John Bercow
Main Page: John Bercow (Speaker - Buckingham)(13 years, 8 months ago)
Commons ChamberRead Full debate Read Hansard Text
Mr Speaker
Order. There is a great deal of interest in the Secretary of State’s statement, and I appeal to Members leaving the Chamber to do so quickly and quietly, because I want to hear the Secretary of State—[Interruption.] I am always grateful to you, Mr Pound, for your attempted assistance.
Vince Cable
With permission, Mr Speaker, I would like to make a statement on the future funding of higher education and student finance, in the light of the report published today by Lord Browne’s independent inquiry.
Lord Browne was asked to undertake his review in November last year. The review was set up by the Labour Government on a cross-party basis, and that is how we wish to proceed. I and the Minister for Universities and Science, the right hon. Member for Havant (Mr Willetts), thank Lord Browne and his review panel. The Government endorse the main thrust of the report, but we are open to suggestions from inside and outside the House over the next few weeks before making specific recommendations to Parliament, with a view to implementing the changes for students entering higher education in autumn 2012. More detail will be contained in next week’s spending review on the funding implications, but as a strategic direction the Government believe that the report is on the right lines.
Browne acknowledges that
“the current funding and finance systems for higher education are unsustainable and need urgent reform”.
The issue is how, and it has to be framed in terms of how the higher education sector contributes to the deficit reduction programme. There is also, I think, consensus that there should be no up-front tuition fees for students, which would seriously deter students from low and middle-income families, and this Government strongly oppose up-front tuition fees. Indeed, we share Lord Browne’s conclusion that we should extend exemption from up-front tuition fees to part-time students—currently 40% of the student population—who have been unfairly discriminated against hitherto.
The question, then, is how much the graduate contributions for tuition should be. We are considering a level of £7,000. Many universities and colleges may well decide to charge less, because there is clearly scope for greater efficiency and innovation in how universities operate—two-year ordinary degrees are one approach. Exceptionally, Lord Browne suggests that there should be circumstances under which universities can price their courses above this point, but he suggests that this would be conditional on demonstrating that funds would be invested in securing a good social mix with fair access for students from less-privileged backgrounds, and in raising the quality of teaching and learning. We will consider this proposal carefully.
We believe it essential that if the graduate contribution is to rise, it should be linked to graduates’ ability to pay. On average, graduates earn comfortably more than £100,000 over their lifetimes compared with non-graduates, but not all graduates benefit in this way. Some choose socially useful but modestly paid or unpaid work, which may include time spent bringing up a family. At present, the graduate contribution acts too much like a poll tax, and is not fair.
I therefore asked Lord Browne specifically to look at progressive solutions to the problem, and he has come up with persuasive proposals to deal with it. He suggests a £21,000 graduate income threshold before any payment is made—as against £15,000 at present—and that it be linked to average earnings. He also suggests that a real rate of interest should be paid, but only over that threshold. The effect is striking: 30% of graduates would pay less from their lifetime earnings than they do under the existing system. The top third of graduate earners would pay more than twice as much as the lowest third. That is fair and progressive. The Government broadly endorse that approach, and we will examine the details of implementation. The principle of needs-blind admission to universities must remain central.
The cost of university education to individuals and the state reflects living costs as well as tuition costs. The Browne report makes some constructive suggestions. We will make detailed proposals that will not only make it attractive for students from families of modest means to go to university, but be fair and affordable, including by exempting the poorest students from graduate contributions for some or all of their studies.
Lord Browne considers alternatives, including a graduate tax, which I believe the new leader of the Labour party favours. [Interruption.] I have consistently argued for a progressive contribution, which we are now delivering. Some key features of a progressive graduate contribution would incorporate the best features of a graduate tax. It would be collected through the pay packet at a rate of 9p in the pound above the £21,000 threshold and, combined with a real interest rate, as Browne recommends, it would be progressive and related to ability to pay. However, Browne identifies serious problems with what he calls a “pure” graduate tax. He concludes that the proposal is simply unworkable.
