Higher Education

HC Deb 18 September 2003 vol 410 cc311-56WH

[Relevant documents: The Future of Higher Education-Fifth Report from the Education and Skills Committee, Session 2002–03, HC 425–1, and the Government response thereto, Cm 5932.]

Motion made, and Question proposed, That the sitting be now adjourned.—[Ms Bridget Prentice.]

2.30 pm

Mr. Barry Sheerman (Huddersfield)

It gives me great pleasure to introduce this debate on the report of the Select Committee on Education and Skills on the White Paper, "The Future of Higher Education".

As most of us know, the Select Committee system is very important. I believe that it involves some of the best activities that we parliamentarians indulge in. It is a great privilege to be the Chairman of the Education and Skills Committee. Its members are a good team, and we pride ourselves on the quality of our reports, particularly the one we are debating today.

Some of our colleagues may not know that if one wants to secure a debate of this nature, one must go to the Liaison Committee, which consists of the Chairmen of all the Select Committees, and fight for it. I was allocated a day to debate higher education, but the Government subsequently postponed the White Paper's publication considerably, and we had to suffer the indignity of the Government stealing our debate for their purposes. By being dogged, we managed to get it back, which we are pleased about. It was hard fought for.

We believe that the report is one of our best, although we are proud of all of them. The Government's response was disappointing, but we have seen some movement since they published that response. I will reveal how we reached our conclusions and recommendations.

Select Committees work in a particular way, and that involves taking evidence. In our higher education investigation, we asked for evidence and invited people to give oral evidence. We assiduously sought comment from all the interested parties. Anyone interested in higher education could write to us. Indeed, when some higher education institutions did not respond, we wrote and wrote again to ensure that none was left out. When there was insufficient time to hear all the oral evidence that we would have liked to hear, we got on trains and went to institutions such as the universities of Edinburgh, Belfast, Oxford and Cambridge, sometimes as a whole Committee, and sometimes individually to get a fair reflection. We did that work because we wanted to find out what those involved in higher education thought of the White Paper.

We were so assiduous because we believed that the development of higher education is at a pivotal point. We believe that we have an opportunity to ensure the right quantity and quality of investment in education, and that there would be serious consequences for the nation if that opportunity were missed.

In the report summary, we stated: we examine the proposals in the White Paper The Future of Higher Education and the implications of the large investment in higher education over the next three years, with spending rising from around £7.5 billion in 2002–03 to almost £10 billion in 2005–06—a real terms increase of more than 6 per cent. each year. We believed that our aim was to make a positive contribution to improving the Government's White Paper. We also said: Universities are vital to the future successful development of the potential of individuals and society as a whole. They are at the very heart of the maintenance of an intellectually vigorous and civilised society. They are also essential to the future prosperity of our nation. Too many Governments and politicians tend to emphasise the second and not the first of those priorities. Higher education is about the maintenance of an intellectually vigorous and civilised society. Of course, it is also about the future prosperity of our economy and our country.

We reminded the Government that universities in the United Kingdom are basically very successful. If one looks at the spending pattern over recent years, one wonders how we have maintained a higher education system renowned for its quality. There is no question but that it is so renowned: we can judge that from who wants to come here to study. Most people in the world, when they are choosing somewhere to study at undergraduate or postgraduate level, choose the United Kingdom. Others might query whether the Ivy league universities in the United States are considered. However, the Ivy league is a small pro portion of 3,000 higher education institutions there, and a very small proportion of those are attractive to incoming students from all over the world.

Our universities appeal across the piece. If anyone is of the view that it is only the likes of Oxford, Cambridge, the London School of Economics and Warwick that attract foreign students, they should dismiss that idea from their mind. Let us look at the facts. As we increased our knowledge and took evidence for the investigation, we found how little was known, and how many misconceptions there were about the nature of British higher education. It is still of high quality. We believe that we uncovered the secret of British higher education—its unique selling point, to use a commercial term—and that is excellence. That excellence is founded on the link between research and teaching in the same institution.

Running through our report was the view that the Government did not fully understand that this country's higher education system will be put in peril if we start to think that it is convenient to have some teaching universities and some research universities. The real strength of our system makes it much finer and more attractive than those of continental Europe, where so much undergraduate teaching is divorced from research; research has been spun off into doctoral and post-doctoral research institutes, and undergraduate teaching takes place in large classes and lecture groups with little personal tuition and contact, and with higher drop-out rates and poor retention.

The United Kingdom has not gone down that route, although that is surprising if one looks at the 1990s and the disaster of funding in higher education. I do not want to make any political points, but the previous Administration reduced funding in higher education by something like 36 per cent. At the same time there was a vast expansion in higher education—and let us welcome that fact—but it was done very much on the cheap. It was up to the incoming Government in 1997 to put that right. They were quite slow to do so—let us be honest about that—but they had different priorities in education. The Government came in on a slogan of "education, education, education". Let us give credit where it is due: from 1997 to 2003, school capital increased by 80 per cent., for secondary education it increased by 69 per cent. and for under-fives by 60 per cent. Overall school spending has increased by 35 per cent. Even further education and adult education has had an increase of 38 per cent. By contrast, higher education has increased by 6 per cent. That puts matters in context.

To be fair, I shall mention the White Paper's foreword's reference to a much greater expansion in the next three years, from £7.5 billion to £10 billion—a real terms increase of 6 per cent. per year. However, it is important not only to put the quality of British higher education in context, but to explain the background. There has been a long period of famine, but with a great expansion in numbers, and there is no doubt that whatever party came to power in 1997 needed to make a choice about what was to happen to the world of higher education, on which so much of our country's future—its economy and society—depends.

We found some good things and some bad in the White Paper. However, we found something else as we took evidence over many weeks from Ministers, though since the Minister for Lifelong Learning, Further and Higher Education is new, we did not have an opportunity to grill him—his turn will come. We met the Secretary of State and many leading educationists. We found that the priorities were not all in one area. From the newspapers, one would think that the White Paper and our report were about only one issue—student finance. That is not so. A much broader brush is being applied. The document is about the future of higher education across the piece.

The people whom we interviewed or who communicated with the Committee seemed united by the question of research. The White Paper contains a commitment to a greater focus on and concentration of research in a few institutions. To be fair, the Government did not take the most extreme view, which is associated with the rector of Imperial college, London, Sir Richard Sykes. He is a fine man whom I have known for years, and who comes from Huddersfield. He takes a robust view of the future of higher education. I asked him whether he meant that he wanted a concentration of research in a handful of universities. He said yes. I asked whether he meant a handful, rather than five, six, seven or eight. No, he wanted five.

Many members of the Committee were worried about the notion of such a concentration of research, which would mean its being mainly in London and the south- east. There would be no regional spread, which would be of great concern to the many of us who want a vigorous regeneration of the regions and know how important higher education is to that.

There is a belief in the Government that greater concentration of research is the way to go. We said that they should think again, and we thought that their response to us was a little insipid. We made our case very strongly, and they did not really give an inch. We all know that there is an argument for higher concentration of research into big science, but only a few universities have the capacity to be in the big science game. Of course, good funding is necessary for those universities. However, there is much else that is important. Evidence that we took, even from the university with the smallest research budget, led us to a certain feeling about the matter. The vice-chancellor of the university of East Anglia made a relevant point.

Dr. Ian Gibson (Norwich, North)

A fine man.

Mr. Sheerman

Indeed, he is, and my hon. Friend says so for obvious reasons. A representative of a fine university was speaking up for the Anglia polytechnic university and saying that it has an extremely small research budget. However, it is important both psychologically and in that it keeps the flame of research alight. One can list universities that receive little research funding from the Government, but to which it is very important indeed.

To reintroduce—almost by the back door—a binary system of universities that are no longer deemed to be capable of research would be dangerous, particularly taken with the fact that one of the wonderful things about higher education in Britain in recent years has been its degree of turbulence. There is movement; we have a league system and institutions can move both up and down, as evidenced by The Sunday Times ranking of universities last Sunday in which York university was sixth and deemed the university of the year. Think of where York, Warwick or Bath—and any number of institutions that have developed into major players in research—started. Some universities are focused and some are not, on the big, big science game, but there has been a refreshing shake-up. On the other hand, we might also observe that universities that have rested on their laurels have sunk down the ratings.

Dr. Gibson

Does my hon. Friend agree that some of the most salient discoveries in science have been made at universities that are not in what he describes as the big league for science? One thinks of DNA and its forensic uses at universities such as Leicester, which is not in the top six, but is full of individuals who are exciting, enthusiastic and pretty bright.

Mr. Sheerman

I agree with my fellow Select Committee Chairman—the Select Committee on Science and Technology in his case—who knows a great deal about the subject and is a fine researcher. He will agree about getting the balance, keeping the flame alight and enjoying the mobility of a league system at the same time as preserving high investment in big science where such capacity is needed. There is nothing wrong with the Government's arguments about clustering and co- operation. The message from the Committee was, "If you believe in investment in big science, invest in it, but do not rob Peter to pay Paul."

On funding, the Government told us that they were confident in what they were doing and did not believe that we were right. That was a disappointment. However, according to press reports of summer meetings of the Higher Education Funding Council for England and others, there is more refreshing news. I shall be interested to hear what the Minister says, because one senses that, perhaps, the Government have listened to the vice-chancellors, the Russell group and the vast majority of those who gave evidence to the Committee and have realised that the right course might be to achieve a balance that is slightly different from that in the White Paper.

An important area, on which we spent some time, was the Government's attitude to pay. That was where we felt that, to put it politely, the Government were using weasel words. They know that if a certain percentage of gross domestic product is put into higher education it should be used to pay higher salaries. If it is not put in, that cannot happen. One of our findings was that salaries in higher education had been too low for too long. All the evidence demonstrated that it is particularly acute in two areas: keeping bright young men and women doing their PhDs and encouraging them to stay on to become academics. During that transition period and in the first five to eight years of a career, salaries were very poor indeed. That cannot continue without an overall decline in the quality of the teachers and researchers entering higher education. We stated strongly that universities were their staff—the teachers and researchers—who must be looked after better.

The average salary of a school teacher is about £25,000, and it is about £23,000 for a university teacher. This is an interesting state of affairs. I told the Association of University Teachers, of which I am, vestigially, still a member, that I welcome its public spiritedness, because it does not really believe in any source of income for higher education other than from the income tax payer, but I left my profession in higher education in 1979 and there has, since then, been no increase in pay in real terms. I suggested that that was not quite the success that some university teachers might have wanted. Low pay in universities is no good to anyone, and it is not good enough for the Government to say that it is up to the institutions to decide how much they pay. With a salary increase of only 6 per cent., a vice-chancellor knows the limitations on the university's ability to pay, so the Government must accept responsibility and offer decent pay to the men and women who run our universities.

Dr. Gibson

I could say that the thing to do is to become an MP, as one would almost double one's salary, but that may be too crude a solution. Would my hon. Friend apply his comments not only to full-time academic staff, but to the men and—mainly—women in universities on short-term contracts, who sometimes have 20 such contracts in their academic lifetime and who suffer great uncertainty about whether the job will continue from one year to another? Some universities have 40 per cent. of their research staff on such contracts. What is my hon. Friend's view about that?

Mr. Sheerman

My hon. Friend knows my view, although the Select Committee did not take evidence on the point. I am not against a balance between short-term and longer-term contracts—universities have always had short-term contracts for certain purposes—but things have gone too far in the wrong direction. I mostly agree with my hon. Friend.

I hope that the Minister will return to the subject of university pay. It is not good enough to say that universities have expanded since 1997 but that there is no shortage of applications. There are shortage subjects at university. I believe, although I am willing to be corrected, that not a single UK student is studying for an economics PhD in the UK. That is astonishing. It is very difficult to get teachers for shortage subjects.

I am a governor at the London School of Economics. Things may be all right for institutions such as Oxford, Cambridge and several others, which have the capacity to pay the market rate for whatever professor they need. It is not all right, however, that a large number of other people are working at a much lower rate of pay.

Mr. Kelvin Hopkins (Luton, North)

My hon. Friend talks about shortage subjects, which is a matter of concern, especially when one considers national needs for educational skills. Does he agree that there is a role for Government in trying to decide the proportion of students who should study particular subjects where there is a national shortage and where it is very important that we keep abreast of the rest of the world?

Mr. Sheerman

I agree with my hon. Friend. He and I have spent much time discussing these issues, and we agree on many of them.

Mr. Andrew Turner (Isle of Wight)

Was there any evidence of a decline in quality of teaching or of educational outcomes in areas in which we identified a shortage of teachers or low pay as a problem?

Mr. Sheerman

Yes. When we took evidence and, more valuably, made visits, either individually or as a team, vice-chancellors would flag up the fact that although they had managed up to that point, there was fear of the next step. Many established university personnel are retiring—it is a generational thing. We are not worried about professorial salaries, but the message that I got when I met the Russell group was that we must get young men and women in, and keep them in the profession for the first five to eight years. There was concern about quality and how it would not be maintained unless something was done.

