Higher Education Bill

HC Deb 27 January 2004 vol 417 cc167-275

Order for Second Reading read.

Mr. Speaker

I inform the House that it is not a day for Back Benchers to come to the Chair to ask where they are in the list, and also on the question of applications to speak that there is a limit of eight minutes on Back-Bench speeches. I also inform the House that I have not selected either of the reasoned amendments on the Order Paper.

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

I beg to move, That the Bill be now read a Second time.

A year ago, the Government published the White Paper on the future of higher education. It set out a wide range of proposals and, today, we reach the point of decision on those proposals. Our decision today in the House—the vote of every single Member of Parliament of every party—will determine the future of our universities and so determine the future ability of this country to prosper in the increasingly competitive global economy. In that world economy, the existence of the high-level intellectual and skilled talents of all our people will be decisive. Our success in that economy will determine the economic strength of this country. That was the reason for the White Paper,[...] that is the reason for the Bill; and, despite all the entertainment of all the different forms of political speculation, we should all acknowledge today that the outcome of the debate will be real and substantial for this country's universities and for the future welfare of this country.

Let me begin with some aspects of the Bill that have received less attention but are nevertheless important. The Bill will create an arts and humanities research council—the first new research council since 1994 and a major step forward for the arts and humanities community, giving those disciplines their proper status. Some might call that measure the revenge of the mediaeval historians.

The Bill gives statutory underpinning to the office of the independent adjudicator, and thus provides a common and transparent means of redress for student complaints, in place of the often archaic arrangements with so-called visitors and other mechanisms—more appropriate to the novels of C.P. Snow than to modern university life.

The Bill transfers to the National Assembly for Wales student support for students living in Wales, wherever they study in the United Kingdom, from the academic year 2006–07 onwards, together with higher education fee levels for higher education institutions in Wales. That will enable the National Assembly for Wales to create a consistent structure of policy to govern higher education in Wales.

The Bill will simplify current arrangements for applications for higher education by enabling relevant information about student support to be shared between relevant institutions.

The Bill has three aspects of even greater substance, which I shall now address in turn: first, increasing levels of funding for universities; secondly, the establishment of an Office for Fair Access; and, thirdly, the creation of a fairer system of student support.

I shall deal first with university funding, and begin with the facts. Since 1980, academic salaries have increased by an average of only 20 per cent. compared with a rise in average earnings of 60 per cent. and of average graduate earnings by still more. The average salary of a professor or head of department is well below comparable salaries in both the public and the private sectors. At the same time, university student-staff ratios have worsened, from 10:1 in 1983 to 17:1 in 2001. Similar stories can be told in respect of books, equipment and other essentials for academic excellence. Between 1989 and 1997 under the Conservatives, planned public funding per student fell in real terms by more than 36 per cent. By comparison, the United States spends 2.3 per cent of its gross domestic product on tertiary education institutions, whereas we spend just 1.1 per cent.

We need to take account of the fact that many of the countries with which we need to compete in the global economy have significantly higher levels of participation in higher education than we do here. I cite Australia with 65 per cent., Finland with 72 per cent., Netherlands with 54 per cent., Norway with 62 per cent., Sweden with 69 per cent., and so on. The OECD average of 47 per cent is higher than the figure here. I put it to the House as strongly as I can that it is our bounden duty to do what we can to address that state of affairs. We cannot simply let it continue.

Through general public spending, we have already made great steps. From 1997–98 to 2005–06, we have increased publicy planned spending on universities by a total of about £2.9 billion. For the current spending period of 2002–03 to 2005–06, we have increased unit funding by 7 per cent. in real terms. In the same period, capital funding for teaching and learning is increasing by 185 per cent., and research capital funding by 77 per cent.

We have given and will continue to give substantial resources, particularly to modern universities, to widen access. For example, Manchester Metropolitan has received £7.5 million; London Metropolitan, £7.5 million; Leeds Metropolitan, £5.9 million; and so on. Continued access is important and we shall continue to address funding by that route.

Although the lion's share of spending will always come from the public purse—at least under Labour, though not I think under the Conservatives—that will not be enough. We cannot continue to rely on the taxpayer alone to solve these matters. The reason is clear. There are and always will be strongly competing demands for public resources. The annual cost of a nursery place for a three to four-year-old is about £1,775, or about £3,550 for a four-year-old. The annual cost of a secondary pupil is about £4,000; £4,200 for a further education student; and about £5,000 for a university student. Those are striking figures, and I contend that any Secretary of State looking at those figures is bound to say that if extra resources are available for investment, it should be directed at the under-fives and primary level. That is the area where we must target resources.

Mr. David Rendel (Newbury) (LD)

If the Secretary of State really feels that such resources as are available to the public sector should be spent in areas other than higher education, surely what will happen in the near future is that the extra funding that is coming in from tuition fees will be removed by the Government from the Government grant and spent on the things that the Government apparently think should receive a higher priority.

Mr. Charles Clarke

I have said on many occasions that is simply not the case. Extra resources are needed for the reasons that I have given. The Liberal Democrats have difficulty allocating the product of their 50 per cent. tax rate in so many different ways. What would they do for under-fives education? What would they do for primary education? They would have no resources left. If the Liberal Democrats were honest, they would face up to that fact and say that more resources are needed.

Simon Hughes (Southwark, North and Bermondsey) (LD)

In that case, will the Secretary of State tell the House what has fundamentally changed since three years ago, when the Labour party said that it would not introduce top-up fees? What makes universities' funding needs so significantly different? What makes the unacceptable level of tens of thousands of pounds of debt so much more acceptable to a Labour Government now?

Mr. Clarke

The short answer to that question is the very rapid pace of change in the global economy and the impact of a large number of universities working very directly in that context.

I conclude from those facts that it is fair to ask students, when they have graduated, to make a contribution to the cost of the university education from which they benefit. For example, I believe that that is just because the labour force survey suggests that individuals with higher education qualifications currently earn on average about 50 per cent. more than those without. I expect the fee regime that the Bill will put in place to provide at least £1 billion a year to universities—a significant sum and one that would allow an increase of about 30 per cent. in the funding of teachers.

I put it to right hon. and hon. Members on both sides of the House, but particularly to Conservative Members that one of the most significant implications of the Bill being defeated today would be that universities would be stripped of the resources that they need to address the challenges of the future. Moreover, if the Conservative proposals were ever to be put in place, all the income currently generated from fees would be lost—as well as that from any increase. One Tory Front Bencher is reported as saying. "We want all universities to be largely financially independent and some completely financially independent." That can only mean the complete removal of public financial support, which would utterly destroy our universities and take hundreds of thousands of student places away from our universities and from people who aspire to go to university.

Llew Smith (Blaenau Gwent) (Lab)

Will the Secretary of State explain how it is that we can always find moneys to go to war—including the £7 billion to go to war with Iraq-and that we—can always find moneys to spend on nuclear weapons of mass destruction but we cannot find money to provide and support a system of free higher education?

Mr. Clarke

I am of the view that the national security of this country is important and that international threats such as terrorism must be dealt with and addressed. I acknowledge that takes resources, but it is a false choice to suggest that there is a straight trade-off in the way that my hon. Friend implies.

I believe that our proposals for university funding meet the needs of the country. I report with pride the verdict of the OECD, published earlier this week, that the UK graduate contribution scheme could be a role model for other countries in Europe that may also have to consider the adequacy of their higher education systems in a modern knowledge-driven economy.

Mr. Graham Allen (Nottingham, North) (Lab)

From the studies made by my right hon. Friend, what conclusions has he reached in respect of the reduction in the number of students that would occur if the Conservative proposals were adopted? Does my right hon. Friend agree with Universities UK that 410,000 fewer students would attend university?

Mr. Clarke

I do accept those estimates. The fundamental fact that the Conservatives have not been prepared to face up to is that the result of their policies would be a massive reduction in numbers, certainly of the order of hundreds of thousands of students. The political strategy set out by the Leader of the Opposition is to stop the Bill today to create space to introduce that policy.

I said that the first main feature of the Bill deals with the need to get increased resources for universities. The second major feature is the establishment of the Office for Fair Access.

Lynne Jones (Birmingham, Selly Oak) (Lab)

Universities UK says that there is a shortfall of £2 billion a year in higher education funding. According to the Institute for Fiscal Studies, the measures will raise £950 million for the universities, but will cost the Treasury £1 billion in terms of up-front money for loans. How will the measures fund the universities in future? How will they solve the funding crisis in the long term?

Mr. Clarke

We are putting more money in from the taxpayer and the Exchequer, courtesy of my right hon. Friend the Chancellor, and will continue to do so. We are putting more money in through the fee regime, which we have described. I acknowledge, and have always done so, that that does not completely fill the gap that my hon. Friend spoke about. But the question that she must answer is how taking out an income stream enables us to reach any solution whatever? If she decides to vote against the Bill tonight, she must face the consequences—there will not be any more money for universities beyond what we have already allocated to meet those needs.

Mr. James Paice (South-East Cambridgeshire) (Con)

On the subject of the money that all the right hon. Gentleman's concessions will cost the taxpayer, he is already on record as saying that that will have to come

out of the education budget. Can he tell the House clearly whether or not that money will be taken from money that would otherwise be going in grant in aid to universities?

Mr. Clarke

Yes I can. No, it will not, as I have told Conservative spokesmen on a number of significant occasions.

I turn to the Office for Fair Access, which is a significant development in the Bill. We need to be candid about the reality of the situation facing our universities. It remains the case that one in four working-class young people who achieve eight good GCSE passes do not go on to higher education. It remains the case that 19 per cent. of young people from the lower socio-economic groups enter higher education, compared with 50 per cent. of young people from middle and upper groups. That has not changed over the decades. In 1960, 27 per cent. of upper groups went to university, but only 4 per cent. of working-class students. There has been an expansion of numbers in the meantime, but the key issue is the fact that the massive, vicious class differential in our higher education system has remained consistent. We must attack that.

Mr. Gerald Kaufman (Manchester, Gorton) (Lab)

Is my right hon. Friend aware that Father Connolly of the Society of African Missions in my constituency wrote to me yesterday? He said: Poor families should not be deprived of the opportunity of a university education. But should they be responsible in financial terms for those who can afford it? The plan put forward by Mr. Blair is one to help everyone. It may not be perfect but it is a step in the right direction. Father Connolly is an independent man who knows about poverty in Africa. He said—[Interruption.]

Mr. Speaker

Order. I must hear what the African missionary said.

Mr. Kaufman

Father Connolly said:

It is a matter of justice, a principle.

Mr. Clarke

First, my right hon. Friend is quite correct. Secondly, the hilarity among Opposition Members about poverty and access to higher education has been a characteristic of their conduct in government and opposition. I urge my hon. Friends to take the opportunity provided by the Bill to ensure that the appalling obscenity of the deep class difference that affects people who go to our universities is addressed and attacked. the Office for Fair Access is about.

David Taylor (North-West Leicestershire) (Lab/Co-op)

Does my right hon. Friend not agree that an access regulator with fewer teeth than a Glasgow granny, as well as a financial package for the working class that is broadly neutral in relation to the present position, are not great incentives if we are to remedy the deplorable position to which he rightly drew attention on working-class participation in higher education, particularly in the Russell group of universities?

Mr. Clarke

My hon. Friend is right. We have discussed the fact that getting high-quality schools for those communities is essential. He is right that we need financial packages such as the education maintenance allowance. He is right that we need a student support package of the kind that we are introducing in the Bill to encourage people from working-class families to go to university. However, above and beyond that, we need an Office for Fair Access with teeth, specifically to address the unacceptable disparity between social classes in applications to our greatest universities. I am not surprised that the Tories laugh, because for the first time in history we have decided to stifle the old approach. It is critical to end that disparity, and we are determined to do so.

Mr. Patrick McLoughlin (West Derbyshire) (Con)

As I understand it, under the proposals that the right hon. Gentleman is putting before the House today, in a few years' time there may be a position in which two people who, having graduated from university, are on exactly the same income but pay different levels of taxation. Where is the justice in that?

Mr. Clarke

The hon. Gentleman is wrong, but I am happy to discuss the matter with him in Committee—[Interruption.]

Mr. Speaker

Order. I do not want the hon. Member for Blaby (Mr. Robathan) to shout at the top of his voice. I do not want him to shout at all.

Mr. Clarke

The whole purpose of the package is to link repayment to the ability to pay. That is the nature of our proposals, which are an improvement on the current state of affairs.

Rev. Martin Smyth (Belfast, South) (UUP)

I understand universities' need. In Northern Ireland, they have been underfunded by 30 per cent. compared with English universities. However, our universities have a higher proportion of people from lower-paid families who, with others, have written to us because they are concerned about the imposition that the legislation will make on them.

Mr. Clarke

Our proposals will help universities in Ireland and elsewhere. The hon. Gentleman is right that there are different cultures in Northern Ireland and Scotland concerning universities and their development. There is greater working-class access and participation in some parts of the country, but our proposals will help across the range.

Turning to our proposals on student support, the first key point is one that Members on both sides of the House must weigh very carefully indeed. Our proposals will eliminate up-front fees, which are currently a clear barrier to people going to university. At the moment, students and their parents must find £1,125 a year, which would increase to £1,200 a year by 2006, just to be able to get access to the campus. There is no doubt whatsoever that those up-front fees are unpopular—[Interruption.] They are unpopular, and they are the precise reason why we rightly decided to review the policy. The Opposition parties should acknowledge the fact that if they vote against the Bill today they will be voting to keep up-front fees. That is their decision. The opinions that they have just expressed are simply crocodile tears. The only way to get rid of up-front fees is to vote for the Bill. Every vote against is a vote to keep up-front fees, and every elector will know it.

Mr. James Gray (North Wiltshire) (Con)

Will the Secretary of State apologise for having brought in upfront fees in the first place?

Mr. Clarke

I made that point one second ago.

Mr. George Howarth (Knowsley, North and Sefton, East) (Lab)

Does my right hon. Friend accept that those of us who chose to judge these measures according to whether they made it easier for able working-class kids to go to university are now satisfied that he has addressed that issue fully? Will he go a little further and promise that in any future review, when he looks at the costs and the repayment regimes that will kick in, housing costs will be taken into account?

Mr. Clarke

Yes, I can give my hon. Friend that assurance. The review process that we are describing will take those factors into account.

Several hon. Members

rose—

Mr. Clarke

Before I give way, I shall make a little progress.

The second important aspect of student support is the establishment of a £3,000 package for all students from working-class families going into higher education. In my statement to the House on 8 January I set out a minimum £3,000 support package for students from the poorest backgrounds attending the most expensive courses, which was made up of £2,700 from the Government and a minimum £300 bursary from universities. This £3,000 package will ensure that no student qualifying for the higher education grant will be any worse off as a result of variable fees, and many will be better off.

Many universities are beginning to develop and announce bursary proposals that go far beyond those minimum requirements. We already have £4,000 bursary packages for a number of universities, such as Imperial college, Cambridge university and Essex university—substantial bursary packages that lead to students getting support of up to £6,700 a year to go to some of our elite universities. That is a significant development.

I also told the House that I was minded to combine the fee remission and the higher education grant into a single combined grant. Last week I published a discussion paper setting out the details of how making a single up-front cash payment of up to £2,700 from the Government to go with the £300 bursary from the university might work. My officials have been addressing the practical and financial implications of merging the two grants, and I can tell the House that from 2006 we will be offering all students from low-income backgrounds a single grant of up to £2,700. I intend that the detail of that should be discussed in Committee.

About 30 per cent. of students will be eligible for the full grant and a further 20 to 25 per cent., where the family income is up to £33,500, will be eligible for partial grant. That will give students real choice about how they manage their finances and will provide more cash up front to support them while they are studying.

Andy King (Rugby and Kenilworth) (Lab)

I am grateful to my right hon. Friend for the commitment that he has made to open up access to those from the poorest sections in our society. That is real progress. Some of us have had some difficulties in relation to the variability aspect, and also with the possibility of the poorest students being forced into the poorest universities and the gulf widening. Can my right hon. Friend assure us that the aspect of variability will be looked at in the review?

Mr. Clarke

I can give my hon. Friend that assurance, as I will describe in a moment.

Hugh Bayley (City of York) (Lab)

Is my right hon. Friend aware that York university is the only one of the top 10 universities in Britain that fully meets the Government's targets on access? The vice-chancellor of York university, Professor Brian Cantor, has written to me to say: Overall we support the Government Bill. It is an acceptable compromise and the best option on offer. Does my right hon. Friend recognise that if the grants he is proposing are not brought in—if the Bill is defeated—fewer working-class kids will get to the best universities, like York?

Mr. Clarke

My hon. Friend is correct and I appreciate the support from him and from his vice-chancellor. Again I must make a political point. [HON. MEMBERS: "Oh!"] Yes, listen to it. This package establishes a £3,000 package for students from working-class families going to university. That is the package that will operate if the Bill is supported today. Those who vote against will be voting against such a package, against grants and against the kind of opportunities for people from working-class families that are so critically important.

Mr. Kenneth Clarke (Rushcliffe) (Con)

Does the right hon. Gentleman accept that people with wealthy parents will not be affected, because those parents will not allow their children to get into debt and they will pay the fees? Of course, children from the very poorest families will not be affected, because they will get the advantage of the bursaries that the right hon. Gentleman is enlarging upon to try to get a majority for his Bill. It is the ordinary student from the ordinary family who just fails to qualify for that help who will carry the burden of tens of thousands of pounds-worth of debt in the first years after they graduate. Does he seriously expect that that will have no effect at all on the willingness of such people to go in for the more expensive courses in higher education?

Mr. Clarke

I must say, this is the first time I have known the right hon. and learned Gentleman stand up as Mr. Ordinary. I always thought he was rather exceptional.

For the ordinary student, we are removing the up-front fee. If the right hon. and learned Gentleman votes against tonight, he will be voting to keep the up-front fee. For the ordinary student, we are increasing the threshold of repayment after graduation from £10,000 a year to £15,000 a year, which is a direct reduction in the amount per year that all students have to pay. If the right hon. and learned Gentleman votes against the Bill today, he will be voting to keep the threshold at £10,000, rather than £15,000, so the ordinary students in his constituency will find themselves in a far worse position than they otherwise would be.

Finally, for the ordinary students in his constituency, if the right hon. and learned Gentleman votes for the Bill tonight, he will vote for a 25-year cap so that beyond that time, all debts will be written off. If he votes against, he will be voting to keep that debt going on for ever for the ordinary students in his constituency. So the ordinary students have a lot to gain from the Bill, too.

Tom Levitt (High Peak) (Lab)

I am grateful to my right hon. Friend for explaining how the level of support will be far higher than the maximum fees that will be charged. Will he confirm for the record that had universities been charging £15,000 or £20,000 a year in fees, there is no way that a similar package of support to cover those fees could have been considered, and it is that anarchy in universities that we legislated against when we said that we were abolishing top-up fees in the past?

Mr. Clarke

My hon. Friend is correct. It is important to acknowledge that, although the Opposition will find that difficult. I shall come to points about variability for the future. Precisely because of the package that we have today, including the Office for Fair Access, major universities in this country, including the university that the right hon. and learned Member for Rushcliffe (Mr. Clarke) attended when he was young and fancy-free, are able to offer bursaries of £4,000 a year on top of what the state is offering for working-class children from his constituency.

Ian Lucas (Wrexham) (Lab)

I am grateful to my right hon. Friend for the recent discussions that have taken place with me and my colleagues. On variability, is it not sensible to weigh the evidence before making the decision in principle to introduce variability? Would not a sensible way forward be to hold a review to investigate the adverse effects of variability before the decision is made in principle? If my right hon. Friend were to give me that assurance, I could undertake to give him my support.

Mr. Clarke

I shall have a word or two to say about variability in a moment, but I am afraid I cannot entirely meet the generous invitation from my hon. Friend.

Claire Ward (Watford) (Lab)

Does my right hon. Friend agree that as Members go through the Lobby tonight, they need to remember one simple fact: if we agree that universities require more money, either we raise it through general taxation and ask those—the majority—who do not go to university to subsidise to a greater extent those who gain the benefit of a university education, or we ask those who are gaining personally from that university education to make some contribution to that benefit?

Mr. Clarke

My hon. Friend is entirely correct in what she says. That is the choice that is faced, and our proposals are widely recognised as fair, in that students make some contribution when they have graduated to the cost of their education.

I now turn to variability, which has been a key element in the proposals.

Mr. Robert Jackson (Wantage) (Con)

One of my colleagues has spoken up for middle England. Will the Secretary of State not agree that the interest of middle England in universities is that they should be of good quality, and that is what this Government are taking steps to deliver?

Mr. Clarke

I am grateful for that comment. At the risk of being invidious, I pay tribute to the hon. Gentleman, as he has had the courage to face up to the logic of the situation which we are trying to address. He has avoided the blind opportunism that has informed the policies of the Leader of the Opposition and his Front-Bench team, who are not prepared to face the real issues, whereas he is.

Several hon. Members

rose—

Mr. Clarke

I am going to make progress on the question of variability. Much concern has been expressed by Labour Members, and, on one or two aspects, by Opposition Members, about the future of variability. People see calls for fees of £10,000, £15,000 and £20,000 a year, and say that although they can accept the £3,000 fee cap, they are concerned that in the future some new regime could be established that could undermine that approach. I want to set out clearly our approach on this matter, which is important.

The maximum level of tuition fees will be set at £3,000 in real terms. That figure will need the approval of the House in an affirmative resolution on Royal Assent to this Bill. As I said, many colleagues have expressed the fear that this is a prelude to fee levels rising much higher in later years. I assure the House that fees at that level form no part of the Government's agenda, and I can provide a threefold assurance that fee rises on that scale will not happen.

First, the £3,000 cap in real terms will apply for the whole of the next Parliament, and lest there be any doubt, we shall bring forward an amendment in Committee which ensures that no vote to raise the maximum level of tuition fees over and above inflation can take place until 2010 at the earliest. Secondly, the ability to raise the fee beyond that level will, under clause 24, require an affirmative resolution. I have given previously and repeat this afternoon the undertaking that that debate will take place on the Floor of the House, enabling every Member to participate publicly and openly in the vote. Thirdly, before any vote takes place, there will be a review by an independent commission, reporting to Parliament directly on the impact of the new fee regime three years after implementation.

Yesterday, in a written ministerial statement, I set out for discussion the draft scope of that review, and the exact terms of reference will be the subject of discussion in Committee. Clearly, if as a result of the review by the commission significant changes were to be made, legislation might be needed.

Angela Eagle (Wallasey) (Lab)

I thank my right hon. Friend for the way in which he has listened to those of us who have difficulties with variability and the prospect of a cap that goes up as well as down, and for the way in which he has listened to ways of screwing down that cap for the whole of the next Parliament. Will he confirm that an amendment will be included in the Bill to make certain that that £3,000 level cannot rise without a further resort to primary legislation?

Mr. Clarke

I can confirm that that is the case. Were there to be a proposal that the fee should rise beyond £3,000 in real terms during the next Parliament, primary legislation would be required to change that. May I say that I respect the way in which my hon. Friend has pursued that discussion?

Kate Hoey (Vauxhall) (Lab)

Perhaps my right hon. Friend will correct me if I am wrong, but if we cannot keep our manifesto commitment, how can we commit the next Parliament to something that has happened in this Parliament? We cannot do it.

Mr. Clarke

We can do it simply by including in the Bill a commitment that no order to raise the fee can be made, so that there can be no change without primary legislation.

Richard Burden (Birmingham, Northfield) (Lab)

Clearly, my right hon. Friend is aware that many Members are concerned that the variable element of the fee will be the thin end of wedge the thickness of which we do not yet see. Can he confirm again that if there were proposals to change that situation, primary legislation would be required?

Mr. Clarke

I can confirm explicitly that if there were a proposal in the next Parliament to make a change in the situation, primary legislation would be required.

Mr. Michael Connarty (Falkirk, East) (Lab)

In front of other witnesses, the vice-chancellor of Essex university, who is writing on behalf of UK universities, said to me that he will charge £3,000 for every course, that he wants £5,000 and needs £5,000 now, and that he will be looking for further increases in the future. Is not the Secretary of State setting up a major conflict, with the universities demanding more funding which he has said he will not give them for at least two Parliaments?

Mr. Clarke

That is not the case. My expectation is that almost all universities will charge around £3,000 for at least one of their courses, and that almost all universities will have courses for which they do not charge £3,000. The variation will vary from university to university, as the hon. Gentleman would acknowledge, and that will be the state of affairs.

Mr. Quentin Davies (Grantham and Stamford) (Con)

The right hon. Gentleman is coming towards the end of his speech. Is not the most striking aspect of that speech the fact that there has been no sense of apology whatever by the Government for having clearly deceived the British public at the last election about their intentions in this matter?

Mr. Clarke

The hon. Gentleman is well known as an intellectual among Conservative Members. I am therefore slightly surprised that he has not taken the opportunity of his intellect to think more carefully about the future of our universities than Opposition Front Benchers have done.

A further concern that has been raised throughout the process has been the question of the future of our professions.

Mrs. Anne Campbell (Cambridge) (Lab)

I congratulate my right hon. Friend on the way in which he has conducted negotiations with Back Benchers over the past few weeks. Can he tell me what assessment he has made of the effect on students of the variable fee, and whether some students might be put off going to more expensive universities and taking more expensive courses because of the variability?

Mr. Clarke

My assessment is that that will not happen. The terms of reference of the commission to which I referred, and which I set out yesterday, include the impact of the new arrangements on students and prospective students—looking in particular at overall levels of application, participation in higher education, choice of institution and course, levels of debt and so on—precisely to test the fear of my hon. Friend and colleagues like her that there might be such an effect. I do not believe that there will be such an effect, but the concern that she expresses is legitimate, and it is right for us to make a serious analysis of it, as I have set out.

There is an additional question, however, in relation to recruitment to the professions. I set out in our White Paper last year the importance that the Government attach to continuing to attract high-quality recruits to the public sector and the professions. We said that Government would have to consider carefully how best to maintain our success in recruiting able students and graduates to public service. I know that that is a particular concern of my right hon. Friend the Member for Newcastle upon Tyne, East and Wallsend (Mr. Brown), because I have discussed it with him. He is concerned that students who do not qualify for the full £3,000 support package should still be able to have, in his words, a gateway into the professions.

I am commissioning a report next year to examine gateways into the professions, which will look particularly at the position of students who do not qualify for the full £3,000 support package, taking into account the starting points for repayment and the taper. It will examine recruitment of graduates to the public services under the new student finance system.

The Government are already spending more than £700 million every year to support the recruitment and retention of teachers, doctors and dentists, nurses, midwives, social workers and other health professionals. Other employers in both the public and private sectors will no doubt want to consider schemes to ensure that they, too, can bring through the graduates they need. Obviously, the proposals of the report will be considered in the context of the next comprehensive spending review so that full account can be taken of the concerns that my right hon. Friend the Member for Newcastle upon Tyne, East and Wallsend has expressed throughout the course of this discussion.

I conclude by saying that this Bill genuinely poses a choice for every Member of this House. Members can vote for the Bill, which provides more resource for universities, an end to up-front fees, a student support package of £3,000 a year for the poorest students, an increase in the threshold at which one repays, and a 25-year cap on the loan being written off. Alternatively, they can decide to vote against it, but if they do so, they should be clear that they will be voting against more money for the universities, voting to keep up-front fees, voting for a system that discriminates against working class communities, voting against grants and voting for higher repayments afterwards. That is the choice facing the House. I commend the Bill to the House.

1.26 pm

Mr. Tim Yeo (South Suffolk) (Con)

This is one of the most important debates that we will have during this Parliament, and I very much regret that neither the Prime Minister nor the Chancellor of the Exchequer intend to remain for it. In view of the disreputable way in which the Government's policy has emerged, it may be that they do not wish to listen to what the Opposition have to say.

The debate started in extraordinary circumstances. Not only was the publication of the Bill delayed for several weeks, but in the two and a half weeks since it was published, the goalposts have been moved again, most recently this very morning. Late last night, the Secretary of State made a written statement describing the commission that will review the impact of variable tuition fees. This morning, further concessions on the workings of the commission have been made following discussions—from which the Secretary of State was apparently excluded—between the Chancellor of the Exchequer and the right hon. Member for Newcastle upon Tyne, East and Wallsend (Mr. Brown).

In his statement, the Secretary of State said: Work to establish baseline data for the review will begin in the 2004–05 academic year."—[Official Report, 26 January 2004; Vol. 417, c. 6WS.] If that is when the baseline data begin to be established, how on earth can the commission draw any conclusions about anything in one year's time, as opposed to the three years that the Secretary of State said last night would be needed for its work to be completed? Furthermore, the review is supposed to consider the impact of the new policy, but variable fees do not start until 2006, so what conclusions can the commission draw in 2005? If that is the concession that persuaded the right hon. Member for Newcastle upon Tyne, East and Wallsend to give up his opposition to the Bill, he is not the man he was as Minister for Agriculture, Fisheries and Food.

Claire Ward

Will the hon. Gentleman give way?

Mr. Yeo

Presently.

The issues that the Bill tries to address are profoundly important for the future of our universities, which have been underfunded by successive Governments for many years and, as a result, are at risk of losing talent and status. Restoring adequate funding in a fair and sustainable way is one of the most urgent challenges facing the Government.

Claire Ward

rose—

James Purnell (Stalybridge and Hyde) (Lab)

rose—

Mr. Yeo

I shall give way in a moment.

The Bill is crucial for students. It will have a deep impact on their lives, not only while they study, but for many years afterwards; and it will affect whether some young men and women who are qualified to go to university feel able to do so.

James Purnell

rose—

Mr Yeo

The hon Gentleman should not be over eager—I shall give way to him presently.

What matters about this debate and the vote that follows is not how it leaves the standing of the Prime Minister, the Secretary of State or the Labour Government. A more important issue is at stake—how we are to shape higher education and our investment in the human capital of the nation. Unfortunately, it has become clear in the past month that the Bill is deeply flawed. We are opposed to it because it attacks university independence, damages students, and fails to solve the long-term funding needs of universities. It does, however, confirm yet again to the British people that they cannot trust this Government.

James Purnell

Did the hon. Gentleman, like me, hear the hon. Member for Havant (Mr. Willetts) say on "Question Time" that under Tory plans fewer people would go to university? How many fewer would it be—100,000, 200,000, 300,000, or perhaps even 400,000?

Mr. Yeo

I did not have the pleasure of hearing my hon. Friend on "Question Time", but I am delighted to deal with the hon. Gentleman's query. Conservative Members are indeed concerned about the numbers of people going to university. That is why yesterday's written answer by the Minister for Lifelong Learning, Further and Higher Education is so relevant. He said, in relation to those pupils who are qualified to go to university by achieving two A-level passes, that one of the main reasons why they do not go is the expected costs involved. That is the evidence from the research that was commissioned by the Government, but, unfortunately they ignored it, because the Bill will raise the costs of going to university for those very pupils who are qualified to go, but are deterred by the costs. The result of the Bill will be to threaten the numbers who go to university in future.

Let us trace the history of the Government's approach to funding higher education.[Interruption.] I am not surprised that Labour Members do not want to hear this part. Let me remind them of what the Prime Minister said during the 1997 general election campaign: Labour has no plans to introduce tuition fees for higher education". One year later, the Teaching and Higher Education Act 1998 introduced tuition fees for the first time. In 2001, the Labour general election manifesto said: We will not introduce top-up fees and have legislated to prevent them". On 22 January 2003, the Government published their White Paper, which broke all those promises.

Claire Ward

Will the hon. Gentleman give way?

Mr. Yeo

I shall give way presently.

A couple of weeks ago, on 14 January, the Prime Minister spoke to the Institute of Public Policy Research about his new policy of top-up fees. He said: These changes are imperative for Britain's future". He went on to say: They are in tune with Labour values and that they are a prime example of the modern path to social justice". That is quite a shift from the election manifesto that promised that those same changes would never be made. I doubt whether the Prime Minister's words will be much help to Labour Members of Parliament when they are on the doorsteps seeking re-election and trying to explain to their voters why they went back on their word. It is no surprise that many people inside the Labour party resent being accused of betrayal when they refuse to break their election pledges.

