HC Deb 08 January 2004 vol 416 cc418-41 1.15 pm
The Secretary of State for Education and Skills (Mr. Charles Clarke)

Today, the Government will introduce a Bill to reform higher education. Before we do so, I wish to make a statement about the related matter of student support.

Change in higher education is necessary because, first, the barriers to access to university need to be lowered. The measures that I am announcing today mean that disadvantaged students will get financial support to study what they want, where they want. Secondly, universities need more investment. Vice-chancellors will say that these proposals will generate hundreds of millions of pounds of new money for them to spend on improving the quality of teaching and to compete with the best universities in the world. Thirdly, we need to move towards treating students as financially independent from the age of 18.

I believe that there is a broad consensus about the fact that universities need more resources and that it is reasonable for students to make some contribution, after they have graduated, to those resources. Where there has not been consensus is about the fairest way to raise this new funding, so that access from the poorest communities is promoted and not undermined. The Government have listened carefully to the concerns that have been raised and we have discussed this matter widely. Those concerns very much inform the proposals that I make today.

Our original proposals were set out in the White Paper that I presented to the House on 22 January last year. Those are that we will remove up-front fees for full-time undergraduates, so that higher education is free at the point of entry. We will provide loans with a zero real rate of interest, paid back through the tax system at a rate dependent on earnings, beginning at a threshold of £15,000 a year rather than the current £10,000. We will introduce the new higher education grant from September this year.

We will also establish the new office for fair access, to ensure that universities support students from the poorest backgrounds. The focus of OFFA's work will be those universities with the poorest track record in widening participation. No university will be able to put up its fee without OFFA's agreement. OFFA will concern itself not with admissions but with applications. In addition, universities will be able to set fees ranging from £0 to £3,000. We will maintain the £3,000 cap in real terms through the next Parliament.

Those were the commitments in the White Paper. Today, I add the following commitments to meet the concerns expressed by some colleagues. First, I accept that some colleagues have genuine concerns about the impact of variable fees on our university system. The Government will therefore establish an independent review, working with OFFA, to report to this House, based on the first three years of the fees' operation.

Moreover, our legislation will require that any proposal to raise the fee cap above £3,000 in real terms is subject to affirmative resolution. There will be an opportunity for a debate on the Floor of both Houses so that every Member of Parliament can vote on such a proposal, dependent on discussions through the usual channels. However, I have to make it clear that we do not agree that a substantially higher fixed fee would be the way to raise additional resources. It would be deeply damaging. We would be denying universities the freedom to incentivise industrial, vocational, scientific, technical, engineering and sandwich courses, or foundation degrees, which are vital for the economic future of this country.

Secondly, I want to emphasise the Government's strong commitment to promoting access to higher education for part-time and mature students. From September 2004, we will provide improved fee support and a grant for part-time students. I welcome the changes recently announced by the Higher Education Funding Council for England to support part-time and foundation degree courses. My right hon. Friend the Minister for Lifelong Learning, Further and Higher Education and the funding council will consult on ways in which the funding system might further support the development of part-time study in higher education.

Thirdly, for full-time undergraduates entering higher education from 2006, we will write off any student loan repayment that is still outstanding after 25 years. On average, we expect graduates to repay their loans in 13 years, but those who have taken on family responsibilities or are on low incomes may need more time. That gives rise to genuine concerns and fears, and I think that a 25-year limit is fair. Fourthly, from September 2006, maintenance loans will be raised to the median level of students' basic living costs, as reported by the student income and expenditure survey. That increase will be modest for most students, but it will be significant for those studying away from home in London. The principle of the decision will ensure that students have enough money to meet their basic living costs while studying.

I emphasise that the student loan is free of real interest. Repayments will be based on money earned, not money owed. It is much better for students to be able to borrow on those terms than at commercial rates. Over time, although it cannot be afforded at this stage, the Government's aspiration is to move to a position where the maintenance loan is no longer means-tested and is available in full to all full-time undergraduates, so students will be treated as financially independent from the age of 18. My fifth and final intention is to ensure that every student from a poor economic background has enough resources to meet even the highest course fee without incurring additional debt. The £3,000 package is achieved by maintaining fee remission at about £1,200; raising the new higher education grant from the £1,000 that I originally proposed to £1,500 a year for new students from 2006; and, through OFFA, requiring universities to offer bursaries to students from the poorest backgrounds, so that the full fee cost of the course will be covered. For example, there will be a minimum bursary of £300 for a course whose fee is £3,000.

The effect of our commitments is that no student from a poor background will be worse off as a result of our proposals, whichever university they attend and whatever fee is charged for the course. Moreover, those commitments will align the level of the higher education grant with that of the education maintenance allowance for 16 to 18-year-olds, which has been very successful. About 30 per cent. of students will receive a full grant and a further 10 per cent. a partial grant. A major advantage of this approach is that modern universities with strong records in recruiting students from poorer backgrounds will be able to use at least 90 per cent. of any increased income from fees to improve course quality, rather than about 70 per cent. of such income, as implied in some earlier discussions. Those universities have made, and are making, a first-class contribution to this country's higher education and economy, and I want to encourage, not discourage, that commitment.

On the bursaries, I have invited Universities UK to work with universities and ourselves to develop model bursary schemes to provide a clear offer to students. In addition, I accept in principle the argument of some of my hon. Friends, who have made it very coherently, that there is a strong case for combining the higher education grant and fee remission to give students greater choice up front about the way in which they use the financial support that they receive from the Government. Again, that would be a further move towards financial independence at 18. However, that approach raises policy, financial and practical issues, which we are examining in detail. If they can be resolved, we will adopt that approach.

From the outset, I have emphasised that our changes, which mainly come into effect from 2006, will not affect adversely the level of public funding for teaching and research. My proposals will improve access to university by abolishing up-front fees and re-establishing student grants. They will provide universities with resources that they urgently and desperately need. They will raise the threshold at which repayment begins from £10,000 to £15,000 and, moreover, they move us towards the day when students become financially independent at 18. The abolition of up-front fees, the higher education grants and bursaries, the raising of the interest-free loan, the higher repayment threshold, and the 25-year write-off of debt mean that students will have the money that they need while they learn, and can afford to contribute when they earn. Universities will get the sustainable funding stream that they need to deliver world-class higher education. I can tell the House that this is a coherent package to be taken as a whole or not at all. If it is not supported by the House, none of those benefits will arise. It is not a pick and mix menu. I commend the proposals to the House.

Mr. Tim Yeo (South Suffolk) (Con)

I am grateful to the Secretary of State for providing me with a timely copy of his statement.

The policy that the Secretary of State has announced today is a clear breach of a specific pledge given by every Labour Member of Parliament to voters at the last general election. I remind hon. Members that the Labour manifesto in 2001 said: We will not introduce 'top-up' fees and we have legislated to prevent them. That promise was made without any qualification whatever. Even hon. Members who read the totality of the Labour manifesto would not have found any hint that that promise applied only to one Parliament.

