Teaching and Higher Education Bill [H.L.]

HL Deb 02 March 1998 vol 586 cc1036-86

Consideration of amendments on Report resumed on Clause 16.

Lord Renfrew of Kaimsthorn moved Amendment No. 51A:

Page 12, line 37, after ("terms,") insert— ("() the Secretary of State has first commissioned an independent view and published the findings,").

The noble Lord said: My Lords, there is real anxiety that the Government will, despite their present protestations, at some future date use the powers of the Bill to increase the tuition fee, which is compulsorily payable, above the figure of 25 per cent. proposed by Dearing, which is represented in the Government's current figure of £1,000. But, in addition to the need for an affirmative resolution in this matter, the Dearing Report proposed a further safeguard. Its Recommendation 79 proposed, that it ensures that the proportion of tuition costs to be met by the contribution cannot be increased without an independent review and an affirmative resolution of both Houses of Parliament. The contributions made by graduates in work in this way should be reserved for meeting the needs of Higher Education".

However, the Government, while accepting the tuition fee concept from Dearing, and the provision for an affirmative resolution, says on page 55 of the new glossy document Higher Education for the 21st Century, Response to the Dearing Report, the Government does not see the need also for an independent review".

There are anxieties here that a future Administration might well seek to increase the proportion of the total tuition costs which would be charged through a tuition fee. I have in my hands a letter from the Students' Union of the University of Wolverhampton referring to an unpleasant experience in the Antipodes. It says, The [present] Bill is skeletal and leaves the powers given to the Secretary of State wide open and without detail. We find this alarming, especially when we see how the percentage of tuition fees charged in places such as Australia has increased dramatically over recent years, from 23 per cent. to an average of 45 per cent". What Dearing has already proposed is, in many quarters, felt to be bad enough. When the Government set aside the safeguards suggested by Dearing, it is time to smell a rat. I think it is necessary that, in addition to the affirmative resolution procedure, there should be some independent review as proposed by Dearing. So, I beg to move.

Baroness Blatch

My Lords, I rise to support my noble friend Lord Renfrew. One's suspicions are aroused when, in response to the Select Committee report, the Government appear to see no reason why an independent committee should be established to consider any increase in tuition fee charges. Contrary to what the Government said on that occasion, it would not necessarily mean that any increase in grants or fees paid to students, however minor, would have to go before Parliament. That was the argument used by the noble Lord, Lord Whitty, at a previous stage. However, it would mean that an independent review, which is what my noble friend is seeking, would be able to give an independent view of the fairness and appropriateness of the case for any increase. That would make any changes to the level of tuition fees paid by students more transparent. We think that it is the transparency that is important.

It is deeply worrying that the independent review, which was recommended by the Select Committee, has been conveniently dropped by the Government. I know that students are particularly worried about this. It may well be that they are reading more into it than is appropriate, but the Government should not use the argument that Parliament will be bothered by itty-bitty pieces of legislation for very minor changes. That is not the argument that I am advancing in support of my noble friend. I am saying that there should be an independent review body to consider any increases that may be suggested so that we do not end up going down the Australian route. It is true that, since the introduction of those proposals in Australia, fees have risen; the threshold at which post-graduate students are required to start repaying their loans has been lowered, and applications for places have certainly declined, particularly from mature students. That result is mirrored here in the United Kingdom for the coming year. Furthermore, the funding crisis which the proposals set out to address in the first place has not been resolved and, hey presto, in Australia yet another review is pending.

Great disquiet has been spread among students and they are fearful about what the Government may do in the future. I believe that the Government should either accept my noble friend's amendment or accede to the recommendation of the Select Committee that there should be an independent review to act in the interests of the students.

Lord Whitty

My Lords, I recognise that the noble Lord, Lord Renfrew, has reflected the anxieties in the student community. Nevertheless, I believe that those anxieties are misplaced in view of what the Government have already said and in view of what we intend to be in the Bill. The Dearing Report recommended that the proportion of costs to be met by student contributions should not be increased without an independent review as well as an affirmative resolution of both Houses. However, that was in the absence of any explicit and clear government commitment reflected on the face of the Bill. We have said that we intend that the maximum annual student contribution should remain broadly at 25 per cent. More importantly, we are seeking an explicit provision in Clause 16(5) that parliamentary approval should be required before we can increase the maximum annual contribution by more than the rate of inflation—in other words, there is a built-in control. We start from a figure of 25 per cent. and we cannot increase it by more than the rate of inflation without parliamentary approval. When Dearing was considering these issues, there was not the commitment—and certainly not the draft clause—which limited us, without parliamentary approval, to the rate of inflation.

Baroness Blatch

My Lords, can the noble Lord point to where in the Bill there is an absolute guarantee that fees could not rise beyond 25 per cent?

Lord Whitty

My Lords, Clause 16(5) provides that we would not increase it. We need a certain flexibility. We can increase it by less than the rate of inflation, but we are limiting any increase to the rate of inflation. That is a changed situation from that which faced the Dearing Committee and the immediate comment after the Dearing Report. We are committed to not raising it significantly differently from the 25 per cent. which Dearing recommended. That guarantee should convince the student community that we are committed to not increasing the proportion in the way that has happened in Australia. I give that commitment again tonight. I hope that in the light of that the noble Lord can withdraw his amendment.

8.45 p.m.

Lord Renfrew of Kaimsthorn

My Lords, I am grateful to the noble Lord for that explanation which gives some encouragement. I am aware also that circumstances have not allowed us this evening to discuss another safeguard which would have been offered under Amendment No. 46, so it may be better to reserve these matters for further discussion at Third Reading if it then seems appropriate. I thank the noble Lord again, and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 52 not moved.]

Baroness Blackstone moved Amendment No. 53: Page 12, line 40, after ("subsection") insert ("(3A)(a) or").

On Question, amendment agreed to.

Baroness Blatch moved Amendment No. 54:

Page 12, line 49, at end insert ("(9) A statutory instrument containing the first regulations under any provision of this section shall be laid in draft before, and shall be subject to approval by resolution of, each House of Parliament. (10) A statutory instrument containing the second or subsequent regulations under any provision of this section which is made without a draft having been laid before, and approved by resolution of, each House of Parliament shall be subject to annulment in pursuance of a resolution of either House of Parliament.").

The noble Baroness said: My Lords, in moving Amendment No. 54, I should like to speak also to Amendments Nos. 69 and 71. I return to the specific recommendation of the Select Committee on Delegated Powers and Deregulation. As I said at a previous stage, this Chamber has a 100 per cent. record of always agreeing the recommendations of that Select Committee. I believe that there should be no exception here. I beg to move.

Earl Russell

My Lords, I am happy to support this amendment. I have here the recommendation of that Select Committee. It states: We invite the House to consider whether the subject matter of the regulations under section 16 is so important that the bill should be amended to require affirmative procedure for the first regulations". I explained in Committee why that is the strongest wording that the committee puts forward.

I agree with the noble Baroness, Lady Blatch, that this Chamber has so far accepted all the recommendations of that Select Committee. No rule is true forever, but I have been shown no reason why this should be the first occasion for departing from it.

Baroness Blackstone

My Lords, Members of your Lordships' House will see that I am proposing amendments to Clause 25 which have a very similar effect to that which I believe the noble Baroness, Lady Blatch, is seeking here. Clause 25 provides for the making of regulations and orders under this Bill and is, therefore, the more appropriate place to bring forward amendments of this type. Therefore, I very much hope that the noble Baroness will feel able to withdraw the amendment.

I also hope that my amendments need not detain us for very long. They are very similar to those tabled by the noble Baroness, Lady Blatch. They require the use of the affirmative resolution procedure for the first set of regulations made under Clause 16. The last of them makes parallel provision for Scotland by amending the Education (Scotland) Act 1980, under which the equivalent Scottish regulations will be made. They also provide for the possibility of a choice in future years between the affirmative and negative procedures. As the noble Baroness is aware, that is the approach favoured by the delegated powers scrutiny committee.

The student loans regulations for the academic year 1998–99 will be made under Clause 16 and under the equivalent Scottish provision; and they will come to your Lordships' House before the Recess. I remind noble Lords of the undertaking that I have already given that the student support regulations for the academic year 1999–2000 will also be subject to the affirmative procedure. These amendments will enable us to honour that important commitment. Furthermore, they will enable regulations to be considered under the affirmative procedure in subsequent years if those regulations introduce substantial changes. For example, such changes may include the extension of eligibility for support to different groups of students or substantial variations to the way in which the level of repayment is calculated. I stress that currently the Government have no such changes in mind. We undertook to reflect on what was said in Committee about the report of the Delegated Powers and Deregulation Committee. We have done so. I hope that these amendments fully meet the concerns, and I commend them to your Lordships.

Baroness Blatch

My Lords, I thank the noble Baroness for her clarification of the amendments that she has tabled. Perhaps it is due to my own inadequacy, but I need to be absolutely certain that they meet in every way both the recommendations of the committee and the concerns that I have expressed. I am relieved by what the noble Baroness has said. However, one of the examples that the noble Baroness gave was the possibility of a change in the level at which students repaid loans. That was precisely what happened in Australia. The level at which students began to repay loans was changed quite dramatically but not in favour of the students.

Baroness Blackstone

My Lords, I should like to reassure the noble Baroness. The Government have absolutely no intention of changing the 25 per cent. level. However, I said that at some future date perhaps there would be another government—maybe a government formed by the party of which the noble Baroness is a member—that wanted to make a change and at that time regulations subject to the affirmative procedure would be in place.

Baroness Blatch

My Lords, I am delighted by the intervention of the noble Baroness. I am reminded that there has been almost a switch in positions. The noble Baroness at one time pressed me and said it was very important that the House should take a view on any changes. I am very happy to be the one who today presses the noble Baroness. But the noble Baroness has made my point. I was delighted that in giving her example she said quite clearly that the Government had no intention and had no plans whatever to make a change. However, for the purposes of Pepper v. Hart I believe it is very important to have it on the record. Subject to reading carefully what the noble Baroness has said, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 18 [Imposition of conditions as to fees at further or higher education institutions]:

Baroness Perry of Southwark moved Amendment No. 55: Page 13, line 45, after ("secure") insert (", to the extent of its powers,").

The noble Baroness said: My Lords, Amendment No. 55 represents my second attempt to try to persuade the Government that the current wording of Clause 18 gives rise to a problem with specific reference to the Universities of Oxford and Cambridge. Clause 18 gives the Secretary of State power to impose conditions on the grants by a funding council relative to the fees that universities and colleges of further education charge their students. Subsection (3) specifically gives the Secretary of State power to impose conditions relative to higher education. In subsection (4) it is provided that the Secretary of State shall require the governing bodies of such institutions to ensure that neither they nor any institution connected with them charges more than the prescribed amount of fees—a sentiment with which I heartily concur.

There is a real constitutional and legal difficulty for the Universities of Oxford and Cambridge. In particular, Clause 18 goes on to provide that the funding council is required to impose a sanction on any university if it or any institution connected with it charges more than the prescribed fee. The difficulty is that in both Oxford and Cambridge the colleges are quite clearly connected with the universities in many ways. I am quite sure that on any reasonable definition of "connected with" the funding council will be convinced that the colleges of the universities are connected with the universities.

However, the legal position begins to fall apart when one considers that the governing bodies of neither Oxford nor Cambridge has any power whatsoever over the fees charged by the individual colleges of those universities. We may deplore this; it may be inconvenient, or it may cause all kinds of difficulties because of the wording of the Bill, but it is a fact. The colleges are chartered, independent institutions. Many of them under their statutes have not only a right but a duty to charge fees which cover their own tuition costs. The university cannot tell them not to do it or stop them from doing it if it tries. I have every expectation that the colleges at present have no intention of doing this but, as the Minister has just reminded us, time moves on and the current heads of Oxford and Cambridge colleges and their governing bodies will change.

It may be that if a college found itself in financial difficulties it would have a duty to charge its students additional fees, at which point the mechanism set out in the Bill would be triggered. The funding council would be obliged to sanction the university by taking away some of its grant. The college would not itself be subject to sanction but would have caused this very tough sanction to be imposed on the university; in other words, the university would be punished for something over which it had no control. That is not natural justice. I am assured by both universities that their advice is that should this happen and the matter came before the courts the Government would not have a leg to stand on in arguing that they had a right to sanction the university itself. I hope that the Minister can be persuaded that the right course is for the Government to encourage civil servants to come up with a different form of words applicable to those two universities. If not, although I have no intention of dividing the House tonight. I shall return with the same amendment on Third Reading. I beg to move.

Lord Renfrew of Kaimsthorn

My Lords, in rising to support my noble friend Lady Perry I should like to remind the Minister that I indicated at Committee stage how with a skeleton Bill of this kind it was sometimes difficult to understand the substance. In the debate a week ago on the Motion that the Report be now received I asked the noble Baroness a question. I declared an interest at that time because of my association with a college at Cambridge. I asked how the Bill bore upon the fees of colleges at Oxford, Cambridge and elsewhere, particularly Durham. The answer of the noble Baroness, which I do not believe to be correct, was: The noble Lord. Lord Renfrew, will forgive me if I do not become involved in the issue of college fees at Oxbridge. That is quite a different matter. It is not an issue for this Bill".—[Official Report, 23/2/98; col. 420]. But the question of how the Bill bears upon college fees and to what extent is indeed an issue. My noble friend Lady Perry said at Committee stage: we would hope that the Government would address the question of how to penalise the colleges should they charge top-up fees and not try to penalise the university which has no control over what the colleges do [in financial terms]".—[Official Report, 22/1/98; col. 1734] The noble Lord, Lord Whitty, replied: we are looking at mechanisms for dealing with the colleges in Oxford and Cambridge. We may well need to look further at the wording". That was a very wise remark. However, we have absolutely no evidence that the Government have yet looked further at the wording. Certainly, they have tabled no amendments at Report stage. The observation of the noble Lord, Lord Whitty, scarcely tallies with the reply subsequently given to me by the noble Baroness, Lady Blackstone. I submit that it illustrates the confusion which surrounds Clause 18. We are receiving different responses from government spokesmen on different days in respect of a matter which is of serious importance to the universities of Oxford and Cambridge. At present, the Bill provides no explicit mechanism for dealing with college fees. I reiterate, as did my noble friend Lady Perry, that top-up fees are not the agenda of the colleges. It is not clear how top-up fees would be dealt with.