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

Can the hon. Gentleman tell us how many vice-chancellors support his party's stance?

Mr. Yeo

I congratulate the hon. Gentleman on reading out the Whips' hand-out.

Hon. Members

Answer.

Mr. Deputy Speaker (Sir Michael Lord)

Order. The House listened with respect to the Secretary of State, and it should do the same for the spokesman for the Opposition.

Mr. Yeo

Of course, many vice-chancellors—

Claire Ward

Will the hon. Gentleman give way?

Mr. Yeo

I shall deal first with the intervention made by the hon. Lady's colleague.

Many vice-chancellors want the Bill to be given a Second Reading today, because they know that it will unlock the door to top-up fees not of £3,000 but of £6,000, £10,000 or £15,000. I shall quote one of the many vice-chancellors who have made this point. Richard Sykes of Imperial college has said: I think this is a good start but it can't stay at £3,000 if we really are going to have world class universities in this country". The vice-chancellors want the Bill because they want fees—[Interruption.]

Mr. Deputy Speaker

Order. Hon. Members who are seeking to catch the eye of the hon. Gentleman who is speaking must not remain standing for any length of time if it is obvious that he is not going to give way. We cannot have Members standing up all over the Chamber.

Mr. Yeo

Let me remind the hon. Member for Warwick and Leamington (Mr. Plaskitt) that, for every vice-chancellor who supports the Bill, there are thousands of students at his or her university who oppose it. Thousands of members of staff in higher education also oppose it, including 111 in the Secretary of State's own constituency who wrote to the Eastern Daily Press last Friday to say so. I wish the hon. Gentleman luck on the doorstep when he explains to voters that his reason for breaking his promises to them was that he was so impressed by an advertisement placed in The Guardian by the vice-chancellors. I would prefer to be in the position of the Conservative candidate who will oppose him, who will be able to say that we listened to the thousands of students and staff, and that that is why we are keeping our promises.

Several hon. Members

rose—

Mr. Yeo

I shall give way in a moment.

Before I examine the Higher Education Bill in more detail. I want to dispose of one of the Secretary of State's more bizarre assertions, namely that there is no plan B. The number of changes that he has made to his own policy in the two months since the Queen's Speech shows that, far from there being no plan B, the Government are already on about plan F. Last night, with the announcement of the independent review, they finally admitted that there were indeed alternatives to their own policy. They have finally conceded that the principle of variability is up for grabs. At least, that is what they have told their own rebels; we shall find out in due course whether they have said the same thing to the universities. I shall now give way to the hon. Member for Watford (Claire Ward).

Hon. Members

Hooray!

Claire Ward

I am very grateful to the hon. Gentleman for giving way. I know that he has a rather burdensome work load, being shadow Secretary of State for Health and Education. Has the extent of his portfolio meant that he has been unable to formulate an alternative policy on these issues? So far, I have not heard any alternative proposals. I have heard his opposition, but I have no idea what his policy is.

Mr. Yeo

Well, that was a pretty pathetic effort from someone who is on the Government's payroll. Let me remind the hon. Lady that it is the Government's Higher Education Bill that we are debating today. I certainly look forward to debating with her and other hon. Members the Conservative policy on higher education in the Second Reading debate of the higher education Bill that the next Conservative Government will introduce early in the next Parliament. The big difference between that Bill and this one will be that—[Interruption.]

Mr. Deputy Speaker

Order. I hope that I shall not have to keep getting to my feet. There is a great deal of interest in this very important matter, not only in the Chamber but in the country outside, and hon. Members should be aware that the nation is watching not only the debate but their behaviour in the House of Commons this afternoon. I shall intervene if I have to, but I hope that I do not have to do so again.

Mr. Yeo

The big difference between this Bill and the one that will be introduced by the next Conservative Government is that ours will honour the pledges in our manifesto. That is in contrast to the Bill that we are debating today, which breaks the pledges in the Labour manifesto.

Simon Hughes

The hon. Gentleman is quite right to criticise the Labour party, as many others in the country have done, for saying at the general election that it would do one thing and now doing something that takes it in the opposite direction. On the specific issue of top-up fees, can he give the House a pledge today that, if elected at the next election, his party would neither support nor introduce standard top-up fees or variable top-up fees during the first Parliament when it is in government?

Mr. Yeo

Yes, I can.

I turn now to the detail of the Bill. It creates a new regulatory structure—[Interruption.]Do Labour Members want to hear about the Bill or not? It creates a new regulatory structure which removes, for the first time, the freedom of universities to decide which students they should admit. It imposes huge new burdens on the vast majority of students, which, in many cases, will affect their families too. Let us be clear: we still do not know how much, if any, of the money that students will pay in top-up fees will represent a net increase in funding for universities.

Several hon. Members

rose—

Mr. Yeo

I shall give way in a moment.

If fees average £2,500 a year, about £1 billion will be paid to universities by students in top-up fees. Of that £1 billion, at least 10 per cent. will have to be paid out by the universities in bursaries to students from poorer families. The Secretary of State would like us to believe that that will leave about £900 million in the hands of the universities. However, the Bill and all the last-minute changes that the Government have announced to try to bolster their support will also impose costs, including £635 million a year to cover the cost of subsidising the new loans. Another £450 million a year will be required for student grants, along with £30 million a year to cover the cost of writing off loans that have not been repaid within 25 years. Those costs exceed £1.1 billion, although it is unclear whether the further announcements made in the Secretary of State's speech today have added still further to that total.

Several hon. Members

rose—

Mr. Yeo

In a moment. I have not finished this point yet.

On 15 January, the Secretary of State told the House that those costs would be met from within the existing higher education budget. If he wants to tell us that that is not the case, and that extra money will be available, now is the moment for him to do so. The House, the universities and the nation will see his refusal to deny that point. If he sticks by what he told the House, universities will find the cash that they thought they had been promised as hard to lay hands on as weapons of mass destruction in the Iraqi desert.

Michael Driscoll, the chairman of the group of mainstream universities and vice-chancellor of Middlesex university, warned inThe Times Higher Educational Supplement the day after the Bill was published: The devil will be in the detail. The government duped us last time by taking the amount we gained in fees straight out of the teaching grant. The Government did indeed dupe them last time. Last year, funding per student was less in real terms than it was in 1997–98, the year in which tuition fees were introduced. All the income from tuition fees has been clawed back by the Treasury. Whether universities receive a penny of extra money as a result of this Bill and all the other announcements still depends entirely on whether the Chancellor of the Exchequer agrees to increase the total spending limit of the Department for Education and Skills. That is something that he has conspicuously refused to say that he will do. If he were here now, we could ask him about that ourselves. His absence from the House, like his refusal to be a sponsor of the Bill, does not bode well for the universities. Of course, one reason why he may be so reluctant to cough up the cash is that he can see just what a disastrous deal that would be for the taxpayer if he did so.

Several hon. Members

rose—

Mr. Yeo

I will give way in a moment. If enough extra money is given to the Department for Education and Skills to cover all the new costs that the policy will impose, for every —1 received by the universities the Chancellor would have to sting taxpayers for £1.20. Let me remind the House that all those calculations were done before account was taken of the extra £1 billion a year that the Institute for Fiscal Studies estimates will be required to fund the costs of meeting the Prime Minister's arbitrary target of sending half of young people to university.

Mr. Clive Soley (Ealing, Acton and Shepherd's Bush) (Lab)

We really have to try, but I am grateful for small mercies. The hon. Gentleman is talking about the finances, so may I put a question to him? This is the answer that my party and this Parliament want to hear from the Conservative party. Do the Conservatives intend to cap the number of people who can go to university, regardless of what qualifications they have, or are they saying that they will pay all the money that he says is needed through the taxpayer? We need an answer. What is the cap? If there is no cap, where will the money come from?

Mr. Yeo:

It is not our intention to cap the number of people going to university. As I have just pointed out at some length, Government policy—through the Bill and the associated announcements—does not contribute a single penny either to meeting the costs of increasing the number of students or even to addressing the shortfall that universities say they suffer from. In fact, it is under Labour that we have seen a fall in funding per student—

Several hon. Members

rose—

Mr. Deputy Speaker

Order. There is little point in Members standing to seek to intervene when the Member addressing the House is still responding to a previous intervention.

Mr. Yeo

I am not surprised that Labour Members are reluctant to hear these facts, because they expose the flaws at the very heart of Government policy. They expose more clearly than we have been able to achieve until this morning the extent to which the Government have misled universities. They have tried to persuade vice-chancellors that the Bill addresses their funding needs. It does not. They have tried to persuade students and their families that the Bill might finance an increase in the number of people going to university. It will not. It has a number of other flaws, which I shall explain. First, I give way to my hon. Friend the Member for Esher and Walton (Mr. Taylor).

Mr. Ian Taylor (Esher and Walton)(Con)

My hon. Friend is right to probe the Government on what their legislation actually means, but can he offer some clarification? Given that he has made it clear that there is a genuine funding gap—vice-chancellors are very concerned about the finances of universities—and that the Conservative party apparently will not ask the students to make any contribution under its policy, are we therefore to conclude that all the burden of the underfunding that the Conservatives would have to remove will fall on the taxpayer?

Mr. Yeo

My hon. Friend will have to contain himself a little longer, because it is a curious constitutional doctrine that says that an Opposition cannot oppose a Bill as deeply flawed as this before they have laid out their alternative policy in every detail. He was with me in the House in 1988 when the Bill that introduced the poll tax was being considered. I do not remember the Labour Opposition explaining in every detail how they would finance local government when they fought against the poll tax.

Mr. McLoughlin

I am grateful to my hon. Friend for giving way because I want to go back to the point about the number of students at university. Will he take time to remind the House of, or pass comment on, the fact that in 1979 when the Labour Government left office, the position in this country was that one person in eight went to university? During the 18 years of Conservative government, that came down to one in three. We have a record to be proud of on university access.

Mr. Yeo

My hon. Friend is absolutely right. He has quoted statistics correctly, but I further point out to him that the fastest expansion in the number of students from social class groups III M, IV and V going to university occurred in that period.

Mr. Robert Jackson

My hon. Friend is arguing that if private funding is introduced alongside public funding, the public funding will always be clawed back, so that there will be no point in the exercise. That is an argument against any form of mixed funding. Mixed funding regimes operate successfully in many countries around the world. Why cannot they be made to work properly in this country? After all, most of us know that is the direction in which we will eventually have to go to fund our public services.

Mr. Yeo

The answer to my hon. Friend is simple: such regimes could be made to work if they were introduced by a Government who knew what they were doing and were honest with students, universities and taxpayers. This is not a question of argument with him, as I have quoted the facts. In the last five years—since the introduction of tuition fees—the Government have clawed back every penny of the extra income that universities thought they were going to receive. That is exactly what will happen again.

Several hon. Members

rose—

Mr. Yeo

I will give way presently, but I must make some progress.

The principles of university independence and academic freedom are fundamental to Conservative Members, but they are threatened by the establishment of a regulator whose role is to manipulate university admissions policy. The Government claim that the regulator's job is to widen the mix of backgrounds from which students come. No one, least of all Conservative Members, will argue with that goal; as I have just explained, no party has done more than the Conservative party to widen access to universities.

We believe passionately in equality of opportunity, but we have a different vision from the Government of how to achieve it. The answer lies in raising the achievements and aspirations of pupils while they are still at school. It lies in firing the ambitions of teachers at schools that historically have not sent many pupils to university. That is where Government energy should be directed, but, as always, Ministers prefer to regulate.

Mr. Allen

Will the hon. Gentleman give way?

Mr. Yeo

Presently. The establishment of the new university regulator, referred to in the Bill as the Director of Fair Access to higher education, is central to Government policy. No university will be able to charge a penny in top-up fees without the regulator's say so. As the Minister for Lifelong Learning, Further and Higher Education told the House on 15 January, in a comment that revealed which universities the Government are particularly gunning for: The simple fact is that none of the Russell Group universities will be able to charge anything above £1,125 ‖ unless they satisfy the access regulator that they are doing everything they possibly can to encourage youngsters from non-traditional backgrounds‖to come to their university." —[Official Report, 15 January 2004; Vol. 416, c. 955.] Instead of selecting students on the basis of academic merit and potential, university admissions policies will have to reflect the prejudices of Ministers—another example of how this Government constantly interfere with and overrule the judgment of qualified professional people on how to do their jobs.

Mr. Allen

Will the hon. Gentleman give way?

Mr. Yeo

Presently.

Mr. Michael Fallon (Sevenoaks) (Con)

Will my hon. Friend give way?

Mr. Yeo

Yes.

Mr. Fallon

For the benefit of the House, will my hon. Friend confirm that under clause 30 the director of fair access is not to be an independent person, but must follow the guidance issued by the Secretary of State? He will be a creature of Ministers.

Mr. Yeo

My hon. Friend anticipates the passage of my speech that I am just coming to. That is a very important point, because part 3 sets out how the burden of regulations from which universities already suffer will be increased. As the explanatory notes explain, universities cannot charge top-up fees until they have in force a plan‖approved by the relevant authority. In other words, that means the regulator. Governing bodies will have to show how they are attracting applications from prospective students who are members of groups that are under-represented in higher education, regardless of whether such applicants are qualified to study at their universities.

Unfortunately, getting the plan approved by the regulator is not the end of the story. Clause 35 gives the regulator the power to fine any university that he considers is not doing what he wants by ordering the Higher Education Funding Council to cut its grants. Universities will have no right of appeal. Given that the Secretary of State appoints the regulator and fixes his salary, that the regulator reports directly to the Secretary of State, not Parliament, and that the Secretary of State outlines the matters on which the regulator must report, it is clear that, as my hon. Friend the Member for Sevenoaks (Mr. Fallon) said, the regulator is a creature of the Secretary of State. The regulations that tell the regulator how to do his job will also be made by the Secretary of State, although he has refused to let Parliament see them in time for the debate.

The Bill gives Ministers the power to decide who goes to which university and to take money away from a university that does not do what it is told. Let nobody fantasise that the Bill opens a door to more independence for universities; it does precisely the opposite. It brings all universities under tighter political control than ever before. It will inflict damage on our universities, including those that aspire to be world class.

Mr. John Bercow (Buckingham) (Con)

Given the importance of the United Kingdom research base, will my hon. Friend hazard a guess about why the first 10 clauses focus exclusively on arts and humanities, duties on public bodies and the powers of the Secretary of State but are silent about the wider pursuit of necessary commercial sponsorship?

Mr. Yeo

My hon. Friend makes an important point about support for science, especially scientific research. I hope that the Government will pay more attention to that; indeed, Committee proceedings may provide an opportunity to explore the answer to my hon. Friend's extremely penetrating question.

Mr. Allen

Does the hon. Gentleman realise that 65 per cent. of families in my constituency have disposable incomes of less than £15,000? That is one reason why we have the fewest people going to university of any constituency. The figures mean that people who get the necessary A-levels will receive a full grant of £2,700 plus a university bursary of £3,000. How can the hon. Gentleman talk at the Dispatch Box about access when he will lead his colleagues—but hopefully, none of mine—through the Lobby tonight to do away with a £3,000 grant that would allow those kids to go to university?

Mr. Yeo

It is interesting that the hon. Gentleman makes that point—I believe that he was a member of the Government when tuition fees were introduced. I presume that, at that time, the concerns of his poorer constituents were not at the forefront of his mind.

Let us consider the effect of the measure on students. In every walk of life from industry to science and from medicine to the media, graduates contribute to our national life. Britain's long-term competitiveness, our standing in the world and the quality of our public services depend on our educational system and our universities' ability to produced well-qualified and motivated graduates. Those men and women are already starting their working lives with average debts of £8,000 to £10,000 and the Bill trebles that burden of debt. It will inevitably affect the choices that students and their families make.

Only a Government who neither understand nor care about the anxieties of many young people and their families about debt could introduce such a Bill. Or perhaps Ministers have simply stopped listening. In May last year, a Joseph Rowntree Foundation report concluded: Young people from disadvantaged backgrounds are often deterred"— I am sorry that the hon. Member for Nottingham, North (Mr. Allen) is not listening because it relates directly to his point. The report stated: Young people from disadvantaged backgrounds are often deterred from both entering full-time education in the first place and from continuing within higher education long enough to reach their full academic potential because of the economic hardships they suffer, in particular debt. Last year, a survey for the Higher Education Funding Council and Universities UK found that respondents from lower social groups were more likely than those from higher social groups to hold debt-averse views. However, the Bill will force the majority of students to borrow unprecedentedly large amounts of money.

Let us consider the case of a student whose parents' total income is only £33,500. Perhaps the father is a firefighter and the mother, a classroom assistant. If the student wants to go to a university in London that charges the full £3,000 fee, he or she will rack up debts of £27,000. If he or she achieves a starting salary of £20,000 and enjoys annual pay increases of 5 per cent., the loan will not be repaid for more than 20 years. The Government claim that such debts will not deter prospective students.

Tim Loughton (East Worthing and Shoreham) (Con)

Does my hon. Friend share my special concern about the effects on the national health service? The British Medical Association has calculated that doctors training in London could start their careers with £64,000 of debt. Doctors take six years to train and cannot take holiday and evening jobs to subsidise their training because of its nature. At a time when we are desperately short of doctors and have not achieved the numbers that the Government admit we need, how on earth will the measure do anything other than deter people from training as doctors?

Mr. Yeo

My hon. Friend is right. The Bill will almost certainly adversely affect the supply of students to study medicine. In Canada, where higher tuition fees were introduced, evidence shows that the number of medical students from low-income families has fallen.

Several hon. Members

rose—

Mr. Yeo

I must make progress. In the document entitled "Higher Education Funding, the Government stated: International experience suggests that higher variable fees can be introduced without adversely affecting the participation of students from less well-off families. Yet a survey for the Australian Education Department pointed out only last month that students from disadvantaged backgrounds make up a smaller proportion of all Australian students now than in 1991. In the United States, a congressional advisory committee pointed out that almost half of qualified school leavers from low-income households are prevented by financial barriers from taking four-year degree courses. Almost a quarter are prevented from going to university.

Nobody knows how many British school leavers the Bill will deter from going to university, but the Secretary of State admitted that the level of fees that universities charge has a direct impact. On 3 December, he said that more students could be attracted to study physics if the relevant university charged a zero fee. If he believes that a zero fee will encourage students to study, how many students will be discouraged by fees of £9,000 over three years?

Even the £3,000 cap is unlikely to stay for long; nobody in the university world believes that it will. Last week, Professor Michael Stirling, chairman of the Russell Group and vice-chancellor of Birmingham university told The Daily Telegraph: It's a step in the right direction, though no-one is pretending it's enough to cap top-up fees at £3,000. Professor Nick Barr, an economist at the London School of Economics and one of the architects of the Government's policy said on 7 January: The cap that is proposed will have to rise. It is no good the Secretary of State saying that the Government will enshrine the cap in primary legislation.

In 2001, voters were told that the Government had legislated to prevent top-up fees, but that did not stop them introducing them two years later. Every hon. Member who supports the Bill will open the door to top-up fees, not of £3,000 but £6,000 and £10,000. At that point, the gap between universities that can charge such fees and those that cannot will get bigger. When fees reach those levels, it cannot be disputed that cost will affect students' behaviour. The student at a London university whose parental income is £33,500 or more will face a debt of £36,000 when fees are £6,000 and £48,000 when they rise to £10,000. The Secretary of State hilariously told "Newsnight" that he would bet his mortgage that the £3,000 limit would be in place in 10 years. Does he really think that a single student will believe him, after he has broken every other promise he made on this subject?

The Secretary of State should count himself lucky to have a mortgage at all. Graduates who start their working lives with debts that take 20 years to pay off, and on which outgoings will rise to £240 a month, will find the size of any mortgage they can take out severely curtailed. At the very time when we should be encouraging a culture of saving, the Bill will saddle them with debt. It will erode the savings of those who are in or near retirement as they struggle to support the next generation.

There is a considerable stake in this evening's vote, but not much of it has anything to do with the dire warnings that the Government Whips have been issuing as they go about their arm-twisting on behalf of the Prime Minister. I urge Members of all parties, especially those on the Government Back Benches, to reflect very carefully on the consequences of their votes—the consequences for students, for their families, for universities and, indeed, for themselves. No one will remember the circumstances in which this vote took place when suffering the effects of the Bill.

Approving this Bill will force future generations of students heavily into debt just when they should be encouraged to save. Approving this Bill opens the door to the making of access to university dependent on ability to pay, not ability to learn. Approving this Bill increases the burden of regulation on all universities; and approving this Bill does not give universities a single penny of extra income.

Members of all parties fought the last general election on the basis of pledges that they would not introduce top-up fees. At the next general election, some Members will be able to look voters in the eye and say that they honoured that pledge. I am proud to be one of them. I gave that pledge, I meant to give it, I wish to keep it, and I urge every other Member to join me in rejecting the Bill.

2.7 pm

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

It was kind of the hon. Member for South Suffolk (Mr. Yeo) to remind the House of the three happy years that we spent arguing about agriculture policy across the Dispatch Boxes. I recall that he went out of his way to be helpful to me then, and I hope that I shall be able to say something later in my speech that will be helpful to him.

I do not want to concentrate on the good things in the Bill, some of which we knew about from the beginning, because I think the Secretary of State has already made his case very well. I want to concentrate on my well-known objections to the Bill, and on how far the Government have moved to meet them. I had four objections: the increase in the level of debt for graduates; the difficulties with regard to the current proposals for meeting the universities' funding gap, as it is said to be; and the two issues of principle—the manifesto pledge and, most significant for me, the potential introduction of a marketplace in higher education.

I worry about debt. I am not talking about the debt and the financial burden that affects those from the very poorest backgrounds, for I think that the Government set out to do a lot for youngsters in that position. My fear is for the next poorest, particularly those who wish to make a career in the professions and public service and are therefore likely to incur above-average expenses while studying. I also worry about the amount of debt with which youngsters in their early twenties will be encumbered. That will apply especially to a young person who meets someone at university with whom he or she wants to set up home. Those young people will have to manage a joint debt at precisely the time when they might be thinking of taking out a mortgage.

The Government have gone a long way towards meeting that point, with the establishment of an independent commission to examine the impact on youngsters in the position I have described, the offer of an interim report, and the concession that in the spending review moneys will be set aside for the purpose of whatever recommendations are produced by the interim commission. I must tell my right hon. Friend that he is probably the only Secretary of State, now, to have that "nod and a wink" arrangement with the Treasury in regard to the spending review. If I helped him towards that, and if there is anything that I—along with my friends on the Back Benches—can do to underpin it, we stand ready. As is famously known in this place, the Secretary of State is not the only friend I have who might be influential in these matters.

Mr. Gordon Prentice (Pendle) (Lab)

May I ask who will select the members of the independent commission?

Mr. Brown

I am happy for my hon. Friend to do that, but I suspect that the Government will appoint someone of national standing and independent character, so that the independent commission can consider the issues and we all have an opportunity to put our views to it—including the National Union of Students.

I think I can say something that will genuinely help the hon. Member for South Suffolk. I agree with him that inherent in the proposals as currently structured is a failure to meet what the funding gap is said to be. There is clearly an issue involving moneys for the universities. I do not think that the flawed market mechanism that the Government are introducing will deal with the gap without compromising fairness. It is essential to examine alternatives, and I agree with the hon. Member for Wantage (Mr. Jackson) that it is perfectly reasonable to consider mixed funding. There is no reason why that proposal should not be at least considered, for it is entirely rational. I also think it reasonable to consider alternatives proposed by the Opposition in general. [HON. MEMBERS: "What are they?"] Even given my reduced circumstances, it is not for me to say what the Opposition's proposals are. I respectfully suggest that it is for the Opposition to say what they are. Perhaps, having identified the funding gap, they could present their proposals for dealing with it. After all, a funding gap must be filled with money, and the money must come from somewhere.

Mr. Patrick Hall (Bedford) (Lab)

Will my right hon. Friend give way?

Mr. Brown

If I remember the new rules correctly, only two goes are allowed—but I will give way.

Mr. Hall

Does my right hon. Friend accept that the £1 billion a year that it is estimated will be raised by variable fees will represent 68 per cent. of the revenue shortfall identified for English universities? Is that not a significant contribution?

Mr. Brown

It is a significant contribution, but much depends on who we listen to. There is indeed a shortfall, as everyone accepts. According to some, it is a significant shortfall. The shortfall will have to be dealt with, but I think it wrong that the market-based solution was sold to the universities as the only solution on offer. There are other ideas, good ideas, that are worth exploring—and now at least we have the opportunity to do that.

Let me make myself perfectly plain. I favour a graduate contribution based on earnings—the earnings of a youngster who has benefited from higher education—rather than on the financial position of that youngster's mum and dad. That is my view, and it is comparable with what is in the Labour party manifesto. I do not think there is anything wrong with continuing to argue for it, and there will be an opportunity for those of us who hold it to put it to the commission.

Of course I realise that that is a double-edged sword. As with any argument, it will be perfectly possible to lose this argument—don't I know it? But at least we have a chance to make the case again. Indeed, there are elements of just such a scheme in the Government's current proposals. We are not as far apart as it may seem.

Lembit Öpik (Montgomeryshire) (LD)

Will the right hon. Gentleman give way?

Mr. Brown

You will put me right on this, Mr. Deputy Speaker. Am I allowed to take a further intervention?

Mr. Deputy Speaker

Whether or not the right hon. Gentleman takes an intervention is entirely a matter for him.

Mr. Brown

I am relatively new to this. Despite all the things I have done in this place, the experience of being a Government Back Bencher is entirely new to me—although I think I am getting the hang of it. I can tell the hon. Member for Montgomeryshire (Lembit Öpik) that his intervention would take time from my speech, and that he will be able to make his own speech later. I cannot take any more interventions.

On the question of how we treat our manifesto pledges, there is the separate issue—although this point is, of course, addressed to the whole House, it particularly concerns my hon. Friends—of how we treat our party. The issues that we are discussing today should have been discussed in the Labour party policy forum. We would be in better shape—and so would the proposals—had we gone through that exercise first to test the ideas in front of our hon. Friends and colleagues whom we expect to support us before rallying behind the agreed proposals. Instead, the proposals were presented to us first, there was a demand that we should agree with them and we put up a fight to try to amend them so that they could be agreed. One of the concessions is to put the commission's work through the party's policy-making process, which will allow us in the Labour party an opportunity to argue our points of view.

The heart of my objection to the original proposals, which have now been circumscribed, is the remorseless march towards the market. I passionately believe that the "marketisation" of higher education is wrong—for me it is a matter of not only economics and funding but social justice and social cohesion. I shall treat the House to a quote from the "University College Record" by Lord Butler of Brockwell in October 2003: We have also to think about the disincentive‖But £5,000 or £7,000 or even more does not look intolerable when it is borne in mind that private secondary education may be costing parents £20,000 per year. That argument is perfectly logical if it is taken in its own terms, but some of my constituents do not earn £20,000 a year, and we must stand up for them.

I want universities to soar, but if they are to do so our people must come with them. These proposals box in the cap and the move towards the market, and I take the Secretary of State at his word when he says that this is not a transitional move to a marketplace and that the proposals are as they stand.

2.17 pm

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

We took the Secretary of State and the Prime Minister at their word when they said in their last manifesto that they would not introduce top-up fees—sadly, top-up fees are being introduced. I was looking forward to a principled debate, but we have had a shabby charade. Labour Member after Labour Member will line up tonight to go into the Aye Lobby to support a Thatcherite policy in direct opposition to what they said during the general election campaign, betraying the principles on which the Labour party is built.

It is no surprise that the British Market Research Bureau, which conducted the latest opinion poll on the issue, says that 70 per cent. of the public are against top-up fees. The general secretary of the Association of University Teachers, Sally Hunt, described top-up fees as the most unpopular policy under this government". The grand old Duke of York, the right hon. Member for Newcastle upon Tyne, East and Wallsend (Mr. Brown), led his troops to the hill, and we have seen him lead them back down again—what a shabby performance!

Dr. Nick Palmer (Broxtowe) (Lab)

Will the hon. Gentleman give way?

Mr. Willis

No, I will not.

The Bill is bad for students, bad for families, bad for lecturers, bad for universities, bad for taxpayers and bad for the country. It is not bad for the Liberal Democrats, because at the next general election we will remind voters of the promises and what should have happened.

The sadness is that the debate about the future of higher education should be one of the most engaging that this House has ever had. It should be about how we tackle the current inequities between academic and vocational pathways into higher education. The Secretary of State did not mention the unacceptable fact that 45 per cent. of young people who obtain vocational qualifications at level 3 do not end up in university, yet 92 per cent. of those with two A-levels do. That inequity should be debated and tackled. We should debate how we could offer a climbing frame of opportunity to attain higher skills and higher education throughout life, rather than just for students with two A-levels.

Instead, the debate has become little more than a sordid trade-off, with the Secretary of State acting more like Del Boy in "Only Fools and Horses" as he tries to sell dodgy goods to his own Back Benchers. We all know that the Bill is not simply about higher education—the Prime Minister has been at pains to point that out. It is about changing the way in which this country pays for its public services. That is at the heart of it. The Bill is stage one of a process that will see responsibility for paying for child care, transport, and health and social care shift from general taxation to the individual. If hon. Members do not believe me, they should read the Institute for Public Policy Research report when it is published tomorrow. It describes Government policy and thinking on the issue.

Hon. Members should not be fooled into thinking that the Bill is only about higher education: it is not. Why else would we have seen in the past few days Labour Whips running around Westminster threatening to hand out redundancy notices? They have cajoled and even offered dinner with Cabinet members to ensure that sufficient MPs break their promise to the people of Britain. In an act of sheer desperation, the Chairman of the Education and Skills Committee even resorted to sending out pictures of the right hon. and learned Member for Folkestone and Hythe (Mr. Howard) in brown paper envelopes to recalcitrant MPs to frighten them into submission. How desperate is that?

Hugh Bayley

The hon. Gentleman made the point that students in further education have poorer opportunities than those in higher education. Those in further education face variable fees. Why does he not propose getting rid of variable fees in further education, and why does he propose to spend on universities all the Liberal Democrats' tax increase, rather than spending it on further education?

Mr. Willis

I shall come to the second point that the hon. Gentleman raises—I consider him as more than just a political neighbour—later in my speech, and I assure the hon. Member for Huddersfield (Mr. Sheerman) that I will not do so too late. On the first point, I agree, and our policy is to achieve that objective. It is unacceptable for students in further education to be burdened with differential fees at a time when the whole debate in this House is about higher education. I remind the hon. Member for City of York (Hugh Bayley) that the Bill is about higher education. The Secretary of State makes no proposals to tackle any of the issues that the hon. Gentleman feels so strongly about. As Labour Members seem so keen on reviews, I suggest that he ask Ministers to set up another review to consider those important issues.

James Purnell

Does the hon. Gentleman recall that the hon. Member for Yeovil (Mr. Laws)—his colleague—did not support the Child Trust Funds Bill because he thought that the priority for funding should be children under five, not children at 18? Given that the hon. Member for Harrogate and Knaresborough (Mr. Willis) could fund only one education pledge, why would it all go on those aged over 18?

Mr. Willis

I am delighted that the hon. Gentleman takes such an interest in our policy—and the consistency of it. My hon. Friend the Member for Yeovil (Mr. Laws) is right. The Government intend to spend up to £350 million giving people such as my hon. Friend baby bonds when they have children, but we would prefer that money to be spent on early-years education. It is a tough choice, but mature political parties have to make tough choices.

I have no doubt that the Secretary of State and the Minister for Lifelong Learning. Further and Higher Education are sincere in their desire to put forward their proposals. I congratulate them both sincerely on their willingness to debate those proposals and to be challenged on them. However, when the Bill is lost tonight, I urge the Secretary of State not to throw his toys out of the pram and say that there is no plan B or C. Plenty of other ideas and devices are available.

