HL Deb 08 June 2004 vol 662 cc247-54

9.32 p.m.

Consideration of amendments on Report resumed on Clause 27.

The Deputy Speaker (Baroness Turner of Camden)

My Lords, Amendment No. 22 has been spoken to already with Amendment No. 21.

Noble Lords


Baroness O'Neill of Bengarve moved Amendment No. 22:

Page 13, line 35, at end insert—

"(4) In order to ensure that student fees paid to relevant institutions are additional to, and not in replacement of, public funding—

  1. (a) the Higher Education Funding Council for England ("HEFCE") shall annually determine and make public the amount of direct public funding made available per home or EU undergraduate admitted to courses in each category at Higher Education Institution ("HEI") in England;
  2. (b) in the event of a decline in the real value of any of these amounts, as measured by an index of HEI costs, HEFCE shall take steps to reduce the total number of publicly funded home and EU undergraduates on courses in the relevant category, in order to maintain the unit of resource per home or EU undergraduate for courses in each category;
  3. (c) the Higher Education Funding Council for Wales ("HEFCW") shall annually determine and make public the amount of direct public funding made available per home or EU undergraduate admitted to courses in each category at HEIs in England;
  4. (d) in the event of a decline in the real value of any of these amounts, as measured by an index of HEI costs, HEFCW shall take steps to reduce the total number of publicly funded home and EU undergraduates on courses in the relevant category in order to maintain the unit of resource per home or EU undergraduate for courses in each category."

The noble Baroness said: My Lords, I have not spoken to the amendment already. I spoke to the amendment tabled by the noble Lord, Lord Phillips. As other noble Lords were already, by anticipation, speaking to Amendment No. 22, I indicated that I was not then speaking to it, but I shall do so now. The amendment has an error in the printed version, for which I apologise. In its proposed new paragraph (c), the last word should not be "England" but "Wales"; Wales should have the last word.

The point of Amendment No. 22 is quite straightforward. It is designed to achieve a good part of the aims of Amendment No. 21, without the difficulty of setting a commitment to additionality in the Bill. Unfortunately, that straightforward aim requires a certain complexity of drafting, and I am not sure that I have everything technically right. However, I shall outline the proposal.

At present, the funding for teaching costs at universities in England and Wales is set at four levels depending on the category of the course. Medical courses receive the highest funding; courses with heavy amounts of laboratory work are then funded at a higher rate than courses with a small amount of it; those in turn receive more than those with no laboratory work. The basic unit of resource for teaching is set at those four levels.

The amendment requires that, in the event that the real value of those funding levels, as measured by an index of higher education institution costs, cannot be maintained, the number of places rather than the support per student would be reduced. This would maintain the real value of funding per student on each category of course, but without committing the present or any future government to additionality.

It is only realistic to accept that we must cut our coat according to our cloth. In the event that public funding per student on a given category of course cannot be maintained, there is only one choice—cutting the unit of resource for students on that category of course, or cutting the number of funded places. The universities have been through long years in which the former salami slicing policy has been followed.

We owe it to future students, who will be paying substantially for their degrees, to make sure that they are not short-changed by further salami slicing. We owe it to universities not to encroach on their autonomy, and the amendment leaves it open to them to accept additional home or EU students for whom they receive no public funding—as is the case at present. Realistically, it will seldom be possible for universities to admit unfunded home or EU students. Nevertheless, their autonomy to do so is not reduced by the amendment.

The amendment is couched in terms of the unit of resource for each category of course in order to remove any incentives for universities to compensate for a declining average unit of resource by shifting their intake away from more expensive laboratory-based courses to other cheaper courses.

The only argument that I can identify against the amendment is that it might take longer to raise the level of participation at first degree level to some notional figure—I pluck it out of the air—say, 50 per cent of the age group. If we want the real thing—serious undergraduate education—we should prefer a sober and, it is to be hoped, temporary reduction in student numbers on specific categories of course at times of economic difficulty. That would be preferable to an unfunded race towards a mesmerising target. I beg to move.

Lord Renfrew of Kaimsthorn

My Lords, if only we had had the effects of the amendment five, 10 or 15 years ago, we would certainly not be in the disastrous situation that we are in now. This is a clear-sighted and well-conceived amendment, like its predecessor. All or, certainly, most of us favour an increase in the numbers of students in higher education, but not if that means that the provision for higher education declines significantly in quality and declines significantly in resource, as has happened in recent years.

Therefore, I warmly support the amendment, which powerfully gets to the heart of the issues that we are addressing and would make the Government, if it was accepted or, more likely, voted for by the House, recognise that if one sets a high target that is fine, but one has to meet the commitments that will underwrite such a high target. If we had the chance to re-write the amendment, in line 4 of paragraph (b), where it says that we would, take steps to reduce the total number of publicly funded home and EU undergraduates on courses"— that is, if the ratio is not met—I would be careful to say, admitted to courses". That relates to a point made by the noble Baroness, Lady Warwick. We would not wish to see students who are already embarked on their university courses excluded as a result of the amendment.

