Higher Education (Basic Amount) (England) Regulations 2010

I declare an interest as vice-chancellor of the University of Greenwich. Like my noble friend Lord Giddens, I have worked in other higher education institutions, and at one time, as many noble Lords know—I shall return to this as one or two things have been said about the earlier introduction of fees—I was the Minister responsible for post-16 education. I support my noble friend Lord Triesman in this amendment. I do so not in a spirit of outrage; I am not outraged—I am disappointed, saddened and worried. There is a real danger that we are walking into a trap, which we have made for ourselves and which we will later regret. It is important when making fundamental changes of this kind that we do so in a considered way, and my noble friend’s amendment asks that we should give more consideration to these serious issues. I do not want to repeat everything that has been said before, nor do I want to go into a great deal of detail, but I want to focus on three or four of what I consider to be the fundamental points before we go down this route. There are many issues of detail where I believe that the proposals are in fact flawed, but those are for another time. First, I shall focus on what a number of other speakers have already touched on—the abolition of all funding for teaching in the arts, humanities and social sciences. The value of these subjects is enormous. In any civilised society, we invest time, effort and money in ensuring that our young people become well educated in these subjects. This is an investment, not a subsidy. One of the things that I found regrettable in the report of the noble Lord, Lord Browne of Madingley, was that he referred to higher education in terms of a subsidy. It is in fact an investment in our futures, our economy, our society, our well-being and the quality of our lives, and these subjects are fundamental to all that. I cannot tell noble Lords how much misery and despair the decision to stop all teaching funding in these subjects has caused among academics right across the country and among students, both undergraduate and postgraduate. No country in the world has stopped public funding for a major part of the work that is done in teaching in its public universities, and I deeply regret that it looks, unless we can make a different decision today, as though this country will be the first to do so. On the question of the cut in the teaching grant from £3.5 billion to only £0.7 billion, I am perfectly aware of the need to tighten our belts and to reduce public expenditure but no other part of the public sector—no other institution in receipt of public funding—has been asked to cut by 80 per cent. Why should we be asking our universities to do this? My second point has not been given enough consideration so far today—the enormous cost of the tuition loan scheme when these new fees are introduced. Instead of fee loans for a three-year degree at less than £10,000 under the present system, the Government will have to borrow to fund loans of up to £27,000 per student. That will mean billions of extra borrowing by the Government because many universities are going to charge the full amount, as my noble friend Lord Triesman has already said, and because the Government have seriously underestimated the levels of repayment that are likely to be achieved. The noble Baroness, Lady Sharp, referred to the fact that the RAB costs will be much higher than the Government have claimed. We are thus faced with the absurdity that the taxpayer will end up by paying more for the new system than for the present one. Every reputable think tank that has looked at this comes to the same conclusion, so it is not just my view; it is the view of those who have carried out careful analyses, in an objective way, of what is being proposed. We might ask: why has the Treasury accepted these proposals? It is because of the arcane rules that it employs in public accounting so that grants to universities count as public borrowing but loans to students to cover their fees do not. As the Higher Education Policy Institute has said: "““It is smoke and mirrors, and it provides an extraordinary reason for changing the whole basis for the financing and organisation of the university system””." I ask noble Lords opposite what their views are on this and whether they really believe that it is right that we shall end up with taxpayers having to pick up a bigger bill. Do they also really believe that the market will be bamboozled by this particular con trick? I do not believe that they will. I turn to what the noble Baroness, Lady Shephard, said; the noble Baroness, Lady Sharp, also touched on this. There was a suggestion that we on the Labour Benches were being hypocritical. I resent that charge. I feel that I am saying everything with integrity, not with hypocrisy. I speak as the Minister who introduced tuition fees in 1998. I do not believe that it is wrong for students to make a contribution to the cost of higher education, otherwise I would not have been involved in that major policy change at the time. Nor do I believe that it was wrong in 2004 to increase the contribution from students, although we did so on a rather different basis. However, we should not assume, because there was no reduction in demand when fees were first introduced and when they were increased somewhat in 2004, that this means that there will be no reduction in demand today. On the contrary, I fear that these huge increases that the noble Lord, Lord Bilimoria, and others have referred to will have a deleterious effect on many young people. They say—and why should we not believe them?