Higher Education Bill

HL Deb 08 June 2004 vol 662 cc153-221

3.38 p.m.

Report received.

Clause 12 [Qualifying complaints]:

Baroness Sharp of Guildford moved Amendment No.1:

Page 5, line 24, at end insert ", or

(c) as a member of staff or former member of staff of that institution"

The noble Baroness said: My Lords, the amendment is about the inclusion of staff within the Office of the Independent Adjudicator. I have again tabled this amendment, after moving it in Committee, to provide the opportunity to move closer to a solution to the problem.

Let me briefly recap the arguments that I made in the previous discussion. First, the Office of the Independent Adjudicator replaces the visitor system for dealing with complaints, but just for student complaints, not staff complaints.

Secondly, coverage of staff employment complaints by employment legislation and employment tribunals is satisfactory and we are not asking for any change in those procedures. For staff complaints that relate to whistle-blowing, the staff are protected by the Public Interest Disclosure Act. Again we are satisfied that this provides support for the staff in those circumstances.

However, there is a range of issues that are not covered by employment rights or the Public Interest Disclosure Act and are still dealt with for staff by the visitor system. They include, for example, procedural matters and some issues relating to academic freedom. They were the focus of our concerns in discussing the matter in Committee. I quoted to Members of the Committee the Parliamentary Under-Secretary of State in the other place, who said: In a small number of cases, there is some ambiguity. The Government do not believe that the status quo is acceptable, or that the independent route that we are establishing for students is necessarily an appropriate route for staff complaints".—[Official Report, Commons Standing Committee H, 12/2/04; col. 93.] In the other place it was accepted that movement was needed. We talked a lot about that in Committee. The Minister was sympathetic to our case and argued that there was a case for looking at the issue again. He said: In the case of employment issues there is a remedy through employment law and the tribunals"— as I have been saying—

There are remedies relating to academic freedom, which, for good historic reason, have involved visitors and continue to do so. As I indicated, there is a class of cases that may not fall into either category and that may give rise to the difficulties that, I accepted, could occur, particularly with regard to human rights legislation. In that light we certainly will be prepared to look at that area, where there may be a lack of definition that is precise enough to meet the objections made".—[Official Report, 10/5/04; col. 109.]

It is in the light of that that I raise this issue again. I look forward to hearing from the Minister whether he has made any progress on those issues. I beg to move.

Lord Forsyth of Drumlean

My Lords, I support the amendment tabled by the noble Baroness, Lady Sharp. She is right to point out that Ministers have now made several assurances that they are addressing the problem. At this stage I very much look forward to hearing how the Minister plans to do so.

Clearly, there is an issue. I have found it difficult to get my brain round the difficulty that arises from the replacement of the visitor system for student complaints on the grounds that it does not satisfy the Human Rights Act 1998 and Article 6 of the ECHR, yet apparently the Government are prepared to allow the loose end whereby staff are expected under the Bill to continue to use the visitor system. I congratulate the noble Baroness on her persistence on this matter. She certainly has our support in pressing the Government to resolve it now.

Baroness Warwick of Undercliffe

My Lords, noble Lords will be aware that Universities UK, of which I am chief executive, and as such declare an interest, has opposed amendments in this House and another place that seek to bring all staff complaints within the remit of the Office of the Independent Adjudicator. We have done so for a number of reasons, which I shall briefly outline.

I want to make it clear that opposition to these amendments does not mean that we do not recognise that there is a small number of staff complaints in pre-1992 universities which still fall within the jurisdiction of the visitor. Indeed, in Committee I made it clear that there is an issue that warrants further discussion, not least because of the ruling of this House in 1993 that, where the visitor acts within his jurisdiction, that jurisdiction is exclusive and complainants are prevented from seeking redress from the courts. As I think I made clear, there is a question over whether the right way to address that is to remove the visitor's jurisdiction or to remove the immunity from judicial review.

Following the report of the Nolan committee, Universities UK and the Standing Conference of Principals established a group to devise guidelines on procedures for higher education institutions in dealing with public interest complaints. Those guidelines included a final stage for independent appeal against the findings or penalties concluding the internal procedures. The group recommended that all institutions should adopt such procedures.

UUK is committed to reviewing the guidance, so this is an area that we can find an early opportunity to revisit. I know that the noble Baroness, Lady Sharp, has been disappointed with the time that it has taken to respond to concerns raised during the passage of the Bill relating to such complaints. Those are now being taken forward. I hope that the noble Baroness, Lady Sharp, will be reassured to know that I have written to the general-secretary of the Association of University Teachers to invite her to meet me and other interested parties to discuss the issues raised by the debates in this House and in another place. Although I remain opposed to the idea that the Office of the Independent Adjudicator is the appropriate forum for all staff complaints, I hope that through discussion we can find a satisfactory way forward.

There are clearly a number of other issues that should be explored. It would not be right to pre-judge the appropriate way forward without being clear about the nature and extent of the problem.

The amendment includes all staff complaints. Noble Lords will be aware that the Office of the Independent Adjudicator already operates as a voluntary scheme. It was established to deal with student complaints alone. Its establishment was the result of consultation with the sector as to the best way forward. It would not be right at this stage, and in this way, to extend its remit so dramatically.

Notwithstanding the areas in which the visitor retains exclusive jurisdiction in pre-1992 universities, we should not lose sight of the fact that staff and students are in essence and in law very different categories. The relationship between higher education institutions and their students is distinct from the relationship between those institutions and their staff. That said, I hope that the noble Baroness, Lady Sharp, will agree that the passage of the Higher Education Bill has thrown light on that subject. I join other noble Lords in congratulating her on her dogged pursuit of the issue.

3.45 p.m.

Lord Triesman

My Lords, I join both noble Lords who have thanked the noble Baroness, Lady Sharp, for raising these issues. As I said in Committee, there is a real issue to be resolved.

I hope that the noble Baroness will appreciate that we accepted during the debate in another place and in Committee that the current position was far from ideal, particularly the visitor's jurisdiction over staff complaints. As noble Lords have pointed out, there is an inconsistency in removing the visitor's jurisdiction over student complaints but not that over staff complaints. There is also an inconsistency between staff rights in chartered universities and those in new universities.

We accept that we should address those problems now; therefore we have tabled an amendment today to remove the exclusive jurisdiction of the visitor over academic staff. If it has taken us a little while to get to this point, it was in the effort to ensure that we got the right solution rather than just a solution. However, it is clear that the student complaints scheme as currently proposed would not be appropriate for staff, as it relies on institutions accepting the recommendations of the reviewer—without the consensus at present on the coverage of staff, they are unlikely to do so.

It is for Universities UK, the Universities and Colleges Employers Association and the staff unions to consider whether separate independent review arrangements need to be put in place. I was very pleased to hear the noble Baroness, Lady Warwick, indicate that Universities UK will be willing to discuss the problems and the current arrangements with the Association of University Teachers, and others. I am sure that that will be welcomed and encouraged by your Lordships' House. Should the parties want the Department for Education and Skills to be involved in these discussions, which would consider the merit of alternative arrangements and the benefits of applying those across the sector, we would obviously be willing to offer our support.

I stress that once the visitor's exclusive jurisdiction is removed he or she will still be able to act in a non-visitorial capacity as an independent reviewer on staff complaints on, for example, matters of academic freedom. I hope that the noble Baroness, Lady Sharp, will accept that in the timescale available in this Bill it is not possible to achieve a complete resolution of the issue. However, we have made some progress, and we can use the Bill to address the anomaly—

Lord Forsyth of Drumlean

My Lords, I apologise for interrupting the Minister; I am a bit of a new boy here. He said that he had tabled an amendment today. Could he point out where it is? I am not aware of the text of the amendment, or where it has been tabled.

Lord Triesman

My Lords, the amendment, which removes visitorial jurisdiction, comes relatively late in the order, and I will ensure that its precise identification is available to the noble Lord as quickly as possible.

For the moment, while we have made progress, we can use the Bill to address the anomaly that we all accept exists in the visitors' jurisdiction. We also welcome the point that has been made by the noble Baroness, Lady Warwick, to offer discussions to the staff unions, and we hope that those discussions will progress well. Apparently the amendment is before Clause 43. I urge the noble Baroness to withdraw her amendment.

Baroness Sharp of Guildford

My Lords, I am extremely grateful to the Minister. I was unaware that the new amendment had been tabled. Am I right in thinking that it is Amendment No. 52A? No, that is on the right of appeal. The amendment is not on the Marshalled List, so I take it that we shall be considering this amendment at Third Reading. The Minister indicated to me in discussions that we had outside the Chamber that he was likely to be fairly forthcoming on this issue, so I was expecting a fairly benign answer from him, as indeed we have had. I take it that we will see an amendment at Third Reading.

I am grateful to those noble Lords who have supported me, and to the noble Baroness, Lady Warwick, for the good news that Universities UK and the Association of University Teachers will be getting down to talks on this matter. As I indicated in Committee, my main purpose in tabling this amendment was to try to get some movement on this issue—

Lord Triesman

My Lords, I owe the House an immediate apology. My belief was that the amendment was tabled today, but I understand that in fact it is being tabled, and it will be available for the debate in your Lordships' House next Monday. If I have caused any misapprehensions, I entirely apologise, but the material will be there, and it will precisely meet the specifications that I have identified.

Baroness Sharp of Guildford

My Lords, as I say, I am extremely grateful to the Minister for the real effort that I know that he has put in to securing some movement on this issue. It is excellent that that is so. This issue has been around for the past four or five years. We have a good student appeals and complaints mechanism up and running now, and let us hope that within the next year we can see some positive movement. Staff complaints is a fairly minor area, but it is a nagging area. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Triesman moved Amendment No. 2:

After Clause 18, insert the following new clause—

"EXTENSION OF PERIOD WITHIN WHICH DISCRIMINATION PROCEEDINGS MUST BE BROUGHT

(1) In section 76 of the Sex Discrimination Act 1975 (c. 65) (period within which proceedings to be brought) after subsection (2) insert—

"(2A) Where in England and Wales—

1. (a) proceedings or prospective proceedings under section 66 relate to the act or omission of a qualifying institution, and
2. (b) the dispute concerned is referred as a complaint under the student complaints scheme before the end of the period of six months mentioned in subsection (2)(a),

the period allowed by subsection (2)(a) shall be extended by two months.

(2B) In subsection (2A)—

1. "qualifying institution" has the meaning given by section 11 of the Higher Education Act 2004;
2. "the student complaints scheme" means a scheme for the review of qualifying complaints, as defined by section 12 of that Act, that is provided by the designated operator, as defined by section 13(5)(b) of that Act."

(2) In section 68 of the Race Relations Act 1976 (c. 74) (period within which proceedings to be brought) after subsection (3) insert—

"(3A) Where in England and Wales—

1. (a) proceedings or prospective proceedings by way of a claim under section 57 relate to the act or omission of a qualifying institution,
2. (b) the dispute concerned is referred as a complaint under the student complaints scheme before the end of the period of six months mentioned in subsection (2), and
3. (c) subsection (3) does not apply,

the period allowed by subsection (2) for instituting proceedings in respect of the claim shall be extended by two months.

(3B) In subsection (3A)—

1. "qualifying institution" has the meaning given by section 11 of the Higher Education Act 2004;
2. "the student complaints scheme" means a scheme for the review of qualifying complaints, as defined by section 12 of that Act, that is provided by the designated operator, as defined by section 13(5)(b) of that Act."

(3) In Schedule 3 to the Disability Discrimination Act 1995 (c. 50) (enforcement and procedure), in paragraph 13 (period within which proceedings must be brought) for sub-paragraph (2) substitute—

"(2) If, in relation to proceedings or prospective proceedings under section 28V—

1. (a) the dispute concerned is referred for conciliation in pursuance of arrangements under section 31B before the end of the period of six months mentioned in sub-paragraph (1), or
2. (b) in England and Wales, in a case not falling within paragraph (a), the dispute concerned relates to the act or omission of a qualifying institution and is referred as a complaint under the student complaints scheme before the end of that period,

the period of six months allowed by sub-paragraph (1) shall be extended by two months.

(2A) In sub-paragraph (2)(b)—

1. "qualifying institution" has the meaning given by section 11 of the Higher Education Act 2004;
2. "the student complaints scheme" means a scheme for the review of qualifying complaints, as defined by section 12 of that Act, that is provided by the designated operator, as defined by section 13(5)(b) of that Act.""

The noble Lord said: My Lords, in moving the amendment, which is grouped with the consequential amendment, I again thank the noble Baroness, Lady Sharp, and the noble Lord, Lord Skelmersdale, who put forward the arguments in Committee for this provision, which I am pleased to say we have decided to accept.

The time limit for submitting court cases under Part 4 of the Disability Discrimination Act is generally six months, but there are provisions to extend this by two months where the dispute has been referred to an approved conciliation service within the time limit. We accept that a similar extension should apply to complaints against qualifying institutions referred under the student complaints scheme. Although the original amendments referred only to cases of discrimination on grounds of disability, for the sake of consistency this amendment also provides two-month extensions to the six-month limits for court cases against qualifying institutions under the Sex Discrimination Act and Race Relations Act. Where the Acts provide for specific extensions in other circumstances, such as cases referred to conciliation, there will be only one automatic extension of the time limit. I hope that the amendment meets the concerns raised by noble Lords. I beg to move.

Baroness Sharp of Guildford

My Lords, I am grateful to the Minister for bringing forward this amendment, which answers precisely the points that I raised in our discussions in Committee. It was not a major issue, but for those affected this amendment means a great deal. I raised the original amendment on behalf of the Royal National Institute for the Blind and for Skill, the organisation that campaigns on behalf of disabled students. I pass on their thanks to the Minister. In the ordinary course of events, the noble Baroness, Lady Darcy de Knayth, speaks on behalf of Skill. As some noble Lords may know, she has been indisposed for some time, but she was back yesterday, and I was able to tell her that we had secured this amendment and she was extremely pleased. She asked me to give her thanks to the Minister.

While discussing disability issues, I also thank the Minister for the letter of clarification in relation to Clause 12(2) and complaints by disabled students about the failure of institutions to make reasonable adjustments to academic processes. It would be useful to get some part of that letter on the record, and I will read one paragraph. The Minister wrote to me:

It is, as you say, not possible to list all the circumstances in which complaints may qualify, as teaching and assessment methods differ between institutions and within subject areas, and, of course, the OIA will make its decisions on the individual circumstances of each complaint. However, I can confirm that if students are excluded from components of a course, such as field trips, work placements or study abroad and the institution fails to make reasonable adjustments to the assessment arrangements, including to the maximum marks that can be achieved, then such complaints would come within the remit of the reviewer. Similarly, if disabled students are treated less favourably than other students in terms of resources available to them, then these too are complaints which are within the reviewer's remit. Of course, we would normally expect the student to exhaust the internal complaints procedures of the institution before referring the case to the reviewer to allow the institution to resolve any problems". I am grateful to the Minister for this clarification, which has helped to identify and calm the fears around that issue. This is a very satisfactory outcome to the probings that we made on these two issues in Committee. I thank the Minister.

Lord Skelmersdale

My Lords, I too congratulate the Minister on this amendment, which the Government proposed in Committee in answer to an amendment standing in the name of the noble Baroness, Lady Sharp, and another in the names of my noble friends Lord Forsyth and Lady Seccombe. Both covered the single point that this Bill and the Disability Discrimination Act differ in one important respect, that of the time given to disabled students to complain of unfair treatment in higher education establishments. Thanks to this government amendment, which was welcomed by the noble Baroness, Lady Sharp, and by the RNIB and Skill, the Bill and the Act are now on a par. As the Minister has pointed out, it is not only disabled students who need the extra two months, but those who are sexually or racially discriminated against; something that I confess did not occur to me in Committee. My stance then, that it would be easier to amend previous legislation than this Bill, has been vindicated. I am extremely grateful.

On Question, amendment agreed to.

Lord Renfrew of Kaimsthorn moved Amendment No. 3:

After Clause 20, insert the following new clause—

"ACADEMIC SALARIES REVIEW BODY

(1) The Secretary of State shall appoint an Academic Salaries Review Body ("the Review Body") to provide independent advice on the remuneration of teachers and researchers in institutions of higher and further education in the United Kingdom.

(2) In reaching its recommendations the Review Body is to take into account—

1. (a) comparability between academic salaries and those of other professions since 1950, and
2. (b) the need to recruit, retain and motivate suitable and qualified academic staff in a full range of academic disciplines in institutions of higher and further education in the United Kingdom.

(3) In appointing members of the Review Body the Secretary of State shall include representation from institutions of higher and further education and from other professions including those for which a university degree is not an obligatory qualification.

(4) The Secretary of State shall make arrangements to submit the report of the Review Body annually to both Houses of Parliament together with his own plans in relation to the implementation of its recommendations."

The noble Lord said: My Lords, several noble Lords have already observed that the trouble with this Bill is that it does not altogether effectively address the central problems in our higher education system today. Among these are under-funding of staff, as well as of the under-funding of universities in general, and an astonishing insensitivity to the central dilemma of access; namely, that students from low income backgrounds are often debt averse.

I declare an interest as a university professor. In Committee, I introduced an amendment, and my intention was to focus attention on what everyone agrees is one of the most serious problems affecting our universities today. University staff are very poorly paid. The gap in remuneration between university teachers and other professions has steadily increased over the past 20 to 40 years. The noble Lord, Lord Eatwell—I am sorry that I do not see him in his place—emphasised that point at Second Reading. My noble friend Lord Tugendhat spoke very effectively to that amendment, as did other noble Lords.

4 p.m.

In Committee, however, I placed my proposed academic salaries review body under the wing of the new Arts and Humanities Research Council, which was widely felt to be unsuitable. Following the advice of several noble Lords who spoke, I have now been able to rectify that. Moreover, following the later advice of the noble Lord, Lord Walton of Detchant, and others, I have simplified the proposal, which makes the plan much less prescriptive in its specifications concerning the composition of the board.

I was taken aback in Committee when one much respected noble Lord opposite, after endorsing the figures that I had quoted—a 45 per cent decline in academic earnings compared to non-manual income over the past 20 years—very soundly observed that that was so well known that there may be no need, to declare again that academic salaries are far lower than comparators. We need the funding to do something about it".—[Official Report, 10/5/04; col. 30.]

I am afraid that it is beyond my power and, I suspect, beyond the power of this House to generate the necessary funding by amendment. We all know that the fee income generated by the Bill will go about half way to cover the universities' current recurrent funding deficit. It is therefore highly unlikely that it will make any significant positive impact on the current level of salaries. It will be lucky to pay them, let alone to increase them.

We can at least show that this is a matter of continuing concern of which we and others deserve to be reminded annually until some effective move can be made to rectify the position. That is what the amendment seeks to do. It is a rather modest amendment, but it will at least have the effect of keeping that important issue before our eyes. I beg to move.

Lord Walton of Detchant

My Lords, I am happy to add my name to this amendment and therefore to support it very much in the terms that have been expressed by the noble Lord, Lord Renfrew. When I began practice in the National Health Service at its inception in 1948—I subsequently served in it for 40 years—there were repeated problems and many conflicts between the members of the medical profession on the one hand and government on the other relating to pay and other financial support for doctors.

The first row came within two years when GPs complained, as independent contractors, that their salaries were inadequate. It turned out that the Government had taken GP income tax returns before the National Health Service as a guide to what their subsequent remuneration should be. When the GPs found that to be inadequate, it perhaps suggested that general practitioners were no more honest than the rest of the population in relation to their income tax returns.

