OVERSEAS STUDENTS: FEES AND FUNDING 1980–81

HL Deb 12 December 1979 vol 403 cc1275-352

9.6 p.m.

Lord STEWART of FULHAM rose to ask Her Majesty's Government whether they will give a full account of their plans for fees and funding of all students from overseas, including funds provided to the British Council for that purpose, in the academic year 1980–81. The noble Lord said: My Lords, this Question was based originally on a single sentence in paragraph 33 of the White Paper on Public Expenditure. It reads: New overseas students or their sponsors will be expected in future to meet the full cost of their tuition". However, in that single sentence are wrapped up many implications and consequences, and I must say at once that I am indebted to the noble Baroness, Lady Young, for the help she and her office gave me in providing information about a number of the matters involved.

I recognise that time is moving on and that there is a long list of speakers. I shall therefore endeavour to be as brief as a subject of this importance and complexity allows. I shall seek to set out in general what I think are the main issues involved, and I am sure that many of the noble Lords who are to speak later will be able to enrich that by individual and close knowledge of universities, of students and of the welfare of students and the problems they face.

First, I should say that it seems to me that this proposal concerning the fees of overseas students dwarfs any previous proposal about them that has ever been considered. I notice, though it was before I was a Member of this House, that in July there was a debate here on a proposal for an increase of student fees, but in that debate, to take one example—that of the fees of undergraduate students—what was in issue was an increase of those fees from £770 to £940. Now we are told that if the full fee is to be paid, the figure for the undergraduate student—for postgraduate students it will he a higher figure, and many of those whom we are discussing are postgraduate students—will not be £770 or £940, but will be at a minimum £2,000, £3,000, or £5,000 according to the nature of the course pursued; and those are minimum figures. Whereas in the debate in July the Government claimed to be saving £6 million, I understand that they now expect—though I shall throw some doubt on this later—to make an economy for the public purse of about £90 million.

As I say, this is a proposal that dwarfs all others, and I do not think that we shall need in this debate therefore to look back and consider what was done or said over student fees by one Government or another in the 'sixties or 'seventies. We are now dealing with a quite different order of proposal.

I want first to put this question to the noble Baroness, Lady Young. What do the Government think, or hope, will happen as a result of this measure? Are they working on the assumption, for example, that the students will turn up and pay up in the same numbers as they do at present?—because as a matter of fact it is only on that assumption that the Government would save the £90 million. But I find it difficult to believe that the Government are really expecting that to happen. But let us suppose for a moment that that is what happens—that the number of overseas students attending our universities is the same—and the Government can then say that they have succeeded in shunting £90 million off the shoulders of the British taxpayer on to foreign students, their parents or their Governments.

But even if the numbers remain the same, the students will be different. Fewer of them will come from poorer countries. There is, I believe, already some tendency for this to occur in universities which have experienced earlier rises in fees. That will mean that students from countries desperately in need of knowledge, particularly in certain fields, will be the ones most likely to be deprived by this. Not only will it in future be students from richer rather than poorer countries—even if the numbers keep up, and that is a great if; it will be individually the wealthier, rather than the poorer, students. I believe in some universities there is already some anxiety as to whether they can keep up academic standards when there is created a situation in which the range of students who can even afford to approach the university is limited.

At this point, I would add what might be called a detail, but it is a detail of rather moving importance. Is any special provision to be made for the needs of refugee students?—because they will find the requirement to pay full fees of particular difficulty. In a reply on 27th November to a Question for Written Answer the noble Baroness said something about students from countries in the European Community. She said something, but I think she will agree that it was not then precise; the Government had not decided what their position would be. When the Government are looking at that problem, can they also look at the problem of refugee students?

So far as I have spoken on the assumption that the number of overseas students stays up to a figure of between 80,000 and 90,000, which it is at present, and I am asking whether the Government hold that assumption. But I am bound to say that I do not think they do, because they have already expressed some anxiety about student numbers, in particular research students, by putting forward an award scheme for those whom it is hoped will be research students doing work of exceptional value. To begin with, it is to affect 500 such students and possibly build up later to 1,500. To begin with, £1 million, and I presume that it might rise to £2 million or £3 million, if the scheme goes ahead as the Government suggest. I think it fair to say that this proposal has been received by the universities with very moderate enthusiasm. The vice-chancellors said that the scheme was not the best way to attract the most able future research workers to Britain and the secretary-general of the vice-chancellors' committee said that it will do very little to undo the harm caused by the Government's full-cost fees policy. But the fact that the scheme is put forward indicates, I think, that the Government have some anxiety about the number of students, and are making a tiny attempt to relieve their anxieties in that field.

I return now, my Lords, to what I believe to he the much more probable assumption—and, I expect, the assumption the Government are making—that there will be a marked falling off in the number of overseas students. Let us see what the results of that will be—first, on the universities themselves. The Government have told universities that the grant to universities will be reduced by 13 per cent. in view of the fact that they will, one hopes, be getting the fees from overseas students instead. Of course, if that happens, if all the students turn up and pay the full fees, the universities might not fare so badly; but it is extremely unlikely that they will. So when we look at this proposal, although in form it appears to be a proposal to shift the cost of students' education from the British taxpayer to the foreign Government, to the foreign parent or to the foreign student, what it is in practice is a way of reducing expenditure on the universities. That is what is really going to happen.

I suppose one can say, "Well, these are hard times, the Government need money, and every institution has to be looked at". But what a curious way the universities are being looked at. I suppose that if one tried, one could make a case for saying that certain economies can be achieved in the universities, but would you really begin by saying that a university's resources are to be cut down to a greater or less amount according to the proportion of foreign students that it now has? Because although, as the vice-chancellors have pointed out, in general it is one-eighth of their income that will be at risk, in some institutions it will be one-third of their income that is at risk. This is going to be an operation completely indiscriminate; and if the number of overseas students goes down, the university lacks its grant and the student fees do not come in, the Government will surely accept that a university cannot he expected to shrink its expenses in proportion to a reduction in the number of its students. There are, of course, overhead expenses and it is this fact that makes a great deal of the calculation about what is saved a rather shadowy and unreal one.

If the result is that you have universities with unused facilities as foreign students cannot come forward to pay the full fees, in some cases they will be facilities provided for courses specifically designed for the needs of overseas students. Courses of that kind are very necessary. Some countries, for example, have a great need to send their people to this country to learn more about the proper conduct of agriculture, and some universities in this country have set to work to meet that need. A possible result of what the Government now propose is that all the preparations made for those courses will be so much waste.

Surely the Government know that if you are talking about economy it is not enough to play about with figures of money. You must consider what is happening to resources; and what is most likely to happen here is an actual waste of resources. I wonder whether the Government have considered this aspect of the matter. The cheerful way in which they have talked of £90 million, the cheerful way in which they have talked of cutting the university grant in the expectation that the overseas students' fees will make it up, suggest they have not fully considered what will happen. I think they may take the advice which has been tendered to them in some university quarters that, before bringing this scheme into operation, they should hold a speedy inquiry and find out exactly what will happen in certain universities, because I think that that preliminary work has not been done.

Those are likely to be the results on universities. What about the results of this proposal on the country as a whole? Much has been said—and I notice that much was said in the debate in July—on the value to this country of having a body of overseas students here; and if I run through the points about that briefly, it is not because they are unimportant, but because I think we are all familiar with them. There is the value of the research work done by students; there is the advantage to our balance of payments which comes from expenditure by the students and their relatives visiting here; there is the undoubted advantage of having overseas in the future in important commercial positions people who have close connections with this country. These advantages cannot be precisely quantified; but I do not think that anyone will maintain that they do not exist. The great weight of business opinion, and that of the people who do this kind of business, is that it is a decided advantage to us to have abroad in commercial positions people who have pursued their university studies here. Then there is the political advantage, the desirability of having in the future people in important political and governmental positions in their country who have had their university education here rather than elsewhere.

I would say this. If the Government do not believe that that is important; if the Government do not believe that it is of great advantage to the influence and the prestige of this country to have overseas students; if the Government do not believe that, then they are unique among all the developed countries of the world in that disbelief. The Russians have no doubt about it at all and neither have most other countries with highly developed university systems. I say no more about those matters. They have been very much discussed in the past. I accept the difficulty of quantifying. But I say that here are real, if not exactly measurable, advantages; and they all have to be put in the scales against the "paper-£90-million" which the Government say they are going to save. One must come to the conclusion that the damage is not worth the alleged saving.

I think I will end on another point, not as mundane as the advantages to trade and so on. I think that it adds to the character and dignity of the universities—which is one of the things that the word means—to have people from many countries. The university itself is enriched. Our country, said Pericles, in his great panegyric on his own city, is an education to all Greece. We could make a comparable claim on a larger scale. It was one of the glories of this country that we were a centre from which learning radiated throughout the world. I think that the Government have been too hasty to pursue what may be only a shabby economy without regard for certain more permanent values.

Finally, my Lords, if I say little about the British Council, it is not because it is not important, but because I think we shall have an opportunity to discuss that next week. But it is sad at the time when students are going to be put to this immediate difficulty over fees that the British Council which helps them in so many other ways—with grants, with advice about accommodation and generally enabling them to fit into the life of this country—is, itself, to suffer reductions which are going to make it close some of its local centres, reduce the work of the London centre and reduce, I believe, by half the grants that it makes to students. Altogether, I think that we have the signs here of a policy put in with too little forethought and to little imagination; and I beg the Government to think again.

9.23 p.m.

Lord GLADWYN

My Lords, once again, thanks to the very welcome initiative of the noble Lord, Lord Stewart of Fulham, we are discussing what we on these Benches regard—and I am sure I am right in saying what the noble Lord himself regards—as the extraordinary and indefensible attitude of the present Government towards overseas students. Once again, we shall no doubt hear the noble Baroness who is to reply on behalf of the Department of Education and Science explaining, with, I am afraid, a certain complacency, that what the students bring into this country on balance by way of foreign exchange is non-existent because it is unquantifiable. Once again, she will read out her brief to the effect that the students must bear what is always referred to as the full cost of their education. Here, in case she still refuses (as she did last time) to accept the argument—and, I think, the irrefutable argument—advanced on this matter in the recent study by the London Conference on Overseas Students, may I quote a passage in a letter to my noble friend Lord Avebury, from the much respected Professor Cattermole of Essex University, one of our leading professors in engineering: He writes: The sum of money withdrawn from University Grants Committee funds appears to be the result of multiplying total university costs by the proportion of overseas students. Thus it vastly overestimates the true 'subsidy', in three respects. First, the average cost of any activity is greater than the marginal cost. We need some basic provision for staff, equipment, etc. for British students, and the cost of taking additional students is less than proportional: equally, the savings we could make by not taking them are less than proportional. Secondly, only part of our costs is attributable to teaching: a significant part is attributable to research, much of it to direct utility. Thirdly, the calculation ignores external effects: these are very varied; but include (at least) the money brought into the United Kingdom by overseas students, and the effect on trade of goodwill engendered by British education". Exactly how much of the alleged £100 million deficit would vanish into thin air were these principles applied to the calculation is open to argument; but no reasonable person can now doubt that by far the greater part of it would. Only the Treasury sticks to its original estimate, so it cannot apparently be changed because, as we all know, Governments always tend to believe that the Treasury is never wrong and is always right. And, of course, if it were changed, the entire Government case would simply go by the board.

None the less, once more we shall hear that, given the alleged cost of educating overseas students in this country, the only sensible thing to do—this, undoubtedly, is what the noble Baroness will say—is to let market forces loose in the sphere of education, admitting (with some grudging exceptions) only those foreigners who are so rich that they could obviously send their sons to any seat of learning anywhere in the world if they so chose, irrespective of cost.

Of course, as the noble Lord, Lord Stewart of Fulham, has said, it is obvious that, this being so, this will result in a heavy fall in the total number of students. It is impossible to argue the contrary. There will no doubt be a tiny concession regarding postgraduate students, some 5 per cent. of whom we understand may be the subject of special grants, though how they will he selected, and on what grounds, is something of a mystery.

Finally, if only not to infuriate our EEC partners, even beyond the point at which they were infuriated recently in Dublin, we shall probably hear that students from the Community will only be charged about ten times the nominal charges of most European universities. A great concession! Unless there is an unexpected increase in the number of scholarships to be granted to the poor Third World, that will be all. The possibility that by largely exempting EEC students from fees two or three times those charged even in America, we may expose ourselves under the Treaty to the necessity of admitting students from the Lomé Convention countries on similar terms does not seem as yet to have occurred to the Government. No doubt they would be absolutely horrified if it ever did.

Almost all leading academics, I think I am right in saying, are now ranged against these self-inflicted wounds—because that is what they are, rather than cuts—explaining how, in addition to depriving us of undoubted benefits that overseas students bestow on our benighted land, they will probably result in severe hardships from many universities and polytechnics, some of which may have if not to close down altogether at any rate to lower their standards, which would be a terrible thing to do. To no avail: the Government apparently believe that the academics are of no electoral importance, I am afraid, and that they have the votes behind them in that the country as a whole does not think much of students—and particularly of coloured students.

Even if it should be the intention of the Government to economise, not so much on account of overseas students themselves, which has already been shown to be no economy, but directly on expenditure on universities and polytechnics, if that should be their sole objective, what is the point of a policy which, far from hitting the more unpopular, and no doubt the least efficient educational establishments which have few or no overseas students, penalises exclusively those institutions which, by reason of attracting students from abroad, are presumably the most efficient and therefore the ones it is most desirable in the national interest to subsidise and maintain? What is the point of that?

The policy, in other words, has not been properly thought out: it has not been thought out at all. It is a kind of blunderbuss which has been fired off almost at random in response to a rather half-baked ideology; and for that very reason it is going to cause infinitely more harm than good. What courses, I wonder, will the sons and daughters of the rich foreign friends of the present Government take? They will no doubt be well able to afford the £5,000 a year necessary to become a dentist. But what son or daughter of an oil sheikh is going to go into that profession, or even to become a doctor, for that matter? Perhaps a few, in the hours they will be able to spare from their attendance at Annabels or the Clermont Club, will be serious enough to obtain a degree in engineering, but not very many, as we might think. Will they take any active part in the extra-curricular activities of the universities and polytechnics which they may favour with their presence? Perhaps that will be beneath their dignity. Probably, in their expensive "digs", they will go in for the soft options, in which case the seats of learning, deprived of grants they can only recover by fleecing the foreigner, may well find themselves even further in the red, because they will only get £2,000 instead of £5,000 per head. And when these rich characters do get back home, what prospect will there be of their providing the men and women who are likely to come to the fore in the next generation and thus create goodwill towards Britain, to say nothing of creating trade? Not much. The bright boys of the future will mostly have been well trained in Moscow or in East Berlin, if not, of course, by our main competitors.

My Lords, just listen for a moment to what a director of Balfour Beatty Limited says—they are responsible for some £400 million of contracts annually. I quote: In Singapore, Malaysia, Hong Kong, where university education is largely British oriented, we have an in-built advantage: the chaps who have returned from university training in the United Kingdom know its quality and they think in United Kingdom terms. Now in the Philippines it is all the other way: they think in American or Canadian terms, their post-graduate Mecca is a United States university, and, naturally enough, when it comes to placing a huge contract, they look first in that direction. The Americans know it and they encourage overseas students in a number of ways—bursaries, facilities for work, low fees—whereas we are foolish enough to raise the fees time and again. It is utterly short-sighted, and the long-term effects (to our disadvantage) are incalculable ". Broke we may be, but really, however broke, there is no impelling reason for us to go in for a purely self-defeating exercise.

