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Baroness Hamwee: My Lords, I am a poor substitute for my noble friend Lord Tope who is very sad that he cannot be here this afternoon. He will be relieved that these proceedings at any rate are uncontentious. He will read the remarks of the noble Baroness in Hansard. He is one of those noble Lords who I can say with confidence will read what he should read. He would want me on his behalf and on behalf of these Benches to thank the Minister for the work, the co-operation and assurances given during the course of the Bill.

I repeat that we on these Benches welcome the Bill. But I should also repeat that we welcome it as a small step towards the better funding of education. We are still not clear what the net financial savings will be. We support the Government's objectives, though the Minister will understand the slight note of scepticism that crept into some of our remarks with regard to identifying the means. Therefore, while we welcome the Bill, we hope that the Minister will recognise that we do so continuing the constructive comments and sometimes constructive criticism made by my noble friend.

Lord Campbell of Croy: My Lords, I thank the noble Baroness, Lady Blackstone--and the noble Lord, Lord Sewel, because half the Bill applied to Scotland--for their courtesy and helpful replies at the various stages through which the Bill passed.

I can now bring the House up to date about the saga of the phantom Scottish White Paper. I have received, since Report stage, the promised letter from the noble Baroness. It confirms that there is no Scottish White Paper to match the English one. Her letter also confirms my surmise at Committee stage that the Scottish equivalent was only a press conference at the Scottish Office taken by a junior Minister on the same day as the English White Paper was published--7th July. I reiterate

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my view, respectfully, that that is not a suitable substitute for a public parliamentary paper available to all; namely, a White Paper.

I remind the House of the significance of the White Paper. At Second Reading on 24th June the noble Baroness referred to the publication of a White Paper early in July as a future event very relevant to the Bill, in particular on plans for reducing class sizes. She mentioned it in both her opening and closing speeches. In the closing speech she described it as a wide-ranging document.

The Bill covers England, Scotland and Wales. The noble Baroness said nothing to indicate that the White Paper would be on England only. I, and no doubt others, then awaited with eager anticipation the appearance of this document which had so much bearing on the Bill. Sure enough, a White Paper on education was published on 7th July with a Statement in Parliament at the same time. There was nothing in the White Paper or the Statement to say that it dealt only with schools in England. I deduced that it was on England only and asked in the questions after the Statement whether there was a White Paper for Scotland. The noble Baroness was not able to tell me. She clearly did not know and undertook to write to me. She also, generously, said nice things about the Scottish system of education, with her customary charm.

Of course, the unsatisfactory situation that I am describing is no fault of the noble Baroness or of the noble Lord, Lord Sewel. They have admirably given explanations and replies from their briefs. However, I blame the Government as a whole. A White Paper for Wales dealing with education has been published since 7th July. I also blame the Government as a whole for giving the impression that they have overlooked Scotland; and worse, that Scotland does not matter. That impression provides ammunition for the Scottish National Party, though I am sure that that unfortunate impression was not intentional. It was probably due to carelessness. But it does not help new Labour in its feud with the SNP.

When we consider that the Scottish constitutional White Paper which will come out tomorrow, the devolution debate which will take place next week and the whole referendum procedure are happening largely in an attempt--misguided, in my view--to outflank the SNP, it is unwise to appear to have forgotten about Scotland in specific fields like education. It would not have happened in the time of the late Lord Ross of Marnock. I am glad to see the noble Lord, Lord Hughes, present; he will remember those days.

Lord Ross and I twice reversed roles on the Front Benches in another place as Secretary of State and Shadow Secretary of State. Noble Lords from Scotland in all parts of the House will know that I had a great respect for him. Storms and gales would have whistled down the corridors of Whitehall if he had learnt of a proposal to issue an English White Paper without proper arrangements for, or knowledge of, a Scottish equivalent. Incidentally, in those days a White Paper was white and contained the necessary information; it was not a glossy brochure with colour pictures.

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At one stage in Committee, on 10th July, the noble Lord, Lord Peston, suggested that the debate had been hijacked by the Scots and that even that was legitimate. Half the amendments which were grouped for that debate indeed related to the Scottish part of the Bill. Our legitimate Scottish points were about the destruction of the assisted places scheme North of the Border. It is with sadness that I see this Bill proceeding to its final stage.

Baroness Blackstone: My Lords, can I perhaps say that absolutely no discourtesy was meant for Members of your Lordships' House from Scotland who have a specific interest and concern for Scotland. I am extremely grateful for what the noble Lord, Lord Campbell of Croy, said in relation to the propriety of proceedings in this House. I shall of course pass on his concerns to my right honourable friend the Secretary of State for Scotland.

