HL Deb 04 December 2003 vol 655 cc490-540


Debate resumed.

Baroness Howe of Idlicote

My Lords, the centrepiece of what I have to say concerns top-up fees, which, clearly, are among the most important issues to be resolved in this Parliament. They are important because it is unarguably necessary to secure more resources for our universities if we are ever to return universities to their previous high international standing There can be no doubt about the need. Academic salaries in Britain are quite disgracefully low As the noble Lord, Lord Wakeham, said, the student/staff ratio has doubled from 9:1 to 18:1 in the past decade Student per capita funding has decreased by 37 per cent State contribution per student today is £1,125 per annum, which is nothing like the full cost of approximately £4,000 By contrast, Australia spends 30 per cent more per student and the United States spends nearly three times as much.

The Government are to be congratulated on being both courageous and realistic in their decision to tackle the problem, which has been shelved by previous governments for far too long Their plans are surely a step in the right direction. If we accept the premise, as I do, that higher education is no longer for the few, but is necessary for the many—not least for international economic competitive reasons—we must encourage not just a variety of routes, such as part-time or distance learning, in order that students of all ages are able to achieve higher education, but even more importantly, additional ways of financing students, including contributions from the students themselves That is where so-called top-up fees come in, which would be payable, not at the time but after graduation, through an income-related repayment scheme.

Of course, one has sympathy for the university students of today and tomorrow and the potential debt that they will have accumulated when they graduate. But the majority will earn considerably more than the average wage. The deferral of any up-front fee payment until after graduation will be a significant help to all students. The anticipated delays and exceptions proposed for those on low earnings before repayment clocks in may need to be increased, but are undoubtedly a considerable and significant concession.

Although it is a novel idea in this country, it is at the heart of the much better-funded United States university system, and is part of changes taking place in Australia to enhance the quality of universities and to enhance access to those universities. That is a further and highly legitimate factor in pursuit of the Government's important objective of "inclusiveness". Those from deprived backgrounds who qualify should—indeed must—have access to adequate means-tested maintenance grants of a sufficient size on which to live during their studies.

I do not believe that that has to be done by a government loan. That is not the way in which it is done in Australia or the United States. If we follow their examples, surely we need to give universities more—not less—freedom to run their own affairs. By all accounts, the US has the most successful university system and the most highly paid academics. It is also the most competitive and the most variously funded. Access is provided for as well.

Certainly, its Ivy League universities manage to apply a means-test approach to admission; that is, only after acceptance do they decide how much the student should contribute personally, with the balance being found from bursaries or other sources Clearly, as there are no fewer than 39 US universities, each with an endowment of 13 billion dollars, it will be some time before we can compete at that level. But we must start now.

There are other ways in which we could make our system more flexible. Why, in principle., should not universities have the freedom to charge variable fees? As the noble Lord, Lord Rooker, said, it happens with part-time courses. As a previous deputy chairman of the Open University, I know that exactly the same thing applies there. Why should we not apply a more market-based approach to over-subscribed courses, such as media studies, to enable some cross-subsidy to less popular but much needed subjects?

The trouble with our "system" is that the Government have become too involved with the minutiae of how universities are run. There are many complaints of undue bureaucracy and of endless offers in "biscuit tins", as one vice-chancellor far from the Russell Group described it. Money is offered for specific government objectives and universities are lured off their own agenda, in order to qualify for a little desperately needed extra money.

That is why I cannot endorse the notion of a director of "fair access". Setting up yet another expensive statutory body to judge whether a university has done enough to attract more disadvantaged students is both insulting and further evidence of the Government's wish to interfere with the independence of universities. There are surely less expensive ways of achieving that highly desirable objective, not least to trust universities, in a rather different environment from many years ago, to deliver. Already the statutory bodies with which universities need to do business cost nearly £1 billion per annum and employ 1,500 staff.

All that represents an added and avoidable burden on the taxpayer, who has many other even more pressing educational needs to finance. As political parties know well, there is certainly a limit to the level of taxation that the electorate will tolerate. If we are looking at the many priorities for government, more resources for schools rightly is top of the agenda. Indeed, I would argue that the most vital component of the success of the Government's higher education proposals is to ensure that schools in deprived areas are equipping those students with university potential to achieve the necessary qualifications.

I warmly commend the Government for the many initiatives—Sure Start and others- that aim to compensate disadvantaged children from backgrounds where learning is not valued. Universities, too, are playing an important part here. They are opening their premises to visits from schools, with university students going into schools to encourage those children with high potential to aim higher. That is yet another reason why we need to concentrate more resources at school level.

But one has to say that, so far, these efforts have not seemed to be as successful as one would have hoped. If one takes the deprived area schools in inner London, for example, it is inevitable that children there will need the most inspiring and dedicated teachers—and more of them per school—if there is to be any real hope of success in this direction. I would argue, as I did when I was a member of the Inner London Education Authority some years ago, that as these schools need double the staff effort and dedication of, say, schools in the leafy suburbs, then surely the answer is to ensure that they get double the resources and double the number of teachers.

I believe that there are plans to open four new schools in inner London, but I am concerned that, important though the initiative may be, it will not fully meet the Government's otherwise admirable objectives. More action and less bureaucracy is needed and I hope that, when she responds to the debate, the Minister will be able to reassure me that this will happen.

I may seem to have ended at a point some way from my opening concern with higher education, but this is all a seamless web. The plain fact is that, if we are to find the resources for the vital early stages of a child's education, then it cannot be wrong to expect those lucky enough to benefit from a high quality tertiary education—and they certainly do—to pay back some of the fruits of that benefit. That is the social justice of the case for so-called "top-up" fees.

3.41 p.m.

Lord Sewel

My Lords, one of the difficulties associated with taking part in the debate on the humble Address is to decide on which subject to focus. Given my own interests, I have had to make a choice between rural affairs, where a number of important policy advances have been made, with more to come, on which I could say some warm words, and education—in particular higher education—where I am afraid that those words would be less warm. I have chosen higher education.

I start by declaring an interest as the senior vice-principal of the University of Aberdeen. I should make clear that I do not speak for the University of Aberdeen on this subject; I am speaking purely for myself and myself alone. I hope also that, on this topic, we shall not have any nonsense that those noble Lords who come from Scotland should not participate in this area of policy. As we have a single labour market for academics and increasingly a single market for students, whatever happens in England has quite direct implications for Scottish higher education. I think that we have a justifiable interest.

One of the good developments of the past few weeks and months has been the general recognition that higher education is under-funded, and that is to be welcomed. If we are to maintain—actually, I think the word is now "regain"—our world position of excellence in higher education, then we have to look at increased funding for such education and a new funding stream. There is no doubt about that.

Many aspects of the Government's approach to the funding of higher education are soundly based. It is right that the main beneficiaries of higher education should be expected to make a contribution. It is right that that contribution should be in the form of a requirement to pay following graduation rather than the payment of up-front fees. It is also right that the contribution made should be income-contingent. I believe that, among serious commentators, there is general agreement on those three elements. However, it is when we go beyond that point that the difficulties and the scope for criticism arise.

Let us look at variability. The Government and the Prime Minister have placed great weight on the need to provide for variability in setting fees. What we know is that the Government have announced that the maximum fee will be limited to £3,000 per year, a figure which is to stand for some years. The higher education sector has responded to that by declaring that, basically, all universities will charge that fee for all their courses. So a problem with variability arises at the very beginning because it assumes that, some way down the track, the cap will be lifted and the opportunity for universities to charge higher fees for their courses will be given. It is important that the model is correct from the beginning, no matter what are the particular figures agreed on fees at the start.

I am not convinced that students from modest backgrounds—not the poorest backgrounds—will not be influenced in their choice of course or university by the size of the fee that they will be expected to repay. That is wrong and we ought not to do anything that could lead in such a direction.

I turn now to income contingency, which in its concept and principle is absolutely right. However, the Government's present proposals are very much a blunt instrument. Basically, a common, universal contribution is to be made, one that is not related to the extent to which the individual graduate benefits from higher education. So the contribution is not directly related to the benefit derived. I illustrate the point by referring to two graduate professions: primary teaching and the law. The primary school teacher will pay as much as the top lawyer, and that is wrong. The Minister may have a partial answer to that, so I shall narrow the example down and look in general at graduates in law.

Law graduates do not all go on to become top lawyers. Many noble Lords are top legal professionals, but not everyone with a law degree becomes a top lawyer. Some work in community law centres, while some leave the practice of the law, as did my own private secretary, to work for a significant period in the voluntary sector. It is wrong that all those graduates should be expected to pay the same level of fee because the financial benefit or return is different.

There is another way of dealing with the problem, one that addresses the three principles on which all participants in the debate are agreed. In fact it would result in a closer correlation between the amount paid and the benefit derived; that is, through a graduate income tax. I read somewhere that the Government were moving away from such a solution because they had evidence that those from more affluent backgrounds were reluctant to contribute towards the higher education of those who chose to work in less financially rewarding careers. I think that that is a very good reason to go down the graduate income tax route; it is a strong argument in favour of it. I also believe that a graduate income tax, rather than the proposals currently before us, is closer to the core values and beliefs of my party.

Lord Monson

My Lords, before the noble Lord sits down, would he explain how the graduate income tax would work for graduates who leave to work abroad?

Lord Sewel

My Lords, the answer to that is: how would the Government's proposals work for those who leave to work abroad?

3.48 p.m.

Earl Peel

My Lords, despite the fact that agriculture and rural affairs did not get much of a mention in the gracious Speech, it does not mean that there is not a great deal of activity in that quarter. I am glad to say that fanning fortunes have recently picked up a little, but how sustainable that will be remains to be seen. However, it is one thing for the farming community to try to cope with an unprofitable industry, but it is quite another when it tries to do so in the knowledge that the very structure in which farming has operated for so long is about to undergo a sea change.

I declare an interest as an owner of land which is subjected to several tenancies. However, I certainly subscribe to the view that most farmers recognise fully the need for a radical change in the subsidy system. It is no longer tenable for taxpayers' money to be used to support production and if farmers are to continue to receive support it is right and proper for it to be channelled in the direction of the improvement of the environment. So I welcome the principles behind Herr Fischler's proposals for decoupling support in his mid-term review.

But I believe it is imperative that, given the degree of flexibility open to member states in how they implement the proposals, Defra must not rush headlong into decisions that will affect the future of farming without very carefully considering the options.

As the noble Lord, Lord Grantchester, said—I take this opportunity to welcome the noble Lord back to your Lordships' House and congratulate him on his second maiden speech—the Government appear to be concentrating on two scenarios so far as concerns the new single payment. One scenario revolves around the individual historic entitlement calculated on what the farmer has received during the relevant period; and the second is a regional average payments system which, broadly speaking, means what it says.

We are led to believe—and I am pleased to see that the noble Lord, Lord Whitty, is in his place—that the Government are leaning towards the first scenario which, on the face of it, may appear the simplest to operate and the most equitable. But any farmer who changed his business operations during the relevant period on which the payment will be based could be in great difficulties and reliant on an untested—and almost certainly under-funded—appeals system if he is to receive a reasonable payment. I believe—I may be wrong—that some 1 million acres could fall within this category of uncertainty. I therefore suggest to the Government that if they pursue this route there could be very considerable difficulties ahead.

I ask the Government to consider also the case of a farmer who, encouraged by the new mood in agriculture, abandoned his intensive operations in favour of an extensive system of production geared towards environmental gain. However, because he did so at the end of the entitlement period but was still extensively farming during the entitlement period, under the new single farm payment he could receive up to, say, £600 a hectare. Compare this to his neighbour who converted to a more benign system just before the entitlement period. He may qualify for only, say, £100 per hectare. They are both farming in a responsible and sustainable fashion but the enlightened farmer who converted earlier is penalised to the benefit of the less entitled farmer who converted late. This cannot be an equitable solution. Once again it demonstrates the dangers ahead for the Government if they pursue this option.

The other method—that of regional average payments—remains a popular alternative with some. However, this, too, has its shortcomings. I believe that, as a broad brush calculation, more than 20 per cent of fanners would lose more than 20 per cent of their support. So, again, this option also produces problems.

As the noble Lord, Lord Grantchester, pointed out, two hybrid schemes are available. I urge the Government to consider seriously the one that broadly combines historic payments for animals and regional average payments for crops. This is not the time to go into details but this option could lead to a more sustainable system, which is exactly what the industry needs during this time of uncertainty.

Perhaps I may now say a few words about the recently published report of the noble Lord, Lord Haskins. In my view, anything that is designed to streamline the operations within Defra and to reduce the present confusion must be welcomed, and I am sure that there is much to be welcomed in the noble Lord's report.

I wholeheartedly applaud the idea of integrating the landscape and recreational dimensions of the Countryside Agency's responsibilities with the nature conservation role of English Nature. They are all inextricably bound up. Indeed, I remember that when we last discussed this issue—which I believe was back in 1996—I spoke in support of the amalgamations, which of course eventually took place in Scotland and Wales but not in England.

I would go further than the recommendations of the noble Lord, Lord Haskins. I can see no logical reason why the new agency should not embrace the responsibilities of promoting the economic viability of rural businesses in addition to the environmental stewardships. I say this because the objectives are all interwoven. Without a healthy, profitable rural sector the management of the countryside and all the sustainable conservation objectives that are so important to so many of us simply will not happen.

I end by saying to the Government that, despite my enthusiasm for much of what the noble Lord, Lord Haskins, recommends, I urge caution. The implications of the mid-term review in all its guises, along with the implementation of Sir Don Curry's level 1 and level 2 schemes, are truly profound as far as changes in the countryside are concerned. Between them they are likely to produce one of the most significant changes that agriculture has experienced for some time.

