27 Oct 2010 : Column 1193

House of Lords

Wednesday, 27 October 2010.

3 pm

Prayers-read by the Lord Bishop of Wakefield.

Houses of Parliament: Cycle Hire

Question

3.06 pm

Asked By Lord Butler of Brockwell

The Chairman of Committees (Lord Brabazon of Tara):My Lords, Transport for London recently contacted the House of Commons regarding the possible installation of a Barclays Cycle Hire docking station on the Parliamentary Estate. While we cannot permit a station for public use in the secure area of the Estate, we are looking at whether an alternative location can be found outside the secure area. The nearest docking station to the House of Lords is in Smith Square.

Lord Butler of Brockwell: My Lords, I thank the noble Lord for that encouraging reply. I declare an interest as a subscriber to the Barclays Cycle Hire scheme. I have tested the walk to Smith Square and it takes the better part of 10 minutes. Would the noble Lord agree that it would be for the convenience of Members of this House and their staff to have greater ease in using this facility? I realise that some may see this as an additional option in achieving a reduction in the membership of this House, but I assure the House that that is not my primary intention.

The Chairman of Committees: I would not like to comment on the second part of the noble Lord's question, but as I said in my original Answer we are actively looking, with Transport for London, at the possibility of finding a station. However, it will have to be outside the Parliamentary Estate since, for obvious reasons, it cannot be within the secure area. One hopes that we will succeed in finding one in the neighbourhood.

Viscount Falkland: My Lords, the noble Lord must have made some examination of the numbers of Members of your Lordships' House who might like to use the pool. There is not much point in going much further if it is just the noble Lord, Lord Butler, and myself who will cycle. If there are a significant number, it would be sensible to bring one of the pool docking stations nearer. As someone who cycles every day on my own bicycle, I know that it is very health giving. In asking the noble Lord whether he also cycles, I can say that it is a very good way of controlling one's weight and-with reference to the remark of the noble Lord, Lord Butler-possibly does add to one's longevity. It is jolly good fun and makes you feel better.



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The Chairman of Committees: My Lords, clearly, looking at my weight, I do not use a bicycle in London, but significant numbers of Peers and staff do. Of course, most of them own their own. This scheme operates only within zone 1 in London. Seventy-seven bicycle spaces are available to Members of the House and the staff. They are not currently used to capacity, but they are available and there is no shortage.

Lord Haskel: My Lords, as a user of the Barclays bicycle scheme, may I ask whether the Chairman of Committees has, as part of his inquiries, looked into the possibility of reducing the government car pool and getting Ministers to use the bicycles?

The Chairman of Committees: My Lords, far be it from me to suggest a reduction in the government car pool. I understand that it has already been substantially reduced, making it in my opinion doubtful to want to be a Minister.

Lady Saltoun of Abernethy: My Lords, is it not time that we had a taxi rank on the Parliamentary Estate? Not all of us are young enough or spry enough to ride bicycles.

The Chairman of Committees: My Lords, a taxi rank takes us a little way away from the original Question on the Order Paper, but there are facilities at Peers' Entrance for summoning taxis which I hope noble Lords find satisfactory.

Lord Skelmersdale: My Lords, may I have an assurance from the Chairman of Committees that this is a matter purely for your Lordships' House and your Lordships' authorities and has nothing to do with another place?

The Chairman of Committees: No, my Lords, I cannot give that assurance. If there was a possibility of having a docking station in the vicinity, it might be either on part of the Commons estate or part of the Lords estate. However, it would probably be excessive to have one on each.

Lord Davies of Oldham: My Lords, we respect the Chairman of Committee's reservations about the proposal, but does he recognise that the Government and Opposition are as one in seeking to encourage cycling? Therefore, this proposal is constructive. I wish him well in his efforts to find a docking station somewhat closer than the existing one. I say for the benefit of the House that there is a most discreet and effective docking station right next to the National Gallery. I cannot think of a more enjoyable trip by bike than that between here and the National Gallery on a very wide and safe road.

The Chairman of Committees: I am glad that the noble Lord supports the scheme and that he has time during a busy working day to bike between the National Gallery and here; generally, I have not. However, as I said earlier, we are pursuing this. I will make certain that Transport for London and, obviously, the House authorities take note of the enthusiasm expressed at this Question and will redouble their efforts to try to find a docking station.



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Lord Tomlinson: My Lords, if we are to introduce Barclays as a form of advertising on the Parliamentary Estate, has the noble Lord given any thought to what other use can be made of advertising on the Parliamentary Estate in order to make a contribution to public sector deficit reduction?

The Chairman of Committees: The noble Lord, Lord Tomlinson, invites me to stray somewhat from the Question on the Order Paper. The Barclays scheme is nothing to do with the Houses of Parliament; it is to do with Boris and Transport for London. That is it.

Lord Roberts of Llandudno: My Lords, as we are encouraging cyclists to wear helmets when they are on the back of a bike, how can we encourage people to do so, or how can we provide helmets for those who rent bikes in order to facilitate transport around Parliament?

The Chairman of Committees: My Lords, I have studied a number of questions recently in this House on the Barclays cycle scheme and I know that the subject of the wearing of helmets has come up frequently but, answering as I am for administration of the House, it is not a matter for the administration of the House whether Members should wear helmets or not. I think that most noble Lords are probably grown up enough to make their own decision about that.

Prisons: Population

Question

3.14 pm

Asked By Lord Dubs

The Minister of State, Ministry of Justice (Lord McNally): My Lords, the Ministry of Justice will publish a Green Paper later this year setting out plans to reform sentencing and rehabilitate offenders more effectively. We hope and intend that a range of proposals in that document will be discussed which, if implemented, would have an impact on overall prison numbers.

Lord Dubs: My Lords, the Minister will be aware that the Justice Secretary's statement that he intends to reduce the size of the prison population was most welcome. Does the Minister agree, though, that reducing the prison population will not necessarily save money? There are groups in prison, such as the mentally ill and drug addicts, who need treatment to get them to mend their ways rather than to be incarcerated.

Lord McNally: My Lords, I agree with the noble Lord, and that is why in part of the sentencing review we intend to look at the treatment of the mentally ill, in co-operation with the Department of Health, in terms of early identification of mental illness and making sure that people are diverted from the prison system into proper mental health treatment. The review will also look at drug rehabilitation. Part of the reassessment will be to see if we can provide systems of treatment which help to end drug dependency which, as the noble Lord will know, has been one of the factors in the revolving door of crime.



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Lord Thomas of Gresford: My Lords, the recommendation of the Corston report in 2007 was that female prisons should be replaced by,

That recommendation was rejected by the previous Government in August 2008. Will the Green Paper put that forward again for consideration?

Lord McNally: My Lords, I pay tribute to the noble Baroness, Lady Corston, and the contribution she made to the discussion on women in prison. Four thousand women in custody is far, far too many, and we are developing a strategy which will ensure that the women's estate has custodial and community settings, is fit for purpose and meets the needs of women offenders. However, I have to be frank with my noble friend that at this point in time we face the same problem as the previous Administration in providing the kind of small multifunctional custodial centres which the noble Baroness recommended.

Lord Elystan-Morgan: My Lords, I invite the Minister to give most urgent consideration to setting up a searching and comprehensive review of two questions: first, we incarcerate more people per 100,000 than any other country in western Europe and, secondly, our prison population has more than doubled over the past 25 years. Will he give an undertaking that future policy will be built upon a solid foundation, rather than upon the shifting sands of economic crises?

Lord McNally: My Lords, that is exactly the aim of the Green Paper that we hope to publish before the end of the year, in trying to get a sensible and sane discussion about prison numbers. It would be greatly helped if, every time there is an attempt at a rational debate of these issues, our national media did not turn it into a hysterical numbers game and suggest irresponsibility on the part of whichever Government are in power. I hope that when our Green Paper is published this House will play its usual constructive role in discussing these issues.

The Lord Bishop of Wakefield: My Lords, following the Minister's comment about mental health cases and the desire to shift those from prison and custodial sentences, can we look forward to early proposals from the offender health division to implement last year's recommendations by the noble Lord, Lord Bradley, in his excellent review of this issue?

Lord McNally: My Lords, yes indeed. The Ministry of Justice is working with the Department of Health and the Home Office to ensure that front-line criminal justice and health agencies focus on identifying those people with mental health problems at an early stage of the criminal justice pathway, and is exploring ways of diverting into health and social services those for whom this would be the better option.

Baroness Hughes of Stretford: My Lords, the Minister will know that at long last the Youth Justice Board has had some success in reducing the very large number of young people whom we incarcerate in this country. Given the Government's announcement that they will disband the Youth justice Board, who now will be

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responsible for continuing this very welcome downward trend in the number of young people in prison in this country?

Lord McNally: My Lords, I pay tribute to the work of the Youth Justice Board. As the noble Baroness said, during its time it has overseen a very welcome drop in youth offending. It is not disappearing: its work will be reabsorbed into a unit within the Ministry of Justice.

Lord Bach: My Lords, of course it is common sense that if reoffending rates fall, fewer people will go to prison. However, how are the Government planning to get reoffending down when the comprehensive spending review plans to cut 10,000 jobs from the Prison Service and the National Probation Service? Does the Minister understand-I am sure that he does-that it is utterly and completely unrealistic to argue for cutting the number of prison inmates by 3,000 while at the same time decimating the National Probation Service?

Lord McNally: My Lords, first, the job figures cover a five-year period, and in some cases the reductions will be absorbed by natural wastage. Some of the excessive language that has just been used ignores the fact that the Administration will genuinely look at alternatives to prison. What has struck me in the very short time that I have been in this job has been seeing examples-often very small examples-of interventions with prisoners that have an extraordinary impact on reoffending. There was an example on "Today" last week of a charity finding accommodation for prisoners before they were released. Among the prisoners with whom it was working there was a 20 per cent reoffending rate rather than the 80 per cent in other categories. I believe that there are alternatives and I hope that the Green Paper will give scope for an intelligent and non-hysterical debate about these factors.

Mobile Homes

Question

3.22 pm

Asked By Lord Graham of Edmonton

Lord Graham of Edmonton: My Lords, I beg leave to ask the Question standing in my name on the Order Paper and in doing so declare an interest as the secretary of the All-Party Parliamentary Group for Mobile Homes.

The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Hanham): My Lords, the Mobile Homes Act 1983 makes statutory provision to enable mobile home owners to sell their homes subject to the buyer being approved by the site owner. Where approval is not forthcoming, the resident seller has a right to apply to the county court to seek its approval in the stead of the site owner.



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Lord Graham of Edmonton: My Lords, I am grateful to the Minister for that reply, but I am sure that she has been told by her department of the case in Bromsgrove where the site owners harried vulnerable and distressed people to sell their homes cheaper than they were worth. Thanks to the good services of the Mercia police force, they were brought to court. They had deliberately burnt down two mobile homes. As a consequence, seven men were sent to prison for a total of 64 years. I realise that that is an extreme case, but will the Minister recognise that details of many other cases have been sent by me and others to the department, and it would be very nice if she could give me an assurance that resolution of this problem is high on her very busy agenda?

Baroness Hanham: My Lords, we are very well aware that there are some mobile home site owners who are not kind, efficient or businesslike. The matter referred to by the noble Lord, Lord Graham, is of course an extreme example of what is happening. Some site owners are making it extraordinarily difficult for mobile home owners to sell, by refusing permission or by making it very difficult for them. We are aware of this and will make efforts to do something about it.

Baroness Maddock: My Lords, first, does my noble friend agree that mobile homes are often low-cost and eco-friendly, and that they are often a home choice for elderly people? Secondly, what steps are the Government taking to make sure that the regulations surrounding mobile home sites and site owners are brought more into line with the standards that we require from landlords and leaseholders in other parts of the housing sector?

Baroness Hanham: My Lords, I agree entirely with my noble friend that mobile homes are largely occupied by elderly people. These homes do not have a huge initial capital value but, by the time their owners come to sell them, they are probably the only asset that they have. It is the Government's intention to amend the Mobile Homes Act 1983 to change the appeal procedure by tenants or residents from the county court, which is expensive and slow, to the residential property tribunal, which is cheap. In fact, I do not think that it costs anything and it can be very quick and easy to use. It is absolutely essential that these owners, who are very vulnerable, have the speediest possible access to the law.

Lord McKenzie of Luton: My Lords, in view of the very serious examples raised by my noble friend Lord Graham, will the Minister also now commit to taking forward proposals which were under way but not completed by the previous Government to strengthen local authority licensing powers to encompass, in particular, a fit-and-proper-person regime for site operators?

Baroness Hanham: My Lords, I am aware that there was quite a lot of legislation for mobile homes which was ready to go at the last election. As I said, we are committed under a statutory instrument, which is now waiting to come to the House, to make some changes to the law to ensure better regulation.



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Armed Forces: Harrier Fleet

Question

3.27 pm

Asked By Lord Lee of Trafford

The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Astor of Hever): My Lords, I am sure that the whole House will wish to join me in offering sincere condolences to the family and friends of Corporal David Barnsdale, 33 Engineer Regiment (EOD), who was killed on operations in Afghanistan.