Over the years, there was conflict after conflict. There were repeated negotiations between doctors, government and the Department of Health in relation to remuneration issues, which were sometimes so bitter and prolonged that the late Baroness Castle of Blackburn, when she was Secretary of State for Health, referred to the British Medical Association as the shock troops of the middle classes.

This preamble is relevant because when ultimately the Government agreed to establish a review body relating to the remuneration of doctors and dentists those conflicts ceased. Ever since that review body was established, there has been a satisfactory situation where government and the profession have agreed with the advice of that review body on all issues relating to remuneration. Similar issues arose over the pay of nurses and teachers and other review bodies have been similarly effective.

When the Bett report on academic salaries was published a few years ago, I remember asking a question in this House. The then Minister, the noble Baroness, Lady Blackstone, who I am glad to see in her place, said that the Bett report was an important report but that the remuneration of academic staff was a matter for the universities and not for government. No doubt, we shall get the same response from the Minister today.

A major issue of remuneration of university academic and research staff exists in the terms that were so clearly expressed by the noble Lord, Lord Renfrew. To establish a review body to give advice to government on the remuneration of teachers and researchers in higher and further education would help to resolve that problem. I am therefore happy to support the amendment.

Lord Morgan

My Lords, I spoke on this issue before. Again, perhaps I may warmly congratulate the two noble Lords who have spoken on the principle of what has been raised. There is no question but that the low level of academic stipend has been an extraordinary national scandal for a very long time; in fact, since 1979–80. These are very talented people who, commonly and necessarily, because they do graduate work, enter the profession later than many other people. Although top salaries have risen, the starting point is still very low, the spine is very long and the general economic and financial expectations of university teachers are appalling. I speak as a former vice-chancellor. The situation was bad nine years ago and it is worse now.

We have funding for the universities, which is enormously welcome, but, inevitably, the new funding will go into proper development and the building up of the superstructure facilities for students, and so forth. There will not be anything like sufficient funds for those very talented, very poorly paid people in our society. It may be that the Government will say that this is perhaps the wrong Bill in which to have this particular proposal, which I can understand. But if that is the reply, I should be very grateful if my noble friend the Minister would tell us what would be the right Bill and what would be the procedure.

It seems that a yardstick of some unassailable kind is needed for university stipends: when I began as a university teacher in the 1950s, they were part of the public service scales of the Civil Service. That has long been set aside. Now university teachers are left to the mercy of cash-strapped universities and the most valuable people—the people who create our university system—are the victims. If the amendment is not acceptable in its present form, I hope that we shall hear from the Government what would be acceptable and whether very urgent action will or will not be taken to deal with this national scandal.

Lord Tugendhat

My Lords, I agree so strongly with the three speeches that have just been made that there is very little to add. I declare an interest as Chancellor of the University of Bath. I think that a great many problems in the economy and social matters can often be helped towards a solution if there is a degree of publicity and transparency surrounding them.

It may be very well known in this House, in academia or in Whitehall that academic salaries have fallen very far behind comparable activities, but I do not believe that it is so tremendously well known in the public at large. My impression is that among the public at large there is a certain misunderstanding about the levels of remuneration for academics and a certain assumption that everyone lives like Oxbridge dons used to live before the war. It may be surprising that that misapprehension remains, but I think that to a large degree it does in many circles.

Therefore, the important point in the amendment tabled by the noble Lord, Lord Renfrew, is his reference to providing "independent advice". I think that the provision of independent advice, which would, I hope, receive a suitable amount of publicity in the newspapers, and so forth, would contribute to public understanding and therefore to the resolution of the problem.

I am struck by the success achieved over time—it did take a long time—by the Senior Salaries Review Body in bringing about an improvement in the salaries of senior civil servants and even, to some extent, of Ministers. The extent to which senior civil servants now earn salaries below those of their comparators in some other professions is much less than it was before these matters received publicity.

I want to make only one small comment on the wording of the amendment tabled by my noble friend Lord Renfrew. It refers to comparability between academic salaries and those of other professions. For this body to do its work most effectively, it should compare full professors in universities with personal assistants in the financial services sector. Personal assistants in financial services provide an indispensable service, as I know well and to my own benefit, but it is strange that full professors in universities often earn less than such personal assistants. Comparisons of that sort and, indeed, of others made by an advisory body of this kind would be helpful.

Of course I accept, along with other noble Lords, that it is for the universities themselves as employers to take decisions about how much their employees are to be paid, but that in itself is not an argument against a body of the sort recommended by my noble friend. Quite apart from whatever the Minister may say about who is responsible for salaries, I would be very interested to hear why it would be a bad thing for more publicity and transparency to be brought to bear in this area.

Lord Corbett of Castle Vale

My Lords, I declare an interest as president of the Josiah Mason sixth-form college in my former parliamentary constituency of Birmingham Erdington. There is a certain attraction in this amendment and I think that there is agreement on all sides of the House that academic salaries in both higher and further education have become out of kilter. However, I have to say how much I agree with a note I have received from the Association of Colleges, which may also have been sent to other noble Lords. It makes the point that this amendment is an attempt to treat both the higher education sector and the further education sector as if they were parts of the public sector. They are not. Indeed, it was the noble Lord's government of a few years ago that took them out of the public sector and incorporated them as independent bodies. Since then they have been responsible for their own affairs.

I turn now to talk about the further education sector. After many difficulties during the changeover period, the colleges are now responsible for negotiating levels of salary with all their staff, not only their academic staff. An immediate effect of this amendment, were it to be carried, would be to do away with that system, thus sending us back to conducting a plethora of negotiations in colleges up and down the land.

The more important objection to the amendment is that it attacks the independence of colleges. Certainly it was my experience, when the colleges were taken out of the public sector and made to stand on their feet, that part of that process meant that, while standing on their own feet they also went for each other's throats. I can say from personal knowledge that in the city of Birmingham there was a period of some years when every college wanted to attract the maximum number of students. They did not care two hoots about what happened to the college down the road and, let it be said, little consideration was given to the courses on offer—whether they repeated courses already available a couple of miles away or whether the needs of certain groups of students were ignored altogether. What had happened was that the accountants were put in control.

Happily, those days are over. I can speak only of the City of Birmingham, but today there is extremely good co-operation between the colleges in the city. I hope that that is also the case elsewhere. Colleges sit down together to plan provision across the city for the various age groups, not least for the enormous number of adult part-time students who, rather than going back into education, are increasingly entering education properly for the first time in their lives. Instead of colleges competing with each other, sensible co-operation now applies.

I have some sympathy for the wish to put the clock back, but I do not think for a moment that the noble Lord is arguing for a return of colleges of further education to the public sector. However, given that they stand on their own feet, I do not see how what is suggested in the amendment can be imposed upon these independent bodies.

The noble Lord, Lord Walton of Detchant, cited the experience of the National Health Service, which makes my point exactly. The National Health Service is in the public sector with one employer, the Government. That example helps to make my point in objecting to what is being proposed in the amendment. Not for a minute do I seek to quarrel with anyone who points out that there is a real crisis in the payment levels of those in higher and further education which ought to be addressed, but I do not feel that this is the way in which to do so.

4.15 p.m.

Baroness Sharp of Guildford

My Lords, I am reminded of the days when I was a parliamentary candidate. When knocking on doors and canvassing, people would say, "I would vote for you if I thought you could win". I have much sympathy with the amendment of the noble Lord, Lord Renfrew, as well as for the point made by the noble Lord, Lord Detchant, who emphasised the satisfactory work of pay review bodies on some occasions. Nevertheless, I also pick up on the point made by the noble Lord, Lord Corbett, that the amendment seems to look back to a different era. As he rightly pointed out, colleges and universities are now independent. When we raised the issue of the Betts report, the answer given by the noble Baroness, Lady Blackstone, at the time was that this is a "matter for the colleges". Today that is a fact.

A new pay scale has just been negotiated and agreed. It is a very long one and embraces its own areas. In a sense, therefore, a degree of locally negotiated pay is now coming in; the system is moving in that direction and it would be difficult to roll it back. Members on these Benches have sympathy for the case for a little more in terms of nationally negotiated arrangements but, equally, times have moved on. Therefore I do not feel that this amendment is appropriate.

Baroness Carnegy of Lour

My Lords, the noble Baroness has just pointed out that there is a new pay scale. However, the point here is that—as we were told by the noble Baroness, Lady Warwick of Undercliffe, when this matter was raised in Committee—within universities staff pay accounts for 58 per cent of their total expenditure. That means that if academic salaries in the universities are to be brought up to a reasonable level, they need much more money, but the extra funding that they will receive under this Bill is to be limited by a cap. So the Government are doing nothing to help the universities achieve this.

I hope that the Minister is not going to say in response that this is a matter for the universities and the Higher Education Funding Council for England. However, she is smiling so perhaps that is exactly what she is going to say. However, that is simply not going to help the situation at all because the extra money under the Bill is so limited.

The point made by my noble friends Lord Tugendhat and Lord Renfrew that a little publicity would help things along is important. Whether that comes about from a review body or by some other means, regular publicity highlighting academic salaries would help the public to understand that the Government themselves are being extremely frustrating about this matter. Somehow, academic salaries have to improve, but if 58 per cent of universities' budgets is already accounted for in this way, it is no good us looking to the Higher Education Funding Council for England to achieve that unless it is given a lot more money to do so.

Lord Wilson of Tillyorn

My Lords, I rise briefly to speak in favour of the amendment for much the same reasons just outlined by the noble Baroness, Lady Carnegy of Lour: it would give publicity to this issue. For some years, as Chancellor of a Scottish university, I have been all too aware of the very low level of academic salaries, but it is only recently that I have come more directly back into contact with Oxbridge, referred to by the noble Lord, Lord Tugendhat. How distant it is from any dreams one might have had of what those places were like before the Second World War.

The college of which I am Master has recently lost a Fellow who concluded that he could no longer go on in the expectation of a salary that would always be lower than that of the driver of a train on the London Underground. Consequently we have lost a man of great brilliance and great potential.

I believe that there is a need to bring these facts to the attention of the informed public and Members of Parliament on a regular basis without, I hope, ever getting into a situation where that becomes restrictive. It is terribly important that universities should be able to raise salaries for academic staff who deserve it. We should not get into a situation where everything is rigidly set down in rules and flexibility is reduced.

Lord Norton of Louth

My Lords, I am pleased that my noble friend has returned to the subject that he raised in Committee. I was very struck by what my noble friend Lord Tugendhat said. Not long ago, I was speaking to a leading law firm, not too far from here, and was told that its starting salaries were £80,000 a year. An academic finishing a career would not be earning anything approaching that kind of salary.

I have made the point in your Lordships' House before that academics are underpaid, under-resourced, undervalued but overburdened by bureaucracy. If we are to continue to deliver a high quality of education able to compete with that offered in other countries, each of these problems has to be addressed. My noble friend's amendment is therefore necessary but not sufficient.

I declare an interest not only as an academic but, perhaps more importantly in this context, as a head of department. I am conscious of the extent to which universities are surviving on the good will of academics. I am profoundly aware of how much members of my department are putting in to ensure a level of excellence in teaching and research that is not met by the salaries they receive. As the head of department I know the problems of recruitment and retention as a result of inadequate salaries and working conditions. We cannot carry on without addressing the question of poor salaries; we cannot carry on without addressing the issue of resources. That is why the later amendment on additionality is so important.

It can be argued—and has been—that the amendment may not be appropriate in the Bill, but I want to draw out the relationship between the Bill and the problem embodied in subsection (2)(b) of my noble friend's proposed new clause. Students will incur substantial debts in taking a first degree; if they want an academic career, they will need to devote their time and finances to acquiring a doctorate; by the time they are ready to enter the academic world in their mid to late twenties, they will be carrying a massive burden of debt. Why then should they go in to a poorly paid university job when they can earn far more abroad or in another profession? We must recognise the linkage.

We simply cannot go on as we are. There are already major problems with recruitment and retention. They will become worse if the cost of education increases and the salaries paid to academics continue to decline relative to other professions. For the reasons I have touched upon, I therefore welcome my noble friend's amendment. It addresses a major problem that confronts higher education and which is likely to become even more of a problem once the Bill has been enacted.

In replying, the Minister will not only be responding to a specific amendment but sending out a wider message to higher education. It is vital that that is not a negative message.

Lord Forsyth of Drumlean

My Lords, I congratulate my noble friend not only on moving the amendment at this stage of the proceedings on the Bill but also on the splendid debate that we had at an earlier stage on the issue of academic salaries. I do not propose to repeat any of the arguments now.

On the face of it, the amendment looks like a well-designed fly for the Government; it should attract their attention. The Minister is looking puzzled. "Fly" as in fishing. It seeks to establish a review body which would achieve nothing, so it should have enormous appeal to the Government. It is very clever of my noble friend to have redrafted it in that way.

I am torn because the noble Lord, Lord Morgan, described academic salaries as a national scandal. I do not think it is a national scandal at all; I do not think the nation knows anything about it. I freely admit that it was a great shock to me to discover what academic salaries were. I found out only by virtue of the role I am carrying out in your Lordships' House in respect of the Bill. I fully acknowledge that some of the shame should be borne by me as well as by the Government because this happened on our watch when we were in government as much as it has happened under this Government.

But the notion that this serious problem—which goes to the central structure of the edifice of higher education in Britain—can be resolved by publicity and the setting up of a review body that will draw attention to the plight of academic salaries is, I fear, a mistake.

If one looks at the salaries of the vice-chancellors one notices that they have not been subject to the same constraint as some of those who work under them—there has been a movement in direction among the vice chancellors if not among the humble lecturers—but I do not believe for one moment that anyone responsible for running any of these institutions would not like to resolve the problem of academic pay tomorrow if they could. The way they would do that would be through resources and funding. While I do not wish to widen the scope of the consideration of the amendment, I do not believe that the Bill addresses the problem of under funding or will provide the resources to do so.

I have a high regard for my noble friend Lord Renfrew and I would like to support him, but I fear that to set up a body of this kind for the sake of creating publicity—a body which will, as the noble Lord, Lord Corbett, pointed out, interfere in what are essentially private institutions subject to public support—would be a mistake. I cannot support my noble friend's amendment but I very much support his urgent plea. I endorse his view that unless we address the question of academic pay we will see crumble our centres of excellence and our institutions of higher education.

Baroness Blackstone

My Lords, I never expected to find myself agreeing with almost every word that the noble Lord, Lord Forsyth, said. He is absolutely right—it is not a good idea to set up institutions that are not very likely to produce results. I entirely agree with him—and therefore disagree with the noble Lord, Lord Tugendhat—that an academic salaries review body is hardly likely to lead to a huge amount of publicity in favour of the cause of increasing academic salaries. This is not an issue on which it is easy to engage the great British public. For all the wonderful work that academics do, they are not like nurses; they do not feature in the public imagination. So I do not believe that we should set up a body of this kind for that reason.

I also disagree with my noble friend Lord Morgan and the noble Baroness, Lady Carnegy of Lour, that there is not enough money under the Bill to make some difference to academic pay. It is not inevitable that all the money will go on facilities and other items related to better quality in terms of scientific laboratories, libraries and so on, although I hope there will be an improvement in them as well.

The Government, vice chancellors and those who manage universities must take a responsible view in looking at the extent to which academic salaries have fallen—and, in that sense, I am very sympathetic towards what lies behind the amendment of the noble Lord, Lord Renfrew—but I ultimately agree with my noble friend Lord Corbett. Universities and further education colleges—and we must never forget the colleges because a great deal of HE goes on in them—are independent institutions. I believe that it would be better—this is probably also the position of Universities UK, the body that represents universities—to leave decisions about academic salaries with the universities so that they have the discretion they need, rather than set up a salaries review body which is far more appropriate for those public services that are entirely run by the Government or their agencies, such as the NHS.

The noble Lord, Lord Walton of Detchant, mentioned that when the Betts review was being debated in this House, my response was that I thought it more appropriate for that task to be left to the universities. I said that as a Minister and I now say it again as someone who is about to become a vice-chancellor. I think that that will lead to better outcomes and I agree, therefore, with the noble Baroness, Lady Sharp.

4.30 p.m.

Baroness Ashton of Upholland

My Lords, I begin by saying to the noble Lord, Lord Renfrew, that I was pleased that he was able to disentangle this issue from the Arts and Humanities Research Council. I understand and appreciate all noble Lords' concern. The theme that has run through this debate has been everyone's concern about academic salaries. In our previous discussions, we have talked about the way in which they have lagged behind other salaries and pay awards. I do not think I need add anything more—we have acknowledged it. My noble friend Lady Blackstone acknowledged it as a Minister; my right honourable friend Alan Johnson has acknowledged it as a Minister; and it has been acknowledged in public many times by the department.

At the risk of saying exactly what the noble Baroness, Lady Carnegy, predicted I would say, we do not believe that it is the Government's job to regulate salaries in the further and higher education sector or, indeed, to dictate to institutions at what level they should set salaries.

The amendment would impose a duty on the Secretary of State to prepare an implementation plan for the review body's recommendations. But the Secretary of State does not have any powers to control academic salaries, and the amendment does not confer any on him.

Higher and further education institutions are independent, autonomous bodies. We want to make sure that they are managing their own resources as they see fit. Institutions, as employers, are responsible for determining the level of pay for their staff through negotiation with staff and the relevant unions. I agree wholeheartedly with everything that was said by my noble friends Lord Corbett and Lady Blackstone.

My noble friend Lord Morgan asked which Bill such a proposal would belong in, if not this one. I do not think it is a question of a Bill. Noble Lords have raised very interesting issues. We have discussed the importance of the Betts report in this House and have talked about Universities UK and the joint negotiations taking place.

In terms of monitoring, measures are in place to extend the data that are now available on staffing matters in higher education through the Higher Education Statistics Agency. That will give institutions a better picture of the situation. From 2003–04 it will look at all academic staff and, for the first time, non-academic staff, and then at all categories of staff from 2004–05. That may generate a little more publicity, although I agree with my noble friend that academic pay does not capture the imagination in the way that the pay of nurses and others does—more's the pity, as I am sure your Lordships will believe, but that is the reality. It is important that we are very mindful of this and recognise the importance of academic pay in providing for world-class institutions and ensuring, as the noble Lord, Lord Forsyth, said, that they do not crumble.

I believe that the Bill represents a way of supporting, with further funding, institutions in order to make the right kind of choices between investment of different kinds, including investment in their workforce, who are so critical. I was pleased that the noble Lord, Lord Forsyth, is supportive of this. I look forward to his plans for further investment. Clearly I will have to get my fishing analogies right, which may be difficult. None the less, this is a very important subject.

We do not believe that this amendment is the right way to go. I accept that the issues are very dear to your Lordships and that it is right and proper for this House to continue to debate them. But we do not believe that the amendment would be effective in terms of doing anything appropriate for institutions. We think it is right for institutions to make the decisions; we think the new joint arrangements on negotiations should be given the opportunity to work effectively. On that basis, I hope that the noble Lord will feel able to withdraw his amendment.

Lord Renfrew of Kaimsthorn

My Lords, it has been a very interesting debate and, indeed, a rather sad one. I am very grateful to all noble Lords who have spoken and to the Minister for her very courteous treatment. "More's the pity" were her words—I quote her with accuracy, I think. That is the position that we have reached in university funding.

The noble Baroness, Lady Blackstone, did not suggest very many solutions but said that it was not easy to engage the great British public in the matter of university pay. To my regret, I think that that was the position of my noble friend on the Front Bench. If I felt that he had a clear plan up his sleeve to remedy university funding when the present Opposition are in power, then I would have been much more encouraged by that position.

