Higher Education Policy

Andrew Bridgen Excerpts

Wednesday 27th April 2011 Commons Chamber

[Mr Denham]

With due respect to the hon. Gentleman, I shall read back to him directly the words I spoke before I took those interventions: two graduates with the same degree from the same university starting the same job will start their working life with as much as a £9,000 difference in their level of debt. That is an accurate representation of the system that there will be and of the current system, in which, as Government Members do not understand, fee repayments start after graduation. The issue, however, is that students—those planning to go to university—are being told that they will be responsible in most courses for footing the entire cost of their university education. That is undoubtedly true.

[Andrew Bridgen (North West Leicestershire) (Con)]

rose—

[Margot James (Stourbridge) (Con)]

rose—

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[Mr Willetts]

I have been at many events with university vice-chancellors at which they have all accepted that, given the circumstances that we inherited and faced with the policy options of reducing teaching grant, reducing student numbers or implementing Lord Browne’s proposed changes in student finance, we took the right decision. I am confident that we have improved on Lord Browne’s proposals by making the repayment threshold more progressive.

Let me quote someone who is not a vice-chancellor, but who is perhaps still treated with a degree of respect by some Opposition Members, namely Lord Mandelson. The new postscript to his excellent memoirs, which I commend to Opposition Members, states:

“When the university fee debate came up before the Lords, for example, there was a large part of me that felt I should weigh in.”

I am sure that there was. It goes on:

“It was I, after all, who had set up the Browne Review”—

the Labour party seems to have forgotten that—

“into what future changes were necessary to ensure proper funding for universities in the best and fairest way, for both them and their students. When I did so in November 2009 I assumed, as the Treasury did, that the outcome would have to include a significant increase in tuition fees. I felt that they would certainly have to double in order to offset the deficit-reduction measures that we too would have implemented had we won the election. The alternative would be a disastrous contraction of higher education.”

Those are the words of the previous Secretary of State, and I take them as an accurate account of what was in the minds of Labour Ministers when they set up the Browne review.

[Andrew Bridgen]

I remind the Minister of the words of Professor Steve Smith, the president of Universities UK, who said that the coalition Government’s higher education policies

“will bring in the resource needed to allow students to go to university regardless of their financial circumstances, provide financial sustainability for universities, and ensure that we can maintain the UK’s international competitiveness in terms of undergraduate education.”

[Mr Willetts]

Absolutely. That is the view of Universities UK, and, as I have explained to the House, it holds that view because in the difficult circumstances that we inherited from the previous Government, we have taken the correct strategic decisions.

I have set out our approach to higher education. What was striking in the speech of the shadow Secretary of State was the complete absence of how he believes higher education should be financed in tough times. What was particularly noticeable was the absence of any reference to what we understand to be the preferred policy of his party leader, namely a graduate tax. We are still waiting to see the move to the graduate tax, which we understand is now the view of the shadow Secretary of State. Of course, the last Labour Government produced a helpful document on the subject entitled, “Why not a Pure Graduate Tax?”, which sets out clearly some of the issues surrounding a graduate tax. We are still waiting to hear whether the shadow Secretary of State advocates it.

Of course, our proposals involve a capped graduate tax, which has a threshold of £21,000 and a rate of 9%, is linked to the university that one went to, and is extinguished when one has discharged the cost of one’s higher education. That is the right way of delivering a graduate tax to pay for higher education. I would be very interested to hear from the shadow Secretary of State whether he believes that that system should be improved in some way. Does he prefer a model of graduate tax with, perhaps, a lower threshold and a lower rate?

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[Lilian Greenwood]

No—I am not taking another intervention.

Unfortunately, my concerns were further confirmed when I recently met staff from Nottingham and Nottinghamshire Connexions services. Careers advisers were not only demoralised by cuts to their service when young people most need advice and guidance to help them to make difficult choices, but deeply concerned about the impact of Government policies on the teenagers whom they are committed to assist. They told me that fee increases are having a clear impact on many young people, and that many young people in Nottinghamshire feel that they can no longer afford to study for a degree.

The problem is heightened by the increase in youth unemployment. Young people are worried not only that they will rack up debts of £30,000 or £40,000, but that they may not even be able to secure a job at the end of it. It was particularly sad to hear a member of staff of the Aimhigher campaign, which supports young people from disadvantaged backgrounds who have the potential to go on to higher education, tell me that it has become increasingly difficult to convince such young people that university is for them.