Turning to my noble friend's Question, we expect to make savings in the region of £900 million between now and 2018, the Harrier's previous out-of-service date. This figure is subject to commercial considerations and we expect it to be refined during implementation of the SDSR. The decision to retire the Joint Force Harrier has been very difficult and has not been taken lightly. I express my gratitude to the service men and women, past and present, associated with the Harrier force. This decision is in no way a reflection on the valuable contribution that they have made to the defence and security of our nation.

Lord Lee of Trafford: My Lords, first, I join these Benches in the earlier tribute. To ditch the Harrier fleet and all the crew expertise that has been built up over the years for a saving of a mere £100 million a year and to denude our carriers of their aircraft and strike capability is surely madness and makes us look absurd in the eyes of the rest of the world. Perhaps we should consider getting rid of our flight decks and replacing them with sun decks. More seriously, would it not be possible to maintain a smaller fleet of Harriers for contingencies?

Lord Astor of Hever: My Lords, in a perfect world, no defence Minister would have wanted to retire the Harriers, but this decision was driven by the economic legacy left by the previous Government. Military advice has been that the Tornado is the more capable aircraft. The greater size of the Tornado force allows continuous fast jet support for forces in Afghanistan, which is highly valued by ISAF, and an ability to meet other contingencies. With regard to keeping a smaller fleet of Harriers, the withdrawal of an aircraft type delivers greater savings than partial reductions.

Lord Tunnicliffe: My Lords, we on these Benches join the Government in offering our sincere condolences to the family and friends of Corporal David Barnsdale, 33 Engineer Regiment (Explosive Ordnance Disposal).

I am sure that the whole House has sympathy for the Minister when he meets our allies and explains to them that we shall retain one carrier and build some carriers, but that we will not have any aircraft on them. I understand that HMS "Illustrious" may be retained and that we are committing to build two further carriers. Perhaps I can press him on what it would cost to retain a small fleet of Harriers solely to operate from those ships, which would retain our strike skills.

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We know that one or two fast jets over the battlefield have an enormous impact. We have the spares and we are going to pay the contractors-that is what the weasel word "commercial" means-and the Royal Air Force knows how to manage small fleets. Surely there would be space at one of the Tornado bases. What would it cost to take on board such a sensible compromise?

Lord Astor of Hever: My Lords, I welcome the noble Lord to the Dispatch Box as his party's spokesman on defence. I very much look forward to working constructively with him.

We will add cats and traps to the carriers, and although that will delay the entry of carrier-strike capability by three years, it will allow us to use a carrier variant of Joint Strike Fighter which has a heavier payload and a longer range than the STOVL variant. Overall, the carrier variant of JSF will be cheaper, reducing through-life costs by around 25 per cent over the STOVL variant.

Lord Craig of Radley: My Lords, I thank the Minister for his very fine comments about the Harrier force. No one would wish to see them go. Under the circumstances, where the choice has to be between Tornado and Harrier or more Tornados, surely the Tornado produces a better result, bearing in mind how many aircraft need to be supported in Afghanistan. Does the Minister recall that the Sea Harrier force was withdrawn some four years ago?

Lord Astor of Hever: Yes, my Lords, I recall that. The military advice is that the Tornado has a greater capability. The primary capability advantages of the Tornado GR4 over the Harrier GR9 include greater payload and range and integration of capabilities, such as Storm Shadow, fully integrated dual-mode Brimstone, the Raptor reconnaissance pod and a cannon.

Lord Naseby: My Lords, a number of us on these Benches have been RAF pilots who understand the decision that has been taken. However, the concern of many of us is to ensure that, in the future, there is training to ensure that when the new aircraft come on stream we have a stream of pilots capable of flying them. Can we be reassured that that issue, if not currently being addressed, will certainly be addressed in the not-too-distant future?

Lord Astor of Hever: My Lords, I can give my noble friend that assurance. We are working on that at the moment and we envisage working with our international partners to make that possible.

Lord West of Spithead: My Lords, the decision to get rid of the Harriers and not the Tornados is bizarre and wrong. It is the most bonkers decision that I have come across in my 45 years in the military and I can assure this House that I have been privy to some pretty bonkers decisions in that time.

In terms of cost, if we remove the Tornado force, we would be looking at about £7.5 billion by 2018. With the Harriers, we are looking at less than £1 billion. In cost terms it does not make sense. We are told that the Harriers cannot do the job in Afghanistan. That is just not true; they can do it. Indeed, I have spoken to a

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lot of Army officers over the weekend who say that they very much value the particular capabilities of an aircraft designed for CAS to do that. We are removing a total capability.

This is not a party-political issue; it is crucial to the defence of our nation. I would like the Minister not to give a quick answer but to promise to go away to look at this decision. In terms of cost terms and capability, it absolutely does not make sense. There is nothing wrong in sometimes feeling that one has gone the wrong way. I ask the Minister to ensure that this is looked at again very quickly, because decisions are being made to remove a capability as we speak.

Lord Astor of Hever: My Lords, I share the noble Lord's admiration for the Harriers. We have had to make some very difficult decisions. Noble Lords should be reminded of the legacy that we inherited: a black hole in the defence budget of £38 billion. The last year of the Labour Government in which the noble Lord served saw the overspend in defence increase by £3.3 billion. That is the largest ever recorded increase. The top 15 equipment programmes are £8.8 billion over budget and have a cumulative delay of 32 years.

Lord Reid of Cardowan: My Lords-

Lord Burnett: My Lords, we are pledged to defend the 14 Crown Dependencies, 13 of which are islands. They are scattered around the world and include the Falkland Islands. I welcome the retention of our expeditionary capability at brigade strength and the support that the Prime Minister expressed again for the Royal Marines in the other place on 19 October. From our shared experience, my noble friend will be aware that it is vital for amphibious troops to have fixed-wing air support. I hope that he can confirm to the House today that he and other Ministers in his department will continue to use all their influence to ensure that at all times British troops engaged in expeditionary operations will have British carrier-borne fixed-wing aircraft in support.

Lord Astor of Hever: My Lords, I share my noble friend's admiration for the Harrier fleet, and wish that I was able to give him a more positive answer. None of our decisions taken as part of the SDSR reduces our ability to deter or defend against an attack on the Falkland Islands. In terms of combat air, the Falkland Islands are defended by Typhoon aircraft. We also have a range of further capabilities to deter any aggression, such as submarines.

Lord Reid of Cardowan: My Lords-

Noble Lords: Time.

Science and Technology Committee

Membership Motion

3.37 pm

Moved by The Chairman of Committees

Motion agreed.



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EU: Economic Governance

Statement

3.38 pm

The Commercial Secretary to the Treasury (Lord Sassoon): My Lords, with the leave of the House, I shall now repeat in the form of a Statement the Answer given by my honourable friend the Financial Secretary to the Treasury to an Urgent Question asked in another place earlier today. The Statement is as follows:

"Mr Speaker, I am very grateful for the opportunity to update the House on the conclusion of the Task Force on Strengthening Economic Governance of the European Union and to report on the UK's position on the task force and, in particular, to restate that the UK is exempt from the current and future sanctions regime.

Heads of State and Government commissioned the President of the European Council, Herman Van Rompuy, to produce a report on EU economic governance and report back to the October European Council. Van Rompuy chaired a task force meeting consisting of EU finance ministers. The Chancellor represented the UK on the task force. The report has been agreed by the task force. The European Council is expected to endorse the report tomorrow.

Copies of the report, along with the Chancellor's submission to the task force, have been placed in the Library of the House this morning. It concludes that the EU should take steps to reinforce fiscal discipline and that the euro area in particular must face tougher surveillance of its fiscal policies, with sanctions for non-compliance with the pact where appropriate.

The report also recommends measures to improve EU level co-ordination of macroeconomic policies. This will ensure that any harmful macroeconomic imbalances between member states can be identified and corrective action taken. Finally, the report also notes that there should be a permanent crisis resolution mechanism for the euro area. The UK supports the conclusions of this report. A strong and stable euro area is firmly in the UK's own economic interests, given the high level of UK exports to these countries and our close economic ties.

In the years before the crisis, fiscal discipline was absent-and not just in the eurozone. High levels of debt have exacerbated the problems some member states faced during the economic downturn. The task force recommends that there should be a greater focus on member states' public debt levels in future and the Government agree with this approach. I am pleased to note that the report explicitly states that sanctions cannot be applied to the UK under the stability and growth pact. Domestic fiscal frameworks play a crucial role in ensuring that member states act responsibly.

EU surveillance is useful but, as the House knows, national Parliaments and national institutions must hold Governments to account for their economic and budgetary policies. Let us be absolutely clear: yes, we want to see a strong and stable eurozone. That is in our interests just as much as in the interests of our neighbours. The UK has led the way on economic governance. Multi-year budgets and independent statistics and

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forecasting have already been introduced. We have a clear fiscal mandate to eliminate our structural deficit. We are leading the eurozone, and our high standards have already received international endorsement.

We will look at any proposals to help the eurozone overcome its problems, but, as the Prime Minister has just said, we will not agree to any changes to the EU treaties that move more powers from this country to the EU. The UK's exemption from the sanctions proposals will be explicit; there will be no shift of sovereignty from Westminster to Brussels. The report makes this clear. It agrees that,

While we are looking at problems in the EU, we have serious concerns about the proposed size of the 2011 EU budget. I was shocked to see, on the day of the spending review, the vast majority of Labour MEPs voting against a freeze in the EU budget. When countries across Europe are taking tough decisions to put their public finances in order it would be wrong-unjust, even-to have a 6 per cent rise in next year's EU budget, as has been suggested. We cannot accept that; we will fight this hard. We are protecting Britain's interests in the EU, doing what is right for our country and our people, and the Prime Minister will be updating the House next week".

My Lords, that concludes the Statement.

3.43 pm

Lord Eatwell: My Lords, I am most grateful to the Minister for repeating as a Statement the Answer given to a Question asked in the other place. Before dealing with the issues referred to in the Statement, might I correct a factual error? The noble Lord stated that,

voted,

The noble Lord is misinformed. In fact, on Tuesday, Labour MEPs voted against proposals for an increased EU budget. Moreover, Labour MEPs tabled amendments to cut more than €1 billion from wasteful areas such as agriculture and export subsidies. Perhaps the noble Lord would like to reflect on the fact that, on the day of the comprehensive spending review, Tory MEPs voted to increase the European Parliament's entertainment budget by 50 per cent. Will the noble Lord correct his colleagues in another place?

In the Statement, the noble Lord argued-entirely correctly, in my view-that,

It follows that we in the UK have a major economic interest in the fiscal policies and arrangements of the eurozone. Will the Minister tell the House what role the UK has played in EU discussions on the co-ordination of eurozone economic policy to date? What measures of policy co-ordination throughout the European Union would Her Majesty's Government support? What role, for example, did the Government play in the recent weakening in the German position on sanctions imposed

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on those countries running fiscal deficits in excess of those defined in the stability and growth pact? Does he support the view of President Sarkozy and Chancellor Merkel that a new EU treaty would be required to develop a new stability regime in Europe?

Matters of economic stability are global matters. Important decisions affecting the future of the UK will be taken at the G20 summit in Seoul next month. Given that many of the matters to be discussed at the Seoul summit, including the development of international financial regulation, are matters in which the EU now has an overarching role, will the UK be co-operating with our EU colleagues who are members of the G20 to present a united voice in Seoul?

3.46 pm

Lord Sassoon: My Lords, I am grateful for the agreement of the noble Lord, Lord Eatwell, that the UK has a very strong interest in seeing a strong and secure eurozone. I will certainly draw to the attention of my honourable friend the Financial Secretary his interpretation of what happened in the European Parliament last week.

I think that the question that the noble Lord asked about our input to the strengthening of the co-ordination of macroeconomic affairs in Europe is best illustrated by the considerable input that my right honourable friend the Chancellor of the Exchequer gave to the task force's deliberation. Among the input that the Chancellor of the Exchequer gave, he called for greater transparency and independence of the national institutions that are involved in the national budget-making process. He made it clear that national budgets should first go through national parliamentary processes before they go to Europe, so that, in the case of the UK, the UK Budget remains first a matter for Parliament before it is reported to Europe. Thirdly, he called for stronger macroeconomic surveillance in Europe. He called for a reinforcement of the stability and growth pact. He called for debt aspects of the stability and growth pact to be given more emphasis and he made some comments on governance arrangements. The UK contribution to the ongoing discussion of these important matters has been very considerable and we are completely content with the output that has come from the task force proposal.

There is absolutely nothing in the task force report that would require treaty changes. There are other matters that are being informally canvassed by certain member states and others, including the idea of a permanent crisis resolution mechanism or suspension of voting rights. There are all sorts of ideas that would require treaty changes but these have not yet been put on the table. If they are put on the table, we will deal with them at that time.

3.48 pm

Lord Ryder of Wensum: My Lords, what precisely are the sanctions for non-compliance referred to by my noble friend?

