HL Deb 22 January 2003 vol 643 cc702-20

3.17 p.m.

Baroness Ashton of Upholland

My Lords, with the leave of the House, I shall now repeat a Statement made in another place by my right honourable friend the Secretary of State for Education and Skills. The Statement is as follows:

"I wish to present to the House this afternoon the Government's proposals for the future of higher education in England. I want to begin by thanking my colleague, the honourable Member for Barking and Dagenham, and my officials at the department for the excellent work they have done in preparing this White Paper.

"I start by stating that our universities are a great success story. Their record on research, on provision of higher-education opportunities for hundreds of thousands of young people, and on linking university research to economic achievement is outstanding. That record of achievement is acknowledged in a financial settlement for the next three years which is better than any in recent years and which I announce today in my letter to the Higher Education Funding Council for England, which I am placing in the Library of the House.

"I want to express my appreciation to the Chancellor of the Exchequer for this excellent settlement, which provides an average 6 per cent per year increase in real-terms funding over the period of the settlement. I know that the settlement represents his personal commitment to this vital sector of the economy. The settlement means that every part of the university world will be able to plan for the next three years in confidence on the basis of a secure future funding stream which is substantial and generous.

"However, as we would all acknowledge, our universities need to be able to generate still more resources, whether they come from the state, individual students, alumni or employers. I address these points later on, but it is a central point of this White Paper to acknowledge that students' share of the overall costs of university education will increase.

"That said, however, the House needs to understand, as our universities do, that they exist in an increasingly dynamic and an increasingly competitive world. In our White Paper, we set out the nature of that dynamism and the nature of the competitive challenges we face.

"First, our universities have to make better progress in harnessing our knowledge to the process of creating wealth. Secondly, they have to extend the opportunities of higher education to all of our population, irrespective of their personal and economic background. This White Paper attempts to fulfil both ambitions.

"Despite the attractions of inaction—which have perhaps too often led past governments to avoid facing up to important challenges—this House needs to acknowledge that coasting along, basking in previous successes and shirking the need for reform offers no robust future for our universities.

"We need to acknowledge that a university system that caters for 43 per cent of the age group will be intrinsically different from one that provided for 20 per cent in 1990—only 13 years ago. We need to face up to the fact that international competition from world-class universities in the USA and the growing competition from institutions in China and India change the terms of trade for the UK's great historic universities.

"The world of one single employment from 16 or 18 to 60 or 65 is gone for ever. Our universities have the principal responsibility for helping our working population to adjust to the future.

"In this increasingly competitive economic world knowledge is all-powerful and so effective working relationships between universities and both private and public sectors are increasingly significant. In short, in a world of accelerating change, we all need to understand that our society's principal weapon in ensuring that we master change, rather than surrendering to it, is our education system and, principally, our universities.

"As a result of that we say that our universities have to identify more clearly than they do now the way in which they address the great missions on the basis on which they were created. Those missions are research, knowledge transfer and, perhaps most important of all, teaching. These are the central themes of the White Paper, and we start from the basis that over the years the emphasis on research has, for understandable reasons, been at the expense of teaching and knowledge transfer.

"So on research we argue that we need still more focus upon world-class research. We state that the funding regime should encourage research collaboration, should promote research concentration and should strengthen the highest world-class research in the country. The White Paper sets out how our research funding regime will meet those aspirations. It means giving extra resources to our very best research departments and world-class universities as well as ensuring that new research will emerge and flourish.

"Although I have decided not to seek to remove research degree awarding status from some universities, it does mean that research evaluations will be increasingly rigorous. And we will create a UK-wide arts and humanities research council to ensure that funding for arts and humanities is given the status it deserves. For knowledge transfer, this approach means an increasingly close relationship between my department and the Department of Trade and Industry. Both my right honourable friend the Secretary of State for Trade and Industry and I know that we cannot address innovation without addressing skills and that we cannot address enterprise without improving the relationship between universities and business.

"That is why my right honourable friend the Chancellor of the Exchequer established Richard Lambert's review of the university-business relationship and that is why this White Paper commits the Government to setting up a network of knowledge exchanges, primarily focused in universities that are not research-intensive, to develop that relationship.

"We have to crack the real British disease, which is that our world-class intellectual research is exploited by competitors from other countries but not by ourselves, and we must make sure that we lead the process of knowledge transfer from research to business both nationally and regionally. A far closer relationship between universities, the regional development agencies and the new sector skills councils is necessary, and the White Paper sets out ways in which that can be achieved.

"But the main function of universities must be what it always should have been: high-quality teaching. Today, I am pleased to announce that the Government are giving a far stronger focus to teaching, a focus that is reflected in a significant stream of resources within the funding settlement.