The way to proceed, clearly, if the verdict was that unit costs had declined so that the amendment came into effect, would be to reduce the admissions to such courses in a future year. No one would wish to see students who had already embarked on their university careers suddenly excluded by a procrustean application of the amendment. I am sure that that is the intention of the noble Baroness; it certainly was my intention when I put my name to the amendment. I am sure that that is the light in which the amendment should be read, so I commend it to your Lordships.

Lord Forsyth of Drumlean

My Lords, I congratulate the noble Baroness, Lady O'Neill, on her ingenuity. Earlier, I did not move Amendment No. 4, which concerned the issue that we discussed at length in Committee. In order to make progress, I felt that perhaps we should not take time over it again, particularly in view of the amendment that we are discussing now. This amendment provides an ingenious way of ensuring that governments will the resources for the rhetoric of their policy statements.

I am very disappointed that the noble Baroness, Lady Blackstone, is not in her place. I resisted the temptation to respond to her comments about additionality because I was conscious that we wanted to move to a vote. But it is a fact that, since 1997, funding per student provided by the Government has fallen by approximately 10 per cent. It is also a fact that the total amount of money each year has been increasing, but that has been the case since 1979 and not only since 1997. However, funding per student has been lower than in any of the 18 years under the previous government.

I raise those matters not to make a party political point but to highlight the fact that it is not enough to say that participation should go up without willing the funds. I believe that this amendment is devilishly clever and it should be supported. It may give the Treasury less cause for concern than the previous amendment standing in the name of the noble Lord, Lord Phillips.

I believe that, with the two amendments, should the House decide to approve this one, we have been really helpful to the Minister in pressing this case. She will be able to talk to her colleagues in the Treasury, and I imagine that any Secretary of State would be delighted to have an amendment of this kind included in legislation because it would be a guarantee that the declared policy of the Government to meet their target would be followed by appropriate funding and, were the funding not there, it would be transparent for all to see. Therefore, I very much support the amendment and, should the noble Baroness, Lady O'Neill, decide to press it at any stage in our proceedings, I shall certainly join her in the Lobbies.

Lord Sutherland of Houndwood

My Lords, I am also very happy warmly to support the amendment. Two or three key words that have echoed around the Chamber in our debates are what underwrite the amendment. One is additionality; one is transparency; and the other is the connection between means and ends. Each of those is included in this very subtle and clever amendment.

I support the amendment because, if funding for teaching is reduced and this amendment is agreed to, it will be clear that there will be consequences for public policy and for government statement. The Government will understand fully the implications of what they do, and that is good for good government. Taxpayers will understand why universities must be supported: they are not a bottomless pit of energy and talent that can be milked and milked. Students, their parents and sponsors will understand why, in the current situation, fees are necessary and they will see what they get for those fees. Finally, also in terms of transparency, universities will know what is expected of them, they will know what the resource is and they will be able to make proper plans over a foreseeable future.

Baroness Howe of Idlicote

My Lords, I spoke to the previous amendment and shall speak to this one very briefly. I definitely support this amendment. Everything has already been said about its clarity, the fact that there is a clear agenda to follow and the very detailed way in which the unit of resource and the other methods by which it is to be measured have been spelt out. Therefore, I hope that these two amendments will be taken very seriously, and no doubt we shall return to them.

Baroness Sharp of Guildford

My Lords, we on these Benches have some reservations about the amendment. In particular, while we recognise how clever it is, we have reservations about the degree to which it picks up what at one time was Conservative policy on these issues—that is, that one should hold the funding and cut the number of students. We on these Benches are with the Government in believing that we need more students. We obviously need more money and more resources. I recognise that the amendment refers to unit funding per student, and we are trying to use that as a lever. I cannot put my finger on precisely why I have difficulties with it, but I have difficulties about that issue. Therefore, I am unhappy about it as it stands.

9.45 p.m.

Baroness Perry of Southwark

My Lords, I entirely support the thrust and the object of the amendment. I admire very much the careful wording of the noble Baroness, Lady O'Neill. My reservation is slightly different. I am not entirely sure what steps HEFCE and HEFCW could take to reduce the number of home or EU undergraduate students. If universities choose to take in more students unfunded, thereby reducing the unit of resource for each student, I do not see how HEFCE can stop them. In the past we have had many examples of universities continuing to admit students despite the fact that the funding has already been capped. Although I would love to see this amendment succeed, it could be extremely difficult to lay such a duty on HEFCE because the number of students in higher education is the result of a host of individual decisions taken by universities, departments and students.

Lord Dearing

My Lords, when debating the previous amendment I said that I would be willing to support this amendment as an alternative. I want to make a few points. The noble Baroness, Lady Perry, spoke with knowledge and feeling about days gone by when universities were encouraged to expand at marginal cost and the former polytechnics did so with a will. I am not sure how one can constrain the enthusiasm of various universities to do what they believe best for their communities. That needs further thought. The noble Baroness said that she would wish to give it some further thought. She thought about the possibility of making explicit the fact that this relates to funding for teaching rather than to funding in general.

We have already heard that work is being undertaken on a definition of user funding, which would be relevant. There may be five categories, as I believe that it has been decided that for foundation courses, in whatever subject, there is a 10 per cent premium. As the Government plan that most of the expansion should be in foundation courses, it may be relevant for the noble Baroness to consider that. I believe that this is worth further consideration by this House.