There is much anticipation and there is hope. But there is also fear and confusion. No matter what option the Government finally decide on in terms of single farm payments, there will be huge uncertainty both within the farming industry and Defra itself. I strongly recommend that any changes to the department and its agencies should not be contemplated until such time as everyone is ready and the effects of the mid-term review have been allowed to settle. There are some good proposals here, but I urge the Government not to run before they can walk.

3.57 p.m.

Lord Mitchell

My Lords, as someone who has had a substantial student loan, paid it back and lived to tell the tale, I should like to make my contribution by putting a real life perspective into the current debate.

When 5 per cent of the population went to university, the state could well afford to finance them. Now 50 per cent of our young people aspire to higher education—and this must be a good thing—but the bald truth is that the Government cannot afford to fund the complete tuition fee. Plus we must face the fact that, like so much else in our country, our universities have been crumbling due to inadequate finance. Truth be told, even our best universities are losing out in the global academic hierarchy.

When I was 21,I went to the United States to study for a master's degree in business administration. In those days no such degree was available in this country, and besides I wanted to see the world. I was accepted by Columbia University in New York city. I left England with £500 in my pocket, realising that not only would I have to pay my tuition fees but also that I would have to find money to live.

American universities work hard—harder than I had ever known. In my case, nine until six every day; one week off for Christmas and only a few days for Easter. But, despite this, I still had to work to eat and for four nights a week I worked as a waiter, living on tips. Even so, I could not afford my tuition fees.

In those days the tuition fees were 8,000 US dollars per term. The university helped a little but, for the bulk of the cost, I had to borrow. I came back to the UK in 1966 with a loan equalling 15,000 US dollars. We were given a three month settling-in time and then the repayment schedule kicked in. Unlike the current proposals, no consideration was taken of future income; there was no respite until salaries reached a pre-set level; you had a loan and you had to pay it back. My American colleagues were receiving salaries of around 12,000 US dollars per annum, but I came home to the UK, where my first job paid £750 per year.

Your Lordships can imagine how hard it was to survive. One year later, the pound was devalued against the dollar, the effect of which was that the principal that I had begun to reduce was increased in sterling terms even above its original level. I learnt an important business lesson—never have a foreign currency mismatch between principal and income. But I survived. To me that loan was never a debt: it was an investment. Was it worth while? Yes it was, thousands of times over. What did it teach me? That all that hard work got me my masters degree, but also that anything is possible if you set your mind to it. For me, it was a good lesson. I have no hesitation in saying that.

The Government are right to say that students should make a contribution. They are also right to say that different universities should be able to charge different levels of top-up fees, but that subject will run and run and I will not go on about it any longer.

I now turn to my real education passion, which is e-learning, and here I must declare my interest as a trustee of the eLearning Foundation and that my employer supplies computer services to schools. E-learning is a great British success story. It is the process whereby children—as well as university students and adults—are able to learn either at school or at home using computers, not as a replacement for classroom teaching but as a complementary aid. The eLearning Foundation was set up two years ago with the simple remit to ensure that every child in this country has access to computer learning with the ultimate objective that all children should have their own computers, in their rucksacks, just as they have their pens and pencils. Our new chair is my right honourable friend Estelle Morris.

Today, over one million children go to schools that are associated with the eLearning Foundation. The Department of Education and Skills has been hugely supportive of e-learning in general and my foundation in particular. I must thank my noble friend the Minister and the Secretary of State for their wholesome backing. The department's commitment to e-learning includes £280 million of e-learning credits; £195 million in laptops for teachers; and a £287 million commitment to ensure that all schools will have broadband capacity by 2006. The Government's target is for one computer for every eight children in primary schools and one computer for every five children in secondary schools by 2005. In my opinion that is too timid. In a knowledge based world we need to have higher aspirations.

There remains a massive problem associated with the so-called digital divide—that middle class children have computers at home and poor children tend not to. We simply cannot have our most disadvantaged children missing out on the very skills that could ensure their employment prospects in the future.

Does e-learning matter? Is it all worth while? I have visited schools in socially excluded areas that employ state-of-the-art technology, and the effect is dramatic. Hard evidence is now replacing anecdote that schools that embrace IT improve their results in SATS and GCSE. Staff and students are better motivated, school pride is enhanced and parents are becoming more involved. Most importantly, those young people are going into the world with 21st century skills. What we see for those lucky ones must be available to all.

4.3 p.m.

Baroness Byford

My Lords, no one can accuse this Government of not consulting widely in and on the countryside. They cannot claim to be unaware of the problems and needs of rural communities. The Curry report, the Haskins report and the three inquiries into the mishandling of the foot and mouth outbreak, all stress that rural areas have many problems that are different from those of towns. I remind the House of our family farming interest. The conclusions of those consultations, the recommendations of the reports and the much-vaunted concentration on joined-up government should combine to ensure that policy takes rural factors into account. I fear that that is not so in the gracious Speech.

Educational reform by this Government includes a great deal of very heavy micromanagement. For example, I am told that the DfES has produced more. than 200 pages of detailed "guidance" on how local education authorities should structure their formulae for school funding. It seems fairly obvious that an LEA concerned with several hundred inner-city schools will face rather different pressures and problems from a rural LEA with fewer schools but much greater distances between them. The DfES is "guiding" LEAs to put more and more of their financing into schools using age-weighted pupil units in place of base or school allocations. That militates against the continuing operation of many of our smaller schools, most of which are in rural areas.

Schools are funded from local sources. They have to conform to national agreements. There is nothing wrong with that one might say, but if the necessary funding for the various government initiatives is not made separately available, it has to be taken from the school's budget. The smaller the school, the higher the ratio of income per pupil and the more difficult it is to pay for them. As recently as 7th November (at col. 552) Hansard contains a Written Answer that admits that government funding is not sufficient to pay increases to teachers on the upper pay scale who moved to point 2 in 2002. Will the Minister tell us how many teachers reached level 2 in 2002 and are therefore now eligible for advancement to level 3 but for whom there is no funding? Will she also clarify whether the Government intend to fund the cost of the extra pay each year following the award of a level 1? Small schools may have difficulty finding the money to pay these increases.

The whole question of funding was touched on succinctly by my noble friend Lady Hanham this morning. Indeed, she referred to the National Audit Office's report condemning the Government and their policies for calling for extra spending and then blaming local government, which is not fair.

The gracious Speech announces pilot school transport schemes, and I understand that LEAs may be allowed not only to raise existing charges but to introduce them where buses are now free. There are relatively few rural secondary schools and it is normal for older village children to travel more than three miles each way to attend school. Furthermore, primary school rolls are falling all over the country because of the declining birth rate. Government pressure to reduce surplus places allied to the greater linkage of funds with age-weighted pupil units will mean the closure of more village primaries. To charge for school transport, especially for those below the age of 16, will be to discriminate against rural children.

We await the details of the transport Bill, but I urge the Government to remember that cars are an essential way of life for rural folk. Any integrated transport system should be based on local community needs, especially those of local schools.

I now turn to housing. Lack of affordable housing is a problem for town and rural dwellers alike. In rural areas, average weekly wages are not only much lower than in urban areas, but the problem is all the more acute. The Government's record is a disgrace. Statistics show that 130,000 or so households are without a permanent home of their own, while at any one time, 750,000 properties stand empty in this country. Of those, 20 per cent are in the public sector. In the rural White Paper of 2000, promises were made that 3,000 affordable houses a year would be built in small settlements. The record shows that that was not achieved. In 1997, some 2,020 were built, but in 2001 that figure had dropped to 1,371. Added to those figures is the fact that between 1997 and 2001, only 20 per cent of affordable housing was rural build. The Countryside Agency report of 2002 stated that public sector and social housing account for 14 per cent of total stock in rural districts, compared with 23 per cent in urban ones. Hopes have been raised, but targets have not been achieved.

We await the details of the housing Bill. However, I should like at this stage to flag up the concern that was mentioned in an earlier debate about the "seller's pack". That issue is still causing great anxiety.

I turn to the planning Bill. Two consultation papers are currently out on the draft planning and policy statement PPS7 and on sustainable development in rural areas. Planning authorities should allow limited development to meet local business, community and identified housing needs, particularly in order to maintain the viability and vitality of smaller towns and villages. A positive approach should be taken to improve accessibility and community value of existing facilities such as village pubs, shops, village halls and schools.

Paragraph 18 of the consultation paper states that the reuse of existing rural buildings is usually preferable to leaving them underused, vacant or derelict—a point which I raised with the noble Lord, Lord Rooker, in an earlier debate. The rural districts of England contain more than 577,000 businesses which represent 30 per cent of England's total. Agricultural businesses account for 15 per cent of the total in rural districts. One way in which the Government can help current and future businesses is to encourage the spread of broadband or high-speed electronic communication. Currently only 3 per cent of rural businesses have broadband compared with 11 per cent in urban areas.

I turn now to what was not included in the gracious Speech. There was no hunting Bill. What are the Government's intentions? In another place, in debating the gracious Speech, at col. 338 of the Official Report for 1st December, Mr Alun Michael confirmed that, as the Prime Minister had made clear the previous week, the issue will be dealt with in this Parliament. How will that be achieved when, as has been upheld, the previous Bill impinges on human rights?

The gracious Speech also did not include a Bill on animal welfare, which has long been promoted by Elliott Morley and long looked for by many outside organisations. My understanding is that a draft Bill will be presented in spring 2004 and brought before Parliament if time allows. I ask the Minister whether there might not be a link between the non-appearance of those two Bills.

I began by saying that the Government have consulted widely, and it is true. However, the hard reality is that, unless action is taken urgently, agricultural and horticultural businesses will be at the whim of the current thinking of politicians. The Curry report and the Haskins report are both hugely important. The latter looks at the ways in which Defra evolves its policy and reflects how those policy decisions are delivered. Defra distributes more than £1 billion of its total £3 billion in more than 45 agri-environmental schemes. What a lot of people employed unproductively, and what a lot of time and money being spent in bureaucracy and form filling! That really must not continue.

For the sake of our countryside and our rural businesses, and of course for the long-term conservation of wildlife and habitat, the Government must urgently settle those details. CAP reform, however, is the more important issue. It is of prime importance that we agree how those payments should be made. Should they, as my noble friend asked earlier, be based on an historic, a regional or a hybrid system? What we must not do is burden agricultural businesses with added costs, making them uneconomic compared with other countries. The Government should clearly bear in mind the risk they run of exporting our food production and the effect that that would have on our balance of payments.

I believe that long-term food security is more important now than in years gone by. This year's June census gives a grim warning: 17,000 farmers and farm workers left the industry in England between 2002 and 2003. Nearly 85,000 have left the farming industry since the Government took office in 1997. I believe that opportunities exist; the development of non-food crops, for example, can bring great advantages. However, the Government's energy policy lacks direction and has failed to supply sufficient fiscal help. There is much to do. I hope that the Government will move from their consulting mode to an action mode.

4.15 p.m.

Lord Puttnam

My Lords, I am required to speak quite briefly, certainly too briefly to do justice to the challenge of achieving a sustainable future for the whole of this country's higher education sector. I should, of course, declare an interest as chancellor of the University of Sunderland. I have apologised in advance to the Minister for the fact that I was not in my place this morning. I chair the National Museum of Photography, Film and Television. We arranged to interview new directors this morning and some of them have flown in from overseas. No discourtesy was intended to the House, but I also avoided any discourtesy to prospective candidates for the job.

Everyone connected with our universities can only be grateful to the Government for acknowledging the hopelessly inadequate level of funding that has been suffered for years. The Government's proposed legislation is undoubtedly well meaning. I find myself in agreement with almost every word the Prime Minister uttered last week in setting out the need for an early Bill. In fact, I disagreed with only two words. Unfortunately, those words were "these proposals". The scale, the nature and the urgency of the problem have already been clearly identified. That is the good news. The bad news is that the proposed remedy in the form of "variable" or "top-up" fees could quickly prove every bit as damaging and divisive as it will over time be seen to be hopelessly inappropriate to the scale and nature of the challenge.

One of the great benefits I have derived from membership of your Lordships' House is the opportunity that it affords non-politicians such as myself to question former Ministers on their retrospective attitude to the effects of this or that piece of legislation for which they were responsible. In listening to them, I have been struck by a single recurring theme; that is, levels of under-investment that have been found acceptable by successive governments despite certain knowledge that, sooner or later, the piper would have to be paid. Any snapshot of the post-war years serves to highlight our continual failure to address the fundamental inadequacy of our transport infrastructure, our public education system and our health service. I could add to that list at great length, and every example I could offer would strike a resonant chord with one or other Member of your Lordships' House.

Now we are being asked to turn our minds to higher education funding. Better late than never, some will rightly mutter. But there lies the first and possibly the biggest bear trap. The lack of resources within the sector is so chronic and has been ignored for so long that anything looks like up. Sad to say, many— possibly even most—vice-chancellors have bought a "bill of goods" dressed up as the best or the only game in town. Shame on them; they should know better. There cannot be one of them who sincerely believes that the Bill, when published, will be the solution to the long-term problems of the sector, although a few—a very few—might privately believe that subsequent secondary legislation will enable them to have something close to the funding stream of their dreams. However, they also know that their security will be bought at the cost of undermining and possibly crippling the aspirations of the great majority of students and higher education institutions in this country.

No, the present proposals will not do. For a start, this entire funding argument is being distorted by an entirely legitimate need for consolidation in the sphere of what I will term "Big Science". I entirely accept the necessity for capital-intensive "centres of excellence" which cannot be generally replicated around the country. These will tend to attract the majority of ambitious young scientists, and, as a realist, I am prepared to live with the distortions to which this concentration of power and money will inevitably lead. But these very particular circumstances do not apply to the vast majority of departments at our universities.