In the face of principled opposition to the Bill from Members on both sides of the House, including a significant number of Government Back Benchers who are less willing than the Prime Minister and the Secretary of State cynically to break their promise to voters, the Secretary of State has now produced a policy that achieves an amazing triple whammy. It is bad for students, it is bad for universities and it is bad for taxpayers. It is bad for students because, in future, the vast majority will pay far more for their education, thus making university education dependent on ability to pay, not ability to learn. It is bad for universities because, for the first time ever, their freedom to decide whom they admit to study will be taken away. There is no certainty that all the money paid by students in top-up fees will become extra income for the universities, which may well remember that when the Government introduced new student fees in 1998, much of the money was later clawed back by the Treasury. It is bad for taxpayers because, for every extra pound that the universities receive, the taxpayer will have to contribute at least £1.25. Even a Government as wasteful of taxpayers' money as the present one may think that that is not good value.

The first question—[HON. MEMBERS: "Hurrah!"]

Mr. Deputy Speaker (Sir Alan Haselhurst)

Order. I am sorry to interrupt the hon. Gentleman. The House should listen to the Opposition spokesman in exactly the same—[Interruption.] Order. If the hon. Member for Huddersfield (Mr. Sheerman) wants to teach me to do my job he must find another occasion. The fact of the matter is that the House should listen with moderation and calm. This is a difficult issue and has attracted a great deal of attention. The Secretary of State was listened to respectfully, and so should the Opposition spokesman.

Mr. Yeo

Will the Secretary of State guarantee that Exchequer funding per student will grow in real terms after the introduction of top-up fees? Has the Chancellor of the Exchequer, notable today by his absence from the Front Bench, guaranteed the Secretary of State that that is indeed the case and that there will be no repeat of the previous clawback?

Secondly, if the Secretary of State does not intend to increase the maximum top-up fee that universities can charge, why is that not included in the Bill—adjusted, perhaps, for inflation? As the whole policy is based on breaking one election promise, any assurance the Secretary of State offers on this matter is of little value, especially as his statement today already confirms the very mechanism by which he plans to increase the maximum cap in future.

Thirdly, will the Secretary of State confirm, therefore, that top-up fees capped at £3,000 a year are too low to contribute to the costs of increasing student numbers to the arbitrary 50 per cent. target set by the Prime Minister, and that top-up fees would need to rise to £8,000 or £10,000 a year to make any meaningful contribution to the costs of meeting that target?

Fourthly, what is the cost of the extra concessions the Secretary of State announced today? In particular, what will be the cost of writing off any student loan not repaid within 25 years? Will the right hon. Gentleman confirm that the cost of the concessions that he announced today and of any further concessions that he may decide to make during the passage of the Bill raise the cost to taxpayers without benefiting universities? In practice, it would be cheaper for taxpayers if the Secretary of State simply wrote out a cheque to the universities, instead of setting up the cumbersome bureaucracy contained in the Bill, but that of course would not allow him to establish the new access regulator, and thus to be able to control who will enjoy the benefits of university education.

Fifthly, the Secretary of State has said that some universities may retain 90 per cent. of the income received in fees. Will he confirm that that means that other universities will retain less than 90 per cent.? How much less? Seventy per cent.? Fifty per cent.? Will he confirm that the system that he is setting up involves a cross-subsidy between one university and another? Is this the stick that the new access regulator will use to beat universities that refuse to co-operate with the Government's social engineering experiment?

Sixthly, we know that some hon. Members are worried about variable fees and the fact that they create two tiers of universities—those that charge the top fee and those that do not. Is the Secretary of State happy that his policy creates two tiers of students—those willing to incur debts of £30,000 and those who are not? Does he recall saying in the House on 3 December that universities that charge a zero fee for certain courses would encourage people to study those subjects? The right hon. Gentleman thereby, perhaps unwittingly, confirmed that top-up fees would deter some students from taking up the university places for which they are qualified.

The Conservative party will fight this damaging policy every inch of the way. We will oppose the Bill when the Secretary of State finally summons up the courage to bring it before the House for a vote on Second Reading. We believe the Bill breaches the principles that universities should have independence not just academically, but over admissions policy, and that access to university should not be based on ability to pay.

A year after first announcing the policy, the Government have been forced into a series of changes which have made an already flawed policy much, much worse. The Government are destroying the independence of universities, burdening future students with huge debts, and wasting more taxpayers' money. That is wrong in principle, it will be damaging in practice and it must be defeated.

Mr. Clarke

Let me deal with the points that the hon. Gentleman raises. The manifesto was for a Parliament. It is for a Parliament. That is what will be carried through. On the so-called triple whammy, it was almost a triple whammy in the foot, if I may say so, covering up a serious absence of policy on the part of the Opposition.

The hon. Gentleman claimed that our policy was bad for students. It is not. It is good for students. Getting rid of up-front fees will benefit students. Providing proper financial support for students when they are at university is good for students. Expanding places at universities, which the hon. Gentleman wants to close, will be good for students, particularly for those from working-class backgrounds who traditionally have not gone to university.

The policy is good for universities, as the universities will tell the hon. Gentleman in his interesting cabals with them, because the universities will get the resource they need to provide the quality of teaching to raise standards in this country. It is good for the taxpayer, because in our basic position the taxpayer will be able to benefit from an active economic sector with the universities which generates the current economic strength of the country.

On the hon. Gentleman's specific points, I can give him the pledge he seeks that the Exchequer funding per student will grow, as it has done since we were elected in 1997, and in sharp contrast with the record of the Government whom he supported. We have decided not to write the top-up fee into the Bill, as he suggests, but to allow every hon. Member to vote on any increase in that fee, as I suggested, because of the existing concerns. It would be inflexible to do otherwise.

On the hon. Gentleman's third point, he said that the £3,000 capped fee is too low. That is extraordinary from a party that says that it will introduce a zero fee for everybody and criticises us for introducing a £3,000 cap, which it says is too low. That is an arrow at the inconsistency and dishonesty at the core of the Conservative party's policies.

On the hon. Gentleman's fourth point, the cost of extra concessions, the one that he specifically asked about was the 25-year debt repayment guarantee. The cost of that, we estimate, is about £25 million all together. We think it is reasonable because there are groups of people—I think particularly of those who are parenting, who may go through university and decide to raise families and not go into the workplace, or people who go for vocational work, for example in the Church or voluntary organisations, without significant income—who should be freed from the worry that they have a debt hanging over them for the rest of their life. I believe that policy is right.

