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Lord Wallace of Saltaire: My Lords, I rise to support my noble friend Lord Russell on this amendment. This clause is not a necessary part of the Bill and it seems to me extremely important to remove it. It has an authoritarian style. Indeed, to use a word I know the Government do not like, one might almost say that it is a socialist measure which seeks to impose uniformity on 120 or 130 higher education institutions which revel in their diversity. It is an accumulation of executive power. The Minister herself has talked about reserve powers. Generally stated, it is a minefield of complexities of interpretation and it takes us down a road which we should not at this stage be following.

What we are doing in this Bill, reluctantly and with the opposition of many of us on these Benches, is moving away from a state-funded system towards a

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system in which universities are going to have to find more resources from non-state sources. The Government wish at this stage, as they start out, to insist that their hands are tied behind their backs and that, as we start out--not knowing how far we will go, not knowing where the £1,000 for the first year--will move in the second or third year--all higher education institutions, perhaps with the exception of Oxford and Cambridge, will have to charge the same amount.

I speak as an academic at the London School of Economics, and one has to think about the other quality universities in this country. We have heard a great deal about Oxford and Cambridge. There are other world-class universities in Britain. We have managed to survive so far by expanding the number of students from outside the European Union. The last government used to reply, every time we protested about the squeeze on our funding, that we should merely attract more students from outside the European Union. We have reached the stage where one of the priorities many of us in my institution now have is to increase the number of British students in our institution, because that seems to us to be one of our fundamental functions.

None of us wish to move down the road towards top-up fees, but if it is a choice between maintaining the quality of British higher education institutions in years to come and accepting that, like universities on the continent, we will allow our quality to fall as numbers expand, then we have to have that option in front of us. I regret that, but that may be, as my noble friend Earl Russell has said, one of the reserve powers we need in negotiating with the Government--the future government--over future funding.

Ministers currently say that they are not intending to use these powers. This House should make it very clear that it does not therefore wish to give Ministers these powers. The British constitution operates far too much already on the basis of executive power and parliamentary acquiescence. To remove this clause from the Bill would be to mark that Parliament wishes to insist that it does not go too far in giving government the benefit of the doubt.

Lord Baker of Dorking: My Lords, I strongly support the amendment moved by the noble Earl, Lord Russell. This is a very unhappy clause, and I suspect that several members of the Government are rather unhappy about it. Clearly, it has a confusing implication and consequences which they are now slowly beginning to recognise.

We saw one aspect of that tonight in the earlier debate on Oxford and Cambridge fees, when the Ministers recognised that there is a real issue here: namely, if one penalises a university like Oxford, can that penalty be passed on to the individual colleges? The Minister has indicated that there will be some amendment to subsection (8) of this clause. I would not welcome that kind of amendment, because then one has an immediate problem, which I indicated at Second Reading.

In a debate on a procedural matter I remember the noble Baroness, Lady Blackstone, saying that it was not flagged up, but, earlier in the debate on this whole

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question of the powers of old chartered bodies, I did in fact rather immodestly mention this at Second Reading, as when I was the Secretary of State I had my own fingers burnt on exactly the same issue dealing with academic tenure. I found that in order to introduce a reform--not impose a will--I had to establish a great institution, and the commission took five or six years. The Ministers, when they come to deal with that little aspect of this clause, will find that they have the same sort of problem.

The problem with the clause--I share the anxieties expressed by the noble Lord, Lord Wallace--is that it will impose a straitjacket upon the future development of universities. No one can foresee how universities will develop; no one could have foreseen 10, 15 or 20 years ago the nature of higher education in our country today, the variety and depth of courses.

The concern of the Government is that by introducing tuition fees some universities and colleges may charge top-up fees and become, as the right reverend Prelate said, clubs of the rich--rich, dull students attending only because they are rich. I must say to the right reverend Prelate and to the Government's worries about this that the country that charges the highest top-up fees has the highest quality universities. That is not the pattern that developed in Harvard, Princeton, Berkeley and the other great American universities where the fees are infinitely higher than the levels about which we are talking now. They have not become playgrounds for the rich playboys and playgirls of America. If they did, their reputations would fall and students would not want to go there. That is a self-correcting mechanism for which we should allow flexibility in the future.

