HL Deb 23 July 1997 vol 581 cc1445-58

3.37 p.m.

Baroness Blackstone

My Lords, with the leave of the House, I shall now repeat a Statement being made in another place by my right honourable friend the Secretary of State for Education and Employment about the publication today of the report of the National Committee of Inquiry into education. The Statement is as follows:

"The Government are very grateful, as I am personally, to Sir Ron Dearing the chairman of the inquiry and to the 16 members of his committee. Their work has been completed in record time and in a manner for which we are all extremely grateful.

"Today the Government announce a new deal for higher education: new funding for universities and colleges; free higher education for the less well off; no parent having to pay more than at present; and, a fair system of repayment linked to ability to pay.

"Our university system is in crisis. Our competitors in North America and the Far East—the Asian Tigers—have many more young people in higher education. In the USA participation is about 40 per cent., in Canada 44 per cent. They recognise the need to invest in their people, mirroring the investment in fixed capital and equipment of the past. Such countries are expanding higher education rapidly. Business in this country also recognises the need for a strong and thriving university sector to prepare for the 21st century.

"One in three young people now enter higher education compared with one in 20 in the early 1960s. Half the students in higher education are over the age of 21 and a third of them are part time. Public funding per student has fallen by around 25 per cent. over the past decade with consequences for the quality of teaching, seminar work, materials and equipment. Yet the increase in participation among socio-economic groups A to C has been double that of groups D and E. The present system is not working.

"The same level of funding for students today as existed in the 1970s would cost the taxpayer an extra £4 billion per year. If we combined that level of funding with increased participation—towards 40 per cent.—it would cost an additional £2 billion by 2015. Taken together, such changes would add 3p in the pound to the basic rate of tax.

"The last Government placed a cap on the expansion of higher education, created the present mix of loans, grants and parental contributions, and failed to address the financial implications of the further development of the sector. However, with cross-party agreement, they established the Dearing Inquiry accepting that the status quo was not an option. Everybody recognised that our higher education system was in dire need of attention. It has both funding problems and huge anomalies. Tuition is free for some, but 500,000 part-time students in higher education and many of the 2 million further education students are expected to pay fees and receive little or no maintenance support.

"The committee was given the task of ensuring maximum participation in higher education, enhancing standards and quality, ensuring fair and transparent means of student support, while obtaining value for money. The Government endorse the aims and purposes of higher education set out by the committee, building upon the Robins Committee Report of 30 years ago. Higher Education in the Learning Society is a coherent and thoughtful report providing a vision of the future.

"The committee's recommendations cover the local and regional role of higher education, the qualifications framework, academic standards, the role of information technology, management and governance of institutions and the quality of teaching and research. We shall be considering these recommendations over the summer.

"We welcome the committee's proposals for widening participation, including its emphasis on those groups which are currently under-represented. Later this year we will set out our comprehensive response in a White Paper on lifelong learning. I give an initial response to set out a clear direction.

"The committee recognises that we cannot afford further improvement or expansion of higher education on the basis of current funding arrangements. Students should share both the investment and the advantages gained from higher education. Rights and responsibilities go hand in hand. The investment of the nation must be balanced by the commitment of the individual. Each will gain from the investment made. Graduates gain considerably from higher education compared with non-graduates. Graduates, on average, see their earnings rise by as much as £4,000 for every £20,000 of earnings.

"We have considered funding options within the principles laid out in Opposition. Dearing believes that the present loan system is unfair and not working effectively. He recommends that: loans should be paid back over a longer period of time to help poorer students; that parents should not be asked for higher contributions; that a £1,000 tuition fee for everyone—roughly 25 per cent. of the average cost of a course—should be added to the loan; and that some element of maintenance grant be retained.

"We accept a great many of the broad principles laid out by Sir Ron. We intend to build on the committee's preferred option, taken together with the proposal in our policy statement Lifelong Learning. We must develop a more efficient system than the present confusion of loans, grants and parental contributions.

"For lower income families remaining grants will be replaced by loans of the same value. For higher income families an additional maintenance loan will be available equivalent to the tuition fee. We will, however, ensure that the poorest students do not have to pay fees. That is the best way of encouraging access and free education for the least well off. We are equally determined that there should be no increase in parental contributions.