But quite apart from students who will not come if these extortionate fees are introduced, what about the students already studying here? We understand that the Government have magnanimously agreed to exempt students in mid-course; but what provisions are there for the 37,000 students on preliminary, non-advanced courses? I do respectfully ask the noble Baroness to reply to that question. Are they to be forced to give up before embarking on the higher qualifications most of them came for? I would remind the House that in the only comparable increases imposed by Her Majesty's Government in 1967, students going on to higher courses were cushioned from the differential fees and had to pay a maximum of only £50 extra, which was recoverable in cases of hardship from a special DES fund. Surely something similar to that will be organised this time, or are the Government going to be absolutely hard-hearted and do nothing of the kind?

A couple of years ago the United Kingdom Council for Overseas Student Affairs and the Council for Education in the Commonwealth put forward the idea of a commission, whose object would be to work out and submit to the Government for approval schemes for both regulating and making the best use of overseas students in this country. We certainly did not exclude—of course we did not—the possibility of some quota scheme or schemes. We quite realised that there might well have to be some limit set to the total number of students in this country. We did not deny that. This scheme for a commission was not actually turned down by the Labour Government, who were still considering it when they fell. But it was quite soon rejected by the present Government, on the simple ground that it was a Quango—a beast whose extermination, as we all know, has been ordained by Mrs. Thatcher. I am afraid that perhaps the real reason was that it might somehow interfere with the sage confabulations of the civil servants who, in my view, are primarily responsible for the present mess.

Undaunted, we then suggested that at least Mrs. Thatcher might take a leaf out of Mr. Heath's book and give a Foreign and Commonwealth Office Minister—one of the eight, I think—some powers of co-ordination of rival departmental policies, in the same way as these were conferred on Mr. Anthony Kershaw in 1971. Clearly this was an error. The personal assistant of Mr. Blaker, who—that is, Mr. Blaker—had said that he would consider this suggestion seriously, later informed me that it was not acceptable. Liaison between the various departments was perfect, the private secretary said. We must therefore assume that the Foreign and Commonwealth Office is in complete accord with a policy which, as explained by the Mauritius Finance Minister at the Conference in Lusaka, is causing much distress and heartburning in the Commonwealth and great satisfaction behind the Iron Curtain. Apparently, that is what the Foreign Office thinks is a very good policy.

I repeat that I have scarcely any hope that this debate will induce the Government to abandon their foolish plans, though possibly they may modify them to some very slight extent. It is true that the fuss we made here about the proposed slashing of the BBC Overseas Services had some effect, and that when it was repeated in the other place the Government actually executed a U-turn. But I am afraid that there are fewer votes in overseas students, and even fewer in the British Council, which is associated in the popular imagination largely with "culture"—a word which tends to grate on a British ear—and whose splendid work in connection with the propagation of the English language and democratic ideas is often quite ignored.

And yet only two years ago this House indignantly repudiated the very proposals of the Berrill Report that have now effectively been resuscitated by a Tory Government. Where are the Tory champions of the British Council now? Where are the defenders of its crucial role in the teaching of English and the propagation of British political principles in the world? They are no doubt terrified of incurring the wrath of the embattled lady who, so we are told, is going in the near future to take on the unions, cure inflation, beat unemployment and lead us to the Promised Land. Loyalty, therefore, before conscience every time! That seems to be the basic Tory principle.

We shall have an opportunity shortly, as I think the noble Lord, Lord Stewart of Fulham, said, to discuss the proposed dismemberment of the British Council, so I shall not enlarge on it this evening. All I would say in conclusion is that it is a sad moment, both as regards students and as regards the British Council, when we turn our backs on the great civilising mission which this nation has for so long performed. If, therefore, these iniquitous proposals ever come before your Lordships in the shape of a White Paper—and no doubt the Government will try to avoid doing that—we on these Benches, at any rate, shall divide the House against them and we shall certainly hope that, as two years ago, a large majority of your Lordships will share our indignation and express it by your votes.

9.40 p.m.

Lord WEDDERBURN of CHARLTON

My Lords, I wish to contribute four points to your Lordships' debate for which we are very grateful to the noble Lord, Lord Stewart of Fulham. I wish to assure the noble Baroness that on this occasion at least I approach the problem in no party spirit or with no party interest. Indeed, I must declare an interest. I hold a Chair in the University of London at the London School of Economics, and on this occasion I speak largely against my background of some 27 years of teaching and research in universities.

My first point is that it has surely been made quite clear by the Vice-Chancellors and other spokesmen for the universities and polytechnics that they are not asking for any privilege or exemption on the matter of overseas student fees. Given the Government's policies—which it is not tonight's debate to challenge—universities can expect to have their resources straitened and diminished, but what they do not expect is that they should be diminished on a totally irrational and arbitrary basis.

University finance has been said to be in chaos, and partly that is true. Every Government of the last decade, including the last Government, bears its share of the responsibility for that. But the issue of overseas student fees is quite separate from the other diminution of university resources. It is irrational because it is based on a false assumption—insistence by the Government that the cost of overseas students must be calculated on a full unit cost basis; namely, the income of a university divided by the total number of students in that university.

The Government have already rejected —and the noble Baroness rejected it in this House—the report of this year's London Conference on Overseas Students, which argued that the right approach is one of marginal cost. Whether that is exactly the right approach it is very difficult to say, but the full unit cost cannot be right. If I hold a seminar with 30 students and if 10 overseas students are taken away, the cost to the university is not diminished by one-third, as the Government appear to believe. The cost of the building, of salary and of heating the building is the same. And if 10 students are added to the seminar, the cost is not increased by 25 per cent. Whatever the correct calculation may be, the full unit cost cannot be the right one. There is no university in any higher education system in the world which uses the full unit cost as the basis of its calculation for student fees. If it is used in this case, it will make our higher education system the most expensive in the world.

Secondly, if the Government still cannot accept any other basis than the full unit cost, even given what I believe to be a false assumption, how can it be right to deduct from the income of each university—I speak of universities because I know more about them than about polytechnics—a percentage according to the percentage of overseas students attending that university, as history and chance have bequeathed that percentage to that university institution? The overall cut is 13 per cent, but taking the percentages which will be applied according to the number of overseas students, it will be 8 per cent. at Cambridge, 29 per cent. at Essex, 11 per cent. at Oxford, 37 per cent. at the London School of Economics, 4 per cent. at Keele and 33 per cent. at the University of Manchester's Institute of Science and Technology. If it were applied to schools, it would be 74 per cent. at the London School of Hygiene and Tropical Medicine. This is a wholly arbitrary way of reducing income. If income has to be reduced, let it be reduced in a more rational manner. As the Vice-Chancellor of Southampton University said in The Times on 27th November: The method is appallingly crude. The Government is setting out to prune roses with an axe—and a blunt one ". It is worse than that. To use the London School of Economics as an example—and I pray it in aid not through any special interest but as an example which will apply to some other universities as well—we have a thousand or more overseas students, many of them very talented graduates. On the Government's calculations, it appears that the full unit cost will come to something just under £3,000 a head, so the deduction will be in the nature of £3 million from the London School of Economic's income. We cannot make up that income by taking more home students. That has been made clear to all universities by the University Grants Committee and the Government. We are told to go out and replace our overseas students by finding others. If we do that and charge the minimum for arts and social science students—as indeed we are bound to do while the market is being tested, because every other institution is charging that figure—we charge £2,000 a head, which brings in £2 million. So, even if we replace every single overseas student, the institution is £1 million short on this arbitrary calculation.

How can that possibly he right? Indeed, what is the pressure on universities?—and it seems to me that this is the point on which the public deserve to be better informed. The pressure on universities is not to take fewer overseas students; the pressure on many universities will be to take more overseas students and worse still the pressure on very many universities will be to admit more overseas students not on the basis of academic standards and academic merit but on the basis of whether they can pay. The illogical and irrational result which I cannot believe is intended by the Government is that the universities should become racketeers. Some people say that foreign students are already a racket in certain places. If they are, I do not know of them, but that should be investigated. Certainly, the pressure is to become racketeers and to overcrowd our seminars to the disadvantage of able, and especially able home students, with the sons and daughters of the western world's rich men who are not serious students. I cannot believe that is the right policy to present to universities to replace the stock of talented students who now come for the most part into British higher education.

That leads to my third point—because there is another problem. The Government appear to have taken this decision on the basis that there are suitable overseas students available who can afford these colossal new fees. In your Lordships' House on 7th November in the Official Report at column 813, the noble Baroness herself said, as many Government spokesmen have said: The fact is that every time the charges to overseas students have gone up so the number of students in this country has increased ". That was true between 1976 and 1978, but the Government surely cannot go on saying that now, in the light of their own statements. On 22nd November in another place at column 381, the Minister, Dr. Rhodes Boyson, said: In 1979–80 there were about 17,000 overseas graduate and postgraduate new entrants to British universities as compared with 18,672 in 1978–79 ". That is a decrease of some 9 per cent. and it is not unrelated to the previous Government's increase of fees by 30 per cent. The level was 9 per cent. down on 30 per cent.

Lord ANNAN

My Lords, will the noble Lord allow me to intervene? Does he not think that the decrease in the number of overseas students was due to the request, in fact the instruction, which came from the UGC on the orders of the then Secretary of State, requiring uni- versities to decrease the number of overseas students to the figure that they took in 1975 minus 7 per cent.?

Lord WEDDERBURN of CHARLTON

My Lords, I was about to advert to the quota point, if the noble Lord will allow me to develop the argument. There was the factor of the quota which was imposed on universities but such evidence as I have heard from those in charge of admissions in various universities also relates the decrease to the increase in fees. That is to say, two factors were at work, as the noble Lord, Lord Annan, is quite right to remind your Lordships—the quota and the increase in fees. I do not know how many overseas students the noble Lord, Lord Annan, has discussed this matter with, but I have discussed it with a few and it is perfectly clear that the 30 per cent. increase in fees was a factor in that 9 per cent. decrease. What can we expect in 1980–81 after further fee increases of between 100 and 400 per cent.?

On 28th November Dr. Rhodes Boyson, during a debate in another place (at column 653 of the Official Report), said: Some fall in the total number of overseas students is anticipated in the academic year 1980–81 but it is not possible at this stage to predict what that proportion will be ". I suggest that there is now on the record a very great weight of evidence predicting on reasonable grounds what that fall may be. Perhaps I may select four published statements out of dozens. On 15th November in The Times the Master of Balliol and two other heads of houses in Oxford estimated that they would lose between one-third and a half of the number of our overseas students. On 29th November the Daily Telegraph reported a spokesman of the University of Bristol as estimating a drop of about one-third. In the Observer of 18th November the noble Lord, Lord Bullock, Master of St. Catherine's College, Oxford, estimated the loss of about a half.

In The Times Higher Educational Supplement on 23rd November Professor Haszeldine, the Principal of the University of Manchester Institute of Science and Technology, was reported as estimating that between 35 and 40 per cent. of his overseas students would be lost. And he added: If that were the case the university would no longer be able to pay its fixed costs ". University after university is predicting, after a careful look at the matter, that something like 30 per cent. at a conservative estimate is the probable drop in the number of students.

On 27th November the right honourable gentleman, Mr. Rhodes Boyson, answering for the Secretary of State in another place, said: The Government have no plans to close down any British university within the next five years ". The Government, I suggest, are obliged tonight to tell us how it is going to avoid that, if not by planning at least by mistaken policies, because the cuts which have to be suffered by some institutions risk closures of departments and possibly even of some institutions themselves.

That brings me to my last point. Dr. Page, the Vice-Chancellor of Reading, said on 14th November that the new fees—and I quote: could price British universities out of the market for overseas students. The consequent fall in university income would have disastrous consequences for home and overseas students alike ". The consequences for our own home students will not be felt only in closures or redundancies. The international character of their educational environment, which matters a lot to many people in universities, will be seriously impaired. Moreover, universities which have for decades been centres to which foreign students have looked, and especially students from the Commonwealth, will find the role that they play fading away. Special arrangements, it seems, are probably to be made for EEC students. That one can welcome. But one half of the foreign students in universities are from the Commonwealth. Already since 1977 various factors have caused a huge drop in the number of students from the poorer countries, over 20 per cent. from Kenya, over 20 per cent. from India. Although I accept that the quota is a factor, it cannot be an accident that the larger drop has come from the poorer countries. The fee increases are clearly a major factor.

Students are telling us—by which I mean myself and the colleagues to whom I speak every day—students from the Commonwealth, from Canada, Australia, Nigeria, are telling us every day, that next year those behind them from the universities who would like to come here will not be able to afford it. They will go to the United States—and, as the noble Lord, Lord Gladwyn, says, no doubt in some cases to Eastern European countries.

There are various educational bodies throughout the world which are expressing alarm at the Government's policy, and if the Government will not listen to British voices perhaps they will listen to voices abroad. I quote one example, of which I could send the noble Baroness a large number. The Council of International Educational Exchange in the United States, which represents 170 colleges and universities and educational organisations in the United States, on 7th November at its meeting in New York City unanimously passed a resolution urging the British Government to reintroduce arrangements for the reception of overseas students on conditions no less favourable than those obtaining for United Kingdom students as soon as possible. I quote again: The object was preserving and strengthening the strong ties which have meant so much to the development and dissemination of knowledge and for mutual understanding between our nations ". The international position of British education is also something which is at stake. Everything which has so far happened has proved how correct was the perception of the chairman of the Vice-Chancellor's Committee, Sir Alec Merrison, who spoke on the 16th October 1979 on behalf of all the Vice-Chancellors in saying: The effect of these policies upon our universities and students both from home and overseas is potentially disastrous. They will undermine institutions which are vital national assets and of international renown ". Sir Alec Merrison went on to say that his committee, the Vice-Chancellors, implored the Secretary of State to think again. I would join in asking the Government what are their plans for the many university institutions which, with present policies, will in 1981–82 face very large deficits indeed. They may face closures of departments or institutions, but they will not be closures which are planned on academic grounds. If there is a case for the closure of certain departments, or indeed of certain universities, then let that case be made. Let it be made rationally and in a way that can be dis- cussed. But closures which are the erratic spin-off of an irrational policy on overseas students' fees which apply arbitrarily, by the accident of history, according to the percentage of overseas students who happen to be at a university in any particular year—that is a policy of chaos.

The noble Lord, Lord Bullock, the Master of St. Catherine's College, Oxford, was surely right when he urged the Government, in his letter to the Observer on 18th November: To postpone the scheduled increases and institute instead a thorough-going inquiry … into the whole question of overseas students ". If there are undesirable practices as regards the presence of overseas students in certain departments or universities, let the case be made. But, for those of us who are teaching in the universities, the present policy means that in two years' time it may well be found that, for the sake of £100 million—or 10 Jaguar fighter planes—a heritage of higher education has been irreversibly damaged and totally changed in a way which I cannot believe is the intention of the Government.

9.57 p.m.

The LORD BISHOP of OXFORD

My Lords, after the recent welcome reappearance of The Times, three supplements of obituary notices were published of distinguished persons who had died during the past year. It was immediately striking how many of those scholars and scientists who had rendered long and outstanding service to this country had been born outside her shores, but had received a welcome, first from the academic community, and later from our people as a whole.