"We will publish an annual comprehensive student survey of university teaching standards, overseen by HEFCE and the National Union of Students. We will establish new national professional teaching standards, establish new centres of teaching excellence and target pay resources to those universities that reward high-quality teaching. In addition, we will recognise excellent teaching as a university mission in its own right by making the award of university title dependent on undergraduate teaching degree awarding powers only.

"Let there be no mistake. All universities will, in future, be judged by their teaching achievement as much as by their research attainment. The days of great research accompanied by shoddy teaching are gone.

"So, it is research, knowledge transfer and teaching that are our universities' historic missions. Every single university has to make a frank assessment—and publicise that assessment—of its own strengths in addressing each of those missions. Drift will not be acceptable.

"The real truth is—let us acknowledge it—that some universities are strong in research, others in teaching and still others in knowledge transfer, and some are strong in two or all three. Let us not pretend that all universities are somehow the same. Let us tell the truth to the people of this country who pay for universities and want their children to benefit from them. We already have a multi-tiered university system.

"On the basis of this assessment, we need to decide what proportion of the age group we wish to encourage into university education. I want to confirm today that the Government's target remains, as we set out in the department's public service agreement published in 2000 and reaffirmed in last summer's spending review settlement, to increase participation in higher education towards 50 per cent of those aged 18 to 30 by the end of the decade.

"That target is essential because the economic future of the country depends on that level of education and training. We live in an increasingly competitive world, within the European Union and outside. I do not understand those who claim to speak in the national interest but do not acknowledge the importance of this target.

"However, such a level of participation requires us to re-examine the nature and range of degree courses that we offer. We believe that the bulk of the increase in degree student numbers, from its current proportion of 43 per cent of the cohort, should come from two-year vocational foundation degree courses—a major contribution to the skills and productivity agenda of this country. I believe that the further education colleges, which now provide 11 per cent of this country's higher education, have a major contribution to make here.

"I am pleased to tell the House that a range of employers including, in the public sector, my right honourable friend the Secretary of State for Health and the Home Secretary, as well as myself, are ready to make such a commitment in principle as employers. I also believe that major private-sector employers will welcome and participate in this initiative.

"But the guts of my proposals today come in the field of access. The social class gap among those entering higher education is a national disgrace. Thirty years ago, students received full grants and there were no tuition fees. Despite this, students from middle-class backgrounds were three times more likely to go to university than those from poorer backgrounds. Over the 30 years, the numbers going to university have more than trebled but the gulf in access has remained the same.

"This vicious statistic has to be reversed, although we should in truth acknowledge that this is a long and difficult process. The elements are clear—we have to improve dramatically the quality of school and college level education in our most disadvantaged areas. That is the centre of the strategy for 14 to 19 education announced yesterday by my honourable friend the Member for South Shields. We have to transform university access and admissions criteria so that universities make a genuine and balanced assessment of the potential of every candidate. We have to ensure that universities address the access issue.

"I propose therefore to establish an access regulator, working with HEFCE, who will ensure that any university that wants to increase its tuition fee has rigorous admissions procedures, provides bursaries and other financial support and works directly with schools in every part of the country to promote the aspiration of a university education. The regulation will be tough and I believe that most universities will welcome that initiative.

"We have to create a diverse university sector that welcomes applicants from all parts of the community, by a range of different routes. That is one of the arguments for a sensitive fees regime. And it is why we are raising the "postcode premium", which gives extra money to universities that teach and support students from disadvantaged backgrounds. Finally, we have to create a financial regime that encourages access.

"This brings me to the final chapter of my White Paper, which deals with student finance. First, we should face up to the truth that genuine university freedom comes through building endowment rather than any other device. Universities in this country need to build up endowments. There are already substantial incentives for both individuals and corporate bodies to donate to universities but they are not sufficiently understood and used. The White Paper sets out how, as a matter of priority, we will promote this for graduates, institutions and government.

"Promoting endowments is the right long-term strategy but it will take many years to build up substantial funds. The spending settlement addresses the short-term needs but universities must have funding streams that are sustained.

"The Government will remain the major funder of higher education. But the history of the last 50 years or more, under governments of all colours, shows the problems when universities have to compete with other priorities from nursery schools to health. If they have to rely solely or mainly on public sector resources, the result is pressure on staff/student ratios, capital investment and innovation. We cannot risk slipping into that sort of decline.

"As countries throughout the world have discovered, requiring students to contribute to the cost of their education is the only realistic alternative. That has the merit of justice. On average, graduates earn 50 per cent more than non-graduates over their lifetime. I believe that it is only fair for students to make some contribution to the costs of the education which gives them significant economic benefits. The alternative funder—the general taxpayer—is entitled to ask in comparison what financial support they have received from the Government to assist their personal educational ambitions.

"That is why the White Paper that I present today follows this approach. My student finance proposals are as follows. First, we shall allow universities to vary their fees between £0 and £3,000 a year from September 2006 onwards. I remind colleagues that the figures I propose are significantly lower than some of the early suggestions. The £3,000 cap will be in place for the whole of the next Parliament, rising only in line with inflation. Only those universities that have satisfied the access regulator will be allowed to increase their fee.