In relation to foundation degrees, we were rather disturbed by what the Minister with responsibility for higher education at the time said to the Committee and what she said outside, and by what the Government said in the White Paper on higher education, which seemed to link the expansion of higher education and their target of 50 per cent. with foundation degrees. We welcome foundation degrees because they offer an interesting and useful range of qualifications to young and older people. However, linking the two—the increase to 50 per cent. through foundation degrees only, which vice-chancellors told the Committee was an instruction—would give foundation degrees a bad name. What will happen if, as the demand for university places grows naturally, people apply for an honours degree in whatever subject and are told, "No, no, you can only do a two-year foundation degree, because there's a cap"?

That point led us on to some interesting work. Some of the evidence given to the Committee on what people thought about the 50 per cent. target was interesting. Much was made of the target, but, interestingly enough, we have heard more recently about the Government's response. They are not walking away, but softening the importance or lowering the profile of the 50 per cent. target. That surprises me, because there is no doubt that recent research by the institute 'or higher education research at Oxford has shown just through demographics that there will be another 150,000 students queuing up to enter university by 2010. Although that institute is not, as far as I know, a political institute, it seems to believe that the reforms and educational investment lower down are working, but that another 100.000 people, at the minimum, will be coming through, fully qualified, to enter university.

Quite honestly, given the evidence that the Committee took, there is no doubt that simply sitting on one's hands and letting nature take its course will lead to 50 per cent. being achieved There has been discussion about that arbitrary figure, but thank goodness larger numbers of people can benefit from higher education in this modern age, in which, as the evidence we took showed time and again, graduate-type skills will be needed. That is the truth of the matter.

There is a fair degree of ignorance on both sides of the House about the statistics and the facts. I always point out that in my constituency about 18 per cent. would have gone to university. The average throughout the country in 1975 was only 4 per cent., but now it is 16 per cent. We have to pinch ourselves a bit. When people talk about 50 per cent., they ask, "Does more mean worse?", and, "Are we going to have enough plumbers and electricians?" At the last count, however, 84 per cent. of the student population of Huddersfield and 86 per cent. in the country at large were down to be plumbers and electricians.

There is room for millions of people to realise their potential through higher education. I have never believed that people in higher education do not merit it. My personal view is that such statements are absolute nonsense. We should look at the figures—not for our constituencies but for each local authority. It is salutary that, apart from London and the south-east, no one gets 25 per cent. That raises questions, but my right hon. Friend the Minister for Lifelong Learning, Further and Higher Education may not like the answer. We could ask whether only the taxpayer will pay for expansion in higher education, but most people in this country never benefited from higher education; they were not offered interest-free loans, and many of them left school at 16.

That brings me nicely to the last part of my speech, which I suppose is the most controversial. We tried to be helpful to the Government about student finance. I can nail one myth. Some excellent journalists work in the education sector, and some journalists outside the education sector write some pretty awful news stories about education. The story that we had recommended top-up fees of £5,000 rather than £3,000 was nonsense.

We were interested in what makes a market. On the one hand, we said that it would be wrong for the Government to impose a market, if they chose to have flexible fees, by saying what fees should be charged. However, the evidence showed that there is high probability that if £3,000 were decided upon, most universities would charge £3,000. That is the fact of the matter. The evidence was that £5,000 might have made a market, but not £3,000; and I still believe that to be the case.

Dr. Gibson

Did my hon. Friend include in that market the variation in fees between courses and universities, or did he assume that if a fee were going to be charged it would be £5,000 or nothing? What is the Committee's position on variable fees?

Mr. Sheerman

The Committee does not have a view; most of the universities that gave evidence were uncomfortable with the thought of charging different fees for different subjects. The general impression was that they would go for £3,000, but other members of the Committee may want to comment on that.

Mr. David Chaytor (Bury, North)

Is it not the case that fees are charged in almost every other area of our education system? That is so in the private sector for secondary and primary education, for part-time degree courses and postgraduate degree courses, and particularly in the further education sector. The principle of differential fees both between and within institutions has been accepted for half a century. Why should it be so different for full-time undergraduate degrees?

Mr. Sheerman

That is a good point, but my hon. Friend knows what evidence we heard. We did not make a recommendation on that aspect. I have taken a number of interventions and gone on for far too long, but I want to wind up with two points.

The push of our evidence on student fees was that we believe that the Government could maintain an income from student fees and also be fairer to poorer students. We took evidence from Professor Nick Barr and others who suggested various ways of doing that. As an illustration, we suggested charging interest instead of having interest-free loans, which are a large subsidy in the region of £ 1.2 billion. In the main, better-off students and their families benefit from that in interest-free loans. The apprentice in my constituency who left school at 16 and started a business did not receive the investment of £25,000 available for going on to higher education. He did not receive an interest-free loan when he wanted to employ people; he had to go to the bank. We suggest that some of the interest on the loans could pay for more generous bursaries and maintenance grants for poorer students.

Our remit was not to challenge the Government on whether education fees should be paid or whether they should be flexible, but to explain the repercussions of their policies and to make helpful suggestions for helping the people who traditionally have not gone on to higher education.

The Select Committee has worked during the past two years to inquire into access to higher education, retention of people in higher education and finance for higher education. We accepted and welcomed the direction in which the Government were moving, but we believe that they could provide enhanced and better targeted support for those from low-income families. We gave an illustration of one way in which that could be done. We also suggested a change of attitude to the £1,200 when it becomes £3,000 and that all of it could be remitted for poorer students. That is another possibility.

We welcomed the abolition of up-front fees so that higher education is free at the point of entry. That seems to be a good direction in which to go. As we all know, there are no fees under the 2006 proposals for students coming into higher education.

I must make two small points because they are important. We did not find the case proven for the access regulator. Our previous work had assured us that the benchmarking system of the Higher Education Funding Council for England was sufficient. The Government criticised us because we criticised them for a tendency towards micromanagement of higher education. They deny that they are keen on micromanagement, but some would say that the access regulator is an example of micromanagement. It suggests that the universities cannot be trusted to respond to HEFCE benchmarking, even when it seems that matters are moving in the right direction using the HEFCE benchmarking process, and we thought that it was unnecessary to have an access regulator. Certainly, the evidence from the universities shows that most of them did not like it very much.

Finally, on micromanagement, there is always a tendency for Governments to micromanage and we said clearly what many hon. Members on both sides of the House tend not to want to hear. There is no doubt and there is wide and historic evidence that the more a higher education institution is dependent on Government whim and money, the less independent it is and the more dependent it is on its paymaster. We thought that that was bad. Most of the evidence shows—this is reflected in our report—that it is not good if a university must go to the Chancellor of the Exchequer with a begging bowl. There will be fat years and thin years, and we have just come through the long, thin years of the 1990s. Does any one want to return to them?

When we visited Queen's university, Belfast and Edinburgh university—the visit to Edinburgh was an individual one, and the Select Committee went to Belfast—it was interesting to hear how debate had changed in Scotland and Northern Ireland shortly after devolution. In Northern Ireland, the original view was for a zero increase in the higher education budget in the first year. People were quite shocked when senior staff said that it would be very nice to have an independent source of income for the institution. Some universities in Scotland have suddenly realised that they may be left behind in the research ratings—the capacity to carry out high-level research—in their competition with English universities.

Some colleagues do not like to hear that most members of the Select Committee have been very much convinced during our four inquiries by the argument for an independent source of income, however it is arrived at, that gives independence to higher education. I hope that the Minister addresses that point. Members of the Select Committee believe in the Dearing principles, as he and the Government have said that they do. The people who benefit from higher education should pay for it in part. That includes society through the taxpayer—as I said, 84 per cent. have not been to university—and the individual, who will have a very much better life, and not just in terms of income. We always talk about 50 per cent. more income, but those people will also be able to enjoy life to the full and to realise their full potential.

Dearing also mentioned employers. We had not thought that through much, but we were darned if we would not include something about an employers' contribution. The response to the Select Committee contained some weasel words. It said that there are all sorts of grants to encourage employers to invest in research and development. However, that was not our point. If it is fair that all three should pay, why should there not be a levy on companies that do not spend X per cent. on R and D? The money would go into a fund to support R and D work at universities. We want an evenhanded approach. If we accept the Dearing principles, which, according to the Government's response, they do, we must accept them all.

With the interventions, I have gone on far too long. I apologise, Mr. Deputy Speaker.

Mr. Deputy Speaker

Order. It may be helpful if I point out the conventional format of these debates. The debate may proceed until 5.30, but the convention is that the three Front-Bench winding-up speeches commence at 5 o'clock. That knowledge may help Members to gauge their presentation.

3.12 pm

Mr. Michael Portillo (Kensington and Chelsea)

As someone who has never participated in a higher education debate, I feel rather fortunate to be participating in this one, and I am particularly fortunate to be able to speak so early in the proceedings. There are many experts on the subject among those who sit on the Labour Benches, those who sit on the Conservative Benches and those who were on the Conservative Benches but are now on the Labour Benches; they have a great deal of knowledge of the subject.

I congratulate the hon. Member for Huddersfield (Mr. Sheerman) and all the members of the Select Committee on the report. The hon. Gentleman said that it was one of their better reports, which I thought was a rather half-hearted NA, ay of commending his own report. I would go much further and say that the report is not bad at all.

I shall not detain the Chamber for any length of time but more or less confine myself to a single point on the first issue that was raised by the hon. Member for Huddersfield, which is the issue of research funds, specifically the concentration or dilution of such funds. I speak as the Member for the constituency of Kensington and Chelsea, which contains Imperial college. The rector of Imperial college, Sir Richard Sykes, was one of the witnesses to appear before the Committee. He made his case strongly. I am worried that the Chairman of the Select Committee chose to describe his intervention as an extreme one. I do not think that that word is appropriate. Sir Richard has a strong point of view.

Mr. Sheerman

Robust.

Mr. Portillo

He has a robust point of view. Politics is the language of priorities—or whatever the phrase may be—and it is important when spending public money to spend it as well as we possibly can. If an individual with a great deal of experience—I shall go into that a little more in a moment—says that the reality staring us in the face is the need to concentrate our money to get the best effect from it, we should regard that not as an extreme position but as a challenging one. We should think very carefully about it.

The Select Committee's report is very good, but the section on research is not the best part of it. One reason I have attended today's debate is that when I read the report, it struck me that if one interviews several witnesses from around the country on a subject such as research concentration, a bias will of course be built into the sample. If one interviews a lot of people from institutions located all over the place, the majority of them will of course be against concentration. I came along today because I did not want the Imperial college point to go by default, and I want to ensure that it appears in the record of proceedings.

The Select Committee report is fair enough to quote Sir Richard Sykes extensively, and I shall quote him now so that we can get to the essence of the case. He said: If we want to have, in a competitive world that is being driven today basically by science and technology, half a dozen top universities in this country, that can compete because they have excellence, not just in a few groups but across the whole panoply of scientific excellence, so you have got the critical mass that helps these people work together to address some of the world's biggest problems, then we can afford only a few of them. That is an interesting and well-considered point in which every sub-clause is important. If we are to compete in the world, if we are to have the concentration of people to make things happen and to give us critical mass, and if that excellence is to be not only in one or two subjects but across the whole field of science, as a country we can afford only a few universities. That point is very well stated.

Despite the report's excellence, the Committee did not argue itself out of the Sykes proposition. I have considered its arguments carefully. It states that there is already quite a lot of concentration, so why should there be any more; but that is not an argument and does not excuse us from considering whether the concentration in the past has been a good thing and whether greater concentration would be an even better thing.

Before we get too carried away, I should say that according to a letter I have received from Imperial college, the concentration has so far involved the reallocation of £20 million, which is 2 per cent. of the Higher Education Funding Council research grant—we are discussing rather a small sum. The Minister nods, but I do not know whether he will nod at the next sentence. Imperial college goes on to say: A much larger redistribution of the teaching grant (of some £217 million or 6.7 per cent.) passed without much public comment. Overall, Imperial College benefited by £3.6 million from the re-distribution of the £20 million for research, but lost £2 million from its teaching grant this year and an estimated £1.5 million next year". It has not been an enormous switch.

I listened with great attention to the hon. Member for Huddersfield. He made many good points, but I must say that I did not agree with most of them. For example, he said that we have a great deal of excellence in our universities and that we should be very proud of how we are competing. I will not be unpatriotic and contradict that head on, but how our universities are doing at any level is not a cause for complacency. It is a matter of constant competition. At the top level, I am not at all convinced that the likes of Oxford, Cambridge, Imperial college and University college London can be regarded as being in the same league as Harvard, Yale and other global competitors.

In most places, there is not a particularly strong connection between research and undergraduate teaching. I am, of course, being driven towards elitist arguments, which is a charge that I can take on the chin. The attempt to make equal that which is unequal in the field of higher education has been the bane of higher education policy in recent years. That is not a party political point because there was much of that policy under the last Conservative Government.