The policy of the Government towards overseas students, as evidenced by the proposed steep increase of fees in 1980–81, appears to run counter to this tradition, at once admirable and profitable, in British life. The arguments for such drastic increases are, so far as I am aware, entirely those of short-term economic benefit. It is right to underline the word "short-term" for it surely cannot be doubted that the education and training of overseas students in the institutions of this country have in the long term benefited our economic interests with the students' various countries of origin. No doubt these benefits are difficult to compute, but it is not a negligible argument which has been advanced by the London Conference on Overseas Students that the consequent trade benefits and the foreign exchange brought into this country together outweigh the alleged drain on our economy which has impelled the Government to make such a drastic increase in fees.

Moreover, the figures which have been quoted must raise a doubt whether the full-cost fees proposed for overseas students embarking upon new courses from 1980 genuinely represent the actual costs, or whether they are being used as a partial subsidy for home students, and one which many home students, be it said, show no signs of desiring themselves,

We have heard the suggestion that universities should, in effect, have their normal grant cut by the amount they are expected to "earn" from overseas fees. Such a suggestion seems highly inequitable both to the universities and to the overseas students, and when the world market in institutions of higher education is surveyed, it appears that we shall be in serious danger of killing the goose that lays the golden eggs—even if it sometimes takes a few years to lay them.

It would, however, be a grave reduction of the moral and intellectual perspective on this question, to speak of it only in terms of cost benefit. Even if we were to grant the Government's case as far as the economic arguments are concerned—and it seems to have been severely damaged already this evening—there is a moral obligation on the part of this country which the present proposals appear to disregard. The Bishops of the Church of England, the Church in Wales, and the Episcopal Church in Scotland, meeting in Salisbury last June expressed themselves as follows: The welfare and proper development of many overseas countries depends on the building up of an educated leadership, and we believe that this country's continued contribution to that end, through the availability of educational opportunities, far outweighs any economies that may be effected by the present proposals ". The building up of that educated leadership is probably the most priceless asset that any developing country can have. It has been one way in which Britain, even when unable to offer large-scale direct aid in financial terms, has played a notable part in the formation of a stable, political and economic life in developing countries. It would surely have to be a very substantial gain indeed—not one of the order of £90 million per annum, as projected—that made us resolve to sacrifice that constructive place in the affairs of other continents and countries and hand it over on a plate (for many of these students will assuredly seek their higher education outside their own countries) to more liberal hosts in North America, or Eastern or Western Europe.

It is a comparatively rare issue that drives the House of Bishops and the National Union of Students, not to mention the principals and vice-chancellors, to make common cause. The fact that this issue has done just that may be taken as a clear indication of the amount of feeling that there is against the proposal of the Government to establish the highest fees for overseas students in the civilised world. It may be argued that these bodies, taken together, represent only a small section of our population as a whole, and that they contain a number of interested parties. Yet there are times when academic communities are capable of arguing not merely for self-interest but for enlightenment and justice with regard to national affairs as well as their domestic ones. What else do we have universities for?—and, indeed, churches?

We are anxious, for the sake of Britain's good name and her place in the international community, and especially that of the future leaders of that community, to resist the present tendencies towards an illiberal prejudice against foreigners as such, for that is how it is bound to appear to public opinion both at home and abroad. We believe that in this case moral principle and a realistic estimate of our country's long-term gain point in the same direction, and the direction is that the Government should think again and modify very considerably their proposals for a swingeing increase in fees upon overseas students, irrespective of their ability to meet them.

10.2 p.m.

Lord ANNAN

My Lords, your Lordships will know only too well by now that I do not share the views of the Committee of Vice-Chancellors about overseas students' fees nor, I regret, the views of the vast majority of my colleagues in the universities. Of this recent increase I shall just say this. The Government were elected on a mandate to cut public expenditure and this evening we have not yet heard one word about the economic recession which faces the world and with which this country, with its declining industrial strength, is unfortunately faced. I support the Government in their aim, that they must cut public expenditure and I do not blench when it affects the universities in which I work. But I do wish that, when they do cut it, they will not try to disguise the cut with a lot of twaddle about imposing an economic fee on overseas students. If I do not again rehearse the argument about marginal costs, that will be because it has already been done so ably by former speakers.

I noted the remarks of the noble Lord, Lord Gladwyn, about the quality of students who would be likely to come to universities if this way of calculating overseas students' fees is observed, but I regret to say that I do not share his view at all. The overseas students who will come will not be composed solely of polo-playing playboys. In fact, as we well know, I would guess that Chinese parents in Hong Kong and Malaysia will not be deterred by the new level of fees. They are the shrewdest of entrepreneurs and they know value for money when they see it. A three-year degree in engineering or law, taught in English at a staff/student ratio of one to 10 or even one to 15, is from their point of view a snip.

Lord GLADWYN

My Lords, I apologise for interrupting the noble Lord, but why should a shrewd Hong Kong merchant, however rich he may be, who wants to send his son to the best university, choose a course at a university here when he could equally send his son to America, where he would receive a better technical education for half the price?

Lord ANNAN

My Lords, I really must disagree with the noble Lord about the choice. The staff/student ratio in an American university at undergraduate level bears no relation to ours. Ours is infinitely more favourable. That is why there will still be numbers of these students who will come to this country. They are very able and clever students indeed. Just look at the class lists in the University of London in engineering and you will see Chinese names very often in the first class.

Of course it cannot be denied by the Government that inevitably students from poorer countries will in fact not come, and that among these will also be some of the ablest students. I shall not at this time of night retell the sad story of the universities' folly in turning down flat Mrs. Williams's 13 points which she put to them in 1969. They were points for saving money in higher education. One of those points was overseas students' fees. Of course the Vice-Chancellors like to argue that the Government got themselves into a terrible mess by not only expanding universities but by creating 32 polytechnics, upgrading the colleges of education, and creating the Open University. The Robbins proposals alone required a growth rate of 4 per cent., and we never achieved that.

I am afraid that my colleagues often seem to expect the Government to behave as if it was a student working out problems in algebra which are susceptible to rational answers. I do not believe that Government is like that. If instead we each of us did not take such a pride in fighting our own corner, and behaved less like syndicalists and tried to help the Government, whatever party forms it, I believe this country would be better off. But no, on this issue the universities have always decided to paddle their own canoe. Now, owing to the economic recession, the universities find themselves up an evil-smelling creek without a paddle.

If in the old days one asked what percentage of overseas students the universities thought it legitimate for Britain to admit, one never could get an answer. If one asked was 10, 20, 30 or 80 per cent. of available places a correct figure, no one would ever answer. I myself have always been in favour of a quota once I realised that this was the only way in which this problem could be contained. I was a little surprised to hear the noble Lord, Lord Gladwyn, unless I misheard him, come out in favour of a quota tonight, because in times gone by I have always understood that he did not feel that that was the right way of tackling the problem, but I welcome that support because I believe that it is.

I think that the fees have been raised to a dangerously high level, but the trouble is that no one now believes the universities. I think that now several Vice-Chancellors would in fact agree with these views. There are several who now believe that the protests which have been delivered absolutely consistently in the past whenever fees have gone up have diverted attention from a much more serious problem. So therefore I am not asking the Government to reverse their policy; obviously they are not going to do that. It is not actually the principle of charging higher fees that I object to, it is of course the dramatic drop in the income which the universities are now going to have to face. It is that dramatic drop in income which makes me tonight ask the Government to be prepared, if necessary, to give emergency help.

My colleagues believe, as we have heard this evening, that in three years' time we shall be lucky if we get 30 per cent., 50 per cent. perhaps, of the overseas students that we now get, if we charge the minimum fees. Now I would much have preferred a settlement which took only 80 per cent. and not 100 per cent. of the overseas student cut from the universities. But I ask the noble Baroness: Will she give us an assurance that the level of fees will be reviewed in 1981 or, at the very latest, in 1982?

We have some cause to doubt that the new fee level is competitive. Harvard and Berkeley California, for example, are certainly, if you contrast the level of science and engineering fees, more favourable and, despite our bad track record in the past, the universities could this time be right. If they are right, then, as the noble Lord, Lord Wedderburn of Charlton, said, real damage will be done.

As the noble Baroness knows, the universities are being subjected to a double cut; there is a cut in real terms as well as the potential cut in income from the overseas students. The base line for this year has already been reduced and I must tell the noble Baroness what this will mean for the University of London because the University of London is a curious place; not merely is it the university of the capital city, it is the mother of universities from all over the Commonwealth which for years took London degrees, and we are bound therefore to have more students from overseas than any other university.

It is not just a percentage of 19 as opposed to 13, the national average, that makes me say that; it is simply that there are whole institutions which over the years Governments have encouraged London to develop. It is those that will be at risk and I must tell the noble Baroness that unless we get some special recurrent funding, we calculate that the London School of Hygiene and Tropical Medicine, mainly concerned today with preventive medicine, the Royal Postgraduate Medical School, most of the institutes in the British Postgraduate Medical Federation and certainly the School of Oriental and African Studies, which was built up by the Scarbrough and Hayter funds, will close or become unrecognisable as the institutions they are now.

I hope the noble Baroness will believe me when I say that that is not a crude blackmailing statement; London will not adopt that course of action which will be most embarrassing to Government. But the rest of the schools in London University cannot carry these institutions by tightening their belts. They too are in trouble and, as we heard from Lord Wedderburn, the London School of Economics and, I can assure the noble Baroness, University College and Imperial College, forecast very heavy deficits if a policy of this kind, of the double cut, is carried through. The trouble is that London is a high cost university; the London allowance alone costs us £12 million. If that is the kind of calculation which, on this so-called free economic fee, is taken into account, no wonder we shall be so very embarrassed by the size of the cut.

But whatever happens to overseas students, I predict that with the present cut which is being imposed, some academic staff will have to be dismissed because we shall not be able to pay them. I have no doubt, in a way, that that is what the Government want. After all, that is what cutting public expenditure means. However, I feel I must warn the noble Baroness that the first member of the academic staff to be told that there is no money to pay him or her will, I would guess, be advised by the Association of University Teachers to fight his case in an industrial tribunal on the grounds not that he is being made redundant but that he has tenure to retiring age and that if the contract is broken he must be compensated accordingly.

May I therefore ask the noble Baroness if she will initiate now within the department discussions similar to those which took place when the recent closures of colleges of education occurred? The universities must surely have a national policy for the dismissal of staff and they are going to need such a national policy possibly sooner than we like to imagine; I do not mean next year and I do not necessarily mean the year after, but certainly in the third year of this policy I would expect that to happen.

If the noble Baroness tells me that the experience of the Crombie scheme so appalled the Department of Education and Science that they are never going to repeat the exercise, I shall not be entirely surprised. But again may I respectfully warn her that dismissal of staff will cost money. Government will have to supply that money if long-term savings—which they apparently want and which, naturally, they view the economic situation as dictating—are to be made.

I have not discounted the possibility that the present cuts are designed to make the universities live for a year or more off their reserves. Everyone is now talking about their reserves. The Public Accounts Committee are talking about their reserves. The AUT are talking about their reserves, so that universities can settle salaries at a 15 to 20 per cent. increase. But in most cases the reserves that exist exist for two reasons. The first is to maintain buildings—and some of the buildings are extremely old and are crumbling, and cost the earth to maintain. The second reason is that in the past Government finance has gone in this way. Government have announced an inadequate grant, and then in May or June, at the end of the academic year, have sent the universities supplementary grants which are not therefore built into the baseline and which have to be treated as non-recurrent money. I understand that, under the new Government policy of cash limits, this will not occur, but perhaps the noble Baroness can tell us whether the Government have a policy concerning the reserves of universities.

The matter of overseas students' fees was only one of the 13 points which Mrs. Williams put to the universities in 1969. In my judgment the cuts which the universities are now facing are only the beginning, because not only will public expenditure continue to be cut if the world recession deepens, but in the mid-'eighties the fall in the birth rate will enable the Treasury to demand—as they have in the schools—that the academic and associated staff in universities be reduced. That is another reason for immediately setting up machinery to deal with the problem of dismissal of staff.

But I believe that there is another reason for those 13 points to be thought of again. Dr. Rhodes Boyson has said publicly that he does not want the universities to descend to a general level of grey mediocrity—which is exactly the point that the noble Lord, Lord Wedderburn of Charlton, was arguing. Dr. Boyson wants élite institutes such as the London School of Economics to be given priority. But this grey mediocrity will result if the universities do not consider how they can help Government. May I ask the noble Baroness whether she will invite her right honourable friend the Secretary of State to initiate discussions with the UGC and the Committee of Vice-Chancellors to work out a long-term plan for the cutting of costs, so as to maintain some institutions at their present rate of funding? Please do not destroy the top quality of research and teaching, even if inevitably in some places, in some departments, there must be a reduction.

I also wonder whether the agenda should not cover the possibility of various other points that were proposed at that time, 10 years ago, such as the two-year degree. Should it not also include designating some universities or institutes, or departments within universities, as the equivalent of the grandes écoles in France? I put this suggestion forward in a debate in your Lordships' House on 31st March, 1976, and I still think that it deserves study. The country cannot maintain the present level of teaching and research in all our institutions of higher education, but we can preserve it in some places in some of them.

10.19 p.m.

Viscount AMORY

My Lords, if I may say so, the noble Lord, Lord Stewart of Fulham, has put down a very timely Question. I have no grounds to speak with one hundredth part of the authority of the noble Lord, Lord Annan, on the subject; I was most interested in what he said. One remark he made almost caused me not to speak at all. That was when he referred to polo-playing playboys. I instantly recalled that in the days of my youth, playboy or not—and looking around, the only Member of your Lordships' House whom I can see who knew me in those days is the noble Lord, Lord Gladwyn—I did once participate in a game of polo. If that puts me outside the parameters of qualifications to speak in this debate, my Lords, I must at once resume my place.

My Lords, most of us understand the need to contain and, if possible, reduce the present level of public expenditure as a proportion of our current national income. As politicians, we also know that to restrain policies to which people have become accustomed is far harder than initiating new policies. Whatever methods the Government adopt are likely to prove unpopular. Each of us wants our own particular enthusiasm exempted. It is easy to agree that a particular cut will prove a false economy in a broader context; but unless we want the effort to contain aggregate public expenditure to prove abortive, I believe we are bound to accept that, with very few exceptions indeed, every public service must have some quite severe restriction imposed upon it—and universities, I am afraid, are no exceptions. Indeed, it is clear that the restrictions to be imposed on the universities are going to be quite painful to them, and will involve some reduction in the number of home students.

The assurance of level funding, as it has been called, is proving a delusion, and is involving considerable confusion. The delays in notifying university authorities what they are going to have to spend in the year ahead, or in the current year, are very worrying to them. But the question with which we are concerned this evening is not university finance in general, but the level of overseas students' fees. Here, again, I believe we must be realistic and keep things in perspective. During the past decade, as has been said, the number of overseas students has more than doubled, and that is something of which we certainly have no reason to be ashamed. There seem to be wide variations in the individual resources available to different overseas students. Some are well endowed, others exceedingly hard pressed. But in view of the current rate of inflation in the United Kingdom, some increase in their fees seems unavoidable.

