HL Deb 15 July 2004 vol 663 cc1497-502

6.52 p.m.

Lord Triesman

rose to move, That the draft regulations laid before the House on 2 July be approved [24th Report from the Joint Committee].

The noble Lord said: My Lords, Section 24 of the Act makes provision for the Secretary of State to make regulations prescribing the basic and higher amounts which will apply from 2006–07. These regulations were made available in draft form during the passage of the Bill, so I believe that noble Lords will already be familiar with their content.

The regulations perform two functions. First, they set a basic and higher amount for the fees which may be charged to full-time undergraduate students. Secondly, they describe the courses to which lower limits apply in an academic year.

The process for agreeing the regulations is set out in Section 26 of the Act. In the case of a first set of regulations, the Act requires that the regulations are laid before and approved by each House. That is the purpose of today's debate.

Future increases in both the basic and higher amounts are restricted to inflation unless, in the case of the basic amount, approved by affirmative resolution, or, in the case of the higher amount, by an amendable resolution. Indeed, noble Lords will recall that that was one of the concessions we made during the passage of the Bill in order to strengthen the role of Parliament in this process and to reinforce our commitment that any debate on above-inflation rises in the higher amount should take place on the Floor of both Houses.

In any case, no such increases can take place before 2010 at the earliest. That, too, is written on the face of the Bill.

We have already spent a good deal of time discussing the principle of variability, and I am sure that noble Lords will not think it appropriate to go over that ground again this evening. The regulations simply set the fee levels that we discussed throughout the passage of the Bill and will apply to full-time, undergraduate courses from 2006–07. Only institutions with an agreed access plan will be able to charge up to the higher fee. Those without such a plan will be restricted to the basic fee. The framework for the sanctions regime, which will apply if an institution charges more than it should do, is set out in the Act. It was subject to considerable debate in your Lordships' House. That is in the condition of grant, which we intend to lay on the Higher Education Funding Council for England. We published a draft of the condition of grant when we debated the fees section of the Act in Committee. I hope that it goes without saying that we do not expect institutions to act in a way that would necessitate the use of those provisions, but as noble Lords will know, they offer important safeguards for students.

Ordinarily, the fee levels set out in Regulation 4 will apply: a basic amount of £1,200 and a higher amount of £3,000. There will be specific courses where a different basic and lower amount will apply, and those are set out in Regulation 5. Under that regulation, the basic and higher amounts are set at £600 and £1,500 respectively, half of the levels that would normally apply. Noble Lords will recognise that the courses listed in this section are essentially those for which students already pay half-rate fees under the current system. They include students on sandwich placements; students undertaking a year abroad; students on part-time ITT courses; and students whose final year lasts for 15 weeks or less. For those students, we are continuing the half-rate principle, but whereas the present institutions automatically charge the half-rate fee for those courses because that is the rule that has been set by the Government, in future they will have the discretion on what level to charge, up to those fee caps. They can charge very much less if they wish, and they will need to justify to their students charging at the level they propose for the year abroad and so on.

It is those regulations, backed by the Act's provisions, which give effect to our promise that fees will be no more than £3,000 in real terms. The regulations complete the set of undertakings about fees that we made when we took the Bill through both Houses of Parliament. As your Lordships will no doubt recall, there was some talk at the time that we would not stick to £3,000 as a cap. Fanciful figures of £10,000 and £15,000 were mentioned. Our intentions have always been clear, and these regulations deliver to the letter on the promises. Once made, the £3,000 cap cannot be lifted by more than inflation until 2010 at the earliest. That is due to Section 26 of the Act. By then, Parliament will have had the benefit of the report by the independent commission, which will report directly to Parliament in 2009 on the first three years of fee variability.

The content of these regulations and the principles that underlie them are already familiar to the House and have been subject to extremely painstaking and detailed debate. I remember it all with great affection. I beg to move.

Moved, That the draft regulations laid before the House on 2 July be approved [24th Report from the Joint Committee].—(Lord Triesman.)

Baroness Seccombe

My Lords, I thank the Minister for outlining the regulations. One listens to the pledges in the regulations and considers the hollow pledge that was made in the manifesto of 2001: We will not introduce top-up fees and have legislated to prevent them. It is disappointing that the Government broke those manifesto commitments. We can only hope that the pledges that they have given this time will not be broken as soon.

In the 1998 Act, the Treasury, having introduced fees when it said it would not, kept the cash that it received. Since that time, government funding per student has fallen by 10 per cent. Now students are to be saddled with debts of around £30,000. But as the Minister said, we have debated these issues at great length in recent days. Now is not the time to revisit the matter as I do not wish to waste your Lordships' time by repeating myself.

