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Higher Education (Basic Amount) (England) Regulations 2010

Volume 723: debated on Tuesday 14 December 2010

Motion to Approve

Moved By

That the draft regulations laid before the House on 29 November be approved.

Relevant documents: 10th Report from the Joint Committee on Statutory Instruments and 14th Report from the Merits Committee.

My Lords, I will speak also to the second Motion in my name, on the higher amount, to the amendments in the name of the noble Lord, Lord Triesman, and to the Motion in the name of the noble Lord, Lord Bilimoria. I will explain why the House should not support either the amendments of the noble Lord, Lord Triesman, or the Motion of the noble Lord, Lord Bilimoria.

The subject that we are considering has aroused strong feelings. I will talk about the package of measures that the coalition Government are proposing, but will start by describing factually the Motions before the House. The Higher Education Act 2004 allowed publicly funded higher education institutions to charge for their tuition costs, subject to conditions. It created the concept of a basic amount and a higher amount for these charges; there are effectively two caps, a basic cap and a higher cap. Any higher education institution can charge below the basic amount, and the Act sets no conditions for this. An institution that wishes to charge above the basic amount can do so only if it has first agreed an access plan with the Director of Fair Access. No publicly funded institution can charge above the higher amount.

More than six years after the Act was passed, the Motions before the House today propose increases to the basic amount and to the higher amount. For the basic amount, the proposed figure is £6,000; for the higher amount, it is £9,000. The basic amount of £6,000 is not a minimum figure; it is a cap, beyond which any institution looking to charge more requires an access agreement. There is nothing to stop any provider of higher education charging less. I should also explain how this translates into the Motions on the Order Paper today.

Changes to the basic cap on tuition charges, set at £1,200 by the 2004 Act, can be made by statutory instrument subject to an affirmative resolution. A Motion to approve draft regulations raising the basic amount is therefore the first Motion standing in my name on the Order Paper today.

The amendment to my first Motion, tabled late yesterday by the noble Lord, Lord Triesman, would, if carried, prevent the regulations being approved and is consequently fatal. I should remind the House what fatal means. There is absolutely no mechanism for the Commons to address or put right a defeat in these circumstances, and accepting one or both of the noble Lord’s amendments would therefore, in practice, be a veto. There is no ping-pong in this case.

During the passage of the Higher Education Act 2004, concern was expressed in this House and in another place about the arrangements for increasing the higher level for tuition charges. There was concern that Ministers should not be able to make new regulations, setting new higher levels, without a debate on the Floor of both Houses. The solution agreed is set out in Section 26 of that Act. Regulations that would increase the higher level can be made only if both Houses have previously passed a resolution specifying what the new higher level should be and the date from which it applies. Only once that resolution has been passed can regulations be made to increase the higher level to that amount.

A resolution under Section 24 of the Higher Education Act 2004 raising the higher amount is therefore the second Motion standing in my name on the Order Paper today. I should stress that the amendment to my second Motion proposed by the noble Lord, Lord Triesman, is also fatal. If the amendment were carried, my resolution would no longer meet the requirements of the Higher Education Act 2004. My two Motions, which have been approved in similar terms by another place, are part of a package and they are linked.

The Motion in the name of the noble Lord, Lord Bilimoria, is a free-standing resolution. Although it will be debated alongside my two Motions and the amendments thereto, it will be decided separately and independently at the end of our debate if the noble Lord decides to move it. The Motion calls on the Government not to implement increases in the higher level or basic level in 2012. The Government believe that that course of action would damage our higher education system, and I will consequently be urging the House not to support the noble Lord’s Motion.

The backdrop to our proposals is the huge fiscal deficit that we inherited. We can no longer ask the taxpayer to continue the current level of higher education funding. In tackling that deficit, we want to maintain a high-quality university sector that is more responsive to the needs of students and is underpinned by a progressive system of graduate contributions.

We have carefully studied the independent review of higher education funding and student finance undertaken by the noble Lord, Lord Browne of Madingley, who reported in October after months of consultation. I pay tribute to the noble Lord for that report, in which he made a powerful case for reform. We have also listened to representations from universities, students and parents. I cannot accept the suggestion that appears in the amendments tabled by the noble Lord, Lord Triesman, that there has not been enough discussion of these issues.

In essence, we are changing the way that funding flows to our universities and colleges. From 2012-13, we will start to reduce the amount of funding that we provide to the Higher Education Funding Council for England to support university courses. This is in line with our announcements in the October spending review. The council will still get funding for the highest-cost subjects and for those that are strategically important and vulnerable.

We are correspondingly increasing the public money that we will make available as loans for students who want to attend higher education. In all, we do not expect the overall income of the higher education sector to reduce. We are also maintaining, in cash terms, our spending on the science budget with resource spending of £4.6 billion a year by 2014-15.

The regulations and resolution that we are proposing today enable those universities and colleges that can attract students to get the funding that they need to offer high-quality teaching. Universities will decide what charges they make for which of their courses. They will need to estimate the value that students place on what they are offering and adjust their charges accordingly. We believe that having to consider carefully what potential students want and need will benefit universities as well as students. Crucially, no full-time undergraduate student studying for their first degree will need to pay any of their tuition costs up front. The tuition loans from the public purse will not be means-tested and will cover the full costs of the courses. We will, for the first time, be giving part-time undergraduate students a similar entitlement to tuition loans as full-time students, on a pro rata basis. Following representations from universities with large numbers of part-time students, we are extending the entitlement to tuition loans to students studying for at least one-quarter of their time, rather than one-third of their time as was originally proposed.

A core part of our proposals are the repayment arrangements, which are a significant improvement on the current situation. We have already promised to increase the repayment threshold—the income at which graduates start to repay their contribution—from the current £15,000 a year to £21,000 in 2016. Raising the threshold reduces the monthly repayments for every single graduate. That £15,000 threshold figure was introduced by the previous Government as part of their 2004 Higher Education Act changes. It has never been uprated. We propose to uprate it annually from 2012 by RPI, subject to discussions with the devolved Administrations. From 2016, when the £21,000 figure starts to apply, we will uprate not by inflation but annually by earnings. Therefore, students who enter higher education in 2012 or beyond and complete a three-year degree can know that they will not suffer if they do not get high-paid jobs. That cost will be carried by the public purse.

The amendments tabled by the noble Lord, Lord Triesman, call for an impact assessment of the effect on students. We have published an equality impact assessment, and bodies such as the Institute for Fiscal Studies have also examined our proposals. We estimate that around a quarter of graduates will be better off under this regime than under the present regime. We know that, for example, women taking time out to bring up a family will not need to repay their graduate contribution if they are not earning £21,000. They, in particular, are likely to benefit from any outstanding graduate contribution being written off after 30 years. On the other hand, graduates who earn the higher salaries will be paying back more. That is a progressive system. Those who benefit the most from their higher education pay back the most.

We have been asked what safeguards there will be against all universities simply charging £9,000, just as they all charged £3,000 in 2006. The first difference from 2006 is that we are empowering the student and not simply giving extra money to the university. Under our proposal, universities and colleges that cannot attract students will immediately lose money and will have to change their approach, so they will have to think very carefully about the value for money of their offer to a potential student. Secondly, and also different from 2006, we are toughening the access plan requirements enforced by the director of the Office for Fair Access. In 2006 some institutions levied the maximum possible charge and gave blanket, untargeted bursaries to almost all their students. They were giving discounts on their published charges at public expense. That gave a spurious impression of uniform charging across higher education.

We are now asking the director of OFFA not to approve this sort of proposal. In 2006, the Government required access plans to be renewed every five years. Under our proposals, they will have to be renewed each year, so there will be a hard and regular look at what institutions are doing under their access agreements. If a university or college does not do what it has promised, the director can refuse to renew its agreement the following year. But we know that there is still a problem in securing fair access to some universities. Institutional bursaries by themselves have not worked. Instead, we want universities to concentrate on improving their outreach work with schools and colleges, and to support our new £150-million national scholarship programme—for instance, by universities offering a second year’s free tuition to the most disadvantaged students. A national programme of that type will provide a more visible and understandable offer than institutional bursaries to potential students from disadvantaged backgrounds.

The Secretary of State has published, on his department’s website, the draft letter of guidance that he envisages writing to the Director of Fair Access. This sets out in more detail the way that we expect the access plan arrangements to work. He has said he will listen to comments before finalising that letter in early January.

The regulations and resolution being considered today form only part of our higher education proposals, but they are an urgent part.

Can the Minister confirm that there are two Motions today; one deals with the regulations, and the other deals with a Motion? Can he confirm that the second one cannot be treated as secondary legislation?

There are two Motions. The second one is not secondary legislation at all, but it is a Motion that we have to pass under the 2004 Act, which the noble Lord’s Government passed. As I explained, they passed the concept of the Motion, because there was a concern both in this House and in another place, where I think that the noble Lord was at the time, about proposals for increasing fees. That is the proposal before us and that is why we are discussing it.

As I was making clear before I was interrupted by the noble Lord, the regulations and the resolution form only part of our higher education proposals, but they are an urgent part. We bring them forward today because students, their families, and universities all need to know what the arrangements will be from the 2012-13 academic year. The fatal amendments of the noble Lord, Lord Triesman, would put a halt to that, while the Motion of the noble Lord, Lord Bilimoria, asks us to delay, but these decisions are needed now. We also plan to issue a White Paper early in 2011, to deal with the equally important but less urgent higher education questions. As I said, today’s proposals are part of a progressive package that will put higher education on a stronger footing for the future, and I commend them to the House. I beg to move.

Amendment to the Motion

Moved by

Leave out from “that” to the end and insert: “this House regrets that the Government has failed to consult adequately with parents, students, higher education bodies, employers and local authorities on raising student tuition fees and to convince many people of the fairness and sustainability of its proposals for funding higher education; urges the Government to undertake more public consultation on the issue, including consultation with future graduates and their families who did not contribute to the consultation over the Browne review; further considers that there should be an independent impact assessment on (a) the financial consequences of the proposed fees on students from both lower and middle income families, and (b) the financial consequences of the proposed fees on women, including a full assessment of the impact of the fees on equalities and fairness, and further calls on Her Majesty’s Government to commission new research to analyse the probable impact on demand for university courses of fees being increased to the range of £6,000 to £9,000 per annum from students from lower and middle income families and women; and further considers that, prior to contemplating any increase to the basic amount specified in section 24 of the Education Act 2004, the Government should publish a White Paper on reform of higher education funding, allowing for consultation and for consideration of alternative proposals”.

My Lords, I thank the noble Lord, Lord Henley, for his clarity on the Government's propositions. We have not heard them put with that level of clarity before. It is unfortunate but necessary to move the amendments to the regulation and the resolution which follows it. Like the noble Lord, I will do so in one speech; I think that that will be welcomed by the House.

The consequences for the future of higher education policy and the damage which we believe that the Government's proposals will do cannot go unchallenged. The House has heard before my declarations of non-remunerated interests: fellowships at Cambridge and Warwick universities and at the LSE. I should add that I also served—and met a number of noble Lords on the other side of the House as education Ministers—as the general secretary of the Association of University Teachers. My regret about today's circumstances flows above all from a long connection with, and even a great love of, the United Kingdom's higher education system. I know that that is true for a great many of your Lordships, who have had at least the same contact or feel the same contact. I take no pleasure in this at all. None the less, I hope to persuade the House that what we are saying is vital.

It has been put to the side of the Chamber on various occasions that the Government’s proposals flow from the report of the noble Lord, Lord Browne, commissioned by a Labour Government. As we all know, commissioning a report does not imply agreeing with it. Indeed, I hope that I will be able to demonstrate that it was commissioned in circumstances so different from those obtaining today that we, as a House of Parliament, would be foolish not to consider whether it is today right for our universities.

May I also be clear—as clear as I can be—about what this regulation and resolution together do? It is no ordinary proposal. It is not simply an adjustment of fee levels. This proposal is the game changer. Of all the issues raised, but never fully or properly discussed in the past six weeks, this proposal changes everything. It is the most profound of the policy proposals. It doubles the starting threshold fee for students and trebles the basic student fee, with only sketchy conditions to be met. The House will not need to be reminded that no student will pay upfront—that is not a new provision —or that repayment starts at a higher level of income, which I welcome, of over £21,000 per year, but that repayment will also occur at an additional rate of 9 per cent of income and will attract an increasing, sliding rate of interest which, at the top, is 3 per cent above RPI.