I also listened very carefully to the noble Baroness, Lady Sharp. In her speech in Committee on the amendment which had the same intention, she said that she was with it in spirit but did not feel that it was in the right place in the Bill. That was when it was associated with the Arts and Humanities Research Council. So I was disappointed to sense today that she was less with the amendment in spirit than she had been, and I did not altogether understand the difference.

I used and withdrew the word "complacency" in a previous discussion on this amendment, but I want to reintroduce it into this discussion in the light of the debate we have just had. I have not heard one individual offer any hope of improvement except, perhaps, the noble Baroness, Lady Blackstone, who said that more money is coming into universities, so why do they not spend it in this way? I will study with great interest the salary trajectory within the university which is so fortunate as to have the noble Baroness as a future vice-chancellor. I predict that she will find it difficult to increase academic salaries substantially when most commentators on the Bill agree that the top-up fees will bring in sufficient funding to go about halfway towards covering current university deficits. I shall be very interested to learn how they are supposed to offer a significant enhancement in academic salaries.

The comments which impressed me the least—to say that I was irritated would be a discourtesy to noble Lords—were those of the noble Lord, Lord Corbett. He said that since universities were not public bodies, we should not give attention in this form to their problems. It is perfectly true that universities are independent bodies and many of us wish that they were much more independent than they are. But one of the defects of the present Bill, it has been argued, is that the top-up fees are capped. I do not wish to enter into that argument; I simply remind noble Lords that if universities wish to spend more money on academic salaries, they would not have the means. My noble friend Lady Carnegy made the point very well: as more than half of the funding coming into universities goes on academic salaries, if the shortfall is of the order of 45 per cent over 20 years, how would they do this without increased funding from public sources?

The Minister's speech was entirely moderate and constructive, but I think that she used the word "regulate" at some point. Certainly, the noble Lord, Lord Corbett, seemed to imply that the proposed review body would be interfering with the independence of universities. I simply cannot believe that to be the case.

I think that this is a sufficiently significant amendment because this is a matter of deep concern in the universities. I noted with interest that Universities UK made no comment on this amendment, although it has on many earlier ones, and that, I hope, will be noticed in the country at large.

If noble Lords support me, I intend to test the opinion of the House. It is an occasion to stand up and be counted. I shall be interested to see how many noble Lords in my party are content to follow the Government's line. I shall be interested to see how many Liberal Democrats follow the line advocated by the noble Baroness, Lady Sharp. Although I am not hopeful of carrying the amendment, it is of sufficient importance that the country and universities at large should be able to see how Members of this House have voted and, therefore, I would like to test the opinion of the House.

4.41 p.m.

On Question, Whether the said amendment (No. 3) shall be agreed to?

Their Lordships divided: Contents, 57; Not-Contents, 122.

Division No. 1
CONTENTS
Alton of Liverpool, L.	Monson, L.
Ampthill, L.	Morgan, L.
Avebury, L.	Mowbray and Stourton, L.
Bagri, L.	Naseby, L.
Bramall, L.	Norton of Louth, L. [Teller]
Bridges, L.	O'Neill of Bengarve, B.
Brittan of Spennithorne, L.	Park of Monmouth, B.
Brooke of Sutton Mandeville, L.	Parkinson, L.
Campbell-Savours, L.	Patten, L.
Carnegy of Lour, B.	Perry of Southwark, B.
Chadlington, L.	Prior, L.
Cox, B.	Prys-Davies, L.
Deedes, L.	Quinton, L.
Denham, L.	Quirk, L.
Dundee, E.	Renfrew of Kaimsthorn, L. [Teller]
Eden of Winton, L.
Elles, B.	Renton of Mount Harry, L.
Feldman, L.	Simon of Glaisdale, L.
Fowler, L.	Slim, V.
Howe of Aberavon, L.	Tugendhat, L.
Howe of Idlicote, B.	Ullswater, V.
Hurd of Westwell, L.	Wakeham, L.
Jopling, L.	Walpole, L.
Kilclooney, L.	Walton of Detchant, L.
Kimball, L.	Warnock, B.
Mackay of Clashfern, L.	Weatherill, L.
Mar, C.	Williamson of Horton, L.
Marsh, L.	Wilson of Tillyorn, L.
Molyneaux of Killead, L.	Wolfson, L.

NOT-CONTENTS
Ahmed, L.	Blackstone, B.
Alli, L.	Blackwell, L.
Amos, B. (Lord President of the Council)	Borrie, L.
	Boston of Faversham, L.
Andrews, B.	Brooke of Alverthorpe, L.
Archer of Sandwell, L.	Brookman, L.
Armstrong of Ilminster, L.	Burlison, L.
Ashton of Upholland, B.	Carter, L.
Bach, L.	Chandos, V.
Bassam of Brighton, L.	Chester, Bp.
Bhatia, L.	Christopher, L.
Billingham, B.	Clarke of Hampstead, L.

Clinton-Davis, L.	Lipsey, L.
Cohen of Pimlico, B.	Lockwood, B.
Corbett of Castle Vale, L.	Macdonald of Tradeston, L.
Craig of Radley, L.	McIntosh of Haringey, L.
Crawley, B.	McIntosh of Hudnall, B.
David, B.	MacKenzie of Culkein, L.
Davies of Coity, L.	Mason of Barnsley, L.
Davies of Oldham, L. [Teller]	Massey of Darwen, B.
Dean of Thornton-le-Fylde, B.	Merlyn-Rees, L.
Dearing, L.	Mitchell, L.
Desai, L.	Morgan of Huyton, B.
Dixon, L.	Morris of Manchester, L.
Donoughue, L.	Nicol, B.
Drayson, L.	Ouseley, L.
Dubs, L.	Palmer, L.
Elder, L.	Parekh, L.
Evans of Parkside, L.	Patel of Blackburn, L.
Evans of Temple Guiting, L.	Paul, L.
Farrington of Ribbleton, B.	Pendry, L.
Filkin, L.	Peston, L.
Finlay of Llandaff, B.	Pitkeathley, B.
Fitt, L.	Plant of Highfield, L.
Fyfe of Fairfield, L.	Ponsonby of Shulbrede, L.
Gale, B.	Puttnam, L.
Gavron, L.	Radice, L.
Gibson of Market Rasen, B.	Randall of St. Budeaux, L.
Gilbert, L.	Rendell of Babergh, B.
Golding, B.	Richard, L.
Goldsmith, L.	Rooker, L.
Gordon of Strathblane, L.	Sawyer, L.
Goudie, B.	Scotland of Asthal, B.
Gould of Potternewton, B.	Sheldon, L.
Graham of Edmonton, L.	Simon, V.
Grocott, L. [Teller]	Stone of Blackheath, L.
Harris of Haringey, L.	Sutherland of Houndwood, L.
Hayman, B.	Temple-Morris, L.
Hilton of Eggardon, B.
Hogg of Cumbernauld, L.	Thornton, B.
Hollis of Heigham, B.	Tomlinson, L.
Howarth of Breckland, B.	Triesman, L.
Howells of St. Davids, B.	Turnberg, L.
Howie of Troon, L.	Turner of Camden, B.
Hoyle, L.	Vinson, L.
Hughes of Woodside, L.	Warwick of Undercliffe, B.
Hunt of Kings Heath, L.	Watson of Invergowrie, L.
Irvine of Lairg, L.	Whitty, L.
Jones, L.	Williams of Elvel, L.
Kirkhill, L.	Winston, L.
Layard, L.	Woolmer of Leeds, L.
Lea of Crondall, L.	Young of Old Scone, B.

Resolved in the negative, and amendment disagreed to accordingly.

4.51 p.m.

[Amendment No. 4 not moved.]

Clause 23 [Condition to be imposed by English funding bodies]:

Baroness Sharp of Guildford moved Amendment No. 5:

Page 9, line 13, leave out from "course," to end of line 17 and insert "no fees are payable by any qualifying person, and"

The noble Baroness said: My Lords, in moving the amendment, I shall speak to Amendments Nos. 6, 9 to 13, 16 and 31. This set of amendments replicates those that I tabled in Committee and seeks to eliminate from the Bill any mention of fees, whether higher or basic amounts of fees. I have spoken already at length at Second Reading and in Committee about why we as a party object to the policy of charging fees to students and would prefer a system which provided the education element of higher education free of charge. I do not propose to repeat the arguments that I made on those two occasions, which have not found much favour in your Lordships' House. In making the arguments, I have been called ingenuous and accused of living in cloud-cuckoo-land. I reject both accusations.

We make much in this country of the importance of democracy and of the democratic machinery of our government. I remind your Lordships that an important element in democracy is the existence of an opposition, which can present and argue for alternatives. This House, to a very much greater degree than the other place, has accepted the line taken by this Bill that there is no alternative—that the only way in which to raise the extra resources that the universities need is to charge fees of the students. My argument has been that there is an alternative.

Our proposals, unlike those of the Conservatives, have been fully worked out and fully costed and. if implemented, would put more resources into the hands of the universities more quickly than the Government's proposals. OK, we propose to fund our proposals from taxation, by imposing a higher. 50 per cent band of tax on the very rich. I take the mood of the House, which is to reject any notion of such a tax. In doing so, however, let me remind your Lordships that you are in effect going to levy a tax.

What is being proposed is a form of graduate tax, and those who will pay it will be young graduates. For those young graduates whose salaries rise very rapidly from the present average of £20,000 up to £70,000, or the £80,000 starting salary with the lawyers to which the noble Lord, Lord Tugendhat, referred, paying back a debt of something like £20,000 or £30,000 may be insignificant. However, for the many whose salaries rarely go above the £30,000 or £35,000 mark, it will last for a very long time. Those who choose to go into careers in the public or voluntary services in which incomes rise slowly will often find that they are paying that graduate tax for the best part of 20 or 25 years, and sometimes even longer. That means that, on top of their income tax and their national insurance payments, a 9 per cent rate of tax is being charged—so the marginal rate of tax is 42 per cent, which is higher than we are asking millionaires to pay on their income. For those young graduates, debts will hang around for a very long time and will bite deeply into their monthly pay packets. Why should we impose on them that higher rate of tax?

However, I see that I make very little headway in persuading your Lordships that there is a better way than that proposed. One of our main objections to the current proposals is that they put so little into university coffers. It is extraordinary that rather less than £1 billion is being put into university coffers, at a cost to the Exchequer of at least £1.5 billion a year.

I rest my case on it being the job of the Opposition to present alternatives. In this case, as in so many, it is not the case that there are no alternatives; there are many alternatives, and we have presented your Lordships with one of them, but Parliament has chosen so far not to explore this alternative. I beg to move.

Lord Forsyth of Drumlean

My Lords, the noble Baroness suggested that she did not have support, but I have some sympathy for many of the points that she makes, and for her amendment. Indeed, the previous debate illustrated clearly the scale and extent of the problem and the lack of a remedy in the Bill. The provisions on fees in the Bill, with all the difficulties and hardships which they will cause to students who have to repay the fees over the course of their working lives, do not actually represent good value for money for the taxpayer. The cost of that whole machinery exceeds the revenues by at least £200 million.

I am at one with the noble Baroness in opposing the Bill's remedy on fees, but I cannot quite bring myself to support her amendment, because it leaves the other aspect of the Bill in place—the provisions which leave the universities subject to the OFFA regime and the provisions for access agreements. However, I do not want to repeat the arguments that we had earlier. Perhaps the noble Baroness can be persuaded to consider withdrawing her amendment and coming back at a later stage, focusing on the issue of fees alone. That issue is separate from the issue of access agreements and the role of OFFA, which we on these Benches find deeply repugnant.

Baroness Ashton of Upholland

My Lords, first, I should tell the noble Baroness that I consider her to be a lady of great principle. I do not endorse any of the comments that might have been made about her in your Lordships' House. I believe that she comes to your Lordships' House with a position. Although I do not believe that position is workable, for reasons that I gave at great length in Committee and which I shall reflect on briefly now, I accept that it is a position.

The noble Baroness has made it clear that the position that she would wish to see is to raise more resources for universities through the general taxation of a particular group of people. Noble Lords will have heard me say already that the difficulty with that arises when one considers the number of things that any government wish to achieve in the course of their lifetime, in terms of the range of needs in our society.

I spoke before about the differences in funding levels available to those who pursue higher education and the benefits that accrue to those individuals, compared to the amount of money that we spend on primary or nursery schools to support our younger children. As noble Lords have said on many occasions, that is where the work needs to happen—to support young people into higher academic achievement, if that is appropriate to them. That is a position that noble Lords have understood; they have understood, too, the importance in the Bill of the money being available to institutions for them to spend as they see fit. In the light of the previous debate, given the passion with which the noble Lord, Lord Renfrew, spoke about academic salaries, I believe that that is an important part of it. too.

5 p.m.

We have a balance before your Lordships' House between recognising the role of the taxpayer and the role of the state in higher education. We have not debated the importance of looking to alumni, business or other support for universities much in this House. Critically, those who benefit from higher education do so not just because of their academic abilities and the rewards that that may bring them, or just because of the higher salaries that they may acquire, but because of what we know about graduates' mental and physical health. They are more likely to take part in our democracy and are more likely to be fulfilled, if I may describe it that way. Those are also important benefits.

I do not wish to take more of your Lordships' time but I tell the noble Lord, Lord Forsyth, that when we are debating these issues it is important that we are clear about his party's position and that he brings that into the debate. That is important in looking at the way forward.

Lord Forsyth of Drumlean

My Lords, I am sorry that the noble Baroness is unaware of our position. It is that if the Bill will give universities revenues of £900 million and the cost to the taxpayer is £1.1 billion, would it not be more sensible to give the £1.1 billion to the universities?

Baroness Ashton of Upholland

My Lords, I take that as a commitment from the noble Lord that he intends to give the universities an additional £1.1 billion. I am not sure that I can.

I believe that the way in which we have put together—

Lord Forsyth of Drumlean

My Lords, this is getting like the House of Commons. If the noble Baroness thinks that £1.1 billion is enough to deal with the size of the problem, then I rest my case that the Government's response to that problem in the Bill is inadequate.

Baroness Ashton of Upholland

My Lords, I was alluding to the issues that have been raised by the noble Lord's right honourable friend, Mr Letwin, and where he is saying that his priorities would lie in education. That is a perfectly reasonable stance but not one from which universities would benefit. It is important that when we look at the way forward we are clear about the options available in your Lordships' House, to the Government and to the relevant institutions about what is on the table. Those are important issues to have before us. The noble Baroness should not press her amendment. The Bill recognises the need to ensure that funding comes in to the institutions, to the universities. We recognise that those who benefit should contribute to it. On that basis, she should withdraw her amendment.

Baroness Sharp of Guildford

My Lords, I am grateful to the Minister for her sympathetic response on this issue. We have explored these issues on previous occasions and the answer that I have received is the one that I expected. It is important not to base too much hope that financing universities may come from the third leg, as it is called—from industry. I have worked on the economics of research and development for a long time. How little the industrial sector has chipped in to research and development has been continuingly and extraordinarily disappointing. The same applies in the funding of university endowments and so forth. We had a debate the other day sponsored by the noble Lord, Lord Joffe, in which he pointed out that charitable giving in this country has gone down by 25 per cent over the past 10 years. We should not put too much hope in that source. The main stream of funding has to come from the Government.

As I pointed out earlier, in effect the Government are taxing young graduates in order to put more money into universities. This may be the right way to do it but we do not think that it is. I shall withdraw the amendment as I think it might be sensible for the noble Lord, Lord Forsyth, and me to get together to see what we might be able to come up with. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 6 not moved.]

Lord Skelmersdale moved Amendment No.7:

Page 9, line 24, at end insert—

"( ) to ensure that, in respect of any qualifying course, no qualifying fees are charged to any eligible student for any academic year beyond the first three years of a first degree course."

The noble Lord said: My Lords, all the amendments in this group aim to achieve the same end, namely that those students who are studying courses that are longer than three years should not have to pay any fees for the fourth or further years or, in the case of the amendments of my noble friend Lord Renfrew, any subsequent years after the first three. In other words, his amendments have the same effect as Amendment No. 7.

Our Amendment No. 7 will ensure that the governing body of the relevant institutions under Clause 23(1) will not be able to charge fees beyond the basic rate for any qualifying course beyond the first three years of a first degree course. Meanwhile, my noble friend's amendments will ensure that fees may be charged but that the Secretary of State will foot the Bill. I cannot imagine what the Treasury would have to say about that idea, but the Minister will doubtless enlighten us in due course. We had a long debate in Committee on this issue and I do not want to take too much of the House's time reiterating what I said then, so I shall try to summarise the main concerns.

In the cases of doctors, veterinary surgeons, architects and a few other professions, courses at university extend for more than three years. The British Medical Association has calculated that the measures contained in the Bill could lead to a medical student in London incurring a maximum debt of just over £64,000. It also claims that the Government have not produced any figures to disprove this and argue that a student in a family with a residual income of £20,000 will be committing himself to 91 per cent more debt by choosing to study medicine instead of the more normal three-year degree. The increased levels of debt that medical students will incur will inevitably cause some students to think twice about studying medicine, regardless of their social backgrounds.

Laboratory-based subjects such as medicine are among the most expensive courses, with teaching costs per student at around £10,500 a year. Medical colleges are therefore likely to charge the maximum fee of £3,000. The BMA is concerned that the Bill's proposals on the package of fees and finance will be a disincentive to increasing the number of doctors in this country, something that the Department of Health, quite rightly, has as a major policy. As it stands, the Bill, once enacted, will mean that the Department of Health is operating with one hand tied behind its back. It will be looking at this arrangement again, but only after—I repeat, after—the Bill is passed, to assess whether it will pay the full amount of the increased fees, the £3,000, for the fifth and sixth years of training for trainee medics and dentists. That is hardly joined-up governance. Has the Department for Education and Skills any plans to help medics and dentists meet the full increased fees if the DoH decides that it cannot fund the full amount?

Nurses will be similarly affected. According to the DfES, nursing students and other allied health professionals, such as physiotherapists, currently have their fees paid by the NHS, which buys up places contractually from the universities. Will this continue? If so, this amendment would enable the NHS to put the money it would have provided for the fees for the fourth year into other, much needed, aspects of the NHS. If not, the effect will be an inevitable decrease in the membership of professions supplementary to medicine.

Future architects, not being in the public sector, will be badly off too. They have to study for five years and then do two years in practice before passing their professional exams. I calculate that the average debt per student will be at least £57,000. The debt of £30,000 for one of my noble friend's research assistants, to which I referred in Committee, is just about half of what she would be encumbered with once the Bill is enacted. Future veterinary scientists will be in much the same boat.

These very real concerns should all be considered in line with the "gateway to the professions" review announced by the Secretary of State at Second Reading in another place. This too will begin only after the Bill is passed. It will assess the impact of variable fees on such professions and will further consider the matter. In Committee, Ministers failed to indicate how long the review would take. Are they now in a position to inform the House of that?

This amendment is needed to ensure that all higher education students are treated fairly and that these particular students are on a par with those on other undergraduate courses. The Government must not wait for what would have to be up to seven years for a medic, vet or architect to complete fully his or her training before a full and proper assessment can be made of the detrimental effect or otherwise of variable fees. I beg to move.

Lord Campbell-Savours

My Lords, I should like to intervene for only a few moments because I was unable to be here for parts of the Committee stage on the Higher Education Bill due to an illness of a member of my family and my need to attend hospital every day.

