Higher Education Bill

Public Bill Committee, 26 February 2004.

Standing Committee H

Clause 23 - Condition that may be required to be imposed by English funding bodies

Jimmy Hood (Labour, Clydesdale)

I remind the Committee that with this we are taking the following amendments: No. 3, in

clause 23, page 9, line 10, leave out 'the higher amount' and insert

'£3,000, increased annually on 1st April, in line with the Retail Price Index'.

No. 144, in

clause 23, page 9, line 11, at end insert

'but which can increase by a minimum of 0.5 per cent. above the rate of the retail price index in each academic year.'.

No. 223, in

clause 23, page 9, line 11, at end insert

'and that at least 10 per cent. of its fee income is supplied for distribution amongst institutions, as directed by the Secretary of State'.

No. 239, in

clause 23, page 9, line 11, at end insert

'and that there is provision to students, as directed by the Secretary of State, of a bursary equivalent to at least 10 per cent. of the fee, or £300, whichever is the greater sum'.

No. 83, in

clause 23, page 9, line 13, leave out from 'period' to 'institution' in line 15.

No. 84, in

clause 23, page 9, line 26, leave out paragraph (a).

No. 85, in

clause 23, page 10, leave out lines 30 and 31.

No. 120, in

clause 23, page 10, line 30, leave out from 'means' to end of line 31 and insert

'£3,000, increased annually on 1st April in line with the Retail Price Index'.

No. 110, in

clause 23, page 10, line 35, at end insert

'but excludes any year of education beyond the first three years of a course in medicine, veterinary medicine or education'.

No. 86, in

clause 24, page 10, line 44, leave out 'and the higher amount'.

No. 87, in

clause 24, page 10, line 48, leave out 'and the higher amount'.

No. 88, in

clause 24, page 11, line 1, leave out 'either of those amounts' and insert 'that amount'.

No. 89, in

clause 26, page 11, line 26, leave out paragraph (a).

No. 225, in

clause 26, page 11, line 30, at end insert

'and that at least 10 per cent. of its fee income is supplied for distribution amongst institutions as directed by the Secretary of State.'.

No. 240, in

clause 26, page 11, line 30, at end insert

'and that there is provision to students, as directed by the Secretary of State, of a bursary equivalent to at least 10 per cent. of the fee, or £300, whichever is the greater sum'.

No. 252, in

clause 26, page 11, line 30, at end insert

'but which can increase by a minimum of 0.5 per cent. above the rate of the retail price index in each academic year.'.

No. 90, in

clause 26, page 11, line 32, leave out from 'period' to 'institution' in line 34.

No. 91, in

clause 26, page 12, leave out lines 33 and 34.

No. 121, in

clause 26, page 12, line 33, leave out from 'means' to end of line 34 and insert

'£3,000, increased annually on 1st April in line with the Retail Price Index'.

No. 92, in

clause 31, page 14, line 5, leave out subsection (1).

No. 93, in

clause 31, page 14, line 10, leave out 'also'.

No. 94, in

clause 31, page 14, leave out lines 39 to 43.

No. 95, in

clause 35, page 16, line 4, leave out '(a) or'.

No. 96, in

clause 36, page 16, line 23, leave out '(a) or'.

David Chaytor (Labour, Bury North)

In continuing the debate on this group of amendments, I should to speak against amendment No. 82, give a little moral support to amendments Nos. 144, 223 and 239, and comment on amendment No. 110, which was discussed briefly on Tuesday.

I know that this is not a Second Reading debate, but with regard to the general issues underlying the Bill, the principle of the variable fee and the graduate repayment scheme is the right way forward. I have supported a graduate repayment scheme for the best part of 20 years and I am enthusiastic about the principle of variable fees, although sceptical about whether that will make a significant difference in the short term. We must be realistic about the likely impact of variable fees. I suspect that the vast majority of institutions and courses will move towards the £3,000 figure.

I pay tribute to my hon. Friend the Member for Cambridge (Mrs. Campbell) for consistently pursuing her argument in favour of variable fees. [Interruption.]

Sorry, I meant to say in opposition to variable fees. It is always worth trying those tactics. She has provided a model for a professional, conscientious Member of Parliament with the way in which she has consulted widely among her constituents and represented their views. However, I disagree with her fundamentally.

I am conscious that I have the luxury of not having to represent a constituency such as Cambridge, excellent constituency and university as it is. My constituency perhaps represents the United Kingdom as a whole more accurately than the constituency of any other hon. Member in the Room, because in my constituency 18 per cent. of people are graduates and 82 per cent. are not graduates, which is entirely in line with the national figures. Therefore, as well as the luxury of not being subject to intense pressure from the National Union of Students or any of its local offshoots, I have the advantage of representing a constituency that represents British public opinion far more accurately.

To set the matter in context, I should point out that during the past 12 months since the White Paper was published I have received a total of 24 communications on the whole subject, 17 of which were e-mails orchestrated by the NUS. Seven were letters, four of which opposed the Government's policy and three of which were in favour. It is important to appreciate that context, because for the overwhelming majority of people in the UK, variable fees are not an issue, as they have never been anywhere near a university, and for such education and training post-18 as they have experienced, they have paid variable fees. The debate has been dominated by the graduate elite in Parliament, the media and the south-east. If we had a stronger regional balance in our political culture, perhaps there would not have been such a focus on the contentious issue of variable fees.

The difficulty with the wholly or almost wholly taxpayer-funded system of university education that has applied for most of the 60 years since the end of the second world war is that it has been the education equivalent of the common agricultural policy, because it has trapped huge amounts of public investment and directed it largely to those people who need it least. That has to change, and the graduate repayment scheme is an important step towards changing it. The introduction of variable fees is another important step towards the fairly mild, gentle redistribution of our education budget that is necessary if we are to liberate the potential of all our young people.

In forming a judgment about variable fees and amendment No. 82, we must consider the evidence. It has been said many times that in the whole of our post-18 education and training system—other than in the specific case of full-time undergraduates—variable fees are the norm, have been the norm and will always be the norm. There is no evidence whatever that variable fees have acted as a deterrent to participation, whether in the Open university, postgraduate study or part-time study in our universities, HE in the further education sector, the further education sector itself, or in workplace training on employers' premises. Where

variable fees apply, the level of participation by different social groups is far higher than it is among full-time undergraduates. Those are important points.

I shall speak briefly about amendment No. 110, which refers to training in veterinary science. The hon. Member for Hertsmere (Mr. Clappison) raised that matter because the campus of the Royal Veterinary college is in his constituency, and he expressed concern that the college and those students would be at a disadvantage. I have tried briefly to make a point about his argument on participation. My right hon. Friend the Minister said that recruitment to veterinary science was not as bad as he had described, and was fairly healthy. According to one of the Higher Education Funding Council widening participation indicators, the Royal Veterinary college did not perform particularly badly. On the other two indicators, which concern the participation of students from low-income neighbourhoods and from social classes III, IV and V, the Royal Veterinary college performs above its targets. The arguments that the hon. Gentleman made were not entirely rooted in statistical reality. I dwell on that briefly, because it demonstrates that there will be some losers in the new system. We should not shy away from that as it is a way to rebalance opportunities across the university sector. Those pursuing degrees in veterinary science and in many other similar professions are confident that they will enjoy lucrative careers, and it is entirely right that the new system should require them to pay a slightly bigger contribution.

I want to discuss amendment No. 82 and deal with the points raised by my hon. Friend the Member for Cambridge in support of her opposition to variable fees. First, she says that they will introduce a market in HE. The fact is that there is now and always has been a market in higher education. Every 18-year-old filling in a Universities and Colleges Admissions Service form knows that. The currency for that market was largely A-level grades before 1998, which were supplemented by a fixed fee from 1998. It is not credible to say that variable fees will transform the system. It is a highly segmented market, and the currency brought to that market determines one's ability to enter it.

The market is highly imbalanced between the powers of the producers—the universities—and those of the consumers. One of the positive benefits of a move to a variable fee system will be to strengthen slightly the power of the consumers and to concentrate their minds on the choices that they make. Similarly, the system will concentrate the minds of the producers to ensure that they provide the best possible information about their courses to their applicants, so there are positive advantages.

Anne Campbell (Labour, Cambridge)

I thank my hon. Friend for his remarks at the beginning of his speech, although they will not do much for my credibility with my student population.

I return to the point made by my hon. Friend about the market. I agree entirely that there is a market at the moment and its currency is A-level grades. I am afraid that the variable fee will introduce another currency in the market, which will be money. Because poorer students tend to be debt averse, they will be the ones

who are affected by the new currency, whereas students from middle-class and richer backgrounds will not be affected, because at the end of the day their parents will probably pay. I should like my hon. Friend to address those points. Intervention in the market is fine, but this intervention will have an impact on the poorer students, not the middle-class students.

David Chaytor (Labour, Bury North)

I understand the point completely. There are two issues that we have to consider. First, that point would have been valid had there been no system of student support in place. I certainly could not support either the raising of the fee, or the introduction of variable fees unless there was a package of student support. The point would have been valid had the Government not announced the reintroduction of the grant or the requirement on universities to provide their own bursaries and had the Government not encouraged universities, through the institution of the office for fair access, to develop much larger bursaries.

Cambridge was the first to propose a bursary of £4,000. Without betraying any confidences, I know that my hon. Friend is concerned that the sheer amount of money now circulating in bursaries might give some students too much. The deterrent effect, which is my second point, is not valid given the reintroduction of the grant. The huge and unprecedented expansion of university bursaries is entirely the result of determination and pressure by the Government and the creation of OFFA.

Chris Grayling (Conservative, Epsom and Ewell)

Will the hon. Gentleman give way?

David Chaytor (Labour, Bury North)

I have been instructed to take up the minimum amount of time in this morning's debate, so I would prefer to continue.

I return to the segmentation of the market. The currency of the market is largely A-level grades. The financial side introduces a new dimension. I do not think that it is a disaster, but rather that it has positive advantages. There is no reason why someone who has three or four grade As at A-level and is applying to Cambridge should be concerned about the costs. My hon. Friend has said many times that Cambridge is one of the cheapest universities and has one of the most generous bursary systems: the idea that someone in that position would suddenly decide to go to Wolverhampton, Bolton or Luton is not credible.

Anyone who has an offer of a place in one of our leading research universities knows full well the financial and career advantages that a course at that university will bring them. I do not take terribly seriously this idea that people will be deterred from courses and will choose on price rather than qualification.

The third issue that my hon. Friend raised was the widening gap between universities. I was grateful that she did not refer to the creation of a two-tier system as many have done. We have always had a multi-tiered system. The market is segmented: some universities recruit students largely with grade As and others recruit students largely with grades D and E. There is little that the Bill will or can do about that. Frankly, as

long as there are enormous differentials in human achievement, there will be enormous differentials between our universities.

Two points should concern us here. First, we should not oppose the concept of a hierarchy of universities. A small number of universities compete at a global level and a much larger number of universities operate in a local or regional market within the United Kingdom. I do not see anything terribly wrong with that. The issue is not the existence of the hierarchy but access to it. The virtue of the Bill is that it increases access for all young people, depending on their qualifications, to the leading research universities. That is the important point. The Bill opens up access to the very best universities. It does not somehow try to squeeze the best down.

The other point relates to the rigidity of the system. The Russell group comprises 19 universities. I always feel slightly sorry for the university that thought it would be the 20th. Twenty would have been a rounder figure and I am sure that there was some grief when it was decided that there would be 19. But, it will not always be 19. Look at what has happened to some of the modern universities established in the 1960s. Warwick is the classic example of a university that now has its place in the Russell group, and if people saw the research assessment results for York university, many would think that it would have a case for being in the Russell group. The important point is that there is dynamism in the system. The Russell group will not exist for ever. There is talk of an emergent smaller core group—a G5, G7 or G8—and it is important that the financial framework that the Government establish encourages such dynamism.

The great English disease is that we see diversity and immediately put things into a hierarchy. It is important not to do that. There are many excellent small, local, modern universities. They are not as high up in the pecking order as the Russell group universities, but that does not mean that they are worse. They are doing a different job for different purposes. We need to refine our views on diversity and hierarchy, and recognise that because a small, modern university is operating largely in its sub-regional context, that does not mean that it is worse, only that it is different.

My hon. Friend the Member for Cambridge also mentioned public sector workers and priority subjects. She tried to demonstrate that there was an anomaly in arguing that the case for variable fees was based on ensuring that those who did the most prestigious subjects leading to high-earning careers pay the full fee. She referred to the debate on zero fees for maths and physics and touched on people who graduate from courses for which the full fee is charged and subsequently go into modestly paid jobs in public services or charities.

On the public sector and charity issue, it is the responsibility of the state to ensure an adequate flow of public sector workers into health, education and other areas. As such, we are likely to see the state as an employer providing various forms of incentives, such as the golden hellos that the City has always provided to high-flying graduates in maths, economics and

business management. That will have to come from the public sector, but there are huge advantages in public sector employers providing such incentives and offering to pay fees. It can help to buy loyalty, and particularly for teaching in inner-city areas, an offer to repay course fees on the condition that the graduate stays in a particular school or local authority area for a number of years would be beneficial. It would certainly help the national health service maintain loyalty and stability in the work force, whether that is nurses, paramedics and, especially, junior doctors.

I want to correct one point on the question of maths and physics. I have not read Professor Smith's report on maths line by line, but I have read a summary. He is not suggesting that there should be a zero fee for mathematics as an incentive, but that the fee could be waived. That is an important point, because although the effect is the same, there would still be a fee for mathematics and, I suspect, physics. However, certain institutions may choose to waive the fee as a means of recruitment.

I do not believe that the way to boost our national total of physics graduates is simply to waive the fee. We should boost it by massively investing in improved science teaching in primary and secondary schools, and the same applies to maths. However, the waiving of the fee could influence a student with good A-level grades to choose mathematics rather than a different degree such as accountancy, economics, philosophy or social anthropology. Influencing students to choose a field in which it is in the national interest to increase recruitment would be a legitimate use of the potential in the variable fee system.

My hon. Friend's concluding point was that variable fees will lead to students making economic choices about their courses and seeing them as a financial investment. They will, and what is wrong with that? We, as middle-aged people—with the exception of my hon. Friend the Minister—are sometimes a little naive about young people's perceptions. It is reasonable that a young person should look at their future career in terms of a financial investment.

The staggering thing is that so few people can see the case for university education as a financial investment. People who will cheerfully borrow huge amounts of money to go on foreign holidays or who will buy their sons and daughters a car for their 18th birthday seem to have a mental block about seeing the value of university as a financial investment.

Some people have always seen university as a financial investment, although that is not the only factor that they take into account. The new system will not change that significantly. University is an important financial investment, and the more people regard it as such, or see the financial implications of it, the more we will generate a more discriminating group of young people, who will be in a position to make better choices for their future.