"Our response to Dearing ensures that fees and maintenance taken together do not place an increased burden on middle-income families. Parents at present are expected to contribute up to £2,000 for maintenance. The committee proposes that repayments should be made on an income contingent basis. We accept this but the committee's funding options also assume that repayments should begin when a graduate's income reaches £5,000. We do not believe that this is acceptable. We will consult on a higher starting point for repayment. We also believe that repayments should be over a longer period and set at a lower level of annual repayments than is proposed by the committee. A supplementary hardship loan, of £250 per year, will also be available.

"We are also minded to accept the committee's recommendation that students with special needs should receive the specific grant on a non-means-tested basis. We will consider the need for appropriate measures, such as bursaries for students entering teacher training and some health and social care professional courses. Employers in other fields may wish to consider similar measures. We intend that these proposals apply to all new students and we are examining how best such changes might be phased in.

"In addition, I also wish to assure the House today that top-up fees play no part in the Government's proposals. No university or college should proceed on the basis of introducing such additional fees. The Government will also be considering how the new arrangements will apply to the particular situation of higher education in Scotland.

"These proposals today will mean more money for universities. The Government will ensure that savings are used to improve quality, standards and opportunity for all in further and higher education. Change is essential if we are to maintain the skills and research base of our country. We cannot defer action to another generation. Our preferred solution secures equity, access, quality and accountability. Our proposals retain the principle that repayments should be made on the basis of future income, not present circumstances.

"Today's report presents major challenges which every single Member of this House must address together. Building on this report, we will produce a system that will be fair, will be good for students, for parents, for the universities, good for business and good for Britain.

"The Government are facing the future with confidence. We have the will to take the difficult decisions and to ensure the investment needed for the future of our nation. I recommend to the House that we take on this challenge with clarity and courage. To do otherwise would be to betray the next generation."

My Lords, that concludes the Statement.

3.48 p.m.

Lord Pilkington of Oxenford

My Lords, I thank the noble Baroness for repeating the Statement and, like her, I welcome the care and consideration that the committee and Sir Ron have given to these matters. As she knows, the Dearing Report is a lengthy and complex document—500 and not 1,700 pages—and I thank her for her courtesy in allowing me to see it this morning. However, I have had only a few hours to study it. Obviously, we shall need to debate this more fully. So, at the moment, I should just like to pose a few questions.

First, on the maintenance grant, the Government propose to move to a full loans system, replacing the present system of 50 per cent. loan and 50 per cent. maintenance for poorer parents. Therefore, I ask the Minister how she feels about the Dearing criticism of that idea. On page 320 of the report it states, Option A"— which suggests the full loan for maintenance— increases public subsidies to students from higher income families at the expense of students from lower income families. The former gain access to loan subsidies while the others lose their grant". I want to know how the Minister responds to that criticism.

Secondly, how do the Government feel about a further Dearing comment that the proposal would increase public expenditure in the short term? Associated with that, since the Government suggest that loans should now be available for the payment of £1,000 for tuition fees, can the Minister comment on the effect of that on the PSBR? The next question is this: or are the Government considering accepting the Dearing idea of following the example of the Netherlands and removing student loans from the PSBR? Again, what is the Government's view of charging a realistic rate of interest on student loans? I quote from Dearing: The largest element of subsidy in the current loan scheme is the difference between the retail price index-linked rate of interest charged to students and the cost to the Government of borrowing the funds". I now turn to the mention in the Statement of the university system being in crisis. Sir Ron makes some suggestions on how to deal with that. I would like to know how the Government feel about them. For example, Dearing says: We have identified a range of short-term funding needs—£350 million in 1998–99; £565 million in 1999–2000". As the Minister knows, he points to the crisis emerging from that situation. How do the Government propose to meet these proposals?

I have a further question which relates to finance. Dearing suggests a pay review body in April 1998. Are the Government interested in that? The body would most likely suggest even more charging, since he says that many university teachers are underpaid. What do the Government feel about the balance of funding changing from block grants to grants following the students—in other words, the students direct the money—which is a further proposal in Dearing?