I should like to have a point in the amendment clarified. It raises with me the issue of what happens in the case of four-year university foundation course degrees in the sciences. I am not entirely sure about what the amendment means by "qualifying course". Can I take it from the noble Lord's comments in moving the amendment that "qualifying course" would include those four-year foundation courses? As I understand it, they are usually characterised by the need for some students who have taken particular courses at A-level, who have often received poor guidance from those in a position of responsibility in schools and taken the wrong subjects, to receive an additional year's training in the form of a foundation year before the three-year training.

Let us say that someone who has done Latin and Greek at A-level suddenly decides that he wants to be a chemical engineer. He would go to a university and do a foundation year perhaps in maths, chemistry, physics and a generality of studies that would equip him to proceed with an engineering degree. In so far as the need for that additional year of study very often derives either from bad advice or simply from a student's inability to decide at A-level—or, post O-level, precisely what A-levels they should be doing—surely they should not have to pay for effectively an additional year at university.

My request is quite clear. I seek to understand what is meant by "qualifying course". If what is meant is a foundation year, then I shall certainly support the amendment.

Baroness Sharp of Guildford

My Lords, my name is associated with the amendment and I should like briefly to speak to it. Perhaps in doing so I can answer the question raised by the noble Lord, Lord Campbell-Savours.

The situation is precisely as the noble Lord suggested. Some courses are four-year courses, and I have in mind another one. Many engineers these days do an MEng, which is a four-year course, rather than the three-year course. They would be hit precisely by this proposal. As it stands, they would have to pay the higher fees through the four years.

Lord Campbell-Savours

My Lords, one of my sons did five years at Leeds University. He did a one-year foundation course, the three-year degree and then an additional year for an MA. That is five years, not four.

Baroness Sharp of Guildford

My Lords, the noble Lord is quite right. If they were doing an MEng course, they would do five years, just as architects, for example, do seven years. A range of degrees require longer periods. It is precisely those professions that are extremely worried about the impact that the higher fees might have on entry into the professions.

The point is very unclear at the moment. The purpose of the amendment is to make clear that we are looking for three years' worth of fees from the student and how to handle degrees that extend beyond that period and are not paid for, as with doctors after, as I understand it, the fourth year when payment is made by the National Health Service, where it is not paid for separately. As I said, the aim of the amendment is to make it clear that the student shall pay three years' worth of fees and that any further years of fees should be paid for.

5.15 p.m.

Lord Renfrew of Kaimsthorn

My Lords, I have tabled Amendments Nos. 14, 19 and 20. If I were more confident of my powers of persuasion, I would seek to separate my amendments from Amendment No. 7 which has just been so ably moved by the noble Lord, Lord Skelmersdale. I fully agree with the arguments that he made for the necessity of the amendment; and in that he has been very ably supported by the noble Baroness, Lady Sharp. I also concur that if someone is registered for a degree when they are undertaking a foundation course, which I believe them to be, then under this amendment, and under my amendments, they will stop paying after three years. I think that the answer to the noble Lord, Lord Campbell-Savours, is clear.

However, it became clear at the Committee stage, when a very similar amendment was proposed, that there is a significant problem because the amendment as proposed by the noble Lord, Lord Skelmersdale, and as supported by the noble Baroness, Lady Sharp, means, very properly, that the student pays only three years and after that the university pays. That is what is wrong in general with this Bill. The universities keep on having to carry the can.

If I felt it appropriate, I would seek first to persuade your Lordships, if invited, not to vote for Amendment No. 7, but, when we came to it, to vote in favour of Amendment No. 14. However, I am not sure that I have the courage to divide your Lordships' House again so early in the evening. That is why I have not sought to dissolve the grouping. However, I want to underline the difference. My amendment would be worded identically were it not that I required a separate clause to delete—if noble Lords look carefully, as I did—"university to pay" and insert "Secretary of State to pay".

As I already indicated, and as the noble Baroness on the Front Bench opposite indicated, it is unfortunate that I have perhaps become severely sharp in my criticisms. I detected that hint in her own words. She may be right. I am disappointed that the opposition spokespersons have introduced amendments that very rightly point to a defect in the Bill and very rightly suggested that students have paid enough fees after three years. I agree that three years for an undergraduate course is enough. However, the solution is to say that, after that, the Secretary of State should pay.

Why should the universities have to carry the can in this way? The problem with the Bill is that it is not giving universities sufficient funding. That is why, with the greatest disappointment—I think I made this clear in our debate in Committee—I do not feel able to support my noble friend's amendment and why I am still critical of noble Lords on the Liberal Democrat side who say, "Yes, that is all right. We want to change it so that the universities pay and carry the can". I do not think that that is acceptable.

So that is why I oppose the amendment. My reason for not pressing my own Amendment No. 14 separately is that I do not wish to try the patience of your Lordships' House.

Baroness Carnegy of Lour

My Lords, I wonder whether the Minister can tell us whether the Government have consulted the Scottish Executive about this matter. The noble Lord, Lord Sutherland, may be able to confirm whether I am right in thinking that in Scotland a student pays fees for the first four years, because courses are four years in Scotland, and after that the fees are funded by the Scottish Executive, and presumably that money is allowed for in the Barnett formula. It would be interesting to know whether the Government have consulted the Scottish Executive.

It seems to me that one of these sets of amendments probably contains the answer to a problem that the Government have with the Bill: what is going to happen about these longer courses. It also presents a problem for Scotland—I have not consulted about this—as it seems to me that as one has to pay only the first four years if one is studying to be an architect or a doctor in Scotland, there may be a flight from England to Scotland for those courses just at the time when the Barnett formula does not increase, as money is coming into the English universities from students. Therefore, the increase in expenditure that would qualify Scotland for a higher amount under the Barnett formula will not be forthcoming. That seems to me an added complication.

However, my main interest is to know whether the Government have consulted the Scottish Executive and what they were told. I mentioned this in Committee, so if it had not been drawn to their attention before, it was then.

Lord Triesman

My Lords, Amendment No. 7 would ensure that fees may not be charged after three years at all, while Amendments Nos. 14 and 19 require the Secretary of State to meet the fees after the third year on the student's behalf. The effect for the student is the same. If higher education institutions are not allowed to charge fees to students beyond their third year of study, they will lose fee income. If the Secretary of State is required to meet the cost of fees for all students after their first three years, resources would need to be found from elsewhere in the HE budget. So both methods of exempting students from fees after three years would have an impact on the funding received by HEIs, and I should leave noble Lords under no illusion that the Government could find extra funding to make up that loss in funding. I was invited by the noble Lord, Lord Skelmersdale, to test the feelings of the Chancellor of the Exchequer on that proposal. I suspect that he would be unlikely to be moved by that additional appeal.

There is no reason why our proposals should deter students from studying subjects such as medicine, the courses for which are longer than three years. I want to comment on a number of the professions that have been mentioned.

For each year in which fees are charged, eligible students will continue to benefit from the generous student support package and, regardless of the level of loan which they have taken out, their monthly repayments will be the same. There is no evidence indicating that students are deterred from taking longer courses, and we believe that there are two principal reasons for this: first, the support is there to enable them to complete these courses; and secondly, students recognise the real benefits to them, personally as well as professionally. They study on these courses because they realise that the benefits will outweigh the costs. Indeed the OECD recently confirmed that the rate of return in terms of earnings for graduates in the United Kingdom is the best in the world.

All of this will remain the case under the variable fees system. The importance that the Government attach to courses which last more than three years such as education, medicine, dentistry, architecture, veterinary medicine and so on—many of the courses that were mentioned earlier—is demonstrated now by the significant measures which are being taken to protect training for, and recruitment to, various public sector professions.

A good deal was said on this matter in Committee which I shall not repeat—I am sure that will be welcome—and I shall not repeat much that was said about how our current recruitment initiatives work for the five main groups to which I referred earlier, but I should like to say something about their effectiveness.

Lord Roberts of Conwy

My Lords, will the noble Lord reassure us that, certainly so far as medicine and dentistry students are concerned, the money for their extended years will still be provided by the NHS?

Lord Triesman

My Lords, when I discuss the relevant group I shall be able to give a clear answer to that question.

I shall begin with teachers and discuss various professions. There are more teachers with qualified teacher status in our schools now than at any time since 1984. There are 50 per cent more teachers training than there were five years ago. As for medical and dentistry students, applications to medical schools in the United Kingdom have gone up since 1998, as has the total number of students studying medical courses.

The amendment will make no difference to the arrangements that are made with the National Health Service in respect of the finances. The NHS makes its contracts directly with institutions to deliver the courses that the NHS needs at an agreed price. That operates on the basis of no tuition fees being payable by the students, so the level of fees is zero and there will be no difference from the students' point of view or in terms of the overall costs to the National Health Service. There should be no change in that regard as regards the future arrangements.

In 2003, according to UCAS, the number of accepted applicants for pre-clinical veterinary medicine was up 9.3 per cent in comparison to 2002, and places on these courses are heavily over-subscribed. I make the point because, were there to have been a significant deterrent effect, it would not be likely that such a figure would have occurred.

In architecture—another profession mentioned by noble Lords—UCAS 2003 entry figures show one of the biggest increases in applications accepted that has ever been recorded—a rise of 10.3 per cent in the past year. Even when we gross up the figures on levels of debt, which I suspect in some cases are highly speculative, we can see positive movements in all of these professions.

Nurses, who were mentioned, will not be affected by the Bill. As I said, the NHS buys these places direct and will continue to do so. Department of Health Ministers have indicated that, whatever the future levels of tuition fees, they will take measures to ensure that any increase in the cost of university courses will not have an adverse impact on the supply, retention, diversity and quality of students on health professional courses, including medicine.

So it is clear that in general the picture is a positive one and that students are being given the support they need to take courses in these areas. I can assure noble Lords that relevant departments already monitor demand for, and take-up of, places on courses in these key areas and will continue to do so after the introduction of variable fees in 2006–07.

As the noble Lord, Lord Winston, mentioned in Committee, the evidence from the United States also is that students are not deterred from taking longer courses, even where they pay fees for each year. As we all know, fee levels in the United States are hugely higher than in the United Kingdom. Although I do not have the relevant data in front of me, I believe that very much the same picture applies in Australia, for example, where these issues have been considered for some time.

We also described in Committee how we would commission a report next year by Sir Alan Langlands to examine gateways into the professions. We have done so precisely because we recognise the huge importance to our society of a system that provides an adequate supply of entrants to these essential areas.

I was asked to comment on the timing of the review. Sir Alan Langlands will start work on the review directly following Royal Assent, if it is achieved, with the aim of reporting to the Secretary of State by the middle of 2005. I was corrected when I made the presumptuous assertion that Royal Assent might be achieved.

The report will, of course, examine how the public sector and the professions can sustain and improve recruitment opportunities in a general sense for graduates and will look at the professions, including medicine and architecture as well as teaching and veterinary medicine.

I should like, finally, to underline a much more fundamental point about the freedom of universities in all of this.

Lord Campbell-Savours

My Lords, before my noble friend comes to his final point, may I take him back to the question of the foundation year prior to a three-year degree? Will he answer specifically the question that I asked, which was about why a young person who is ill advised or simply does not have the knowledge to make the right decision should be penalised in the event that they go to university?

5.30 p.m.

Lord Triesman

My Lords, I certainly intend to address that, but I wanted to deal with the points about the longer courses in relation to professions first. I shall return to the noble Lord's point in a moment.

The freedom of universities is important. Throughout our debates on the Bill, we have stressed the importance of the autonomy of the higher education institutions. Our desire to avoid regulation where none is necessary is also a part of our thinking. As noble Lords know, the variable fees provisions give more freedom to institutions themselves to decide what to charge for each course, within the caps agreed by Parliament. I hope that noble Lords feel that that is a good thing. With that comes responsibility; universities must justify the fee levels. The amendments tabled by the noble Lord, Lord Renfrew, break that fundamental principle. Whatever universities charge for years one to three of a course, they could charge £3,000 for year four, wholly safe in the knowledge that the Government would be expected to meet the bill automatically. That could not be right.

On the other hand, Amendment No. 7 looks to universities themselves to subsidise students on longer courses. An individual university or college might conclude in exceptional circumstances that the final-year fee should be waived or reduced, but that is a matter for each institution, taking account of the demand for their courses. I would see a requirement for all universities to waive fees for the fourth year and beyond as a clear example of over-regulation; such a decision would surely be for local consideration, not central prescription.

I have always been a strong supporter of making sure that access courses and foundation years were successful. If a foundation year is a general access course—because someone has not taken A-levels, taken the wrong A-levels or whatever before wishing to apply to take a degree—those courses are in further education and are not covered. No student support is relevant, but no standard fee is relevant either. The course will probably not have been taken in the same institution as the degree. If it is an integral part of a degree—an engineering foundation year—it is in HE and will be taken in the same way as all other elements of degrees in HEIs, and will get student support.

It is hard to be precise about the number of students who embark on a course and then conclude that they were given the wrong advice, but I know of examples where that has happened. Potential students can be given the wrong advice in a wide variety of circumstances. I would like to think that there were far greater precision in universities and further education colleges now in making sure that guidance was appropriate, and that it is no longer the case that students—those who present themselves with a set of qualifications that might make taking a heavily oversubscribed degree a good option—find themselves persuaded to take a degree on which they should not embark because it hardly suits their capabilities. I believe that that may have happened in some instances, but such examples happen no longer.

Lord Campbell-Savours

My Lords, I want to press my noble friend on that matter. The advice about which we are talking is given to young people at the age of 16 when they have completed their GCSEs, as they go into the first year of sixth form. That is the critical time. If during the following two years of A-level they find that they have taken the wrong subjects and want to move out of whatever and into engineering, they will pay for an additional year. That seems totally wrong.

Lord Triesman

My Lords, it would be extremely hard to create a system that detected whether someone had taken the wrong advice, or had embarked on something relatively willingly only to find in a relatively short time that it was not what they wanted to do. In a slightly different circumstance, I was asked whether my own children might have made rational choices at 14, 15 and 16 about their higher education. All that can be hoped is that the best possible advice is given by schools, or perhaps by further education colleges when people get to the age of 16, and that people try to establish by the widest possible discussion whether that is the right advice. One could not legislate for the possibility of someone saying that they feel in retrospect that the advice that they received was not as good as it might have been.

The Scottish Executive are reviewing the position, and I confirm to the noble Baroness, Lady Carnegy, that we are in dialogue with them. The Scottish third-phase review of higher education has made a number of recommendations, including that the Quigley agreement be continued. We understand that the Scottish Executive are considering the outcome of that.

In the light of those arguments, I hope that the noble Lord will consider withdrawing the amendment.

Lord Winston

My Lords, my noble friend mentioned my name, so I would like to clarify what I think is on record. My noble friend Lady Ashton very kindly wrote to me on the matter. I did not say that I had evidence from the United States; I said that it was my anecdotal impression that having longer courses was not a deterrent. I also asked whether it would be wise to conduct further research on the matter, and the noble Baroness agreed with that in her letter.

Lord Triesman

My Lords, I can only confirm that continuing research on and review of that would be extremely important.

Lord Skelmersdale

My Lords, I am grateful to the Minister for answering the point of the noble Lord, Lord Campbell-Savours, on foundation years, where the situation is totally clear. Where a foundation year is part of the university course and taken at the same university, it is covered by the Bill. Where it is part of further education—for example, a third year at a sixth-form college—it is free anyway. The question simply does not arise in my mind.

I thought that we all agreed that universities should be funded through HEFCE. Once HEFCE has funded the university, that is the university's money to dispose of in any way that it sees fit. Therefore, my noble friend's argument about the Secretary of State funding the position through his amendments independently does not really wash. Anyway, the fourth year for English students at a Scottish university is paid for by the department. That is another reason why the objections to the amendments do not wash.

I am also grateful to the Minister for setting on record the future position under the Bill of the medical profession in its broadest terms, by which I include dentists, nurses and professions supplementary to medicine. However, he cleverly almost ignored the position of such core students as architects or vets. They are not in the public sector, but very much in the private sector. Although in mitigation the Minister told us that we had the highest application rates ever for students to enter professional careers, the point that he does not make is that all those figures come before the Bill becomes an Act. No one knows what will happen after the Bill becomes an Act, although many of my noble friends and I have made good guesses. I wish to test the opinion of the House.

5.39 p.m.

On Question, Whether the said amendment (No. 7) shall be agreed to?

Their Lordships divided: Contents, 156; Not-Contents, 139.

Division No. 2
CONTENTS
Addington, L.	Blatch, B.
Alderdice, L.	Bowness, L.
Ampthill, L.	Bradshaw, L.
Anelay of St Johns, B.	Bridgeman, V.
Ashcroft, L.	Brougham and Vaux, L.
Astor of Hever, L.	Buscombe, B.
Attlee, E.	Caithness, E.
Avebury, L.	Campbell-Savours, L.
Barker, B.	Carlisle of Bucklow, L.
Beaumont of Whitley, L.	Carnegy of Lour, B.
Biffen, L.	Chadlington, L.
Blackwell, L.	Clement-Jones, L.

Colwyn, L.	Miller of Hendon, B.
Cope of Berkeley, L.	Monro of Langholm, L.
Craig of Radley, L.	Montrose, D.
Craigavon, V.	Mowbray and Stourton, L.
Crathorne, L.	Murton of Lindisfarne, L.
Crickhowell, L.	Noakes, B.
Dahrendorf, L.	Northbrook, L.
Dean of Harptree, L.	Northesk, E.
Deedes, L.	Northover, B.
Denham, L.	Oakeshott of Seagrove Bay, L.
Dixon-Smith, L.	O'Cathain, B.
Dundee, E.	Oppenheim-Barnes, B.
Eccles of Moulton, B.	Parkinson, L.
Eden of Winton, L.	Patten, L.
Elles, B.	Peel, E.
Elliott of Morpeth, L.	Perry of Southwark, B.
Erroll, E.	Peyton of Yeovil, L.
Falkland, V.	Phillips of Sudbury, L.
Feldman, L.	Plummer of St. Marylebone, L.
Flather, B.	Quinton, L.
Forsyth of Drumlean, L.	Rawlings, B.
Fowler, L.	Razzall, L.
Freeman, L.	Reay, L.
Garden, L.	Redesdale, L.
Geddes, L.	Renton, L.
Glentoran, L.	Renton of Mount Harry, L.
Goodhart, L.	Rix, L.
Griffiths of Fforestfach, L.	Roberts of Conwy, L.
Hamwee, B.	Rodgers of Quarry Bank, L.
Hanningfield, L.	Roper, L.
Harris of Richmond, B.	Rotherwick, L.
Hayhoe, L.	Saltoun of Abernethy, Ly.
Henley, L.	Sandwich, E.
Higgins, L.	Scott of Needham Market, B.
Hodgson of Astley Abbotts, L.	Seccombe, B. [Teller]
Home, E.	Selborne, E.
Hooper, B.	Selsdon, L.
Hooson, L.	Sharman, L.
Howe, E.	Sharp of Guildford, B.
Howell of Guildford, L.	Sharples, B.
Hunt of Wirral, L.	Shaw of Northstead, L.
Jenkin of Roding, L.	Shutt of Greetland, L. [Teller]
Jopling, L.	Skelmersdale, L.
	Smith of Clifton, L.
Kimball, L.	Soulsby of Swaffham Prior, L.
King of Bridgwater, L.	Stewartby, L.
Lane of Horsell, L.	Swinfen, L.
Lang of Monkton, L.	Taverne, L.
Lester of Herne Hill, L.	Taylor of Warwick, L.
Liverpool, E.	Tebbit, L.
Livsey of Talgarth, L.	Thomas of Gresford, L.
Luke, L.	Thomas of Walliswood, B.
Lyell, L.	Tordoff, L.
McColl of Dulwich, L.	Trefgarne, L.
MacGregor of Pulham Market, L.	Trenchard, V.
	Trumpington, B.
Mackay of Clashfern, L.	Ullswater, V.
Mackie of Benshie, L.	Vinson, L.
Maclennan of Rogart, L.	Waddington, L.
McNally, L.	Wakeham, L.
Maddock, B.	Wallace of Saltaire, L.
Mancroft, L.	Walmsley, B.
Mar and Kellie, E.	Watson of Richmond, L.
Marlesford, L.	Wilcox, B.
Masham of Ilton, B.	Williams of Crosby, B.
Methuen, L.	Windlesham, L.
Miller of Chilthorne Domer, B.	Wolfson, L.