"Secondly, we shall restore a grant for students from the poorest backgrounds. From September 2004, students whose families will earn under £10,000 will receive a £1,000 grant, with a proportion of that paid up to family income of £20,000. Thirty per cent of students will get the full £1,000 grant.

"Thirdly, we shall abolish from 2006 the requirement for any student or their family to pay a fee before or while they are studying. Deferred fees will be paid after students graduate through the tax system, linked to a student's earnings and ability to pay. And I can tell the House that, as with the existing student maintenance loan, no interest will be charged on deferred fees. Any sums outstanding will be adjusted only for inflation so that students pay back only the real value of their fee and maintenance loan.

"Fourthly, we shall continue to exempt around 60 per cent of students from some or all of the first £1,100 of fees, in the same way as we do now.

"Fifthly, we shall raise from April 2005 the threshold at which graduates start to repay their fees and loans from £10,000 to £15,000. This change delivers a saving of £450 per year, which will particularly help graduates when their earnings are lower in the early part of their careers.

"Sixthly, we shall review the level of the maintenance loan and operation of the parental means test for loans as part of the next spending review.

"These student finance proposals will affect different students, potential students and their families in different ways. It remains the case that the British system of student support will be among the most generous in the world.

"The fact that we are asking individual students to contribute, albeit after they have graduated, does mean that their potential debt is increased and this could act, without the wider package of reforms I have introduced, as a disincentive. I believe that, taken as a whole, my student finance package is positive for access to universities and that it will reinforce the other measures on access to which I referred earlier.

"As I said at the outset, the White Paper which I published today represents a massive step forward in equipping our universities to meet the challenges of the future. They will take their rightful place in the dynamo of economic progress and social justice. We need now to take the necessary action to put these proposals into effect. I commend them to the House".

My Lords, that concludes the Statement.

3.35 p.m.

Baroness Blatch

My Lords, I do not believe that throughout my time in this House I have had to sit through such a depressing Statement. Academic freedom is dead; long live the man in Whitehall. I think back—I say this with some feeling—to how this House fought for academic freedom and I see, almost in real terms, my late friend Lord Beloff turning in his grave.

My first question to the noble Baroness is: what is so special about today's information that it warrants a Statement to Parliament, and what was so unimportant about the policy announcement yesterday that it did not merit a Statement in Parliament? For days, Ministers have been cavorting around TV and radio studios, talking to press journalists, putting items in the press and talking about the detail of today's Statement. This morning, Kim Catcheside on Radio 4 talked in much detail and very knowingly about what we heard just now from the Minister. Therefore, imagine my surprise and amazement when we were told this morning that the Minister was not prepared to go to Radio 4 to be interviewed because Parliament had to be informed first. It is monstrous.

On 14th April 1997, just two weeks before the Government came to office, the Prime Minister, no less, personally wrote an article in the Evening Standard. He said: Labour has no plans to introduce tuition fees". Within weeks of coming to office, the Labour Government did just that. In the 2001 manifesto, just ahead, surprisingly, of the next general election, the Labour Party said, with the Prime Minister's approval, that Labour had no plans to introduce top-up fees and, we have legislated against them". As my noble friend Lord Forsyth said, how can anyone believe what the Government say, least of all the students, who live on every word of what Ministers say to them?

Perhaps I may ask the noble Baroness a technical question concerning whether the Government have, indeed, legislated against top-up fees. It is true that it is very difficult to charge university students top-up fees. However, my understanding of the legislation—I stand to be corrected—is that the Government cannot legislate against universities charging such fees. Universities are free to do that; they are independent bodies and can charge fees for that purpose.

What the Government did was far more malicious. They said that universities would suffer financial penalties through the HEFCE if they dared to put up tuition fees. Therefore, if I am right about that technically and legally, will the noble Baroness say how the Government will prevent universitiescharging top-up fees? Will they do so by penalising them financially rather than stopping them?

The students have certainly been conned. When the Government came to office in 1997—in answer to a comment from the right reverend Prelate—students from poorer families received a 50 per cent grant and there were no tuition fees. They did not start paying back loans until they were earning at a level of 75 per cent or above the national average wage. At that time, that was about £17,000. That was a vastly different proposition from the one today.

Will the Minister say whether all the concessions that exist today will continue? Can she also explain an anomaly? Will she say why, when we are so short of teachers in terms of both recruitment and retention, postgraduates receive a concession whereas the B.Ed. students, who do four years' training and form the staff of the majority of schools—approximately 19,000 schools receive B.Ed. graduates—receive no help whatever from the Government? It would be helpful to know whether that anomaly can be addressed and whether the other concessions will remain.