One cannot say that the education of all undergraduates, whatever their prospects may be, is strongly connected to a research presence in the university. It may be that some undergraduates who have the potential to go on to do very important work in a particular field, even in their undergraduate years, would benefit from a connection with research, but one cannot make the point in a more generalised way, as the hon. Member for Huddersfield has.

Mr. Chaytor

I was interested to hear the right hon. Gentleman's argument about the concentration of research. Does he accept that his argument about the advantages of differentiation ought to lead him inevitably to the conclusion that the Government's policy on differentiated fees is correct? Will he support their policy, and will he tell us his views on that policy before he completes his remarks?

Mr. Portillo

The hon. Gentleman wants to trip me up, but I am perfectly capable of tripping myself up—I intend to do so later in my speech.

I did not have much sympathy with the point made by the hon. Member for Huddersfield about geographical spread. That is a tough one, because I am from not only the south-east but the very heart of London. The hon. Gentleman is from Huddersfield and he is likely to see the world differently. On a matter of such importance, we cannot use research funding as if it were some sort of adjunct to regional policy. We cannot use it as though it were some sort of outdoor relief. I know that I exaggerate to make the point, but I put it in those stark terms because I say to him that those considerations are inappropriate.

Returning to the global matter, I shall mention the credentials of Sir Richard Sykes: he is not only the rector of Imperial college, but he was the chairman of GlaxoSmithKline. It is of fundamental importance that we have strong top-end research institutions to compete against the world. That is about not only education policy but—one might not expect a Conservative to say this—national policy. It is about how our country will maintain and improve its cutting edge.

I did not think that I needed to declare earlier in my speech that I am a director of BAE Systems, but I am, and, in that position too, one sees the importance of topnotch, concentrated science in our universities as a contribution to our efforts as a nation.

The hon. Member for Huddersfield said, with some despondency, that he had heard the Government's reply and that it was unequivocally negative—a pretty dusty answer. The Government were right, however, and I want to applaud them for that. I want to ensure that that particular point, which I have been keen to make, is not lost by default.

On student finance, I say to the hon. Gentleman that the Committee made an extremely valuable contribution to the debate. I do not blame the Committee for not wanting to get itself hooked on whether top-up fees are right or wrong and instead taking the rather elegant approach of assuming a Government policy and considering how it could be improved. Several of the Committee's recommendations, which were set out very ably by the hon. Gentleman, are very important contributions and could go some way to cracking the nut, which is a difficult one to crack.

The hon. Member for Bury, North (Mr. Chaytor) made an extremely interesting intervention about differential fees for non-undergraduate courses outside the area that we are considering. There must be some read-across there. Anyone who is opposed to top-up fees, whether they are on the Back Benches or the Front Benches, has an obligation to read the report, to wrestle with its points and to understand some of the alleviations that the Committee mentioned.

The hon. Member for Huddersfield did us all a great service by emphasising recommendation 35, which states: We believe that there is much evidence to show that there is an inevitable link between diversity of funding and the ability of universities to develop and to operate with greater independence and freedom"— spoken, sir, like a good Conservative. I found it heartwarming to hear that extremely good point made. I will sit down before I get myself into any more trouble.

3.24 pm

Alan Howarth (Newport, East)

We are indebted to the Select Committee for a report that is always interesting and which articulates a range of important issues very well. The volume of evidence is a gold mine. There is a great deal that we can read with instruction and benefit. I congratulate the Select Committee. I also want to congratulate the Government on reversing the decline over so many years of the unit of resource for higher education and on their commitment to raise funding for the higher education system by substantial amounts in real terms year on year. I congratulate them on having grasped a good bunch of nettles—to use the phrase that R. A. Butler used in speaking of the Education Act 1944—in their White Paper. We may as well take these difficult problems together not least because we cannot have a coherent policy unless we do. If we get the reforms right, they could be as historic as the 1944 Act.

There are two imperatives for the higher education system. First, we must bring in substantially more money still, beyond that which can so far be foreseen. The higher education system has been miserably underfunded and, as my hon. Friend the Chairman of the Select Committee told us, universities have defied gravity in the way in which they have sustained quality during the period in which there has been rapid expansion at marginal cost, on the cheap.

I strongly endorse what my hon. Friend said about university pay. It is, as the Select Committee said, woefully low. Over the past 20 years, there has been a 4 per cent. increase in academic pay against a 45 per cent. increase in average earnings. We simply cannot expect to renew the academic system to the necessary quality if we fail to reward those who work in it, whether as academics or non-academics.

The Government have managed to increase public funding for research by substantial amounts, which is enormously to their credit. However, we need yet more funding for research. There is a backlog of tatty and inadequate facilities that it will cost a lot of money to make good. Students are impoverished, and there will be many more students in any case. We need more money.

The second imperative is to widen participation in higher education. That is appropriate in a just society—those who are qualified to enter higher education should be able to do so. That is a principle that everyone has accepted since Robbins. In our modern economy, in which intellectual skills are increasingly at a premium, it would also be foolish not to enable those who are qualified to receive a university education. As my hon. Friend the Member for Huddersfield (Mr. Sheerman) mentioned, the demographic projection is that 150,000 more people will be qualified for higher education by 2010.

Mr. Andrew Turner

The right hon. Gentleman reiterates the Robbins principle that everyone who is qualified should be entitled. What does he believe constitutes being qualified? It seems that the number of people involved has increased remarkably in line with the number of places available. I wonder whether that is because of good planning by the Government or the fact that the qualification has changed.

Alan Howarth

The hon. Gentleman tempts me into an extensive debate that would be a digression from the themes that I wish to develop. Let me simply say that, as a rough rule of thumb, two A-levels are conventionally accepted as placing people at least on the threshold of eligibility for admission to university.

As some right hon. and hon. Members may dimly recall, I was higher education Minister between 1990 and 1992, and the more I thought about student finance during that period, the more I became convinced that top-up fees were the right way to go. Among those who influenced me at that time was Professor Barr, whom the hon. Member for Huddersfield mentioned, and who has contributed an exceptionally interesting piece of evidence, reprinted in the Select Committee's report. I commend it to anyone who takes a serious interest in this vexed topic. I was tiptoeing towards that view politically, but my Secretary of State, the right hon. and learned Member for Rushcliffe (Mr. Clarke), intervened decisively to kybosh my tentative project on the grounds of administrative impracticality—which were more genuine then than they would be now—and of political expediency. That was a missed opportunity. When John Major asked if I would continue as higher education Minister after the 1992 election, I declined for a variety of reasons, among them that I was not willing to preside over a continuation of the erosion of the unit of resource. I already felt that the financial position of the universities was fragile.

I then witnessed, in the period between 1992 and 1997, a headlong expansion on the cheap. The hon. Member for Daventry (Mr. Boswell), for whom I have the warmest affection and regard, presided over much of that process. We are still struggling to recover our balance. The universities are still struggling to recover from that systemic underfunding. I give way to the hon. Gentleman—I am tempted to refer to him as my hon. Friend.

Mr. Tim Boswell (Daventry)

I shall stay neutral on that. If the hon. Gentleman looks at the record he will find that most of the expansion took place before I assumed office, following a short interregnum after his tenure. Partly through some control on student numbers, we retained a measure of stability through most of my time in office. I claim no credit for headlong expansion. Will the hon. Gentleman also acknowledge that there was a degree of consensuality in the expansion process in the very early 1990s, because it was caused partly by vice-chancellors taking on additional students at the margin, as he said, not simply by a Government edict that they should do so? All the Government's expansion targets at that time were exceeded.

Alan Howarth

There was much greater scope for legitimate efficiency gains at the start of the process than there was later, but I know that the hon. Gentleman, at the end of the day, always had the well-being of the university system at heart. One wonders whether the Conservatives can convincingly claim that now when they have clearly set their face against the necessary expansion of participation in higher education. The position that they are taking on expansion and top-up fees is opportunistic. It would deny opportunity to people who ought to have it, it would deny funding to universities and it is unrealistic fiscally because those additional young people in our society will have to be educated and trained, and that will have to be paid for. There is no reason why it should not be paid for at the academic level for which they qualify.

I believe that the Conservatives are wrong and that the Government are essentially right in the thrust of their policy: to allow increases in tuition fees; to cover the costs through loans to be repaid by graduates only as and when their incomes reasonably permit; to bring back maintenance grants to help people from low-income homes; to improve help for part-time students; and to support universities, schools and colleges in working together to raise educational aspirations. That must be the fairest way to go, and best for the well-being of the universities.

Why do I say that that way is fairer? The present system is regressive. The difference between the fees paid by students from the richest families and students from the poorest is only some £1,125. That difference is too little. The Government's policy of increased fees, covered by loans plus grants redistributes resources away from students in better-off families towards students from worse-off families—through the reintroduction of the grant— and to future graduates on low pay or no pay. That is a progressive policy.

At present, the imbalance between funding by way of taxation and funding by way of fees is too great. Of course higher education is a public good, and a large proportion of the cost ought to be met by general taxation. At the moment, the maximum student contribution is only 25 per cent. of the cost of tuition. Public expenditure on higher education is £6 billion, and fees account only for some £400 million of that. Higher education confers enormous private benefits, and taxes paid by relatively disadvantaged people are excessively subsidising those who are directly advantaged through the experience of higher education, which is regressive. Fees are fairer than taxes, and variable fees are fairer than flat-rate fees. The cost and the private benefit of different universities and different courses varies, and ought, in fairness, to be reflected in the fees.

Mr. David Rendel (Newbury)

Does the right hon. Gentleman accept that even within one university, different courses may lead to different financial rewards for graduates? Within one course it is quite possible for different graduates to go into entirely different careers, which may have different financial effects.

Alan Howarth

Yes, I do, and the policy response to that should be a matter for individual institutions. They should certainly have the freedom to set differential fees and should not be discouraged from doing so.

Government are addressing the sources of unequal opportunity through their strategy on access. Class differential in education attainment and denial of opportunity occur early. Of those working-class students qualified to go into university, 90 per cent. do, but the problem is for them to get to qualification. Only some 15 per cent. of children of unskilled workers reach that gateway. The Government's policies on sure start, child care, nursery education, school standards, university outreach into schools—the Aimhigher programme—and educational maintenance allowances all represent the way to attack the social class gap problem in higher education.

Why do I say that the Government's policy would also be better for the well-being of the universities? It is the only realistic prospect of bringing substantial amounts of additional money into the system. Taxpayers will not be willing to do so, nor should they be expected to do so.

If there is an increase in fees, we should see the burgeoning of a market in education. We need that. We need to reduce the dirigisme and bureaucracy—what the Select Committee refers to as micromanagement, as a theme in its report. The Government are becomingly self-conscious on the question of micromanagement. They acknowledge the issue and express their resolve to do better in the future by micromanaging less. That will be very difficult if the Government are to be directly responsible for such a large proportion of the expenditure on universities. In any case, not only is all that bureaucracy burdensome, costly and distracting in relation to what universities are really there to do, but it is objectionable in a free society.

The Government's role is to see fair play, to strengthen incentives, to ensure that the information is there for the consumers of higher education, and to enable people to take the opportunities that they ought to have in higher education, but not to plan and run higher education to the extent that they now do.

In relation to the question of promoting the well-being of universities, I would again argue that variable fees are preferable. Where all institutions charge the same, there will not be competition or the pressure to identify and respond to student preferences. I perfectly understand why the Government judge that, when introducing top-up fees, it is wise to set a cap at £3,000.

Dr. Gibson

May I ask my right hon. Friend how he would judge mediaeval history against a physics course? Would the fees be chargeable at the same rate? How can one judge which should get the maximum and which should get less?

Alan Howarth

I would not make that judgment. It is for the vice-chancellor and his university colleagues to make such judgments.

We are dipping our toes in difficult waters. An initial cap of £3,000 may be appropriate, but I hope that the Government will look forward to lifting it at the earliest opportunity. I am concerned that they expect the cap to remain at that level for the whole of the next Parliament, which could be until as late as 2011. We will need more money sooner than that. When they come to legislate, I hope that they will at least deal with the figure in secondary legislation, as it would allow flexibility; I hope also that they will rule nothing out.

I would add that the more that can be raised from universities through fees, the more the Government will be released from the responsibility of funding tuition—and the more money will be available to fund research. I tend to agree more with my hon. Friend the Member for Huddersfield than with the right hon. Member for Kensington and Chelsea (Mr. Portillo), but the dichotomy between them is not absolute. We must, of course, fund our world-class research so that it remains world-class, but it would be improvident to fail to fund the 4-rated departments. The Government have offered them a reprieve, but we need confidence that the reprieve will be enduring—and we need to be sure that there will be enough money to support promising research, wherever it may be needed. In keeping with our properly cherished tradition of higher education, we should do all that we can to ensure that the cross-fertilisation of ideas between teaching and research is as extensive as possible.

