Higher Education

HC Deb 22 January 2003 vol 398 cc301-19 12.31 pm

The Secretary of State for Education and Skills (Mr. Charles Clarke)

With your permission, Mr. Speaker, I wish to present to the House this afternoon the Government's proposals for the future of higher education in England. I want to begin by thanking my colleague the Minister for Lifelong Learning and Higher Education and my officials at the Department for the excellent work they have done in preparing the White Paper.

I start by stating that our universities are a great success story. Their record on research, on provision of higher education opportunities for hundreds of thousands of young people and on linking university research to economic achievement is outstanding. That record of achievement is acknowledged in a financial settlement for the next three years, which is better than any in recent decades and which I announce today in my letter to the Higher Education Funding Council for England, a copy of which I am placing in the Library.

I want to express my appreciation to my right hon. Friend the Chancellor of the Exchequer for an excellent settlement that provides an average 6 per cent. a year increase in real-terms funding over the period of the settlement. I know that the settlement represents his personal commitment to this vital sector of the economy. Under the settlement, every part of the university world will be able to plan for the next three years in confidence, on the basis of a secure future funding stream that is substantial and generous.

However, as we would all acknowledge, our universities need to be able to generate still more resources, irrespective of whether they come from the state, individual students, alumni or employers. I shall address those points later on, but it is a central point of the White Paper to acknowledge that students' share of the overall costs of university education will increase. That said, however, the House needs to understand, as our universities do, that they exist in an increasingly dynamic and an increasingly competitive world.

In our White Paper, we set out the nature of that dynamism and the nature of the competitive challenges that we face. First, our universities have to make better progress in harnessing our knowledge to the process of creating wealth. Secondly, they have to extend the opportunities of higher education to all our population, irrespective of personal and economic background. The White Paper attempts to fulfil both ambitions.

Despite the attractions of inaction, which have perhaps too often led past Governments to avoid facing up to important challenges, the House needs to acknowledge that coasting along, basking in previous successes and shirking the need for reform offers no robust future for our universities. We need to acknowledge that a university system that caters for 43 per cent. of the age group now will be intrinsically different from one that provided for 20 per cent. of the age group as recently as 1990—only 13 years ago.

We need to face up to the fact that international competition from world-class universities in the United States and the growing competition from institutions in China and India changes the terms of trade for the United Kingdom's great, historic universities and that the world of single employment from 16 or 18 to 60 or 65 is gone for ever. Our universities have the principal responsibility for helping our working population adjust to the future.

In this increasingly competitive economic world, knowledge is all-powerful, and so effective working relationships between universities and both public and private sectors are increasingly significant.

In short, in a world of accelerating change, we all need to understand that our society's principal weapon in ensuring that we master change, rather than surrendering to it, is our education system, and principally our universities.

Mr. Desmond Swayne (New Forest, West)

Get on with it!

Mr. Speaker

Order. Mr. Swayne, this is the second time this week that I have had to call you to order. I really think you need a dark room to sit in and wait until the feeling has gone away. You must behave yourself. I called on the Minister to give this statement. He is giving a statement to the House, and you will not shout in this Chamber.

Mr. Clarke

Thank you, Mr. Speaker.

As a result of this process of change, our universities have to identify more clearly than they do now the way in which they address the great missions on the basis of which they were created: the missions of research, knowledge transfer and, perhaps most important of all, teaching.

Those are the central themes of the White Paper. We start from the basis that over the years the emphasis on research has, for understandable reasons, been at the expense of teaching and knowledge transfer.

On research, we argue that we need still more focus on world-class research. We state that the funding regime should encourage research collaboration, should promote research concentration and should strengthen the highest world-class research in the country. The White Paper sets out how our research funding regime will meet those aspirations.

It means giving extra resources to our very best research departments and world-class universities as well as ensuring that new research will emerge and flourish. Although I have decided not to seek to remove research-degree awarding status from some universities, it does mean that research evaluations will be increasingly rigorous. And we will create a UK-wide Arts and Humanities Research Council to ensure that funding for arts and humanities is given the status that it deserves.

For knowledge transfer this approach means an increasingly close relationship between my Department and the Department of Trade and Industry. Both my right hon. Friend the Secretary of State for Trade and Industry and I know that we cannot address innovation without addressing skills, and that we cannot address enterprise without improving the relationship between universities and business. That is why my right hon. Friend the Chancellor of the Exchequer established Richard Lambert's review of the university-business relationship, and that is why the White Paper commits the Government to setting up a network of knowledge exchanges, primarily focused in universities which are not research-intensive, to develop this relationship.

We have to crack the real British disease—which is that our world-class intellectual research is exploited by competitors from other countries but not ourselves—and we have to make sure that we lead the process of knowledge transfer from research to business both nationally and regionally. A far closer relationship between universities, the regional development agencies and the new sector skills councils is necessary, and the White Paper sets out ways in which this can be achieved.

But the main function of universities must be what it always should have been—high-quality teaching. Today I am pleased to announce that the Government are giving a far stronger focus to teaching, a focus that is reflected in a significant stream of resources within the funding settlement.

We will publish an annual comprehensive student survey of university teaching standards, overseen by HEFCE and the National Union of Students. We will establish new national professional teaching standards, establish new centres of teaching excellence and target pay resources to those universities which reward high-quality teaching. And in addition we will recognise excellent teaching as a university mission in its own right by making the award of university title dependent on undergraduate teaching and degree awarding powers only.