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

Mr. Willis

I should like to make some progress, because many hon. Members want to speak.

As for the Bill, I have to tell the Secretary of State that it contains elements that are worthy of retention. We applaud the moving of higher education and student support for students in Wales to the Welsh Assembly. That is absolutely right. We support the establishment of an arts and humanities council that will raise the profile of both in higher education. Indeed, that is in stark contrast to the comments that the Secretary of State made earlier about the classics and ancient literature having no great place in higher education.

The proposal for an independent adjudication system is welcome, but I hope that the Secretary of State will seek to widen that so that we have an education ombudsman dealing not only with higher education students, but with further and higher education students and staffing in those two sectors as well. That is overdue, and I hope that the Secretary of State will support it.

Mr. Betts

rose—

Mr. Willis

How can resist?

Mr. Betts

I thank the hon. Gentleman for giving way. I should like to be clear as to where the Liberal Democrats stand when they talk about tough choices. When the hon. Gentleman's party has paid for its extra long-term care for the elderly, its extra for pensioners, its extra for the police, its extra for schools and now extra for further education, how will it fund this higher education policy? Can he be explicit about that, so that we all understand where the Liberal Democrats are coming from?

Mr. Willis

Unlike the hon. Gentleman when he was running Sheffield council, when nobody knew where money was coming from or going to, my right hon. Friend the Member for Ross, Skye and Inverness, West (Mr. Kennedy), the leader of my party, has made absolutely clear what our priorities are for a 50p rate. He has made it clear in the House and in a letter to the Prime Minister. If the hon. Gentleman would like a copy of that letter, I shall make sure that he receives one, because I would not like him to be left out.

Although there are good elements in the Bill, they are not sufficient reasons to support it on Second Reading. Despite the so-called concessions, it fails to meet the primary objectives set by the Government in 2001: to bridge the funding gap in our universities, to widen access and to remove the fear of debt for future students.

We accept the need to resolve the funding crisis in our universities after two decades of chronic under-funding. The question is: will the introduction of a market, supported by variable fees and a cap, resolve the funding gap?

Mrs. Alice Mahon (Halifax) (Lab)

I am following the hon. Gentleman's argument very carefully, and I think he will find that I agree with it. Twenty-three years ago, I went as a mature student to Bradford university with a full grant and with tuition fees paid. My eldest son went to Oxford. Today, however, I would not face this kind of debt, and my eldest son would certainly have been looking for a cheaper university.

Mr. Willis

The right hon. Lady—the hon. Lady; she should be a right hon. Lady—is absolutely correct. I recently attended, as did the Secretary of State, the student of the year awards, which the Assessment and Qualifications Alliance presented at the Queen Elizabeth II conference centre. Much to my surprise, I met there a girl I had taught nearly 30 years ago in my first A-level group. She came from a very poor home in Chapeltown, Leeds. Her son was one of the students who received an award. She came down to London specifically to tell me that she would never have got to university without the support that she received. Certainly, her son would not have received the award without that support. We should never forget that.

Simon Hughes

Like many of my colleagues, I have a sheaf of letters and e-mails from students, many of them medical and dental students. They already have debts of £20,000, £25,000 or £30,000 under the present regime. What is my hon. Friend's information as to the likely average debt if the proposals go through? Is it morally acceptable to send people off into life after education with that amount of debt round their necks?

Mr. Willis

The evidence that the British Medical Association presented this week of medical students with debts of £50,000 to £60,000 gives a flavour of what we shall see in the United Kingdom.

A better example is to take a student who is basically on a £3,000 fee course for three years. Barclays bank estimates that by 2010 that debt will have risen to £33.700. That is a staggering amount for any student to go into the world with. If we are talking about students having to set up pensions—

The Minister for Lifelong Learning, Further and Higher Education (Alan Johnson)

Those figures are wrong.

Mr. Willis

The right hon. Gentleman should take that up with Barclays bank, which prepared those figures and which is a fairly reputable institution.

Several hon. Members

rose—

Mr. Willis

I am moving on.

The issue that I want to tackle is that of whether the market, supported by variable fees with a cap, will resolve the funding gap in our universities.

Mr. Allen

rose—

Mr. Willis

I want to develop the point, and then if the hon. Gentleman still wishes to intervene he may.

The answer is patently "No". It will be 2009 before the universities receive the £1.1 billion promised from the package. That is the truth—2009. By then, the gap will have increased to a point at which increases in fees will be needed. If the universities are saying that they need £1 billion to £2 billion now, in five years' time what will that gap be? It will certainly not have been bridged by the uprated tuition fees, the top-up fees. The House has to understand that no Government will ever return to plugging that gap purely from taxpayers' money.

Mr. Allen

Will the hon. Gentleman give way?

Mr. Willis

Please let me finish the point.

When Members vote tonight, they must forget all the promises that the Secretary of State has made. The reality is that by 2009 it will not be possible to go back to a system of state funding our universities with flat-rate fees. That is the truth of what we are talking about.

The right hon. Gentleman's latest concession—to put the matter in the Bill in order to have an inquiry in 2009—is an act of desperation. When before has a Secretary of State had to put something into a Bill just to persuade his own Back Benchers that he is not lying? That is the situation that we have got into.

Although I am vehemently opposed to both the flat rate and variable fees, I recognise that the only way in which a market in higher education based on variable fee income can work is to allow that market to determine the fee level. That is the truth, and it is the point that the hon. Member for Wantage (Mr. Jackson) made honestly and fairly. It is the only logical outcome of the policy proposed today. That is why we as a party—every one of our Members, 54 of us—will be going into the Lobby against the Bill tonight on that issue of principle.

Labour MPs who support the Bill tonight must realise that the cap is not sustainable after 2009 because of the injection of funds that would be needed, and we must also realise that by 2014, the year in which the Secretary of State promised Mr. Paxman—and bet his house on it—that the cap on university fees would be no higher than it is now, the higher education system would be in utter and total chaos without the supporting funds.

The prospect of annual fees in excess of £15,000, as proposed by Richard Sykes of Imperial college, is not fanciful. It is not fiction; it is the reality of what we will actually see, because it is the reality in America. How can any Labour Back Bencher be seduced into thinking that such a policy would assist in broadening access for underrepresented groups, and how could it possibly prevent the establishment of a two-tier university system, where students choose both course and university on the basis of cost? The Prime Minister, of course, claims that that will not be the case.

Lynne Jones

We already have a de facto two-tier system. Universities UK's own research shows that young people from disadvantaged backgrounds are disproportionately represented at the modern universities and not represented at the prestigious universities. Is not the problem that the measures proposed today will exacerbate that already bad situation?

Mr. Willis

The hon. Lady is absolutely right, but there are two sides to that coin. Our recent research looking at major cities—Newcastle, Manchester, Liverpool, Leeds and Nottingham—has shown that, on average, roughly 45 per cent. of students studying in higher education go locally for their education, and that that percentage is increasing very quickly indeed. In Newcastle, nearly 70 per cent. of students leaving the Bluecoat school, which is a very high quality, high achieving school, study locally.

Mr. Allen

rose—

Peter Bradley (The Wrekin) (Lab)

rose—

Mr. Willis

Please let me finish my answer to the previous intervention.

The other side of that coin—it is a very serious issue—is that we must drive up the quality of what is offered locally, to match whatever there is across the country. We must be able to tell young people, "You have a genuine choice between going local and going away", and it should not be a choice made on the basis of price. That is the point—if the new universities are in the 25 per cent. that do not charge top-up fees and all the rest do, we will create a two-tier system by default, purely on the basis of price. That is something that I do not want.

Mr. Allen

I had almost forgotten what I was going to say—but it was not "I will see the hon. Gentleman in the Lobby tonight". Would the hon. Gentleman consider the question of the market? He seems to be implying that there is not a market already and that there is no variability already. That strikes at the heart of many of the concerns that colleagues on this side of the House have too. There is a market, but it is rigged. It works against the interests of working-class kids who actually get the right A-levels. Will the hon. Gentleman address the question of how, by using social policy, we make a deeply imperfect market a better one for all those who are qualified to go to university?

Mr. Willis

I have a lot of respect for the hon. Gentleman and the way he fights for his constituency, but I do not think that it is possible to tackle inequality simply by creating other inequalities. We must tackle inequality, and I agree wholeheartedly with the Secretary of State and the Under-Secretary with responsibility for skills and vocational education that we must tackle it much lower down. We have to ensure that from 14 onwards there is an aspiration for all our young people to go into higher education through a vocational or academic route or a mixture of those, and that is the big issue that we must tackle. However, I do not want young people to find suddenly, when they go up those routes and get their level 3 qualifications, that there is a financial barrier that prevents them from taking the next route. That is the issue that I am interested in, and that is why I shall vote against the Bill tonight.

As I was saying before those useful interventions, the Prime Minister, I think rather disingenuously, has said that there is no evidence from abroad—from Australia, Canada and the United States—that countries that have introduced contribution costs limit access. That is absolute nonsense. It is impossible to find any research—other than research written in Australia by the man who introduced the fees in the first place, whom the Secretary of State quotes in his evidence—to show that that has not happened. In Australia fee levels have risen by 25 per cent. since 1996, when variable fees were introduced. In America, with its Ivy league, which is reputed to have the Cambridge-style bursary system, only 4.7 per cent. of students from the lowest socio-economic groups go to Harvard and the figure is roughly the same for the other Ivy league universities. In the United States, money counts and money buys you into the best universities. That may be the Secretary of State's vision, but it is not my mine, and it is certainly not the vision I spent my life in education defending and promoting.

I realise that the Secretary of State has tried to mitigate the worst effects of the system, but the Office for Fair Access is a classic fudge. If any Back Benchers have bought that, naivety is not the word to describe them. What will OFFA actually do? The hon. Member for South Suffolk (Mr. Yeo) was right to say that it is a bureaucratic irrelevance and a sop to its critics, and that it will burden universities with meaningless plans. At the end of the day, it has absolutely no powers. It has no powers over admissions, which is surely the key if we are to tackle issues of inequality. It has no powers over what goes into the plans—the Secretary of State has all the powers there—and it has no powers to impose penalties. So what is this guy getting £100,000 for? I would like that job—[Interruption.] He must have two children with fees to pay.

One measure that we welcome is the move away from up-front fees, though it was the present Government who imposed them. Few Members present in the House at the time will have forgotten the promise given by the right hon. Member for Sheffield, Brightside (Mr. Blunkett), now the Home Secretary. He said in 1997 that the entire objective in taking our difficult decisions has been to put higher education on a firm footing for two decades."—[Official Report, 23 July 1997; Vol. 298, c. 958.] That is why tuition fees were introduced in the first place. My hon. Friend the Member for Bath (Mr. Foster) and I said at the time that that was the thin end of the wedge, which is exactly what it has been. The policy is going ahead by stealth, whether we like it or not. It was designed somewhere in the bowels of the No. 10 policy unit.

Has anyone objectively analysed the new arrangement from the position of a student from a poor background, or even one from a modest income background? For poorer students, there will be a new grant of up to £3,000, but the benefit will come only if the student attends the cheapest course at the cheapest university. That would make the student £1,500 better off. If students go to a good university on a £3,000 course, they will receive £3,000 up front and be left with a fee of £3,000 to pay. Will hon. Members explain how a student is better off on that account, because I simply do not understand it? If, by contrast, students go to a university that charges the £1,200 fee, they will have £1,500 of disposable income to spend. They will not get the bursary, but they will not have to pay the full fee.

Geraint Davies (Croydon, Central) (Lab)

Does the hon. Gentleman agree that the introduction of a time limit on repayment means that low-paid graduates—someone on £17,000, for example—would, over 25 years, have to pay £4,500, which is 9 per cent. of the money earned over £15,000? Graduates would have to pay that £4,500 irrespective of the level of fees—whether they were £9,000, £18,000 or £20,000—so payment is linked to earnings rather than fee levels. Furthermore, in the British Medical Association example, where a student faces paying £63,000, he would, if earning £30,000, only have to pay half the fees. It is misleading the House to imply that they have to pay all the fees, because what they have to pay is linked to what they earn, which is progressive.

Mr. Willis

I was hoping that the hon. Gentleman was going to explain something. All he has done is confuse the House even more. so I leave hon. Members to reach their own conclusions.

It is no use the Secretary of State and the Prime Minister talking about debt as an investment for families for whom debt is a daily nightmare. The Secretary of State should look no further than the research for the Department for Education and Skills that was conducted by Professor Callendar of South Bank university. She said: Debt aversion has the greatest impact on the participation of the very group the government most wants to attract into higher education. She concluded by saying: Top up fees of £3,000 will put even more poor students off university". That is the Government's own research.

Debt, and the fear of debt, will affect not only applications to universities, but the courses that students will choose and their future life plans. A recent MORI-Unite poll shows that two out of five students who are currently in higher education would have chosen a different university or course if fees of £3,000 were charged. That is the view of real students in real universities.

The principle that students access the universities and courses of their choice on merit must be the only criterion for access to higher education—it is the Robbins principle of access to higher education. The Bill will break that principle, which has been the hallmark of Britain's higher education system for the past 40 years, and Labour Back Benchers will troop into the Aye Lobby tonight to support that.

The Government say that there is no plan B, but they are wrong.

Mr. Soley

Will the hon. Gentleman give way?

Mr. Willis

I am getting on to plan B.

We have a plan B. It is fully costed and meets the Government's objective of putting more money into universities. It would broaden and deepen participation and ensure that graduates who gain a lot financially from their degrees pay back more towards the cost of higher education. What is more, our figures have been analysed by the Higher Education Policy Institute, and its director agrees with them. Our proposals are not difficult to understand. We would abolish fees, abandon any plans for top-up fees, and reintroduce proper maintenance grants of up to £2,000 a year for students from the least-well-off backgrounds. Crucially, we would invest an additional £1 billion—matching the Government's money—in our universities from 2005, not from 2009 when the full impact of the top-up fees policy will happen. There would be more money with less bureaucracy for universities and less debt for students. There would be a saving to the Treasury of at least £450 million for each £1 billion put in to service the debt.

We would pay for our proposals with a concept that has been sadly missing from new Labour ever since it came to power in 1997: fair progressive taxation. We would not use general taxation to find more money for higher education, as the Prime Minister tries to pretend, because we would have a higher tax band for incomes of more than £100,000 a year. Let me remind Labour Back Benchers that our proposal would impose an extra tax burden on the wealthiest 1 per cent. of the population. However, those on the Labour Front Bench oppose the idea that the wealthiest 1 per cent. should pay a bit more tax. In reply to the hon. Member for Watford (Claire Ward), who is no longer in the Chamber, 82 per cent. of those people are graduates who, like the Prime Minister and the Secretary of State, were given a free higher education when they were students and the country was less affluent.

Mr. Adrian Bailey (West Bromwich, West) (Lab/Co-op)

During the hon. Gentleman's earlier comments, he made great play of the fact that Labour's plans for tuition fees would not meet the escalating costs that might develop over the next five or 10 years. Will he assure me that the current proposal of the Liberal Democrats for a 50 per cent. taxation rate on incomes greater than £100,000 a year would fully fund the scary figures that he projected without prejudicing any of their myriad other spending commitments?

Mr. Willis

I was with the hon. Gentleman until his last comment. He should go to bed with a book rather than a Millbank handout—it does not affect one's health in the same way.

The first part of the hon. Gentleman's question is very genuine, and it is something that all political parties have to answer. My argument is that the Secretary of State certainly does not agree with all that the universities ask for—nor do we as a party—and I am pretty sure that those on the Conservative Front Bench would not agree either. Much of the expansion in resources that they want is for capital projects; some of it is for research, some for teaching. We would have to disaggregate that. The Secretary of State has reached the conclusion that £1 billion is about the right sum to raise from differential fees to put into the universities. We broadly agree with his assessment. The difference between us is that the universities need that money now. Under our proposals, they will get that money in 2005; they do not have to wait until 2006, 2007, 2008 or 2009—four or five years later. By that time, we will have put £5.5 billion extra into the universities to plug that gap.

The Prime Minister argues, in true right-wing style, that a 50p rate would drive high earners out of the country and that all the evidence supports that. Well, it does not. The Prime Minister cannot find a single piece of evidence from a reputable economist—other than one in the United States in 1974—who can, in fact, support that view. Richard Adams, writing in The Guardian last Friday, said: The wealthiest potential payers probably live in tax havens like Sark and would not be affected". There is not a serious economic commentator who claims that a 50p rate would have a major impact on tax avoidance. Rather than worrying about losing our richest people, we should be worrying about losing our best graduates. We should be worried about who will do a PhD under the new proposals. Who, when saddled with debts of £20,000 to £30,000, will take on a low-paid research post? Those are the issues with which we should be concerned.

I tell the Secretary of State that we will vote against the proposals tonight not because we are against the thrust of what the Government want to do or against their broad analysis, but because they are wrong in principle. The Liberal Democrats said so at the last election. We keep our manifesto promises; they break them.

Several hon. Members

rose—

Mr. Deputy Speaker

Order. I remind the House that there is an eight-minute limit on Back-Bench speeches.

2.52 pm

Jim Dowd (Lewisham, West) (Lab)

Thank you, Mr. Deputy Speaker. I recognise that far more hon. Members want to speak than we have time to fit in, so I will not take any interventions and will just make a couple of points.

First, I congratulate my right hon. Friends the Secretary of State for Education and Skills and the Minister for Lifelong Learning, Further and Higher Education on the way in which they have engaged in this process, which involves what is undeniably one of the most difficult and contentious issues with which we have had to deal since the Government came to power on that glorious day in 1997. I sincerely hope that that process of engagement, of listening, of concession—call it what you like—has not reached a conclusion; that, as we gain a Second Reading for the Bill this evening and as it progresses through its other stages in Parliament, we are able to improve it; and that my right hon. Friends recognise that it can still accommodate improvement.

One of the differences that we have been grappling with this afternoon is that we are talking about equity and opportunity. It strikes me, coming from a very working-class part of inner London, that the gravest inequity is between the higher education sector, which seems to exercise people disproportionately, and the further education sector, largely because the FE sector is almost overwhelmingly working class and does not have the HE sector's clout or influence. I speak as a member of the majority of people in this country who did not have the benefit and advantage of a university education. However, in the House, I am in a singular minority. Even though I have not done the precise calculations, I suggest that the number of hon. Members who have been through higher education is about the reverse of the national figure of 80 per cent. who have not, so I shall consider what the proposals mean for people in my part of south-east London. I am not sure what the Tories propose, but it seems that they want to retain elitism, have no cap and find all the money from public funds in the fullness of time. If student numbers fall, it is patently obvious that it will not be middle-class kids who go without: it will be the working-class kids who we are trying to get into university who will miss out yet again, and higher education will remain the divisive and elitist institution that it has been for far too long.

The famous Liberal Democrat proposal of a 50 per cent. tax rate on salaries of more than £100,000 is a replacement for their magic penny in the last Parliament, which was supposed to fund everything; it is a marvellous commodity because they can spend it time and time again. Even as the hon. Member for Harrogate and Knaresborough (Mr. Willis) was speaking, he added another pledge. He blithely said that, as he wanted equality between higher and further education, he would abolish all FE fees. Does the hon. Gentleman have any idea how much that would cost? Would that be paid for by the Liberal Democrats' magic 50 per cent. tax rate? He nods. I heard him on the radio this morning trying to argue that his party's special tax device was not general taxation.

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

But that was this morning.

Jim Dowd

Indeed. It just seems so long ago.

Of course it would be general taxation. If the economic illiteracy displayed this morning is any reflection of the rest of the Liberal Democrats' plans, it is small wonder that nobody believes them and that they will never be in a position to implement their policies.

If there are additional priorities for public money, I entirely agree with my right hon. Friend the Secretary of State—as I am sure do most of my right hon. and hon. Friends—that money should go into the early-years, primary and secondary school sectors, where the building blocks of education and progress are created.

The big issue in my part of the world—which I am sure is shared in urban and working-class communities elsewhere—is not young people being fearful of debt or its consequences in later life but getting working-class kids even to think that they can get into university. A couple of weeks ago I was privileged to visit Forest Hill school in my constituency to see the Aim Higher roadshow, which opens the eyes of kids in south-east London by saying, "If you want to do this, you do not have to be intimidated and think it is something that only kids better off than you can do."

If all the Government were doing today was introducing top-up or variable fees, even I would have great difficulty giving that my support. I congratulate my right hon. Friend the Secretary of State because the Bill goes way beyond that by realigning the whole system of student support across the country. I shall support that balancing act this evening because it will change the prospects for many thousands of young people in my constituency by giving them an opportunity that they have previously been denied.

I particularly welcome the abolition of up-front fees, which are a bar to students from families on lower incomes, and the reintroduction of maintenance grants. I also welcome my right hon. Friend's acknowledgement today that fee remission will be bundled up to provide an even bigger incentive. The 25-year cap will mean that debt will not be for life, with repayments reflecting earnings over that time.

The Liberal Democrats say that 82 per cent. of people who earn more than £100,000 a year went to university, so it is fair that they should pay. What about the other 18 per cent. who did not go to university? And if 82 per cent. of high salary earners went through higher education, that shows what a good investment it is, with incomes considerably uprated as a consequence.

Mention of debt aversion really irritates me. It is old fashioned, patronising and condescending: the assumption seems to be, "Working class people don't really know how to handle money. That's why they've got so little." They know how to handle money all right. And they know a bargain when they see one. Higher education is a bargain. I fully support this package in the round, and hope that every one of my colleagues on the Labour Benches will do the same.

2.59 pm

Mr. William Hague (Richmond, Yorks) (Con)

I am grateful for the chance to take part in this debate, in which the Education Secretary made a number of detailed points and my hon. Friend the Member for South Suffolk (Mr. Yeo) made some powerful points of detail.

Throughout today and before it, it has been fascinating to watch negotiations and concessions unfold; and I have no doubt that that has been as fascinating for the Education Secretary as it has for the rest of us. It is not unusual for a Minister to make concessions when he has said he will not make concessions—that is part of the normal negotiating process of politics; it is quite unusual for a Minister to make concessions he did not wish to make; and it is wholly extraordinary for a Minister to make concessions that he was not aware he was making. That is what appears to have happened in the negotiations—the joviality of the right hon. Member for Newcastle upon Tyne, East and Wallsend (Mr. Brown) rather confirms that that has happened—between him and the Chancellor. Whether those concessions amount to anything is a matter for debate, but one thing is not really a matter of dispute, and it is the central point on the basis of which I am opposed to the legislation. We all said—the entire House of Commons said—that we would not introduce such legislation. It is not just something the governing party said it would not do; it is not just something the Labour party said it would not do; extraordinarily and most unusually, the manifestos of the three main political parties said that they would not introduce such a measure—[Interruption.] And, indeed, other political parties such as Plaid Cymru. With the agreement of my colleagues, I wrote in the Conservative manifesto: we will not introduce top-up fees". The Liberal Democrats made an even grander claim, as parties do when they are more distant from office. "All fees will be abolished," they said grandly. The Labour party said: We will not introduce 'top-up' fees and have legislated to prevent them. What an extraordinarily categoric and emphatic thing to say. It is most unusual for the same promise to be made by all parties. Normally, manifestos contain contrasting promises for the electorate to choose from. But this was the same from every political party, and by my calculation it means that 635 or more of the 659 Members of Parliament stood on a platform of not introducing top-up fees.

Mr. McLoughlin

When the Secretary of State was asked about that, he said that things had changed since the election. Can my right hon. Friend think what those things are?

Mr. Hague

That was one of the weaker parts of the Secretary of state's speech. When asked, he said that the pace of economic growth was unexpected—something that did not amuse the Chancellor, who was sitting three places away from him at the time. The Secretary of State appeared to have no faith in the Chancellor, whereas the right hon. Member for Newcastle upon Tyne, East and Wallsend only has faith in the Chancellor and, extraordinarily, the two have come together in support of the legislation. What happened in the intervening period—the two and a half years of economic growth that the Chancellor predicted—to take the Secretary of State so much by surprise that he had to break a manifesto commitment was not adequately explained in his opening speech.

It is not just the Government who are breaking faith with the electorate—the body politic is breaching their faith. We all go to schools and universities and say, "Politics matters, and your vote matters." We are all ashamed in the House, or we jolly well should be, that only 59 per cent. of people voted in the general election. We tell people that their participation counts, but what are we supposed to say if we pass legislation that the entire House of Commons said it would not pass—if within two and a half years of the election it is passed through the House of Commons in direct defiance of all those pledges? I went to a primary school the other week to talk to the children about Westminster and what MPs do. An 11-year-old put up their hand and said, "But Mr. Hague how do we know, if you are going there for five years, that you are going to do what you said you would?" I said, "We all try." In fact, in that rare spirit of cross-party generosity that comes across us all when we talk to people who do not have a vote for another seven years, I even said, "Mr. Blair tries. We all try. Sometimes it doesn't work, aspirations are unfulfilled, targets aren't met, but we try to keep the promises that we made to the people." What will we say in future?

Mr. Allen

rose—

Mr. Hague

Will the hon. Member for Nottingham, North (Mr. Allen) be able to say that the Labour party kept its election commitment?

Mr. Allen

I shall say it in my speech, if I am lucky enough to catch the Deputy Speaker's eye. Does the right hon. Gentleman know what the Conservative policy is on the issue? If so, would he tell all the parties present and all those who are watching his entertaining speech at home?

Mr. Hague

The hon. Gentleman knows that the great virtue of being an ex-leader of a party is that one does not have to explain the policies for the future. I am responsible for the past, not for the future. My hon. Friends will explain their policy before the general election, and it will then be the job of every Member of Parliament elected to support that future Conservative Government and every Member of Parliament elected to any party to hold them to account when they are in office to keep whatever commitment they make at that general election. That should be the job of all Members of Parliament in the House.

That is why, even though the Prime Minister has looked them in the eye and asked, "Are you going to be loyal?", it would be better for the health of our democracy if Labour Members were loyal to the voters, kept faith with the country and were true to their word than if they were loyal to a transient Prime Minister. I have always said that people regard the Prime Minister first with fascination, then with admiration, then with disillusionment, and then with contempt. We are well down that process now. As the waves of contempt close over him in the future, we will still want a healthy democracy. We will still want people to believe that their vote counts, and that what Members of the House of Commons say they will do is what they will do in practice.

Let us not try to claim in the House that none of us has ever made a U-turn or changed a policy. Usually when any party changes a policy, it is because circumstances have changed in some way—there has been a war, there has been a recession, or some new information has come to light. There is nothing that we know now about the state of our universities that we did not know two and a half years ago. There is a serious problem in our universities with academic salaries. There are many serious problems in our universities, but we knew all that at the time of the last general election and we all knew it when we wrote our manifestos.

We did not write those manifestos casually. We are not talking about something that was slipped in by some junior official who went to the printers while the leaders of the parties were not looking. Our commitment went into the manifesto because in each party we had a meeting about it. I was leader of the party when we wrote it into our manifesto, and we had a meeting about it. We asked, "Is everyone responsible for this policy sure that this is right—that this is what we are happy to do if we win the election?" We knew that was an unlikely event, but we still took it seriously. Presumably the same thing took place in the party of Government, which did expect to win the election.

That was a premeditated promise, a categoric commitment, and it is a shameless and ruthless breach of that commitment that the Government are engaged in today. That is why it is a bad day for our democracy if the Bill goes through. It may be a bad day for higher education, or it may be a good one. I do not think it is, but even if it were, it is an overriding argument that when the entire House of Commons has pledged itself to a particular policy, it should do its utmost to keep faith with the country, rather than breach faith with the country.

I know it might be advantageous in a narrow party sense—I am talking about my party—for the Bill to be passed by a small majority tonight, or to be passed by any majority. Then the great agony of negotiating, deciding and voting on it on Report and so on will begin. The right hon. Member for Newcastle upon Tyne, East and Wallsend will continue to make his trips to the Treasury and will become an even more central and powerful figure in the Labour party, and what an awful process that will be for so many of his colleagues. All these things will go on, and Labour Members will parade around at the next election as though they had a placard round their neck that read, "These people do not keep their word." In many ways we are happy for them to parade around with that placard, but it is not good for our democracy or our democratic values.

There are many other objections to the Bill. Although it is presented as a way of escaping further increases in taxation, it is tantamount to an increase in taxation, and a particularly harsh, arbitrary and unfair increase in taxation, because it will particularly hit people on middle incomes who have bright children. The man who said to me a few weeks ago—[Interruption.] I will not give way again because I only have 28 seconds left. As for the man who said to me the other day, "I've saved a bit, I'm not going to get any help, I've got three bright children, and I want them all to go to university," what will the Government say to him? Are they sure that the third child is not going to be discriminated against because they are the third child wishing to go to university? It is a bad policy that is bad for democracy in this country and it should be rejected.

3.10 pm

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

I follow an entertaining speech, but the former leader of the Conservative party is trying to reinvent the British constitution. I always understood that the parliamentary constitution of this country meant that a manifesto commitment lasted for one Parliament and did not bind the next Parliament. We can agree to disagree on that.

I want to speak briefly on what the challenges of this Bill mean for higher education and for the future of our country. The House should bear two things in mind, one of which is that this country will not survive as a competitive nation unless it uses all the skills of all its people and releases the potential of every child and adult in this country to the fullest extent.

Simon Hughes

Will the hon. Gentleman give way?

Mr. Sheerman

No.

As Chairman of the Education and Skills Committee, which has conducted four inquiries into higher education in the very recent past, I can speak with some authority, as some of the leading experts in the country have given evidence to us. There is no doubt that if we examine our education system, we will all recognise one clear underperformance: the underachievement of many people who come from poorer backgrounds, and the inability of our education system, over 150 years of public education, to deliver the full potential, in terms of educational opportunity, of all our children, however clever they may be. If we examine the graph showing bright working-class children and average middle-class children at two and a half years of age, we find that by the age of six they have crossed over in terms of academic performance. Such a failure is a disgrace to all of us.

I do not agree with everything in this Bill, but I believe that we should support it. I do agree, however, that in 1997, for the first time in the history of this country, a Prime Minister ran—this is a manifesto commitment—on "Education, education, education," as our Government's priority. That was what they were going to deliver, and they renewed that commitment in the following election. That is what mattered. I do not remember a stirring commitment from any Conservative Member.

I remind the House that since 1997 the Government have poured money into those areas in which policy evidence suggests that it is most effective: early years, sure start and the preparation of young children; free nursery education for four-year-olds and now three-year-olds; an 80 per cent. increase for school buildings; a 60 per cent. increase for junior schools; and a 35 per cent. increase throughout secondary education. We never had such spending previously in the history of this country. That is something of which I, as a Labour Member of Parliament, am proud to put before an electorate. In addition, the provision of education maintenance allowance at 16 is keeping young people from working-class backgrounds in education from 16 to 18—the time at which they can drop out.

That is what we have achieved, and I put this Bill in that context of great achievement. I remember that cheap jibe from the Leader of the Opposition recently—that he was a grammar school boy talking to a public school boy. No one is responsible for the school to which he or she is sent, but we have every responsibility for the school to which we send our children. That is our responsibility as individuals. I have always used and supported. as have most of my Labour colleagues, state schools—we have not preached about the public sector and sent our children to the private sector.

In terms of the context of the Bill, I want to comment on why it is important to invest in higher education and find diverse resources to invest. The Government are wrong if they do not believe that there will be a greater call on the taxpayer over the coming years to invest in a higher education system that really competes with the best in the world. However much money we get from this new form of variable fee, which I support, it will not be enough to make our university sector the most competitive in the world, so more taxpayers' money will be required.

Some of my hon. Friends talk complacently about a two-tier system. Do they realise how many opportunities a child who is sent to the private sector, or to a selective school or grammar school, has in terms of getting to the best universities compared with the ordinary child who goes through the comprehensive system? The system is still rigged in favour of the privileged. The Bill will make a remarkable step towards opening up our universities to all the talents. I am an unashamed elitist, but I want the kind of elitism that is based on a person's potential and grades, not on whom they know, how well connected they are, and whether they are given the best opportunity to get the best A-levels and to peak at 18. I want every child of talent to be able to walk through the doors of every first-class institution in this country.