As I mentioned during the debate on the Motion that the Report be now received, I have had sight of a draft amendment to Clause 20 in the name of the noble Baroness, Lady Blackstone, making explicit reference to college fees but not in a way which would recognise their particular features. Fortunately, the amendment, Amendment No. 67, no longer contains that element.

The Bill appears to treat college fees precisely as though they were top-up fees. I say "appears" because I do not understand it too well. We have received no explanation from Ministers other than the general statement that they might look at the wording. If they have done so they have not yet communicated the results of their ratiocination. The Bill makes no explicit distinction between the fees. That is why its structure is so deeply unsatisfactory and difficult to argue with, as some of us said at an earlier stage.

I make it clear that at this stage I am not arguing against the Government's policy on college fees, particularly as I do not have the slightest idea what it is. The noble Baroness says that it is not an issue for this Bill. But what is an issue, or should be, is the mechanism which the Bill affords for dealing with the matter. The Government may or may not have a policy on college fees, they may or may not tell us what the policy is, but we are debating the legal mechanisms. The noble Lord, Lord Whitty, conspicuously failed to answer the questions put by my noble friend Lady Parry on the second day in Committee and the Minister brushed the point away last Monday.

That is not good enough. If the Government do not yet have a policy or are making a policy on the wing—as on matters such as the gap year, the four years for Scottish students and the means testing of students from the European Community—that is up to them, but we are debating legislation. The Government must have a mechanism or the Bill is defective. The noble Lord, Lord Whitty, says laconically that we need to look at the wording. It is now the Report stage and we are still mired in confusion on this and a number of other issues. I support the amendment.

Baroness Warnock

My Lords, I, too, support the amendment. The colleges have their own charters and are entitled to do what they wish and act as they believe necessary, in many cases for their survival. It is easy to write off such issues as concerning only Oxford, Cambridge and Durham and as of no central importance to the Bill. But if the Bill is not clear, Oxford, Cambridge and Durham will be in real trouble. I share the college of the noble Baroness, Lady Perry. We would not wish to do that. Therefore, I strongly support clarification of the issue at the present time—and there is not much time left.

The Lord Bishop of Lichfield

My Lords, the universities of Staffordshire and Wolverhampton are well established in my diocese in the West Midlands. I therefore share the concern of other Members of this House and of the Minister that all colleges and universities in the UK should flourish equally and as a whole. However, I am among those who are not yet persuaded that to maintain the particular prerogatives of a college at Oxford or Cambridge is to detract from the distinctive ethos and excellence of other colleges and universities elsewhere. I am among those who fear that if by any means extra funds which an Oxford or Cambridge college at present receives are removed or drastically reduced, such colleges are in danger of becoming the preserve of the well off.

That point was made in another debate in your Lordships' House by the right reverend Prelate the Bishop of Oxford. Sooner or later, some of the colleges in the ancient universities may be obliged to charge more, thereby becoming a club for the wealthy. That would mean excluding students who are now there on their academic ability simply because their parents would not be able to afford the extra fees. It would sad if colleges in the ancient universities became clubs for the relatively well off, with all that that could imply for future jobs and careers in this country. There would be an accentuation of the worst kind of élitism.

I therefore support the amendment, with the background of being identified with the establishment of new universities in my region, but in the hope that a way can be found of safeguarding the historic diversity and character of our colleges and universities on the basis of academic ability alone.

Baroness Blatch

My Lords, I support my noble friend's amendment and what has been said by my noble friend Lord Renfrew and the right reverend Prelate the Bishop of Lichfield. The right reverend Prelate had a wonderful ability to show support for the amendment while at the same time understanding the relationship between the old institutions and the rest of the university sector.

A pincer movement appears to be making almost impossible the survival of some of the colleges. That is the only point I wish to make in supporting the amendment. It was November when the Department for Education and Employment received advice on the allocation of college fees. It is time—in fact, one is overdue—for a response from the Government. It is highly suspicious that we might not receive that response until the Bill has passed through this House. That would be unfortunate. The amendment is tabled not only in the vacuum of not knowing precisely what the Bill means, but in the vacuum of not knowing what the DfEE plans in terms of allocating funds to college fees.

Baroness Park of Monmouth

My Lords, one of the great problems about all this is the continuing uncertainty. At present in Oxford it is proving virtually impossible to make long-term appointments. The colleges do not know where they stand. They do not know whether they dare commit themselves to the costs of a long-term, permanent tenure. Therefore, very many short-term appointments are being made.

That will have a serious effect for several reasons. First, graduates will be deterred from the academic life because they see that there is no permanent future in it. Also, because of the uncertainty, the colleges are having to think about whether they can continue to afford to sustain endangered subjects; whether they can afford to have three tutors in chemistry or whether it had better be two. That will be to the disadvantage of students from every financial situation. They will not be able to be there because there will be no one to teach them. There is a serious problem of long-term uncertainty which needs to be resolved.

Earl Russell

My Lords, I do not believe that the Government have realised quite how modest this amendment is. It requires governing bodies to do things to the extent of their powers. I hope it is not the Government's view that they should do things beyond the extent of their powers. We are all bound to respect the law. I hope the Government realise what are the limits of the relevant powers.

Lord Whitty

My Lords, as the noble Baroness, Lady Perry, spoke, it became clearer as to what is behind the amendment. I am not entirely sure that subsequent contributions have helped because we have gone into areas concerning the future of Oxbridge colleges and their funding which are not matters for this clause or for us today.

On the face of it, the amendment is unnecessary in that, as the noble Earl has just said, we should not expect a governing body to act beyond its own powers. Indeed, we could hardly legislate to that effect. Therefore, the amendment is otiose, as they say.

However, I now understand more clearly what is in the noble Baroness's mind in relation to the amendment; namely, the concern that Oxford and Cambridge in particular, and possibly other institutions, do not have sufficient power over connected institutions to ensure that they do not charge top-up fees. I understand her view that it is those colleges which should be penalised rather than the university. Of course, having said that, there may some room for debate as regards the interpretation of what is and what is not within the governing body's powers. I still find it difficult to accept that universities should continue to receive grants for students attending connected colleges if they are not prepared to use their powers to the full to ensure that those students are not charged top-up fees.

However, having said that, I recognise the problem. As the noble Lord, Lord Renfrew, said, we have looked at the wording, but we do not believe that any amendment should be made to this clause. Rather than amend subsection (4), we are prepared to look again at that part of subsection (8) which refers to fees payable to connected institutions with a view to bringing forward in another place an amendment clarifying that reference. That would be an amendment to subsection (8) to clarify the links between funding council grants for certain students and the aggregate fees that may be charged to those students by both parent universities and any institutions connected with them with a view to ensuring that institutions can be penalised for top-up fees charged to students only if they are claiming funding council grants for those students.

Therefore, we intend to come forward in the Commons with amendments to subsection (8). I hope that, at least to some extent, that commitment will reassure the noble Baroness, Lady Perry, and that, in the meantime, she will be prepared to withdraw the amendment.

Lord Pilkington of Oxenford

My Lords, before the Minister sits down, my noble friend asked when the Government are going to give an opinion about Oxford and Cambridge fees. No answer has been given to that question.

Lord Whitty

My Lords, I have said already that that is not of relevance to the Report stage of the debate. However, the answer is that that will be done shortly.

Lord Pilkington of Oxenford

My Lords, as ever.

Baroness Perry of Southwark

My Lords, I thank the Minister for his reply and his acknowledged understanding of the point I was trying to make. I thank other noble Lords who spoke on related matters.

I am rather disappointed that we are being offered an amendment which will come not to this House but to the other place. Many people in this House understand the issue very well and they would have a particular interest in ensuring that what is provided is something which can be accommodated in terms of the legal structure of Oxford and Cambridge.

Although I know that Third Reading is almost upon us, I hope it may be possible for the Government to bring forward an amendment at that time so that it can be considered here before the Bill leaves this House rather than waiting until it reaches the other place. I shall look forward to seeing an amendment tabled in time for Third Reading. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 56 to 59 not moved.]

9.15 p.m.

Baroness Blackstone moved Amendment No. 60:

Page 14, line 18, at end insert— ("() The Secretary of State shall not exercise the power to prescribe descriptions of courses under subsection (4) in such a way as to discriminate

1. (a) in relation to courses of initial teacher training, between different courses on the basis of the subjects in which such training is given, or
2. (b) in relation to other courses, between different courses at the same or a comparable level on the basis of the areas of study or research to which they relate.").

The noble Baroness said: My Lords, at every stage of this Bill, we have heard allegations in this Chamber that Clause 18 poses a threat to academic freedom. I do not believe that to be the case. But, nevertheless, I share and understand the value which many in your Lordships' House and outside attach to the principle of academic freedom.

The noble Earl, Lord Russell, along with his noble friends, has tabled the same amendment—Amendment No. 61—as he put down in Committee, with the aim of restating the principle of academic freedom that is enshrined in the Further and Higher Education Act 1992. In responding to that amendment in Committee, I said that I fully understood the motives behind it and sympathised with its aims, even though most of it was unnecessary. More than that, I promised that we would look with the CVCP at Clause 18 to see whether an appropriate amendment could be drafted to ensure that, as far as possible, conditions on grant to control top-up fees could not be framed by reference to courses in particular subjects.

Amendment No. 60 fulfils that commitment. Subsection (4) of Clause 18 makes provision for courses of prescribed description provided by higher education institutions to be covered by conditions on grant controlling top-up fees. It is for the Secretary of State to prescribe the courses in regulations. But subsection (8) already makes clear that such courses may not include part-time or postgraduate courses, other than those of initial teacher training. The amendment adds to that safeguard by preventing the Secretary of State, when he draws up the regulations, from singling out courses at any particular level by area of study or research.

That makes it absolutely plain that the Secretary of State cannot, through conditions controlling top-up fees, affect the freedom of universities to decide which courses to offer, which subjects to teach or which areas of research to pursue. He can, thus, prescribe first-degree courses or courses leading to a diploma as those that can be covered by conditions on grant controlling top-up fees. But he cannot name in those conditions particular areas of study or research—whether any branch of medicine, science, technology, social science, arts or humanities.

The only exception is initial teacher training; and it has been necessary to deal with courses in initial teacher training separately for technical reasons. That is because not all courses of initial teacher training lead to a first degree. Some courses lead to a postgraduate certificate. Other courses—for, say, intending craft instructors who are seeking a qualification to teach in FE colleges—lead to an undergraduate certificate below first-degree level. We want to ensure that, whatever the level of the course, students on courses of initial teacher training should still receive financial support for fees from public funds. We have made clear all along that we need to be able, if necessary, to control any top-up fees that may be charged to students on those courses. That is why, paradoxical though it may seem, we have made special provision in this amendment for courses of initial teacher training to ensure that they are treated like first degree courses and not differently.

However, so as to ensure, again, that the Secretary of State cannot, through conditions controlling top-up fees, interfere in universities' freedom to decide which courses of initial teacher training to offer, this amendment prevents him from singling out such courses by subject. Thus the relevant regulations could prescribe that conditions might apply to all courses of initial teacher training. But they could not prescribe that conditions might apply to courses of initial teacher training specialising in any particular subject—such as social science—but not in another, such as the physical sciences.

I made plain in Committee the Government's commitment—and it is a total commitment—to upholding the principle of academic freedom. I hope that the amendment before the House speaks louder than any words that I could utter and enshrines that commitment in the Bill. For its part, the Committee of Vice-Chancellors and Principals has made clear in its briefing that, government amendment (No. 60 on the Marshalled List) meets universities' concerns about the protection of academic freedom". I very much hope that it will also meet the concerns of your Lordships' House. I beg to move.

Earl Russell

My Lords, I thank the noble Baroness for the amendment. Indeed, one must always thank Ministers for small mercies. But I think that this is a very small mercy. If the Minister compares the words of Amendment No. 60 with those of Amendment No. 61, which I do not intend to move at this time of night, she will observe a very considerable discrepancy. I grant that Amendment No. 60 prevents the Government from distinguishing between different academic subjects. As far as I can understand it, it does not prevent the Government from imposing a term or condition such as, for example, the abandonment of the tutorial system on all academic subjects. I do not know why not. I can find nothing in Amendment No. 60 or any of the material in Amendment No. 61 relating to the academic conditions for the selection of staff or the admission of students. Can the Minister tell the House why not?

Baroness Blackstone

My Lords, I have made clear in Committee and in speaking earlier this evening that I fully understand the motives behind the noble Earl's amendment and I sympathise with its aims. I know that university autonomy is a sensitive issue for vice-chancellors; after all, I have been one. I quite understand concerns about academic freedom. I can only assure the noble Earl once again that this Government are committed to upholding the principle of academic freedom. We have no intention of prescribing how universities should carry out their teaching, to refer to one example that the noble Earl has just mentioned. We have no intention—under the 1992 Act I do not think the Government would be able to do so of prescribing how any university should select its students. I do not think that I can say any more than that. I have tabled what I believe to be a helpful amendment to meet the concerns of your Lordships' House on the issue of academic freedom in relation to the kind of subjects that are taught. Of course that is a matter for the universities, as is the question of how they carry out their teaching. It is quite unnecessary for us to bring forward an amendment that prescribes the powers of the Secretary of State in relation to teaching methodology or indeed the selection of students.