Let there be no mistake: all universities will in future be judged by their teaching achievement as much as by their research attainment. The days of great research accompanied by shoddy teaching are gone.

So it is research, knowledge transfer and teaching which are our universities' historic missions.

Every single university has to make a frank assessment—and publicise it—of its own strengths in addressing each of these missions. Drift will not be acceptable.

The real truth is—and let us acknowledge it—that some universities are strong in research, others in teaching and still others in knowledge transfer, and some in two or all three. Let us not pretend that all universities are somehow the same. Let us tell the truth to the people of this country who pay for universities and want their children to benefit from them. We already have a multi-tiered university system.

On the basis of that assessment, we need to decide what proportion of the age group we wish to encourage into university education. I want to confirm today that the Government's target remains, as we set out in the Department's public service agreement published in 2000 and reaffirmed in last summer's spending review settlement, to increase participation in higher education towards 50 per cent. of those aged 18 to 30 by the end of the decade.

That target is essential because the country's economic future depends on that level of education and training. We live in an increasingly competitive world, within the European Union and outside. I do not understand those who claim to speak in the national interest but do not acknowledge the importance of this target.

However, such a level of participation requires us to re-examine the nature and range of degree courses that we offer. We believe that the bulk of the increase in degree student numbers, from its current proportion of 43 per cent. of the cohort, should come from two-year vocational foundation degree courses—a major contribution to the skills and productivity agenda of this country. The further education colleges, which now provide 11 per cent. of this country's higher education, have a major contribution to make here.

I am pleased to tell the House that a range of employers including, in the public sector, my right hon. Friends the Secretaries of State for Health and for the Home Department, as well as myself, are ready to make such a commitment in principle as employers. I also believe that major private sector employers will welcome and participate in this initiative.

The guts of my proposals today come in the field of access, however. The social class gap among those entering higher education is a national disgrace. Thirty years ago students received full grants and there were no tuition fees. Despite that, students from middle-class backgrounds were three times more likely to go to university than those from poorer backgrounds. During the past 30 years the numbers going to university have more than trebled, but the gulf in access has remained the same.

That vicious statistic has to be reversed. We should in truth acknowledge that that is a long and difficult process, but the elements are clear. We have to improve dramatically the quality of school and college level education in our most disadvantaged areas. That is the centre of the strategy for 14-to-19 education announced by my hon. Friend the Minister for School Standards yesterday. We have to transform university access and admissions criteria so that universities make a genuine and balanced assessment of the potential of every candidate.

We have to ensure that all universities address the access issue. I therefore propose to establish an access regulator, working with HEFCE, who will ensure that any university that wants to increase its tuition fee has rigorous admissions procedures, provides bursaries and other financial support and works directly with schools in every part of the country to promote the aspiration of a university education. The regulation will be tough and I believe that most universities will welcome this initiative.

We have to create a diverse university sector that welcomes applicants from all parts of the community, by a range of different routes. That is one of the arguments for a sensitive fees regime, and that is why we are raising the "postcode premium", which gives extra money to universities that teach and support students from disadvantaged backgrounds.

Finally, we have to create a financial regime that encourages access, and that brings me to the final chapter of my White Paper, which deals with student finance. First, we should face up to the truth that genuine university freedom comes through building endowment, rather than any other device. Universities in this country need to build up endowments. There are already substantial incentives for both individuals and corporate bodies to donate to universities, but they are not sufficiently understood and used. The White Paper sets out how, as a matter of priority, we will promote this for graduates, institutions and Government.

Promoting endowments is the right long-term strategy, but it will inevitably take many years to build up substantial funds. The spending settlement addresses the short-term needs but universities must have funding streams that are sustained. The Government will remain the major funder of higher education, but the history of the past 50 years or more, under Governments of all colours, shows the problems when universities have to compete with other priorities, from nursery schools to health. If they have to rely solely or mainly on public sector resources, the result is pressure on staff-student ratios, capital investment and innovation. We cannot risk slipping into that sort of decline.

As countries throughout the world have discovered, requiring students to contribute to the cost of their education is the only realistic alternative. I believe, in addition, that that has the merit of justice. On average, graduates earn 50 per cent. more than non-graduates during their lifetime. It is only fair for students to make some contribution to the costs of the education that gives them significant economic benefits. The alternative funder, the general taxpayer, is entitled to ask in comparison what financial support they have received from the Government to assist their personal educational ambitions. That is why the White Paper that I am presenting follows this approach.

First, my student finance proposals allow universities to vary their fees between £0 and £3,000 a year from September 2006 onwards. I remind colleagues that the figures I propose are significantly lower than some of the early suggestions. The £3,000 cap will be in place for the whole of the next Parliament, rising only in line with inflation. Only those universities that have satisfied the access regulator will be allowed to increase their fee.

Secondly, we will restore a grant for students from the poorest backgrounds. From September 2004, students whose families earn under £10,000 will receive a £1,000 grant, with a proportion of that paid up to family income of £20,000. Altogether, 30 per cent. of students will get the full £1,000 grant.

