Vince Cable
Main Page: Vince Cable (Liberal Democrat - Twickenham)(13 years, 5 months ago)
Commons ChamberRead Full debate Read Hansard Text
The Secretary of State for Business, Innovation and Skills (Vince Cable)
I urge the House to oppose the motion. I agree with the right hon. Member for Southampton, Itchen (Mr Denham) that this is a very serious and big issue. It arouses strong emotions—there are people out on the streets protesting about it—and I think we deserve something a little better than this anticlimactic procedural motion about whether to proceed with a vote before or after a White Paper. Surely, this is an opportunity for him to set out alternatives.
Vince Cable
I will deal with interventions later.
The right hon. Member for Southampton, Itchen gave a revealing answer to an intervention from one of my colleagues, in which he acknowledged that there are alternative ways of allocating funding in my Department and in the Government. He did not tell us what they were, but we should examine those choices in detail. The House could reasonably expect, in this massive issue that arouses massive emotions, to hear some indication of what the main Opposition party envisages as an alternative to what the Government are doing.
It has never been explained in the House, but we hear on the grapevine that an alternative idea—the graduate tax—is doing the rounds. Personally, I was instinctively quite attracted to that idea, and we had it very carefully examined. I do not know exactly what the proposal is—whether it is what has been called a pure graduate tax or a system of graduate contributions of the kind we are introducing, which relates payment to the ability to pay. I do not know what the Opposition propose. What is their alternative?
The right hon. Gentleman and his colleagues set up the Browne commission process to examine the options in detail and in general principle. It roundly condemns the alternative that I believe he favours—although I am not quite clear. His Government were in power for 12 years, overseeing student financing and acting on the basis of the Dearing report, which comprehensively demolished the arguments for the alternative the right hon. Gentleman now says he favours, so what is that alternative? What is it?
Vince Cable
I am not giving way at the moment; I may do so later.
What is the Opposition’s alternative? It is perfectly legitimate to ask questions and we shall try to deal with them. What is not legitimate is to create this enormous moral furore, with absolutely no alternative strategy whatever.
Vince Cable
I shall deal with interventions in a moment.
I remind the right hon. Member for Southampton, Itchen that Members from all parties are skating on thin ice when it comes to student financing. He was in the House at the time, so he will remember the pledge on which he campaigned. The right hon. Gentleman quoted our pledge, so I shall quote the pledge on which he campaigned:
“We will not introduce top-up fees and have legislated to prevent them.”
He and his colleagues then voted to do just that.
Vince Cable
Wait a moment. I shall deal with interventions later.
There was no coalition agreement. The Labour Government had a majority of 167. There was no financial crisis. At the time, the Chancellor of the Exchequer was going round telling us that Britain was outperforming every Government since the days of the Hanoverians. There was no economic crisis, yet the Labour Government introduced a system that transferred the burden of paying for universities from the state to individual graduates. They introduced it. We are now dealing with a real crisis and we are trying to deal with it in a coalition context. That is the issue the right hon. Member for Southampton, Itchen has to address.
Mr David Lammy (Tottenham) (Lab)
Does the right hon. Gentleman want to withdraw that last statement? It is wrong to suggest that the current arrangements withdraw funding from the state. He knows that his cut of 80% does that.
Vince Cable
What on earth were top-up fees designed to achieve? They were designed to get graduates to pay instead of the state—that was the whole point.
Emily Thornberry
If the right hon. Gentleman could have his time again, would he be for or against student fees?
Vince Cable
In the context in which we are now operating—an extreme financial crisis—I am introducing a policy that is a great deal more progressive than the one Labour left behind.
There is a problem, and before I move to the specifics, I shall deal with where the Opposition are coming from, particularly their new leader. Last week, he told the press that he was “tempted” to join the student demonstrations. He has had three days praying in the wilderness, dealing with the devil and deciding whether he wants to succumb to temptation. I do not know whether he has, but if he does, and if he addresses the students, I have been trying to imagine what he will tell them. I think the narrative would go something like this: “We feel your pain. We feel your sense of betrayal by the Government and the Liberal Democrats. We have applied our socialist principles, and we are going to produce a fairer system and lead you to the promised land. What are we offering you? What is our policy? Our policy is delay.” The policy is delay—procrastination. There is a new mantra for the National Union of Students executive: “What do we want?” “Delay.” “When do we want it?” “Well, maybe next year—probably.” That is the alternative on offer.