Lord Pilkington of Oxenford

My Lords, with the leave of the House, I have a worry which the Minister will most probably be able to dismiss. It seems to me that the Government have taken control of university tuition fees. The financing of universities will now be a matter for the Treasury and the university concerned. Let us suppose the universities want to raise tuition fees. In the old days they negotiated with the HEFC. Now they have to negotiate with the Treasury. The Minister shakes her head, but where will the money come from? The Minister's colleagues look worried. If universities want to raise tuition fees two years from now, how would they do that?

Baroness Lockwood

My Lords, before the Minister replies I wish to ask her a question. As I understand it, there is no difference between the funding of universities and the role of the Higher Education Funding Council as proposed under the Bill, and the position which exists at the present time. Would it be appropriate to prescribe in a Bill what the academic responsibilities should be of either the governing body or a vice-chancellor of a university? Would that not in itself be breaching the principle of academic freedom?

Baroness Blackstone

My Lords, I say to my noble friend Lady Lockwood that I think I have already answered that question. The Government have no intention of interfering in the academic decisions that are made by our universities. I am puzzled by the point raised by the noble Lord, Lord Pilkington, as it does not appear to have anything to do with this amendment. It is perhaps relevant to the subject of later amendments when we shall discuss whether top-up fees should be included on the face of the Bill. All I can say to the noble Lord is that the Government have not taken control of university tuition fees. In this clause they are taking a reserve power to prevent universities charging top-up fees. It is a power that we hope we shall never have to use.

On Question, amendment agreed to.

[Amendments Nos. 61 and 62 not moved.]

Earl Russell moved Amendment No. 63: Leave out Clause 18.

The noble Earl said: My Lords, I beg to move that Clause 18 do not stand part of the Bill. I must declare one more interest. I am advised on this by the principal of my own college who says among other things, "In my dealings with foreign delegations considering to what country their students should be sent, reassurance is often sought that the government of the day do not have control of the university. It would be difficult to have to say that the law provides power for a Secretary of State to impose conditions on the amount and nature of fees to be charged to students—conditions which may impact on the general quality of education we can provide".

I am in agreement with that view. Clause 18 is not fit for a curate's breakfast. No parts of it are excellent. It is objectionable both in whole and in part. Clause 18(2) is a Henry VIII clause. It was not identified as such by the Delegated Powers and Deregulation Committee.

Clause 18(3) deals with the matter we have just discussed. I am not in the least satisfied by the Minister's answers. Ministers always say that they do not intend to interfere with academic freedom. What Ministers intend to do is to save money; and they do that absolutely regardless of the effect on academic freedom. That is an old story and it is independent of party.

Clause 18(4) is a power to impose a cap—the reserve power to which we referred just now. It gives the Government in the end ultimate power to determine costs. Clause 18(6) is in effect a power to exclude from the state system those who do not co-operate with that cap. That is intended, I think, to be a bluff. One day that bluff may be called. The end of a state-funded system of higher education would indeed be a disaster. If the clause reaches the statute book I, for one, cannot be certain that that will not happen.

The clause strikes me as being somewhat like sending someone to sea in a rather rickety submarine which has suffered a certain amount of war damage, and then barring the escape hatch. The power to charge a top-up fee is precisely that; it is an escape hatch. No one wishes to exercise the power any more than he wishes to escape from inside a submarine in deep water. But there may be circumstances when it is not possible to provide a competent academic education for the amount the Government provide. The options may be only to do that or close down. It is in that spirit that I describe the provision as like closing the escape hatch of a submarine.

Perhaps a more appropriate parallel is the air force in World War I. It appeared to those in command that it would diminish the courage of those who were flying if they were allowed parachutes. So it was decided that they should not be allowed parachutes for fear they might desert their planes and avoid battle. It is not my intention, nor I believe the intention of anyone else, that any university should charge top-up fees. But it appears to me to be necessary that in the process of adjusting what shall be paid for the support of universities there should be a process of negotiation.

It is entirely proper that the Government have the final say in how much public money should be spent. Where the Government cannot have the final say is in deciding how much that money will buy. For that is to enter an area where government's competence is limited. It also breaks the basic principle of the market: the Adam Smith principle that a deal must be in the interests of both sides. For if the Government have the power to determine both how much they will spend and what that money will buy, we then get into what is best described as the Aeroflot system of funding. I have not forgotten the noble Lord, Lord Boyd-Carpenter, asking in this House that the Government should deny landing rights at Heathrow to Aeroflot for reasons for air safety.

There is here an issue of academic freedom. At Second Reading the noble Lord, Lord Whitty, said that if that was so, he did not understand what the words "academic freedom" meant. The content of courses inevitably has implications as to costs. If the cost of a course cannot be decided, its content cannot be decided; library or laboratory provision cannot be decided upon. So in the end you are told, as the Treasury always does, that you have to cut your coat according to your cloth. If that principle gains control, there will be no way in which we can decide upon the content of courses according to their academic merit. When that happens, I do not know whether it will be worth preserving a state-funded system of higher education any longer. I should regret its disappearance desperately.

The one serious argument from the other side during our discussions was put at Second Reading by the noble Baroness, Lady Kennedy of The Shaws. I gave her notice that I intended to refer to it. She raised the point of access. I care about that as deeply, I believe, as she does. I have not forgotten one of my school contemporaries who was in the first year with me at Oxford referring to somebody who was 10 times the scholar he would ever be as, "You know, the sort of person who ought not to be here", simply because he had a Lancashire accent. I have no truck with that sort of attitude.

But I also remember the noble Baroness, Lady Symons of Vernham Dean, a few weeks ago answering a Question from my noble friend Lord Carlisle about why there were not more ethnic minority ambassadors. She had some suggestions as to things that might be done, as indeed do I. But in the end her answer was that the problem was lower down. It was perfectly obvious both that that answer was true and that she was having great difficulty putting it over to the House. If people ask about the proportion of people from state schools in universities, that is very often the answer. The place where we need to look is not university admission procedures, but school libraries.

The other response is: what is the point of providing more access if that to which we are providing access no longer deserves the name of higher education? To say that more and more people should receive higher education—which is a good proposition—is no excuse for ensuring that what they receive does not deserve the name of higher education at all. If this clause remains in the Bill, that is what will happen. I beg to move.

9.30 p.m.

Lord Beloff

My Lords, I support the amendment proposed by the noble Earl, Lord Russell, although from a rather different perspective. Unlike the noble Earl, I hope that there will be top-up fees in many universities. I believe it is the only way in which we can meet the type of model which the noble Lord, Lord Desai, outlined for us in a debate on the Bill earlier today; that is to say, to depart from the obviously catastrophic attempt to finance on equal terms out of the public purse 150 institutions of higher education in order to proceed to something closer to the American model where a range of different institutions are funded in different ways, partly from the public purse, partly from private purses and partly from students, making it possible, as the noble Lord, Lord Desai, pointed out, for entry not to be governed by the ability to pay. That is the key to a proper system of higher education.

The cause of our present problems is a notorious failure on the part of the Department for Education over a period of years to foresee that it was creating an insoluble problem. It postulated a growth in the number of institutions and students without reference to whether it would be able to pay for those students to receive the kind of instruction to which they felt they were entitled. In addition, to take up a point made by the noble Lord, Lord Glenamara, the assumption was that there would be places for everyone with suitable ability; but, in order to maintain the pace of expansion, the ability threshold—perhaps not in terms of individual talent, but in terms of preparation for university work—was allowed to fall.

I believe that the noble Earl, Lord Russell, is right. If this provision remains in the Bill, we shall eventually see a collapse of the higher education system funded primarily by the state without making it possible for the lacunae in that system to be filled by enterprise, different forms of financing and endowment and different levels of fees.

I know that this is wholly different from the view of the Government as it was expounded. They have not been able to convince people with direct experience of universities today that what they propose is workable and that they can somehow produce a system which will be generally acceptable and admired internationally, as the British system has been in the past, without some departure from their rigidity on the matter of fees.

The noble Lord, Lord Whitty, mentioned that the Bill would be further amended in another place. I hope that the Bill will never reach another place. After all, the Government have been defeated twice today on amendments of importance, although not as important as the one we are discussing now. They know perfectly well that they are riding for a fall, even if the amendment of the noble Earl, Lord Russell, is not accepted. The general university world will not accept their outlook. It would be far better for them to let things ride for a year or two, to look at what should be done about the financing of higher education and to come back with a Bill which is not only better prepared but also better drafted so that much time will not have to be spent in your Lordships' House in trying to penetrate the intention of the Government on this or that issue.

This is a very sad matter. It is sad to have to speak in these terms in your Lordships' House, but I find it impossible to do otherwise.

Lord Wallace of Saltaire

My Lords, I rise to support my noble friend Lord Russell on this amendment. This clause is not a necessary part of the Bill and it seems to me extremely important to remove it. It has an authoritarian style. Indeed, to use a word I know the Government do not like, one might almost say that it is a socialist measure which seeks to impose uniformity on 120 or 130 higher education institutions which revel in their diversity. It is an accumulation of executive power. The Minister herself has talked about reserve powers. Generally stated, it is a minefield of complexities of interpretation and it takes us down a road which we should not at this stage be following.

What we are doing in this Bill, reluctantly and with the opposition of many of us on these Benches, is moving away from a state-funded system towards a system in which universities are going to have to find more resources from non-state sources. The Government wish at this stage, as they start out, to insist that their hands are tied behind their backs and that, as we start out—not knowing how far we will go, not knowing where the £1,000 for the first year—will move in the second or third year—all higher education institutions, perhaps with the exception of Oxford and Cambridge, will have to charge the same amount.

I speak as an academic at the London School of Economics, and one has to think about the other quality universities in this country. We have heard a great deal about Oxford and Cambridge. There are other world-class universities in Britain. We have managed to survive so far by expanding the number of students from outside the European Union. The last government used to reply, every time we protested about the squeeze on our funding, that we should merely attract more students from outside the European Union. We have reached the stage where one of the priorities many of us in my institution now have is to increase the number of British students in our institution, because that seems to us to be one of our fundamental functions.

None of us wish to move down the road towards top-up fees, but if it is a choice between maintaining the quality of British higher education institutions in years to come and accepting that, like universities on the continent, we will allow our quality to fall as numbers expand, then we have to have that option in front of us. I regret that, but that may be, as my noble friend Earl Russell has said, one of the reserve powers we need in negotiating with the Government—the future government—over future funding.

Ministers currently say that they are not intending to use these powers. This House should make it very clear that it does not therefore wish to give Ministers these powers. The British constitution operates far too much already on the basis of executive power and parliamentary acquiescence. To remove this clause from the Bill would be to mark that Parliament wishes to insist that it does not go too far in giving government the benefit of the doubt.

Lord Baker of Dorking

My Lords, I strongly support the amendment moved by the noble Earl, Lord Russell. This is a very unhappy clause, and I suspect that several members of the Government are rather unhappy about it. Clearly, it has a confusing implication and consequences which they are now slowly beginning to recognise.

We saw one aspect of that tonight in the earlier debate on Oxford and Cambridge fees, when the Ministers recognised that there is a real issue here: namely, if one penalises a university like Oxford, can that penalty be passed on to the individual colleges? The Minister has indicated that there will be some amendment to subsection (8) of this clause. I would not welcome that kind of amendment, because then one has an immediate problem, which I indicated at Second Reading.

In a debate on a procedural matter I remember the noble Baroness, Lady Blackstone, saying that it was not flagged up, but, earlier in the debate on this whole question of the powers of old chartered bodies, I did in fact rather immodestly mention this at Second Reading, as when I was the Secretary of State I had my own fingers burnt on exactly the same issue dealing with academic tenure. I found that in order to introduce a reform—not impose a will—I had to establish a great institution, and the commission took five or six years. The Ministers, when they come to deal with that little aspect of this clause, will find that they have the same sort of problem.

The problem with the clause—I share the anxieties expressed by the noble Lord, Lord Wallace—is that it will impose a straitjacket upon the future development of universities. No one can foresee how universities will develop; no one could have foreseen 10, 15 or 20 years ago the nature of higher education in our country today, the variety and depth of courses.

The concern of the Government is that by introducing tuition fees some universities and colleges may charge top-up fees and become, as the right reverend Prelate said, clubs of the rich—rich, dull students attending only because they are rich. I must say to the right reverend Prelate and to the Government's worries about this that the country that charges the highest top-up fees has the highest quality universities. That is not the pattern that developed in Harvard, Princeton, Berkeley and the other great American universities where the fees are infinitely higher than the levels about which we are talking now. They have not become playgrounds for the rich playboys and playgirls of America. If they did, their reputations would fall and students would not want to go there. That is a self-correcting mechanism for which we should allow flexibility in the future.

When we introduced per capita funding for universities and student loans I hoped that one day we would set out on a path which would make our universities truly independent, and those would be, together with endowments, the main sources of income. In that case the Government's interference and the duties and the need for a funding council would disappear. I hope that funding councils will eventually disappear. I am sorry to say that in the presence of the noble Lord, Lord Davies, who has just become the chairman of one of them. I do not wish him personal redundancy, but the sooner he disappears from the scene in his official capacity, the greater will be the independence of higher education in our country. I believe we want a more self-correcting mechanism in the funding of higher education.

I am disappointed that the clause appears to be going backwards. It is taking greater powers of direction and that will create a tension and restriction which higher education does not want. It is not in the best interests of higher education. I do not argue for the rich to go to high colleges, and so forth; I share the same anxieties in that regard. I am concerned with the quality of higher education.

Let us suppose that a new course is established in some area of academic study about which we have not yet thought and suppose the university says that the cost of the course is £8,000 a year. Overseas students will pay that. In many cases they come from countries with a much lower per capita income than this country, but they are prepared to pay it. However, we will only charge English students £1,000. Suppose, as a result of that, that the sums cannot be made to add up and the best teachers cannot be attracted to take the course—it is not an existing course, but a new course. It would be an infringement upon the academic freedom of that institution to offer that course and we cannot get away from that.

