Minister and the general election had never happened: it is the same voice, the same philosophy and exactly the same policy. I wonder whether the Minister for School Standards inherited his speech from his Tory predecessor and whether he has read the opinion poll in Scotland on Sunday, which showed that 75 per cent. of Scots want educational provision to be provided free, through taxpayers' money, and that they want it to be available to all, as of need and as of right. His policy is overwhelmingly opposed in Scotland because it jars against our national educational tradition.
  The Bill is all about the technical means of achieving a policy to which my party is totally opposed. We prefer to remain faithful to the Scottish education tradition and to make the right to educational provision available to all, irrespective of background, ability to pay or other such reasons. The guiding factors should be intellect and the will of our society, rather than the short-termism of any one Government.
  I intend to speak briefly in the debate because my party's position on the principle of the Bill is clear. We are opposed to the privatisation of student debt. It is clear that the devil in these proposals will be in the detail, as it affects each student and each family coping with the debts that are imposed by the loans.
  A few simple principles underline my attitude to the legislation. First, if I had entered government on the cry, "Education, education, education", my first act would not have been to "Privatise, privatise, privatise". The student loans system is anathema to the SNP and we would seek to abolish it rather than hand it over to the private sector. It fails to meet the needs of the student population and it has created an overhang of debt for thousands of young people as they make the already precarious transition from study to the workplace.
  The greatest irony is that the very people who now champion this privatised loan system benefited from universal student grants and were able to launch their careers with a clean financial slate, rather than a combination of debts, amounting for many to half their first income. I was one of my generation who benefited from access to university and I am ashamed to find that
  722
  that generation may be cutting off swathes of the current generation from the ability to enjoy such educational achievement. By so doing we are treating that generation shamefully.
  The system hits at the tradition of Scottish education. Since 1995 alone, average student debt has leapt by a dramatic and unacceptable 40 per cent. to about £2,500, and the current average debt of those who are leaving university is almost £4,000. The Bill may help to reduce Government debt, but it will do nothing to tackle the mounting crisis of student poverty and debt. It is the people and the parents who will pay for this policy.
  As we debate this measure, we are told that the Government are looking favourably on proposals to charge every student a £1,000-plus annual tuition fee. We shall not know about that until later this week, but leaks lead us to believe that that is in prospect. That is unacceptable. What twisted priorities and short-term proposals are these? I thought that Labour had been elected to stop that sort of Toryism, but instead the Government are implementing it. Apparently, a Scottish Assembly will soon be in charge of education. Perhaps it should be responsible for such decisions and should not be presented with a fait accompli. Has the Minister consulted his Scottish Office colleague with responsibility for education? If he has, what was the response?
  The Bill and similar measures hit at the heart of the traditional Scottish four-year honours degree; by pursuing such students, the Government are throwing away a valuable asset. Perhaps in considering England and Wales, the Government have not thought about what they are doing in Scotland. I ask them to think again. The reality that the Government must recognise is that education is an investment in all our futures. They must realise that penalising students through loans and a fees system that are barriers to entering higher education is unacceptable in a country that needs to mobilise its most talented young people and not burden them unnecessarily.
  Mr. Robert Jackson: The hon. Gentleman says that the loans system is a barrier to entering higher education. That argument was put when, a few years ago, I was taking through the House the Bill that became the Education (Student Loans) Act 1990. Has he noticed that there has been a huge expansion in higher education since the student loans system was introduced? Since that time, higher education has expanded faster than in any other period.
  Mr. Welsh: That shows the demand. There has been vast expansion at a time of contracting resources, and that is at the heart of the problem that the measure will not address. Instead of properly resourcing higher education, the Government are turning their guns on the students. The measure will be a deterrent: it will dissuade youngsters from undertaking higher education. As I have said, my generation benefited from the grants system. I was not lumbered with massive loans of the sort that we are inflicting on present and future generations of students. It is an unnecessary burden, and I repeat that it hits the traditional Scottish outlook on education, which is that it should be available to all irrespective of background. The intellect and not the purse should decide,