Lord Sassoon: My Lords, the critical point is that the sanctions that apply apply only to the eurozone members. They do not apply to the UK, which has a

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specific carve-out and will continue to have a carve-out, as now reconfirmed. There are no sanctions that apply to the UK.

Lord Harrison: My Lords, I inform the Minister that Sub-Committee A of your Lordships' European Union Select Committee, which I have the pleasure of chairing, is currently undertaking an examination of proposed EU economic governance in the light of the Van Rompuy report and the earlier Commission statement. We hope to report in the first quarter of next year. Will the Minister elaborate on the United Kingdom's position on treaty change? I listened carefully to what he said, which was that he would not entertain any such change where the Government believed that the United Kingdom's independence was compromised in any way. If a treaty change were proposed that would strengthen the eurozone-a common ideal across the House-would the Government entertain it?

Lord Sassoon: My Lords, if anybody proposes a treaty change that has not yet been proposed, it will be considered on its merits. To be completely clear, any proposed treaty change that has any suggestion of transferring powers from the UK to Europe will be subject to a referendum. If something is proposed, we will look at it on its merits and respond accordingly.

Lord Newby: My Lords, does the Minister find it strange that the UK is in the unique position of being able to impose fines on everybody else within the EU in co-operation with other EU member states and yet, however fiscally ill disciplined a future UK Government might be, the EU cannot impose sanctions against us? Are there any effective pressures under this set of proposals that, in future, the EU will be able to bring to bear against a British Government who were behaving profligately?

Lord Sassoon: My Lords, I welcome the question from my noble friend. It enables me to restate that it is perfectly right and proper that the UK should be subject, as it is, to the financial disciplines of the stability system in the EU. This means that we are required to exercise fiscal discipline. Indeed, the July council expressed itself satisfied. It said that the new UK Government's proposals for deficit reduction were adequate to meet our responsibilities. It is quite right that we should go that far but, equally, we are not members of the eurozone. The system of sanctions that applies in the eurozone escalates to fines, as my noble friend said. The sanctions can start by requiring interest-bearing deposits, then non-interest-bearing deposits and finally fines. It is completely appropriate that those should apply to the eurozone and not to the UK.

Lord Tomlinson: My Lords, the noble Lord said clearly on two occasions that treaty changes are not on the table and that we will consider them with an open mind if they are. However, will he accept that treaty changes, if they are proposed, will reopen the whole of the Lisbon treaty box and require parliamentary ratification? Will he also be a little more robust in telling us that he can see no circumstances at present in which Her Majesty's Government will consider treaty changes?



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Lord Sassoon: My Lords, it is likely that proposed treaty changes will be discussed at the meeting of heads of state at the European Council tomorrow. My right honourable friend the Prime Minister will be there. If treaty changes come forward, the coalition agreement is clear. We will look at any other proposals if they do not transfer powers from London to Brussels. That is the position.

Lord Williamson of Horton: Since the Statement refers not only to governance but, briefly, to the budget, and since media and other comment on the budget also refers frequently to the risk to the United Kingdom rebate, will the Minister confirm that there is no possibility of a change to the UK rebate, except with the agreement of the United Kingdom Government, because it is subject to unanimity?

Lord Sassoon: Indeed, my Lords, that is the position. It is worth reminding ourselves that since my noble friend Lady Thatcher won that rebate at Fontainebleau it has saved Britain £88 billion. That is what tough negotiations in Europe achieved. The previous Government agreed to significant changes to those arrangements, which mean that the abatement has come down very significantly. However, my right honourable friend the Chancellor said after the ECOFIN meeting on 8 September that we will make it clear from the start that:

"We are not going to give way on the rebate. No doubt others will want to put it into the mix but they'll be wasting their time. People better know that at the beginning of the process or they are certainly going to discover it at the end".

Noble Lords can see that my right honourable friend the Chancellor will be in the robust tradition set for us by my noble friend Lady Thatcher on these matters.

Lord Marlesford: My Lords-

Lord Liddle: My Lords-

Lord Richard: My Lords-

Lord De Mauley: My Lords, there is time to hear from all noble Lords.

Lord Richard: My Lords, did I hear the Minister saying that the Government would consider changes to the treaty that did not involve a transfer of sovereignty from this country to the EU? Did he say that? If he did, what are the implications of that for the Prime Minister's commitment that there would be a referendum on the Lisbon treaty if there were any changes to it? There is a distinction between any changes to the treaty and changes that transfer sovereignty from Britain to the EU. Which is it?

Lord Sassoon: My Lords, there will be a referendum on all proposed treaty changes that would transfer competence to Brussels. In terms of whether we look at treaty changes, if any treaty changes come forward and are proposed at the council tomorrow or at any other time, the UK Government will of course look at them and consider whether they propose to move competences. Depending on which category they fall into, we will act accordingly.



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Lord Marlesford: Does Britain have the power to veto any increase in the EU budget?

Lord Sassoon: My Lords, as I understand it, the financial framework and perspective have to be agreed unanimously. Discussions are starting on the framework that will cover the years 2014 to 2021.

Lord Liddle: Will the Minister confirm that tomorrow at the European Council the leaders of France and Germany are going to propose treaty changes on the debt crisis resolution mechanism? Is it not slightly odd that the British Government are going to that meeting without having a view on those proposals?

Lord Sassoon: My Lords, I sometimes struggle to speak for all the policy matters covered by Her Majesty's Treasury, which are wide enough. I absolutely cannot speak for what the leaders of France and Germany are going to say when they come to the council tomorrow. I am sure that the Government will be prepared to answer any proposals that come forward. We will hear more about this after the meeting on Monday.

Lord Stoddart of Swindon: My Lords, would not any proposals coming from France, Germany or anywhere else for a treaty change require to be passed by unanimity? If so, can we have an assurance that the Government will not agree to any such change? If they do-to take up the point made by the noble Lord, Lord Richard-can we have an absolute assurance that there will be a referendum?

Lord Sassoon: My Lords, I do not think that I can add anything to my earlier answers on this matter. I have tried to make the position as clear as possible. We will treat any proposed treaty changes on their merits and depending on whether they suggest any changes in competences between the UK and Brussels.

Lord Stoddart of Swindon: Does that require unanimity?

Lord Sassoon: Yes.

Lord Grenfell: Does the increase proposed in the European Union budget violate the current financial framework or is it within the limits that were set?

Lord Sassoon: At the moment, the proposals floating around sit within the various statutory limits for Europe. However, just because those statutory limits are set at some theoretical level, that does not mean that it is at all appropriate in the view of the Government for people to go around suggesting 6 per cent increases in the budget next year or anything remotely like it. At a time when the UK and many other members of the EU are tightening their belts appropriately, the EU budget should do the same.

Lord Hannay of Chiswick: Does the Minister agree that there are perfectly respectable arguments against treaty change at this stage that do not need to delve into the intricacies of Britain's relationship with the European Union? Given that what is being sought is greater stability in the eurozone, which is in our interest, respectable arguments against treaty change-such as that the ratification by countries quite different from

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ourselves might be problematic and might lead to a loss of confidence in the euro as a result-ought to be deployable by any member state.

Lord Sassoon: My Lords, the task force has come forward with some significant proposals for strengthening the framework within the eurozone. I echo the noble Lord's sentiments in respect of the task force proposals, but those proposals, which would be a significant step forward, do not themselves require any treaty changes. There may be other suggestions, such as the idea of a permanent crisis resolution framework, which may require treaty change. The UK Government absolutely support the euro area's desire to take positive action to overcome its problems through the creation of an appropriate framework. If that has treaty consequences, we will look at it in that spirit.

Lord Tomlinson: My Lords, the Minister did a bit of a soft-shoe shuffle in replying to the question asked by the noble Lord, Lord Marlesford. He talked about the next financial perspective, whereas I am sure that the noble Lord was arguing about next year's budget. In the interests of clarity, will the Minister tell us how Her Majesty's Government voted in council in relation to the budget for the year 2011? Did they show financial discipline or did they vote in favour of it?

Lord Sassoon: My Lords, forgive me, but I cannot recite how we voted on each matter at each council meeting. However, I will write to the noble Lord in answer to that question.

Afghanistan

Statement

4.03 pm

The Minister of State, Foreign and Commonwealth Office (Lord Howell of Guildford): My Lords, with the leave of the House I will now repeat a Statement made earlier today by my right honourable friend the Foreign Secretary on Afghanistan. The Statement is as follows:

"Mr Speaker, with permission, I will report to the House the Government's assessment of progress towards UK objectives in Afghanistan. This is the first of the quarterly reports that the Prime Minister announced in his Statement to the House on 14 June.

Making progress in Afghanistan is the top foreign policy priority for the Government, linked closely of course to our foreign and development policy towards Pakistan. It is right, therefore, that Parliament is able to scrutinise the mission in Afghanistan in detail. From the beginning of the new Government we have given full attention to Afghanistan in the National Security Council. We have ensured that government departments and Ministers are working together at the highest level and that the necessary resources are being devoted to this difficult task. We have doubled the operational allowance for our troops, sharply increased our development aid and rebalanced the deployment of our forces in Helmand.

In addition to these reports and regular updates by Ministers, we will also make more information available to the House in the form of Written Ministerial Statements

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each month from November. I will make a further Statement when the investigation into the tragic death of Linda Norgrove is complete.

Members on all sides will join me in expressing gratitude to our courageous Armed Forces. They are the finest any nation could hope to have. We should also remember the families of the 341 men and women who have given their lives and the many who have been wounded. For nine years thousands of Britons have served in Afghanistan in both civilian and military roles in extraordinarily difficult circumstances, and we owe them a great deal.

It remains vital to our national security that Afghanistan be able to maintain its own security and to prevent al-Qaeda from returning. NATO's strategy is to protect the civilian population, support more effective government at every level and build up the Afghan national security forces as rapidly as is possible. It also requires the Afghan Government to meet the commitments on governance and security that it made at the Kabul conference in July this year. My report today will cover all these areas. It represents the combined assessment of the Foreign and Commonwealth Office, the Ministry of Defence and the Department for International Development, and the next quarterly report will be delivered by the Secretary of State for Defence in the new year.

On security, we assess that steady progress is being made across Afghanistan and specifically in Helmand and Kandahar provinces. International forces now number 130,000, while the Afghan national security forces will reach 260,000 by the end of the year, exceeding their target for 2010. Afghan and ISAF forces have checked the momentum of the insurgency and the area under the control of the Government of Afghanistan is increasing. However, the situation remains extremely challenging. One of the effects of increased military activity is that the number of security incidents, particularly those involving direct fire, has increased sharply. We should not underestimate the highly difficult task our forces continue to face.

ISAF's military effort is currently focused on Kandahar. Afghan and international forces continue to clear the insurgency out of areas adjacent to the provincial capital. Afghan security forces are taking an increased role in planning and executing the current phase of these operations and make up well over half of the forces involved. In the coming weeks, operations will focus on holding the ground that has been gained and providing a secure environment for local Afghan governance to develop.

In Helmand province, UK forces continue to train the Afghan national security forces and conduct security operations against the insurgency. As my right honourable friend the Secretary of State for Defence announced on 14 October, we are increasing the number of UK troops directly involved in the training and development of the Afghan national security forces by over 320. This increase is part of the rebalancing of UK forces in the province and has been made possible by the handover of security responsibility for Kajaki, Musa Qala and Sangin to our US allies, in order to concentrate British forces in the key population areas of central Helmand.



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On 17 October, units of the 3rd Brigade of the Afghan National Army's 215 Corps launched a significant operation to secure settlements near Gereshk. This operation is building on the success of previous Afghan national security force operations which have cleared the insurgency out of former havens in central Helmand over the course of the summer. Planning and implementation is being led by the Afghans with British mentors from 1st Battalion Irish Guards providing support. For the first time, engineering, artillery, countering improvised explosive devices and reconnaissance are being conducted by the Afghan National Army itself.

US Marines, which now form the majority of the ISAF forces in Helmand, continue the hard fought struggle against the insurgency in Sangin, while in Marjah they have continued to carry out operations alongside the Afghan National Army and Police.

The Government are confident that we have the right military strategy in place and the right number of troops in Afghanistan. However, we must expect levels of violence to remain high, and even increase, as Afghan and ISAF forces tackle the insurgency. The murders by insurgents of the governor of Kunduz province and a district governor in Nangarhar province remind us of the violence that still exists, even in the more secure areas of the country.

The Prime Minister will attend the NATO summit in Lisbon on 19 November, when we expect NATO to agree the process of transferring lead responsibility for security across Afghanistan to the Afghan security forces by the end of 2014. It will be a phased transition, with the Afghan security forces gradually taking the lead, as they have in Kabul, in jointly selected districts and provinces as the conditions on the ground are met. British forces will be drawn down from combat operations by 2015.

On governance, we assess that the Government of Afghanistan are making some progress on their Kabul conference commitments. The human rights support unit in the ministry of justice has been opened. The Afghan national security adviser has approved a revised national security policy. The Government are finalising a 100-day report which will highlight progress and areas where further action is needed. But more still needs to be done, some of it more quickly.