Thirdly, we will abolish from 2006 the requirement for any student or their family to pay a fee before or while they are studying. Deferred fees will be paid after students graduate, through the tax system, linked to a student's earnings and ability to pay. As with the existing student maintenance loan, no interest will be charged on deferred fees. Any sums outstanding will only be adjusted for inflation so students only pay back the real value of their fee and maintenance loan.

Fourthly, we will continue to exempt around 60 per cent. of students from some or all of the first £1,100 of fees, in the same way as we do now.

Fifthly, we will raise from April 2005 the threshold at which graduates start to repay their fees and loans from £10,000 to £15,000. That change delivers a saving of £450 per year of the minimum payment, which will particularly help graduates when their earnings are lower in the early part of their lives. Finally, we will review the level of the maintenance loan and operation of the parental means test for loans as part of the next spending review.

Those student finance proposals will affect different students, potential students and their families in different ways. It remains the case that the British system of student support will be among the most generous in the world. The fact that we are asking individual students to contribute, albeit after they have graduated, does mean that their potential debt is increased, which, without the wider package of reforms that I have introduced, could act as a disincentive. Taken as a whole, however, my student finance package is positive for access to universities and will reinforce the other measures on access to which I referred earlier.

As I said at the outset, the White Paper that I published today represents a massive step forward in equipping our universities to meet the challenges of the future. They will take their rightful place as the dynamo of both economic progress and social justice. We need now to take the necessary action to put these proposals into effect. I commend them to the House.

Mr. Damian Green (Ashford)

I thank the Secretary of State for advance sight of his statement—not that it was as necessary as usual, as many of us have followed with fascination the leaks and counter-leaks of the rows within the Cabinet that have led to today's half-baked compromise.

It was a privilege and a pleasure to be quoted by the Prime Minister at Prime Minister's Question Time. It is only fair that I return the favour by pointing out what members of the Cabinet have said about the policy that the Secretary of State has just announced. The Chancellor described top-up fees as a "ridiculous idea". The Secretary of State for International Development said: it's a really bad idea; I'm against it". Members may regard those as the usual suspects. Most surprising is the Education Secretary, who said: on top-up fees, I am generally anti". So the right hon. Gentleman is opposed to his own policy as announced today. In addition, of course, 135 Labour Members have signed the early-day motion opposing top-up fees, and I dare say that we will hear from some of them in a few moments.

It is important to put the statement in context. In 1997, Labour promised that there would be no tuition fees. Subsequently, they introduced tuition fees. In 2001, they promised that there would be no top-up fees. Today, they are introducing top-up fees. One fact is clear from today's statement: no parent and no student will ever again trust any Labour promise on education.

The statement must be measured against three criteria. First, is it fair to all students? Secondly, does it help universities remain strong independent institutions? Thirdly, will it spread opportunity? On all three counts, it is sadly lacking.

Let us take fairness first. The Secretary of State has brought back grants, as the Dearing committee recommended back in 1997 shortly before the Government abolished them, and as we have been calling on Ministers to do ever since. May I clear up one of the Secretary of State's seemingly extraordinary factual claims? He says that grants will be available at the full £1,000 for those whose family income is below £10,000 and that 30 per cent. of students will receive those full grants. That seems to be a very large claim. If it is true, it suggests that all his worries about access are irrelevant. He cannot face both ways on that one.

Will the Secretary of State also tell the House what estimate he has made of the effect of the higher fees that he is announcing today on families whose income comes in just above the threshold for grant? He will be aware that a large overhang of debt on families not used to dealing with it may well act as a deterrent to people applying for university. We heard nothing in his statement that would comfort that type of relatively poor family, so will he enlighten us further?

Can the Secretary of State also confirm that the introduction of a regulator to tell universities who they can admit as students is a uniquely interfering and centralising measure that will be condemned by everyone who cares about academic freedom and independence? Will he admit that whether a student gains a particular place will no longer depend just on exam results and academic potential, but on whether the student fits the Government's prejudices on social engineering? Unlike, I suspect, other Members in the House, I have had the advantage of advance sight of the White Paper, which says that the measures that the Government will consider when deciding whether students are fit to qualify under the access regulator will include their parents' level of education". We now know that 18-year-olds will in future be condemned for the sins of their fathers and mothers in going to university. What an absurd and perverse message to send to young people. The way to improve access to university for young people from poor families is to improve the schools that they go to, not to rig the admission system.

So the Secretary of State's proposals are unfair. However, they also damage the independence of universities. If they are not able to choose students on purely academic grounds, their integrity is compromised. Does the right honourable Gentleman realise how serious that is for the future reputation around the world of British universities? I am sure that they will welcome the extra research money but, if the effect of his announcement is to drive talented students away from the British system altogether to other countries that consider only academic ability and potential, that will handicap those universities that want to compete at a world-class level. Does he recognise what a disaster he may be provoking in our world-class universities? If he does not, why has he taken to insulting them? The most arresting phrase in his rather long statement was: The days of great research accompanied by shoddy teaching are gone. Would he like to name the great institutions that have gone in for great research and shoddy teaching or, as is the habit of members of the Cabinet, is he just throwing insults around willy-nilly to disguise the inadequacies of the Government's policy?