I now leave money matters and ask a few questions about qualifications. On page 146 of the report Dearing expresses considerable admiration for GNVQs as a qualification for entry to higher education. Are the Government happy about that in view of the recent very potent criticism of NVQs and GNVQs? A further addition to that is that Dearing—and it is one of the main points in the report—makes great play of the close link that must occur between academic and vocational qualifications, in the same place and closely linked. Are the Government happy about that in view of the fact that both they and their predecessors have expressed great admiration of the system that prevails in Europe where academic and vocational qualifications are obtained at separate institutions? Sir Ron ignores the whole European experience. Is he correct in doing that?

In essence, my worry is that the Government have jumped too early into financial decisions. I have doubts whether the money raised will meet what Sir Ron Dearing suggests. I believe that they have considered the price before the product, but I am hoping that the noble Baroness, with her usual lucidity, will put all my worries at rest.

Lord McNally

My Lords, I do not know whether my declaration of interest is as a former vice-president of the National Union of Students or as the father of three children who will go through higher education in the 21st century. What I am aware of is that we all share a debt to Sir Ron for a very thorough piece of work and one which, as the noble Lord indicated, demands more than a knee-jerk reaction. Indeed, I suggest to the Minister that she commits herself to a two-day debate in October on the Dearing Report. I say two days because one day will certainly be taken up by all the chancellors, vice-chancellors and ex vice-chancellors who inhabit these Benches.

I have a few points. As regards the idea of funding centres of excellence—the so-called university premier league—how does that emerge from the report, and what is the Government's attitude to research funding as reflected by Dearing? The issue which will capture the headlines is fees and grants. Perhaps I may remind the Minister that those of us who oppose advertising on the BBC, raiding the lottery for current expenditure or paying for health at the point of need do so because we suspect that, whenever the Exchequer finds a honey-pot, the temptation is to keep on raiding it. The noble Baroness pointed out that the proposals will cover about 25 per cent. of the cost of student fees. Is that a capped 25 per cent. or at some future stage will someone suggest 40 per cent., 80 per cent. or 100 per cent.? Is the honey-pot something which can be continually raided?

Finally, perhaps I may put to the Minister the real concern on this matter. I am the child of a working-class family, and I came through university on a full grant, with full fees paid. I am conscious—not least from the statistics that the noble Baroness quoted—that even after 30 years of university expansion we still fail to bring into our higher education system working-class children. The Minister gave some indication as to how the Government might respond to that. I hope the noble Baroness will consult much more fully on this issue. There is a suspicion that again that situation will be a deterrent to working-class children going into higher education. Will the Minister monitor from now on the impact of these proposals? Will she look both at home and abroad at new ways of trying to attract children from lower income groups into higher education?

As I said, I benefited from a poorer but perhaps more generous age. We on these Benches still believe that at some stage politicians of all parties will have to face this fact. If we really want the higher education system that the Minister so rightly says the country needs to equip it for the 21st century, we shall have to face the taxpayer with the need, through an equitable tax system, to pay for that investment. A tax system that begins by differentiating between what academic qualifications one has rather than considering one's ability to pay is not an equitable system. I do not believe I can think of anyone better qualified or with a better commitment than the Minister to see through a reform of the higher education system. We on these Benches wish her well in this matter. We are making decisions for the 21st century. She is well equipped to make them. We also welcome her commitment to further consultation during the next few months. We all know what our holiday reading is and we look forward to further discussion on the Dearing Report in the autumn.

Baroness Blackstone

My Lords, I am sure that we shall all have an interesting summer holiday reading this long and fascinating report. I begin by thanking the noble Lord, Lord Pilkington, for his initial comments and the noble Lord, Lord McNally, for the nice things that he said about me and I hope my competence to deal with some of these very difficult issues.

Both noble Lords asked a number of questions and I shall do my best to answer them. However, if any of them are unanswered I shall of course write to them. I believe that the noble Lord, Lord Pilkington, began with a question about the shift, as he described it, towards a full loan system, which he took from a quote in the Dearing Report. Perhaps I may explain to the noble Lord that it is not the Government's intention to shift to a full loans system in the sense that all middle-class students from higher income family backgrounds will get a full loan to cover their maintenance. The expectation is that parents will continue to contribute if they come from higher income groups. The noble Lord, Lord Pilkington, may be slightly confused because Sir Ron Dearing was commenting on a different scheme from that which the Government have put forward.

