Higher Education and Student Finance

John Denham Excerpts

Tuesday 12th October 2010 Commons Chamber

[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.

[Mr John Denham (Southampton, Itchen) (Lab)]

May I thank the Business Secretary for his statement and for giving me advance notice of it? Is it not the truth that the coalition has decided to put the responsibility for reducing the deficit on to the personal bank accounts of this country’s most ambitious and able young people, saddling them with debts that many will never pay off, when the Government should be opening doors for them to make the most of their ability?

Labour Members believe that higher education is important not just for individual graduates but for growth, prosperity, job creation and our ability to succeed in a competitive world. That is why, a few years ago, we took the tough decision to introduce fees, and it is why we invited Lord Browne to undertake his inquiry. We should thank him for his work. I welcome the raising of the threshold, the equitable treatment of part-time students and the emphasis on better guidance in schools and improved information on quality. Those were issues on which we asked Lord Browne to advise, to build on work that we had already begun. The £350 increase in the maintenance grant will of course be offset by the abolition of the £329 bursary for poorest students. In the spirit of cross-party co-operation, will the Business Secretary promise today to make available to the House and the wider public the economic models used by Lord Browne?

It is clear that Lord Browne’s report has been crucially shaped by the assumptions that he has had to make about coalition policy. Will the Secretary of State confirm that Lord Browne’s report assumes that the teaching grant for higher education will be cut by 80%? That would effectively end the public funding of most courses, and place the responsibility for paying for higher education on to students alone. Will he also confirm that some universities could lose more than 90% of their public funding? Is not the row within the coalition conveniently obscuring the biggest cuts to a publicly funded university system that we have ever seen? Tough decisions have to be made to cut the deficit, but even in its plans for reckless, deep and rapid cuts the coalition is planning cuts of only 25%, so why is it singling out higher education for such a massive and disproportionate cut? Our competitors around the world are investing in higher education because universities are a key driver of growth and new jobs. Why is the coalition turning its back on growth?

The Business Secretary says that some universities might charge less than £7,000. Does he accept that an average fee of £6,000 would cut university funding by £300 million? He says that he is considering a £7,000 basic fee. On 28 April this year, the leader of the Liberal Democrats—now the Deputy Prime Minister—said:

“If fees rise to £7,000 a year…within five years some students will be leaving university up to £44,000 in debt. That would be a disaster. If we have learnt one thing from the economic crisis, it is that you can’t build a future on debt.”

So what exactly is the difference—[Interruption.] That was the Deputy Prime Minister’s conclusion. What exactly is the difference between the £7,000 a year fees that he believed would be a disaster and the £7,000 a year fees that his Business Secretary now proposes? Promises were made by the Business Secretary and the Deputy Prime Minister at the last election that should not be lightly thrown away. The trust of politicians is a matter not just for the Liberal Democrats but of the integrity of this House as a whole.

Is it not true that Lord Browne’s report makes proposals that would leave many graduates paying off their debts when their own children start university? Is it not true that, while the average graduate today pays off their loan in 11 years, under these proposals the majority of students would not throw off the burden of debt for 30 years? Is it not true that the middle-income graduates—the teachers, police officers, engineers and middle managers, who are often the same people losing their child benefit—will pay more than their fair share? They will pay longer and pay more interest than the higher earners, who can pay off their loans more quickly. Is it not true that women will be in debt longer than men and pay more interest on their loans?

Will the Business Secretary be more explicit? Does he support the ending of the fee cap? A student taking a course costing £12,000 per annum will leave with a total debt, including maintenance, of £47,250, compared with the £32,000 debt that the Business Secretary says is the basic one. Can we not all recognise that, in the real world, too many able students will turn their backs on the university and the course best suited to them and be forced to shop around for the cheapest option? Will the Secretary of State accept that the Browne proposals on access to the most selective universities lack any teeth or any strength?

The Secretary of State once advocated a graduate tax because he believed that it could produce a manifestly fair and progressive system, with those who can most afford it making the greater contribution. Now, he has been told that he does not support a graduate tax. Given the promises he and his colleagues made at the election, does he not agree that we all have the right to demand that any proposals meet the same tests of fairness that he used to support?

[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.]