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Lord Annan: My Lords, could we vote in favour of common sense and not pedantry?

Teaching and Higher Education Bill [H.L.]

3.21 p.m.

The Minister of State, Department for Education and Employment (Baroness Blackstone): My Lords, I beg to move that the Bill be now further considered on Report.

Moved, That the Bill be further considered on Report.--(Baroness Blackstone.)

On Question, Motion agreed to.

Clause 16 [New arrangements for giving financial support to students]:

Lord Tope moved Amendment No. 37:

Page 11, line 6, at beginning insert--
("(A1) Fees in respect of tuition for any course of higher education at a publicly-funded institution shall only be payable by the student concerned where a grant in the same amount has been made available for that purpose to that student.

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(A2) For the purposes of subsection (A1) above, "the student concerned" means a person whose normal place of residence for purposes other than attendance at that institution is in the United Kingdom.").

The noble Lord said: My Lords, in moving the amendment standing in my name and that of my noble friends, I speak also to Amendments Nos. 40 and 45.

There has been considerable concern in your Lordships' House and in the country generally as to exactly where in the Bill one finds the provision to institute student payment of tuition fees. Indeed, there is no specific reference to such a provision in the Bill. That has made it extremely difficult to draft any amendments opposing it, and therefore to have any debate in your Lordships' House on the principle of student payment of tuition fees. We reach this comparatively late stage of the Bill without having had any substantive debate on what many would see as one of the most important aspects of the Bill. I bring forward Amendment No. 37 as the vehicle by which your Lordships can debate the important issue and principle of student payment of tuition fees.

I am sure that it will be noted that this debate is also taking place in prime time, as was the Government's intention. The amendment that I move as a device to make our views clear on this issue provides that students will have to pay fees only where an equivalent grant has been made available for that purpose. I make no pretence that it is anything other than a device to register our fundamental opposition to the payment of tuition fees. The effect of the amendment, if passed, would be to nullify that payment. On these Benches, we oppose the student payment of tuition fees as wrong in principle, unnecessary in practice and the thin end of a very large wedge.

The most important of those arguments is that the Government's move is wrong in principle. They know it. The Harris poll among Members in another place suggests that 45 per cent. of Labour Members of Parliament also know it. Indeed, I think that only last week the noble Lord, Lord Glenamara, assured us that the provision will be defeated should it reach another place. I hope today that we can save it the trouble. If the measure reaches another place, I hope that the noble Lord is right in his belief.

There is widespread concern and opposition throughout the country to the imposition of tuition fees. There have been demonstrations in 14 cities across the United Kingdom. An estimated 40,000 students, lecturers and parents have taken part in the campaign against the student payment of tuition fees. There is a great wave of feeling against what I described at Second Reading--I got into some trouble with others in your Lordships' House--as a student poll tax. Many of us have received shoals of letters from student unions, individual students and concerned parents. That suggests that that concern is well founded.

We believe in the principle that education should be free at the point of entry and at the point of need. That is the principle we are defending today. We see education as a public service and a national investment. I had thought that noble Lords on the opposite side of the House shared that view of social provision and

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national investment. I know that many noble Lords and Members in another place are deeply unhappy at the move which the Government are making.

Much has been said about the deterrent effect of the imposition of tuition fees on applications for higher education. As we have said previously, those of us who oppose it may tend to exaggerate that effect. I think that it is equally true that the Government will seek to minimise that effect. The truth is that we shall probably not know the actual effect for a year or two until the system has settled down. But it must be self-evident that the fear of having to meet the tuition fees, the fear of having to leave university with a large debt, must be a disincentive in particular for people from poorer families. It is most certainly not an incentive to enter higher education.

Our second argument is that the Government's plan to introduce student payment of tuition fees is unnecessary in practice. We acknowledge fully and strongly that significant further money needs to be found for universities. We are all well aware of the funding crisis there. But it does not need to come from the £1,000 contributions of young or not-so-young students. Our approach to covering the cost is threefold. We recognise that there are three main beneficiaries of higher education: the state; the student, the individual learner; and the employers. Employers are too often left out of the equation. Yet if they are to benefit from a highly educated workforce, as our international competitors do, they need a strong and well-financed higher education sector. According to the CBI, good employers contributed an estimated £28 million in 1994; and I am sure the figure is higher now.

The problem is that there are too many free-loading employers who do not make any investment. They ride on the backs of their more responsible competitors. Liberal Democrats therefore want to introduce a remissible education and training levy, equivalent to 2 per cent. of the organisation's payroll. That proposal is endorsed by the OECD. Companies employing small numbers of people would be exempt. We estimate that that measure alone would raise some £500 million.

Clearly a further contribution needs to come from the Treasury. We make no bones about that. There have been many weary jokes in your Lordships' House and elsewhere about the longest "p" in history. But the fact remains that the somewhat modest £2 billion extra on education for which we asked was carefully costed and that more money for higher education was a small component within it. Additionally, we believe that the current funding system for tertiary education is wasteful with funds being distributed in various ways through a number of different funding agencies. The duplication of bureaucracy uses resources that could be better spent.

Lastly, I turn to the third beneficiary--the students. I think that it is now accepted, perhaps reluctantly by most students, that they, too, need to make a contribution towards university funding, not through the payment of tuition fees but through contributions to their maintenance. For that reason, after some difficult discussions within our party, we are prepared to abandon the concept of the maintenance grant and to

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fund that through income contingent loans. That, too, would release significant sums of money. I suspect that later in the day I shall say more about income contingent loans. But they are different in practice and principle from the student debt. They depend upon the outcome not the income. They take account of where the student will be in the future, not where he is when he starts on the process. Repayment is linked to so much in the pound, not to having to pay off a large debt or to having to meet the equivalent of a mortgage payment each month.

