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Tuition Fees

Volume 405: debated on Thursday 22 May 2003

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5.

What evidence he has evaluated on charging different fees for different higher education courses. [114999]

8.

What evidence he has evaluated on charging different fees for different higher education courses. [115002]

As our White Paper identified, a number of independent reports have shown that graduate earnings vary significantly, depending on a student's chosen course and university. For example, a new report published this week by the Centre for the Economics of Education confirms that graduates from Russell group universities are likely to earn more than those from other universities. Given that difference in potential earnings, and given the need to increase funding for higher education, we consider that the fairest way to proceed is to have a variable fee regime.

My right hon. Friend knows that courses in the science and engineering disciplines are far more expensive to run than other courses, and that we are desperately short of good-quality graduates in those fields. If differential fees are allowed, universities might take the option of charging higher fees for those courses. Is my right hon. Friend as concerned as I am about the continuing closure of science and engineering departments? The latest announcement is that King's college's chemistry department might close. Would not the introduction of differential fees make matters worse?

I share my hon. Friend's concern about any potential closures of university science and engineering departments. We are discussing with universities and the industries concerned how to mitigate that. I do not accept, however, that a variable fee regime would have the implications that he describes. In fact, there is a good deal of evidence that for both men and women, higher returns over and above two or more A-levels are associated with studying medicine, law, economics, maths and engineering—subjects such as those that my hon. Friend mentions—and it is not unreasonable that the fees regime should reflect that.

My right hon. Friend mentioned medicine as a subject that might fall into the category that needs special attention. He knows that there is an increasing need for doctors in the national health service, partly due to the immense investment that we are making in it. Does he share my anxiety and that of the British Medical Association that the differential fee policy could have a disproportionate effect on medical students? Has he evaluated the potential effect on the supply of doctors?

My hon. Friend's focus on the state of medical education is correct. I am discussing the way in which we tackle such issues with my right hon. Friend the Secretary of State for Health. We are considering several alternative routes, including the golden hellos and handshakes that already apply in some disciplines. My hon. Friend is right to raise the matter, but I believe that we have solutions to ensure a continuing supply of good, high-quality medical students who are committed to expanding the health service.

Given that the latest evidence shows that some courses carry a negative graduate premium, does the Secretary of State accept that, according to his logic, those who take such courses should be paid to go to university?

I do not accept that, hon. Members will be surprised to know. The impact of the regime will happen over four or five years as we ascertain the way in which universities and vice-chancellors decide to deal with specific courses. There will be much more variety in fees than people currently believe. Some universities will probably reduce the fees from the current £1,100—possibly even to zero—to take account of some of the factors that the hon. Gentleman described. We will therefore have a more diverse system, which will be generally beneficial.

Industries in the United States put millions of dollars without strings attached into their local universities, thus allaying many of their financial problems. Why does not that culture prevail in this country?

I think the reason is that the relationship between the higher education sector and industry is not strong enough. We are actively promoting discussion about that. For example, my right hon. Friend the Secretary of State for Trade and Industry and I hosted a seminar with the Confederation of British Industry and universities to discuss the matter. As my hon. Friend knows, despite the extra money from business to which he referred, American universities charge fees that are massively higher than anything that we anticipate in this country. I do not believe that there is a connection between the issue that my hon. Friend raised and the variable fee regime.

The Centre for the Economics of Education study to which the Secretary of State referred concluded that the introduction of differential fees would make the signal that is attached to a degree fuzzier to employers and reinforce existing divisions in the university sector. Does the Secretary of State agree?

I do not agree. The most interesting fact in the survey is the 2.5 to 6 per cent. variation in earnings premium for students at Russell group universities. It concludes that some universities could charge between £3,000 and £7,000 a year more, and that that would be justified by the premium. We suggest nothing like such a variation, but it is reasonable to show clearly and directly that society and the individual benefit from university education. That should be acknowledged.

Does my right hon. Friend agree that excellent regional universities—for example, the University of Northumbria at Newcastle and Sunderland—are anxious that they will be at a disadvantage if an élite group of universities, mainly in the south-east of England, are allowed to raise their fees to figures upwards of £10,000 a year, as today's newspapers reported the Minister for Lifelong Learning and Higher Education as saying?

First, nobody is anticipating putting fees up to that kind of level. Secondly, my hon. Friend's question gives me the chance to pay tribute to the five universities in the north-east that are working extremely well together to promote the kind of collaboration that we have been describing, precisely to avoid the effects about which my hon. Friend has expressed concern. It is through that form of collaboration that we can establish a regime that will enrich the university sector as a whole in an entirely beneficial way.