Irrespective of any assurances you may hear, these proposals will, in short order, lead to the emergence of significant differential fees as, for the very first time, a wholly unwelcome marketplace emerges within our state provision of public education.

In many parts of the country the very notion of debt is abhorrent, and that attitude is most prevalent in those self-same communities in which this Government have made real inroads in breaking down generations of prejudice—a fear and prejudice that insists that universities are just "not for the likes of us".

Of those who actively seek the creation of elite, expensive institutions I ask, having graduated with flying colours, do we not want the very brightest and best of our young people seriously to consider a career in the public sector? That being the case, I very much doubt that the mountain of debt that they will be carrying will be much of an encouragement.

I believe myself to have been born a citizen of a great country. More than anything I want my grandchildren to be citizens of a great country. Surely our sole reason for being in this place is to help make that possible. But I do not believe that this country has much of a future if we fail really to crack this issue of university funding. Having read and heard a great deal, my every instinct tells me that these present proposals which, when fully implemented, will raise some £1.25 billion a year, will prove inadequate to meeting one of the great challenges of this new century. That instinct was supported by an article by the Chancellor, Gordon Brown, in The Times this morning in which he said: The reason we seek to broaden access to universities is that only by drawing on the widest pool of talent, from whatever social background, can we achieve for Britain the excellence our economy requires". Please note that the Chancellor does not use the words "seeks" or "hopes for", but "requires". To achieve that we have to cast our minds well beyond any half-baked compromises. We need to think big and dig deep, just as are other highly competitive countries, many of which are juggling with these self-same priorities but with far fewer assets with which to address them.

My own preference, which I shall go into in more detail should the Bill obtain a Second Reading in this House, is a hypothecated graduate tax underpinned by the issue of a higher education bond. I shall suggest that the bond is designed to raise some £20 billion and is underwritten on a 50:50 basis by the Government and the universities themselves collectively. Not only would the sum raised go a long way towards achieving that frequently invoked nirvana, a world-class HE sector, but it would do so in a flexible, equitable and, I hope, sustainable manner.

If I may, I shall address my final remarks to colleagues in my own party. Not only do I believe that I was born into a great country, I also believe myself to be a member of a great party. Like many of your Lordships I expect to be campaigning for that party in the not too distant future. This Government have much of which they can be justifiably proud, not least in the area of education. It is those achievements I should like to shout from the rooftops. However, I have no idea what I shall answer when asked, as inevitably all of us will be, "Which manifesto commitments will you renege on this time?"

Perhaps because I am not a lawyer I shall not resort to the kind of semantic evasion I have recently heard offered as a means of wriggling out of our self-created dilemma. Surely all of us in this and another place have an overwhelming interest in promoting trust in our political system, not undermining it.

In conclusion, my deepest dread is that 20 years from now I shall find myself shuffling down these corridors passing another generation of men and women who express only regret for their missed opportunities, most particularly for the timid and inadequate manner in which they addressed what might well be remembered as the great university funding crisis of 2004.

4.24 p.m.

The Duke of Montrose

My Lords, I was struck by the welcome in the Minister's opening speech— unfortunately, he is not present at the moment—for the area of the gracious Speech that concerned a fairer and more just society. I am sure that is something that the Minister has cherished for some time. It may appear slightly strange for someone in my position to say that the question of what is just and fair may depend on one's own situation.

I must declare an interest as a farmer and livestock rearer, as I speak on those subjects. I wish to touch on two points: the countryside in general and an issue that specifically concerns Europe. For very many of those involved, one of the attractions of being a farmer or rural landowner is that it has been possible to sustain the impression that a rural life means living a life of independence within your own acres. There was a flexibility to choose what line of production would best suit your situation and your temperament. Farming was regarded as an essential element of the national life, and the "honest toil" celebrated in literature and verse was seen as thoroughly beneficial in taming nature and allowing all kinds of useful things to flourish, although some of the Minister's remarks showed how much that attitude has changed. Many of the ways in which government offered to underpin production left a lot of room to sustain that impression. But in fact, what with the progress of science and with government and EU subsidies and regulation, all of those things have become progressively less and less true, and the public seem to be less and less convinced that money provided to sustain those activities is to their benefit.

As so ably expressed by my noble friend Lord Peel, I feel that we are now facing a watershed. Most of that air of independence is being swept away and once again the state is taking over. It is perhaps a little difficult to say whether the state should be regarded as Britain or Europe but, whichever it turns out to be, it does not imply a fundamental difference. The state, of course, is taken to be acting on behalf of the people and therefore any rights of the individual that are being diminished are somehow wonderfully increasing the rights of large numbers of others.

That may seem fairly incontestable when we are dealing with something like access rights, which of course we have seen being enacted on a rather wider basis in Scotland than is proposed in England and Wales. In Scotland it is proposed that access can be exercised anywhere but in the curtilage of a domestic dwelling or school. But, wherever it occurs, it is a diminution of the right of the individual property owner.

The new philosophy is very much that we should be paid to put on a show for those who wish to escape the harsh realities of their lives and be able to wander curiously in the fresh country air without finding anything that will give them offence.

There is also a new wave of enthusiasm for community ownership, most easily conceived as community ownership of woodland, but gradually being rolled out into ownership of property, and in most cases receiving handsome financial assistance from public funds. However, there is an awkward question that lies behind the community woodland proposal in particular. Woodlands require management and even those on the scale of the Forestry Commission are currently losing money—in that particular case several million pounds a year. How will things work when there is a burden of losses to be met by the community, perhaps in one year or perhaps in more than one year?

As many of my noble friends have said, by far the biggest change to our understanding of what constitutes a rural way of life is likely to come from the mid-term review and the complete decoupling of agricultural subsidies from production. As it stands, this appears to be the most likely option offered by the mid-term review of the CAP to be chosen for this country. This seems at first glance to be the most radical simplification of all the myriad forms, returns, permits and applications that the industry could ever conceive and, if that was all, we would all be likely to send up a big cheer.

However, as many of your Lordships will be aware, coupled with that requirement is a stipulation known as cross-compliance. Certainly, to my knowledge, in Scotland, and more than likely in the remainder of the country too, this will be centred mainly on the requirement for everyone who is receiving the single farm payment to agree to what is termed a "whole farm plan". This will be drawn up to suit the criteria of the administration which will have a fairly pre-conceived idea of what produces the most public good. In the nature of this kind of thing, any desire for innovation or variation from what has been laid down is liable to be acceptable only after considerable persuasion and negotiation. The shape of the countryside will be taken in hand by the Government.

As someone who has care of and responsibility for animals, I should like briefly to express my thanks to my noble friend Lord Soulsby for flagging up so much our problems with health for animals. I also want to mention a regulation currently being considered in Brussels that has its roots among the public perceptions that I mentioned. It is the proposed regulation for the welfare of animals in transport. It plans to bring in far more onerous criteria than those in the Welfare of Animals in Transport Order 1997, the current rule in this country. Any problems that have arisen have tended to be from a flouting of those existing criteria, which have been accepted as thoroughly practical and are in use as the basis of some of the highest animal welfare schemes in the country. The new proposed regulations have created great concern for all sectors of the livestock industry, but particularly for the sheep sector and remote areas.

We live in a country of immense climatic and geological variability. We have a livestock industry that depends on transport to ensure the welfare of that livestock, because it requires to be moved from one part of the country to another. I draw noble Lords' attention to a study carried out for one remote area, by the Highlands and Islands Development Board, of the effect of the proposals. It estimates that, for sheep moving within Scotland, the proposals will cost producers an extra 75p per head. For those moving beyond Scotland, they will cost £2 per head. For cattle, they will cost £6.15. That may not seem much but, when calculated over the total animal movements for that area alone, the cost is £ 1.65 million, in an industry that is severely stretched. Do the Government know any scientific reasons that can be advanced for those EU proposals? What attitude do they expect to take in the negotiations?

Under our old support systems, farmers liked to feel that they had the ability to cope with all the changes that a commodity trading market could throw at them. The next stage will offer new and greater challenges. Like my noble friend Lord Peel, I ask the Government, if they are making haste, to do so very cautiously.

4.32 p.m.

Baroness Perry of Southwark

My Lords, in the very wide topics that we are debating, I wish to talk about policies on higher education, as other noble Lords have done. Those policies have two overriding priorities. The first is that we do not waste any human capital. Everyone who wishes to go into higher education and is qualified to benefit from it should be able to do so. The second priority is that the universities are sufficiently well funded and free from government interference to provide the right and most suitable kind of higher education for the vastly increased number of students now entering the system.

Access is fundamental. Any structure that higher education adopts must be sufficient to ensure that the access is to the right kinds of courses, fitted both to the needs and abilities of students and to the needs of the economy and employers outside. Incidentally, I have no problem with the Government's target of 50 per cent. That came not from the Government in the first case, but from the CBI after some very careful study of what the overall demands of the economy would be.

However, we should remind ourselves that that economy is very diverse. The idea of graduate employment being restricted to a fairly small number of elite jobs is no longer at all credible in a knowledge economy. As other noble Lords have said, there is a wide range of needs in the economy now for highly educated people, which includes everything from the most esoteric of physicists or engineers to the well educated retail manager, hotel manager or surveyor, and nurses and teachers of course in the professions.

If we are to meet the needs of both the students and the economy, it is important that our system is diverse. I am concerned that the Government's proposals for the £3,000 maximum fee do not encourage diversity. As the noble Lord, Lord Sewel, said, all the signs are that the universities are already saying that they will all charge a flat £3,000 fee for every course and in every kind of institution. That sum simply does not give enough headroom to get the kind of variation that the Government rightly seem to want. It will force the system into uniformity instead of the diversity that we are rightly seeking.

Let us look at the possibility of adequate financing for the universities. The sum of £3,000 per student is simply not enough. As many noble Lords have said, UUK's estimates are of a £3 billion shortfall, and the £3,000 fee will deliver only half that. Of the £1.5 billion that on the Government's best estimates it will deliver, one third is quite properly set aside for bursaries. Assuming that the Treasury coughs that up in the years before the loans start being repaid, only £ 1 billion at best will go into universities, which is only a third of what they really need.

That is an overall figure for all universities. I cannot but declare my interest in my university of Cambridge. Like many of the other top research institutions, it must be able to continue to compete in the international market with universities in the United States and elsewhere where the funding is much better. Having chaired for five or more years 11 of Cambridge University's appointment boards in the sciences, engineering and medicine, I know at first hand how desperately difficult it is to recruit the really top researchers that our country needs in our best universities, when they are being offered not only twice as much, but sometimes five times as much as we can afford to pay them here, by universities in the United States.

After many years of working and being involved in higher education, my conclusion is that the most important thing that we can do for universities is to set them absolutely free to raise appropriate fees for those students who are well able to pay. Almost half the students at our top universities come from schools where their parents have been paying anything from £12,000 to £20,000 a year for their education. Why should they pass from the sixth form of such a school to a university that they get for £2,000, £3,000 or £4,000 a year? That seems wrong.

It also seems wrong that the Government are attempting to interfere with the academic freedom of the universities in the nature of the students whom they recruit and accept. In every democracy, the government have traditionally stepped back at arm's length in any question of admission to universities, even though funding is given. The access regulator seems an affront to all who believe in the freedom of the university system.

It is because of that that I very much welcome the letter that the very respected Council for Industry and Higher Education has written to the Secretary of State It states: "We also want our higher education to be innovative and responsive to an expanding range of needs. This is more likely to be achieved with less central intervention Each institution, like any other business should tell people what they will get for their money, price accordingly and let the customer choose". I agree entirely.

A priority in higher education policy is that no student who is capable of benefiting from higher education and wishes to go into it should be denied the opportunity because they or their parents are unable to pay It is for that reason that I beg the Government to consider the importance of a proper bursary scheme, well publicised, funded and founded, to allay the fears of students from less well-off families that they will acquire debts that they will be unable to pay. Those frighten them in perception more than reality, as the Government will argue, but that may be enough to put them off, which saddens me greatly.

So I very much welcome the announcement made last week by Cambridge University that, despite its financial difficulties, it intends to provide the one-third of its students, who in the Government's proposed maintenance grant for poorer students will qualify, with bursaries of up to £4,000 a year. It is not intending to do that entirely from its fees but from fundraising I ask myself how many universities have the range of alumni among whom fundraising can successfully be done, as it can, it is to be hoped, at Cambridge. Very few will be able to match that conclusion.

I therefore beg the Government to consider setting the universities free to charge reasonable fees. I am sure that Cambridge, if it were left free to set its own market fee, would be able to charge its wealthy students much more and therefore be enabled to give much more to its poorer students. I do not accept the Government's proposals as they stand I believe that they will discourage the less well-off students; they will not provide sufficient money to bridge the gap in university funding; and they will not encourage the necessary diversity.

4.41 p.m.

Baroness Warwick of Undercliffe

My Lords, I, too, shall speak on higher education in which I declare an interest as chief executive of Universities UK.

I warmly welcome Her Majesty's announcement of the Government's intention to introduce a higher education Bill in this Session. There are several excellent and welcome elements to this Bill, but I want to concentrate on that which is most controversial; that is, tuition fee increases I commend the Government for taking the tough decision to include this controversial Bill in the legislative programme and I urge noble Lords to support its passage through this House.

Her Majesty's Government have a grave responsibility to do what is right and necessary and not just what is easy and popular. In standing by their conviction that urgent action must be taken to safeguard the future of higher education, Ministers have chosen the difficult path. But, in my view, it is the right one.