The noble Lord asked about the implications of the Government's proposals for public expenditure in the short term. There will be very limited implications since the charging of a fee will soon balance out the increased loans that will be made available. In fact, there will be a net gain after a very short period of time. The noble Lord also asked about whether the remaining student loans would still be counted against the PSBR. That is something that we shall be considering over the next few months. It requires a change in national accounting procedures. Clearly, it is something that we need to consider, just as we need to consider other countries' practices in this respect.

The noble Lord, Lord Pilkington, went on to ask whether we have any intention of charging a realistic rate of interest on existing loans. I do not know what the noble Lord regards as a realistic rate of interest, but we have no intention of changing the present scheme whereby students take out a loan and repay that loan in real terms—in other words, the only interest that they pay is the RPI; it is the increase in the loan in relation to inflation. There is no interest rate charged on top of that. We think that it would be wrong to charge students at commercial rates.

The noble Lord then asked about the university system, referring to the fact that the previous government left it in crisis. There is, of course, a serious crisis. The noble Lord also wanted to know what the Government intend to do about short-term funding needs. The noble Lord rightly pointed out that Sir Ron Dearing identified the fact that our universities have substantial needs which must be met if they are to return to the kind of quality that we would all like to see. The Department for Education and Employment is to conduct a comprehensive spending review during the summer and autumn when we shall look closely at those needs to see how far we are able to meet them.

The noble Lord, Lord Pilkington, went on to raise questions about GNVQs as a qualification for entry into higher education. Sir Ron Dearing advocates the recruitment to universities of students with such vocational qualifications. I am sure that the noble Lord is aware that many universities already recruit students with those qualifications. He suggested that there have recently been criticisms of the GNVQ and NVQ qualifications. I am fully aware that such criticisms have been made and that we need to do all that we can to strengthen those qualifications. The Government are trying to do just that. We shall, of course, be consulting further with the universities about their views on entry requirements and on the extent to which students with vocational qualifications should be admitted. However, I advise the noble Lord that it is the Government's intention that the current system, which was set up by our predecessors, should in this respect continue.

Lastly, the noble Lord suggested that the Government are jumping too early into financial decisions. We thought very hard about this. Our view was that it would be wrong to leave the universities, parents and students uncertain as to the Government's thinking in this area. We shall, of course, consult and we hope to hear from many Members of your Lordships' House as well as from all the interested parties who have a part to play in the delivery of higher education.

I turn now to the questions asked by the noble Lord, Lord McNally. The noble Lord asked about the Government's attitude to the Dearing Report's proposals on research funding. Again, this is a matter on which we want to consult and on which we do not wish to take a view until we have had the opportunity to hear the views of the funding councils, the research councils and the universities.

The noble Lord pointed to the tendency of the Exchequer to go on raiding honey-pots. I am, of course, extremely aware of that tendency. The answer to the noble Lord's question is that the Dearing Committee has made some suggestions on this, including that any change above the proportion of 25 per cent. should be introduced only after an affirmative order in Parliament and following an independent inquiry. Perhaps I may reassure the noble Lord that this Government have absolutely no intention of changing the proportion from a 25 per cent. contribution by students to the average cost of courses, with a 75 per cent. contribution coming from the state.

The noble Lord, Lord McNally, related his own experience as somebody who came from a working-class background and went to university—in the early 1960s, I think, which is about the same time as I went to university—with the benefit of a full grant. At that time, approximately 6 or 7 per cent. of all 18 year-olds had the opportunity to enter higher education. As I have already mentioned, the figure is now 30 per cent. It would be extremely difficult for us to continue to expand the system, as we wish and intend to do, on the basis of asking the taxpayer to pay for that additional expansion.

Perhaps I may remind the House that only 30 per cent. of the population get the benefits of higher education and that those benefits are considerable. First, I think that I am a good witness of the fact that it is an enjoyable experience. Secondly, students who benefit from higher education will have lifetime earnings which are considerably higher than those of comparable young people who do not have that benefit. On those grounds, we feel that it is reasonable that they should pay later. No one will be asked to pay up front—no student from the kind of home from which the noble Lord came. I believe that this is the most equitable approach to the question that he raised.