In the debate about variable fees—I do not refer solely to my hon. Friend's contribution in that respect—there has been much confusion and many issues have been blurred. The most obvious of those issues is the relationship between the student and the graduate. In one sense, the introduction of the repayment scheme and the variable fees scheme means that one's family circumstances at the point at which one becomes a student are irrelevant. If we were constructing a pure scheme from scratch, all other things being equal, it would matter not one jot what one's family circumstances were at the age of 18, 21 or 28—whatever age one became a student. The issue is how someone can repay the investment when they start earning.

The argument that the new scheme will be a deterrent because of the costs at 18 is unfounded. There are no costs at 18; the state pays the fees and it provides the loans. It is a tribute to my right hon. Friend the Minister and the Secretary of State that the loan has now been increased to reflect living costs a little more accurately, and that we have seen a huge increase in bursaries.

There is also the question of student choice. People say that the new scheme will determine students' choices. However, we should understand that students do not choose universities; the universities choose the students. Most students are reasonably realistic about which universities they are capable of entering; I believe that the new system will make them even more realistic about that, and also about the value of their degree and how it relates to their previous qualifications and aptitude. Students do not have a free choice of universities and, arguably, they should not have. The universities make the choice.

There is still confusion about the difference between the fee that is levied and the fee that will be charged. I am relaxed about levying a fee of £3,000, £2,500 or £2,000, but it is critical that the fee that is charged to particular groups of students should vary. It will vary according to the decision of the university and the level of the bursary available from the state and the university. I do not want to start a debate on what might happen beyond 2010, but we need to be clear that we can have a system that levies a higher level of fee, as long as the state intervenes appropriately so that the fee charged does not deter those who might otherwise be deterred.

One or two Opposition Members made the point about thresholds and the position of students from families who are just above the threshold for eligibility for a grant. That is a serious point, which I have raised with Ministers on several occasions. I believe that the thresholds are too low and that a range of things kick in just into the £30,000 income bracket, not just in relation to eligibility for university education, but other elements in our welfare state. However, in one sense the new system is not a financial means test. I see it more as a cultural means test, because the fee will be paid by the state at the point of entry.

Given that a loan is provided and will be repaid later, it does not matter, in theory, what the student's family income is, but there is a lack of cultural support from families with chronically low incomes. The value

of the grant system, which will be targeted at students from those families, is that it is not so much financial compensation as cultural compensation for the fact that, in many families with incomes of £14,000, £15,000 or £16,000 a year, there is no tradition of continuing education beyond the age of 18 and going to university. That is the real deterrent; that is what we have to crack.

James Clappison (Conservative, Hertsmere)

Does the hon. Gentleman agree that what he terms the cultural interest of people from lower-income families is a matter of whether they will pay for something that is now free? Does he agree that people whose family income falls between the substantial slice of £15,970 and £20,970 will, for the first time, pay towards the cost of their education? They will have to pay their tuition fees, albeit that they will do so later.

David Chaytor (Labour, Bury North)

The hon. Gentleman has not either not been listening or he has not understood what I am trying to say. Those people will not be paying; the young person will pay when they graduate. Their circumstances at the age of 21 will be quite different from when they were 18, regardless of whether their parents earned £17,432 a year. At 21, that young person might walk into a £40,000-a-year job in the City of London, and that is when they will start to pay.

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

Will the hon. Gentleman give way?

David Chaytor (Labour, Bury North)

The last intervention has discouraged me from giving way, and I am conscious of the time. The hon. Gentleman will have the opportunity to speak later, but given that he is looking upset I will give way.

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

I thank the hon. Gentleman for giving way. What is the logic, therefore, of giving anyone a grant? If at, say, £22,000 or £30,000, nobody is given any support, why give anybody a grant if everyone will have to pay it back later? That is the logic of his position.

David Chaytor (Labour, Bury North)

That is precisely what I was trying to explain two minutes ago. The proposal it is not about financial compensation, but cultural compensation, because the deterrent is not primarily financial; it is cultural. The logic of giving the grant to those whose family incomes fall within a comparatively narrow band is to overcome the deterrence of culture—of being brought up in a family in which there is no understanding or experience of going to university. That is the issue.

George Mudie (Labour, Leeds East)

I hope that my intervention will be helpful. I completely accept my hon. Friend's point, but we must face up to the fact that very few youngsters go to university without getting some parental support, whether it is cash, help with travel costs, or taking them to university by car. Speak to any student and any parent and that is what they will say. The grant is perfectly acceptable and understandable and it should be applauded, because it takes into account that families from the poorest sections of the community cannot give their students the support that others get.

David Chaytor (Labour, Bury North)

I agree completely. I am not arguing that the grant is purely symbolic; of course, it has a practical advantage to students from families with very low incomes.

I want to mention two brief points before I draw my remarks to a conclusion. First, it has been said that the new system will lead to the worst excesses of the market, the kind of thing that happened in further education colleges in the early 1990s and in some secondary schools. I am going to chose my words carefully on secondary schools because I know that the Minister will speak to me forcefully afterwards if I say the wrong thing, but the point has been made that there is a fear that this will lead to courses closing and that certain universities will be sucked dry of students.

We have not discussed at all whether the 112 universities that we have is really the number that we need and will always have in the future. I do not think that it is. We should confront the reality—which is not that difficult—that we probably have too many universities, too many similar courses competing and too many university departments. I see nothing wrong in stating that and having an open debate about it.

If students make more discriminating choices at point of entry and that leads to some courses being less popular and some departments having no students, so be it. That is one advantage of the market in allocating resources more effectively.

Chris Grayling (Conservative, Epsom and Ewell)

Will the hon. Gentleman give way on that point?

David Chaytor (Labour, Bury North)

I will not, but we might continue the debate in another context. We should not shut our eyes to the fact that this is likely to happen. I think it will be positive. What matters is not the total number of university departments, but the total number and quality of graduates that we produce as a nation.

We must be clear that the history of higher education in this country demonstrates that the key factor in widening participation and increasing access is not cost but the qualifications that young people have. It has been said on many occasions that 90 per cent. of those with two A-levels at 18 continue to university. This is the key priority for any Government: to get more young people with the relevant qualifications at 18. When university education was largely free—with free tuition and 100 per cent. maintenance grants for large numbers of students—the participation rate remained static for the best part of 25 years.

I conclude on the important point that if the Bill did not include a provision to levy variable fees; that is, if we did not legislate by statute for variability, it would be perfectly easy for every vice-chancellor of every university in the country to introduce variability simply by exercising discretion over fee remission. At the end of the day, the obsession with variable fees is largely a distraction and a digression, because if we did not legislate for it, the vice-chancellors would simply do it. That is what has happened in part-time study and with post-graduate degrees; and what happens in further education colleges. Every further education college principal has the discretion to waive fees or to allocate half fees, which is absolutely right.

It is staggering that we trust our vice-chancellors to run universities with budgets of millions—in a few cases, hundreds of millions—of pounds, but we cannot trust them to make sensible judgments about setting the level of fees for full-time undergraduate courses. It is entirely an issue of management responsibility. What responsibilities do we give to management? If we did not legislate for it and say explicitly that it could be done, they would simply do it. They would do so by offering additional bursaries and part bursaries and by remitting fees in one way or another for particular purposes, either to boost recruitment to certain courses or to help particular groups of students or individual students.

We must consider that final point at great length, because it undermines the opposition to the principle of variable fees and the way in which it has become an issue on which some people want to go to the stake. If we did not legislate for it, each university could introduce variability either by manipulating the bursary system or by simply waiving fees by 100 per cent., 75 per cent., 50 per cent. or 25 per cent. The power is there. I am conscious that I have spoken for longer than I was asked to, but I believe that we are arguing about something that does not merit such enormous national debate.

Eleanor Laing (Conservative, Epping Forest)

We have heard a lot of complicated arguments, not least from the hon. Member for Bury, North (Mr. Chaytor), about the issues raised in clause 23. I would like to make some points pertaining to amendment No. 1.

Jimmy Hood (Labour, Clydesdale)

Order. Amendment No. 1 has not been selected.

Eleanor Laing (Conservative, Epping Forest)

I beg your pardon, Mr. Hood. I meant of course to say amendment No. 3 and the other amendments in the group that we are addressing. I have been so confused by the arguments from the hon. Gentleman over the past half an hour that I have forgotten the simplicity of my points.

The first point is that we need a large number of good-quality graduates. We need large numbers of people going to university, completing their courses and graduating. [Interruption.] The hon. Member for Chatham and Aylesford (Jonathan Shaw) shouts from a sedentary position that that is a change of policy, but it is not; my party has always believed that. It is right that that should be the aim because having a large number of good graduates is a benefit not only for society and our economy, but for the individual. Therefore, the cost of a university education should be shared between the state and the individual. It is the Government's responsibility to get that balance right, and the balance should not deter people from becoming students. The Government's proposals in clause 23, and the proportion of cost born by the student as opposed to the state, are wrong.

Ivan Lewis (Labour, Bury South)

The balance of contribution between an individual and the state, which the hon. Lady referred to and which most

members of the Committee would agree with, is the complete opposite of the party policy articulated by the Conservative Front-Bench spokesman. He said that the Conservatives will abolish all fees and there would therefore be no balance in terms of the contribution between the individual and the state. Will the hon. Lady explain?

Eleanor Laing (Conservative, Epping Forest)

As usual, the Minister is thinking in narrow terms. [Interruption.] That is not amusing. Obviously, a young person attending university bears costs other than fees. The Government, and therefore the taxpayer, support universities in other ways than directly through fees. The Minister is thinking in far too narrow a way, and that is precisely the problem that we are addressing.

Tim Boswell (Conservative, Daventry)

While my hon. Friend is considering the issue of fees, will it not have occurred to her that until the 1998 legislation, which precluded the charging of fees by universities, any vice-chancellor or university could charge whatever fee for a first undergraduate degree that they wanted? None of them did so; the only one that tried got a bloody nose from the governors.

Eleanor Laing (Conservative, Epping Forest)

As usual, my hon. Friend makes an important point. His knowledge of the higher education system, acquired over many years, contrasts sharply with what we are hearing, which shows an incredible ignorance of how the system works.

We have argued a lot about what encourages someone to become a student, or a family to send a young person to university. I would argue that every person has a different reason for going to university, just as there is a different reason for all the other life choices that an 18-year-old makes. It is incumbent on us as a Committee to ensure that the Government have considered every aspect of giving a chance to every child. That is the point that I am trying to address. On that issue, before the Minister jumps up and gets excited about what I am going to say—[Interruption.] He is getting excited already and I have not said anything. From the luxury of the Back Benches, I am stressing my own opinion and not necessarily that of my party's Front Bench.

Ivan Lewis (Labour, Bury South)

There is a split.

Eleanor Laing (Conservative, Epping Forest)

There is not.

Jimmy Hood (Labour, Clydesdale)

Order. I am sure that hon. Members are not going to get too excited this morning, and I am sure that we are all desperate to hear what the hon. Lady has to say.

Eleanor Laing (Conservative, Epping Forest)

The Government's target of 50 per cent. of the relevant age group going to university is arbitrary and unfair, because the only acceptable target for a Government to have for 18-year-olds going on to some form of training or education to benefit their future careers, society and their families is 100 per cent. That is the only fair target. A 50 per cent. target can only be arbitrary. Why 50 per cent? Why not 49 or 53? It does not make sense: the target of people going on to an academic career should depend entirely on their academic ability not on a 50 per cent. target. It is complete nonsense to say that a line can be

drawn down the middle of society, with 50 per cent. being academic and 50 per cent. not.

David Chaytor (Labour, Bury North)

If the hon. Lady's argument is that the target should be 100 per cent., can she explain why the previous Conservative Government capped student numbers in higher education at about 36 per cent.? Would she accept—given that the current rate is 43 per cent., and that the rate increased by 1 percentage point for each of the last seven years—that it is reasonable to conclude that it will increase by 1 percentage point for each of the next seven years, so the target of 50 per cent. will inevitably be met?

Eleanor Laing (Conservative, Epping Forest)

Nonsense. The hon. Gentleman should, after his long speech, do me the courtesy of listening to what I said. I did not say that 100 per cent. or 50 per cent. of people should go to university. Government Members are absolutely obsessed with the idea of university education. It is almost—am I allowed to say this?—snobbish. Are Government Members aware of the important contribution to society, the economy, their families and to themselves, made by millions and millions of people who did not go to university and never will?

Ivan Lewis (Labour, Bury South)

Is the hon. Lady aware that there are currently a record 230,000 young people doing modern apprenticeships in this country? Is she also aware that a number of those people will go from an advanced modern apprenticeship on to a higher education degree? If Conservative policies were to become Government policy, those young people would be denied the opportunity of going from a vocational route on to higher education. We would repeat the mistakes that we made in this country in the past, by dividing young people into sheep and goats. There are two groups of young people and vocational education is seen as second-rate and second-status. We are determined that that should not happen.

Jimmy Hood (Labour, Clydesdale)

Order. Before we start discussing sheep and goats, I invite hon. Members to return to our discussion of variable fees.

Eleanor Laing (Conservative, Epping Forest)

Thank you, Mr. Hood.

The Minister has just said precisely what I have been saying. Of course I am aware of the large number of modern apprenticeships, but how will introducing variable fees help young people who do not enter higher education by means of A-levels but by means such as modern apprenticeships? How on earth will clause 23 help any of them? It will not help them at all.

Ivan Lewis (Labour, Bury South)

Will the hon. Lady give way?

Eleanor Laing (Conservative, Epping Forest)

I cannot give way again. I might wish to pursue other issues, but the Chairman does not want me to, and I must defer to his ruling that we stick to the issue at hand.

The Minister is always too ready to say that the Opposition do not understand. He asks whether I know about the 230,000 modern apprenticeships, and of course I do. However, I also know that the principal of the further education college in my constituency is worried that the college's position will be undermined, and the situation is the same throughout the country. The Government go on and on about the 50 per cent. target for university education instead of looking at

the wider picture, but it is the wider picture that is important.

Patrick Hall (Labour, Bedford)

Will the hon. Lady give way?

Eleanor Laing (Conservative, Epping Forest)

I will not give way to the hon. Gentleman at present.

The implication inherent in the 50 per cent. target is that half of 18-year-olds are capable while the other half are not.

Ivan Lewis (Labour, Bury South)

Eighteen to 30-year-olds.

Eleanor Laing (Conservative, Epping Forest)

All right, 18 to 30-year-olds. That is the cohort of young people that we are talking about. The idea that those who do not go on to university are somehow failures is unfair and untrue, and the 50 per cent. target is nonsense. If Ministers really cared about equality of opportunity and about giving everyone in our society a chance, they would agree that 100 per cent. is the only target that we should have. It is nonsense to discriminate by saying that half the population is not capable.

