§ 2. Mr. David Chaytor (Bury, North) (Lab)What assessment he has made of the differences between flat-rate and variable university tuition fees, with particular reference to the equity of each. [141757]
§ The Secretary of State for Education and Skills (Mr. Charles Clarke)Our assessment is that a flat-rate fees system would be more unfair than a variable fees system. It would force every university to charge the same amount across the board, irrespective of the demand, nature or quality of the course, or the potential rate of return for the student, thus removing the flexibility to target foundation degrees or degrees in subjects such as physics or other sciences. It would lead to course closures, institutions having no flexibility in deciding what to do, and lower quality. It would mean that we would be unable to influence access through the regulator, as we propose. Finally, it would lead to redistribution from poorer to more affluent students.
§ Mr. ChaytorI thank my right hon. Friend for that reply. Is not it the case that the majority of students in the United Kingdom have always been eligible for variable fees because most of them are not full-time undergraduates? If he were vice-chancellor of a smaller, post-1992 university, at what amount would he be inclined to set the fee?
§ Mr. ClarkeMy hon. Friend's first point is correct. The undergraduate fee is unique when compared with other fees, because of the current regulation. If I were in 631 the enviable circumstance that my hon. Friend described, I would set a range of fees for different courses in the university of which I was vice-chancellor, taking account of the demand, the nature of the course and the sort of encouragement that I wished to offer to get students for specific subjects. I would not set a fee for the whole university but would consider each course separately.
§ Mr. Tim Yeo (South Suffolk) (Con)Yesterday, the Secretary of State claimed that a university that charged a zero fee would encourage students to study there, thus admitting that universities that charge a full fee would discourage students from studying there. The Institute for Fiscal Studies has shown that fees at the level that the Government propose would raise only a fraction of the money that they need to implement their policy. How high does he expect the fee to rise—to £4,000 or £5,000 a year? Whatever the level, is not it true that the Government's policy means that access to university will be on the basis of ability to pay, not academic merit?
§ Mr. ClarkeFirst, although I have not had an opportunity to consider in detail the Institute for Fiscal Studies report, which the Evening Standard commissioned, I have been briefed on it and it is based on a set of tendentious assumptions both about the fees to be charged and the Government's policies. Secondly, we have been clear that, until at least the end of the next Parliament, there will be a maximum cap on all fees of £3,000 in real terms. The talk of £4,000 or £5,000 is not relevant. I have never hidden the fact that the fee will be a factor in a student's choice of course—that is obvious. However, it is only one among a range of factors, which include the rate of return from specific courses, the academic tradition and whether students want to study away from home
§ Jeff Ennis (Barnsley, East and Mexborough) (Lab)Recent research commissioned by the Secretary of State's Department shows that under the existing system, students from poorer backgrounds are leaving university with debts of almost £10,000, whereas other students leave with debts of £7,000 or just under. Given that, will my right hon. Friend explain how setting a differential fee will not encourage more working class children to choose the cheapest course closest to home?
§ Mr. ClarkeThere are several different answers to that question. First, as my hon. Friend appreciates, a series of measures is in place to provide resources for students from poorer backgrounds to go to university. The fee remission, the grant and bursaries from different universities are examples. Secondly, it is important to have a system of repayment that is based on the tax system, rather than a different sort of loan, and a zero real rate of interest, thereby taking account of an individual graduate's earnings. Another sort of loan would not do that. Both points are significant reassurances to people who intend to go to university.
§ Mr. Phil Willis (Harrogate and Knaresborough) (LD)Does the Secretary of State agree that whether resources for universities derive from differential fees, flat-rate fees or progressive income tax, the Chancellor will have to make an estimate of the amount of money that he will loan to universities in 2005–06? In the 632 previous Session, the hon. Member for Isle of Wight (Mr. Turner) asked the Government what the gap was. The Minister for Lifelong Learning, Further and Higher Education spoke at a meeting that I recently attended and said that it was £1 billion. Will the Secretary of State clearly define the gap that differential fees, flat-rate fees or any other mechanism are trying to plug?
§ Mr. ClarkeThere are two points. First, there is not a gap; the question is how much money would be raised. Estimates vary between £1.2 billion, £1 billion and £1.5 billion, depending entirely on the fees that are charged. I shall not make an estimate for the simple reason that we do not know the sort of fees that different universities will charge for different courses. It would be ludicrous to try to pretend that we did.
The second point is much more important, and I think that it is to what the hon. Gentleman was referring. I have made it clear, and I take the opportunity to do so again today, that we see the fee income that will be generated, however much it may be, as being additional to the commitment made by the state in the comprehensive spending review. That amount went up significantly in the last CSR, and I expect it to increase in the next one. In other words, we are talking about the fees representing extra money to universities, rather than a replacement for money from the taxpayer.
§ Mr. Shaun Woodward (St. Helens, South) (Lab)Will the Secretary of State tell the House what impact he expects his proposals to have on my constituents, whether they will lead to greater aspirations being realised for students from poorer income families and, specifically, whether there is a case for the Government looking at the threshold level being indexed to average earnings in the country?
§ Mr. ClarkeMy assessment is that our proposals will make it more, rather than less, likely that young people in my hon. Friend's constituency will see university as a real possibility. That is the example in other countries that have established such a system, such as Australia. The example of the Cambridge bursary scheme announced last week, which would provide £4,000 on top of the £1,125 fee remission and the £1,000 grant to allow students from poorer families to go to Cambridge, is a major new development even before our proposals have been introduced, but it was influenced by them, and it proves that our system will generate precisely the kind of ambition in my hon. Friend's constituency that I know he wants to promote.