For all those reasons, I would not like to see this clause stand part of the Bill. The anxieties expressed by my noble friend Lord Beloff, the noble Earl, Lord Russell, and the noble Lord, Lord Wallace, are real ones and I hope that the Government will think again about this. The interests of higher education in our country are extremely important. It is one of the real jewels in the Crown. We have in this country a number of universities which are the envy of the world. They will become even more the envy of the world with greater freedom and flexibility; not with greater control.

Lord Desai

My Lords, when I was young I was a revolutionary Socialist. I thought that the revolution should happen instantaneously and immediately and I went from A to Z in one fell swoop. Perhaps age, not wisdom, mellowed me.

I know where I want to go, but I do not want to go there through this Bill. The noble Lord, Lord Beloff, correctly described how I would eventually want to see the British university system operating. It will have differentiated fees. There will be no funding councils, better capital markets and lots of freedom for students to work while they learn. However, I would not charge £1,000. As I said at Second Reading, I would charge 1 0,000. The average cost of teaching is £8,000. To that we add £2,000 so that we can give fellowships—merit scholarships—and that is how we will arrive at the American system.

This Bill will not take us there immediately. This is a first small Bill in a system which has been used to a good deal of government control—I shall come to that point with the noble Earl, Lord Russell—and in which we have been used to thinking, as many noble Lords have said, that higher education is free in this country and that we have equal fees and so on. We are breaking away from that system in a very small way. The reason why I am in a dilemma is that I want to go from here further but not through this Bill.

The noble Earl, Lord Russell, said that in a sense only the supplier of education knows the cost of providing good courses and that if you tell that person what to charge then you have violated academic freedom. I have been in the higher education system for 33 years—perhaps not as long as the noble Earl has been—and I have never had the freedom to decide the price I charge for a course. Academic freedom has thrived—this is the system we are trying to defend. In this system we have always had uniform pricing and by and large in this system we have not had freedom to charge any price we like. We are about to enter a stage in which we are breaking the system of free tuition for 18 to 21 year-olds and we are saying they must pay. At this stage there will be a great temptation for the top 10 to 15 universities including the LSE—we have had a good deal of discussion at the LSE about top-up fees—to break out of this system and go immediately to charge £1,000, £2,000 or £3,000 more.

I am rather puzzled by the Liberal Democrats on this subject. Either they want no fees whatever and complete equality or, as soon as you break out, they want lots and lots of inequality. They have to make up their minds about this.

Lord Wallace of Saltaire

My Lords, with respect, diversity is part of what we wish to maintain, a good Liberal value; and uniformity and lower quality are what we fear.

Lord Desai

My Lords, the noble Lord has been as long in higher education as I have been. We have maintained diversity and quality of educational courses with great difficulty and the moral is uniform pricing. I know it does not happen in theory—it cannot happen in theory—but that is the system we have built up. We want to go away from that system. We want to keep as much as possible the diversity of the system and not so greatly increase inequality of the system that it breaks down.

What I see the clause as saying is that there will be no immediate and undisciplined breakaway by the Russell group, or other such group, which will make the universities which are going to toe the line feel very badly done by because they will have to have uniform pricing, they will not be able to charge top-up fees and they will therefore suffer both from a loss of students and from a loss of quality. I see the clause as saying that we will go from here to there, as the noble Lord, Lord Baker, said. He wanted reform. He started in 1990; this is a next step; and perhaps within the next five or six years we will take another step. However, I do not see that this is the Bill in which we want to give that freedom.

I really think that the noble Earl, Lord Russell, is exaggerating the consequences of this clause. Until now we have had no freedom to decide what prices to charge and we have managed to preserve academic freedom. Suddenly, as soon as the Bill is passed, his world will come to an end because he is not allowed to charge a little extra. I do not understand that world. I live in the world of higher education where we try to manage our difficulties.

Earl Russell

My Lords, I am sorry to intervene, but this is the third time that the noble Lord has said that he does not understand. Does he not know enough about the public spending round to appreciate that what comes out of it is the result of a negotiation?

Lord Desai

My Lords, I do. Does not the noble Earl know that the overall culture of higher education funding in this country has been largely of not much choice for the universities as regards what they buy and charge? The same system is going to continue. Academic freedom is not going to die because of the fact that we shall charge tuition fees but not be allowed to charge top-up fees. The system of fees will break up in about five to 10 years. I do not believe that this Bill is the appropriate place to start the process.

Lord Walton of Detchant

My Lords, at this stage of the evening I would not wish to introduce what may be a discordant note. I begin by congratulating Her Majesty's Government and the noble Baroness on the Front Bench on certain features of the Bill. For many years some of us in your Lordships' House attempted to persuade the previous administration of the crucial importance of having a general teaching council, but invariably that proposal was blocked for a variety of reasons.

However, as regards this particular amendment, one of the things that concerns me most is the present state of the universities. They have suffered a 40 per cent. reduction in unit costs over the past 20 years. I wholly accept the concerns that have been expressed by the Government Benches as regards future funding and aspects of student support. I found it extraordinary that earlier tonight Amendment No. 50 was passed by your Lordships' House. That is an amendment which, put on the face of the Bill, will establish the principle of 50 per cent. contribution to student support in tablets of stone and in perpetuity, taking no account of the crucial importance of accepting that loans should also take account of the contribution that students will make in future to their fees.

Having said all that, however, I am deeply concerned about the university sector, which in many respects is in serious difficulty. I believe that the amendment proposed by the noble Earl, Lord Russell, and others is crucial to the future of the sector. How can one tell what the future holds as regards government funding for universities and higher education in the next few years? How can one be sure what future governments will decide in relation to funding higher education? For that reason alone, and as responsible institutions, universities must be allowed some flexibility in being able to raise funds from sources other than government funding in order to support the initiatives in higher education that they wish to pursue. How can one possibly accept this clause, which would act as a kind of straitjacket in restraining them from raising funds from other sources in order to maintain the quality of education which they wish to provide? Therefore, I support the amendment with the greatest of enthusiasm.

10 p.m.

Baroness Lockwood

My Lords, this House has a reputation for defending the universities, particularly their academic freedom. However, I feel that too much is being read into this clause. When the Bill was first published there was, rightly, some concern about the breadth of the clause and the possible interpretations. However, since then my noble friend the Minister has been able to introduce amendments which have more clearly defined what is meant by the "funding" of courses. Apparently, those amendments have now satisfied the CVCP to the extent that it is prepared to support them, as well as the clause.

There seems to be some misunderstanding also about what the different fees mean. We are talking about the £1,000 which students will be expected to contribute to their university fees, but that is only a contribution. Fees for different university courses differ according to the nature of the course. The student is not being expected to pay a 25 per cent. contribution towards any particular course because the costs of courses have been amalgamated and, on average, students are now being asked to pay 25 per cent. However, that does not mean that the costs of the courses (as they are now) will remain static. The noble Lord, Lord Baker, said that there is the possibility of future developments which will demand much higher funding of some courses. I am sure that if there are scientific developments in the university world, the universities, the funding council and the department will together be able to accommodate such charges. However, that matter is entirely different from individual universities being able to charge their own top-up fees.

In earlier debates we heard a lot about what the National Union of Students was saying about the Bill. So far, no mention has been made of what the NUS is saying about Clause 18, which is that it should be preserved. Although the NUS might oppose the introduction of the £1,000 contribution to fees, it is certainly opposed to the ability of universities to introduce top-up fees. I should like to quote from a letter from the University of London, written on behalf of the Aldwych Group, which represents the student unions of the universities in the so-called "Russell Group". It stated that, the issue of 'top up' fees is particularly pertinent to our institutions. This would lead to a two tiered higher education system based on wealth rather than academic ability". I feel that we must take note of what the student unions are saying in this respect.

If the House does not accept Clause 18, it will lead to different charges at different universities. I do not disagree with what the noble Lord, Lord Walton of Detchant, said earlier. He is concerned about the funding of universities per se. I, too, am concerned about that, but I do feel that a better system of funding needs to be introduced. However, that is quite different from this clause which prevents individual universities introducing differential fees—not for differential subjects because there is a differential in the fees for social sciences as opposed to the sciences—which would have to be borne by individual students. That would be a divisive force in our university system and I would oppose it on those grounds.

Lord Wallace of Saltaire

My Lords, before the noble Baroness sits down, does she accept that we have a two-tier university system and do not have total uniformity? We have Oxbridge versus the rest. Oxbridge receives funding additional to that received by the rest. Is the noble Baroness in favour of maintaining that two-tier system, or does she wish to impose total uniformity on the higher education sector?

Baroness Lockwood

My Lords, there was a substantial debate on this subject some months ago. Had the noble Lord taken part in it he would have been aware that at that time I was very conscious of the history of the universities of Oxford and Cambridge and the need to protect that system to some extent. But I do not believe that because we have that situation in relation to those two universities all universities should be treated differently.

Baroness Park of Monmouth

My Lords, I should like to deal briefly with the point just made that students are not concerned about the effect of this clause. On the contrary, for example, University of Edinburgh students have been very concerned about the effect on teaching and the academic programme in relation to the fourth year. Equally, they were concerned when Mr. Brian Wilson suggested to one of his colleagues one very simple solution to the problem: the universities should be asked to re-jig their four-year courses to make them suitable for those with A-Levels from England to enter the second year. The students believed that that was exactly the kind of interference in the academic syllabus for purely management and financial reasons that should be feared because of the present wording of Clause 18. Therefore, I believe that students are more concerned than might be supposed.

Baroness Young

My Lords, I believe that this debate illustrates extremely well the value of your Lordships' House. We have heard a sequence of contributions from noble Lords beginning with the noble Earl, Lord Russell, my noble friends Lord Beloff and Lord Baker and the noble Lord, Lord Desai, who have had extensive experience of the university world. They know how things work. I speak here as a university person one removed, although I know a little about the universities. My anxiety is threefold. This is such a serious worry that I very much hope that the noble Baroness will consider the matter further. First, Clause 18 puts universities in a straitjacket. If there is one thing that universities do not want if they are to flourish it is uniformity. If one is to achieve excellence one must have diversity, as the noble Lord, Lord Wallace, said. That gives one the best of everything. Universities can specialise in what they believe they do best. To prevent the universities from getting extra money will hinder academic freedom.

The second point about which I am concerned is that which has already been very well made by my noble friend Lord Baker. We are legislating for the future. One does not know what the future may bring. Who would have thought 10 years ago when I was an education Minister that one-third of young people would be in higher education at all, let alone an even greater proportion? I have been married for a very long time to a scientist. Scientists will always say that one never quite knows where the frontier will be or from where the next development will come. Therefore one requires flexibility for these courses.

I do not know what the noble Earl will decide to do with this amendment, but I believe it raises such a very serious matter for the whole future of the education system that the matter must be looked at again. Although I welcome the amendment in relation to the courses, it is a small part of a much bigger problem and needs careful thought.

Baroness Blatch

My Lords, the noble Baroness, Lady Lockwood—

Noble Lords

Oh!

Baroness Blatch

My Lords, as spokesman on the other side of the Chamber, I believe that I am entitled to respond to an amendment.

The noble Baroness referred to and prayed in aid the CVCP. I do not know what her words were, but I know that words were carefully brokered between the CVCP and the Government. The committee admits to "being reasonably" satisfied rather than very happy. I am sure that the Minister will also pray in aid the CVCP. However, having met its representatives and had discussions with them throughout the progress of the Bill, I know that there is deep puzzlement throughout the higher education sector about the stand which the CVCP is taking on behalf of higher education. Given that what we agree in this Chamber will stay on the statute book for a long time, I say only that 10 years down the line it may regret not having made a better and more effective stand for the right of academic freedom in higher education.

Although I greatly respect the views of the noble Lord, Lord Walton of Detchant, perhaps I may say a few words in order to justify an amendment won earlier tonight in respect of maintenance. There is nothing strange about the amendment. When individual students leave university having undertaken the same course, students from lower income families should not be disproportionately disadvantaged compared with their fellow students who may well come from a more affluent family. It would be deeply unfair if a student from a poor family, irrespective of tuition fees, had to borrow all his maintenance money whereas a student from an affluent family had to borrow only half. That would be unfair and the amendment corrected the situation.

Earlier the noble Lord, Lord Whitty, promised to bring forward an amendment. There is a read-across from that amendment to the debate we are now having on Clause 18. That amendment must be seen and considered by this House before the Bill moves to another place. My noble friend has made known her concerns about the issue not only tonight but on Second Reading and in Committee. It is not beyond the wit, certainly of the noble Lord, Lord Whitty, to spell out the Government's intentions and what they hope to achieve. I hope that between now and 10th March it will be possible for us to see an amendment, even if it is not perfect. It is important that we do so before the Bill leaves here for another place. If the Government do not come forward with an amendment, this House will have lost its only opportunity to discuss its merits and to give voice to the concerns of my noble friend Lady Perry.

Whatever the Government say, their proposals in the Bill and their intention to use its powers will in practice, although I accept not technically, be setting fees at universities. I accept the criticisms made about previous governments and it will be interesting to see how much more generous the present Government are. However, one cannot rule out tight settlements in future by a Chancellor of the Exchequer. In fact, I could almost write part of the Chancellor's Budget speech next year. At the back of my mind, I can almost hear him saying that in 1998–99 higher education received an extra £165 million and it cannot expect such generosity every year. That £165 million is a one-off payment and there has been no promise that it will be built into the base revenues of higher education. I do not believe that that promise can be given, but if it is not, not only must one make up the £165 million into the future, but there must be additional moneys.