When we introduced per capita funding for universities and student loans I hoped that one day we would set out on a path which would make our universities truly independent, and those would be, together with endowments, the main sources of income. In that case the Government's interference and the duties and the need for a funding council would disappear. I hope that funding councils will eventually disappear. I am sorry to say that in the presence of the noble Lord, Lord Davies, who has just become the chairman of one of them. I do not wish him personal redundancy, but the sooner he disappears from the scene in his official capacity, the greater will be the independence of higher education in our country. I believe we want a more self-correcting mechanism in the funding of higher education.

I am disappointed that the clause appears to be going backwards. It is taking greater powers of direction and that will create a tension and restriction which higher education does not want. It is not in the best interests of higher education. I do not argue for the rich to go to high colleges, and so forth; I share the same anxieties in that regard. I am concerned with the quality of higher education.

Let us suppose that a new course is established in some area of academic study about which we have not yet thought and suppose the university says that the cost of the course is £8,000 a year. Overseas students will pay that. In many cases they come from countries with

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a much lower per capita income than this country, but they are prepared to pay it. However, we will only charge English students £1,000. Suppose, as a result of that, that the sums cannot be made to add up and the best teachers cannot be attracted to take the course--it is not an existing course, but a new course. It would be an infringement upon the academic freedom of that institution to offer that course and we cannot get away from that.

For all those reasons, I would not like to see this clause stand part of the Bill. The anxieties expressed by my noble friend Lord Beloff, the noble Earl, Lord Russell, and the noble Lord, Lord Wallace, are real ones and I hope that the Government will think again about this. The interests of higher education in our country are extremely important. It is one of the real jewels in the Crown. We have in this country a number of universities which are the envy of the world. They will become even more the envy of the world with greater freedom and flexibility; not with greater control.

Lord Desai: My Lords, when I was young I was a revolutionary Socialist. I thought that the revolution should happen instantaneously and immediately and I went from A to Z in one fell swoop. Perhaps age, not wisdom, mellowed me.

I know where I want to go, but I do not want to go there through this Bill. The noble Lord, Lord Beloff, correctly described how I would eventually want to see the British university system operating. It will have differentiated fees. There will be no funding councils, better capital markets and lots of freedom for students to work while they learn. However, I would not charge £1,000. As I said at Second Reading, I would charge £10,000. The average cost of teaching is £8,000. To that we add £2,000 so that we can give fellowships--merit scholarships--and that is how we will arrive at the American system.

This Bill will not take us there immediately. This is a first small Bill in a system which has been used to a good deal of government control--I shall come to that point with the noble Earl, Lord Russell--and in which we have been used to thinking, as many noble Lords have said, that higher education is free in this country and that we have equal fees and so on. We are breaking away from that system in a very small way. The reason why I am in a dilemma is that I want to go from here further but not through this Bill.

The noble Earl, Lord Russell, said that in a sense only the supplier of education knows the cost of providing good courses and that if you tell that person what to charge then you have violated academic freedom. I have been in the higher education system for 33 years--perhaps not as long as the noble Earl has been--and I have never had the freedom to decide the price I charge for a course. Academic freedom has thrived--this is the system we are trying to defend. In this system we have always had uniform pricing and by and large in this system we have not had freedom to charge any price we like. We are about to enter a stage in which we are breaking the system of free tuition for 18 to 21 year-olds and we are saying they must pay. At this stage there will

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be a great temptation for the top 10 to 15 universities including the LSE--we have had a good deal of discussion at the LSE about top-up fees--to break out of this system and go immediately to charge £1,000, £2,000 or £3,000 more.

I am rather puzzled by the Liberal Democrats on this subject. Either they want no fees whatever and complete equality or, as soon as you break out, they want lots and lots of inequality. They have to make up their minds about this.

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