Students who attend six-year courses—they are not only medical students, although those students are included—will have debts of between £40,000 and £50,000 at the end of their studies. It would be helpful to know what will happen to them. Will we see a cap on Scottish universities now, as we understand may be the case, if prospective students from English universities want to escape the English system?

How will top-up fee income be calculated? Does the 6 per cent real-terms increase in funding of higher education announced today take into account top-up fees? If not—it will be a welcome addition to higher education funding—how are the universities to be funded between now and 2006? If the 6 per cent is additional, can we be certain that that will remain constant in real terms and/or better when top-up fees are introduced? I ask that because the Government's word cannot be taken.

During the passage of the Bill when top-up fees were introduced—I hope that my colleagues on the Liberal Democrat Benches will remember this—we were promised that the tuition fees would be truly additional money into the higher education sector. That has not been the case. What happens now is that students are sharing the burden with government so the additional money into government has not been truly additional.

It is almost unbelievable that there will be an access czar. What will the czar be called: "Ofuni"? "Ofloony" would be more like it. Do we really mistrust higher education so much that we have to appoint a czar to oversee access? How on earth will that work? What criteria will be used? How will a university be judged as to whether or not it can have top-up fees?

The brightest and most talented of our young people should find places in higher education regardless of background. That is felt most strongly. But this is the Government who took the rungs out of the ladder for the bright children from poor homes. Assisted places were taken out of the system. They are against selection on the grounds of academic ability. Ministers have done more to make it difficult for children from poor backgrounds to get into university than almost anyone else I know. If the Government want to make it easier for children from poorer backgrounds to get into university, they should improve school education and give bright and talented young people the best possible academic education that can be afforded.

What assurance can the Minister give the House that we shall not see standards of access into our universities compromised in the interests of widening access? We all want to see those who qualify get into university. We all know that more can be done to encourage young people from poorer backgrounds or from those families which do not have a custom of going to university. But universities are already doing a great deal. We want them to continue to work collaboratively with schools, but the Government have done more to make that difficult. The Government will take control over paying universities. I should like to know how that will work.

I conclude by saying that students will be unforgiving. This attack on academic freedom, the madness of Whitehall control by using an access czar and the controlling research and all other higher education activities will do untold damage in our country. Social engineering and socialism are back with a vengeance. Higher education will become a social engineering factory. The sooner we can find a way of freeing our universities to be independent institutions, the better.

3.43 p.m.

Baroness Sharp of Guildford

My Lords, from these Benches I thank the Minister for repeating the interesting Statement, some aspects of which we welcome. We share with the Government the view that with 43 per cent of the 19 to 30 age cohort now going through university we need a different university system from that which grew up in the last century in the post-Robbins era. However, looking at this White Paper, the Government have neither the right balance now nor the plans to get the right balance.

We welcome a number of aspects of the White Paper. We welcome the emphasis given to research and to high-quality teaching at universities. However, we feel that perhaps both are better achieved by light-touch inspection regimes rather than the heavy-touch regimes threatened. We are worried by such threats.

We welcome the conversion of the Government to the need for some form of maintenance grants for students from disadvantaged backgrounds. But why only £20 per week—£1,000 per year—when those who are 16 and 17 and staying on at school or college are given £32 per week under the educational maintenance allowance? That seems an odd anomaly, particularly given the substantial risk aversion among those people towards taking on debt. We feel strongly that the system pioneered by the Liberal Democrats through the regime in Scotland has been successful. We are delighted to see the Government borrowing that; however, they need to think through how it will be done.

We remain highly sceptical about whether the Government have come up with a definitive answer in the White Paper. I echo the words of the noble Baroness. We do not know precisely what will be in the kitty between now and 2005. All the extra money from top-up fees is promised from 2006 onwards. We have the promise of 6 per cent extra from the Treasury under the CSR. I cannot make head nor tail of the figures but imagine, with a little help, that I shall be able to in due course. Can we be assured that we shall see that money? How do we know that it will go to the universities? When tuition fees were introduced under the noble Lord, Lord Dearing, we were promised that that money would be earmarked for universities and it was not. Over the past four or five years the Government took somewhere in the region of £700 million out of the budget of universities. That money should have gone to universities. It is one reason for the current crisis.

Given their stated aim—indeed, their highest priority aim—of increasing access for students from disadvantaged backgrounds, do the Government really think that the way to do that is by trebling tuition fees? When tuition fees were originally introduced after the Dearing report, we were told by the Government that they would have no impact on access. Their own statistics have been carefully worked through, but work at Exeter University and by Claire Callender at South Bank University clearly shows that it is precisely the students from disadvantaged backgrounds who are worried about taking on debt. It is not debt itself but the perception of debt which is important here and which will deter disadvantaged students from going to university.

Surely, this will create a two-tier system. Students from poor homes will be worried about applying for expensive courses. Therefore, as predicted, there will be a two-tier system of universities, one for the rich kids and one for the poor kids. That is not what we want. What about differential fees between subjects, as forecast? What about science and engineering? That is one of the more expensive subjects but one to which we are desperate to attract more students. Will differential fees not put off students from studying science and engineering?