If there is a tax settlement in future, the straitjacket referred to by my noble friends Lady Young, Lord Baker and others will be real. Where are the universities to go? The fact that there are to be no top-up fees is to be written on the face of the Bill if it is passed in its present form. There has been a promise that the proportion of tuition fees paid for by students is not expected to rise in real terms beyond 25 per cent.; but that is not to be on the face of the Bill. Therefore, I advise those students who are anxious to see Clause 18 remain part of the Bill to be careful because they will be extremely vulnerable in the future. If there is to be more finance to fund higher education, if it does not come from the Treasury and cannot come from top-up fees, it will have to come from the students. That 25 per cent., willy-nilly, will be raised beyond the limit intended by the Government.

If that does not happen, something must give. My noble friend Lady Park referred to the academic programme. First, it will affect staffing and then the course programmes. All the other points about quality then come into play. It is a straitjacket. So far, the Minister has been unable to explain the scope of Clause 18. That was a question put directly by the noble Earl, Lord Russell, and my noble friend Lord Limerick, who is not present this evening. I ask the noble Baroness whether she is able to enlighten us further this evening on the absolute extent of the scope of this clause.

10.15 p.m.

Baroness Blackstone

My Lords, I find it very strange that the noble Earl, Lord Russell, and his noble friends should seek to leave out Clause 18. I found his metaphors somewhat perplexing too. They were all transport metaphors. We moved from parachutes to submarines and Aeroflot all within the space of two or three minutes.

I have tried also, without success, to find some consistency in the noble Earl's approach to future funding arrangements for higher education. On the one hand, he and his noble friends are opposed to students' contributions to fees. On the other, they are seeking to leave out Clause 18. In doing that, they are opposing the safeguard which is designed to protect students from being asked to pay additional top-up fees. Where is the logic in that? It is quite extraordinary.

I remind the House of the purpose of Clause 18. Contrary to some of the claims made both in your Lordships' House and outside, Clause 18 is not about altering the relationships between government and the universities. Rather, it is just one component, albeit—and I am perfectly happy to admit this—an important component of new arrangements to secure adequate and appropriate funding for higher education in the 21st century.

The noble Lord, Lord Baker, quite rightly raised issues about the quality of higher education and underlined its importance. I agree with him 100 per cent. about that. However, the Government recognise also that the funding of universities over the past few years has been totally inadequate. The government of which the noble Baroness, Lady Blatch, and the noble Lord, Lord Baker, were members did not recognise the inadequacy of the funding that was provided for universities. If they had, we should not be in the position in which we are today. We might not even be charging tuition fees because the universities would be properly funded.

Baroness Blatch

My Lords, the noble Baroness makes that point but it was precisely because there needed to be some very serious, fundamental thinking about the funding of higher education that Dearing was commissioned with all-party support. There was absolute agreement across all parties that more money had to be found for education. Later, we shall be discussing how we can secure additional money to remain in higher education. But it is not true to say that we did not recognise the problem. We certainly did, which is why we commissioned the report, the recommendations of which gave rise to this Bill.

Baroness Blackstone

My Lords, I was going to deal with that later, and indeed I will. Eventually, when the then government were absolutely up against it because there was a revolt of the vice-chancellors, they set up the Dearing Committee. Unfortunately, they were in office for 18 years and failed to provide adequate funding for the universities. There was a per capita cut of 40 per cent. over that period. I really do not think that the noble Baroness has a leg to stand on.

The Government recognise that, as the Dearing Committee found, the further improvement and expansion of higher education cannot be afforded on the basis of current funding arrangements. Other sources of funding for higher education have to be found. But the question is: who should fund universities? In the Dearing Committee's view, which the Government have endorsed, the costs should be shared between those who benefit from higher education.

Of course, the country as a whole benefits from higher education, socially, culturally and economically; and so the taxpayer bears the major burden of funding higher education. The taxpayer will continue to bear the major financial burden, even after the introduction of the new funding arrangements.

But it is not just society as a whole that benefits from higher education. Students themselves stand to benefit, not only from the personal enrichment that higher education brings but also the financial advantages of higher salaries that graduates on average earn, as I said earlier today. But we also recognise that there need to be safeguards for students, in return for the financial contributions that they will make. We have made clear that the Government will ensure that the savings are used to improve quality, standards and opportunities for all in further and higher education. As universities stand to benefit from the new funding arrangements that we are proposing, so they too must be prepared to accept a little restraint in the fees that they charge students.

Too few Members of your Lordships' House speaking in today's debate seem to recognise that basic fact. However, most universities do. But that is all that Clause 18 requires from universities—a little restraint in the fees that they charge home and EU full-time undergraduates and students on courses which lead to a qualification for teacher training.

The noble Baronesses, Lady Young and Lady Blatch, said that we were legislating for the future here. I must remind the House again that we are only talking about a reserve power. The Government hope never to have to use that power. It is true that there are other countries in the world where the Government do not become involved in controlling higher education fees for students. Some of our universities may look with envy particularly at American universities with their larger resources and long to be able to charge fees in the same way as they do.

I must say that I often looked with envy at them. I have been a Fellow at Harvard University and at the University of California at Berkeley. Of course, they are extremely well funded. But our higher education system has long been fundamentally different from the American and heavily dependent on government funding. I understand that the noble Earl and his noble friends are not seeking freedom for universities from government funding: quite the contrary, they wish to increase that dependence. Yet they seek a free market in the level of tuition fees that universities may charge beyond a certain minimum threshold. I believe that the noble Lord. Lord Beloff, is much more consistent in his argument. He wants a completely free market and his argument stands up much better than that put forward by the noble Earl, Lord Russell.

However, a completely free market is totally at odds with our system of student support with which, if I may point out to the noble Lord, Lord Baker, there has been nothing comparable in the United States. If the noble Earl wishes universities to benefit from a national system of grants for institutions and loans for students, then he needs to recognise that it may not be compatible with a market system where universities are free to charge what they like without any government regulation, even in reserve. As long as we in this country value—as I believe we do—a national system of grants and loans, then the Government must be able to balance the needs of universities and students, as well as taxpayers. The current Bill does just that; indeed the Government's new funding system will provide substantial additional funds for our universities. Noble Lords opposite might perhaps recognise that. Perhaps there ought to be just a little more optimism about the negotiations that we have to have on these matters. A little more optimism would go a long way.

I understand the concerns of the noble Lord, Lord Walton of Detchant. However, there is a great deal of flexibility for universities to raise funds from a vast variety of other sources. Many of them do that. I speak from personal experience as I spent huge amounts of my time raising funds from a whole variety of other sources. We are in no way imposing a straitjacket, to use the term that I think was used by the noble Baroness, Lady Young.

It has long been the case that if universities wish to accept public funds they need to accept that there may be conditions attached to those funds. One cannot have it both ways. We have sought to minimise those conditions. All that Clause 18 does is to give the Secretary of State a reserve power to place conditions on grant through the higher education funding councils to control, if necessary, the level of fees that universities charge to home and EU full-time undergraduates and students on courses of initial teacher training.

We have made amendments to clarify the fact that conditions cannot apply to overseas students, or to part-time or postgraduate students other than those on courses of initial teacher training. We have made clear that the only penalties that might be imposed on an institution that decided to impose top-up fees would be financial ones and that imposing some other penalty would be absolutely out of the question. We have brought forward amendments to make clear that conditions could not single out courses of initial teacher training by subject or all other courses at any particular level by area of study or research. Later this evening we shall bring forward amendments to the definition of fees in Clause 20. Taken together, these amendments put beyond doubt that it will not be within the power of any Secretary of State—whether current or future—to control top-up fees in order to interfere in a university's academic affairs.

We have done our best to make clear the limited nature of Clause 18. As my noble friend Lady Lockwood said, the amendments we have brought forward, or are bringing forward today, follow discussions with the CVCP and have been welcomed by it. Indeed its briefing note makes clear that the amendments to Clause 18 address its concerns. I deeply regret the comments made by the noble Baroness, Lady Blatch, which I thought were singularly unfair to the CVCP, which represents the HE sector as a whole. It does that well and with commitment, honesty and integrity. The vast majority of vice-chancellors are opposed to top-up fees. They accept that safeguards on the charging of additional tuition fees are necessary for students. As my noble friend Lady Lockwood said, that also applies to the National Union of Students, which will be deeply disappointed—as will most parents—if the Tory Members of this House and Members of the Liberal Democrats decide that they will support this amendment and remove Clause 18 from the Bill.

In supporting the leaving out of Clause 18, the noble Lord, Lord Wallace of Saltaire, acknowledges no obligation on the part of universities towards either students or taxpayers. He and his noble friends require either the taxpayer or the student to pay as much in fees as the universities choose to charge. I am surprised that he should take that position. It strikes me as frankly bizarre.

Lord Wallace of Saltaire

My Lords, the Minister might care to answer the point I made. As the Minister well knows, expansion on the Continent has been achieved by allowing quality to decline. However, we have managed to avoid that in British universities by expanding the number of foreign students. As the Minister well knows, many of us involved with universities are currently struggling with the possible impact on next year's finances of the Asian financial crisis. I am not sure whether the Government will give us a rescue package if that turns out to be a disaster. However, the Minister has not addressed the question of maintaining the quality of British universities which was my main concern.

10.30 p.m.

Baroness Blackstone

My Lords, with respect, I have referred to the issue of quality at least three times in responding to the debate. Indeed, the whole purpose of the new system of funding of universities is to do our very best to improve quality. The noble Lord, Lord Wallace of Saltaire, and I share—as I share with the noble Lord, Lord Baker—a wish to improve the quality of higher education in this country.

But it strikes me as, frankly, bizarre—coming from a party which the noble Lord, Lord Tope, said only a week ago was, totally and fundamentally opposed to the imposition of student payment of tuition fees". So why on earth do he and his noble friends oppose provisions which would control the charging of additional tuition fees? The noble Earl, Lord Russell, often tells us during the course of our debates in this House that he needs to explain to his students—I understand that—what the Government or this House has decided. How will he explain to them that he was responsible for ensuring that students will be required to pay far more in fees than the Government ever proposed that they should? How would he justify his actions to the thousands of students up and down the country who might, as a result, be prevented from entering higher education?

A number of points have been made about uniformity. We have a diverse system of higher education; and so we should. We have a diverse system through different levels of research funding that relate to the quality of research undertaken by our universities. We have very different proportions of postgraduate students in our universities. We have very different levels of vocational provision in our universities. We have different levels of overseas students. Some institutions are specialists and some provide a wide range of courses. Nothing in the clause will alter that diversity.

Perhaps I may say this to the official Opposition. The previous Government, from the Prime Minister and the Secretary of State for Education and Employment down, opposed top-up fees and said so in terms. I think that it is rather surprising that Members opposite are now taking a quite different view within less than a year of leaving government. It was indeed the threat of top-up fees by some universities when they genuinely were at their wits' end as to how they were going to provide the quality we all want and need that led the previous Conservative Government to set up the Dearing Committee; and I am glad to say that the Dearing Committee came up with proposals to prevent the need for top-up fees which the Government are now implementing. Indeed, the Government are finding ways of raising even more money for universities than the Dearing recommendations would have led to.

The noble Earl, Lord Russell, may tell us that he is concerned with protecting university autonomy and academic freedom. But this clause is not fundamentally about academic freedom; and we have brought forward an amendment to make that quite clear. Clause 18 is about offering students safeguards in return for their contributions towards the tuition from which they individually stand to gain so much. It is about offering safeguards to their parents too. It is about achieving a complex balance between the needs of universities for extra funding and for autonomy, between the demands on the taxpayer and the demands on the student.

I believe that with all the amendments that we are bringing forward Clause 18 achieves the appropriate balance. This amendment, on the other hand, would wreck that balance; and I urge the House to resist it.

Earl Russell

My Lords, I shall not attempt to match the noble Baroness for length. She has invited me to explain to my students. I have done so. I shall tell her what I tell them. First and foremost must be a concern for quality; and Government are no judge of quality. If quality is not preserved it does not matter who has access. Once quality is preserved, then we would like to see access as far as possible independent of parental income or social conditions. Thirdly, we would like to continue to see diversity.

The noble Baroness talked about conditions. We understand that he who pays the piper can call the tune. But he is unwise to exercise that prerogative if he happens to be tone deaf. I ask the House to imagine somebody running a restaurant. He is making a loss; he cannot get any more people in—there is no room for any more tables; he cannot reduce the quality of his meals without falling foul of the Health and Safety Executive; and he cannot lower his prices because they are capped. What does he do? He closes down. I do not want to do that, and that is why I ask the opinion of the House.

10.35 p.m.

On Question, Whether the said amendment (No. 63) shall be agreed to?

Their Lordships divided: Contents, 63; Not-Contents, 73.

DIVISION No. 4
CONTENTS
Addington, L.	Mayhew of Twysden, L.
Avebury, L.	Newby, L.
Baker of Dorking, L.	Nicholson of Winterbourne, B.
Beloff, L.	Northesk, E.
Biffen, L.	Ogmore, L.
Blatch, B.	Park of Monmouth, B.
Brookeborough, V.	Perry of Southwark, B.
Butterfield, L.	Pilkington of Oxenford, L.
Carlisle, E.	Rawlings, B.
Carnegy of Lour, B.	Redesdale, L. [Teller.]
Camock, L.	Renfrew of Kaimsthorn, L.
Chesham, L.	Rodgers of Quarry Bank, L.
Cross, V.	Russell, E [Teller.]
Dean of Harptree, L.	Russell-Johnston, L.
Dholakia, L.	Ryder of Wensum, L.
Dundee, E.	Seccombe, B.
Goodhart, L.	Selkirk of Douglas, L.
Hamwee, B.	Smith of Clifton, L.
Harris of Greenwich, L.	Steel of Aikwood, L.
	Taverne, L.
Inglewood, L.	Thomas of Gresford, L.
James of Holland Park, B.	Thomas of Walliswood, B.
Lichfield, Bp.	Tope, L.
Linklater of Butterstone, B.	Tordoff, L.
Lucas, L.	Wallace of Saltaire, L.
Ludford, B.	Walton of Detchant, L.
Mackie of Benshie, L.	Warnock, B.
McNair, L.	Williams of Crosby, B.
McNally, L.	Winchilsea and Nottingham, E.
Maddock, B.	Wise, L.
Mar and Kellie, E.	Wynford, L.
Marlesford, L.	Young, B.