The question to me, therefore, is how much, and whether the fees charged to overseas students should in some way be more selective, if necessary. If the fees are drastically raised, as is proposed, the financial effects on some universities are going to be very severe, and, in the case of most universities, substantial. In the only university that I know at all well there are at present about 300 overseas students. They are much welcomed by the university. If, as a result of very sharp increases in fees, one-third of them, 100, are lost, that in purely financial terms means a loss to the university of at least £200,000, and perhaps more. But more important in the view of university authorities, I think, is that if the present flow is sharply reduced it will reduce an influence which is very beneficial to our country, both in the short-term and, more important, in the long-term, too.

While, therefore, I believe that some further increase in fees is justifiable, and indeed inevitable, the present proposals are, I think, too harsh. I hope the Government will, as they did in the case of the BBC External Services, as the noble Lord, Lord Gladwyn, said, sit down and discuss with those who best know the problems involved some way of mitigating the harshness of the discouragements to overseas students who want to pursue their studies in the United Kingdom, and particularly those from the poorer Commonwealth countries, from which we have traditionally welcomed students.

I say that as an old Treasury man; because perhaps as an old Treasury man, I might have been expected to say precisely the opposite. But I covered myself by saying that I do not think that anybody could feel more strongly than I that we should contain overall Government expenditure as a proportion of our current income. I hope, therefore, that the Government will think this problem right through before they reach final conclusions. I should like to say how glad I am to see with us this evening my noble friend Lord Boyle after his recent illness. I trust that when he comes to speak in his turn that my one-time Financial Secretary will not say precisely the opposite of the few and far less authoritative remarks made by an old colleague.

10.26 p.m.

Lord GARNER

My Lords, many noble Lords taking part in this debate must have the feeling of having been here before because we have discussed this subject so frequently over the years. However, there are two differences, at least, on this occasion. The first, as the noble Lord, Lord Annan, and the noble Viscount, Lord Amory, rightly pointed out, is that the needs for reduction in public expenditure are very strong and far more stringent now than perhaps previously. Secondly, I must recognise that many of us, I included, expressed fears on previous occasions which do not seem to have been completely fulfilled in practice. But I must say that there is a big difference on this occasion in that the plans proposed suggest such a staggering increase as to amount almost to a difference in kind rather than in degree, particularly because, as has been said by other speakers, the incidence on individual institutions is far more disastrous than on some others because of the application of a rigid mathematical formula.

There is much that I could say on the general question, but I want to be brief at this hour and I am afraid, as I have already explained to the noble Baroness, that I may have to leave before the debate ends; so I will confine myself to one particular institution with which I happen to have been associated and treat that as an example. Some years ago, I succeeded the noble Lord, Lord Coleraine, as President of the Royal Postgraduate Medical School and was very honoured to do so because it seemed to me that here was an institution in the forefront of medical research; it enjoyed an international reputation; it was pre-eminent in the training of both practitioners and teachers both in the United Kingdom and overseas. Standards of this sort take time to develop and traditions of value come only with the years. When they are there, one should build on them; once they are destroyed, they are very difficult to replace.

As we have already heard from the noble Lord, Lord Annan, who mentioned a particular case, we are faced with a situation in which much of this might be thrown away. The present plan—I understand that it is merely a plan—hit the Royal Postgraduate Medical School (as indeed it did a number of institutions) doubly, as the noble Lord, Lord Annan, has said; and, first, by the insistence of a charge for overseas students. Here, we have conducted our own market research among the students to try to get the best estimate we could of what would be the likely effect of charging the minimum fee of £5,000. The result that we had (and it may not be absolutely accurate) is that the numbers of overseas students are likely to be reduced to one-third—reduced by two-thirds and not by one-third, as we have heard in a number of other places. That may or may not be so, but it gives an indication of the seriousness and the dimension of the problem. The second form in which the school will be affected is by the very severe reduction in grant with the result that, if the plan were carried out, the income in 1984 would be little more than half what it is now, if as much as that. No institution can hope to carry on the full complement of its work on that basis.

Therefore one is entitled to ask the Government whether they accept the view which the school certainly holds, and a view which has been endorsed by all visitors to the school from the university, from Government departments and other independent authorities, that it plays a vital part in the National Health Service, together with its co-operation with Hammersmith Hospital; that it makes a unique contribution in training and in research; and that it is one of the most important factors in maintaining the prestige of British medicine throughout the world.

From a Government which have made clear their belief in maintaining the standards of excellence and wish to promote enterprise when special genius is involved, one would naturally expect an affimative reply. An affirmative reply itself is not sufficient without the will there to attain the ends. I must make it clear that unless some other arrangement—one can think of a variety—can be made, the dire consequences that have been suggested might ensue. I do not believe that this will be allowed to happen; I do not believe it can be allowed to happen. Sometimes I seriously wonder whether all the departments involved in the Government fully realise the implications of what is being proposed.

I pose this question to the Minister tonight—not expecting an immediate reply, of course. There is an importance in the matter because we must know where we stand so that we can plan sensibly for the future. It is important not only in itself, but in relation particularly to staff and morale in the school: Hope deferred maketh the heart sick ". Coming on top of all the cuts and reductions that one has endured over recent years, this further blow could be a cold douche to enthusiasm. Here I should like to pay tribute to the dedication and devotion of the very distinguished members of the staff. We must really try to get away from the present atmosphere of frustration and uncertainty, and be able to see the goal clearly ahead.

I believe in this country. Clearly some things are not going too well at the moment; clearly there is a need for financial restraint. I believe that there are some things that we in Britain do superlatively well which are of benefit not only to ourselves, the people in these islands, but also throughout the world. One of these is the high standard of medical practice, teaching and research. This could be at risk, with the danger of our falling into the category of a second class country in this important field where we have excelled for so long. I beg the Government, therefore, to think again before irreparable damage is done.

10.34 p.m.

Lord KILMARNOCK

My Lords, I do not want to assist in an operation of overkill but simply to make a few simple observations. It seems to me rather hard to arrive at a sophisticated breakdown of institutional expenditure per full-time pupil or student from public funds. I understand that the Tress-Brown index has come up with a figure of roughly £2,000 across the board. This must be the hub of a fan of costs ranging from somewhat lower to somewhat higher figures. This median figure (and some which appear in the CSO Statistics for Education, vol. 5) support the view that average cost per student is somewhat less than the department wishes to impose.

If universities, polytechnics and other further and higher educational establishments are being asked to make up a considerable part of their funding by the proposed increased charges to overseas students, this is a very vital part of their economy, and it is surely reasonable to allow them greater flexibility in what they charge. For example, Lancaster University was charging £1,230 last year for a full-time graduate student from overseas and £940 for full-time undergraduate students. What are they to do now? I think they had 484 overseas students last year. Reading says it will be in a terrible mess. There is a severe danger that an orchestral course that I know of, costing roughly £2,000, may be obliged to charge £3,000 and so on.

I fail to see how it can be sensible to lay down blanket minimum "economic" fees where costs vary widely and where many establishments would be happy to fill in some of their courses with students who are "marginal "—and I do not apologise for referring again to this question of marginality. It may be marginal in terms of expenditure but not in terms of income. Obviously, many universities have achieved a fixed level of resources—staff, buildings, libraries, and so on—which causes them to calculate student numbers in terms of "marginal utility", while the DES continues to work on a flat cost per student. I cannot see any reason why the useful principle of "marginal utility" should not be encouraged rather than banned. I should like to ask the noble Baroness to comment on that point.

My plea, in the first place, is for greater flexibility. After all, in the university and higher education system in this country we are fortunate in having highly responsible and able vice-chancellors, principals, registrars and bursars, some of whom are here this evening. It seems to me they must be given a wider field of manoeuvre and allowed greater flexibility in the application of these rules which have been, correctly I think, described as "crude "—" cutting roses with an axe "I think was the phrase of the noble Lord, Lord Wedderburn.

A further strange anomaly will arise if the Government's policy is pursued rigidly. It is a matter of simple domestic book-keeping and affects the funding of overseas students by the British Council, both through its own direct scholarships, which are at present around 500, and the scheme it administers on behalf of the ODA, which affects about 8,000 students. It seems to me absurd to tell the council, on the one hand, to cut its coat according to its cloth and, at the same time, to require it to pay, both on its own behalf and as an agent for the ODA, moneys and fees that will in many cases be higher than the full economic cost of courses in Arts, Economics, Political Science and so on; and to pay them to British educational establishments which would in those cases prefer to charge less, and could economically charge less, particularly if the principle of "marginal utility" is allowed to apply.

This is surely robbing an impoverished Peter to pay a reluctant Paul—and all inside the British domestic economy with no overall cut-back in public expenditure. It will simply mean the council will be able to fund even fewer scholarships, to the detriment of overseas students, in the majority of cases from the poorest countries, and at British universities, where the council was previously able to place these students. Surely, in a civilised and responsible society, it is possible to allow the British Council to liaise with universities and other further educational bodies and allow them to place students at reasonable fees to be agreed, where it can be shown that there is no additional public expenditure. This is an extension of the principle of reasonable flexibility. I end with a short quote from a letter from an old friend with vast experience of higher education in the Midlands. He writes: Academic registrars and admission officers hope and pray that the Government will not be too drastic and that the proposed minimum fees will be reduced ".

10.39 p.m.

The Earl of LISTOWEL

My Lords, I have had something to do with overseas students, mainly African students from African Commonwealth countries, since I came back from Ghana in 1960, and that, I think, is my excuse for intervening in this debate. I am not animated by any political motive. Let me say, before I go on to my very few remarks, that I must apologise to the noble Baroness, Lady Young, in case I am not here at the end of the debate to listen to her reply. But I shall, of course, read it with the greatest interest in Hansard tomorrow morning, if that is the case.

I do not think a single speaker during the course of this debate has agreed with the Government's proposal for the increase in the fees for overseas students made in the White Paper, and I must say that I am deeply concerned about it. My main plea will be for the Government to think more carefully about the consequences of this decision before it is implemented. I am sure that it is true of Government policy, as it is of our own decisions, that we should, before we are absolutely certain, try to work out all the consequences and implications of what our actions on those decisions will produce.

It seems to me surprising that both the universities and other institutions of higher education in this country and the British Council, all affected very much by these proposals, have not as yet been fully consulted. The noble Lord, Lord Stewart, said that this preliminary work has not yet been done and that the Government should make their own inquiry. I entirely agree with that suggestion. I am told that the Overseas Students Trust, which of course knows more about the problems of overseas students than any other body in this country, is going to make an inquiry of its own, and I should have thought that such an inquiry was well worth waiting for, provided that it is proceeded with speedily.

I think, also, that the foreign and Commonwealth Governments who send students to this country should he brought into consultation. It would surely be disastrous for the policy proposed by the Government to be put into effect without such a careful consideration of the educational and political consequences, which might be a retaliation for what we have done, and those consequences, educational and political, should be weighed by the Government against the small economic advantage that they would gain.

I should like to suggest that such consultations, both here and overseas, should take place immediately and that there should be no increase in fees for overseas students, beyond the increase required by the rate of inflation, until such consultations have been completed and properly assessed. I noted that the noble Viscount, Lord Amory, who as usual took a very balanced view, said that he thought the increases proposed by the Government were too harsh.

I think that some unofficial reactions, which have come to my attention from some of the Commonwealth representatives in London, show what the attitude of the new Commonwealth is likely to be. My old friend Sir Leckraz Teelock, High Commissioner for Mauritius, has said—and he has allowed his words to be quoted— Now only very rich people will be able to study in the developed countries of the Commonwealth ". Another comment—and, again, the High Commissioner has allowed this to be quoted—has come from Dr. Mattieri, High Commissioner for Sierra Leone. He said: We sent our boys to fight for you in Burma in the last war and even in the First World War. Now you are excluding us on the grounds of poverty ". Indeed, the high level of the proposed university fees, which would make our universities among the most expensive in the world, will work most inequitably as between the new and the old Commonwealth countries. The poor, developing countries will not be able to afford these fees, while the affluent industrial countries will in many cases still be able to meet them. This is particularly unfortunate when it is remembered that the vast majority of Commonwealth students come here from developing countries. In the past these students have been one of the most valuable Commonwealth ties, and their loss will be a loss to the whole of the Commonwealth.

My second suggestion, which I hope the Government will consider, is this—perhaps the noble Lord, Lord Lyell, will pass it on to the noble Baroness, Lady Young, whose absence at the moment I quite understand because she has been here from the very beginning of the debate. Even if the Government do proceed to increase the fees of overseas students—and some reduction in expenditure in all directions is, of course, inevitable in the present economic climate—I wonder whether an exception could be made for all postgraduate students, not just the 5 per cent. which I believe the Government would be willing to accept. These students are, after all, the intellectual élite of the countries from which they come, and such contacts at an impressionable age may be of great value to us, as they have been in the past, when these students return to take up responsible posts in their own countries. Moreover, they almost certainly lack at home the facilities they need for postgraduate work, which can only be found abroad. Most of these new Commonwealth countries can provide the majority of the university places in their own universities but not, of course, provision for research.

My final argument for accepting postgraduate students is that research work in their chosen field of study will add to a common fund of knowledge. It will benefit us as well as them and make possible that international collaboration on which the advance of knowledge in every field depends. I cannot believe that the cost of continuing scholarships or reduced fees for postgraduate students from overseas would not be ludicrously small as compared with the advantage of preserving this country as a Commonwealth and world centre for postgraduate teaching and studies.

10.48 p.m.

Lord ROBBINS

My Lords, in rising to make a brief contribution to this debate, may I make things clear as regards two questions which I am not going to argue? First, I am not going to argue against any cuts in real grants to higher education in general. In the present financial crisis some cuts are, in my judgment, probably inevitable. I often tell friends who grum- ble in a diffuse way about the uncertainties in this connection that while, for instance, staff/student ratios in the universities of this country remain at their present favourable level they had better confine their complaints to fellow countrymen rather than indulge in them abroad, because if they indulge in them abroad, where in general staff/student ratios are so much less favourable, they may be greeted with mirth.

Secondly, I am not going to argue against some raising of fees in general. Provided always that local support is given to those who cannot afford the cost of higher education, I see no objection to some raising of fee revenue in relation to grants. Having made those two points clear, I want to define my target: the subject of our present debate, which is the effect of current proposals for university finance, especially discrimination between foreign and domestic fees, upon institutions catering at a high level of graduate students in particular.

I shall not dwell on the moral aspects of this policy. Perhaps one ought not to get too agitated about this aspect of the problem. After all, discrimination is practised in Eire and in certain parts of North America. I will only say that I personally find it distasteful to say to students coming from abroad with adequate qualifications, "Oh, you come from Bohemia, I shall therefore have to charge you x per cent. more than a home student ". I may be squeamish in these matters but if I think of the duties of those who under present instructions will have to do that I am reminded a little of Adam Smith's stricture—which I hasten to say does not apply in the least to the noble Baroness—and I am distressed that I find myself probably about to venture on sentiments with which she will disagree. The stricture of Adam Smith's which goes through my head is that the sneaking arts of underling tradesmen are thus erected into political maxims for the conduct of a great empire. But perhaps it is all a matter of taste.

What I want to argue is that the system proposed is going to hit very hard those institutions which have the highest reputation for study at the graduate level—a level which until recently had not been attained by all the university institutions in this island. I speak on this subject with less than the diffidence with which I usually approach speaking in your Lordships' House, since for more than 20 years I had the honour to be chairman of the graduate school of one such institution, the London School of Economics. I shall argue first that the policies announced are inimical to the atmosphere and reputation of these institutions, and secondly that they may be financially disastrous.