  723
  but the Government have decided that it will be the purse. The Government's mechanism will affect students and their families.
  Mr. Jackson: The hon. Gentleman was probably at university at about the same time I was. About 5 per cent. of 18-year-olds went to university at that time and had the huge privilege of the grants system. There is now 30 per cent. participation, which is one of the highest percentages in the world, and that is against the background of student loans.
  Mr. Welsh: I was an adult entrant to university and I could not have gone there without a Government grant. If there had been a loans scheme, I could have been deterred; but if I had gone ahead, a large burden would have been placed on me. I refer the hon. Gentleman and the Government to the effects within universities. Yes, there are more students, but there are restricted resources and, as a result, there is a massive increase in drop-outs and in student debt. Students and their families are paying the price for the policy.
  Measures that pull the rug from under the feet of students who have signed agreements with the Student Loans Company are unacceptable. Their agreements must not be meddled with against their interests, and my party hopes that the Government will table amendments to guarantee such protection. We must not allow future generations of students to be offered an even more disadvantageous loan arrangement than the current one. The present measure is only the start—the door being kicked open. The system will advance and loans will gradually rise.
  By introducing the profit motive into the provision of loans, there is a real risk that student need will be exploited and adequate protections will not be in place. My party opposes the measure, and I call on the Government to reconsider the whole sorry package of higher education measures which they seem set on forcing through against the interests and needs of our students. I urge the Government to raise their sights and to enter the new millennium guaranteeing free and equal access to higher education, rather than glorifying in an empty status symbol, a mere funfair dome on the Thames. The next generation of Scots will judge the Government by their priorities.
  Many of the people who voted Labour in Scotland hoped that there would be a change, but the same speeches and policies are being carried through. There will be much disappointment. I again refer the Government to the traditional Scottish view. We must allow all our youngsters, irrespective of background and the wealth of their parents, the right to take themselves forward in education as far as their talents and abilities will carry them. That is the strength of our society. The Scottish education system is fundamentally strong, and we must build on its traditional views and values. The Bill and the proposals, which I hope will not appear on Wednesday but which leaks tell us are on the way, are an attack on the heart of Scottish education, which should be leading us into the 21st century. The Government will pay a heavy price for such an attack.
  5.37 pm
  Mrs. Browning: The speeches, and especially that by my hon. Friend the Member for Wantage (Mr. Jackson), have shown that the issues of higher education, students
  724
  and student loans concern and interest the House. The Bill is essentially technical. Before the week is out, we shall be able to consider the Dearing report and, as the Minister promised, later in the year there will be an opportunity to discuss and legislate in more detail on the terms of student loans and on issues such as the access fund. We support the Bill.
  5.38 pm
  The Parliamentary Under-Secretary of State for Education and Employment (Dr. Kim Howells): We have had a short but very interesting debate in which we have heard some interesting speeches. I should like to highlight especially the speech made by the hon. Member for Angus (Mr. Welsh), who raised some points about which I, too, am very concerned. When I was pursuing my career in higher education, back in 1965—like the hon. Member for Angus, who is two years older than I am—[Interruption.] Yes, he has a good head of hair.
  The grim fact is that the proportion of young people from working-class backgrounds in higher education is as low now as it was when we were in higher education. We must realise that we will have to get schools right if we are to widen access to university and other higher education institutions. It is not good enough to say that people have been denied access to higher education because of a particular maintenance funding system. Such systems are enormously important, but, fundamentally, we must ask where the majority of university students come from. The truth is that they come predominantly from the leafy suburbs.
  Mr. Welsh: When the Minister mentions unavailability of access to higher education for working-class people, is he really including Scotland? For the people who surrounded me growing up—many of whom went on to do degrees in Scotland—the higher education system was open to all. Such availability is what I want to preserve and enhance. Is the Minister sure that his comments are true of Scotland? They are perhaps true of England and of Wales, and that is sad. I should like England and Wales to adopt, not destroy, the Scottish attitude.
  Dr. Howells: All I can say to the hon. Gentleman is that I should like to see the statistical breakdown of postal addresses of those in higher education. The Higher Education Funding Council conducted such an exercise in Wales and in England and the results were very interesting, showing pretty dismal patterns of access to higher education for people from lower social and economic groups.
  Mr. Robert Jackson: I, too, share the concerns expressed by the Minister and by the hon. Member for Angus (Mr. Welsh). Does the Minister accept that the proportion of working-class children entering higher education has risen only in the past five or six years, under the regime of student loans? Why has that increase occurred? It has occurred because universities expanded enormously. The main determinant of access to university for working-class people is the size of the university system. In the old system—with its low participation levels and very expensive grant scheme—unit costs were so high that the system was kept small, militating against

  725
  access. Now, however, by spreading the burden through loans, we are able to have a larger system, thereby promoting access.
  Dr. Howells: That is a fair analysis of what has happened over the past 10 years, and it is important that the hon. Gentleman has reiterated it in the House.
  Mr. Barry Sheerman: Will my hon. Friend allow me to intervene before the hon. Member for Wantage (Mr. Jackson) gets away with his comments completely?
  Dr. Howells: Yes.
  Mr. Sheerman: I agree with much of what the hon. Member for Wantage said, such as the importance of widening availability to higher education. The cultural element, however, is also important. I am not aware of any system that successfully enough breaks into working-class culture to open the minds of young working-class people, so that they regard education as a part of their lives and culture. Action dealing with the cultural element must accompany widening the scope of availability. I agree with half of what the hon. Member for Wantage said, but we must go further. Forty years ago, Brian Jackson wrote "Education and the Working Class", based on a study in Huddersfield. He understood the problem; we have still not found a solution.
  Dr. Howells: My hon. Friend is correct: we do not have a solution. Because we did not have a solution, the previous Government—with the support of all Opposition parties—commissioned an inquiry into the future of higher education, and it will be as important as the Robbins report was 30 years ago. I hope that the report will be vigorously and robustly debated and examined.
  Anyone who argues that the current situation is perfect is a fool, because it is not perfect. If we are to create a learning society—no hon. Member or member of the public who thinks about the matter would argue that that is not necessary—we must determine how to make higher education attractive and how to make communities understand the great part that education can play in generating wealth in those communities.
  Mr. Robert Jackson: Notwithstanding the comments of the hon. Member for Huddersfield (Mr. Sheerman), we can address those goals against a very optimistic background. There are some striking figures. There has been a huge increase in the staying-on rate in schools after the end of compulsory education at 16, and, in the past 10 years, there has been a huge increase in the uptake of higher education. The penny is dropping, and we are reaching a situation in which people accept a learning society. The key to the future is to provide a large, open, flexible and diverse higher education system.
  Dr. Howells: I agree.
  Mr. Welsh: I make a plea to the Minister to examine the situation in Scotland, because the Government's proposals will restrict access to higher education and deter students. The Minister has described a system that has
  726
  perhaps already deterred folk in England and Wales. He said also that diverse student backgrounds are necessary. Perhaps he has heard of Rab C. Nesbitt. I come from Govan and attended Govan high school. Many of the people with whom I attended high school went on, like me, to attend Glasgow university, reflecting the traditional Scottish outlook on education.
  It should not matter from which part of the country someone comes. There should be a national system that is available to all, and education from the elementary to the university level should be available to all according to ability. That is our system in Scotland, and the Government's policy is working against it. I should be happy for the Government's proposals to apply to England, but let us, please, not ruin what we have in Scotland.
  Dr. Howells: The hon. Gentleman clearly has his opinion on the great virtues of the Scottish education system, and, as someone from Wales, I certainly will not decry it. The virtues that he is extolling surprise me, however, because many of my Scottish friends would not agree with his analysis. They have told me that the situation in Scotland—the percentage of young people from working-class backgrounds in the university population—is as dismal as it is in England and in Wales.
  Ms Roseanna Cunningham: Will the Minister give way?
  Dr. Howells: No, the hon. Lady was not in the Chamber for the debate, and I will not give way now. I want to press on.
  I suggest to the hon. Member for Harrogate and Knaresborough (Mr. Willis) that, in future, he should not let the hon. Member for Bath (Mr. Foster) write his speeches for him. Having been a member of the Public Accounts Committee for more than two years, I know the value of the contribution that the Comptroller and Auditor General's office can make in getting legislation right. We hope that the House has learned from the National Audit Office's examination of past privatisations, and I assure the hon. Member for Harrogate and Knaresborough that the NAO will examine this one, too. I give him that undertaking. The NAO examines all privatisations, and it will examine the privatisation of student loans carefully.
  The hon. Member for Wantage (Mr. Jackson) says that it has been 10 years to the month since he tried to initiate a debate on top-up fees. He provided a fascinating history, and I understand his desire to put straight the record on his part in the matter. I should remind him and all other hon. Members, however, that today's debate is not about top-up fees or about any type of fees; we are debating a technical matter which, as the Bill states, is about selling the debt of the student loan book.
  Mr. Robert Jackson: Does the Minister accept that the proposal will take student loans out of the public sector borrowing requirement, thereby providing a crucial link to the debate about fees?
  Dr. Howells: The measure certainly has elements of that in it, but there is no hidden agenda.