If there are any lingering doubts among those on the Opposition Benches, I strongly recommend that they read the open letter from the new shadow Chancellor to the new Labour leader three weeks ago, which reads:
“Oh, and for goodness’ sake, don’t pursue a graduate tax. We should be proud of our brave and correct decision to introduce tuition fees. Students don’t pay them, graduates do, when they’re earning more than £15,000 a year, at very low rates, stopped from their pay just like”—[Interruption.]
Mr Speaker
Order. I apologise for interrupting the Secretary of State, but I want to hear every word of his statement, and every Member should want to do the same.
Vince Cable
I do believe, moreover, that we need to look beyond the graduate population. Some 55% of young people do not go to university. We must not perpetuate the idea, encouraged by the pursuit of a misguided 50% participation target, that the only valued option for an 18-year-old is a three-year academic course at university. Vocational training, including apprenticeships, can be just as valuable as a degree, if not more so.
Finally, there is a challenge to us all to promote a long-term sustainable future for higher education. This has been a difficult issue for all parties in the House. Those on the Opposition Benches have ranged between early advocates of a graduate contribution, such as the right hon. Member for Sheffield, Brightside and Hillsborough (Mr Blunkett) and the new shadow Chancellor, through to those implacably opposed to change and to the current Labour leadership, who have apparently embraced a graduate tax. The Conservatives initially campaigned against graduate contributions, but reversed their position. My own party consistently opposed graduate contributions, but in the current economic climate we accept that the policy is simply no longer feasible. That is why I intend, on behalf of the coalition, to put specific proposals to the House to implement radical and progressive reforms of higher education along the lines of the Browne report.
Vince Cable
May I welcome the right hon. Gentleman to his new post? He was a much respected Minister in the previous Parliament and was regarded as a man of considerable integrity, mainly because of his resigning from the Blair Government over the Iraq war. Whatever our differences, he will be respected for that decision.
I should be interested to find any quotation marks indicating that I have ever advocated a pure graduate tax. In the South Bank university speech, I advocated a progressive graduate contribution. That is what this statement is all about.
The thrust of the right hon. Gentleman’s comments related to deficit reduction—a problem on an enormous scale that we inherited from him and his colleagues. May I remind him that according to the analysis conducted by the Institute for Fiscal Studies, my Department—the one that he shadows—was, under a Labour Government, confronting cuts of 20% to 25%. About 70% of that budget is for higher education. He and his colleagues have already said that they do not accept the cuts in regional development agencies and they do not accept cuts in science. They were therefore planning to make massive cuts in the university teaching budget. It is just sheer hypocrisy to stand up here and tell us—[Interruption.]
Mr Speaker
Order. I apologise for interrupting the Secretary of State. I know that feelings are running high on this subject—[Interruption.] Order. The more noise there is, however, the slower progress will be. Very large numbers of Members wish to participate. I want to help the House, but the House has to be prepared to help itself.
Vince Cable
I repeat that Labour Members, who landed the country in this enormous deficit problem, have to begin to spell out what it is that they would cut. It would include universities; let us be under absolutely no doubt about that.
The right hon. Gentleman had the extraordinary nerve to talk about building a future on debt. I and many Members will recall my warning the former Prime Minister five, six or seven years ago about the dangerous escalation of private debt in this country, which has led to British households having more debt in relation to their income than those in any other country in the world. This is what we inherited. He and his colleagues introduced a system of tuition fee funding that is built on debt. They introduced a system of repayment over 25 years; we are extending that, potentially, to 30 years. What is the fundamental objection in terms of personal debt? The right hon. Gentleman has given no convincing explanation of what alternative he is recommending.
I think we need to get to the bottom of this. The right hon. Gentleman did get around to talking abut the graduate tax. Is that now the policy of the Labour Opposition, or is it not? We know that the shadow Chancellor is opposed to it, and that his leader is in favour of it. The right hon. Gentleman is sitting uncomfortably in the middle. What is his position?