It is not the case that there will be cross-subsidy between one university and another. Overall, the fees that are generated will be used by the universities to improve the quality of what goes on at those universities. That is the right way to proceed. On the hon. Gentleman's final point about the zero fee, as I have said many times to him across the House and to his predecessors, money is a factor in any decision that anybody takes. My point is that money is a factor, not the factor. If we are trying to encourage, as we are, foundation degrees, science study, engineering study and sandwich courses, it would be extremely shortsighted to take the view that we should forbid a university trying to encourage people on to those course to use the power to vary fees.

Mr. Phil Willis (Harrogate and Knaresborough) (LD)

I thank the Secretary of State for an advance copy of his statement.

Despite the orchestrated support for the Secretary of State, Labour Members should be ashamed of themselves and of the statement. If they vote for the policy, they will be breaking a solemn manifesto promise. To say that it was for one Parliament will not wash with the electorate, who were told categorically that they would not have to pay top-up fees. Labour Members will vote for the policy knowing that they are pulling up the ladder of opportunity for thousands of poorer students in generations to come.

If Labour Members vote for the policy, that will fly in the face of everything the Labour party has stood for since its inception. This is a policy born out of Thatcherism. It has been adopted by a party that has lost its way—a party that has sold its principles to a Prime Minister who has led it elsewhere. Perhaps Labour Members think it is okay to say one thing to the electorate and something else when they are in government. [Interruption.]

Mr. Deputy Speaker

Order. I am sorry to interrupt the hon. Gentleman. The House should give a hearing to the Liberal Democrat Front-Bench spokesman, in the same way as the other two spokesmen have been heard.

Mr. Willis

Thank you, Mr. Deputy Speaker. Hon. Members do not like the truth. The electorate will not be allowed to forget. We will not allow them to forget.

I have told the Secretary of State on many occasions that as a party we share the objectives that the Government are trying to achieve, particularly to encourage more students who are currently excluded from university to go there, and to provide greater resources to our universities. We are the only party that is offering a viable, sensible and costed alternative to the Secretary of State's policies.

It is no good members of the Tory party crying crocodile tears. This morning on the "Today" programme, when asked what the alternative was, the hon. Member for South Suffolk (Mr. Yeo) said that the Tories did not have one; they are simply against what the Government say. That is not a sensible debate. The Secretary of State may not appreciate our policy to fund higher education with a 50p tax rate, but it is a viable alternative to the Government's policy.

We will examine the Bill carefully. We support many of the proposals that the Secretary of State has put forward today. We support the up-front tuition fees; the increase in the repayment threshold; the raising of the threshold for maintenance loans and the 25-year limit on payments. We particularly welcome the increase in support for part-time and mature students. But for the Secretary of State to say that the Government will increase grants to £1,500 for our poorer students and then tell them to keep that in the bank for three years so that they can use it to pay off their tuition fees, is really hypocrisy of the greatest sort. That is exactly what has been said today.

The Secretary of State said that the £300 bursaries would be the minimum. What will happen in universities such as South Bank? How will our poorest universities get the funds together to support increased top-up fees? Perhaps the Secretary of State will enlighten us on how they will be supported.

The statement is a dog's breakfast. It is over two years since the Prime Minister launched a review of student funding. Two years ago he said that one of his objectives was tackling the problems of debt and the perception of debt". How on earth can one treble students' debt and achieve that objective?

The Secretary of State and the Prime Minister may believe, from their privileged backgrounds, that debt should be seen as an investment, but in reality, many of the kids on the estates of Moss Side, St. Paul's in Bristol or Seacroft in Leeds would laugh in the face of anyone who made that comment. It is a middle-class comment perpetrated on working-class kids.

What in these proposals will support students with disabilities? Where is the support for students on four-year courses and sandwich courses? Will they all have to pay top-up fees? Where will our universities get the resources? Too little, too late, was the response from the chairman of the Russell group this morning. It expected, like most hon. Members, that £3,000 would be only for starters for the universities; it would not be where they finish. The regulator is simply a sop to Labour Back Benchers and is a bureaucratic nonsense for our universities.

What is the funding gap that these proposals are trying to bridge? The Secretary of State must have an estimate, because on page 6 of the DFES paper "Student loans and the question of debt" the average student debt in 2006 was estimated to be £15,000. What are we trying to do? Does he agree with the Institute for Fiscal Studies that the money coming in from his proposals will be only £500 million?

The Secretary of State has been uncharacteristically disingenuous. He has tried to move the debate between fixed fees and variable fees. The real question is whether we have fees at all. The Conservative party has sold its principles long ago. The Labour party is about to do the same. The Liberal Democrats will oppose this measure on principle, not simply as opportunists.

Mr. Clarke

First, I thank the hon. Gentleman for his Christmas card this year. It contained as much information about Lib Dem policy as what we have just heard.

The Government's position is not to pull up the ladder of opportunity, to use the hon. Gentleman's metaphor, but to build a staircase whereby people from the poorest communities in Britain can have a chance. It is a staircase that involves better school education, better college education, better skills education and better university education, and that is something that we, and I believe the hon. Gentleman, are broadly concerned to do.

I am grateful that the hon. Gentleman said that he would examine the Bill carefully, but the point that I make in all candour to him and his colleagues is that when they consider whether to support the Bill on Second Reading, they must decide whether they want to carry through his mis-statement, when he said that he supported up-front fees. [Interruption.] It was a mis-statement; I acknowledge that his policy is the opposite. But the effect of voting against the Bill on Second Reading will be to ensure that up-front fees stay; to ensure that grants do not happen; and to ensure that the threshold is not increased. So the choice that he and his colleagues have to make is whether to vote for the Bill on Second Reading and then consider the various improvements that they would like to see made during the Bill's passage, or whether to try to vote the Bill down on Second Reading.

The £1,500 grant to which I referred today is on top of the student loan, not in place of it in any respect whatever, and it can be used immediately, if so chosen, to pay off any fee that arises; it is not saved for three years and then used.

The new universities are very positive about the proposals, for the important reason that they are precisely the universities that have been most effective, most entrepreneurial, at developing courses that deal with the economic problems of our country, building relations with our different institutions—the sandwich courses and the four-year courses, the foundation degrees—and they want the flexibility to decide how best to do that, which is one reason why variability is important.

We have taken measures to assist students with disabilities. The disability student allowance is a good case in point. We do encourage the sandwich courses through our sector skills approach, and we will continue to do so.

All kinds of assertions have been made on the funding gap, but I shall rest on what Lord Dearing said in the report in 1996. He estimated a funding gap of the order of £8 billion. In order to deal with that, he proposed that we should ask graduates to contribute: a policy that the hon. Gentleman opposes. Lord Dearing proposes today, in an article in The Guardian that the hon. Gentleman may or may not have seen, that the variable fee approach is a way to attack that funding gap. He acknowledges, as he should, that from the Exchequer, from taxpayers' money, we have already put £3 billion in towards that £8 billion funding gap, and, as I said to the hon. Gentleman, we will continue to invest from the Exchequer, from taxpayers' money, in universities. So, yes, the hon. Gentleman is right that there is a funding gap; the question for serious politicians and serious political parties is how we close it. Our proposals are about doing just that.

