We welcome Lord Browne’s independent report on higher education, which makes recommendations about the structure and level of graduate contributions. We are looking at his proposals carefully and considering a contribution level of £7,000.
My right hon. Friend knows the reasons, which are well documented, why I cannot support the thrust and direction of Government policy on this one. Given the inevitable, and indeed immediate, ramifications of any policy change for the tertiary sector in England on Russell group universities in Scotland, is he willing between now and next May to enter into open-minded discussions with all the political parties in Scotland to see whether a modus vivendi can none the less be achieved to maintain some of the principles for which we have argued long and hard where Scottish tertiary sector education is concerned?
That is a constructive suggestion. I am happy to do exactly what my right hon. Friend has said. To reinforce the point, yesterday the principal—the vice-chancellor equivalent—of Glasgow university, where I know my right hon. Friend is a rector and with which I have an association, said in relation to the growing funding crisis in Scottish universities:
“I believe we need to adopt a graduate contribution model that is properly designed, progressive and one which requires those who earn more during their lifetime to pay back more to society in order to fund higher education.”
That is exactly what we are doing.
On Tuesday, the Social Market Foundation published an analysis of how the Business Secretary’s £7,000 a year minimum fee will hit different graduates. It shows that the hardest hit will be graduates who earn £27,000 a year, while students who get help from the bank of mum and dad to pay off early will get a £12,000 discount on the cost of their degree. Is that fair?
It would not be fair, if that were the outcome. That particular analysis does not properly consider the true present value of the payments that people will have to make. There has been some excellent research on the operation of different interest rates in order to produce a genuinely fair and progressive outcome, which Government Members want and which I hope the right hon. Gentleman still wants.
When my building society starts asking me to pay my mortgage in net present value, I will do so. Until then, I will talk pounds and pence like everybody else.
Does the Business Secretary recognise that if he allows universities such as Oxford and Cambridge to charge £10,000 or £12,000 a year, the gap between the few and the many will get wider? The Higher Education Minister has said that it is not possible to stop people paying their fees up front. Will that not create the unfair situation in which those born into privilege, such as the Prime Minister and the Chancellor of the Exchequer to pick two at random, can get a huge discount for paying up front, while the bright child from a poor background who makes it to Oxford or Cambridge will pay even more? How is that fair?
We are anxious to ensure a fairer solution than the existing graduate contribution system that we inherited. The right hon. Gentleman has used the analogy of mortgage payments, which is interesting. No building society or bank that I am aware of would exempt people from any payments until they were earning £21,000 a year, which is the progressive element that we are trying to introduce. He has rightly referred to the difficulties that would arise if certain Russell group institutions were allowed to charge very large variable contributions. That is why I made no commitment on Tuesday on how we would deal with that problem, on which we need to reflect further. He is right that there is an issue of fairness, which we will address.
Will my right hon. Friend do all that he can to stop higher education from disintegrating into a free market free-for-all, either by imposing a cap or by requiring a high proportion of additional fees levied by some of the top universities to be paid out in bursaries to poorer students?
Yes, my hon. Friend is quite right; there has to be choice and there will be some competition among universities, which is welcome. That is very far short of a laissez-faire free market. We do not want that. There has to be protection for low-income students when they graduate. We will build in those protections and will ensure that there is a proper progressive scheme.