NOT-CONTENTS
Acton, L.	Hardie, L.
Amos, B.	Hardy of Wath, L.
Archer of Sandwell, L.	Haskel, L.
Bassam of Brighton, L.	Hilton of Eggardon, B.
Berkeley, L.	Hoyle, L.
Blackstone, B.	Hughes, L.
Brooke of Alverthorpe, L.	Hughes of Woodside, L.
Burlison, L.	Hunt of Kings Heath, L.
Carter, L. [Teller.]	Irvine of Lairg, L. [Lord Chancellor.]
Cocks of Hartcliffe, L.
Currie of Marylebone, L.	Islwyn, L.
David, B.	Jay of Paddington, B.
Davies of Coity, L.	Judd, L.
Davies of Oldham, L.	Kennedy of The Shaws, B.
Dean of Thornton-le-Fylde, B.	Kilbracken, L.
Desai, L.	Kirkhill, L.
Dixon, L.	Lockwood, B.
Donoughue, L.	Lofthouse of Pontefract, L.
Dormand of Easington, L.	McIntosh of Haringey, L. [Teller.]
Dubs, L.
Evans of Parkside, L.	Mallalieu, B.
Falconer of Thoroton, L.	Merlyn-Rees, L.
Farrington of Ribbleton, B.	Milner of Leeds, L.
Fitt, L.	Molloy, L.
Gallacher, L.	Monkswell, L.
Gilbert, L.	Montague of Oxford, L.
Gordon of Strathblane, L.	Murray of Epping Forest, L.
Gould of Potternewton, B.	Nicol, B.
Grenfell, L.	Northfield, L.

Ponsonby of Shulbrede, L.	Simon, V.
Prys-Davies, L.	Simon of Highbury, L.
Puttnam, L.	Smith of Gilmorehill, B.
	Stone of Blackheath, L.
Ramsay of Cartvale, B.	Symons of Vernham Dean, B.
Randall of St. Budeaux, L.	Thomas of Macclesfield, L.
Rendell of Babergh, B.	Turner of Camden, B.
Richard, L. [Lord Privy Seal.]	Whitty, L.
Sewel, L.	Williams of Mostyn, L.

Resolved in the negative, and amendment disagreed to accordingly.

10.44 p.m.

[Amendment No. 64 not moved.]

Baroness Blatch moved Amendment No. 65:

After Clause 18, insert the following new clause—

RECEIPT AND DISPOSAI, OF FEES

(" .—(1) The governing body of a relevant higher education institution shall be entitled to receive, and to dispose of as it sees fit, the full amount of any fees or grants in respect of fees payable to it in respect of tuition by or on behalf of any student.

This subsection is without prejudice to any arrangements under which the governing body proposes, with the consent of the Higher Education Funding Council, to pay the whole or part of any fees or grants in respect of fees to any connected institution, as defined in section 65(3B) of the 1992 Act.

(2) In this section, "relevant higher education institution" means an institution providing courses of higher education, where "higher education" has the same meaning as in the Education Reform Act 1988.").

The noble Baroness said: My Lords, Amendment No. 65 is grouped with Amendment No. 66. It concerns the money which goes to universities which is derived from income from tuition fees. I was fascinated to hear the noble Baroness's one-word answer to the noble Lord, Lord Dahrendorf, who is not in his place at the moment, when he asked whether it was right that higher education would benefit from the money generated from income fees. The noble Baroness's answer was, "Yes". In speaking to this amendment, I wish to explore that answer.

Let me say, first, that Amendment No. 66, standing in the name of the noble Lord, Lord Tope, has the same aim as my amendment. I believe that the noble Lord has produced a more effective form of words than I have. I shall therefore seek to withdraw my amendment and throw my support behind that of the noble Lord, which I believe achieves more concisely what we are both looking to achieve.

Whether higher education will benefit from income generated from savings made as a result of these proposals is something we wish to explore. If the noble Baroness is correct, then it must be the case that for the purposes of funding higher education institutions, this money, this newly-generated money and income, must be disregarded in order that it is genuinely, in its entirety, additional funding. That should not only apply to this year. We have had promises this year that the money will go into higher education, although we know that not every penny of it will, because some will be spent in other places.

What we do not know from the noble Baroness and what we ask for a specific answer on is this: will this money, pound for pound, go in and remain within higher education? Can we have an absolute assurance that it will not displace other moneys that would normally come from the higher education funding council? In other words, can we have an assurance that this money is pure pound-for-pound additionality into the higher education sector, enjoyed institution by institution?

If the answer is not unequivocal and should any part of this money that is generated from higher education students and their families be used anywhere else in the system, for example, in further education—and no one is arguing that further education could not use more money—or in any other part of government expenditure or, worse, should it end up in Treasury coffers, then the tuition fee is not a tuition fee; it is a tax.

I look forward to hearing from the noble Lord, Lord Tope on Amendment No. 66 because, as I said, I believe that that amendment has rather more effective wording. I beg to move.

10.45 p.m.

Lord Tope

My Lords, as the noble Baroness, Lady Blatch said, we are trying to achieve exactly the same object here. I am very grateful to her for acknowledging so graciously that the amendment in my name and that of my noble friend achieves that object more succinctly and more exactly.

The case has been made by the noble Baroness, Lady Blatch, and was made previously in Committee that we are concerned that all the money raised should go to higher education. I suspect that the Minister may tell us in a moment that the amendment is unnecessary. However, I believe that it is necessary, if for no other reason than to reassure those in higher education at all levels who have doubts on the issue.

Much earlier today the Minister asked me to justify how this could be a student poll tax. I do not particularly wish to pursue that now, especially at this time of night, but I agree with the noble Baroness, Lady Blatch. If it should be otherwise, then it is a tax; it is a tax on students. That is analogous to a student poll tax.

I shall not press my amendment tonight, but I shall be seeking the same assurances that the noble Baroness, Lady Blatch has sought, and I shall certainly be considering, perhaps with her, what we will do in the light of those assurances.

Lord Whitty

My Lords', the noble Baroness asked that we repeat some assurances that she was given at earlier stages of the Bill when these matters were raised. At various points there seems to have been some confusion as to how the present system of funding of higher education works and perhaps some of our assurances were not as clear as she would have liked.

Let me make clear now to the noble Baroness that the money which students pay directly to universities and colleges in tuition fees will remain with the instituions. That is the first point. The second point is that the contributions that local authorities pay on students' behalf, if the assessed income of students and their families means that they do not have to pay the fee in full or at all, will also remain with the institutions. It will of course be for universities and colleges themselves to decide on how to use those resources.

In relation to the original amendment of the noble Baroness, Lady Blatch, and the first part of the amendment of the noble Lord, Lord Tope, that is a sufficient and clear assurance that the objectives of those amendments will be met. I therefore do not believe that those parts of the amendments are necessary. Nor can I accept the rather more complex implication of the second part of Amendment No. 66, which is to disregard the fee income for the purposes of calculating the grant for the higher education funding councils.

A large proportion of fee income will continue to come from public funds. Therefore, while universities and colleges will receive £1,000 for every home or EU full-time undergraduate new entrant in Autumn 1998—either from the students, their families or local authorities—by no means all of that will be new money. Local authorities have long paid tuition fees on students' behalf to universities and colleges and will continue to do so. But we estimate that the total contribution will be just over £1 billion in England alone. We clearly cannot leave such a large sum of taxpayers' money out of account when calculating the level of the other channel of public funds for higher education; that is, grant to the HEFCE.

Nor can the funding council leave out of account the fee income received by institutions. That is primarily because it needs to ensure some fairness in funding across institutions where the aim is to fund similar activities at similar rates. As a result, it will be necessary for the funding council to make adjustments to the grant it provides to ensure that some institutions do not lose out in consequence and that others do not gain unfairly. Institutions should not depend for their income on the level of income of their students and therefore the degree to which students are required to meet their own costs.

The aim is that universities and colleges should receive similar support in grant and fees to fund similar activities. Obviously institutions receive more funding, for example, to educate a medical student than a law student because of the extra costs involved. But all institutions, broadly speaking, should receive similar amounts to teach medical students on the one hand, and broadly similar amounts to teach law students on the other. That will require some adjustment rather than disregarding the level of contribution from the students themselves. That fairness of outcome—the noble Lord, Lord Wallace may call it socialism; I call it fairness and common sense—is certainly the approach that we will adopt in the allocation of funds.

For the coming year, following the crisis in the funding of higher education to which everybody referred, we have already announced a package of measures which, as a result of these changes, will allow an extra £165 million to be spent on higher education in 1998–99. Universities and colleges will receive directly £130 million of that and there will be £40 million basically on access packages. The higher education sector will therefore benefit fully from the money derived from students' contributions to tuition fees, which is approximately £130 million; that is, it will benefit to a greater degree than the saving that we acquired as a result of that by allowing £165 million to be spent on education. That also refutes the suggestions that were made that we are robbing the higher education sector to provide funds for further education. We make no apology for applying further funds to further education, but that has not come out of the savings that we have made on the higher education side.

We have been asked to give undertakings for subsequent years. We are not in a position to give cast-iron undertakings in relation to future years. The reply of my noble friend to the noble Lord, Lord Dahrendorf, related to next year. We are, as noble Lords will be aware, in the middle of a comprehensive spending review. It would be unrealistic for noble Lords to expect me to pre-empt decisions on public expenditure for future years or to put undertakings relating to future public expenditure decisions on the face of the Bill. However, the savings over time will be substantial and higher education will benefit seriously from those savings.

As far as concerns the amendments, to leave out of the reckoning fee income for the purposes of calculating the grant for the higher education funding councils would prevent those councils making the adjustments that are needed to create a fairness of outcome for the institutions, one compared with another. Nor would it be right to place on the funding councils restrictions which would in themselves lead to unfairness in the way in which they allocate grants in the process which they adopt for allocating them.

This has been a somewhat complex response to what is a complex issue. I hope it has cast some light, if not total light, on the way in which these allocations will take place. Given those explanations, I hope that the noble Baroness will be prepared to withdraw the amendment.

Baroness Perry of Southwark

My Lords, before the Minister sits down, perhaps he can clarify something for me. I think he said unequivocally that no money from the higher education savings—the private fee money—will go to further education. Why is it then that on 19th December in another place his honourable friend Dr. Howells, in an answer to a similar question, said: the introduction of private contributions to tuition fees for higher education will mean an extra £125 million for higher education institutions, plus £4 million to allow for a modest increase in students on sub degree courses mainly in FE colleges. In addition some £15 million of the higher education savings has been allocated to the further education sector".—[Official Report, Commons, 19/12/97; col. 365.] Can he explain the apparent contradiction in that quotation?

Lord Whitty

My Lords, the £16 million allocation to further education does not come from the charging of tuition fees. The total saving which arises from the saving of tuition fees is £130 million. In total, the extra money going to higher education will be £165 million. A small element of double counting on the sub-degree courses will probably to some extent take place in the further education sector, but that is a very small amount of double counting. In other words, the benefit of all the changes to the higher education figure is greater than the saving on tuition fees. The allocation to further education referred to in that announcement relates to the changes in the loan system and not to the saving on tuition fee contributions.

Baroness Blatch

My Lords, this is as clear as mud. I agree with the noble Lord when he says that moneys paid by the state for those students who are exempt from paying the tuition fees is not new money. It comes from within the state system. Money paid for parts of the £1,000 for those students who are subject to means testing, where it is paid by the local authority, is not new money. It is money from within the system. So I accept that. Money paid in part by students themselves who are means tested but still qualify to pay part of the fees and all of the £1,000 paid by one-third of the students who are subject to paying the full amount is totally new money. It is money that is not there now and it is money that will be there as a result of these changes.

What the noble Lord has said has not made anything clear beyond 1998–99. The red herring in this debate has been, and continues to be, the £165 million. As I understand it, the £165 million has been found from restructuring the way in which grant is paid on a term basis rather than on an annual basis, or vice versa. There has been some restructuring of how that money is paid and it has thrown up a one-off saving of £165 million. The Government, in the kindness of their heart, have decided that that money shall go to higher education. It is not linked, although from time to time the noble Lord says, in passing, that the new money, which sometimes is £125 million and at other times is £130 million, is a sum of money that is exceeded by the £165 million. I would also argue that it is subsumed by £165 million because, as I understand what the noble Lord said, higher education is not going to receive additional moneys of £165 million plus £135 million from tuition fees in 1998–99.

What the noble Lord has not said and what the noble Lord, Lord Tope, and I wish to achieve by these amendments, relates to the additional money. It would be helpful if the noble Lord will confirm for clarification at the Dispatch Box tonight the situation as regards the money that is derived from £1,000 paid in full by one-third of the students and the parts of £1,000 paid by other students. What does that total in new money? Is that £130 million? If so and if the noble Lord cannot agree in principle that that will be treated year on year—whatever is commensurate with the number of students paying it—and that it is guaranteed and considered to be additional money, disregarded for the purposes of funding higher education, then we do not get the assurances we are asking for.

The noble Lord says that he is continually giving the assurances that we seek. There has not been an assurance that this money will not be considered replacement money, substitute money, displacement money, for that which is already in the system. For example, if the Chancellor comes down rather heavily in terms of a settlement for the higher education sector—it will not happen this year because it would be difficult presentationally for the Government, and may not even be next year or this side of the election—are we going to find over time, in the medium to long term, that the money provided by students has simply disappeared into the system? Will we find that additionality no longer applies and therefore the rationale for the proposals expounded by the noble Baroness and the noble Lord? It has been stated constantly that this money will be additional and will be spent exclusively and in its entirety on higher education. We seek much firmer assurances than the noble Lord has given tonight.