Several hon. Members


Mr. Deputy Speaker

Order. The House will be aware that there is some interest in this matter, but I must protect later business, so once again I ask for the co-operation of right hon. and hon. Members in not making statements but putting precise questions to the Secretary of State. That would be most helpful to everyone concerned.

Mr. Barry Sheerman (Huddersfield) (Lab/Co-op)

My right hon. Friend will know that I appreciate and support much of the Bill because, as he said, it moves back to the principles of the Dearing report. Does my right hon. Friend believe that there can be some refinements in Committee and on Report, because there is still room for change and improvement? Has he an open mind on change during the Bill's passage through the House?

Mr. Clarke

First, may I appreciate not just my hon. Friend's but his Committee's contribution to the public debate on this question during the past year? The short answer to his question is that of course refinements—his word—will always be looked at; that is the right thing to do. But if the question is whether we would be prepared to contemplate a fundamental change in the Bill's approach, for example on variability or whatever, the answer is no. It is, as I said, a package, but a package where refinements can be considered.

Mr. Julian Brazier (Canterbury) (Con)

Will the Secretary of State confirm that the amount of money that the package in its totality will raise is less than the cost of the latest round of expansion in the universities, so the funding gap can only widen? Secondly, will he confirm that there are now 10 universities with a dropout rate of around 25 per cent. or higher, and does he think that that drop-out rate will go up or down after these proposals?

Mr. Clarke

I cannot confirm the hon. Gentleman's first figure because it is wrong. The extra money coming through will be of benefit to the universities. On his second point, Britain has the lowest drop-out rate of all the OECD countries. The drop-out rate is high in 10 universities; there are other universities from the same group—the ex-polytechnics and so on—which have outstandingly good records on drop-out rates. We all work to improve them and the hon. Gentleman is right to raise the matter, but he should not demean what is happening. Our universities have an outstanding record on this compared with those in any OECD country.

Mr. Nicholas Brown (Newcastle upon Tyne, East and Wallsend) (Lab)

Why are the Government philosophically attracted to a market-based solution to the funding problems of higher education? Once the cap is lifted, as it inevitably will be, how will youngsters from homes of ordinary means, or even just above ordinary means, ever be able to afford to take the most prestigious courses at the most prestigious universities, for which the fees will of course rapidly be raised, as the vice-chancellors have, in fairness, said is their intention?

Mr. Clarke

My appeal to my right hon. Friend and others is to look at the reality of the current university system. Fifty per cent. of students in our universities—part-time students. postgraduates and others—are paying variable fees right now, in the system that is moving forward. That is the reality. The second reality that it is important to recognise—I believe, after speaking to the universities, that this is the case—is that every university will have at least one course whose fee is £3,000, and that no university will have only £3,000 courses. There will be massive variety through the system, and that is as it should be.

The reason for variability is not some ideological market-based obsession of the kind that some people are concerned that we are about. This is about trying to ensure that universities, in seeking to increase access and to provide courses that are relevant to the economic future of the country, are able to make rational choices about adopting the right fee structure to address those issues while bringing more money into the system. The assurance that I will happily give to my right hon. Friend is that there is no market dogma driving this approach. I know that some people believe that there is, but there is not.

The second assertion made by my right hon. Friend related to ambitions for raising fees in the future. I know that he is concerned about that because we have discussed it directly. As I have announced today, we have in place a rigorous process—involving every Member of the House in a vote, if the situation were to arise—relating to allowing the cap to increase. That is a positive approach that will deal with the issue properly.

Mr. Peter Luff (Mid-Worcestershire) (Con)

How can the Secretary of State justify imposing on a newly married, recently qualified teacher couple a combined household debt of £50,000 to £60,000 or more?

Mr. Clarke

That will not happen. The hon. Gentleman gave the example of teachers, but he may not be aware that my Department has a whole programme for encouraging people into teaching which involves paying up front in a way that deals with many of these questions. Other colleagues in both the private and public sectors have similar policies. The key question for the married couple to which the hon. Gentleman refers is: are they able to earn at a level that enables them to make a reasonable contribution? If so, they will make that contribution; if not, they will not have to pay it. If, for example, the wife decided to stay at home and look after the children, the effect of the 25-year cap that I have announced today would mean that that debt would not hang over her after that point.

Dr. Alan Whitehead (Southampton, Test) (Lab)

I welcome my right hon. Friend's commitment to move money into the pockets of poorer students who would otherwise not have access to higher education. May I urge him, however, to examine urgently and early the case for fee remission to grants up front, so that the £1,300 that could be created by that process could go into the pockets of those poorer students in 2006, when the scheme starts?

Mr. Clarke

I appreciate the effort that my hon. Friend and his colleague, my hon. Friend the Member for The Wrekin (Peter Bradley), have put into the consistent, serious, intelligent and applied work that they have done to promote the course of action that he suggests. My right hon. Friend the Minister for Lifelong Learning, Further and Higher Education has discussed with him in detail the direction that we should take. We do not agree on all the points, as my hon. Friend knows, but we appreciate the spirit and style of the serious discussion on the policy.

The answer to my hon. Friend's question is yes, we will examine the question in the way that he suggests. As I said in my statement, there is a strong case for bringing fee remission and the grant together, which we support in principle. There are some serious issues involved, and it would be foolhardy of me to say, "Okay, we can brush those aside", which is why we must look at the matter carefully. If we can sort those problems out, however, we will do what he and his colleague have suggested.

Mr. George Osborne (Tatton) (Con)

Do a majority of Labour Back Benchers support this policy?

Mr. Clarke

I am tempted to ask the hon. Gentleman whether a majority of Conservative Back Benchers support their Front Bench's policies—[Horn. MEMBERS: "Yes!"]—then I will say the same the other way round. I will answer that question after the Second Reading of the Bill, when we are able to count up the numbers in detail.

Mr. Huw Edwards (Monmouth) (Lab)

What reassurance can my right hon. Friend give to those modern universities that already take a high proportion of access students? They have expressed concern that the extra fees that they might receive would be redirected to the students and not directed into teaching and other resources that they need.

Mr. Clarke

The reassurance that I can offer to those universities is that, instead of having to find about —800 per student in the form of higher fees—as outlined under our previous proposals—they will have to find about £300 per student, as a result of our decision to increase the student grant. As I said in my statement, that means that in all cases, the universities will be able to spend more than 90 per cent. of any income that they generate by increasing fees—it is a matter for them to decide whether they want to do that—directly on teaching quality, salaries, investments and so on, rather than reprocessing it into student bursaries. We have analysed this question in relation to those new universities. The figure that we were talking about before was of the order of 70 per cent., and it was that figure that gave rise to some of the concerns reflected in my hon. Friend's question. What I have announced today addresses that point.