Mr. Allen

Does my hon. Friend agree that restoring a grant, particularly at the level of £3,000, will be seen as one of this Government's greatest achievements in education? He said that no more money is available for this package, but has he considered the zero rate of interest that will be charged on the loan to pay the fees? That is a Government-preferred rate that could save several hundred million pounds, which could go into making the grant even higher—it might end up going from a standing start to more than £3,000 for people on the lowest incomes.

Mr. Sheerman

My hon. Friend tempts me on to interesting territory. As he knows, the Select Committee on Education and Skills recommended that the zero interest subsidy for middle class families—amounting to £1.2 billion —could have been taken away and used for other purposes, but the Government did not accept that, for reasons that I understand.

Overall, my hon. Friend is right. The package before the House will build on our other reforms to open up educational opportunities in the educational system. As politicians, we should always admit it when we are wrong. I was wrong—and my Select Committee agreed with me—when I came out against the Office for Fair Access. On reflection over the months, I decided that I, personally, was wrong about that. OFA will be part of the process of prising open the system and providing the necessary leverage to ensure that the most talented people can get into any institution into which their talent drives them. In other words, it will do something that universities are loth to do. That is not a criticism. Universities started to talk about top-up fees because they had had 18 years of the Conservatives screwing them into the ground, with more students, fewer resources, appalling pay for lecturers, and no opportunity to do anything about it. In frustration, many said, "We've got to have top-up fees—we need £10,000 or £15,000 to make this a world-class competitive higher education sector."

That is the background. Now, the Bill is introducing the fees policy. It is a good Bill which opens up educational opportunity and delivers in a way that was never possible in the past. Our future economic prosperity depends on investment in higher education. The good life for all our constituents depends on how much we pile into that, and on retaining in our country people with higher education. I recommend the Bill; I am unashamedly in favour of it.

3.20 pm

Mrs. Gillian Shephard (South-West Norfolk) (Con)

I draw the attention of the House to the fact that for the past three years I have been a member of the governing council of the university of Oxford, which is an unpaid position.

A year ago, the Government published their White Paper on higher education, which identified a number of problems in the higher education sector. They were primarily that the sector needs to expand—up to a participation rate of 50 per cent.—that it needs more funds, and that participation should widen across socio-economic groups. The House is entitled to ask whether the Bill will solve those problems and, if it will not, to reject it. In the brief time that I have for my speech, I hope to address those questions and to raise one or two others.

The Government's White Paper presents some interesting contrasts with its predecessor: the Dearing inquiry that was proposed to the House in February 1996. In 1996, the number of young people in higher education, after a very rapid expansion, was approaching one in three; at present, about 43 per cent. of people aged between 18 and 30 are involved. In 1996, the UK was spending more on higher education than any country in the western industrialised world. A third of all first degrees were in science, mathematics and engineering. Last year, a third of all first-time graduates had studied business and administration, creative arts and design or social studies.

Like its successor, the Dearing inquiry was concerned with the growth of knowledge, technological advance, international competition, the need for professional flexibility and for updating and upskilling. It, too, had to consider the implications of increasing student numbers; the number of first-time graduates had more than doubled between 1979 and 1996. Unlike its successor, however, the Dearing committee was not asked to assume that a growth in numbers was desirable for its own sake; rather, the inquiry was asked to make recommendations on how the shape, structure, size and funding of higher education, including support for students, should develop to meet the needs of the UK over the next 20 years."—[Official Report, 19 February 1996; Vol. 272, c. 22.] By contrast, the Government's White Paper sets a 50 per cent. target for participation in higher education. The basis for that target is, in essence, a political aspiration—that is okay—based on what the Government believe is economically and sociologically desirable. Their justification for that figure is vague; it does not seem to be linked to the requirements of the jobs market. Indeed, the Association of Graduate Recruiters has reported that the majority of its member companies, which include KPMG, Unilever, JP Morgan and, notably, the national health service, finds that the UK already produces too many graduates.

Mr. Robert Jackson

During my right hon. Friend's visits to Oxford, has she encountered the Higher Education Policy Institute, which has produced papers showing that a reasonable projection is that student numbers will rise to 50 per cent. by the end of this decade? That is a projection, not a target, and it flows from the fact that all Governments—like our own party—are committed to the idea that all qualified young people who wish to enter higher education will be able do so.

Mrs. Shephard

That happens to have been my position. I am perfectly well aware of the existence of the institute and indeed have been in touch with it.

My point is that the Government have a perfect right to aspire to a 50 per cent. participation rate in higher education, but they do not have the right to convey the impression that there is an objective justification for such a target, nor to assume that without such justification they will necessarily carry the day with those who have to foot the bill or, in other ways, accept the consequences. The Government must also accept that since that 50 per cent. expansion is part of the higher education funding crisis—in their terms—they must be able to justify it and persuade others of the rightness of their arguments.

Jonathan Shaw (Chatham and Aylesford) (Lab)

In the light of the comments of the hon. Member for Wantage (Mr. Jackson), will the right hon. Lady tell the queue of parents whose children have two or more A-levels that they will not have a university place?

Mrs. Shephard

My point is that admission to university should be based on merit and capability, not on targets set by the Government according to what is politically desirable. That point is shared by many academics, including Professor Alan Smithers of Liverpool university, who has said: Higher education has been expanded as a superior form of youth training to keep down unemployment. There are a lot of courses which don't lead to a good understanding of the world or equip students for a job. Those are his words, not mine.

Alan Howarth (Newport, East) (Lab)

Will the right hon. Lady give way?

Mrs. Shephard

No, I shall not give way again.

What will the Bill do to address the second problem—that of underfunding—bearing in mind that the Government are in part the author of their own misfortunes? Will its proposals improve the funding position of the universities? Professor Michael Sterling, the chairman of the Russell Group, thinks not. In The Times on 8 January this year, he said: We have all got ourselves into a mode of belief that what is in the Bill will solve the problem. Everybody knows that it won't, including Charles Clarke. It is true that he made those remarks on 8 January, and that 26 or 27 concessions have been made since then, but the principle is still a good one.

The cost of the proposals in the Bill will be more than£1 billion, as the right hon. Member for Newcastle upon Tyne, East and Wallsend (Mr. Brown) has confirmed. That cost will have to be met from the higher education budget, because top-up fees will raise less than £1 billion, once the cost of bursaries has been taken into account, not to mention the cost of any further concessions. There could be another one tonight: who can say? The reference by the right hon. Member for Newcastle upon Tyne, East and Wallsend to the nods and winks from the Treasury was most revealing. Perhaps we shall see more concessions based on such nods and winks. What a pity that the representatives of the Treasury are not in the House this afternoon.

The third problem that the White Paper identifies is the low participation rate in higher education among the three lowest socio-economic groups. On this, the Government have to confront their own broken promises. They broke the promise made in the 1997 general election campaign that tuition fees would not be introduced, when they revealed in their response to the Dearing report that they planned to introduced such fees and that, for good measure, they would abolish maintenance grants. In 2001, they promised not to introduce top-up fees, yet the Bill introduces them.

At the same time, graduate student debt is increasing dramatically. A recent MORI poll published inThe Daily Telegraph last week found that student debt had risen by 74 per cent. over the past four years, with the average graduate debt standing at £8,000. Quite what kind of blow the Government believe the Bill will strike for higher participation from the three lowest socio-economic groups is not clear, but whatever their belief, it is not shared by university teachers and students. As the president of the National Union of Students has said: We must question why the Government refuse to recognise the deterrent that debt is for students from the poorest backgrounds. The Bill cannot achieve what the Government said in their White Paper needed to be done. That alone should be enough to persuade any right-minded person to vote against it, but there are other, more fundamental objections. Not least is the fact that the Government, having trumpeted their intention to give universities and colleges more independence, are introducing a Bill that will, unprecedentedly, impose financial penalties on institutions that fail to introduce approved admission criteria. This extraordinary control-freakery in pursuit of a social, rather than an academic, agenda has never been seen in this country before. It is to be expected, however, from a Government who have shown time and again, today and during the wider debate, that they regard universities, in part, as instruments of social policy, while ignoring their real role, which is to create and disseminate new knowledge and to preserve and transmit to future generations a body of knowledge inherited from the work of earlier generations.

I accept that universities should, and almost always do, make every effort to disseminate what they can offer to students, provide outreach programmes and preparation courses, and sell their wares across the country. However, if they are to remain the guardians of academic excellence and freedom, they must be allowed to admit on merit alone.

James Purnell

Will the right hon. Lady give way?

Mrs. Shephard

No. The Government are the authors of their own misfortunes. The electorate are repelled by their cynical ditching of their election pledges—not once, but twice. The electorate can see that these proposals will help neither students nor higher education and that they will deter, not encourage, young people from less well off homes to enter higher education. They will also strike a fundamental blow at the independence of universities.

Finally, the Government's inability, despite a majority of 164, to handle their own affairs will not be lost on the voters. The Bill should be opposed.

3.30 pm

Alan Howarth (Newport, East) (Lab)

In the early 1990s, as higher education Minister, I thought hard about how to retrieve the universities from what was already a gathering financial crisis. I concluded that we should move towards top-up fees. I was indeed edging in that direction when my Secretary of State, the right hon. and learned Member for Rushcliffe (Mr. Clarke), genially kicked top-up fees right out of play. It is true that they were not practical politics then. The new student maintenance loans were still controversial and the Inland Revenue refused to have anything to do with administering repayments by graduates. Now, more than a decade later, I very much welcome the Bill, as well as the package of student support and funding for the universities, introduced by my right hon. Friend the Secretary of State.

The Government's policy is fair to students. Up-front fees will go and students from low-income households will be vastly better supported by grant, fee remission and bursary. Loans for maintenance will be increased to match average student expenditure on essentials. That means that no one will be unable to afford to go to university.

The loans will carry no real rate of interest. Critics who worry about debt aversion and graduates being locked into additional debt should acknowledge that the Government are not plunging students into mortgage-type debt, credit card debt or loan shark debt. There is nothing for students to be scared of in these changes. While graduates are earning less than £15,000 or not earning at all, no repayments will be required. On earnings of £20,000, graduates will repay annually only half what they presently repay. Outstanding debts will be written off after 25 years. It is a very good deal indeed.

Mr. Tim Boswell (Daventry) (Con)

The right hon. Gentleman, who shared responsibilities with me at the time he refers to, has mentioned a repayment threshold of£15,000. Would he care to speculate as to what the starting point would be under the mortgage-type loans, which he traduces but which he and I administered under the Conservative Government? Would it not already be more than£20,000?

Alan Howarth

We can certainly say that raising the threshold is a substantial improvement and that the important thing to do is to work towards creating better conditions—more propitious conditions—for people to go to university.

The Government are being fair to students in holding down the maximum annual repayable fee to £3,000. If in due course it is proposed that the maximum fee should be raised in real terms, we will all need to think very carefully indeed in considering graduates' income and expenditure patterns. People need to save more for their pensions while shouldering prodigious mortgage costs, bringing up children and, possibly, caring for elderly relatives. They will have to repay university fees as well as student loans. I hope, for the sake of universities, that the £3,000 maximum fee is eventually increased somewhat, but it must be affordable for graduates.

Mr. Allen

Will my right hon. Friend make it clear in terms of repayment of fees that no student and no parent, rich or poor, will pay anything? Graduates will repay the fees, and do so at the rate of £5.25 a week when they are on £18,000 a year and at only £25 a week when they are on £30,000 a year. As my hon. Friend the Member for Lewisham, West (Jim Dowd) said, on an interest-free loan, everybody can realise what a great deal that is.

Alan Howarth

I am greatly looking forward to my hon. Friend's speech.

Variable fees are fairer to students than flat-rate fees. This infamous marketisation will mean, within the strict limit that the Government are imposing, a dynamic of accountability that will help to ensure the responsiveness of university departments to their students. It would plainly be unfair if the Department for Education and Skills, like so many "Gosplanners", were to impose a single tariff for every university course whatever its academic level, quality, cost, popularity and value in the marketplace. I welcome the new powers for the Welsh Assembly, but I urge my Assembly Member colleagues to reconsider their position on variable fees.

I am pleased that my right hon. Friend intends to move towards abolishing the means-testing of student loans. That, too, will be fair to students because it will confer on them financial independence from their parents and therefore treat them as young adults, like their peers who left school and went more or less straight into paid employment.

The policy is fair to taxpayers as well as students. Everyone gains from excellent universities, which are the trustees of our civilisation and inherit, transmit and develop our culture. They ensure that we continue to have a worthwhile life of the mind. Whitehall, in its obsessive materialism and instrumentalism, often ignores that. Whitehall validly recognises, however, that, without more university education, we will be less prosperous. Universities are therefore a public good and the Government are right to plan to increase expenditure on higher education and envisage that five sixths of funding for universities should derive from general taxation. The income from top-up fees will be only one sixteenth of the amount that the taxpayer will provide. That contrast has not been sufficiently noted.

Equally, it is right that taxpayers should not be required to pay for all the increase in funding for universities. Graduates enjoy a large personal benefit culturally and materially from their higher education. Eighty-two per cent. of taxpayers have not been to university. I cannot ask my constituents in disadvantaged wards of Newport, East to foot the bill for all the private and personal gain of university students.

Mr. Rendel

Will the right hon. Gentleman give way?

Alan Howarth

No. Any extra revenue from taxation available for education should go towards improving education from infancy onwards. Precisely because we want more people from disadvantaged backgrounds to our priority for public expenditure must be pre-university education so that we raise aspirations.

My right hon. Friend's policies are fair, too, to the universities. The Government are providing significant financial relief. Top-up fees may bring in £1 billion; a £3,000 fee is a 30 per cent. increase in funding per student; and £1 billion represents 10 per cent. of planned public expenditure on the universities—a significant proportional increase.

The financial plight of the universities as it is, even after the Government's important improvements in funding since 1997, remains dire. Libraries and laboratories are miserably and stupidly underfunded, buildings are dilapidating, staff-student ratios have drastically deteriorated, the findings of the latest research assessment exercise were not honoured and, most unjustly and foolishly of all, academic salaries have become a pittance.

The extra £1 billion from top-up fees comes, of course, on top of the Government's commitment to increase public spending on higher education by 6 per cent. a year in real terms over the next three years, rising to £10 billion in 2005–06. Although that increase falls short of the £10 billion over three years for which Universities UK has—reasonably enough—bid, it will make a big difference. And it is only fair. Universities trebled student numbers in 20 years while maintaining standards in teaching; in 20 years, too, funding per student fell by 40 per cent.; research ratings improved while funding failed to keep pace; academic salaries all but stood still while average earnings in the United Kingdom rose by almost half. No group of workers has increased its productivity more or been so poorly rewarded. Against that record, some of my right hon. Friends should be wary of castigating the universities for poor management.

Top-up fees also have the virtue that they bring a small enhancement of independence to universities. My right hon. Friend the Secretary of State should aim further to increase their independence. The White Paper spoke of the desirability of new endowments. While the Conservatives can dream their dreams, the Government should at least lay the foundation for the long-term creation of endowments. We cannot revert to the vision of that brief moment in the history of the universities—the 25 years between the Robbins report of 1963 and the Education Reform Act 1988—of a fully state-funded system, underwriting students to live and study away from home. We know, too, however, that even as the state has withdrawn from that commitment, it has multiplied its intrusions into the affairs of universities, with a change to the legal status of tenure, the Secretary of State's ever more detailed and prescriptive letters of guidance to the Further Education Funding Council and bureaucratic Pelion piled on Ossa.

Now the Bill creates an Office for Fair Access. Its purpose is unexceptionable; the state has legitimate claims to make, but I find the notion of a regulator for universities disquieting. I hope that my right hon. Friend ensures that OFFA operates with the lightest touch and, that as the Government increase the financial independence of universities, they will become less dirigiste, trust the universities more and allow them scope as free centres of knowledge, thought and teaching.

3.39 pm

Mr. Michael Jack (Fylde) (Con)

I find it somewhat odd to speak in a debate in which the Government of the day include two former presidents of the National Union of Students who, when they stood on those conference platforms and made their speeches defending the interests of students, would not have dared for one moment to advance proposals such as those that have found their way into this Bill. It seems in a way that they have sold out for a mess of pottage, which I find deeply distasteful and disappointing.

In their White Paper "The Future of Higher Education", the Government rightly say Our economy is becoming even more knowledge-based and we are increasingly making our living through selling high-value services…A comprehensive review of the academic literature suggests there is compelling evidence that education increases productivity. I agree with those two sentences.

Mr. Allen

On a point of order, Mr. Deputy Speaker. Is it not a convention that when a Member names or implies the name of another, the Member in question is allowed to respond to an accusation made in that way?

Mr. Deputy Speaker (Sir Alan Haselhurst)

I am grateful to the hon. Gentleman for speaking on the basis of his long experience of procedural matters, but I have not as yet observed a breach of the convention to which he refers. The right hon. Member for Fylde (Mr. Jack) was engaged in a quotation. The convention is certainly correct, but it is up to him whether to observe it in due course.

Mr.Jack

I am grateful to you, Mr. Deputy Speaker.

In answer to a parliamentary question that I asked about the rate of return to the United Kingdom in respect of investment in higher education, the Minister for Children, the right hon. Member for Barking (Margaret Hodge) said that the social rate of return on higher education for men and women entering at 18 was between 9 and 11 per cent. That is a superb rate of return.

The White Paper points out that the more that is put in, the more the nation gains. That is why investing in its brightest and best is the right thing for the nation to do, and why it is wrong to do as the Bill does and put barriers in the way of access to higher education for talented young people.

Mrs. Lorna Fitzsimons (Rochdale) (Lab)

After being named, I had given up hope.

As one of, in fact, six former presidents of the NUS present in the Chamber, all of whom support the Government's proposals, I can safely say that I am on record as supporting a graduate tax when I was president.

Mr. Jack

The two former presidents to whom I was referring are the Foreign Secretary and the Secretary of State for Education and Skills, who, unlike the hon. Lady, were of my vintage.

Let me say a little more about the rate of return to the nation. The House of Commons Library has calculated for me that graduates who, by definition, are earning more are paying more in taxes. There is already a tax differential of some £2000 a year between what a graduate pays in tax and what a non-graduate pays. On that basis, the nation is earning a very good rate of return on its investment in graduates.

I believe that, as a point of principle, it is right for the nation to invest in its brightest and best for all our good. The young lady who tackled the Prime Minister on "Newsnight" asked whether the dustman would not be glad that she, a doctor-to-be, had used her skills and talents to provide the cure that he needed without being deterred from entering the profession—like many graduates who wish to become medical students—by talk of £60,000 of debt.

Jim Sheridan (West Renfrewshire) (Lab)

Some of the lowest earners in the country—certainly in my constituency—are paying taxes so that people can be educated in public services, only for them to take their skills abroad. The taxpayer gains no benefit from his investment in education.

Mr. Jack

One would hope that anyone financed by public funds would give something back to the United Kingdom. I take the hon. Gentleman's point, but an economy that is driven increasingly by cerebral activity must invest in its brightest and best. I do not think that variable fees are the best way of proceeding with that agenda.

If the Government were not worried that the increased cost of higher education would put people off, why have they set a level of £15,000 below which they will fund and above which they will not? If the cliff edge is £15,000, a family with an income of £20,000 would face a difficult situation. We have discussed large debts, and in my judgment they will put people off. The magazine "Public Finance" surveyed finance directors of major companies and found that 85 per cent. of them believe that the increased cost of higher education will put people off, which is the reverse of the objective of Government policy.

I am the father of two young men who graduated last year, one as an economist from Loughborough university, the other, after six years of study, as a doctor. I calculate that with top-up fees it would have cost the doctor approximately £50,000 and the graduate economist approximately £25,000. Whatever anybody says, such debt or cost levels are bound to affect people's university choices.

The vice-chancellor of the university of Central Lancashire explained his worries to me about the effect that the advent of variable fees will have on the choices that people make about education, and he definitely anticipates the introduction of a two-tier system. I would not like a bright potential doctor from a low-income background to examine the debt repayments that they would face and decide that they would not necessarily go into medicine and would look for a cheaper alternative. That is not the best way to harvest the human skills in this country.

Alternative sources of funding have not been discussed so far in this debate. The House of Commons Library analysis of the resources of higher education institutions produced some interesting information. In 2000–01, for example, the Oxbridge group of universities achieved 10.6 per cent. of their income from endowments and investments while the totality of universities achieved only 2.2 per cent. from such sources. The same data shows that while the Oxbridge group of universities achieved 33.4 per cent. of its income from research and development through research grants and contracts, the totality of universities achieved the low figure of 16.4 per cent. from such sources. If one considers the income from research and development and endowments as well as the possibility of former university students paying money back to their colleges, it is clear that there are alternative ways to bring in substantial sums of money to assist the universities and make them less dependent on an effectively limited sum of money from general taxation.

We must think carefully about the different ways in which higher education can be gained. The Open university is a remarkable institution. I tabled a parliamentary question that illustrated that under the current arrangements the cost to a graduate of the Open university is £4,400. I know that all young people want to go away and establish their independence—it is a wonderful experience and I am privileged enough to have had a university education. However, in the times in which we live we may have to examine other methods. We should carefully examine expanding both the Open university and vocational degrees, which the Government are currently developing, and consider ways to increase access to higher education via extended learning. We should look at reducing the costs of higher education for some people to try to get us off the treadmill that the only way to acquire a university degree is by the conventional route into our current institutions of higher education.

There are inconsistencies. The son of a family friend graduated two years ago from Leeds university with a geography degree. He examined the world of work and decided that by going to his local college of further education and retraining for a plumbing qualification at effectively no extra cost to him he can enhance his salary from what he could have earned as a graduate.

Such inconsistencies point back to an issue that has already been raised by right hon. and hon. Members in this debate: the real key to educational opportunity in the United Kingdom lies in improving the output of our secondary education sector. That is how more doors can be opened to the brightest and best in our society to go forward to higher education. We need innovative and lower cost ways of obtaining that education, but above all we must maintain a high level of public investment in our higher education—our universities—to maximise for Britain the potential in humankind. Investing in people is a national responsibility: it should be something to which we are all proud to contribute, for the collective benefit of the country.

3.50 pm

Mrs. Anne Campbell (Cambridge) (Lab)

I speak as a longstanding opponent of variable top-up fees. Indeed, I put my opposition on record as early as 1997. However, we now have a different proposition from the one that came from the universities in 1997, before the election in that year. The proposals are for capped fees and include considerable help for poorer students. I shall come back to that point because although the changes do not satisfy my concerns completely, the present proposals are much better than the original ones, which would have allowed the universities to raise unlimited sums from fees.

The money has to come from somewhere. That recognition is sadly lacking on the other side of the Chamber. Reducing student numbers or trying to constrain how many people can go to university cannot possibly be the answer. To tell a young person with two good A-levels that they cannot go to university because the Government cannot fund enough places would be cruel and unnecessary. It would also lead to poorer economic performance in the long term. The Liberal Democrat proposals to fund higher education completely from taxation are dishonest. If we considered the totality of taxation raised, we would find many other areas that were more important to social equality than higher education.

Dr. John Pugh (Southport) (LD)

The hon. Lady uses the word "dishonest". Is she not simply saying that we have different priorities? The fact that we have different priorities from you does not make our proposal dishonest. Will she elaborate on what she means by dishonest?

Mr. Deputy Speaker

Order. The hon. Gentleman must use the correct parliamentary language.

Mrs. Campbell

I shall elaborate on what I meant when I described the Liberal Democrats' proposals as dishonest. They pretend that everything can be funded by a small increase in taxation. It is easy to talk about 1p on the general tax rate, or increasing top-rate tax to 50 per cent., but they do not say how that would fund all the different promises that they have made or how much those promises would cost.

Lembit Öpik

Will the hon. Lady give way?

Mrs. Campbell

No, I shall not give way again. I have answered the point.

Because of my opposition to variable fees, but also because I recognise the good aspects of the Bill, I decided to ask my constituents what they thought and I conducted a survey by several different means. The Cambridge Evening News helpfully published one of my consultation survey forms. I also distributed paper copies to schools and asked them to ensure that pupils from year 11 upwards answered my questions. I had an online consultation on my website, and the Cambridge university students union conducted a very similar one on its website.

I found that I received very different answers from different segments of the population. From the Cambridge Evening News, from the hard copies and from my website, which had around 650 responses, the results were as follows: 36 per cent. would prefer to retain the status quo; 29 per cent. thought that I should support the Government; and 36 per cent. were undecided. I also received some very good comments as a result of those surveys, and I shall return to those later.

The Cambridge university students union survey received 835 responses, showing very different results: 73 per cent. were in favour of the status quo, compared with 18 per cent. who wanted me to support the Government; and 9 per cent. were undecided.

Lembit Öpik

rose—

Dr. Palmer

rose—

Mrs. Campbell

I give way to my hon. Friend.

Dr. Palmer

I am very grateful to my hon. Friend, not just for giving way but for giving me permission to conduct the same survey on the Broxtowe website. I confirm that her results were not a flash in the pan. In Broxtowe, more than three times as many favoured the Government's proposal as favoured the status quo.

Mrs. Campbell

I am conscious that the students union ran a big campaign to try to get people to pressure me into voting against the Government on this matter. The students concerns must be taken notice of. In the past 24 hours, I have gone back to both students union presidents, Ross Tuckley at Anglia polytechnic university and Ben Brinded at Cambridge university, to discuss with them in more detail exactly what their objections are. They both told me that their principal objections concern variability—the variable fees—and fall into roughly three categories.

The first is the cap, and fears about raising the cap. I appreciate the promises that have been made and the fact that there are constraints in the Bill. I know that it will take a vote on the Floor of both Houses to raise the cap, and that my right hon. Friend the Secretary of State has made an undertaking, which is very much appreciated, that the cap will not be raised until the election after next. However, as one student put it to me, we would be letting the genie out of the bottle. Whether the cap goes up in 10 years' time or 12 years' time, or whenever it is, that will still lead to a far greater degree of variability between courses than exists at present.

I understand that a possible amendment has been discussed with my right hon. Friend, who is not inclined to accept it at the moment. I would certainly support an amendment in Committee or on Report to limit the raising of the cap to inflation increases. I hope that we shall be able to discuss this matter during the Bill's passage.

The second objection is that variability will lead to a two-tier university system, with cheaper courses leading to an inevitable decline in quality at some universities. My right hon. Friend has written to me about this. I received the letter just a few hours ago, and I am grateful to him for it. He tells me that the Higher Education Funding Council is conducting a review of the way in which it allocates funding for university teaching. That could lead to the possibility of a greater Government subsidy for universities that might be disadvantaged because they cannot attract the same fee. I hope that that is so, because it would be a very positive move.

The third objection is that students will choose their university according to cost, rather than opting for the one that best matches their attitudes and abilities. I am delighted that an independent commission will examine the effects of the new funding regime. It is important that that be done as soon as there is any evidence that there is a basis for this objection. It is a real concern.

My difficulty is that, although I have considerable concerns about variability, I do not want to lose those aspects of the Bill that end up-front fees, reintroduce grants, and produce a higher rate of loans—so that students do not have to take out commercial bank loans—and easier debt repayment.

One of the reasons why I intend to abstain instead of voting with the Opposition tonight is because of two e-mails that I have received from constituents as part of the survey. Both are from Cambridge university students. One, who is the first in his family to enter higher education, having attended a comprehensive school in the north-west of England, says: I believe the Government's proposals are the only viable way forward for the future of university funding. After discussing these matters with my family, we all came to the conclusion that I would have been in a much better position had I gone to university under the system as outlined in the Government's proposals. Another student, who is quite active in the students union, says: I work voluntarily at a youth club on one of my council estates in Cambridge, and meet many kids who will probably never go to university, but this is not because of fees; this is because of their nursery education, their primary education, their poor nutrition, their lack of after-school clubs. I grew up on a council estate and under the Tory party my family were so poor that there were times when the only meal I got was"—

Mr. Deputy Speaker

Order.

4.1 pm

Mr. Simon Thomas (Ceredigion) (PC)

I want to explain why I and my colleagues will vote against the Bill tonight, and why we will do so on the basis of the Bill as we see it and read it, not on the basis of hidden promises—letters being sent to Back Benchers on all sorts of deals that are being stitched up here, there and everywhere. We need to debate the Bill and the effect that it will have on the current higher education sector. I hope that the Bill does not pass into Committee, but if it does, we shall be able to see how it may be improved.

The problem of funding higher education is shared across England and Wales. The leadership of Welsh universities, however, holds a different view of the Bill from that of Universities UK. Two thirds of Welsh vice-chancellors have said that they oppose the Bill—so some vice-chancellors do oppose it. In the past couple of weeks, I have had the benefit of being part of a Royal Society exchange programme with a scientist at the university of Wales in Aberystwyth, and I have learned through discussions with him and his colleagues just how deep is the crisis in our research institutions—in funding and so on.

Pete Wishart (North Tayside) (SNP)

My hon. Friend is probably aware, too, that almost all the academic community in Scotland opposes the Government's plans for tuition fees. Is it not therefore extraordinary that Scottish Members are prepared to go through the Lobby as voting fodder for the Government tonight, instead of backing the Scottish interest and ensuring that it is protected?

Mr. Thomas

I agree with my hon. Friend. It is clear that the Bill affects Scotland as much as it does Wales, England and Northern Ireland. Given that students move from all parts of the United Kingdom to other parts of the United Kingdom to pursue their higher education, we must address how best to tackle the issues for all students, whichever funding mechanism arrives in those countries.

Lembit Öpik

Will the hon. Gentleman give way?

Mr. Thomas

In a minute.

Yesterday, I met Aberystwyth students on their protest against the Bill, and today I met Lampeter students who were here to lobby me. I have also met members of the Association of University Teachers in the universities in my constituency, so I have come to realise the extent of the salary difficulties currently confronting so many higher education staff.

However, the debate is not just about the funding gap that exists in higher education; it is also about the aspiration gap that holds many young, bright people back and prevents them from entering higher education. We already know that poorer students are 45 per cent. deeper in debt than their richer counterparts. Let me put it like this: if someone whose parents earn £20,000 a year goes into higher education, under the present arrangement they will come out with debts of about £10,000, but if someone whose parents earn £30,000 a year goes into higher education, they will come out with debts of about £7,000. An incredible gap already exists, which puts off poorer students.

I do not accept the idea that it is somehow patronising to think that students from poorer backgrounds are put off by debt aversion. That problem is there in all the facts, all the statistics, and all the work commissioned by the Department itself. It is clear in Claire Callendar's work and in the Rees report commissioned for Wales. Debt, or the fear of debt, is the single most influential factor in putting off students from poorer backgrounds from entering higher education. Indeed, it is cited as the No. 1 factor by three quarters of the respondents to any survey that has been undertaken, in England and in Wales. The Rees report made that point very strongly in the Welsh context.

We must assess whether the Bill deals with the two main obstacles: the funding gap for higher education, and the aspiration gap for many of our brightest and best. For a start, the Bill barely supplies 10, 11 or 12 per cent. of the funding gap—£1 billion out of £8 billion, £9 billion or £10 billion, depending on how we look at it. The Bill is flawed even in respect of what it is trying to achieve, irrespective of whether we agree with the principles. It means that we must still turn to general taxation to meet the rest of the funding gap, which poses the question why, if general taxation is good for £7 billion, it cannot be used for £1 billion. But there we are; the Government have set their hearts against that.

The Bill also poses the question of a return to polytechnics or to two-tier universities in which some are only teaching institutions and the cream do the research. The Bill can only exacerbate the debts already suffered by many students.

Lembit Öpik

I agree with the hon. Gentleman about the crisis that the Bill will cause in Wales if it is passed. On the return to the binary divide, does he agree that it is wholly contradictory for former NUS presidents who fought hard to abolish the binary divide now to support a Bill that will reintroduce it? If there is any lack of honesty, surely it is pretending that somehow the Bill is equitable, when all the evidence suggests that it is not—certainly not for Welsh students.