NOT-CONTENTS
Ahmed, L.	Bassam of Brighton, L.
Alli, L.	Bhatia, L.
Andrews, B.	Billingham, B.
Archer of Sandwell, L.	Blackstone, B.
Ashton of Upholland, B.	Boston of Faversham, L.
Bach, L.	Bragg, L.

Bridges, L.	Lea of Crondall, L.
Brooke of Alverthorpe, L.	Lipsey, L.
Brookman, L.	Listowel, E.
Brooks of Tremorfa, L.	Lockwood, B.
Burlison, L.	Macdonald of Tradeston, L.
Cameron of Lochbroom, L.	McIntosh of Haringey, L.
Carey of Clifton, L.	McIntosh of Hudnall, B.
Carter, L.	MacKenzie of Culkein, L.
Chandos, V.	Mallalieu, B.
Chester, Bp.	Marsh, L.
Christopher, L.	Mason of Barnsley, L.
Clarke of Hampstead, L.	Massey of Darwen, B.
Clinton-Davis, L.	Merlyn-Rees, L.
Cohen of Pimlico, B.	Mitchell, L.
Corbett of Castle Vale, L.	Morgan, L.
Crawley, B.	Morgan of Huyton, B.
David, B.	Morris of Aberavon, L.
Davies of Coity, L.	Morris of Manchester, L.
Davies of Oldham, L. [Teller]	Nicol, B.
Dean of Thornton-le-Fylde, B.	O'Neill of Bengarve, B.
Dearing, L.	Palmer, L.
Desai, L.	Parekh, L.
Dixon, L.	Patel of Blackburn, L.
Donoughue, L.	Paul, L.
Drayson, L.	Pendry, L.
Dubs, L.	Peston, L.
Elder, L.	Pitkeathley, B.
Evans of Parkside, L.	Plant of Highfield, L.
Evans of Temple Guiting, L.	Prys-Davies, L.
Farrington of Ribbleton, B.	Puttnam, L.
Filkin, L.	Quirk, L.
Finlay of Llandaff, B.	Radice, L.
Fitt, L.	Randall of St. Budeaux, L.
Gale, B.	Rendell of Babergh, B.
Gavron, L.	Richard, L.
Gibson of Market Rasen, B.	Rogan, L.
Gilbert, L.	Rooker, L.
Golding, B.	St. John of Bletso, L.
Goldsmith, L.	Scotland of Asthal, B.
Gordon of Strathblane, L.	Sheldon, L.
Goudie, B.	Simon, V.
Gould of Potternewton, B.	Strabolgi, L.
Graham of Edmonton, L.
Gregson, L.	Sutherland of Houndwood, L.
Grenfell, L.	Taylor of Blackburn, L.
Grocott, L. [Teller]	Temple-Morris, L.
Harris of Haringey, L.	Thornton, B.
Harrison, L.	Tomlinson, L.
Haskins, L.	Triesman, L.
Hayman, B.	Turner of Camden, B.
Hilton of Eggardon, B.	Uddin, B.
Hogg of Cumbernauld, L.	Walpole, L.
Hollis of Heigham, B.	Walton of Detchant, L.
Howarth of Breckland, B.	Warnock, B.
Howe of Idlicote, B.	Warwick of Undercliffe, B.
Howells of St. Davids, B.	Watson of Invergowrie, L.
Howie of Troon, L.	Weatherill, L.
Hoyle, L.	Whitty, L.
Hughes of Woodside, L.	Wilkins, B.
Hunt of Chesterton, L.	Williams of Elvel, L.
Hunt of Kings Heath, L.	Williamson of Horton, L.
Irvine of Lairg, L.	Wilson of Dinton, L.
Jones, L.	Winston, L.
Kirkhill, L.	Woolmer of Leeds, L.

Resolved in the affirmative, and amendment agreed to accordingly.

5.51 p.m.

Lord Forsyth of Drumlean moved Amendment No.8:

Page 9, ling 24, at end linsert—

"( ) A condition under this section must require the governing body of the relevant institution to secure that, in respect of any qualifying course, the qualifying fees charged to a person do not exceed the basic amount if that person—

1. (a) had on or before 1st August 2005 received an offer of a place on a designated course or on a similar course which is no longer offered, in either case the first year of which begins before 1st September 2007, and whether conditional on obtaining specified qualifications or not; or
2. (b) had received an offer of a place on a designated course the first year of which begins before 1st September 2006. and—

1. (i) he was not able to take up the offer because a specified qualification or grade was not awarded to him,
2. (ii) he appealed against the decision not to award the qualification or grade to him,
3. (iii) the appeal was allowed after the last date when he could have taken up the offer, and
4. (iv) as a result he was offered a place on the course for a year which begins on or after 1st September 2006 and before 1st September 2007.

( ) For the purposes of this section, a course is similar to a designated course, whether or not it is at the same institution, if—

1. (a) it leads to a degree or other qualification which is the same as the degree or other qualification which the designated course leads to, and
2. (b) the governing body of the institution at which the designated course would be studied is satisfied that the subject matter of the designated course is for the most part the same as the subject matter of the other course."

The noble Lord said: My Lords, with Amendment No. 8 we return to an issue that we considered at length at a previous stage. It concerns the position of students who wish to take a gap year. I know that the amendment which was considered previously did not meet with the approval of Ministers. Therefore, on this occasion I have taken the precaution of using more or less the same wording as that which, when the Government introduced fees for the first time in 1998, provided for students who took a gap year to be treated in exactly the same way as students who applied for university places.

Therefore, the amendment aims to ensure that students who are awarded a deferred place at an institution in 2005 for the academic year starting in 2006—the same year in which the new top-up fees come into effect—and, indeed, any students who cannot accept an offer due to a failure to fill the grade requirement but who successfully appeal to be offered a place for the subsequent year will be treated as if they had been accepted in the academic year 2005.

I am very disappointed that the Government cannot see the enormity of this problem. It seems to me that several injustices will occur. The first will be that many students, faced with the prospect of paying fees of around £1,000 as opposed to £3,000 over three years, will decide not to take a gap year. I believe that that would be a great tragedy—gap years have become an institution with youngsters.

I know that the Government say that people will have had three years' notice. Ignoring Parliament's role in this matter, it is true that youngsters will have been given notice. Although my youngest daughter will just escape this measure, she, in common with her sister, planned her gap year years before she went to university and found the people with whom she intended to travel. It seems to me to be extremely unfair that the members of one cohort, who did not have any choice about when they were born or their date of birth, will be put in this disadvantaged position.

The Government have sought to argue that some students may very well take the view that the terms that are now being offered under the new scheme are so advantageous that this will not be a problem. I have to say that their parents may not take the same view. According to the sums, the students who take a gap year will be saddling themselves with considerable additional debts which will have to be paid over their working lives. Should their parents encourage them not to take a gap year on financial grounds alone, there will be another consequence—namely, the number of students applying for places at universities will be greatly exaggerated and there will be a bulge of applicants in the year that we are discussing. The effect of that will be that students who would otherwise have obtained a place on the course that they wished to study will be squeezed out of a place and, of course, consequently the following year will see a mirror image of the problem.

For a very wealthy family who do not mind paying the additional costs and who have a child who might struggle to obtain a place on a particular course, the advice is obviously to take a gap year and to fund the additional cost of the educational provision. In the following year it will be easier to get on to the course in question because there will be less competition for places as the "bulge" will not apply.

I think it is wrong for the Government to argue that this measure will somehow be neutral in effect and that it will be equally balanced. I believe that its effect will be to make it harder for children who come from families who struggle to pay the costs of higher education to take a gap year. I do not want to detain the House by rehearsing all the benefits and advantages of gap years. I can refer noble Lords to the very eloquent statement made by the noble Baroness, Lady Blackstone, on behalf of the Government on 13 August 1997. I pay tribute to her and give her credit for having recognised the problem then.

I have no doubt that the Minister will say that this time the situation is different because people will have been given notice. I think that I have dealt with that point already. I have no doubt that the Minister will also say that there is not really a problem because the universities can do what they like. I am told that approximately 100,000 students take a gap year. That represents a substantial sum of money for the universities to find. The Government may argue that the universities can say, "Well, we will just treat gap year students in this way", but they would be giving up considerable funds. I have no doubt that my noble friend Lord Renfrew, who, sadly, is not in his place, will be jumping up to point out that this will be impossible for the universities to bear.

The difficulty is of the Government's making. It arises because they are changing the system and introducing this legislation. The Government should take responsibility for that decision and they should allow students who wish to take a gap year the opportunity to do so. I could understand it if the Government came back and said, "Perhaps it would be fairer if they had the same financial package as they would otherwise have had, as opposed to the revised package" but, so far, the Government have been determined not to deal with this issue.

This is not a party political matter; it is one which is causing great concern around the country. The noble Baroness, Lady Sharp, has pressed this matter as, indeed, have Conservative and Liberal Democrat Members in the other place. They are doing so because there is real concern among families with students who will be going to university at this time.

I guess that for many families the penny has not dropped that this measure will cause a problem, and far be it from me to give the Government political advice to help them. But I guess that the penny may just drop at about the time that the Prime Minister thinks that he needs to call a general election. Therefore, in the interests of helping the Government in these difficult times, I suggest to the Minister that, by accepting the amendment, she may very well prevent much grief and hardship for some of her colleagues in the other place because it is the kind of issue which causes great distress and irritation to parents and voters. I beg to move.

6 p.m.

Lord Campbell-Savours

My Lords, I support the amendment. The noble Lord is absolutely correct in what he says. His analysis fits precisely with the understanding that I have gained from talking to the many friends of my three sons, all of whom went to university, and from whom much of my case has been gleaned during the course of this Bill.

The problem in this debate is that there has been insufficient consideration of the position of students and far too much consideration of the position of universities. I know they have funding problems, but that is an argument that should be had with the Chancellor of the Exchequer, not with students. It seems to me that those who will be punished are people who should, in normal conditions, have the option of being able to take a gap year. From my own experience such people need a year off because at that stage in their lives they are not ready to go to university. They need a year in the real world before they settle down to the serious business of studying at university.

I am really worried about the social profile of those who benefit from a gap year. They will not be kids in Workington who have worked their way through the system and who are frightened of debt but have to take it on if they want to go to university. The sons and daughters of the great British middle class who enjoy very fat incomes will say to their children, "It's all right, you needn't worry, we'll fund your gap year and any additional year at university". I believe that that is wrong. We are penalising the very people who sent many of us as Labour Members of Parliament to the House of Commons. I simply cannot understand the logic behind many of the positions that we have taken on this Bill. The very people who will suffer are our people in the country. If the noble Lord presses the amendment to a Division, I shall join him once again.

Baroness Sharp of Guildford

My Lords, my name is attached to this amendment. I echo the words said on both sides about the advantages of passing this amendment. It is unfair to the students who are not certain whether it is worth their while taking a gap year. I believe that taking a gap year can prove a great advantage to students. As the noble Lord, Lord Campbell-Savours, indicated, it would be unfortunate if they were put off taking a gap year because they did not want to afford it. It is not the wealthy students would be put off but those who are at the margins and who would benefit enormously from a gap year.

As regards universities, there is a total uncertainty about how many will apply. Will there be an extra wave of 100,000 people applying? Universities are unclear on the position. In 1998 the measure was taken and now some care has been taken to replicate in this new amendment the wording used last time. Care was taken to smooth the whole process. It poses uncertainties for parents about what advice they should give. It seems to me that the amendment is well worth passing. I hope that the Minister will accept it.

Baroness Warwick of Undercliffe

My Lords, the impact of the introduction of a new fee regime on student applications is by no means clear, but it is important that we have transitional arrangements in place for those who choose to take a gap year. I am concerned to ensure that the appropriate funding is provided from the block grant and the same fee income as is currently in place for students, but it is important that we address the issue. That is very much in line with the view taken by Universities UK on the previous occasion when the situation arose. I am happy to support the amendment.

Baroness Ashton of Upholland

My Lords, I say to the noble Lord, Lord Forsyth, that I am sure that the Prime Minister will be delighted to have advice from him on elections. I wonder whether he gave advice in 1997 at the time of the election.

The latest figure for the number of gap-year students is 19,600 in 2002. It is worth while putting the figures on the record.

One could extrapolate two positions as regards the amendment and how we are considering the issue. In our view, we should take up neither of those positions. At one end of the spectrum the Bill could provide that universities have to charge all gap-year students the higher variable fees; at the other end of the spectrum the Bill could provide that universities are forbidden from charging gap-year students more than the current fixed fee, which is likely to be about £1,200 in 2006–07. The amendment seeks to do the latter of those two options.

The Bill, as it stands, does neither. Our view is that universities should have the discretion to decide what fees to charge. That is the whole point of variability. The noble Lord, Lord Forsyth, indicated that I would contrast that with the position in 1998—a contrast which could not be greater—when the Government decided to exempt gap-year students.

Lord Forsyth of Drumlean

My Lords, I am grateful to the Minister for giving way. On the figures, I was relying on a briefing from organisers of gap-year fairs which estimated that in anticipation of top-up fees in 2006, applications for entry to universities in 2005 will increase by about 60,000. The other figure is 100,000. The Minister may not have seen this, but there is such a difference between her figures and these, it would be helpful if she could explain why she has come to the conclusion that the figure is so much lower.

Baroness Ashton of Upholland

My Lords, I shall explain where the figures come from. I do not know about the gap-year fares' figures at all, but my figures of the total accepted on a deferred basis of 18 year-olds applying to universities is 19,600.

Baroness Blackstone

My Lords, perhaps I may help. I believe that the figures of students who are accepted on a deferred basis will not cover the entire gap year student numbers. They will be those who decided to apply one year ahead for a place a year later, but many students take a gap year and apply during that gap year. That is a distinction. I think that the Government's figures are a little misleading.

Baroness Ashton of Upholland

My Lords, indeed on that basis they are and I am very sorry if I have misled the House with the figures that I have been given. If we have an exact figure I shall put it in the Library. Noble Lords will understand that the figure of 19,600 relates to what my noble friend has said and I am grateful to her for clarifying that. There is a disparity and I was concerned when I read out that figure. It is important to get that figure in your Lordships' minds. I am grateful to the noble Lord as well.

Our view is that universities should have the discretion to decide, as I have said, what fees to charge. That is the point of variability. In 1998 we had an issue about timing and there was no discretion for universities in terms of the fees that they charged. Fees were fixed and all universities had to charge the same. They were not allowed to make special cases if they felt they should. Exemption was provided by the Government in regulations because that was the only way an exemption could be granted.

There was also a timing issue. The committee of inquiry chaired by the noble Lord, Lord Dearing, reported in July 1997 and the Government took the decision that month to introduce the tuition fee. By that point, students had already applied for entry for 1997 and been accepted. Those who wanted to take a gap year had already agreed with their universities that they would do so. In some cases they would even have entered into financial commitment for the gap years.

So the timing issue is important in the context of the Bill, without pre-empting the wish of Parliament in terms of the Bill. We believed that that was right in 1998 because students had entered into commitments in good faith. We felt it was important for gap-year students to be recognised. However, none of that applies this time round. The noble Lord, Lord Forsyth, implied that those who want to take gap years may already have taken that decision, but I do not believe that that is the same as the position in 1998 when students had already agreed with the institutions to defer. I am sure that some students have already considered taking gap years, but they will not be applying until next spring for entry in autumn 2005 and will agree with their universities next summer to defer entry until 2006. One way or another that will be long after these issues are settled in Parliament.

However, not only is the timing point different; there is also the question of discretion. We are not constraining universities' actions. If they see an advantage in offering exemptions to gap year students, they are able to do so.

It is possible that taking either of the extreme positions I have outlined could lead to unmanageable surges—as I think the noble Lord, Lord Forsyth, is indicating—in applications in one year or another. Requiring higher fees to be charged in 2006–07 could create a surge in 2005–06. Alternatively, exempting gap year students could create a surge in 2006–07, with an incentive to take a gap year so that the students could benefit from the enhanced student support.

Lord Forsyth of Drumlean

My Lords, I am sorry to interrupt the Minister again. Will she explain why there would be a surge if there were an exemption, because the students would not be in any worse-off position? If people want to have a gap year they could decide to do so and would be treated in exactly the same way. I do not understand that point.

Baroness Ashton of Upholland

My Lords, if people decide to take a gap year they could benefit from the enhanced student support arrangements that are being put in place from 2006–07. I understand the noble Lord's position, which is that one would have the current position for students in full and total. However, as I have indicated to the noble Lord, there are huge difficulties in running two systems in parallel that I would not wish to see us undertake.

So we think that the best way forward is to give universities flexibility and discretion in this area so that they can properly manage the ebb and flow of student numbers. That is an important and critical part of why we want the amendment withdrawn.

I recognise the importance of the issue to students who wish to undertake a gap year. In creating the Bill—we have one pot of money—we are allowing universities to make the right kinds of decisions. On that basis, I ask the noble Lord to withdraw his amendment.

Baroness Blackstone

My Lords, before my noble friend sits down, does she think that, in giving the universities the flexibility to make a decision, the Government anticipate a general agreement among all universities to do the same thing? Alternatively, does she think that each university will have to decide on the issue and then somehow or other inform all the student applicants what their position is?

I have some worries about the latter position because if that were to happen large numbers of young people would be left in a position where they were not clear on what the university intended to do. Universities will have to get this provision into their prospectuses rather early. Some students may decide to go to one university rather than to another simply on that basis—that is, whether or not they will be given special treatment. I am not sure that is the best basis on which to make a decision about where to study. So I think there are some difficulties.

At the same time I entirely accept what my noble friend has said about the position being different today from that in 1997 when I made a decision to treat differently those students with deferred places. At the time it was absolutely necessary to do that because, as the Minister has said, students had made decisions on the basis of assuming one set of requirements and a totally different one was going to be brought in for the following year. So there are differences. But I still think there are some problems about this provision.

I wonder whether it would be helpful if the Minister were to take the matter away and to look at it to see whether the kind of transitional arrangement proposed by my noble friend Lady Warwick could be considered. It may be impossible, but I do think that there are some problems here.

Baroness Ashton of Upholland

My Lords, I am always grateful to my noble friend. I also want to clarify a matter so that I can get it on the record. I have a note about the 19,600 students. These are the students that would be affected by the amendment. It could not apply to the group identified by my noble friend Lady Blackstone, as the amendment states that they must have applied before 1 August 2005. So it is exactly the group that would be dealt with by the amendment. I want to make that clear.

I understand what my noble friend says, but our position is that we are working with universities to ensure that they make the decisions that they think are right for their institutions.

Time and again in your Lordships' House we have amendments that try and take out slices of money from this pot and give it to the control of either the Secretary of State or someone else. I have been completely consistent in trying to resist those attempts and saying that either one gives the institutions the responsibilities or that one does not. In this context we wish the institutions to make those decisions based on their best interests and in discussion with their students and applicants about what might be best for them. That may not be where some noble Lords feel we should be, but I think that it is a consistent position from that point of view.