Thirdly, I accept the arguments that many hon. Members, particularly the hon. Member for Cambridge, have made over the past day or so. The single most important factor in determining social mobility—giving everyone a chance, no matter what their background—is opportunity in education. There can be no doubt that telling people that they must pay up-front fees is a deterrent. If it were not, Labour Members would not be so worried about them. Variable fees are also a deterrent.

We should be thinking about giving every young person positive encouragement so that they can develop their abilities and talents to the full. We should do that not only when they are deciding whether to go to university but much earlier in their education. It is wrong of the Government to put such emphasis on the point between A-levels and higher education. [Interruption.] If Labour Members did not talk among themselves so much, or make noises about what I was saying, they might actually understand my point, instead of taking the prejudiced view that I do not care about society because I represent a Conservative constituency and the Conservative party. That is what Labour Members—[Interruption.]

Jimmy Hood (Labour, Clydesdale)

Order. I am sure that hon. Members will pay close attention to the hon. Lady while she finishes her very interesting speech. However, the Committee has been discussing the amendments for some time and not only this morning, and she seems to be going over a lot of ground that was covered in previous contributions. The discussion may be becoming tedious, and points that have already been covered are being repeated. I invite the hon. Lady to bear that in mind when talking to the amendments.

Eleanor Laing (Conservative, Epping Forest)

I apologise, Mr. Hood. I was drawn into that debate by comments from Government Members that I should have ignored.

I agreed with much of what the hon. Member for Cambridge said, particularly the point about the whole of a person's education. Unless we consider the whole

education, there is no point in considering the narrow issues that clause 23 addresses, because the single most important factor in encouraging a young person to take up an offer of a university place is their previous education and their ability to achieve the grades that are necessary in their foundation education to enable them to go on to university. By foundation education, I do not mean only education at age 16 or A-levels; I mean education from the very beginning. Studies show that early intervention in a child's education has a proportionately far greater effect, pound for pound or day for day, than intervention later, in the teenage years.

Jonathan R Shaw (Labour, Chatham and Aylesford)

I am delighted that the hon. Lady is mentioning Sure Start again. She extols the virtues of it, and it is wonderful. Why, then, did she vote against paying for it?

Eleanor Laing (Conservative, Epping Forest)

I am sure that that question does not pertain to clause 23, but if I may answer it, I voted against Sure Start because when it started we got a lot of jargon from the Government and lots of glossy orange brochures that were full of rhetoric, and far too much money was being spent on presentation for the sake of the Labour party, rather than with regard to the effect that the scheme was having on children. However, as the system has developed, I have seen it bed down in rather a good way in many parts of the country, so I would not speak against Sure Start in principle now. [Interruption.]

Jimmy Hood (Labour, Clydesdale)

Order. The hon. Lady is trespassing out of order again, but Government Members are inciting her to do so by heckling from a sedentary position. I hope that that will stop to allow her to complete her speech.

Eleanor Laing (Conservative, Epping Forest)

Thank you, Mr. Hood. I shall endeavour to close my ears to the insults from across the Committee.

I am speaking for every person in our society who should have a chance of higher education. That is why I am so concerned about variable fees, which clause 23 addresses. At the Committee's previous sitting, the hon. Member for Nottingham, North (Mr. Allen) rightly mentioned that 30 per cent. of families in my constituency would not have to pay fees at all. He seemed to think that I would be surprised at that number, but I am not. In fact, the figure of 30 per cent. is very low, and that is where the threshold argument is also wrong. Variable fees and the principle of fees at all are likely to deter more than the 30 per cent. of families in my constituency identified by the hon. Gentleman. The figure is probably far more than 30 per cent. in his constituency. We are talking about very large numbers of people. It concerns me greatly that the proposals will also adversely affect the other 70 per cent. of families in my constituency. Whereas the 30 per cent. of those individuals identified will receive help in the form of grants, the other 70 per cent. will not. Their families do not earn enormous amounts of money. We are talking about a family income in the region of £30,000 per annum, which is not large; we should also remember that those are not families with

only one child. I do not know why the Minister finds it funny that such families in my constituency do not deserve to be represented. That is what I am here for and I am determined to do it, no matter how much noise he makes.

Graham Allen (Labour, Nottingham North)

May I help the hon. Lady? I would hate her to ruin an otherwise persuasive argument by misquoting statistics or being inaccurate. She rightly said that I told her that, where the youngster was qualified to go to university, 30 per cent. of the families in her constituency would receive a full grant. In addition, up to 67.78 per cent.—the hon. Lady must forgive me, as I cannot be more exact than that—would qualify for assistance of some sort, in other words, a full grant or a partial grant. That leaves only 32 per cent. of her constituents who would receive nothing at all from the Government's package. I am sure that her constituents will regard that as a good deal, so I hope that she puts it in her next newsletter.

Eleanor Laing (Conservative, Epping Forest)

I am honestly grateful to the hon. Gentleman for those excellent statistics, but that does not change my argument at all, although it makes me slightly less concerned about the other 37.78 per cent. in the middle, who will get some help. However, those people, especially those in families with more than one student, still come from families whose income is modest, although not necessarily low. I am concerned that the help that that middle group of potential students would receive will not be enough to counteract the deterrent effect of having to pay up-front fees. Therefore, although I thank the hon. Member for Nottingham, North for his brilliant statistics, I am concerned that more than 30 per cent. of potential students in my constituency, and all round the country no doubt, will not receive any financial help at all. Again, we are talking about modest family incomes. There are a small number of rich people in this country, to whom any financial encouragement or deterrent does not matter, but they are a tiny group.

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

On a point of order, Mr. Hood. The whole Committee does not have access to the statistics to which the hon. Lady refers, and to which the hon. Member for Nottingham, North referred extensively on Tuesday, nor do we have access to the basis on which those statistics were derived. It is important to know whether the percentages that we are discussing refer to household incomes, which would also include the elderly. It is important that the Committee should not be misled.

Jimmy Hood (Labour, Clydesdale)

I thank the hon. Gentleman for his point of order, although it is certainly not a point of order for me, but an issue for the debate. If an hon. Gentleman does his own research, finds his own figures and presents those in a speech, he does not present them as a matter of fact, but as part of his research. They are there for challenge or debate, so the issue is not a point of order at all.

Graham Allen (Labour, Nottingham North)

On a point of order, Mr. Hood.

Jimmy Hood (Labour, Clydesdale)

As long as the hon. Gentleman does not make any comment on the point of order on which I have just ruled.

Graham Allen (Labour, Nottingham North)

I think it would be helpful if I say that any statistics that are quoted should be available to all members of the Committee. Any hon. Member who cares to pick up the phone and talk to the House of Commons Library—as I am rather surprised some Members appear not to have done—would find the statistics for their own constituency.

Jimmy Hood (Labour, Clydesdale)

I am sure that is a point of information rather than a point of order.

Eleanor Laing (Conservative, Epping Forest)

I appreciate the niceties of the point made by the hon. Member for Harrogate and Knaresborough, but I am willing to accept the hon. Member for Nottingham, North's statistics, because I know my own constituency very well, and those statistics sound about right. When he says 67 per cent., whether it is actually 65 or 69 per cent. does not matter in principle. I am still concerned about every young person in my constituency, regardless of whether their parental income is low, moderate or high.

Tim Boswell (Conservative, Daventry)

I am grateful to the hon. Member for Nottingham, North for elucidating those points. While not disagreeing with him on the overall shape of the statistics, certainly not in relation to my hon. Friend's constituency, would my hon. Friend not agree that the important point is what the Bill changes? Some 60 per cent. of students already receive some relief for the tuition fees they are now required to pay, so the proportion who receive some support will not substantially increase. In any case, the effect on those students is the overall package. Even if slightly more of them are receiving assistance under the Government's new proposals, that is itself a function of the fact that many more students will be asked to pay substantial sums of money that, at present, they do not.

Eleanor Laing (Conservative, Epping Forest)

My hon. Friend puts the point perfectly. The principle is unchanged regardless of the precise statistics.

James Plaskitt (Labour, Warwick and Leamington)

The hon. Lady started with the proposition that 70 per cent. of her constituents would not gain anything from this Bill. She then moved down to 30 per cent. Does she not realise that the families who make up even that 30 per cent. all receive help as a result of the abolition of up-front fees?

Eleanor Laing (Conservative, Epping Forest)

The hon. Gentleman keeps trying to make his Government's point. I am not surprised about that, but he is ignoring the basic problem.

Tim Boswell (Conservative, Daventry)

Having been wordy in my earlier intervention, can I perhaps put it as simply as this: if my hon. Friend were to give me a fiver, and I were to give her £4 back, I could in a sense be said to have assisted.

Jimmy Hood (Labour, Clydesdale)

Order.

Eleanor Laing (Conservative, Epping Forest)

Perhaps I should test this. I will give my hon. Friend a fiver later and I shall see what sort of assistance I get back. It is an interesting proposition. I thank my hon. Friend.

My concern throughout is that, if we allow clause 23 to pass into legislation, we are in danger of deterring some people who are qualified and should be able to

go to university from doing so. Once again the Government are putting an enormous and simply unfair financial burden on middle-income families. I accept that very low-income families will be helped to an extent by the legislation before us, and that high-income families will not be affected at all, but yet again, as with so many of the Government's financial policies, it is middle-income families that will suffer. From the beginning, all the way through, they are the ones who have to pay more in council tax, income tax and all other taxes. Looking at the structure of the variable fee system in clause 23, it is those middle-income families who already work hard to support their families and the community around them who will be disadvantaged by this unfair provision.

James Clappison (Conservative, Hertsmere)

My hon. Friend is right. Is it not also the case that the middle-income band that we are talking about is very big? The very rich will be all right because they can pay and the very poor who earn below £15,975 will be okay. Everyone else in that huge middle band will receive a little help now in order to pay much more later on.

Eleanor Laing (Conservative, Epping Forest)

My hon. Friend puts it perfectly. The very large number of middle-income families to which I am referring makes up the largest proportion of families in this country. We are talking about the majority of families in our country, who are in that middle-income bracket, and whose future generations will be badly affected by the measure. We all want to see equality of opportunity in education. It is the most important factor that we should aim to achieve. However, the Bill—particularly clause 23—does nothing to encourage that.

Jonathan R Shaw (Labour, Chatham and Aylesford)

It is a pleasure and delight to follow the hon. Member for Epping Forest (Mrs. Laing).

I rise to speak to clause 23, and in doing so I join my hon. Friend the Member for Bury, North in praising to the hilt my hon. Friend the Member for Cambridge. I am sure that that will do her good despite her concern that it will not curry favour with the student population in her constituency.

My area, Medway towns, the largest area in south-east England, comprising 250,000 people, did not to have a university until we had a Labour Government. Greenwich and Kent universities have now built a joint campus, and they encourage young people to go to university for the first time. I hope that we will have thousands of students in the future if the money is available. The crux of the matter is that we must put more money into our university system.

There has been some criticism from hon. Members of all parties that universities do nothing and that vice-chancellors are not encouraging young people to go into universities. In my area, that is not true. Greenwich university has actively engaged with the children's university, working in primary schools in poor areas and exposing young children to university. It has been getting on the radar of parents and others who had never previously considered higher education, or even further education.

The point is that the key to access is the attainment of two A-levels. We can argue about debt all we like, but access depends on achieving two A-levels. However, the responsibility for those A-levels does not lie with universities, but with our education system. As the hon. Member for Epping Forest said, that is why it is so important to invest throughout a child's life. Although she agrees with that principle she will not pay for it, but we will not worry about that tad of contradiction in her argument.

James Clappison (Conservative, Hertsmere)

The hon. Gentleman makes an important point. Does he agree that, important though the elite universities of this world are—the Oxfords and Cambridges, as represented by the hon. Member for Cambridge—we must not lose sight of universities such as the one to which she referred and other new universities such as Hertfordshire, older civic universities such as Hull and Sheffield and the 1960s new universities of Lancaster and York? Those universities, in many cases, offer hope to the young people that he described.

Jonathan R Shaw (Labour, Chatham and Aylesford)

That is right. The Education and Skills Committee of which I am a member with my hon. Friend the Member for Bury, North visited Birmingham. At a secondary school I was introduced to young people who had been to Cambridge as part of its summer school. It is important that universities are doing their bit. We want them to do more. That is the purpose of OFFA, which will take good practice and spread it throughout to widen access. However, access will not be widened if there are no places for young people.

The hon. Member for Epping Forest talked about lots of graduates and said that she wants a future for 100 per cent. of young people. The projection made by the Institute for Higher Education Policy, which is not the Government's target, is that demographic changes will mean that by 2010, between 170,000 and 250,000 more young people will have two A-levels. Show me the queue of parents who will say that they do not want to meet this target, that it is wrong, and that they are willing to forgo a university place for their son or daughter. Show me the parents who will say that they would rather not have the place than pay the fee.

Eleanor Laing (Conservative, Epping Forest)

I will express not my own opinion, but that of the principal of an FE college, who told me that there is no doubt that many people come to his college who might have achieved A-levels in certain subjects but who are far better suited to studying something important and worthwhile at an FE college that will lead to a good job and a good career. An FE college is not university. It provides good training, but it is not academic. That is why the target of 50 per cent. is nonsense.

Jimmy Hood (Labour, Clydesdale)

Order. I want to guide the Committee a little. It is easy for hon. Members to fall into discussing something that is better addressed in a stand part debate. That may be because we are discussing amendments and I have said that there will not be a stand part debate. However, I hope that Members will keep to the amendments and not enter into a stand part debate. I am sure that the hon.

Member for Chatham and Aylesford will now return to the subject of variable fees and tuition fees.

Jonathan R Shaw (Labour, Chatham and Aylesford)

I am grateful for your guidance, Mr. Hood.

As the hon. Member for Bury, North said, a great deal of concern has been expressed about the variable fee. People have said that it will be the thin end of the wedge, and that the genie is out of the bottle. I do not believe that. If we consider the difference between what the standard fee will be and the upper fee that will be allowed, we are not talking about a huge amount of money. More importantly, people talk about universities going it alone and charging huge fees. The hon. Member for Daventry (Mr. Boswell) is incorrect. Universities have the power to charge fees now. However, the Government have the power to stop the amount of money that universities receive from HEFCE. If money from the public purse continues to dwindle, there is a danger that they will indeed become independent. That is the thin end of the wedge. The young people about whom everyone is concerned will not be able to go to some of the prestigious universities.

Tim Boswell (Conservative, Daventry)

On a matter of fact, the hon. Gentleman is absolutely right that it is open to universities to charge fees now. Indeed, Buckingham university is a private university and charges fees, although some of its students are supported by state assistance. Nevertheless, his argument is a little like saying that the Ritz is open to everyone. The Bill will not prevent HE institutions from charging fees; they will simply not receive any HEFCE funding if they do. In that sense, the whole argument is parasitic on the case that he made somewhat captiously that of course people can opt out of the state system and, if they do, the Government have no power to stop them.