Mr. David Bendel (Newbury) (LD)

Given that the universities that charge top-up fees are now going to be expected to pay something back to the students in the form of bursaries, will the Secretary of State tell us what proportion of the gap in funding—whose existence he has acknowledged—will be covered by the increase in fee income that the universities can expect to receive?

Mr. Clarke

The estimate depends entirely on the level of fees that the universities charge, and we do not know that yet. If we were to assume that 75 per cent. of courses were set at the full £3,000 level and the remaining quarter at the current level, for example, the extra income that that would generate would be of the order of £1 billion to £1.2 billion. On an annual basis, it helps to supplement the £3 billion that we have already put in to attack the historic underfunding deficit that we inherited from the Conservatives.

Peter Bradley (The Wrekin) (Lab)

I am rendered practically, but not quite, speechless. It has to be acknowledged that this is a radically different Bill from the one that I believe Ministers originally envisaged, and much of it is welcome. I welcome the commitment to a maintenance grant, to equity for the modern universities, and to parliamentary control over the future of variable fees. The Bill leaves one important question unanswered, however. If we have disarmed the adverse consequences of variable fees, what are they for? If the three-year review is unable to find an answer to that question, will my right hon. Friend be prepared to abandon them altogether?

Mr. Clarke

The reason we have variable fees—I know that my hon. Friend understands that we already have them for part-time students, postgraduate students and so on—is to reflect the reality of university courses as they are. As I said to my right hon. Friend the Member for Newcastle upon Tyne, East and Wallsend (Mr. Brown), this policy comes not from some ideological dogma but from a recognition of the reality of promoting the kind of courses that we want. I recognise, however—and it is an important recognition, if I may say so—that my hon. Friend and his colleagues reflect accurately a widespread concern, certainly on the Labour Benches and possibly on the Opposition Benches, that the impact of variable fees could be different from the one that I have just described. It would be foolish not to acknowledge that such concern exists.

My answer has two parts: first, that we have a review of the kind that my hon. Friend and his colleague, my hon. Friend the Member for Southampton, Test (Dr. Whitehead), have promoted, to analyse the effect of the variable fees after three years, so as to determine whether my hon. Friends' fears have been realised, involving an independent report making recommendations directly to the House so that it can make its judgment on those questions and every hon. Member can make their call—that is a principled way of going about this in a proper way. Secondly, we put in the safeguards that I announced earlier relating to the ability of every Member of the House to vote on any increase in fees.

Mr. Desmond Swayne (New Forest, West) (Con)

On precisely that point, will the right hon. Gentleman remind us of whether such motions would be amendable and tell us how much time would be available for their debate?

Mr. Clarke

As I said in my statement, the precise process is for the usual channels to discuss, but the submission that we are making quite explicitly is that this particular issue should be dealt with not on the Committee Corridor in the normal 90-minute exchange, but on the Floor of the House so that every hon. Member can make a decision on it.

Mr. Dennis Skinner (Bolsover) (Lab)

Is the Secretary of State aware that way back in 2001 I was elected to represent the parliamentary Labour party on the committee that endorsed the manifesto? There were a lot of things in it, but I felt pretty certain that we would not introduce top-up fees. It is clear that variable fees is just another way of describing top-up fees. I suggest to my right hon. Friend and colleagues that if there is not some way found to eliminate the variability of those fees, it is conceivable that the Government have bitten off more than they can chew.

Mr. Clarke

I am genuinely grateful for that contribution—[Laughter.] I mean that seriously. I answered the manifesto point a moment ago. I want to put in the mind of colleagues and my hon. Friend this fact: universities close courses; it happens quite frequently. They close courses because they cannot find students to go on to them. The main funding for those courses—say a physics course—comes through the HEFCE. If the universities say, "We want to run that course with the money from the HEFCE", they may decide that the best way to achieve that is to charge a low fee. If they want to establish a foundation degree in some area that we are talking about, which is a key aspect of our proposals, they may decide that it is not intelligent to charge a fee of £2,500 from the outset for such a degree. The question for us is, in those circumstances do we effectively forbid universities from deciding to lower a fee to attract students? My answer is no.

Mr. Eric Forth (Bromley and Chislehurst) (Con)

How can the Secretary of State have the gall to talk about academic freedom when the Government control fees and funding, and a bureaucracy is to be set up to control admission?

Mr. Clarke

The OFFA process is about applications, not admissions, as I indicated earlier, and the right hon. Gentleman and Conservative Front Benchers are fundamentally wrong in respect of a charge made earlier by the hon. Member for South Suffolk (Mr. Yeo) and now by the right hon. Gentleman. It is wrong to say—it will not happen—that OFFA, which we are to establish, will control university admissions. Universities will control university admissions, and that is as it should be. Power would truly be taken away from the universities by following the policy of the hon. Member for South Suffolk, in saying that the money would come only from the state and not through fees. The inconsistency in his position—which many Conservative Members understand, but he does not—is the risk of universities being entirely dependent on the state.

Mrs. Lorna Fitzsimons (Rochdale) (Lab)

I represent Rochdale, where a majority of my constituents still do not go on to higher education, partly because we have not been lucky enough to have one of the education maintenance allowance pilots, although we are going to have them rolled out. Will my right hon. Friend accept it from me, as the representative of such a constituency, that the debate about choice and variability is erroneous? The biggest choice for my students—for those who are going to choose—is whether to go into higher education in the first place; the choice is not between institutions. The biggest determinant in that choice is aspiration at the ages of six and 11. As the Bill progresses, will he also ensure that we do everything we can for those aged six and 11? Although I give a huge welcome to the maintenance increase, which is long overdue, the thresholds represented by the ages of six and 11 will make the distinction for constituents such as mine.

Mr. Clarke

I agree with my hon. Friend completely. One of our hon. Friends told me this week that 9.1 per cent. of the students in his constituency went to university—that is a disgraceful figure. As I said to the hon. Member for Harrogate and Knaresborough (Mr. Willis), our task must be to build a staircase of opportunity and, as my hon. Friend says, it starts at the very bottom. In fact, I would say that it starts not even at six and 11, but at pre-five through the Sure Start initiatives, which have been so important. The only way that we will crack this appalling waste of talent and the disincentive to ambition and aspiration is by investing in the education system from birth and right through. That is why we must decide how and where we are going to do that. I believe that our policies will positively assist that to happen.

Mr. Tim Boswell (Daventry) (Con)

I was a higher education Minister when student numbers were expanding but no tuition fees were charged. Does the Secretary of State recognise the fact that from time to time I have had the chance to consider non-starter policies, which evolve by concession into non-earner policies without stopping being non-starters?