The House will know that it has been pleaded in aid that there are some compensating factors said to lessen the blow to students. If a student’s parents are out of work and the student has received free school meals—that is, fortunately, a very small group in our society—there may be a fee-free period for the student to study paid for, by the way, by other students whose parents had been in work but who, nonetheless, may not have any considerable salary to dispose of. The increase in maintenance grants for lower-income students, consistently described by the Government as generous, in fact amounts to £6.70 per week. The compensating factors may give comfort to some people whose consciences may be pricking and who will, perhaps, still support the proposals today, although I hope they will not, but I would have had a sizeable bet a year ago that they would have described these arrangements as parsimonious.

Stripped back to the realities, this is a 200 per cent starting fee hike and, for most, it will be 300 per cent increase. It will, in all probability, result across the board in about a 300 per cent increase in student debt. The independent Higher Education Policy Institute predicts that £9,000 will be “the going rate” because universities must charge “all that they can”. Indeed, since these proposals are joined at the hip with an 80 per cent cut in the teaching unit of resource—90 per cent in universities without significant medical or engineering departments—the cut has imposed an average of £7,500 per student per year in university teaching income. Any institution charging less than that will lose money on teaching when compared with its current position. These are not proposals about gaining administrative efficiency in a university or unwarranted overheads that we should all properly address; they are an attack on high-quality teaching in our universities, which is a central function of our universities. That is quite simply what they are. One vice-chancellor, urging me to vote for the increases today—and I shall not—has written saying:

“The nightmare scenario would be the retention of the cuts but no means of restoring the balance through the higher tuition fees and the modified graduate tax that the Government is proposing”.

When the Government plead in aid the support of some vice-chancellors for these measures, let us, at least in this House, be candid. It is Hobson’s choice. They feel compelled to get the students to pay privately the sums that have been cut by the Government on a scale and at a rate that no other country has contemplated. Judging from my mailbox, and I cannot believe that it is particularly different from the mailboxes of others in this House, no other higher education system believes we are sane. Nobody else would contemplate introducing so blatant a division between the rich and the poorer.

I said, I think advisedly, that this is game changing. This afternoon’s decision will switch the concept of universities from being a public good, as they have always been in modern history and as they were rightly described by my noble friends Lord Giddens and Lady Blackstone on 22 October, to, in essence, a private-sector market that is driven by personal-private investment. Noble Lords might like that, or they might hate it—I am in the latter camp. Some might want to advocate it, some might want to fight it, but everyone must acknowledge that, as a concept for our universities, it has never once been debated and analysed in this House. Everyone must also acknowledge that we cannot have a monumental change of that kind on which the House has never focused.

I have suggested that the noble Lord, Lord Browne, may have intended this outcome. Perhaps he discussed it in private meetings with Cross-Benchers, but I have not had the benefit of any such luxury. Let us turn to what has happened in your Lordships' House. I asked the noble Baroness, Lady Wilcox, three times in a month a question that is fundamental to the candour with which the Government treat the House. Did the noble Lord know in advance the scale of the government cuts for which his report has come to provide an alternative source of private money? If he did, he must have intended to make our universities private in so many crucial respects of their lives. However, as I say, we have never debated that or that outcome. If he did not, his plan must have been to grow university resources and the opportunities that universities provide, and then we would have a wholly different discussion. I hope that the latter is true.

For those who are intrigued by the concept of the big society, this is of real consequence. Is this a strategy of building resources that would have spoken to greater inclusiveness, breaking down individual barriers to what people can achieve for themselves, their families and their communities and building their personal capacity for the greater good? Is it a strategy of building resource that would have spoken to a policy of growth in our economy, investing in the excellence that fuels an advanced economy, generating great science and great engineering and renewing its arts, its culture, its creativity, its understanding of the social realm of life, and building the next generation of high-spec manufacturing that we all crave for our country? That would at least have been compatible with the growth White Paper. I had thought that these were the lodestones of government thinking, but obviously not.

The noble Lord, Lord Henley, said that the cuts were intended irrespective of the circumstances which the Government describe and with which I disagree, and then clung to what the report by the noble Lord, Lord Browne, had said: that this was simply the strategy to raise the money that had gone by another route. This is the strategy of replacing money from the Exchequer with money from students’ pockets. It is, straightforwardly, the undeclared privatisation of universities. It has nothing to do with strengthening our universities as a vital national resource. Will it achieve the policy objectives that are set out in such detail in nearly 122 words in the Explanatory Memorandum, because that appears to count as policy these days? Who knows whether it will? We have not debated it. I doubt it. Will the trebling of debt increase social mobility, a fundamental of the big society? Hardly. Will the policy take account of student debt? Self-evidently, that is the least of the considerations. Will it ensure a properly funded university sector? Only if you can survive an 80 per cent cut and you do not care too much about non-core subjects at the heart of the United Kingdom’s culture. Will it improve teaching quality and advance scholarship? No authoritative body in higher education anywhere in the world anticipates that outcome from these proposals. Students may become customers in this system, but I tell noble Lords this: it will not give them the power to walk around switching providers as often as they feel dissatisfied—it is not that kind of supermarket. Will it attract a higher proportion of students from disadvantaged backgrounds? There are no first-class honours for getting that answer right; there is no prayer of it.

Let me return to the position of those from lower-income families. The raising of the repayment threshold may help, albeit to a limited extent. What we lack is an answer to the question that I asked three times—and it is an answer for the House, not just for me: where is the specific research on the appetite for debt in these poorer families? It is the question which my noble friend Lady Kennedy asked so eloquently in late October. No impact research on this is provided. I honestly do not believe that the Government know how to find this out. With respect, there may be too little experience here of growing up in a poor community, too little experience of places in which even the small-ticket items have to be bought on the never never and there is always some neighbour in your street facing repossession. People in these circumstances hate debt. You suffer it, but you do not embrace it. Big debt is as welcome as a broken leg. Of course some people may have a wealthier future, perhaps to achieve a fruitful and professional life, but overall I cannot believe that many people in this position will consider a future with major debt alongside their aspirations to own their home and to better their own family, and then face a tax rate for their working lives plus 9 per cent. Goodness knows what the position will be of those who decide to enter higher education but who drop out without even a degree and the chance of additional earnings.

In past discussions on Statements, these questions have been asked repeatedly of Ministers right across the House. I ask noble Lords seriously to judge for themselves what light is shed in the background papers. The honest answer is just about none. I have been concerned about middle class, middle income families because they are ineligible for any of the very modest compensating factors. Again, I asked three times about the impact on them. What is the probable length of their debt repayment? How does it compare with a period of repayment that is available to the wealthiest families? Will it be fair? The answer might lie with the ready reckoner that has been provided, if anyone in the House can make sense of it. Incidentally, if anyone wants to volunteer for that, I will nominate them for the Fields medal for mathematics. It is unintelligible and it does not answer these points. These families are entitled to little or no relief, and they will probably pay the higher rate all their working lives. They will certainly pay it when their own children embark on a university course of study, repeating the cycle of debt. They will never be in the position of wealthier families who can pay it up front, perhaps in much the same way in which people pay public school fees. We are entitled to detailed information on this, and it has not been provided.

And so to the impact on those who are most likely to experience career breaks: mainly, but not exclusively, women. Where is the full study of their repayment profile? Where is the basis for a judgment on whether these proposals are discriminatory? I sought this information three times, and my heart leapt when I saw a link to the statutory equality duties impact test in the supporting papers. Would this finally be an answer to the question? There are days when I regret that we cannot use visual materials in debates in the House. I have the test here in my hand. It just says that you should make an impact assessment and that this,

“relates to policies of the previous government and may not be up to date”.

The test, which is apparently now redundant, is available, but no evidence is available. The success criteria in the document outline the achievement of policy objectives but say not a word about overcoming this potential source of discrimination. If any of this is a sustained commitment to fairness, I am at loss to see how. I know very well that no one on the Front Benches of the previous Government would have tolerated a lack of evidence of this kind as a base for so fundamental a change in policy, much less one to transform our most cherished institutions: the universities.

The whole vacant space of real evidence is capped by the missing cornerstone of any market analysis alongside the policy. Will the pricing attract more students, sustain current numbers, or diminish numbers? Is the demand for university places wholly inelastic or not? Could you charge whatever you wanted without affecting demand?

I know that there are many successful business people in this Chamber and I make one assertion about each and every one of them: no one, no sane person, would wholly disregard price as a critical factor when trying to compute demand. No one would operate without market intelligence on price. Anyone today asking this House to invest in “student fees 300 per-cent-up shares” or “student debt-for-life shares” would ask whether there is basic information on what is likely to happy in the marketplace. It does not exist.

Certainly, there is evidence out there. The inestimable Sutton Trust, on which many of us have frequently relied for excellent, objective analysis, has concluded that there will be a significant decline in demand because of pricing. Peter Lampl describes the proposals of high fees and deep cuts as toxic and rash, as going far too fast and as going much too far. The Higher Education Policy Institute, on which many of us have relied for depth and independence of study over a long period, concludes that a £9,000 fee,

“would reduce demand for HE by about seven percentage points … There must be a prospect that some students will baulk at paying a fee of up to £9,000 for a course that is likely to lead to rather uncertain financial benefits”.

So I put it bluntly: this proposal lacks the rudimentary science on which policy should be based. The Government invite you—no more or less—to lick your finger and to put it in the air and see whether you like the feel of the breeze. If, as seems wholly likely, you get it wrong, the damage is done for ever. It is unacceptable.

The House Merits of Statutory Instruments Committee could have hardly written more coolly about these proposals. It commends that we should consider the Government’s assumption that student numbers will not change as a result of the proposals and consider whether the Government have made an assessment in the light of the submissions made to the noble Lord, Lord Browne, of the possible consequences of a rise in personal debt for society at large and what the real impact will be on social mobility. Clearly, the committee cannot have discovered the answers any more than I believe we have. In this light, a full, independent study is sought by these amendments—nothing less—because that is the information on which we should make policy. It should not be made on guesswork and hoping that it turns out all right. There should be no guesswork about the future of our universities and students.

Then the committee turned to process and timing. What are the reasons for bringing forward the package now when on the timetable we could work it out and reach consensus so long as we do it by 2012? It has asked us to examine the robustness of policy development, the process behind this instrument, which is as damning a question as could possibly be asked.

My concluding argument is that, by insisting on an amendment to the original Labour legislation introducing fees—Section 28 to which the noble Lord referred in his opening speech—this House insisted that it, as well as the Commons, had the right to vote on the decisions. The case was made by some of those in the coalition who I see sitting on the Benches opposite. With an inbuilt government majority, it said, in another place, once introduced, any harsh Administration might come along and raise sharply the fees to the detriment of students. It sought and won the right to have a decision taken here, because in the past no one party could dominate this place and consequently get a decision at will.

It is right that the option is sought today and agreed, because it was agreed in primary legislation in the 2004 Act. On the grounds that the Act put it into primary legislation that that right existed for this House, it cannot be objected to. The House of Commons gave its assent to that very arrangement. It cannot be wrong then to exercise the power that you sought and you achieved.

So we do, but what a decision. I have emphasised the times when we sought and failed to get answers to the fundamentals. When I asked about the Government’s response to the game-changing shift signalled in the Statements we heard repeated in October by the noble Baroness, Lady Wilcox, the noble Baroness told us that in order to understand the policy, we must wait for the White Paper. I was disappointed, but I understood the point. When replying to the major debate on 27 October, addressing the same issues, the Minister said:

“I welcome the questions from the noble Lord, Lord Triesman, but I am sure that he will understand that I cannot pre-empt the Government's full response, which will be announced shortly”.—[Official Report, 27/10/10; col. 1302.]

That was referencing the much heralded White Paper. I was again disappointed but I can appreciate that Governments do not start with decisive legislation before they have set out their thinking in a Green Paper and/or White Paper. The White Paper is still to be produced.

Now, alongside the absence of evidence on which noble Lords are asked to take these decisions, we have an astonishing reversal of what any of us might think was the right way to treat Parliament. We now have the game-changing legislation as the first step, to be followed by the White Paper. Who knows, as we discuss that policy, we may on that occasion be promised a Green Paper and we might then, I suppose, be promised some form of consultation before that.

The noble Lord, Lord Henley, said that this was all part of the Government’s proposals. Noble Lords have been given a jigsaw—

I sense that the noble Lord is coming to the end of his speech. Indeed, he has made a powerful case to the House, as he always does. To what extent that turns out to be a cogent case will be seen no doubt in the debate which follows. He asked for fundamentals. Perhaps I may ask him to address this one: is it not the case that the Labour Party acknowledged before the general election that there would be a sharp shortfall in the basic funds provided to universities? If not by these means, by what means would the Labour Party fill this gap?