Those are our alternatives for finding the funding for higher education. But we are not here today to debate, still less to vote upon, Liberal Democrat proposals. I thought it important to make clear that we recognise the crisis and have means of meeting it.

I have spoken about the principle and about covering the cost. I wish to conclude with a warning about this provision being the thin end of a very large wedge, and possibly in two ways. Once the principle of free tuition has been conceded, demands will increase for student payment to grow and grow. I am aware of the provision in the Bill, but it will not be sufficient safeguard once the legislation has been introduced. In Australia, tuition fees have risen from an average of 23 per cent. of actual tuition costs to an average of approximately 50 per cent. That has led to a year on year drop in applications since 1996, with just the same pattern of decline in mature age applicants that we are beginning to see in this country.

The other danger is that, once student payment of tuition fees is accepted, it will spread further. The Government are trying to revise the traditional view of social provision so that those who can pay for public service should have to do so. It may well be that the next target will be sixth form education, and so on.

The time has come in this debate to take a stand and say that student payment of tuition fees is a step too far in principle, in practice, and in terms of the real dangers that it opens out. There are many more sensible and fairer ways of dealing with the funding crisis in universities. We are not today debating the Liberal Democrat alternative proposals--much as I would be happy to do so. We are deciding on the Government's proposals. We have the first opportunity in Parliament to express our view on those proposals, which were not a manifesto commitment. I therefore urge noble Lords to take this, the first opportunity in Parliament, to say "no" to tuition fees. This amendment is the opportunity to do so. I beg to move.

3.30 p.m.

Earl Russell: My Lords, some of your Lordships will be familiar with the work of Mr. Russell Baker, who is for the New York Times a combination of Miles Kington and the young David Frost. When I arrived in the States in 1984 I was reading his volume in the New York Times. He described a scene where a father burst into floods of tears at his son's graduation ceremony. It was because he had just been told that his son wanted to go to graduate school. When I read that, I vowed to myself that that was a situation I would never consent to have in this country. This is the time for me to make good that vow.

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My noble friend touched on the "thin end of the wedge" argument. It is a very powerful one. Present the Treasury with an alternative source of funding, give it an inch of that and it will take an ell; give it once, and it will do it again and again. There is nothing new about that. In 1589, immediately after the Spanish Armada, the Chancellor of the Exchequer asked another place for two subsidies, and very rashly promised that it would never be done again. Twenty-one years later, one of those who heard the promise said, "How it hath been honoured, you all know as well as I." There is nothing new in the story.

If we look around this Chamber we must be aware of the force of education as an engine of social change since 1945. The noble Baroness the Minister will remember the debates on the Education (Student Loans) Bill 1990. One after another, noble Lords rose to their feet and said, "This is the system without which I should not have been here." If we get the thin end of the wedge--if tuition fees rise from £1,000, to £2,000, to £4,000, and I do not know how far after that--that avenue will be closed. If it is closed, the effect on the social structure of our country will be one about which I do not want to think.

We talk about getting all the money to go to university. We talk about avoiding a claw-back by the Treasury. But in this respect we are up against the sovereignty of Parliament. No Parliament can bind its successors. We cannot now bind a future Chancellor of the Exchequer to put a certain sum of money into the budget for higher education, and therefore we cannot protect ourselves against a slide down the slippery slope where the proportion of funding for higher education coming from tuition fees gets greater and greater.

I declare an interest as a parent of two recent graduates. The debt of people who finish courses as students is already extremely heavy. I had colleagues in the United States who were still paying off their own student debt when they first took on the load of their children's student debt.

We have heard from time to time--for example, in the pensions debate in this House on 15th October--about the need to encourage people to make more provision for their pension. I wonder whether we can really have both these things at once; or whether we are starting two hares that cannot finish the course.

We have to consider also the effect on public sector recruitment. We know--and the Minister drew our attention to the fact during debates on this very Bill--that there is a considerable problem in the area of teacher recruitment. Where students leave university with a greatly increased load of debt, and where we have the big institutions in the City offering golden hellos, attracting recruits by offering to pay off student debt, the Government are on a fork. Either the public services accept that their number of recruits will go down and down; or they compete and they, too, offer to pay off the debt. By doing one, they do not get the recruits; by doing the other, they do not get the saving. We know of Morton's Fork; but this is a reverse Morton's Fork. Government is sticking the fork into itself. That is even worse than shooting oneself in the foot. A pitchfork can be quite a dangerous instrument.

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My final reason for supporting the amendment is that the charge is not on the student's subsequent income, but on the parents' immediate income; and there is no compulsion to make the parents pay it. There are cases--I have had one recently among my own pupils--where the father will not disclose his income. There is no way of getting round that. We have had cases, and again I have been dealing with one recently, where the parent will not pay--in that case because of his belief that women should not receive higher education. There still are such people, I regret to say.

There are also cases of bankruptcy, resulting from the last recession and predictable, no doubt, from the next, where the parent cannot pay. There again, the readjustment of the grant cannot be done in time and the student has to leave. So the student's chances of an education depend on parental goodwill and parental circumstances. That is not right. I am happy to support the amendment.

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