  727
  The Bill is straightforward and technical. Its sole purpose is to enable us, this year and next, to complete sales of student loans. We are completing those sales because they are critical to meeting, this year and next, our manifesto commitment to living within existing spending plans. Some Opposition Members questioned our objective. I repeat: we shall meet our manifesto commitment. In doing so, we shall be able to give priority to our education programmes, which have been enthusiastically received.
  Some hon. Members have raised concerns about the position of borrowers whose loans are sold. Let me stress that we are selling the loans by way of competition. The bidders are all large and reputable organisations, and there is no question of the loans being sold to some ruthless or fly-by-night organisation. That is complete fantasy, which does no service to students and borrowers. We shall retain control over whom the loans are sold to now and in the future.
  There are other safeguards for students. The sale agreement with the purchasers, a model of which will be placed in the Library in due course, will stipulate minimum collection standards to be followed. The loan agreements will protect students. In particular, key terms such as time and manner of repayment and deferment will be retained and frozen. Borrowers will have the protection of consumer credit legislation. In addition, there will be an independent assessor to investigate complaints. Overall, borrowers' legal rights will be entirely unaffected by the sale.
  The Minister for School Standards and I have explained why we are going ahead with the loan sales this year and next. We have also accepted that meeting the overriding objectives we have identified will result in the payment of subsidies to the purchasers. Existing loans are subsidised. There is no real interest rate; there is deferment. The loan book that we are selling has to be subsidised. That is the price of having loans that are generous to the borrowers. We cannot predict the level of subsidies in advance, because we are running a strong competition. Twenty substantial bidders are already competing against each other. We shall, in due course, choose the most competitive bid from the vigorous competition.
  As I have said, we are now committed to the same plans and same sales for two years, but this is not our only objective. We are also committed to the establishment of public-private partnerships which, like this sale, will transfer risk to the private sector. The sale may also enable financial institutions to get a clearer understanding of student loans and encourage them to play a more direct role in the provision of student support in the future.
  The Bill is not about the Dearing report. Its reference to Dearing is limited, as my hon. Friend made clear. The Bill is about meeting a key manifesto commitment that we would work within the spending plans already announced for two years. Those plans, which we inherited from the previous Government, include substantial sales of student loans this year and next. The plans are tight, and we must proceed with the debt sales if we are to meet them and give to education the priority that we want.
  Our timetable is pressing. The sale competition is inevitably complex and time consuming. It will take at least another six months. Hon. Members should understand that we cannot resume the competition before
  728
  Second Reading. Second Reading is needed before the recess, which is why we are here today and why I commend the Bill to the House.
  Question put, That the Bill be now read a Second time:—
  The House divided: Ayes 267, Noes 3.

  Division No. 63]

  [5.52 pm

  AYES

  Ainsworth, Robert (Cov'try NE)

  Davidson, Ian

  Allen, Graham (Nottingham N)

  Davies, Rt Hon Denzil (Llanelli)

  Anderson, Donald (Swansea E)

  Davis, Terry (B'ham Hodge H)

  Ashton, Joe

  Denham, John

  Atherton, Ms Candy

  Dewar, Rt Hon Donald

  Atkins, Charlotte

  Dobbin, Jim

  Austin, John

  Dobson, Rt Hon Frank

  Banks, Tony

  Doran, Frank

  Barnes, Harry

  Dowd, Jim

  Barron, Kevin

  Drew, David

  Battle, John

  Drown, Ms Julia

  Beard, Nigel

  Eagle, Maria (L'pool Garston)

  Beggs, Roy (E Antrim)