Lord Dearing

My Lords, before the Minister sits down, I should be grateful for her help because I am finding it difficult to follow precisely where we are going. Is the universities' position that they would like the Government to take the decision for them that they cannot raise the fees for students who take a gap year, rather than take the decision themselves? That seems to me to be the issue. Do the universities want to take the decision or are they saying to the Government, "No, take it for us. We will do without the money"?

Baroness Ashton of Upholland

My Lords, effectively I think that would be the position.

Lord Forsyth of Drumlean

My Lords, I am really disappointed by the Minister's response. I hope that I will not in any way damage her ministerial career by saying that throughout the passage of the Bill I have found her very amenable and open to argument. There are matters of principle and policy which are central to the Government's objectives. But on issues of detail, where there were anomalies arising from what is a fundamental and major change, she has usually been quite willing to listen to argument.

Here we have something which affects—we can argue about the numbers—many tens of thousands of students. The noble Lord, Lord Campbell-Savours, spoke very eloquently and, I think, with considerable justification about the effect on people from poorer families and the disadvantage that they will suffer. I mentioned the benefits that could come for wealthier people.

Those students who happen, through no fault of their own, to be in this particular year cohort who do not take gap years are still going to find it more difficult to get the places they want at universities. It seems a very small matter. It is an anomaly created by the change in the system. The fact that the Minister is not prepared to give an inch on this or to listen to the pleas from—and I was extremely grateful for the support of Universities UK—all parties and from the Cross Benches, suggests to me that perhaps some of the noble Baroness's colleagues have not given this matter the required consideration.

So on this occasion I think that I need to test the opinion of the House. Should the House decide to support the amendment, I hope that the Government may look to find some accommodation for this problem. The amendment may not be perfect in every respect but the problem is there and is one that needs to be addressed.

6.17 p.m.

On Question, Whether the said amendment (No. 8) shall be agreed to?

*Their Lordships divided: Contents, 143; Not-Contents, 132.

Division No. 3
CONTENTS
Addington, L.	Howell of Guildford, L.
Alderdice, L.	Hunt of Wirral, L.
Ampthill, L.	Jenkin of Roding, L.
Anelay of St Johns, B.	Jopling, L.
Arran, E.	Kimball, L.
Astor of Hever, L.	King of Bridgwater, L.
Attlee, E.	Laird, L.
Avebury, L.	Liverpool, E.
Barker, B.	Livsey of Talgarth, L.
Beaumont of Whitley, L.	Lyell, L.
Blackwell, L.	McColl of Dulwich, L.
Blatch, B.	MacGregor of Pulham Market, L.
Bowness, L.
Bradshaw, L.	Mackay of Clashfern, L.
Bridgeman, V.	Mackie of Benshie, L.
Brougham and Vaux, L.	Maclennan of Rogart, L.
Buscombe, B.	McNally, L.
Campbell of Alloway, L.	Maddock, B.
Campbell-Savours, L.	Mancroft, L.
Carlisle of Bucklow, L.	Mar and Kellie, E.
Carnegy of Lour, B.	Marlesford, L.
Chadlington, L.	Masham of Ilton, B.
Colwyn, L.	Miller of Chilthorne Domer, B.
Cope of Berkeley, L.	Miller of Hendon, B.
Crathorne, L.	Monro of Langholm, L.
Crickhowell, L.	Montrose, D.
Dahrendorf, L.	Mowbray and Stourton, L.
Dean of Harptree, L.	Murton of Lindisfarne, L.
Denham, L.	Noakes, B.
Dholakia, L.	Northbrook, L.
Dixon-Smith, L.	Northesk, E.
Donaldson of Lymington, L.	Northover, B.
Dundee, E.	Norton of Louth, L.
Eccles of Moulton, B.	Oakeshott of Seagrove Bay, L.
Eden of Winton, L.	O'Cathain, B.
Elles, B.	Oppenheim-Barnes, B.
Elliott of Morpeth, L.	Peel, E.
Falkland, V.	Perry of Southwark, B.
Feldman, L.	Peyton of Yeovil, L.
Flather, B.	Phillips of Sudbury, L.
Forsyth of Drumlean, L.	Plummer of St. Marylebone, L.
Fowler, L.	Rawlings, B.
Freyberg, L.	Razzall, L.
Garden, L.	Reay, L.
Geddes, L.	Redesdale, L.
Goodhart, L.	Renton, L.
Goschen, V.	Renton of Mount Harry, L.
Hamwee, B.	Roberts of Conwy, L.
Hanningfield, L.	Rodgers of Quarry Bank, L.
Harris of Richmond, B.	Roper, L.
Haskins, L.	Rotherwick, L.
Hayhoe, L.	Saltoun of Abernethy, Ly.
Henley, L.	Scott of Needham Market, B.
Higgins, L.	Seccombe, B. [Teller]
Hodgson of Astley Abbotts, L.	Selborne, E.
Hooper, B.	Selsdon, L.
Howe, E.	Sharman, L.

Sharp of Guildford, B.	Trenchard, V.
Sharples, B.	Trumpington, B.
Shaw of Northstead, L.	Tugendhat, L.
Shutt of Greetland, L. [Teller]	Ullswater, V.
Skelmersdale, L.	Vinson, L.
Smith of Clifton, L.	Waddington, L.
Soulsby of Swaffham Prior, L.	Wakeham, L.
	Wallace of Saltaire, L.
Stewartby, L.	Walmsley, B.
Strathclyde, L.	Warwick of Undercliffe, B.
Swinfen, L.	Watson of Richmond, L.
Taverne, L.	Wilcox, B.
Thomas of Gresford, L.	Williams of Crosby, B.
Thomas of Walliswood, B.	Windlesham, L.
Tordoff, L.	Wolfson, L.

NOT-CONTENTS
Ahmed, L.	Hilton of Eggardon, B.
Alli, L.	Hogg of Cumbernauld, L.
Amos, B. (Lord President of the Council)	Hollis of Heigham, B.
	Howarth of Breckland, B.
Andrews, B.	Howe of Idlicote, B.
Archer of Sandwell, L.	Howells of St. Davids, B.
Ashton of Upholland, B.	Howie of Troon, L.
Bach, L.	Hughes of Woodside, L.
Bassam of Brighton, L.	Hunt of Chesterton, L.
Billingham, B.	Hunt of Kings Heath, L.
Boston of Faversham, L.	Irvine of Lairg, L.
Bragg, L.	Janner of Braunstone, L.
Bridges, L.	Jones, L.
Brooke of Alverthorpe, L.	Kirkhill, L.
Brookeborough, V.	Lea of Crondall, L.
Brookman, L.	Lipsey, L.
Brooks of Tremorfa, L.	Listowel, E.
Burlison, L.	Lockwood, B.
Cameron of Lochbroom, L.	Macdonald of Tradeston, L.
Carter, L.	McIntosh of Haringey, L.
Chandos, V.	McIntosh of Hudnall, B.
Christopher, L.	MacKenzie of Culkein, L.
Clarke of Hampstead, L.	Mallalieu, B.
Clinton-Davis, L.	Mar, C.
Cohen of Pimlico, B.	Marsh, L.
Corbett of Castle Vale, L.	Mason of Barnsley, L.
Crawley, B.	Massey of Darwen, B.
David, B.	Merlyn-Rees, L.
Davies of Coity, L.	Mitchell, L.
Davies of Oldham, L. [Teller]	Morgan, L.
Dean of Thornton-le-Fylde, B.	Morgan of Huyton, B.
Dearing, L.	Morris of Manchester, L.
Desai, L.	Nicol, B.
Dixon, L.	O'Neill of Bengarve, B.
Donoughue, L.	Palmer, L.
Dubs, L.	Parekh, L.
Elder, L.	Patel of Blackburn, L.
Erroll, E.	Paul, L.
Evans of Parkside, L.	Pendry, L.
Evans of Temple Guiting, L.	Peston, L.
Farrington of Ribbleton, B.	Pitkeathley, B.
Filkin, L.	Plant of Highfield, L.
Finlay of Llandaff, B.	Prys-Davies, L.
Fitt, L.	Puttnam, L.
Gale, B.	Radice, L.
Gavron, L.	Randall of St. Budeaux, L.
Gibson of Market Rasen, B.	Rendell of Babergh, B.
Gilbert, L.	Richard, L.
Golding, B.	Rogan, L.
Goldsmith, L.	Rooker, L.
Gordon of Strathblane, L.	St. John of Bletso, L.
Goudie, B.	Scotland of Asthal, B.
Gould of Potternewton, B.	Sheldon, L.
Graham of Edmonton, L.	Simon, V.
Gregson, L.	Strabolgi, L.
Grocott, L. [Teller]	Sutherland of Houndwood, L.
Harrison, L.	Taylor of Blackburn, L.
Hayman, B.	Temple-Morris, L.

Thornton, B.	Watson of Invergowrie, L.
Tomlinson, L.	Whitty, L.
Triesman, L.	Wilkins, B.
Turnberg, L.	Williams of Elvel, L.
Turner of Camden, B.
Uddin, B.	Williamson of Horton, L.
Walpole, L.	Wilson of Dinton, L.
Walton of Detchant, L.	Winston, L.
Warnock, B.	Woolmer of Leeds, L.

[*The Tellers for the Contents reported 143; the Clerks recorded 142 names.]

Resolved in the affirmative, and amendment agreed to accordingly.

6.30 p.m.

[Amendments Nos. 9 to 14 not moved.]

Clause 24 [Regulations under section 23(6) relating to basic or higher amount]:

Baroness Sharp of Guildford moved Amendment No. 15:

Page 11, line 26, at end insert—

"( ) The Secretary of State may permit through regulations a block exemption from the requirements of the Competition Act 1998 (c. 41) for institutions collectively seeking to develop proposals in relation to the higher amount within a designated geographical area where he is convinced that such proposals contribute to the purposes of widening participation."

The noble Baroness said: My Lords, Amendment No. 15 relates to the Competition Act implications of this Bill. There has been some discussion of the degree to which universities would fall foul of the Competition Act 1998 if they sought to collaborate in raising fees. This is a probing amendment, which I put forward at the behest of the Association of Colleges, not of Universities UK or the universities, to explore how far collaboration between higher education institutions and further education colleges would fall foul of the law if they sought to collaborate over fees for higher education courses taught in further education colleges. Specifically, while the Competition Act, in Schedule 3, allows for exemption of agreements that have been made in order to comply with a legal agreement, the Enterprise Act 2002 allows for market investigation where it appears that the structure of the market or the conduct of suppliers or customers is harming competition. Therefore, potentially there could still be an investigation.

The Association of Colleges has raised three specific scenarios: first, where a higher education institution franchises a course at a further education college and requires the college to charge the same fee as the higher education institution; secondly, where a higher education institution charges for validating a course in a further education college, but where the course is delivered through the college; thirdly, where a higher education institution needs to set a fee level for a student progressing from a foundation course to an honours degree course. In its discussions with the Department for Education and Skills, the Association of Colleges has been assured that none of these scenarios pose problems.

In the first case, where a higher education institution franchises a course to a further education college, that would be treated like any other case of franchising, with the franchiser at liberty to set the price for the product it supplies. Agreement over price between the higher education institution and the further education college would be treated as normal business practice and would not fall foul of the Act. The Association of Colleges would like an assurance that this is the case even where prices are different. When, for example, the further education college sets its price considerably lower than the higher education institution price, in order to adjust to market circumstances, superficially it might appear that the two are in competition with each other, but in practice they have de facto agreed to segment the market and serve different parts of the market at different prices.

Secondly, in relation to the validation by a higher education institution of a course offered by a further education college, the decision over what to charge is for the further education college. Negotiations over the price to charge for the validation process, if this is done by the higher education institution, is a normal business transaction between the college and the higher education institution and does not entail, and should not entail, any agreement over the price charged to students for the course.

Thirdly, in relation to a student progressing from a foundation course to an honours degree, each institution sets its own fees, and while the higher education institution might wish to consider how much the student has already paid in fees in taking decisions as to what fees to charge, this information should come from the student and not from the college, and there is therefore no suggestion of collusion. Here again the Association of Colleges is less sanguine about this advice. It points out that foundation degrees are being developed jointly by higher education institutions and further education colleges precisely to ensure an easy progression, where appropriate, to a full honours degree. In such cases, they may well want to discuss the level of fees to be charged, so as to ensure an easy progression.

Finally, the advice from the department is that where a group of further education colleges collaborates to provide a set of courses at higher education level, whether the HEFCE money comes through one lead college, which in effect then becomes the franchiser, or to the separate colleges, there is no need for discussions about fee levels, and provided this is so, there is no contravention of the Competition Act. Equally, the Association of Colleges points out that where colleges have collaborated to develop a joint set of courses, it is most unlikely that they would not wish to discuss fees and it is in the interests of students that a common fee is charged.

The Association of Colleges therefore comes back to where it began with this amendment. Would it not be easier to have a block exemption from the Competition Act written into the Bill where colleges, whether further or higher education institutions, are collaborating to provide courses that widen participation and that en route inevitably involve some discussion and some collaboration over fee levels? I beg to move.

Lord Dearing

My Lords, I will be quick. I hope that the noble Baroness will not press this to a vote tonight, because it is fresh and we need time to reflect on the detail. My initial reaction to any creation of what in industry is often called an orderly market, and sometimes unkindly called a cartel, is that it is a bad idea. We should be highly sceptical. We should consider it on merit, but not in a hurry.

Baroness Ashton of Upholland

My Lords, I shall attempt to give some of the reassurances that the noble Baroness is looking for. If there are other specific questions that I do not address in what I say, I will be happy to facilitate discussions with the Office of Fair Trading if that would be of benefit.

I welcome the recognition of the importance of widening participation, which underpins the proposals for the reform of higher education funding. Many of the provisions in this Bill—notably the establishment of an Office of Fair Access and the introduction of variable fees—are intended to create a system that is accessible for all of those who have the ability. I do not believe that an exemption from the provisions of the Competition Act is required to enable providers of higher education to succeed in this aim. Indeed, many already take this goal very seriously and do extremely well in encouraging applications from groups that have traditionally been under-represented in higher education. The introduction of variable fees will simply provide institutions with an additional lever to encourage applications.

In many areas, partnerships and discussions between institutions can be positive and can benefit students. Generally speaking, providing that institutions do not exchange information that could lead to collusion over fee levels, it is likely that they can exchange information without falling foul of the Competition Act. For example, institutions may well discuss with each other how best to deliver the measures that they are taking to widen participation. These are examples of areas where collaboration can lead to clear benefits for the student.

However, collaboration on price is never in the best interests of the consumer. The noble Lord, Lord Dearing, referred to that in his comments. This case deals with students, and we must defend their position. Even with the best of intentions, the very fact that prices may be fixed at a level that suits a particular group of institutions in a particular area means that in some cases it will not be in the interests of the students. Of course, institutions will respond to the decisions made by others providing similar courses in gauging how to set their fee levels. Indeed, I see that as one of the real benefits of variable fees, but it would not be acceptable for fee levels to be agreed among providers in advance, in a secret deal, behind closed doors. Such an arrangement would remove the incentive for institutions to improve quality, since it would mean that they could get away with charging a particular price.

The noble Baroness specifically asked me about three examples. The first was about fee-setting for a higher education franchise within a further education college. Where a higher education institution takes a decision to franchise into a further education college, it can be legitimate for the higher education institution to require the further education college to charge the same fee. It is not unlike any other franchise arrangement.

On the question of validation by a higher education institution of a course delivered by a further education college, the decision on what fee to charge would rest with the further education college. Any negotiation would be between the further education college and the higher education institution over the price for the validation process, not the fee charged to the student for the course. There would be no need to exchange information on the fee levels for students.

Finally, on the progression from a foundation course to an honours degree, where a student has completed a foundation degree at a further education college, and wishes to upgrade it to an honours degree at a higher education institution, the higher education institution might want to consider how much the student has already paid in fees when taking any decision on what level of fee to charge for the honours degree. In that instance, the HEI would be using the information on fees paid by the student to inform its own decision on fee levels and, of course, could do so without discussing fee levels with the FE college.

As the noble Baroness said, there are two models of collaboration within a consortium: that is, a lead college that would receive funding from HEFCE and would pass some of it on to its members; or several colleges which would receive funding from HEFCE to deliver a jointly developed course. The first model is not materially different from the franchising arrangements that I have already discussed. The lead college would need to have a fee level in its access agreement, which would be the fee charged to the student.

In the second model, each college would need to check its own decision without discussing with other members of the consortium what level of fees to charge for the course. That ought not to present problems as they develop the course to be offered.

That addresses most of the key points. As I have indicated, I am happy to pursue any of the specific issues that the noble Baroness wishes to raise. On that basis, I hope that she will feel able to withdraw her amendment.

Baroness Sharp of Guildford

My Lords, I thank the Minister for her reply. This is a probing amendment. There are a number of issues that the colleges have legitimately raised, which would be worth pursuing with the Minister. But, for the moment, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 16 not moved.]

Lord Shutt of Greetland moved Amendment No. 17:

After Clause 24, insert the following new clause—

"REPAYMENT OF STUDENT LOANS FOR THOSE ENTERING SPECIFIED AREAS OF EMPLOYMENT

The Secretary of State may use his powers under section 186 of the Education Act 2002 (c. 32) (student loans) to repay in whole or in part the amounts payable on loans made in respect of fees charged under sections 23 and 24 of this Act—

1. (a) for qualifying persons who undertake specified categories of employment within the public sector, or
2. (b) for qualifying persons who undertake specified categories of employment in the not-for-profit sector of the economy."

The noble Lord said: My Lords, your Lordships will remember that in Committee we were in the territory of Amendment No. 17. I hope that this amendment is written in a way that is more acceptable. It seeks to provide for student loans to be repaid by the Secretary of State using the powers that exist under Section 186 of the Education Act 2002. I am grateful for the response given by the noble Lord, Lord Triesman, in Committee and for the letter from the noble Baroness, Lady Ashton, which indicated that Section 186 has already been used for people who are training to be schoolteachers.

It is my belief that as the Bill stands we have dealt with courses that last for more than three years. We are now looking at courses of three years' length. We are wondering what will be the state of the human condition in terms of how people will consider debt. I can see a situation where the parents of an 18 year-old will say, "You are going off to university. Make sure you get on a course that's going to lead you to employment that's going to give you a substantial salary".

Therefore, I can see that there will be circumstances where careers that do not lead to those substantial salaries and the courses that lead to those careers will not be filled, and that there will be a problem. Of course, we do not know. I can imagine that the Minister will respond by saying, "Well, we have got Section 186 so we can deal with that in due course". That may be the case, but there is no harm in relating Section 186 to a Bill where it may be needed, so that it is absolutely clear that if those circumstances arise there is an answer. I beg to move.

Baroness Carnegy of Lour

My Lords, this amendment is very strange. As I understand it, at present, any employer—private or public—can pay off a debt. In this case, the suggestion has been made that it should be only public sector employees who could have that benefit. Why are the Liberal Democrats so keen on attacking the employment possibilities of private employees as opposed to public ones? Could the noble Baroness tell us that when she replies?

Lord Wilson of Dinton

My Lords, on reflection, could the noble Baroness not consider that this is a rather dangerous statute to have on the statute book? It would convey to the Secretary of State a degree of personal patronage that does not seem to be related to any specific public purpose. Indeed, he might be someone who wishes to advance someone in a political career by giving them a necessary university background. This is an unnecessary clause and I hope that the House will not approve it.