In the light of that analysis, I understand that the cost of the concessions that the Secretary of State has announced today exceed £1 billion a year. Can he confirm to the House—an answer he did not give earlier—that the Chancellor has guaranteed those commitments to concessions as new money for the higher education budget, or is there a danger that it will simply be knocked off that budget and lost to the university sector?

Mr. Clarke

If I had been a higher education Minister under the previous Government, I think that I would draw a veil over my record on university funding. The answer to the hon. Gentleman's question is that the policy is completely agreed with the Chancellor and with the Treasury. It will be carried through with the guarantee that I gave earlier—it is fundable and it will be funded.

Mrs. Anne Campbell (Cambridge) (Lab)

I welcome the concessions that my right hon. Friend has made, but, for those of us who are still extremely concerned about the principle of variability, how can he reconcile his statement that this is a coherent package with some incentive for us to vote for the Bill on Second Reading?

Mr. Clarke

I think that this is a coherent package. I also think two other things. The first relates to variability for fees for students from the poorest third of families. The proposals that I have made today effectively take away that variability, because they mean that any student from one of those poorest families will get their fees effectively covered by the combination involved in the £3,000 package. So, there is no variability from that point of view.

More than that, as my hon. Friend knows better than anyone else in the House, the decision of the university of Cambridge to respond to this approach by saying that it will go for bursaries—on top of the grant of £1,500 and on top of the fee remission of £1,200—of £4,000 for students from those families, which makes a total package of about £6,500, is a dramatic illustration of the fact that it will be genuinely possible for students from the poorest backgrounds to go to the most prestigious universities in this country. I can say to her that other elite universities, although I am not at liberty to reveal which, are prepared to do similar things. That is a direct consequence of the policies that we have carried through.

Sir Patrick Cormack (South Staffordshire) (Con)

As the Secretary of State has been kind enough to share some of his aspirations with the House and to acknowledge concerns, he must have thought about what he will do if things do not work out as he hopes. What answer will he give to the vice-chancellors, and what will he do if they say to him, "This policy is not working. We are still underfunded."?

Mr. Clarke

On the funding aspects, we will continue to put funding in, as we do through the comprehensive spending review and by the process that we have had. As I said to my hon. Friend the Member for The Wrekin (Peter Bradley), we will review the operation of the process from that point of view as from every other. That is the right thing to do. I will tell the hon. Gentleman what I say to the vice-chancellors, and I say it quite directly: this is a major opportunity to transform the resources, funding and standing of universities in this country and to enable them to make the contribution that we all want them to make to research, teaching and local economic development. The Bill will be the means of achieving that. I urge all vice-chancellors to seek support for it for precisely those reasons.

Mr. Kevin Barron (Rother Valley) (Lab)

My right hon. Friend knows that the take-up of higher education in my constituency and many others in South Yorkshire is well below the national average. I would like to know what estimate he has made of the difference that the new grant package, in particular the removal of up-front fees, will make to take-up. I recognise that low-income families are not the only issue, but my constituency has a high proportion of them, which must impact on the aspirations of my constituents. Will more of our young adults than at present go into higher education?

Mr. Clarke

The answer is yes, unequivocally. I say, by the way, that that is in direct contrast to the policy of the Conservative party, which wants to reduce the number of students. We are removing two key barriers. Key barrier No. 1 is that we are removing the up-front fee, which has to be paid if someone wants to get even a foot into the campus. The second barrier that we are removing is the fact that the maintenance loan is not enough for many students to fund their living costs while they are at university. I am putting that right through the announcement that I have made today, so our measures will specifically assist people in my right hon. Friend's constituency, and I am glad to say that.

Mr. Patrick McLoughlin (West Derbyshire) (Con)

I quote: We will not introduce 'top-up' fees and have legislated to prevent them". In the totality, what does that mean?

Mr. Clarke

I have already dealt with that on a number of occasions and I have nothing to add.

Dr. Brian Iddon (Bolton, South-East) (Lab)

I find the concept of variability impossible to accept. I am worried about, for instance, the impact of the policy on the newer universities, which are already struggling financially to the extent that they are chopping the most expensive courses in science and engineering. In order to compete in the market economy that we are about to introduce, they will have to charge extremely low fees in comparison with better-off universities. That will make their financial position much worse. Are those universities expected to survive, or does my right hon. Friend expect them to amalgamate with nearby universities that are better off?

Mr. Clarke

I certainly do not expect amalgamation. As my hon. Friend knows, a specific proposal in the White Paper has allowed a higher education college in his constituency to become a university, which was not permitted by the previous arrangements. That is not a policy for merger; it is a policy for strong universities with community roots—and the Bolton institute certainly has those.

We need to invest in the science and engineering-based courses mentioned by my hon. Friend. The fundamental remunerative resource for those courses does not come from fees; it comes from the HEFCE, as a result of decisions made by my right hon. Friend the Chancellor in conjunction with it about the types of course that we want to encourage and support. That can happen only if those courses attract students, however, and that is what we must bring about. We must not erect barriers that prevent universities, such as the one in my hon. Friend's constituency, from doing what they need to do to recruit students.

Mr. Elfyn Llwyd (Meirionnydd Nant Conwy) (PC)

Yesterday, the hon. Member for Falkirk, West (Mr. Joyce) said that if the Bill became law Scotland would inevitably have to follow because it would not be able to compete. The Leader of the House has said the same to Welsh Labour Back Benchers. Does that not undermine the whole concept of devolution, given that every single party in Scotland and every single party in Wales is opposed to the proposals?

As an ex-president of the National Union of Students, is the Secretary of State not ashamed of, or at least slightly embarrassed about, introducing a policy that was considered regressive and divisive even by the Thatcher Administration?

Mr. Clarke

Those of us who represent English seats were entirely happy for the Scottish Parliament to decide what system of student support to choose. These matters are devolved, and rightly so. Let me, however, refer to something that I know the hon. Gentleman is seriously considering. One thing that the Bill will do is to devolve higher education student support to Wales, and if it falls that too will go.

Geraint Davies (Croydon, Central) (Lab)

Does my right hon. Friend agree that the introduction of a time limit for the repayment of student fees will make the proposals much more progressive from the point of view of low-earning graduates? For example, someone earning £17,000 a year for 25 years because of child care and career breaks will pay only £4,500, the maximum being £9,000. If the fees rise, that person will still pay £4,500. Poorer graduates will meet a falling proportion of the total fee costs over time. However, I urge my right hon. Friend to reduce the 25-year time limit if he can.

Mr. Clarke

The proposals will indeed have the effect described by my hon. Friend. Let me take this opportunity to thank him for, and congratulate him on, the consistent work that he has devoted over past months to supporting the policy that I have announced today.