On Question, Bill passed and returned to the Commons with an amendment.

Higher Education Inquiry: Report

3.37 p.m.

Baroness Blackstone: My Lords, with the leave of the House, I shall now repeat a Statement being made in another place by my right honourable friend the Secretary of State for Education and Employment about the publication today of the report of the National Committee of Inquiry into education. The Statement is as follows:

    "The Government are very grateful, as I am personally, to Sir Ron Dearing the chairman of the inquiry and to the 16 members of his committee. Their work has been completed in record time and in a manner for which we are all extremely grateful.

    "Today the Government announce a new deal for higher education: new funding for universities and colleges; free higher education for the less well off; no parent having to pay more than at present; and, a fair system of repayment linked to ability to pay.

    "Our university system is in crisis. Our competitors in North America and the Far East--the Asian Tigers--have many more young people in higher education. In the USA participation is about 40 per cent., in Canada 44 per cent. They recognise the need to invest in their people, mirroring the investment in fixed capital and equipment of the past. Such countries are expanding higher education rapidly. Business in this country also recognises the need for a strong and thriving university sector to prepare for the 21st century.

    "One in three young people now enter higher education compared with one in 20 in the early 1960s. Half the students in higher education are over the age of 21 and a third of them are part time. Public funding per student has fallen by around 25 per cent. over the past decade with consequences for the quality of teaching, seminar work, materials and equipment. Yet

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    the increase in participation among socio-economic groups A to C has been double that of groups D and E. The present system is not working.

    "The same level of funding for students today as existed in the 1970s would cost the taxpayer an extra £4 billion per year. If we combined that level of funding with increased participation--towards 40 per cent.--it would cost an additional £2 billion by 2015. Taken together, such changes would add 3p in the pound to the basic rate of tax.

    "The last Government placed a cap on the expansion of higher education, created the present mix of loans, grants and parental contributions, and failed to address the financial implications of the further development of the sector. However, with cross-party agreement, they established the Dearing Inquiry accepting that the status quo was not an option. Everybody recognised that our higher education system was in dire need of attention. It has both funding problems and huge anomalies. Tuition is free for some, but 500,000 part-time students in higher education and many of the 2 million further education students are expected to pay fees and receive little or no maintenance support.

    "The committee was given the task of ensuring maximum participation in higher education, enhancing standards and quality, ensuring fair and transparent means of student support, while obtaining value for money. The Government endorse the aims and purposes of higher education set out by the committee, building upon the Robins Committee Report of 30 years ago. Higher Education in the Learning Society is a coherent and thoughtful report providing a vision of the future.

    "The committee's recommendations cover the local and regional role of higher education, the qualifications framework, academic standards, the role of information technology, management and governance of institutions and the quality of teaching and research. We shall be considering these recommendations over the summer.

    "We welcome the committee's proposals for widening participation, including its emphasis on those groups which are currently under-represented. Later this year we will set out our comprehensive response in a White Paper on lifelong learning. I give an initial response to set out a clear direction.

    "The committee recognises that we cannot afford further improvement or expansion of higher education on the basis of current funding arrangements. Students should share both the investment and the advantages gained from higher education. Rights and responsibilities go hand in hand. The investment of the nation must be balanced by the commitment of the individual. Each will gain from the investment made. Graduates gain considerably from higher education compared with non-graduates. Graduates, on average, see their earnings rise by as much as £4,000 for every £20,000 of earnings.

    "We have considered funding options within the principles laid out in Opposition. Dearing believes that the present loan system is unfair and not working

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    effectively. He recommends that: loans should be paid back over a longer period of time to help poorer students; that parents should not be asked for higher contributions; that a £1,000 tuition fee for everyone--roughly 25 per cent. of the average cost of a course--should be added to the loan; and that some element of maintenance grant be retained.

    "We accept a great many of the broad principles laid out by Sir Ron. We intend to build on the committee's preferred option, taken together with the proposal in our policy statement Lifelong Learning. We must develop a more efficient system than the present confusion of loans, grants and parental contributions.

    "For lower income families remaining grants will be replaced by loans of the same value. For higher income families an additional maintenance loan will be available equivalent to the tuition fee. We will, however, ensure that the poorest students do not have to pay fees. That is the best way of encouraging access and free education for the least well off. We are equally determined that there should be no increase in parental contributions.

    "Our response to Dearing ensures that fees and maintenance taken together do not place an increased burden on middle-income families. Parents at present are expected to contribute up to £2,000 for maintenance. The committee proposes that repayments should be made on an income contingent basis. We accept this but the committee's funding options also assume that repayments should begin when a graduate's income reaches £5,000. We do not believe that this is acceptable. We will consult on a higher starting point for repayment. We also believe that repayments should be over a longer period and set at a lower level of annual repayments than is proposed by the committee. A supplementary hardship loan, of £250 per year, will also be available.