The Government are on the right lines, but the package could be improved. The Government should go a little further, ensuring that higher education will be truly free at the point of use. By that, I mean that they should commit themselves to increasing loans for maintenance so that they allow a sum to cover realistic student living costs. They should abolish the means test. They should treat students not as kids who happen to be dependent on their pa rents longer than those who leave school at 16 but as people who are entering adulthood. Doing that will end the burden on parents, end student poverty, end that desperate juggling between paid work and study, and create independence for students. That would be attractive.

The Committee proposed that the interest rate subsidy should be ended. I see the advantages of being able to use that sum, which could be as much as £1.2 billion. The case could also be made that money should not be used to provide fee remission for students from less well-off households because of the principle that graduates should repay according to their earnings. It may be an attractive proposition in presentational terms, but it is not a logical part of the scheme.

If we were able to free resources in those two ways, we could produce a much more redistributive and attractive package of support. Increasing loans and grants and extending educational maintenance allowances would, in the end, be a better solution. We could also spend more on university outreach. We could spend more in supporting universities, in order to ensure that people from disadvantaged backgrounds successfully made the transition into higher education. Although all that may be further down the track, I ask my right hon. and hon. Friends not to rule it out.

We need more money for research. The Department of Trade and Industry proposes that the research councils should pay 65 per cent. of the true cost of the research that they pay for. It seems highly questionable that the missing 35 per cent. will be found from QR funding from the Higher Education Funding Council or from charities. That gap needs to be filled. The transparency review found that Departments themselves were not paying the true cost of the research that they commissioned, and I hope that my hon. Friend can assure us that the Government will do better in the future.

We need to find more money to support endowments. It is pleasing that both major parties are now committed to the principle of enabling universities to build up endowments. It is bound to be a long haul, but some money, at least initially, should be made available to enable universities to set up foundation offices in the way in which they have been assisted to set up business development offices.

A legitimate question is how I believe all that should be paid for. Unblushingly, I would say that Government borrowing should pay for it. The Government keep telling us that higher education is very good for the economy. We know that there is an increasing premium in the global economy on intellectual skills. We need to invest in human capital, and there is a very good business case for Britain borrowing to invest in it. I see no reason why we should not borrow, especially to cover the transitional period before the new arrangements become self-financing or more so.

I understand the political nervousness surrounding the issue. The changes proposed are radical. The subsidy for the middle classes will be somewhat reduced. Universities may become more differentiated through the operation of a market in higher education, and some academics may find the resulting comparisons odious. There is much black propaganda. which is intensifying the anxieties that young people, especially those from working-class families, have about debt. Young people can foresee the debt, which they assume will be like credit-card or even loan-shark debt, much more clearly than they can foresee the benefits of the reforms. The policies are right, however, and are attractive, when properly understood, and I hope that the presentation of my right hon. and hon. Friends will be unapologetic and entirely confident.

3.46 pm

Dr. Ian Gibson (Norwich, North)

This is an opportune debate and I am sure that we will make avid progress with the issue in the next few months. There will be sharp conversations, which I welcome. We do not get many chances in a generation to talk about higher education, its revision and ensuring that we get it right. It is so important to this nation and, indeed, to the world.

The Select Committee report is very welcome. At this stage, I would give it a 2:1 bordering on a first, although the Committee may appeal. Many things in it are excellent. In particular, I welcome the discussion about the concentration of research funding—a system developed in this country through the Russell group, whereby 12 great universities and true used to meet in an hotel. The principle was that the universities had medical schools attached to them. That has now changed, due to this Government. Medical schools are developing in other universities, for example I might mention Manchester, its good work, its spin-off companies and all the other stuff that is going on there. I could also mention Dundee. When I was young, Dundee was a strange place. It had a bridge and that was about it. It now has a distinguished university, which is preeminent in cancer research worldwide. It may well be the next Nobel prize winner.

One can never tell what will happen when individuals have the determination to make things happen. That is what we want to encourage. Concentrating research funding sometimes devalues people, with the result that they are bribed and recruited elsewhere. A premier division is created: everyone wants a David Beckham, but it does not happen. Bright ideas come from strange places and great discoveries happen at a strange time on a Friday afternoon or at midnight in some strange laboratory.

Mr. Boswell

I am grateful to the hon. Gentleman for allowing me to intervene, as it will allow me to cut out some of my remarks. To pursue his analogy about David Beckham, surely the point about research excellence is that a group of 11 people playing as a team at the highest level cannot possibly survive without a large pyramid of people playing in lower leagues and even at an amateur level. Width, as well as concentration, is needed to achieve the highest levels of attainment.

Dr. Gibson

The hon. Gentleman shows his age. No super football team now exists on just 11 players. There are 30 to 40 players in the first squad, who come from different parts of the world and interact in all sorts of strange ways that are unpredictable, and they need a manager to bring everything together, as well as a lot of money.

My second point is on research and teaching, which the report discusses clearly. My experience in teaching and in having talked to alumni and students since then is that it is not the first 40 or 45 minutes of a lecture that is important because that is dum-de-dum stuff that is written up in the textbooks so the students can dive off to the library for it. What is important is that the person teaching is pretty sure that what they have just taught is the perceived truth, but knows that there is something else to research and find out, and can enthuse young people into believing that that is the truth. Being up-to-date with research is so important.

For example, I remember when people researched prions but they were not in the textbooks and people did not really believe in them. Suddenly, prions—BSE and all that—became exceptionally important in our lives. Getting that excitement and questioning across is what higher education is about. It is about making people realise that we are 99 per cent. sure of the answers. That is why higher education in this country is so excellent. We have great teachers who are also involved in research. I accept that someone can be a great teacher without doing research but it is an added value, which we must encourage, wherever it is: Luton, Norwich, Dundee or anywhere else. We must get the people who are excited about research to continue to teach, not hive them off into distinguished centres such as Imperial college, where they closet themselves away and do great research but do not talk to and excite the next generation of young people in the arts or the sciences.

I am pleased that low academic pay has been mentioned and that we have discussed contracts, which really put people off academic life. Why would someone want to start in a profession if they do not know after two years whether their grant will be continued for another three years in a subject area in which they have not won a Nobel prize, but are doing something that they believe in and that might just, in five or six years, bear fruit? That is the same in the sciences and the arts. We are so good at research in this country and we must maintain it. I am sure that that comes through in the report. The Government recognise that and are making great strides in trying to ensure that we hold on to it.

No one can say that we do not need extra funding in higher education. It has been starved for years in terms of percentage of gross domestic product. We must get money into that system. We might rehearse elsewhere how to do that, and I might point out one or two ways to do more to get people excited enough to put money into the process, but we need the money now. My problem with any scheme is that I do not want it in 2020 or 2030. Universities need money now. Norwich university has this week had to set up a taskforce to handle angry parents, and young people from abroad and mature students who have nowhere to live. It is absolutely disgraceful that students throughout the country are having trouble finding places to live. An aggressive recruitment policy is under way, because bringing students in equals money, but the infrastructure is not there. We know of the problems with lecture theatres and so forth. Those are the real problems, including academic pay, that we really must address. We need the money now. If we are to get the money down the line, we must find some process of delivering it to make our higher education sing at the highest level and to ensure that the people who are in it stay there. The tendency to drift away to the much richer colleges and universities in the United States and parts of Europe will always be there unless we tackle those basic issues. It is all right talking about doing great research, but not if the water is pouring through the roof. That does happen. I might exaggerate a little, but we can do better with our infrastructure.

Broadening access to universities is key. I and many other hon. Members have said that before. It is disgraceful that people from working-class backgrounds have not accessed higher education. It is not because they are incapable, but because there has not been a mechanism for bringing them in and encouraging them to aspire to the things that they want to achieve. My father said, "You don't want to go to university. They're a bunch of snotty individuals. They never talk to anybody when they come home. You stay home and play football—you'll be big in your local team." My mother directed me to university and I have never regretted it. Home life and parents are important influences on what one does in life. Teachers who not only inspire but guide and say, "You're capable of doing this," are also important. Sometimes I think that we are bad at encouraging people.

I do not know why the target is 50 per cent.—why not 60 per cent. or 70 per cent.? Sometimes I get a funny feeling about targets, because they can be reached by manipulation. My hon. Friend the Member for Huddersfield (Mr. Sheerman) suggests that foundation courses help to raise the percentage of students and he has his worries about that. If foundation courses bring people into learning then they are fine. However, I do not want to stop at 50 per cent. Why not push the target up?

I do not know why we have stopped at 18 to 30-year olds. What is so magic about that age group? Some of the best students I have ever taught were mature students who came back at the age of 50 after their children had grown up and got first class and 2:1 degrees, which were as good as those obtained by any of the young people. They could also drink young people under the table at any time in the student bars, which are an important part of student life because students go there to interact and to discuss things.

We often focus on individuals in this debate. Giving an individual an opportunity to develop is fine, but higher education is broader than that. It gives so much to the nation and it binds people together. I get emetic when I hear about miners' sons paying for richer people to use higher education— the situation has been like that for ages. I can counter that point with arguments about the percentage of income tax that different social class groups pay.

I do not know what happens to my income tax. I do not have much say on whether it goes into defence or nuclear power, and we all have that problem. Such arguments will not move the debate on. We must work together as a nation to improve our higher education. Such arguments set person against person and class against class, which is not what we are trying to achieve through higher education. We are trying to get people from right across the nation to work together and to interact not only in scientific laboratories or arts classes, but socially. Universities are so good at getting people to discuss the sort of world that they come from and breaking down barriers.

Two weeks ago, I met alumni from the 1960s to the 1990s whom I taught over the years in the United States. I am so proud that not one of them is working in a field related to the subject that they studied at university. They have forgotten everything that we ever taught them, but we made them enthusiastic and keen to work at life and to get on with things. What people do at university should not matter.

I do not want to compare a dustman with a Nobel prize winner—we are all dustmen really because we all put out the bins in the morning. We all have social functions at all sorts of levels because we work together as a nation and as a community. We are not getting over the message about higher education and we are not winning the arguments. I understand why my right hon. Friend the Secretary of State says that he would rather put money into other levels of education—we have not sold the value of higher education to people.

The vice-chancellors of higher education institutions exist in sleepy hollows and do not interact with local communities. Their idea of interacting with the community is having a pop concert and inviting some young people. They are very poor at interacting with schools in their community and making sure that the university is not a place up the road that is very difficult to get into, apart from once a year when people can visit to listen to a rock concert. Access to things of value should be opened up clay and night, week-in and week-out, throughout the year.

I know about the splits, resentments and arguments among further education colleges. I have fought for years to make the higher education colleges in cities such as Norwich work together. There is no reason why the people in both sectors cannot cross over, but that does not happen because of personalities. The chief executives and the vice-chancellors do not want that. We must break down that attitude in political terms, which would break down some of the social and cultural differences.

Employers have much more to do in the process. I have worked in the United States and seen how much local employers put into local universities. Why? They know that many of the people who have been educated in their local university or college will end up working for them. Many people who came to Norwich and did not intend to stay there, ended up working for the Norwich Union. What has the Norwich Union put back into the local university? I am referring not to a couple of prizes, but to bringing bright people through the system who will eventually benefit the company. We have not cracked that.

I have recently started paying my old universities—Edinburgh and Norwich—to help them to develop their buildings and enterprises, but some alumni still hold up their hands and say, "Why should I give anything back to the university that educated me?" and that makes me queasy. It happens in the United States, where people's loyalty to their local university is amazing. Perhaps they do that because they are paid good money, but they also feel loyalty to their universities because they came through the system and gained the advantages, so they feel that they should help other people at those universities.

That brings me to top-up fees. I have serious problems with that idea—not with the principle, but with whether the money can be delivered now when we need it. The scheme would be variable and, as has been said, it happens in one sector. It is difficult to think of a more divisive scheme—coming from where we are now, with central control—than moving to a system of students paying more in one department than another. What worries me is that a student might choose a course because it is cheaper than another. I think that my right hon. Friend the Minister said this morning—he will tell me if I heard correctly, because it was early in the morning—that to get people into physics it might be a good idea to have a cheaper top-up fee. If I am wrong, I apologise, but I think that that is what he said. Reading physics is more expensive than reading fine arts because technicians, equipment, laboratory facilities and so on must be paid for. That is a fact of life.

A system would be set up under which universities they have autonomy—would control the money coming in to pay not only bursaries but the departments that do not have enough to practise the black art, and my example would be physics. A dilemma would be created and I know how academics fight each other. Exceptionally articulate people talk for hours about issues and get nowhere. We do not want to set up such a system and that is a problem.

On top-up fees, £5,000 may be fine, but would it deliver enough? We can argy-bargy about that until the cows come home, but where would it stop? If Richard Sykes has his evil way, they would be £12,000 or £15,000, which is exactly what happens in the United States. There are league tables of student debt. There are also huge bursaries and most students receive some support based on their family's income.