Mr. Thomas

I tend to agree with the hon. Gentleman, but the real disgrace is stating clearly in the manifesto that something will not be done—indeed, that it will be outlawed—and then doing it. That is even more disgraceful than the changing position of NUS presidents. We all know what sort of positions NUS presidents have adopted over the years to get where they are.

In those two respects, the Bill is bad enough, but there is a final principle that I strongly oppose. It would be enough to drive me through the No Lobby tonight even if it were not for the rest of the Bill and the dog's breakfast that it will introduce into higher education. I mean the introduction of market forces and variability into our higher education system. I cannot believe that Labour Members, having watched 18 years of what market forces did to the communities that they represented when they were in opposition, are so slow witted that they cannot deduce what market forces will do to higher education. The cap will not keep tuition fees down; it will not work.

Have market forces ever been capped in respect of anything that has been privatised in this country? Have market forces ever addressed the real needs of poorer people? It has never happened. We heard from the right hon. Member for Newport, East (Alan Howarth) where the idea came from—straight from the Conservatives into No. 10 think-tanks. I will oppose that in principle.

Mr. Parmjit Dhanda (Gloucester) (Lab)

rose—

Mr. Thomas

I regret that I shall not give way again, because I do not have much time left and I have already given way twice.

Capping variable fees is rather like trying to be a little bit pregnant: it will grow out of all proportion and all sizes. The Secretary of State, will not be able to stake his mortgage by controlling variable fees. The principle has been yielded and the principle will out.

It is wholly honourable to say that one wants fully to embrace variable tuition fees in higher education. I disagree with it fundamentally, but it is honourable for people to say that that is what they want. What is a disgrace, however, is trying to hide behind reviews, commissions and all sorts of sticking plasters—they are not yet in the Bill, but we are told that they will be introduced in Committee—and pretend that the principle of variability and market forces running through our higher education institutions is somehow not there. It is as if the Cheshire cat was there and now only the grin is left—but the grin is a nasty snarl and grimace in what it means for higher education.

I now want to discuss the fact that the Bill devolves power to Wales. One might expect any Plaid Cymru Member to vote for any form of devolution, but the principle that market forces will exist throughout our higher education system is more important to me than devolution. I do not accept that the Bill is the only opportunity that we will have to devolve powers on higher education to Wales. The Richards commission will report at the end of March, so that is the appropriate time to consider the panoply of powers for the Welsh Assembly and, hopefully, to make it a proper Parliament for Wales. Let us consider what the Bill means in the Welsh context.

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

Will the hon. Gentleman give way?

Mr. Thomas

I regret not, although I hope that the hon. Gentleman gets an opportunity to speak. He will know that 45 per cent. of Welsh students study in England and that more than half the students studying in Wales are from England. In that context, the Bill makes no sense whatever. The devolution of power to the National Assembly is a bit of a nonsense and a sop, because if the Assembly does not have powers on taxation or full legislative powers, it will not be able to address the matter. I would not oppose the measure if it were all that was in the Bill, but given that the Bill will introduce variability and market forces, my hon. Friends and I will oppose it. Moreover, the Secretary of State for Wales, Jane Davidson, the Minister for Education and Lifelong Learning in Wales and, now, the right hon. Member for Newport, East have accepted that top-up tuition fees will inevitably come to Wales at some stage.

I shall tell the House what Plaid Cymru as a party believes in. We strongly believe that the taxation system is the best way of addressing national needs, and higher education is a crucial national need. What is more, it is even more acceptable to fund higher education through taxation when the Government want 50 per cent. of young people to go to university than it was when 25 per cent., 33 per cent. or even 8 per cent. of young people went. The taxation system can, and should, be used to pay for the tuition of students in Wales, England, Northern Ireland and, indeed, Scotland, because that is the best and fairest system.

I conclude with a story from ancient history about the Greek colony of Locri. According to Gibbon, a Lochrian who proposed any new law stood with a cord around his neck and if the law was rejected the innovator was instantly strangled". I am not saying for a moment that the Secretary of State for Education and Skills should be strangled, but the Bill should be killed off at birth. It is the wrong Bill for the wrong time, and it will not help the education sector of this country.

4.12 pm

Mrs. Lorna Fitzsimons (Rochdale) (Lab)

It is interesting to be a member of a rare species in the House of Commons—an ex-president of the National Union of Students. It is even more interesting that Opposition Members claim to know what I used to stand for. It is amusing sport because all six ex-presidents stand firmly in the Government's camp on the proposals—[Interruption.] I used to spar with the hon. Member for Montgomeryshire (Lembit Öpik) during student politics, and I shall take joy in reminiscing in order to show how absolute overt political opportunism is driving the Opposition parties. I remember negotiating wit0h them when I was president of the NUS, and I have been lobbying people—primarily those on the Conservative Benches—on higher education since 1986.

I was the first person in my family to go on to higher education. I am from a constituency with, historically, appalling representation in higher education. I am dyslexic and I have only two O-levels. When I went on to higher education at a college of art, the Conservative party tried to shut it. When I became president of the NUS, it tried to shut that, too. It failed on both counts, which suggests to me that it will fail again tonight. It will fail due to simple reasons of principle on which all six ex-presidents stand together and are clear.

We all support the idea that more students should access higher education. When I was accepted by Loughborough college of art and design, four equally qualified young people were not. They had exactly the same qualifications as me, so our admission was decided by the luck of the draw. That system squandered the nation's talents. It will not surprise many people outside the House to find that naked snobbery is at play in this place because the only people who would benefit from Conservative Members' blatant opportunism would be those who have always been in this country's elite and have always held the majority of power through knowing the benefits of higher education.

Lembit Öpik

Will the hon. Lady give way?

Mrs. Fitzsimons

No, the hon. Gentleman sought to tell us about the policy of getting rid of the binary divide. Most people outside will not have a clue that the binary divide was the notional divide between the old universities and red brick universities and polytechnics. I was the president of the NUS who happened to think that I was the luckiest girl alive when the binary divide went and we naively thought that there would be a level playing field in higher education. What a silly girl I was! The reality was that there were research universities, universities of research and teaching and teaching universities, and that the quality was stratified because the funding system was stratified and because of the disproportionate benefit of getting research funding into universities. That has given years and decades of privilege in British higher education, so somehow to claim all of a sudden that we are creating a two-tier system is totally and utterly to negate the evidence. I am one at least who is honest enough, having fought and won a campaign, to admit that we were deluded in what the outcome would be. That brings me to the manifesto.

Lembit Öpik

Will the hon. Lady give way?

Mrs. Fitzsimons

I will not; I will continue.

One of the things that I certainly wanted, and still want, from a Government—sadly, we did not get it in the 18 years of the Conservative party being in power— is a Government who are big enough to say, "Sorry, we made a mistake." The most dangerous thing in politics is someone who knows that they made a mistake, regardless of the rights and wrongs, and is not courageous and big enough to admit to it. I, for one, think that the future of our country's higher education system and constituents' opportunities are big enough for us and the Prime Minister to say, "We made a mistake", because that makes for a healthy democracy.

Lembit Öpik

Let me stress that I enjoy sparring with hon. Lady—I may hate the sin, but I still love the sinner. My concern is that she now admits that the manifesto was erroneous. Is she also saying that she and every Labour NUS president that I knew who opposed this kind of funding proposal for students also made a mistake? Is she saying that she made a mistake when she was president of the NUS, and, if so, why should anyone trust the student Labour movement again?

Mrs. Fitzsimons

Because our top priority was the reintroduction of maintenance grants, which is what the Bill will do. The Conservative Government presided over a massacre of the student grant. They introduced the Student Loans Company, which was so costly in its administration that it was cheaper to give students the money. I do not support any offering from the Conservative party that says that it has any of the interests at heart of any NUS president. I have spoken to 12 of my predecessors, who all support what the Government are doing because they are bringing back for the first time in living memory a decent grant that will help people who are disproportionately disbenefited by the fact that they are not now represented in higher education. Even when we had a full grant, no more than 20 per cent. of the participants in higher education came from the lower socio-economic backgrounds. So this is not all about money.

Mr. Boswell

I am grateful to the hon. Lady for giving way. I detect a certain degree of rewriting history, given our exchanges when I was a Minister and she came to see me. Will she tell the House whether the real value of the maintenance grant that is now on offer will be greater than the real value of the maintenance grant that was on offer under Conservative Governments some 10 or 12 years ago?

Mrs. Fitzsimons

Absolutely and utterly, and I had the debts when I left university to prove it—£4,500. The bottom line in those days was that we had to have three jobs to make ends meet. I come from a background where both of my parents were unemployed for long periods in their lives, and to claim that there was any panacea or great thing in the past is to rewrite history, as the hon. Gentleman suggests. The reality is that I am proud of this package because it recognises the historic disbenefits to the working classes in terms of representation in higher education.

Lynne Jones

Will my hon. Friend give way?

Mrs. Fitzsimons

No, I will not; I have given way enough.

The proposals will also get rid of the historic discrepancy between part-time students, FE students, mature students and overseas students, whereby they have always experienced variable fees. We will now ensure that there is a level playing field. For once and for all, we realise that those in the protected group of three-year undergraduates are not the only people in higher education and that those courses are not the only vehicle for studying in higher education. Ensuring a progression from the early years right the way through is the only way that we can capitalise on people's true potential.

Half a person's brain capacity is developed by the age of six, yet more money is spent on educating undergraduates. That is absolutely and utterly untenable. Having lobbied Parliament on higher education since 1986, I cannot remember such a heated debate about the historical lack of funding for the under-sixes. We need to examine our consciences because vested interests are at play much of the time. I admit that we used the fact that many university towns were marginal seats to win campaigns, but that does not make good policy. I would defend the Bill anywhere because it benefits the vast majority of the constituencies that we represent and it is about honest politics.

As to the binary divide and two-tier system, when I was on the national executive of the National Union of Students polytechnics had to compete for 10 per cent. of the funding council's formula. We thought that meant doom—that the poorest in terms of quality and money would go through the floor and the rich would get better and better. That did not happen. There has been variability in the funding formula—such as the top-up given to Oxbridge and the 10 per cent. for the old Polytechnics—from time immemorial, but it has not distorted the market.

The UK has one of the most highly scrutinised higher education systems in the world, although it can go still further in terms of quality. At the time of the debates on Robbins, only 6 per cent. of the population entered higher education. Opponents of the proposed expansion to 8 per cent. said that degrees would not be worth the paper they were written on. I urge caution by those of my hon. Friends who seek to argue that because more people are achieving degrees, they are not worth as much. Media studies have become a euphemism for something that is not a genuine degree course, but the correlation between such courses and employment is sometimes greater than with courses that some people would eulogise as being purely academic. That was the case when I was lucky enough to be an undergraduate. In those days, the Conservative party was trying to close our colleges on the pretext that fine art or textile graduates could not obtain employment. We proved that they did.

This Bill marks a huge, historic move in the advancement and representation of people who have not had the benefit of higher education.

4.23 pm

Mr. Robert Jackson (Wantage) (Con)

I intend to vote with the Government tonight. As I agree with the arguments made by the Secretary of State, I will not repeat them. Instead, I will say a few words about the two main arguments adopted by my hon. Friend the Member for South Suffolk (Mr. Yeo). I use the word "adopted" advisedly.

My view of the so-called access regulator is that it is an unnecessary development but may be desirable. I rather share the view of the right hon. Member for Newport, East (Alan Howarth), who hinted at improvements to be made in Committee and in the other place. An access regulator is unnecessary because anyone who is familiar with our universities knows that there is no question of their exercising class discrimination in their admissions policy—either consciously or unconsciously. However, a regulator may be desirable because, as the Chairman of the Education and Skills Select Committee pointed out, there is certainly a problem of relatively low demand for university places among young people from underprivileged backgrounds. I believe the reason is the poverty of academic ambitions and attainments in all too many state schools. The regulator may turn out to have a positive role as a useful source of pressure on such schools to raise their game.

The view of my hon. Friend the Member for South Suffolk, on the other hand, is that the access regulator represents a serious breach of the fundamental principle that universities should be completely free to determine their own admissions policies. I agree that there should be no political interference in university admissions.

Mr. Fallon

Surely the distinction is that regulators introduced by statute or Parliament are independent of the Department or Secretary of State who establishes them. The regulator established by the Bill "must" follow the guidance of the Secretary of State.

Mr. Jackson

My hon. Friend has made a good point, which I hope will be pursued in Committee.

I would like to return to the point of principle raised by my hon. Friend the Member for South Suffolk. I agree that there should be no political interference in university admissions, but he has deliberately exaggerated—and I suspect that my hon. Friend the Member for Sevenoaks (Mr. Fallon) has too—the threat posed by the regulator to make a debating point against the Bill.

If my hon. Friend the Member for South Suffolk was genuinely concerned about university independence, he would show a better understanding of the implications of abolishing fees, forbidding universities to charge them and leaving universities wholly dependent on the state for funding. I wonder whether he and other colleagues have ever thought seriously about why Conservatives favour lower taxes. We do so not for the indulgence of greed, nor because lower taxes promote faster economic growth. Why, after all, is economic growth desirable? We favour lower taxes because there is a fundamental connection between financial independence and moral and political independence. Tories believe that individuals and civil institutions alike flourish best in conditions of economic and moral freedom. In opposing this important and valuable legislation, Opposition Front Benchers are failing to make that essential connection, which goes to the heart of the Conservative tradition. I do not believe that a concern for university independence and freedoms that fails to make that connection is genuine.

My hon. Friend the Member for South Suffolk also argued that the universities would be financially better off without the new fees. He takes advantage of the fact that, if the Bill is passed, its first year of operation will inevitably fall outside the Government's financial planning horizon. We therefore cannot know—the Government cannot tell us, except perhaps in nods and winks—what the total sum provided by the Government for higher education in that year will be, although there have been welcome assurances that they will continue to stand by the universities.

There is an obvious sense in which my hon. Friend is right. If money is spent on A it cannot also be spent on B. If we spend money on financial support for students from poor families, we cannot also spend it on funding universities.

Clare Short (Birmingham, Ladywood) (Lab)

I follow the hon. Gentleman's argument. but does he think that proposals for a graduate tax would prevent the up-front debt that puts people off going to university? Individual students would, however, make a lifelong commitment to pay something extra for the privileges that they will get. Is that not a better solution?

Mr. Jackson

No it is not, because a graduate tax would be paid to the Treasury and would be part of the general funding that goes to the Government. It would not provide the financial independence, leverage and margin for manoeuvre that is necessary to secure the universities' independence.

To return to my hon. Friend's argument, it is true that if we spend money on A we cannot also spend it on B. That, however, begs a question. To take an example from another field, if we spend money on the Navy we cannot spend it on the Air Force. However, we need both a Navy and an Air Force. By the same token, we need funding both for universities and for students. My hon. Friend the Member for South Suffolk shed a substantial number of crocodile tears on account of the possible deterrent effect of higher fees on students from poor families. At the same time, he denounced, both explicitly and implicitly, the measures that the Government propose to introduce to address the problem. Would he therefore not take any measures to support poorer students? Would he withdraw the maintenance grant? Would he cancel the interest rate subsidy on student loans? Students and their parents ought to be told. Is he serious about these issues, or is he once again just making a debating point to oppose this important legislation?

My right hon. Friend the Member for Fylde (Mr. Jack) spoke about an endowment policy. I am glad that has made an appearance. It was the Conservative party's commitment in its last election manifesto, referred to by my right hon. Friend the Member for Richmond, Yorks (Mr. Hague). Endowment is a fine thing, but are my colleagues, my right hon. Friend the Member for Fylde included, aware that an endowment fund constructed on the model of the Wellcome Foundation, the foremost education charity in the country, would require capital of some £30 billion simply to match the additional income generated by the fees introduced by the Government?

Where will money on that scale come from? Nobody knows. I certainly do not think my right hon. Friend the Member for Richmond, Yorks knows. Let me tell my colleagues something—donors will not give serious money to what they see as state institutions. Why should I give money to compensate for the abolition of fees, which most of those who benefit from a university education are perfectly able to pay?

Funding universities is not rocket science. Looking around the world, it is obvious that there are only two ways to go. I leave aside the idea of an endowment fund, which is more of a fantasy than a policy. One option is that the taxpayer pays the lot and fails to pay enough. That is the European system, which has resulted in the decline of what were once the finest universities in the world, in Berlin, Paris and Heidelberg. Where are they now? This is the path that we, too, have been treading over the past three decades, with the same dismal consequences staring us all in the face.

The other option is mixed funding, whereby taxpayer funding is topped up by student fees. That is the basis of the immensely successful American university system. It has been introduced successfully in Australia and is being debated and developed in many other countries. This is the option that the Government are proposing and which the Opposition will be voting against tonight.

I will go into the Lobby with the Government with my head held high. The time will soon come when the electorate will ask whether the Conservative party is once again a serious party of Government. I must tell my right hon. and hon. Friends on the Opposition Front Bench that when that time comes, I believe that the way they have chosen to handle this issue will be remembered and will be held against them.

4.32 pm

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

The Bill gives us a once in a generation opportunity to deal significantly with the future of higher education. If we are to sustain widening access to higher education, it is important that we underpin it with firm foundations and firm principles that make that access work. As the hon. Member for Wantage (Mr. Jackson) pointed out, 50 per cent. of young people going into higher education by 2010 is not an arbitrary target plucked out of thin air. It represents roughly the number of young people who will in principle have achieved the educational qualifications to apply to take a course of study by that date.

In the 1990s, the number of people who were qualified to take a course of higher education rose dramatically, and the numbers in higher education rose dramatically, as commentators of the time described it, "as if by accident". That was essentially a response to market incentives to expand, but with no long-term underwriting of those results. As we heard, funding per head of students fell by 36 per cent. during that period.

We heard today from the Opposition that they propose not to have a top-up fee and not to cap the number of students going into higher education. I am not sure what they do propose. All hon. Members in the Chamber are equally puzzled. The only explanation that I can come up with from what we have heard today is that the proposal from the Opposition might return us to the 1990s, with market incentives for institutions to expand: money goes per student. but we do not have the fundamental foundation that is needed to ensure that money for teaching expands, and that the universities have the money in their forward resource accounting to make sure that they can take the numbers that they require and ensure that they are taught and that the degrees are worth it after those students have gone through the university system.

What should this opportunity consist of? It should make a reality of the rhetoric of access. It should ensure that the teaching of a wide access regime in higher education is buttressed by proper funding. If we are to require some of that funding to come from fees, it should ensure that the effect of the fees does not cancel out the gain of access.

Access to higher education, of course, should mean access to all courses in all universities, for all those who are able to take advantage of them, not access to some universities for the members of elite families who traditionally send their children into higher education, and not access to newer universities and new degrees only for those who are making up the 50 per cent. figure. It seems to me that market variability in fees is inimical to those principles. It may mean that if colleges can charge what they like and access has been secured, a new burden in the shape of price, not qualification, arises for the student wishing to undertake the course for which they are qualified. It seems to me that the proposals for this Bill before Christmas did not make clear how that problem was to be overcome.

That issue is much clearer now, however, because of the £3,000 up-front grant for students going into higher education—money in pocket. The hon. Member for Harrogate and Knaresborough (Mr. Willis) did not explain why there is a fundamental difference between fee remission and money up front. Money up front is money in one's pocket to go to university—to marshal one's resources to get to university and to overcome the problem that many students from poorer backgrounds face, of being unable to contemplate how to get to university let alone how to get through it. That is a fundamental change.

Mr. McLoughlin

Suppose that two people do the same job and earn the same money. It is possible that one of them will have to pay back the fee while the other will not have to pay anything back. If the proposal is supposed to be based on what the student earns later, will the hon. Gentleman explain the fairness in that?

Dr. Whitehead

The hon. Gentleman has misunderstood fundamentally what is entailed in moving from fee remission to up-front grants, whereby the poorer student pays the fee and has a grant to undertake activities at university when they go there. The fee repayment is therefore identical for all students, and people will pay the same, as far as fees are concerned, when they are sitting next to each other in the workplace. The difference will be that the student who has gained access as a result of having money up front will be able to navigate their way into and through university and to gain their life chances as a result of that up-front money.

Mr. James Clappison (Hertsmere) (Con)

Is it not the Government's case that that money is meant to represent the £3,000 towards the fees, and that part of those fees is being paid already? Is it not unfair to the person who is in the same position later in life that the repayment is based on past income?

Dr. Whitehead

With great respect, I am afraid that the hon. Gentleman is also wrong. Under the new proposals confirmed today, all students would pay the same fee later in life, the difference being that a number of students would have a grant to navigate their way through university—quite a different process.

We heard from the Liberal Democrats that they would fund all this from taxation. I heard from the hon. Member for Harrogate and Knaresborough the interesting proposition that for every £1 billion that is put in under the Liberal Democrat proposals, we will save £450 million. As £450 million, under the Government's current proposals, is the resource accounting budget difference between what we put into universities at the front and what we hope to collect— the money that we lose—it is a wonderful concept that by not collecting the money at all we save £450 million. If that is the basis of the Liberal Democrats' calculations, we do not set much store by them. The other key point that concerned me when the Bill was first published is whether its provisions would rapidly degenerate into a truly market-variable regime, with the effects on access that I described. My understanding of the original pledge on top-up fees was not that fees would never rise, but that we should prevent a free-for-all whereby universities would charge what they thought the market could bear. The £3,000 cap on fees appears to do just that. The Bill does not propose a market in variable fees—if a market in variable fees means that fees go up as well as down—but, in essence, a fixed fee with discounts.

The crux of the debate is this: are the Government about to cut loose and unleash market variables? People may well have been concerned about that before Christmas, but they must surely change their minds given that there will now be a review of the system after three years and a vote on the Floors of both Houses in the next Parliament on any proposals to lift the cap. It is not possible, as some hon. Members suggest, to slip a raising of the cap through under the negative procedure during an afternoon sitting involving a dozen Members.

These changes should reassure all but the most determinedly distrustful of critics. We have to make a choice on whether we throw away this opportunity to move decisively towards an era in higher education where, although we have not solved the entire problem of funding, we have moved a long way towards ensuring that the teaching of students, the pay of lecturers, the circumstances in which students are taught, and conditions and salaries in universities are catered for through a real increase in provision per student over the years ahead. Moreover, we have achieved a breakthrough in terms of maintenance for students from poorer backgrounds, thereby improving their ability to navigate the system.

Do we throw away those gains because of our belief that the Government might resile from what they have said about the way in which the fee will work in future years? This is not an equation that anybody with the interests of higher education at heart can easily balance without concluding that it is right and important to give the Bill a Second Reading, examine it closely in Committee and ensure that it provides the gains that we have heard about, which are important for the future of access to higher education.

4.43 pm

Paul Holmes (Chesterfield) (LD)

When I made my maiden speech in this Chamber on 21 June 2001, standing on this spot, one of my subjects was my opposition to tuition fees, which I explained by reference to a couple of examples based on my experience.

I was the first member of my family, a family living on a large council estate, ever to go to university. In 1975, with an unemployed father and a mother who was a part-time home help, I could not have considered going to university under the existing tuition fees system. Before being elected in 2001, I worked as a head of sixth form. The hon. Member for Lewisham, West (Jim Dowd) said that he is irritated by the patronising and old-fashioned view that debt deters students from lower-income families from going into higher education. I do not know what job the hon. Gentleman did before he was elected, but I was a teacher for 22 years.

Jim Dowd

I am happy to tell the hon. Gentleman that I was an electronics engineer.

Mr. George Foulkes (Carrick, Cumnock and Doon Valley) (Lab/Co-op)

And a good one, as well.

Paul Holmes

Well, for 22 years, I was a teacher—a head of sixth form in the 12 years prior to my election. So I do not believe that my views are old-fashioned, out-of-date or patronising. As a head of sixth form, I taught and advised year 10, 11, 12 and 13 students, trying to persuade the bright working-class kids, first, to stay on to do A-levels or advanced GNVQs, then to consider going on to higher education.

From the point at which the Conservative Government started to reduce the value of the grant, when grants and loans were 50:50, and from 1997, when the Labour Government introduced tuition fees, I saw increasing difficulty, year by year by year, in getting children from that background to consider staying on and going into higher education.

In my maiden speech, I did not talk about variable fees. There had just been a general election and the Government who won it had given a cast-iron guarantee in their manifesto that they would ensure that variable fees were never introduced. There was no small print saying "just for the next year or two"; it was a cast-iron guarantee. For the past two and a half years, I have been a member of the Select Committee on Education and Skills. We have published two reports—in 2002 and 2003—on higher education, funding and related issues. During our hearings and while we were drawing up those reports, I repeatedly made the points from my maiden speech to which I have just referred, but I was told by some of the Labour Members on the Committee that it was anecdotal evidence and could not be taken into account. They said that there was no hard evidence of debt aversion among students from non-traditionally academic families and low-income families.

That puzzled me, as the Select Committee had taken evidence from Scotland—the Cubie report—which referred to that problem and led the Scottish Parliament to abolish tuition fees and reintroduce grants. We took evidence from the Rees report from Wales, which convinced the Welsh Assembly—where, as in the Scottish Parliament, there is a Labour majority—to reintroduce grants and to state that, if it had the power, which London has not given it, it would have abolished tuition fees.

Last year, even more recently, we took evidence from Professor Claire Callendar, about whom we have already heard in the debate. In work commissioned by the Government, she said that there was crystal-clear evidence of debt aversion and fear of debt in relation to the loans that the Government have introduced. We have seen a lot of hard evidence, yet the Government continue to say that there is no proof.

The Government are saying, although they do not use these words, "We accept that we made an abysmal mess of the system in 1997. We introduced tuition fees. We scrapped grants, even though the Dearing report said specifically that they should not be scrapped. We made an abysmal mess and we are going to undo it by removing the up-front element of the fees and restoring grants". The Government expect to be praised for undoing the complete mess that they created six years ago. On top of that, being new Labour, they plan to create a new mess by introducing variable fees.

Variable fees will inevitably increase debt. When the Secretary of State introduced that proposal, he said that the average student attending a university charging fees of £3,000 a year would leave with a debt of about £24,000. We heard earlier that Barclays bank estimates that the debt would be £30,000. Whether the debt is £24,000 or £30,000, it is a huge deterrent to the people identified as fearful of debt in the Cubie, Rees and Callendar reports.

Variable fees will deter low-income students. Even more important, as many Members have said, variable fees will mean that students who go to university will not make choices based on their academic ability—as they should—but on their ability to pay. They will attend the cheaper universities.

Will variable fees be the thin end of the wedge? Of course they will. When the proposals were announced, the chairman of the Russell group said that they were too little, too late. The vice-chancellor of Brunel university said that universities needed to make increases of more than £3,000. The vice-chancellor of Imperial college said that the college needed to charge £20,000 for medical students and £10,000 a year for other students. Scores of vice-chancellors have made similar comments. There will be vast pressure to increase the fees beyond £3,000.

The Secretary of State tells us not to worry because there will be an independent review three years down the line. In the Select Committee on 14 January, I asked the Secretary of State whether he was saying that there was no alternative to the proposals, and no way, other than through variable fees, of funding higher education to the level needed. In effect, he was telling us to take it or leave it—there was no pick-and-mix approach and if we voted the wrong way the whole Bill would fall. I asked why, if there was no alternative at present, there would be an alternative three years down the line if the independent commission said that the system was a disaster and we should get rid of it. The Secretary of State answered: "I do not believe the review will come to that view".

An independent commission will look into something to which there is no alternative, and the Secretary of State has already decided that it will not come to an adverse decision about the experiment on which the Government are embarking. So what is the point of an independent commission?

We are told to look overseas for examples. Last week, the Education and Skills Committee went to California—not for the beach and the sunshine, as it is winter. We spent a long time in meetings with academics, business men and people from Californian schools. They agreed unanimously that one reason why California, which has a smaller population than Britain, was the fifth largest economy in the world was the massive investment that has been put into higher education since world war two and, especially, since the 1960s. The Conservative party should note that the Californian business men, far from saying that they needed a small, elitist higher education system, were saying that, even though about 60 per cent. of people go into higher education, they wanted more to do so. That is because their economy, one of the most successful in the world, needs more highly educated people, not fewer, as has been suggested by one party.

We were given evidence of variable fees across America. California has the lowest fees in the USA. We were also shown comparative graphs illustrating the numbers of students from low-income families going to university in the different states. We can predict what those graphs showed—although the Secretary of State appears not to agree—which was that, in the states with the highest fees, the lowest number of students from low-income families went to university. Similarly, the states with the lowest fees, such as California, attracted the highest number of such students.

Jonathan Shaw

Was this not also about investment elsewhere in the educational system, including nursery schools, primary schools and secondary schools? Simply to talk about the fees in California and elsewhere is inaccurate. We have to examine the whole picture to understand what determines entry into higher education there.

Paul Holmes

The hon. Gentleman is quite right. He was with us on that trip; he sat in the same meetings and heard the same evidence. He is right to say that the academics, educationists, universities and businesses were all emphasising the massive investment in education across the board, all the way through from early years. They were not suggesting robbing higher education to put money elsewhere; they were saying that they needed money at every level. They did not distinguish, as this Government are now seeking to do, between higher education as something that students should pay for and the other levels of education as something that the taxpayer should pay for.

The hon. Gentleman was in the same room as us when we heard evidence that if, for example, the fees that the "Governator" of California is now proposing were introduced, 100,000 people would immediately drop out of the community colleges—the equivalent of further education—as a result. We heard similar evidence about higher education.

Australia is another overseas example that we should consider, because the Government are copying its fee system. We have already heard that, since variable fees were introduced there, the number of students from low-income families going to university has fallen. What we did not hear earlier is that the state contribution to higher education in Australia has fallen from 90 per cent. in 1996 to 50 per cent. now. In other words, when fees are introduced, students get into debt but the universities are no better off. The students are certainly no better off.

Tonight I shall vote for part of the Labour party manifesto: the part that says that there should be no variable fees or top-up fees at all. I hope that enough Labour Members will come with me to vote not only for their manifesto but for the Liberal Democrat principle that education should be paid for from progressive taxation, not by placing a debt burden on students.

4.53 pm

Dr. Ian Gibson (Norwich, North) (Lab)

One of the pleasures of speaking at this time of the evening is that there is no need to be repetitive, because I have heard enough to be able to find new angles, and I am keen to do that. I declare an interest, in that I have spent quite a bit of my life in universities, both in this country and in the United States. I find the people who work here a better class of people in general than the academics I had to mix with, although the backstabbing is just as vehement in both fields. That prepared me very well for working here.

Jonathan Shaw

That is why you are standing sideways.

Dr. Gibson

That is absolutely right.

I feel privileged to be taking part in this debate because this is a very important issue, as Members on both sides of the House have pointed out. It is important that we take this on and do something about higher education, and realise its great value to the economy and for the education not only of young people but of mature students, who represent an ever-increasing force and who contribute greatly to this country. We encourage that with lifelong learning.

I pay tribute to all my colleagues who have been active over the last 10 months in pressurising, sticking together, putting forward arguments on this issue and moving us to where we are today. We are a long way down the line from where we started, and I think that we should congratulate ourselves on having achieved that in a comradely spirit.

Tonight, a lot of people will be taking a position and voting accordingly because they are worried about variable fees. Most of the people I have talked to find variable fees the least attractive of all the issues that have come up in relation to this policy. I want to say something about that, because it has not been exposed to proper debate. Although I do not have time to do that fully, I shall try to do something about it.

Of course we know that there are variable fees in other aspects of the higher education system, but we must ask this question: by extending them to another sector of higher education, will we increase marketisation, market forces and so on to the point where we start to lose the purpose of what education and higher education are all about? That is true with creeping marketisation in any industry or in any aspect of human activity. People can go too far, and if they do not watch out they can end up selling out the purpose. The financial markets take over; they direct the policies. Many people see that, and it was the subject of a debate at No. 11 last week in which many other people of great eminence—economists from across the country—were arguing that one has to be careful about taking a step too far.