The Government are often accused of not listening— but in this case they have listened to what the universities have been saying. They have also listened to what this House has been saying about the urgent need to find a solution to the university funding crisis. They now offer this House and another place an opportunity to act. I think it is now almost universally accepted that universities need more resources. The real debate is about who should pay, how much and when.

At this point, I want to commend to the House the contribution made by the noble Lord, Lord Dearing. Like the noble Lord, in his seminal report, I believe that all those who benefit from higher education should contribute to its costs when they see that benefit. And I can say that Universities UK believes that it is fair to ask graduates, who gain most from higher education, to pay something towards the costs of their tuition.

But we now find ourselves at a crossroads. The Government want to give universities the freedom to raise their fees for full-time undergraduate students up to £3,000. They want to give institutions the freedom to chose whether they charge the maximum amount or something lower. They want to give institutions the same freedom and flexibility to set full-time undergraduate fees that they already have—and have managed responsibly—for part-time, international and postgraduate students and, as my noble friend the Minister said this morning, which the Open University has had since its inception. It is worth recalling that at least 50 per cent of all students already pay variable fees.

A number of alternatives have been discussed. I believe that the idea of a flat-rate increase of £2,500 is being circulated in another place. As others have said, even the Government's proposal will go only some way towards redressing the funding crisis. Of course, any increase in the current fee would help, as the noble Lord, Lord Puttnam, pointed out, but, in my view, the Government's option offers the best chance of beginning to bridge the funding gap. I am convinced that the way forward lies with a flexible fee structure. I believe that all universities will benefit from the new degree of freedom offered by variable fees.

Much of the unease about the Government's proposals for variable fees has centred on the idea that it will somehow create poor universities for poor students. I am convinced that will not happen. First, all universities will be better off under the Government's proposals, and so all students will see the benefit of that. Secondly, it is by no means clear that some universities will charge £3,000 for all their courses while others will charge much less for theirs. It is much more likely that course fees will vary within institutions, with most charging more for some courses and less for others. The variable system proposed by the Government will give vice-chancellors the freedom and flexibility to respond to local conditions and to stimulate demand for courses where demand has been weak in the past, such as some languages and science courses. Do we really want to tell universities that they should be prohibited from cutting course fees? Universities need the same flexibility in relation to full-time undergraduates as they have for other students.

Thirdly, the Government propose to increase the level of financial support for the poorest students. Currently, around 42 per cent of students do not pay fees. Universities have been discussing with the Government the best ways to ensure that these most disadvantaged students are in no way worse off as a result of the proposed changes. And with their increased income from fees, the universities will be in a better position than ever to offer additional assistance to the students who are in most need.

Combined, these factors mean that the students from the poorest backgrounds, who may well be those most likely to be put off by the prospect of debt, are likely to be no worse off under the proposed system than under the current one. That means that no poor student should be put off attending even the most expensive course. And other students will also benefit because none of them will pay any fee at all until graduation.

What the Government propose is that we ask potential students to make a considered investment in their future—an investment which, as my noble friend Lord Mitchell so lucidly demonstrated, is clearly worth it. There is plenty of evidence from the benefits graduates enjoy in terms of higher earnings, more choice and opportunity, social mobility and even health.

What is more, despite the increase in the number of graduates in the UK, emerging evidence shows that the earnings premium is increasing. There is plenty of help for those most likely to be cautious. The repayment threshold and zero real rate of interest protects those who take a long time to repay their loans because their income is low, or because they take career breaks.

In my lifetime, I have seen higher education transformed from the preserve of a fortunate elite to something to which everyone can aspire. I passionately believe that this is right and necessary for social justice and economic success.

This Government are not afraid to make tough choices. They could have settled for a quiet life and ignored the implications of continued neglect of higher education. They have instead demonstrated their commitment to higher education through the introduction of this Bill. Noble Lords will know that Universities UK will be taking an enormous interest in the details of the Bill once it is published, but I have no hesitation whatever in welcoming its inclusion in the Address.

Lord Sewel

My Lords, before my noble friend sits down, does she accept that the contribution made ought to be proportionate to the benefit received?

Baroness Warwick of Undercliffe

My Lords, I am sure that my noble friend will agree that all graduates obtain a benefit from higher education and that in the case of those making a contribution on a variable basis, they will be making a proportional contribution.

Baroness Blatch

My Lords, before the noble Baroness sits down, will she not accept that a sizeable number of graduates are doing menial jobs? Not long ago, I was in the north east and saw three graduates on the assembly line at the Samsung factory. My son is an academic in science research at Cambridge University and at the age of 36 he is earning £26,000 a year. The notion that graduates automatically coin in the money simply is not true.

Baroness Warwick of Undercliffe

My Lords, for many of us who went to university, the first jobs we undertook could by no means be called undergraduate jobs. I am pleased to say that most of us have been able subsequently to benefit from our higher education. But I do not believe that there is a difference between us because those on low incomes will make no repayment of their fees. Under the Government's proposals, they will not begin to make contributions until they are earning, currently, £15,000 a year.

Baroness Sharp of Guildford

My Lords, perhaps, as a point of fact, I may ask the noble Baroness whether, on that basis, she agrees that those who do not earn more than £31,000 per annum during their lifetime on current rates would never pay back their debt? Does she agree that the effective rate of income tax on the loan amounts to 41 per cent, which is more than the rate of income tax that we charge millionaires? They would continue to pay that throughout their working lives if they never earned more than £31,000.

Baroness Warwick of Undercliffe

My Lords, perhaps I may briefly comment on that. It seems to me that the proportion of income that they will pay on that basis will remain small as well.

4.50 p.m.

Lord Berkeley

My Lords, I rise with some diffidence in an attempt to be a filling in a higher education sandwich. I am sure that my noble friend Lord Desai will continue the debate. However, I want to talk about something completely different—the environment, transport and safety. It has been an interesting debate, but transport is part of the environment. I declare an interest as chairman of the Rail Freight Group, although I shall not talk too much about rail freight now.

In the gracious Speech is the prospect of legislation on school transport and roadworks but sadly, I believe, nothing on road safety. However, I believe that it is still the Government's policy to encourage more people and freight to move to less environmentally bad means of transport. That is part of their policy, as is their intention to reduce injury and deaths on the roads and on other means of transport.

Therefore, I want to consider the issue of transport safety in the round. Yesterday, the noble Viscount, Lord Bridgeman, asked an interesting Starred Question. We all want safety in our lives but, as my noble friend Lord Peston said, life is dangerous, even at home. However, I believe that we then need to ask ourselves whether the rules, standards and laws, and so on, help to achieve safety or whether there are perversities, such as when the application of rules in one sector causes more accidents by transferring an activity to a less safe and less regulated mode.

Every year, nearly 4,000 people are killed on the roads and very many more are seriously injured, compared with just a handful on the railways. That excludes accidents at level crossings and as a result of suicide or trespass, which are not really caused by the railways. Some may argue that rail travel should be safer because one expects a higher standard when in the care of others. But the same comment applies to most road accidents. Few are self-inflicted and certainly not those in which thousands of pedestrians and cyclists are killed and seriously injured by motor vehicles each year. Many of those victims and drivers were "at work" .

It is the role of the Health and Safety Executive and Health and Safety Commission to minimise the risk of death or injury in the workplace. But, interestingly, I received a Written Answer on 18th November which stated: It has been the policy of successive governments that the HSE should not generally seek to enforce health and safety at work legislation where public and worker safety can adequately be protected by more specific and detailed law enforced by another authority".—[Official Report, 18/11/03; col. WA282.] Therefore, the HSE spends about £262 million every year chasing just a few deaths on the railways and forcing up costs many times while, perhaps at the request of government, it ignores nearly 4,000 deaths a year on the roads. Surely it should also be working towards reducing the number of deaths and injuries which occur on transport, regardless of mode. The problem is that the HSE's action on the railways, and inaction on the roads, is having completely the opposite effect.

There is a government policy to encourage more public transport, but the problem is that the costs on the railway are shooting up and out of control. I want to quote from a report produced about a month ago by Transport 2000. It stated that analyses suggest that, unit costs [of railway] have increased by a factor of three or more since privatisation. In some cases the multiple can be as much as five times". No single factor is responsible for cost inflation; rather, it is a combination of internal effects—for example, the sub-contracting of responsibility for maintenance and so on—and external forces, such as safety legislation. Costs have risen by a factor of three, four or five since privatisation.

As noble Lords may know, Network Rail has taken maintenance back in-house and is restructuring to reduce costs. One wishes it well. But passenger train services are costing more and more. Therefore, I want to consider the causes of the costs. The Government rightly tell industry that it must reduce its costs but, when it comes to the causes of costs, that is an issue which the Government can change for the better as it is something that the Government have created themselves.

I shall give a few examples. I read about the best one, which came from the Health and Safety Executive, only last week. New trains on the Connex South Central service south of London are longer than the platforms at which they will stop. The Health and Safety Executive said that the platforms must be extended, but that would cost hundreds of millions of pounds. Eventually, the train operator obtained permission to extend only a small proportion of the platforms and install something called "selective door opening". That means that the driver can press a certain button and only the doors opposite the platform will open. "Ah", said the HSE, "but how does the driver know that he is at a short platform?" The answer was that GPS would have to be fitted to the cabs of every train so that drivers would know where they were. Surely, if a driver is responsible, he will know where he is. What is the cost of the GPS and of the platforms? The worst thing is that the HSE will deny all that and say that the operator offered to carry out the work. However, the operator offered to do so only because there was no other way to get the trains to run. They would continue to sit in the sidings, as they have done for the past few years.

I could give many, many such examples, but I believe that the real problem is that a bureaucracy has entered this issue, coupled with a fear of prosecution. The HSE will say that that is a good thing and that, in any event, it never requires things to be done. It covers its tracks well, but the climate of fear is there. Is it really right for the railways to be subject to the same enforcement policy as oil rigs and gas plants and so on? Are the railways really so dangerous when roads, according to the HSE, are not dangerous? Noble Lords may have read in the Economist last week about the recent resignation of the Director of Rail Safety, Alan Osborne. He was quoted as saying that the HSE had become "dysfunctional".

It is funny that the HSE set up a complete department to implement the Cullen recommendations following the accidents on the Great Western line. There are 194 recommendations. However, the only one that the HSE has not implemented is the one that would allow a new independent chief inspector of railways from outside the industry to run the Railway Inspectorate. That is a classic case of good old Whitehall protecting itself and never mind the rest of us.

I agree with Mr Osborne: the real problem is that the HSE has become totally dysfunctional. I believe that we must consider carefully the possible solutions. The HSE must implement the common value for preventable fatality between road and rail. Billions of pounds are being wasted. With the creation of the Rail Accident Investigation Branch and the RSSB, which we all discussed when debating the Railways and Transport Safety Bill last summer, do we really need the HSE and the HMRI dipping their fingers into everything, hyping up the media and then, having done so, saying that there is public concern? We do need an independent safety regulator under the forthcoming European regulations, but it does not have to be this way.

My suggestion, for what it is worth, is that the overall regulation should be moved to a joint safety and economic rail regulator. That would have many advantages It would save a great deal of money; it would keep the regulator at arm's length from central government, and it would ensure that the economic and safety aspects of the railways were considered in the round.

I believe that the Government would then achieve their twin goals of reducing railway costs, getting more passengers and freight on to the railways, and reducing transport accidents overall by moving towards a CAA approach to the railways At the same time the HSE might spend some of its £256 million on turning its attention to road fatalities If that is not a good idea, it could give some of that money to the police and to the other law enforcement agencies to get a reduction in some of the 4,000 deaths. The Government could be in a win/win situation I conclude by asking my noble friend whether we can expect a short Bill next summer to put right some of those gross anomalies.

5 p.m.

Lord Desai

My Lords, I have taught in higher education in this country for 38 years. As I have just retired I do not have to declare an interest in relation to these proposals. If these proposals, whatever they may be—even the most generous version in terms of resources—are implemented, people who follow me will not be as well off as I was when I arrived in 1965.

In my teaching career I have witnessed—at least in the past 20 years—nothing but massive deterioration in the working conditions of academics, especially young academics who struggle to find a full-time job almost six or seven years after completing their PhD, after writing articles and after having published books.

A strange anomaly is that when we talk about hospitals and mental health services everyone in the political world enthuses about nurses and doctors, everyone loves secondary school teachers; and cannot do better for them or for primary school teachers, and everyone loves the producers in manufacturing industry and in public services, but everyone hates the academics. No one has a single word of sympathy for the plight of academics. That is so because when one thinks of higher education or when higher education is shown on television one thinks of or sees the lovely lawns of an Oxbridge college with people swanning about in gowns. The world believes that all academics teach and live in Oxbridge colleges; the world believes that academics do not really have to do any hard work, they give the same lectures every year, have long vacations and somehow they are lotus eaters.

I would echo one part of what my noble friend Lord Puttnam said in an imaginative speech. If this matter is not put right at this juncture, 20 years from now we shall not have a higher education system; we shall have what Germany or Italy has, which is an education system that is so awful that, ever since it became possible for students in the European Union to undertake courses in British universities, at the same level of fees as British students, we have had a huge influx of European students. The reason is that our system, even now, is better.

What is to be done? We all agree that resources are needed. I have been a supporter of loan-financed higher education with contingent income loans since 1987 when my young colleague, Dr Nicholas Barr, first sent me a paper on loan-financed higher education. I want to put that paradox to people. It is not equitable in an unequal society to have uniform pricing. It is actually very inequitable. Over the past 30 years we have subsidised the richer, middle-class children due to the fear that the minority working-class children, who would not be able to go to university if higher fees were charged, would suffer. Therefore, until December 1997, the 10 per cent tail has wagged the 90 per cent dog—middle-class people. They received a huge subsidy and that has been inequitable.