Jonathan R Shaw (Labour, Chatham and Aylesford)

If the cost of running the course becomes so prohibitive for the institution, what will be the likely outcome? I should think that there is a greater danger of that university removing itself from the current structure and becoming independent.

George Mudie (Labour, Leeds East)

My hon. Friend is being very unfair to the Government. His point about the public purse could equally have been made in 1997, after 18 years of non-investment and falling amounts of money per student. I wonder what speech he would make in a Budget or spending review debate, in which we took pride in proclaiming that we had put £2.5 billion into higher education. The Minister indicates that I have underestimated that amount—it is £3 billion. It is not a question of public expenditure drying up. We have invested £3 billion, which is an increase of more than 30 per cent., or 6 per cent. a year in real terms. By giving the public the idea that the Government are not putting money in, and that places are at risk, my hon. Friend is, uncharacteristically, not being generous enough to the Government.

Jonathan R Shaw (Labour, Chatham and Aylesford)

I am grateful to my hon. Friend for that intervention. We have put more money into universities and into a range of—[Interruption.] That is not a policy that I am familiar with. We have also put £500 million into educational maintenance allowances. That relates to the point that was made about

attainment. We must distribute the money in order to achieve our objectives. We will not put it all into student finance, or higher education, as we want to invest moneys elsewhere. Those are the choices that we face.

I have a couple of comments to make about the Conservative policy—well, we do not know what it is.

Jimmy Hood (Labour, Clydesdale)

Order. I am sure that the hon. Gentleman is going to speak to the amendments.

Jonathan R Shaw (Labour, Chatham and Aylesford)

Indeed, Mr. Hood.

We have heard arguments from various members of the Committee who oppose variable fees, including the hon. Member for Westmorland and Lonsdale (Mr. Collins). When challenged as to how future projections would otherwise be funded, he said that we would have to wait and see. The hon. Member for Wantage (Mr. Jackson), who is on the Select Committee, made a powerful argument on Second Reading about how else we could finance higher education. Endowment was one suggestion, but would that give us funds equal to the amount of public money that we put in? We have been told that the foremost education charity in this country, the Welcome Foundation, would require £30 billion to match additional income generated by the Government fee scheme, so that does not add up.

The Liberal Democrats also oppose variable fees. They have used examples, figures and statistics to support their arguments, but the hon. Member for Harrogate and Knaresborough (Mr. Willis) did not provide much of an explanation as to where that information came from. He tried to raise a point of order to complain about my hon. Friend the Member for Nottingham, North, and to ask where his figures came from, but he has quoted someone as saying that Cambridge university would not guarantee her a place because she could not find the necessary £50,000.

Mr. Willis indicated assent.

Jonathan R Shaw (Labour, Chatham and Aylesford)

The hon. Gentleman stands by that, but I do not know what evidence he has to support it. Perhaps he will provide some evidence at the next sitting.

The hon. Member for Hertsmere was concerned about veterinary students and the effect that variable fees would have on them. He made a good case; he was concerned because he had been told that the number of applicants to be veterinary students had reduced by 7 per cent. He was then informed by my right hon. Friend the Minister that applications for clinical veterinary medicine had risen by 9.3 per cent., those for veterinary science and agriculture by 9.1 per cent. and those for veterinary medicine and dentistry by more than 70 per cent. I do not know much about veterinary dentistry, but it is good that lots of cows and sheep will not be queuing up in Scarborough. Anyway, that argument was shot to pieces.

We also heard about the hon. Member for Hertsmere's concern about the social mix of veterinary students. My hon. Friend the Member for Bury, North mentioned that the proportion from state schools and from private schools was about the same.

That was the key benchmark, to which the hon. Member for Hertsmere responded that posh people go to state schools as well. Basically, his argument collapsed.

Jimmy Hood (Labour, Clydesdale)

Order. I am not sure whether the hon. Gentleman is trying to sum up; I thought that the Minister was going to do that. I invite the hon. Gentleman to return to the amendments.

Jonathan R Shaw (Labour, Chatham and Aylesford)

I am just coming to the end of my remarks. However, before I close, I want to mention the hon. Member for Newbury (Mr. Rendel), who said that he was having dinner with someone from Oxford who said that they were going to charge £10,000 to £15,000. Who was that person? We need to know so that they can defend themselves. Which college were they talking about? The hon. Gentleman cannot just introduce the subject by saying, ''I was having dinner, and someone said—''. Who would have dinner with him in the future? They will not trust him; he will be eating alone.

As has been said, variable fees have been practised in further education colleges and that has not prevented or inhibited access. Access has been inhibited by attainment; the measures that the Government are putting forward throughout the education sector will mean wider access. However, we will have wider access only if we have the money to pay for it. Debt is a concern. The issue is that if we take on a debt, we want the product to be a quality one. However, people will not be taking out a mortgage; if they do not pay back their loans or fees, no one will knock on their door and say, ''We are taking your telly away,'' or ''We are taking your car away.'' If they fall on hard times, they will not pay. We are investing in our universities so that we have quality. Perhaps we can improve lecturers' pay and the infrastructure, and make sure that more of our young people get a decent education.

Mark Francois (Conservative, Rayleigh)

I thank the hon. Gentleman for allowing me to intervene on his summing-up speech. He just said that if people fall on hard times, they will not pay. I am sure that he has read the Bill; he will be aware that specific provisions prevent students from declaring themselves bankrupt.

Jonathan R Shaw (Labour, Chatham and Aylesford)

I had not spotted that; perhaps my right hon. Friend could respond to that point. However, it is important to note that if someone's income falls below £15,000, they will not pay. That is a very important point. The amendments would prevent us from putting the investment that we need into our universities. They would prevent young people from securing a future for themselves and our country.

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

It is always a pleasure to follow the hon. Member for Chatham and Aylesford. What an enjoyable tour de force it was; I am not sure what it added to the debate, but it was incredibly enjoyable. I thank him for it.

I also thank the hon. Gentleman for his introductory comments about the quality of work that universities throughout the country—not just the elite ones—are doing to widen access. The fact that 47 per cent. of students at the university of Wolverhampton come from the three lowest socio-

economic groups is an example of a university that is doing what the Government want it to do. I take my hat off to it. However, in response to amendment No. 82 and the issue of variability, we must consider the contrast between Wolverhampton and the universities of Oxford and Cambridge, which are much prayed in aid. They have 9 per cent. of students from the three lowest socio-economic groups. The Royal College of Veterinary Surgeons, which has been mentioned a lot, has only 10 per cent. from those groups, Bristol only 11 per cent. and the London School of Economics only 13 per cent. That shows that there is a real challenge for the higher education system.

I agree with the hon. Member for Nottingham, North that in constituencies with a lot of people from the lowest socio-economic groups, there is enormous talent that could be developed. Ultimately, we should judge the Bill, and the variability of fees, by asking whether they will make things better or worse for students from those constituencies. If it is the latter—which I believe it is—not only was the hon. Member for Cambridge right to table the amendment, but we will be right as a Committee to urge the Government to think again.

I want to take this opportunity to apologise to the hon. Member for Cambridge for my ill-judged remarks on Tuesday. She has led the debate on variability with great distinction, and I take my hat off to her. I do not agree with all that she says, but without her assiduous pursuance of the issue, we would not have had such a high-quality debate. I thank her for that. I shall write to her about the student whom I mentioned on Tuesday, as soon as I have received that student's permission to release the information. I shall not send it to the hon. Member for Chatham and Aylesford, because I do not believe that he has a direct constituency interest in it.

This string of amendments deals with what the Bill is all about. Variability is at the core of the Bill, and it is right that we have had a major debate on it. No Committee member would disagree with the strongly held view of the hon. Member for Nottingham, North that decisions on higher education are often made at birth, based on the home someone is born into and the quality of life and education in their early years. I have no problem with complimenting the Government on their work on that. There has been an astounding move forward in early-years education with the development of free education for all three and four-year-olds, and Sure Start has made a difference. Although we want still to see that further rolled out to different parts of the country, it is right that I put those views on record on behalf of my party.

We are also right to point to the 14 to 19 continuum as crucial in keeping young people in education and helping them break the 16 barrier. However, it seems perverse to remove the barriers of social and education deprivation in early-years and 14 to 19 education, but then create another barrier to prevent young people from getting into higher education. I have heard the Minister's arguments, and he has done an excellent job

in picking up the arguments and trying to make sense of them. He has responded genuinely to criticisms rather than simply going into party political mode.

The hon. Member for Westmorland and Lonsdale, however, spoke about the Government's election manifesto promise. I do not want to trespass on that; at the next general election, Labour Members will have to stand before their electorate and explain why they made the change. That is right and proper, and it will be for us to point out to the electorate that it was a broken promise. [Interruption.] Labour Members say from a sedentary position that they have no problem with that, but we have not had an explanation in Committee or in the House, nor from the Prime Minister, of the reason for such a significant change of attitude.

What was said in 1997 and as late as 2001, and what is now being said about variability in Committee and on the Floor of the House are quite different. The Secretary of State and four Ministers with responsibility for higher education have all prayed in aid arguments against top-up fees in one form or another. The Secretary of State for the Home Department, the right hon. Member for Sheffield, Brightside (Mr. Blunkett), said when he was Home Secretary that

''we have to make it clear that we cannot have a freebooting system, in which top-up fees help some at the expense of others. I understand the strong feelings of those in universities who believe that they could raise lots of money independently from the state, but that would be done at the expense of a comprehensive and coherent university system.''—[Official Report, 23 July 1997; Vol. 298, c. 959.]

At the heart of my argument is whether we want to see a cohesive, coherent and comprehensive university system. I certainly do, and I believe fundamentally that variability will damage it.

Alan Johnson (Labour, Kingston upon Hull West and Hessle)

Will the hon. Gentleman give way?

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

Of course.

Alan Johnson (Labour, Kingston upon Hull West and Hessle)

The hon. Gentleman looks shocked. He mentioned variability and then top-up fees. Does he remember tabling a parliamentary question in 1998 asking for a definition of top-up fees? Does he remember that the reply—it was the subject of much debate at the time—was that, with top-up fees, the Government set the fee and the universities are entitled to top it up beyond that and beyond the level of state support? I accept that there will be arguments about manifesto commitments, but there is a difference between top-up fees and variable fees with a cap.

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

With the greatest respect, that intervention was unworthy of the Minister. I accept what he said about that exchange, but the premise on which the Bill is based, and the premise on which student support is based—until a recent shift of policy, which has yet to be agreed and with which, to be fair, the Minister has not agreed—is a standard fee plus a top-up fee. That is the whole basis on which the student support mechanism has been calculated for 2006–07 onwards. There are two versions of that on the table—I shall return to them in a moment—so we cannot yet say that we are going to have a system of a standard fee plus a top up. However, I accept that the

net effect of the Bill's provisions will be that, from 2006–07, we will have a single fee rather than two separate fees.

On 26 February 1998, the hon. Member for Cambridge asked the then Minister for Lifelong Learning, now the Minister of State, Department for Transport, the hon. Member for Pontypridd (Dr. Howells), about the top-up fees and asked:

''Will he stand firm in ensuring that having no top-up fees becomes part of the Government's strategy?''

The Minister replied:

''I can give my hon. Friend an absolute assurance that top-up fees play no part whatsoever in our proposals.''—[Official Report, 26 February 1998; Vol. 307, c. 491.]

That was in 1998.

In March 2000, the Minister for Pensions, the hon. Member for Croydon, North (Malcolm Wicks), when he was the Under-Secretary of State for Education and Employment, said:

''The Secretary of State has made it clear that we are opposed to top-up fees. We will support no policies that make it difficult for poorer students or students from middle-income families to gain access to our best universities. Our approach is based on fairness and equality. I want to make that absolutely clear.''—[Official Report, 23 March 2000; Vol. 346, c. 1150.]

I have enormous respect for the hon. Members for Croydon, North and for Pontypridd. I do not believe that they were being deceitful; I believe that that was the basis on which they were making policy at the time. What has changed since they made those comments?

What has changed since Baroness Blackstone, on 26 July 2000, said to the then Education and Employment Committee:

''Top-up fees would, I think, introduce a free-for-all of a kind that would be very, very difficult to operate in this country. There is no tradition of this sort of totally free market approach to higher education. I think we would find huge disparities between different institutions in the kind of income that they were able to generate, also in what they were charging''?

At that time, Baroness Blackstone was the Minister responsible for higher education and she has a proud history in higher education, particularly working with students from under-privileged backgrounds.

In response to the current Under-Secretary of State for Foreign and Commonwealth Affairs, the hon. Member for Harlow (Mr. Rammell), the then Secretary of State said:

''Anything that discourages open access to all universities and their departments in this country is, in my view, wrong.''—[Official Report, 23 March 2000; Vol. 346, c. 1106.]

I believe that the only Minister who has had responsibility for higher education in both Labour Governments since 1997 was the hon. Member for Leeds, East (Mr. Mudie). In response to a question from Jackie Ballard, the hon. Gentleman said:

''We have consistently said that top-up fees play no part in the Government's policy on higher education.''—[Official Report, 29 April 1999; Vol. 330, c. 229W.]

He is the only ex-Minister to stand by the comments that he made.

When the Minister replies, in his usual frank and forthright way, will he explain what has changed? That was the question asked on the Floor of the House by the right hon. Member for Richmond, Yorks (Mr. Hague) during a notable speech on Second Reading, and no response was given.

Chris Grayling (Conservative, Epsom and Ewell)

Is the hon. Gentleman aware that behind the scenes at the Department for Education and Skills, a degree of wrestling with conscience is taking place? Did he see the comments made by the Secretary of State's predecessor, the Minister for the Arts, the right hon. Member for Birmingham, Yardley (Estelle Morris), about her conflict over the issue? She said:

''I do think if you are leading the policy it's got to be your policy, you've got to own it, you've got to live, sleep, eat, breathe it, you've got to be 110 per cent. behind it and I wasn't.''

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

That is a characteristically frank and honest comment from the right hon. Lady. That was one of the reasons that she found it difficult to continue with the job.

Ivan Lewis (Labour, Bury South)

That is not true.

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

That is what the right hon. Lady said, and I have a great deal of respect for her. Will the Minister tell us why there has been a massive change of heart?

My second point is that the Minister and the Secretary of State often pray in aid the Dearing report, and they choose selectively from that 1997 report. Where, in that report, did Lord Dearing recommend top-up fees or variable fees as part of the solution for higher education? Where, in the Cubie commission in Scotland or the Rees commission in Wales, was the principle of variable fees suggested as the solution to the problem?

Patrick Hall (Labour, Bedford)

I am listening carefully to the hon. Gentleman and he is suggesting that, if we had looked, we could have all seen over a long period that university and higher education needed more money. Could he therefore explain where, in his party's manifestos for the 1997 and 2001 general elections, it was demonstrated how its spending plans would deal with that gap?