Last month's parliamentary elections passed without serious security incident. However, the independent electoral commission has confirmed that more than 1 million votes, almost a quarter of the total, were disqualified on grounds of irregularities and fraud. The Electoral Complaints Commission will investigate allegations against candidates and disqualify those found to have committed fraud before final results are issued. This is an important process to build Afghans' confidence in their country's institutions.

On 7 October, the High Peace Council was inaugurated, fulfilling a key request of the Afghan Consultative Peace Jirga in June. It marks an important milestone for the Afghan peace and reintegration programme. It is for the Afghan people to shape a political settlement which reflects the needs, culture and aspirations of all the Afghan people. The UK will support a settlement which gives Afghanistan stability and security, is representative, gives no one group disproportionate

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influence, upholds human rights and the rule of law, and is in accordance with Afghanistan's constitutional framework. The UK will work with individuals and groups who genuinely share these aims and who accept the conditions laid down by President Karzai's Government. Insurgents must renounce al-Qaeda, give up armed struggle and work within the Afghan constitutional framework. We consider on its merits any request for the UK to play a role in support of this Afghan-led process. At the same time, ISAF will continue to exert intensifying pressure on the insurgency throughout the country.

Corruption continues to be a serious problem in Afghanistan and there has been only modest progress in anti-corruption efforts. In the past year, the Criminal Justice Task Force convicted 440 people, including serious narcotics dealers and corrupt officials. New mining regulations have been introduced to increase transparency and accountability. The UK is helping the Afghan Government to strengthen accountability and prevent corruption through financial management reforms and to build institutions with the ability to tackle corruption and enforce the rule of law. We are pressing for the anti-corruption monitoring and evaluation committee, which has been appointed, to start work as soon as possible.

In early September, Afghanistan's central bank was forced to intervene to stabilise the Kabul Bank after allegations of corruption. The Afghan authorities must now work with the IMF to conduct a proper audit and take any necessary action. Weaknesses in the banking regulatory system must be addressed if Afghanistan is to maintain domestic and foreign public confidence.

The Afghan economy grew last year by a rapid 22.5 per cent, and tax revenues have risen sixfold in six years. The IMF predicts that the Government of Afghanistan will be able to cover non-security running costs by 2015 and all running costs by 2023.

The House will recall that, on 21 July, the Secretary of State for International Development announced a £200-million increase in UK funding for Afghanistan to stabilise insecure areas, stimulate the economy and improve essential services. Early progress is being made at the ministry of interior, where the new Minister is keen to develop a more capable and accountable police force which will help sustain the transition of security responsibilities to the Afghan Government.

The deployment of British Armed Forces abroad is one of the gravest responsibilities of government, along with that of protecting the security of Britain's citizens and territory. In Afghanistan, the two go hand in hand. The Government understand how important it is to retain public confidence in our mission and to ensure democratic scrutiny of it. We will continue to provide regular and frank assessments to the House. Above all, we will do our utmost to ensure that NATO's strategy in Afghanistan is seen through with rigour and determination and that the extraordinary efforts of so many thousands of our Armed Forces serve to enhance the national security of the United Kingdom".

That completes the Statement.



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4.14 pm

Baroness Symons of Vernham Dean: My Lords, I thank the Minister for repeating the Statement and for the very helpful detail contained in it. We on this side of the House want to express our sympathy and condolences to the families and friends of the members of the Armed Forces who have lost their lives in Afghanistan. We are very proud of their courage, determination and steadfastness, and our thoughts are with those who have suffered such a terrible loss as a member of a family at this time. We also welcome the Minister's commitment to make a Statement when the investigation into Linda Norgrove's death is complete. She was a very brave woman who was clearly held in very high esteem, and many people would wish to have further detail when the time is appropriate.

We welcome the detail on the military deployment and the assessment that insurgency has been checked in a number of areas in Afghanistan. However, the Minister will not be surprised to know that there are still concerns about the process of security transition in Afghanistan. The Statement makes clear what NATO's strategy is-to protect the civilian population and build up the national security forces as rapidly as possible. We all want to see our troops home as soon as may be, but we want that withdrawal to be based on success of knowing that the sacrifices made have been made on a lasting basis. Is the Minister really confident that a satisfactory security transition will be achieved by 2015, as the Statement and the Deputy Prime Minister have said? That part of the Statement must be put into the context of other parts of the Statement that say that the situation is challenging-or "extremely challenging", as I think it says-and that the number of security incidents, particularly those involving direct fire, has increased sharply in recent weeks. That has to be worrying.

The Statement mentioned that a number of United Kingdom troops are directly involved in the training and development of the Afghan national security forces. The Statement says that that number has increased by some 320 UK personnel. Can the Minister assure us that the cost of those additional 320 individuals is in addition to the £200 million announced as being additional expenditure over the next four years? If they are not additional expenditure, they would take up a huge slice of that £200 million. I cannot be precise but, at a rough estimate, it might be anything between £8 million and £10 million a year.

I turn to the question of the elections. We were told that the final declaration on the elections would be on 30 October. However, the individual provincial preliminary results are ready and available online. Does the Minister have any assessment from those preliminary results of what the eventual outcome is? They are available online but not in English-but I imagine that those clever people in the Foreign Office would have been able to do some calculations by now.

The Minister will also be aware that the Wall Street Journal has reported that we may expect many new faces among those elected. As he said, nearly a quarter of the results are invalid because of electoral fraud. I think that about 1.3 million ballot papers have already been discounted and some 2,500 polling stations have had their results disqualified in full-that is one in

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seven; a very high number. There are other really awful reports that in some areas voters have been forced into polling stations at gunpoint and that individuals inside the polling stations observing what is going on-the observers and the officers in charge of those stations-have been forced at gunpoint from the polling stations while ballot boxes have been interfered with and stuffed with false ballot papers. Does the Minister have any corroboration of that from our embassy staff, who are interested in this and have observers on the ground? We all know, of course, that this sort of corruption is endemic, and that there is an argument that at least some progress is being made if it is clear that ballot boxes that have been corrupted are being taken away. Therefore, this is not an entirely gloomy picture, but it is very worrying when the level of fraud appears to be so high.

The noble Lord mentioned the Electoral Complaints Commission and the Independent Election Commission. Will the results published on 30 October be the final results that have been checked for fraud, or will they be provisional results which have to be checked again? It would be helpful to know what the status of those results will be when they are published.

On other governance issues, we have all read in the newspapers recently the alarming reports about cash going from Iran directly to President Karzai. The president himself has said that a number of countries provide funding for him in a number of different ways. However, part of the Kabul statement and the Kabul settlement stipulated that there should be proper accounting of all money received into Afghanistan. It is important that such a process is transparent-we would all agree on that-and that the money is used for proper capacity building rather than buying influence. As I understand it, all the money received from the United Kingdom is paid into the Afghanistan Reconstruction Trust Fund, which is administered by the World Bank. Are all international contributions made through the World Bank; and, if not, do we know the countries that are making contributions outside the World Bank in a way that perhaps needs to be questioned more closely?

I return to the issue of women in Afghanistan. We are all aware that President Karzai has signed the Shia Personal Status Law, which, as the noble Lord will be aware, severely curtails women's rights in some truly abhorrent ways. This is not a matter we can just wave to one side; it fundamentally attacks the human rights of many women in Afghanistan. The Kabul conference communiqué included commitments on women's rights, the mainstreaming of gender equality and ensuring human rights and the provision of civic education. What direct communication and contact have Her Majesty's Government had with women's groups working in Afghanistan? There is a fundamental weakness on this point on the Government's part. Afghanistan is a country where there is gender segregation-not throughout but in many places. The 14 Ministers of the FCO, DfID and MoD include not a single female. These are countries where authority matters. It is important to have an authoritative figure who can talk about these issues directly to the Government and to women's groups. I hope that the noble Lord will be able to tell us something about what measures will be put in place in order to deal with those issues.



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On 21 July the Minister told us of the £200 million extra funding that the Government had pledged at the Kabul conference, and I think that he confirmed at that time that it was indeed new funding. I am sure that he will be able to assure us on this point but, for the sake of complete clarity, can he confirm that the £200 million is not affected by the spending cuts? That would be helpful.

Can the Minister also give details-perhaps not now, but maybe later when he has had a chance to think about it-of the financial commitments made by other EU countries? We know how much the UK is putting in, but how much are our European Union neighbours putting into these funds, and how much is coming from our colleagues in the NATO countries and, indeed, the 40 or so countries that are reported to have participated at the Kabul conference?

The quarterly statement is enormously welcome, and I applaud the detail in it. I look forward to information being regularly received in this way. It will allow Parliament to plot progress and it is, if I may say so, an admirable example to some of the Minister's colleagues of ministerial accountability to Parliament.

4.25 pm

Lord Howell of Guildford: My Lords, the noble Baroness has posed a series of extremely well informed and penetrating questions. The words that I seized on in her contribution were that I might have a chance to think about some of them, because instant replies might not be perfect. I will, though, attempt to answer in detail a number of the important points that she has made.

I shall not take those points in order; instead, I shall deal straight away with what I believe to be the central consideration in the devolution of Afghanistan society-the position of women in it. Indeed, this applies to many of the broader political issues and struggles that the world faces today, particularly in central Asia and the Middle East. I agree with her that the position of women is central. Our officials are working closely with the Afghan authorities all the time about this matter. I have some figures here. Some 100 women were involved in the earlier peace jirga. During the election, 402 women stood as candidates, which is quite a lot; 68 seats were guaranteed for women, and one seat was won by a woman despite not being guaranteed. So, things are happening, but we have a long way to go. We are miles from seeing the proper civilised position of men and women in a modern society. We are just not there yet; a huge amount of work lies ahead. I agree with the noble Baroness that it is, above all, by the measure of that that one can decide whether there is success in seeing Afghanistan, which is a noble country that must be able to play a part in the civilised comity of nations, go forward in the right way. That issue is central.

I return to corruption, the various issues about money flying around and recent comments about bags of gold and so on. The key requirement with that sort of issue is transparency and knowing, if money is to be transmitted in this rather primitive way, that it is at least going to good causes and not to evil and secret causes. Transparency should bring those things out.



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On the overall corruption situation, though, I cannot be all that cheerful. Tremendous pledges were made at the Kabul conference, to which I referred, about the need for reducing and eliminating corruption, but on the Afghan side, frankly, not much progress has yet been made. The so-called "high office of oversight", a sort of Afghan anticorruption commission, was set up, but in our view it needs to play a stronger co-ordinating role than it does. On our side, we helped to fund the major crimes task force, which was set up last November, a year ago, and that has had some success and has got some prosecutions and convictions. That is a sign of advance. Then there is the Monitoring and Evaluation Committee which has now been set up, but that, too, needs to get started and really get going. Until these things are operating really effectively, we cannot be at all complacent about the corruption situation.

More generally, perhaps I should have begun by saying that I very strongly welcome the support from not only the noble Baroness, who is deeply experienced in these matters, but her party, for the general trend of what we are trying to do in Afghanistan. This proves that we are in this as a nation and determined to see these matters through.

She asked whether I am confident about the timetable to ensure that there will be no combat troops by 2015. We are confident that things are going the right way, that progress is being made and that this is a realistic timetable. We think that that can be done. There may be training units left in Afghanistan after 2015, but we are absolutely convinced that it makes sense and is strategically correct that by 2015 there will be the withdrawal of all combat troops. We think that that schedule makes a great deal of sense and fits into the whole pattern of the gradual transfer of security and general administration to the Afghan people and the Afghan security and police forces.

As to costs, I can confirm that the £200 million announced by my right honourable friend the Secretary of State for International Development is completely insulated from the cuts. The noble Baroness wanted that assurance and she can have it. Regarding, the cost of the 320 additional support personnel for training and so on, I believe that that cost is separate from the £200 million and will not eat into it. I give her the assurance now and hope that I will not have to eat my words. She is quite right to say that if we start deducting those sorts of salaries and costs, it would rapidly erode the commitment. So I am giving her the assurance that the cost is separate.

She asked a number of questions about the election outcome and the results. I am not sure that I can be as helpful about those. We have been dealing with issues of fraud and we think that overall they do not invalidate the election-although I must confess that the figure of 1 million votes being fraudulent or irregular is formidable. However, we still think that the elections were held in challenging circumstances, although obviously, because of the invalidation of so many votes, the elections were not perfect. Despite all the logistical and security difficulties, it is right that the Afghans have exercised their right to have a say in the future of their country. Exactly how these results are going to come out, provisionally or finally, I cannot

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tell. So far as I know, no interpretation has been made by psephological wizards in the Foreign Office as to how it will all work out; therefore, I cannot be as helpful to her on that matter.

I hope that I have covered all the questions that she asked. Later on, I shall go over very carefully what she said and if there is any gap in my answers, I will certainly seek to fill it.