Lord Winston

My Lords, one problem that. I have with this excellent and thoughtful amendment is the consideration to which I referred at Second Reading: by that kind of approach, those universities that can may increase the amount of overseas students who come from outside the EU. I believe that our universities should primarily educate our own community. It worries me to think that there may be increasing pressure not to do that, and in the long term that would be to the detriment of our society. It is very good to have overseas students from far-flung parts of the world, as we do in my university, Imperial College, but that is not ideal for Britain as a whole.

Baroness Ashton of Upholland

My Lords, I too agree with the words used about the amendment of the noble Baroness: the noble Lord, Lord Forsyth, said "ingenious" and "devilishly clever" and the noble Baroness, Lady Sharp, said "clever". I hope she does not mind me pouring more accolades on her. However, she will not be surprised that I am not able to support the amendment.

I have two general points to make. When I reflect on the different stages of any debate in your Lordships' House, I am interested to see how themes return and how tremors carry throughout the House. I have noticed two themes: top-slicing and constraining the freedom of universities. At various points today I have tried to position myself and the Government by saying, "I think it is wrong to keep top slicing and I think it is wrong to constrain universities". That has not always done me a lot of good today, but I say to those in the university sector that that is what I am seeking in what I do. In later amendments—not for today's debate—I hope that noble Lords will see further evidence of that.

It is very important, at least for me, that we look at all our evidence in that context. That is really where I start with the amendment. A number of noble Lords have said that the amendment would require HEFCE to behave in a very centralist way. The noble Baroness, Lady Perry, said how difficult it would be and how one would in effect constrain universities in terms of numbers. The only way that that would be conceivable would be by reducing flexibility around individual institutions.

Another theme that I have not used today but one which those representing universities will know well is the increase of bureaucracy, which is something that certainly the noble Baroness, Lady O'Neill, would not wish to see. The funding allocation for teaching students would have to change. It would have to become less flexible. Higher education institutions would lose the scope to vary student numbers within their tolerance bands, which we described earlier.

So I can very straightforwardly say to the noble Baroness that on that basis, although I can understand the sentiments behind the amendment—and I do and have always appreciated what noble Lords are seeking to achieve—I do not believe that it is appropriate for us to accept it. It would change the way in which the relationship between HEFCE and the institutions is formed and founded in a way that would be negative for the institutions. I understand, as I say, why the noble Baroness raises this issue.

I would say to the noble Lord, Lord Forsyth, that I very deliberately, as I think he appreciates, have not got into the banter of it—I have left it to my noble friend Lady Blackstone. We could spend all day on this. I am quite clear on the position the Government hold. What I will say is that the unit funding will rise by 7 per cent in real terms—I can say that categorically—between 2002–03 and 2005–06. It is the measure of commitment of this Government.

I understand that noble Lords seek as much commitment as they can possibly get. I completely appreciate that. But the Government's commitment is in a sense to put our money where my talk is. That commitment is absolute. So we can go on over the past. I am trying to think of a fishing analogy for the noble Lord. I cannot think of one because I do not know anything about fishing. None the less, I think I can be very clear about the commitment.

For me today's scenes have been very important. The particular scene about the rights of institutions and the desire of institutions, both academically and in other ways, to operate in that way would not be achieved by the amendment. On that basis, I hope the noble Baroness will feel able to withdraw it.

Baroness O'Neill of Bengarve

My Lords, I thank the Minister for some very clarifying remarks, and other noble Lords who have commented on this amendment. The amendment is less ambitious than the noble Baroness suggested.

We have to remember that at present undergraduate numbers are set for universities. Many noble Lords will know of the interesting acronym BUNs—basic undergraduate numbers—and that universities are fined both for under-recruiting and over-recruiting. In this situation it is hardly an advance in red tape to propose that numbers be cut by HEFCE or HEFCW in order to maintain unit levels of funding. The context in which one must look at this is that these matters are controlled.

There was a time, to which I think the noble Baroness, Lady Perry, referred, when there was a great deal of incentivising of recruiting students who were at marginal cost—the noble Lord, Lord Dearing, also referred to them—for whom no funding was provided. One always hoped that in the following year numbers would be made up and suddenly the students whom one had admitted on an unfunded basis would turn out to be funded students. Those days have passed. We do not have that expectation now. That seems to be the context in which one might look at the Bill. Those things are already controlled.

So, for me, it is simply a matter of means-ends reasoning. If we will the ends, we will the means. I am with noble Lords who think that we should not reduce the number we take into universities. I say to the noble Baroness, Lady Sharp, that that is not the intention; it is that each student whom we admit should be properly funded. Universities, should they find some source of funding, should have the autonomy to admit additional students, but that is not the most likely future.

I shall study very closely what noble Lords have said, reflect upon it and perhaps table an amendment at Third Reading. For now, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Triesman

My Lords, I beg to move that consideration on Report be now adjourned.

Moved accordingly, and, on Question, Motion agreed to.

House adjourned at three minutes before ten o'clock.