That is regressive distribution of income, giving people free higher education because of a desire that more working-class people should go to university. The reason that such people have not gone to universities in the past has had little to do with the level of fees. When I first arrived here to teach there were no working-class students, there were no fees and there were full maintenance grants. There were no working-class students because the quality of our secondary schools was such that they did not stay on after the age of 16. If one wants more working-class children to go to university one should not look at universities, but at schools. One must also make many opportunities available for people who do not want to go to university immediately at age 18. There are many more routes to choose.

That is exactly what happens in the United States. The reason why the United States has the largest degree of access to higher education compared with any European country is not that it is socialist, but that it is not. It has always had a diversity of fee charging and a diversity of standards in different universities. No one lays down uniformity or that every university has to do the same thing. They allow universities to choose how to structure themselves. If universities choose to be good the students will recognise that, and if they choose to be bad the students will know that they are bad. After all, those going to universities are literate 18 or 20 year-olds and they can find out for themselves whether a university is good or bad. One does not have to tell them. If they had to be told it would not be worth going to university.

My first solution, which will never happen, would be that universities would charge whatever they want for whichever course and that the current level of support that the Government provide will be leveraged into bursaries, so that everyone would pay, and those who qualify for bursaries and win them would receive full bursaries. Rather than waste your subsidy on middle-class children, as we do now, we would conserve the new resources in order to give bursaries. That bursary fund would not be specific to universities but would be national.

Like American universities, there would be income-blind admissions. Universities could then admit people and those with an admission could go to the National Bursary Fund saying, "I have been admitted to Oxford, Warwick, Sunderland, or wherever; I want this much money; these are my qualifications; give me the money". That would allow for much greater leverage.

My time is running out, but I have one more point to make. I believe that we have muddled the maintenance grant problem. Everyone talks about the debt horror, but it is strange that people talk about debt horror only in relation to higher education. Have noble Lords read any tabloids lately? The last half of every tabloid is about borrowing. We borrow for everything else but not for higher education. That is nice, is it not?

We have muddled the maintenance grant. This probably would not happen because it is a rather idealistic proposal, but I would put all full-time higher education students on income support. Why give them that money? We would do so because they are doing something in which society wants to invest. We want them to have that time at university and it is worth giving students the minimum that we believe anyone deserves for survival.

Of course, that will cost money, but that money will be repaid from their future income tax. In a sense it is an investment and it will remove the fear. If I had more time I would comment on the proposal made by my noble friend Lord Puttnam. My proposal is that any fee that is charged by any university would generate the resources, but if one is not allowed to do that I would prefer the proposal made by the noble Lord, Lord Quirk. He said that as regards the £3,000, there will be variations within that for each university. Therefore, I say to my noble friend, "Let us not have £20 billion, but can we have £40 billion please?"

5.9 p.m.

The Lord Bishop of Southwark

My Lords, I regret that the noble Lord, Lord Desai, does not have more time because the debate between him and the noble Lord, Lord Puttnam, would be worth listening to.

I regret also that your Lordships can make only one speech in this debate, as I would have been tempted to put down my name to speak on rural affairs, the environment, and education. If all noble Lords had done that, an already lengthy debate would have gone on long into the night. So, because of the Church's close involvement with education, the choice today must be education. I speak on my own behalf and that of the right reverend Prelate the Bishop of Portsmouth, who chairs the Church of England's Board of Education but who cannot be in his place.

We welcome the high priority given to education in the gracious Speech. It was particularly interesting to hear a link between, individuals achieving their full potential", and "Britain's future success". I should like to put that another way: the aim of education surely must be to equip students to make their own way in the world and to help them to make that world a better place for others.

There is more to an individual than economic production and so more to an individual achieving his or her full potential than becoming an effective unit of resource. Real success for Britain will be the rebuilding of a humane and civilised, diverse but cohesive society. Many teachers today are strongly committed to students achieving their full potential in that way. They have felt as though they were swimming against a strong tide in recent years.

The Government, we are told, are committed to raising educational standards. That can and should be interpreted to mean much more than literacy and numeracy, important though they are. Such standards have been raised in primary schools but at a great cost. The Government, to their credit, have recognised that cost and now promote excellence and enjoyment as the main drivers for the primary school curriculum.

The school league tables published today for the first time rightly include a value added factor. They therefore become more useful as a guide to how well a school is doing, although I remain cautious about the whole concept of league tables. As it happens, seven out of the 10 best performing schools in these tables are faith schools—Jewish, Roman Catholic and Church of England. We have more than 100 church schools in my own diocese, many of which are in the urban areas of south London. I know just what a springboard of opportunity these schools are, in particular for minority ethnic children.

The Minister in introducing the debate referred to the consultation paper Every Child Matters. Every child does matter. School standards matter, but in a frantic and fractured society where school is sometimes the only centre of stability for some children, the ordered, happy climate of a primary school can itself be a great blessing to its pupils, whatever the other standards might be.

Of course standards need to be raised in secondary schools. That is a demanding task, particularly in south London where house prices make it difficult for urban schools to maintain a stable teaching body and where sometimes the majority of students receive free school meals. Standards matter, especially for the non-academic, many of whom are still failed by the system, but again that must not be at the expense of breadth in the curriculum.

We on these Benches are conscious that reforms being planned to the school curriculum post-14 might jeopardise some of that breadth. For example, the Secretary of State, recently said that, the call of the times is for a higher profile for Religious Education", in schools. We agree. Yet, post-14 reforms might put that at risk.

The Church of England is happy to play its part in promoting a more diverse secondary system. I am particularly pleased to have visited the St Cecilia's Church of England High School, which recently opened in Wandsworth in my diocese. This school, which specialises in music, is one of many brand new state-of-the-art Church of England secondary schools being opened through an effective partnership between the Church and local government with the encouragement of national governments. Thankfully, the days are long gone when some local authorities regard church schools with suspicion.

The Church of England has welcomed much in the proposals on higher education set out by the Government It has a very long history of commitment to this sector. The 11 Church of England colleges and universities serve a diverse student body. Our chaplains serve the needs of students and staff in the majority of higher education institutions in the land. We want to see our universities flourish, not just for the good of those who study and work in them, but for us all Here I must declare an interest. I am a member of the council of King's College, London, and, indeed, I chair its staffing policy committee. I say to the noble Lord, Lord Desai, that I for one have a high opinion of academics.

I know from this first-hand experience how much universities and colleges have striven to maintain quality despite financial pressures in recent years. They urgently need better resourcing. But how to do so is a matter of great debate. We welcome some aspects of the proposed new funding arrangements: the reintroduction of the grant and deferring payment of fees and loans until graduates earn enough to afford to repay them But there is a perception that what is being demanded of students is a widespread acceptance of greater levels of debt.

The Church is rightly proud of the record of its colleges in widening participation. It would be most concerned if a perception that higher education is only for those who can afford it puts wider access in peril. Universities are precious institutions. There is a long tradition of Christian reflection in this area. John Henry Newman in 1854 wrote: The general principles of any study you may learn by books at home but the detail, the colour the tone, the air, the life which makes it live in us you must catch all those from those in whom it lives already". That is what universities are truly about Universities do not just bestow individual financial benefits. Such benefits may come, but graduates frequently choose a profession despite it not being well paid.

The ideal of service in the common interest is central to the Christian tradition. We should beware that self-interest does not become a prime motivation in government policy.

Whatever measures are put in place must be for the common good. we look forward to playing a part in the forthcoming debates. Whatever other weighty matters may be before your Lordships' House in the coming months, I believe that nothing will have more significance than this matter.

5.18 p.m.

Lord Rix

My Lords, first I must apologise for not being in my place this morning. I have explained my absence to both Front Benches and I am grateful to them for being so understanding and agreeing to my speaking in the gap.

I should like to refer to the part of the gracious Speech which touched on higher education. In so doing, I must declare an interest, although not a financial one. Six years ago I was privileged to become the first Chancellor of the University of East London. For the past month I have been performing at the Barbican. Some old thespians have a pantomime season; in my new role I have a graduation season. This year I have shaken the hands and congratulated more than 1,500 of our students whose hard work— often in the most straitened circumstances—has won them success.

The gracious Speech referred to a new office of fair access. I must say that my university does not need such an office. While Oxford and Cambridge colleges were still debating whether or not to admit the fairer sex, our foundation institution was training women for careers in teaching, nursing and industrial chemistry. Now the quality of our arts is rated the same as Oxford, our sociology the same as Durham and our cultural and media studies is one of the handful of international class departments in Great Britain.

Even before we had the opportunity to read the Lambert report this morning, we had responded to the call from the Chancellor to forge stronger links between universities and industry. Our business incubator units are full. We have a centre of manufacturing excellence with Ford and other universities at Dagenham. Working with such companies as Cisco and Logica, we provide the network hub for another new technology institute. We have established our inventors' club and a number of our products have already reached the marketplace. The list goes on. Yet we are a university likely to be adversely affected by the Government's proposals, as are other universities that serve the poorer areas of our country. Have not the recent ludicrous proposals from the HEFCE, which will leave four out of five universities with the most black students worse off, created enough turmoil already?

I begin with fees. It seems that the Government desire variable fees—fees that vary not just from subject to subject, as they do in Australia, but from university to university. If the Ivy League universities are to add to their substantial endowments by charging more than relative newcomers, it will not be long before a whole class of higher education institutions are dismissed by some Government spokesperson as "bog-standard universities".

We are also told that one third of any top-up that we charge should go to bursaries. Regrettably, it is the universities that serve the poorest areas that will be least able to support extensive bursary schemes. As the noble Lord, Lord Desai, said, a fairer way would be for those "thirds" to be paid into a national bursary fund, not the lottery of individual bursary schemes.

I am sure that there is much in the Government's proposals for higher education that deserves our approbation—for example, the belated adoption of the ideas contained in the report of my noble friend Lord Dearing, who is not in his place, of payment after graduation and the restoration of the student maintenance grant for those who need it most. However, I must ask three questions that require an answer. Is the system of bursaries the best that we can devise? Is the system of differential fees truly world-class? Do the Government's proposals safeguard those universities whose mission is to serve the poorer parts of our country?

If the answer to any of those questions is "No", I can only fall back on a phrase that was commonplace among educators in my youth, but, alas, has fallen out of favour in these politically correct times: the Government must try harder.

5.22 p.m.

Baroness Sharp of Guildford

My Lords, today's debate on the gracious Speech has addressed the issues of education, the environment and rural affairs. In consequence, we have had a wide-ranging debate, which has touched on issues as diverse as European regulations for yoghurt, Scottish railways, wind farms, farm management, animal health regulations and traffic safety, as well as the issue of top-up fees, which has perhaps come to dominate our discussions, especially just recently.

Inevitably, given the wide range of topics that has been discussed, someone in my place—asked to wind-up the debate—wonders where to begin and end. If I may, I shall concentrate mainly on issues in education, which is my field, but touch on one or two others, because it is appropriate to do so when speaking from the Front Bench.

One thing that has struck me is that although no legislation is proposed for agriculture this year, nevertheless, from the speeches that we have heard, it is clear that many and wide-ranging changes are afoot in that sector that will result in considerable changes in organisation and management, and that, on the whole, at present the Government are a follower rather than a leader of those changes.

As a follower and a leader, the Government are also in danger of doing too little in the field of the environment—where, again, there is surprisingly little legislation. Despite the frequent obeisance to notions of sustainability and the sustainable community, what is actually proposed will do little to channel the activities and energies of this country into more sustainable routes.

I very much agree with some of the ideas advanced by the noble Lord, Lord Beaumont, who is not in his place. For example, it is vital that we begin to face up to the environmental pollution created by the aviation industry. The noble Lord, Lord Chorley, mentioned wind farms and said that, in a sense, they are the only game in town at present in sustainable energy, but there is the real problem of what we do when the wind does not blow. We must provide back-up facilities by ordinary methods of energy creation.

As I said, I shall concentrate mainly on education issues. I touch on the point made by the noble Baroness, Lady Hanham, about school finance. That does not fall within the ambit of the gracious Speech but, nevertheless, it may well dominate some of our discussions during the next year. It is vital that we get it correct. The whole issue of local governance was raised by both the noble Baroness and my noble friend Lady Maddock.

Today's Audit Commission report makes it clear that at present, in many senses, local government receives too much from central Government: it is too beholden to central Government. We need a reordering within the framework of local government finance between locally derived and centrally provided resources. The main reason why there have been such huge increases in council tax is the reordering of the grants already given by the Government. We need real consideration of the local government finance settlement and new developments in it.

I also briefly mention the question of school transport, on which there will be a Bill. The issue bridges the educational and environmental agendas. The Bill's aim will be to lessen the congestion caused by the school run. I hope that, at a time when we are worried by growing obesity in children, just as much attention will be given to encouraging children to walk or cycle to school as to forcing their parents to reconfigure their lives by staggering school hours, and so forth.

I am myself staggered by the suggestion that school children should be means tested for school bus fares. I recognise that the current proposals are merely for trials, but it defies the laws of supply and demand that we should think that one way to avoid congestion on the roads is to charge children on school buses more. I hope that that experiment will not be carried out in rural areas, where children are dependent on school buses for travelling to school, and that it will prove to be an experiment that gets lost.

Before I turn to top-up fees, I should discuss the child protection Bill. The Bill follows two Green Papers: No Child Left Behind and Children at Risk. Along with other noble Lords who have spoken on the subject in this and other parts of the debate, broadly speaking, we welcome the Bill's proposals. In particular, we are delighted to read of a children's commissioner for England alongside the children's commissioners that already exist for Wales and Scotland.