Young people and their parents frequently bring this issue up on the doorstep. On Monday afternoon, a constituent asked me how he could afford to send his children to university.

[Andrew Bridgen]

Will the hon. Lady give way?

[Lilian Greenwood]

No. I have already taken several interventions.

My constituent was in work and owned his own home, and his children would not qualify for bursaries. He understood the importance of learning as a worthwhile investment in their future, but like many middle-income parents he felt that higher education was becoming out of reach for his children. The Government talk a great deal about widening access and ensuring that more young people from lower-income families go to our top universities, and about improving the chances of those in state schools, which are admirable aspirations, but they have done nothing to ensure that those things happen.

I fear not only the impact that the fees increase will have on our young people from low and middle-income families, but the impact that those policies will have on Nottingham. As many in the House will know, Nottingham is home to two excellent universities that attract students from all over the country, and indeed the world. The university of Nottingham and Nottingham Trent university make a huge contribution to our city and are vital to our local economy. Our city’s most successful businesses tell me that one of the main reasons for locating in Nottingham is the availability of highly educated young people. Although residents may on occasion wish that there were fewer students in the local neighbourhood, they also know that our universities are vital to the city’s economy and future financial success.

Last week, I spoke to a senior member of staff of Nottingham Trent university. She expressed concern that the increase in fees represents a threat to our ability to attract the brightest and best students to Nottingham, and reported that many young people and their families are considering studying close to home because they feel that they cannot afford the costs of living away on top of fees.

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[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.

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[Andrew Bridgen (North West Leicestershire) (Con)]

The future funding of higher education was one of the immediate issues, like that of the budget deficit, that had to be addressed after the months and years of drift at what I can only describe as the fag end of the previous Labour Administration. If we had not addressed it we would have risked reaching a point of decline in further education from which we would have been unable to climb back. Hon. Members should have no doubt that doing nothing was certainly not an option. The previous Government recognised that, which is why they commissioned the Browne review in November 2009. The review’s remit was to investigate the balance of contributions to universities by taxpayers, students, graduates and employers and to consider how much students should be charged for attending university.

If our universities are to compete in the global economy, they need to be well funded. With a huge budget deficit, one cannot argue that when other Departments are facing cuts, the further education budget could be in any way immune. However, the increase in tuition fees proposed by the coalition Government does not, as the shadow Secretary of State has claimed, signal a wholesale withdrawal of state support for higher education. Under the current system, higher education is funded 40% by the student and 60% by the state, and under the new regime it will be funded 60% by the student and 40% by the state. That is far from the wholesale withdrawal of state funding. The fact that fees are to be capped means that there will be no up-front payments for students. No one will pay anything back until they are earning at least £21,000.

[Tristram Hunt]

Will the hon. Gentleman confirm that that £21,000 figure is at 2016 money, so in current terms the figure is £15,900? Once someone earns more than £15,900, they begin to pay back.

[Andrew Bridgen]

I would need to check the hon. Gentleman’s figures, but the sum is considerably more than the current level. The bottom 20% of earners will pay back considerably less in total, and those earning less than £25,000 will pay back less than £1 per day for their university education. That is a progressive repayment system. The Government are working on ways to help students from the most economically disadvantaged backgrounds by reducing the fees that they will have to pay back.

In opposition to this, we have the puffed-up inaction of the Labour party and the support given by the Leader of the Opposition and the shadow Chancellor to the idea of a graduate tax, which is not a solution to higher education funding. It would provide no guarantee that universities would receive the additional funding raised. There is no mechanism for former students to repay early, and it would not allow any differentiation between a student from a lower income background and one from a higher income background.

[Margot James]

Does my hon. Friend think that is why so many senior members of the last Labour Government disagreed with a graduate tax, including Alan Johnson, Lord Adonis, the former Prime Minister, Mr Blair and Lord Mandelson, as quoted by the Secretary of State?

[Andrew Bridgen]

My hon. Friend makes an excellent point. The Opposition are split on the matter for obvious reasons. A graduate tax is not the solution. A considerable number of graduates would pay substantially more than the cost of their course. In addition, there would be a large funding gap in the short term. The Browne review estimates that if all new students from 2012 paid a 3% graduate tax which would start at £8,000, not £21,0000, the tax would not provide sufficient revenue to fund higher education until 2041-42.