  Edwards, Huw

  Bennett, Andrew F

  Efford, Clive

  Benton, Joe

  Ellman, Ms Louise

  Berry, Roger

  Ennis, Jeff

  Blackman, Liz

  Etherington, Bill

  Blears, Ms Hazel

  Fatchett, Derek

  Blizzard, Bob

  Field, Rt Hon Frank

  Blunkett, Rt Hon David

  Fitzpatrick, Jim

  Borrow, David

  Fizsimons, Lorna

  Bradley, Keith (Withington)

  Flint, Carolin

  Bradley, Peter (The Wrekin)

  Follett, Barbara

  Brown, Rt Hon Gordon (Dunfermline E)

  Foster, Michael Jabez (Hastings)

  Foster, Michael John (Worcester)

  Brown, Rt Hon Nick (Newcastle E)

  Gapes, Mike

  Brown, Russell (Dumfries)

  Gardiner, Barry

  Burden, Richard

  George, Bruce (Walsall S)

  Burgon, Colin

  Gerrard, Neil

  Byers, Stephen

  Gilroy, Mrs Linda

  Campbell, Mrs Anne (C'bridge)

  Godsiff, Roger

  Campbell, Ronnie (Blyth V)

  Goggins, Paul

  Campbell-Savours, Dale

  Golding, Mrs Llin

  Cann, Jamie

  Gordon, Mrs Eileen

  Casale, Roger

  Grant, Bernie

  Cawsey, Ian

  Griffiths, Nigel (Edinburgh S)

  Chapman, Ben (Wirral S)

  Grogan, John

  Chisholm, Malcolm

  Gunnell, John

  Church, Ms Judith

  Hain, Peter

  Clapham, Micheal

  Hall, Mike (Weaver Vale)

  Clark, Paul (Gillingham)

  Hanson, David

  Clarke, Eric (Midlothian)

  Heal, Mrs Sylvia

  Clarke, Tony (Northampton S)

  Healey, John

  Clelland, David

  Henderson, Doug (Newcastle N)

  Clwyd, Ann

  Hepburn, Stephen

  Coaker, Vernon

  Heppell, John

  Coffey, Ms Ann

  Hesford, Stephen

  Cohen, Harry

  Hill, Keith

  Colman, Tony (Putney)

  Hodge, Ms Margaret

  Cook, Frank (Stockton N)

  Hoey, Kate

  Cooper, Yvette

  Home Robertson, John

  Corston, Ms Jean

  Hood, Jimmy

  Cousins, Jim

  Hope, Phil

  Cox, Tom

  Hopkins, Kelvin

  Cranston, Ross

  Howells, Dr Kim

  Cryer, Mrs Ann (Keighley)

  Hoyle, Lindsay

  Cryer, John (Hornchurch)

  Hughes, Ms Beverley (Stretford)

  Cummings, John

  Humble, Mrs Joan

  Cunningham, Jim (Cov'try S)

  Hutton, John

  Cunningham, Rt Hon Dr John (Copeland)

  Iddon, Dr Brain

  Illsley, Eric

  Darling, Rt Hon Alistair

  Jackson, Ms Glenda (Hampstead)

  Darvill, Keith

  Jackson, Helen (Hillsborough)

  Davey, Valerie (Bristol W)

  Jackson, Robert (Wantage)

  729

  Jenkins, Brian (Tamworth)

  Prentice, Ms Bridget (Lewisham E)

  Jones, Barry (Alyn & Deeside)

  Prentice, Gordon (Pendle)

  Jones, Helen (Warrington N)

  Primarolo, Dawn

  Jones, Ms Jenny (Wolverh'ton SW)

  Prosser, Gwyn

  Purchase, Ken

  Jowell, Ms Tessa

  Quinn, Lawrie (Scarborough)

  Kaufman, Rt Hon Gerald

  Rammell, Bill

  Keeble, Ms Sally

  Rapson, Syd

  Keen, Alan (Feltham & Heston)

  Reed, Andrew (Loughborough)

  Keen, Mrs Ann (Brentford)

  Robertson, Rt Hon George(Hamilton S)

  Kennedy, Jane (Wavertree)

  Kidney, David

  Robinson, Geoffrey (Cov'try NW)

  King, Andy (Rugby & Kenilworth)

  Roche, Mrs Barbara

  King, Ms Oona (Bethnal Green)

  Rogers, Allan

  Kumar, Dr Ashok

  Rooker, Jeff

  Lawrence, Ms Jackie

  Roy, Frank

  Laxton, Bob

  Ruane, Chris

  Lepper, David

  Russell, Ms Christine (Chester)

  Leslie, Christopher

  Ryan, Ms Joan

  Levitt, Tom

  Salter, Martin

  Liddell, Mrs Helen

  Savidge, Malcolm

  Linton, Martin

  Sedgemore, Brian

  Lock, David

  Shaw, Jonathan

  Love, Andrew

  Sheerman, Barry

  McAllion, John

  Sheldon, Rt Hon Robert

  McAvoy, Thomas

  Short, Rt Hon Clare

  McCartney, Ian (Makerfield)

  Singh, Marsha

  McDonagh, Siobhain

  Skinner, Dennis

  Macdonald, Calum

  Smith, Rt Hon Andrew (Oxford E)

  McGuire, Mrs Anne

  Smith, Angela (Basildon)

  McIsaac, Shona

  Smith, Jacqui (Redditch)

  Mackinlay, Andrew

  Smith, John (Glamorgan)

  McLeish, Henry

  Smith, Llew (Blaenau Gwent)

  McNamara, Kevin

  Smyth, Rev Martin (Belfast S)