Last year, I had cause to entertain in your Lordships' House the children's commissioner for Denmark. I was intrigued and delighted to discover from him that he made himself such a champion for children that, in effect, he had his own Childline— children spoke directly to him about their problems and he championed their issues. He was not just a voice for the lobby groups for children. 1 hope that our children's commissioner will be the same.

I also welcome moves to bring together all the services dealing with children. It is important that we have a director of children's services in local authorities. I look forward to discovering how the new children's trusts will work. I hope that in both cases there is meaningful accountability and it is not just another exercise in renaming and buck-passing. There must be real accountability, which means that there must be real authority over issues that impinge on children beyond education and social services; for example, housing, policing and psychiatric and counselling services. I echo the hope expressed by the noble Baroness, Lady Massey, that school counsellors will be reinstated. They can do enormous good and prevent problems being pushed down the road and getting bigger.

I echo the thoughts of the noble Baroness, Lady Massey, and the noble Earl, Lord Listowel, on the importance of parenting education and its role on the citizenship agenda. It is important that we educate young people before they become parents. I have always maintained that the most important time to provide parenting education is during ante-natal classes. I hope that parenting will become part of ante-natal preparation.

We have heard many contributions from around the Chamber on top-up fees. It is no secret that we oppose top-up fees, but it is not correct to suggest, as Ministers and the media have sometimes done, that our position is sheer opportunism. We have a fully fledged, coherent policy on higher education, which, if truth be known, we believe to be more comprehensive than that proposed by the Government in their White Paper. We are looking not just at the higher education sector but also at further education, as the boundaries between the two have become blurred. We agree entirely with the observation by the noble Lord, Lord Wakeham, that higher and further education are the best routes towards social mobility.

In our paper we also embrace the concept of e-learning, as mentioned by the noble Lord, Lord Parry. The Government's paper does not embrace such concepts or present a 21st-century vision for higher education. Too often, it looks backwards to the academic vision of higher education—that is our main criticism of the paper. We have developed coherent proposals on that front. I wish to make an important point on the structure of higher education. The noble Lord, Lord Desai, said that we were in danger of muddling the maintenance and tuition aspects of universities. In my opinion, we are in danger of muddling the research and teaching aspects.

Much of the concern expressed about universities relates to this country's ability to maintain the competitive leading edge in research. That is very true. It is now widely accepted that research and development help to create innovation, which is at the core of the country's competitiveness. The United Kingdom's difficulty is that, traditionally, since 1980, we have spent less as a proportion of GDP on research and development than most of our advanced industrial competitors. That applies to the government sector, whose share of the proportion of R&D has fallen dramatically over the past 25 years, and the industrial sector, whose share is abysmal, with the exception of the pharmaceutical and aeronautical industries.

Unless the Government and industry both pull their socks up and ramp up investment in research and development, our research sector cannot survive, as Michael Porter said in his very interesting study, Report on the Competitiveness of the UK Economy. The Government have done their bit. University research budgets have received money—in 1999, under the joint infrastructure project, and under all the CSRs. In the latest Comprehensive Spending Review, the increase in the research budget in real terms is 10 per cent per annum. I accept that there is a huge backlog to be made good, but we recognise that the Government are doing something about research.

University teaching budgets have been starved by this and previous governments. Nobody cares much about university teachers and their conditions. I was surprised that it was the noble Lord, Lord Lamont, who raised a debate in this House about salaries of academic staff, which was interesting. Top-up fees are not the answer to research funding problems in universities and cannot be expected to be. The money to be raised from top-up fees is intended to help university teaching. Student numbers have doubled without a proportionate increase in resources, so the unit of resource has halved precisely over the past 20 years. In the end, chickens come home to roost. Buildings are crumbling due to lack of maintenance; there are not rooms big enough to accommodate classes of 20; and there are not lecture halls big enough to take the size of lectures that must now be given. Pupil/teacher ratios are higher than in secondary schools. Everybody now accepts that universities need more money; the question is where it will come from. That is the issue of top-up fees.

The Government have muddied the field by setting themselves twin objectives that in some senses are diametrically opposite. There is the objective of increasing the resources available to universities, but alongside that is the objective of expanding numbers under the inclusion agenda. It is almost impossible to meet both objectives simultaneously. If you wish to include more people from low-income families, you do not increase the price, which is what the Government are doing through top-up fees. I accept that by increasing the price we are using the market. However, those who argue for the use of the market then say that they do not want to use it because universities already have a market based on ability, and that students should be selected by ability. Supporters of top-up fees say that they do not want those of high ability to be unable to go to university because they cannot afford it; therefore, they are disposing of the market. If you want to use top-up fees to ration places at universities, you cannot accept simultaneously that the market should be ignored and another scheme introduced to admit able students. That is a form of selection by ability.

The Government propose to raise the money by putting up fees. It will be "study now, pay later". The Government say, "We are not going to charge upfront fees. Instead, we will switch to loans". We should not forget that those loans will be a bigger subsidy to the middle classes than they had before. We have already seen that with the maintenance loans. Essentially, we will offer the middle classes free money to put into the building society and earn interest on while they are at college.

As well as the "pay later" loans, there is the means-tested grant. In the White Paper, the means-tested grant was for maintenance; now it is to defray fees. Which is it intended to be? On top of that, the Government are saying that the important thing is the differential fee. We will have "Oftoff" or "Offa"—or whatever it will be called. There will be a director of access. Originally, we thought that the director of access would look to see which universities offered decent access to those from low-income families and then allow them to put up fees, so that it would be universities such as the University of East London that would put up fees. We now understand that the Russell group will be able to put up fees, but only to £3,000 and that one third of the revenue from fees is to be allocated to bursaries. Again, there is that administrative cap—only up to £3,000. That hardly provides anything.

What have we got with all the complicated procedures that have been put in place to try to marry the two objectives? We have a mess of pottage. We have a system that is unfair because of debt aversion. Whether we like it or no, those who come from low-income families are worried by huge debts and are put off applying to places where they might incur them. Secondly, those debts bear down disproportionately on young graduates who do not earn much and on those who, during their career, will not earn much. People will not pay off the debt, if they earn less than £31,000. With earnings up to something like £22,000, they will not even pay the interest, even with inflation, on the debt that they are likely to have. That is an important issue.

The system will be inefficient. How much will the fees raise? At most, they will raise £1 billion for the universities. How much do the universities need? They need at least £2 billion a year. The proposals are ineffective, and the fees will not raise what we require for the universities. So much of the money will be diverted into bursaries. Basically, they will raise £1 billion a year.

It will be costly. How much will it cost us to raise £1 billion a year? Loans do not come for free. The Treasury has to borrow the money. It borrows at 4.5 per cent, but students pay only 2.5 per cent. There is also the risk of default. The study done by the Institute for Fiscal Studies shows that 40 per cent of the cost of fees must be regarded as a resource cost. I underline that. It will cost £400 million a year for a £1 billion benefit. That is a costly way of raising money.

Our way of raising the £2 billion would be to look to income tax, an income tax on those earning over £100,000 a year. This generation of students has already borne the cost of the switch from maintenance grants to maintenance loans. Those who earn more money pay more tax, if the income tax system is properly progressive. We do not think that the income tax system is properly progressive, which is why we want to make it more progressive. Some 82 per cent of those who earn over £100,000 are graduates, so we are getting to what the noble Lord, Lord Sewel, spoke about; namely, a dedicated graduate tax on high earners.

I am of the generation that benefited from a university education for which tuition fees were paid and there were generous maintenance grants. That was funded by earlier generations. Why should the current generation, which has benefited disproportionately from the rise in income for those in the professional classes, jerk away from being equally generous to future generations?

5.43 p.m.

Baroness Blatch

My Lords, I have always thought it a privilege to open or wind up in a debate on the gracious Speech. However, today is even more special, as it is the first time that I have had the opportunity to wind up for the Opposition on the final day.

There have been many excellent speeches in the past five sitting days, covering all areas of interest that will be the subject of our work in the rest of the Session. The House has been privileged to hear three excellent maiden speeches during our debates—those made by the noble and gallant Lord, Lord Boyce, the right reverend Prelate the Bishop of Liverpool and the noble Lord, Lord Grantchester, from whom we heard today. I am not sure that what we heard from the noble Lord, Lord Grantchester, was, in fact, a maiden speech. The noble Lord has enjoyed what can only be described as a second coming. I congratulate him warmly on his speech today, and I know that Members in all parts of the House look forward to hearing him speak in future debates.

It is regrettable that the debate should embrace so many subjects and that it should take place on a truncated parliamentary day. Due to time constraints, there is no way that I could do justice to so many speeches that have been made today. Of course, all our debates on the gracious Speech will provide the Government and the House with a valuable insight into the views of Members on all Benches about the Bills that are scheduled to come before us in the next weeks and months. My noble friend Lady Hanham opened the debate with an impressive speech. My noble friend brings a wealth of knowledge and experience of local government to our debates. Certainly, her contribution today was evidence of her fingertip knowledge of some very complex matters.

I am fortunate to have three Front Bench noble friends helping to cover the many topics contained within the title of today's debate. My noble friend Lady Byford also has enormous experience of rural affairs. She has spoken from these Benches with skill and a deep understanding of issues concerning the countryside and country people. My noble friend the Duke of Montrose also brings considerable expertise to bear on our debates and today was no exception. I am deeply grateful to each of my noble friends for their contributions today.

The protection of children as a high priority is supported by all political parties and measures to improve the service for vulnerable children often achieve political consensus. The detail of the Bill when it comes before the House will receive very careful attention. It is critical to produce reforms that are practical, manageable and properly funded. People who have responsibility for such sensitive work should be fully accountable and the level of unnecessary bureaucracy should not stifle the work of the professional.

The tragedy of the Victoria Climbie case, the Lauren Wright case and other cases was that so many professionals knew that there were problems, but they failed to act on them. My honourable friend Tim Loughton said that, the effectiveness of child protection will not be determined by a new Tsar or more levels of bureaucracy but rather by having the right (trained) professionals at grass root level picking up intelligence on child abuse and working with other agencies to intervene". My concern is the dangerously high level of vacancies in this specialist work which needs to be addressed with urgency—a point raised by the noble Earl, Lord Listowel. What is being done about that problem? I echo what was said by the noble Earl, Lord Listowel. If the Government are serious that the child protection Bill should be cost neutral, once again I fear that local authorities will be left unilaterally picking up the bill.

On reading the Green Paper, a single monolithic system appears to be the Government's answer to child protection. I wonder whether that is right. We will want to look carefully at the arrangements for keeping electronic records of all the 11 million children in this country. We will wish to explore what information will be kept and for what purpose, and who will have access, who will authorise third party access and who will hold and administer the register.

The Government's record for managing computer systems is so far lamentable. We shall look for guarantees that the keeping and administration of such sensitive information is not farmed out to a third world country, like so much other work. Perhaps the Minister will give answers to those questions when she replies.

I understand that there is to be a draft Bill relating to the rights and opportunities of disabled people. We look forward to being involved in the scrutiny process. However, I am not absolutely certain at this stage whether that will come under the education portfolio. Perhaps the Minister can tell us.

The ink is hardly dry on the Anti-social Behaviour Act when we are warned in the gracious Speech that further anti-social behaviour powers will be sought for schools and local authorities. What is so new now that was not foreseen only a matter of months ago? Quite frankly, schools and local authorities must be in despair at the Government's lack of coherence and competence in that area.

We are warned that there is to be a shake up in the provision of school transport. My noble friend Lady Byford has referred to that matter as it affects the rural communities. I hope that the Government will take note of what my noble friend said. Narrow country lanes without sidewalks and the distances that children have to travel could present insuperable problems for rural families if school transport were to be removed.

I turn now to the most contentious part of the gracious Speech; that is, the higher education Bill. It proposes the introduction of variable top-up fees of up to £3,000 for access to university. Am I alone in being dismayed at two references in the gracious Speech in relation to this Bill? The first concerns the deceptive language used: A Bill will be introduced to enable more young people to benefit from higher education. Up-front tuition fees will be abolished for all full-time students".—[Official Report, 26/11/03; col. 1.] It will not be lost on anyone, least of all our students, that there was no mention at all of an increase of 200 percent in the top-up fees. Secondly, I was struck by the inelegance of the phrase "up-front tuition fees".

I have read the higher education White Paper very carefully and many questions remain to be answered. For example, paragraph 7.40 on page 87 states that "after graduation", or indeed following dropping out of university, loans will be repaid through the tax system at the rate of 9 per cent of [the individual's] income above a certain threshold". Can the Minister tell the House what is that threshold?

There is no argument between the political parties that higher education requires increased funding. I agree with my noble friend Lord Wakeham, the noble Lord, Lord Neill of Bladen, and others that this is the case and has been so for a long time; indeed, that is why the Dearing report was commissioned, although sadly his recommendations were not accepted by the Government. However, there is concern about the Government's 50 per cent target for access to higher education. Concern is also felt about the high drop-out rates at some of our universities and about the number of students who are accepted into university with inadequate qualifications which inhibit them from benefiting from a higher education degree. It is also the case that there needs to be a substantial increase in the provision of high-quality vocational options to meet more effectively the needs of many post-16 students.