The right hon. Gentleman says that the policy recommended by the Browne report, which we have endorsed in outline, is hard on middle earners. Let us confront that proposition. We inherited a system that effectively amounted to a poll tax. That was the way in which the student tuition fee system operated. We required Browne to produce proposals for a progressive formulation. Such a progressive contribution would not have come about if this Government had not intervened and asked Browne to produce proposals. That is the commitment that we have made to middle earners, many of whom will not have to pay the full rate of tax.
Let me read the right hon. Gentleman a comment made by the independent Institute for Fiscal Studies. Opposition Members frequently quote its views, as they did in the aftermath of the Budget earlier this year. The IFS said that
“those in the bottom 30% of lifetime earnings would actually pay back less than under the current system”—
that is, the system that the right hon. Gentleman operated. Only the highest-earning 30% of graduates would pay back the full amount of their loans. That is the progressive system with which we are identified, and with which the previous Government had no intention of proceeding.
Finally, let me confront the pledge, the promise, that my colleagues and I—[Interruption.] Yes, I am confronting that issue: the issue of the pledge that my colleagues and I undertook to implement. In the current circumstances, we cannot implement it. I fully accept—[Interruption.]
Mr Speaker
Order. The Secretary of State must be heard. Members have challenged him. He is dealing with the point according to his own lights, and the House must hear him.
Vince Cable
As I was saying, I fully accept that, but let me explain. I believe that Members in all parts of the House will share this experience. Like many of them, I was the first person in my family to stay at school beyond the age of 15. I went to university free of charge, with no fees or maintenance costs to pay. They were paid for me by the state.
Like many Members, I wanted to ensure that my children’s and my grandchildren’s generations enjoyed that free system of university education. In an ideal world, that is what we would do, but we are not in an ideal world. We are in a world in which we have inherited a massive financial mess. We have come to terms with reality, and it is time that the right hon. Gentleman and his friends did the same.
Mr Speaker
Order. First, I remind right hon. and hon. Members that questions must be about the policy of the Government: what it is, or what it should be. Secondly, in view of the very large number of Members seeking to catch my eye, I underline the importance of each Member’s asking a single short supplementary question—and, of course, I remind the Secretary of State of the merits of pithy replies.
Mr David Evennett (Bexleyheath and Crayford) (Con)
I welcome the Secretary of State’s statement and commend the Browne report, which is a really constructive piece of work.
We need world-class teaching in our universities and we need world-class research in our universities, so reform must come, and we accept what the Secretary of State has said. Does he agree that the quality of student experience of teaching, tutorials and careers advice needs to be improved, and that we also need more innovative part-time courses?
Nick Boles (Grantham and Stamford) (Con)
It was a great hero, I believe, of the right hon. Gentleman who said:
“When the facts change, I change my mind.”
When the facts change, does not the new Leader of the Opposition bury his head in the sand?
Mr Speaker
I apologise to the hon. Gentleman for having to deal with this matter in this way, but questions must be about the policy of the Government and, unfortunately, that one was not.
Geraint Davies (Swansea West) (Lab/Co-op)
Does the right hon. Gentleman accept that if higher fees to attend the best universities deter poor students from going to them, the most able students will not go to the best universities and Britain will be the poorer for it?
Mr Speaker
Order. I am keen to accommodate some more colleagues, but brevity is now of the essence.
Barry Gardiner (Brent North) (Lab)
At the beginning of his statement, the Secretary of State commended my right hon. Friend the Member for Southampton, Itchen (Mr Denham) for his integrity in resigning from the previous Administration. Given that the Secretary of State has now told the House that he will not honour his pledge, will he show similar integrity?
Vince Cable
As I explained earlier, when the previous Government put in place a substantial increase, numbers initially fell before subsequently recovering. As I said in response to earlier questions, it is not the job of the Government to be prescriptive about numbers. I return to the point that I made at the outset: there is a danger of looking at universities in isolation. There are many further education options for people post-18, including apprenticeships and vocational training. We have to treat all those on their merits and give them equal status. The number of people going to university is not, in itself, a useful measure of anything.
Mr Speaker
Order. I am grateful to the Secretary of State and colleagues for their co-operation.