4.33 pm

Baroness D'Souza: My Lords, I, too, thank the Minister for repeating the Statement and say how much I welcome these quarterly Statements, which are extraordinarily useful. I underline what has been said previously by the opposition Member and ask the noble Lord to confirm before the next quarterly Statement-even in writing-that the generous amount of aid allocated for development work in Afghanistan will go directly to relevant aid programmes run by the private and NGO sectors, not via the Armed Forces. The question I really want to ask is: is a serious peace process involving discussions with some elements of the Taliban now being considered?

4.34 pm

Lord Howell of Guildford: On the second point, I beg the noble Baroness's indulgence. Did she ask whether there were serious discussions with the Taliban? I see that she is nodding. Whether discussions should open with the Taliban is a matter for the Afghan authorities. President Karzai has said very clearly that he would contemplate these discussions on certain conditions, which are pretty obvious. He wants to talk to people who are not determined to carry on killing and promoting violence, but who are anxious to see the creation and build-up of a stable and non-violent Afghanistan. If these sorts of conditions are met and sensible discussions can take place, they will. We definitely take the view that it is for the Afghan Government and people to decide how to conduct those sorts of talks. In short, this is an Afghan process. If we are asked to play a role in the process, we will consider it on its merits. I hope that that clarifies the matter.

The £200 million is a DfID programme for the development of a better Afghanistan. It is separate from the military commitments that we are determined to maintain in order to ensure that our troops have the best possible equipment at all times. These are separate matters. The DfID money is for the development and prosperity that we hope in due course to see in Afghanistan. I reiterate the point that the economy is beginning to grow at a very remarkable rate. This is a very encouraging sign amid the continuing difficulties.

4.35 pm

Lord Clinton-Davis: Will the Minister take the opportunity to reject the idea that has been advanced by at least one prominent person-and perhaps by several-that British troops should be withdrawn from Afghanistan immediately? That is entirely unjustified at the moment.



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Lord Howell of Guildford: I wholly agree with the noble Lord: that must be right. The squeeze is on al-Qaeda in Afghanistan. It has had to move elsewhere and is more dispersed. The process is continuing and to abandon it now by withdrawing would be a regrettable and deplorable act.

Baroness Falkner of Margravine: My Lords, I will pick up on the point made by the noble Baroness, Lady D'Souza, about negotiations with the Taliban. My noble friend's response was somewhat at variance with the Statement, which clearly says that the UK will support a settlement for Afghanistan that meets six qualifying objectives: whether it is representative, upholds human rights and so on. The emphasis is on the UK supporting a settlement. Can my noble friend reassure us that if we are expected to support a settlement, some of the preconditions, such as upholding human rights and giving no one disproportionate influence, will be part of our endorsement of a settlement? It concerns me that we may say that these things need to happen for us to support the settlement, but then allow the Taliban to disregard the High Peace Council and these statements entirely.

My other question concerns media reports that ISAF and NATO are turning to the Russians for logistical support and assistance in Afghanistan. Can my noble friend tell us more about the accuracy of the statements, because this could have a rather perverse outcome on the ground, given Russia's previous history there?

Lord Howell of Guildford: I will tell my noble friend a bit more about the Russians in a moment. First, I will deal with the other question. I do not think that anything that I said is inconsistent with the Statement. I made it clear and repeat, first, that we regard this as an Afghan process and, secondly, that President Karzai has said that he is willing to reach out to all his countrymen, which I suppose must include a moderate Taliban, provided that they meet certain conditions. That obviously means cutting ties with al-Qaeda, ending violence and pursuing their aims peacefully within Afghanistan's constitutional framework. We will support the President in that. I do not think that there is anything inconsistent in that view. However, the process is in the hands of the Afghan people and one hopes that it will lead to positive results in that some, and perhaps all, of these conditions will be met. However, we shall have to see.

I turn to the Russian position and the rather interesting things that have been said recently about that. First, my noble friend will know that the Russians have already been helping quite substantially. There is nothing new about Russian involvement and assistance in this matter. Perhaps I may give her the details. Russia already provides considerable support to the ISAF mission in Afghanistan, including additional helicopters and basic material supplies for the ISAF forces. The NATO Secretary-General has said that NATO is now in discussions with Russia on increasing that support. A decision on how Russia wishes to do this is obviously a matter for it. I agree with my noble friend that, when one thinks about the historical baggage and the irony of past situations, this is an unfamiliar, new situation. However, when I read about it, it struck me that it

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confirms that what the world is trying to do in Afghanistan is to eliminate a tremendous danger of instability arising from the al-Qaeda operations, which would affect everyone. Instability and failure in Afghanistan would be just as much a threat to Russia-and, indeed, to China and the great rising powers of Asia-as to Europe and America. Therefore, I was heartened by this support. Provided that it is of the right kind, that we learn the best lessons from it and that we learn from the Russians what lessons they have discovered from their own failures in the past, I think that it is a positive development.

Lord Rowlands: My Lords-

Lord Wright of Richmond: My Lords-

Lord Judd: My Lords-

Lord Wallace of Saltaire: My Lords, the noble Lord, Lord Rowlands, has tried several times to ask a question.

Lord Rowlands: My Lords, can the Minister elaborate a bit further on the statement that the area under the control of the Government in Kabul is increasing? Can he tell us in how many provinces today it can really be said that the Kabul Government's writ is running and that there is some kind of effective Kabul Government?

Lord Howell of Guildford: I believe that the answer is 14 provinces.

Lord Wright of Richmond: My Lords, is the Minister able to tell the House anything about progress or otherwise on controlling the poppy crop?

Lord Howell of Guildford: I cannot say very much, except that the earlier setbacks have to some extent been corrected and I believe that we are making progress. I should like to be able to give the noble Lord a far more detailed reply but I am not in a position to do so at the moment. I shall therefore do it in writing or at some other opportunity.

Lord Hamilton of Epsom: My Lords, can my noble friend confirm that the northern tribes in Afghanistan are getting extremely nervous about the talks with the Taliban? That of course means that the Pashtuns are being brought into the peace process and they are the people against whom, not very long ago, the northern people were involved in a very serious civil war, supported by the West.

Lord Howell of Guildford: It is a yes and no sort of answer. It is certainly true that Taliban extremists have relations with, in particular, the Pathan or Pashtun tribes, but my noble friend must remember that the Afghan security forces consist of 43 per cent Pashtun and 42 per Tajik, who have been at odds in the past but are now working together. Therefore, while inevitably the position of the Pashtun and their readiness to work with the rest of Afghanistan to see a stable state emerge will always be the problem-and has been for 100 or 150 years; there is nothing new about this-the fact is that at the moment many Pashtun are working very well with the Tajiks and the northerners. If it comes to discussions with any kind of Taliban adherents,

27 Oct 2010 : Column 1219

they will obviously be the ones who are more ready to be integrated and to discuss a positive future and who are less extreme than the inevitable wild small percentage who will want to go on killing to the last.

Lord Judd: My Lords, on talks with the Taliban, there is a very delicate balance to be struck as regards preconditions. Although it is understandable that certain basic preconditions should be laid down, in talks of this kind it is essential to understand that the way to win commitment is in the process of the talks themselves. If you set too big an agenda of preconditions, that will become an obstacle to the process getting off the ground. It is a matter of how you generate the process to produce the commitment that you seek. On the Russian assistance that is now being provided, experience over recent years has, I am afraid, given a good deal of indication, if not evidence, that the Russian methods of operation in military matters are not always quite the same as ours in the commitment to win hearts and minds. Can the noble Lord provide firm reassurances that anything that the Russians do will not become counterproductive in this context?

Lord Howell of Guildford: My Lords, I can certainly assure the noble Lord on that. We would watch that very carefully indeed. It is difficult to separate the history from the view of post-Soviet Russia today. Russia is our friend, with whom we seek to have good relations, but the invasion of Afghanistan was a very brutal affair. Although some techniques used by the Russians were apparently rather good on the ground, there were brutalities as well. That is why many of the mothers of Russian soldiers demanded that their sons came home and got out of Afghanistan, which led to many other consequences.

On the negotiations and how they are handled, the noble Lord speaks with great experience of such situations. It is absolutely right that we have to achieve a balancing act in any negotiations of this kind as we come out of the violent phase and into the peace phase. My noble friend behind me has reminded us of the concerns of the northern peoples, particularly the Tajiks, and of the ancient jealousies between the different groups. All those things have to be balanced in any talks with the Taliban if they come about and if President Karzai is able to fulfil his willingness to reach out to all his countrymen, as he says.

Lord Hannay of Chiswick: My Lords, I thank the Minister for the Statement and for the regularity of Statements to come. Does he agree that the Statement said not one word about the regional dimension of the Afghan problem and that that dimension-the attitude of the neighbours of Afghanistan-will become increasingly important as we move towards 2015? The willingness of the neighbours to commit themselves in binding legal obligations not to interfere will be one part of securing a future Afghanistan that is not prey to its neighbours, whether Iran, Pakistan, Uzbekistan or the other neighbours. Could he say something on that aspect and whether he agrees that, in future reports on Afghanistan, it would be helpful if the Government could say something about the effort that

27 Oct 2010 : Column 1220

they are putting in to building up a structure around Afghanistan in which a post-NATO Afghanistan could live in tranquillity?

Lord Howell of Guildford: My Lords, I must agree with the experienced noble Lord about the regional significance. On how you get that into a Statement on the regular reports on Afghanistan, I am not so sure. I can certainly say, here and now, that we recognise that the region has an important role to play in supporting Afghanistan and in facing all sorts of major challenges, including combating extremism, terrorism, illegal migration, narcotics and many other things. We welcome the fact that Afghanistan is actively seeking to support its bilateral relations in the region; indeed, regional co-operation was a major theme of the London and Kabul conferences. I cannot for a moment disagree with the noble Lord's point that this is part of the jigsaw. We must have effective regional support. The problems that are encountered across the Durand line-the Pashtun do not even recognise some of the international boundaries-the problems that Pakistan, which we need to give all the help that we can, has faced and the continuing malign policies of Iran are all very much part of the situation and all need to be examined. I will suggest to my right honourable friends that they elaborate on that in future Statements, although it would make these Statements even longer than they are already.

Lord King of Bridgwater: My Lords, does my noble friend recognise that the Statement that he has made is very grave? The whole House has listened in a suitably sombre atmosphere to the account of the situation after-where are we now?-nine years, after 341 of our soldiers have died and a considerable number have been very seriously injured, and in which we have faced what in military terms might be described as a good deal of mission creep. We went to expel al-Qaeda and make sure that Afghanistan never again became a base for terrorism on a global scale. We have now picked up some enormously worthwhile objectives: the end of corruption in Afghanistan; full human rights for women in Afghanistan; the end of the drug trade, if possible; and proper electoral practices being fully observed. As one reads across that list, one realises the challenges that we now face. As the noble Lord, Lord Hannay, said, certain neighbours are not interested in ISAF and NATO succeeding in their current ventures-the activities of Iran come into question. Against that background, are not the Government, supported by the Opposition, absolutely right that, as time is not on our side, we must get maximum momentum now for Afghanisation of the programme to get properly established at the earliest possible date?

Lord Howell of Guildford: I am absolutely sure that that assessment is expert, well informed and right. It is our desire and intention to maintain momentum on a number of fronts. My noble friend talks about mission creep. In a sense, the narrow and single objective to start with after 9/11, which was that somehow al-Qaeda was to be crushed and Osama bin Laden captured from his hiding place, has widened into a much bigger issue. Of course, the context has widened

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as well. We have seen the growth of jihadist, extremist Islam; we have seen it spread into other countries. We have seen difficulties in neighbouring countries. We have seen the rise of obduracy in Iran. All those matters have unfolded while we are struggling. That merely confirms that in the 21st century, if we want a civilised, global and stable society, we will face many such struggles in future. They will not be over quickly; they will take a long time.

Viscount Slim: My Lords, I welcome what the Minister said and I was very heartened by what the noble Baroness said. The noble Lord, Lord Hannay, is quite right: there is a big tribal problem in this area. However, if the Minister cared to go to Quetta and had a cup of coffee in one of the many cafes there-as he well knows, it is a Taliban rest camp-he would find that the cafe talk of the Taliban and al-Qaeda is, "These chaps talk about a surge. These chaps then talk about leaving. We've won". That is very dangerous when we are talking about discussions with the Taliban or al-Qaeda. Is it not wise to get them on two knees-or certainly one-before we have those talks? We have examples in the Lebanon and in Gaza of what happens: Hezbollah and Hamas have got closely, cunningly integrated in government, cabinet, parliament and the workings of the city and the surrounding countryside. Their influence is immense. This will be the aim of the Taliban and al-Qaeda if they get their hands in any way on the Afghan Government, weak and corrupt as they are. This happy talk about, "Let's all get round the table", is very dangerous for ISAF, NATO and Britain. I would like to see full confidence that ISAF, Britain, America and the other countries are going to sort these chaps out-that we are going to win and only then will we talk. With everyone opening their arms and saying "Come and talk", we are walking straight into a great problem for five to 10 years in the future.