11 p.m.

Lord Whitty

My Lords, I repeat that the money paid directly by students—a proportion of which the noble Baroness refers to as new money—will remain with the institutions. I thought that I had made that clear, but the noble Baroness does not regard it as satisfactory. I do not believe that noble Lords would expect me to pre-empt the outcome of public expenditure decisions on what the totality of expenditure will be on the higher education system in future years. We have a comprehensive spending review under way. In any case, as with all governments, public expenditure decisions are taken year by year.

Baroness Blatch

My Lords, the Government must be very relieved that they won the vote on Clause 18. But that is as nothing to the consequences of what the noble Lord is now saying. Throughout this Bill the noble Lord has been saying to the students, schools, colleges and institutions that the reason the Government are producing these proposals is so that more money will go into the university sector. There is one point that the noble Lord has made which we accept. The money will remain with the colleges. If that money is to be genuinely additional money then it must be disregarded for the purposes of funding higher education. If the noble Lord cannot give that guarantee then his proposals and the rationale for them fall on deaf ears.

Lord Whitty

My Lords, I do not believe that I can say much more than I have already. This is the mechanism for getting new money into the higher education system. If the noble Baroness is pressing me to say what the expenditure on higher education in total will be, that is not possible and I do not believe that noble Lords would expect me to do so.

Baroness Blatch

My Lords, before withdrawing the amendment, I advise the noble Lord that we wanted an assurance in principle that this was meant to be new, additional money which was not to be displaced by the normal funding of higher education. If that assurance cannot be given, we shall return to the matter on Third Reading. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 66 not moved.]

Clause 20 [Interpretation of Chapter I]:

Baroness Blackstone moved Amendment No. 67:

Page 15, leave out lines 9 to 12 and insert— (" "fees", in relation to attendance on a course, means fees in respect of, or otherwise in connection with, attendance on the course, including admission, registration, tuition and graduation fees but excluding—

1. (a) fees payable otherwise than to the institution providing the course in respect of the awarding or accreditation of any qualification,
2. (b) fees payable for board or lodging,
3. (c) fees payable for attending any graduation or other ceremony; and
4. (d) such other fees as may he prescribed;").

The noble Baroness said: My Lords, I promised in Committee that we would look again with the Committee of Vice-Chancellors and Principals at the definition of fees in Clause 20. That is the definition that makes clear what costs are expected to be covered by the fees that are charged by universities and colleges and for which means-tested financial support will be made available to students under regulations to be made under Clause 16 (2)(b). It is also the definition that makes clear what additional fees universities and colleges might charge without risking a condition on their grant under Clause 18.

This amendment makes it clear that we expect the essentials of any course of higher education to be covered by the basic fee for which means-tested support will be available up to a maximum of £1,000 next academic year. That sum is intended to cover all tuition costs and any administrative costs associated with the processes of admission (or matriculation), registration (or enrolment) and graduation. We would thus not expect students to pay any extra for admission to an institution, for annual registration with that institution, for tuition during their course or for graduation. We accept that a university may charge for the costs of providing a social occasion to celebrate the awarding of a degree, but there should be no question of a university charging a fee to a student for the actual award of a degree.

If universities or colleges charged extra for any of those essential items—admission, registration, tuition or graduation—the Secretary of State would have to consider whether or not to seek to control such fees by exercising his reserve power to place conditions on grant under Clause 18.

The amendment also makes it clear that, on the other hand, there are certain costs that the Government do not consider to be covered by the basic fee, and so universities may charge separately for these. They include fees charged by external awarding or accrediting bodies; board and lodging; and the cost of special ceremonies. So any university which charged extra for a graduation ceremony or any college which levied charges for board and lodging would not run the risk of having a condition placed on its grant under Clause 18.

Let me make it clear that this amendment has no implications for college fees and that the outcome of our review of Oxbridge fees is an entirely separate matter. That review follows the Dearing Report which pointed out that college fees represented a substantial addition to the standard funding for higher education institutions and proposed that the Government should review them. It also recommended separately that there should be no variations in the level of public funding for teaching, outside modest margins, without very good reasons. We therefore asked the HEFCE to conduct a review of college fees, taking into account its proposed new teaching funding method and the relevant points in the Dearing Report. We are still considering that advice and hope to be able to make an announcement shortly.

As the noble Lord, Lord Renfrew, said—I am sorry that he is not in his place—it is true that an early draft of the government amendment, which we showed to the CVCP, contained a reference to college fees. But we concluded that it was technically defective because either college fees fall into the first category of fees in this government amendment, where we do not wish to see top-up fees charged—that is, tuition fees and the like—or, in the case of board and lodging, they fall into the other category of fees where we believe that institutions should be able to decide on an appropriate level of charges. So we concluded that it would be tautologous to mention college fees separately. That early draft has now been revised; and noble Lords will see that the government amendment on the Marshalled List has no reference to college fees in order to avoid technical defects. But let me stress again that the amendment does not in any way pre-empt the outcome of the review of college fees.

Finally, the definition allows the Secretary of State to prescribe in regulations other fees that universities and colleges would be able to charge without being liable to a condition on their grant controlling such fees. Those fees could include fees for field trips and possibly fees for materials, which the noble Earl, Lord Limerick, raised in Committee. This provision for regulations will allow us to consult widely with appropriate representative bodies such as the CVCP and the Committee of University Chairmen before drawing up a detailed list. It would also allow for amendment of that list in due course if it appeared that we had omitted some important fee.

This amendment clarifies which fees universities may or may not charge in addition to the basic fee, for which financial support will be available to students. It also allows for further elucidation through regulations. I beg to move.

On Question, amendment agreed to.

Clause 21 [Grants and loans: Scotland]:

Lord Sewel moved Amendment No. 68:

Page 17, line 20, at end insert— ("() Regulations to which this section applies shall not prescribe a rate of interest to be borne by loans higher than that which the Secretary of State, having regard to such retail price index as appears to him to be appropriate, is satisfied is required to maintain the value in real terms of the outstanding amounts of such loans. () Regulations to which this section applies may make provision, for the purpose of calculating the interest to be borne by loans, for repayment by borrowers to be treated as having been made or received on such date or dates as may be prescribed.").

On Question, amendment agreed to.

[Amendment No. 69 not moved.]

Baroness Carnegy of Lour moved Amendment No. 70:

Page 17, line 34, at end insert— ("(2A) Where the Secretary of State has determined a maximum amount under subsection (2) above, he shall not include in the maximum amount of allowances payable those bench- and field-trip fees, or increases thereto, operated by institutions prior to 26 November 1997.").

The noble Baroness said: My Lords, in speaking in Committee to amendments to Clauses 18 to 22 the noble Baroness, Lady Blackstone, said that after further consultation with the CVCP the Government were willing to consider amending the definition of "fees" in the English and Scots clauses. We have just debated the Government amendment to the English clauses in response to that assurance. Not knowing whether an amendment would be forthcoming from the Government, and after further consultation with the Association of University Teachers (Scotland), I tabled Amendments Nos. 70 and 73 to elicit further information on the Government's intentions for Scotland and also for England and Wales.

The amendments use the examples of bench fees for the use of, say, equipment and materials by chemistry students and extra fees for field trips, perhaps for geography students. Amendment No. 70 seeks an assurance that such fees charged before publication of the Bill will not in retrospect be considered to have been part of the course and so carried forward into the future. Amendment No. 73 seeks confirmation that should a financial penalty be imposed on top-up fees then fees such as bench- and field-trip fees would be excluded from the calculation.

These are details. However, can the Scottish Office Minister, the noble Lord, Lord Sewel, say whether it is the intention of the Government to amend the Bill to match the amendments which his noble friend Lady Blackstone has just achieved in relation to the English clauses? If that is the intention, can the Minister give an assurance that the specific items on the face of the Bill will also be on the face of the Scottish clauses and that the regulations will be properly discussed with Scottish institutions and will cover the same areas as in England, because that is the Scottish institutions' desire? I believe that that assurance is very important, and I look forward to the reply of the Minister. I beg to move.

Earl Russell

My Lords, I am most grateful to the noble Baroness for tabling these amendments. I believe that it is very good for us to have England riding on the back of Scotland. One hopes that someone will remember to mention England as well. I congratulate the noble Baroness on putting the matter that way round. We learn from it.

The question of what is intended by "fees" has given rise to a good deal of confusion and doubt. Field trips are an academic necessity for some subjects. I think in particular of geology. These matters cost money and it must come from somewhere, sometimes from fees. A lot of courses simply cannot be done without field trips. I hope that there will be further clarification on the subject. The Minister seems to be eager to give it and I look forward to hearing him.

11.15 p.m.

Lord Sewel

My Lords, I fully appreciate the points made by the noble Baroness, Lady Carnegy, and the noble Earl, Lord Russell. I make it clear from the outset that there is no difference between my noble friend Lady Blackstone and myself in terms of the policy objectives in England and Wales, on the one hand, and Scotland, on the other.

A difficulty arises because the Scottish legislation that is amended is structured differently from the English legislation. The Education (Scotland) Act 1980, which provides the basic legislative framework for the substantive issues discussed and put forward in the amendment, is different from the provisions in England and Wales. As I made clear, the policy objectives are the same; we seek to arrive via a slightly different route compatible with the 1980 Act.

We intend to have a period of full consultation during which regulations will be evolved. It is our intention that institutions will not be prevented from making reasonable charges for the services they provide. We will be issuing draft regulations. At that stage, my colleague from the Scottish Office and I will be interested to hear the reaction of the representatives of the institutions of higher education in Scotland and will take them fully into account. No issue of principle is involved, and I do not believe that there is an issue of practice between us.

There is a difficulty with Amendment No. 73 as drafted. If agreed, it would require the Secretary of State to authorise every single change in bench and field-trip fees. Even the Secretary of State, who works very long hours, would find that difficult to encompass. However, I assure the House that we intend to reach the same policy objective as that achieved by my noble friend in her amendment to the Bill. It is just that, in order to keep the matter all square with the Education (Scotland) Act 1980, we will arrive via the different route of regulation and I give an assurance that there will be full consultation with the higher education institutions.

Baroness Carnegy of Lour

My Lords, I thank the noble Earl for his support and I thank the Minister for his reply. I am glad to note that there is no policy difference. However, it is extremely disappointing that the Scottish Office is not up to speed and able to produce an amendment when the English department can do so. There is no reason why that has not been done and I do not know why we should have to go to the lengths of inventing an amendment when the Government intend to do so. That is disappointing and one wonders what will happen in the Scottish parliament if things move so slowly. I hope that everything will brisk up a little.

Having said those few crisp words, I accept the Minister's assurance. I hope that the draft regulations will be available soon so that everyone can look at them properly. That is important because a great deal of money is at stake for the institutions in Scotland. In the mean time, I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

[Amendment No. 71 not moved.]

Clause 22 [Imposition of conditions as to fees at further and higher education institutions in Scotland]

Lord Sewel moved Amendment No. 72:

Page 18, line 31, at end insert— ("() Where the functions of the Secretary of State under section 4 of this Act are exercised by the Funding Council, the prohibition contained in subsection (3) of that section shall not apply in relation to conditions imposed under subsection (2B) above."").

The noble Lord said: My Lords, I should start by saying that these amendments introduce into Scotland the corresponding provision in Clause 18(9) which applies to England and Wales. I hope that will be a convincing argument for the noble Baroness, Lady Carnegy.

These are technical amendments to make clear that certain existing provisions in the legislation governing the funding of higher education and further education in Scotland do not impinge on the new fee regime for further education and higher education institutions which we are introducing in the Bill. The equivalent legislation has been provided in the English provisions in the Bill in Clause 18(9), as I said, although drafted in a slightly different way, but that is understandable. Originally it was thought that such provisions were not necessary but, on reflection, we believe that it is advisable that the matter should be put beyond doubt. I hope that that is agreeable to the House. I beg to move.

On Question, amendment agreed to.

[Amendment No. 73 not moved.]

Lord Sewel moved Amendment No. 74:

Page 19, line 7, at end insert— ("() The Secretary of State shall not exercise the power to prescribe descriptions of courses under subsection (3B) above in such a way as to discriminate—

1. (a) in relation to courses for the training of persons preparing to be teachers which are open only to persons holding a degree, between different courses on the basis of the subject in which such training is given; or
2. (b) in relation to other courses, between courses at the same or a comparable level on the basis of the particular areas of study or research to which they relate.").

The noble Lord said: My Lords, Amendment No. 74 brings forward for Scotland provisions equivalent to those already debated for England and Wales as Amendment No. 60. Subsection (2) of Clause 22 makes provision for courses of prescribed description provided by higher education institutions to be covered by conditions on grant controlling top-up fees. It is for the Secretary of State to prescribe the courses in regulations. This amendment prevents the Secretary of State, when he draws up the regulations, from singling out courses at any particular level by area of study or research.

This makes absolutely plain that the Secretary of State cannot—through conditions controlling top-up fees—affect the freedom of universities to decide which courses to offer, which subjects to teach or which areas of research to pursue. He can thus prescribe first-degree courses or courses leading to a diploma as those that can be covered by conditions on grant controlling top-up fees. But he cannot name in those conditions particular areas of study or research—whether any branch of medicine, science, technology, social science, arts or humanities. I believe that that goes all the way that can reasonably be expected to defend the whole principle of academic freedom. I beg to move.

Earl Russell

My Lords, I wonder whether I may ask the Minister the question I asked his English colleagues. Why do these amendments make no reference to the other term of Amendment No. 61—the academic conditions for the selection of staff or the admission of students?

Lord Sewel

My Lords, I am sorry. I did not hear that.

Earl Russell

My Lords, I beg the Minister's pardon. I wanted to ask why these amendments that he is offering do not include the term which was included in the 1992 Act, which is also included in Amendment No. 61, of not imposing conditions on the academic conditions for the selection of staff or the admission of students. That is a gap in the amendment and I want to know why it has not been filled.