Elsewhere in the university sector, the Secretary of State will be aware of the concerns of vice-chancellors. One vice-chancellor from Derby said on Radio 4 this morning that today's announcement might help the rich universities get a bit richer, but would leave the rest to get poorer. What does the Secretary of State say to vice-chancellors of those universities which often do an excellent job for their locality and which will not be able to take advantage of the higher fees now on offer, but which will still have to bear the extra costs of the Government's new regulatory burdens with which the White Paper is filled?

Can the Secretary of State further enlighten us about the endowments? I was fascinated to hear him agree that endowments are the best way forward, and it is only fair that he is ditching his policy of the last election. He is betraying that promise, but he is trying surreptitiously to adopt our policy from the last election. I have no problems with that. However, I have read the White Paper and, underneath all these fine words, as far as I can see, all he will do to promote endowments is set up a taskforce. I do not think that that will be up to the job.

On the third key issue of whether this statement promotes opportunity for all, the Government fall into their usual failing. They think that the way to help people is to set a target, regulate everyone to death in pursuit of that target, fiddle the figures until the target is in sight and then declare success before scuttling away. In this case, the key target is the 50 per cent. access target that no Minister has tried to justify on objective grounds. It was fascinating to hear the Secretary of State today trying quietly to wriggle away from it by talking about "moving towards" the target. Given the Prime Minister's expostulations of just half an hour ago, it is a bit rich for the Secretary of State to make it clear that this is no longer quite the target that it might have been.

Why does the Secretary of State not take the chance to drop an arbitrary target that downgrades most vocational qualifications, wastes huge sums of money that could be better spent filling the funding gap that the statement is meant to address and entices students on to unnecessary courses that even the Minister for Lifelong Learning and Higher Education has now taken to describing as mickey-mouse courses. Why has the statement made no attempt to address this most fundamental error of university policy under the right honourable Gentleman's predecessors?

The Secretary of State had the chance today to reassure students and parents, to help universities become stronger and more independent and to make a genuine attempt to spread opportunity. The Cabinet splits on this issue have resulted in a messy, botched compromise that will satisfy no one. The right hon. Gentleman has missed his chance, and the real victims will be students, parents and the universities, all of whom have been misled and sadly let down by the Government.

Mr. Clarke

I am not surprised that the hon. Gentleman's attack did not refer to his own policies. As far as we can establish, he has only two. He has made it clear that he wants to stop expansion of university education and abandon the 50 per cent. target, and he has made it clear again today that he opposes our proposals to boost access for poorer students and for those from less-advantaged homes. His approach and that of his party is a throwback to his party's policies of more than 50 years ago. It will be rejected both by the whole university—

Mr. Speaker

Order. I want the Secretary of State to reply to the questions.

Mr. Clarke

I start with the hon. Gentleman's third point on the spreading of opportunities. His policies make it clear that he is against that, but let me respond—I will answer directly from the White Paper—to his question about the target.

The hon. Gentleman asked why we are committed to 50 per cent. of the population going into higher education. We are committed to that, because every study of any successful economy tells us that that is the way to go. Page 60 of the White Paper sets out the countries that have committed to that target. The figure for Finland is 71 per cent. now; for New Zealand, it is 70 per cent. now; for Sweden, 67 per cent. now; for Poland, 62 per cent. now; for Australia, it is 59 per cent.; for Norway, it is 59 per cent; and so on. If we want our country to compete in the world economic market, we will compete on the basis of the skills and talents of our people. That is why the 50 per cent. target is vitally important.

The hon. Gentleman asked what we were doing for people just above the £20,000 level of family income. The major thing that we are doing is remitting fees up to a family income of £30,000 so that the fees will not have to be paid. Secondly, we are putting off the payment from upfront to deferred. That is significant, because families who live on an income of £40,000 to £50,000, which is a lot in some parts of the country but not so much in some parts of London and the south-east, now have to find £2,000 a year to put each child through university—£1,000 for the maintenance loan and £1,000 for the fee. They will now have to find only £1,000 a year for that; we are halving the amount that we asking parents to pay to ensure that their child can go to university. That is a significant move, and I am surprised that the hon. Gentleman has not taken the trouble to welcome it.

On the access regulator, the point that I want to emphasise above all is that quality and merit are the central aspect of everything that we do. The only people who will be admitted to university are those who have the merit and the ability to benefit. However, the serious flaw in the hon. Gentleman's argument is that he refuses to acknowledge that literally hundreds of thousands of young people on estates up and down the country and from poor backgrounds have that quality and merit. They need to be able to get places in university. That is why we have established a tough access regime. The hon. Gentleman and his party do not care about those people.

I think that I have dealt with the points raised, but I will be happy to deal with any further points in writing.

Mr. Phil Willis (Harrogate and Knaresborough)

I thank the Secretary of State for providing an advance copy of the statement and the White Paper. We recognise the difficulty of reconciling competing priorities. We also recognise that the problem was caused by gross underfunding under the previous Government. However, this Government have not solved the problem. Indeed, they have added to it.

The Secretary of State did not mention Wales. What plans does he have to transfer the proposals on student funding to the Welsh Assembly so that it can take responsibility for them, as is the case with the Scottish Parliament and the Northern Ireland Assembly?