How can the Government prevent a system emerging of rich universities getting richer? Today, on the "Today" programme, the Vice-Chancellor of the University of Derby made clear that those who can charge top-up fees are already the richer universities. As he put it, the richer universities will get richer and the poor will get poorer.

Another matter which worries us—it was mentioned also by the noble Baroness, Lady Blatch—is the sheer bureaucracy of the system. It is riddled with means tests for this and for that. Has there been any calculation of the extra costs in the bureaucracy of means testing, of "Oftop", as we call it: the office of top-up fees, the new regulator or the new czar? How much will all that cost?

Has any thought been given to part-timers who I believe are the Cinderellas of the system? If we expand the system as is wanted, they would play an important part.

Finally, have the Government thought about the impact of their policies upon women? On average, the earnings of women in full-time employment are 38 per cent below those of men. As a result, they will be landed with debt over a long period of time. Yet this Government are supposedly committed to encouraging women to try to break through the glass ceiling and to apply for a higher level of jobs. Have they really thought through their policies carefully?

Before the 1997 election this Government promised that if elected they would never introduce tuition fees. We now have promises that they will not introduce top-up fees. In a letter to vice-chancellors in August 1999, just after they had introduced tuition fees, they said: The Secretary of State has made it clear that 'top-up' fees play no part in the Government's plans. Ministers believe that they would restrict access for students from less well-off backgrounds and hence be detrimental to student choice. The Government shares the Dearing Committee's view that access to popular programmes should continue to be determined by academic merit and not by ability to pay". These Benches take a somewhat different view from that of the Government. We believe very strongly that the opportunity for a university education should be according to ability and not according to income. And we take the view that—in this present day and age when, as the Secretary of State stressed, the knowledge-based society is an imperative for us all—education up to graduate level should be a birthright. We find it amazing that, as Ted Wragg, in yesterday's Guardian, said: Labour will still be charging a colossal sum for what should be a birthright".

3.51 p.m.

Baroness Ashton of Upholland

My Lords, I am conscious of the time requirement laid down in the Companion. I hope that noble Lords will allow me to run over that requirement slightly in order to answer as many questions as possible.

I begin with the questions of the noble Baroness, Lady Blatch. She talked of the importance of the 14 to 19 strategy, which was outlined in the House of Commons yesterday. I passed on the comments of noble Lords concerned about that matter to my right honourable friend.

However, I want to focus on the importance of today's Statement. There has been a great deal of press speculation. Ministers have tried to lay out their proposals, but this subject needs to be aired. I believe that most people recognise that by airing it we have created the necessary quality of debate.

I have dealt with issues concerning the manifesto. I do not feel that I need to repeat them at this stage. The noble Baroness asked about the legislation. The mechanism is through the HEFCE letter. Powers are given to the Secretary of State whereby not charging top-up fees may be made a condition of grant, which is the standard way to place requirements on universities. We shall consider as we frame the legislation the basis for future limits on top-up fees.

The noble Baronesses, Lady Blatch and Lady Sharp, spoke of their concerns for poorer families. I believe that when noble Lords look at the package we have created they will see that we are very conscious about the need to ensure that poorer families can send their sons and daughters to universities. That is why the package is so important.

The noble Baroness, Lady Sharp, talked about the potential for the perception of debt. We are very alive to the possibility that that could put young people off going to university. It is also true that if universities work closely with them to explain the opportunities that university will create for them we shall begin to balance out that equation. That is why this whole package is so crucial and so important.

We are in discussion with our colleagues in Scotland to ensure that we have an appropriate system. We shall continue that dialogue. We shall be publishing what we describe as a "technical document" a little further down the track, which will set out precisely how these schemes will operate.

The noble Baroness, Lady Blatch, asked whether the "top-up" fees would be separate from the 6 per cent funding? They are. Rather than my going through the figures, if noble Lords turn to page 19 of the White Paper, they will see the spending settlement from now until the end of this spending review period. I trust that noble Lords will feel able to hold the Government to that detail in the future, which I believe is very important.

I say to the noble Baroness, Lady Blatch, that we are not trying to take control of pay. We already have a fund for universities with good human resource strategies. Indeed, we want to make sure that all universities are developing the kind of strategy that will enable them to provide excellent teaching alongside excellent research. The White Paper proposes that, when universities have put this strategy in place, that money should become part of the general settlement. We believe that that is an appropriate way to ensure their independence.

The noble Baroness, Lady Sharp, asked about means testing and whether that would create bureaucracy. I sensed a ripple across your Lordships' House. We already have means testing to help students with fees. We will be able to use the same forms and systems for both the grants and for help with the fees under the new system. We are trying to improve and simplify the way the system is run with a single IT system for all local education authorities, which will roll out in 2004–05, and which I believe will help to support our desire to reduce bureaucracy wherever we can.

