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Baroness Seccombe: My Lords, I thank the Minister for that reply. However, does he agree that, so long as we have a tradition of UK students attending universities across the UK, they have a right to be treated equally and fairly?

Lord Davies of Oldham: My Lords, they certainly have a right to be treated fairly. However, as the noble Baroness will recognise, Scotland has a devolved administration and makes its own decisions with regard to its students. The Scots maintain that their system contains elements of great fairness. At this point, that system is different from the English and Welsh system. We will discuss with the Scots the implications of the development of our new scheme. However, I think the noble Baroness will recognise that the significance of devolution is that the Scots have the right to take decisions on behalf of their own students.

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Lord Pilkington of Oxenford: My Lords, does the Minister agree that any sensible and talented student in England or Wales would go to Scotland in view of the financial arrangements which Her Majesty's Government have introduced?

Lord Davies of Oldham: My Lords, I think that the noble Lord may be presuming too much. I have a very high regard for the intelligence of English and Welsh students. The cross-border traffic has not greatly increased or been enhanced by the development of a fee structure in which the Scottish position has recently been identified as marginally more favourable to students. Students are still deciding where to go based on the quality of the course and on what they think of the university. As we know, some students, including one or two very famous ones, choose Scottish universities. However, Scottish students also come to English and Welsh universities.

Lord Neill of Bladen: My Lords, can the Minister throw any light on the practicalities? As he made clear, the scheme will come into force in 2006. The White Paper makes clear that no repayment by a student is required until they graduate and are earning 15,000. The courses last three, and, in many cases, four years. In the meantime, how are the universities to receive any fees? Will each university be paid per student over those four years by the loan company or by some other public source? The White Paper does not make that clear.

Lord Davies of Oldham: My Lords, it is clear that the scheme needs to be ushered in over a period and it will take time for the provisions of the White Paper to be implemented. The Government have substantially increased funding to 80 institutions over the period of the public spending review—the next three years. The Government are increasing expenditure on HE institutions by 6 per cent—several times above the level of inflation—to help to meet what noble Lords on all sides of the House recognise as the funding crisis in higher education. The increased resources apply to the short term. In the longer term funding will be met through government payment—that goes without saying—and the student contribution through the deferred fees scheme.

Baroness Trumpington: My Lords, does the Minister agree that he has spoken an awful lot of words but has not answered the noble Lord's question?

Lord Davies of Oldham: My Lords, I am sorry if there is one noble Baroness whom I have not satisfied with my answer. I shall try once more. Noble Lords on all sides of the House have identified the fact that universities need more money; the Government are providing that.

Baroness Sharp of Guildford: My Lords, the Minister will be aware that the majority of that money is allocated to the science budget and not to teaching costs. Will the Minister give us figures on the increased unit funding per student for the next three years?

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Lord Davies of Oldham: My Lords, I do not have those figures to hand. However, I emphasise that we debated these issues intensively only a short while ago when noble Lords in all parts of the House articulated demands for extra resources on behalf of our universities. Those extra resources are being met in the short term. A period of three years is short term in university terms but nevertheless represents a significant commitment on the part of the Government. The Government will increase resources by 6 per cent year on year. That seems to me a significant step in the right direction.

Baroness Carnegy of Lour: My Lords—

Lord Williams of Mostyn: My Lords, we are into the 16th minute.


2.53 p.m.

Baroness Wilcox asked Her Majesty's Government:

    Whether they are concerned at the level of personal debt.

Lord Davies of Oldham: My Lords, as the noble Lord, Lord McIntosh, said on 3rd December:

    "The Government continue to fully back the judgment of the Monetary Policy Committee in delivering macro-economic stability. The MPC is alert to the risks associated with further expansion of household debt, as it made clear in its November inflation report. However, households' total interest payments are now only 7.3 per cent of their disposable income compared with a peak of 15.1 per cent in 1990 and an average of 9.3 per cent over the period 1979-97".—[Official Report, 3/12/02; col. 1022.]

Baroness Wilcox: My Lords, I thank the noble Lord for that Answer. I am pleased that the Government are concerned about the levels of personal debt. Therefore, perhaps the noble Lord can enlighten me on the following question: how did the DTI consumer affairs Minister in another place come to the conclusion that people were in control of their debt when research from the Financial Services Authority shows that 20 per cent of families now owe an average of more than 2,000 on credit cards and 6 million of the 30 million families in Britain have problems meeting their interest payments?

Lord Davies of Oldham: My Lords, the Minister made the point that people are able to manage their debt successfully. One obvious reason why households can be reasonably secure about their debt is that at the present time society enjoys almost the highest employment levels that have ever been known. Job security means that people can indeed be confident about their present position and their ability to take on debts which they have to repay in the future.

Lord Swinfen: My Lords, do the Government consider that the present policy of mortgage lenders is wise? Some years ago they used to lend only up to one-and-a-half to two times an individual's salary and only

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a proportion of the value of the property whereas today I gather they will lend up to four times a salary and over 100 per cent of the value of the property.

Lord Davies of Oldham: My Lords, I believe that most of us recognise that those who supply mortgages do not take undue risks. They carry out a careful analysis of the future prospects of the economy and of the ability of an individual to repay a mortgage. Mortgage lenders are prepared to lend a greater percentage of income as mortgage repayment rates are low due to low interest rates. Therefore, households are able to repay larger amounts of debt.

Lord Barnett: My Lords, I congratulate my noble friend on answering even financial Questions, especially as he is my former PPS. Is he aware that in recent evidence to the House of Lords Economic Affairs Select Committee, the Monetary Policy Committee and The Times Shadow Monetary Policy Committee refused to express any serious concern on these issues and, like the Opposition, put forward no serious alternatives? Is my noble friend therefore content to leave the matter to them? Have the Government no policy in this area by way of taxation, mortgage payments or interfering with the private sector?

Lord Davies of Oldham: My Lords, it is 20 years since I was the noble Lord's bag carrier and sat at his feet but it goes without saying that I am still able to learn lessons from him. I agree with the main premise he puts forward: namely, that the Opposition raise anxieties which sometimes appear in the popular press but have precious little relationship to the way in which the real economy is working. We all recognise that this is a very bumpy time for the international economy. However, British people are in a relatively favourable position in terms of employment, low interest rates and the management of public finances.

Lord Newby: My Lords—

Baroness Gardner of Parkes: My Lords—

Lord Williams of Mostyn: My Lords, it is the turn of the noble Lord, Lord Newby.

Lord Newby: My Lords, I, too, congratulate the Minister on what is clearly his audition for the McIntosh award for ministerial versatility. Given that many financial services providers have aggressively marketed equity withdrawal and other forms of debt over the past couple of years, will the Minister encourage the FSA, as part of its remit of promoting public awareness, to issue strengthened guidance about the downside of excessive consumer levels of personal debt?

Lord Davies of Oldham: My Lords, the noble Lord makes a good point. People are able to borrow more against their mortgages and to remortgage when

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property prices are rising at the present level. There is absolutely no reason to suspect that property prices will continue to rise at the rate that they have done in the past couple of years. Therefore, people need to exercise caution. The noble Lord is right to suggest that public bodies can play some part in that regard, not least against a background of a certain amount of misselling which has occurred with regard to other financial products and arrangements. It would do no harm for a public body to keep a close eye on the situation.

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