We recognise that there are some positive aspects to the White Paper. There is a need to re-engineer higher education. Those who say that we can carry on delivering a 1960s model in the 21st century are fundamentally wrong. We accept that there needs to be a greater focus and mission within universities. We also accept the need to concentrate quality research in fewer university departments and to increase the commitment to teaching. We are especially pleased that the Secretary of State recognises the work in further education colleges and their vital role in expanding the foundation degree base, in particular for work-based degrees. So those are the positives. But Labour has been in government for six years. It recognised the problems in higher education following the Dearing report and has had 15 months to plan this announcement. Despite that, the funding announcement is a shambles and a betrayal.

The Secretary of State mentioned the socio-economic gap between poorer and wealthier students. Although that has widened in the past 30 years, the most significant increase has taken place in the past four years, since the introduction of tuition fees. His Department's research says that the fear of debt is turning non-traditional students away from university. In light of that, can he explain why increasing that debt threefold will improve things? Why will the prospect of repaying a student debt at the rate of £60 a month for the rest of a student's life be such a potent lure? Why will poor students get £32 to stay on in a sixth form but only £20 a week when they go to university? That is inconsistent.

Has the Secretary of State recalculated the so-called graduate premium on the basis of 50 per cent. of young people going to university rather than the traditional figure? Has he assessed the impact of his policy on women? There is a 58 per cent. differential between male and female graduate earnings. How can the right honourable Gentleman reconcile his policy when he knows that the debt burden will fall most heavily on women, who will be unable to repay the major debts that they incur during their time at university?

We welcome some students getting golden handcuffs when they leave to go into the public sector, but who will pick up the bill? Will schools have to pay the fee remission for teachers? Will hospitals have to pay it for nurses? Will police authorities have to pay it for police officers? Given that one in four workers work for the Government, will they also be entitled to golden handcuffs?

The most damaging impact of the funding proposals will be felt by our universities. The creation of the new university tsar—"Oftoff"—may be a sop to the Chancellor because he threw his toys out of the pram, but it will do nothing to help students. All it will do is create a massive bureaucracy for our universities. Why cannot the Higher Education Funding Council do the job? It gives the money to the universities. Surely it is possible for it to be responsible for that function. Is there not a strange irony in the fact that the imposition of the tsar is a classic lever of social engineering, yet the Secretary of State is proposing to create a two-tier university system that is the antithesis of what he is trying to achieve?

Does the Secretary of State accept that only by charging maximum top-up fees will many universities be able to claim their world-class status? Does he also accept that those universities that do not charge the top-up fees will fall into the category of second-class universities in a two-tier system? Does he not recognise, too, that students will choose their university course not on the basis of what is best for them according to their ability, but on the basis of what they can afford?

Someone said that the White Paper is a defining moment for higher education. It is also a defining moment for the Labour Government. If they push through the proposals, they will never be able to look students in the face again because they will be the first Government to say to the poorest students in the land, "You can only go to university if you run up a debt."

Mr. Clarke

I appreciate the hon. Gentleman referring to the fact that we are trying to reconcile competing priorities. I also appreciate his support for the need to re-engineer higher education and to focus quality research, and I am grateful for what he said about other aspects of further education. I appreciate his considered response.

I have discussed with my right hon. Friend the Secretary of State for Wales and the First Minister and Education Minister in Wales the possibility of devolving student finance to Wales. It is a complex and difficult matter. No reference is made to it in the White Paper because we want those discussions to continue. There are serious pros and cons to that approach and we need to work those through.

On the general issues, it is important to acknowledge that fear of debt is a significant factor. I also hope, however, that the hon. Gentleman will be good enough to acknowledge that the removal of the upfront fee, the donations and the passage of resources in the form of grant, fee remission and so on are serious considerations on the other side of the fear of debt. Any debt that a student might incur will be offset by remission of fees, which will apply to 40 per cent. of the population; by grant, which applies to 30 per cent. of the population; by parental contribution; by working while at college; and by university bursaries. In addition, many universities will charge less. The honourable Gentleman should take that significant consideration into account when he examines the range of policies.

I also hope that the hon. Gentleman will acknowledge that a zero rate of real interest payment will make a significant difference both to the overall burden and to the important issue of access of women to university. I appreciate his point on that and there are serious concerns, but those would be worse if a real interest rate were applied.

Fear of debt is an issue, but if we are to provide greater independence at the age of 18, it means that the parent will no longer pay the £1,000 fee upfront. Instead, the student will pay it on a deferred basis later in life. That is fairer. It is true, however, that it also has the direct effect of increasing debt. We estimate the average debt to be in the order of £10,000. A survey yesterday suggested £9,000. We expect that to increase on average to £12,000 or £13,000 as a result of deferring the fee and then to £14,000 or £15,000 depending on what assumptions are made about how many students pay top-up fees and so on. It is an increase, but I hope that the hon. Gentleman will acknowledge that we have to set it alongside the other measures, although I accept that it is a consideration.

We suggest that the access regulator is located in HEFCE. Deciding, as the hon. Gentleman appears to have done, that forcing students to live at home is the right way forward is the wrong policy for the Liberal Democrats to propose.

Mr. Barry Sheerman (Huddersfield)

Does my right hon. Friend accept that this is an exceedingly difficult policy area in which to please everyone? Does he agree that there are two priorities? The first is to give universities a deal so that over the next 10 to 20 years they are assured of an income and of their independence. The second is to tackle the national scandal of the lack of opportunities for children from working-class backgrounds to stay on at school and enter higher education. I hope that the Secretary of State agrees that the White Paper will be judged on those two criteria.