I was pleased with the welcome given by the noble Baroness, Lady Sharp, to our proposals. I recognise that education maintenance allowances are £30 in most places and £40 in a couple of other places. But we are trying to balance keeping students from very poor families in education who will benefit from that where that is the only resource that might be available. For higher education there is a grant plus a loan system to enable them to carry on. So it is not equating like with like in that context. It is about a balance within the resources that we have available. I make no apology for that.

I wish to say something about the regulator. This is a very important move. It has been discussed by my right honourable friend the Secretary of State for Education and Skills with a number of vice-chancellors. The post will be located within HEFCE and will have two aims. One is that universities should be able to demonstrate that they have good access strategies and policies. The regulator will be able to spread good practice and to help universities address this issue, which many universities have sought to do for some time.

I also believe that it is a kind of protection, because an independent regulator can point to the work of universities and to their desire to ensure that they have a good intake of students, and that they have undertaken that task in the best way possible.

3.57 p.m.

Lord Sutherland of Houndwood

My Lords, I welcome a number of points in the White Paper but I raise two questions about fundamental premises in that paper. The points I welcome will not be much otherwise noticed, and I think that the record should be straight on that. First, the proposals for an arts and humanities research council went through tortuous routes, but I am delighted to see that now in place.

Secondly, I welcome the move that the proposed earnings threshold of £15,000 before repayment of loans, which although in my view is still too low, will also apply in Scotland.

Thirdly, I refer to the point for shadowing matching funding to encourage external fundraising. I look forward to the Government's detailed proposals on that matter.

The two premises I question, however, are very important. The first, which was highlighted in the Minister's speech, is the assumption widely made that in research-strong universities, this is achieved by a funding transfer from teaching to research. I should like to see the data on which that assumption is founded. That is a minimal question. My view, on the basis of having worked in a number of universities with excellent research records, is that the transfer is often the other way. The data would be very welcome.

The second premise, however, is a rather more important one in view of the highlight given to it. It relates to the problems of access. I support entirely the Government's aspirations. I come from a low-income family and I had the benefit of government support. But the assumption in the paper is that the problem of access will be dealt with in two ways: first, that universities will be threatened in order to ensure that they admit on the basis of location; and, secondly, that access will be encouraged largely by work not directly related to the wider community.

My questions are: first, can I have the statistics that show the basis on which the assumptions are made that transfer of money takes place from teaching to research; and, secondly, will the Government consider more widely the fact that many communities that have low access to universities also have very poor health and low housing quality?

The Lord Privy Seal (Lord Williams of Mostyn)

My Lords, many of your Lordships have a keen interest in this Statement. Perhaps I may respectfully remind your Lordships of what was recently reconfirmed by the Procedure Committee: this is not an occasion for a full debate but simply for short questions, preferably to the point.

Baroness Ashton of Upholland

My Lords, I shall be brief. I was not trying to imply—although I understand that this is the point made by the noble Lord, Lord Sutherland—that the transfer of funds is somehow negative for universities. I was trying to allude to the fact that universities have different strengths. We are keen to ensure that the quality of teaching is high throughout universities, but that those for which it is an area on which they have a particular focus have the opportunity to become centres of excellence in teaching, able to spread that practice. We feel strongly about that. If there are statistics such as the noble Lord describes, I shall of course send a copy of them to him and place one in the Library.

The issue of access is the nub of developing a system that will enable us to provide for all our young people who are capable of getting into university. As ever, the scheme is put together in an attempt to deal with all the different issues. It will not be entirely to the taste of all noble Lords—of that I am sure. But I hope that it will be recognised—it will certainly be monitored in this way—as a way in which we can put together our university sector to enhance its research, teaching and knowledge transfer skills, and provide a sound financial basis for years to come on which we can grow our education system and university sector.

The Lord Bishop of Portsmouth

My Lords, I have three brief questions. The first is procedural. Does the Minister agree that pre-selection of Statements should go wider than the Official Opposition and the Liberal Democrats on such occasions? There is a huge amount of frustration about that in the House—I certainly speak for my brother Bishops.

I have two further brief questions. How can an access regulator be conducive to academic freedom—without employing the language of the Royal Navy about a long screwdriver? Secondly, with both a graduate tax and top-up fees, are we not returning to the lamentable days that the noble Lord, Lord Sutherland, and I remember—we have Edinburgh University in common—of that rather old-fashioned English false hierarchy of higher education?

Baroness Ashton of Upholland

My Lords, my noble and learned friend the Leader of the House will consider the wider issue of Statements. For my part, I was glad to give the right reverend Prelate a copy of the Statement before I began, although I should have preferred it if he had been able to read it beforehand.