My Lords, it was always a likelihood that there would be some increases in fees. But increases on these kinds of scales were never contemplated.

A question has been asked and it is right to hear the whole of the answer. It was never contemplated at these kinds of levels. In general, it has been felt that, like all other countries which make a significant and major contribution to the education of their university undergraduates, that responsibility should continue to fall to the state because universities are emanations of the state and not supermarkets.

Mr Vince Cable in another place said that he was proud of the legislation. I think he said that a couple of days after he said that he might abstain on it, and then decided that he would vote for it. I do not know what constitutes pride in a piece of education legislation. I am sure that the 1944 Act must have been thought by those who introduced it—Lord Butler certainly—to be legislation to be proud of. The Education Reform Act 1988 steered through by the noble Lord, Lord Baker, would have been legislation of such sweeping importance that people would have been proud of it. But I wonder whether history will look on a sequence of tripling fees, cutting the EMA, and stopping funding for the arts, culture, studies of society and many things which we think are fundamental to the quality of our life in this country as being the great reforming moments of an education process of which anyone should be proud.

The noble Lord’s leader described those who oppose or, in his view, do not understand the proposals of the Government as dreamers. I do not think that people out there should be insulted in that way. Dreamers often are not people with their heads in the clouds; they are people who have an aspiration. They want opportunities in higher education and they want to be included, not excluded. I hope that the House will support the amendments, most of all because I believe that the House will want to demand the right to decide the policy by the means cherished in Parliaments over the decades, and then decide how to implement the policy, and not do it by a blind guess.

My Lords, a little over two months ago, I published a report outlining a sustainable way forward for higher education funding. Our conclusions are now generally well known, and I have expounded upon them in detail in your Lordships’ House on a previous occasion. Today, I will speak as directly as I can on the narrower issue of raising tuition charges, but I do not wish to mislead your Lordships that the argument rests there. The Government have accepted many of our proposals and have made a strong argument for tackling tuition charges first to ensure certainty for students and universities. Let me be clear that, although the Government’s proposals for higher charges deviate in some important ways from our own, I will support the government Motion today.

Under our system, we recommended removing the fee cap and introducing a levy mechanism that would kick in at £6,000 to ensure that institutions shared the cost of supporting their students; the Government’s proposals are for two caps—a basic cap of £6,000 and a higher cap of £9,000 for institutions that agree to tougher standards on access and widening participation. While I remain a supporter of our proposals, the Government’s plan replicates the benefits of our approach in some important ways by allowing institutions to gain increased access to private sources of finance at a time of necessary fiscal austerity, by enforcing different behaviour for institutions charging higher fees and by allowing the Treasury to budget accurately for the cost of student loans. Those are powerful arguments in favour of passing today’s Motion.

Higher charges are just one part of the proposed system, as the overarching philosophy of our report was guided by three distinct but related principles: quality, participation and sustainability. I want to outline very briefly how tuition charges fit into our approach to those three important principles. On quality, we recommended lifting the cap not only on tuition charges but on the number of students admitted to individual courses. That is a critical element of our reform package. We cannot expect institutions to change unless we first allow them to change. The panel’s view was that students, as the people who experience higher education, are best equipped to judge its quality. Allowing institutions to grow, expand and adapt according to student needs will be critical to ensuring that our universities remain the best in the world.

On participation, the panel was keen to ensure that no student felt compelled to avoid higher education for financial reasons. We should begin by drawing a distinction between tuition charges, which are paid back after graduation, and living costs, which must be paid during study. The evidence that we received was very clear that, for poorer students, having adequate cash in hand for living costs makes a big difference to whether they feel able to participate in higher education. However, on tuition charges, the panel received no evidence that higher fees have so far had an impact on participation. Most likely that is because education remains free at the point of access. We determined to maintain that important principle. That is why we recommended that all students continue to receive generous loans to cover their tuition costs. That is also why we recommended that loans be extended for the first time to the 40 per cent of students who choose to study part-time. As for the repayment of loans, we wanted to make the system much more progressive than it is at present. By increasing the graduate repayment threshold to £21,000, and raising it annually in line with earnings, that is exactly what will be achieved.

Turning to the final principle of sustainability, we wanted to create a system that could evolve organically rather than by painful contractions every five years or so. Our system—I stress again that it is a system—would achieve that by putting students very firmly in control of shaping the university landscape. Their choices would become the key variables to which everything else would respond. However, for that to work, the concept of student choice must be supported by the practical measures that bring it to life. School pupils must receive adequate information, advice and guidance from the age of 13 to ensure that they fully comprehend their choices. We recommended that money be set aside to create a professional career service for exactly that purpose. We recommended that all universities develop student charters to spell out what students will receive in return for their investment. We also recommended that a new, independent regulator be created to target funding on expensive subjects and to ensure that students can continue their studies in the rare event of institutional failure.

I hope that it is clear that what we have presented is not just a series of recommendations but a systematic approach to reform—a system in which the pieces fit together for a reason. Today we are debating the question of tuition charges, but soon we will be back to discuss the further elements of reform. I believe that these reforms are essential for this nation to maintain its hard won pre-eminence in higher education, and I therefore strongly support this step.

My Lords, the human tendency since time immemorial is for us often to take things for granted. I do not think that we stand back and appreciate enough how excellent the higher education sector in this country is. We always punch above our weight. The benchmark for excellence in higher education is the United States, yet as a country six times smaller, we consistently produce four or five of the top 10 universities in the world, the others being American. Again, I do not think it is highlighted enough that the United States spends as a proportion of GDP nearly three times as much on higher education as we do, almost 3 per cent versus 1.1 per cent. What is more, government expenditure in the United States is 1.2 per cent of GDP, higher than our combined expenditure on higher education, both public and private.

There is no question but that we need to increase overall expenditure on higher education. The ideal situation is when we get to the same place as the United States, where two-thirds of the provision is private and one-third comes from government. The two-thirds provision should come from student fees, benefaction, endowments, scholarships and sponsorships. In this light, my noble friend Lord Browne was asked how we could improve higher education. So much of his report is good and there are many excellent suggestions, but instead of moving towards what I have just outlined, the cat was let out of the bag in the last sentence of his report. It states:

“These measures create the potential to allow the numbers of student places to increase by 10% and enhance support for living costs while still allowing public spending reductions to be made”.

Here we are, on the one hand with the Government actually proposing to cut teaching support by 80 per cent to try to save £3 billion over four years, and on the other hand by almost tripling tuition fees in one go in 2012.

We all know that the finances in this country are in a dire position. We all know that cuts need to be made, and we all know that public expenditure is far too high as a proportion of our GDP. But to get out of this predicament, we do not necessarily just have to make cuts; we also have to grow as an economy, and to do this we need the elements of our economy that are our unique selling proposition—our core competences—and there is no better example than our higher education sector.

There are cuts and there is carpet bombing. We need to be selective and to cut effectively by pinpointing. There are big-ticket items where billions can be saved, such as inefficiencies and administrative savings in the NHS. It is possible that tens of billions could be saved. The Department for Work and Pensions budget is nearly £200 billion. That is where big savings can be made. But to try and save £3 billion in an area where we are the best of the best in the world, and in such a blunt way, does not make sense.

This is combined with an immigration cap. Every day I hear from businesses that say that they are hurting because of the immigration cap. I hear every day from our higher education sector, where 10 per cent of our academics are foreign and where it is estimated that foreign students bring up to £8 billion of direct and indirect income into this country. We must learn that when the United States clamped down on immigration, it lost out; we benefitted. We have competition—10 EU countries spend more on higher education as a percentage of GDP than we do.

The higher education sector has been hit from both sides. If the Government were proposing to maintain their spending on higher education and to raise tuition fees, that would be another case altogether; but the Government are trying to have their cake and eat it too, and this has caused a great deal of grief and upset across the country. None of us approves of the violence that is taking place in the protests—it does not help anyone’s cause—but the vast majority of the country sympathise with those students who will have to suddenly pay up to three times more for their higher education.

The impression is, I understand, that the cuts in the CSR budget are a fait accompli—that is it; they are irreversible; we cannot change them. What would we say if tomorrow, suddenly, we had to pay three times the amount for our petrol or for our rent? Noble Lords should consider how hard it will be for students who have no tradition of university in their families to convince their families that it is right for them to move to a future guaranteed with debt. Are we really encouraging our nation to have young people moving forward to live their lives with a noose of debt tied around their necks for 30 years?

We need to increase fees, but to do it so drastically and all in one go is too much. We need to move towards the American model of a more balanced approach to higher education funding, which puts more power in the hands of the students to create a world market, but we need to do so gradually; we need to phase it in over a period of years—whether that be three years or five years. The way we are going, it is inevitable that some of our universities will break away from government funding altogether and become completely private, as many American universities are. However, again, this move will happen gradually and will be carefully considered.

This is all being rushed through. As the noble Lord, Lord Triesman, said, we have not had the chance to consider and debate White Papers—and haste makes waste. It is only a few years since we moved to a system where £3,000 fees and loans were put in place—in fact, there are some medical students who have not yet completed their five-year courses through that system. Most of us here have benefited from free higher education in this country. The concept of students paying fees and taking on loans was a step change; however, what is now proposed is a step too far. We should increase in small steps and build towards where the report of my noble friend Lord Browne recommends we should go.

As has been pointed out, this is especially so when our country and our economy are in a fragile situation, where global uncertainty still abounds. This is not a time for sledgehammers; it is a time to nurture, care for and protect our country’s most competitive advantage, not destabilise and disrupt it. Quite frankly, in the bigger picture we are being penny wise and pound foolish.

Over the past decade our higher education industry has moved in the right direction of benefaction, with Cambridge University raising more than £1 billion and with Oxford following suit. With other universities trying to raise their own income streams—Thames Valley University, where I was chancellor for five years, has appointed a director of development—we are moving in the right direction, but we need to time to nurture it. Fifty years ago, 5 per cent of school leavers in this country went to university; today it is 45 per cent.

What the Government are trying to do now has opened up a whole host of questions. People are questioning the purpose of higher education, the use of our degrees and the quality of our institutions. They are asking why the majority of people who do not go to university should pay for those who go to university—why we should subsidise them. These debates have gone on and will go on for ever, but the bottom line is that higher education is a crucial part of the foundation of our economy which benefits not only those who go to university but the whole of society and the whole of the country.

As a country we do not have large tracts of land or large natural resources like Canada, Australia, Russia and the United States; all we have is our people, our brains and our capability. These are driven by our high-class, world-beating higher education institutions and I beg the Government not to throw the baby out with the bath-water. As the Browne report states, higher education institutions safeguard knowledge, catalyse innovation and strengthen civil society; they bridge the past and future and the local and global.

In my Motion I am saying that, yes, tuition fees need to be increased if we are to maintain and improve higher education in this country; however, that is not what is happening, because these multi-fold fee increases are there to compensate for drastic cuts in government funding for higher education. If we are to have increased fees, surely they could be phased in over a period of years and not in the blunt and cruel way of bringing them all in at once in 2012.

In its 2010 spending review the Treasury rightly states that our higher education institutions are the jewel in our crown. I welcome many of the elements of what the Government are proposing—the ring-fencing of research and science; the inclusion of part-time students; helping and encouraging lifelong learning and learning at all ages; the increasing of the income threshold to £21,000 before loans have to be repaid—but, in the rest of the G20 countries only one other country, Italy, is cutting its higher education budget, and that, too, by 19 per cent by 2012.

The coalition Government talk about their three tenements—freedom, fairness and responsibility. With their hands on their heart, can they truly say that to treat our wonderful higher education institutions, academics and students in this way is fair? I implore the Government to listen, to show compassion, to be just and to be fair.

My Lords, I should declare my interests: I am the Visitor of King’s College, Cambridge, and of Lincoln and Brasenose Colleges, Oxford, and I am on the governing body of the Bishop Grosseteste University College. However, I speak principally as the chair of the Church of England’s board of education, which, of course, has a significant responsibility for the affairs of higher and further education in this country.

It is clear that there are no doubt many ways by which higher education can be funded—direct funding, grants, loans, public/private partnerships and so on—and the Government are largely following the recommendations of the review of the noble Lord, Lord Browne. They have opted for the principle of loans, as promoted by the previous Government. As we have heard, the task of the noble Lord, Lord Browne, was to trim the burgeoning financial commitment of central government to higher education while maintaining and improving current levels of participation in higher education across all socioeconomic groups, including those from the most deprived backgrounds. It remains to be seen whether the trick can be done using the means now before us.