I shall make a few points. I am glad that eventually the Government did climb down over gap year fees. It will certainly help 28,000 students and their families. I particularly wish to thank the noble Baroness, Lady Ashton of Upholland, for all her efforts in achieving that. We are grateful for other changes as the Bill progressed, but obviously disappointed that there were not more. The removal of additionality from the Bill in another place was distressing, particularly as the Government failed to back up their arguments. But perhaps the most important problem that remains with the Bill is that it will not fill the funding gap. Who knows whether future students will be deterred by the huge increase in fees. The regulations cause me sadness and now we have to await the decision of the electorate.

Baroness Sharp of Guildford

My Lords, when I studied economics there was a category of goods which were called regrettable necessities. I regard the regulations before us today as regrettable necessities. As the noble Lord made clear, we have debated at some length fairly recently the Act on which these regulations are based. I argued hard and passionately that there should be no basic or higher amount because from these Benches we wish to see no fees at all. I did not receive support from all sides of the House and certainly not from the Government Benches. We did not manage to change the Government's position. It is therefore a regrettable necessity that we now have these regulations before us. In so far as they are a true reflection of what we agreed within the Act, I have no quarrel with them whatever.

Like the noble Baroness, Lady Seccombe, I believe that the Act opens up a new era for British students. We shall see young graduates burdened with very considerable amounts of debt. It will be very interesting to see the reaction of graduates. That is one of the issues that we debated; namely, the unintended consequences. My noble friend Lord Russell has just reminded me that we already have great problems in recruiting for courses in our chemistry departments, which are normally four-year degree courses. Therefore, a larger amount of debt is entailed. It is quite likely that some of the science departments will find themselves in considerable trouble when recruiting students from now on. We shall see.

I accept the Minister's statement that the Government will abide by their promise not to raise the fees until 2010. When they are raised they will come before this House, as these regulations have, for authorisation. We shall have a chance to debate them. Sums in the region of £10,000 and £15,000 were mentioned as regards the rise we might see in 2010. The Minister may remember that it was no less a person than the Rector of Imperial College who raised the possibility of fees in the region of £15,000 per student.

For the moment the higher amount will be £3,000, which we accept. We have no quarrel with the regulations although we do regret them.

Lord Triesman

My Lords, I thank both noble Baronesses for their comments. Their speeches merit a short reply, not least the invitation to the electorate made by the noble Baroness, Lady Seccombe, to pass the final judgment on this matter. The manifesto commitment was made in response to a threat towards the end of the last Parliament that some universities wanted to charge up-front fees of up to £15,000 a year. Sir Richard Sykes may well have such an ambition, but he may feel that that has been somewhat limited by the legislation that has been before the House. I believed then and I believe now that such an unregulated system would be wholly wrong. That is why the commitments were made and unregulated fees are still prohibited by the legislation that has been passed. The £3,000 cap remains in place.

It is also worth reiterating an undertaking given in the debate on the Bill which I make in response to the comment of the noble Baroness about what was said and done in 1998. We believe that the increases that have been introduced in the recent spending reviews will cover a large proportion of the financial needs of the sector in the short term while, over the longer term, income from variable fees will provide additional funding worth around £1 billion per year. I want to make the further point that if, as we expect, the fees generate an extra £1 billion, that is what the universities will get, not a pound less. I could not put it more simply than that.

Earl Russell

My Lords, I would be grateful if the Minister could tell the House how the Government decide which of the financial wants of universities they choose to classify as needs. What evidence do they use to reach that decision?

Lord Triesman

My Lords, I think that the noble Earl, Lord Russell, knows the answer even before I say it. The funding councils in the various parts of the United Kingdom are explicit about what they believe are the needs of universities in their forward bids. The organisation Universities UK makes detailed observations, as do other bodies. They are charged with the good stewardship of the finances of universities and, generally speaking, they express the needs. Whether it is always possible to meet the full needs they describe is another matter, but in general we have tried to do so on their advice.

I turn to a comment made by the noble Baroness, Lady Sharp, in describing some of the consequences. Of course these are early days and it is true that we will be reviewing the consequences. The data currently available cover only the impact of the level of fees thus far. Inevitably that is true. But I do not think that there are grounds for deep pessimism. The UCAS figures published only a couple of days ago have quite rightly received a little press attention, although perhaps not as much as they should. They show that the total number of applications in the most recent UCAS figures is up by 2.9 per cent. I shall not go through the whole list, but the noble Baroness mentioned chemistry in particular. Applications for chemistry courses have risen by 6.5 per cent over the year. I am encouraged by that because I want to see the sciences prosper as well as other subjects. People coming through in the sciences must be an encouraging sign for us all, irrespective of our approach to the Bill.

I think that I have responded to the main points made by the two noble Baronesses. I commend the regulations to the House.

On Question, Motion agreed to.