6.45 p.m.

Baroness Seccombe

My Lords, the aim of this amendment is to exempt those working in public service jobs or the not-for-profit sector of the economy—namely, charities—where relatively low pay makes recruitment difficult. We strongly support the idea of public good and would like to highlight our unwavering admiration for those who work in jobs that achieve that. We certainly recognise the problems of pay within that sector. We pay tribute to the noble Baroness, Lady Sharp, who took note of our concerns in Committee and has now incorporated the not-for-profit sector as well as the public sector within the amendment.

However, we still have concerns about distinguishing between individuals because of the jobs that they do when public good can be achieved in so many ways in so many professions. We will listen with interest to what the Government have to say on the matter.

Lord Campbell-Savours

My Lords, I, too, support the amendment. Many decades ago, as a child my mother sat me on her knee and told me that the greatest contribution one could make in life was through work in the public sector. As time passed, I began to realise that very often people in the public sector are grossly underpaid for the contribution that they make. I would include university and further education lecturers in that sector, about which we had a debate earlier today. Of course, they are grossly underpaid. If we cannot deal with that matter directly through the Exchequer in order to give a reasonable settlement to the problem of university and further education lecturers' employment costs, it may be that that is the group who should be incentivised.

I support the amendment because there are groups in society who are underpaid. It seems wrong for a Labour Government to want to develop a regime that entices people to go into higher paid areas of employment if only so that they can afford the costs of higher education. We must have a system that allows people freely to consider whether they are prepared to take a low income in life because they are making a contribution to the charitable or public sector. Surely, people should be free to choose that. The regime that we are setting out has considerable costs—the question of the scale of debt—that are the subject of much dispute, which we have not dealt with today. That group, who potentially will face substantial debt, should not be placed in a position where they may wish not to take on the responsibilities that otherwise they would want to take on.

Lord Triesman

My Lords, this amendment seeks to encourage and safeguard applications to public and voluntary sector professions. It proposes that the Government would have the power to meet the cost of fee loan repayments for graduates entering those careers. The motivation for the amendment is obviously commendable. The noble Baroness, Lady Seccombe, made exactly the point that these are all professions for which we have a high regard, which was also the underpinning of the point made by my noble friend Lord Campbell-Savours. It was discussed to some extent in Committee, but I hope that I can give some reassurances on the key issues.

I said in Committee that we are committed to the employment of the highest possible calibre of staff in our public services, including those who work in the voluntary sector. However, I did not believe then and I do not believe now that primary legislation is the right way to achieve it.

I repeat my reassurance that across the whole public sector, departments will be seeking to ensure that the new arrangements for student funding do not discourage graduates from all backgrounds from entering training for, or taking jobs in, the public sector. As noble Lords are aware after my earlier reference, we will be commissioning a report next year to examine gateways into the professions, including how the public sector and the professions can sustain and improve recruitment opportunities for graduates.

That does not mean that employers in the public sector, any more than in the private sector, should be deterred from implementing strategies now to sustain recruitment and retention. It is open to them to do so, as the noble Baroness, Lady Carnegy of Lour, pointed out. The review is not intended to be prescriptive in its recommendations, rather it will examine and highlight the effectiveness of various interventions that employers have in place.

However, we already have measures to provide for some of the groups that I envisage are intended to benefit from this amendment. The noble Lord, Lord Shutt, mentioned one of them. I outlined the groups in detail in Committee: the teaching professions, nurses and other medical staff. I should also say, as my noble friend Lady Ashton made clear in a letter to the noble Lord, Lord Shutt, following our debate in Committee—and as has been said in another place—that we already have the powers to write off loans, and we are now doing that for teachers in certain priority subjects. The powers are contained in Section 186 of the Education Act 2002.

But it is fundamentally for employers, whether private or public, to decide for themselves what steps they should take to recruit and retain the right staff. They will need continually to review and update those matters by looking at their circumstances and making judgments. They can do that in a way that we are not in anything like the same position to do. Departments will seek to ensure that the new arrangements for student funding do not discourage graduates from all backgrounds entering the public sector.

On a technical point, as the noble Baroness, Lady Seccombe, and I believe the noble Lord, Lord Renfrew, pointed out in our last debate on this subject, it is now difficult to define what constitutes a public sector worker. The list of professions would be arbitrary and, I suspect, rather wide-ranging.

Turning to the repayment of student loans in the not-for-profit sector, I understand that this is aimed at encouraging graduates into this area. Graduates who choose to work in the voluntary sector may well be on low pay or none for a time, and it is precisely these graduates who should benefit most from our student support provisions. Individuals who want to dedicate themselves to voluntary service need not worry that their student loan is going to become unmanageable. In response to my noble friend Lord Campbell-Savours, I do not believe that people will be discouraged from entering an area for which they feel great vocational passion if they know that they are not going to have to repay the debt in a way that would be difficult to manage. The debt will simply retain its value in real terms and, while it might prolong the time taken to repay, there is a benefit in knowing that in any event it will be cancelled after 25 years. The terms of repayment are non-commercial, linked to income at a zero real rate of interest.

However, the main point must be this: it is unlikely that we can make judgments about the best opportunities for employment compared with employers who have to make those decisions in the real world. We have thought about this hard and sympathetically and I hope that the noble Lord will feel it appropriate to withdraw his amendment.

Lord Shutt of Greetland

My Lords, I thank the Minister for that response. As he indicated, there was some difficulty about how the public sector could be defined. The terms "public sector" and "not for profit" seemed to cover the point. I know that there is a question whether universities are themselves in the public sector, but I am certain that they are not-for-profit bodies because I do not believe that they pay dividends. Therefore I suspect that universities would be included in the not-for-profit sector.

However, the main aim of the amendment was to ensure that this debate is on the public record. It makes it clear that Section 186 of the Education Act 2002 exists and that the Government, if they are minded and there is a problem, have one way to address any shortage of opportunity by suggesting that people may well be able to take on courses and other related work. The opportunity is there. In withdrawing the amendment, I am glad that the debate has been recorded for the future.

Amendment, by leave, withdrawn.

Lord Shutt of Greetland moved Amendment No. 18:

After Clause 24, insert the following new clause—

"REPAYMENT OF FEES VIA VOLUNTARY SERVICE

(1) The Secretary of State shall use his powers under section 186 of the Education Act 2002 (c. 32) (student loans) to develop a scheme whereby fees charged under sections 23 and 24 of this Act may be repaid in whole or in part through the performance of voluntary service.

(2) Regulations under section 186 of the 2002 Act shall specify both the types of voluntary service eligible and the minimum period of service necessary to qualify for such repayments."

The noble Lord said: My Lords, this amendment concerns voluntary service. Previously, we had a helpful response from the noble Lord, Lord Triesman. This is perhaps more serious in that we can see a real problem arising here. Is it conceivable that youngsters will undertake a significant period of voluntary service if, at the end of it, they have to embark late on a career, take on a mortgage and so forth, and face debt repayment? That is a hill too steep to climb. Although the noble Lord, Lord Triesman, has indicated that there are powers under Section 186 of the 2002 Act to develop a scheme, this amendment would ensure it by stating: The Secretary of State shall use his powers

to put together such a scheme.

In moving this simple new clause to ensure that there will be a scheme, there is no plan to introduce it for a frivolous period of voluntary activity lasting perhaps only three months. I refer to significant periods of voluntary service. This kind of scheme would be very worthwhile for those taking on significant voluntary service. That is why I seek to add to the legislation a provision that the Secretary of State "shall" use powers to develop a scheme so that people know where they stand. They will then know that it is possible to undertake significant periods of voluntary service without feeling that, when they embark on a career later on, they will face too much debt. I beg to move.

Lord Campbell-Savours

My Lords, this is an excellent amendment with much for the Government in it. I can imagine a scheme being set up which Gordon Brown would rather like. I can think of a certain organisation that he would particularly want to foster: Voluntary Service Overseas.

Let us imagine a student coming out of university with a degree in development studies. He wants to go out and change the world and to make a contribution; and he wants to volunteer. He decides to go to a community in need in Africa. Alternatively, someone may want to develop the skills they have acquired in engineering. That person, too, may well decide to join Voluntary Service Overseas.

The question is whether, in deciding to make such a contribution, those students will be worried about the amount of debt outstanding in their names. We are talking about debt here. Predictions at this stage about the scale of that debt are not very precise. All sorts of predictions have been made, some from the Government which we have not gone into this evening, as well as from the National Union of Students and independent think tanks which believe that the level of debt presumed by the Government is far lower than is otherwise being forecast. The point is that the debt will be substantial, whatever the figure may be.

I am concerned to ensure that a critically important group of people willing to make a contribution overseas should not be put off in any way. My noble friend would be doing us a great service if her civil servants were to write to the Treasury and draw the attention of its Ministers to this amendment. I can imagine a scheme being set up that would lead the world in methods of repayment to incentivise our whole approach to overseas voluntary service.

7 p.m.

Lord Renfrew of Kaimsthorn

My Lords, I am interested in the amendment, but who do its proposers imagine will foot the bill? I support the amendment as long as it is not the universities. I was not happy with the two amendments that have been carried today because it seems to me that the universities will foot the bill and not the Treasury.

However, I welcome the amendment—or I think I do—because I take it that the implication of the Secretary of State using his powers is that the Treasury will foot the bill. I am glad to see the noble Baroness, Lady Sharp, and the noble Lord, Lord Shutt, nodding their heads. I have not seen my noble friend Lord Forsyth nodding his head, but he is nodding it now. I am delighted that my Front Bench is now endorsing the principle that the Treasury rather than the universities should pay for this welcome amendment, which I am happy to support.

Baroness Carnegy of Lour

My Lords, I was critical of the previous amendment, but I think this one is excellent; it has huge possibilities. I reiterate what my noble friend has just said.

Baroness Seccombe

My Lords, I support the amendment, to which my noble friend Lord Forsyth has added his name. It places a duty on the Secretary of State to use his powers to encourage young people to undertake voluntary service by making it a form of student loan repayment.

The debate on the pros and cons of top-up fees is not new to the House. It is well known that while we recognise the need to address the funding crisis in universities, the level of student debt that the Bill will effect is of great concern to us. Our concerns range from anxiety about debt acting as a deterrent to the young people we are trying to encourage to enter university, to the fact that it would saddle students with a significant financial burden at a time when they would be encountering the pressures that everyone faces at the start of adult life.

We also reiterate our admiration for those who work in, or offer their services to, the voluntary sector. We recognise the valuable work done in so many sectors where there never seem to be enough volunteers. Voluntary work benefits everyone and can be a life-forming experience.

We welcome the changes made to the amendment following the concerns expressed in Committee and are very happy to support it.

Baroness Blackstone

My Lords, perhaps I may seek clarification as to what the amendment really means. The noble Baroness, Lady Seccombe, referred to the "voluntary sector". The voluntary sector forms an enormous part of the public and private provision of all kinds of services in this country. Most people in the voluntary sector are paid for the work they do. It would not make any sense for the amendment to apply to anyone working in the voluntary sector, as the noble Baroness, Lady Seccombe, implied.

If I am right and the Liberal Democrat amendment concerns unpaid voluntary service, either overseas or in this country, I wonder whether there will be a problem with defining it. Will it be full-time or part-time? A great deal of volunteering is done not on a full-time basis but on a part-time basis.

Although I can see what lies behind the amendment, were it to be agreed to, the practicalities of implementing it would be enormous. For those reasons alone I suggest that this piece of legislation could not and should not take the amendment on board.

Lord Walton of Detchant

My Lords, in supporting the amendment in principle I should declare an interest: one of my granddaughters and her husband run a small company called www.workingabroad.com, which arranges attachments overseas for a large number of people, both young and old. Many people work in the Third World—where they themselves have worked—and I think that is greatly to the advantage of those individuals. They are not often remunerated for the voluntary service they give.

Who will evaluate the voluntary service given by such individuals in order to justify the repayment of their loans by order of the Secretary of State? It will require a certain amount of accountancy expertise to carry out that evaluation. However, having raised that query, I support the amendment in principle.

Lord Triesman

My Lords, I have just been wished good luck. Perhaps I will need it. If good luck fails me, I shall ask the noble Lord, Lord Walton, to tell me what followed the "www dot" so that I can make a suitable application for one of those jobs.

The amendment seeks to encourage graduates into voluntary service and calls upon the Government to meet the cost of the fee loan repayments for graduates entering these careers. It is, to be candid, another top-slicing amendment. The appeal—which I understand completely—is made once again for the Treasury to provide the money rather than the universities. I am forced to repeat—as my noble friend has done on a number of occasions today—that there is one pot of money; that is the reality. And if there is only one pot of money, accepting the amendment would amount to a top-slicing arrangement.

The Government have already taken a number of initiatives to encourage voluntary work through various volunteering initiatives. Indeed, it has been a passion of my right honourable friend the Chancellor of the Exchequer to do so. For example, the Russell commission, launched by the Home Secretary and the Chancellor on 17 May, will work towards a national youth volunteering strategy which will lead to more young people developing their skills and serving their communities. The commission will build on the wide range of programmes that the Government currently support. Ian Russell will be speaking to the department to ensure that the experience and lessons from existing programmes influence the commission's plans.

We want to put in place a set of flexible opportunities which match young people's lifestyles and aspirations. We believe that the Russell commission will ensure that volunteering by young people flourishes, bringing with it benefits not only for the individuals concerned but for the communities in which they volunteer. By promoting active citizenship, we can contribute to stronger and more cohesive communities.

Much of the volunteering involved will be part-time. It will call on people to provide their skills and abilities when they can, not in some predetermined way as may have appeared to be the case in the past.

The Department for Education and Skills is involved in this work. I shall make sure that its officials work closely with the commission and that they are aware that this amendment was discussed during the course of the passage of the Bill. This will ensure that any lessons in this element of the Bill are learnt. I am sure that noble Lords will share my interest in the outcome of the work of the commission. These are important steps in encouraging people to volunteer their time and their services for the benefit of the broader community.

As I said in Committee, we also have the Millennium Volunteer programme, to which more than 130,000 young people up to the age of 24 have pledged their time. They are not all full-time; they are not easy to compute; nevertheless they have pledged their time. There is also the Higher Education Active Community Fund, which enables the development of new volunteering opportunities by funding the administrative costs associated with arranging them.

The people who will take part, particularly young people, are precisely those who will benefit from the income-contingent repayment element of student loans. The points made by the noble Lord, Lord Shutt, and my noble friend Lord Campbell-Savours are very important, but the fact remains that if people do not earn more than £15,000 per annum they will not pay; if they earn more than £15,000,they pay only in relation to income over the threshold; and after 25 years the debt is cancelled. So those who wish to pursue these kinds of activities—and we greatly encourage them—most certainly would benefit from such arrangements. In summary, we are doing a great deal of work in support of the voluntary sector and encouraging graduates into this area, which your Lordships' House has applauded in the course of this discussion.

I am also sure that one of the major factors on which noble Lords will agree is that the great value of voluntary service is precisely that it is voluntary. I have been very struck by a number of the debates in your Lordships' House. There can be no more than a few places where so many people with such extraordinary experience of voluntary activity have been collected in one place, bringing the benefit of that experience to your Lordships' House.

I am also pleased to say that, asking about these matters in the community in which I live. I found that a significant number of younger people, those who are sometimes thought to be rather cynical about the values of community and politics, are involved in running children's playgrounds, visiting hospices and a wide range of other activities. Whether we reflect on the experience of those of us in this House or those younger people to whom I have just referred, one thing they have in common is that almost the last thing they think about is finance. Volunteering is about something very much more profound.

I do not for a moment believe that there is not benefit to the individual in the development of skills, compassion and commitment to community, but I am not sure that the motivation to pay off student debt will be high on the list of what makes people volunteer. In that light, it is extremely hard—almost impossible—to think about what voluntary work would mean and where the boundaries would lie.

As the noble Lord, Lord Shutt, mentioned, we already have the power under Section 186 of the Education Act 2002 to pay off student loans for prescribed categories of students. Interestingly, that is a "may" power, which sounds more voluntary than a "shall" power, which sounds rather more prescriptive. However, we believe that it would be right to use that power in appropriate circumstances, but not to make it a compulsory element—to move from encouraging volunteering to the kind of arrangement suggested. The great value of volunteering is, as I said, that it is altruistic.

On these grounds, I urge the noble Lord to withdraw the amendment. I believe that the Government have a good record on volunteering and, with the greatest respect, this amendment may not be the way to carry it further forward.

Lord Shutt of Greetland

My Lords, before I continue, I thank the House authorities for disabling the pigeons, budgerigars or whatever, which have been an impediment to our activities this last hour or so.

I thank all noble Lords who have supported the amendment in principle. I understand that there are one or two reservations, but nevertheless, we have had thorough support in principle.

It was indeed the intention that the Secretary of State should use his powers. Obviously, in doing so, the Secretary of State would have to talk to the Chancellor of the Exchequer. I was delighted that the noble Lord, Lord Campbell-Savours, believed that this was a full toss for this particular Chancellor.

I believe that voluntary is voluntary. There is a case for "voluntary" covering people who are at least given a few bob to feed themselves. In no way does "voluntary" mean people who are paid a significant salary from which they are able to save and start a career, having done so-called voluntary service. No, indeed—the amendment is about voluntary meaning voluntary.

The amendment comprises two simple proposed subsections. One suggests that the Secretary of State develop a scheme, the second sets out the types of voluntary service eligible and also indicates the minimum period of service necessary. All sorts of other matters would be included in a scheme, but it would be a scheme that people understood; if they decided to participate, they would know where things were going.

We must put ourselves into the position of 18 year-olds. They consider the debt future that life holds and whether they can stomach the idea of undertaking voluntary service when they will incur another debt if they go to university, and so forth.

I would like "may" to become "shall". However, I shall consider the comments of the Minister, who said that he will send a note to the Bill team. We may well return to this matter on another occasion, but in the mean time I thank the Minister for his comments and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 19 not moved.]

Clause 27 [Sections 22 to 26: supplementary provisions]:

[Amendment No. 20 not moved.]

7.15 p.m.

Lord Phillips of Sudbury moved Amendment No. 21:

Page 13, line 35, at end insert—

"( ) Student fees paid to relevant institutions pursuant to this Act shall in principle be additional to and not in replacement of state funding provided for and in respect of the teaching of undergraduate students at such institutions which funding will be at an annual real level per student not less than the average provided over the previous three years."

The noble Lord said: My Lords, I should like to ask the indulgence of the House in degrouping this amendment from the succeeding one. I have spoken to the noble Baroness, Lady O'Neill of Bengarve, who accepts this proposition. I have also mentioned this to the other Front Benches, so I propose, if I may, to deal just with Amendment No. 21, which stands in four names. None the less, I entirely support Amendment No. 22 in the name of the noble Baroness, Lady O'Neill, and others.

On 17 May, there was a full debate in Committee on this amendment, or one very like it, which was tabled in the same four names, representing the four corners of the House. In a debate lasting nearly an hour, 11 people spoke and, apart from the noble Baroness, Lady Ashton, everyone was strongly in favour of the amendment. After all, it did no more than put into the Bill the Government's oft-repeated undertaking not to reduce state funding for university education, thus ensuring that the fees charged to students would be new, additional funding for universities.

Those of your Lordships who were present then will remember the striking contribution made by the noble Lord, Lord Baker of Dorking. When Home Secretary, he introduced the national lottery. He gave the same sort of unqualified undertakings then as are being given now. As he remarked, those undertakings were forgotten as Ministers—even in his own government—and governments changed. As he put it, such pledges are written in sand … So pledges are not sufficient—[Official Report, 17/5/04; col. 525.]