  MacShane, Denis

  Soley, Clive

  Mactaggart, Fiona

  Southworth, Ms Helen

  McWilliam, John

  Spellar, John

  Mahon, Mrs Alice

  Squire, Ms Rachel

  Mallaber, Judy

  Starkey, Dr Phyllis

  Marek, Dr John

  Stevenson, George

  Marsden, Gordon (Blackpool S)

  Stewart, David (Inverness E)

  Marsden, Paul (Shrewsbury)

  Stinchcombe, Paul

  Marshall, Jim (Leicester S)

  Stott, Roger

  Martlew, Eric

  Strang, Rt Hon Dr Gavin

  Maxton, John

  Stringer, Graham

  Meale, Alan

  Stuart, Ms Gisela (Edgbaston)

  Merron, Gillian

  Taylor, Rt Hon Mrs Ann (Dewsbury)

  Michie, Bill (Shef'ld Heeley)

  Milburn, Alan

  Taylor, Ms Dari (Stockton S)

  Miller, Andrew

  Taylor, David (NW Leics)

  Moffatt, Laura

  Timms, Stephen

  Moran, Ms Margaret

  Tipping, Paddy

  Morgan, Rhodri (Cardiff W)

  Todd, Mark

  Morley, Elliot

  Touhig, Don

  Morris, Ms Estelle (B'ham Yardley)

  Trickett, Jon

  Morris, Rt Hon John (Aberavon)

  Truswell, Paul

  Mountford, Kali

  Turner, Dennis (Wolverh'ton SE)

  Mudie, George

  Turner, Desmond (Kemptown)

  Mullin, Chris

  Twigg, Derek (Halton)

  Murphy, Jim (Eastwood)

  Vaz, Keith

  Norris, Dan

  Vis, Dr Rudi

  Olner, Bill

  Ward, Ms Claire

  Palmer, Dr Nick

  Watts, David

  Pearson, Ian

  White, Brian

  Pickthall, Colin

  Whitehead, Dr Alan

  Pike, Peter L

  Wicks, Malcolm

  Pond, Chris

  Williams, Rt Hon Alan (Swansea W)

  Pope, Greg

  Pound, Stephen

  Williams, Mrs Betty (Conwy)

  730

  Winnick, David

  Wyatt, Derek

  Winterton, Ms Rosie (Doncaster C)

  Wood, Mike

  Wray, James

  Tellers for the Ayes:

  Wright, Dr Tony (Cannock)

  Mr. John McFall and

  Wright, Tony D (Gt Yarmouth)

  Mr. Clive Betts.

  NOES

  Cunningham, Ms Roseanna (Perth)

  Tellers for the Noes:

  Dafis, Cynog

  Mr. Andrew Welsh and

  Wigley, Dafydd

  Mrs. Margaret Ewing.

  Question accordingly agreed to.
  Bill read a Second time, and committed to a Standing Committee, pursuant to Standing Order No. 63 (Committal of Bills).

  EDUCATION (STUDENT LOANS) BILL [MONEY]
  Queen's recommendation having been signified—
  Motion made, and Question put forthwith, pursuant to Standing Order No. 52(1)(a),
  That for the purposes of any Act resulting from the Education (Student Loans) Bill, it is expedient to authorise the payment out of money provided by Parliament of any increase attributable to the Act—

  (a) in the sums required by the Secretary of State for making payments under the Education (Student Loans) Act 1990;

  (b) in the expenses of the Secretary of State under that Act.—[Ms Bridget Prentice.]

  Question agreed to.

DELEGATED LEGISLATION
Mr. Deputy Speaker (Sir Alan Haselhurst): With permission, I shall put together the motions relating to delegated legislation.
Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Standing Committees on Delegated Legislation),

DELEGATED LEGISLATION
  HOUSING
  That the draft Allocation of Housing (Reasonable and Additional Preference) Regulations 1997, which were laid before this House on 26th June, be approved.

  NORTHERN IRELAND
  That the draft Commissioner for Complaints (Amendment) (Northern Ireland) Order 1997, which was laid before this House on 7th July, be approved.—[Ms Bridget Prentice.]
  Question agreed to.

HEALTH
Ordered,
That Mr. Peter Brooke be discharged from the Health Committee and that Mr. Robert Walter be added to the Committee.—[Mr. Betts, on behalf of the Committee of Selection.]