I shall not linger long on the first line of argument. Anyone who has had firsthand acquaintance with a first class graduate school will testify how much it usually owes to the mixture of students from various parts of the world. Anyone who has travelled about the world in quarters of politics, business or learning will know how much the reputation of this country depends upon the dispersed loyalty and respect of the foreign alumni of such institutions. To use the term used by the noble Baroness, this may be non-quantifiable but it is, I humbly suggest, an unquestionable fact. But I must emphasise—and this has already been emphasised very strongly by other speakers—the probable disastrous effect of the proposed policy. Apparently it is thought that the numbers of high-grade foreign students will be maintained. With respect, I would say that that is likely to prove pure nonsense.

The impression seems to be that increases of the order of magnitude contemplated will not deter desirable entrants. Perhaps it is thought that possible increases from Opec countries and elsewhere will more than offset applications from poorer but very high-grade students from other parts—and in "other parts" I include the United States and Canada, not all of whose citizens possess the wealth of the Kennedys. My Lords, it does really stand to reason that a great many highly desirable students who have contemplated coming to this country and who otherwise would have come will now be looking elsewhere for somewhere cheaper, and institutions such as the Manchester Institute of Science and Technology, the London School of Hygiene and Tropical Medicine, the School of Oriental and African Studies, the Courtauld Institute and so on—institutions which depend for a substantial part of their income on the presence of foreign students—will be in grave difficulties. And these difficulties in certain cases—and this is very near home so far as I am concerned—will not be diminished by the cuts in subsidies to domestic graduates such as must be involved by cuts in the amounts allocated to scholarships by the Social Science Research Council, not to mention possible cuts in awards by the British Council.

These difficulties are not imaginary. I conjecture that all institutions of university calibre whose finances depend to more than a moderate extent on the recruitment of students abroad will face deficits which, on any reasonable conjecture of present policies of future intake, deserve the description of being truly alarming—and that statement takes account of the trifling provision for an allocation for students of quite exceptional ability. Do we really want, in the interests of prudent economy—and prudent economy is certainly incumbent on us—to throw such a disproportionate burden on just those institutions which contribute most to our present international reputation?

I must not go on, but I must say that at the end of a working life spent in institutions of this sort I would say this in all seriousness: if the present Secretary of State had deliberately set himself to create maximum embarassment to the main centres of excellence in higher education, and even to the destruction of some of them, he could not have done better.

11 p.m.

Lord GORE-BOOTH

My Lords, in accordance with the precedent set by certain other noble colleagues, I should perhaps declare that I have been for five years the unpaid chairman of the governing body of the School of Oriental and African Studies and that therefore, to that extent, I have some interest in this subject. None the less, I have tried to keep my thoughts very short and as impartial as I can when considering the present situation.

The first reaction that we have had—and I am now speaking from the public relations point of view—from a Press organ has been, "London college to close down ". I think that if any member of the Government feels any grievance about the reaction to what has happened, that must support the argument of so many noble Lords, with which I fully concur, that there was room for more consultation and more and deeper thought about this matter. However, equally, I attach importance to expressing agreement with my noble friend Lord Annan, because one cannot conduct this matter on the basis that everybody else must save, but not me. That is not permissible. Therefore, from my personal point of view—and I speak under no instructions—clearly there must be some sacrifice somewhere by everybody if we are to be justified in putting up the strongest arguments we can for our own particular occupation.

If your Lordships will forgive me, coming from the stable that I do, I propose to make one or two remarks about the School of Oriental and African Studies, which may show a little more of what actually happens and what causes what happens. I was grateful to the noble Lord, Lord Annan, for his kind remarks about SOAS. If the institution of SOAS were to go under as a result of this policy—I am sure that we shall fight not to go under, because we happen to think that we do a good job in an important realm of external policy—I think that it is only right to remind your Lordships of a little of what would be lost.

In this Government-created and promoted college—and I realise that Governments can change their minds—we make an effort, as one noble Lord said (I think that it was the noble Lord, Lord Robbins, but I may be wrong) to harmonise activity and diligence in the common interest of institutions and individuals from foreign or Commonwealth countries and ourselves. That can only be a plus in the most literal financial or, equal in importance, intellectual circles. It cannot but be a plus to set against the minus. This has been demonstrated in all sorts of extraordinary ways, of which I shall mention just one example.

When the problem of our relations with Asian countries was beginning to extend, a special effort was made to introduce and foster the growth of the knowledge and trade, and so on, with the Japanese through the language techniques employed by SOAS. This was inevitably profitable because, as my noble friend has said, it encouraged our own occupation and our own understanding of the Japanese, and so it works. During the Second World War it worked simply because we had an extraordinarily good ability to understand what was going on in Japan, which we would never have had had we not made the acquisition of knowledge of Japanese attractive through having SOAS. I am not suggesting that all the advantages are available in wartime and not otherwise. By making study in SOAS attractive, this kind of cross-fertilisation brings results both in ways that are expected and in ways that are unexpected.

So we have what a friend of mine has described as a permanent resource or a permanent asset—some may call it a permanent weapon. If we make this facility less and less attractive—and I agree in the main with those noble Lords who believe that the amount that we shall be taking away will do this—then we are simply throwing away, not an asset directly in cash, but an asset of a deep and unexpected value which one easily overlooks, and at one's peril.

So when we looked at the paper yesterday and saw the headline "London college closing ", that did not wholly, over-melodramatically, express the situation, though my colleagues are tough and talented people. We do not want that to happen and we should hate it if it did, and certainly if it did for a wrong cause. As my noble friend Lord Annan said, at this point it is important for anybody speaking from any of these institutions to be honest about the situation and admit that in the present situation any Government are bound to want to economise and are bound to try to be fair in the economies that they make.

Therefore, it would be wrong to offer a kind of blank or total objection to every kind of economy that was presented. That would not be playing the game fairly. At the same time what has happened—and I am sure it was not the intention of the Secretary of State—has fostered a feeling of hostility towards the educational world; even an amateur must appreciate this. One way in which some of the edge could be taken off this situation—though, again, this is not an original idea; it was also presented by another noble Lord, if not more than one—is if it could only have happened in the way it should have happened. In seeking to achieve an economy, a number of people should have been consulted—I shall not say that they should have been taken into the Government's confidence because that would hardly be possible—including many of the notable Members of your Lordships' House and others, on the best way to achieve this, if it could be achieved, and on how to select people most fairly. That point has, in fact, been dealt with; they do not seem to have been selected at all. I think it will be found that in the part of the academic world in which I am involved that would certainly have been understood. The missile that has been thrown at the academic world in this way takes away the reasonableness of people who would like to help the Government in this situation. They naturally react in the opposite way when this is thrown at them.

I can say with a certain confidence—if your Lordships will excuse me for just a moment in a little bit of propaganda for our institution—that this institution is one which has by far the greatest international prestige compared with its rivals. There is practically no competition in this country at all. Your Lordships will not be surprised to know that the only competition comes from the Soviet Union. The Soviet Union very rarely does something that is not greatly to its advantage, so perhaps we might be humble enough to pay serious attention to this curious fact. If we have an organisation like this—and I know that others have similar merits, notably from the speech of my noble friend Lord Garner—do let us have a more reasoned examination of it. This is not a plea for delay for the sake of delay. It would be more sensible, in trying to add up to some extent the relative merits and importance of the various institutions, and also seeking ways—as many other noble Lords have said—to avoid the tremendous bump in the fees payable.

A great deal more could be said. I do not feel qualified to say it, but I did feel that as I felt strongly about this matter it was necessary to say something. I can assure your Lordships that if something can be done, the effect on morale will be great. If nothing is done, there will be a deep disappointment, and adverse effects, even if not to a tremendous degree, will quite undoubtedly follow.

Finally, I should like to express my gratitude to my old boss the noble Lord, Lord Stewart of Fulham, for raising this matter, which he did with his great authority and his great humanity. We are all extremely grateful to him for having raised it. I end with the hope that the Government, having launched this proposal in this way, will have another look at it and its effects and see whether they cannot improve on what they have said they will do at this particular time.

11.13 p.m.

Lord VAIZEY

My Lords, I should like to echo what the noble Lord, Lord Gore-Booth, has just said in thanking the noble Lord, Lord Stewart of Fulham, for introducing this Question. I should also like to echo what my noble friend Lord Amory said in welcoming back the noble Lord, Lord Boyle of Handsworth, after his serious illness. This debate is of great importance, as many noble Lords have already said, because it concerns our country's relations with opinion-formers in many countries. It also concerns the security and the condition, the health, of our higher education system, especially the universities. These are both matters of profound importance.

It is clear that the policy of differential charges for overseas students is not in itself a matter of dispute between the two main parties in this Chamber. The differential was introduced by Tony Crosland; it was then maintained by the present Prime Minister. It was increased by Fred Mulley, and in fact increased three times by Shirley Williams. Now the proposal is that it be increased again by the present Secretary of State.

During these years of differential fee increases the number of overseas students has undoubtedly increased, and—a point which has not been made so far—it has increased outside the public sector, in many institutions which, because they are private, charge the full economic fee, so there are many thousands of foreign students in this country already paying full economic fees.

There is opposition in principle to the policy of differential fees but, as I understand it, the present issue is whether the level of increase is now so great that the number of foreign students in the public sector will decline and—and I gather that is the point of Lord Stewart's Question—will decline, be it noted, in the public sector, including the universities, and not in the private sector. That is a question of fact and the indications are that the new level of fees is already discouraging foreign students, especially those in the postgraduate institutions where the maintenance of an international body of students is vital to the high levels of achievement to which we are accustomed, and I shall return to this important point on which several noble Lords have already dwelt.

There is another issue which must be raised at this stage. The manner of the new fee increase has added enormously to the difficulty of planning the efficient use of resources in higher education and in the universities in particular. Admissions for October 1980 are already well under way; we have little idea how much we have to spend and, in the case of overseas students, the uncertainty is almost complete. Several major institutions—the Manchester Institute of Science and Technology and the London School of Economics—undoubtedly face very severe financial difficulty, perhaps even going so far as bankruptcy, if this policy is maintained.

Candidly, I try to be as sympathetic as I can to Ministers and officials and I have been trying to imagine the discussions taking place in committees which must have advised my right honourable friend to take this bizarre course. The only reason I wish to live to be 80 years of age is so that I can go to the Public Record Office at Kew in 2009 and read the minutes of these extraordinary committees.

Viscount AMORY

My Lords, may I inform my noble friend that there are other good reasons for wishing to live to be 80, which, with luck, I shall do if I can hold on for another five days?

Lord VAIZEY

If I can follow my noble friend's example in every respect I shall be delighted, my Lords. I am not necessarily opposing the principle of differential fees, although it would be idle to pretend that it has not caused strong feelings of ill will to successive Governments; it has not added to the popularity of one Minister of Education over the last 12 years. Nor am I opposed to reductions in public expenditure. I welcome them in general and often in particular. Realistically, we know, as the noble Lord, Lord Annan said, that the size of the relevant age group will decline from the mid-1980s onwards and it would be unreasonable not to expect reductions to be made in the provision for higher education.

I must however suggest to my long-suffering noble friend on the Front Bench that what is now happening is causing damage to the Government's reputation and damage to the stability and efficiency of the universities and the rest of the higher education sector. Moreover, it would be my respectful submission that substantial economies are attainable and that they should be pursued rather than this will o' the wisp. First of all, if some indication could be given of actual realistic levels of expenditure over the next five years, realistic plans could be made. The universities have shown themselves to be prudent, well run and highly responsive to public needs; they responded to demobilisation in 1945 with two-year degree courses, they responded to the need for more scientists and engineers and the need for more places following the Robbins Report. However, what they need to follow public policy is firm guidance, but all the University Grants Committee is doing at the moment is uttering feeble and, let it be said, semi-literate bleeps. I disagree here with Lord Annan; I do riot think it is the universities' fault. If there is selfishness within the universities, it is because clear guidance has not been given for several years.

Next, when Mr. Crosland introduced the differential fee system, he also introduced the binary system. The duplication of courses, of staffs, of buildings in higher education was bound to be expensive and inefficient, and so it has indeed proved. There are 17 physics departments in Greater London alone, and 90 in the country as a whole, many of them with vacant places. My noble friend, given the will and given a sensible body to overlook higher education, could save millions of pounds in the exact sciences alone over a period of years by careful planning of these scarce resources.

If we add to this other issues, many of which have been raised by my noble friend Lord Annan frequently in the past in this House and elsewhere—more students living at home, a re-examination of Student Union finances; a whole series of questions—I would submit to your Lordships that genuine savings could be made, and not the paper savings to which the noble Lord, Lord Stewart of Fulham, so appropriately referred. But they require co-operation between institutions on both sides of the binary line. This co-operation does not take place at the moment because there is no financial inducement to any institution to undertake it, due to the fact that any money that is saved is grabbed back.

I would submit that overseas students are an easy target, and probably an unworthy one. Moreover, by the extreme uncertainty, and by the method of reduction, the costs of educating British students will actually rise. We shall keep our staffs, and we shall educate fewer students. The effects of the policy are capricious. However much the London School of Economics may be detested because of its socialist past—a fictitious past, as the presence of my noble friend Lord Robbins shows here—the Government can hardly be said to have wished to drive it to bankruptcy in 1982. If a college were to be closed, there would presumably be other candidates.

I support the need to cut expenditure. I have suggested in my speech that expenditure can be saved on a fairly large scale, and I regret that my right honourable friend has been advised to take his present course, rather than to go directly to the profoundly necessary task of planning the higher education system in such a way that its morale is maintained while public money is saved. I deeply regret that the present Secretary of State may very well fall into extremely bad repute generally, and be regarded as a thoroughly bad Minister because of this one, single ill-advised decision.

11.22 p.m.

Lord HATCH of LUSBY

My Lords, I, too, should like to thank my noble friend Lord Stewart of Fulham for raising this issue. I only wish that it had been possible to combine this debate with the debate that we had last night on immigration, because I believe that the views that have been expressed about the value of a mixture of cultures and of individuals from different cultures would have been particularly appropriate in view of some of the speeches we heard during yesterday's debate. It has been clearly proven by the noble Lords who at present are administering our institutions of higher learning in this country, or who have done so in the past, that the effect of the proposed plans of the Government will be to reduce the number of overseas students in this country. I hope that as my noble friend Lord Stewart is asking this Question, the noble Baroness who is to reply will answer the specific question as to whether her plans for expenditure on the fees of overseas students next year will in fact in her estimation reduce the number of overseas students.

I say this because what so far has been missing from the debate is consideration of the effect on British students of the absence, or reduction, of overseas students. I recall nearly 30 years ago taking a seminar in the University of Edinburgh, where there were a number of African students. One of those African students I particularly remember, because he is now President of Tanzania. His name, of course, is Julius Nyerere. If the increase in fees for overseas students which is now proposed had been in effect at that time, President Nyerere would not have been educated in this country. I would consider that to be, not so much a loss for President Nyerere as a loss for the hundreds of students at Edinburgh University and other universities visited by him during his student days in this country, who remember him today and who have been affected by him.

I would suggest that one of the most important aspects of the Government's policy towards overseas students should be the imagination to recognise the needs of British students—British students who are going to live for the rest of this century and for well into next century in a totally different world from that in which we were brought up; a world which is not a village but a world which has become a hamlet. The knowledge that our students have of overseas cultures (which, as the right reverend Prelate the Bishop of Bradford so movingly pointed out yesterday, can be learned only in the personal contact situation) is what we risk losing if the noble Baroness admits the argument, which has been almost totally universal tonight, that the effect of her Government's policy will be to reduce, and drastically, the number of overseas students coming to this country.