Mr. Christopher Chope (Christchurch) (Con)

How will the Secretary of State ensure that students who defer their university entry from 2005 to 2006 in order to do voluntary work at home or overseas during their gap year are not penalised?

Mr. Clarke

After Royal Assent, I shall ensure that all students and all families understand the implications of the policy for their own circumstances. The decisions that they make on the basis of that information are a matter for them. I am not going to start telling every student in the country what to do.

Joan Ruddock (Lewisham, Deptford) (Lab)

I thank my right hon. Friend for his response to concerns raised by people like me, but may I tell him that the £15,000 threshold for repayments is still too low for graduate workers in London, especially those in the public sector? As for variability, I must tell him with great regret that he has not convinced me; but I am prepared—and I hope we shall be given time for this—to consult sixth-form students and students at Goldsmiths college to establish whether the package will deal with concerns about the future of poorer students.

Mr. Clarke

I am grateful to my hon. Friend for what she has said. We did indeed discuss the matter, and I have tried to take account of some of the points that she made to me then. I think it important for Members to follow her advice and discuss with schools and colleges in their areas what they expect the implications for them to be.

Having raised the threshold from £10,000 to £15,000 we considered raising it further, but decided that it would be better to put the money into increasing the maintenance grant. There is an argument to be had about that, but that was our judgment, and others will have to make their own judgments.

What is significant for my hon. Friend's constituents and for students living in her London constituency is my announcement about increasing the maintenance loan in line with the expenditure survey.

Paul Holmes (Chesterfield) (LD)

Most Members—including many who will, with heavy hearts, do what the Whips tell them and vote for this measure—believe that the introduction of a £3,000 variable fee is the thin end of the wedge. They fear that the limit will be removed, and fees will soar to the astronomical levels that we have seen in the United States. The Secretary of State has conceded that he can guarantee the £3,000 limit only into the next Parliament. What would he say to vice-chancellors such as the vice-chancellor of Imperial college London, who said this week that he would like to charge £10,000 a year in tuition fees to all students and £20,000 a year to medical students?

Mr. Clarke

I will say to those vice-chancellors in public, here in the House, what I have said to them in private: it will not happen. Let me also say to them that they should consider very carefully what support they can provide in the form of bursaries and grants. I made that point earlier in relation to Cambridge university, but I think other universities should do the same.

Mr. Jon Owen Jones (Cardiff, Central) (Lab/Co-op)

I agree with much of what the Secretary of State said in his statement, and I think he has the agreement of the House in general, but I do not agree with him about variable fees and I do not think the House does either. May I suggest that, in the time-honoured tradition, he establishes a commission—perhaps under the chairmanship of Sir Ron Dearing—to report in 2006 prior to legislation for 2008? Universities would then lose, at most, two years of extra funding, and the Secretary of State would lose one hell of a problem.

Mr. Clarke

Let me tell my hon. Friend of a problem that neither he nor I would lose. The problem that we share—he may experience it more than any other Member because of the large number of students in his constituency—is the need to secure the future of our universities in all respects, and to establish a student support system that is strong and effective. We can try to duck that problem for a while—not that my hon. Friend suggested that—but the country as a whole will still have to face up to it. One of the jobs of any Government, certainly a reforming Government, is to face up to such questions and to try to create a climate that meets the needs of the country. That is, I believe, what our policies are about.

Mr. James Clappison (Hertsmere) (Con)

The Secretary of State says that universities, not OFFA, will be responsible for admissions, but does not the funding mechanism that he has established, together with what he has said today about the focus of OFFA's work, put the strongest possible pressure on universities not to admit applicants strictly on the basis of academic merit, but to take account of other considerations about their backgrounds? That would be wrong, would it not?

Mr. Clarke

No, in no way.

Tom Levitt (High Peak) (Lab)

I welcome this package, as I welcomed the original package. My local university, Derby, will certainly support it as well.

Will my right hon. Friend confirm that when a student is entitled to a higher education grant and a bursary and when the sum of those is more than the balance of the fees due, the student will still receive the money and will thus be a net beneficiary of the system?

I agree that it is important to maintain the principle of variability, but is not the effect of my right hon. Friend's proposals likely to reduce the amount of variability that exists in practice, as more universities opt for the £3,000 fee?

Mr. Clarke

The answer is yes to my hon. Friend's first question. I also agree with the second question, but I think that one will find a scattering of courses across the country in different universities, with some degree of variability. That deals with the situation, and is in fact desirable.

Mr. Andrew Robathan (Blaby) (Con)

What does the Secretary of State understand by the statement: We will not introduce top-up fees"?

Mr. Clarke

I shall say again what I have said before: a manifesto is for a Parliament. That is the situation.

Mr. Clive Betts (Sheffield, Attercliffe) (Lab)

I welcome some of my right hon. Friend's proposed changes, but I still think the £15,000 limit too low and the 25-year period too long. However, my fundamental problem is with variability and the bringing in of a market-driven higher education system. Does he accept that if he were prepared to make concessions on variability, he would gain a widespread consensus among Labour Members? Without that, he will find it very difficult to win the support of many of his right hon. and hon. Friends, including me, for the total package that he is asking us to accept.

Mr. Clarke

The first point is that I have discussed variability today, and I hope that people will consider carefully the meaning of what I said. Secondly, through the support that we provide in a direct series of ways, I have established a position for the third of students from the poorest families whereby variability in the fees that they have to pay, or deal with, is effectively eliminated. Thirdly, I know that some colleagues—my hon. Friend may be among them, I am not sure—think that there should be no variation on a principled, ideological basis: that variation in part-time student fees, postgraduate fees and so on is okay, but variation in full-time undergraduate fees is not. But I believe that many of those who have been worried about variability are actually worried about a high fee level for students from poor backgrounds and its disincentive effect. I have sought to address that point very directly in today's statement.

Mr. Owen Paterson (North Shropshire) (Con)

What will be the annual cost of the concessions and the administration, and what, therefore, will be the net sum passed on to universities?

Mr. Clarke

It is not a net sum passed on to universities—it is the money that they raise by charging fees themselves. I gave the estimated answer to that question a moment ago. According to the estimate of 75 per cent. at £3,000 and 25 per cent. at the existing level, the income to universities would be some £1 billion to £1.2 billion.

Mr. Martin Salter (Reading, West) (Lab)

I welcome the extra help for poorer students announced by the Secretary of State, although I regret the lack of any movement on thresholds. None of the concessions would have been achieved but for the campaign run by Labour Members in the past 12 months. Does he accept that, despite the concessions and the movement made, he is asking an awful lot in asking us to play fast and loose with our own manifesto, on which he, I and every other Labour MP was elected?