Higher Education Institutions
Motion made, and Question proposed, That this House do now adjourn.—[Ms Bridget Prentice.]
6.4 pm
Dr. Alan Whitehead: I am grateful for the opportunity to speak about an issue that is pertinent to the debate that we have just had and to the imminent publication of the Dearing report. We do not yet know the contents of that report, although they have been widely speculated on. All the discussion in newspapers is currently about the Government's likely stance on charging for tuition fees.
The spotlight is rightly on finances, because the sector has delivered on a huge expansion in student numbers in the past decade with very little new funding. The unsung stars of that expansion are the university lecturers, who have performed feats of increased productivity that would have been hailed as a miracle if they had occurred on a manufacturing production line.
It is right to spend a little while reflecting on the management of the change, the supervision of the finances that have supported it and the extent to which we have emerged from the decade of explosive growth in student numbers with the principles of free inquiry in an academic community, which underpin the idea of a university, intact. Have we delivered on the governance of institutions of higher education as well as university lecturers have apparently delivered on the increase in student numbers over the past decade?
I am not sure exactly what Dearing will come up with. I am glad that we shall have an extensive debate on the report. My understanding is that there will not be substantial mention of governance in it. That is a shame, because, after the events in some institutions over the past few years, many people in higher education have expressed justified concern about how well some of our institutions are governed. My contention is that, in some areas, we have fallen woefully short of what we should reasonably expect. Unfortunately, there appears to be no solution in sight.
The danger of doing nothing is that, as we enter the next decade of tight financial settlements and continued pressure to achieve more results with less cash, the pressure on vice-chancellors and directors of higher education institutions to cut corners and take liberties with the proper procedures for good governance will become enormous. As we have seen from the small, but important, number of cases in higher education, several of which have been investigated by the Public Accounts Committee, the potential for that already exists and has been demonstrated as a significant problem.
We need to be clear about the consequences of doing nothing. British higher education has an international reputation and attracts thousands of overseas students because of the quality of its courses and the facilities for study that are available. Visiting students provide a massive foreign exchange earning for the United Kingdom. The international research reputation of UK universities and the value placed on UK degrees is high throughout the world. For that reason, many institutions have begun to offer degree courses validated by United Kingdom institutions but taught overseas. If UK higher education is seen to suffer as a result of a crisis of
732
governance, that confidence will be damaged irrevocably, with profound consequences for the whole of the sector and for the British economy.
Lord Nolan, in the second report last year by his Committee on Standards in Public Life, reported on, among other things, the standard of ethics in the governance of higher education. By and large, he gave the sector a clean bill of health. The 13 recommendations he advanced were universally regarded as being relatively minor, yet the problems persist and they can be identified quite specifically in origin and in structural cause.
The major disputes that have hit the headlines in recent years in higher education in Huddersfield, Portsmouth, Bournemouth, Swansea and my own city of Southampton have all occurred in the new university sector which was established after the Education Reform Act 1988 and have all involved former polytechnics and colleges of higher education previously under the control of local authorities.
We can say with some certainty that Nolan aggregated his evidence and failed to distinguish between the old university sector, with its system of charters individually approved by Parliament, and the new sector which came into existence as incorporated higher education institutions with a significantly different system of internal governance and regulation. It is true to say that the existence of the charters, with their entrenched right to representation of a variety of constituencies within the university and with their interlocking groups of decision makers in the senate, the council and the court—although they often reach decisions by a rather cumbersome process—means that, in general, the universities are well governed and largely free from the sort of complaint that has plagued the new sector.
If we look at the incidence of problems in the new university sector in isolation, we can see that, since 1989, more than 10 per cent. of institutions have been the subject of major problems—a very high casualty rate in fewer than 10 years of operation. Why is this so? We should first look at the nature of the disputes.
Overwhelmingly, the disputes relate to a breakdown of confidence between students, staff, governors and management of the institutions. Overwhelmingly, they are disputes where the actions of either the governors or the director or vice-chancellor—or both—seem to ride roughshod over legitimate grievances and protests, and where the protests are ignored or suppressed, sometimes by authoritarian means. All those disputes seem to take an interminable time to resolve, although the issues seem relatively plain to the outside world.
In the case of Huddersfield, trouble erupted when the governors attempted to remove all staff and student representation from the governing body. Portsmouth, Bournemouth and the Southampton institute all reflect in different ways the ability of a strong director or vice-chancellor to rule effectively by fear with the complicity of at least some of the board of governors, and with the inevitable reaction of staff and students against such tactics.
The resolution of the conflicts in those three places did not really reflect the essence of the conflict. In Bournemouth and Portsmouth, directors left as a result of investigations into issues not really related to the central problems. At the Southampton institute, the director has recently taken early retirement. The dispute in Swansea related to the apparent lack of control over an