People were also worried that this policy was not part of our radical election manifesto—they are sincere about that. For many, it does not sit with traditional Labour values and principles, and I am sure that people still feel that. I want to encourage them to carry on feeling it, in the sense that these are the values that we were brought up in. There is no reason at all to sacrifice them in terms of the debate. We must carry on and fight for them.

What really upset me was that we were told the policy is non-negotiable. I thought that everything in life is negotiable. I have been taught all my life that people should argue and negotiate. In doing that, people come to some solution or compromise.

Members may think that there is a strong or incontrovertible argument for establishing the variability principle, but I have been hard pressed over the months to find out what it is. We might have hoped that Ministers would spell out the likely consequences of establishing this extension of the financial market in higher education, but it beats me what they are. Of course, I can ask the Minister tonight to try to convert people, but I doubt whether that will happen after all this time.

Clare Short

The 10 months have gone by, all the arguments have taken place and the concessions have been made. Does my hon. Friend think that it is notable that the Government will not concede on variability, which is the core concern among Labour Members? That suggests that there is a determination to get variability in, come what may.

Mr. Deputy Speaker

Order. Before the hon. Gentleman resumes, may I gently remind him that he should be addressing the Chair?

Dr. Gibson

I am watching my back, Mr. Deputy Speaker. Thank you very much for that. Yes. On the problem of variability, that word has come to mean something magical. People use it and float it about, but what it means in the structure and financing of universities, as well as the setting up of courses and so on, has never really been defined. People have argued that we might be able to use a zero fee to develop courses that are unpopular or that cover shortage areas such as science and engineering. To me, that is absolute madness. Where is the evidence that subject choice can be manipulated by tinkering with fees? Why should students be dissuaded from following their interests and aptitudes by financial penalties?

The exact costs of teaching in universities are unknown. Believe me—I have sat through millions of meetings where people have tried to calculate how much of our money was spent on a course. They added in the cost of technicians and all the other things, as well as students jumping about from course to course, but they never came up with any magic formula. All I can say is that that figure is much more than £3,000.

Science and engineering, for example, are extremely expensive to teach. They need special laboratories and equipment. Compare them with under-fives education: magnetic resonance scanners are not used in primary schools, although perhaps they should be. That is a big expense in higher education, so I am not amazed that the figures are different.

Lower fees will not reflect the real cost, and what we will get in the university structure is cross-subject subsidisation, so all those academics will waste hour after hour arguing about why science gets all the money and all the equipment while those poor arts people, who can charge great sums for creative writing courses, see nothing for that.

Geraint Davies

Does my hon. Friend accept that somebody who faces high variable fees and becomes a low-income graduate earner will not have to pay them, whereas someone who becomes a high-income graduate earner will have to pay back the money? Surely that is a fair way for universities to tax higher earners and cross-subsidise back into research.

Dr. Gibson

I thank my hon. Friend for his comment. If I had enough trust in university management and believed that the sort of thing that he outlined would happen, I would agree with him. However, it will not necessarily happen; there is no guarantee that the money will be moved in that direction.

Mr. Allen

I congratulate my hon. Friend on the way in which he has campaigned. Nobody doubts his sincerity and we respect his views. People, for example my hon. Friend the Member for The Wrekin (Peter Bradley), can be stereotyped as both rebels and loyalists. Will my hon. Friend the Member for Norwich, North (Dr. Gibson) acknowledge that he has gained tremendously through the campaign? He has probably got 80 per cent. of what he and his colleagues—in whose number I include myself—were after. Will he therefore consider taking the battle into Committee rather than going into the opposite Lobby from his colleagues tonight?

Dr. Gibson

Perhaps my hon. Friend will ask me that question when I have finished. I give him a 2.1 for his attempt, but it is not yet first class.

The Royal Society examined the crisis in science education. Sir Alistair MacFarlane, chair of its education committee, warned that the introduction of variable top-up fees could especially put off students enrolling on some undergraduate courses in science, engineering and technology. There is therefore deep anxiety about the use of top-up fees.

The chair of the Russell group wants to charge maximum rates to attract better staff from other universities by paying higher salaries. It sounds as if national pay bargaining will go through the window. The transfer market is based solely on research: people are recruited to get higher research assessment ratings in different universities. The best researchers do not necessarily make the best teachers, and the best teachers are not always the best researchers. It is lucky if both qualities coincide. I believe that the money will go to research but not teaching—that is a problem when we are considering providing support for undergraduates. One has to know the structures of universities and how they operate. I therefore do not believe that students will get much extra value.

An eminent vice-chancellor said that variability was good because it happens in the United States of America—but so do the death penalty and equal curriculum time for creationist teaching. My goodness, let us adopt it all! There are genuine problems. It has been said that difficulties have been experienced in Australia with variability and delivering for people from lower socio-economic groups. I do not know how one compares courses in different departments and universities. Every one appears valuable to me.

The problems that have been flagged up suggest that we should not accept the Bill, but vote against it.

5.3 pm

Mr. Jeffrey M. Donaldson (Lagan Valley) (DUP)

We recognise that the proposals will not apply immediately in Northern Ireland. Nevertheless, the Bill will have a significant effect on higher education in our region. The Democratic Unionists do not disagree with the basic argument that because individual graduates obviously benefit from a university education, they should contribute to the cost of their courses. However, society and the national economy derive a discernible benefit from producing quality graduates and the country must therefore invest in university education.

There is a problem in Northern Ireland. Our two universities—Queen's university in Belfast and the university of Ulster—recognise that there is a significant funding gap for higher education, and Northern Ireland falls well behind the rest of the United Kingdom in university funding. We feel that that should be addressed.

No matter what the Government say about the reintroduction of the maintenance grant for students from lower-income families and the end of up-front fees, the fact is that the spectre of higher university charges will deter a sizeable number of prospective students, regardless of when and how the fees must be paid. The imposition of additional fees amounting to up to £3,000 a year represents an increase of nearly £2,000 on current levels for Northern Ireland students. I cannot imagine that a 200 per cent. price hike would increase uptake of any product.

Fees are not, of course, the whole problem. Living costs are just as much of a deterrent, whatever the level at which they are set. It is a source of shame that according to a university of Ulster study, only 1.8 per cent. of the male student population in Northern Ireland come from a Protestant working-class background. The Government need to address that as well.

Those students emanate from precisely the sort of area that is poisoned by paramilitary influence, and they are exactly the kind of people whom we want to encourage to go to university. I fear that top-up tuition fees may only serve to alienate further people from deprived communities in many parts of Northern Ireland, and will deter them from seeking a university education.

Northern Ireland's two universities are over-achievers when it comes to expanding access. Queen's university Belfast is the best university in the United Kingdom in terms of attracting students from working-class backgrounds, with the university of Ulster close behind in fourth place. I do not want a system that could cause both those universities to lose their hard-earned status as universities open to all.

The DUP has a number of proposals that it believes can deal with some of the issues I have raised. We think that the Government are wrong to set arbitrary targets such as the one involving 50 per cent. of school leavers entering higher education. We agree with the rationale of the policy—indeed, more people from working-class and lower-middle-class backgrounds should be given access to university and to advantages long denied to them—but the Government are driven by artificial targets that distract them from the crux of the issue, which is the need to deal with the university funding crisis in a meaningful way.

We think that business, for example, should he encouraged to contribute to university funding more meaningfully. Business benefits from the creation of excellent graduates. Digby Jones of the CBI has said:

It's only right that people who have benefited from higher education should pay back a bit more He was talking about graduates, but we feel that just as companies engaged in qualifying research and development are given a 150 per cent. tax exemption for R and D expenditure, a 150 to 200 per cent. exemption should be given to businesses that make donations directly to universities. We need to give them an incentive to contribute more to our universities, because they benefit from them. If we are to tax students because they benefit from the universities, businesses should be encouraged to make their contribution too.

Children from lower-middle-class homes clearly suffer the most debt when studying, because their families cannot afford to pay any extra money and they are forced to take loans to fund their education.

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

What is the general attitude in Northern Ireland? In 1989, when the original Education (Student Loans) Bill was introduced, a speech from the hon. Member for North Antrim (Rev. Ian Paisley) suggested that there was opposition across the board, from Sinn Fein to the DUP and other groups. Everyone was singing from the same hymn sheet. Is that still the case?

Mr. Donaldson

I can confirm to the hon. Gentleman that all the main political parties in Northern Ireland oppose the Government proposals, as do students and their families. There is deep opposition right across civil society in Northern Ireland. We want our education system to be supported properly, but the Government proposals are not the best way forward.

One of our proposals would introduce a tax break for middle-income families who find it difficult to fund their children's education. The Government should consider introducing a tax credit directly to benefit lower and middle-income households at the most important time—when the student is actually at university.

The Government proposals are deeply flawed. They will have a significant impact on our universities in Northern Ireland and will increase the funding gap between universities in Northern Ireland and those in the rest of the United Kingdom. They will make it more difficult for students from Northern Ireland, especially those from lower and middle-income family backgrounds, to gain places at universities on the mainland, which will mean fewer students from lower-income backgrounds gaining access to university education, which we must prevent from happening. In Northern Ireland, we want to encourage, not discourage, those people to gain access to university education. We must provide incentives, not disincentives, to encourage people to access further and higher education.

The vice-chancellor of Queen's university Belfast, Professor Sir George Bain, says: Both universities in Northern Ireland are already under-funded compared to their counterparts in Great Britain. A further funding gap will be disastrous for Northern Ireland. This is the critical issue for the region in light of the impending Westminster vote. Northern Ireland must not be allowed to fall further behind. The vice-chancellor and president of the university of Ulster, Professor Gerry McKenna, says that the Government proposals would dismantle a UK-wide system of higher education, something that has been a great strength and a global brand leader. It was also introduce a two-tier, market-driven system of higher education, would perpetuate social exclusion and would play England against Scotland, Wales and Northern Ireland". The Government must consider that seriously.

In conclusion, the proposals are flawed. They will certainly have a negative impact upon students in Northern Ireland, especially those from lower and middle-income family backgrounds. For those reasons, we will vote against the Government proposals.

5.12 pm

James Purnell (Stalybridge and Hyde) (Lab)

I am sorry that the hon. Member for Wantage (Mr. Jackson) is not present, because I owe him an apology. About 15 years ago, I participated in a demonstration when I was a scruffy student at Oxford university at which someone threw an egg at him.

Mr. Willis

Shame on you.

James Purnell

I take collective, but not individual responsibility, for the incident, and I want to apologise after all these years.

I also want to apologise because at the time I thought that his proposals were not motivated by a desire to increase access to university. Anyone who listened to his speech today could see that his intentions were extremely well motivated. I only wish that Conservative Front Benchers had had the courage to carry through what he started in the 1980s. The Conservative Government undertook the task of increasing access, and when parties that we do not agree with the rest of the time do something that is correct, we should have the courage to say so. In turn, I wish that the Tories had had the courage to say today that they agree with the Government—agreement was clearly written across the faces of many Conservative Members when the hon. Member for Wantage was speaking.

Unfortunately, after making a start on increasing access, the Conservative Government decided to cap numbers entering higher education, and the right hon. Members for South-West Norfolk (Mrs. Shephard) and for Kensington and Chelsea (Mr. Portillo) decided to cut off the money that was necessary to increase access. The cap stayed at around one third of pupils until this Government took power.

I am extremely proud of the fact that we have increased access and of the fact that access has risen to 42 per cent. I would be even prouder if we got it up to 50 per cent.

I want to nail one dishonesty that has been put about in the debate—that this is not about meritocracy. If anyone says that this is about social engineering rather than meritocracy, he or she cannot have looked at research by the Sutton Trust and others showing that of two children of equal academic ability, with equal results at A-level, one from a working class family and one from a middle class family, the working class child is less likely to go to university. What is fair about that? What is meritocratic about that? Giving children the grants that they need to go to university is the only thing that can make that meritocracy real.

We on this side of the Chamber should never agree that we are not being meritocratic. We are doing what is fair. It is not social engineering; it is giving people the right to go to university when they get the A-levels required.

Mr. Jon Owen Jones

If it is true—and I accept that it may well be—that giving grants is a great help for working class people to get into university, why was that not part of the Bill initially?

James Purnell

Grants were part of the Bill. Thanks to the work that has been done by people on this side of the House, the Bill is even better than when it was launched; and it was better than the White Paper then. This is much better than the original proposal. The hon. Member for Harrogate and Knaresborouh (Mr. Willis) said that it had come from the bowels of Downing street. I know that he thinks that the proposal is a load of excrement, but I find that an over-harsh description. The proposal is significantly better than before the last manifesto. One thing that my colleagues have achieved is to ensure that the lesson has been learnt. The Government clearly recognise that proposals must be consulted upon and have to go through the party. We never want to get into this mess again.

Mr. Barnes

As the Bill has been significantly improved, is it possible that it could be still further significantly improved? I propose a debt holiday after graduation to last during a difficult time for all graduates, when they are starting families and obtaining mortgages. If we could knock off payment for a number of years, that would be a distinct advantage over the present proposal.

James Purnell

I am sure that my right hon. Friend the Minister was listening carefully to what my hon. Friend said. It is not for me to say whether it will be possible.

if we vote the Bill down tonight, what am I supposed to say to the children in my constituency who are obtaining better results? I think of Ashley high school, where the results leapt by 17 per cent. this summer, and of Hyde technology school, where 70 per cent. are achieving five good GCSEs—for the Bangladeshi community the figure is over 70 per cent., which is hugely better than the national average. The results have gone through the roof in the last two years. What am I supposed to say if we decide to put a cap back on university numbers?

I shall have to say to those pupils "Yes, the results have got better. Yes, those schools have got better. But you will not be able to go to university. Ten years ago you would have been able to get there with these A-level results, but now you won't." That would not be fair to my constituents. The only people that it would help are those who come from leafy suburbs, who go to schools that are already over-funded and are represented on the Opposition side of the House.

I should like to look quickly at the worries of hon. Members on the Government side of the House about the Bill. I know that some are worried that it will increase inequality. I think that it will reduce inequality, by helping more people to go to higher education.

First, will people be frightened of debt? Of course, if the debt attracted mortgage interest rates or credit card interest rates, that would be a consideration. If people had to pay it back whatever their income, that would be a consideration. If, as a Liberal Democrat Member said, our system was like the American system, that would be a consideration. But in America, people are taking on debts of $40,000 every year; the annual fee is $40,000. It is no wonder that no one from a poor background goes to Harvard. That fee is what we are legislating against today.

Dr. Pugh

The hon. Gentleman mentioned the Bangladeshi community. He is now talking about the Americans. The Bangladeshis are very different from the Americans. They are very debt-averse. Does not the hon. Gentleman recognise that there are cultural differences?

James Purnell

My point is that the difference between a $40,000 annual fee and a £3,000 annual fee makes the systems completely different. When a loan is income-contingent. when it has to be repaid only after one earns £15,000, that is reasonable. If Porsches were on sale in my constituency on an income-contingent basis, so that one did not have to repay anything if one earned less than £15,000, there would be an awful lot of Porsches in Stalybridge and Hyde.

Secondly, should we oppose variable fees in principle? If the fee could vary upwards and it was unlimited, and there was nothing that we could do to prevent higher education institutions from increasing it to £20,000, £30,000 or £40,000 a year, as they do in America, of course we should oppose variable fees, but the Bill would cap fees at £3,000. Should we therefore say that everyone should pay £3,000? If we vote down variability, who suffers? The only people who suffer are those who would otherwise have paid £500, £1,000 or £2,000. If the Bill falls and the Government want to increase the fee, they can do so, but then everyone would pay £3,000. The people who are helped by variability are the very people who come from poorer backgrounds who may be able to get on to a course that costs less. That helps equality; it does not increase inequality.

Mr. Patrick Hall

Will my hon. Friend give way?

James Purnell

I have already taken three interventions.

Thirdly, does the Bill marketise the system? The point of the Bill is to make the market work better. We already have a market in higher education, as we must accept, but at the moment it is grossly unfair. People have to pay a fee up front. When I was going around my constituency during the 2001 election campaign I met a mother in Newton who was desperate for her kids to go to university. She said that she was having great difficulty in finding the necessary £1,100. The Bill will mean that she will never have to find a similar sum for her younger children. It means that those children will pay the bill only when they are earning enough money to be able to do so. In my constituency, about 50 per cent. of people earn less than £18,000 a year. Therefore, broadly, in my constituency, only ex-students who are in the top half of earners will have to pay anything back, and at about £18,000 year it will be about £5 a week. I think that that is affordable and fair.

I was wrong about the motivation of the hon. Member for Wantage in the 1980s; I do recognise that he was trying to increase access. However, I think that the Conservatives made one mistake, and that was getting rid of grants. I got a grant. I got to go to Oxford, the first person in my family ever to do so, because I had a grant, and I am immensely proud that the Bill will bring back grants so that people from poorer backgrounds can go to university. I urge my colleagues to vote with the Government tonight. If we do not get the Bill, we shall lose the grants; we shall have to campaign on up-front fees at the next election and we shall lose the increased access to higher education. The people who will suffer will be those in our constituencies; those who will benefit will be the people on the Opposition Benches, who do not want their children to have greater competition for university places. As the results in schools in our areas improve, we must give those children the chance to enter higher education, and that is what the Bill delivers tonight.

5.22 pm

Mr. John Maples (Stratford-on-Avon) (Con)

One of the abiding memories of today's debate will be the vision of Government Back Benchers queueing up to disavow not just their manifesto and their principles but the rebellion that they were apparently threatening until a few hours ago. It seems that the Secretary of State's powers of persuasion are as formidable as he is in person. I do not know whether he is aware of the fact that last Sunday was the day on which the Church celebrates the conversion of St. Paul, but he certainly seems to have learned some lessons from it and performed a similar feat.

We are on common ground over the fact that universities are short of money and that the fall in unit funding has had a dramatic effect. I should like to illustrate one of those effects. The other day, one of our, dare I say it, two greatest universities privately commissioned a study to see where it ranked in the world order of universities, and it concluded that it was about 14th. That may surprise us—it surprised me—but what is even more surprising is that every one of the 13 universities that ranked above it was in the United States. There must be a lesson to be drawn from that. Part of it is that the funding, certainly in Ivy League universities, is probably about three times per pupil what it is in a United Kingdom university, but we should be careful before we disavow the American model.

If we think that universities need more money, where is it going to come from? Well, people may say that it can come from the Government. For the taxpayer to pay for 50 per cent. of the population to go to university is probably not a realistic objective. I say that with some reluctance because, like many others who have spoken, I went to university on a full maintenance grant, with all my tuition paid for, and I like to think that that education has benefited not only me, but the people that I have worked for and with, both inside and outside the House. The idea of public benefit certainly applies to people who become doctors or judges, for example, because we all benefit from them. I view that as a strong argument for public funding, though not perhaps strong enough to say that everyone who goes to university should have all their costs paid.

Parents are another source of income and the Government's proposals will milk them further. Only a small percentage of parents earn enough to be able to dispose of large or significant sums of money in that way. Only 10 per cent. of the working population of this country earns more than £40,000 a year, and only about 20 per cent. earn more than £30,000—the cut-off for support under the Government's arrangements. The ability of parents to cough up much more is pretty limited, so we are left looking at students.

It is sometimes argued that graduates earn more money, but that means they pay more tax and if they earn £400,000 more over a lifetime, they will pay somewhere between £100,000 and £150,000 in extra tax anyway, making it a pretty good investment from the state's point of view. However, if we are looking to students to pay a greater contribution to their education, they can pay up front, pay a graduate tax or pay in arrears. the Government introduced upfront fees and I believe that there are serious objections to them. Personally, I do not like the idea of a graduate tax, because it removes a link or any choice on the student's part between how much they pay and where they go.

One aspect of the Government's proposals that I like is the introduction of some variety into educational provision. It may be that studying law at Cambridge will take three years at £3,000 a year, but some other university may be able to do it in two years. Buckingham university does degrees in two years and there is no reason why a typical undergraduate degree could not be done in two years. Something would be lost, but the student would end up owing much less money. The idea of making students pay a specific fee in arrears is probably the right way to proceed.

What I dislike about the Government's proposals is that, having done that, they further involve the means-testing of parents in financing the student's education. That seems to me to be fundamentally wrong. Why should a relatively poor parent of a child who became a partner in Goldman Sachs have subsidised the education of a child from a wealthy home who became a teacher? Even more appositely, why should parents on £31,000 a year have subsidised the education of a child of parents on £29,000 a year? One of my two objections to the Government's proposals is that if we are to have fees in arrears, they should be left entirely to the student and the parents' means should have nothing to do with it.

Peter Bradley

; The hon. Gentleman must have read a different Bill, or certainly heard a statement that was different from that made today. The point of the Bill is to make repayments of tuition fees entirely income- contingent. It is the graduate who pays them. They have no connection or association with the income of parents before the school leaver attends university.

Mr. Maples

I chose my words carefully. I said that the parent over the limit would have subsidised the education of the child of parents below the limit. I understand the hon. Gentleman's point, but he should acknowledge that there is also a means test of parents, which affects who pays for which child's education. Under a fees-in-arrears system, I do not believe that that should be so.

However good the idea of students paying fees in arrears, it has been almost totally undermined by the Government's concessions in order to stave off—they hope—the rebellion. As I understand it, the concessions will amount to a greater cost to the Treasury than the benefits that the universities will gain from them. The Government have undermined their own proposals in those two respects.

My second fundamental objection to the Bill is about the access regulator. It is an awful proposal, which smacks of the worst sort of social engineering. Are universities to select people by postcode, as happens for hospital waiting lists? Are people to be selected according to the type of school they attended or their social class? I fully accept that the people who go to our best universities should be those who will benefit most, which means that it should be those who are going to get the best degrees.

It may be—some vice-chancellor s have argued it—that A-levels are not a good predictor of what sort of degree students achieve, in which case we need a better predictor. The United States uses SATs, a system in operation for 50 years, which brings considerable benefits. We could invite the universities to set a different sort of A-level examination that would be a better predictor. However, making crude adjustment to A-level results on the basis of the school or the postcode or parents' income will not help us to get the best people into university. What we need is an objective and transparent system of deciding which 18-year-olds go to university and which do not. It must be transparent, objective and it must be seen to be fair. I accept that that system might well not be A-levels as they presently exist, but it should certainly not be A-levels that are adjusted by some political appointee looking at postcodes.

David Taylor

The hon. Gentleman says—I am paraphrasing—that he cannot conceive of an acceptable or workable system that would steer students to specific universities on the basis of postcode, income or education. However, surely we have that system at the moment, especially for those who attend Russell group universities. Are we not just trying to balance that up?

Mr. Maples

I accept that A-levels might not be the best criterion to decide who should go to a Russell group university. However, using A-levels that were adjusted by an arbitrary political criterion would be even worse. If A-levels are unsatisfactory, let us have an alternative system, but let it be objective and transparent so that people who apply to universities understand what they must do, what hurdles they must pass and whom they must beat to get in. They should not be told that their exam results and hard work will be arbitrarily adjusted because their parents happen to be middle class or to live in a wealthy suburb of Birmingham, but that seems to be the Government's intention. I am bothered that the regulator will be politically motivated because he will report to, and take instructions from, the Secretary of State.

I shall try to wrap my two or three points into a quick conclusion. Universities need more money. Although I hope that I can be persuaded that that could be funded by public funds, I suspect that I will reluctantly be persuaded that a greater contribution from students will be needed. However, they should pay in arrears and there should be no cross-subsidies between wealthier and poorer parents—or less poor and more poor parents, which is what the scheme will amount to if the cut-off is set at £30,000 a year. The system should be based entirely on what a graduate earns at the end of the day, and there should be no access regulator because that will create a problem.

I understand that the Government's proposals will result in universities collectively receiving just under £1 billion more—I think that the figure is about £910 million—and that the cost to the Treasury of all the grants, loans, subsidies and write-offs will be about £1.1 billion. It seems to me that there is an alternative to the Government's proposal. The Secretary of State could have saved himself from an awful lot of trouble, from today's debate, and from having to make half his colleagues ideologically stand on their heads in the Chamber by simply giving £1 billion directly to the universities, not having the fees and saving himself and the Treasury £200 million in the process.

5.32 pm

Clare Short (Birmingham, Ladywood)(Lab)

As has been said in the Chamber before today, asking Labour Members to vote against the manifesto on which each of us was elected to the House is a serious matter. It is a breach of trust with the electorate and a breach of a solemn promise. It is also politically foolish. People are more and more cynical about politics and politicians, and these events will increase that cynicism and undermine the public's confidence in our party and its promises in a serious and troubling manner.

We must ask what is the reason for such a serious breach of our promise. Why must we rush through the Bill even though it will not take effect until after the next election? We are told that we need more resources for higher education—that is agreed across the House—so that we may reach the Government's target of 50 per cent. of young people going to university. However, facts outlining the progress that we have made during recent years and the increased resources that the Government have made available for higher education show that the case for rushing, in a manner that will breach our manifesto commitment, completely falls.

The figures show that during the years of the Tory Government there was considerable progress on the number of young people going to university. The proportion went up from 12 per cent. of the age group in 1979 to 34 per cent. in 1997. Last year, after continuing progress under our Government, the figure reached 43 per cent. There is no need to panic about the 50 per cent. target because we are making good progress toward that objective.

We are told that universities are desperately short of money. It is true that they need more money and that they suffered badly during the Tory years, as did most of our public services. Between 1989 and 1997, the universities suffered a drop in funding of 36 per cent. per student. So that enormous expansion in participation was paid for by the universities, and they did not get enough investment to reward that very important expansion. But the downward trend was reversed in 2001, and the Government have committed more money to higher education.

Spending on higher education will rise from a total of £7.5 billion in 2002–03 to almost £10 billion in 2005–06—a real-terms increase of 6 per cent. a year. So it seems to me that, yes, we have got an issue to solve, because of course we want every young person in our country who wants to go to university, and is capable of doing so, to be able to do so. I am sure that we will go beyond the 50 per cent. target in time, as our country develops and there is more and more access to quality education. But we have not got a short-term crisis, and all this proposal, which is such a serious breach of our manifesto commitment, will bring in is less than £1 billion, which will not solve the long-term funding needs of the higher education sector.

This seems to be really questionable and incompetent policy making, and we have to ask where it has come from. I am afraid, as I said in my speech when I resigned from the Government, that we have seen in our second term a pattern of very surprising proposals. I do not know whether they come from the bowels of No. 10, or some of the advisers that circulate around No. 10, but they are not consulted on or publicly discussed, and they are then driven through the House with appeals to the loyalty of Labour Members to vote against things that they know to be right. We have seen that over and again, and it leads to bad policy making. If we are to have a more presidential style of government, we must have a more independent Parliament that can say, yes, we are loyal to our Government and our party, but we will vote them down when they are wrong. Surely that is the right way to proceed if we are not consulted.

Jonathan Shaw

Of course my right hon. Friend voted for up-front fees and cuts in single-parent benefits. Tonight, will she support the Bill, which will introduce grants at the end of the year for poorer students?

Clare Short

That is not a very sensible intervention. Obviously, I will say before the end of my speech what I will do tonight. I will make that point in my own time if my hon. Friend will allow me.

I believe that the only logic in the Bill is that of the Russell group—a move to a market in higher education—but what has happened is that, because Labour Members have been brave and the rebellion has been strong, concession after concession has been made. Those concessions are welcome and good, but they are an attempt to try to squeak through a deeply flawed Bill, whose logic will drive us forward, as soon as it can be attained, to variable top-up fees and a market in higher education that will have lots of destructive effects. Young people will have more and more debt. All hon. Members must have had many letters and e-mails with anguished stories of families currently burdened by debt and who are troubled by their debts.

Mr. McLoughlin

Will the right hon. Lady give way?

Clare Short

Let me get on a little further.

The logic of that change will be that young people will start to decide which subjects to study, where to study and, even more significantly, to decide their career and profession on the basis of debt, money and cost. Surely we do not want to live in that kind of country. Surely we want access to higher education to include people who want to do mediaeval history, poetry or philosophy. Yes, we all know that investment in higher education is of benefit to the economy, but it is also of value in itself. Surely we do not want people's decisions in their lives to be distorted by those differential costs in higher education—most certainly, I do not. I fear that that change will downgrade the commitment of young people to choose a vocation and public service in their lives because, as they are saddled with debt, they will start to look for the jobs that give a high salary, rather than the jobs that represent a dedication to public service. We will diminish those values in our society to our great cost.

All honour to the leaders of the rebellion for prising out of the Government all sorts of beneficial commitments. It is good that young people should not have to pay up-front fees. It is good that there are to be maintenance grants—though the cut-off point will be a big problem for many families. Some desirable elements, which could have been put in another package, have been introduced to persuade certain Labour Members to vote against the party manifesto on which we stood and against the principles of a good system of higher education funding. A free vote would not carry this Bill in the parliamentary Labour party.

The right course would be a review of how to get more money into higher education, then include in our next manifesto a commitment to introduce a new system. I am highly attracted to the idea of a graduate tax, which could easily be paid over to the Higher Education Funding Council. It could be set down in legislation that the Treasury could not vary the amount, and so on. Thorough discussion, more detail and costings are needed to find the answer—and we should try to achieve national consensus because this matter will affect generations of young people to come.

Mr. Connarty

Is it not indicative that the principal of the university of Essex told me that universities want £5,000, but £3,000 is all that they are allowed? They see the funding gap as being much greater. Is there not a conflict in the Bill between a market in which people want more for their courses and a Government who will not give that to them?

Clare Short

I agree absolutely. The Russell group logic is the logic in the Bill. The concessions have now pushed the other way, but that logic will still break through over time—which would be destructive to the quality of higher education. The elite universities are not the best at everything. Undergraduates should not have to fund all the research. We should have leading-edge, world-class universities to undertake good research, but we must find a way of distributing funding according to ability—not create a market based on snobbery and elitism.

I appeal to all right hon. and hon. Members to vote down this deeply flawed Bill, then urgently discuss how to achieve better long-term funding of higher education. Each party should fight the next general election on manifesto commitments about the right way of doing things. That would be the honourable way through. The measure being proposed today is deeply dishonourable and will increase cynicism about politics and damage the reputation of our party.

5.42 pm

Mr. Ian Taylor (Esher and Walton) (Con)

I particularly noted two speeches in this interesting debate. One was by the hon. Member for Norwich, North (Dr. Gibson)—whom I respect and with whom I served on the Science and Technology Select Committee in the last Parliament—who advocated arguments against the Bill. The other was by my hon. Friend the Member for Wantage (Mr. Jackson), with whom I find myself very much at one, who indicated that the Bill was moving in the right direction.

The best oratory in the debate came from my right hon. Friend the Member for Richmond, Yorks (Mr. Hague). He made a powerful speech but was particularly unwise to base it on the fact that Conservative Members should observe what was in their last election manifesto. There are fewer of us on this side of the House because we did observe our last manifesto. [Laughter.]

I have no problem in saying that because the facts have changed, I have begun to rethink my approach to this policy. Universities are in a crisis that is getting worse and we must do something about it. As the last science and technology Minister in the previous Conservative Government, I wrestled with a lot of problems but did not manage to persuade my Chancellor of the Exchequer to put as much money into research and development within universities as the current Chancellor has done. I give the Government credit for that.

Research is a vital area. More money should be put into research infrastructure—not just into research. Academics are seriously underfunded and many of our best academics are again beginning to look abroad for their future. Given that situation, everybody should rise above party politics to some extent and start thinking about what can be done to plug the gaps in the university system. Nobody who goes to university will benefit from such a situation. If standards are declining because of the pressures on universities, students will suffer, whatever their background.

Access is a problem, and we should do our best to widen it. However, we should not talk about it as if the universities themselves are not seeking talent. In many cases, if they identify the talent they do not have enough resources for bursaries to encourage it.

Lynne Jones

Is the hon. Gentleman not concerned about the future of science departments after the Minister for Lifelong Learning, Further and Higher Education told the Education and Skills Committee that it is

a near racing certainty that chemistry and physics, where they have high infrastructure costs but they need the volume, will charge nothing, or next to nothing, to attract students"? Is not the viability of those departments at risk?