In very generously responding to that debate, the main argument adduced by the Minister against the amendment was that, we do not believe that it is right to tie the hands of governments present and future for an unspecified time, which would be the impact of this amendment".—[Official Report, 17/5/04; cols. 525–28.]

That carries the clear implication that the unqualified undertakings of additionality which the Chancellor of the Exchequer, Secretary of State for Education and the noble Baroness have all repeatedly made are subject to one very leaky qualification. Exactly what circumstances would justify the Government in untying their own hands? The moment the Government answer that is the moment when the rationale for this highly contested Bill slides into incomprehension, verging on farce. What, then, has the legislative equivalent of the battle of the Somme been all about? Is it right that the Government can slide off the hook while, in the same circumstances, the poor students will continue to be impaled on their fee obligations?

The other riposte to the Government's case is that this is an exceptional Bill dealing with an exceptional impost on students. If, for reasons of economic crisis or whatever, the Government wish to abandon additionality, then they can come back to Parliament, as they do when they amend every other taxation measure.

Amendment No. 21 is a truly partnership amendment. It has been greatly helped by those who spoke on 17 May, and others, so as to be recast in the form in which it appears tonight. It would remove the reference to the provision of funding "directly and indirectly", which was felt to be too vague. It also eliminates the EU additionality formula; namely, that the Government are committed, subject to exceptional macro-economic circumstances".—[Official Report, 17/5/04; col. 517.].

I suggested in Committee that many of your Lordships would find that a pretty unappealing way of dealing with the problem, and so it proved. Therefore, in order to deal better with the same issue, I have included in the amendment reference to a three-year rolling average of real government spending on universities and have made it clear that that relates only to the teaching of undergraduates and not, for example, to research. That allows flexibility and does not discourage a government from being generous in one year for fear of setting a binding precedent for future years.

I end by urging the Government to accept what is clearly the will of the vast majority of those most engaged with the university sector in this House. The circumstances of the amendment seem genuinely to be the exception that proves the rule and I hope that the Government, however reluctantly, will accept the desirability, if not the necessity, of the amendment. I beg to move.

Lord Forsyth of Drumlean

My Lords, I rise briefly to support the noble Lord, Lord Phillips. He has made the case eloquently. I have only one point to add: we have been here before. An amendment on additionality was passed by this House on the previous occasion when fees were introduced. It went to another place and Ministers said, "Don't worry. It isn't necessary. Don't bind our hands", or words to that effect. They said that fees would be additional income. We do not need to look in the crystal ball; we can read the book. The assurances were given previously, with the effect that the money was clawed back. I know that the Minister will say that that was because the Tories were planning their reviews, but the money was clawed back. The assurances that were given were not honoured. I hope that the Minister has listened to the detailed words spoken in debates in the House and will accept the amendment.

Baroness Sharp of Guildford

My Lords, my name is not attached to the amendment, but I make it clear that that was because we felt, as the noble Lord, Lord Phillips, said, that it was an advantage to reflect the views of the four corners of the House. The amendment is tabled with the full blessing of the Liberal Democrat Front Bench.

Lord Dearing

My Lords, during the debate, we have, with some compassion, reflected on the financial obligations that we are asking young graduates to accept at a time when they will be entering the world with a hugely inflated level of house prices. We owe it to them to give them complete assurance that the money that they are being asked to provide will go for the benefit of higher education. We must owe that to them and see them right.

I shall refer briefly to both amendments. I welcome the changes that have been made to the drafting of Amendment No. 21 since it was first tabled. I shall add just one comment, which applies also to Amendment No. 22. Unless we have a precise definition of "teaching", we have nothing against which we can hold the Government to account. I hope that in its further refinement it might be explicitly related to teaching.

I am prepared to accept and support either amendment. If there were any indication from the Government that one had a basis for acceptance, I would rapidly move towards it.

Baroness Warwick of Undercliffe

My Lords, as I said in Committee, this issue brings us to the very heart of the Bill. If the additional funding for which the Bill provides through variable fees is offset by reductions in public funding, we shall be no closer to solving the financial crisis in university funding.

As other noble Lords have said, the noble Lord, Lord Phillips, deserves great credit for his perseverance on this issue. At each stage of the Bill, he has brought forward a proposal for ensuring that fees are truly additional and he has overcome each obstacle placed in his path.

Like my noble friend Lord Dearing, I argued in Committee that it was essential to find an agreed definition of the unit of public funding per student. The various definitions of that unit have led to disputes every year about the level of funding. I am pleased to tell your Lordships that, since then, discussions have begun between Universities UK and the Government on a common definition, which will be published annually. I hope that this will underpin the debate on university finance in the future. If public funding is reduced, there will be no statistical arguments for the Government to hide behind.

The Minister, the right honourable Alan Johnson, wrote to me yesterday outlining how this might be taken forward by his department and the Higher Education Funding Council. However, the amendment tabled by the noble Lord, Lord Phillips, binds the Government even tighter and I will therefore support it should he choose to press it to a vote.

Perhaps, like the noble Lord, Lord Dearing, I may comment on the amendment tabled by the noble Baroness, Lady O'Neill. It has the same merit in that it seeks to ensure that fees are truly additional and that student places are fully funded. However, I have a major concern in that in suggesting cuts in student numbers the amendment does not state exactly how they may be determined or managed. Obviously, universities would have great concerns about that. It is a complex issue and I am not sure it could be solved through primary legislation. I would therefore have difficulty supporting the amendment, but it raises issues that the Government must address.

Lord Rix

My Lords, as Chancellor of the University of East London, I trust that the additional funds which students will be providing for their own education are used to enable vice-chancellors to support general student experience and not to enable the other chancellor—the Chancellor of the Exchequer—to support general state expenditure.

Baroness O'Neill of Bengarve

My Lords, I rise only to support most warmly the amendment tabled by the noble Lord, Lord Phillips. I have checked that there is no pre-emption, but I shall not speak to my amendments as they have been degrouped.

Baroness Howe of Idlicote

My Lords, sadly, I did not have the opportunity of hearing what everyone said in Committee because I was out of the country, but I have of course read it. I support both amendments and have added my name to that tabled by my noble friend Lady O'Neill.

Those of us who support the Bill, despite some grave reservations, do so in the full realisation that the proposed top-up variable fees will not immediately bring in sufficient resources to provide the equipment and salaries discussed earlier today which will enable UK universities once again to compete at world-class level. However, it will be a start in giving universities far greater independence and freedom in how they raise and spend their own resources. But clearly that belief would be gravely undermined if the Government—any government, and we have heard of previous scenarios—reduce their current share of university funding in real terms year on year.

As the noble Lord, Lord Phillips, said, the Government have committed themselves to doing no such thing. Therefore, what possible objection could there be to putting this important provision on the face of the Bill?

Lord Sutherland of Houndwood

My Lords I, too, congratulate the noble Lord, Lord Phillips, on the subtlety of the amendment. It is important that an amendment of this kind—I would happily support this one or that tabled by my noble friend Lady O'Neill—is included in the Bill. The reason is that the Bill is significantly drafted to provide additional funds to universities and the record is clear; the money can begin to be sidelined. The fear is that without a guarantee of this kind it would be.

7.30 p.m.

Baroness Blackstone

My Lords, I wish to raise one issue. The noble Lord, Lord Forsyth, is having a conversation, but my point relates to what he said earlier when. We have had this little spat before. He still refuses to accept what I said, but I am going to repeat it.

It is not true that the Government clawed back the additional funding that came from fee income last time round, when the scheme was introduced. The Government provided substantial additional public funding from the taxpayer to go to universities, in addition to the money that was earned by the universities from the introduction of fees. Indeed, the Government were able to reduce the efficiency savings required by the Treasury from 6.5 per cent, which was the position when the noble Lord's party was in government, to the 2 per cent recommended by the noble Lord, Lord Dearing, in his report. That represented a substantial amount of additional public funding. Moreover, for a short period, the Government were able to provide an increase in the unit of resource. Regrettably, that did not last. However, it is not accurate to say that the previous Labour Government clawed back the money provided from the additional fee income.

I would not want anyone to decide how they voted on this amendment on the basis of what the noble Lord said, because it was not entirely accurate. I hope that he and the House will accept that.

Lord Campbell-Savours

My Lords, in the light of the honesty expressed in the statement made by my noble friend, I see every reason why the Government would want this amendment to be included in the Bill. Therefore, if there is a Division, I shall certainly support it.

Lord Winston

My Lords, I, too, shall listen extremely carefully to what the Minister says. However, like so many noble Lords who spoke at Second Reading. I feel that it is very important that the Government maintain the commitment. The universities, as we have heard constantly throughout the day, are very short of money, and this is a minimum requirement to ensure that the legislation is acceptable.

Baroness Ashton of Upholland

My Lords, we debated these issues at great length in Committee, as the noble Lord, Lord Phillips, said. We considered the extent to which it was appropriate for legislation to tie the hands of future governments and prevent them determining their spending priorities in the light of circumstances. I argued then, as I shall argue again this evening, that primary legislation is not the right place for a financial commitment of this nature.

I appreciate the strength of feeling in your Lordships' House. However, I should say to the noble Lord, Lord Forsyth, as I think he would recognise, his position in support of the amendment is given in light of the fact that the Bill would not be a way in which a Conservative government would pursue education policy in future. Noble Lords may believe that all my words about the track record of this Government in trying to support the sector are true, and that somehow by voting for the amendment they would tie the hands of a future Conservative government. However, I do not believe that would be the case, as I do not believe that a Conservative government would go in this direction on education policy.

When the noble Lord, Lord Phillips of Sudbury, described the amendment in Committee, he compared it to the provisions of a Finance Bill. It is of course true that a Finance Bill binds the hands of successor governments, but they are an annual event and can therefore readily be changed to reflect the priorities of the government at the time. This amendment would inevitably tie the hands of a government for an indefinite period. Of course, that is precisely the point of what the noble Lord is trying to achieve. However, I question whether that is a reasonable objective.

The amendment goes further than looking at the funding for higher education, by ensuring that the new fee income is additional and guaranteeing that public funding for higher education cannot decrease in future. The previous amendment, which we discussed in Committee, included a phrase about exceptional macroeconomic circumstances. I expressed some concern about what that might mean in practice for higher education. I note that the phrase has now disappeared. While that eliminates some of the definitional uncertainty, it leaves the amendment even harder to implement. Even if there were some major and significant financial pressures on a government, the effect of the amendment would be that higher education above all other priorities would be protected.

Our debates in Committee also touched on some of the other practical difficulties inherent in the amendment. The noble Lord, Lord Dearing, highlighted some unintended consequences that might arise. For example, although the current version of the amendment talks of the average funding over the previous three years, a government might still be very reluctant to provide a one-off injection of funding to meet someperceived need: that would increase the average and could therefore be unsustainable in the future. The result could be that the funding might be kept at the lowest level permissible under the Act, irrespective of whether additional funding might have been available in any one year. That cannot be in the interests of the sector.

I also raised the issue of whether the amendment would apply at the level of the whole sector or whether it would need to apply at an institutional level. If it is the latter, then noble Lords may readily see that there would be significant practical difficulties, not least in the fact that funding could not be amended if the pattern of provision at an institution changed.

There are also issues about the flexibility that the sector might enjoy. At present, HEFCE allows institutions to change their student numbers and pattern of provision within tolerance bands. If the amendment were passed, and we were bound to ensure that the unit of funding remained at a certain level, we would need much more stringent control over student numbers, and indeed student numbers within specific funding categories. Otherwise, we could find ourselves in breach of the Act if, in good faith, we set our funding at a level which would ensure that the requirement was met, but the sector subsequently over-recruited or recruited into more expensive courses than anticipated.

We need to bear it in mind in thinking this through that universities make offers to students for places based on their predicted rather than actual grades and institutions are obliged to meet those offers. Even with the best intentions, therefore, it would be difficult for an institution to hit exactly a target for student numbers. The complexity and unfairness that the proposal would introduce would be unmanageable.

I want to pick up another couple of points from Committee that I did not deal with. I can confirm for my noble friend Lady Warwick that the Chancellor's Budget Statement about how the funding per student will increase over the spending review period did not include the student support provided to those students. This is good news for the sector. We are committed both to increasing the unit funding paid to institutions and to increasing student support, where the new package of grants and the payment of loans for variable fees will be of significant benefit to students. In other words, they are not at the expense of one another.

I can also confirm that, following my discussion with the noble Lord, Lord Phillips, for which I am grateful, and further discussions with Universities UK, my right honourable friend the Minister for Higher Education has written to Universities UK proposing the establishment of a working group to produce a new definition of unit costs. That would, of course, be published in the annual departmental report in the usual way. That may go some way to considering the issues that the noble Baroness, Lady O'Neill, would have raised if she had spoken to her amendment. It would provide a clear means of demonstrating the additional funding being put by the Government into the sector over and above tuition fees. In other words, it deals with the issue of transparency, which noble Lords have been concerned about.

The Government's commitment to the future funding of higher education is clear. I cannot accept the amendment or offer to bring back an amendment of my own, but I can confirm again that income from tuition fees will be additional and that with Universities UK we shall develop more transparent accounting and reporting arrangements, which would enable your Lordships' House to see how we have delivered against those commitments. On that basis, I ask the noble Lord to withdraw his amendment.

Lord Phillips of Sudbury

My Lords, I am grateful to the Minister as always for her politeness, clarity and attempt to bridge the unbridgeable. It is pretty obvious that this is a whole-sector amendment and not an institution-by-institution one, so that query on her part can be laid to rest. Also, I fail to understand why the annual Finance Bill could not have a clause in it amending this formula if the particular circumstances prevailing required it. Therefore, it is simply not the case that the amendment, if brought in, would be there forever.

The Minister talked of complexity and unfairness. There will be unfairness if the Government or any future government resile on the undertakings given or otherwise wheedle their way out of them because they have other fish to fry and other priorities to pursue. It may be a factor in our low level of GNP funding of higher education that we do not have something like this amendment in our legislation. I believe that the provision, while not perfect, would work and could be refined over time. It should be in the Bill, for all the reasons that noble Lords have given. Therefore, I wish to test the opinion of the House.

7.39 p.m.

On Question, Whether the said amendment (No. 21) shall be agreed to?

Their Lordships divided: Contents, 98; Not-Contents, 88.

Division No. 4
CONTENTS
Addington, L.	Carnegy of Lour, B.
Alderdice, L.	Cohen of Pimlico, B.
Alton of Liverpool, L.	Colwyn, L.
Arran, E.	Courtown, E.
Astor of Hever, L.	Craigavon, V.
Attlee, E.	Crathorne, L.
Avebury, L.	Dean of Harptree, L.
Barker, B.	Dearing, L.
Bradshaw, L.	Dholakia, L.
Bridgeman, V.	Dundee, E.
Bridges, L.	Falkland, V.
Brittan of Spennithorne, L.	Forsyth of Drumlean, L.
Brookeborough, V.	Fraser of Carmyllie, L.
Brougham and Vaux, L.	Garden, L.
Buscombe, B.	Goodhart, L.
Butler of Brockwell, L.	Greengross, B.
Campbell-Savours, L.	Hamwee, B.

Harris of Richmond, B.	O'Neill of Bengarve, B.
Higgins, L.	Park of Monmouth, B.
Hodgson of Astley Abbotts, L.	Peel, E.
Hooper, B.	Perry of Southwark, B.
Howe of Idlicote, B.	Phillips of Sudbury, L. [Teller]
Inge, L.	Puttnam, L.
Jenkin of Roding, L.	Rawlings, B.
Jopling, L.	Redesdale, L.
Kimball, L.	Renfrew of Kaimsthorn, L.
King of Bridgwater, L.	Rix, L.
Laird, L.	Roper, L.
Layard, L.	St John of Fawsley, L.
Lindsay, E.	Scott of Needham Market, B.
Linklater of Butterstone, B.	Seccombe, B. [Teller]
Livsey of Talgarth, L.	Selborne, E.
Lyell, L.	Sharp of Guildford, B.
MacGregor of Pulham Market, L.	Shutt of Greetland, L.
	Skelmersdale, L.
McNally, L.	Smith of Clifton, L.
Maddock, B.	Stewartby, L.
Maginnis of Drumglass, L.	Sutherland of Houndwood, L.
	Thomas of Walliswood, B.
Mancroft, L.	Vinson, L.
Mar and Kellie, E.	Wallace of Saltaire, L.
Masham of Ilton, B.	Walpole, L.
Miller of Chilthorne Domer, B.	Walton of Detchant, L.
Monson, L.	Warwick of Undercliffe, B.
Montrose, D.	Watson of Richmond, L.
Mowbray and Stourton, L.	Wilcox, B.
Noakes, B.	Williams of Crosby, B.
Northover, B.	Williamson of Horton, L.
Norton of Louth, L.	Wilson of Dinton, L.
Oakeshott of Seagrove Bay, L.	Winston, L.

NOT-CONTENTS
Ahmed, L.	Gould of Potternewton, B.
Alli, L.	Graham of Edmonton, L.
Amos, B. (Lord President of the Council)	Grocott, L. [Teller]
	Hayman, B.
Andrews, B.	Hilton of Eggardon, B.
Archer of Sandwell, L.	Hogg of Cumbernauld, L.
Ashton of Upholland, B.	Hollis of Heigham, B.
Bach, L.	Howarth of Breckland, B.
Bassam of Brighton, L.	Howells of St. Davids, B.
Blackstone, B.	Hoyle, L.
Brennan, L.	Hughes of Woodside, L.
Brooke of Alverthorpe, L.	Hunt of Chesterton, L.
Brookman, L.	Hunt of Kings Heath, L.
Brooks of Tremorfa, L.	Janner of Braunstone, L.
Burlison, L.	Jones, L.
Carter, L.	Kirkhill, L.
Chandos, V.	Lea of Crondall, L.
Clarke of Hampstead, L.	Lipsey, L.
Clinton-Davis, L.	McIntosh of Haringey, L.
Corbett of Castle Vale, L.	MacKenzie of Culkein, L.
Crawley, B.	Mallalieu, B.
Davies of Coity, L.	Massey of Darwen, B.
Davies of Oldham, L. [Teller]	Merlyn-Rees, L.
Desai, L.	Mitchell, L.
Dixon, L.	Morgan of Huyton, B.
Donoughue, L.	Nicol, B.
Dubs, L.	Patel of Blackburn, L.
Elder, L.	Paul, L.
Evans of Parkside, L.	Pendry, L.
Evans of Temple Guiting, L.	Pitkeathley, B.
Farrington of Ribbleton, B.	Plant of Highfield, L.
Filkin, L.	Radice, L.
Gale, B.	Randall of St. Budeaux, L.
Gavron, L.	Rendell of Babergh, B.
Gibson of Market Rasen, B.	Rooker, L.
Gilbert, L.	Scotland of Asthal, B.
Golding, B.	Simon, V.
Goldsmith, L.	Stone of Blackheath, L.
Gordon of Strathblane, L.	Taylor of Blackburn, L.
Goudie, B.	Temple-Morris, L.

Thornton, B.	Wilkins, B.
Tomlinson, L.	Williams of Elvel, L.
Triesman, L.
Turner of Camden, B.	Woolmer of Leeds, L.
Whitty, L.	Young of Old Scone, B.

Resolved in the affirmative, and amendment agreed to accordingly.

Lord Triesman

My Lords, I beg to move that further consideration on Report be now adjourned. In moving the Motion, perhaps I may suggest that the Report stage begin again not before 8.50 p.m.

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