Higher Education Policy

Adrian Bailey Excerpts

Wednesday 27th April 2011 Commons Chamber

[Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)]

I welcome the fact that the Minister admitted that these proposals have been driven by the need to cut the public sector deficit, rather than by any wider educational considerations. Borrowing to give grants to universities counts as public borrowing, whereas borrowing to make loans to students does not, because that is offset, at least in part, by an income stream. This is an accountancy smoke and mirrors exercise, on which the Minister has based one of the most seismic changes in educational funding imaginable. At the end of the day, if the figures are wrong, it will still be the taxpayer who foots the bill. If the loan obligation is higher than expected, that will present problems. If the income, in return, is lower than expected, that will present additional problems. On the basis of the evidence that we have seen so far, that is the situation that is emerging.

[Mr Andrew Smith]

Was my hon. Friend struck, as I was, by the failure of the Minister, who declined to take my interventions on the point, to address the issue put to him by our right hon. Friend the Member for Southampton, Itchen (Mr Denham)—that at the Public Accounts Committee, his own permanent secretary had said that at the current level of fees, universities faced a cash funding gap, which could be plugged only by cutting the teaching grant further or by cutting numbers? Is not that the mess they have left us in?

--- Later in debate ---

[Mr Bailey]

Yes, my right hon. Friend anticipates one of my later points. Both the Higher Education Policy Institute and, by implication, the Office for Budget Responsibility have recognised that issue.

Let me make it quite clear that from my personal perspective I have always believed that graduates should make a contribution to their education. There is a legitimate debate—it should have been had before these proposals were introduced—about the appropriate balance of benefit between an individual and the country’s economy and about what the appropriate obligation for payment should be between the individual and the state. That has to take place, obviously, within the constraints of affordability.

[Andrew Bridgen]

The hon. Gentleman comments on the allocation of payments and the contribution that graduates should make to their education, but was that not the entire function and purpose of the Browne report, which has been taken into account?

[Mr Bailey]

Yes, it certainly was and I was just coming to that. We should have had a White Paper, followed by a full debate, which would have enabled the Government to put forward their proposals and the Opposition and others to probe them. A range of educational institutions —there are an enormous number of them—would have been able to contribute their expertise. What we have had, however, is this seismic shift in Government funding, carried out without adequate research and debate.

I spent 10 years on the Government Benches listening to lectures from Conservative Members about the dangers of hasty legislation and the unintended consequences that almost inevitably arise from it. If ever there was a case in point, I honestly think this is it. Hasty legislation, or hasty regulation in this case, is usually bad legislation, or regulation.

The lack of research and work done highlights a number of issues. The first is the setting of the fee levels. The Minister’s hopelessly optimistic estimates, on which the financial model was predicated, have been demonstrated as completely incorrect. The repayment implications are considerable. A whole range of expert research has been done to demonstrate that the income stream on which the Government predicated their financial model will not be met. There will therefore be a long-term financial liability, possibly an expanding one, that the Government will have to meet.

Another issue that could and should have been explored far more comprehensively if we had had a White Paper is of course the role of the Office for Fair Access. When Ministers were pressed on the setting of the level of tuition fees, they seemed to ascribe to OFFA powers that were completely beyond it, as my right hon. Friend the Member for Southampton, Itchen (Mr Denham) said in his opening remarks. The fact remains that OFFA is an organisation of four people, to whom responsibility was attributed by the Deputy Prime Minister for setting the tuition fee levels of all universities. That is totally beyond their resources, and they could not do it anyway, because they do not have the legislative basis to do so. This could and would have been teased out in a full and open debate of a White Paper, but by virtue of the Government’s actions it has been precluded.

The outcome is that the figures in the financial model do not appear to stack up. I mentioned the potential long-term financial implications earlier. As the Minister has acknowledged, the options are to cut funding for universities further and to reduce student numbers. I believe that if tuition fees averaged £8,000 per annum, it would be necessary to reduce the number of students going to university by 17,000 in order to stay within the model. There is actually a third option: the Government could change graduates’ repayment conditions. I think that that would open another can of worms, and would provide the basis for further research to assess the possible outcome.

[Mr Graham Stuart]

Will the hon. Gentleman give way?

[Mr Bailey]

No, I will not give way again.

A reduction in student numbers is inevitable, either because the Government decide to ration them or because of the deterrent effect of the higher fees on student recruitment. I should like the Government to make it clear whether, if the figures indeed do not stack up and the average fees exceed £7,500, they will limit student numbers. I do not know the answer and I am not sure that the Government do, but I should welcome their opinion none the less.

I should also welcome some sort of statement on when we will see the White Paper so that we can debate the issues further. It was originally to be published in January, we were then assured that it would be published in June, and I understand that in subsequent speeches to the civil service the Minister has referred to the summer. It is a bit like Billy Bunter’s postal order. I pressed the Secretary of State on the matter in the Select Committee this morning, and even then he would not give a commitment that the White Paper would be published in June. What I should like him to do today is tell us when it will be published, and whether it will deal with questions raised not just by me but by a range of Members about the funding implications of the current proposals.

Other countries recognise the value of higher education and the number of graduates who make an economic contribution. Other countries, even those that have suffered from the same sort of financial problems that we have experienced during the recession and are subject to the same sort of financial constraints, are investing more in higher education. The long-term implication of not getting this right and reducing the number of graduates is very serious indeed. On the basis of the picture that is emerging at the moment, I think that we are in danger of having fewer graduates, of damaging our economic growth, and of adopting a financial model that will make our public sector deficit far worse in the long term.