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

First, no one has ever identified the gap. If we had been discussing in Committee what the gap was and the Government had said, ''This is the gap that needs filling'', I would have some sympathy with the argument that the hon. Gentleman has put forward. However, even in 1997, Lord Dearing identified a gap that the Government did not commit themselves to bridging. They did not even attempt to restore that difference through the Teaching and Higher Education Act 1998. That was a political decision, which is fair enough; when a party is in government, it has to take such decisions.

We made it clear in 1997 and 2001 that our party was opposed to the introduction of fees, and said that we were prepared to put a penny on income tax to pay for that to be avoided. Government Members might disagree with that—I know that it is no longer fashionable for them to talk about progressive taxation—but we cannot go further than saying that that is what we believe and how we would pay for it.

Hon. Members may disagree with the principle, but they cannot disagree with the fact that that is the way in which the Liberal Democrats proceeded.

Jonathan R Shaw (Labour, Chatham and Aylesford)

Will the hon. Gentleman give way?

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

No, I want to make progress.

Secondly, I would like to ask whether the variable fees system is the only way forward for funding our higher education system, because that is what we are now being told. That was not the case in 1997 or 2001 or until the White Paper was published. Why, therefore, are we now being told that that is the only way in which it can be done? The answer is that it is not the only way.

There are numerous other ways in which we can fund our higher education system. We could, for example, have a flat-rate fee, which the hon. Member for Cambridge would advocate. Many other hon. Members, on both sides of the Committee—[Interruption.] The Under-Secretary comments from a sedentary position. I am trying to argue that there is not just one way of solving the problem. That is the—[Interruption.] If he will allow me to continue, I shall explain all to him; he will then be enlightened and go away happy this weekend.

We could agree on the principle that, using a flat-rate fee of about £2,000, we would pull in exactly the same amount of money as the Government are proposing to raise through the new system. We could argue round the edges, but the principle is correct. We could agree to putting in a floor, in terms of the fee income, to address the fact that some universities will lose out significantly as a result of the provisions. That would be a legitimate position to adopt. We could give higher education the £1 billion that it will cost the Government to implement the scheme; it could be given straight to the universities—[Interruption.] No, the analysis that the Minister gave indicated that it will cost roughly £1 billion to operate the proposed system. That money could go direct to the universities.

George Mudie (Labour, Leeds East)

It is interesting to consider ways of raising money, but the hon. Gentleman has still not received an answer, and should continue to demand an answer, to the question of what amount of money we are trying to raise. No consistent amount has been specified. If the amount of money is £1 billion—if that is the gap—and if the figure of £3,000 raises that amount, we do not have a problem. However, if that is not the gap, the Minister should tell us what we are aiming at, instead of pouring scorn on the attempts by the hon. Gentleman to deal with the matter.

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

I thank the hon. Gentleman for his intervention.

The challenge for the Minister, when he winds up, will be to tell us what gap is to be met by variable fees. The hon. Gentleman is right that the sums proposed by the Government and, indeed, the Liberal Democrats do not match the roughly £9.9 billion that Universities UK wants under the existing comprehensive spending review and the just over £8 billion that it wants under the next one.

Several hon. Members rose—

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

Would hon. Members please let me finish one point before they start getting excited? My point is that once the Government say, ''That is the amount that we want to raise'', all of us—the Conservative party, the Liberal Democrats and the Government—will face the challenge of saying what we will do in that regard. At the moment, we are simply saying that we will match what the Government put in through their variable fees scheme. That seems perfectly reasonable.

Jonathan R Shaw (Labour, Chatham and Aylesford)

When giving evidence during a stunning performance before the Select Committee, the hon. Gentleman's colleague Baroness Sharp of Guildford said that the Liberal Democrats' plans for the yield from additional taxation covered a three-year period. Must we not look beyond three years if universities are to have a sustainable level of income? What happens after three years?

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

That is an absolutely fair point, and every Government should take that approach. Of course, I fully accept that we must respond when the Government produce their comprehensive spending review plans for the next three years in higher education and other areas. We must always respond in the context of what the Government are doing, because that is what Opposition parties do—we have no other option.

Unlike the hon. Gentleman and his colleagues, who have reneged on a commitment to fair taxation, I fundamentally believe that the richest people in our society should make the greatest contribution.

Kali Mountford (Labour, Colne Valley)

Will the hon. Gentleman give way?

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

No, I will not.

The richest in our society should make the greatest contribution to public services. It is perfectly reasonable to have the option of saying that we can tax people with incomes of more than £100,000 at a rate of 50p. It is quite astounding that new Labour rejects the idea of taxing the richest 1 per cent. I believe that we should tax them—I have believed that all my life and I will continue to believe it. [Interruption.] That makes my next point. We can, in fact, raise the money through taxation. If higher education is so important, as I believe that it is, why can we not use some of the £4.7 billion that we would raise? That is the new Treasury figure, which has been updated since my colleagues and I met the Select Committee. We, at least, went to the Select Committee to talk about our proposals. We, at least, have produced a policy document, and I have given the Minister and the Secretary of State copies to analyse—

Michael Foster (Labour, Worcester)

They usually get leaked.

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

I like it when they are leaked; it is the only way we get attention. So, tax is an option.

We could have considered an issue that Lord Dearing wanted us to consider back in 1997—

Mr. Plaskitt rose—

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

Please may I make a little progress? Lord Dearing examined the issue of an employer's graduate premium. Employers are the real beneficiaries, and there is a legitimate argument to be had—the hon. Member for Bury, North dealt eloquently with it—about how we interface with employers and about whether they should pay back graduate loans or invest in another system. The issue is open to debate, but we have not discussed it. Such an approach is still a possibility, so why has the Minister decided—amendment No. 82 highlights this—that variable fees are the only way forward?

Let me tell the Minister and the Committee with great honesty that this is about the principle of variability. There is no way that the Minister can convince anyone in the higher education system—

Kali Mountford rose—

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

I should be grateful if I could just make this point and then I will give way to the hon. Lady with pleasure.

No one in the higher education system, the House of Commons or the House of Lords believes that the £3,000 cap will answer the plight of our universities. Those who argue that there is not much difference between a flat rate fee of £2,000 or £2,500 and a variable fee with a ceiling of £3,000 are right. We have to look beyond that. This is an issue of principle that goes right to the heart of the modern Labour party.

The idea of moving the costs of public services from the state to the individual is a perfectly legitimate position to take. It is one that the Conservatives have held for many years. It is the policy of the Republican party in the United States. It is the policy of most right-wing Governments throughout the world. But it is right. The Minister smiles. Given our backgrounds it is hard for me to say that and even harder for him to listen.

Kali Mountford (Labour, Colne Valley)

I am grateful to the hon. Gentleman for giving way. Twice in this debate I have been confused by Liberal Democrats' comments. I assume that it is because he is trying to speak to the amendment. He has advocated both flat rate fees and taxing the super-rich. Which is the preferred way forward? If it is taxation, what other public sector programmes ought to be funded in this way?

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

The hon. Lady does me a disservice. Most members of the Committee would appreciate that I have tried to stick to the amendment and to point out that there are alternatives to variability. I have laid out those alternatives. I have made our policy on spending the higher rate of tax clear to the Committee. I have also set it out in the Chamber, as has my Leader. It is not appropriate, Mr. Hood, for me to go into Liberal Democrat policy here. [Interruption.] Perhaps you would like me to do so?

Jimmy Hood (Labour, Clydesdale)

The hon. Gentleman invites me to give a ruling. He is absolutely right. I should prefer him not to go into his party's taxation policy. I should like him to continue to speak to the amendments.

Graham Allen (Labour, Nottingham North)

On a point of order, Mr. Hood. Where you feel that it is relevant to the amendments on

clause 23, which is the heart of the Bill, would you rule the hon. Gentleman out of order if he referred to his party's policy, if there is one, on grants, fees and other areas?

Jimmy Hood (Labour, Clydesdale)

That is a not a matter for the Chair. It is a matter for debate. I am sure that the hon. Gentleman has heard that contribution.

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

Your reputation for wisdom, Mr. Hood, goes before you. It is clear to see. [Interruption.] It is what I say to my wife when I am in a desperate situation. [Interruption.]

Jimmy Hood (Labour, Clydesdale)

Order. It seems that the hon. Member has a shovel and is now digging. I ask him to throw his shovel away and carry on with his speech.

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

Thank you, Mr. Hood.

My party is clear about how we would address the issue. We would not have variable fees. We would not have flat rate fees. We would simply have no fees. However, we have made it absolutely clear that we would pay for that through a higher rate of tax on income over £100,000, taxing 1 per cent. of the population, 82 per cent. of whom are graduates. That raises £4.7 billion, according to Treasury figures, of which £2 billion would be spent on producing the higher education funding proposals to match what the Government are doing. That is a fair response about which I cannot be more honest and open.

I return to the issue of variable fees, which is an issue of principle and not simply about higher education. It is important that the Committee understands that variable fees will create a market in higher education that builds on the inequities of the current system and will not remove them. The hon. Lady was right about that in her intervention on the hon. Member for Bury, North. No one has yet given a satisfactory explanation—I challenge the Minister to do so in his summing up because it is pertinent to what we are talking about—why the introduction of variable fees per se will deal with inequities in the current system.

The Committee is right to point to some of the inequities. I do not share the damming verdict on our higher education system and particularly on our so-called elite universities that they do not want to attract students from poorer or lower socio-economic backgrounds. There is a range of reasons why such students are not presenting themselves at those universities as well as why they are not being chosen. Some remarkable work is being carried out—the hon. Member for Chatham and Aylesford referred to his local university—at our top universities to seek out that talent. My question is, will variability remove those inequities or will it enhance them?

Ivan Lewis (Labour, Bury South)

Will the hon. Gentleman give way?

David Chaytor (Labour, Bury North)

Will the hon. Gentleman give way?

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

No, I will not, because I am anxious to finish.

Jimmy Hood (Labour, Clydesdale)

Order. The hon. Gentleman has said that he will not give way.

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

My thesis is that by introducing cost and the ability to pay to the market we significantly change

the situation for the worse for such students. The current system undoubtedly has a pseudo-market based on the perceived-—I do not believe that it is actual in many cases—benefit of quality in the top universities. By that I mean that I do not believe that the quality is any better in many cases than that at a redbrick university or indeed one of the new universities. They are also accessed, as has been rightly said, on the basis of A-level ability.

When we analyse the top universities in terms of their entrants it is important to consider how few students come from what I would call the vocational route into those universities. Ninety-two per cent. of students with two A-levels will go to university and roughly 45 per cent. of those with a level 3 vocational qualification go to university. For our top universities that figure is much smaller, because the real criterion is what one can do at A-level. That issue is not to do with the universities, but with the system of how we select people for university.

David Chaytor (Labour, Bury North)

Will the hon. Gentleman accept that it is also the relationship between the nature of what one has studied at A-level or NVQ 3 and the nature of the courses provided by the leading research universities? Does he also accept that it is foolish to make variable fees an issue of fundamental principle, because whether or not the Bill legislates for it variability will be exercised at vice-chancellors' discretion through the use of fee remission or the deployment of bursaries? That is the fundamental point. Why is he making it such an issue to go to the stake for?

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

The hon. Gentleman knows that I have a great deal of respect for his arguments, which he makes with much consistency, but I find this staggering: what has changed over the past two years that has led him to that conclusion now when he did not—

Ivan Lewis (Labour, Bury South)

Will the hon. Gentleman explain this? He was magnanimous in supporting the Government's wish to deliver a level 2 entitlement for adult learners in the context of further education. The inevitable consequence is continued differential fees in the further education sector. The hon. Gentleman has been a long-standing passionate advocate of further education and has never regarded differential fees in this context as a matter of principle, ideology or values. Why is it different in the context of higher education? Also, the greatest misleading of the British people comes when we pretend that there are infinite public resources to spend on infinite public-sector commitments, which cannot be paid for when decisions and difficult choices have to be made. That is the cruellest deception and one practised on the British people by the Liberal Democrats every day of the week in our communities.

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

That was unworthy of the Minister. One can do no more as an Opposition than say what one's priorities are and how they will be paid for.

The Under-Secretary has a perfectly legitimate point about further education and variable fees in FE. I would not deny that. I supported the move to a

universal level 2 and certainly in our 2005 manifesto plans—which have not been totally leaked yet—I want to make a significant policy statement on level 3. It is important that we address that issue.

There is a cost and the resources have to be found. There is a challenge for the Government as well as ourselves to say how to attract more people with a level 3 qualification and how to encourage employers, colleges and the individual to invest in that. That is a proper debate to have. I can assure the hon. Gentleman that come the next general election that will be a platform on which we will want to stand and fight.

I will say first that I agree wholeheartedly with the Prime Minister's comment that in the 21st century economy we will live by our intellectual power. We need to harness that intellectual power. Therefore, getting higher education right is not an option but an absolute necessity for the country. That is why as a party we want to put priority on investing in that first. It is an issue of priorities.

Ivan Lewis (Labour, Bury South)

The level 2 entitlement, which the hon. Gentleman confirmed his party support, and even an extension to level 3—although we already say that in cases of regional or sectoral market failure we are willing to extend entitlement to level 3 as well—have the inevitable consequence of variability: of differential fees within the further education sector. Why is that not a matter of principle, values, ideology and philosophy for the hon. Gentleman, as it is in the context of higher education? Please answer the question. How is he passionate about further education and feels that is fine, with perfectly rational, good policy, but in higher education it is somehow betraying the principles of social justice and of fairness?

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

With respect, I believe I have answered that. [Interruption.] I can do no more than say that the inequities that exist within the FE system have got to be driven out. I have said to the Minister that I hope to be developing a significant platform in our next manifesto dealing with those issues. The Government on their level 2 entitlement and regional level 3 entitlement are going some way down that road. I hope that we can build on it. Please do not accuse me of not having a principled objection to variability within FE, because I do. [Interruption.] I do. I have always said that.

James Clappison (Conservative, Hertsmere)

Will the hon. Gentleman, with his long experience in education, which is far more than mine, confirm that variable fees in further education were charged long before 2001? All that time the Labour party was castigating variable fees and promising in the manifesto not to bring them in and, presumably, all that time the hon. Member for Bury, North was biting his tongue. Can this then be put forward as a change in circumstance? We need to know from the Minister what the change in circumstance has been since 2001.

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

I thank the hon. Gentleman for those comments. He is absolutely right.

Ivan Lewis (Labour, Bury South)

Will the hon. Gentleman give way?

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

No.

Mr. Chaytor rose—

Jimmy Hood (Labour, Clydesdale)

Order. The hon. Member for Harrogate and Knaresborough has indicated that he is not giving way.

Ivan Lewis (Labour, Bury South)

On a point of order, Mr. Hood. I wonder whether it would be appropriate to leave the Committee at this stage to write a letter to the Association of Colleges, warning it about the flat-rate fee policy that a Liberal Democrat Government would introduce.