Will the public purse be relieved of higher education costs? Only if loans are repaid and the recent financial crisis teaches us that policies predicated on debt and its repayment are speculative to say the least. As for maintaining and improving participation in higher education, it is surely counterintuitive to believe that students will commit to this size of future debt in anticipation of a benefit which is by no means guaranteed. Surely, even if they are prepared to so commit, we must ask whether the normalising of debt in this way is morally defensible or socially sustainable.

Even if the policy delivers on those objectives, it is still legitimate to challenge aspects of the reasoning advanced in support of it and to expose the extent to which fundamental principles in relation to education in general and higher education in particular are being compromised. Let me try to lay to rest oft repeated arguments which really should not be allowed credibility in your Lordships’ House. One can by all means argue that a high price must be paid for any recovery in the health of public finances so that even the commitment of the state to deliver an enhanced quality of education to the next generations is put on hold, or even that the prevailing government ideology is for low taxation and small government so that the state must be rolled back in relation to higher education as in relation to so much else. I personally would struggle to sign up to those arguments, but at least they have the merit of being honest when it comes to motives driving the measures promoted by the Motion before us today.

But, by and large, these are not the reasons most commonly advanced in support of this policy over recent days and weeks. Those reasons offered indicate an attitude to higher education which is radically different—the phrase “game-changer” has been used—from anything that we have known before and is deeply troubling to those of us who see education as a key component in human flourishing; that life in all its fullness which Jesus came to bring.

We hear it argued that it is the individual student who benefits from higher education, so it is reasonable for the student to pay, albeit not up front—thank goodness—but eventually, through a repayment of loans. But that flies in the face of everything that we believe and cherish when it comes to what higher education is all about and why it matters. Surely it is for the sake of the common good that the state uses taxpayers’ money to fund higher education, because that is precisely what a progressive taxation system is designed to deliver. It is the mechanism whereby the common purse funds what is for the common good. Even John Stuart Mill in his distinctly small-government manifesto, Principles of Political Economy, asserts that education,

“is one of those things which it is admissible in principle that a government should provide for the people”.

It is a masterly understatement if ever there was one. So let us hear no more of this idea that higher education is a privatised commodity to be bought and sold on the open market.

That leads on to a further point. John Stuart Mill also said:

“In the matter of education, the intervention of government is justifiable, because the case is not one which the interest and judgment of the consumer are a sufficient security for the goodness of the commodity”.

So let us hear no more about the choices of the student determining which courses will and will not be on offer in the higher education sector. No Government can abdicate their responsibility to plan for the development of such knowledge, skills and aptitudes as will be necessary for the future well-being of the nation and its people. Students can certainly exercise influence to drive up standards by having a choice as to which courses on offer they are minded to pursue and where. But the free-market model cannot extend to them determining by their choices whether certain subjects or courses will continue to be taught at all. I may well derive some satisfaction from all students opting to study theology, but I rather think that sufficient numbers of students studying engineering, medicine, English literature, foreign languages and so on to a high standard would be a good and necessary thing, and only Governments governing can ensure that balance for the common good.

Here, a further fallacious argument needs to be examined: the idea that certain subjects should attract government funding while others, especially those associated with the humanities and social sciences, should not. It is argued that all subjects will be funded equally from tuition fees, and then additional funding will be available for those courses utilising expensive laboratory and other infrastructure facilities. But, as I understand it, it has already been conceded that study of foreign languages should be grant-aided over and above the tuition fee. So what about the humanities and social sciences, which are vital to the development of rounded human beings rather than mere economic units? Surely the Government do not subscribe to the view that higher education is essentially about economic rather than human development—that most crass form of instrumentalism which I have to say to the dismay of some others in the House seemed to lurk around the corridors of power during the dying days of the previous Administration. But reasoning advanced in support of current policies seems by implication to reinforce that instrumentalist approach to higher education, so it needs to be said yet again that human development is about history, geography, philosophy and theology as much as it is about physics, chemistry and applied mathematics. Can we hear no more about the state needing to fund only courses which are believed to prepare people for work and serve the economy? Joanna Bourke of Birkbeck College recently referred to this stance as,

“vulnerable to the swaggering philistinism of management science”.

Perhaps I would not put it quite that way myself—although on further thought, perhaps I would.

What we need to challenge in relation to this legislation is, first, the elevation of individual benefit over the claims of the common good; secondly, education as a commodity subject to the vagaries of market forces, when it is truly to be for the common good—in relation to higher education, the individual student may not always know what is best for the good of all; and, thirdly, the need for higher education to celebrate and resource the widest range of subjects if graduates are to emerge as fully rounded human beings. That was precisely why our forefathers endowed universities and, in this regard at least, their wisdom has not been eroded by the passage of time.

If we are all in it together, it would appear that this and subsequent generations of students will be in it more than most. It is an issue of justice when some of the poorest young people in our society are deterred from contributing through further and higher education to the common good of all by withdrawal of, as has been referred to, the education maintenance allowances for further education and, as is the subject of this debate, the hiking of tuition fees to pay for a higher education. For all these reasons, this proposed way forward for the funding of higher education in this country is deeply flawed. The long-term costs of such a short-term gain are hardly to be countenanced, even in the most straitened of financial circumstances.

My Lords, the noble Lord, Lord Triesman, taunted those of us on these Benches with the fact that, in the 2004 debate, we argued for, and gained the right for, Parliament being able to debate any change in the level of fees and fee regulation. This is precisely what we are doing today.

Like the noble Lord, Lord Bilimoria, and the right reverend Prelate the Bishop of Lincoln, I regret the degree to which the present debate over fees has ignored the wider cultural and social benefits that stem from our much praised universities. “Learning is for earning” was one of the headlines that followed the report issued by the noble Lord, Lord Browne. We have to some extent lost the carefully balanced and nuanced approach taken by the late Lord Dearing in his report 13 years ago. The Dearing report suggested that university education has three beneficiaries: society as represented by the Government, the student and industry. That report also suggested that the costs of such an education should be shared among the three.

I have some sympathy with the package of proposals being put forward by my honourable friend the Secretary of State for Business, Innovation and Skills in the other place. The proposals have a number of distinct advantages over the present situation. First, what is on offer is undoubtedly more progressive than the current system in that the less well-off—those coming from poor households and earning low salaries—will get a bigger maintenance grant and more advantageous loan conditions than under the present fees system. The richer students, specifically those earning higher salaries, will pay more than under the present system. Therefore, as my honourable friend has claimed, the proposed scheme is more progressive than the current scheme.

I also welcome, as all noble Lords have done, the extension of loans to part-time students, which rights a long-running and major inequity in our system. For much too long, the system of loan and maintenance grants has favoured and given a very positive incentive to students to study full time. The reforms open the way to make our higher education system much more flexible, so that the student can mix part-time and full-time courses and mix distance learning with campus-based studies. In the long run, those changes will transform our university system and make it much more like the American system, which many people wish it to be. In that sense, I agree wholeheartedly both with the Minister, who said that the measure will, in essence, change how universities will move, and with the noble Lord, Lord Triesman, that the measure is a game-changing proposal.

As is now well known, I have some substantial reservations with the package being put forward. Although the new package is, as I have said, undoubtedly more progressive than the current provision, we cannot get away from the fact that, with the rise in fees possibly to as high as £9,000 a year, the size of the outstanding loans on graduation will be larger. With maintenance loans as well as the fee loans, most students will be looking to debts of between £30,000 and £40,000 a year. If two graduates set up household together, the total debt will be from £60,000 to £80,000. Whatever people say about students now being used to debts, the work undertaken by the Sutton Trust and Sir Peter Lampl shows clearly that such a sharp hike in fees may well make students very uncertain about whether they wish to go through to university.

Because the loans will be larger, they will also be less likely to be repaid. Indeed, any person earning less than £41,000 will not even be paying off the interest due on the loans. Only graduates earning more than about £50,000 will pay off substantial amounts of capital. It is estimated by a number of organisations, such as HEPI and the IFS, that something like 50 per cent of graduates will never pay off their loans. Disproportionately, those will be women, who earn less and are more likely to go part-time or to take a period out of earnings.

One good thing about the package being proposed is that, unlike credit card debts or mortgages, when a graduate’s earnings go down the payments will also go down. However, the debt will not go away. For anyone earning more than £21,000, 9 per cent of anything that they earn will be subtracted through PAYE on top of their income tax and national insurance—and that will last for 30 years. If you do not repay your debt, 9 per cent on top of your income tax and national insurance will be extracted from your pay package on anything you earn over £21,000. In effect—my honourable friend has said this—the loan will become a graduate tax of 9 per cent. Personally, I feel that that is a very high level of graduate tax. I feel very strongly that those of us who benefited from having no tuition fees and generous maintenance grants in the 1960s, 1970s, 1980s and 1990s, are landing on young people of today—the next generation—quite disproportionate costs in that respect.

My second objection is an arcane point that relates to the financing mechanism. Loans do not come for free and substantial loans will be needed to back up the payments being made to the students. The Student Loans Company is funded by the Exchequer, which in turns borrows the money that it lends to the Student Loans Company. The Student Loans Company will then sell the debt on, on the grounds that one person’s debt becomes another person’s asset. However, because so many students will never pay off their debts, the value of those loans when sold on has to be discounted. The Treasury figure for that discount is 28 per cent, but HEPI, the IFS and London Economics all think that that underestimates the repayment issues. Even if we accept the Treasury figure, the annual cost of fee loans and maintenance loans combined to the Treasury will be roughly £2.8 billion for every £10 billion tranche, so the cost to the Treasury down the line will be just about the same as is being taken out of the higher education budget—£2.9 billion. I find myself asking why we are taking that money out of the higher education budget if down the line we will need to meet that cost, which will be more or less exactly the same. The answer, of course, is that doing so conveniently takes the sum off the current account and, through the Student Loans Company, switches it into part of the capital account that is not part of the national debt. Therefore, the cost is in effect taken off the books. That is very convenient, but it will come back on to the national debt at a later point.

Those are my reservations about the package. For all the merits of the proposed system, I end up thinking that it will be unfair to low and middle income students, who will have to pay 9 per cent on top of national insurance and income tax for a very long time. However, I have very little sympathy with Labour’s position, which I find somewhat hypocritical. The Labour Government introduced student fees after a pledge not to do so back in the 2000s. Not only did the Labour Government set up this loans system that is now being extended, they commissioned the Browne report and set its terms of reference while deliberately ducking from taking any decision on what they would do with the report until after the election. Having rejected the idea of a graduate tax when it was put to them in 2004, they are now arguing that a graduate tax would be a fairer system.

I do not hide the fact that I find myself in a dilemma. There are elements of this package that are very fair, very right and very proper. My honourable friend has lent over backwards to make it into a fair package. However, I end up feeling that there are other elements in it that I do not understand and that are unfair.

My Lords, I speak in this debate not primarily as a Labour Peer but as an educator and a former director of the London School of Economics. I have worked in universities the whole of my adult life and in a considerable diversity of universities. I believe that the Government’s legislation will be highly damaging for the university system and, as an educator, I should like to explain why.

The flaws in the legislation come from two sources. The noble Lord, Lord Browne, will forgive me, but the first is the erroneous view of the Browne report that higher education is a private benefit rather than a public good. The right reverend Prelate, the Bishop of Lincoln, rightly drew attention to that in a forceful fashion. In contributing to the values of good citizenship and civic culture, the public role of universities ranges far beyond the areas identified in the report. Secondly, the decision to cut the teaching grant by 80 per cent is way in excess of what is necessary or sensible. I do not feel that Labour is being hypocritical in saying that, because the Government must be obliged to look at the proposals again.

No other university system in the world will charge students such a high level of fees with such inadequate safeguards to protect those from poorer and middle-level backgrounds. Comparison has been made with the American system, but the system that is proposed is not like that. We will get the worst of the American system without the safeguards that US universities have. Perhaps I might list those briefly, because they are very substantial and show that the public domain is far more representative in American universities than will be the case in the system that the Government seek to introduce.

In the American university system, first, there are state universities that charge fees a long way below those of private universities. Secondly, there is a credit system for degrees that means that it is far easier for students to drop in and out of university courses than is the case within the British system. In turn, that means that it is much easier for students to work their way through university. Thirdly, in many states, community colleges form a conduit for students from poorer backgrounds to get into elite universities. I have seen for myself, while teaching in California, how important that is. For better or worse, that is not the case in the relationship between further education colleges and universities in this country, although it should become so.