The Minister, I think, is not quite clear what we are talking about here. This Bill replaces the Beloff amendment which was in the 1992 Act which made it impossible to impose conditions, as conditions of grant, on the terms for selection of staff or admission of students as well as conditions on the academic content of particular courses.

This Bill of course supersedes the earlier legislation. The conditions in the Beloff amendment do not apply to this Bill. Therefore, that concession, which is welcome as far as it goes, covers some of what was in the 1992 Act but not all of it. I want to understand why the part that has been left out has been left out. It is a question of considerable importance to a number of people as well as to me. It is a question which we hope will not require too lengthy a consideration because a lot of us are rather anxious to hear the answer to it. The answer we hear may make a considerable difference to what we decide to do when we return to the Bill on Third Reading. Therefore, I hope the Minister is in a position to answer.

Lord Sewel

I believe that I understand what the noble Earl is saying. I should make it clear that we have no intention of imposing the type of conditions which the noble Earl envisages. I make it clear that this amendment relates only to top-up fees. It is certainly not the Government's view that anything in relation to the approval of top-up fees should in any way be conditional on matters relating to the selection of staff or admission of students. I can give the noble Earl the assurance that I will look at this further. If there is a matter of substance between us, I shall so inform him.

Earl Russell

My Lords, I thank the Minister.

On Question, amendment agreed to.

Lord Sewel moved Amendment No. 75:

Page 19, line 17, at end insert— ("() The prohibition contained in section 40(4) of this Act and the duty imposed by section 41(2) of this Act shall not apply in relation to conditions imposed under subsection (3B) above." ").

On Question, amendment agreed to.

[Amendment No. 76 not moved.]

Baroness Blatch moved Amendment No. 77:

Page 19, line 17 at end insert— ("(3F) In exercising his powers under this section, the Secretary of State shall ensure that any arrangements for the payment of grant in respect of tuition fees for the fourth or any subsequent year of study at a higher education institution in Scotland apply equally to a student whose parental home or normal place of residence for purposes other than attendance at that institution is in England, Wales or Northern Ireland as they do to a student whose parental home or normal place of residence for purposes other than attendance at that institution is in Scotland." ").

The noble Baroness said: My Lords, this amendment was taken with Amendment No. 51, which the House accepted earlier. Therefore, I beg to move.

On Question, amendment agreed to.

Clause 23 [Right of young persons to time off for study or training]

Baroness Blatch moved Amendment No. 78:

Page 20, line 48, at end insert ("; and (b) shall be laid in draft before Parliament for approval by resolution of each House.").

The noble Baroness said: My Lords, I shall be brief. The measures set out in Clause 23 are most serious and I shall not repeat the points that I made in Committee. At that time, I fully accepted the arguments put forward by the noble Baroness; namely, that these are two clauses which ought to be seen and considered by another place. For that reason, I withdrew my amendment which sought to remove them from the Bill.

Nevertheless, if employers are going to find themselves subject to the law in order to fulfil their obligations under the measures contained in Clause 23, I believe that it is incumbent upon the Government to place any regulations in draft before Parliament, for approval by resolution of each House". I beg to move.

Lord Whitty

My Lords, two regulations would be covered by the amendment, both relating to insertions in the Employment Rights Act 1996. The first relates to the power to specify a body to award a qualification and the second to the power to prescribe the standard of achievement. As regards the power to prescribe that standard, we have already said that we want young people to get to Level 2—that is, five good GCSEs, an intermediate GNVQ or an NVQ Level 2. As for the power to award or authenticate qualifications, we have said that, for example, the Qualifications and Curriculum Authority will be the guardian of standards in England.

Throughout the debate reference has been made to the report of the delegated powers committee which has considered regulations arriving under these clauses. The committee has agreed with the proposal in the memorandum of the department that such statutory instruments should be subject to the negative resolution procedure and not the affirmative procedure. In all other respects, we have now accepted in full the recommendations of the committee and we consider that we can also do so in this case. I hope, therefore, that the noble Baroness will feel able to withdraw her amendment.

Baroness Blatch

My Lords, the point made by the Minister is a fair one. However, there are a number of companies—and, again, I believe that I mentioned this in Committee—which are decidedly disquieted by what they see as prescription of the training. Many companies provide training which is entirely adequate for their employees to enable them to do the job for which they are employed. Some of the companies to which I refer are actually quite big companies. However, because they do not specifically fit the particular mode of training or the particular content of training that will be prescribed, they will be expected to provide additional training, to send people off campus for training or to make expensive modifications to their training.

We are discussing a rather serious matter. Therefore, even though I intend to withdraw my amendment, I would ask the noble Lord to ensure that, in the negotiations with commerce and industry, the Government will take those points on board and introduce as much flexibility as is consistent with the quality of training. I trust that companies will not be required to make unnecessary—or what they consider to be superfluous— expenditure to meet the demands of a bureaucrat, as opposed to the demands that they would seek to address; namely, the quality training that is consistent with the people who work in their company doing the job for which they are employed. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

11.30 p.m.

Baroness David moved Amendment No. 78A:

After Clause 24, insert the following new clause—

REPORT TO PARLIAMENT BY SECRETARY OF STATE

(" . The Secretary of State shall lay a report before both Houses of Parliament twelve months after the coming into force of this Part stating what, in his opinion, has been the effect of this Part on the labour market for persons aged 16 and 17.").

The noble Baroness said: My Lords, the purpose of this amendment is to require the Secretary of State to report to Parliament on the impact of these provisions on the labour market for 16 and 17 year-olds one year after the coming into force of this part.

Local authorities are concerned that a combination of the exclusion of 16 to 17 year-olds from welfare-to-work and this right to time off will have a serious adverse impact on the employability of this age group. Local authorities are keen to ensure that the employment and training options for 16 and 17 year-old young people are enhanced.

While the Government's measures, as set out in these clauses, are welcome, they must be considered in the context of the assistance currently available to this age group. Unlike their older counterparts, 16 and 17 year-olds are denied assistance from the social security system and have no recourse whatsoever to other moneys. Those who may have been accommodated or assisted by local authority social services departments are often compelled to seek financial support from social services departments. This is neither desirable in terms of providing consistent financial support to young people in need, nor in terms of local authority budgets, which show that, increasingly, payments under Section 17 of the Children Act have been used to meet the income support needs of young people denied help elsewhere. There is therefore a cost both to the individual and a cost which is unaccounted for in the local government finance settlement for local authorities in having to meet these income support needs.

This group of young people are not as yet eligible to participate in the Government's New Deal for the unemployed. The official school leaving age is 16 and the expectation is that those young people leaving school at this age will seek employment, training or education opportunities. They do, in effect, enter the labour market. However, as far as employers are concerned, subsidies are available for employing 18 to 24 year-olds under the welfare-to-work programme, which is not available to this younger age group. The impact of the welfare-to-work programme may be inadvertently compounded by the Government's proposal to require employers to release 16 and 17 year-olds for training. The measures will represent a further cost to employers in recruiting from this age range and may thus act as a potential disincentive. The Government estimate the full-year costs of compliance to employers to be in the range of £60 million to £130 million per annum—large sums.

The Government have recently launched their policy initiative, Investing in Young People, which together with projects in the new start strategy is intended to support, amongst others, those 16 and 17 year-olds. But the IIYP policy has yet to take effect in full and the new start projects are not a nationwide approach but are funded only in 17 pilot areas. In order to monitor these measures, and those in the Bill, and to assess whether they are the most effective way of achieving the Government's objective of improving opportunities for 16 and 17 year-olds, this amendment would provide the opportunity for a full parliamentary scrutiny of their effects.

In Committee my noble friend Lady Blackstone said, The Government recognise that there is a potential issue here concerning the interaction of two important commitments. But we believe that that will be a local rather than national issue. However, we shall monitor closely the impact of the New Deal and will be able to assess its possible interaction with other policies. Of course that is important, but it is quite right to give priority to those young people aged 18 to 24 who have been unemployed for more than six months. But we wish to ensure that that does not put at risk the opportunities for 16 and 17 year-olds, a group who have the benefit of other opportunities such as modem apprenticeships, national traineeships and other government supported work-based training. But it is a group also which does not always take up those opportunities".—[Official Report, 26/1/98; col. 33.]

Can the Minister explain how the Government intend to monitor the New Deal and its impact on the proposals in the Bill? I want an answer. It is an important point. The 16 to 17 year-olds may be disadvantaged. I look forward to the Minister's response. I beg to move.

Baroness Blackstone

My Lords, in considering this amendment, I should first like to reassure the House that we have already stated categorically in the regulatory appraisal published alongside the Bill that the impact of this legislation will be evaluated progressively over the two years following implementation. We shall also wish to look at the interaction between the provisions and the New Deal. At this stage I cannot give my noble friend details of the actual structure of the piece of research that will be undertaken, but I can assure her that it is important that we look at this interaction and we shall do so.

I can also reassure the House that we shall publish the evaluation reports that are commissioned and that there will be no delay in making the material publicly available in the usual manner.

I can also confirm that the legislation will be implemented only as and when resources are available, and the costs and numbers of participants are expected to phase in. We are continuing to listen to the views of key partners, especially employers, but also local authorities, so that the legislation can be implemented in a way that is both sensible and flexible, and guidance can be given on best practice.

As this amendment is about the labour market, it may be helpful if I set out the wider context. Comprehensive data for the UK are not available, but the department estimates that there are over 350,000 16 and 17 year-olds in employment or on government supported work based training. Of these, around one-third have already achieved qualifications at level 2, around one-third are already working towards level 2, and around one-third are not receiving any training, or only training below level 2. This last group, totalling an estimated 115,000, is the primary focus of this legislation.

However, this amendment would require the Secretary of State to be in a position to lay a report before both Houses of Parliament 12 months after the introduction of this new employment right. There would of course be some information available from a variety of sources, but it might at that early stage be qualitative rather than quantitative, difficult to aggregate to give a true national picture, and possibly partial. If an evaluation study were to be commissioned to report by the due date, it would need to be in the field some six or nine months after implementation, and that would seem rather too early.

More importantly, many young people exercising their right to time off for study or training will not be able to show at this early stage any tangible outcome or benefit such as a qualification achieved, and it would be quite wrong to send any signal that might try to rush them. The full effect of this initiative will only be felt in the medium to long term, by improving young people's employability, and employers' competitiveness. An evaluation that had to report 12 months after implementation would not be able to identify these benefits.

As your Lordships will be aware, one of the key aims of this part of the Bill is to improve the long-term employability of young people and to give them those opportunities while they are young. My noble friend may be right that this could bring about some changes in the labour market, but such changes are unlikely to be substantively evident within 12 months of introduction. We need to allow time for both young people and employers to take full advantage of this new employment right, which will be implemented both sensibly and flexibly.

I hope that I have reassured both my noble friend and the House that there will be progressive evaluation arrangements as set out in the regulatory appraisal, and that the evaluation reports that are commissioned will be published. I hope that my noble friend will accept these reassurances and will be able to withdraw her amendment.

Baroness David

My Lords, I thank my noble friend for that partially reassuring answer. I think it does convey that she is aware of the problem. The local authorities are anxious about this matter, because their social services departments have to pick up the tab if things do not go well. However, I should like to discuss this with the Local Government Association, which wanted this amendment put down, and hope that it will be satisfied with what the Minister said. I see that perhaps there is a problem in getting a response within one year that will be satisfactory and complete. But after my noble friend's reassurances I will, at any rate for the moment, withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 25 [Orders and regulations]

Baroness Blackstone moved Amendments Nos. 78B to 80 en bloc:

Page 23, line 3, leave out ("section 16(5))") and insert ("the following provisions of this section)").

Page 23, line 5, at end insert— ("(Subsection (2) does not apply to the first regulations to be made—

1. (a) in relation to the General Teaching Council under section 1(3), or
2. (b) in relation to the General Teaching Council for Wales under section 1(3) as applied by an order under section 6(1). and no such regulations shall be made (whether made alone or with other regulations) unless a draft of the statutory instrument containing the regulations has been laid before, and approved by a resolution of, each House of Parliament.").

Page 23, line 5, at end insert— ("() Subsection (2) does not apply to the first regulations to be made under section 16; and no such regulations shall be made (whether made alone or with other regulations) unless a draft of the statutory instrument containing the regulations has been laid before, and approved by a resolution of, each House of Parliament. () That subsection also does not apply to—

1. (a) any regulations in relation to which paragraph (b) of section 16(5) applies, or
2. (b) any other regulations under section 16 a draft of which has been laid before, and approved by a resolution of, each House of Parliament.").

Page 23, line 13, at end insert— ("(6) Once the General Teaching Council or (as the case may be) the General Teaching Council for Wales have been established, the Secretary of State shall, before making regulations under Chapter I of Part I of this Act, consult the Council to which the regulations will relate.").

On Question, amendments agreed to.

Schedule 2 [Minor and consequential amendments]:

Baroness Blackstone moved Amendment No. 80A:

Page 29, line 16, at end insert—

("Education (Scotland) Act 1980 (c.44)

In section 133 of the Education (Scotland) Act 1980 (regulations)—

1. (a) in subsection (2), at the beginning insert "Subject to subsections (2A) and (2B) below,"; and
2. (b) after subsection (2) insert—

"(2A) Subsection (2) above shall not apply to the first regulations to be made under section 73(1)(f) of this Act with respect to loans; and no such regulations shall be made (whether alone or with other regulations) unless a draft of the statutory instrument containing the regulations has been laid before, and approved by a resolution of, each House of Parliament.

(2B) Subsection (2) above shall not apply to any regulations under section 73(1)(f) of this Act with respect to loans, other than the regulations mentioned in subsection (2A) above, where a draft of the statutory instrument containing the regulations has been laid before, and approved by a resolution of, each House of Parliament.".").

On Question, amendment agreed to.

House adjourned at twenty minutes before midnight.