The White Paper is complex; the Education and Skills Committee has considered these matters in three separate reports. Will my right hon. Friend assure the House that the Committee will be given time to consider the White Paper in detail, to comment on it and to give the Government the benefit of the experience that we acquired in preparing those reports, and that notice will be taken of those opinions before a final policy is determined?

Mr. Clarke

First, I can say that I have found this policy area difficult. I can give my hon. Friend the assurance that he seeks: there will be time for the Select Committee to consider these questions. I go further and encourage the Committee to consider them, because its reports, to which he referred, have advanced the discussion of these matters, and it deserves to be commended for that.

It is important to reaffirm that the 6 per cent. real-terms annual increase in university budgets is a major commitment to increased resources. As I said in my statement, I thank my right hon. Friend the Chancellor. Now we must use those resources to achieve the second priority that my hon. Friend mentioned, which is ensuring that we change the life chances of our poorest people.

Our polices on education from age 14 to 19 are critical, but universities cannot ignore their responsibilities. To be fair, most do not want to do so, but we need an access regulator based in HEFCE to ensure that none can do so. There will be a sanction: if a university does not sort out its access and admissions policy, it will not be allowed to charge a higher fee. That will be an incentive, and it is a potential benefit of the top-up fee regime.

Mr. Robert Jackson (Wantage)

I congratulate the Secretary of State on a brave and bold policy. Higher education has reached a crossroads, and the Government are taking the right turning. They are creating a mixed economy in higher education, and that is very welcome. In the last century, one Cambridge college, Trinity, won more Nobel prizes than did the whole of France. Does the right hon. Gentleman share my hope that the new arrangements will make it possible for that college and others to match that record in this century?

Mr. Clarke

I appreciate the support from the hon. Gentleman, whose experience as a Minister with responsibility for higher education informs what he says. I hope that, in this increasingly competitive world, we will be able to achieve that aim. What characterises the hon. Gentleman's contribution to the debate, both publicly in this place and privately, is a desire to discuss the serious issues about the future of our universities. I say to Conservative Front Benchers and to the Liberal Democrats, who are also trying to have a serious debate, that this is a national issue that has to be resolved, and hard decisions must be made. I believe that our proposals are right, but we must discuss the issues properly on their merits—I am encouraged by the remarks of my hon. Friend the Member for Huddersfield (Mr. Sheerman)—and that is how I want to proceed.

Several hon. Members

rose—

Mr. Speaker

Order. The House will know that I am obliged to take notice of the Modernisation Committee's recommendation that there be an hour for statements. I therefore need the co-operation of the House, and questions must be brief.

Angela Eagle (Wallasey)

I welcome the increase in resources and the fact that my right hon. Friend is wrestling with these difficult issues. Does he recognise, however, that many of us on the Labour Benches are very worried about the concept of variable top-up fees and their possible effects on the practical chances of people from poorer backgrounds aspiring to some of the elite universities?

Mr. Clarke

I entirely accept what my hon. Friend says. I know that she speaks for a number of my colleagues, who have expressed precisely the same concern, and that the motive for their concern is the question of access to the elite universities. My hon. Friend will have in her constituency, as I have in mine, estates and areas where the hope of university education is a long way off. The proposals on financial issues and, even more importantly, on getting universities to interrelate with schools in those areas take us a significant way down the path that we need to take.

I cannot hide from the House my acceptance of the fact that the fear of debt, which my hon. Friend mentioned, is a real issue, as I said in response to the hon. Member for Harrogate and Knaresborough (Mr. Willis). The question for me is how, and in what context, we deal with that. I am happy to discuss with my honourable Friend and other colleagues the best way of doing that. However, I repeat that finance is not the only issue of access, and we have to consider the matter in the round.

Mr. Michael Fallon (Sevenoaks)

Will the access regulator have the power to enforce on universities an admissions procedure that compels them to admit students who they do not consider will benefit from higher education—yes or no?

Mr. Clarke

No.

Mr. David Chaytor (Bury, North)

Does my right hon. Friend agree that the defence of the status quo simply serves to reproduce the existing inequalities in our education system, and that is why we have to transform the balance of public investment from higher education to primary, secondary and further education? I congratulate him on his courage in tackling this issue. This is the first Government seriously to propose radical changes to widen access to higher education.

Will the access regulator permit top-up fees only when the university concerned has a proven track record of widening access, rather than on the basis of a statement of intent to do so?

Mr. Clarke

I appreciate my hon. Friend's support, and I pay tribute to his work, on the Select Committee and elsewhere, in the debate on these questions. The role of the access regulator will be to establish that any university that wants to consider raising fees has to have in place a process to widen access. The regulator will also have responsibility for monitoring that process against targets set by the university itself, and it will have the right to state that the university is not doing what it said it would do. The proof of the pudding will be in the eating; there will not be a process of clever bidding, but a real test.

Mr. Laurence Robertson (Tewkesbury)

It has to be right that as many young people as possible are given access to education, but they must also have access to training. Given that a sizeable number of graduates are unemployed or doing jobs that do not require degrees while a number of organisations and public services have a desperate skills shortage, is not the 50 per cent. target for universities wrong? Should we not take a more balanced approach to education and training? In other words, is not training more appropriate for some young people than a university education?