Mr. Clarke

The request that I make to my hon. Friend and to all our colleagues is to assess the situation facing universities and student support, and to make a judgment, as I have done and as he will have to do. That is what we are about. The one thing that would not be acceptable would be to refuse to face up to these questions, which are important for the future of the economy and of our society. It is true that such active engagement in this debate—call it campaigning or whatever—has been a very important aspect of the evolution of these policies. We have tried to listen to the points made by my hon. Friend and by many others in these discussions.

Mr. Michael Clapham (Barnsley, West and Penistone) (Lab)

I recognise that my right hon. Friend has gone a long way to meet many of our fears, but I should tell him that I cannot swallow variable fees. I am also very concerned about the issue of trust. May I encourage him, at this eleventh hour, to consider taking up the idea of a commission, rather than reviewing the situation in three years? Such a commission could report before the next election, so that we could have a guided manifesto commitment.

Mr. Clarke

I will think about everything, of course, but I want to emphasise that the Dearing commission looked at this issue seriously and came up with some serious proposals, which we are seeking to implement. That is the right way forward in addressing the problems that my hon. Friend describes. As he knows in respect of his own constituency, for people in the families whom he represents the accessibility of some universities is very low. We need to set about changing that right now.

James Purnell (Stalybridge and Hyde) (Lab)

As someone who got a grant to go to university and then campaigned on the streets of Westminster against its being removed by the hon. Member for Daventry (Mr. Boswell), I should tell my right hon. Friend how glad I am that a Labour Government are bringing it back. But does he remember the then Conservative Government putting an artificial cap on student numbers of some 33 per cent., and will he promise that this Labour Government will never cap young people's aspirations, and that anyone who gets the right A-level results will be able to go to university?

Mr. Clarke

I will give that commitment, and I should say to all Conservative Members that it is very important that they face up to the issues, just as I am asking my colleagues to do. The list of evasions that are part and parcel of the position of Tory Front Benchers is outrageous. They have explicitly said that they want to reduce the number of students going to university. They are wrong, and that policy will be deliberately rejected by their constituents, as it should be.

Mr. Harry Barnes (North-East Derbyshire) (Lab)

The writing-off of student debts after 25 years is presumably intended to attract those of us who have criticised this measure, but is it not peculiar to operate in such a way? For most graduates, those are the years of marriage, raising children and having a 25-year mortgage. Surely it would make rather more sense to say that they should pay off the debt after 25 years, rather than during that period.

Mr. Clarke

My hon. Friend is always creative in his policy approaches, and I welcome that in every respect. The point that he eloquently makes about family responsibilities has formed a very important part of our consideration of what constitutes the right thing to do. It is precisely because of those issues that the threat of a debt to be repaid over a lifetime ought to be removed by introducing the cap of that 25-year limit.

Mr. James Plaskitt (Warwick and Leamington) (Lab)

I thank my right hon. Friend for his statement and for the improvements that he has made through his proposals. However, I draw his attention to the comments of Lord Butler of Brockwell, the master of university college, in his letter to Members. He says that the general view among universities appears to be that the Government should get its top-up fees legislation through as a first step. There will certainly have to be further steps". If—or, as I suspect, when—universities want to raise the cap, what will he require from them in return?

Mr. Clarke

If I may say so, Lord Butler has not been in the university world for very long, and his knowledge of it is perhaps not as great as that of some others. I have talked to many universities about these policies, and I know that some would like to have a higher fee cap than the £3,000 that we propose. But I also know that those same universities say—in my view, they will continue to say it—that this is a step towards meeting the funding need that has been identified, and they will welcome it. I say to Lord Butler, to Mr. Richard Sykes and to everybody else concerned that this is the position.

Mrs. Joan Humble (Blackpool, North and Fleetwood) (Lab)

In his proposed introduction of variable fees, my right hon. Friend seems to be assuming that most undergraduates will be studying either single honours or combined honours degree courses. However, there is a real concern among the new universities, which offer modular degree courses, that they will be unable to offer variable fees should they wish to do so, because students are encouraged to choose modules across different departments in the first semester, and other modules across other departments in the second and third semesters. How can universities price variable fees in that context, and how can students possibly make choices?

Mr. Clarke

If there were a fixed fee of, for the sake of argument, £2,500, as has been suggested, the universities that my hon. Friend mentions would be unable to make any dispensation whatsoever to deal with the prices of the different modules in operation. I know of the concerns that she describes, which is why I have made today's statement on increasing the grant. The implication is that a much higher proportion of fee income generated, particularly by the new universities of which she speaks, will be able to be used for increasing academic standards in those areas. However, if she talks to many of the vice-chancellors, as I have done, they will tell her that they want the power to look at different fee levels for sandwich courses, four-year courses, foundation degrees, science degrees and so on. Without that power, which would be removed if there were no variable fees, their ability to drive their universities forward to meet the economic needs of their localities and the social needs of their students would be very severely inhibited.

Mrs. Betty Williams (Conwy) (Lab)

My right hon. Friend will be very aware that variable fees is the main concern of a majority of Labour Back Benchers. I welcome the concessions that he has made in today's package. For example, he says that there will be an independent review, working with OFFA, at the end of three years. Does he agree that if things do not work out, a great deal of harm will have been done to higher education, and can he tell the House today what he really means by this independent review?

Mr. Clarke

I have suggested the independent review in response to the arguments advanced by a number of people. It is fair to say that we need to see and understand how the policy works. I have suggested that we should do that for a period of three years, after which a report should be made to the House so that hon. Members can discuss the arrangements. That is the right way to go. I do not believe that variable fees will damage this country's university system, for the reasons that I have set out. However, we need to have an informed and independent consideration of the issues involved so that we can make our judgment.

Mr. lain Luke (Dundee, East) (Lab)

My right hon. Friend will understand that there is much concern north of the border about the possible introduction of variable top-up fees in England and Wales. The major worry of university principals in my city has to do with the impact on universities, both north and south of the border, that are less well endowed financially. They will be less able to attract quality research staff and, as a consequence, their research programmes will suffer. What guarantees can my right hon. Friend give that the playing field will remain level in respect of access to research resources, given the huge imbalance that exists between universities?

Mr. Clarke

First, I can guarantee that cross-border discussions will continue to address that problem. My right hon. Friend the Secretary of State for Scotland has discussed the proposals with the Scottish Executive to determine how to move forward in those circumstances. I can confirm that research will remain a national responsibility, but I cannot state that there is no difference between the two systems. The meaning of devolution was that different systems would be created. That is what has happened, and those different systems have different implications. However, the Government and the Scottish Executive are obliged to work together as closely as they can to deal with the different implications in a positive and constructive way. I can make a commitment to ensuring that the Government do just that.

Several hon. Members


Mr. Deputy Speaker (Sir Michael Lord)

Order. I appreciate that a number of hon. Members have not been able to catch my eye on this important statement. However, we must move on as there is other important business to protect. I remind the House that this issue can be revisited when we consider the Bill on Second Reading.