There is one other point I should like to put to the noble Baroness, on a practical basis. I have done this before, and I still do not understand the logic of this Government's policies. It is surely proven that the education of overseas students in this country is of business advantage to the business world of Britain—and we are a trading nation. As one previous speaker (I think it was the noble Lord, Lord Gladwyn) pointed out, some of the largest and widest internationally-trading companies in this country are very concerned about the danger of losing the contacts which they make through the education of overseas students here, who go back to their own countries with a knowledge of the culture of this country and who naturally turn to this country in their position in either politics or the business and economic world. Surely the noble Baroness must recognise that, if this Government believe in their own policy of reviving the trading power of Britain, then this is in fact burying the seed corn which they themselves would rely on to extend our trading opportunities in the future.

However, what I want to concentrate on in the last few minutes of what I have to say tonight is how this can be done. How can we provide our own people—our own young people, above all—with this multi-cultural understanding which is essential for their peaceful life during the next half-century? How, at the same time, can we provide the links on which our business and economic health depend? And how can we move out of this negative attitude of the Government and have sufficient confidence in our own British culture to say—not, chauvinistically, "This is the best culture in the world "—" We have got something to contribute to the growing concept of a world culture, a culture of many components, one of which must be seen to be that of Britain "?

I believe that contained within the noble Lord's Unstarred Question is one of the most important answers to this question; that is, the role of the British Council. The British Council have unashamedly taken British culture in its widest sense: the practice of British institutions, the language of the British people, the practices, experiences and customs which have grown up in our own multi-cultural Britain; and taken them all over the world. Those who travel in many parts of the world know of the work that they have been doing. But they have been doing more; and more specifically related to what I have been already saying. They are bringing, out of their own funds, overseas students to this country. They are administering the work of supervising, looking after and encouraging overseas students in this country. They are acting as agents of the Overseas Development Administration in the arrangements made for technical co-operation with students in this country. They have the Students' Centre in London and have offices all over the country.

I should like to ask this of the noble Baroness: Does she believe in the work of the British Council? Does she believe in the functions that the British Council have been set up to achieve? Does she agree with the repudiation of the Bell Report, as far as its condemnation or criticism of the British Council was concerned? If the answer to these questions is in the affirmative, then what hope can she give to the British Council, what prospects can she give to the British Council?—because she must know (and I am sure that she will agree with me on this) that an organisation like the British Council must be able to plan ahead. There is no use in talking about one year's cuts as though they were once and for all. The effect is exponential and the effect on the British Council will be exponential.

They have already worked out that if the present cuts (which they understand are to take place) are put into operation, this may well—dependent upon the size of the students' fees—cut in half the number of overseas students they can bring into this country. It may well run down the work of the Students' Centre until it has to be abolished. And it may well bring to an end the work that the British Council have been doing in helping British students to get experience in overseas countries, to place them in overseas institutions and to give them the experience that they will thereby get.

I ask the noble Baroness when she comes to reply to address herself to this issue and to tell this House, and through this House, the British Council, what are the Government plans, visions and objectives as far as the part that the British Council can play in the development of our multi-cultural student population in this country and abroad. Do the Government believe in the British Council? If they still believe in them, how are they going to sustain them without so fatally damaging them by making cuts which are bound to have an effect not just this year, or next year, but in three, five and seven years hence?

11.35 p.m.

Viscount CRAIGAVON

My Lords, I shall be very brief at this hour, and confine myself to just one point; that is, the long-term effects of the Government actions. I broadly agree with the robust realism of the noble Lord, Lord Annan. I have been advocating quotas for many years. I fear the academic world has hardly seen the beginning of the real cuts. At the same time, I feel that the noble Baroness owes rational and coherent explanations of the Government's position to many of the powerful speakers that we have heard.

I know that the Conservative Party have always placed considerable importance on their foreign policy. It is very easy for us in this country, and the media, to fool ourselves about our importance in the world, especially as we all use the lingua franca of English. I accept that our international influence has been declining; but surely the one way and the cheapest way that we can have an international voice in the future is by casting a little educational bread upon the waters at this time while we still have valuable things to teach. What I am afraid is happening is that decisions on this matter are being taken by default.

As a younger Member of your Lordships' House, if I were able to look back at the present time from 25 years' hence, and if I found that our international influence was significantly diminished, it would not be due to positive decisions; it would be from a slow process of neglect and expediency, of which the British people would have claimed to have been hardly conscious.

I would add my appeal to the Government both for the benefit of ourselves in this country and for those we can help abroad through education, to take a much longer-term view of our traditional foreign education links. Some noble Lords may have read about the remarks of Dr. Rhodes Boyson in another place, when he said that the behaviour of Iran and Nigeria (two of the top three in numbers for sending us students) were not the best examples of the claimed benefits of educating their students, but in terms of spending money on foreign matters, we could have invested in aircraft carriers and a fleet like the Americans. But they would have been of no more use in resolving those delicate situations than is the American Sixth Fleet. It is more hopeful for me in those situations that a mass of Nigerians and Iranians have in the past been educated both here and in America.

It is on that basis, that we have shared part of our culture and ways of thinking with them, that the situation will be resolved; not the fact that we can send in the Fleet. I hope that the noble Baroness, Lady Young, can channel the traditional and laudable concern of the Conservative Party about foreign policy away from guns and slightly more towards hearts and minds.

11.38 p.m.

Baroness VICKERS

My Lords, I am delighted to have the pleasure of speaking in this debate but I am not as qualified as many other noble Lords to do so. I should like to say to the noble Lord, Lord Gladwyn, that I was rather surprised at the tone of his speech, because he seemed to prophesy what the noble Baroness is going to say. She is a very capable Minister and I think it is very dangerous to prophesy what somebody is going to say. I was wondering whether, when the noble Lord asked his charming wife to marry him, he prophesied what the answer would be. This seemed the kind of thing that he was saying.

There is a very good English language regional school in Singapore. The noble Lord may be pleased to know that the ASEAN countries are always turning to this college, and it is a college for what teachers learn English and our methods. The Filipinos and Thais particularly appreciate it. I should like to point out—I am afraid the noble Lord is not here—that the polytechnics get their grants from local authorities and not direct from the Government. I should like to suggest to the noble Lord, Lord Gore-Booth, that he might tackle the Japanese to reinstate the position. They have plenty of money, and I do not think that learning Japanese did us much good in the last war.

Lord GORE-BOOTH

My Lords, may I just interrupt for a moment? Possibly I did not make it quite clear, in my laudable effort to make my speech as short as possible, that a lot of the profit in having the Japanese here as our students and guests is that we learn a great deal about them, and that was very useful during a certain emergency in our history.

Baroness VICKERS

My Lords, having served overseas and having been in Indonesia, I did not think that the Japanese had learned very much from us at that time. I should like to quote from something Mrs. Shirley Williams said on 19th December 1978: I shall not quote all of it: So we face a twin problem:—increasing pressure on our resources, coupled with the indiscriminate nature of the tuition fee subsidy ". She went on: It is well known, certainly to this audience, that I want to see a more rational system. I want to see £100 million tuition fees used positively to help selected groups of overseas students, in place of the present indiscriminate system—if "system" is the right word to apply to the present practice ". I want to make a suggestion which may not be very popular, but perhaps we could work out some system. I have been through the details, but I shall not give all of them. I will only give the very low and the highest of the incomes per capita of many of the students. For example, in Bangladesh they only have 265 dollars per capita; Egypt has 200 to 499; Algeria has 500 to 536; Greece has 2,000 to 4,999; and Australia has over 5,000. I cannot see any reason why we should not bring in a sliding scale—not a means test. If they came as private pupils, they would pay the fee demanded by the institution concerned. Therefore I do not see that it can be any more of a means test than paying out of your own pocket for private education and having a sliding scale, so that the poorer countries get more help from the Government.

When I was in Malaya I had the opportunity of selecting and recommending students to come to Britain and study social science. I found it very beneficial to them. The pupils were all tied to serve for so many years on their return the establishment which sponsored them if they received a Government grant. I think it was very beneficial to the students to get outside their own country and see how others lived.

I should like also to stress that I tried to select some of the very poorest people who had average intellect. We trained them for a little while in the office in the country concerned—in Malaysia—and then sent them home, because one was apt to get very highly educated people who could not come down to the level of the people in the villages. These people, having started in the villages with their training, gave very useful service to the State.

The noble Earl, Lord Listowel, mentioned some of the countries which were interested and which had put forward ideas in regard to the future—countries that are—shall we say?—rather dismayed about the future: the Gulf States, Pakistan, the West Indies, Brazil, Hong Kong, Singapore, Thailand, even Korea, Chile and Indonesia. I was at a lunch yesterday with the Deputy High Commissioner for India, and I asked him about this problem. He said that although they realised the difficulties here, they hoped to continue. He said that what they really hoped was that people would go back to their country, because they did need highly educated people back in India again. Education increases understanding, so we must give priority to Commonwealth countries.

I have been a member of the Commonwealth Parliamentary Association for 19 years, and it is a very beneficial organisation. When we have our annual conference, we all speak the same language and practically all have the same educational background. Therefore, there are better working committees and there is much better understanding. Education is very powerful in creating understanding. I should like to ask: Do we want to keep the Commonwealth? I ask that because it is language and education which keep the Commonwealth together. That is one of the reasons why I should like to make a plea that we look after the Commonwealth first.

Various Governments have been very generous over the years, because there have been 17 political upsets in different countries when students have been here. We all remember Biafra, and now we have people from Iran here. What have we done? We have paid for them from funds or from social security until they could manage, so we have been very generous. They have never been sent back, which is a very good mark for this country.

If students go to the United States of America, they will get a fairly good education more cheaply, but it is of a different type. That is what worries me, because when they go back to their own countries they will have different ideas from their parents and grandparents, who were educated in the British system. That is another reason why I prefer them to come here. Sir Roy Marshall, who is the Commonwealth Educational Liaison Unit chairman, called a meeting and said that he was going to consult the High Commissioners about the future of their students. It will be very interesting when we get the report, to read what they have to say.

I should like to mention Reading University, because I have a lot to do with it. The full economic cost is £2,000 for arts, £3,000 for sciences and £5,000 for medicine for all new students—and I emphasise "new students ". The cut by the Government for this university is 15.6 per cent., which is making the assumption that the shortfall will be made up by the university charging the full cost of fees. Unfortunately, this will not work, because the number of students never remains constant. Education in this country is among the most expensive in the world. I have been looking at the accounts for various universities in America. Stanford is approximately £2,600, Carnegie-Mellon is £2,000, Berkeley is £1,500 and the State University of California is £950.

We have quite a number of people who are here on scholarships and I should like to refer to this aspect because it is very important and we must not forget what we have done in this direction. Of sponsored students we have 1,334 United Nations Fellowships, 24 Council of Europe, 33 OECD, 7,497 British Study Fellowships, 572 overseas representatives, 61 British Council Fellowships and Euro-scholars, 89 Confederation of British Industry, 65 Marshall scholars, 193 Rhodes scholars and 9,227 British Council. So that we have a good number who will be sponsored in the future.

Reading University is one that I particularly like to mention, because it has advanced engineering, agriculture and rural development. That is why it is very important for students. Of the total student population, 13 per cent. is from overseas and they are largely British Council sponsored. I should like one Minister to be in charge of the development of policy; it leads to difficulties when several Ministers are involved. I should like the Minister to consider the development of a positive policy on overseas students, in collaboration with academic, professional and voluntary representatives of teaching in the institutions and local education authorities. I should also like my noble friend to tell me whether those overseas students who come here with their wives, and whose wives work to help keep themselves while their husbands are studying, will still be allowed to bring their wives.

Perhaps I should point out that the only private university, in Buckingham, charges £2,500 for a degree course. May I also point out that while there has been an increase in the number of students, there has also been a considerable increase in the number of countries sending those students, which makes a great deal of difference. We should therefore be proud of the expertise of those, many of whom we have heard in today's debate, who have spent so much of their time upon trying to improve the lives of young people by giving them the benefit of their knowledge.

I am president of the International Friendship League which runs hostels for students. Those hostels are not subsidised; they are self-supporting. Therefore I mix quite a lot with students. I should be very grateful, therefore, if my noble friend could answer those two points. I think that we have to give her all the support we can in the difficult days which lie ahead of her. I hope we shall see the benefits of the new policy and that next year we shall have another debate, when we will be able to see how things are working out.

11.52 p.m.

Lord BOYLE of HANDSWORTH

My Lords, I am very grateful to the noble Viscount, Lord Amory, and to the noble Lord, Lord Vaizey, for their kind personal references to me. The hour is very late, but I feel it would be wrong for this debate to end without one contribution from a representative of the large civic universities of the North of England.

I think the essential point was made at the very start of this debate by the noble Lord, Lord Stewart of Fulham, when he said, with the typical precision which I got to know so well in the House of Commons over many years, that tonight we are discussing a quite different order of proposal from any we have discussed in earlier debates on the subject. The House should remember that absolutely crucial point.

1 have never taken a dogmatic view over differential fees—nor, indeed, have the senate or council of my own university. At recent senate meetings, professors of applied science who are in close touch with industry have gone out of their way to remind their colleagues that it is not only the universities which at present face acute difficulties and that we should always remember the particular problems of manufacturing industry, which is now having to face the consequences of a minimum lending rate of 17 per cent. But when one has said all that, there would equally be unanimous agreement within my university that, in the words of the noble Viscount, Lord Amory, the present proposals of Her Majesty's Government are much too harsh.

When I say "unanimous agreement" I do not mean only unanimous agreement among academics and unanimous agreement among students. One ought to remember that these same views would be very widely endorsed by university councils and university courts representing lay people—indeed, with majorities of lay people. My own university council at Leeds at its first meeting this term unanimously endorsed the statement of Sir Alec Merrison to which the noble Lord, Lord Wedderburn, referred in his speech earlier in the debate. When I made my annual court statement on 22nd November and answered questions for 40 minutes I was quite struck by the unanimity of feeling in court: that while everyone recognises the Government's difficulties and the nation's difficulties, none the less these particular proposals go a great deal too far.

Now, my Lords, why is this view so widely felt? The reasons have been given tonight, and I will repeat them very briefly in their simplest terms. First, there is the wide recognition that without the contribution of overseas students British universities would be quite different institutions, of much less value. The University of Leeds does not have a particularly high percentage of overseas students. Incidentally, our peak was reached as a percentage I think in 1975 or 1976. None the less this is as deeply felt at Leeds as anywhere else, and something else is deeply felt: we are not a regional university, we are something more indeed than just a national university. We are a part of what the noble Lord, Lord Robbins, at one point in the report referred to, I think, as the international confraternity of universities. By that I do not mean only, or perhaps even mainly, arcane contributions to learning. I mean the part that universities like Leeds and Manchester and Liverpool and Birmingham play in validating international standards of professional performance that are held right across continental boundaries, and indeed right across ideological boundaries.

Secondly, I would make the point that fully one-quarter of overseas students are here to do research, and they play a vital part in the intellectual and scientific life of the nation and therefore in helping to keep academic disciplines alive. Thirdly—and this point was made most effectively just now by the noble Viscount, Lord Craigavon in his speech—all over the world there are men and women, often in positions of influence, who have a real understanding of the United Kingdom because they spent some of their formative years of their lives being educated in this country.