Finally, the top universities in America—the elite or private universities, to which reference has been made—are able to run a needs-blind admissions system because they have such massive endowments. There is no chance whatsoever that our top universities—barring maybe one or two—could ever achieve such endowments within the medium term. That system is not feasible here. I repeat, therefore, that we will get all the downside of the American system without the public benefits which that system provides. For this reason, I strongly endorse the amendment because the Government should be forced to think again. This legislation is ill thought through, corrosive and socially divisive.

I intend to make very brief comments because a lot of noble Lords obviously wish to come in and a lot of arguments have already been aired. I welcome the noble Lord, Lord Triesman, as I have not had the chance to welcome him to his present position. I note that the same silky tongue is at work and I am certainly one of those who in the past had very cordial relations with the noble Lord, Lord Triesman, when he was in his trade union situation. Indeed, it extended to him sending me Christmas cards but I do not think that he will send me one this year. Well, he might; yes, he is telling me that he may.

I must declare three interests: I am chairman of the council of the Royal Veterinary College, chairman of the Institute of Education and chairman of the Oxford University Society. This debate is being conducted against cries of outrage from the Opposition but those cries cannot and must not conceal the facts of the matter—the situation in which we are. The Opposition, when in Government, introduced the fee system and the mechanism for uprating which we are debating. We have been castigated for doing this in a hasty manner but that mechanism was put in place by the Opposition. As Steve Smith has said, writing in the Times on 6 December, the coalition Government,

“has chosen a system that builds on the logic of the one introduced in 2006”.

The Opposition, when in Government, set up the Browne review which recommended, among many other things, the lifting of the fees cap. It was a great pleasure and a great illumination to hear from the noble Lord, Lord Browne, today. Liam Byrne, the Chief Secretary to the Treasury, left office with the previous Government uttering the immortal words, “There is no money”. I have sympathy with a number of the sentiments expressed by the noble Baroness, Lady Sharp, because self-evidently the Opposition have no solution for the problem that they have created and it is down to the coalition Government to find the solution. It is obvious that they have no solution because when the noble Lord, Lord Ashdown, asked the noble Lord, Lord Triesman, for his own policies the noble Lord threw no light. We remain in darkness in that respect.

In contrast, the coalition Government have promised a White Paper—I believe that it will be in the New Year—so that the many detailed complexities and implications of the fees decisions can be examined and consulted upon. I look forward to that White Paper because there are questions that need answering about, for example, the funding of students who are already graduates. We do not have those answers at the moment. I should have thought that almost everyone in this House would be able to produce other questions for which we need the clarity that a White Paper would provide.

The Government have proposed help with fees for the least well-off students for the first year of study and, possibly, for the second. They will invest £150 million to provide a national scholarship programme. Universities which charge fees of over £6,000 will have to demonstrate how they will attract students from the least advantaged backgrounds. The income threshold for the repayment of fees is to be raised from £15,000 to £21,000, which will make around a quarter of graduates better off than with the threshold left in place by the Opposition—not that, from listening to this debate, you would have guessed that—while for the first time, part-time students will be eligible for loan support for tuition costs on the same basis as full-time students.

I believe that the Government have made the best possible fist of the situation bequeathed to them by the previous Government. That is why I will most certainly be supporting the Government today. However, if the fee rise is rejected today, Universities UK has calculated that some 59 per cent—that is its figure, not a government figure—of current higher education places will be lost. I do not see that as fair, inclusive, or socially advantageous but it may be that some of the contributors from the party opposite will explain how they see that as fair and advantageous.

There are also those who advocate delay today. I suggest that if they have ever run an institution, an organisation or a business, they ask themselves how they could make any attempt at planning staff numbers, course numbers or student numbers if they do not know the most basic thing: what the income will be of the institution that they run. By rejecting the fee increase today, we will be imposing on all our higher education institutions the chaos of confusion and uncertainty. Everyone in this House supports higher education. Many of us are the beneficiaries of it. But I would not want to impose that uncertainty on those institutions that we hold dear by withholding a decision today.

Will the noble Baroness not concede that part of the reason why Universities UK and other institutions that are not members of that organisation are worried about the possibility that this regulation may not go through is that they know that the Government propose to withdraw the teaching grant? That is what will make their financial situation so unpredictable, not the question of whether fees go up.

Who does the noble Baroness think is responsible for the situation that we are in? It is her party, the party opposite.

I declare an interest as vice-chancellor of the University of Greenwich. Like my noble friend Lord Giddens, I have worked in other higher education institutions, and at one time, as many noble Lords know—I shall return to this as one or two things have been said about the earlier introduction of fees—I was the Minister responsible for post-16 education.

I support my noble friend Lord Triesman in this amendment. I do so not in a spirit of outrage; I am not outraged—I am disappointed, saddened and worried. There is a real danger that we are walking into a trap, which we have made for ourselves and which we will later regret. It is important when making fundamental changes of this kind that we do so in a considered way, and my noble friend’s amendment asks that we should give more consideration to these serious issues.

I do not want to repeat everything that has been said before, nor to go into a great deal of detail, but I want to focus on three or four of what I consider to be the fundamental points before we go down this route. There are many issues of detail where I believe that the proposals are in fact flawed, but those are for another time.

First, I shall focus on what a number of other speakers have already touched on—the abolition of all funding for teaching in the arts, humanities and social sciences. The value of these subjects is enormous. In any civilised society, we invest time, effort and money in ensuring that our young people become well educated in these subjects. This is an investment, not a subsidy. One of the things that I found regrettable in the report of the noble Lord, Lord Browne of Madingley, was that he referred to higher education in terms of a subsidy. It is in fact an investment in our futures, our economy, our society, our well-being and the quality of our lives, and these subjects are fundamental to all that.

I cannot tell noble Lords how much misery and despair the decision to stop all teaching funding in these subjects has caused among academics right across the country and among students, both undergraduate and postgraduate. No country in the world has stopped public funding for a major part of the work that is done in teaching in its public universities, and I deeply regret that it looks, unless we can make a different decision today, as though this country will be the first to do so.

On the question of the cut in the teaching grant from £3.5 billion to only £0.7 billion, I am perfectly aware of the need to tighten our belts and to reduce public expenditure but no other part of the public sector—no other institution in receipt of public funding—has been asked to cut by 80 per cent. Why should we be asking our universities to do this?

My second point has not been given enough consideration so far today—the enormous cost of the tuition loan scheme when these new fees are introduced. Instead of fee loans for a three-year degree at less than £10,000 under the present system, the Government will have to borrow to fund loans of up to £27,000 per student. That will mean billions of extra borrowing by the Government because many universities are going to charge the full amount, as my noble friend Lord Triesman has already said, and because the Government have seriously underestimated the levels of repayment that are likely to be achieved. The noble Baroness, Lady Sharp, referred to the fact that the RAB costs will be much higher than the Government have claimed.

We are thus faced with the absurdity that the taxpayer will end up by paying more for the new system than for the present one. Every reputable think tank that has looked at this comes to the same conclusion, so it is not just my view; it is the view of those who have carried out careful analyses, in an objective way, of what is being proposed.

We might ask: why has the Treasury accepted these proposals? It is because of the arcane rules that it employs in public accounting so that grants to universities count as public borrowing but loans to students to cover their fees do not. As the Higher Education Policy Institute has said:

“It is smoke and mirrors, and it provides an extraordinary reason for changing the whole basis for the financing and organisation of the university system”.

I ask noble Lords opposite what their views are on this and whether they really believe that it is right that we shall end up with taxpayers having to pick up a bigger bill. Do they also really believe that the market will be bamboozled by this particular con trick? I do not believe that they will.

I turn to what the noble Baroness, Lady Shephard, said; the noble Baroness, Lady Sharp, also touched on this. There was a suggestion that we on the Labour Benches were being hypocritical. I resent that charge. I feel that I am saying everything with integrity, not with hypocrisy. I speak as the Minister who introduced tuition fees in 1998. I do not believe that it is wrong for students to make a contribution to the cost of higher education, otherwise I would not have been involved in that major policy change at the time. Nor do I believe that it was wrong in 2004 to increase the contribution from students, although we did so on a rather different basis.

However, we should not assume, because there was no reduction in demand when fees were first introduced and when they were increased somewhat in 2004, that this means that there will be no reduction in demand today. On the contrary, I fear that these huge increases that the noble Lord, Lord Bilimoria, and others have referred to will have a deleterious effect on many young people. They say—and why should we not believe them?—that they do not wish to contemplate the sort of debts that they are going to have to face. It was interesting that the noble Baroness, Lady Sharp, said that this was a more progressive system but then went on to contradict herself by describing the problems that lower-income and middle-income young people, perhaps both of them graduates, will face when they are buying their first houses and having their first children. I fear, particularly if we are talking about young people who come from ethnic-minority communities and from low-income backgrounds, that they will be hugely put off by the size of this debt.

There has been very little reference so far in the debate to mature students. We have to remember that more than 25 per cent of students coming into British universities are over 21, and that within that 25 per cent about 8 per cent are over 25 and another 8 per cent are well into their 30s. For these people, taking on this kind of debt will mean that many of them will be paying it off into their retirement. Do we not think that that will have some impact on their decisions about whether to come back into higher education? These are people who lost out earlier and were not able to go when they were younger.

There has been a certain amount of cloud-cuckoo-land talk among Ministers in suggesting that there is likely to be no impact on demand because there was none in the past. I quote from another think tank, London Economics, which says:

“There is undoubtedly a real risk that participation in higher education and in particular participation by those from lower socioeconomic groups and mature students will be undermined as a result of the significantly higher fee levels that will be required from 2012”.

I want to associate myself with the Motion of the noble Lord, Lord Bilimoria; I have sympathy with what he says. In many ways, it is the steepness of the rise that has led to so much anger on the part of students and so much concern on the part of their families. Doing all of this in one go is a very odd piece of public policy-making. I can think of no other example where we have introduced an increase in charges and trebled them. I would love to know why the noble Lord, Lord Henley, thinks that that is a sensible route to go down. It cannot be. It leads to huge inequities within families. One child who goes to university in 2011 will pay a fee of £3,000 or repay a loan of £3,000 as a graduate, while his or her younger siblings, who may be 18 months or two years younger, will pay three times as much. I know families who cannot understand this and feel that it is immensely divisive.

Let me turn to something that I referred to in the debate on the report of the noble Lord, Lord Browne. The Government should reconsider what I see as a rather crude market approach in which they claim that students will have greater freedom to choose universities based on quality and that the new arrangements will “drive up quality”. For the life of me, I simply cannot understand how they think this will happen. Again, perhaps the noble Lord, Lord Henley, can explain it to me.

I do not believe that this approach will work for the following reasons. First, the information is not there and will always be imperfect. Young people do not get access to this kind of up-to-date information and, even if we provide it for them, I regret to say that it is unlikely that they will read it. In any case, measures of quality are extremely difficult and can often lead to misleading conclusions. Secondly, students are not paying up front but over many years, long after they graduate. Therefore, this market principle does not work in that they are not having to find the money and then spend it where it will produce the best value for them. Thirdly, student numbers have to be controlled anyway because of the public expenditure cost of the loans which I have already described. This economic orthodoxy of a perfect market simply does not exist.

Let me conclude by returning to where I started. Perhaps I can help the noble Lord, Lord Ashdown, regarding his perfectly legitimate question. I have an answer, and I think that it would be shared by many of my colleagues. If the Government were to consult and do a little bit more listening and rethinking, the first thing they would do would be to restore some of the teaching grant for the arts, humanities and social sciences. That would be strongly supported by the Labour Party as something that we would have done had we won the election; we would have had to cut the teaching grant but not by 80 per cent. If that were to happen, the Government could then set fees at a considerably lower level which would be more acceptable to young people. We must remember that the very high fees are to replace an 80 per cent cut in grant so that universities can continue to operate with the facilities and staff they need to meet the standards expected of them in this country and internationally.

I passionately believe that were the Government to do that, students, their families, graduates, universities and the taxpayer would, as a result, have a better outcome but the deficit would still be cut. In turn, the Government would be congratulated on listening, on thinking again and on putting forward proposals which sustain the long-term future of higher education in the UK as a public good, as it is perceived everywhere else in the world.

My Lords, I declare an interest as the principal of Jesus College, Oxford, and as somebody who has spent much of his career teaching undergraduates in this country and in north America. I have to say that I have changed my mind about the view I take on the Government’s proposals. The view you take, I think, depends on where you start from. The vice-chancellors, in their view, have their feet in the coals of the fire and are looking for a way to get them out, and the only way to do that is to support a whopping great hike in student fees. If, however, you stand back and ask some fundamental questions about the justification for the proposals, I believe that you come to quite a different view.