On the regulator and the question of academic freedom, I tried to make the point that the regulator presents an opportunity. We have talked to a number of vice-chancellors who have welcomed the proposal for universities to work alongside a regulator who can support their initiatives to widen access. The regulator will be someone who can work with the universities to develop their strengths across the sector. As we all push towards wider access—an ambition for many universities—the regulator will ensure that they are able to achieve that together and separately.

The regulator will also provide protection that is wanted by other noble Lords who are concerned that universities may simply treble the fees and take those who feel that they are able to pay a high fee because of their parental background. The White Paper is about ensuring that we have a basis on which to address those questions.

There is a fundamental difference between our proposals and a graduate tax, which is that people pay a graduate tax continuously once they reach the income level; our proposals concern paying back what people themselves have borrowed to attend university.

Lord Carrington

My Lords, I declare an interest as chancellor of a university. The proposals are partly due to the underfunding of universities. How and when will universities get their money? Will they have to wait until students pay?

Baroness Ashton of Upholland

No, my Lords. The Government will give universities the money at the students' point of entry. The loan relationship will be between the student and the Government, not the university. Universities will receive the money up front, which I am sure will please them enormously.

Lord Winston

My Lords, in describing the missions of universities as being research, knowledge transfer and, perhaps most importantly, teaching, have not my noble friend and the Government forgotten something extremely important? Universities are also about the general culture of our society, the wellbeing of the people who live in it and the process of personal expansion. The accent on wealth in society may do great damage to university education.

Baroness Ashton of Upholland

My Lords, I am sorry if my noble friend feels that in presenting the Statement I placed too much emphasis on wealth—I did not mean to do so. Our universities play a critical role in the wealth-creation and economic standing of our nation. We should recognise and applaud that, as we have tried to do in many ways. I fully accept what my noble friend says about universities being a broadly based set of institutions with a deep impact on the cultural—and, I would argue, spiritual—life of our nation. We cherish that and want it to grow and expand.

Lord Rix

My Lords, I must declare an interest as Chancellor of the University of East London, a university that follows the criteria apparently favoured by the Government. It has many students from poorer and non-academic backgrounds, from ethnic minorities and mature students. However, being a new university, it receives approximately 50 per cent less funding than universities that are only a few years older. Does the White Paper address that anomaly?

Baroness Ashton of Upholland

My Lords, the noble Lord must forgive me, but because I do not have the details of the funding structure of the University of East London in front of me, I cannot answer his question in the detail that I would want to.

On a more general point, we are trying to recognise that different universities have different strengths. I applaud the work of the noble Lord's university in ensuring that it reaches out to students, but to ensure that we recognise universities' different strengths, we must place our resources and emphasis on enabling them to rise to their challenges and develop the skills that they know best.

If I am able to help the noble Lord further with his question about the detail of his university, I shall of course write to him.

Lord Crickhowell

My Lords, why should the Minister believe that her access regulator will better know how to judge the potential of candidates for making effective use of a university education than universities themselves? Would it not be a national disgrace, to use her words, if the system were to penalise well-educated young people from good schools in order to assist the possible but unproved potential of others who come from bad schools, where standards need to be dramatically increased—again, to use her words?

Baroness Ashton of Upholland

My Lords, it would be completely wrong for the regulator to be considering the detail, as it were. We want the regulator, who will work alongside the universities, to have a strategic approach to the issue of access. When I say "detail", I mean effectively sitting in on interviews. That would be wholly inappropriate.

We want to recognise the potential of our young people—and, indeed, of some of our older people—and enable them to access higher education. We do not want to penalise young people because of their background, in whatever way, but, rather, offer opportunities to enter university to young people who would benefit from it—and benefit the nation.

Lord Desai

My Lords, I welcome the White Paper. Can my noble friend reassure me that the drastic 40 per cent cut in unit of resource per student that occurred under the previous Conservative government will now be reversed, and that universities will be better funded because this Government have at last tackled the problem of university finance?

Baroness Ashton of Upholland

My Lords, we are trying to tackle that. There are detailed figures that I hesitate to give to your Lordships' House without the benefit of having them in front of me. What I can say is that we calculate from an index of 100 in 2002–03 a rise to 106.8—an almost 7 per cent increase in that unit of funding.

Lord Butler of Brockwell

My Lords—

Lord Roberts of Conwy

My Lords—

Lord Williams of Mostyn

My Lords, it is the turn of the Cross Benches, I think.

Lord Butler of Brockwell

My Lords, I declare an interest as Master of University College, Oxford. At present, students make a contribution of £1,100 to the average cost of a degree course of £4,400 per year and the Government pay the rest. Can the Minister confirm that the Government intend to continue that level of support, if a university raises its fee to £3,000?

Baroness Ashton of Upholland

My Lords, for students who receive the £1,100, in the context of their family income, the position will remain the same. Students who come from a family with a total income of £10,000 or less will receive an additional grant of £1,000.