With the reckless spending habits displayed by the previous Government, universities would have much to fear if they had to rely on a graduate tax, which would inevitably fail to raise sufficient money, in contrast to the up-front and stable tuition fee income, which will allow universities to spend money as they see fit, rather than being subjected to constant Government interference.

The policies of the previous Government discouraged part-time students from studying, as they are expected to pay tuition fees up front and had no access to student loans. The fact that part-time students will have equal access to student loans will give more opportunity to those who may wish to study later in life, and will give universities a more balanced age range of students. Hon. Members should be aware that more than 250,000 students are studying at the Open university, and they will all be better off under the present Government’s policies. Given the need to retrain in a rapidly changing world, I welcome this.

The changes being bought in by the coalition Government will result in a higher standard of teaching being maintained, a higher completion rate of degree courses as a result of an informed and considered decision-making process, and students from poorer backgrounds being given a better opportunity to make the right decisions. This can only help universities by having students on the right courses.

We should also consider what the Opposition would call the ideological argument—whether universities should be dependent on the Government for their finance. The Browne review argues that a graduate tax would weaken the independence of universities, which would become entirely dependent on the Government for their funding. It argues that its own proposals would force universities to improve standards to compete for students. Under the coalition policies, the relationship of universities with students would rightly become more important than their relationship with Government.

[Paul Farrelly (Newcastle-under-Lyme) (Lab)]

I fought against a market system under our last Government. We agreed a reasonable compromise, but not without a fight. On the Opposition Benches there was no fight. We knew where the Liberals used to stand. Can the hon. Gentleman tell the House where his party’s manifesto mentioned a trebling of tuition fees and an 80% cut to teaching grants to universities?

[Andrew Bridgen]

The policies are fair. There is increased fairness, increased opportunity and stability of income, and it is my firm belief that the coalition’s policies will allow our universities to prosper.

I am a graduate, and I had a full grant in my day, but in those days 4% of the school-leaving population went to university; last year, the figure was 43%. That is a considerably different proposition, and I remind the hon. Gentleman that in my constituency 84% of people are not graduates. An average graduate will over his lifetime earn in excess of £100,000 more than a non-graduate, so, if we are talking about fairness, is it fair that my non-graduate taxpayers should subsidise the earnings of those who have had the benefit of a university education? They will have that benefit not for the 30 years that they might pay back their student fees, but for all their working life, and I hope the hon. Gentleman remembers that.

To those who say that the system will not work, I say “Look at America”, where for decades the fees system has resulted in the country having eight of the world’s top 10 universities. If Oxford and Cambridge universities are to remain in the top 10 and other UK universities are to have any chance of breaking into the top 10, we need that stability of funding.

The increased tuition fees will create an expectation and demand for quality teaching among students, and with the proposed changes to A-level marking, which I support, students will apply with actual rather than predicted grades, helping state students to go to the best universities, reducing the drop-out rate and ensuring better results for students all round.

Fairness, opportunity, quality and stability are the hallmarks of this coalition policy on higher education funding, and these tough long-term decisions will secure the future of our nation’s universities, our graduates and our undergraduates.

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[Andrew Bridgen]

What are the Minister’s views on the viability or otherwise of a graduate tax as a solution to higher education funding, as proposed by the Opposition?

[Mr Hayes]

My hon. Friend the Member for Havant referred to an interesting document that Labour has produced, “Why not a Pure Graduate Tax?”, which concludes:

“We have been unable to identify any other country with a graduate tax system along the lines described that could serve as an exemplar for how a pure graduate tax might work.”

I have good news! Experts in Labour central office have now found one. Ethiopia has a graduate tax, but it is thinking of ditching it, just as Labour has decided to take the idea on board.

As for the charge that variable fees will deter working-class students, we heard the hon. Member for Stoke-on-Trent Central (Tristram Hunt) speak with authority on the subject. I know that he is a close student of working-class culture—[Laughter.] I said merely that he was a student; he does study it. He and the hon. Member for Nottingham South (Lilian Greenwood) told us that fees would deter working-class students. When the right hon. Member for Kingston upon Hull West and Hessle (Alan Johnson) was a Minister, he introduced variable fees, saying:

“I reject the notion that working-class kids are more debt averse than youngsters from other backgrounds. I just reject it completely, absolutely completely.”

That was his view of the effect that variable fees would have on the participation of working-class students.