I asked myself three questions. Are the proposals justified and fair? Do they make the funding of universities more sustainable? Do we understand the consequences of this radical change? No doubt noble Lords are on the edge of their seat waiting to hear the answers to those questions. We have heard many of the things that I am going to say already, so I will take a short cut to save anxiety and stress and give the answers in summary form. No, the proposals are not justified and fair. No, they do not make the funding of universities more sustainable. No, we do not understand the consequences. Let me explain briefly why I have come to this view and why I therefore support the Labour amendment to the Motion.

We have already heard, and I do not need to dwell on this, that a university education is partly a public good and partly a private good. Individuals benefit but the nation needs doctors, lawyers, engineers, scientists—even civil servants and economists, it is sometimes said. The state should therefore pay part of a university education. I think it is reasonable that students should pay something themselves, so the debate is about how much it is fair to ask them to pay. These proposals represent, as we have already heard, a dramatic shift in responsibility for payment for an education from the public purse to the private purse.

We must not forget, as has been hinted at by other speakers, that the United Kingdom already invests a significantly lower proportion of its wealth in tertiary education than most other countries. The latest OECD figures, published this year, show us at 30 per cent below the OECD average in public investment in tertiary education and at nearly 40 per cent below the EU average. Will the Minister tell us how he can justify cutting public support for universities when we are already spending less as a proportion of our GDP than countries such as Hungary, Mexico, Poland or Brazil? Do not tell us that this is about reducing the budget deficit—it is actually about priorities.

The Minister tells us in his letter that no one should be put off from participating in higher education as a result of the changes. People have already asked where is the evidence to support that assertion. Certainly, the Institute for Fiscal Studies concludes in its report that students from the poorest 30 per cent of families will have more to pay back than they do at present. How do we know that this will not put them off? My conversations with the students I am responsible for suggests that it will.

We are also told—and this point has been raised already—that there are details of access arrangements, some of which are spelt out in the draft letter from the Minister for science and universities to Sir Martin Harris. But normally, when you want to understand the details, you turn to the fine print. I did so, and the print was so fine it was almost non-existent.

My second point was about the sustainability of universities. In his letter to noble Lords, the Minister states that the Government believe that this package offers a more sustainable future for our universities. I have always held the notion that belief should be reserved for matters of faith; no doubt the right reverend Prelates will comment on that. But when it comes to the sustainability of universities, I would prefer something more substantial than belief. We have already heard that in effect this proposal takes money with one hand and gives it back with the other, so the proposed fee increase—if we go to £9,000 a year—would barely exceed, and perhaps only just match, the amount of money that is removed in the cuts elsewhere. Therefore, universities such as my own, Oxford University, will be no better off, even if we charge £9,000 a year, and perhaps even worse off. How does this make the system more sustainable?

Thirdly, and finally, do we understand the consequences of this huge experiment? As we have heard, the proposal turns university education, to a large degree, from a public good into a private benefit. What do we know about the outcome? What do we know about its effect on the balance of students choosing to study different subjects? Do we know that it will encourage social mobility? Do we know what kind of restructuring it will result in in the university sector? I believe that the university sector could benefit from restructuring but I do not think that it is sufficient to leave that to the market. A university education is not like toothpaste or a fizzy drink; the market will not necessarily deliver what the nation needs. That can be delivered only after deliberation and consideration by Government and by Parliament.

As we have heard, universities in the UK are an outstanding success story; in fact, they are one of the very few areas in which we still have world pre-eminence. Let us not conduct a massive experiment and leap into the unknown with this success story without first understanding the outcomes and the possible consequences. For those reasons, I urge noble Lords to support the amendment and vote against this proposal.

My Lords, I disclose an interest as the Chancellor of the university of which Jesus College is a distinguished part. However, on this occasion, I am afraid that I do not agree with Jesus, and for reasons which have made me for 20 years a passionate believer in a bigger contribution by students to their education. I say with respect to the noble Lord, Lord Krebs, that his speech was a triumph of hope over experience because for years, under Governments of both political persuasions, and one that I recall of no political persuasion whatever, we have spent substantially less on higher education as a proportion of GDP than almost all our competitors, and certainly less than the OECD average. The latest OECD comparisons, published in 2010, show that in 2007—the latest authorised figures—we spent 1.2 per cent to 1.3 per cent of our GDP on higher education. I agree with the noble Lord, Lord Giddens, that British taxpayers spent less on it than did American taxpayers. We also spent less than the OECD average, and considerably less than the United States, which spent 3.1 per cent of GDP on higher education—and that was before the cuts of £1 billion which were introduced by the former Lord President. I am sorry that he is not in his place today to explain to us exactly what he intended when he asked the noble Lord, Lord Browne, to undertake his review of tuition fees.

There are only four ways in which you can get money for higher education. You can get it through research income, endowments—we know very well that only three universities in Europe would get into the top 150 in the United States in terms of the size of their endowments—the taxpayer or tuition fees. We know from the experience of the past 10, 20, 30 or 40 years that the taxpayer will not provide the money, so the only revenue stream that is left is the student. I totally agree not with the spiritual authority of the right reverend Prelate, but with almost as great a spiritual authority—I agree with what Mr Blair had to say about the social equity of students making a contribution to what will make such an impact on their lifetime earnings. It seems to me a wholly defensible proposition.

My Lords, does the noble Lord agree that what the former Prime Minister Tony Blair said was that it should be a contribution? He used the words himself. He did not say, and never did, that students should pay the whole of the cost of their higher education.

No, as I shall explain in a moment, they will not be doing that in the case of the university that I know best. I remind the noble Baroness that the former Prime Minister wanted to introduce fees in 2004, not of £3,000 but of £5,000. He could not get that through the House of Commons largely because of the views of his honourable friends in the Parliamentary Labour Party, so let us not rewrite history. I suggest that the noble Baroness should refresh her memory by reading Mr Blair’s autobiography.

My Liberal Democrat noble friends have been teased about changing their mind. As my noble friend Lady Sharp pointed out, there are very strong reasons for their change of mind. It was slightly ironic that in his flirtation with the Liberal Democrats yesterday, the leader of the Labour Party, in a less than bravura performance, offered them the opportunity of talks with Liam Byrne. That must have set their pulses racing with excitement. But what makes it particularly ironic is that it is the same Mr Byrne who, as my noble friend Lady Shephard pointed out, gave the game away and told us after the election that there was no money left—zilch. I am not sure that it is the right moment to follow the right reverend Prelate in questioning why public debt is so terrific but private debt is such a bad thing. At some stage we could seek the authority of the New Testament on that proposition, but perhaps this is not the right moment.

When we consider changes to what one has promised the electorate, I seem to recall what happened in January 2004, after the then Labour Government had changed their position. When asked,

“Is the party open to the charge that it has broken a manifesto commitment?”,

Mr Alan Johnson replied yes. When asked:

“Is that crime of a century for a government to do?”,

he replied no. If one is to believe what is said about the public accounts under Labour, Mr Johnson did not have the excuse then of the bank having been broken.

I want to make a couple of points about the proposals themselves, not going any further into the seam of intellectual integrity which has underpinned the Labour Party’s position. I have a couple of questions. First, I think that all of us want to see an increase in the endowments for our universities, which are well behind our American competitors in that regard, as the noble Lord, Lord Giddens, pointed out. Can we be sure that the Government will look at how they can encourage philanthropic donations in the future, not just to charities in general but to our university sector in particular because it is of considerable significance?

Does the noble Lord agree that it would take many years for a substantial proportion of universities here to build up enough endowment to create a needs-blind admissions system?

Yes, it would take time, even for those universities which do not have as many foreign students as his university does.

Will the noble Lord also address how Sheffield Hallam University, of which I have the privilege to be chancellor, will secure endowments? Many good universities contribute hugely to the local economy and educate people who would never normally have gone to university in the past. They will not now be able to raise the volume of endowments or charitable funds that the noble Lord has mentioned.

The noble Lord may be aware that in this country about 2 per cent, perhaps rather less, of alumnae give to their old universities. That is far less than the figure one would find at even the least well endowed university in the United States. We have to change our attitudes to supporting our old universities.

The other question that I want to ask is about the cap. I ask this not least in the interests of the Opposition, who will, I am sure, want to consider which policy they change next. Are the caps of £6,000 and £9,000 set in stone, or can we be assured that they will be revisited in due course? I ask that, not least because of my concerns about the position of the Leader of the Opposition, who said, when asked what the Labour Party’s position was, that he was not going to fall into the trap of making a promise to scrap what we have put forward, because it was a promise that he might not be able to keep.

If what the Government are proposing—which, as the IFS has said, is more progressive than the existing system—is so noxious and is worse than anything since Herod’s slaughter of the firstborn, I should like to hear from the Opposition that they will either reject or accept the proposal, because their present position is, quite simply, irresponsible.

My Lords, I declare two non-pecuniary interests. The first is as a governor of the University of Chichester, which I should not say has for many years had the highest level of student satisfaction—although I did say that. My second interest is as a Bishop with an obviously direct interest in anything which might impact negatively upon the teaching of theology, particularly for those who are to be ordained. In fact, it is neither of those matters that I want to comment on; nor do I wish to rise to the challenge made by the noble Lord, Lord Krebs, about belief and faith; nor do I want to comment even on what the noble Lord, Lord Patten, said about looking for New Testament comments on debt.

The noble Lord probably would not regard this as coming from a higher authority than the New Testament but, by one of those interesting quirks of history, it is almost exactly 150 years to the day—it is actually tomorrow, 15 December—that Palmerston wrote to the then Chancellor of the Exchequer, Gladstone, warning him in relation to economic policies that the debt of citizens was by no means the same thing as the debt of states. That was a remarkably prescient comment.

What we have here is, at least in part, an attempt to deal with national debt by transferring it to individuals. The noble Lord, Lord Giddens, talked about something corrosive. The socially corrosive effects of this measure go far beyond the particular educational instincts that are at its heart. My point is therefore not really about education or the impact of this measure upon our higher education institutions, but about the potentially socially corrosive effect of high levels of individual debt in relation to national debt, which is a different matter altogether.

My Lords, I am in a rather unusual position of representing four universities. I am chancellor of Sheffield Hallam University, which is a new university that contributes hugely to the local economy and teaches people who would not normally in the past have had an ambition to go to university. I am chairman of the Royal College of Music, which is a specialist conservatoire, representing an entirely different skill base. I am a professor at Imperial College, London, which is one of the world’s top 10 universities and is research-rich. I am also on the council of Surrey University, which has aspirations and an extraordinary portfolio that extends from the area of public services right through to nuclear physics, and is increasingly engaged in excellent research.

Because of time, I want to make two brief points. It is very unwise to think of universities as one body. The point about my portfolio and the thing that all those universities have in common is that each is entirely different. There are special problems, for example, in the conservatoires. If we lose the exceptional funding for them, there will be an unparalleled crisis in the arts that we have not seen before. There is much in the proposals of the noble Lord, Lord Browne, that is worthy of serious consideration and is clearly very clever. However, much more time is needed to allow the issues between the different areas that we need to look at to be considered.

It is also true that increasing the fees will make the specialist conservatoires increasingly elitist, and we will end up with increasing numbers of Chinese students—excellent though they are—and poorer British students will not be able to study music, for example. It is also worth bearing in mind that 85 per cent of musicians probably do not earn £21,000 a year through music, even at the height of their powers. Will they be paying back fees for some other skill which was not developed in the higher education system?

The other brief point that I want to make is the question that I raised with the noble Baroness, Lady Wilcox, at the very beginning—on the day that the proposals of the noble Lord, Lord Browne, were first debated in this House. I said that, as I spoke, students in Sheffield were walking the streets protesting at the increased higher education fees. They did not understand what was going on, and I asked the noble Baroness how the Government intended to engage with the students. The Government have still not engaged with the students. This is a highly dangerous situation. This is a very complex measure and the idea of having this vote on fees before we have seen the White Paper is nonsense. It is not good government, and I have to say to the Government that it may be extremely dangerous to the coalition if they insist on driving this through.

My Lords, it seems to me that those of us on this side of the House who will vote in favour of the Government’s proposals have to answer four questions. The first is directed—fairly or unfairly, you may think—particularly at the Liberal Democrats, and was raised by the noble Lord, Lord Patten: “Why do you not honour your election pledges?”. Let us put it in the stronger terms used outside this place: “Why are you betraying the promise that you made to us?”. Let us for a moment examine that promise. It was a promise that if there was a Liberal Democrat Government, we would then seek to get rid of tuition fees. Whether that policy was wise for my party is a different matter. When I was its leader, I tried to persuade my party out of that policy in 1998, but I signally failed in a democratic party. That policy was democratically arrived at. However, the truth is, I am sad to say, that there is not a Liberal Democrat Government—there is a coalition Government. In order to put that Government together, we had to come to compromise deals with another party, which gave us some of the things we wanted and some of the things which we did not want. How else could you put a coalition deal together?