Lord Forsyth of Drumlean

My Lords, to cut through the spin, would it be a fair summary of the Minister's new policy that the hard-working classes in this country whose children are now 14 or younger can expect them to be saddled with large debts in return for their tuition at university? Universities will be entitled to raise that money on the basis that a regulator will make it harder for such children to get into universities in the first place. Is not that a disgrace?

Baroness Ashton of Upholland

My Lords, that is not the Government's position. We recognise fully that the programme we set out today will lead to university graduates having to pay back an increasing amount if a university chooses to put up fees on a particular course or throughout the institution. Universities must make that decision on the basis of several factors.

We know from talking to many people about the issue that one of the key factors is finding the money upfront. At present, students' parents or the students themselves must do that. That situation will go. Instead, there will be a loan that students can pay back at a suitable point in their career. That will be demonstrated to be an important move.

The purpose of the regulator is to ensure that universities are working to develop access and widen participation in higher education. I congratulate all universities that do that. As a nation, we need such development if we are to have the thriving economic base that we want. Universities must continue that work and must be supported in doing so by the regulator. That is the purpose behind the Government's strategy.

Baroness Warwick of Undercliffe

My Lords, I am pleased by my noble friend's recognition of the success of UK universities. I declare an interest as chief executive of Universities UK. We are also pleased at the specific amounts of new money that the Government have agreed to make available for higher education. I am relieved that the Government have dropped proposals for withdrawing research degree-awarding powers.

Can my noble friend reassure me that it is the Government's intention that teaching in higher education institutions should continue to be offered in a context informed by research and that new centres of research will still be able to flourish?

Baroness Ashton of Upholland

My Lords, I am happy to confirm that for my noble friend. We must recognise that teaching is of paramount importance in what a university offers. But we must also recognise that research is fundamental. What we are looking for in our university structure is for different universities to recognise their skills and build on them.

I am sure that my noble friend and Universities UK will examine closely our proposals on research. We are considering how to develop research so that universities providing innovative research at the cutting edge move forward—whatever their basis in the current assessment—and are supported in doing so. We also want universities to work together in what I might call a cluster to develop the expertise that enables them to compete internationally.

Lord Roberts of Conwy

My Lords, I note from page 75 of the White Paper that the regulator will have the power, to withdraw approval for variable fees or impose financial penalties". Does that mean that the regulator must approve a proposal for variable fees?

Does the document apply to universities in Wales? I understood that higher education was a devolved matter.

Baroness Ashton of Upholland

My Lords, what the noble Lord read out about our proposals in respect of the regulator is correct. However, what it means is that part of the decision on whether a university can put up its fees will be whether it has satisfied the regulator on access. Many universities are already considering the issue, so it is not a hardship for many of them. We are keen to ensure that any increase in fees goes hand-in-hand with universities developing their relationships with schools and examining their admissions arrangements.

In Wales, discussions continue. There have been press reports that we have devolved student support to Wales; they are incorrect. We are having discussions with our colleagues in Wales on how the systems might work closely together. I am happy to keep the noble Lord informed about those discussions.

Lord Morris of Aberavon

My Lords, I declare an interest as Chancellor of the University of Glamorgan. Have the additional costs of a postgraduate professional qualification—such as for law students—been taken into account in the debt that is envisaged?

Baroness Ashton of Upholland

My Lords, the individual student will have his or her debt calculated on the basis of the kind of degree, the fees and the maintenance allowance, which, as noble Lords will know, is different in London from elsewhere. We have considered different examples of what the debt might be. An individual student will have it calculated in that way, and there is no overall debt figure that will apply to students studying a particular course for a particular period. Family circumstances will vary. There may be examples in the White Paper. I am happy to lay in the Library examples of individual cases, which may help noble Lords to grapple with the issues.

Baroness Perry of Southwark

My Lords, can the Minister explain how the reform of the postcode premium will relate to mature students, who form one half of the student population? The new criteria include not only parental income but the performance of a student's school—which seems a bit irrelevant for a 35 year-old—and the level of their parents' education. That seems very odd.

Baroness Ashton of Upholland

My Lords, I cannot answer the first part of the noble Baroness's question, as I do not have that information. I shall write to her. I apologise.

In examining the factors that determine whether a young person goes to university, we have tried to isolate the most critical factors. Noble Lords will not be surprised that one of those factors is the level of education of the parents. Many families in this country have no history or tradition of university education and, therefore, no expectation that their child or children may attend a university. That is well understood, and we wish to bear it in mind for those students. In households for which university is part and parcel of life, going to university will be talked about. In other households, it is often simply not a subject for discussion. Unless the schools and universities talk to such students, they may not aspire to university, even though they are capable of going. That is particularly true in areas in which the schools do not encourage that aspiration.

There are well-documented cases. Noble Lords will know of anecdotes and other evidence that demonstrate how important it is to ensure that students raise their aspirations and recognise university as something that is for them.