Mr. Clarke

All I can say is that I agree. We proposed two-year vocational degrees precisely to meet those concerns. I know from initial conversations that private business will want to pursue that route, and as I said, my right hon. Friends the Secretary of State for Health and the Home Secretary also support that policy. I suggest that the hon. Gentleman puts his cogently argued case to his Front-Bench colleagues.

Dr. Ian Gibson (Norwich, North)

I guarantee my right hon. Friend a warm welcome at Carrow Road on Saturday afternoon. He talks about rigorous research assessment. Will he get rid of the much-maligned research assessment exercise used in universities? When he talks about public and private sector influence on funding, does he mean that both sectors will write off student debt? Many of us would welcome that as a major step forward, especially if it included the private employers who take on our bright young people but do not put much into their initial training.

Mr. Clarke

I am grateful for my hon. Friend's question. I am sure that, at Carrow Road on Saturday, we will cheer the team on together and see them defeat the team of the Minister for Lifelong Learning and Higher Education in the FA cup.

We are talking not about getting rid of the research assessment exercise but about changing it. Professor Gareth Roberts has been leading the approach to that. There are problems in the system, which is why changes are proposed, and we intend to implement Professor Roberts's recommendations.

On public and private, there are a number of public and private employers who wish to give money and pay fees for people when they take them on. We do that ourselves for teachers of certain specialist disciplines, and the Department of Health does it for certain medical and other disciplines. I hope and believe that that will be extended, as it has a major positive benefit for public sector management and helps with the renewal of operations. I cannot give a firm assurance, but we intend to go down that route, which will mean that employers will contribute more substantially.

Adam Price (East Carmarthen and Dinefwr)

I am grateful to the Secretary of State for an advance copy of the statement. I am a little slow—I did not have the benefit of an elitist university education—so perhaps he could explain in simple terms why, if it is right for the Government to pay tuition fees in full for students from the lowest income background, even with the reintroduction of the maintenance grant, they are not prepared to do so with deferred top-up fees? Is it not the case that the equality of opportunity that the Secretary of State espouses will not be achieved by deepening the fact and perception of postgraduate debt, which is presumably why his Labour colleagues in Wales disagree with him?

Mr. Clarke

I think that I can help the hon. Gentleman, much as it pains me to do so. We will introduce £1,000 maintenance grants in 2004 and they will run through the whole period. The money will still be there for whatever system we use, but we are ready to consider for 2006 onwards, when the top-up fees come in, the possibility of using that money to pay for the top-up fee component. There is a real debate about the best way of using that resource to target students from the poorest backgrounds, but we cannot make a decision until we have a better idea of how many universities will increase their fees.

Mrs. Betty Williams (Conwy)

I heard my right hon. Friend's answer to the hon. Member for Harrogate and Knaresborough (Mr Willis) about the situation in Wales and his explanation for why he made no reference to it in his statement. Is he aware of news which appeared on the Wales section of the BBC website yesterday at 11.15 am, which said: The Assembly will be handed complete responsibility for student finance in Wales". Can my right hon. Friend provide an explanation, and is he prepared to investigate how that appeared on the BBC website?

Mr. Clarke

I am glad to tell my hon. Friend that I have studied every detail on that website, and can give her some assurances. None of our Ministers and no member of our Department talked to BBC Wales, nor did the Secretary of State for Wales or his Department, nor did the Welsh Executive or its Ministers. After the usual whizzing round for the leak, which is always extremely entertaining, I am now assured that the three bodies that I talked to—the Welsh Executive, the Wales Office and ourselves—are not the source of the leak. The factual situation is not what has been reported on the BBC Wales website, but what I told the House in response to the question asked by the hon. Member for Harrogate and Knaresborough (Mr. Willis).

Alistair Burt (North-East Bedfordshire)

Does the Secretary of State not accept that there is a significant difference between providing incentives to universities to widen access, which is the present situation, and threatening them if they do not? Does he not fear that the lack of trust in universities that the appointment of the regulator implies will fundamentally affect his relationship with universities, particularly when discussing academic freedom in future?

Mr. Clarke

The concerns raised by the hon. Gentleman are important, and I have discussed the issue with many vice-chancellors. Most vice-chancellors accept and understand the situation, and realise that they have to sort out the massive flaw or damage besmirching the university expansion that has taken place since 1990, and want us to help them to do so. I predict that universities will approach the change positively and constructively, but we are determined that those that decide not to do so will be subject to a full range of sanctions prohibiting them from increasing fees.

Mr. Gordon Marsden (Blackpool, South)

My right hon. Friend is to be commended on seeing off the wilder ambitions of some of the Russell group universities to inflate top-up fees and restrict research study and awards. He emphasised that the core of his argument is about access for first-generation students, so does he accept that many will regard £1,000 as a barely adequate starter grant? Will he give an undertaking to the House that that figure is not fixed in stone? Will he review it regularly and lobby his right hon. Friend the Chancellor for extra funding to increase it to a significant premium?

Mr. Clarke

I can give my hon. Friend that assurance. We are conducting an assessment of student maintenance costs to get a true picture of the costs involved. As I said in the White Paper, we will go into the next comprehensive spending review ready to discuss the questions that my hon. Friend has raised.