I shall certainly give way to the noble Lord in just a moment.

I remind the Labour Party that it had an opportunity to do a deal too, but it ran away. It did not want to participate in taking the responsibility for clearing up the mess that it left behind. It is important for the House to understand that. I agree that we have had to amend the view that we took, but we did so in order to put together a coalition Government in what we believed to be the national interest at a time of crisis. The Labour Party, too, has changed its policy, but it did not have to. I know that harsh words fall uneasily on the ears of noble Lords in this House, and I understand that, but this is a piece of naked opportunism. The truth is that Labour went into the election proposing tuition fees and is now against them. In the previous election, Labour was against tuition fees, and then proposed them. What is its policy now? Frankly, we do not know. The Leader of the Opposition says that there should be a graduate tax. Mr Johnson says he thinks that a graduate tax is unworkable—precisely the position of the noble Lord, Lord Browne—but he is then persuaded to say yes. Then, in answer to my question, the noble Lord, Lord Triesman, seemed to tell me that the Labour Party was in favour of fees. What is its policy? I do not know; but at least, if we are asked, “Why did you not fulfil your election promises?”, that question should be asked of Labour too. It did not have to propose an amendment for any reasons of national interest; it did so for reasons of an opportunistic ability to attack the Government.

The noble Lord puts forward the proposition that if a party is not elected to government, the promises that it made and on which it sought votes in the election are no longer binding. If that is the case, every minority party can renege on any promise at any time.

I will make it very clear to the noble Lord. The deal that was made was a coalition deal between two parties. I remind my Liberal Democrat friends that the coalition deal was endorsed unanimously by the parliamentary party and by the party at its conference; it has the democratic endorsement of the party. Where we are at present is uncomfortable, but we would be much more uncomfortable if, having accepted the coalition deal and passed it by the internal mechanisms of the party, we now ran away from it. If the noble Lord, Lord Elystan-Morgan, will forgive me, I would like to make progress; I have spoken for about six minutes already.

The next question that we have to address is whether this is necessary. In order to say that it is not, one would have to say that, uniquely, the higher education sector of this country should be excused from carrying the burdens that everybody else has to carry, and should be excused from the cuts. If the noble Baroness will allow me to make a little more progress, I will happily give way.

Is the noble Lord aware that government departments are being asked to take a cut of 25 per cent while universities are being asked to take a cut of 80 per cent?

The noble Baroness makes exactly the point that I would have gone on to, had she given me the opportunity to do so. When we consider university cuts, we may do one of two things. We may institute those cuts or ask graduates—not students—to bear a proportion of the costs. The right reverend Prelate who spoke earlier said that students should not be required to pay for higher education. They are not being required to pay; they are being asked to share in the payment. Under these proposals, universities by and large will have the same amount of funds as they had before, because graduates will pay their contributions. That is perfectly right. I cannot argue the case that the higher education sector should be removed from the burden that the rest of the nation has to carry. Those such as the right reverend Prelate seem to propose that somehow higher education should be free. It was free for my generation. I never went to higher education; my university was Her Majesty's Corps of Royal Marines. Free higher education is possible for 7 per cent of the population, but is impossible for 50 per cent. One has to find a mechanism to fill the gap.

The next question is whether it is fair. I will deal with the issue of debt. I accept that the consequence of these proposals will be to raise debt to the order of £27,000, £30,000 or perhaps more. I regret that; it is the consequence of the age in which we live and the economic position in which we were left. However, we do not complain when young people have to take out a mortgage debt of £150,000 or £200,000 to buy their house. This is not like a credit card debt; it is much more like a mortgage. There is a fixed system of repayment and a fixed mechanism for repayment. Frankly, I do not find it offensive; if one can take out mortgages for physical property, why should one not take out a mortgage to improve one's intellectual property, from which one will benefit in future? I know that I am testing the patience of the House and I am keen to make progress, but I will give way.

On the question of personal debt, did the noble Lord see the figures released earlier this month that showed that personal debt in this country is now £1.5 trillion and that, out of 2,000 families surveyed, more than half said they were already in trouble with the debts that they had incurred? Is this any way to go into working life—with this albatross round your neck?

I understand the point that the noble Lord is making. However, we accept that it is reasonable for people to borrow huge sums to get themselves on to the property ladder. I see nothing different in following the same broad system. This is equivalent not to a credit card debt but to a mortgage. It is perfectly reasonable that we ask people to pay a significantly smaller amount of interest on a debt that will improve their life chances. There is nothing odd or strange in that.

My final question is that of fairness. The noble Lord, Lord Triesman, made the case that somehow or other—

Perhaps it would help if I explained that it is up to my noble friend Lord Ashdown to decide whether he gives way. My noble friend has already taken two or three interventions; he is under no obligation to take any more if he does not wish to.

I apologise to the noble Lord. I have already been speaking for 11 minutes and if I were to take his intervention, I would be testing the patience of the House, so I will finish. The noble Lord, Lord Triesman, painted a Dickensian picture of the poor family who cannot afford to pay the fees. However, it will not be poor families who pay, but graduates when they are earning more than £21,000. The question is; are these proposals fairer or less fair than the present system? The answer is that instead of starting repayments on a salary of £15,000, students will start them on a salary of £21,000. The level of their repayment will be about half what they are paying at present. The rich will pay more than the poor; that is not the case under the present system. Part-time students will not pay up front; that is not the case at present. The fact that students will be repaying the costs for longer will mean that they will be able to repay when their salaries are higher. Many students have told me that one consequence of the present system is that they are repaying in their mid-30s, precisely when it is most difficult. They will now be repaying in their mid-40s, when it will be far easier.

When I vote tonight in favour of the proposals, I will vote not out of defensiveness but because I believe that they are progressive, that they will be followed elsewhere in the world, that they are right for higher education and, above all, that they are fairer for students, especially students from poorer families.

My Lords, I will speak briefly about medical education. Undergraduate medical students currently receive NHS bursaries in their fifth year, and graduate students in their second, third and fourth years. The proposal to end NHS bursaries is also under consultation. Medical studies are full-time—45 weeks a year—and leave no opportunity for part-time employment. At St George's, University of London, where I am on the teaching staff, we pride ourselves on making progress in widening participation. I should like to know what the cost will be for a student who has to take out a loan for the full five years, and a large loan to cover their living costs, and whether the Government agree that this degree of debt will discourage prospective doctors from all but the wealthiest families. I will need assurances before being able to support this proposal that if the proposed increases in fees go ahead, at least NHS bursaries for medical students will not be stopped.

If the House would like me to intervene, I will make a few remarks. Others wanted to speak, but I am in the hands of the House. I will start by saying a word or two—I will give way to the noble Lord.

My Lords, I will speak briefly in support of these regulations. I do so after spending 10 years validating the polytechnic sector on the Council for National Academic Awards. My experience is unusual; I am a non-academic who spent 10 years close to higher education. That experience leads me to suggest that if the Government's plans result in the closure of a large number of courses in the humanities departments of the former polytechnics—in particular teacher training courses—that would be a considerable achievement. It would save a lot of money that could be channelled to serious courses, and it would stop the short-changing of many thousands of students who attend humanities courses and find themselves ill equipped for the world of work, or indeed for making any useful contribution to wider society. The students themselves will be the best judges of the courses and will not enrol on those that they consider to be a waste of their time—indeed, perhaps even a waste of their lives.

I also congratulate the Secretary of State, Michael Gove, on his attempts substantially to raise the quality of teacher training. I believe that these regulations will do much to help him to achieve that.

Beyond that, and finally, I believe that these regulations will start to create something which has been sadly missing in our system of higher education—a system of quality control. I know that there is a system of quality assurance but that is not at all the same thing. The quality control brought in by these regulations will be manned by the students with the teeth to make it effective, and I cannot think of anyone better to do it. Therefore, I support the regulations.

My Lords, it is wonderful to be so welcome. I noticed the declaration of interests that the noble Lord, Lord Triesman, made at the beginning of his somewhat lengthy speech, although it was none the worse for that. My noble friend Lady Shephard described him as having a silky tongue. I had better declare another interest in that I was one of those higher education Ministers who saw him, and I declare the interest that I greatly enjoyed the lunch that he gave me some 13 or so years ago. I am not sure that I ever declared it at the time but it was a very useful meeting, as he explained to me just how many members of his union were in both Houses. I think he claimed that he had more than any other trade union leader in the history of trade union leaders having members in this House.

I listened with interest to the somewhat lengthy speech of the noble Lord, Lord Triesman, but I heard no coherent argument in it whatever. It was a mere rant, with no solution put forward by the party that got us into the mess that my noble friend Lady Shephard described. He claims that there is no evidence and that there was no consultation, but does he not think that the report produced by the noble Lord, Lord Browne, and commissioned by the Government of whom he has been a member, provided just that? In that report there is evidence, and in the production of that report there was a great deal of consultation.

A great number of points have been made during this debate and I want to deal with some of them in order to knock the myths that are growing up. The first one—addressed, first, by the right reverend Prelate the Bishop of Lincoln but brought back to us again and again—is the idea that the poorest will be deterred. The right reverend Prelate referred to the removal of the education maintenance allowance for 17 and 18 year-olds. I understand that the removal of the EMA was examined in a report by the party opposite when it was in government. The report showed that some 90 per cent of the money was being wasted, and it was not encouraging the children involved to stay on at school, as they would have stayed on anyway. I think that my right honourable friend did exactly the right thing in suggesting that that money could be moved and made better use of.

In terms of the poorest being deterred, many of us made that argument when student fees were introduced. It started, as the noble Baroness, Lady Blackstone, said, in 1998 and was then enhanced by the 2004 Act. On both occasions we saw an increase in those from less well-off homes going into higher education, and I do not see any reason why that should not happen again. We will certainly continue to examine what happens after these changes come into force.

The next point—put forward by the noble Baroness, Lady Blackstone, and the noble Lord, Lord Krebs—is that our decision to increase the upper cap to £9,000 is purely a political choice and that we have made it for no other reason than we want to save money. I must make it clear that in their Pre-Budget Report of 2009 the previous Government identified some £600 million of cuts to higher education and science to be made by 2012-13. The department responsible for universities, BIS, was not protected in Labour’s public expenditure plans, so it is hard to see what protection a Labour Government would have produced over the spending review period if they had not been able to cut departments’ budgets by some 25 per cent, which is exactly what we have done.

That deficit exists—we inherited it—and the Government are responsible for the interests of all taxpayers in meeting it. At a time of real financial hardship, we believe it is right to make cuts across public spending, but we do not believe that it is right to ask those on low incomes to pay additional taxes to prop up an unaffordable university funding system from which they do not benefit directly. Obviously there is a benefit to all of society—I accept that—but there is a greater benefit for the individuals going to university and I do not think that we can get away from that.

The second point that I want to address is the idea put forward—again, by the noble Baroness, Lady Blackstone—that the new system will not save any money. She quoted the Institute for Fiscal Studies and the Higher Education Policy Institute, which have both questioned whether the policy will save money in the end. I say to the noble Baroness that our proposals contribute directly to paying down the deficit because they replace grants with loans, of which about 70 per cent are expected to be repaid in due course by those on higher earnings. We are reducing the direct funding of universities via the teaching grant—

I shall give way when I have finished this point and then the noble Baroness can spring to her feet. However, it is up to me to decide whether I give way. We are reducing the teaching grant and increasing the loans, and therefore universities’ funding will not be affected.

My Lords, is the Minister aware that HEPI has carried out substantial analytical work which suggests that the Government have been over-optimistic in their assumptions—I do not want to go into all the detail now—about how much of the loans will be repaid? It has come up with a figure much closer to 50 per cent than 70 per cent.

HEPI has done its research based on its assumptions; we have done ours based on our assumptions, and I am confident that our assumptions—

This is not the time or place for the noble Baroness and me to go into these matters. The noble Baroness and I have been arguing points for 14, 15 or even 20 years and we have never necessarily agreed, so I do not suppose that we would agree if we argued for a bit longer about this. The simple fact is that we are confident about the robustness of our assumptions, and HEPI obviously takes a different view.