733
entrepreneurial director who effectively launched a variety of poorly regulated businesses across the world selling the institute's degrees.
Both the issues at contention and the problems relating to their resolution seem to boil down to a central feature of the universities—the assumption of governance behind their incorporation. That can be seen clearly in their governing bodies. Lord Nolan described those governing bodies as follows:
"In England and Wales their governing structure is determined by statute (Schedule 7A of the Education Reform Act, 1988, as inserted by Schedule 6 of the Further and Higher Education Act, 1992) and so is much less variable than that in the old universities. New universities are governed by a board of between 12 and 24 members (and the principal unless the principal declines to be a member). Up to 13 members (described as 'independent') are drawn from those who have experience in industry, employment, commerce, or a profession. They must constitute a majority. Up to two governors may be teachers and up to two students; between one and nine may be co-opted members, and at least one of these must have experience in the provision of education. There are also colleges of higher education which are not universities but which are funded by the higher education funding councils. Their structures of governance are similar to those of new universities. It may be noted that elected members of a local authority are not eligible for service on the governing bodies of new universities unless co-opted as individuals."
We can say, then, that the impression one can receive of these boards is that they are business-oriented governing bodies which are designed to oversee what is seen as the business of the higher education corporations. Indeed, asked why a version of the model of governance applying to the old universities had not been applied to the post-1988 new universities, Sir Peter Swinnerton-Dyer, the former chief executive of the now defunct Universities Funding Council, is reported to have replied:
"Kenneth Baker is among those ministers who distrusted experts and who believed that anything run by business … would be wisely and efficiently run".
This model of business-based governance goes along with the presumed goal of the new sector, and of higher education generally in the age of restricted finance and almost unrestricted expansion, which is that the good business gets the funds for research and gets the student numbers simply by being a better business than the others.
Business methods prevail, with many boards running secretively, with the target goal for the institution being set as getting in more students and more funding. Provided that those two figures look good at the bottom of the annual report, little else seems to be of concern, at least to some governors of the new institutions.
Business men on such boards tend to appoint and support those who seem to be like themselves. The lack of checks and balances in the post-1988 system by and large allows governors to appoint each other. In some instances, it allows a powerful director or vice-chancellor effectively to hand pick many of the governors so that a seamless power nexus is soon established at the top of the institution.
In the case of the Southampton institute, with which I am very familiar, that extended to an armlock on information going to the governors and from the governors to the staff, to the discouragement of either governors or staff from seeking or supplying independent information, to the intimidation of dissent and to the
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establishment effectively of an inner power group of the director and a few governors which bypassed the constitutional processes of the institute.
Indeed, so far did the procedures become bypassed that a management-based, so-called programme planning committee effectively eclipsed the academic board on all matters of course development, on the ground that the development of courses was about student numbers and, therefore, essentially financial and that it involved management decisions with only ancillary academic content.
As the cases I have highlighted show, when things go wrong it is extremely difficult to penetrate the nexus that may have developed and put things right. The distinguishing feature of all the cases lies among other things in just how long the institution remained evidently dysfunctional before the matter came to a head, either internally or, at least partially, with the help of outside agencies of regulation such as the Higher Education Funding Council or the Higher Education Quality Council. It is significant that those bodies are seen in the sector as more regulators than anything else.
Although the charters in the new university sector do not exist in the same way as they do in the old universities, the bodies set up to ensure that they work properly are simply there to ensure that no one has his hand in the till and that academic courses are functioning correctly. They have little power to intervene on matters of governance and, by and large, they do not. Where they do intervene, they do so discreetly, round the back door, and slowly, so that those who are well entrenched in management positions in institutions that are not going well have a long time to fight their corner before justice is done.
The fact that the academic standards of such institutions during a crisis generally remain high and have done so to a remarkable degree at Southampton institute is a tribute to the resilience of academic staff in the face of such problems. That far more cases have not arisen, over and above those that I have outlined, is a tribute to the good sense and fairness of academic managers in most establishments.
We are stuck with a flawed system of governance in the new universities—a sort of quangoversity regime, where disaster is often averted by good fortune and common sense, rather than by anything in the system itself.
I conclude, therefore, that the system overall is a monument to the "markets good, participation bad" assumption of that period of public policy madness between 1987 and 1989. It is, in essence, all of a piece with the monsters that we have created in parts of the NHS, in local government quangos, where power has been taken away from directly elected local representatives and put in the hands of appointees, and in our feeble regulation of the privatised utilities.
A new Government who do not share those values should act to ensure that good governance—a balance of representation, and a sharing of views and decision making reflecting a balance of interests within the academic community—is restored.
We are not short of suggestions about what might be done. I have recently been in correspondence with the Association of University Teachers, which advocates, among other things, the restoration of the university visitor system, which is largely falling into disuse in the

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higher education sector. Although that may not be a perfect solution, it means that there is an independent voice—someone who has the right to go in and investigate, take up grievances and speak independently on behalf of those who otherwise might have no voice.
David Triesman, the general secretary of the Association of University Teachers, wrote to me that he had suggested to Lord Nolan
"that all HE institutions should have a charter as do the pre-1992 universities. The text of charters can be modernised but they provide a clear expression of the mode of decision-taking including who is entitled to be involved; they provide guaranteed checks and balances; they reserve academic decisions for the academic community—members of that community include students (of course) and other staff; they express accountabilities; they set out responsibilities as well as rights."
The Council for Academic Freedom and Academic Standards wrote to me recently, stating that it has an extensive reform programme
"which includes independent scrutiny of institutions; broadening of governor membership; advertising of vacancies; maybe elections; model disciplinary and grievance procedures; all minutes on webpages; stronger Senates."
My personal view encompasses the idea that new universities should have a much larger base of governor election and appointment—a base too large for a few people to control, and made up of all sections of the local community, including the students, the staff, the business community, the education community, local authorities and voluntary organisations. Such a range of people will have a stake in the success of that higher education institution.
That body, comprising perhaps 60 or 70 people, should be charged with the oversight of electing a smaller group of people who presently sit as governors of new universities, so that people cannot hand pick those with whom they will work, and those who sit in judgment on the dealings of the professional managers and their relationship to the academics of the institution have to contend with people who have an independent view, an independent constituency and have been elected or appointed by independent means.
I shall read the definition of "university" in the "Shorter Oxford Dictionary". It states:
"The whole body of teachers and students pursuing at a particular place the higher branches of learning; such persons associated together as a society or a corporate body, having the power of conferring degrees and other privileges, and forming an institution for the promotion of education in the higher branches of learning."
That definition is good enough for me. It emphasises the involvement of
"the whole body of teachers and students".
It is not the property or prerogative of a few people, through which to pursue their ambitions. It must be well managed, but it must be "a corporate body", with all the reciprocal rights and responsibilities that that entails. We are far from that common-sense view, following the marketisation of higher education in the 1980s and 1990s. We must urgently address the issue in the remaining years of this millennium, if we are to carry forward recognisable traditions of academic excellence and inquiry into the next century.
6.25 pm
The Parliamentary Under-Secretary of State for Education and Employment (Dr. Kim Howells): I thank my hon. Friend the Member for Southampton,
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Test (Dr. Whitehead) for selecting this important matter as the subject for his first Adjournment debate. I welcome the opportunity to discuss the governance of higher education institutions.
My hon. Friend described well some of the problems that can affect higher education institutions. He gave examples of mismanagement, institutions divided by poor staff-management relations, ill-considered financial ventures and issues of accountability.
Of course, I was aware of my hon. Friend's close personal interest in the subject, having read his article in The Times Higher Education Supplement at the beginning of July. In that article, he made a number of pertinent comments about accountability based on his own experience and knowledge.
Before I respond to some of the specific points made by my hon. Friend, it may be helpful if I set out the current position and the new Government's view of those arrangements, and suggest how some of those issues may be developed over the coming months.
The House is well aware of the Government's commitment to ensuring openness and accountability in public life. With considerable sums of taxpayers' money invested in higher education, we need to ensure the highest standards of conduct in those who run higher education institutions, be they universities or colleges.
The effectiveness of any organisation depends on the effectiveness of its management and governance arrangements. My hon. Friend made that clear, and it is imperative that those arrangements are sound and are seen to be working.
The second report of the Committee on Standards in Public Life—the Nolan committee—which was published in May 1995 looked closely at various types of public spending institutions. It devoted considerable attention to higher and further education. The committee found that
"the firm view of our witnesses and those who wrote to us was that the standards of conduct in higher and further education were generally very good".
I know from my hon. Friend's article and speech that he has some doubts about the committee's findings, which he described as an aggregate of the evidence that was presented, but I am sure that he will not want to dissent from the view of the committee—which I share—that standards of conduct are very good.
However, my hon. Friend highlighted a few recent instances in higher education institutions where serious problems have arisen. Those have been investigated by the National Audit Office whose reports have made a number of useful recommendations which my Department and the Higher Education Funding Councils have noted.
It may help the House if I set out the background to what Ministers can and cannot do with respect to higher education institutions and the type of problems that my hon. Friend has outlined.
Higher education institutions are autonomous, self-governing, private corporate bodies. They are not controlled by the Government and they are not subject to ministerial direction. That position is clearly established in law by the Education Reform Act 1988 and the Further and Higher Education Act 1992. So Ministers cannot intervene in their internal affairs. That proscription extends to issues of governance as well as to course content, research programmes and the criteria for the