The noble Lord suggested that the academically qualified would be asked to pay as opposed to people being asked to pay on the basis of ability to pay. Perhaps I may stress once again that our scheme is one of income contingency. No one will be asked to pay if they are unable to afford it.

4.8 p.m.

Lord Glenamara

My Lords—

Lord Renfrew of Kaimsthorn

My Lords, this is a sad day for higher education—

Noble Lords

Order! This side!

Lord Glenamara

My Lords, my noble friend Lady Blackstone has a tremendous capacity for saying the most disagreeable things in the sweetest possible way, but even her considerable charms cannot disguise the stark reality of what she has said today. I have been a member of the Labour Party—and have been proud to be a member of the Labour Party—nearly all of my adult life, but I am not proud today. I am ashamed of what the Government are proposing to do. I am ashamed that my Labour Government propose to erect two enormous barriers between young people from working-class homes and higher education. That is precisely what the Government propose to do. I believe that over the lifetime of a Parliament it will deter tens of thousands of young people from poorer homes from entering higher education.

If the scheme is put into operation, a newly qualified graduate from a poorer home will leave college with a debt of anything between £10,000 and £15,000. If he comes from a well-off home and his parents have financed him he will have no debt at all. Young graduates often marry young graduates. If they do, the debt will be twice as much—it may be £30,000—at a time when they hope to buy houses, have children and so on.

That this should happen is utterly wrong. It sickens me. I do not know whether I can remain in a party and support a government who are prepared to do this to their own people. The people to be hammered are those who have created the Labour Party and sustained it throughout this century. They will be penalised in a terrible way. I remind the Minister that not all graduates will be the highly paid fat-cat lawyers that the noble and learned Lord the Lord Chancellor spoke about or doctors or merchant bankers. A great many will be school teachers, physiotherapists, nurses and social workers. I know that because I confer degrees on hundreds of such graduates each year. They will not receive high salaries but very modest ones. The intention is to place the burden of this enormous millstone upon them.

I protest about this. I am shamed by it. I very much regret that a Labour Government have done it without any mandate or consultation. They have introduced the change on the same day as the report comes out. This is absolutely wrong, and I protest about it in the strongest possible terms.

Baroness Blackstone

My Lords, I deeply regret the fact that my noble friend Lord Glenamara is unable to support the proposals that the Government have announced today. I respect his views but I believe that they are fundamentally flawed and that he is wrong.

I deal first with my noble friend's last point that this has been carried out without a mandate. The Labour Party agreed with the Conservative Government last year that it was right to set up the Dearing Committee to inquire into the future of higher education. The manifesto clearly set out that agreement and said that we would await the findings of the Dearing Committee. The committee has recommended that tuition fees should be charged to all students. We have modified that proposal in a way that I should have thought my noble friend would have recognised as being highly desirable. We have said that no low income student or student from a low income family should be required to pay fees.

We clearly set out in our manifesto that we considered that the present system of maintenance grants and loans was not working well. That was there, and I am surprised that my noble friend appears to have missed it. The electorate was consulted on the matter. We decided to pursue the objective which was set out in Lifelong Learning and in the manifesto, on which we consulted the National Union of Students and obtained its support. My noble friend also neglects to point out—the matter was set out in the Statement, and I am surprised that he has chosen to ignore it—that already many thousands of the 2 million students in further education are required to pay a contribution towards their tuition. These are the most disadvantaged students in the further education system. They are the ones for whom we believe it is right to have a more level playing field. I am amazed that my noble friend objects to that.

I am also amazed that my noble friend has chosen to ignore the fact that there are ½ million part-time students in higher education. I have experience of such students. For many years they have been asked to pay a contribution to their education out of taxed income. Does my noble friend believe that it is equitable to have the kind of system that we had before, in which a minority of students—in other words, those on full-time undergraduate courses—receive their tuition free while virtually all other students, including nearly all post-graduates, are asked to contribute? I end by asking my noble friend whether he accepts that the previous system, under which the taxpayer, who did not benefit from higher education but was asked to subsidise very extensively students who did, was regressive.