    "We are also minded to accept the committee's recommendation that students with special needs should receive the specific grant on a non-means-tested basis. We will consider the need for appropriate measures, such as bursaries for students entering teacher training and some health and social care professional courses. Employers in other fields may wish to consider similar measures. We intend that these proposals apply to all new students and we are examining how best such changes might be phased in.

    "In addition, I also wish to assure the House today that top-up fees play no part in the Government's proposals. No university or college should proceed on the basis of introducing such additional fees. The Government will also be considering how the new arrangements will apply to the particular situation of higher education in Scotland.

    "These proposals today will mean more money for universities. The Government will ensure that savings are used to improve quality, standards and opportunity for all in further and higher education. Change is essential if we are to maintain the skills and research base of our country. We cannot defer action to another generation. Our preferred solution secures equity,

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    access, quality and accountability. Our proposals retain the principle that repayments should be made on the basis of future income, not present circumstances.

    "Today's report presents major challenges which every single Member of this House must address together. Building on this report, we will produce a system that will be fair, will be good for students, for parents, for the universities, good for business and good for Britain.

    "The Government are facing the future with confidence. We have the will to take the difficult decisions and to ensure the investment needed for the future of our nation. I recommend to the House that we take on this challenge with clarity and courage. To do otherwise would be to betray the next generation."

My Lords, that concludes the Statement.

3.48 p.m.

Lord Pilkington of Oxenford: My Lords, I thank the noble Baroness for repeating the Statement and, like her, I welcome the care and consideration that the committee and Sir Ron have given to these matters. As she knows, the Dearing Report is a lengthy and complex document--500 and not 1,700 pages--and I thank her for her courtesy in allowing me to see it this morning. However, I have had only a few hours to study it. Obviously, we shall need to debate this more fully. So, at the moment, I should just like to pose a few questions.

First, on the maintenance grant, the Government propose to move to a full loans system, replacing the present system of 50 per cent. loan and 50 per cent. maintenance for poorer parents. Therefore, I ask the Minister how she feels about the Dearing criticism of that idea. On page 320 of the report it states,

    "Option A"--

which suggests the full loan for maintenance--

    "increases public subsidies to students from higher income families at the expense of students from lower income families. The former gain access to loan subsidies while the others lose their grant".

I want to know how the Minister responds to that criticism.

Secondly, how do the Government feel about a further Dearing comment that the proposal would increase public expenditure in the short term? Associated with that, since the Government suggest that loans should now be available for the payment of £1,000 for tuition fees, can the Minister comment on the effect of that on the PSBR? The next question is this: or are the Government considering accepting the Dearing idea of following the example of the Netherlands and removing student loans from the PSBR? Again, what is the Government's view of charging a realistic rate of interest on student loans? I quote from Dearing:

    "The largest element of subsidy in the current loan scheme is the difference between the retail price index-linked rate of interest charged to students and the cost to the Government of borrowing the funds".

I now turn to the mention in the Statement of the university system being in crisis. Sir Ron makes some suggestions on how to deal with that. I would like to know how the Government feel about them. For example, Dearing says:

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    "We have identified a range of short-term funding needs-- £350 million in 1998-99; £565 million in 1999-2000".

As the Minister knows, he points to the crisis emerging from that situation. How do the Government propose to meet these proposals?

I have a further question which relates to finance. Dearing suggests a pay review body in April 1998. Are the Government interested in that? The body would most likely suggest even more charging, since he says that many university teachers are underpaid. What do the Government feel about the balance of funding changing from block grants to grants following the students--in other words, the students direct the money--which is a further proposal in Dearing?

I now leave money matters and ask a few questions about qualifications. On page 146 of the report Dearing expresses considerable admiration for GNVQs as a qualification for entry to higher education. Are the Government happy about that in view of the recent very potent criticism of NVQs and GNVQs? A further addition to that is that Dearing--and it is one of the main points in the report--makes great play of the close link that must occur between academic and vocational qualifications, in the same place and closely linked. Are the Government happy about that in view of the fact that both they and their predecessors have expressed great admiration of the system that prevails in Europe where academic and vocational qualifications are obtained at separate institutions? Sir Ron ignores the whole European experience. Is he correct in doing that?

In essence, my worry is that the Government have jumped too early into financial decisions. I have doubts whether the money raised will meet what Sir Ron Dearing suggests. I believe that they have considered the price before the product, but I am hoping that the noble Baroness, with her usual lucidity, will put all my worries at rest.

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