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selection and appointment of academic staff and for admissions policy. That position arose from a real concern in the House that academic freedom and autonomy should be preserved and safeguarded.
The non-centralised system means that there is no common system of governance in higher education institutions, which reflects the diversity of the sector and the origins of individual universities. I should perhaps explain that governance terminology differs in different parts of the UK, so for convenience I shall use English terminology, despite being a Welshman.
The council or board of governors of the institution is the executive governing body and has ultimate responsibility for all the affairs and activities of the institution. Its task is to set the strategic direction of the institution and to ensure that it achieves its primary objectives in teaching, scholarship and research.
There are broadly two types of institution in the higher education sector—old universities, which are those established before 1992 and whose constitution and powers are set out in charters or statutes, and post-1992 universities, colleges and institutes, whose governing bodies' powers and constitutions are set out in various Education Acts together with institutions' own instruments and articles of government. It is the latter type of institution that my hon. Friend is most concerned with and where he sees a general failure of their governance arrangements. I can understand his concern to promote the cause of good governance in all higher education institutions, but I cannot accept his contention that all governing bodies are necessarily flawed or bad.
Governing bodies are entrusted with public funds and, therefore, have a particular duty to observe the highest standards of corporate governance. In carrying out that duty, governors need to ensure that, at all times, they have due regard for the proper conduct of public business. The guiding principles are integrity and objectivity; openness and transparency; and accountability for the activities of the institution and for the stewardship of public funds. I am sure that my hon. Friend will accept that those principles are widely followed in the sector.
The accountability framework ensures that there are a number of checks in the system to ensure that the taxpayers' money voted by the House for use by the sector is properly accounted for. Universities and colleges are accountable in a number of ways. The funding bodies, such as the Higher Education Funding Councils for England and Wales, require, as a condition of grant, that all institutions put in place sound financial management and control systems.
The funding councils' audit service has a right of inspection in all universities and higher education colleges to check on their stewardship of public funds. It also
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reviews governance arrangements to ensure that the financial control systems in place are properly used and work. If necessary, the funding councils have the power to suspend payment of grant, in whole or in part, to safeguard public funds. The National Audit Office is also able to go into institutions to carry out inspections. As the House well knows, that can result in the Public Accounts Committee holding hearings if necessary.
Another important strand is the work of the newly established Quality Assurance Agency. The agency will take over work previously carried out by the Higher Education Funding Councils' quality assessment divisions and by the Higher Education Quality Council. The QAA will look at institutions' internal mechanisms and structures for assuring their academic quality and standards. It will, as now, continue to produce public information on their quality audits and subject assessments at institutions.
My hon. Friend made it clear that governance is not just about financial management and accountability for public funds, but I hope that he will realise that, under current arrangements, Ministers are unable to intervene directly. We are, however, conscious of the need to ensure that current arrangements are reviewed to see whether they are the best that can be achieved. We have much to learn on that subject and my hon. Friend's contribution is much appreciated.
It is clear that, despite ongoing problems, governance in higher education is generally good, although a few unfortunate instances have pointed up weaknesses in internal arrangements at particular institutions. Those who run institutions must learn from those lessons and avoid anything similar happening in future.
I can reassure my hon. Friend that the Government see the need for revised guidance to be issued to the sector, building on lessons learned and good practice. My officials have been helping the Committee of University Chairmen in developing a revised version of its guide for members, and the Higher Education Funding Council is in the process of drawing up a revised code of audit practice. We will monitor compliance with those guides.
I also await with interest the Dearing inquiry recommendations on governance issues. The Government will, of course, want to consider what the committee recommends very carefully. Where the case for action is made, we will take it. I assure the House that my right hon. Friend the Secretary of State for Education and Employment and I intend to take these issues forward vigorously. Suggestions from my hon. Friend will be welcome. I am grateful to him for raising the issue and I wish only that the House had been fuller to hear his important contribution.
Question put and agreed to.
Adjourned accordingly at twenty-four minutes to Seven o'clock.