There are a number of real concerns about the Government's proposals to raise top-up fees. Many concessions have already been made, and from what we learn from the pressure on Mr Blair and on Mr Charles Clarke to woo their own party members, more concessions could be on the way. It is possible that, just as the Bill on foundation hospitals resulted in such a diluted proposition that the original proposals were lost from sight, top-up fees will hardly be worth collecting if the greater proportion of the money going into universities through fees are fed back through complex concessionary arrangements. Apart from the cost of a massive means-testing bureaucracy, the additional grants and further delays in the repayment threshold, the net amount from which the universities will benefit will be seriously eroded. I agree with the remark made by the noble Lord, Lord Puttnam, that it will go absolutely nowhere to resolve the problems in higher education.

However, the most pernicious proposal of all is the appointment of an access tsar and the funds that will have to be diverted to pay for his department. This is pure social engineering and a direct attack on academic freedom. The Government dishonestly use the language of freedom for the universities and then totally contradict themselves by the appointment of a access tsar. Universities will not be free to make a decision about additional fees on the basis of a fully costed business case, but only on the whim of the access tsar, who will make a judgment about the degree to which each university has socially engineered its intake.

I have been impressed by many of our universities which go to enormous lengths to find the brightest young people from schools and families in which there is no tradition of attending higher education. Access should be on the basis of merit decided by the institution itself, not according to contrived rules overseen by a government-appointed apparatchik.

The way to increase the opportunities for young people from poorer backgrounds is, as has been said, to improve school-based education and to raise the aspirations of young people, along with those of their families and teachers. However, this is a Government who removed the life chances for many children by abolishing the assisted places scheme which was specifically designed to help bright young people from poorer homes. They also abolished selection on the grounds of academic ability, not to mention the Government's manifest dislike of the remaining grammar schools. Those were steps on the ladder for bright young people from poor homes.

Many of those who support top-up fees do so, however reluctantly, because they believe that more money will flow into higher education. Therefore, the most pertinent question for the Minister to answer is: will the Government guarantee that, if they succeed in getting the Bill through Parliament, the full effect of the top-up fees will be truly additional funding? The answer that the fees will go direct to each university will not suffice because the full effect of the tuition fees introduced in the previous Parliament disappeared without trace as the Treasury did not fund the universities in line with the increased numbers of students. The outcome was that the unit funding for students decreased. All that resulted was that the student shared the burden of payment while the Government enjoyed the benefit. I predict that if the Government introduce top-up fees to the value of £3,000, history will repeat itself, and that over time the benefit will not accrue to the universities and the student will be the poorer.

Reference has been made to an omission in the gracious Speech—that is, the hunting Bill. The right honourable Peter Hain has peddled much distorted information in the media about the history of the Bill in the previous Session, so I hope your Lordships will allow me to put the record straight.

A Bill was introduced into the House of Commons in December 2002. Note that date because there was a considerable delay before its introduction into this House. The Bill that was introduced in December 2002 would have allowed hunting to continue under a system of regulation. It had the support of the Prime Minister and of the Minister who took it through its stages in the House of Commons. It would have been welcomed by many Members—I believe a majority— of this House.

The Bill received 81 hours of debate in another place and not until the last hour of Third Reading did the Government Minister accept an amendment from a Back-Bencher, without any warning or explanation, proposing a total ban on hunting, which completely contradicted all that the Minister had been advocating throughout the passage of the Bill.

When the Bill—which had not in its amended form been through any of its stages in the House of Commons—arrived in this House there was an enormous backlog of parliamentary business. Although an additional day was offered by both my noble friend the Opposition Chief Whip and, indeed, those Peers closely involved with the Bill, it was rejected by the Government. Consequently, the Bill had only 12 hours of debate in this House.

It is widely rumoured that the Government may support—even advocate—the use of the Parliament Act on the hunting Bill on the back of its reintroduction via the Private Member's Bill procedure. On an issue that is the subject of a free vote on all Benches and which has not found a basis of consensus support inside or outside of the House, and which directly affects the civil liberties and human rights of a significant minority of country people, the use of the Parliament Act would represent a gross abuse of procedure. Anyone who cares about the conventions of our long-standing parliamentary procedures should regard this as a challenge to be resisted.

However, this Government have little time or regard for the history, conventions and traditions of this or the other place. There is a universally accepted convention that a line in the gracious Speech should state, Other measures will be put before you". That line is included to allow the government of the day the flexibility to introduce legislation later in the parliamentary year that had not been foreseen at the outset or in response to an emergency situation. However, the Government introduced the Gender Recognition Bill—not mentioned in the gracious Speech—the very next day. The Bill must have been in print even as the gracious Speech was being made.

There is also the act of sheer constitutional vandalism when the Government decided to disregard 1,400 years of glorious history by abolishing the post of Lord Chancellor and announcing the setting up of a Supreme Court on the back of a failed ministerial shuffle, without prior discussions with key relevant people, without a Green Paper or a White Paper and, frankly, without even being aware that the post of Lord Chancellor could not be removed without an Act of Parliament.

Then we had further abuse with the Government's total lack of conscience about breaking an unequivocal pledge made to Parliament by the then Lord Chancellor, the noble and learned Lord, Lord Irvine of Lairg, not to remove the elected hereditary Peers until a fully worked through stage two had been completed. However, the Government betray trust with regularity and, sadly, with a casual indifference. Higher education students were promised at the time of the 1997 general election that tuition fees would not be introduced, and at the 2001 general election they were promised that top-up fees would not be introduced. Despite all the stamping of feet and finger wagging over top-up fees by the Prime Minister and his ministerial colleagues, how can their word ever be taken on trust again?

Finally, there is the complete distortion, especially by the right honourable Mr Peter Hain, that somehow the hereditary Peers—as he would incorrectly call them—are largely responsible for government defeats in this House. The facts are that of the 88 government defeats in the previous Session, if only two-thirds of the Government's own Members had voted in each of those Divisions, the Government would have won 50 of the 88 Divisions. It is also worth putting on the record that if one removed the hereditary Peers of all Benches from the voting figures on Tuesday evening, the Government would still have lost the vote by a considerable margin.

Some of us have been puzzled about the nature of the problem that the Government are trying to resolve by their reform proposals. No, the removal of Peers has less to do with a modern agenda or making the House more effective. It is partly politics of envy or a form of class warfare and partly a numbers game. Constitutional change should be undertaken with caution underpinned by a wide basis of popular support. I was deeply saddened but not surprised to hear from a Labour Member of Parliament recently that I should understand that House of Lords reform and the Hunting Bill were about the Prime Minister tossing some red meat to his Back-Benchers. If that is the justification for constitutional change, it is shameful.

I continue to take comfort from the fact that this House, with its present composition, will take its scrutiny and revising role seriously. By and large in this House, arguments have to be won, no one party is dominant and different alliances of Members come together on the basis of the particular issue before the House. This House has proved over and again its ability to hold the executive to account without fear or favour, always accepting the right of the other place to have the last word. Whatever the outcome of constitutional change, the strength and independence of this second Chamber must be sustained. Today was an excellent example of that. Members on the government Benches have spoken freely and bravely against the Government and Members on my side of the Chamber have spoken freely and bravely against some of the proposals that I will support later in the year.

I make just one heartfelt plea to the Government— do not alter our procedures in this House to reduce in any way our ability to carry out our core work of holding the executive to account by a process of scrutiny and revision. My noble friends and I stand ready to work constructively with Members on all Benches as we navigate our way through a predictably heavy parliamentary workload. Taking into account the programme of work before us and having read all the debates on the gracious Speech and having listened to many of them, I do not underestimate the task.

6.4 p.m.

The Parliamentary Under-Secretary of State, Department for Education and Skills (Baroness Ashton of Upholland)

My Lords, this has been a predictably varied and interesting debate, which reflects the debates that we have had over the full five days on the gracious Speech. I join the noble Baroness, Lady Blatch, in being privileged to close not only this debate, but this particular group of debates. We can look back on five days of intense discussions and I believe that we can look forward to robust debate in the days to come. Many noble Lords asked detailed questions on the legislative programme covered by today's debate. I recognise that I might fail to answer all of the substantive points, but I give an assurance that responses will be forthcoming. I begin by paying tribute to my noble friend Lord Rooker for opening today's debate.

I shall, however, endeavour to cover all of the broad themes. 1 begin with the remarks of the noble Baroness, Lady Hanham, which dealt with the whole range of our debates. She challenged me to address a number of concerns, particularly this morning's Audit Commission report. I believe that the report is to be welcomed. I believe also that it is important that it is read from beginning to end. I do not make any apology for the work we have done to ensure that our schools have the funding that they need for the future and to give them certainty. We have given every local education authority a sufficient revenue grant increase to enable them to passport the schools formula spending increase to schools in full. We have also made £300 million of additional resources available for other local services. I also make no apology for the priority that we have placed on our schools.

I agree with the noble Baroness, Lady Sharp, on the importance of the balance of funding review which is in progress. I also welcome her comments on constructively thinking through funding issues and our relationships with local government. I believe that we can do much in that sphere and I welcome the Audit Commission's work in that respect.

The noble Baroness, Lady Maddock, also ranged widely in her remarks. In particular, she expressed her disappointment regarding some of the environmental issues that we raised.

The noble Lord, Lord Grantchester, made less of a maiden speech than a second coming, as I think it has been described. I am glad to welcome him back. He made a very important speech and demonstrated his commitment and understanding of environmental issues.

The noble Baroness, Lady Byford, also made a tour de force by offering a rural perspective on all the Bills that lie before us.

Some 12 noble Lords spoke on issues of higher education. Two focused particularly on the children's Bill and two referred to our school transport Bill. My noble friend Lord Berkeley asked whether there would be a Bill on transport safety. I am afraid that I have not the faintest idea. I have been unable to ascertain the answer, but I shall, of course, write to him.

The noble Baroness, Lady Byford, referred to our housing Bill. The noble Baronesses. Lady Byford and Lady Blatch, referred to hunting. The Prime Minister has made it clear that he intends the issue to be resolved in this Parliament. I cannot give any more details. The Government will announce how they intend to proceed when they are ready. Specifically, I say to the noble Baroness, Lady Byford, that there is no link between the non-appearance of the animal welfare Bill and the hunting Bill. Work is proceeding on the animal welfare Bill.

Some 11 noble Lords spoke on issues concerning the department of my noble friend Lord Whitty. I shall start by addressing some of the specific concerns raised. My noble friend Lord Hunt spoke about very important climate change issues. Global temperatures have increased in the past 100 years by 0.6 degrees centigrade. Through the UK climate impacts programme we are building a picture of that change. We are also working internationally through important groups such as the United Nations Framework Convention on Climate Change and the intergovernmental group on climate change. I agree with my noble friend on the importance of environmental enterprise. We need to make the most of the opportunities to improve our environmental performance while at the same time improving business competitiveness. I am sure that we will find many opportunities to debate those issues.

My noble friend was also concerned about air quality. Although we identified particular problems In 2003, the pollution trend is downwards and that is to be welcomed. There is, of course, much more to do.

The noble Lord, Lord Chorley, talked at length about the issue of wind energy. The Office of the Deputy Prime Minister issued a consultation paper to which the noble Lord referred—PPS 22. The planning paper will be published alongside a companion guide containing a technical annexe and good practice guidance which I hope will go some way to addressing the noble Lord's concerns.

The noble Lord, Lord Palmer, dubbed my noble friend as Lord "Biofuels" Whitty. I have already referred that to my noble friend. I am sure that he will be known as that for a considerable time. The energy White Paper addresses some of those issues. I know that the noble Lord will be in dialogue with my noble friend to pursue those issues.

The noble Lord, Lord Palmer, the noble Baroness, Lady Byford, and the noble Duke, the Duke of Montrose, were very concerned about the common agricultural policy. I believe that we have made significant strides in that direction. I listened with care to what noble Lords said about the mid-term review and the issues of cross-compliance. Those will be picked up by my noble friend and by those officials working on the matter. They will, of course, be in touch to discuss those issues more fully.

The noble Lord, Lord Beaumont, talked about air traffic pollution and energy issues. I am sure the noble Lord is aware that an aviation White Paper will be issued shortly. I have no further details but I hope that the noble Lord awaits that with great interest.

The noble Lord, Lord Soulsby of Swaffham Prior, with his great knowledge and experience, talked in great detail about vets, as I shall call them. It is good to know that at the present time there is no difficulty in recruiting good quality vets and that there are no particular retention problems, which is very important. However, as the noble Lord will be aware, a report on vets and veterinary services will contribute to the final development of the animal health and welfare strategy. That will be a particularly important contribution. A working group has been promised to look at the issues surrounding that report.

The noble Duke, the Duke of Montrose, made many comments on general countryside issues. We believe that through the reforms to the common agricultural policy, the strategy for sustainable food and farming and the development of a refreshed rural strategy, we are beginning to succeed in improving the lives of rural communities and reducing administrative burdens. Notwithstanding noble Lords' concerns about wanting us to be quicker, more effective and so on, I believe that we have begun to make inroads in that regard.

The noble Duke, the Duke of Montrose, was concerned about the transportation of live animals. The department has supported the relevant proposals. Indeed, the UK urged the Commission to bring them forward. We want to ensure that existing rules are updated and that enforcement is improved. In some cases, that adopts or builds on good existing UK practice.

The noble Lord, Lord Grantchester, the noble Earl, Lord Peel, and, in particular, the noble Lord, Lord Soulsby of Swaffham Prior, referred to the review of my noble friend Lord Haskins. We believe that the report is an important piece of work. We have welcomed it, although I believe that parts of it make uncomfortable reading for government departments. There is much to be said for the integrated agency, although, of course, my right honourable friend the Secretary of State has made it clear that she believes there is an ongoing role for the Countryside Agency. We believe that devolution as regards the way in which Defra and its agencies deliver policies to ensure we achieve greater effectiveness and accountability is important. We are working to ensure that we have a complete set of proposals to bring forward. In doing so we endeavour to work closely with colleagues in other agencies. Obviously, that includes the regional development agencies but, not least, the voluntary and community sector. I hope that the noble Earl, Lord Peel, would agree that it is important to emphasise that this reform is not an end in itself but a means of delivering improvements on the ground for business, farmers and rural communities.