Those were the two principal myths that I wanted to stress. I also make it clear that we have considered all these issues carefully. However, as I said in my opening remarks, we recognise that very strong feelings have been aroused. I underline and re-emphasise that our proposals mean that when graduates come to pay—and they will not pay until they earn more than £21,000, and in due course that £21,000 will be uprated in line with earnings—they will pay less per month than they do at the moment. I also stress that that will be needs-blank and that in many cases they will not be paying anything at all, particularly if they have taken a career break or are not earning up to that limit.

These regulations will also allow us to provide a funding stream which enables our universities to attract a flow of income to sustain their world-class position. I am very grateful that noble Lords such as the noble Lord, Lord Bilimoria, stressed the global status of our universities. There is unprecedented global demand for higher education and we cannot let our HE sector drop behind our international competitors. I think that the number of people coming from overseas indicates that they are maintaining their position. However, in this current fiscal climate, that requires significant changes to higher education funding and student finance.

The next thing that I want to stress, which is contrary to what the noble Lord, Lord Triesman, said, is that we greatly value the autonomy of our higher education sectors. They are not emanations of the state, as the noble Lord put it. Each university and college is autonomous and each will be free to decide what contribution it sets for its courses. As we know, a number of vice-chancellors in England have indicated publicly that the Government’s proposals for university funding are reasonable and retain fundamentally important progressive elements. Again, I am grateful for all those who have stressed, like the noble Lord, Lord Ashdown, the progressive nature of our proposals.

I thank the Minister for giving way and I declare an interest in that I hold a chair with Liverpool John Moores University and am a visiting fellow at St Andrews. I want to test the Minister on whether the proposals are progressive, as has been asserted all the way through this debate, even though the Institute for Fiscal Studies has said that they are regressive. The IFS says that those who will be hit the hardest are not those coming from the free-school-meals category but those in the 30 per cent category of the lowest income earners in this country. Does the Minister agree with that assessment?

I do not agree with that assessment because no one will be paying anything until they earn £21,000 or whatever the figure will be after it has been increased. That figure of £21,000 is roughly the average wage. Thereafter, we go on up to about £42,000 before people pay the maximum, which is RPI plus 3 per cent. I do not think that that is the credit card levels of interest that the noble Lord and others seem to imply. That is not a heavy repayment to ask of someone on £30,000, £40,000 or even £50,000 or £60,000. If we take medical students as an example, a GP now earns in excess of £100,000. When one thinks of their investment, that is not a bad return.

I now want to deal with timing, as it has been alleged that we are rushing this through too fast. I want to stress again that we have a responsibility to give students, their families and the universities certainty about what arrangements will be in place for the 2012-13 academic year. One has to remember that, although the White Paper will not come out until early in the new year, already by then students will be beginning to visit the universities that they want to apply to for 2012. They will be starting to apply in the summer of 2011 for some courses, so everyone, including the institutions, need to know where they stand and when they can plan ahead.

Finally, I come back to the nature of the amendments. The noble Lord, Lord Triesman, has sought to reassure the House that his amendments are merely an invitation to the Government and another place to think again. I make it clear in no uncertain terms that this is not an occasion when we can think again. These two amendments are fatal and, if carried, would negate and override the vote in another place last week.

Before the Minister concludes his remarks, I wonder whether he will address the question of humanities in the curriculum of our universities. What guarantee can he give that humanities will continue to have an appropriate place in curriculums?

They will have an appropriate place in the curriculum. Universities will be able to charge fees to students and will receive them up front without the students having to repay anything. The fees will then go to the universities. That is what this is all about. In the end, the good universities will flourish and good courses will also flourish.

Has the noble Lord given thought to the fact that, although a vote against the regulations would cause chaos in its immediate wake, as he just mentioned, it would prompt immediate action, whereas the alternative of embracing these regulations will set in train something that will persist for years and arguably inflict huge damage? How does he weigh the two?

Voting against the regulations would inflict huge damage for the reasons that I have explained, given the nature of the loans and the fact that they will not be repaid until the individual is earning a reasonable amount. If the individual never earns anything or takes a career break, he will not have to repay. I do not believe that the regulations will inflict that damage. I am making it clear that for the House to reject the Motion would be fatal.

The Minister is reminding us that the difficulties on the consumer side are not as great as some noble Lords have suggested. I accept that this is an ingenious splice of a graduate tax and a graduate loan system that is highly protective of the poorest. I think that many noble Lords are asking the Minister to address the question of damage to the supply side produced by moving too rapidly. I hope that, before the Minister finishes his speech, he could say a bit about the Government’s assumptions on the range of closures, mergers, bankruptcies and disproportionate patterns of damage to certain courses but not others. That will give the House a better basis for understanding what the Government anticipate than continual harping on an issue that I accept is of great concern to prospective students and their families but has not been sufficiently well explained. The students are well protected, but the institutions may not be.

I believe that the institutions themselves can benefit from this, as I made clear in my opening remarks. The institutions are autonomous; they are not, as the noble Lord, Lord Triesman, put it, emanations of the state. Those autonomous institutions can make decisions on what courses they offer in seeking to attract appropriate students and on matters such as the length of courses and in what fields they are offered. There will be changes, but it is not for the Government to predict what will happen. We believe that we are making provision for students and those from less well-off families and we are providing opportunities for the institutions themselves. We also believe that it is necessary to put the measures in place so that everyone knows what is happening for the academic year starting in autumn 2012. That is why I stress again, as I have done two or three times, that the amendments in the name of the noble Lord, Lord Triesman, are fatal.

Does the Minister recall that, on 17 January 2007, the elected House gave this House the right to vote on statutory instruments when they might prove to be fatal, when it debated the all-party report on the conventions between the two Houses? The other place gave us that right without dissent and this House did the same the day before.

We have always accepted that this House has a right, if it feels appropriate, to vote down orders. However, this House should consider that very carefully before doing so. That is why I am warning the House that it ought to remember that these two amendments are fatal. For that reason, I recommend that the House rejects them.

I shall be brief. If I made points at length before, I apologise but I thought them important. I certainly do not apologise for the links that I have had with former Ministers responsible for education. That was always part of the consultative process. In those days I always thought that they were welcome, as I welcomed the opportunity as well. As a consequence they will make no difference at all to my Christmas card list. In those conversations we always agreed that one of the most cherished things about universities was their autonomy. It is certainly true that because some of the money that goes to universities flows through the Exchequer it was always the case that they were emanations in that sense, unless you can move it off the books, which is the cunning mechanism that is being described this time.

Of course they are fully and proudly autonomous organisations. Has there been change and reassessment on this side of the House? I hope so. There were always reasons for thinking about whether the proposals that we made were the right ones, and if you lose an election—and we did—it is essential that you think again about what you proposed, to consider whether it was most appropriate. I have no doubt that that has been the case for every party that has lost elections, including the previous one—including the Liberal Democrats, who lost that one as well.

I want to make only one or two specific comments. I thank everyone who has taken part in the debate, because it has been illuminating for me. I promise you, I could not do justice to what has been said; I would speak for too long and that would probably meet with your disapproval.

First, I say to the noble Baroness, Lady Sharp, that I am not chiding anyone about using the right. It was plain that the right to vote or speak against such a proposal was put into primary legislation for good reason. That is not chiding: I welcome it, I applaud it, and those who pushed it were right to push it.

Secondly, I say to the noble Lord, Lord Ashdown, that I read documents and understand that students will not be repaying while they are at university. I hope that everyone in the House will do each other the credit of believing that they have read and understood the fundamental documents, without patronising one another.

I should declare an interest as chancellor of the University of Essex, of which the noble Lord is a distinguished graduate. He says that he has read all the relevant documents. Has he read the document issued yesterday by Universities UK, which is the umbrella body for all the universities in the United Kingdom? It states that, the cuts having been decided on,

“we recognise that the government's proposals are the best option in the current circumstances, and in many respects are more progressive than the current arrangements … Universities UK urges the House of Lords to support the raising of the tuition fee cap”.

My Lords, I suspect that the noble Lord, Lord Phillips, knows perfectly well that I have read it. Not only have I read it but I understand what motivates it. If the ship is going down, you get in the lifeboat. That is a simple matter. You do not quarrel about the painted colour of the lifeboat; you get in the lifeboat.

I wanted to complete my point about the intervention of the noble Lord, Lord Ashdown. It is simply this. There is no question in my mind, and it is not a Dickensian point, that people who are in the lowest-income families do not set off to attract massive debt. There is a huge dissuasion in that. Anyone who has come up through one of those families or one of those areas will know it.

I completely share the noble Lord’s view about families with the poorest incomes, but why is it that his party—and, indeed, many of the demonstrators—consistently override the fact that the offer being made by the coalition would help those in the least well-off families by increasing the level at which they repay, by lengthening the period over which they repay and by recognising that they, including part-timers, should pay nothing up front? It is time that we had candour on both sides of this argument, not just on one.

I can only say to the noble Baroness, for whom I have genuinely huge respect, that the reality in those families is that they have to have confidence to believe that university is for them, despite the fact that there has often never been a history in those families of going to university. They have to believe that it will work for them and that they will not, through the rest of their lives, regret having made that change.

I think that we are coming towards the end, and I promised that I will be brief, so let me finish.

I ask the House: please study the facts, establish the evidence and take your decisions based on the knowledge that we have, not on hopeful guesses about what may take place. If you do not think that the evidence is there, set in motion a means of achieving that evidence, so that decisions can be taken on the evidence.

Many in this House with great distinction have argued over the years that we should always go for pre-legislative scrutiny and that we should spend the time to make sure that we knew what we were doing. Two and three-quarter hours is a fair time, but it is not the scrutiny that should change the university system of the United Kingdom for decades to come, without the knowledge that is essential to take that decision.

I have argued that I believe that it will be fundamentally damaging; I know that others will argue—on the supply and the demand side, incidentally—that that is not the case. That debate cannot be held until the White Paper promised by the noble Lord, Lord Henley, and the noble Baroness, Lady Wilcox, and the other bits of this picture are in front of the House, so that the entire picture can be studied.

That is my final point to the House. It is about the dignity and the way in which the House deals with itself. Fundamental change—game-changing change in legislation—to be followed by the White Paper that establishes the basic arguments? That cannot conceivably be the way for a Parliament to proceed. I wish to test the opinion of the House.

Motion agreed.

Motion to Approve

Moved by

That, for the purpose of section 24 of the Higher Education Act 2004, the higher amount should be increased to £9,000, and to £4,500 in the cases described in Regulation 5 of the draft regulations in Command Paper 7986, and that the increase should take effect from 1 September 2012.

My Lords, I have spoken to this Motion, and I think that I would weary the House if I spoke again. I beg to move.

Amendment to the Motion

Moved by

Leave out from “that” to the end and insert: “this House regrets that the Government has failed to consult adequately with parents, students, higher education bodies, employers and local authorities on raising student tuition fees and to convince many people of the fairness and sustainability of its proposals for funding higher education; urges the Government to undertake more public consultation on the issue, including consultation with future graduates and their families who did not contribute to the consultation over the Browne review; further considers that there should be an independent impact assessment on (a) the financial consequences of the proposed fees on students from both lower and middle income families, (b) the financial consequences of the proposed fees on women, including a full assessment of the impact of the fees on equalities and fairness, and further calls on Her Majesty’s Government to commission new research to analyse the probable impact on demand for university courses of fees being increased to the range of £6,000 to £9,000 per annum from students from lower and middle income families and women; and further considers that, prior to contemplating any increase to the higher amount specified in section 24 of the Education Act 2004, the Government should publish a White Paper on reform of higher education funding, allowing for consultation and for consideration of alternative proposals”.

My Lords, I think that we on this side, too, have spoken as much as we need to on the £9,000 increase. I beg to move.

Motion agreed.

Motion to Resolve

Tabled by

To move to resolve that this House accepts that an increase in tuition fees is necessary to maintain and improve higher education in this country; but regrets the drastic cuts in higher education funding and the multi-fold increase in tuition fees being proposed to fill the gap created by these cuts; and calls on the Government to consider and report to Parliament on the possibility of staggering and phasing in over a period of years any increases in tuition fees and not to implement the increases all at once in 2012.

We have had an extensive debate and the Government have won the vote in both Houses. My Motion does not propose to change anything but acknowledges only that we as a House regret that higher education funding has been cut and that, as a result, tuition fees have had to be put up to such an extent. It requests that the Government consider not postponing the increase but implementing it in a staged manner from 2012 onwards. The reason for this is that we have balanced the books of the country and of universities but we have not thought enough about the students. They will suffer so much because of this and the Motion would have helped them. The perception at the moment is that the Government do not care enough, and we all need to be wary about that perception.

However, given the way in which the debate and the votes have gone, I shall not move my Motion.

Motion not moved.