Lord Howell of Guildford: I cannot for a moment question the wisdom and experience behind that either, except to say that one talks about winning and then, as we learnt in Iraq, one needs to talk about how the win is secured. As the former President Bush found in his famous observations, to win in the short term is something that can apparently be done on the surface. However, a win in the long term means that as we are, we hope, a civilised 21st-century globe, the nations within it- including our own-cannot afford to have a poisoning influence at the centre of things. Whether we like it or not, while we must be as forceful as possible in the military suppression of the violence and extremism, there will, in the end, have to be a state created in which those who may have been involved with or even inclined to support the violence and rebellion of insurgents in the first place have to start playing their role as proper citizens. They will have to be included, so I half accept what the noble Viscountsays, but the obvious strategy is to press ahead with what we are doing. We are confident that we are making progress. Beyond that progress lies the possibility of politics and of social, civic and economic development. Then we will have a world in which Afghanistan will no longer be the appalling headache that it is now.



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Higher Education: Funding

Motion to Take Note

4.57 pm

Moved By Baroness Wilcox

The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Baroness Wilcox): My Lords, the late John Masefield, poet laureate, once wrote that:

"There are few earthly things more beautiful than a university: a place where those who hate ignorance may strive to know, where those who perceive truth may strive to make others see".

I welcome this opportunity to debate the central role that higher education plays in our country so soon after publication of the outstanding report produced by the noble Lord, Lord Browne. Last week, my colleague the Minister for Universities and Science placed the noble Lord's report on a par with those of two distinguished former members of this House: Lord Robbins and the much missed Lord Dearing. I very much echo that view. The noble Lord's review has earned many plaudits, and rightly so. Of particular importance to me is the spirit in which he has conducted it. While the focus was clearly on funding and student finance, his abiding purpose has been to secure the long-term future of so many great institutions, that they may continue to be the beacons of wisdom and tolerance that Masefield praised.

I cannot emphasise enough that our universities are and must remain centres of free thought and discovery, and seats of learning in both the sciences and the arts. While the Government, who are currently formulating a detailed response to the noble Lord's report, are clearly concerned with universities' contribution to our economy and skills base, they will never lose sight of the wider purposes of higher education. There are many experienced figures on all sides of this House whose opinions I look forward to hearing today. Although my own experience is more modest, I am familiar with the HE sector from a number of perspectives: as a graduate and, latterly, a governor of what is now the University of Plymouth and as a governor of Imperial College. I also take a close interest in the UK's outstanding research base through roles in several organisations, including the Foundation for Science and Technology and some work with the Royal Society.

Perhaps I may begin by reminding your Lordships of the context in which the noble Lord's report was published and by highlighting some of its central arguments. I defer to him, of course, on the detail.

We should not forget that it was the previous Government who invited the noble Lord to undertake this review, but on a cross-party basis. The coalition Government hope that consensus on the future of HE will continue. What cannot continue, however, as the noble Lord concludes, is the current unsustainable system of funding, and any reform must be reconciled with the parlous state of the nation's finances, which the Chancellor addressed in last week's comprehensive spending review. The Chancellor has announced that

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the overall resource budget for HE-excluding public funding for research, to which I will return-will fall from £7.1 billion to £4.2 billion by 2014-15. This is because we have accepted the main idea in Browne-that money for universities should flow through students rather than the funding council HEFCE. The noble Lord's was, of course, a review on higher education in England, but it is of interest across the UK. My ministerial colleagues and I will work with the devolved Administrations on how the proposed reforms in England might affect Scotland, Northern Ireland and Wales, so that they can decide how to proceed.

The key point, though, is that money is not being withdrawn from the system but going into the hands of students by giving them loans to cover their tuition. With funding following students, whether they undertake degrees in Portuguese or particle physics, there will be stronger incentives for institutions to improve the quality of teaching and information that they provide. Indeed, it means that those universities which offer a better student experience from the lecture theatre to the careers service, from the library to the union's bar, can expand to accommodate greater numbers of applicants. That process of universities responding to the expectations of more discerning students is a powerful means to drive innovation.

It is also by far the best option for maintaining quality in the sector, something which would have been impossible had we decided to cut the unit of resource per student or introduced a graduate tax. The noble Lord rejected both as unviable. Neither is compatible with his desire, and ours, to preserve UK universities among our greatest national assets. Higher education continues to deliver a significant lifetime earnings premium to its beneficiaries. The noble Lord has concluded that graduates should make a greater contribution to the cost of their education, but within a system that is both fair and progressive. It is to these fundamental principles that I now turn.

It bears repeating that the noble Lord, Lord Browne, was entirely right to insist that there must not be any up front tuition fee for students. The Government are committed to social mobility. We know that going to university is often a transformative experience, opening new vistas for students and great opportunities. Initial costs would deter people from less affluent backgrounds from applying to HE. For the same reason, we welcome his ground-breaking recommendation that part-time students be exempt from up front fees. This is not only fair in making HE more accessible to older students or people whose work or family commitments make full-time study impossible; it will also stimulate innovation in the sector as universities develop different modes of delivering different courses and degrees.

The goal of social mobility informs other features of the noble Lord's report, including his recommendation for a more generous maintenance grant available through a simplified system which the coalition is now considering. Then there are the graduate contributions linked more progressively than under the existing arrangements to an individual's ability to repay. Not all graduates, of course, go on to lucrative jobs. The noble Lord has proposed raising the income threshold below which no graduate would begin to make contributions. Above

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the threshold, higher-earning graduates would pay a real rate of interest, but repayments would cease should their salary decrease, say, or they choose to look after a young family. His modelling would mean that the top third of graduate earners would repay more than twice as much as the lowest third. We believe that is fair and progressive.

When it comes to setting higher tuition graduate contribution levels, the Government are keen, like the noble Lord, that institutions demonstrate how they will support the vital work of attracting applicants from less affluent or non-traditional backgrounds. Universities have undoubtedly made progress on widening participation. However, the Office for Fair Access has found that the participation rate among the least advantaged 40 per cent of young people at the top third of most selective universities "has remained almost flat" since the mid-1990s. The Government will support universities to raise their game on access by improving advice for young people at school and college, for example. Indeed, the Deputy Prime Minister has already pledged £150 million for a national scholarship scheme to improve access for students from families of modest means.

It should be clear from this brief summary that the Government accept the overall thrust of the noble Lord's report. We are currently looking closely at the detail. That is deliberate; it is crucial that we proceed on a sound and sensible basis. There are relatively tight deadlines to ensure that we can amend regulation around fee structures and student support in time for universities to include accurate information in their prospectuses. We will also need to make some changes to primary legislation to adopt the noble Lord's proposal for a real rate of interest on repayments. At the same time, it is not only prospective students and their families who are dependent on our getting this right but universities themselves and a country urgently seeking to balance the books. We need to handle any transition with sensitivity.

There was another dimension to the spending review that was of huge significance to universities: the decision to protect the overall level of funding for science and research programmes in cash terms. This ring-fenced settlement, worth £4.6 billion in each of the next four years, is unquestionably good news. Across the country we have excellent university departments with the critical mass to compete globally and the expertise to collaborate with businesses and other organisations. The settlement should mean that we can continue to support them. I remind noble Lords that the Research Councils cover the arts and social sciences, in addition to the physical and life sciences. Moreover, Sir Bill Wakeham, at the behest of the Research Councils and Universities UK, has identified a range of efficiency measures, which universities can now pursue to mitigate the effects of inflation and preserve research funding in real terms.

From my association with Imperial College, I recognise the value of a stable investment climate. It allows teams of researchers to plan ahead and gives business, both domestic and international, reassurance that our excellent scientists will be able to complete projects. The same is true for medical charities and

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other investors. It is vital that we maximise returns on this investment, continuing to produce outstanding research more cost-effectively than any other country in the G8. The Government will continue to support capital investment in priority areas, hence the recent allocation of £69 million to the Diamond synchrotron in Oxfordshire, where scientists conduct ground-breaking research in the life, physical and environmental sciences. Elsewhere, my department and the Department of Health are co-funding the UK Centre for Medical Research and Innovation, alongside medical charities and University College, London. For similar reasons, we welcome the progress that HEFCE is making on developing an assessment framework that combines recognition of the highest levels of research excellence with reward for the impact it has on the economy and society. We will also work with HEFCE to reform the higher education innovation fund to increase the rewards for universities that are most effective in business engagement.

It would be foolish to deny that much work remains to keep the country's universities on a secure footing, and equally foolish to suggest that the Government have all the answers. Nevertheless, in adopting the bulk of the noble Lord's recommendations-in spirit, if not always in detail-we will not lose sight of what a modern university is for. That is certainly the case in seeking to improve the experience of students so that they may embark upon the next stages in their lives with the skills and confidence to do rewarding jobs, and I mean "rewarding" in the broadest sense. It is certainly the case in making sure that one's financial circumstances are no obstacle to a higher education and at an institution where one's talent and ability can best be realised. It is certainly the case in terms of allowing outstanding researchers, home-grown and international, in English literature as well as engineering, to carry on producing world-class work.

However, I make no apologies for stating that the Government also want universities to help drive economic growth. As the noble Lord, Lord Browne, notes in his report:

"Higher education is a major part of the economy, larger in size than the advertising industry, and considerably larger than the aerospace and pharmaceutical industries".

In fact, almost every industry, and certainly the trio I have just mentioned, is influenced by the teaching and research that goes on in HE. We want university/business links to go from strength to strength in terms of R&D and in tailoring courses around the needs of employers.

We must harness this valuable asset in a way that gives universities the best opportunity to thrive, and that is by respecting another defining feature of UK institutions besides their traditions and their capable staff. I refer to their long-standing autonomy. Our universities will make a greater contribution to society and the economy by pursuing their various missions with maximum independence from the state.

Better teaching and world-leading research, improved access and social mobility, closer links to business and public services, affordability and autonomy are the principles that will underpin any reforms, and the Government will manage them cautiously with a view to a stronger, more vibrant HE sector. I look forward to the debate and beg to move.



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5.12 pm

Lord Giddens: My Lords, the Browne report makes a significant contribution to the debate about the future of higher education in this country, and I congratulate the noble Lord, Lord Browne of Madingley, and the others who were involved in producing it. It is right to say that universities need further funding to sustain their pre-eminence and that students should make a significant contribution to their education. As the Minister said, that education confers distinct career advantages and monetary gains. It is right to reject a graduate tax for several reasons, one being that it would take some 20 years before there was any return.

These things having been said, I find myself in fundamental disagreement with the underlying philosophy of the report and, therefore, with some of its emphasis. It treats higher education as a market in which students are consumers, but higher education is not a market, at least in any orthodox sense. Universities are a public good and are recognised as such everywhere in the world, including in the United States. In other words, they provide benefits from which all citizens gain. These benefits go far beyond utilitarian benefits, which are pointed up in the report. They are far more than just the training of doctors, scientists, engineers and so forth. Universities educate for citizenship. They help create the cosmopolitan outlook that is so fundamental in a diverse, globalising world. This impact stretches well beyond those who receive a university education. It is vital to stress that the arts, humanities and social sciences play an essential role in fostering such a cosmopolitan outlook.

If the report is implemented as it stands, we risk ending up with the worst aspects of the American university system without its redeeming features. I would point out to noble Lords that these redeeming features are substantial. I will list four of them. First, top universities in the United States can operate a "needs-blind" admission system because of the large endowments that they have. British universities will never approach those endowments, certainly in anything like the near future, and will not be able to operate such a system, which is of direct and immediate help to students from poorer backgrounds.

Secondly, in the United States, students can work their way through university because of the credit system, which makes it easy for students to drop in and drop out of university and later resume their university courses. We have kind of analogues here, but we do not have the same system, especially as affects the top universities. This favours students from poorer backgrounds in the United States. I welcome the stress on part-time degrees, but it does not make up for this difference, which is quite fundamental in the nature of university courses in this country.

Thirdly, the state university system is very prominent in the United States. It plays an important part in the university system as a whole. The state university system is in some part, and in some states in large part, publicly funded. Home students pay relatively low fees. This also helps students from poorer backgrounds.

Finally, states such as California have a wonderful system of community colleges. Their FE colleges have some similarities to ours, but they are not a direct

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analogue. The community colleges allow students from poorer backgrounds to get in and to work their way through their degrees, but they also act as feeder institutions for the top universities. I used to teach at the University of California, which has such a system, at UCLA, Berkeley and Santa Barbara. It was terrific to see students who started right at the bottom of the system get into the elite universities. This included students from all sorts of ethnic backgrounds and underprivileged backgrounds.

These factors by and large do not apply in the United Kingdom. We therefore have to look for other safeguards. Lacking these mitigating factors, the reforms proposed in the report would unquestionably accentuate inequalities and deter poorer students. Richer parents will pay their children's fees up front, consolidating a track of privilege that already links private schools and the elite universities.

Just as important-and this worries me a lot, given what I have said about the public nature of higher education-the arts and humanities could go into steep decline if we have simply a student finance driven system, with leading departments having to close. According to the QS rankings, we have the number one university in the world-Cambridge. We have four other universities in the top 10. We do not really need as radical a market-driven approach to support and expand the system that we already have. I look to the Liberal Democratic segment of the coalition to try to ensure that social justice remains as important as excellence in whatever emerges from the debate on this report.