In short, the task is to work with our fanners and the whole rural economy to meet the challenges that we have described in order to sustain the quality of our environment and countryside. We look forward to noble Lords' input in that.

My noble friend Lady Goudie made a succinct intervention on the energy White Paper. I was grateful for what she said about the strategy for the long term. We are rigorously following up the issues in the widely acclaimed energy White Paper. We look forward to further debates on that in your Lordships' House.

The noble Baroness, Lady Maddock, talked about the housing Bill and said that there was much to welcome, for which I am grateful. The Government are committed to the right-to-buy principle but we are concerned in particular about the availability of affordable homes—a point raised by the noble Baroness, Lady Hanham. The relevant legislation will focus on park homes and will draw on the report of the park homes working group. That will appear at some point in the not too distant future. During the passage of the legislation there will clearly be much debate on sellers' packs. In our consultation nine out of 10 sellers and purchasers were very keen to see such packs introduced.

I turn to school transport and the issues raised by the noble Baroness, Lady Byford, on rural schools and travelling. It is worth saying that £600 million a year is spent by education authorities on getting one in 10 pupils to school. A third of all pupils are driven to school, and the absence of suitable buses no doubt makes it difficult for some children to participate in after-school activities. Parents, pupils, education authorities and the Churches say that they want us to look at more choice and flexibility. Parents, in particular, are concerned about high fares, bullying, vehicle quality and arrangements that simply do not cater for younger children.

We believe that now is the time to look for innovation, safer routes and safe crossings, walking buses, secure cycle parking, lockers and bus bays, pedestrian and cycle safety schemes and car sharing. We need to consider the important point raised by the noble Baroness, Lady Sharp, about children and obesity. I accept what the noble Baroness, Lady Byford, said about car transport often being the only option, but we need to look at giving children more options than car transport on our roads. That is particularly important for poorer families that do not have access to car transport, which of course creates its own issues.

We will explore about 20 pilots in total, which will be agreed by the Secretary of State, with about 12 local education authorities—the final figure is to be decided. There will be opportunities to explore what better policies we could have by enabling them to try them on the ground. The issues of rural communities will be very central.

It is also worth mentioning the work between my right honourable friend the Secretary of State and the Rural Affairs Minister, Alun Michael. They meet regularly and have identified transport as an issue on which they want to work. I am sure that we will be able to do more. Children who live between one and three miles away do not have the facilities, and we could do more to support their transport needs. I look forward to debating the matter in the House, but I hope that there will be some agreement on it.

I was grateful for many of the supportive remarks made about what we sought to do in the children's Bill. I agree with the remarks of the noble Baroness, Lady Sharp, about the children's commissioner who must be a champion for children and not merely a response to the lobby groups, important though they are to us all. It is important that such a body is independent of government, reporting on progress against the outcomes for children, particularly the outcomes that in our consultation children told us mattered to them. Those include enjoying and achieving, staying safe and making a positive contribution to society, to name but three.

We shall look at how we develop the work with local authorities to put in place a director of children's services, mirrored by a lead member. I am glad that that was welcomed by the noble Baroness, Lady Sharp. I understand the comments of the noble Baroness, Lady Blatch, about buck-passing. Part of the reason for that proposal is to say that the buck firmly stops there. Those people are given the responsibility for bringing together the services and rising to that challenge. The enthusiasm that I have seen in addressing the conferences on the Green Paper in the past few weeks demonstrates that that is an important area, although we will need to look very carefully at the detail. I look forward to doing so.

I was pleased by the point made by the right reverend Prelate the Bishop of Southwark about the importance of schools, particularly for children who have what might be described as chaotic lifestyles. That brings us to the whole work of extended schools, and the way in which our integrated services need to work.

I say to my noble friend Lady Massey that I add my congratulations to the all-party group. The work of the children's trust pilots will be important, to see how we involve all agencies including, as she said, those on youth justice issues, which will be an integral part of some of the pilots. Citizenship and education are very important to us. Through the Standards Fund, we support a good number of advanced-skills teachers in citizenship, and help them to support their colleagues. We also support the accreditation of PSHE teaching. At the moment, 750 teachers are going through continuous professional development, and we hope to see that number rise to 3,000.

The noble Earl, Lord Listowel, talked about the childcare workforce, and the noble Baroness, Lady Blatch, referred to it, too. I agree with many of the sentiments expressed. There will be a new workforce unit within the department dedicated to working on the issues of retention, recruitment and so on. We have to do more to promote foster parenting, and to give respite care to foster parents. We are looking at that and trying to be imaginative. Recruitment and retention are critical. It is about creating a scaffold to enable people who come in to work with children to move across the profession, advance their professional development, feel that they may start in one area working with children but have many options, and feel that they are part of a professional team.

It is not about being cost-neutral in what we are describing. We believe that if we integrate so that, for example, children no longer have eight or nine assessments for their disability but merely one, there will be costs to be saved and spent more wisely and better. But we are looking to the spending review, about which, noble Lords will appreciate, I cannot say more.

Twenty-five million pounds for parenting over three years is important, but it is not the only money. Sure Start did a lot of work on parenting and will continue to do so. Teamwork multi-agencies are critical. The story described by the noble Earl, Lord Listowel, about a young man who eventually killed himself is one about prevention. It is a story about ensuring that the children we identify under five as already demonstrating what might be called "anti-social behaviour" or as having difficulties in their families do not make the journey that can end up in the criminal justice system. That is the thrust of what we have said in the Green Paper.

The noble Earl, Lord Listowel, asked in particular about the retention of social workers. The turnover rate has fallen during the past three years from 15.3 to 12.4 but there is more to do. He asked specifically about Clause 7 of the new asylum Bill. It is straightforward. It does not include any provision for taking children into care. The provision is that local authorities in the United Kingdom have duties to all children living in their areas, including the children of failed asylum seekers.

A local authority may accommodate, or otherwise look after, a child who is in need. Children are taken into care only when they are suffering, or likely to suffer, harm. I say to the noble Baroness, Lady Blatch, that the disability Bill will be brought forward by the Department for Work and Pensions and not through the education Bill. I point out to the noble Baroness, Lady Byford, that no teachers currently on the upper pay scale 2 have been prevented from progressing to pay scale 3 by funding difficulties. The next round of progressions will take place in September 2004 and we are currently in discussion about those issues.

My noble friend Lord Mitchell talked about e-learning. He is a passionate advocate of that most important issue. We are working towards a unified e-learning strategy, removing barriers at all levels of education for those who want to be involved in it. I say to the right reverend Prelate the Bishop of Southwark on the 14 to 19 work, he has nothing to fear about the role of religious education. The Pathfinders are in operation. I will send details to the right reverend Prelate and invite him to engage in debate.

We spent much time in the debate on higher education. I am mindful that during the passage of the Bill we will have many opportunities to debate these issues at great length. I agree with the noble Baroness, Lady Perry of Southwark, that high-level schools will be in even greater demand in future. Our predictions are that by 2010, 2 million more graduates will be needed by employers than are needed today. Eighty per cent of jobs created in the decade will require the kind of skills and qualifications that higher education provides. It is the Government's responsibility to respond to that.

We have clearly set out what we want to do in the three pillars in our higher education strategy. It is accepted on all sides of your Lordships' House that universities need more money. Indeed, most noble Lords who discussed this area of policy referred to that. It is accepted by most noble Lords, although not all, for different reasons that the number of students will continue to grow.

It is also accepted by most noble Lords that financing needs to come from the taxpayers, but also from those who will benefit from university education. It is the principle behind the work of the noble Lord, Lord Dearing. And of course there is a need for fairness within that. Our proposals mean that there will no longer be an entry price into a university of £1,125.I say to the noble Baroness, Lady Blatch, that students will pay back only when they reach the earning threshold of £15,000-plus.

Baroness Blatch

My Lords, I am grateful to the noble Baroness for giving way. That was not my question. My question was: what is the threshold on which the 9 per cent will be based in the salary of the graduate when he or she comes to pay it back? Students will pay 9 per cent of a certain amount. It is not described as "gross income" or "post tax income". It is 9 per cent above a certain threshold and I want to know about that threshold.

Baroness Ashton of Upholland

My Lords, I apologise to the noble Baroness. I will give her some figures in a moment, but if they do not clarify the matter I shall of course write to her. The principle we have determined upon is that university students, as graduates, will pay back only what they owe when they can afford it. I accept what noble Lords have said about bursary schemes and their relevance and importance. I say to the noble Lord, Lord Rix, in particular that we continue to work with the coalition of modern universities and others to look at how to make that scheme the most effective. In particular, we recognise that some universities already have high numbers of students from poorer backgrounds.

I was grateful for the fact that the noble Lord, Lord Wakeham, has confidence in the Secretary of State. I was interested in his remarks on funding and, in particular, in what he said about priorities. It is perhaps worth saying that we spend £5,300—a different figure from the one given by the noble Baroness, Lady Howe—per university student. That compares with £1,800 a year which is spent on the average three year-old and £3,200 on the average primary school pupil.

The surveys and work carried out on the impact of early years education indicate that it is relevant in breaking the link between a person's social and economic background and his education attainment We must ensure that we invest in early years learning, too That is the policy of this party and it is why I am a member of it Therefore, I say only that governments must make choices about where to invest money for the greatest benefit.

Noble Lords—in particular, the noble Lord, Lord Quirk—rightly pointed out the need to increase the number of applications to universities and to improve the school system I agree At present, we spend £4,000 a year on each secondary school pupil and £5,300 on each university student Therefore, I ask the noble Lord where my priorities should be I believe that we must ensure, as a government priority, that we have a fair and balanced system for universities.

That takes us back to the issue raised on the Liberal Democrat Benches about the taxation system It would not necessarily be our first priority to fund universities directly and wholly through taxation. It is important to ensure that students receive a high-quality education so that they apply to university The evidence indicates that if they apply, they are given a place However, they do not apply because they do not always achieve the necessary A-level results and they do not always receive the support that they need in order to do so That is a critical factor.

During the lunch break, the noble Earl, Lord Mar and Kellie, asked me what would happen if someone died He asked whether a person would have to leave the debt in his will The answer is no, if a person dies, simply and straightforwardly, that is the end of the debt I am glad to reassure noble Lords on that point.

I am very grateful for the support that has come from around the House I am conscious of the time restraint but I want to deal quickly with the issue of the office for fair access and with the concerns expressed by the noble Baronesses, Lady Howe and Lady Blatch, about the bureaucracy involved We are conscious of the need to address that and shall ensure that we do not create bureaucracy or expense The higher education Better Regulation Review Group has been supportive of our plans thus far It has said that the value of the principle of good regulation has become clear to the group during its work, notably in considering proposals for the office for fair access. We shall continue to strive to achieve that and, in doing so, we shall take on board comments made by noble Lords.

The noble Lord, Lord Rix, stated that a third of the money being raised would go into bursaries. We have not made a decision, and I want to make it absolutely clear that we are still holding discussions on that matter We shall make an announcement in due course We are still talking to university professors about that.

I say to the noble Baroness, Lady Perry of Southwark, that we are very clear that admissions policies and procedures will be outside the remit of an access agreement and the office for fair access. No doubt we shall return to debate that issue.

In terms of the repayment of fees, I want to make it clear that someone who earns less than £15,000 a year will not pay back anything. At present, as noble Lords know, repayments are made when earnings reach £10,000; at £18,000, a person will pay back £5.19 per week; and, at £30,000, he will pay back £25.96 a week. I consider those to be reasonable amounts in the context of the salaries that people will be earning.

Baroness Blatch

My Lords, in relation to the figures that the noble Baroness has just given, does she realise that someone who earns up to £18,000 will never pay off the loan? At present, both the loan and the tuition fees increase by 3.1 per cent each year. That is the neutral level of interest—we know that it is not real-terms interest. If that is the case, a £20,000 loan would increase by £600, which is £12 a week. Therefore, if a person paid £5.19 a week, not only would he never pay off the debt but the debt would continue to rise as he paid. Thus, at the end of each year, he would owe more and not less.

Baroness Ashton of Upholland

My Lords, that does not fit with the figures that I have. To help the noble Baroness I suggest that I place a letter in the Library of the House explaining the figures in detail. As always, the noble Baroness makes a very important point about the longer term. We shall keep this debate in mind and consider what we can do further. My right honourable friend will be interested in it. As the noble Baroness is concerned about what happens to graduates, it is worth saying that graduate employability is better than non-graduate employability. Graduate unemployment falls significantly over time. A graduate is half as likely to be unemployed and almost 80 per cent of employed graduates take jobs that make use of their skills. We should not forget that the rates of return to tertiary education are higher in the UK than in any other OECD country. I was asked how we collect loans from graduates who work abroad. The Student Loans Company already does that.

As my noble friend Lord Desai said, if we do not now get this matter right we shall regret it. I say to my noble friend Lord Puttnam that if I ever live to shuffle down these corridors, whatever else I may regret I shall not regret the higher education Bill which I believe puts universities on the best footing that they have had for a long time. It will ensure that my children, my children's children and the children and grandchildren of other noble Lords will be able to attend well-funded universities that are not crumbling and that have the resources that they need to enable students to make their contribution.

With gratitude to all noble Lords who have spoken, I commend the Bills to your Lordships' House.

On Question, Motion, as amended, agreed to nemine dissentiente; the said Address to be presented to Her Majesty by the Lord Chamberlain.