What worries me is that worrying about debt is part of the British culture. That is a shame, but it is so. Young students, whatever their background, are frightened of debt. It is all right for middle-class students because mum and dad or someone else can just go without one skiing trip and pay off the debt—that happens. There is a real problem with telling young people that they will end up with a large debt. Young people at meetings with Members of Parliament have asked how they can come out of university without debts. That started in the 1980s and we must sell the idea to them, but it will not be easy.

Nevertheless, it is great that we are now looking into ways of bringing in money. I have mentioned taxation and graduate tax—I do not know The arguments against it and have not seen the documentation, but I know that it might take a long time to get the money up front. That could be the case with top-up fees too and I should like to see the comparison. We have not yet properly examined this country's potential for getting income from different sources to get enough money into a system that has ailed for too long.

4.4 pm

Valerie Davey (Bristol, West)

As a member of the Select Committee, I am delighted to have this opportunity to discuss the report, and also that the Government have initiated this in-depth discussion of the future of higher education. I endorse the summary at the front of the document and, before I speak about student funding, I shall highlight two areas.

The first is research funding. As somebody from a region—I represent Bristol—I feel that the DTI argument is strong and that there is a need for regional development. We cannot dissociate the universities from regional development and from links with business and industry in their areas. I urge large companies in the Bristol area, such as Lloyds bank, to make a Bristol-based contribution—my hon. Friend the Member for Norwich, North (Dr. Gibson) made a similar case for companies in Norwich. Lloyds is now based in Bristol and should have a greater involvement not only in research but in basic funding. There is a need for widespread consideration of research, and acknowledgement that in high-powered science the equipment alone necessitates a focus. However, that should not be restricted to the handful of institutions to which we have heard references.

Secondly, I want to highlight the short but important sentence, "Universities are their staff". I, too, was disappointed that the Government did not take that as seriously as I was expecting them to. The calibre of the staff in any university is soon reflected in the number of high-calibre students that it attracts and its national and international standing. It is disappointing that universities, above all, have failed to give equal funding to their women lecturers and professors. The fact that they have failed to take the equal pay legislation seriously is something that the Government should bear in mind when considering further funding.

Looking back, and wondering where some ideas had emerged, I stumbled by chance during the holidays on a Young Fabian document called "Students as Citizens: Focusing and widening access to higher education". I highly recommend it. It has some surprising things in it. Not so surprisingly, one of the then Parliamentary Private Secretaries, who gave it his blessing, talked about the importance of the document and went on to say that he could not endorse all of it. For example, he said, fee differentials would, in my view, have an adverse effect on access and participation, and be detrimental to the overall objectives of our higher education policy. He went on, sensibly, to say, Despite this, I happily recommend this pamphlet to all those who value the British higher education system and seek to ensure that we have a high-quality, modernised and accessible system to take us into the new millennium. None of us could disagree with that last section. Some of us, including me, might be a little ruffled to find out that this 1998 document endorses, in part at least, the need for students to pay fees and even for them to pay—there is no use of the phrase "top-up fees" at the time—differential fees. The Minister might be interested to read the document to see how such ideas emerged and consider the logic of the view, "If you pay fees, then, potentially, you pay differential fees." However, I draw his attention to a few other key sentences that link into the debate about high-quality, modern and accessible universities. We acknowledge that high quality depends on funding. No one in the Chamber argues that we do not need to get more funding into universities.

What about modernisation? The Committee did not spend enough time considering how universities will deliver education in the future. We struggled with what the new schoolroom might look like in even five or 10 years, but I am not sure that we took up the challenge of what a modern university would be like. In future, when one signs on at a university, one might be given a CD of the initial, basic course lectures, which would allow staff more time for seminar work and research. Information technology could be used to deliver university courses outside the city or area that it is in. None of us has grappled sufficiently with how courses will be delivered and how the modernised university system will be styled. I heard a lecture recently at Bristol university by a professor from Portugal who was considering the increased need for course and research collaboration across Europe. We turn our eyes too readily to the American Ivy League group and not sufficiently to Europe.

Colleagues have congratulated the Government this afternoon, as I do, on the accessibility schemes that have allowed people from whatever background to obtain those vital qualifications needed to enter university. Sure start and the education and maintenance allowances are part of the debate about access to higher education.

We then come to the need for students to make their own contribution. I do not deny that they should. I have argued that point on the doorsteps of my city, where there are many undergraduates and—more challengingly at times—the parents of future undergraduates at the four excellent universities.

Interestingly—returning to the Fabian document—we have not been selling higher education. It suggested that we should have set up the tertiary education recruitment agency—a professional and voluntary group that should have gone into schools to explain higher education and to help young people, staff and parents fully to understand the potential of higher education. the courses, the cost and what was then the Government's student funding policy. Had we sold that idea and surmounted the initial, huge psychological barrier to accepting the need for a student contribution to fees, we would not now be in quite the same situation. All the feedback that I have received from my constituents has been opposed to differential and top-up fees. I shall list several reasons for that—they are in no particular qualitative or priority order.

The fees fall at the first hurdle because of their complexity. We have heard about the complexity of setting the tariff for courses and universities. Who will set the tariff? At present, the Government set it by capping the amount payable. The comment that we heard earlier—that £3,000 might be the cap in 2011— is a nonsense. I do not advocate pursuing that line. The Chairman of the Select Committee made it clear that the Committee does not advocate going to £5,000. The logic of the Government's argument must be that if they go into a marketplace, they must do something other than cap at £3,000.

The document takes it as read that, if fees must go up, the Government will, as in their earlier determination of school funding, pay the full cost for students from low-income families. The Government seem to be moving tentatively towards saying that £3,000 is the cap, but that for low-income families not only the first £1,000 but the whole lot will be paid. If they do that, they will hand to the universities the challenge of deciding what the cost should be. Low-income students will have it paid. It might rise to £5,000; if it rises to £15,000 at Imperial college the Government will pay £15,000. That completely undermines the argument about getting more funding into universities from students. We shall be back with the dilemma that arises from the Government making a much higher contribution, via the students, to the fee income.

Present Government policy has the worst of both worlds. They will not wholeheartedly embrace the idea that some people now tentatively accept, although I refuse to, that higher education is a market commodity that can be given to those who can afford it, provided that they have a certain willingness to work; nor do they say that they want to offer real access, in which case they cannot make themselves hostage to university boards by allowing them to decide where they will set the fee level. We must go back to absolute principles. The principle in my book is that funding is certainly needed.

The Select Committee report gives alternatives. The Government have not studied sufficiently carefully the possibility of even another 1 or 2 per cent. on the loan interest rate across the piece. Students are taking out loans at market level rates to subsidise the way they live today, so such an approach would help many of them. In addition, the report contains other ideas that should be seriously considered.

The Government should say that the state expects all students to make their contribution, as a member of the community, to whichever university they have determined is best for them. Students would not have to second-guess the likely fees and the length of time for which they would be repaying the loan. They would not be guessing their income on graduation and the length of time it would take to pay off the loan on that income. I agree with those who ask how it is possible to tell that a particular course at a particular fee will provide the relevant students with an income of £x thousand in the future. That approach is not an accessible one for many students, who unlike most people in this Room know the real benefit of university education for them in the future.

I accept that students should make a contribution. It should be a flat rate. I am prepared for an increase, but I am not prepared for a differential. That would make us a hostage to the universities, which would themselves have a difficult problem in identifying and sorting out a fee. In Bristol, the greatest number of applicants want to study English. Should the university raise the fees for English, because more people would pay and then cross-subsidise? Who will do that? Who is the Lady Bountiful who will set not only the fee but the bursary and the way in which it is determined?

The matter is hugely complex. Our report offers the Government some alternatives and that is why I wholeheartedly endorse it. I do not agree with every suggestion, but it is a good paper, which the Government and universities should read in detail. I trust that that will help them to come up with something that offers good quality, modern, accessible higher education.

4.18 pm

Jeff Ennis (Barnsley, East and Mexborough)

It is always a great pleasure to follow my hon. Friend the Member for Bristol, West (Valerie Davey) in debates of this kind. I agree with the Chairman of the Select Committee on Education and Skills who welcomed the increased contribution that the Government are to make to higher education over the next few years—a real-terms increase of more than 6 per cent. per annum. Like everyone else who has spoken, I regard the report as balanced. It gives the Government a good steer. Many of the points that I would have made have already been raised, so I shall try not to repeat them.

Barnsley, East and Mexborough has the lowest gross domestic product per capita of any constituency, at 62 per cent. of the European average. It also has some of the lowest rates of staying on for higher education, which is a direct consequence of its being a former mining area. It will be no surprise to my colleagues that one of my main interests in this debate is the agenda for widening access for poorer students.

I am sure that the Government will admit that they have so far failed to achieve the golden objective of widening access. The figures for 1995 show that 26 per cent. of higher education students came from the three lowest socio-economic groups. By 2000, that figure had increased by only 1 per cent. to 27 per cent. We can obviously do better. It cannot be right that only 15 per cent. of children from poorer families went to university last year, compared with 81 per cent. of those with professional parents. I am sure that the educational ministerial team shares my concern about that problem.

One cannot divorce higher education from the main route into it—namely, secondary education. The killer fact that I always quote in such debates was referred to by my right hon. Friend the Member for Newport, East (Alan Howarth). It is that, irrespective of class background, 90 per cent. of all students who achieve two A-levels go on to university. Without doubt, the main priority for widening participation must be action in schools. The future 14-to-19 agenda will be extremely important in achieving that.

Considerable effort is needed in schools to raise aspirations and achievement among students from poorer backgrounds. That can 1D,, done only with the active and direct participation and support of the higher education sector, a point made forcibly by my hon. Friend the Member for Norwich, North (Dr. Gibson). I am glad to say that many enlightened universities are beginning to take the issue seriously, and my hon. Friend the Member for Bristol, West referred to Bristol university as a case in point.

The Dearing report, which had all-party support at the time of its launch, concluded that the cost of HE should be shared among those who benefit from it, with the individual, the state and employers all making a contribution. The Select Committee strongly supports that principle and recommends that the Government explore ways of encouraging a more substantial contribution from business. That has to be right, as my hon. Friend the Member for Norwich, North said. Equally, there is no doubt that the ending of up-front fees is a big step in the right direction.

The Committee also welcomes the reintroduction of maintenance grants, albeit at too low a level for poorer students. However, it urges the Government to consider the introduction of educational maintenance allowances as a more effective and seamless way of encouraging students who have successfully completed their sixth-form studies to continue into higher education. EMAs are certainly having the desired effect in Barnsley and Doncaster because, in the academic year 2001, the number of young people staying on in the sixth form rose by more than 6 per cent. in Barnsley, and by more than 5 per cent. in Doncaster, where the EMAs are being piloted.

It is my belief that EMAs will have a positive impact in encouraging students not only to stay on but to study more vocational A-levels and take more national vocational qualifications. That would assist our 14-to-19 agenda, which is attempting to increase vocational courses in our secondary education system and in foundation degrees. However, we need to monitor the type of courses that EMA students are doing—a subject that I have raised before. We do not currently have a monitoring mechanism; I think that learning and skills councils should do that, because the implementation of the EMAs from next year will lead to a drastic improvement in participation in vocational education over the next few years. I would like the Minister to respond to that point.

The notion of foundation degrees and their extension must be right if we are to expand vocational education. However, I agree with the report's conclusion that it is a mistake for the Government to make a strong link between the move to a 50 per cent. participation rate and foundation degrees. It would also be a mistake to assume that encouraging more students from poorer backgrounds into HE means steering them towards foundation degrees.

Higher national certificates and higher national diplomas are well established non-vocational qualifications, and they should not be phased out until it is clear that they have been superseded by foundation degrees—another recommendation from the report that I feel strongly about. Foundation degrees can be introduced into universities only when there is a genuine and clear demand from business, particularly local business, for that type of qualification. I hope that foundation degrees will lead to further integration and co-operation between further education colleges and universities. That must be welcome, but in order for it to succeed, the Government need to simplify funding procedures, and inspection and assessment regimes, in so far as they impact on higher education colleges.

Without going into too much detail, I believe that many of the report's proposals on student support mechanisms are extremely positive. For example, to name but three recommendations, if tuition fees rise, the Government should pay the full fee for poorer students. We also say that the increase in the income threshold from £10,000 to £15,000 should be up to £25,000, which is the average national wage. Finally, full cost maintenance should be reintroduced.

The aspect of student support that the Government urgently need to revisit is differential tuition fees. I agree with many points made on that by my hon. Friend the Member for Bristol, West. I have a great fear that if such fees are implemented, we will be in danger of creating more of a two-tier HE system than currently exists. In former mining communities, such as that in my constituency, where cash is still very much king, there is a great fear of debt. Under the Government's proposals, many students from poorer backgrounds will not be attracted to the best course for them, but to the most affordable one. Consequently, the two main criteria that some students will use to choose a university will be cheapness and closeness to home. If that proves to be the case, we shall fail to meet our golden objective of widening access.