Lord Renfrew of Kaimsthorn

My Lords, this is a sad day for higher education. It may be that there are elements within this that are inevitable, but it should be recognised that in this country for 50 years we have had a system under which well qualified students who achieve university admission have not had to pay tuition fees if they are in full-time higher education. It is a sad day that that system should end. But in view of the increasing number of students in higher education perhaps it should end. I express sympathy for the noble Baroness that it falls to her as a distinguished academic to announce to the House the end of a 50-year era of higher education that in many ways has been an admirable one.

Perhaps I may refer to two anxieties. The first concerns excellence. Although it was a short Statement, we did not hear very much about research. That word scarcely passed the lips of the noble Baroness. I should like to be assured that the shortfall in research that is currently so acute will be met. We have received no assurance of any kind in that respect.

My second anxiety is very close to that of the noble Lord, Lord Glenamara. Is it the case that, although for low income families and students with a low income background there will be alleviation of the tuition charge to be imposed through means tests, nonetheless these students will clock up a debt on all of their maintenance? I hope that the noble Baroness can say a little more about that. Perhaps I may give a brief example of what worries me. I put this in the form of a question to the noble Baroness. Imagine a student who enters university, does three years mathematics and goes on to do a Ph.D. in mathematics. He then becomes a school teacher. That person will have a debt of at least £18,000 at current rates of maintenance, to which may be added tuition charges. Will that person be able to get a mortgage when he enters the teaching profession? I very much share some of the anxieties that the noble Lord has expressed.

Baroness Blackstone

My Lords, I am a little surprised by the comment of the noble Lord, Lord Renfrew, that the word "research" scarcely passed my lips. The Statement said that the Government would be consulting on all aspects of the Dearing Report and did not wish to give any kind of lead today. I made that absolutely clear.

I replied to the question about research put by the noble Lord, Lord McNally. The Government are extremely concerned that the shortfall left by the Government that the noble Lord, Lord Renfrew, supported, our predecessors, should be looked at sympathetically. He went on to ask about the alleviation of the tuition charge through means tests. We shall be alleviating it. I repeat that no low income students will pay the tuition fee. As at present, students will take out loans to cover the cost of their maintenance. The National Union of Students has accepted that it is reasonable that students should be asked to do that. The noble Lord shakes his head, but I can assure him that those negotiations with the NUS took place before the election. The noble Lord may not be aware of it but those negotiations did take place.

I do not know from where the noble Lord gets the figure of £18,000 that he quoted. If a student were to go on to do a Ph.D. in mathematics, there are different systems for supporting postgraduate students. It is ill-considered of the noble Lord to throw that in. We are talking about a scheme for the support of undergraduate students. Any graduate on a low income will not—I repeat again—be asked to pay. The scheme run by the previous government, whom he supported, asked students to pay back much sooner, much more and over a much shorter period of time than the income-contingent loan scheme that we intend to introduce.

Lord Dahrendorf

My Lords, I shall talk about principles, which is all that we can do this afternoon not having read the report. Perhaps I may ask the Minister one simple question. I am strongly in favour of opening the gates of higher education. I have always defended education as a civil right. I appreciate also that as we go beyond 30 per cent., financing becomes a different problem from what it was for 6 per cent., 10 per cent. or 15 per cent. I have learnt also that expansion runs the risk of abolishing the differentiation which is also necessary. A truly successful system of higher education has different levels of higher education. One of the great weaknesses of expansion on the European Continent is that it has levelled the higher education system to the extent that we could fill every place in this country's universities with a continental applicant—a refugee from that system. One of the strengths of the American system is that it is differentiated. What principle will the Government follow when it comes to creating a system which is both open and differentiated, both available to all and able to offer the best in special education and research opportunities?

Baroness Blackstone

My Lords, I am grateful that for the first time so far in this debate I have been asked a question which was not hostile but one which sought genuinely to find out the Government's position. The noble Lord and I come from a similar background—sociologists from the LSE. I share with him the wish that we should have an open system of higher education. I share his view also that it has to be differentiated. Indeed, it already is differentiated. That system must continue. The Dearing Committee recommends that much of the expansion should be in the form of sub-degree courses which will be provided in further education colleges. That is something about which we shall want to consult over the summer to obtain the views of all those involved.

Baroness Dean of Thornton-le-Fylde

My Lords—

Lord Annan

My Lords—

The Lord Privy Seal (Lord Richard)

My Lords, a Cross-Bencher, I think.