Jimmy Hood (Labour, Clydesdale)

Order. That is not a point of order. If the Under-Secretary wants to leave the Committee, he can do so in the normal, courteous manner, as I am sure he is well aware.

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

The Under-Secretary does himself a disservice. I can do no more than answer his questions, but I cannot be sure whether he will like the answers.

The Government are right to ask whether funding can be sustained through any system other than variable fees. That is an Achilles heel for us all. I concede that places at all the top universities in the US market in higher education can be filled by charging the maximum fee, which on average is $37,000. As a consequence, only about 4.7 per cent. from lower socio-economic groups ever get into those top universities, which is around half of the equivalent who enter Oxford and Cambridge. I am worried that although the Government say there will be a cap on variability of £3,000 until 2009, in reality, variability runs counter to the idea of a cap. If we want to guarantee resources in the future, there is nothing to stop the Government from withdrawing, pound for pound, the money that students contribute in additional fees. We know that, because that is exactly what has happened since 1998 to basic tuition fees.

Jonathan R Shaw (Labour, Chatham and Aylesford)

Will the hon. Gentleman give way?

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

No, I am not giving way. I also accept that any Government cannot guarantee an income stream through tax to all universities or to any other public sector service. I fully understand that and recognise that, at the end of the day, the money may increase or decrease. However, there is not a vice-chancellor at the leading universities who believes that the cap of £3,000 is sustainable. What is more, those vice-chancellors do not even believe that that is sustainable for the first three years. I am sure that the Minister will accept that the vice-chancellors of the top universities are even on record as saying that they want the cap removed. Even Professor Barr, who is the great supporter of the scheme, has made it clear that he does not believe that the £3,000 cap is sustainable.

We are not talking about a variable fee of £3,000, but the principle of universities charging what they want in the future, subject, of course to the access regulator.

David Chaytor (Labour, Bury North)

Will the hon. Gentleman give way?

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

No, I will not, because I am anxious to finish.

In reality, the people who argue for variable fees are not from the universities that are at the sharp edge of widening participation. On 17 November, the vice-chancellor of Coventry university said:

''All students deserve the opportunity to study in a high-quality environment, adequately resourced to support their success. The system of variable fees, which this government is pursuing, will result in a two-tier system of higher education; where the ability of students to pay, or their willingness to accumulate enormous debts, will determine the quality of their educational experience.''

The vice-chancellors of the universities of Central Lancashire, Kingston, Coventry, Sunderland and Plymouth all wrote a letter to The Guardian in December 2003, which is never mentioned by Ministers. They made it clear that universities that serve

''students from less well-off backgrounds will not be able to command significantly higher fees. Consequently, they will have less resources to meet the needs of their students . . . It is a retrograde step which will reinforce elitism, adversely affect widening participation, and result in a two-tier system of higher education that will seriously disadvantage the majority of undergraduate students.''

Jonathan R Shaw (Labour, Chatham and Aylesford)

Will the hon. Gentleman give way?

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

Please, I am not giving way. Those vice-chancellors are urging the Government to rethink the issue of variability. We heard from the Minister that grants will cover the worst effects of this policy—a point also eloquently made by the hon. Member for Bury, North this morning. That is the principle. [Interruption.] Right.

Let us consider how generous the scheme is. In 2003–04, poorer students will pay no fees and receive a loan of £4,000. At the end of their degree, they will have a debt of £12,000, which they must repay. In 2004–05, the Government will have introduced a grant of £1,000 for the poorest students—we welcome that—who will pay no fees, but will still have a loan of about £4,000 and a debt of £12,000. By 2006–07, under the proposed combined scheme, they will have a fee of £3,000, a loan of £3,550 and a grant of £3,000. They will have to repay £6,550 a year, making a grand total of £19,650. [Interruption.] If we are talking about that as a cultural change—[Interruption.]

Jimmy Hood (Labour, Clydesdale)

Order. The hon. Member for Hertsmere should contain himself, and allow the hon. Gentleman to make his speech.

Phil Willis (Liberal Democrat, Harrogate and Knaresborough)

If we are talking about tackling cultural change by sending students from our poorest communities, such as Nottingham North, down from university with debts of £19,650, I rest my case: it is a bad policy. I hope that the Committee will support this amendment, and take it to the Floor of the House, because the whole House should decide whether variability and top-up fees will be at the heart of our higher education system in the 21st century.

George Mudie (Labour, Leeds East)

I was anticipating that we would be closing. It is very daunting to follow the hon. Member for Harrogate and Knaresborough, and I am glad that he made his contribution, although I am going to let down my hon. Friend the Member for Cambridge. As one of my close colleagues knows, I was press-ganged on to this Committee. As Parliament is so deeply split on such an important issue that will affect so many youngsters' futures, I should have preferred, when it

comes to Committee, to have people who are deeply immersed in education and can contribute in the deepest possible way. I pay tribute to all the contributions, but as I was more involved in the organisation of the rebellion, rather than the theory, there were sad reasons for being press-ganged. That is not a nice start. If I let down my hon. Friend the

Member for Cambridge, I apologise, but I am glad to follow the hon. Member for Harrogate and Knaresborough, whose oratory—

It being twenty-five minutes past Eleven o'clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order.

Adjourned, till this day at half-past Two o'clock.

Standing Committee H

Clause 23 - Condition that may be required to be imposed by English funding bodies

Roger Gale (Conservative, North Thanet)

I remind the Committee that with this we are discussing the following amendments: No. 3, in

clause 23, page 9, line 10, leave out 'the higher amount' and insert

'£3,000, increased annually on 1st April, in line with the Retail Price Index'.

No. 144, in

clause 23, page 9, line 11, at end insert

'but which can increase by a minimum of 0.5 per cent. above the rate of the retail price index in each academic year.'.

No. 223, in

clause 23, page 9, line 11, at end insert

'and that at least 10 per cent. of its fee income is supplied for distribution amongst institutions, as directed by the Secretary of State'.

No. 239, in

clause 23, page 9, line 11, at end insert

'and that there is provision to students, as directed by the Secretary of State, of a bursary equivalent to at least 10 per cent. of the fee, or £300, whichever is the greater sum'.

No. 83, in

clause 23, page 9, line 13, leave out from 'period' to 'institution' in line 15.

No. 84, in

clause 23, page 9, line 26, leave out paragraph (a).

No. 85, in

clause 23, page 10, leave out lines 30 and 31.

No. 120, in

clause 23, page 10, line 30, leave out from 'means' to end of line 31 and insert

'£3,000, increased annually on 1st April in line with the Retail Price Index'.

No. 110, in

clause 23, page 10, line 35, at end insert

'but excludes any year of education beyond the first three years of a course in medicine, veterinary medicine or education'.

No. 86, in

clause 24, page 10, line 44, leave out 'and the higher amount'.

No. 87, in

clause 24, page 10, line 48, leave out 'and the higher amount'.

No. 88, in

clause 24, page 11, line 1, leave out 'either of those amounts' and insert 'that amount'.

No. 89, in

clause 26, page 11, line 26, leave out paragraph (a).

No. 225, in

clause 26, page 11, line 30, at end insert

'and that at least 10 per cent. of its fee income is supplied for distribution amongst institutions as directed by the Secretary of State.'.

No. 240, in

clause 26, page 11, line 30, at end insert

'and that there is provision to students, as directed by the Secretary of State, of a bursary equivalent to at least 10 per cent. of the fee, or £300, whichever is the greater sum'.

No. 252, in

clause 26, page 11, line 30, at end insert

'but which can increase by a minimum of 0.5 per cent. above the rate of the retail price index in each academic year.'.

No. 90, in

clause 26, page 11, line 32, leave out from 'period' to 'institution' in line 34.

No. 91, in

clause 26, page 12, leave out lines 33 and 34.

No. 121, in

clause 26, page 12, line 33, leave out from 'means' to end of line 34 and insert

'£3,000, increased annually on 1st April in line with the Retail Price Index'.

No. 92, in

clause 31, page 14, line 5, leave out subsection (1).

No. 93, in

clause 31, page 14, line 10, leave out 'also'.

No. 94, in

clause 31, page 14, leave out lines 39 to 43.

No. 95, in

clause 35, page 16, line 4, leave out '(a) or'.

No. 96, in

clause 36, page 16, line 23, leave out '(a) or'.

I have been given notice of a desire for a Division on amendment No. 110. Traditionally, the Chair does not call grouped amendments, but I have agreed to call amendment No. 110 in addition to that moved by the hon. Member for Cambridge (Mrs. Campbell). If anybody wishes to press any others to a Division, they must give notice and only then will I exercise a judgment.

George Mudie (Labour, Leeds East)

I was taken by surprise by the time extension this morning. I continue almost in the middle of my sentence making the point that clause 23 is an important part of the Bill. To my understanding it is the element that divided the House: about 49.5 per cent. of the House voted against and 50.5 per cent. voted for. However, that is not reflective of the numerical membership of the Committee. There is a danger that we may not get the Bill through.

That close vote, triggered by the issue of variability, was supported by people such as my hon. Friend the Member for Cambridge, who has highlighted great doubts about variability and involving the market in higher education. She is a nice, pleasant individual who is aware of the traditions of not killing a Bill on Second Reading. She, my hon. Friend the Member for Warwick and Leamington (Mr. Plaskitt), I and others worked hard in negotiations to make the Bill more acceptable and were granted important concessions. We were prepared, because the negotiations continued until the last moment, to vote for the Bill on Second Reading on the understanding—I am a naive Scottish Yorkshireman so I am sure that this is accepted by the Committee—that there would be an open-minded discussion in Committee and that we would seek to mend fences.

I was making the point that putting me on the Committee was a disservice because more eloquent hon. Members with knowledge of education would have been able to speak to the Minister in greater detail and might have brought peace. I do not think that that is helpful—and it is no laughing matter. The futures of a lot of youngsters are at stake. If we are so tightly divided in the House that a Government with a majority of 161 can only win by five votes, there must be common sense that we do not want to return to Report or Third Reading unless we have moved closer together.

I support amendment No. 82 and wish to comment on amendment No. 3, because they both deal with important issues. I am glad that the break gave hon. Members some chance to forget the excellent contribution that was made before it—so that my contribution does not pale in comparison—but I cannot fault it in spirit, sympathy and objectives, even though it was made by a political opponent, the hon. Member for Harrogate and Knaresborough (Mr. Willis). I wish that I had made it. If I had made as good a contribution—and I am certainly not going to—and got such a reception, I would think that there was no hope for the Bill. If that contribution is ignored, sneered at and paid no attention to, we will clearly make no movement on variability. The decision has clearly been taken to introduce a market in education, and the traumatic time that Labour Members went through—I do not know about the Opposition—will be rerun. That is not something that I view with pleasure, in either an individual or, above all, a party sense.

I hope that the points of my hon. Friend the Member for Cambridge will be responded to not just in words or argument, as the argument will then continue elsewhere. I point out that the majority was five. One Member did not vote because his wife was ill that day, so I would consider the majority to be four. A number of hon. Members voted for Second Reading on the basis that there would be further serious discussions.

Graham Allen (Labour, Nottingham North)

I am sure that my hon. Friend is expounding his views, which I respect, on sound policy grounds. Does he

concede that there may be a political party represented in the Committee that would vote with anyone who gave it the possibility of embarrassing the Government? Were there, for example, to be a difficulty about not including variability, would that political party have sided with those in my hon. Friend's position purely to embarrass—

Roger Gale (Conservative, North Thanet)

Order. That fascinating speculation has nothing to do with the amendment.

George Mudie (Labour, Leeds East)

I think that it is a matter of record that both parties have been in the same Lobby this week. I seem to remember being in the same Lobby. I was not alone for a change. There were more than 71 of my colleagues with me. In fact, I looked around and saw a few familiar faces. There is no use in speculating as to why others were in the same Lobby.

Roger Gale (Conservative, North Thanet)

Order. Not only is there no use in speculating; it is not in order.

George Mudie (Labour, Leeds East)

Your ruling is absolutely correct, Mr. Gale.

The hon. Member for Harrogate and Knaresborough is far ahead of me analytically, and he found four objectives in the Bill. I could find only three—they relate to the funding gap, the introduction of a market and social inclusion—apart from the other padding that has been thrown in to make the Bill look half-decent in size, detain us for another week and keep my hon. Friend the Member for Warwick and Leamington and myself out of jam money.

Many of my hon. Friends and I object to two of those objectives: the fee increase and the introduction of the market. The Government's real intention is the basis of the amendment. The Bill is genuinely about putting a market in the education system through variable fees. That is sad, because the other two objectives then become questionable, as they damage the third, which is social inclusion—

Ivan Lewis (Labour, Bury South)

Will my hon. Friend give way?

George Mudie (Labour, Leeds East)

I shall finish this point, then I shall give way; I should never find my place again if I gave way in the middle of a sentence. The Bill damages social inclusion, whatever the Government say—I accept their absolute sincerity—and will never, in my estimation, improve the chances of making university attractive to the poorest kids. If that is the Government's objective, all I can say is, they have a strange way of going about it. If—

David Chaytor (Labour, Bury North)

Will my hon. Friend give way?

George Mudie (Labour, Leeds East)

I am giving way to my other hon. Friend after I have finished this sentence, so there will be a queue.

The other objective is something that was raised by the hon. Member for Harrogate and Knaresborough, and it needs to be discussed. We might obtain more answers on this in Standing Committee than on Second Reading or in Select Committee.

Ivan Lewis (Labour, Bury South)

My hon. Friend faces a double whammy from Bury. If the objection to variability is a matter of

principle, he did the job that I now do, in a very distinguished way, and further education and skills were at the heart—

Roger Gale (Conservative, North Thanet)

Order. I had to call one Back-Bench Government Member to order the other day for not addressing the Chair. It would be quite improper of me not to apply the same restrictions to the Front Bench.

Ivan Lewis (Labour, Bury South)

Can I have another go, Mr. Gale? I have been sitting on the Bench for so long that I am forgetting the rules of the game. In the context of further education, where variability has been the norm for as long as we can remember—the issue was never raised by hon. Members nor, so far as I know, by my hon. Friend when he did this job—why is there now such an objection to variability as a matter of values and principles? That is apparently a contradiction of the social justice and widening participation objectives that Government Members certainly view as central to our aspirations and ambitions for higher education. The hon. Member for Harrogate and Knaresborough failed to answer that question this morning. I ask my hon. Friend to try to tell me what the difference is, and where the values and principles are that divide us.

George Mudie (Labour, Leeds East)

The next question, Mr. Gale, comes from the other hon. Member from Bury: they come not to praise you but to bury you.