Under the existing system for universities, Wolverhampton, Teesside, Newman college and North London have access rates of more than 40 per cent. for poorer students, while the access rate at Oxford and Cambridge is only 9 per cent. I would hate it if differential fees widened that already massive chasm.

Some difficult decisions need to be made about the future funding and expansion of HE. As with most difficult decisions in life, it is all a question of balance, as the Chairman of the Committee mentioned earlier. I hope that the report will give the Minister some assistance in getting the balance right.

4.28 pm

Andy Burnham (Leigh)

I am neither an educationist by background nor an expert by any means. I am also not a member of the Select Committee, which has produced an excellent report that hon. Members on both sides who are contributing to this debate would do well to read before they go out into the public arena to express their views on this complicated topic.

Despite that, I hope that I am well placed to comment because, without meaning to cause offence to my colleagues in the Room, I am perhaps the only person here who went to university under a mixed funding regime. In fact, I experienced the first year of student loans. I do not want this to be a sob story, but I also went to a comprehensive on Merseyside and then on to Cambridge university. I was in the first generation in my family to go to university, so I think that I can add a relevant, if personal perspective on the challenges that people from more deprived communities face in going to university.

I will start by admitting that, in the spring of 1989, when my right hon. Friend the Member for Newport, East (Alan Howarth) was putting the finishing touches to his student loans policy, I was marching through Cambridge on a "Grants not loans" march across Parker's Piece. I had long hair and flares—the lot. I was fairly convinced that that policy was the wrong way to go.

My brother, who was at the same school as me, was also on the march. He is now a teacher. In the Baron of Beef pub in Cambridge—a cracking pub that I would recommend to anyone—he said to me, "What on earth were you doing, a member of the Labour Party, on that march? That is naked self-interest that is at show there. These are people whose parents are wealthy. They are going to go into wealthy jobs, and they are parading through the streets of Cambridge saying that they shouldn't make any contribution and the people that you were at school with, who aren't at university—aren't in high paid jobs—should subsidise it." He rightly pointed out that of the 200 people in my school year at St. Aelred's Catholic comprehensive in Newton-le-Willows, 24 stayed on in the sixth form and, by my recollection, 12 went on to university. He rightly asked why those who did not go to university should subsidise the education that I was receiving. More to the point, why should they pay for me to lounge around reading Alexander Pope, as I was doing at the time?

One point on which I did agree with Margaret Thatcher was that my degrees were a luxury. I saw no reason why I, who was deriving personal benefit from them, should not make a contribution. It changed my view. I probably opposed the policy because the Tories were proposing it, but now I know that it was a Labour policy—a future Labour Minister was devising those proposals—I know why I belatedly came around to it.

The Conservatives were right to introduce a system in which individuals were asked to contribute to their courses through student loans, but where they were wrong—

Mr. Boswell

The hon. Gentleman is making a most winsome and appealing speech. I have no wish to complain about it, except to place one thing on the record, which is not clear from the way he has presented it: there were no tuition fees or charges for education under Conservative Governments. He is talking about student loans, which supported students' maintenance. That does not completely invalidate his argument, but it is important to place that on the record.

Andy Burnham

I am grateful to the hon. Gentleman for pointing that out. He is right. I was the beneficiary of a full maintenance grant, which was frozen in 1991. I then applied for a small student loan, which was the maximum available. However, the Conservatives introduced the principle that graduates should contribute to their education subsistence costs once they were employed. They were right to introduce that principle, but they were wrong to do so without concurrently increasing the funding going into universities from central Government through taxation. The two should have been done together. Their failure to do that led to under-investment in our universities, and to some of the problems with which the Minister is grappling today in presenting this package.

The Select Committee report is right to endorse the Dearing principle that the burden should be shared between the beneficiaries. The Chairman of the Select Committee made an interesting point about employers, which should be discussed further. The Committee was also right to conclude, in recommendation 37, that the deferral of payment of fees … removes one very significant disincentive to participation in higher education. Those who say that top-up fees will do precisely the opposite should consider the details of the package that the Government propose.

All Labour Members agree on two clear points: universities need more money, and we need to carry on expanding access and opening up opportunities to those from the lowest income families arid the most deprived areas. Obviously, certain logical questions follow, such as: how much should that be done? How much do universities need? What is the right balance between personal contributions, taxation, and, possibly, employers' contributions?

I represent a constituency similar to that of my hon. Friend the Member for Barnsley, East and Mexborough (Jeff Ennis). It is where I grew up. The deterrent effect of debt on working-class children is extremely serious. It would be a dereliction of duty for anyone representing constituencies such as ours not to give that point serious consideration before reaching a view on the subject, and I have given it serious consideration.

The alternative is to put greater sums of money into higher education and give universities what they need from general taxation. Would that be fairer for my constituency and the people I represent? Leigh has a post-16 staying-on rate of less than 15 per cent. As the Chairman of the Committee said, if the money were raised from general taxation, the people in Leigh would subsidise a service from their taxes that they have not used in comparison with other parts of the country and which their children, still today, will use proportionately much less than those in other more prosperous areas.

Dr. Gibson

Does my hon. Friend think that people who do not have children should pay for school education through their taxes?

Andy Burnham

I do, because I differentiate between school education and university education. School education is a service provided to the whole country—everybody, the whole society. University education—even today, given the expansion that happened under the Conservatives—does not benefit the whole of the population, so there is a big difference between the two.

Mr. Bendel

Does the hon. Gentleman accept that not everyone from 16 to 18 goes to school, yet it is free?

Andy Burnham

In my constituency, post-16 education is entirely free. When we were at school, there was no educational maintenance allowance. Like my hon. Friend the Member for Barnsley, East and Mexborough, I thoroughly endorse it—it is long overdue. It is right that further education should be provided entirely free to encourage people into post-16 education. I make no differentiation between the two.

If money is to be raised from general taxation for education, my last priority out of primary, secondary, FE and HE would be HE, because people in my constituency are not being prepared at the other levels for the benefits of HE. The money needs to be spent earlier on in the system. I am afraid that I can come to no other conclusion than that the fairest solution for my constituents would be to make people benefiting from university contribute to it. That will remain my position until the staying-on rate is higher.

Leigh has a low staying-on rate for FE. It does not have local school sixth forms. As for the quality of FE provision, the college is good, but the quality of the buildings is very poor. I would like the Government to prioritise investment in FE and sixth form provision in deprived communities, because the young people from deprived backgrounds that we are talking about today will not even get near a university until we have that part of the equation absolutely right.

Yes, investment in secondary education is coming through in my constituency, as I suspect it is in others. The next challenge is post-16 education. University is not an option for 50 per cent. of my constituents, because they are not staying on. For those who do stay on, the quality needs to be better so that university is a realistic ambition for them. For too many, it is not at the moment. That is my main conclusion about whether students should be prepared to contribute.

On the perception of debt, the very fact that the spectre of top-up fees is being bandied about in this place is damaging the cause that some people who are raising the argument seek to further. My right hon. Friend the Member for Newport, East referred to the matter. When young people hear this debate, they will be frightened, because it sounds as though they are being asked to contribute a great deal. We all have a duty to explain carefully what is meant. Up-front fees are being abolished—the Select Committee welcomed that. That is an important development, which means that parents in more deprived parts of the country will save money. It will take away an up-front cost that they have, which will make university education more attractive. That is getting lost in the fevered debate on top-up fees. We need to step back and think about what damage it may do when we are raising that spectre without doing justice to the detail of the package that the Minister proposes.

In my view, that package strikes a good balance. Will it put people off the best universities? When I went to Cambridge I was on a full maintenance grant. We did not have a great deal of money, but we knew that going to one of the best universities generally means better employment opportunities. That follows as night follows day. People would not go otherwise; that is why they do it. It might create a divided system, but can anyone in this Room tell me when the university system in this country was not either elitist or two-tier? It was made up of many tiers. It is probably the most divided public service in this country. From the very top to the bottom, there is a huge range of quality of provision. People must bear that in mind; it is closely linked to employment opportunities.

In closing, I shall mention three issues that should be considered in the context of the debate. The Select Committee in recommendation 25 suggests that the Government should look closely at the drop-out rate from university. I fully support that and ask that the Government take it seriously. However, it conflicts slightly with something that the Chairman of the Select Committee said, which was that universities should be left alone to manage their affairs much more.

Alan Howarth

Does my hon. Friend think that dropout rates need not necessarily be the subject of concern that they are? While in university, students presumably learn and if they drop out for a while then return, as many do, that should be their right, which may suit them well. Is it not important that we ensure that there is a credit accumulation transfer system that really works, and that we do not decry people who, possibly for entirely valid personal reasons, decide that for the time being they will desist from their courses?

Andy Burnham

I was not seeking to decry anyone who drops out, nor am I endorsing the view of my hon. Friend the Member for Norwich, North, who seemingly wants people to lounge around the student union playing pool and drinking beer, which he thinks is great for the taxpayer. I am not of that view either. My point is that we need to give students who are in danger of dropping out more support, but we also need to do something about the culture of some of our universities. It is on that matter that I disagree with the Chairman of the Select Committee.

As a first-year student, I was waiting for the tap on the shoulder: "Come on. We've made a mistake. You were allowed in, but you shouldn't be here. On your bike." Oxbridge—this is probably true of other universities—replicates a public school culture, which is bewildering and overwhelming for children from state schools. It is a world that they have had no exposure to whatever.

It is extremely difficult to make the transition from state education to Oxbridge because a supervision system with one-on-one contact where adversarial argument is encouraged and people are asked to take others on goes against the grain of everything with which people from state schools have had to deal. Perhaps state schools should be better at preparing their pupils for the rigorous challenges of higher education. I also think that we need to be more interventionist in relation to some of the more unacceptable practices of the most elitist universities.

We need to look at what is being provided. There is an issue around media studies. It is no good putting people on courses and asking them to make a contribution when we are raising expectations about the jobs that they may do in the future. Universities have an obligation not only to entice students in with fancy sounding courses that they think people will sign up for, such as sports studies or media studies, but to ensure that those students can find employment once they have left university. In some cases, in the rush to fill places and get people on courses, they are raising expectations that cannot be fulfilled.

Should we differentiate courses that lead to careers in important public services such as teaching and medicine? Should the state provide more help for people on such courses than for people who will go into highly paid jobs in the private sector?

There will always be political difficulties when expanding contributions from individuals into areas that have been traditionally funded by taxation. This issue raises difficult questions, just as residential and nursing care still do. The left of our party, and the left generally, often loses its way in such debates. It sees the loss of universal free provision as an attack on those on low incomes, when the opposite is the case. Such systems cross-subsidise those on the lowest incomes.

The crucial difference in this debate is that we are talking about a group of people—graduates—who, by definition, all become middle class when they finish their studies. That is what an HE qualification does. When we live in an unequal country, why should the left argue for state subsidies for that group of people when we have such pressing needs earlier on in our education system at primary, secondary and FE level?

The Government have got the balance right. The big challenge is to invest in our secondary schools and FE, and to lift the horizons of secondary school pupils. Everyone has bleeding hearts about kids from deprived backgrounds. Let us invest in their schools and give them self-belief and the belief that they can go on and fulfil their potential. Let us get the money to the parts of the system in which everyone benefits.

4.46 pm

Mr. David Chaytor (Bury, North)

I commend the report that has been produced under the chairmanship of my hon. Friend the Member for Huddersfield (Mr. Sheerman). This has been an interesting debate and there have been many valuable contributions. I draw attention, in particular, to what my hon. Friend the Member for Leigh (Andy Burnham) said. Even though he ate a little into the time that I hoped to have for my speech, I thought it important that he spoke from his experience.

I think—perhaps the Minister agrees—that the arguments that have been made this afternoon supporting the Government's policy on tuition fees have started the process of shifting the balance of the wider parliamentary and political debate. I have always thought that, as more people engaged in the debate on tuition fees and differential fees, and as more Members informed themselves about the full implications of the policy, the negative reaction that the White Paper received in January, and which has continued since, would start to shift. This afternoon's debate is significant and could be a turning point in the debate on top-up fees.

Although the report deals with many significant issues, including research, admissions policies and links with business, I want to use my short time to focus on fees. I will start with the Organisation for Economic Cooperation and Development report published earlier this week and widely covered in the national press yesterday. Although it appeared to be mainly about the educational performance of 25 to 34-year-olds, who were educated under the Conservative Government, it contained an interesting statistic that related to the impact of university education in the United Kingdom. As I recall, only the Financial Times covered it.

The report showed that the graduate premium in the United Kingdom is far in excess of that in any other OECD country. In the debate on the reform of tuition fees, the Government have used the figure of 20 per cent. as a graduate premium. That is to say that, all things being equal, on average, a graduate will earn 20 per cent. more than a non-graduate throughout his or her lifetime. In the OECD's report, the figure of 61 per cent. is quoted as a graduate premium. That clearly needs further checking, but if that is the case, and British graduates earn, on average, 61 per cent. more throughout their lifetime than non-graduates, the case against what the Government are doing must collapse immediately. That is an absolutely crucial point.