Dr. Evan Harris (Oxford, West and Abingdon)

The Prime Minister's old university in my constituency needs two things—better funding to compete in a global market and more applications from people from poorer backgrounds. Although the Secretary of State is doing a lot about that, does he not accept that he has created an impossible dilemma? If universities use the top-up debt mechanism to try to get funding, they will lose applications, but if they do so, the regulator will not allow them to use the top-up debt mechanism to raise funding. Has the Secretary of State not created a lose-lose situation?

Mr. Clarke

No, if the hon. Gentleman talks to his vice-chancellor, he will find that his view is closer to mine than his.

Mrs. Anne Campbell (Cambridge)

I welcome much of what my right hon. Friend has said. What inducements can a world-class university offer a student from a low-income background to accept a place at that university rather than one where their debt may be £9,000 less at the end of the course?

Mr. Clarke

First, I appreciate my hon. Friend's particular constituency interest—she has argued consistently on these points. Good-quality education and good job prospects at the end of a course must remain the key issues that drive our policy, but I anticipate that universities, including the one that she represents, will develop bursary schemes and so on or provide additional assistance. Our aim in establishing an access regulator and providing money for access for people from disadvantaged backgrounds is to increase university resources in that area, both in the current system and any changed system that may be introduced.

Mr. Michael Jack (Fylde)

It is a sad day when a former president of the National Union of Students, to obtain the Chancellor's 30 pieces of silver for his policy, has to make life more difficult for poorer students. The Department for Education and Skills suggests that the nation's rate of return from investment in higher education is roughly double the discount rate used by the Treasury. If the rate of return is so great, why was it not possible to deploy more public funds to deal with top-up fees?

Mr. Clarke

Figure 3 on page 18 of the White Paper shows that there were slashing cuts in spending per head on universities under the previous Administration, including during the period when the right hon. Gentleman was a Minister at the Treasury. The Chancellor's commitment, which I announced today, to a 6 per cent. year-on-year real increase in university funding is not only better by a long way than anything achieved by the universities during the period when the right hon. Gentleman was in office, but is a sound basis on which universities can plan for the future and deal with the issue. The right hon. Gentleman is foolish if he wishes to demean that. He should ask the question that Labour Members and I are asking—if universities are to get that cash, how can they use it to achieve the ambitions that we have set out?

Paul Farrelly (Newcastle-under-Lyme)

Access is a problem, so I shall ask my right hon. Friend a simple question—why cannot we have incentives to improve access without divisive and differential top-up fees and different prices for different universities?

Mr. Clarke

My hon. Friend may disagree, but the core issue, as I have told him before in the House, is that we have to acknowledge that it is necessary, even on the basis of the generous settlement that I have announced, to put still more money into universities for teaching undergraduates as well as continued professional development and research. We have to look at who should provide that money. It is fair to ask whether people who get no benefits from the state after 16 because they have left the education system and are taxpayers for the rest of their lives should continue to be the sole source of funding for students. I think that students should make a contribution, but there is a legitimate discussion to be had about how much they should pay. To suggest that they should not contribute at all, however, is mistaken.

Mr. Roy Beggs (East Antrim)

The Secretary of State will be aware that a large proportion of Northern Ireland students enrol in English universities either through choice or because they have not achieved the entry grades for Queen's university or the University of Ulster. Household incomes are much lower in Northern Ireland than in Great Britain and many students will fear the threat of incurring large debts. Will he seek to persuade the Government to increase the number of university places in Northern Ireland and to provide proper research funding to our Northern Ireland universities? Will he monitor closely the impact of his proposals today on the future enrolment in English universities of Northern Ireland students?

Mr. Clarke

The financial and educational relationship between Northern Ireland and the rest of the UK is complicated, as the hon. Gentleman knows better than I do. I am discussing with the Secretary of State for Northern Ireland how we might work in these areas. Whether the Stormont Assembly returns or the Secretary of State remains with his current responsibilities, it is important for the Administration in Northern Ireland to make a commitment in the ways that I have been describing. I can see that some colleagues share that view. I commit myself, in case it is of any help, to discussing with the honourable Gentleman's party, and colleagues in Northern Ireland above and beyond the Secretary of State, how we might work together in these areas.

Mr. Kevin McNamara (Hull, North)

Is my right hon. Friend aware that my parents were on national assistance, and that with my three brothers, we had full maintenance and full university fees? Had my parents or I been faced with the prospect of having a very large sum to repay almost immediately after leaving university and its effects on having a family or mortgage, we would have regarded his proposals as an increased detriment to access by the poorest people. Is not the answer something that has been mooted but barely debated today: if people who graduate make the most money, they should pay the most tax in a graduate tax over their lifetime in employment? It is the fairest way.

Mr. Clarke

I want to make two points. I acknowledge the debt issues, as I have done in responding to a number of hon. Members. It is important also to acknowledge—I hope that my hon. Friend will do so—that as the proportion of the population going to university expands, significantly different issues arise. The issues in respect of 6, 7, 8 or 9 per cent. of people going to university are different from those in respect of an intake of 43, 45 or 50 per cent. On those issues, my honourable Friend should acknowledge that there is a need to look again at that system.

On the overall issues that my hon. Friend raises about the question of the extent to which funding can be provided through general taxation, whether through a graduate tax, income tax or whatever else, that is a matter for the Government as a whole. The issue that is distinct about the fee approach is that the money goes directly to the university rather than being translated through the Exchequer.