It seems relatively easy to see what kind of system you could have which could reconcile these things. It would have three components. First, the massive cuts that universities are going to be asked to take could be reduced. They probably would have to be if there was going to be a net benefit to universities. Secondly, fees should be capped-at around £7,000. That will ensure that quite a lot of money goes into the system, but would also prevent some of the inegalitarian consequences which otherwise will ensue.

Thirdly, the Government should consider introducing specific support for the arts, humanities and social sciences, which are an elemental part of university education. We cannot allow those subjects simply to decline or diminish on the basis of a simple market-driven system. We need some way of reconciling that with support for these essential subjects which contribute so much to citizenship.

In conclusion, it is possible to preserve and enhance excellence in a system that also preserves the essential public benefits which universities offer and which protects the interests of those from deprived backgrounds.

5.20 pm

Baroness Sharp of Guildford: I thank the Minister for the opportunity to discuss this important report from the noble Lord, Lord Browne, on proposals for student financing. I look forward to hearing other contributions to the debate because, as the Minister made clear, the proposals are still being discussed among Ministers and no final decisions on how the report will be implemented have been made.



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Nevertheless, there has been some indication that Ministers will accept a cap on fees of somewhere in the region of £7,000, which would alter, in many senses, some of the proposals put forward by the noble Lord, Lord Browne. At that level, as the noble Lord, Lord Giddens, indicated, there would be no subsidy for the arts, the humanities or the social services: a graduate contribution would meet the whole cost of provision.

My right honourable friend in the other place, Vince Cable, Secretary of State, indicated that he had no alternative; he was confronted by the need to find savings of over £3 billion from his budget. A large proportion of his budget in BIS is made up of the science budget, the skills budget and the higher education budget. He judged-I think this is broadly welcomed in the House-that there was no room for cutting the science budget; that science, as the creator and nucleus of growth in this country, should be, and has been, left in cash terms at the level that it was. Similarly, the skills budget was vital to growth prospects. That left only the university budget and it was decided that there was a good case for asking students to pay a larger proportion of the cost of universities, and the report of the noble Lord, Lord Browne, gave an opportunity to do so.

There are a number of good features in the report. I particularly welcome the proposals for part-time students, a cause for which I have fought long and hard in this House for many a year. I am delighted to see that at long last there is to be pro rata provision in loans and grants for part-time students. It looks to be an important change in the structure of university provision in this country because it will provide an incentive, which to date has been lacking, for students to attend their local universities or further education colleges on a part-time basis. For some students, studying for the part-time two-year foundation degree-which, in effect, is the old HND-might be more appropriate to their capabilities and provide them with a stepping stone to further progression if needed. They are practical, vocationally based foundation degrees which, in many senses, meet our skills needs better than some of the wider degrees currently provided. It is a long-fought-for and important option.

I also welcome the proposition that, effectively, the students should carry the money with them; that universities should have to compete for students by offering good value for money in the courses that they provide.

Teaching has for a long time played second fiddle to research, and the long overdue recognition that teaching is important and should be valued in its own right in universities is implicit in the report of the noble Lord, Lord Browne. I like that very much. I should perhaps declare an interest as a former university teacher and I remain a visiting fellow at the University of Sussex. I can remember having like other academics to fill out diaries about how I used my time. It became clear from the output of those diaries that, far from research subsidising teaching, it was the other way round: the teaching budget in universities was subsidising research.

The proposals have also given vice-chancellors what they have long demanded: a stream of funding which comes directly into their coffers rather than, as at

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present, via HEFCE. That the Government are to keep a cap on it makes it clear that the flow of funding is still regulated by government. Since the Government are borrowing the money to pay the fees, the notion that the arrangement is independent of government is hardly correct.

I have some reservations about the merging of HEFCE, the QAA, OFFA and the Office of the Independent Adjudicator, all to create the superquango of the Higher Education Council. The issue about which I am particularly unhappy was voiced at length in last week's Times Higher Education; that is, that places in universities are to be regulated by the Government setting the UCAS tariff for student access to universities. I do not see how that could possibly work; it means uncertainty both for students and the universities. It will not be known how many students will come in and in which areas.

What I find most difficult about the proposals is that, for many young people and the not-so-young, the debt will never be paid off. The IFS analysis of the proposals show clearly that, with fees of more than £6,000 a year, more than half of graduates would make repayments over 30 years and never pay off the loans. As the IFS points out clearly, the system amounts effectively to a graduate tax-a 9 per cent supplement on income tax for anyone earning more than £21,000 until they pay off the accumulated value of the debt. Approximately half the students will never pay it off.

The advantage of the proposals of the noble Lord, Lord Browne, over the present system is that it is more progressive: those whose parents' income is low and whose earnings are low would benefit most because they would qualify for up-front grants and never have to pay the full interest rate or pay off the loan. The charging of the full rate of the interest on those earning more means that the higher earners would pay more. Since only the higher earners would pay off the debt, they would meet all the costs, whereas the low and middle earners, whose debt is never paid off, would benefit from the subsidy implicit in not having the debt paid off. As has been made clear by my noble friends, charging the real rate of interest with a high threshold for repayment is therefore a more progressive system than the present system with its lower threshold and the zero real rate of interest.

Most difficult is the situation that confronts the middle earner-let us suppose that they are a teacher or a social worker whose earnings start, at age 21 when they graduate, at about £21,000 a year and rise by their early 40s to something like £38,000 a year. Through their earning life, they will pay the 9 per cent supplement on income tax-a marginal rate of income tax on all earnings over £21,000 of 40 per cent, rising to 50 per cent when they hit the higher-rate threshold at about £37,000. We may argue about the disincentive effect of raising income tax by 1 per cent or 2 per cent, so a 9 per cent supplement must be a major disincentive. Is it fair that students whose parents have capital and will therefore pay off their loans when they graduate will not have to pay the 9 per cent supplement? It is this feature of the system that I find most difficult. Why should those who come from lower-income families and who earn reasonable but not very high salaries

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have to live with the incubus of an 9 per cent extra rate of tax for much of their working lives, especially at a time when they are struggling to get into the property market and provide a home for a family? I hope that the Government are thinking of a very generous system for a scholarship scheme. My noble friend mentioned that they would be introducing such a scheme, and I hope that it will be somewhat akin to the old state scholarship scheme that was around when I went to university. I hope, too, that in public service jobs that do not pay too highly there will be very generous golden hellos, paying off the debt for those students who fill those jobs where there are shortages, such as social work or science teaching.

The student loans are coming from the Government. My noble friend said very firmly that money was not being withdrawn from the students; they do not have to pay upfront. We have rather over 1 million students in this country at the moment. If the cap is set at £7,000, it suggests that the student loan book will rise by £7 billion a year, with the maintenance loans on top of that of something like £10 billion a year. The wonders of resource accounting mean that most of that cost will go off the books and not become part of the national debt. If the Government succeed in selling the student loan book, as they want-it is called securitising and is very much what Northern Rock did with its mortgages-the cost will be only the residual cost of the discount required to sell it off, which is probably something like 30 per cent. Nevertheless, that means that there is a net cost to the Government of some £3 billion a year. The original saving on the university budget amounts to £2.9 billion. What the whole exercise has done is to translate that £2.9 billion on current account into £3 billion on capital account. I sometimes wonder whether that is worth while.

5.31 pm

Lord Browne of Madingley: The provision of education has long been the mark of an advanced and civilised society. It provides skills useful to individuals in fashioning a career or a vocation, inculcates a sense of shared heritage and broadens the minds of those who take part. It provides people not just with knowledge today but with the prospect of acquiring knowledge tomorrow by creating a lifelong habit for learning. At root, education is a path to enlightenment, social mobility and ultimately self-fulfilment. The goal of any nation must be to continue to improve and extend those benefits to every corner of society irrespective of birth or financial means. That is the context of this debate today. I am very grateful to the Minister for bringing this important subject to the House.

Over the past 11 months, I have chaired an independent panel tasked with reviewing the state of higher education in England. I should like to talk through the thinking behind our conclusions. Our report noted a number of positives. The UK has a world-renowned higher education sector, with three universities in the global top 10 and 15 in the top 100. The sector educates more than 2 million students every year across a diverse range of institutions, including universities, colleges and specialist institutions, and generates around £60 billion of output for the economy.



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Besides those public benefits, higher education also delivers substantial private benefits to those taking part. Over the course of their working life, the average graduate earns around £100,000 more than if they had not gone to university after A-levels. That graduate premium is substantially higher than the OECD average. In considering the case for reform, better reflecting the balance between public and private benefit was a crucial first step. However, before designing a new system, we first had to understand where the current system was falling short of expectations. For us, that revolved around three principles.

First, there was quality. Institutions are now better funded than they were a decade ago, but they have limited means of accessing additional investment and income. That is because there is a cap on what they can charge and a cap on how many students they can admit. Students themselves have also failed to report a big improvement in their experience of higher education. There was a strong feeling that the extra student investment was buying little in return.

The second principle was participation. While more students than ever are attending and entering higher education, there remain insufficient places for everyone-perhaps as many as 30,000 qualified students were unable to gain a place at university this summer. We also found that, while access was improving, the social composition of those attending the most selective universities has barely changed since the mid-1990s. Compounding this problem was the inequity of government support being provided to full-time students and not to part-time students, many of whom may have missed out on what may be called the traditional university experience at 18.

The third principle was sustainability. Early on in our review, it became very clear that our higher education institutions lacked resilience to public spending cuts; most of their income still came in the form of block teaching grant provided by government. Although it was not our job to determine the level of spending cuts, we had to ensure that our system allowed institutions to replace public funding with alternative sources of income. We also had to ensure that whatever level of spending was decided on by government, it was affordable for taxpayers over the long term. It does not serve the public interest to keep tinkering with higher education funding.

Let me set out our recommendations to address the shortcomings that I have identified. I begin with quality. A good way to improve quality in any organisation is to make funding dependent on it. For this reason we have proposed a radical overhaul of the way institutions are funded. Instead of receiving most of their money through a block grant for teaching, we proposed that funding must instead, as the Minister said, follow the student through government loans. We put student choice at the heart of our system. So as to ensure that choices are as informed as possible, we have recommended that better information, advice and guidance be made available to every school pupil. School pupils today make choices but they do not make them on good information, advice and guidance.

To improve the student experience, we have proposed that there should be a new single regulator in higher

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education with powers to enforce and uphold new student charters-a document which for the first time will outline what each university will offer students in return for their investment. Although we have slightly tightened regulation in terms of quality and access, we have significantly loosened it in terms of student numbers and tuition charges. Institutions will face no restrictions on what they can charge for tuition, although in practice they will have to think very hard about whether they offer good value for money.

We have made further recommendations to ensure that higher charges do not impact on participation. For a start, we have recommended that money be made available to finance a 10 per cent increase in student numbers over the next three years. We should end the annual disappointment for tens of thousands of qualified students who may miss out on places each summer. To ensure that no one is prevented from entering higher education, we have maintained the principle that no student be asked to pay tuition costs up front. For the first time, we have also extended that principle to the 40 per cent of students studying part-time. To cover living costs, we have also maintained government loans for all students, with more generous non-repayable grants offered to those from households earning less than £60,000 a year. All that means that no student will pay for higher education; only graduates will pay, and only then according to the level of their success. We have recommended increases in the threshold at which graduates start to repay their loans from £15,000 to £21,000-importantly, indexed with wages. The Institute for Fiscal Studies has estimated that under that system the bottom 30 per cent of graduates will pay less than they do today. Only the top 30 per cent of the graduate output will pay back the full amount.

As the Secretary of State said on the day our report was launched, that is fair and progressive. Crucially, it is also sustainable. After reforming the system of funding twice in the past decade, we believe that the higher graduate contribution outlined in our report reflects a more sustainable balance between public and private funding. Institutions will no longer be paid just for being there. Public money will instead be used more efficiently to invest in priority courses and courses that might be at risk, and to support those on low incomes.

For Government, bigger loans will remain affordable through the addition of a low rate of interest and a levy on institutions charging more than £6,000 for tuition. The reason for the levy is that it is designed to avoid the perverse outcome that institutions charging the most would receive the biggest government subsidy. But most importantly of all, our recommendations ensure sustainability by creating a system that can respond dynamically to what students want.

Ours is a system that loosens controls on institutions and forces them to think more clearly about their mission and how they can best serve their students. It creates a pathway to a larger, better funded and more dynamic university sector that can retain its deserved reputation as one of the world's best. Crucially, it is a fairer and more progressive system-a system in which people study according to their ability to learn, not their ability to pay.



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5.41 pm

The Lord Bishop of Wakefield: My Lords, I join others in thanking the noble Lord, Lord Browne, for his report and for his words today.