Mr. Rendel

Does the hon. Gentleman accept that what is really important about the graduate premium is the difference between what is earned by someone who goes to university and what would be earned by that same person if they got up to A-level but did not go on to university? In practice, the OECD report looked at the average graduate salary compared with the average non-graduate salary for people who would never have got to university anyway. That is quite a different figure.

Mr. Chaytor

The hon. Gentleman makes an important point. That is exactly why I said that we must look in more detail at what the OECD says. The fact remains that it is indisputable that the possession of a university education in Britain brings enormous financial advantages. Whether we are comparing non-graduates as a whole, or looking at what would have happened to the same person had they not gone to university, is frankly irrelevant.

Let us focus on the graduate premium. Here we see the precise justification for what the Government are trying to do. I reiterate the point made by my hon. Friend the Member for Barnsley, East and Mexborough (Jeff Ennis) who said that this is entirely about balance. Of course it is. It is not about a great ideological divide, but about the balance, quoted by Dearing in his report, between the contributions of the individual and the contributions of the state. In one sense, I am surprised that people get so excited by the issue, because the question is where the balance should lie. At the moment, 25 per cent. of tuition fees are paid by the individual on average, and 75 per cent. by the state. The debate is all about the powerful case for shifting that balance.

Before I move on to differential fees in general, I shall speak specifically about differential fees within universities, which has been touched on. My hon. Friend the Member for Bristol, West (Valerie Davey) is very much opposed to them on the grounds of who will make the decision. I have to tell her that such decisions are made every day of the week by managers in different educational institutions up and down the country. I spent much of the 10 years before I came into Parliament making precisely such judgments. That is partly what I was paid for. It is not terribly difficult. If the policy goes through, as I hope it will, that is what people in universities will be doing.

My hon. Friend the Member for Norwich, North (Dr. Gibson) asked my right hon. Friend the Member for Newport, East (Alan Howarth) about the relative costs of degrees in physics and mediaeval history. The question was not answered, but had it been put to me, I would have said that the answer is very simple. Most universities would make a judgment that they want to recruit more physicists because that is desperately in the national interest and will probably enhance the prestige of their university more than having even more mediaeval historians. I have nothing against mediaeval historians; some of my best friends are mediaeval historians, but it is indisputable that, in terms of the national interest of the United Kingdom, for the foreseeable future, we need significantly more physicists and slightly fewer mediaeval historians. The logic of that is that the fees set for physics degrees should be lower than the fees set for mediaeval history. I have to declare an interest because my son starts his physics degree next Monday; but setting that on one side, the point remains valid.

I turn to the wider issue of the so-called top-up fee and different fees at different universities. The question is one of balance, but it is also whether we want a university system that continues to thrive and that can compete with the best in the world. I have not yet heard anyone deny that that ought to be our national objective, but there is another question: do we want to continue to expand access to that world-class university system? Here is a divide because the Conservative party has made very clear its view that it wants to turn back the clock 25 years, restrict access to university and deny opportunities to large numbers of young people and mature students. My reading of the figures produced some weeks ago by the Higher Education Policy Institute suggests, allowing for the natural growth in demand for higher education as a result of the increasing number of students achieving the relevant A-levels, the population growth and the demographic factor which predicts an increasing number of 18-year-olds, that the Conservative party's policy of abolishing fees by cutting demand would result in a net loss of 464,000 university places by 2011.

Mr. Boswell

Will the hon. Gentleman give way?

Mr. Chaytor

I will not, as I am short of time. I am sure that the hon. Gentleman can make his point in his winding-up speech.

The nub of the issue is whether we want to turn back the clock—not to maintain the status quo but to turn back the clock to an ever-more elitist system that denies opportunity to those who could benefit from it—or whether we should find another way of funding quality and expansion. The Liberal Democrats have decided that they want to fund it out of general taxation. I would have no problem with a 50 per cent. rate of income tax on earnings over £100,000. Indeed, given the opportunity, I would probably vote for it tomorrow. However, we must keep in mind the fact that no one can give a cast-iron guarantee that, in future spending rounds, university funding would take priority over preschool, primary and secondary education, over further or higher education, or over policing, public transport or defence. I defy hon. Members to say that they could give such a guarantee.

I return to the question of the top-up fee. What is being proposed is an additional fee of £1,900 for each year of a three-year degree course. The Government have guaranteed that that sum will remain fixed until 2011, but with the impact of inflation on the basic fee, we will be talking of an increase of £1,750 for each year. If we consider the graduate premium of between 20 per cent., which was cited earlier, and 61 per cent., it is extremely difficult to see how graduates whose average earnings are now well over £30,000 a year and who, by the end of the decade, will be earning as much as £50,000, cannot afford to pay three times £1,750 over their working lives. That is particularly so when the protection is built into the system that the figure will remain at only 9 per cent. of earnings above £15,000. That is a comparatively modest amount.

Some may support the money being paid back over a graduate's working career, but through a graduate tax. I have to say that what happens now is a graduate tax by another name. However, it does not have some of the weaknesses of a graduate tax, under which some people could avoid payment altogether. It will be difficult to avoid payment under the present system.

I come finally to debt. Many of us were the first in a thousand generations of our families to go to university. The question of debt is critical. I do not accept the romantic picture of a heroic, golden age, with working-class people refusing to get into debt. In the United Kingdom today, we see people of all socio-economic groups getting into debt; it is far more a part of life today. The fundamental distinction is not between debt and no debt, or between a willingness to get into debt and fear of debt. The distinction is the purpose of the debt.

Our problem—this is a wider issue about our political culture—is that we happily accept getting into debt for the purposes of consumption, but many have great difficulty in understanding the concept of debt for investment. People, especially younger people with very little money whose families also have very little money, will cheerfully borrow on their credit cards at exorbitant rates of interest in order to buy mobile phones and trainers. As they get older, they will borrow to buy motor cars and to go on foreign holidays. As they get older still, they will cheerfully borrow hundreds of thousands of pounds to buy houses. Why will they not borrow about £6,000 for the best investment that they could ever make?

4.59 pm

Mr. David Rendel (Newbury)

I am delighted that we have had yet another opportunity to debate higher education and how we pay for it, because it is one of the most glowering dividing lines in British politics. The Government want to pay for it out of tuition fees, the Liberal Democrats out of general taxation and the Conservatives by cutting the number of students. At stake is the future of our higher education system, which, as the Chairman of the Select Committee said, has a great deal going for it in terms of academic standards and international reputation, but which is struggling to cope with the legacy of years of under-investment. Student numbers have expanded while funding per student has dramatically declined for the last two and a half decades. The result is a threat to the quality of the education and research that universities are able to provide.

There is much to welcome in the Select Committee's report. It acknowledges the problems facing higher education. Apparently, only the Conservatives are oblivious to the fact that universities need more money—now—and to the powerful moral and economic case for wider participation and greater social equality in our universities. The Liberal Democrats agree with the Committee about the importance of teaching taking place in a research-active environment—a criticism of the Government's contention that the relationship between teaching and research is merely indirect. We also agree with the Committee about the concentration of research funding. I note that on both those issues the Government have managed to unite in opposition to what they are doing almost the entire higher education sector, including Universities UK, the Association of University Teachers, the University and College Lecturers Association and the National Union of Students. The Committee is also right about the critical issue of academic pay and its influence on retention and recruitment. It points to the absence of any substantial improvement in academic and other salaries. In response, the Government say: We do not see evidence of a generalised recruitment and retention problem. However, has the Minister read the Treasury-commissioned study by Sir Gareth Roberts on the supply of science and engineering skills in the UK? That finds evidence to suggest that, given the expansion plans for higher education and the ageing demographic profile of academic staff in key disciplines, we face a staffing crisis grounded not least in the fact that academic pay is far too low.

I am delighted to pledge that my party would ensure that the universities received adequate funding to implement the proposals of the Bett report. The Liberal Democrats also agree with the Committee about an Office of Fair Access—"slim at best" is its verdict on the evidence as to why such a regulator is needed. The Government are very conscious of the need to avoid creating new bureaucracy". That is good news, but it is difficult to see Offa as part of that commitment.

The Committee also concluded, rightly, that the 50 per cent. target is completely arbitrary. Hon. Members might recall an investigation by the Public Accounts Committee, on which I am proud to serve, which found that definitions of the 50 per cent. target have changed over time and that the method of measuring participation—the initial entry rate—amounts, essentially, to guess work. I therefore welcome the Government's response to the Select Committee report, which states: We are ultimately less concerned with the precise percentage rate of participation in any particular year than with the fact that increasing numbers of people can get the higher level of education and training that they and the economy need. That is coming pretty close to what we have been saying all along.

More recently, Liberal Democrat research has shown that the proportion of school leavers applying to go to university is on the decline in England. If one looks at those aged 18,19 and 20, one sees that the number of university applicants increased by only 1.6 per cent. If the increase had been in line with demographic trends it would have been 3.2 per cent.—an extra 5,437 young people. That would just have retained the existing proportion of young people going to university, never mind increasing the proportion towards the Government's target.

It is interesting to compare the situation to that in Scotland, where the age group expanded by 2.1 per cent., but the number of university applicants from it increased by 5.7 per cent. That leads me to the key issue of student support and funding because of the glaring policy difference between England and Scotland, where the Scottish Executive have abolished tuition fees.

My hon. Friend the Member for Chesterfield (Paul Holmes) was the lone dissenting voice on the Select Committee, speaking out against tuition fees and top-up fees. It is revealing and sad that he received no support from its Conservative members, even though the Conservative party now claims to oppose the levying of tuition fees. The Labour-Tory majority on the Committee is, in our view, quite wrong to be so complacent about this issue.

Recent surveys show that the student debt problem is increasing and will increase further if top-up fees are introduced. A study by Barclays bank estimates that the average student debt on graduation will triple by 2010 to an alarming £33,708. With inflation at 3 per cent., such debt will increase by more than £1,000 a year, which means that a graduate paying 9 per cent. interest will need to earn at least £11,000 above the threshold before their cash deficit begins to be paid off at all. Furthermore, that threshold is due to be increased to £15.000 and is rumoured to be under consideration for a further increase. I note that the Select Committee's report concluded that the thresh old should go up to almost £25,000.

There is no doubt that debt acts as a significant disincentive to entry into higher education, especially for those young people from low-income backgrounds whom the Government say they most want to attract into our universities. There is particular concern about the disincentive to those considering longer courses such as medicine. The Committee notes critical evidence from the British Medical Association, the British Dental Association and the Royal College of Veterinary Surgeons on that point. The return of grants is welcome, but as the Committee notes: The general view of our witnesses was that the amount was too low to have any significant impact on students or potential students worried about their level of dept.

In passing, I hope that the Government will also take into account the point that top-up fees would also be a disincentive to those considering taking a gap year, especially in the year in which top-up fees are introduced. Many may decide not to take a gap year if a delay in university entry until the following year means that they will have to pay top-up fees.

There are two arguments for top-up fees, which seem superficially compelling but are both flawed. The first is that universities need the money. They do: everyone, except the Conservatives, accepts that. However, universities will not end up with a single extra penny as a result of top-up fees. Fee income will simply replace a cut in public grants. That is exactly what happened when tuition fees were introduced, which should have been a surprise to no one. When considering how much grant to allocate to HE, any Chancellor, of whatever party, is bound to decide how much of the nation's wealth can justifiably be spent on HE and take into consideration how much money the sector is receiving in tuition fees.

The Select Committee advances a second argument for tuition fees to refute the case for progressive taxation as the best and fairest way to fund higher education. It states: The price to be paid for that funding … is greater Government control of the sector", and that there would be less "independence and freedom" for universities. However, public funding need not and should not imply Government micro-management. Public money is frequently spent by bodies such as Government agencies, which operate at arm's length from the Government. In addition, the threat of interference by the funder is true of all types of funding, not least that from the private sector. By supporting some research projects rather than others, the private sector can also undermine academic freedom: the drugs industry is an obvious example. In such cases, public involvement can protect academic freedom.

The Select Committee heard evidence criticising tuition fees from the National Union of Students, the Association of University Teachers and NATFHE. According to the AUT, 88 per cent. of its members say that they would prefer HE to be funded through general taxation.

Andy Burnham

Will the hon. Gentleman give way?

Mr. Rendel

I am sorry, but I do not have the time.

According to NATFHE, its members are "overwhelmingly opposed" to top-up fees. Academic freedom is a central concern of university teachers and students, yet they accept the overwhelming case for funding through taxation.

I will deal briefly with the Conservatives. They are keen to trumpet their new policy to scrap tuition fees, but no one seems to have told their members on the Select Committee, who failed to turn up to meetings or who supported the Labour majority. We have had other opportunities to debate the ludicrous and dangerous nature of Conservative plans for HE. They say that students will not have to pay tuition fees, but in many cases that is only because those students will not be offered a place at university anyway. Separate studies by the Institute for Fiscal Studies and Professor Nicholas Barr of the LSE confirm that these cuts will hit the poorest the hardest. In addition, Universities UK and the Library have rubbished the Tory sums, which simply do not add up.