David Chaytor (Labour, Bury North)

I hope that my hon. Friend's answer to me will be a little more developed than his answer to the Minister. My hon. Friend and I accept that we have fundamentally different understandings of the role of the market in post-compulsory education. Can he tell us how, at any time during that whole long post-war period, when there were no fees, and when grants were freely available, and even into the 1990s, when there was a part-loan, part-grant system, and even up to 1998, when there was a fixed fee system, that helped to widen participation as of right? Does he not accept that when higher education was wholly, or almost wholly, funded out of general taxation, it functioned entirely as an extension of the middle-class welfare state, and kept working-class young people out of university, because there was not enough investment to provide them with places or to encourage enough of them to continue education beyond the age of 16? What evidence is there that the system that he is defending—

Roger Gale (Conservative, North Thanet)

Order. It is time the hon. Gentleman gave way.

George Mudie (Labour, Leeds East)

I enjoyed that speech; it was better than mine. I was always surprised at my hon. Friend's support for this policy, as I know his distinguished record, and his long history of keen interest in the post-16 sector of education, and I have to live with that. There is an old joke about someone in a certain country—I dare not say which one for race relations reasons—asking for directions and being told, ''Well, if I were you, I wouldn't start from here.'' That is exactly the point I made earlier, but obviously I was not clear enough.

I hope my speech will be even more impassioned that that of my hon. Friend the Member for Nottingham, North (Mr. Allen). If the objective is widening participation, I totally support it, because that is why I am in politics. Education is the only way to get youngsters on board, away from the fight for survival of life in the inner cities and into prosperity. I cannot reconcile that with variable fees, starting at £3,000. I have already raised the level of fees with the hon. Member for Westmorland and Lonsdale (Mr. Collins)—

Mr. Tim Collins (Westmorland and Lonsdale) (Con) indicated assent.

George Mudie (Labour, Leeds East)

It is reassuring when you nod. It is when the fellow to your left looks up that I worry.

Roger Gale (Conservative, North Thanet)

Order. The hon. Gentleman is in danger of digging his own grave. If he has already raised the matter, it is repetition, and he does not need to raise it again.

George Mudie (Labour, Leeds East)

I accept that advice. I raised the matter as an intervention, and I was advised to raise it with the Minister; it was good advice, which I shall take. The present fee was settled, with great assurances, and that will hang around our neck. I am not going to quote the manifesto, as I have got too much time for my colleagues, but I urge them to read the then Secretary of State's speech on Second Reading, when he proposed tuition fees for the first time. The present Secretary of State made exactly the same speech and gave exactly the same assurances. A fee of £1,000 was introduced in 1998, and we said, ''This is it. We will not revisit it.'' The present Secretary of State made concessions in terms of legislative powers and even offered to hold an all-party discussion on the subject of further safeguards, but it never took place because he won the vote on Second Reading—but there you are, that is politics.

Tim Boswell (Conservative, Daventry)

I am following the hon. Gentleman's argument with a good deal of sympathy. Does he agree that not only did the then Secretary of State say, ''£1,000 and that's it,'' but the inference was that funding for the universities would be adequate and secured? That is where the problem arises.

George Mudie (Labour, Leeds East)

Here we are in 2004, introducing a fee of £3,000. I hope no one will jump up and say, ''But they are not up front and the starting point for repayment is higher,'' because I accept that. But we are proposing a fee of £3,000, without shame, without even blushing—never mind variability or anything else. I think we live too comfortable a life in here if anyone on the Labour Benches can stand up, without blushing or apologising, and propose a fee of £1,125 that will increase in two years' time to £3,000, as a starting point. That is an increase of 130 per cent. We are all getting too comfortable in here if we can think that a 130 per cent. increase can be explained away by a later starting threshold for repayment that does not have to be made up front. That is £9,000, rather than £3,300. Let me put that in some context.

James Plaskitt (Labour, Warwick and Leamington)

Will my hon. Friend give way?

George Mudie (Labour, Leeds East)

In a second; I am on a good point here and I do not want my hon. Friend to spoil it. Let us put that 130 per cent. into perspective. What if the Government, in a fit of generosity, decided to pay us what we are worth? What if MPs' salaries were increased from £56,000, which some think is too low and others think is too much, to £120,000? That is an increase of only 130 per cent. How would that play in the streets? It would be considered obscene. I find it obscene.

I have registered my hon. Friend's anxiety to spoil my point, so I shall keep going. I will give way to him when I need a rest. We are so out of touch. [Interruption.] My hon. Friend sighs. On services such as housing, police, education, social services, the Government currently insist that local authorities have a 5 per cent. cap on increases. Good. At the same time they do not see a connection with the increase of 130 per cent for their new policy. That is why I raise the matter.

Too often in politics—it is an old Thatcher trick, I am told—a fight is started elsewhere, everyone is distracted and the policy slips through. It is then too late. We realise that now. We are so worried about variability, with some reason, that we are taking our eyes off the fact that we have moved from £1,100 to £3,000.

Sitting suspended for a Division in the House.

On resuming—

George Mudie (Labour, Leeds East)

I was making the point that at the same time as introducing this increase, the Government are tying local authorities, with equally valuable public services at risk, to a 5 per cent. cap. I am sad that they have made no connection. That leads me to what needs to be said in this Committee about university funding.

James Plaskitt (Labour, Warwick and Leamington)

My hon. Friend is concerned about the increase in the fee, but talks about it purely from the perspective of it being an impost. Has he had the chance to talk to his local universities about how they might use the additional revenue that they will gain as a result of this change? I have spoken to mine. This will create a fund of £5 million to my local university to spend entirely on bursaries to help exactly the sort of young people that he and I want to help to get to university for the first time.

George Mudie (Labour, Leeds East)

As always, my hon. Friend makes a valid point. That leads me immaculately to the point that I was about to make. I am a bit impatient with the universities. The ink was not dry on the 2002 public spending review when this matter surfaced. I was corrected by the Minister this morning because I was being less than generous to the Government, which is not my fashion. I said that £2.5 billion was put into the universities under that review, when it was actually £3 billion. Other sums were given for research. Because of those villains who sit on the other side in the Chamber, for 18 years universities were demoralised. Investment was slashed. Whichever part of the public service one looked at it was under siege. When the

Labour Government came in, they had a tremendous job of rebuilding to do in the public sector, both of morale and infrastructure.

Some members of the Cabinet have been too critical of the public sector. They were still at school or at university on grants when people such as my hon. Friend the Member for Warwick and Leamington and I were defending the public sector from Mrs. Thatcher. In contrast to the past six years, we had 18 years of investment being run down. I cannot think of any part of the public service that I go to that would not thank me for having doubled its money or given it a big cheque. We all therefore get understandably upset when such criticisms are made.

Jonathan R Shaw (Labour, Chatham and Aylesford)

Does my hon. Friend not agree that the police, schools and hospitals will always come before universities, so the 35 per cent. cut about which we have heard is far more dramatic? To sustain universities into the future, we need to have a sustainable revenue source.

George Mudie (Labour, Leeds East)

As my hon. Friend the Member for Warwick and Leamington will confirm, I try to be a hard-headed finance fellow when I am allowed to attend the Treasury Committee and am not put on a Standing Committee. I accept the point that my hon. Friend the Member for Chatham and Aylesford (Jonathan Shaw) makes.

This is my starting point with regard to universities. If, in 1997, the universities had said that they were in a crisis, I would have believed them, and even if they had said that in 1999, I would have believed them, because we ran on with the Conservative's budget for two years. However, in the 2002–05 spending review we gave the universities the biggest settlement in their history. It is interesting that Labour Members say that that was not enough, because that was not how we sold the spending review. In our speeches in the Chamber about our approach to universities we did not say that—we talked up our support for universities. The Minister is proud of that £3 billion investment. It was a magnificent start. We are doing this—[Interruption.] Yes, I hear the mutters of ''start'', but we are discussing this Bill, which is considered controversial by half of Parliament. It is controversial in Labour party terms, and controversial because it brings a market into higher education three months before the next spending review.

I understand from attending the Treasury Committee that the next spending review will not be as generous as the last one. However, no one can attack the Chancellor, the Labour Government or the Cabinet for not going in the right direction. We are slowly rebuilding the services.

I will take notice of the mutters, because they are asking exactly what I want to ask the Minister. I asked the question of the Prime Minister at Chequers and the Chancellor of the Exchequer in the Treasury, and I even asked a certain Mr. Balls. The trouble is that I got three different answers, and if one asks the question of the same fellow twice he gives a different answer again. It is lovely that we have such a reasonable, honest and straightforward fellow as the Minister in the Committee until at least 5 o'clock, because we might

get some straight answers. The answer that we need is to the question: what is the funding gap that we are chasing? We need to know, because no one has told us. Dearing told us in the 1997 report that it was £8 billion to £9 billion, but those figures were not broken down as to infrastructure.

I make the point again that when the Minister responds he must talk about serious money and serious public budgets. If someone were to ask a local authority what its housing stock needs were in budget terms, it would say billions, but it would never get billions. The same would be true for social services, or any other part of the public sector. The Minister is a former trade union official and will have put many such cases for how much his members needed. One can ask, and one never underplays the asking. However, the universities asked for £8 billion and received £3 billion, and they are impertinent enough to be back for another £9 billion. I do not think that the Minister believes that because he is too hard-headed, but we are all in the dark. That was the point made by the hon. Member for Harrogate and Knaresborough.

I find it deeply offensive and objectionable being lectured to, perhaps even in this Room, by members of the Cabinet about the hard decisions that have to be taken. Some of us were taking hard decisions in the '80s when those same Cabinet members were running with the Trots that made us take hard decisions, and I will name names if they look pensive. When we were fighting Thatcher we took hard decisions, but the first thing we needed when pressed to take a hard decision was the facts on the table.

We are heading down the road whereby students, who metamorphose into graduates—

Kali Mountford (Labour, Colne Valley)

They do.

George Mudie (Labour, Leeds East)

Yes, they metamorphose like butterflies into graduates, and free debt is not a worry to a graduate but it is to a student.

The start to making a hard decision is knowing what the required decision is. We should barrack the hon. Member for Harrogate and Knaresborough for saying ''I will fill the gap with this.'' We do not know what the gap is. The worry is that we will wonder why we put in a fee increase of £3,000. I think that it is obscene and needs rethinking. Questions must be asked of an increase of 130 per cent. in an inflation age of 2.5 per cent.

I am a hard-headed finance man; I ran Leeds city council. When the Minister stands up and says, ''This is the basis for the decision. This is the gap,'' I want to know to what extent the £3,000 increase fills that gap. Another mystery is that we do not officially know—I asked three people and got the same answer each time—what net income will be raised by the £3,000 increase. If the 130 per cent. increase completely meets the deficit, why is the Minister putting the increase on future students? Would it not be more equitable to share that fresh burden with the Exchequer? I am pragmatic about students making contributions, but if the Government want to put part of the burden on them, we must know on what basis.

The Dearing report talked about the students' contribution being a quarter of their tuition fees. The former Secretary of State, the right hon. Member for Sheffield, Brightside (Mr. Blunkett), confirmed that that was the accepted formula in 1998. I repeat the question, what is the gap? How much will the increase raise—not in the realms of fantasy, but in net terms? So many concessions have been given and withdrawn, so what is the definitive position? If the increase fills the gap, hard talking must be done. If it does not fill the gap, it fills me with horror. I am filled with horror if this method is applauded as a way to fill the gap and give the universities a sustainable income. I would even go as far as to use the words of my hon. Friend the Member for Warwick and Leamington about what universities do with the money.

Future students must be scared stiff. They knew where they stood with the former Secretary of State: their contribution was a quarter of tuition fees. The present Secretary of State has decided that there is a gap and that students should contribute more, thank you very much. No hard-headed trade union official would accept that sort of woolly argument in any negotiation. Let the Minister tell us the figures; let him reassure us that the six-year pledge made by the former Secretary of State will not be broken in another six years when the cap is reviewed. That is the sub-agenda for all the worries. If there is more money to be found, will the Minister come back saying that the gap is still there and that he needs another £3,000 per student? That is a genuine worry.

Simon Thomas (Plaid Cymru, Ceredigion)

I wanted to intervene on the hon. Gentleman just as he was making the point that I wanted to make. To expand the argument that he has been making very powerfully, if we accept for the sake of argument that the figure from Universities UK of an £8.8 billion gap is correct, and extrapolate from that the number of students paying the full tuition fee, the result is about £1.4 billion. That leaves a significant £7 billion gap, which has somehow to be met. The taxpayer would meet that at some level. Does he share my concern that that shows that the Bill is more important to some people than just the funding aspect? There must be a principle in the Bill that drives it forward, and that seems to be variability and the market. Does he share that real concern about the Bill?

George Mudie (Labour, Leeds East)

I am grateful for that contribution, because that is exactly the point that I am trying to make. The Government's intention to get a market into education has distorted other parts of the Bill, and the financial contribution is so outrageous that one questions why they are doing it. The point was well made: if the gap is £8 billion, why crucify youngsters in this way? That gap is not going to be plugged just like that. I am a fair man: if we ask students to make that contribution, why are we not matching it, and giving the universities another £1.5 billion? That would introduce some equity. When the Government turn round and hammer the customer, we are on difficult political ground.

James Plaskitt (Labour, Warwick and Leamington)

I caution my hon. Friend about Dearing's figure of £8 billion, and urge him to consider all the component parts within it, because the

important point about fee income for universities is that it will support their teaching budgets. Has he had the chance to talk to his local universities about how they will use the revenue? I have spoken to half a dozen in my region, and they tell me that their teaching budget will increase by between 20 and 30 per cent. per student. I remind my hon. Friend that that is to be set against the 36 per cent. per student under the previous Administration.

George Mudie (Labour, Leeds East)

If the Minister was, in his former occupation a trade union official, like me—he was probably more senior than me and ran the place; I was just one of the office boys—and had gone to the employer to say, ''Look, put stamps up 130 per cent.—my members will be very appreciative because it will give them more money,'' that would not have been a serious argument: ho, ho, ho. If we put future graduates' fees up by £3,000 and make them, when they are students, face up to such a debt, that would be serious. Why not make them happier and make it £4,000 or £5,000? There must be a starting point—perhaps by putting Dearing on the table. I am totally pragmatic, but the Committee must know whether there is any firm anchor to what the Government think that youngsters should pay. That is all. It should be backed up with information on which we, and the voters—they are going to be paying it back—can decide whether it is sensible.

I have asked a series of questions, so I shall try to make some progress because I have been stared at, perhaps justifiably. If I read my speech, and it is even more entertaining than what I have said so far, we should all be happy. We have got ourselves tied up with this market. You are experienced in this place, Mr. Gale, and this must make you smile, even though it is hidden behind your hand. I have never before been in a Committee, facing Conservatives, where we have been keener on the market than they are. I sometimes have to scratch my head and wonder what on earth has happened to British politics.

We want to bring in the market. I have listened for days now to the argument that there is market. My hon. Friend the Member for Warwick and Leamington has an economic background. I am not sure whether the hon. Member for Westmorland and Lonsdale does, and if he does I apologise. I might accept a definition of the market from my hon. Friend, but what is the market? What are we introducing? Do we have a market? There are differences. I do not think for a second that Oxford is the same as—I will not mention any other institution, because I do not want to start making comparisons. Every hon. Member is different and every institution is different. Institutions have traditions, history, endowments and research money. They are all different. But that does not constitute a market.