Mr. Taylor

I am not sure that the hon. Lady is right. I have a letter from the University of Surrey, which says that it will make sure that scholarships on academic merit will be given in particular to students studying subjects such as science, engineering and technology. The freedom gained by the small move towards connecting students with the university costs will help to ensure that there is an attempt to draw students into subjects that the universities regard as extremely important.

Government Members have not fully articulated the fact that it is not the universities' fault that in many cases academic standards are not satisfactory. Only a quarter of our school pupils get two decent A-levels. Our debate needs to focus on the whole school spectrum, from primary schools to sixth forms. A qualification equivalent to an A-level, such as a baccalaureate, may need to be introduced, as something has to be done to raise standards. The previous rector of Imperial college said that such was the problem that even its best applicants were not achieving a satisfactory standard in mathematics, and increasingly the first year of its mathematics course taught things that student should have done at A-level. We therefore need to widen the debate, and should not try to pretend that everything will be wonderful if an access regulator is introduced. We need to work much harder if we are to understand what has to be done to broaden access to university.

We need to make sure that the universities themselves work harder. Some of them are excellent, and provide a benchmark for others. Many, however, are not good enough. An interesting letter in The Times from Stephen Day, a constituent of mine, points out that it is often difficult to get universities to raise funds privately to boost their resources. However, there is no question but that there is a role for endowments. As my hon. Friend the Member for Wantage pointed out, it is almost unimaginable that, from a standing start, a university endowment will make a difference. Yale's endowment can sustain an income of £330 million or £30,000 per student, while Imperial college London's sustainable income from endowment is £2.4 million or £240 per student. The idea sometimes voiced by Conservative Members that everything will be all right if we endow a few universities is moonshine.

Endowments are part of the solution, but they are not the whole solution. Industry sponsorship, other ways of working together and proposals in the Lambert report are important means of getting money into universities. Alumni may start to contribute if they think that they can connect with and influence their university, and if they believe that there are benefits from putting money from a successful career back into the university. It cannot be argued that students themselves should not contribute. Disturbingly, in that belief I find that I am closer to the Government Front Bench than my own. It is inconceivable that at the next election, far from what my hon. Friend the Member for South Suffolk (Mr. Yeo) said, students will not have any costs at all. It is important that we connect the student with the university. If the proposal is that students should pay one sixth of the running costs of their tuition, that seems reasonable. One could argue that it should be slightly more or slightly less, but the principle of connection and co-payment is important.

There should be no up-front fees. That is something that I have always worried about. Views change. The Bill establishes that there will not be up-front fees and there will be payment subsequently only by those earning over —15,000 a year. In effect, there is no interest on those loans: interest will be only at the rate of inflation. Those are signal achievements.

Given that the right hon. Member for Birmingham, Ladywood (Clare Short) knows that those are achievements and that if the Bill were to fail, there would be nothing in its place, however intellectually interesting that might be, I am astonished that she is recommending that her colleagues vote against the concessions that she and her colleagues have pressured the Government into giving. I do not understand that principle.

Clare Short

It is possible to put together a different long-term funding package for higher education that includes some of the desirable elements. The Government are saying, "You have to take this thing you don't want, and we'll give you a couple of things you do want." That is no way to make policy. It is incoherent and breaches promises made to the electorate.

Mr. Taylor

The right hon. Lady was in government long enough to know that government is largely incoherent. It is not just the Labour Government. I was a member of a Government myself. The point is that there has been dramatic change. I do not like some of the changes, but that is irrelevant. The package should not be lost, because there is nothing else to put in its place.

Let me tell the right hon. Lady that if the Bill fell, the universities would be in a vacuum. Some of them would go independent and others would concentrate on attracting overseas students where there are variable fees. That would diminish the number of places at our best universities for domestic students. By voting against the Bill, the right hon. Lady will be acting against the interests of the very people she is attempting to protect.

The Government should sort out their arguments and argue with their own Back Benchers. I shall abstain tonight because I refuse to go through the Lobby with those like the right hon. Lady, with whose attitude I totally disagree. Her approach is negative, wrong and unconstructive. I am sad that too many of my colleagues will follow Members like the right hon. Lady through the Division Lobby. There must be change, and the Bill represents a bit of progress. We need to build on it and get a sensible system for our higher education. If we do not, the whole country will suffer, not just the students to whom we are trying to give greater access to our university system.

5.52 pm

Mr. Frank Cook (Stockton, North) (Lab)

It is always a pleasure, though a rare experience, to follow the hon. Member for Esher and Walton (Mr. Taylor). His comments are always measured and clearly analytical. I do not agree with everything he said, but his speech was informative and provocative, and I thank him through you, Madam Deputy Speaker.

Eight minutes is not long to cover the range of aspects that we need to consider tonight. Perhaps I ought to start by saying that I have maintained a position of opposition right from the outset, and I am rather happy that I did. I pay tribute to my hon. Friend the Member for Norwich, North (Dr. Gibson) for leading the group that so effectively opposed the measures over such a long period. It is only through that determination that we have managed to wring from the Government a number of concessions, which have been more than welcome. We have been assisted in that by the somewhat cynical and unprincipled opportunism of the main Opposition party and perhaps some of the others. Nevertheless, they have done us a favour in that regard. We must be careful not to allow them to exploit it too far tonight.

I shall not rehearse the whole range of my concerns about the Bill. A principal worry is the fact that I have two universities associated with my constituency to consider. One is the Queen's campus of Durham university at Stockton, and the other is the university of Teesside. The vice-chancellor of Durham university is very much in favour of the Bill, as a member of the Russell group—the Ivy league. His students, however, are very much opposed to it, save for two. I received dozens of faxes, e-mails and letters, but two from Durham stand out. One says:

Dear Mr Cook, Please vote against the top up fees. I can't say that I feel passionately against the proposals, however, it would be good to see Tony Blair taken down a peg. Maybe he won't be so arrogant in the future. I wonder how prevalent that specific attitude might be. The other one from Durham says:

I am a student but nowadays people want everything but they don't want to pay for it. I am at Durham and trust me 90 per cent. of the students who will e-mail you urging you to vote no are spoilt rich kids like myself who can afford to pay way more to subsidise those who cannot. Stick to your guns and vote yes"— actually, I never said that I was going to do so—

if you are still undecided come down to the car park at the halls of residence and take a look. We are in a difficult situation, are we not?

That was Durham. As for the university of Teesside, the vice-chancellor, Graham Henderson, and his predecessor, Derek Fraser, were adamantly opposed to the Bill. Indeed, when I had an argument with the Under-Secretary, he said that he would persuade Graham Henderson to change his attitude. I told the Under-Secretary that he did not have to go that far— all he had to do to guarantee my vote this evening was to promise me an aircraft carrier to build on the River Tees—[Laughter.] I am expecting to receive it shortly.

The university of Teesside did alter its stance, however, and it gave a full catalogue of the concessions that it needed, which we have rehearsed tonight. That has borne heavily on me. Bearing in mind that this is a Second Reading, which would only commit the Bill to a Committee in which we can study it line by line, as we ought to do with every piece of legislation, I am more disposed to vote for the legislation, on condition that we get further concessions, which may be in the offing—we have had them as late as today. At least that gives us a chance.

For anyone to use this exercise as a means of venting some spleen or seeking retribution against the Prime Minister would be totally wrong. If one wants to do that—I suppose that it can be a legitimate tactic in some people's minds—the time to do it is on Third Reading or on Report. It is not proper to abuse the parliamentary system by doing it tonight.

We have heard suggestions today that this is a matter of the Prime Minister's survival. We should consider these matters in a more mature and rational atmosphere, but that is the tactic that has been used. I can go along with that, but I must say this to those on the Treasury Bench: they have played that card today, but they can only play it once. On Third Reading, they will not be able to play it again.

Debt aversion was a major consideration, as I thought that it must be terrifying for students to be so threatened by debt. En passant, I discussed the matter with a professional gentleman, an immigrant from Burma, who said, "This would be a very good idea, because it is almost guaranteed if the students are good enough to get into university. They only have to pay for it afterwards." I thought about that, then I realised that here I am, a bit longer in the tooth than I was when I first came into this House, having lived in debt for 50 years, with the probability that I shall go to my death in debt. When I worked at the brewery, an old man asked me why I was terrified of the bank manager. I said, "Because I've got an overdraft." He said, "So you owe him money?" I said yes. He said, "Don't you worry about that—let him worry about it."

6 pm

Mr. Jonathan Sayeed (Mid-Bedfordshire) (Con)

We all acknowledge that historically universities have been underfunded by successive Governments and we recognise that the tuition fees paid by British students do not cover a university's costs. Indeed, I would suggest that the true discrepancy between what a student pays and the cost of that student to the university is disguised by the fact that so many academic salaries are so extraordinarily poor as to be a disgrace to successive Governments. Nor is there any dissent from the view that a better educated society is a richer society; we all want more people from all backgrounds to be in higher and further education provided that they can benefit from it.

Indeed, so widespread is the acceptance both of the problem that faces us and the agreement that action needs to be taken that I find it extraordinary that this Government, who have a majority of 164, have failed to bring forward a Bill that has widespread support throughout the House. There are several reasons why it has lacked support. It lacks logic, and I shall go on to explain why. It will fail adequately to fund universities even after—or particularly after—all the concessions that have been made in the past 24 hours. It will continue to exclude many who would otherwise benefit from continued education. It is inflexible, centralist, and will act as a disincentive to many to go to university. It owes more to the Prime Minister's own brand of fuzzy logic and the Chancellor's inclination for control by diktat.

I mentioned flawed logic, and I shall give some evidence for that. Student A and student B go to the same school, leave school with the same A-levels, and go to the same university, where they take the same course, get the same degree, and go into the same job and earn the same salary. But because student—now graduate—A's mother and father had a combined income of £34,000, while graduate B's parents had an income of £20.000, graduate A's debt will be far greater than that of graduate B.

Alan Johnson

That has now been repeated three times. Let me make it absolutely clear—we are rolling up fee remission with grant and paying it all up front as grant. That means that there is no longer any fee remission, so student A and student B would pay exactly the same.

Mr. Sayeed

I am sorry, but either both I and a vast number of the Minister's colleagues have read the Bill wrong, or he does not understand his own Bill. The fact is simple: a student at university whose parents earn more than £34,000 will not receive the same grants or benefits as a student whose parents earn less than £20,000 and will, consequently, incur a greater debt. When graduate A and graduate B are in employment, earning the same salary, graduate A will have a larger debt than graduate B. The debt will not be based on his ability to pay, which is exactly the same as graduate B's. The debt will be greater because he has inherited not wealth but an obligation, simply because his parents had a bigger income than the parents of graduate B. That seems to be a recipe for legal challenge some time in the future.

Dr. Palmer

Will the hon. Gentleman give way?

Mr. Sayeed

No, I shall not be giving way as a number of my colleagues want to speak and time is limited.

There are two ways in which many of those who could benefit will be excluded from university. First, the Bill institutionalises, legitimises and promotes debt. I make no bones about the fact that I belong to the Micawber school of financial management—I believe that saddling students with debt, or the potential for debt, will act as a considerable disincentive. Secondly, because the Bill perpetuates the straitjacket of academically based courses lasting for two or three years, it fails to recognise that many students would be better served by a different basis for learning.

The Bill could have offered high quality, vocationally based education, as well as academically based education, but it has not done so. The Bill should have offered students greater flexibility—possibly through modular courses—so that they could move between work, education and other pursuits. That might mean that it takes them longer to gain their degree or other qualification, but at least they could ensure that they fund it properly. What the Bill could have done, but fails to do, would be to encourage some students, especially those following modular courses, to take a place at a university or further education college closer to their home. In that case, not only would it be easier for them to find part-time work, they could also control their living costs more effectively.

We all know that historically universities have been underfunded. We recognise that the situation has worsened due to the rapid expansion of student numbers. The problem is demonstrated by the increasing class sizes in universities and the decline, in real terms, in academic pay. Furthermore, as anyone who visits a university can see, it is shown by the declining infrastructure of universities. There is no doubt that universities, colleges of further education and other places of education require more money, but it is extraordinary that a Government who are not even funding higher education at the OECD average are looking to change the whole basis of that funding so that it will put off the very people who are least likely to go into higher education at present.

Governments should start with schools—to give the Government their due, they have done that—but they should ensure that the aspirations of school children push them to go to university if they can benefit from it. Governments should not be ensuring that those who are most frightened by debt will be put off university. The Government have failed to bring a good Bill to the House and they deserve to be defeated.

6.9 pm

Mr. Gordon Marsden (Blackpool, South) (Lab)

People inevitably bring their own life experiences to a debate such as this, and mine are varied. I spent 20 years working as an Open university tutor, during which time I was involved in adult education and observed the particular needs of adult students. I also spent 12 years working as the editor of a history magazine, where, on a week-by-week basis, I saw a snapshot of the problems faced by contributors from a range of universities. I was also a member of the Select Committee that produced two reports on student access and retention, which brought many of the issues being discussed here to the fore for the first time. And, yes, like many people here today, I was the first person in my family to go to university.

I suppose that is why I was so moved by Neil Kinnock's famous speech, in which he asked why he was the first person in his family to go to university. He talked about standing on a platform, saying that those people who had not been to university had no platform to stand on. But what does not having a platform to stand on mean, as far as university education is concerned? It means not having a decent functioning higher educational system or social equity in relation to access if universities do not have decent facilities, decent ratios in regard to tuition, a proper career path to ensure the quality of the younger lecturers and tutors coming through, the ability to compete in the international marketplace or the ability to regenerate in the regions in which they are so important. Those are the issues affecting the present situation.

The grinding decline in units of resource under the Conservatives has produced the situation that exists in university education today. The Select Committee reports told us about that in 2001 and subsequently. We have to grasp the nettle and make hard decisions now. Those decisions cannot be left until the end of the decade, and they certainly cannot be left until the Conservatives have made up their mind about what they believe in.

There would be no guarantee of the success of a graduate tax, because it would not be ring-fenced. Furthermore, the top-rate income tax that the Liberal Democrats talk about has already rightly been dismissed as loaves and fishes politics. There are no guarantees on secure funding. Nothing is for ever. No Labour Government are for ever. [HON. MEMBERS: " Shame!"] Sadly. In the light of all that, we need to find a system that will ring-fence and structure the funding of higher education.

Mr. Barnes

My hon. Friend mentioned that he had been involved in adult education. How would he feel about an adult student who had been earning between £20,000 and £30,000 a year before deciding to study full time at university in order to change their aspirations and approach, if that student ended up getting a job worth £20,000 to £30,000 afterwards but also had a student debt, having sacrificed three years to complete their studies?

Mr. Marsden

I know that my hon. Friend has campaigned valiantly on these issues on behalf of adult students. I would say to him that, for the first time, we have a Bill that contains support for adult students—the majority of whom still study part-time—in the form of fees and grants. Those are issues of detail in relation to adult students—particularly students of the Open university and Birkbeck college—which can and should be addressed in Committee.

I understand the concerns about how variability might operate, and about how higher education might be viewed as a commodity, but we must look at the whole package of the Bill. We also need to consider the reality of 21st century education. There was never a golden age of grants. When I went to university in the 1970s, my parents still had to pay one third of my grant, although my father was an ordinary working-class engineer. There is no golden age—past, present or future—of flat-rate lees or grants. When I was an Open university tutor, part-time students paid variable fees, and that is the reality now. As Universities UK has reminded us, universities already charge variable fees for the majority of their courses for part-time, international and postgraduate students.

There are other issues that have not been properly addressed in this debate. One is that of adult and further education. Listen to the reality of 21st century higher education, not from me, but from the National Institute of Adult Continuing Education, which rightly says that

part-timers…represent more than 40 per cent. of all students in HE. The sooner HE stops being seen as a finishing school for a minority and starts to be recognised as a lifelong and recurrent source of…personal development for the majority, the sooner we will move

towards a culture of lifelong learning. For my constituents in Blackpool and for many others up and down the country, more and more higher education is being delivered via further education. The narrow focus of most Opposition speakers, and I regret to say of one or two Labour Members, diminishes and threatens them.

Mr. Wayne David (Caerphilly) (Lab)

Does my hon. Friend agree that we should be aiming for equity between full-time and part-time students?

Mr. Marsden

I agree absolutely with my hon. Friend on that, which is why I said to my hon. Friend the Member for North-East Derbyshire (Mr. Barnes) that we ought to explore that issue in Committee. However, we must not lose sight of the needs of those adult students.

I opened an adult learning centre at Burton's in my constituency a few weeks ago. I talked to people, particularly women in their 30s and 40s, who were being given that platform of further and higher education for the first time. The Bill, for the first time, will give them grants and fees. As we have heard today, higher education is not only about what happens between the ages of 18 and 21 but about life chances later in life.

We must also consider the life chances of even younger people. That is why the Select Committee, when examining that issue, talked about the need to improve access and to improve aspiration in respect of university and school at the ages of 12, 13 and 14. It is also why the education maintenance allowance, which this Government introduced, is key—the continuation of that principle in the grants that are now on offer is so important. Up-front fees have been abolished, which will relieve the fears and concerns of many of the middle-class parents about whom we have heard. Up-front grants will, for the first time, be given to working-class students.

I do not believe that variable fees are a universal panacea, but the way that the Government have proceeded and responded—to the legitimate concerns of Labour Members in particular—will curb some laziness and the wilder fantasies of some Russell group vice-chancellors. The review gives us guarantees, which will be in the Bill, but it also gives us time to consider other mechanisms. We have heard some useful comments, not least from the hon. Member for Esher and Walton (Mr. Taylor), on how we might do that.

We must remember that the Bill is not just about variable fees. We must consider the whole package—the arts and humanities research council, an independent negotiator and the Office for Fair Access. All those will be lost if the Bill is voted down tonight.

I do not need to tell my hon. Friends that the genesis of the Bill had its flaws. Some points that have been made about consultation within our party need to be taken on board by all concerned, but there has been tireless work and engagement—I pay tribute to that—by my right hon. Friends the Secretary of State and the Minister for Lifelong Learning, Further and Higher Education in engaging with and discussing those issues.

Many of the issues that we had concerns about have been addressed. I beg colleagues to focus laser-like on the alternatives to the Bill. Are hon. Members prepared to put higher education in a funding deep freeze until the end of the decade? [HON. MEMBERS: "Come on!"] Oh yes. That would allow some of the privatising vultures on the Opposition Benches to gather. Are they prepared to collude in the outdated vision of universities that many Conservative Members have? That would be a slight on and would adversely affect some of the opportunities for those groups about whom we are most concerned. They would lose out.

Earlier, I talked about Neil Kinnock's vision—a vision of quality, access and social justice. We will not achieve that if we cut off at the knees the socially progressive programme of grants and alternatives that the Bill contains.

6.20 pm

Mr. Tim Boswell (Daventry) (Con)

As the last Back-Bench speaker, I begin on a note of minor agreement. I find aspects of the Bill acceptable, notably the provisions for the arts and humanities research council and for the independent adjudicator. However, although they are important, they are subsidiary to the main event.

Two speakers—the right hon. Member for Newport, East (Alan Howarth) and my hon. Friend the Member for Wantage (Mr. Jackson)—have shared with me the experience of being a Minister with responsibility for higher education in a Conservative Government. At that time, none of us arranged or connived at charging a tuition fee. We paid maintenance grants and the position was different. I am at odds with my former colleagues because tonight, I shall vote against the measure whereas they, for their own and somewhat different—though doubtless sincerely held—reasons, will vote for it.

I accept that universities will need more resources per unit of student funding in future.

Ms Dari Taylor (Stockton, South) (Lab)

The hon. Gentleman says that universities are short of funding. Does he accept that 12 inner-city universities are not only short of funding but will close unless we reach an urgent and necessary financial agreement in the House tonight?

Mr. Boswell

Perhaps that poses an unnecessary ultimatum, but of course I acknowledge that there are pressures, including on many modern universities with which I have considerable personal sympathy.

Partly through a combination of our Government's reluctance to interfere with the sector's autonomy and the logic of the policy to switch to fees, there was perhaps an over-rapid expansion, beyond the expectations of Ministers, in the early 1990s. We have been coping with the consequences ever since. I do not believe that the Government's proposals will ameliorate those consequences; indeed, they may make them worse. We need a much more imaginative examination than the Government have undertaken so far of incentivisation and stimulation of other means of bringing in money from public trusts, employers and graduates, not so much new graduates but alumni in their mature careers.

We must also remember the huge cost of the rate of interest on the student loan book and the difference between that and commercial rates of interest. The proposal will massively inflate the disparity, which may become unsustainable for more than a few years. If we add to that the expansion to 50 per cent, to which the Government are already committed, we have a recipe for an unsustainable policy and yet another that the Government will reverse in a short time.

The essence of the Government's case was tersely summarised in last week's edition of The Economist, under the description "pay or decay". With respect to that excellent publication, there is a logical fallacy—the law of the undistributed middle—in its case. The proposals could mean that students and probably their parents pay while universities decay.

My hon. Friend the Member for South Suffolk (Mr. Yeo) showed that contributions that may flow from the Bill will be offset in full by the cost of the douceurs that the Government have been forced to give away to get the consent of their Back Benchers. There will be significant consequences for debt among students, as Professor Callendar and others have been cited as saying.

The Bill will bear particularly hard on mature students and those on long courses who are not receiving state-financed bursaries. I am thinking not just of doctors but of vets and architects, who will be directly hit. I do not think any attention has been paid today to the special position and needs of disabled students. In fact, I find very few students who are likely to benefit from the overall package.

The irony of all this is that universities will not benefit either. I was impressed by the comments of Dr. Peter Knight of the University of Central England, who said in evidence to the Select Committee last year: I do not think there is a vice-chancellor in the country who believes there will not be a deduction in relation to our public grant when the new fees are available and I assume that everybody is planning on the basis that there will be, the only question is how much". So the money will not come through in extra funding. Interestingly, under the Government's own proposals it will not even come through in the great variability of fees, because the way in which they have set up the system means that most vice-chancellors will charge the full £3,000 for most of the courses they offer.

Even if, miraculously, the Chancellor relents and abandons his stand-off, and takes on the chin the additional cost of support for the higher-education budget in the public expenditure survey, we know from what has been said by Ministers only today that the drip-feeding of slightly—perhaps—additional funds for universities will be limited for six years. It would be a great deal longer if some Labour Back Benchers had their way. Moreover, this minor amelioration, if it actually happens, will be secured only at a heavy price in additional interference. We are familiar with the Government's habit of promising a light touch in regulation, and then bringing in a bludgeon of additional regulation. Nor has there been any mention today of the compliance costs that the universities will face in fulfilling the requirements of the access regulator.

Let me summarise my position. Let me come to the substantive issue, and the vote to which I am looking forward. The Bill is a charter for higher costs for students, no material extra income for universities and a ratcheting up, a step change, in the scale of interference in universities' academic autonomy and detailed running. It will not stem the alleged decline in their funding, any more than Labour's claims at the time of its 1998 introduction of tuition fees—reiterated in a very positive statement in its 2001 manifesto. It said, in effect, that there was no problem; but that will not stop any decline that is taking place, and pressure will be put on additional funding,

It may well be that clustered around the thin and austere figure of the Secretary of State as he rises, or returns, to the podium will be a few vice-chancellors who have congregated to listen—as he waves a copy of the Bill at the public—to his thin voice saying, "Cash in our time". But within two years, mark my words, this will all have to be replaced by the policies of a new Conservative Government.

6.28 pm

Mr. Tim Collins (Westmorland and Lonsdale) (Con)

In 30 minutes we shall vote on a Bill which the Labour manifesto specifically and categorically pledged not to introduce. That is the most unequivocal and important fact before us, as was pointed out by the right hon. Member for Birmingham, Ladywood (Clare Short).

Today sections of the Government have offered concessions of which other sections apparently know nothing. The right hon. Member for Newcastle upon Tyne, East and Wallsend (Mr. Brown) told television viewers earlier today that the Prime Minister and the Chancellor had made new concessions this morning. He spoke about those concessions in part in this afternoon's debate, and said that they were why he was switching his vote. However, the press office at the Department for Education and Skills has denied that any new concessions have been made. Indeed, the Under-Secretary of State for Education and Skills, the hon. Member for Bury, South (Mr. Lewis), appeared on the BBC earlier today to reply to the right hon. Member for Newcastle upon Tyne, East and Wallsend, and said not once, not twice, but three times that no new concessions have been made. Someone, somewhere is being conned. It is clear that the Bill remains deeply flawed and is being sold on a false prospectus.

Mike Gapes (Ilford, South) (Lab/Co-op)

Will the hon. Gentleman give way?

Mr. Collins

In a moment. The Secretary of State and the hon. Member for Nottingham, North (Mr. Allen) both said that the Government are proud to propose the abolition of up-front fees, but who introduced up-front fees? They did.

Mike Gapes

I am grateful to the hon. Gentleman. While we are discussing people being conned and empty vessels, will he tell us his party's policy for funding higher education?

Mr. Collins

I must say to the hon. Gentleman that it is a little bit rich for someone who speaks on behalf of a party whose Secretary of State did not know at 10 o'clock this morning what the Government's policy was going to be at 11 o'clock to ask for clarification from anyone else. I will tell him one other thing: the policies that we will fight the next election on will be in our manifesto and they will be kept and will not be broken, like those made by his party.

The Bill and the strategy behind it were sold as being essential for our economy, but the Institute of Directors and the British Chambers of Commerce disagree. It was sold as being good for our professions and public services, but the British Medical Association opposes it, as does the Royal Society—as the hon. Member for Norwich, North (Dr. Gibson) pointed out. It was sold as being good for students, but although the hon. Member for Rochdale (Mrs. Fitzsimons), a former president of the National Union of Students, supports it, today's NUS is emphatically against it. My right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke), my right hon. Friend the Member for Fylde (Mr. Jack) and the hon. Members for Harrogate and Knaresborough (Mr. Willis) and for Lagan Valley (Mr. Donaldson) all pointed out that people of high ability but ordinary income will be deterred from choosing university courses.

The Bill was sold as fixing fees at no more than £3,000 a year, and the hon. Member for Southampton, Test (Dr. Whitehead) said that he believes those assurances. The Secretary of State has proposed what he calls "truth proofing", in other words, a guarantee that primary legislation would be needed to break that promise. However, we are debating primary legislation designed to break a promise—how does that get us anywhere?

The Bill has been sold as being good for universities, but the representatives of those who work in universities, the Association of University Teachers and the National Association of Teachers in Further and Higher Education, are against it.

Dr. Palmer

A Conservative Member told me a few days ago that he believes that the Bill is in the national interest, but his party has told him that he must vote against it because party interests come first. What is the hon. Gentleman's advice for that Conservative Member?

Mr. Collins

If the hon. Gentleman is proposing a free vote for all hon. Members, I have no doubt whatsoever that on conscience the Bill would go down, and that it would go down crashingly—as he well knows.

Today, the Secretary of State once again failed to deny that the money raised by fees would be clawed back by the Treasury. The concessions announced by the Government will cost more than the total amount raised by fees. Although higher education needs more money, as my hon. Friend the Member for Stratford-on-Avon (Mr. Maples) rightly said, there is a real chance that universities will not be a penny better off even if this Bill passes. A lot of pain, perhaps for no gain at all.

The Bill will be very bad for academic freedom, as my right hon. Friend the Member for South-West Norfolk (Mrs. Shephard) pointed out. The hon. Member for Huddersfield (Mr. Sheerman) said that his Select Committee had opposed the Office for Fair Access, but he had changed his mind. I gently suggest to him that he was right the first time.

The right hon. Member for Newport, East (Alan Howarth) said that he was troubled by the creation of OFFA and hoped that it would operate with a light touch. But that is not what is proposed, for the Secretary of State said that he wants an OFFA "with teeth", not without them. That sounds the death knell for academic freedom.

The hon. Member for Stockton, North (Mr. Cook) said something extremely important, that he understood that some on the Opposition Benches were being instructed that the issue was now one about the survival of the Prime Minister. Let me make this very clear: it is not at all. The issue tonight is not whether the Prime Minister or the Secretary of State will still be in their jobs tomorrow morning. They have both said that they will not stand down whatever the result of this vote, and my right hon. Friend the Leader of the Opposition has made it clear that we would not use defeat of the Bill as a reason to call for resignations.

The issue, rather, is what attitude the Prime Minister will take from now on. The right hon. Gentleman has led Labour Members into a war they did not want, arm-twisted them into voting for foundation hospitals in which they do not believe, and now says that they will be guilty of betrayal if they do not vote for the very top-up fees he told them to promise to block.

Whatever happens, the present Prime Minister wakes up tomorrow morning in Downing street. But does he wake up a chastened man, ready to listen more to his party and his people, or a man filled even more with a fervent belief that he is always right and that his critics do not have the same courage as his? If the Government win tonight, do Labour Members think Downing street will brief reporters that the Prime Minister has learned a lesson and is resolved to listen more carefully in future, or that he has once again faced down his critics?

This is not a motion of confidence in Her Majesty's Government, but as my right hon. Friend the Member for Richmond, Yorks (Mr. Hague) said. it is an issue of confidence in the word of Members of Parliament. Both the Labour and Conservative manifestos, on which the vast majority of Members of this House stood in 2001, contained six unequivocal words. Labour said and we said:

We will not introduce top-up fees". This side of the House will stand by its pledge and vote accordingly. Will Labour hon. Members, many of whom genuinely take their pledged word seriously, do the same? Let Labour Members ask themselves this final question when it comes to justifying their conduct before their voters and in their own consciences: "Which will carry greater weight, that we stood by Tony or stood by our word?"

I urge hon. Members in all parts of the House to show that firm and unequivocal promises still have meaning in British public life and vote down the Bill.

6.38 pm

The Minister for Lifelong Learning, Further and Higher Education (Alan Johnson)

By and large, this has been a calm and measured debate, reflecting the seriousness of the issue and of the decision that we are about to take.

Before I came here mid-morning, I thought that the major questions that we would address in this very important debate were as follows: do we need investment in higher education? Do we need expansion? Should graduates contribute, and if so how? And—the issue regarded on the Labour Benches as crucial— should it be a fixed or a variable fee?

Listening to the debate, I have come to the conclusion that there is one other question: what on earth is the policy of Her Majesty's official Opposition? We are now at the first anniversary of the publication of the very important White Paper.

Bob Russell (Colchester) (LD)

Do not kick the dog. [Interruption.]

Alan Johnson

I assure you, Mr. Speaker, that postmen are always very nice to dogs.

The hon. Member for South Suffolk (Mr. Yeo) accused us of not having a plan B. I never heard a plan A from those on the Conservative Benches. If one looks back to last January, one sees that they have changed their policy on higher education more frequently than they have changed their leader, and that is a lot of changes. I can only conclude that it reminded me of being back in my flares and tank tops in the 1970s, watching the programme that Hughie Green used to front—opportunism knocks.

There were however some very important contributions, and some very interesting and thoughtful speeches, by Opposition Members. I particularly enjoyed the speech by the right hon. Member for Richmond, Yorks (Mr. Hague)—he would not want to be confused with the hon. Member for Richmond Park (Dr. Tonge) at the moment. I also enjoyed the contributions by the hon. Members for Stratford-on-Avon (Mr. Maples), for Wantage (Mr. Jackson) and for Esher and Walton (Mr. Taylor), because they really did have a thoughtful approach to resolving this problem.

I start by asking: do we need investment? There seemed to be agreement on both sides of the House that our higher education sector needs investment. I say to my right hon. Friend the Member for Birmingham, Ladywood (Clare Short), who asked why we need it now, that a lot has changed since the turn of the century. [Interruption.] Well, I shall come to the past two years in a second, but this is an important point. There were 5 million higher education students in China in 2001; that figure has tripled in three years. India is churning out 1 million graduates a year and is recruiting our researchers, lecturers and postgraduates.