It is very easy for many of us here to state personal examples. I remember the one time that I met Tom Mboya on a visit to Kenya. There was absolutely no doubt that his time at Ruskin College was a formative influence on the rest of his life, and I well remember the conversation that we had. Over and above all these arguments of principle there is the final point about money. The Government's policy means making a double cut in university resources on an irrational basis, on a basis that makes rational planning for the future impossible.

I have only one other point to make, very briefly. It is natural tonight that we think of the Third World and also, as we certainly should, of the EEC, but I hope we shall never forget the British university links within the English-speaking world. It is an important fact about the University of Oxford that some 50 per cent. of all overseas students come from the United States—with something like 33 per cent.—or from Canada or from Australia. And as the noble Lord, Lord Robbins, so rightly reminded us, believe it or not, by no means all American students are wealthy. There is the most extraordinary misunderstanding about this. Many of the most valuable and worth while students from the United States coming to this country are not in fact wealthy students.

I would venture to make this one point to my noble friend Lord Annan. He rightly referred to the quality of so many engineering students from Malaysia or from Hong Kong. He said that he believed they would continue to be supported by their families. I must say it is my own experience that quite a number of the ablest students, for example from Hong Kong, do get family support but it is, frankly, precarious support. At any time—and I think of a number of particular cases—such students may have to earn money themselves and become more self-supporting students in this country in order to carry them through their courses. I am afraid that it will be some of the ablest students that we might otherwise have attracted to this country who will now be very much affected by the differential in fees between the United Kingdom and other parts of the English-speaking world; and I think that will be very sad indeed. None of us should be in any doubt about the effect of the size of this differential, and of course it will not affect only those who are just about to come to university. The news of the change in policy is getting around to those who are at an earlier stage of their education in those countries.

I am sure the noble Baroness, Lady Young, cannot have been looking forward to this debate. She must feel a little like the wife of Joseph Chamberlain on the eve of his 70th birthday after the cavalcade round the Birmingham park, when she said she felt beaten all over with little sticks. I certainly would not wish the noble Baroness or her right honourable friend the Secretary of State, or even the Parliamentary Under-Secretary, the fate that overcame Joseph Chamberlain the following Wednesday. Nevertheless, I would say to her that I do believe the Government's policy may have far more severe effects both on numbers and on university finances than Ministers have any idea of.

I have an uneasy feeling Ministers have by now made up their minds quite definitely about policy for 1980–81. I would echo Lord Annan and beg the Government to stand prepared to review this policy for 1981–82 and for the following years. I do believe this is one of those issues where, if the Government were to show themselves more flexible, ready to review policy in the light of experience, that would stand only to the credit of the Government in the years to come.

12.1 a.m.

Baroness DAVID

My Lords, I, too, am very grateful to my noble friend Lord Stewart for introducing this debate. It seems very suitable that someone who has been both Foreign Secretary and Secretary of State for Education should have introduced this subject. The dramatis personae tonight are very much the same as we had on 5th July, though it is good this time to have some new actors and new voices. I am afraid the traffic of our stage is going to last considerably over two hours. The situation now is very different from that in July when the noble Lord, Lord Alport, asked what the Government's policy was with regard to the admission of overseas students to British universities. There was then considerable anxiety expressed at the increase of 3½ per cent. in fees for 1979–80. That now seems chickenfeed. What we are facing are increases for 1980–81 of 113 to 219 per cent. in universities, depending on whether the course is an arts or science one, and even higher increases of 155 to 251 per cent. for those in advanced education in the maintained sector. I should like to hear from the Minister the reason for the new differential between the universities and the maintained sector fees. I should have thought that many courses in polytechnics and colleges of higher education were particularly relevant for overseas students—textile courses, for instance. We have, unfortunately, no one in this House to speak for the State sector, but we should not ignore that sector in this debate.

Increases announced last month have provoked protest from academics, administrators and students which in unanimity of tone is unprecedented, and this is why it is vital to have the matter debated now, in the hope that the Government might, as with the BBC External Services, and for very similar reasons, have a change of heart. The last Government was not popular for making a differential and increasing fees for overseas students, but they were at least gradually reducing that differential. The present Government policy—and one wonders whether it has really been thought out; I do not believe it has—is quite different both in the scale of increases proposed and in the sense that these increases are being used as a direct instrument to impose public expenditure cuts on the universities, and it is a very blunt instrument.

The noble Lord, Lord Annan, said that the need for public expenditure cuts had not been mentioned, but I think that is unfair. My noble friend Lord Wedderburn said that there may well have to be cuts but they should be planned cuts, and Lord Vaizey made exactly the same point. I think that probably we all realise that there should be some cuts, but this hatchet job is not the way to do it. I think that one can compare this blunt instrument attack with the plan in the new Education Bill, to cap the pool—and again that is a very poor instrument.

For the universities, planning, with all the uncertainty about how many overseas students will be taking up places by 1983–84 when all the overseas students will be paying the full fee, combined with very many other uncertainties, would be incredibly difficult. What the Government are proposing to do is to reduce the grants to universities by 13 per cent., assuming that the shortfall will be made up by overseas students paying full fees. But that 13 per cent. represents £107 million; and can it really be certain that sufficient overseas students will be willing to pay more than double the present fees? Indeed, £107 million is a very large sum to be uncertain about and, as noble Lords have pointed out, London has a far higher percentage of foreign students, and is therefore all the more vulnerable.

The Government have previously held that increased fees did not deter students from applying. But increases of this magnitude are certain to deter them. In fact, in the UCCA's recent Press release, the number of application forms received by 15th November from overseas students, compared with those of exactly one year ago, were down by 11 per cent. Just under half the expected total number have so far applied. Therefore, trends must be looked on as provisional. But in recent years overseas candidates have tended to apply more promptly than their United Kingdom counterparts, and if the tendency continues this year, that figure of 11 per cent. is likely to be an underestimate. My noble friend Lord Wedderburn of Charlton referred to the numbers which Dr. Rhodes Boyson gave in a Written Answer in another place on 22nd November. That certainly seems to show that fees have had an effect.

I had planned to say a certain amount about the costing, but that really has been dealt with by other speakers. Therefore, shall just confine myself to saying that I do not think that the method of costing—full cost and average cost—is a fair one and that marginal costs are a better way of going about this.

The Committee of Vice-Chancellors and Principals' Joint Working Party on Tuition Fees estimated that the short-term marginal cost was about half the average unit cost; and the long-term marginal cost about two-thirds. The Council of the Association of Principals of Colleges—that is, the equivalent in the maintained sector of the CVCP—in a paper for their Council, agreed that those estimates may be true of universities; but they considered that in their sector, if all full-time overseas students were taken into account, both the short-term and the long-term marginal costs would be substantially lower than these university-based estimates. They have written to the Secretary of State stating their thesis and they suggest that the facts could be discovered by the DES conducting a sample survey over the country in order to obtain actual marginal costs—short-term and long-term. Surely that would be a sensible and fair thing to do, and need not take a vast amount of time, before deciding finally on the astronomical rise that Ministers are suggesting.

The noble Lord, Lord Bullock, has also suggested an inquiry, as have several speakers this evening. I understand that no university in the world charges fees which are "average costs". Harvard Business School, one of the highest chargers, charges 60 per cent. Would the Government even now reconsider, and think of fixing fees on a basis that has been researched, and not put us totally out of line with the United States of America, Canada and other countries which otherwise may draw off students from this country with all the attendant benefits they bring? I am referring to benefits of trade, business, goodwill, and so on, which have been acknowledged by all parties in this House so I shall not take up the time of the House by enlarging on that theme now.

Another aspect that shocks is the arbitrary nature of the exercise. There has been no discrimination. A number of our academic institutions have been traditionally geared to educating large numbers of overseas students, particularly in London. Noble Lords have spoken powerfully of that, so there is no need for me to report what has been said. In Manchester UMIST will have to make up 35 per cent. of its income if it loses its overseas students. Surely some consideration should have been given to the very diverse nature of the institutions involved and their long traditions. One would have expected a Conservative Government to take heed and respect traditions such as these. I am very sorry that the health of my noble friend Lord Bowden prevents him being here tonight, for I am certain that we should have had him standing up and saying that wherever he went all over the globe he found engineers who had been trained at UMIST.

I should like now to turn to a different aspect of the subject—the distinction between postgraduates and undergraduates. My noble friend Lord Listowel and the noble Lords, Lord Robbins, Lord Vaizey, and others have spoken on this. The Government appear to have recognised that postgraduates might be a help to us; that the research they do and the teaching they undertake in the universities is a very valuable contribution. But to offer a mere £1 million to help support 400 to 500 students—about 2½ per cent. of postgraduates in universities last year, if my arithmetic is correct—is derisory. The selection of those to be benefited will, they say, be made by the Committee of Vice-Chancellors—a ludicrous idea. Obviously, the only way in which to distribute the meagre sum is to spread it around the universities, and it will be a very thin spread indeed.

If the Government are determined on change and cutbacks, surely it would be right to look on the situation of postgraduates and undergraduates as two quite different problems deserving different solutions. At postgraduate level overseas students should pay no more than home students. It is to postgraduate students that most aid money has gone in the past. It is in the post-degree courses and in research that we can make the greatest contribution to the international increase of knowledge, and in return receive help ourselves. Some universities would be very short of teaching staff if they did not make use of postgraduate research students.

Undergraduates from overseas can, I think, be looked at differently. A large percentage of them have in the past come of their own volition, unsupported by this or their own countries. Some, of course, have come as the result of the aid programme, and that should certainly continue as they will have been selected with care. But in many developing countries universities have been set up, often with our help, and it can be argued that first-degree courses should be supported there. If we make it too easy for their best pupils to come to England, we may draw off their cream and, therefore, lower their general standard. If certain courses are not available in those countries, or there are no suitable universities, that is a different matter.

But if the Government are determined to reduce the number of overseas students they should be far more discriminating. I suggest that it is positively harmful to international training and exchange of knowledge to treat postgraduates from overseas any differently from our own home-grown products. What about those of our own postgraduates who wish to study in foreign universities? We want to keep a two-way traffic going. Will the Minister be willing to raise again with her ministerial colleagues the special position of the postgraduate?

Next, I want to speak of the aid programmes organised by the ODA and the British Council. In her speech on 5th July this year (at columns 630–631 of the Official Report) the Minister said this—and I shall remind both her and the House: Many overseas students, for whom the United Kingdom Government take responsibility, come as part of the aid programme. I should like to confirm that their tuition fees will, as in the past, always be paid in full. It might be helpful if, at this point, I were to say a little more about them. Our aim is to help developing countries to build up their own manpower resources, wherever possible through their own institutions. Where training in the United Kingdom is appropriate, we provide it mainly through our technical cooperation arrangements with individual countries, under which some 9,000 students are brought here every year on courses relevant to their country's development priorities. The selection of students and trainees is agreed between Her Majesty's Government and the overseas governments. A further 6,000 students are supported under other aid-funded schemes, including British Council scholarships, the British contribution to the Commonwealth Scholarship and Fellowship Plan, Inter-University Council arrangements and support for refugee students from certain countries … Under the Fee Support Scheme, introduced for the academic year 1977–78, up to 600 new awards have been available annually for selected privately supported post-graduate students from developing countries, on courses of developmental value, who are recommended by their colleges and who have suffered hardship as a result of fee increases of recent years. Training for development is an essential function of the aid programme and in general we expect to continue to provide support for overseas students, subject to periodic review in relation to changing priorities and to the money available. Therefore, many of the poor students come in this way and will continue to have their fees paid in full ". That speech gives a total of 16,100 students, besides others where precise numbers are not given.

I should like to know whether the noble Baroness stands by what she said in July both as to numbers and the Government's willingness to pay their fees in full. If fees are paid in full, will the number of students remain the same? I hear that Somalia, for instance, wishes to send veterinary science students and that the allocation of money for that country will not be increased. As those courses are very expensive, fewer students from that country will be able to come.

The British Council say that unless more money is received the number of new grants available from council funds will drop by half. The number of technical co-operation trainees arriving this year, expected to be 4,600, are down to about 4,000 because the Government gave instructions to suspend action pending decisions. These students are precisely those whose presence in the country will be most valuable, for they are chosen in consultation with the countries themselves, and are chosen as people likely to assume positions of responsibility in their own countries on their return. Their training is related to other overseas development assistance. So these are vital people in building up future relationships. What are the facts about the numbers and funding money for 1980–81?

I understand that the British Council has 543 students here this year funded by the council, and there are nearly 1,400 under the Commonwealth Fellowship Scheme. Then there is the Rhodesian training programme. Last year I believe there were about 1,300 Rhodesian African students being trained in the United Kingdom, and others elsewhere. The programme has been directed towards assisting the creation of a cadre of trained manpower to meet the needs of an independent Zimbabwe. Are all these programmes to continue, and at what level? The cuts in British Council funding would lead one to expect not, or at least that there will be a big reduction. I hope for a very full reply from the Minister on all grants and awards and numbers—whether paid for by the DES, the FCO (now embracing the ODM), or the British Council. And I hope we shall not be told that it is up to the FCO to say what they do—the question under debate was directed to Her Majesty's Government.

Not only is the British Council likely to be able to support actively far fewer students from overseas—maybe half—but the general information and welfare services it provides for young people when they arrive will have to be reduced too. The help given to foreign countries in advising on the choice of suitable candidates for education here will have to be abandoned unless those countries are prepared to pay for the service. The British Council is being emasculated. Are the Government planning a slow death for it? Are they following the advice of the Think Tank in its report on overseas representation? I understand that this House rejected that advice in a debate in November 1977, as the noble Lord, Lord Gladwyn, said.

Changing my tack, like my noble friend Lord Stewart I want to know what the Government's intentions are about fees for students from EEC countries. I put down a Question for Written Answer on this subject and had a reply on 13th November which, with respect, told me nothing I did not know before. In it the noble Baroness said that the Government were considering whether arrangements for overseas students might be modified to take account of the position of students from other member countries of the EEC. Now, four weeks later, have the Government made up their mind and, if so, what have they decided? It seems hard that Commonwealth students should be treated worse than Europeans. Is that still the intention?

The noble Baroness, Lady Vickers, made a powerful plea for Commonwealth students. One other class of students I have not mentioned already is refugees. We have behaved quite generously to Chileans, Ugandans, and others in the past. Is that to be continued? I read the other day that the noble Baroness had made some statement about the possibility of mandatory grants for the refugees from Vietnam; perhaps she could say something on that.

In the debate in July I acknowledged the difficulties and complexities of this whole subject, the immensity of the problems, administrative as well as moral, and I said: Any sudden change can have very dramatic effects. We "— the last Government— had not succeeded in coming up with a set of proposals that satisfied us by the time Parliament was dissolved in April. It is over to the new Government now ".—[Official Report, 5/7/79. col. 624.] Well, the new Government have taken action, precipitate action, I consider, with too little thought for reaction overseas or for reaction at home, unless they thought a reduction in overseas students would please certain people in the community, in which case I would call it an unpleasantly discriminatory policy.

