Higher Education: Funding

Lord Triesman Excerpts

Tuesday 12th October 2010 Lords Chamber

[Lord Triesman]

My Lords, I thank the noble Baroness for repeating the Statement and giving us the opportunity to ask what I hope will be constructive questions about the direction that the Government now intend to follow. I appreciate the fact that the Secretary of State included so few rhetorical flourishes about the economic climate. I do not generally accept what is said about that but, more to the point, the university finance issues have been long in the making—we have had to address them very many times—and getting them right was in our minds well before the collapse of parts of the international banking system. I acknowledge what the noble Lord, Lord Browne, said in the passage quoted by the Minister about the depth and strength of the issues involved.

This is an urgent question because, in my view and that of the Opposition, investment in the United Kingdom’s higher education teaching and research is directly correlated with past prosperity, and will no doubt be correlated with future prosperity, future prospects for our country and with the ambitions of individuals and their families. If we seek growth, it is a key investment element in growth. Lord Dearing said that and, as I recall, no political party dissented from that view. He made the point that everybody should contribute to that investment—another principle from which there was no dissent on anyone’s part. We have long known what is needed to build on these achievements and to ensure that we retain our international competitiveness and the inclusive reach of our higher education.

Further to my point on the Secretary of State, I shall not dwell on the volte-face by the Lib Dems as it is sufficiently frequent as to be unexceptional. Nor will I dwell on Nick Clegg’s statement of 28 April that a £7,000 fee would be a national disaster. Let us look with care at the Browne report and ask questions about it. We will look very carefully at all the proposals. Incidentally, the issue about having a tax or other provision really concerns what the mechanism should be, whether it is progressive, appropriate, and affordable and whether having mountains of debt is a good start in life in the current environment. All those questions could be asked of any system and we will press them with regard to this and any other system. I thought that I detected in the Statement—I should be grateful if the Minister could tell us whether this is the case—an indication that a White Paper was on the way. I think that a couple of passages suggested that further work was to be put before Parliament. Any reform of student finance which relies on a significant increase in tuition fees and is based on the assumption of deep cuts in public funding to higher education also raises serious concerns. I hope in a few moments to return to some questions on that.

Our approach to the reform of student finance—a matter which I have spent a good deal of my adult life concerned with—is guided by the following principles: establishing a stable and long-term footing for higher education funding which enables our universities to fulfil the role that they must play in promoting knowledge, innovation and economic growth; no stop-start or radical and sudden changes in the unit of resource, as we saw under a previous Government; avoiding an unfair and unsustainable increase in the burden of debt on lower and middle-income graduates; and ensuring that graduate contributions are progressive, as I said a few moments ago, so that those who earn and can afford more end up paying more than those with smaller incomes.

It is those considerations that draw me to the questions that I believe the House will want to address over the next period. Can the noble Baroness tell us whether middle-income graduates will pay a fair share as compared with high-income earners? A first reading of Browne—we have had only a brief time for it—and the Statement suggests that not only do the proposals combine higher fees with the setting of a real interest rate, but graduates on middle incomes will end up paying far more than their fair share when compared with graduates who are relatively better off—those earning the highest amounts. There will potentially be significant differentiations between the two groups in cash terms because middle-income earners will take far longer to pay off their loans and will be more affected by the charging of a real rate of interest. Is this the correct reading of the proposition which has been put to us? If it is, I fear that we are in for a flawed future.

Will high earners be debt free much earlier than middle-income earners? It is likely that a larger proportion of people on lower incomes will be saddled with high debt for about 30 years. This will mean that, in most cases, they will retain their debt into their middle 50s—probably when their own children are starting to go to university and they are trying to work out how to finance that. Throughout that period, as we know from past debates, they are buying houses and starting families. I note that, on average, one has to be 37 years old before buying one’s first home. All these events come together in life and it is important that we do not make it more difficult, if we are placing more importance on families and having a home and a sustainable way of living. The Browne review estimates that on average only the top 40 per cent of earners will pay back all the charges paid up-front on their behalf by the Government. That tells me that 60 per cent will not be debt free for at least 30 years. Is that not the case?

What will be the impact on off-balance-sheet borrowing, which has always been one of the real issues with a student tax? The claims that it is too difficult to fund the cost of moving to a graduate tax ring hollow when the system that is being proposed will require the Government to borrow to fund the cost of much higher fee loans. The only difference is that the borrowing to pay universities the up-front fees is off the balance sheet. Can the noble Baroness tell us what level of off-balance-sheet borrowing the Browne review requires? What are the plans regarding the sale of the current debt book, a thorny issue which I remember well? That will impact across the whole of this area.

Will there not be a differential for, and a longer impact on, women? Many women will over their lifetimes earn less than men because of the differences in their careers. Will the Government give an undertaking today that they will undertake an equality impact assessment and give proper consideration to what might be a discriminatory difference between men and women in this regard?

The final questions are tremendously important to the university system and, I hope, to the House, because of the way in which we will all need to understand the process that we are going through not just today but over the next few weeks, which will include the comprehensive spending review. The proposals are unlikely to increase the overall funding to universities. That will almost certainly be the case if some of the cuts to university funding that have been hinted at in well sourced reports come through in the comprehensive spending review. Reports suggest that on the teaching side of university funding, the cuts will not be 25 per cent, or the sorts of figures that we have talked about in other areas, but possibly 70 to 80 per cent. Is the Browne report to be used simply as a mechanism for replenishing those cuts without producing any additional income for the universities, which they plainly need? Will it be a mechanism simply for shifting who pays the current quantum, rather than for producing an environment in which there is real growth and real competitiveness, and our universities can stand in the front rank of world universities, as they have done throughout their history and as they do today? That is vital, because some of those who are doing the sums in this sector have been telling us overnight—I have no doubt that they have told the Minister and her colleagues as well—that it will probably take a fee of something like £8,000 per year to produce any new money for universities if cuts at the level that have been prefigured come through the pipeline.

The noble Baroness may well say, “Wait for the comprehensive spending review and we will find out what all of these figures are”. Of course I understand that, but these are well sourced reports. They may be the type of report that raises the level of alarm so that when something slightly less draconian comes through one feels that only a few of one's teeth have been kicked out rather than the whole set. However, if this is a mechanism designed not to grow the income of universities so that they can complete their historic mission but to replace elements that have been cut, that is not the proposal that has run through Robbins and Dearing and, I hope, will run through Browne and into the future. No account of our national financial interest will be answered by cutting off that growth.

I ask one final question of the Minister. Will she say whether the noble Lord, Lord Browne, was privy to what is in the comprehensive spending review, so that he was able to do the sums and make sure that what he was doing would make the contribution that plainly he intended to make? If he was, I am afraid that we are in for some dire news for universities, and students are in for dire news as well. Of course, we will study and explore this, but I ask these questions because I hope that they will provide the answers that will tell us the trajectory of our universities over the coming years.