Dearing identified a funding gap of £8 billion. Some hon. Members have said, "Yes, we need investment, but this will not bridge the gap," so it is important for me to make this absolutely clear. I remind hon. Members that we have been putting in £2.9 billion of public money since Dearing published his report. We have £800 million from existing fees and we shall raise about £1 billion from these new proposals. That is almost £5 billion. The £8 billion funding gap is not an annual amount: it is a total amount in the infrastructure. We shall make enormous progress towards bridging that funding gap.

Mr. Rendel

Will the Minister give way?

Alan Johnson

No, I will give way later.

I think it was the hon. Member for Daventry (Mr. Boswell) who said that, once we have introduced these proposals—once we have introduced our extra support for students—there will be no money left for universities. The £1,500 grant announced by my right hon. Friend the Secretary of State on 8 January—which will now be £2,700 up front—the 25-year cap and the increase in the loan do not affect by one iota the money from this package that goes to universities. We pay the student support, and that is what we should do as a matter of public policy. The universities will still get the £1 billion to £1.4 billion from this package that we originally envisaged.

Mr. Rendel

rose—

Mr. Yeo

rose—

Alan Johnson

I give way to the hon. Member for South Suffolk (Mr. Yeo).

Mr. Yeo

The Minister has just reached an absolutely crucial point in the argument, and I hope that he will weigh his answer very carefully. Is he saying that the money that will now be used to subsidise the extra loans, to pay for the maintenance grants and to write off the loans that will not be repaid after 25 years, will be provided to the Department for Education and Skills by the Chancellor through an increase in its spending total or not? if the answer is that it will not, we know what happened last time—all the money from tuition fees was clawed back from the universities by a cut in the Higher Education Funding Council grant.

Alan Johnson

The money for deferring up-front fees, introducing a deferred system with a huge cost because we shall apply no real rate of interest, the money for the £1,000 grant, the money for the higher threshold, and the money to provide support to part-time students—for the first time ever in this country—will all come from the Chancellor. What we have found from within the higher education budget is the money for the extra on the maintenance grant, the 25-year cap and the increased loan.

Mr. Rendel

I am grateful to the Minister for giving way a second time. If he were to introduce an extra tax on the highest paid, would he accept that he could give the money to the universities now, as he said, whereas under his own policy it will not be coming in until the year 2009?

Alan Johnson

I shall come on to that precise point in a few moments.

Do we need investment? Yes, and quickly. The Bill will provide the investment, combined with investment from the taxpayer, which is quite proper. We are asking for a £1 graduate contribution for every £14 that the taxpayer contributes.

Do we need expansion? Yes, again. I heard the concerns of the right hon. Member for South-West Norfolk (Mrs. Sheppard) about pushing towards the 50 per cent. target. In fact, we need the investment whether we expand or not, but I believe that it is important to expand higher education towards 50 per cent.

participation. We have one of the lowest drop-out rates in the world. The Organisation for Economic Co-operation and Development says that graduates in this country get a better return than graduates anywhere else. The Council for Industry and Higher Education, which completely supports the drive to 50 per cent., points out that 90 per cent. of this country's graduates gain employment in which they use their degree.

I am not a graduate myself, but they say that graduates are more tolerant, healthier, less involved in crime and more involved in their communities, which is certainly my experience of the graduates in their places around the Chamber.

The third crucial question is whether graduates should make a contribution. I say to Conservative Members—particularly to the right hon. Member for Richmond, Yorks, who led the Conservative party when the Dearing report was published—that Dearing was a national committee of inquiry. The report was a seminal work. Everyone says that Dearing did a thorough job. There are 20 volumes and God knows how many pages.

The Dearing report was unanimous in saying—and this is the answer to the hon. Member for Newbury (Mr. Rendel)—that we are fooling ourselves if we believe that we can fund higher education at 40 and 50 per cent. participation rates purely from the taxpayer in the same way as we did when university education was the preserve of a tiny elite—only 6 per cent. in the early 1960s. It was Dearing who said—the previous Government commissioned Dearing—that graduates should make a contribution.

I say to my right hon. Friend the Member for Birmingham, Ladywood that Dearing was first minded to go for a graduate tax. He did not do so because he felt that the graduate contribution scheme that we are introducing through the Bill was superior, for two basic reasons. The first was that graduates paid their contribution towards their education and did not continue to pay for the rest of their lives. The second was that lump sums can be paid up front under a graduate contribution scheme to get the money paid off quickly. Dearing said that the graduate contribution scheme was income contingent, as with the graduate tax; that it was paid through the Inland Revenue, as with the graduate tax; and that if earnings fell below a certain level, the graduate would cease to pay, as with the graduate tax. That is why I believe that the Dearing report is at the nub of the debate.

Paul Farrelly (Newcastle-under-Lyme) (Lab)

Can my hon. Friend help me on the subject of Dearing and grants? There was a slick operation going on this morning, with a list of concessions on offer, but my right hon. Friend's speech did not live up to it. Outside this place, the media are talking of no concessions being made. Can the Minister be precise? As a result of what has been said today, what extra maintenance grant will the children of a postman on an average income of £18,624 receive, when the wife earns perhaps another £5,000?

Alan Johnson

I will gladly come to that very point and answer my hon. Friend, but I want to stay with the logic of our important debate. Should graduates contribute? Yes, they should. We have had the Dearing national committee of inquiry and, after devolution, the Cubie commission was established in Scotland and the Rees commission in Wales. Cubie was even more vehement than Dearing about graduates paying a contribution, and the Cubie report fully supported graduate contributions.

I have considerable personal respect for the hon. Member for Harrogate and Knaresborough (Mr. Willis), but he cannot come here simon-pure in his principle that graduates must never make a contribution, when in Scotland the Liberal Democrats are part of a coalition Government and every graduate makes a contribution of just over £2,000 through the graduate endowment scheme. How can the Liberals take a principled stance against graduate contributions while supporting—they are right to support it—that system in Scotland?

Mrs. Anne Campbell

Does my right hon. Friend agree that one of the real disadvantages of the Government's scheme compared with a graduate tax is the fact that someone who earns a lot may pay off their money quickly, but it might take a person on a low to average income 25 years before the amount is written off?

Alan Johnson

If my hon. Friend has those precise concerns, I believe that she should read the Dearing report. Dearing set out six reasons why a graduate contribution scheme was superior to a graduate tax. We have had this debate within the parliamentary Labour party and I think that we should take it further. I sincerely believe that this option is much better.

We now get on to the really important question of whether there should be a fixed fee or a variable fee.

Richard Burden

My right hon. Friend will be aware that the problem that several of us have concerns the cap and that I asked my right hon. Friend the Education Secretary a question about that during his opening remarks. Will he clarify one thing for me? He has guaranteed that the cap will not rise during the course of the next Parliament and that it would require primary legislation to raise it within that time. It has also been said that if the commission recommended significant changes thereafter, it would be likely that primary legislation would be required. Would an increase in the rate of variability count as a significant change?

Alan Johnson

Yes, it undoubtedly would.

May I address the very issue about which my hon. Friend the Member for Birmingham, Northfield (Richard Burden) spoke to me only last evening: the question of fixed versus variable fees? We heard important contributions from my right hon. Friend the Member for Newcastle upon Tyne, East and Wallsend (Mr. Brown) and my hon. Friends the Members for Cambridge (Mrs. Campbell), for Southampton, Test (Dr. Whitehead) and for Norwich, North (Dr. Gibson). I accept completely the concerns of my right hon. Friend the Member for Newcastle upon Tyne, East and Wallsend about variability. From our point of view, we understood right from the start—since the first early-day motion was tabled by my hon. Friend the Member for Cambridge—that the primary concern was about poor students.

We now have a situation in which we are putting forward a £2,700 grant—this relates to the intervention made by my hon. Friend the Member for Newcastle-under-Lyme (Paul Farrelly). A £4,000 bursary is being offered at Cambridge, Imperial and Exeter, and I am sure that that is soon to be offered by many other universities. There will be access to a £3,555 loan. That is £10,250 a year of support—those studying physics, incidentally, will get an extra £1,000 on top.

We also have a situation in which 16 and 17-year-olds from poor backgrounds will, from this summer, get £1,500 a year to stay in school. If we do not keep them in school, we cannot get them to do two decent A-levels so that they can get to university. There will be a sum of £11,100 over a five-year period, which represents the kind of package that has never before been seen to help poorer students. However, I accept that my right hon. Friend the Member for Newcastle upon Tyne, East and Wallsend and others still have concerns about variability. Our view was simply that going to a fixed fee of £2,500, as has been suggested, or £3,000 with absolute rigidity and no ability to charge less, would be wrong. However, after three years of the scheme's operation, an independent commission will look at it and report straight to the House—not to the Government—after examining the concerns expressed by my right hon. and hon. Friends. It is important that we do that because that point will be the prime time at which to consider the question of fixed versus variable and to decide whether we should switch from one to the other.

Simon Hughes

Will the right hon. Gentleman give way?

Alan Johnson

No, I am not giving way.

Another concern has been expressed about the effect of the package on modern universities. I hope that hon. Members have seen something today from what used to be called the Coalition of Modern Universities, but which has helpfully changed its name in the last week to Campaigning for Mainstream Universities. It says to all hon. Members: We are leading the delivery of the government's aim of widening participation…If you support what we are doing and you wish to ensure that we can continue to make our essential contribution in the future, it is important that the Bill passes its Second Reading tomorrow"— this was issued yesterday.

If the Bill falls, many of those with the greatest need will be denied the transforming opportunity of a quality university education. Those are the very universities that Labour Members, quite understandably, have concerns about, and it is very significant that CMU has issued that quote today.

We now have a situation where a £2,700 grant is available from the Government. Significant grants are available from those universities that need to widen participation—they accept that they need to do so; there is no argument between those universities and us. The threshold for repayment will now increase from £10,000 to £15,000. As a result, with people's concern about debt—watching the debate, as we speak—graduates are paying back £8.60 a week if they are on £15,000 a year. When the proposal comes in, that drops to nothing. They pay nothing at £15,000 a year. Graduates on £18,000 a year, which is the average starting pay of a graduate, are currently paying £13.85. With our proposal, that drops to £5.19, immediately. That goes right up the scale to people who earn as much as £40,000 a year. It is not what people owe; it what they earn that determines their payment.

On the 25-year cap, my hon. Friend the Member for Croydon, Central (Geraint Davies) was right in pointing out that if, for whatever reason, someone joins the Church, works for a charity, or decides to become an MP—so never earns much money—and only earns the equivalent of £17,000 a year for their whole lifetime, they will only pay back a grand sum, loan plus fee, of £4,500.

Mr. Barnes

Could we be clear beyond peradventure that the change that I am seeking has not been accepted? Instead of the debt disappearing after 25 years, we should take it off the front end, so that there is a holiday from debt. That would affect perceptions considerably, and it would be an advance in the direction that many of us want to go.

Alan Johnson

I very much appreciate the fact that this is not the first time that my hon. Friend has raised that, and I sincerely hope that it will not be the last, because I should love to debate it in Committee.

Other issues have been raised about devolved Administrations. I just want to say that, with the anomalies that occur, it is very important to us that the cross-border situation that might arise with Scotland, Northern Ireland and Wales is thought through considerably and that we discuss it at the JULC.—Joint Union Liaison Committee.

Mr. Jon Owen Jones

May I ask for my right hon. Friend's assurance that he will look carefully into the anomaly that will exist if the Welsh Assembly's policies go into place, whereby a Russell group university—Cardiff—will charge students who go there £6,000 less than any other Russell group institution, so there will be a flood of English students into Cardiff university?

Alan Johnson

I will examine my hon. Friend's point.

A major thrust of attacks—particularly by the right hon. Member for Richmond, Yorks—was that we have broken a manifesto commitment. My right hon. Friend the Member for Sheffield, Brightside (Mr. Blunkett) was clear in the late 1990s in introducing legislation, and very clear about the definition of top-up fees—the Government place a charge and universities can top it up to whatever they like. We will never do that now. We will not legislate for that in the future.

Question put, That the Bill be now read a Second time:—

The House divided: Ayes 316, Noes 311.

Division No. 38] [6:59 pm

AYES
Adams, Irene (Paisley N)	Anderson, rh Donald (Swansea E)
Anger, Nick	Anderson, Janet (Rossendale &Darwen)
Ainsworth, Bob (Cov'try NE)
Alexander, Douglas	Armstrong, rh Ms Hilary
Allen, Graham	Atherton, Ms Candy

Atkins, Charlotte	Donohoe, Brian H.
Bailey, Adrian	Doran, Frank
Baird, Vera	Dowd, Jim (Lewisham W)
Banks, Tony	Drown, Ms Julia
Barron, rh Kevin	Eagle, Angela (Wallasey)
Battle, John	Eagle, Maria (L'pool Garston)
Bayley, Hugh	Edwards, Huw
Beard, Nigel	Efford, Clive
Beckett, rh Margaret	Ellman, Mrs Louise
Begg, Miss Anne	Field, rh Frank (Birkenhead)
Bell, Sir Stuart	Fitzsimons, Mrs Lorna
Benn, rh Hilary	Flint, Caroline
Benton, Joe (Bootle)	Follett, Barbara
Betts, Clive	Foster, rh Derek
Blackman, Liz	Foster, Michael (Worcester)
Blair, rh Tony	Foster, Michael Jabez (Hastings & Rye)
Blears, Ms Hazel
Blizzard, Bob	Foulkes, rh George
Blunkett, rh David	Francis, Dr. Hywel
Boateng, rh Paul	Gapes, Mike (Ilford S)
Borrow, David	Gardiner, Barry
Bradley, rh Keith (Withington)	George, rh. Bruce (Walsall S)
Bradley, Peter (The Wrekin)	Gilroy, Linda
Bradshaw, Ben	Goggins, Paul
Brennan, Kevin	Griffiths, Jane (Reading E)
Brown, rh Gordon (Dunfermline E)	Griffiths. Nigel (Edinburgh S)
	Griffiths, Win (Bridgend)
Brown, rh Nicholas (Newcastle E Wallsend)	Hain, rh Peter
	Hall, Mike (Weaver Vale)
Brown, Russell (Dumfries)	Hall, Patrick (Bedford)
Browne, Desmond	Hamilton, David (Midlothian)
Bryant, Chris	Hamilton, Fabian (Leeds NE)
Buck, Ms Karen	Hanson, David
Burden, Richard	Harman, rh Ms Harriet
Burnham, Andy	Harris, Tom (Glasgow Cathcart)
Byers, rh Stephen	Healey, John
Caborn, rh Richard	Henderson, Ivan (Harwich)
Cairns, David	Hendrick, Mark
Campbell, Alan (Tynemouth)	Hepburn, Stephen
Campbell, Ronnie (Blyth V)	Heppell, John
Caplin, Ivor	Hesford, stephen
Casale, Roger	Hewitt, rh Ms Patricia
Cawsey, Ian (Brigg)	Heyes, David
Challen, Colin	Hill, Keith (Streatham)
Chapman, Ben (Wirral S)	Hodge, Margaret
Chaytor, David	Hood,Jimmy (Clydesdale)
Clark, Dr. Lynda (Edinburgh Pentlands)	Hoon, rh Geoffrey
	Hope, Phil (Corby)
Clark, Paul (Gillingham)	Howarth, rh Alan (Newport E)
Clarke, rh Charles (Norwich S)	Howarth, George (Knowsley N & Sefton E)
Clarke, rh Tom (Coatbridge & Chryston)
	Howells, Dr. Kim
Clarke, Tony (Northampton S)	Hughes, Beverley (Stretford & Urmston)
Clelland, David
Clwyd, Ann (Cynon V)	Hughes, Kevin (Doncaster N)
Coaker, Vernon	Hurst, Alan (Braintree)
Coffey, Ms Ann	Hutton, rh John
Coleman, Iain	Ingram, rh Adam
Cook, Frank (Stockton N)	Irranca-Davies, Huw
Cooper, Yvette	Jackson, Helen (Hillsborough)
Corston, Jean	Jackson, Robert (Wantage)
Cranston, Ross	Jamieson, David
Cummings, John	Johnson, Alan (Hull W)
Cunningham, rh Dr. Jack (Copeland)	Johnson, Miss Melanie (Welwyn Hatfield)
Cunningham, Jim (Coventry S)	Jones, Kavan (N Durham)
Cunningham, Tony (Workington)	Jones, Martyn (Clwyd S)
Curtis-Thomas, Mrs Claire	Jowell, rh Tessa
Darling, rh Alistair	Joyce, Eric (Falkirk W)
David, Wayne	Kaufman, rh Gerald
Davies, Geraint (Croydon C)	Keeble, Ms Sally
Dawson, Hilton	Keen, Alan (Feltham)
Dean, Mrs Janet	Keen, Ann (Brentford)
Denham, rh John	Kelly, Ruth (Bolton W)
Dhanda, Parmjit	Kemp, Fraser
Dismore, Andrew	Kennedy, Jane (Wavertree)

Khabra, Piara S.	Pike, Peter (Burnley)
Kidney, David	Plaskitt, James
King, Andy (Rugby)	Pollard, Kerry
King, Ms Oona (Bethnal Green & Bow)	Pond, Chris (Gravesham)
	Pope, Greg (Hyndburn)
Knight, Jim (S Dorset)	Pound, Stephen
Kumar, Dr. Ashok	Prentice, Ms Bridget (Lewisham E)
Ladyman, Dr. Stephen
Lammy, David	Prescott, rh John
Lawrence, Mrs Jackie	Primarolo, rh Dawn
Laxton, Bob (Derby N)	Prosser, Gwyn
Lazarowicz, Mark	Purchase, Ken
Leslie, Christopher	Purnell, James
Levitt, Tom (High Peak)	Quin, rh Joyce
Lewis, Ivan (Bury S)	Quinn, Lawrie
Liddell, rh Mrs Helen	Rammell, Bill
Linton, Martin	Rapson, Syd (Portsmouth N)
Love, Andrew	Raynsford, rh Nick
Lyons, John (Strathkelvin)	Reed, Andy (Loughborough)
McAvoy, Thomas	Reid, rh Dr. John (Hamilton N & Bellshill)
McCabe, Stephen
McCartney, rh Ian	Robertson, John (Glasgow Anniesland)
McDonagh, Siobhain
MacDonald, Calum	Robinson, Geoffrey (Coventry NW)
MacDougall, John
McFall, John	Roche, Mrs Barbara
McGuire, Mrs Anne	Rooney, Terry
McIsaac, Shona	Ross, Ernie (Dundee W)
McKechin, Ann	Roy, Frank (Motherwell)
McKenna, Rosemary	Ruane, Chris
Mackinlay, Andrew	Ruddock, Joan
McNulty, Tony	Russell, Ms Christine (City of Chester)
MacShane, Denis
Mactaggart, Fiona	Salter, Martin
McWalter, Tony	Sarwar, Mohammad
McWilliam, John	Sawford, Phil
Mahmood, Khalid	Shaw, Jonathan
Mallaber, Judy	Sheerman, Barry
Mandelson, rh Peter	Sheridan, Jim
Mann, John (Bassetlaw)	Shipley, Ms Debra
Marsden, Gordon (Blackpool S)	Simon, Siôn (B'ham Erdington)
Marshall, David (Glasgow Shettleston)	Singh, Marsha
	Smith, rh Andrew (Oxford E)
Martlew, Eric	Smith, Angela (Basildon)
Merron, Gillian	Smith, rh Chris (Islington S & Finsbury)
Michael, rh Alun
Milburn, rh Alan	Smith, Jacqui (Redditch)
Miliband, David	Smith, John (Glamorgan)
Miller, Andrew	Soley, Clive
Mitchell, Austin (Gt Grimsby)	Southworth, Helen
Moffatt, Laura	Spellar, rh John
Mole, Chris	Squire, Rachel
Moonie, Dr. Lewis	Starkey, Dr. Phyllis
Moran, Margaret	Stewart, David (Inverness E & Lochaber)
Morley, Elliot
Morris, rh Estelle	Stewart, Ian (Eccles)
Mountford, Kali	Stinchcombe, Paul
Mullin, Chris	Stoate, Dr. Howard
Munn, Ms Meg	Straw, rh Jack
Murphy, Denis (Wansbeck)	Stringer, Graham
Murphy, Jim (Eastwood)	Stuart, Ms Gisela
Murphy, rh Paul (Torfaen)	Sutcliffe, Gerry
Naysmith, Dr. Doug	Tami, Mark (Alyn)
Norris, Dan (Wansdyke)	Taylor, rh Ann (Dewsbury)
O'Brien, Bill (Normanton)	Taylor, Dari (Stockton S)
O'Brien, Mike (N Warks)	Taylor, David (NW Leics)
O'Hara, Edward	Thomas, Gareth (Clwyd W)
Olner, Bill	Thomas, Gareth (Harrow W)
O'Neill, Martin	Timms, Stephen
Organ, Diana	Tipping, Paddy
Osborne, Sandra (Ayr)	Todd, Mark (S Derbyshire)
Palmer, Dr. Nick	Touhig, Don (Islwyn)
Pearson, Ian	Turner, Dennis (Wolverh'ton SE)
Perham, Linda	Turner, Neil (Wigan)
Picking, Anne	Twigg, Derek (Halton)
Pickthall, Colin	Twigg, Stephen (Enfield)

Tynan, Bill (Hamilton S)	Winterton, Ms Rosie (Doncaster C)
Vaz, Keith (Leicester E)
Walley, Ms Joan	Woodward, Shaun
Ward, Claire	Woolas, Phil
Watson, Tom (W Bromwich E)	Worthington, Tony
Watts,David	Wright, Anthony D. (Gt Yarmouth)
White, Brian
Whitehead, Dr. Alan	Wright, David (Telford)
Wicks, Malcolm	Wright, Tony (Cannock)
Williams, Betty (Conwy)	Wyatt, Derek
Wills, Michael	Tellers for the Ayes:
Wilson, Brian	Jim Fitzpatrick and
Winnick, David	Joan Ryan

NOES
Abbott, Ms Diane	Clifton-Brown, Geoffrey
Ainsworth, Peter (E Surrey)	Cohen, Harry
Allan, Richard	Collins, Tim
Amess, David	Colman, Tony
Ancram, rh Michael	Connarty, Michael
Arbuthnot, rh James	Conway, Derek
Atkinson, David (Bour'mth E)	Corbyn, Jeremy
Atkinson, Peter (Hexham)	Cormack, Sir Patrick
Austin, John	Cotter, Brian
Bacon, Richard	Cousins, Jim
Baker, Norman	Cran, James (Beverley)
Baldry, Tony	Crausby, David
Barker, Gregory	Cruddas, Jon
Barnes, Harry	Cryer, John (Hornchurch)
Baron, John (Billericay)	Curry, rh David
Barrett, John	Dalyell, Tam
Beggs, Roy (E Antrim)	Davey, Edward (Kingston)
Beith, rh A. J.	Davidson, Ian
Bellingham, Henry	Davies, rh Denzil (Llanelli)
Bennett, Andrew	Davies, Quentin (Grantham & Stamford)
Bercow, John
Beresford, Sir Paul	Davis, rh David (Haltemprice & Howden)
Berry, Roger
Best, Harold	Djanogly, Jonathan
Blunt, Crispin	Dobbin, Jim (Heywood)
Boswell, Tim	Dobson, rh Frank
Bottomley, Peter (Worthing W)	Dodds, Nigel
Bottomley, rh Virginia (SW Surrey)	Donaldson, Jeffrey M.
	Dorrell, rh Stephen
Brady, Graham	Doughty, Sue
Brake, Tom (Carshalton)	Duncan, Alan (Rutland)
Brazier, Julian	Duncan Smith, rh lain
Breed, Colin	Dunwoody, Mrs Gwyneth
Brooke, Mrs Annette L.	Etherington, Bill
Browning, Mrs Angela	Evans, Nigel
Bruce, Malcolm	Ewing, Annabelle
Burgon, Colin	Fabricant, Michael
Burnett, John	Fallon, Michael
Burns, Simon	Farrelly, Paul
Burnside, David	Field, Mark (Cities of London & Westminster)
Burstow, Paul
Burt, Alistair	Fisher, Mark
Butterfill, Sir John	Flight, Howard
Cable, Dr. Vincent	Flook, Adrian
Calton, Mrs Patsy	Flynn, Paul (Newport W)
Cameron, David	Forth, rh Eric
Campbell, Gregory (E Lond'y)	Foster, Don (Bath)
Campbell, rh Sir Menzies (NE Fife)	Fox, Dr. Liam
	Francois, Mark
Carmichael, Alistair	Gale, Roger (N Thanet)
Cash, William	Galloway, George
Caton, Martin	Garnier, Edward
Chapman, Sir Sydney (Chipping Barnet)	George, Andrew (St. Ives)
	Gerrard, Neil
Chidgey, David	Gibb, Nick (Bognor Regis)
Chope, Christopher	Gibson, Dr. Ian
Clapham, Michael	Gidley, Sandra
Clappison, James	Gillan, Mrs Cheryl
Clark, Mrs Helen (Peterborough)	Godsiff, Roger
Clarke, rh Kenneth (Rushcliffe)	Goodman, Paul

Gray, James (N Wilts)	Maclean, rh David
Grayling, Chris	McLoughlin, Patrick
Green, Damian (Ashford)	McNamara, Kevin
Green, Matthew (Ludlow)	Mahon, Mrs Alice
Greenway, John	Malins, Humfrey
Grieve, Dominic	Mallon, Seamus
Grogan, John	Maples, John
Gummer, rh John	Marris, Rob (Wolverh'ton SW)
Hague, rh William	Marsden, Paul (Shrewsbury & Atcham)
Hammond, Philip
Hancock, Mike	Marshall, Jim (Leicester S)
Harris, Dr. Evan (Oxford W & Abingdon)	Marshall-Andrews, Robert
	Mates, Michael
Harvey, Nick	Maude, rh Francis
Havard, Dai (Merthyr Tydfil & Rhymney)	Mawhinney, rh Sir Brian
	May, Mrs Theresa
Hawkins, Nick	Meacher, rh Michael
Hayes, John (S Holland)	Mercer, Patrick
Heald, Oliver	Mitchell, Andrew (Sutton Coldfield)
Heath, David
Heathcoat-Amory, rh David	Moore, Michael
Henderson, Doug (Newcastle N)	Morgan, Julie
Hendry, Charles	Moss, Malcolm
Hermon, Lady	Mudie, George
Hoban, Mark (Fareham)	Murrison, Dr. Andrew
Hoey, Kate (Vauxhall)	Norman, Archie
Hogg, rh Douglas	Oaten, Mark (Winchester)
Holmes, Paul	O'Brien, Stephen (Eddisbury)
Hopkins, Kelvin	Öpik, Lembit
Horam, John (Orpington)	Osborne, George (Tatton)
Howard, rh Michael	Ottaway, Richard
Howarth, Gerald (Aldershot)	Owen, Albert
Hoyle, Lindsay	Page, Richard
Hughes, Simon (Southwark N)	Paice, James
Humble, Mrs Joan	Paisley, Rev. Ian
Hume, John (Foyle)	Paterson, Owen
Hunter, Andrew	Pickles, Eric
Illsley, Eric	Portillo, rh Michael
Jack, rh Michael	Prentice, Gordon (Pendle)
Jackson, Glenda (Hampstead & Highgate)	Price, Adam (E Carmarthen & Dinefwr)
Jenkin, Bernard	Prisk, Mark (Hertford)
Johnson, Boris (Henley)	Pugh, Dr. John
Jones, Jon Owen (Cardiff C)	Randall, John
Jones, Lynne (Selly Oak)	Redwood, rh John
Jones, Nigel (Cheltenham)	Reid, Alan (Argyll & Bute)
Keetch, Paul	Rendel, David
Kennedy, rh Charles (Rosy Skye & Inverness)	Robathan, Andrew
	Robertson, Angus (Moray)
Key, Robert (Salisbury)	Robertson, Hugh (Faversham & M-Kent)
Kilfoyle, Peter
Kirkbride, Miss Julie	Robertson, Laurence (Tewk'b'ry)
Kirkwood, Sir Archy	Robinson, Mrs Iris (Strangford)
Knight, rh Greg (E Yorkshire)	Robinson, Peter (Belfast E)
Laing, Mrs Eleanor	Roe, Mrs Marion
Lait, Mrs Jacqui	Rosindell, Andrew
Lamb, Norman	Ruffley, David
Lansley, Andrew	Russell, Bob (Colchester)
Laws, David (Yeovil)	Salmond, Alex
Leigh, Edward	Sanders, Adrian
Letwin, rh Oliver	Sayeed, Jonathan
Lewis, Dr. Julian (New Forest E)	Sedgemore, Brian
Lewis, Terry (Worsley)	Selous, Andrew
Liddell-Grainger, Ian	Shephard, rh Mrs Gillian
Lidington, David	Shepherd, Richard
Lilley, rh Peter	Short, rh Clare
Lloyd, Tony (Manchester C)	Simmonds, Mark
Llwyd, Elfyn	Simpson, Alan (Nottingham S)
Loughton, Tim	Simpson, Keith (M-Norfolk)
Lucas, Ian (Wrexham)	Skinner, Dennis
Luke, lain (Dundee E)	Smith, Geraldine (Morecambe & Lunesdale)
McCafferty, Chris
McDonnell, John	Smith, Llew (Blaenau Gwent)
McGrady, Eddie	Smith, Sir Robert (W Ab'd'ns & Kincardine)
McIntosh, Miss Anne
Mackay, rh Andrew	Smyth, Rev. Martin (Belfast S)

Soames, Nicholas	Turner, Dr Desmond (Brighton Kemptown)
Spelman, Mrs Caroline
Spicer, Sir Michael	Tyler, Paul (N Cornwall)
Spink, Bob (Castle Point)	Tyrie, Andrew
Spring, Richard	Viggers, Peter
Stanley, rh Sir John	Vis, Dr. Rudi
Steen, Anthony	Walter, Robert
Steinberg, Gerry	Wareing, Robert N.
Strang, rh Dr. Gavin	Waterson, Nigel
Streeter, Gary	Watkinson, Angela
Stunell, Andrew	Webb, Steve (Northavon)
Swayne, Desmond	Weir, Michael
Swire, Hugo (E Devon)	Whittingdale, John
Syms, Robert	Wiggin, Bill
Tapsell, Sir Peter	Wilkinson, John
Taylor, David (NW Leics)	Willetts, David
Taylor, John (Solihull)	Williams, Hywel (Caernarfon)
Taylor, Matthew (Truro)	Williams, Roger (Brecon)
Taylor, Dr. Richard (Wyre F)	Willis, Phil
Taylor, Sir Teddy	Winterton, Ann (Congleton)
Teather, Sarah	Winterton, Sir Nicholas (Macclesfield)
Thomas, Simon (Ceredigion)
Thurso, John	Wishart, Pete
Tonge, Dr. Jenny	Wood, Mike (Batley)
Tredinnick, David	Young, rh Sir George
Trend, Michael	Younger-Ross, Richard
Trickett, Jon	Tellers for the Noes:
Trimble, rh David	Mr. David Wilshire and
Turner, Andrew (Isle of Wight)	Mr. Peter Luff

Question accordingly agreed to.

Mr. Tim Yeo (South Suffolk) (Con)

On a point of order, Mr. Speaker. After this utter humiliation for the Government, do you agree that it is completely wrong that a Bill that imposes higher charges on students attending English universities should be carried by this House only by using the votes of Scottish Members of Parliament, given that students attending universities in the constituents of those Scottish Members do not have pay those higher charges?

Mr. Speaker

Order. The House has decided on this matter, and that is the end of it.

Mr. Alex Salmond (Banff and Buchan) (SNP)

rose—

Mr. Speaker

I hope that this is a proper point of order, Mr. Salmond. [Interruption.]Order. Allow me to hear the hon. Gentleman.

Mr. Salmond

Can the Speaker clarify that there was nothing in the terms of order that required the single Scottish Tory MP to sit on his hands and do nothing while Scottish interests were put to the sword by Scottish Labour MPs?

Mr. Speaker

Order. We now come to the programme motion.