Lord Annan

My Lords, following on from the comments of the noble Lord, Lord Dahrendorf, will the Minister say whether there is to he differentiation among universities; that is to say, between those which will be funded for research and those which it is acknowledged will do valuable work but nevertheless are not research institutes? Following that, will the dual funding of research by the HEFC and the research councils continue? It is regarded as important by the universities that it should.

Baroness Blackstone

My Lords, yes, it is no part of the Government's intention to change the differentiation that already exists so far as concerns research funding. The Dearing Committee makes a number of proposals about dual funding. It is our intention to think about them. We have made no decisions as yet. We shall want to hear the views of the universities, the research councils and the users of research in business and industry about the best, most effective and value-for-money way of funding research.

Baroness Dean of Thornton-le-Fylde

My Lords, perhaps I may first declare an interest as a member of the Dearing. Committee. I have listened to the contributions with a great deal of interest. My noble friend the Minister will be pleased to know that my question is not a hostile one. I strongly support her Statement today. There are 93 recommendations in the report, and of course funding has understandably attracted the attention.

As a member of the Dearing Committee I learnt quickly that the golden age of so-called free tuition in higher education is a misnomer. It has not been around for a long time. Less than 50 per cent. of students have free tuition. That golden age did little for the members of our community in the needy social groups.

I welcomed the Statement and I welcome the leaflet that my noble friend's department has issued and which I have just seen. I welcome the debates that we are to have in the future. Funding is important for the whole compact, because this is a compact. The 93 recommendations are a compact covering excellence, diversity, collaboration, standards and a world-class learning regime in the UK.

Lord Richard

My Lords, my noble friend should ask a question.

Baroness Dean of Thornton-le-Fylde

My Lords, I finish by asking my noble friend a direct question. One of the key principles of the report is that if a student is to make a contribution to his or her tuition, the principle must be that an added contribution to the tuition should remain within the HE sector, recognising that a great deal of HE work is delivered in further education colleges. Will my noble friend refer to that, please?

Baroness Blackstone

My Lords, as I said in the Statement, the universities will benefit from the changes. It is our intention that the savings made will be provided to increase opportunity, quality and access for students to the further and higher education system.

Lord Beloff

My Lords, the Minister will be aware that I was a constant critic of the previous government's attitude towards higher education, including the appointment of Sir Ron Dearing. I shall have to wait until the two-day debate of the noble Lord, Lord McNally, to see whether I was justified. Perhaps I may ask one precise, technical question. Will the £1,000 which is to be charged to most students be paid by them directly to their university—will they come with a cheque on the first day of the academic year—or is it a notional contribution which the department will pay to the universities and ultimately recover from the student?

Baroness Blackstone

My Lords, yes. The £1,000 will be paid direct to the university by the parent. Clearly students from low income backgrounds will not be paying any contribution for tuition. Therefore a mechanism must be found to make up the loss of that for those universities which have large numbers of low income students compared with those universities which have large numbers of high income students.

Baroness Lockwood

My Lords, I welcome this Statement and my noble friend's response to some of the questions. Might I have a little further clarification on the participation rate? Is there a target, or will universities be free to make their own programmes and recruit according to those programmes? May we be assured that there will be continuity of funding policy for the universities, because the most difficult problems with which universities have been faced over the past few years have been the changes and the stop/go policies in relation to recruitment? Can they be assured that they can plan and go ahead with their policies without interruption?

Baroness Blackstone

My Lords, one of the most unfortunate aspects of the previous government's treatment of higher education was to indulge in rapid expansion, decide that they did not have sufficient money to fund it and then to stop the expansion. As a former head of an academic institution, I can speak with some feeling about that. It certainly makes planning very difficult.

We do not have a target rate as regards participation. The Dearing Committee does not have one either, but it mentions an overall and general goal of reaching 40 to 45 per cent. We wish to consult on that during the summer and to obtain people's views. Certainly we will hope eventually to raise the ceiling which has been placed on universities as regards the recruitment of students, but I can give no date for that.

Lord Richard

My Lords, lest it be left unanswered, and so that it does not become set into the fabric of discussions on the Dearing Report, at this stage we do not propose a two-day debate on it.