—that they do not wish to contemplate the sort of debts that they are going to have to face. It was interesting that the noble Baroness, Lady Sharp, said that this was a more progressive system but then went on to contradict herself by describing the problems that lower-income and middle-income young people, perhaps both of them graduates, will face when they are buying their first houses and having their first children. I fear, particularly if we are talking about young people who come from ethnic-minority communities and from low-income backgrounds, that they will be hugely put off by the size of this debt. There has been very little reference so far in the debate to mature students. We have to remember that more than 25 per cent of students coming into British universities are over 21, and that of that 25 per cent about 8 per cent are over 25 and another 8 per cent are well into their 30s. For these people, taking on this kind of debt will mean that many of them will be paying it off into their retirement. Do we not think that that will have some impact on their decisions about whether to come back into higher education? These are people who lost out earlier and were not able to go when they were younger. There has been a certain amount of cloud-cuckoo-land talk among Ministers in suggesting that there is likely to be no impact on demand because there was none in the past. I quote from another think tank, London Economics, which says: "““There is undoubtedly a real risk that participation in higher education and in particular participation by those from lower socioeconomic groups and mature students will be undermined as a result of the significantly higher fee levels that will be required from 2012””." I want to associate myself with the Motion of the noble Lord, Lord Bilimoria; I have sympathy with what he says. In many ways, it is the steepness of the rise that has led to so much anger on the part of students and so much concern on the part of their families. Doing all of this in one go is a very odd piece of public policy-making. I can think of no other example where we have introduced an increase in charges and trebled them. I would love to know why the noble Lord, Lord Henley, thinks that that is a sensible route to go down. It cannot be. It leads to huge inequities within families. One child who goes to university in 2011 will pay a fee of £3,000 or repay a loan of £3,000 as a graduate, while his or her younger siblings, who may be 18 months or two years younger, will pay three times as much. I know families who cannot understand this and feel that it is immensely divisive. Let me turn to something that I referred to in the debate on the report of the noble Lord, Lord Browne. The Government should reconsider what I see as a rather crude market approach in which they claim that students will have greater freedom to choose universities based on quality and that the new arrangements will ““drive up quality””. For the life of me, I simply cannot understand how they think this will happen. Again, perhaps the noble Lord, Lord Henley, can explain it to me. I do not believe that this approach will work for the following reasons. First, the information is not there and will always be imperfect. Young people do not get access to this kind of up-to-date information and, even if we provide it for them, I regret to say that it is unlikely that they will read it. In any case, measures of quality are extremely difficult and can often lead to misleading conclusions. Secondly, students are not paying up front but over many years, long after they graduate. Therefore, this market principle does not work in that they are not having to find the money and then spend it where it will produce the best value for them. Thirdly, student numbers have to be controlled anyway because of the public expenditure cost of the loans which I have already described. This economic orthodoxy of a perfect market simply does not exist. Let me conclude by returning to where I started. Perhaps I can help the noble Lord, Lord Ashdown, regarding his perfectly legitimate question. I have an answer, and I think that it would be shared by many of my colleagues. If the Government were to consult and do a little bit more listening and rethinking, the first thing they would do would be to restore some of the teaching grant for the arts, humanities and social sciences. That would be strongly supported by the Labour Party as something that we would have done had we won the election; we would have had to cut teaching grant but not by 80 per cent. If that were to happen, the Government could then set fees at a considerably lower level which would be more acceptable to young people. We must remember that the very high fees are to replace an 80 per cent cut in grant so that universities can continue to operate with the facilities and staff they need to meet the standards expected of them in this country and internationally. I passionately believe that were the Government to do that, students, their families, graduates, universities and the taxpayer would, as a result, have a better outcome but the deficit would still be cut. In turn, the Government would be congratulated on listening, on thinking again and on putting forward proposals which sustain the long-term future of higher education in the UK as a public good, as it is perceived everywhere else in the world.