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Lord Pilkington of Oxenford: I am sorry to be an awful bore at this time of night. It may be that my mathematics are wrong. At the moment, universities receive from the state 100 per cent. The Government have now decided that 25 per cent. of that 100 per cent. will be paid by students. It seems to me that the noble Baroness is saying that universities will receive almost the same, except that 25 per cent. comes from the student and 75 per cent. comes from the state. I therefore find it hard to understand where the extra money comes from. If the state pays 100 per cent. and the student pays 25 per cent., there is 125 per cent. That is marvellous; the university has 25 per cent. extra. If the state only pays 75 per cent. and the student pays 25 per cent., the university only receives the same amount as before.

Baroness Blackstone: I think the noble Lord, Lord Pilkington, is perhaps a little unfamiliar with the system of providing financial support for universities. At present it is done by a complex system of grant paid by the Department for Education and Employment to the Higher Education Funding Council for England and by the Scottish Education Department, and so on, for the other parts of the UK, and by fees that are provided through the local education authorities. The system of supporting universities is much more complex than the noble Lord implies. The fee arrangements will be changed, so the percentages that he and his noble friend keep giving have absolutely no meaning. The scheme does not work in that way.

Lord Pilkington of Oxenford: Will the noble Baroness, who understands the scheme, tell us in words of one syllable where the extra money will come from? That is all I want to hear.

Baroness Blackstone: The extra money will come from the decision to charge students tuition fees. Extra money will also come from providing students with their loans on a termly basis rather than paying the whole amount up-front at the beginning of the year. During 1998-99 that will provide additional resources which will go direct to the universities.

Lord Wallace of Saltaire: I too listened carefully to what the Minister said and shall want to read it. A number of things worried me. The reserve power question leaves a lot to be desired and I still do not understand the rationale for it. If it is a reserve power which is not to be used except in the gravest cases, we are in a rather different situation.

Secondly, if I understood correctly, the Minister said that the universities will continue to have full control over their income and expenditure. It seems to me that

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the purpose of this provision is to ensure that the universities will not have full control over their income. I have taught in German and French universities and am very conscious of the fact that allowing universities to expand their number of students while holding down their income leads to a rapid deterioration in quality and a rapid expansion in the number of students.

The Minister spoke about efficiency gains. I met my efficiency gains this morning in two or three extra students in the graduate seminars I am teaching. That is what efficiency gains mean. We all recognise that quality in British universities is now beginning to go down and is likely to go down further if universities do not increase their income. The Government are now saying that they want reserve powers to prevent universities in extremis from increasing their income.

Lord Renfrew of Kaimsthorn: At an earlier stage the noble Lord, Lord Wallace of Saltaire, referred to a letter from the Vice-Chancellor of the University of Birmingham. The noble Lords, Lord Quirk and Lord Walton of Detchant, who were unable to stay until this stage of this evening's Committee, asked me to express their support for the sentiments contained in that letter, although I perfectly understand that they did not have the benefit of hearing the Minister's reply on that point. I do not want to prolong the debate on that issue.

I wish to emphasise that I believe that the debate on this point has made clear that there is evidently great unease throughout the university world and beyond. As we have already heard, not only the Committee of Vice-Chancellors and Principals but all university teachers, or almost so, and most students are deeply concerned about some of the issues which have been debated. There is particular concern about the two matters which have surfaced in the past 15 minutes of our discussions: the issues of academic freedom and of funding and whether such benefits as will accrue from the imposition of tuition fees will really be felt by the universities and bring about the improvements that are hoped for.

The noble Baroness, in her earlier speech on this point, made some helpful remarks which we shall want to reflect upon. I think it appropriate that I should repeat in Committee this sentiment, widely felt, of the very deep unease which surrounds this clause and, indeed, the Bill as a whole.

Midnight

The Earl of Limerick: I listened carefully to the reply of the Minister to the speech of the noble Earl, Lord Russell. It can be summarised as, "You have nothing to worry about. Trust us." It was the same answer, in essence, as that given by the noble Baroness to the noble Earl on Amendment No. 112. In her response to that amendment the noble Baroness said that the Government would be looking to introduce its own amendment at a later stage. It is only right to signal that many of us will be looking very carefully at the text of that amendment when it comes forward.

Baroness Blackstone: Perhaps I can make one point to the noble Earl, before he intervenes. He was

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suggesting that universities will have no control over their income as a result of this clause. Nothing could be further from the truth. Universities will still set their own fee levels for all kinds of groups of students: part-time students, postgraduate students, except PGCE students, overseas students. They will also be able to raise income from research grants and contracts and consultancy fees.

The noble Lord, Lord Wallace of Saltaire, referred to efficiency gains. He might have the good grace to recognise that, as a result of the new arrangements that the new Government are making, the efficiency gain required from universities next year will be 1 per cent, which is much lower than it would have been under the arrangements and projections of the previous government. It is, in fact, exactly what the Dearing Committee recommended should be required of universities.

I shall try to reassure the noble Lord. He made the suggestion that the reserve power might be widely and frequently used. That was implicit in what he said. I said earlier that the Government hope that they will never have to use this reserve power. We keep hearing that universities do not intend to charge top-up fees. The noble Baroness, Lady Perry, made that point earlier. If it is the case that they do not intend to charge top-up fees for home and EU undergraduates, the power will never be used. It is a reserve power.

I remind the noble Lord that the universities are in receipt of £3.5 billion worth of public money. That is a great deal of the taxpayers' money. In return for that enormous receipt of public money they have to accept that when a government have made it clear to both parents and students that they will not be expected to pay more than is set out in these new arrangements, we have some obligation to both parents and students.

I move on to what the noble Lord, Lord Renfrew of Kaimsthorn, was saying. I believe that he is not living in the real world if he is suggesting that students are concerned about this clause. On the contrary, the Government have been criticised by the NUS for not going far enough. They did not want a reserve power; they wanted us to take an actual power in relation to top-up fees.

I also do not believe that the noble Lord is living in the real world if he thinks that university teachers as a whole are concerned about this clause. Again, on the contrary, many university teachers believe it is vital that entry to universities should continue to be open to all students, regardless of their families' income and that none of them should start choosing courses according to what is charged.

Finally, I refer to my old colleagues in the CVCP. Again, there are divisions in the CVCP. I readily accept that some vice-chancellors do not like this clause. There are many other vice-chancellors who believe that it is absolutely essential. When we are discussing something like this, we ought to be accurate when we are reporting the views of people. I accept that there are divisions, and I know that the noble Lord is absolutely right in saying that some people are concerned. But he was

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suggesting that there was universal condemnation of the use of the provision on the face of the Bill, and that simply is not true.

Baroness Perry of Southwark: Before the noble Baroness sits down, perhaps I may ask whether she will accept this. While there is widespread acceptance of the undesirability of top-up fees and a great deal of sympathy with the Government's wish to find ways to prevent universities charging such fees, I sense that she, like many of us on this side and like many members of the CVCP, would wish to find a sanction that did not run the risk of infringing a university's freedom. Is it not, even now, worth testing the ingenuity of her officials to find another form of sanction against universities topping up their fees other than the one suggested in Clause 18?


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