I would like to reflect particularly on the raison d'être of universities and the impact of this report upon it. Throughout Europe, the origins of university education in Christian culture are abundantly obvious. Salamanca, Florence, Krakow, St Andrew's, Oxbridge and elsewhere: even the buildings tell of Benedictine or similar origins, rooted not only in the church but in a broader Christian humanism underpinned by a belief in a liberal education. Universities old and new have been founded upon a commitment to human well-being, holistic development and a pursuit of truth for the common good. That commitment is resonant with that earlier European humanistic tradition.

For the church, that understanding is rooted in Christian faith but not unique to it. The church has a continuing commitment to people in the lower socio-economic groups, the poor and the marginalised. It is concerned that, even in the days of austerity, steps are taken to maximise the opportunities for all people to fulfil their potential, whatever their background. In the context of this debate, that would mean ensuring that people traditionally underrepresented in higher education had the opportunity to study at this level. We have been much encouraged about progress in that direction in recent years, and believe that everything possible should be done to maintain that momentum.

In the light of that, there is much within the noble Lord's report that we would welcome. Here we include, first, the fact that no student will need to pay for their university education up front, as we have heard, and the increase in the salary threshold at which graduates start repaying their loans. Secondly, we welcome the requirement on universities to develop access commitments indicating how they intend to widen participation. This dovetails with the commitment to raise aspiration among those from lower socio-economic groups, encouraging them to apply to the most selective universities. Thirdly, we welcome the increased government support for part-time students.

There are, however, issues that concern us. Student debt is a major concern, not only its size but its common acceptance as standard. At some point debt must discourage applications, especially from within materially poorer sectors of society. Of course, this report comes as a ray of light to some universities in the light of the proposed cuts outlined in the comprehensive spending review. Without the support of student fees, many, if not most, universities simply would not now be able to continue. However, this is a risky wager. Increasing fees will be the answer only if students decide that they are prepared to incur serious debt.

Implicit in the understanding of the European humanistic ideal of education was a continuing commitment to a liberal education. In the report, there seems to be a largely unexamined premise that the primary role of universities is to prepare people for work and to serve the economy. Worryingly, this feels part of a recent trend, seen for example in the previous Government's framework document for higher education of 2009, Higher Ambitions: The Future of Universities

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in a
Knowledge Economy. This trend goes back significantly further-more than three decades-to James Callaghan's speech at Ruskin College, Oxford in 1978, which heralded the development of a core curriculum. This was seen to be the foundation for a more instrumental and utilitarian approach to education at all levels.

Of course, the desire for people to find employment and service the economy are clearly goods to be welcomed. Unemployment and poverty are a blight on the lives of individuals and whole communities. My experience over nearly eight years in west and South Yorkshire has made this abundantly obvious. We are nevertheless profoundly concerned that the economic function of universities is emphasised to the detriment of their wider educational role, as the noble Lord, Lord Giddens, suggested. Indeed, there is a danger that they are seen simply as one more set of businesses aimed at encouraging appropriate skills for commerce and industry. The present report appears to encourage such a view, seeing some disciplines-mainly science, technology, language skills and medically related courses-as strategically more important than others.

Universities should certainly continue to receive direct funding from the public purse to teach those disciplines. Our concern is that other disciplines such as the humanities in general-including the arts, social sciences, and most languages-should also receive such support, otherwise departments will inevitably close and the insights of such disciplines will no longer be a part of our public vocabulary. The humanities, far from being strategically less important, contribute an essential understanding of what it is to be human and how we can best live together in creative unity. Witness, for example, the continuing debates on how to create societies where people of different cultures and faiths live together in peace and justice. Such debates require us to engage with several of the humanities-including sociology, philosophy, theology, history and others-to underpin our understanding of our own culture and to work effectively for its future. I would go so far as to say that society needs a soul; I use that term in the way that it has been used concerning a developing Europe and not in a narrowly Christian idiom.

Indeed, Her Majesty's Government have drawn attention to our corporate responsibility in creating a big society. To do so, I would argue, we need tools to describe and analyse our society and culture. Moreover, these tools can be transformative of society. Laying hold of the treasures of human wisdom will stimulate the imagination of this and future generations and direct their passion for the common good. Indeed, the present report notes at one point:

"Higher education matters. It helps to create the knowledge, skills and values that underpin a civilized society".

That quotation is reminiscent of the last major government-requested report, mentioned by the noble Baroness in her introduction to the debate-the 1997 report, chaired by Lord Dearing. The Dearing report, Higher Education in the Learning Society, argued that universities are,

and to be,



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Still earlier-in my early youth-the Robbins report, which gave birth to the new universities of the 1960s, talked of transmitting a common culture.

There is a noble educational tradition, rooted in the origins of western European culture, that has affirmed the central role of universities in shaping society. A good and broad university education will shape both individuals and the community of which they are part. Human beings are neither simply economic agents in a marketplace nor individuals isolated from one another. We are-body, mind and spirit-creatures of the soul as well as the physical, fed by music, art and worship as well as by science. All of these are important to the holistic development of culture and society.

A man who is a treasury of quotations, GK Chesterton, noted that:

"The virtues have gone mad because they have been isolated from each other and are wandering alone. Thus some scientists care for truth; and their truth is pitiless. Thus some humanitarians only care for pity; and their pity... is often untruthful".

For the sake of the individual and the common good, our universities must remain places of free-ranging inquiry into what it is to be human and what it means to live together in a civilised way. To neglect those disciplines that enable us to do that would be a serious failure indeed. The novelist and scholar David Lodge wrote:

"Universities are the cathedrals of the modern age. They shouldn't have to justify their existence by utilitarian criteria".

5.52 pm

Lord Norton of Louth: My Lords, I, too, welcome the opportunity to debate-

Lord St John of Fawsley: What is the essential point of a university? The currency of the word has been successively devalued, but a university is a body that engages in research. It is not a glorified high school, technical school or polytechnic, but an institution of higher learning. Successive Governments have offered people at universities courses that are not university courses at all. That is what we should be looking at. I speak as a former Minister in charge of higher education.

Lord Norton of Louth: My Lords, I will resume where I left off. I very much welcome the opportunity to debate the Browne review. It is a great pleasure to follow the right reverend Prelate and I endorse every word that he said. I declare an interest as a university professor of politics. I am also co-chair of the Parliamentary University Group and chairman of the Conservative Academic Group. I am therefore not short of advice, although the advice that I miss on occasions such as this-as, I know, does the House-is that of the late Lord Dearing.

My starting point is to reiterate what the report notes about the quality of higher education in the United Kingdom and about its contribution to the wealth and-following the right reverend Prelate-development of society. We have one of the best-certainly one of the most cost-effective-systems of higher education in the world. We are second only to the US in research ranking, we continue to be to the fore in attracting overseas students and we outstrip many of

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our competitors despite spending less as a percentage of GDP on higher education. As has been said, spending on higher education should not be seen as a drain on public spending, but as a necessary investment for our future economic growth. There is a private gain for students in higher education, but a massive public gain in terms of the contribution to the wealth of this country. As the right reverend Prelate said, this is not just the economic but also the spiritual wealth of the nation.

The noble Lord, Lord Browne, and his team, have produced a seminal report. It derives from a fundamental question: can the state afford to pay for a massive expansion in the provision of higher education? When I went to university, I was in a minority of my age cohort. Once we move to a situation where more than 40 per cent of the age cohort is in tertiary education, cost becomes a critical issue. How are we to fund expansion? We have in effect conceded that the cost cannot be met solely from the public purse, and I do not see how, with continued expansion, we can turn the clock back.

Over the past decade, undergraduate enrolment in HE institutions has increased overall by 28 per cent. If we are to expect students to make a contribution, then I accept that the arguments favour loans, with no up-front payments by students, and a repayment system largely along the lines proposed by the Browne report. The case for a graduate tax appears superficially attractive-I have just been reading the arguments advanced by million+-but when one looks at the arguments, the case against it is more than persuasive, not only in terms of administration but in terms of principle. It skews the balance between the centre and universities in favour of the former. I am therefore persuaded by the arguments advanced by the Browne report.

Although I have seen a number of alternatives, I have not yet seen one that improves upon the case made in the report. For the student, the commitment should be seen as an investment package. I believe that it constitutes a worthwhile investment in terms of the difference that it makes not just to income-in effect, the material side of life-but to what may be deemed the spiritual side. It contributes to the growth of the person. The graduate premium is measured in money, but there is much more to it in terms of personal development. The student benefits from the investment but, as the noble Lord, Lord Giddens, stressed, we should not lose sight of the fact that so too does society. There is a correlation between the proportion of young people receiving university education and the economic growth of a society. Students benefit and society benefits.

The Browne report makes a cogent case and I congratulate the noble Lord, Lord Browne, and his colleagues on the work that they have done. Like others, I very much welcome the recommendations on part-time students. There are, though, three aspects of the report with which I take issue, and perhaps I may deal with those before coming to one or two questions for my noble friend.

First, I share the doubts expressed about the creation of a super-quango in the form of an HE council. My fear is that there would be too great a concentration of

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regulatory capacity in one body and I am not altogether sure that the functions would cohere well in such a body. One thing that I think the Browne report has not taken into account is that the QAA has a UK-wide function. The council will be responsible for ensuring the accountability of HE institutions but I am not clear to what extent the council itself will be accountable. The review mentions only an annual report to Parliament. I appreciate the need to reduce the number of quangos but I am not sure that simply merging four into one is appropriate.

Secondly, it has been mentioned that it appears that funding for the arts, humanities and social sciences will cease. It is not clear why these sectors should in effect be penalised for their success. The intention is to create a market, but if there is a cap then no market may develop in the way that is intended, and the proposals, for reasons I understand, in any event skew the market in terms of preferential treatment. Removing the funding for the arts, humanities and social sciences may undermine the diversity in the provision of courses that characterises higher education in this country, with the effects that the noble Lord, Lord Giddens, mentioned.

Thirdly, although I very much welcome what is recommended in terms of part-time students, I am not sure that the review has it right in respect of postgraduate teaching. That the socio-economic profile one finds at undergraduate level is replicated at postgraduate level is not necessarily a persuasive argument for leaving the situation as it stands.

I turn to the position of government. Clearly, as we have heard, we cannot discuss the review in a vacuum. As the Browne review recognises, we need to maintain investment in higher education, not least in order to maintain our international competitiveness. However, given the cuts in HE, what is being proposed for the foreseeable future is a means of reducing the gap between what is needed and the funding that is available. Crucially, cuts take effect before universities receive increased income from fees.

The cuts have to be seen in context. Funding at the end of the last century and the beginning of this one did not keep pace with the increase in student numbers. The unit of resource fell significantly in the 1990s and is still below the figure of the early 1990s. Universities will be expected to do more as a result of the increase in fees, not least because students will demand more, yet they will find that they receive no overall increase in income. They will have to prepare for the new system at the same time as having to cope with a surge in applications for places next year-a consequence of demography and applicants wanting to avoid the new fee level.

Universities thus need as much certainty as possible and as soon as possible, if they are to plan effectively. Given that, I have three questions for my noble friend. First, can she explain, more than she did in opening, the rationale for the scale of the cuts in higher education? Higher education institutions recognise that, along with others in the public sector, they face a reduction in funding over the next four years. However, over the period of the spending review, the higher education budget faces a cut of 40 per cent. It is perhaps important to stress that the cuts come on top of cuts. One can

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argue that the Browne proposals are the best way to help make up for much of the shortfall but, as we have heard, the danger is that the Government will impose a cap that will not only limit the scope for market forces to operate but leave institutions short of what is needed to invest and to maintain their international competitiveness. How does my noble friend see universities being able to compete with competitor countries that are investing heavily in universities?

Secondly, can my noble friend say more about the Government's thinking on imposing a cap on fees? The Government appear unwilling to embrace what the Browne review proposes, preferring instead a higher cap. This not only militates against creating the market recommended in the review but, if set at the wrong level, may leave universities notably short of the funds necessary to contribute to future economic growth.

Thirdly, could my noble friend say more about the timescale? This is a fundamental point. Universities have to move quickly to plan for 2012. Prospective students need to know not only what fees will be levied but also what support will be available to them. The danger is that they may know the first but have to wait to know the second. As she said, an increase in the fee level can be achieved quickly by secondary legislation, but everything else requires primary legislation. A White Paper is promised by the end of the year to be followed by a higher education Bill. That obviously will need to be achieved within the present long Session. Time is of the essence.

Implementing Browne and managing a reduction in income, at the same time as having to cope with an upsurge in student applications, places an enormous burden on HE institutions. It is vital that the Government are prepared to act quickly in terms of legislation. There needs, of course, to be thorough parliamentary examination. That means, therefore, not a rushed passage through Parliament but an early introduction, not least to ensure proper consultation. Perhaps my noble friend can enlighten us a little further as to the Government's thinking and, if not, can she at least tell us when we can expect to have the Government's response?

6.02 pm

Baroness Blackstone: My Lords, I declare an interest as the vice-chancellor of the University of Greenwich. I should add that I have also spent 10 years in a Russell Group university, 10 years in a 1994 Group university and five years in a specialist institution. I am not saying that I have seen it all, but I have a relatively wide experience of many different types of institution.


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