Higher Education (Basic Amount) (England) Regulations 2010

Baroness Blackstone Excerpts

Tuesday 14th December 2010 Lords Chamber

[Baroness Shephard of Northwold]

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

[Baroness Blackstone]

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

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

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

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

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

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

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

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

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[Lord Patten of Barnes]

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

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

[Baroness Blackstone]

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

[Lord Patten of Barnes]

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

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

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

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

Mr Alan Johnson replied yes. When asked:

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

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

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

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[Lord Henley]

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

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

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

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

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

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

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

[Baroness Blackstone]

My Lords—

[Lord Henley]

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

[Baroness Blackstone]

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

[Lord Henley]

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