Meanwhile, the Liberal Democrats have consistently advanced the principled case against fees. I am proud to say that it was a Liberal Democrat MP who stood alone against the Labour-Tory majority on the Select Committee to speak out for a fair deal for students. I do, however, want to pay tribute to the many Members on the Labour Benches who are also taking a principled stand. They know that there are enough of them to force the Government to back down. If they stand firm, there are enough of them to win the day, but they will be faced during the next few months with all the threats and blandishments that Government Whips can think of. If they start to weaken and allow themselves to be persuaded, their electorates will never forgive them. The polls show that 80 per cent. of the people of England believe that top-up fees are wrong. The Labour rebels have a chance to save their party from electoral disaster, and I urge them to seize it.

5.10 pm

Mr. Tim Boswell (Daventry)

This has been a good debate, based on an interesting, challenging and generally positive report, well introduced by the Chairman of the Committee and spoken to by Committee members and others today. All the submissions and evidence provided have made a major contribution to adult education. That is something to be grateful for.

I hope—not least because in a moment I shall have critical things to say about Her Majesty's Government—that we can begin with some measure of consensus. I throw one point to the Government on which we can agree: I am delighted that they are introducing in their White Paper proposals for an arts and humanities research council. We—the right hon. Member for Newport, East (Alan Howarth) and I—laid the foundations of that work in the early 1990s. That sort of thing always takes a long time.

Rather than go on with the pleasantries, let us try to concentrate on the main issues that have emerged today. First, a brief word on research funding. Much has been said on that. I strongly endorse the feelings of the Select Committee about the lack of notice of changes made in the middle of the research cycle; the likely pyramid effects of concentration; the equivocation at the distinction between research-rich and teaching-rich universities; the somewhat undistributed middle of knowledge transfer; and the fact that throughout the academic world things are never simple. I hope that the Government will, as they have shown some sign of doing, relent on the more extreme application of their somewhat dirigiste policies and remember that it is sometimes necessary to let a million flowers bloom. That has happened very successfully in British higher education. That very positive point was rightly brought out by the Chairman of the Select Committee.

I shall say a word on the Office for Fair Access because recommendation 27 advises the Government not to proceed with the introduction of OFFA. I strongly endorse that recommendation, and not primarily for resource reasons—neither the resources needed to govern it, nor the implementation and compliance costs for the sector. The Minister will remember that the PA report suggested compliance costs with regulation of some £250 million, before we have even started.

In all friendliness, I say to the Minister that the construction of OFFA has been a very Jekyll and Hyde affair, according to whichever Minister has been dominant at the time. At the time of the White Paper, I thought that OFFA was becoming regulation-light—or regulation-lite, no doubt—and that it was simply going to ensure that individual institutions were producing fair access arrangements and look at how they were considering admissions. The Committee and the Minister will be aware that Professor Schwarz is to make recommendations as early as next week on admissions conditions, and we look forward to that.

However, ministerial written answers this week have made it clear to me that OFFA will busy itself not simply with the process of admission, but with the continuing business of the offering of bursaries in the delivery of higher education. Although that may be understandable for access reasons, it means that the whole process of university activity will be a proper subject for further interference and—a matter on which I might touch again in a moment—litigation over compliance with those agreements during the course of studies. That will create a climate of regulation, which will be entirely unhelpful.

Tuition fees are today's major concern. I turn aside from my own comments to comment briefly on what has been said, in terrorem, by the hon. Member for Bury, North (Mr. Chaytor). He said—not casually, because he repeated the assertion—that the Conservative proposals would set back participation by 25 years. I invite him to consider the age participation index in 1978 and then justify that assertion. The hon. Member for Newbury (Mr. Rendel), whom I will allow a degree of franchise for flippancy, said that no one would be going into higher education under the Conservative proposals. I take it that that is not a serious assertion that he would wish to sustain.

If one considers the figures, it is as well to remember, for example, that 60,000 students drop out of their courses before graduation. Bearing in mind the Minister's past remarks that only graduates would have to pay, all that students who drop out will have is a substantial residual burden of student debt.

I have four comments to make about tuition fees. First, the Government's policies are unclear. That is not entirely a negative, because it is right— [Interruption.] It is necessary for the Government to consider the details more closely, considering the Minister's reaction. Apart from the need for maintenance concessions, there is a need for flexibility, whether that is implemented in regulations or not. I am not thinking wholly of the fees cap—the hon. Member for Bury, North was unduly credulous in believing that it will never be lifted—but rather of all the difficulties with which the Minister will become familiar: intercalated students, students who were full-time and convert to part-time and students who change residency. Those issues are extremely complicated, and they need to be properly addressed.

There is also the question of prospectuses. Universities will issue:heir prospectuses in the new year, and there will be students—even those who are not worried about taking a gap year—who will read them on the assumption that they will be resident from autumn 2006, without having any indication of the access agreements.

My second and more substantial objection to tuition fees is their instability. The Select Committee—for reasons that are not solely financial—has already called for an increase in the cap to £5,000, which would make a huge difference to the residual debts. That is the problem with a forced market. There are clearly higher education institutions that would like a higher cap or to charge whatever they like.

It is also worth considering the sustainability of the student fee proposals. I concur with the hon. Member for Newbury when he argues that the Chancellor will pocket the fees. The fees will be taken into account in the public expenditure survey in exactly the same way the 1998 tuition fees were. The stress on resources is likely to lead to a breach of faith because of the 50 per cent. participation target, which will be subject, as has been said, to interpretation. Even more disturbingly, it has emerged that we may end up with one cohort of students paying for another. It has been suggested that as much as one third of the top-up fee will be milked to provide bursaries for other students and to promote access. Ministers need to reflect on the fact that the students from whom the money may be taken—paying with their own money for the facility—may not end up as the highest earners and those most likely to benefit from the courses. There is a degree of inequity there.

My biggest concern, which is touched on by the Select Committee but will need further discussion, is the impact of rolling up student loans. If we accommodate that, and if we say that the resources are there and that the Government will cover them by loan, there is already an implicit subsidy of £800 million a year. It is likely, if the Government are going to cover anything like the cost to students, that that will escalate to £2 billion a year, and even if there is some cash flow back, it seems unsustainable to me. Although we would like to do as much as we can for higher education, there are other priorities, including some that have been mentioned in relation to education, quality of secondary schools and access.

My final objection is that the policy is simply unfair. It will prove very difficult where there are two or more siblings in the family, where there are long courses, in the handling of drop-outs who have to pay substantial sums with no apparent merit and in possible cross-subsidy between students. For poorer students there is an immediate deterrent.

Members of the Chamber will be aware that yesterday, innocently enough, I asked the Prime Minister whether he felt that he had sufficient Back-Bench support for the measure. The answer made me identify for the first time with Conan Doyle and "The Hound of the Baskervilles". It was the dog that did not bark that told the loudest story. All I would say to Labour Members who do not favour differential fees is that they ought to consider coming over to this side of the Chamber, where we shall charge no fees at all.

5.20 pm

The Minister for Lifelong Learning, Further and Higher Education (Alan Johnson)

This has been a really excellent debate on an excellent report. To keep Back Benchers here for two hours after the House has adjourned on a Thursday is testimony to the quality of the debate. In the short time left to me, I want to do justice to the points raised by my hon. Friend the Member for Huddersfield (Mr. Sheerman) and pick up on some of the other issues.

One of the real benefits of the way my hon. Friend opened the debate is that he added a bit of poetry that is not in the White Paper about the importance of universities and the higher education sector. Lord Dearing has a good phrase for that, which I will pinch. He said that in the middle ages, communities were built around the castle; at the time of the industrial revolution, they were built around the factory. In the 21st century, communities will be built around universities. That is a really important point about the changing nature of university education.

There was a difference of opinion on whether there is complacency—particularly in the contribution by the right hon. Member for Kensington and Chelsea (Mr. Portillo)—in the Select Committee report. I do not think that there is and there is certainly no complacency in our White Paper. We are not saying that the higher education sector is declining. We are saying that it is in serious danger of falling behind its competitors, which is why we published the White Paper.

My right hon. Friend the Member for Newport, East (Alan Howarth) paraphrased Rab Butler and said that we are grasping a number of nettles. Why are we doing that? Why did we not just say that we have reversed the decline in cost per student? We are putting a real increase of 6 per cent. back into higher education during the next three years. By the end of the three-year spending review, the taxpayer will be putting £10 billion into higher education—£400 for every taxpayer in the country. Why did we not just leave it at that and not get involved with issues that are hardly focus group policies designed to pursue cheap popularity?

We did not do so—this applies to research as well as fees and funding—for the following reason. I have the figures that show what is happening around the world. The United States of America is planning an 8 per cent. increase in research and development in its universities this year. Canada is aiming to double public sector research and development spend as a proportion of gross domestic product by 2010. Between 2000 and 2005, Japan is increasing investment in science and technology by more than 16 per cent., and that is apart from what is happening in India and China. The world is changing very quickly and if we do not react, and show a bit of political courage in reacting to that challenge, our excellent higher education sector will decline and diminish.

In relation to research it is fair to say that there has been a modicum of controversy about our proposals, but we should be absolutely clear. I take a position that is balanced fairly, as always, between the comments made by my hon. Friend the Member for Huddersfield and those made by the right hon. Member for Kensington and Chelsea. We were moving 2 per cent. of the research budget around and we did that because it will be 2008 before the next research assessment exercise, which takes place every seven years. We were trying to respond to the pressures, as we saw them, in the changing world and we did so very quickly after publication of the White Paper. The Higher Education Funding Council for England report went out about two months after the White Paper and there was a great deal of tension about whether we might have moved too quickly.

To put the matter into context, we said in our response to the Select Committee report that we are not funding a few institutions. Already, 75 per cent. of research funding goes to 25 institutions. We are not saying that only a handful of institutions will receive extra money. We point out that next year more than 43 different institutions will receive more than £5 million each for research. However, that has created tensions.

My right hon. Friend the Secretary of State must feel like a character in a Bateman cartoon. The man who suggested that excellent teaching can exist in its own right, independent of cutting edge research, has created a furore. I seem to have interfered with the ark of the covenant in terms of higher education. I do not want the argument to continue and I do not want to be at loggerheads with the Select Committee or any other group that has made representations. I want some shared analysis. Given that the objective must be the same throughout the sector and among the various players, we must have shared analysis and repair some of the damage done by moving quickly without consultation early on. The HEFCE report, which is out for consultation, and the Gareth Roberts review of the research assessment exercise provide a vehicle for a proper debate. The Select Committee's recommendation that we move that £21 million back again is what we are specifically rejecting and there are understandable reasons for that.

I must defend my hon. Friend the Member for Huddersfield because the Select Committee did not suggest a variable fee with a £5,000 cap. However, it recommended a real rate of interest being attached. We point out in the report the effect of that on low earners after graduation and the figures speak for themselves. It is worth noting that New Zealand went down that route and is now rowing back because of the problems it caused. That is the specific recommendation that we are rejecting.

There were so many good contributions, but in the few seconds left to me I want to speak about funding. This has been a good debate on the Select Committee's report because it is predicated on two central issues. First, should we expand higher education? Yes, we should, say the Select Committee, the Government and, to be fair, the Liberal Democrats. No, we should not, says today's Conservative party. I cannot understand that view and I am absolutely sure that the hon. Member for Daventry (Mr. Boswell) is as uncomfortable with it as everyone else. When we get past the stage of deciding whether to expand higher education, the question is: how should we fund it? The Select Committee said that the Dearing committee set out the principles. That was no fly-by-night, cobbled-together committee. It was a national committee of inquiry set up by the previous Government, who unanimously recommended that graduates should make a contribution. When the Cubie committee in Scotland considered the issue, it specifically rejected all the arguments of the Opposition parties, which included the Liberal Democrats at the time, but who are now in coalition government, and the Conservatives. It said that graduates should make a contribution and that is why there is a non-means-tested contribution of £2,000 by every Scottish graduate after they have graduated. Not just Cubie, not just Dearing and not just the Select Committee, but everyone who analysed the matter properly said that graduates should make a contribution. So we are left with the real debate, which is, given the two issues of expanding higher education and graduates making a contribution, how do we do that?

My final point on whether contributions should be variable or fixed relates to the case made by my hon. Friend the Member for Bristol, West (Valerie Davey). I cannot understand why students should be denied the chance to choose the course that they want at a price that suits them or that universities should not offer them. If we have a system with protection, a reintroduced maintenance grant and income-contingent loans—my hon. Friend the Member for Bury, North (Mr. Chaytor) explained the issue more eloquently than I could and it is not credit card debt—the whole package, plus the introduction of help for part-timers for the first time, plus help for postgraduates is a good package.

This has been an excellent debate.

It being half-past Five o'clock, the motion for the Adjournment of the sitting lapsed, without Question put.