I would ask the Government in all seriousness to pay attention to the great weight of protest, unanimous protest really, manifest in the House and in the country against what I must say are very foolish and shortsighted proposals. I ask them to consider the possibility of treating postgraduates differently from undergraduates and, if they must make increases in fees, to make them with greater sensitivity and caution, so that some of our great academic institutions will not think they are in danger of bankruptcy or closure in the next few years. The proposals they have made can only do harm to our own higher education system, to the educational standards we hear so much about from the Tory Party, and to our reputation and trade in many foreign and Commonwealth countries which have hitherto been our good friends and good trading partners.

12.22 a.m.

The MINISTER of STATE, DEPARTMENT of EDUCATION and SCIENCE (Baroness Young)

My Lords, no one could listen to this debate tonight without recognising the real worry about the implications both at home and abroad of the Government's decision to increase fees for overseas students to full cost from September 1980. I am grateful for the clear and frank views that have been expressed on this subject and I recognise the strength of feeling it has aroused. I assure the noble Lord, Lord Gladwyn, that at any rate I am not in the least complacent about the subject, or particularly cheerful. It would be, after all, so much nicer to be in Government and have a lot of money to distribute to a lot of people, to be able to say to everybody precisely what they would like to hear, than to have to defend the difficult, complicated and hard decisions that we have had to take.

For my part, I should like to place on record that the Government are aware of the contribution that overseas students have made and continue to make to the intellectual and social life of our educational institutions. Nor have we left out of account the deserved reputation of our educational institutions as internationally renowned centres of learning. Quite apart from accepting students from other countries, our universities are in frequent contact with universities all over the world through visits by university staff and by exchanges of staff. There are also many links at the highest academic level and such valuable contacts will all continue.

If, however, we go back to 1970–71, when there were only 18,000 overseas students at our universities—about half the present total—I do not recall that anyone ever suggested that our universities were accepting too few students, that they could not be regarded as institutions of international reputation and repute or indeed institutions that were not influential in the world, and I was very interested in the rhetorical question which the noble Lord, Lord Annan, asked: what is the right number of overseas students to fulfil all these obligations with which I agree and the whole House agrees? Is it what it was in 1970, is it what it is today or is it the figure which the Government of the noble Baroness, Lady David, suggested and which would mean a drop of 21 per cent. in the current numbers of overseas students in our universities?

Well, who knows the answer to that question? But it is one to which I think we need to address our minds, because in asking it we all recognise that returned students often occupy positions of influence in their own countries and can be helpful in commercial and political relations with this country. There are many benefits which I recognise accrue to Britain, but I am sorry to have to say to the noble Lord, Lord Gladwyn, who I know will regret it, that it is difficult to quantify what these benefits are, and we have yet to see figures which will stand up to rigorous examination on how one quantifies precisely the benefits that the overseas students bring. The provision of higher education in this country is of course a valuable part in a number of cultural agreements with other countries.

At the start of my reply I should like to thank noble Lords, particularly the noble Lord, Lord Annan, and the noble Lords, Lord Robbins, Lord Gore-Booth, and Lord Vaizey, for their references to the difficulties of the economic situation which the Government face. We came to office last May committed to reducing the level of public spending, and none of the decisions that we have taken, in the educational world or indeed in other departments, has been taken lightly, and the one to introduce full cost fees for overseas students certainly was not so taken.

The fact is that we are in a world which is very different from that to which we have been used for a long time. I understand that each year the grant to the universities has increased, with the exception of the year 1977–78, when it dropped by 1 per cent. in real terms as against 1976–77. When we are in a situation of no growth in the economy we must look at the future costs of universities, of education. Everyone who has spoken about the economies has said, "Ah! but this is the one important thing that must be saved." If I were to make this kind of speech to an audience of teachers, or to a school, or to some other part of the educational system they, too, would argue that theirs was the one and most important part. The fact is that when one starts to make economies they are always painful and difficult, and no one particularly wants to have to make them.

We decided that we could not afford to go on subsidising overseas students in this country at a cost of some £100 million a year. The previous Administration sought to control the subsidy by means of a quota and by charging differential fees for overseas students, but in 1978–79 that policy did not in fact prove to be effective. Resources were allocated in that year through university grant and Rate Support Grant sufficient to provide for 72,000 overseas students. In the event, 87,000 students came—an excess of 15,000, who were accepted by institutions and paid for out of public funds intended for home students. We therefore believed that a different and more effective policy was necessary because, as some noble Lords have indicated, we started with a rather confused background, and we have in fact opted for full cost fees.

I have been told by many noble Lords that we have used a blunt instrument, but in fact the full fees will apply only to those coming to the universities in the next academic year, and those students who are currently on courses will not pay the full fees. Of course it would have been far more pleasant to have stood here and been able to say that we could afford to continue to pay for all the subsidies on the overseas students, but the country's economic position does not allow us to do so. Public expenditure has had to be reduced, and I think it only fair that, as all sectors of public spending are affected, overseas students should not be exempt.

Perhaps I may now try to answer some of the specific questions that I have been asked. One point which has been made, and which I recognise, is that, whereas the percentage of overseas students over all universities in England and Wales is about 12 or 13 per cent. and in Scotland about 8 per cent., there are particular institutions and universities where the percentage of overseas students is very considerably higher. This was a point made by the noble Lord, Lord Robbins, I think, and by others; and I have been asked whether there will be a review of the effects of full charging. I should like to say that my right honourable and learned friend will keep a close watch on developments. The policy on full cost fees will be looked at when the position on enrolments is clear for the university and for the public sectors, but we do not believe we shall have a clear picture until we are well into the 1980–81 academic year.

I have been asked yet again about unit costs and marginal costs, and why we cannot in fact use marginal costs and not unit costs. I am advised that in fact the UGC grant is based on unit costs for students, and that in the academic year 1978–79 there were in fact 36,500 overseas students, whereas the grant, based on unit costs, covered only 31,000 students. It is thought that in the academic year 1979–80 there are 35,000 students—the figures are still provisional at this time of the year—whereas the grant was originally settled for about 30,000 students. It is in fact based on the unit costs, and the fact that there are more overseas students than have been allowed for indicates that the universities have been efficient and have clearly lowered their unit costs in order to be able to take in these extra numbers. But this is the way the funding is done, and it would be difficult, I think, to change over to any other form of costs, particularly in the institutions where they are clearly not just a marginal cost to the university.

It has also been said that our full cost fees in 1980–81 will be the highest in the world. This is not in fact strictly true. Our fees will be high because our costs are also high; not least as the result of our favourable staff/student ratios. For example, in British universities the ratio is 1 to 9.2 students compared with 1 to 20 in France and 1 to 23 in Italy. Our costs are high because our standards are high and because of the individual attention given to students—unlike some countries, where a place at an academic institution often means little more than access to lectures. Our fees will still be broadly comparable with those of the leading private universities in America, where the fee can be $5,600. But the fact is that a degree course in the United Kingdom is normally only three years, while in America, of course, it is four years. That is much more common. Therefore, the total average cost at a British university is lower. A British university is still a very good buy, and why everybody should take this appallingly depressed view about something which has attracted so many people and which, on close examination, stands up as being something of great value, I really do not know. After all, if one looks at European universities, in France it takes you between five and seven years, and in Germany between four and six years, to get a degree; and when one comes down to a first degree in three years in this country, it is a very remarkable achievement.

Indeed, we believe that our overall policy is more discriminating than some of its critics are prepared to acknowledge. As my right honourable and learned friend announced in another place on 27th November, there will be a new scheme of assistance to postgraduate students. My noble friend Lord Amory asked whether we would not try to mitigate some of the hardships; and, indeed, the scheme recognises the difference, which the noble Baroness, Lady David, asked whether we acknowledged, between undergraduates and postgraduates. In the first year of this scheme—that is to say, 1980–81—some 400 to 500 research students of high academic merit will receive awards equivalent in value to the difference between the fee for a home research student and the fee which would normally be charged to the overseas research student. On average, the award will be about £2,000 per student. Secondly, in view of our membership of the EEC, we are considering how students from other Member-countries may be given favourable treatment. I am sorry that I cannot add anything to this answer. I recognise that it does not advance the answer I gave to the noble Baroness about a month ago. But when I can tell her that I have the information, I will do so.

The noble Lord, Lord Stewart of Fulham, asked me about refugees, as did the noble Baroness, Lady David, and I should like to say that the general responsibility for refugee students as a special category does not fall to the aid programme; but the ODA has given assistance in recent years to such students from certain developing countries. Some were already studying in the United Kingdom when they became refugees because of the political situation in their home country. Others were following, or about to begin, courses of further education in their own countries and came to the United Kingdom as refugees and continued their studies. These schemes covering refugees from Chile, Uganda and Ethiopia are administered by the World University Service with grants from ODA. The Uganda scheme will be phased out and replaced by a normal technical co-operation training programme when conditions permit. The noble Baroness, Lady David, also asked about possible Vietnamese students. I will write to her on that point. It is not yet clear how this will work.

The Government have reaffirmed their commitment to the principles and obligations of overseas aid. We continue to give substantial support to the execution of the developing countries' plans for social and economic advancement. For many years we have co-operated in the transfer of skills to the Third World. Over the years there have been changes of emphasis and new needs have emerged. The developing countries, with our help, have nurtured their own schools, universities and training colleges and have evolved their own cadres of administrators and professionally qualified people.

Our task now is to help the overseas governments and institutions to fill gaps and improve standards: by supplying those specialist skills which are in short supply; by sending them trainers of trainers; and by providing, in Britain, those kinds of academic or technical and vocational training and research facilities which in many of the developing countries are not yet readily available. Thus, our courses in many branches of technology, management of natural resources and public administration, to name but a few areas of training, are highly regarded by the governments and other institutions in some 120 countries. The range is wide and, although relevance to the social and economic needs of individual countries must be the major criterion, it is applied with considerable flexibility. Much of the training we support is on standard courses at universities, polytechnics and training colleges; but some 60 courses have been specially designed for the needs of the Third World.

The noble Lord, Lord Hatch of Lusby, asked me about the British Council. I think at this late hour I will not rehearse all the arguments because I believe that there will be a debate in the House on this very subject next week. I should like to say that the Government recognise that the British Council has an important role both in the administration of the work with overseas students, including the placing of students and helping them with their accommodation and paying their allowances. One of the factors that I think one must consider both in the case of the British Council and, indeed, over the aid programmes is that if we could only get our economy right, if only we could put our own house in order, we should not have to go around apologising all over the world for the state of the country. I think there is something to be said, even if we have to cut back on desirable projects now, for getting our economy right rather than having to go round borrowing money, often to subsidise what appear to be, and are, in many instances, very valuable and nice projects; but at the same time not having the strong economy that we should like to see. We must put our own house in order first.

In 1978–79 some 15,000 overseas students were supported in the United Kingdom under FCO, ODA and the British Council programmes. These are hardly the richest students and, although the students who qualify for support under these schemes form a relatively small proportion of the total numbers in Britain, we believe that they should continue to be the focus of our efforts on behalf of students from developing countries. Provision for aid-financed training programmes for 1980–81 has yet to be finalised, in the light of the Government's review of expenditures and having regard to the levels of aid expected to be available for each country. The costs of travel, fees and maintenance will have increased by 1980–81, and we cannot yet say what targets we will be able to set. But we expect to continue to finance a very substantial number of these key people, and we will meet their full fees and costs. Most of these people, as I say, are nominated by their Governments for courses related to the country's manpower needs.

The noble Baroness, Lady David, also asked me about the training programme for Rhodesia. Currently, there are 2,300 Rhodesian Africans who are supported at United Kingdom institutions at an estimated cost of £7 million. New awards have totalled 1,350 which is four times larger than last year's intakes, and makes the Rhodesian programme by far our largest training programme for an African country. In addition to the programme in the United Kingdom, we are supporting some 500 Rhodesian Africans at the University of Rhodesia, some 400 at educational institutions in other Commonwealth developing countries and 60 students at the YMCA Secretariat College in Salisbury, Rhodesia. These programmes will cost £1,600,000 in 1979–80.

The future of these programmes depends on the outcome of the Constitutional Conference. If there is an internationally recognised legal Government in Rhodesia with whom we can discuss their aid priorities for 1980, then we shall do so. Provisional figures of £8,110,000 for 1980–81 in respect of the programme at United Kingdom institutions for continuing awards only and £598,000 for the programme at the University of Rhodesia are being considered by the Treasury.

We will also continue of course to support the Commonwealth Scholarship and Fellowship Plan and British Council scholarship schemes which maintain a valuable flow to the United Kingdom of overseas people, mostly at postgraduate level, of high calibre and promise.

Lord DAVIES of LEEK

My Lords, may I ask the Minister a question? I apologise but it has been a fascinating but sad debate. Regarding Commonwealth scholarships, have the Department of Education had any discussions with the Ministry of Defence? Is the noble Baroness aware that scholarships sometimes are given to young men from the Commonwealth who join our Army, Navy or Air Force to become engineers, dental surgeons or even surgeons in medicine? Are they interfering with scholarships for those people or are they leaving that to the common sense of the Ministry of Defence who want to fill up the echelons of medicine, the dental service or engineering?

Baroness YOUNG

My Lords, I am sorry, I do not think I can give an answer to that question at this time of night. May I write to the noble Lord?

Lord DAVIES of LEEK

Yes. I only wanted to get it on the record. Thank you.

Baroness YOUNG

My Lords, these schemes, the Commonwealth Scholarship and Fellowship schemes, cover both the old and the new Commonwealth developed and developing countries. For a non-Commonwealth advanced country, the USA, there is the Marshall Scholarship Scheme. Under this Scheme 30 American graduates are brought to this country annually for a minimum of two years to read for first or higher degrees at British universities. The 1980–81 draft estimates of the Marshall Aid Commemoration Commission provide for the support of 72 Marshall scholars in the academic year 1980–81 at a cost of £295,000 on tuition fees and maintenance out of a total expenditure of £385,000.

A number of noble Lords have asked me about our future plans and our arrangements. I have been particularly grateful for a number of constructive ideas that have been put forward. I have made a note and shall study carefully tomorrow the record of what was said by my noble friend Lord Vaizey, and I shall certainly draw that to the attention of my right honourable and learned friend.

In conclusion, I am grateful to the noble Lord, Lord Garner, and of course to the noble Lord Annan, for the constructive and helpful points that he made about how we might consider the whole question of university finance, and of course the problems that arise with the recognised fall in the numbers of home students following upon the drop in the birth rate. The Government see the rationalisation of course provision between universities as a possible way of reducing expenditure. It is recognised, however, that this would not be a quick or simple solution.

This and other schemes for making economies, whether selective or general, are, we believe, primarily matters for the universities and the University Grants Committee, but the professional advisers in the Department of Education and Science would always be ready to assist. I very much hope that these suggestions, which I believe are very valuable and which we will take note of, are matters that will be followed up—because we do recognise that, coming into a situation where we have had to make very difficult decisions within a relatively short period of time, is not the easiest way to go forward for a lot of people who have to plan for the long term. We should therefore very much like to see a number of these proposals followed up in the spirit in which they have been offered.

May I say in conclusion that the Government's policy of reducing public expenditure has meant that we have had to consider all aspects of educational expenditure, including that on overseas students. However, we do believe that, through the continuing aid programme, the new bursary scheme for post-graduate research students, and possibly students from other EEC countries, our policy will be as discriminating as possible. It will seek to strike the right sort of balance between meeting our international obligations, maintaining the international character and reputation of our institutions, particularly the qualities of excellence in so many of them, and at the same time spending only what we can, as a country, afford and no more.