Two infamous individuals are considered to be the architects of our suddenly discovered policy on markets: a Mr. Barr from the LSE and a Mr. Crawford. They may be professors, but I will just call them Mr. Barr and Mr. Crawford. Mr. Barr gave evidence to the Select Committee. It must have been

hilarious evidence because he does not see a market. He does not even see a publicly funded university system. He sees communism.

Jonathan R Shaw (Labour, Chatham and Aylesford)

That is right.

George Mudie (Labour, Leeds East)

My hon. Friend is a distinguished member of the Select Committee. He sat through the evidence, I am sure with a straight face. He is now implementing, with great gusto, an end to communism. This is what Mr. Barr saw as the present university system. He saw ''central state funding''. I do not object to that. If the universities lost central state funding they would be in a bad way. He saw ''control of courses'' and ''uniform fees'', both of which have existed in the universities for 100 years, as communism.

The problem is ensuring that communism stays dead, after we introduce this. We know from Lenin, Stalin and Labour party battles in the '80s, that we must not let them fight back. Mr. Barr told the Select Committee:

''Ensuring communism stays dead includes ensuring that the fees cap does not stay in place so long that central planning returns through the back door''.

Later in his evidence—the architecture that we on the Labour Benches are putting in with gusto—he said:

''The fees cap can be raised in stages, bringing in the benefits of competition and increasing resources.''

I tend to agree with him. I know that it is communism, but I can live with central state funding and the control of fees. It might be seen as eastern Europe in some places, but it brought us to what the hon. Member for Harrogate and Knaresborough and others were saying about the university system. The university is not a profit cow. The university system is vital to this country's prosperity, if not necessarily the prosperity of individuals. The Government must have a great involvement. We will keep that involvement, but I do not know why on earth we want to bring in the market. I certainly do not see it as communism.

David Chaytor (Labour, Bury North)

In view of my hon. Friend's opposition to variable fees, the increase in fee and the method of repaying the fee, if the proposal in the Bill were for a graduate tax, would he support it?

George Mudie (Labour, Leeds East)

That is an excellent question, and I wish that the Minister had asked it. However, I am glad that my hon. Friend has given me the opportunity to put the issue on the table. I have referred to the negotiations that have been and gone. At one stage in the negotiations with the Prime Minister, no less, it was agreed that there would be a commission—not a tame review of the effect that variable fees for three years would have, but a commission, which was to involve the Labour party policy process. It was named to report, in a sensible period of time, on the future funding of universities and to consider all the options. I agreed with the Prime Minister, and still do, but this policy was sprung on Members with a lack of consultation that we all regret.

I look seriously at my hon. Friend the Member for Bury, North (Mr. Chaytor), and at all my hon. Friends. I have already put down my marker in

terms of my expertise in this field. I look to other Members for their expertise, and to their being allowed to play a part in the policy and decision-making processes. I am not going to dive in and say whether I agree with the proposals. I would like the opportunity—both as an ordinary Labour party member and as an ordinary Member of the parliamentary Labour party—to discuss what we are doing. I do not like reading in The Guardian that a new policy, which we have fought against for years, has suddenly become something that I must defend in this building. I think that the commission is an excellent suggestion. I am putting on the record what is kicking around: that one concession from the negotiations was that a commission would be set up, which would take time and great care to consider the options.

I will push the matter even further than my hon. Friend, and say that I hate the snobbery in the education world, particularly that in higher education as compared to further education, which has been treated disgracefully. We have simply put a bit more money into it, and have done things at the margin. I think that further education is almost more relevant to my kids and my city than universities, and I would have liked the commission thoroughly to study higher and further education. The matter should go through our policy process machinery; there should be real discussion and we should all have a part to play. We could refuse to allow higher education to be treated as a special case and to grab all the money. When will further education's turn come?

I will continue with my comments about the market.

David Chaytor (Labour, Bury North)

May I clarify one point? Is my hon. Friend saying that he might have been prepared to support a graduate tax had there been a different kind of policy consultation on it? Does he accept that the effect of a graduate tax would be identical in that individuals' payments would be variable?

George Mudie (Labour, Leeds East)

I did not realise that my hon. Friend was trying to tease out inconsistencies. I said that I came to the matter with an open mind and that I did not think that the House, let alone our party, has had sufficient opportunity for a real discussion. We have been given variable fees as the way forward.

I am a straightforward fellow, who has been in the Labour party for 43 years, and I do not expect to be treated in that way either as an MP or as a Labour party member. This legislation will disfigure higher education, but we have not been given the option to argue the case. At one stage in the negotiations, the Government were prepared to do that, but certain Members crossed the line and some concessions were dropped when the Government had a majority. That is a pity.

I accept in good faith what was said about the regulated market, but hon. Members must be aware of the damage that may be done once the market process has started—I am reading, so I will go very quickly. As hon. Members said, some universities, because of their history, tradition and so on, are more attractive and, in theory, youngsters have an equal chance of going to those universities. But those universities will want to

charge at the market level. As so many hon. Members have said, that will introduce a new factor into—[Interruption.]

Roger Gale (Conservative, North Thanet)

Order.

George Mudie (Labour, Leeds East)

I do not blame hon. Members, Mr. Gale. Reading is not good.

Roger Gale (Conservative, North Thanet)

Order. Reading is not only not good; it is not permitted.

George Mudie (Labour, Leeds East)

Do not tempt me to wander off, Mr. Gale. I shall attempt to follow your guidance surreptitiously.

James Clappison (Conservative, Hertsmere)

I am listening very attentively to the hon. Gentleman's speech, which is extempore and to the point. Every member of the Committee should bear in mind his extremely important point that the principle of our higher and further education system is that everyone, whatever their economic, social or scholastic background, should have the same opportunity and the same chance.

George Mudie (Labour, Leeds East)

That is like saying that rich and poor both have the chance to dine at the Savoy; it is a free country. The Savoy is very nice.

Ivan Lewis (Labour, Bury South)

Based on some of the things that my hon. Friend said about further education, does he not acknowledge that that sector is getting an increase in real terms of 19 per cent. in the current three-year period? He expressed reservations about the principle of variability, but he did not respond to my request to explain why he objects to it. He also expressed a reservation about the way in which the issue was handled, and hon. Members unkindly pointed out that my hon. Friend had been deputy Chief Whip.

My hon. Friend referred to the time when he had to take ultimate responsibility as leader of Leeds city council. During those difficult years, hard choices had to be made and he will have had to put those choices to the Labour group on the council. There must have been many occasions when that group felt uncomfortable with some of the decisions that had to be taken. Was he tolerant of those people who, at the time, said, ''We will not be supporting your leadership and we cannot support you in taking these difficult decisions because of the way the process has been conducted''?

George Mudie (Labour, Leeds East)

That is an interesting question. I can only answer factually and my hon. Friend will be able to check with his chief executive, who knows my record in Leeds. I was leader of the Labour group throughout the 1980s, which were troubled times, and it contained a spectrum of views, but the whip was not taken away from one member in those years. I think that answers my hon. Friend's question. I am merely making the point; I wish this Bill to succeed, but I fear that if we do not address the matter of variability, it may fail.

I was interested in the apposite contribution on Second Reading of the former Conservative Chancellor of the Exchequer, the right hon. and learned Member for Rushcliffe (Mr. Clarke), who raised a matter that I would have expected my Prime Minister to raise. The Prime Minister introduced many

hon. Members to Mondeo man to explain his political philosophy. He said that when he walked down the street before the election that we lost in 1992, he found aspiring working-class people who did not support or identify with Labour. He said, ''There is something wrong. We have got to stop being a narrow, sectional interest and be the party of aspiring people.'' The right hon. and learned Gentleman made the same relevant point.

I was delighted when my hon. Friend the Member for Bury, North said that he was worried about this issue, had raised it in the proceedings, and that it might be revisited. I do not make this point because of the Under-Secretary's history. However, when the Prime Minister addressed the parliamentary Labour party, he was asked a question by a very good MP, my hon. Friend the Member for Morecambe and Lunesdale (Geraldine Smith). The question was simple: what does this offer the children of the postman and the nurse? Their joint income takes them over the £33,000 threshold. I subsequently asked the Prime Minister if he realised the reason for the question, because he skated around it in the meeting.

Some people in the Labour party believe that £33,000 is a lot of money, but it is not if people are raising kids and buying a house. I have already applauded the move to up-front fees, and have made my point. I accepted up-front fees and that the movement at the threshold was an improvement. However, I made the point earlier about the £9,000 debt. Someone—it could have been my hon. Friend the Member for Bury, North—said that he had not received many letters about this. I do not believe that many Members received letters about the poll tax when the Conservative party introduced it. Indeed, we fought a general election and neither side mentioned it. However, we all know what happened when the bills started to land on the doormat.

As I am sure my hon. Friend the Member for Nottingham, North said, letters about student debt have not come from our working-class estates. The issue is not on their radar. They have come from the postman, the engineer, and the people who are buying their house and who say, ''What on earth are you doing to our kids? We have worked and tried to better ourselves. We have moved out of our council house and bought another home. We work hard, and what do you do? Our kids go to university, but instead of having a £3,000 debt, they will have a £9,000 debt.'' The Prime Minister wrote my script on that. I believe that one thing that will be agreed in this Room is that no one in this Committee has bettered the political astuteness of the ex-Chancellor who raised the matter in the Chamber on Second Reading. That was his contribution.

Alan Johnson (Labour, Kingston upon Hull West and Hessle)

He should have been the leader of his party.

George Mudie (Labour, Leeds East)

I will not take up that comment.

David Rendel (Liberal Democrat, Newbury)

The hon. Gentleman is making a brilliant speech. I bring to

his attention a point that he may not quite have picked up yet. There may be couples whose children are coming up to university age. One parent may be in full-time work and the other in part-time work. Does he agree that that it may eventually pay for someone to give up work and their salary so as to reduce their household income?

George Mudie (Labour, Leeds East)

That is a very good point, and I hope that the Minister will consider it. We have this battle all the time—whether about pensions or whatever other part of life—when we meet our constituents. Some people who choose to drop their job and pick up a lot of benefits often end up better off. That is where the working families tax credit has been so good. Our entire approach should be to encourage people to go to work, to make their contribution and to help their families prosper.

Kali Mountford (Labour, Colne Valley)

My hon. Friend talked about the postman. May I tell him about a care assistant who is on £16 a week more than income support? She will benefit when her son goes to university because of the widening access that is available to him. More university places will be funded by this total package, and it must be considered in its totality. It would allow the son access to discounted courses that he could not conceive of entering at the moment.

George Mudie (Labour, Leeds East)

I have every sympathy with my hon. Friend. She makes a very valid point. I shall not repeat myself, but I refer her back to what I have said. She is in no position to say that either that what she described will happen or that it will not happen only because of the Bill. We do not have the financial information. I do not know why we are putting in the figure of £3,000, because I do not know whether it is for the past funding gap and or whether it is for an extension.

Graham Allen (Labour, Nottingham North)

One of the things on which we have information is the number of young people and their families who would benefit from a grant of £3,000 a year. There is currently no grant whatever. My hon. Friend rightly talked about concern for postmen and others in that percentage of people who may not benefit or who may be on the taper, but he should be very careful indeed not to throw the baby out with the bathwater. Despite his strongly views about variability, I hope that he will consider not only the 55 per cent. of families in his constituency who will qualify for a £3,000 a year grant, but the 65 per cent. of families in my constituency whose youngsters, if they claw their way up the ladder, will also qualify for that amount. There are principled points to make, but there is also a great deal to lose.

George Mudie (Labour, Leeds East)

That is a good point and I shall deal with it. Social inclusion has not been helped in that respect. I would applaud the Government if £3,000 were being given without the £3,000 tuition fees being charged. We have had a complicated discussion about that, and I think that overnight the hon. Member for Harrogate and Knaresborough finessed the figures on the cost even more than I did. I appreciate the concerns that my hon. Friend the Member for

Nottingham, North raised—that is what we are in politics for.

We should consider what is being offered to working-class kids. They are being charged £3,000 in deferred fees, which means that they will have a bill of £9,000. Hopefully, the kids to whom we are giving £3,000 in a grant will pay off their fees and then call in the normal loan. However, I fear that there will be a worrying temptation to leave the £9,000 as a debt to be picked up when they graduate and to take their grant and the normal loan. My hon. Friend the Member for Warwick and Leamington and I have spent a useful six months getting into the ribs of Mr. Barrett, of Barclays, over credit cards and how blithely we are racking up debt. I appreciate that that is a different kind of debt, but the principle is the same. We heard some horrifying tales of spiralling personal debt.

Jonathan Shaw rose—

Mr. Plaskitt rose—

George Mudie (Labour, Leeds East)

I am not going to talk about the difference between the debt that we are discussing and credit card debt, because the Chairman would be on me in a second.

David Chaytor (Labour, Bury North)

Will my hon. Friend give way?

George Mudie (Labour, Leeds East)

I must go on, because I have already overstayed my welcome. My hon. Friends feel comfortable, because there will be a regulated market, but exactly how will we regulate it? Are we going to interfere with the regulator? Are we going to give the regulator instructions? What is our starting point? I repeat: we need to know before we establish the system. The White Paper says that the level of fees must be low enough to be manageable, but I would welcome it if the Minister could say what that meant, either in terms of a percentage of tuition fees or an amount. Otherwise, it is meaningless, because the word ''manageable'' is open-ended. The Government's answer to everything is to employ regulators to take decisions away from Ministers, because they can be blamed and we cannot. However, regulators sometimes do what they want, so I would ask the Minister to consider the issue.

I understand that the review board will make an announcement about the cap before 2010. To follow on from my previous question, do the Government intend to be proactive with the review board? Will they spell out what they regard as reasonable and manageable and what percentage they regard as the maximum?

I have some technical questions about differentiated fees. Some have come through by fax and I may deal with some later. I am happy for the Minister to confirm that this is wrong, but there is concern that the Bill gives no details about the way in which institutions may vary fees. How will they be able to vary them in and across academic years, or in the lead-up to an academic year, as part of a marketing exercise? I am keeping all my fingers crossed that the Minister will not ask me to explain any of that, although I am sure that he, with his expertise, will not need me to. How will institutions be able to charge students different amounts, based on their financial backgrounds?

It is also claimed that the Bill fails to cover the right to charge whole or partial fees to students who transfer between institutions part way through a course. There is no legislation to cover the issue and practice varies significantly. Indeed, several students have been charged the full tuition fee twice for one year when they transferred between institutions. Although I would not use such strong words, some people say that that will be simply intolerable under a system in which fees go up to £3,000 and that we should legislate against that.

The rest of the debate is in Hansard.