I shall now deal with the core issue—the right hon. Member for Southampton, Itchen himself identified it: how do we finance higher education? The last line of his motion is the only one with any substance; it relates to money and the 80% cut in the tuition grant. That is a serious issue, so let us try to deal with it.
The right hon. Gentleman was an education Minister so he knows perfectly well that there are three separate funding streams for higher education: student support, research and tuition. When we look at the picture as a whole, we see that at the end of the Labour Government about 60% of all student funding came from the state and the other 40% came from the private sector, from graduates and overseas students. As a result of the changes we propose, approximately 60:40 will become 40:60. It is a mixed economy and the state contribution is being reduced.
The question is whether that number is right. Should it be more or should it be less? If the state is to contribute, where should the money come from? The issue we all have to face is this: when we came into government, and I came into this job, I knew that my predecessors were going to cut the Department that I lead by between 20% and 25%. That was the Institute for Fiscal Studies’ analysis, which has never been denied. It is clear from the logic of not having protected Departments that that would have happened. That was in a Department, 70% of whose funding goes to universities. If the Labour Government were not going to cut the tuition grant for universities, we have to ask where the money would have come from.
I shall set out the range of alternatives. A 50% cut in further education was one possibility; another was a 40% cut in science and another was a 45% cut in the innovation and enterprise budget. We know that the previous Government would not have gone down several of those routes; they committed themselves to increasing the science budget by even more than us. I think the Labour spokesman on science made that very clear at our Question Time last week. The Opposition were not happy that we had maintained the science budget; they want to go even further. At BIS questions, they constantly raise the issue of regional development agency funding—they want to spend more money on that. Where will the money come from? Is it from the cuts they were committed to?
There is a choice. We understand that. What could have happened, although the Opposition have been very quiet on the subject, is that instead of raiding the universities, they could have made drastic cuts in the further education budget. That was the real choice: the further education budget for vocational training for young people who do not go to university. It is almost certain—indeed, it was being put in place when I joined the Department—that cuts in further education were already in train. The right hon. Member for Southampton, Itchen has quite properly spoken of the substantial increase in funding for universities under his Government, but he did not point out that the further education budget did not increase at all. I think it actually fell in real terms. That reflects Labour’s priorities.
Mr Denham
That last point is wrong. Does the right hon. Gentleman accept that this whole argument is a farrago of nonsense because it is based on a premise about the level of the BIS budget that is wrong, as has been set out clearly by my right hon. Friend the shadow Chancellor—[Interruption.] I do not want to prolong the intervention. The problem is that the coalition Government insist on denying what they are constantly told. The vote on fees will be a vote not on the policy of the Opposition but on his policy. Why will he not answer the questions that I properly put this evening? Why is he spending all his time doing anything other than answering the questions that I put?
Vince Cable
I will explain in a few minutes why I do not think delay is the sensible option. The right hon. Gentleman acknowledges, and his Opposition motion states, that this is essentially an issue about money and priorities. That is why I am persisting with the question.
It is possible that the Labour Government were not intending to cut further education. There were other options available. They could have cut universities without cutting the tuition grant. How could they have done that? They could have done so by drastically reducing the number of students, a course of action that, I believe, the National Union of Students prefers. But clearly it would be wrong, and the right hon. Gentleman knows perfectly well from experience and research that increasing the number of university students is one of the best ways of promoting social mobility. So I assume that that is an option that the previous Government would not have taken.
We are left with one other basic option. What we could have done—it would have been an easy way out and we would have avoided many of the difficulties that we are having politically—is to have taken the money out of the budget and let the universities get on with it, not raised the cap. The student representatives might well have applauded that. We would have avoided all the difficulties that we are discussing tonight, but the effect would, of course, have been to starve the universities of funding, and our world-class universities would have been undermined.
Given the funding constraints, which the right hon. Gentleman faced as well, we had no alternative but to ask well-paid graduates to make a contribution later in life to the cost of university education.
Hugh Bayley (York Central) (Lab)
I do not need to remind the right hon. Gentleman about the pledge to scrap tuition fees, but perhaps I do need to remind him that the Liberal Democrats’ manifesto said that policy
“is affordable even in these difficult economic times, and without cutting university expenditure”.
The right hon. Gentleman is widely regarded as an expert on economic affairs and the downturn. Did the Lib Dem manifesto get its economics so very badly wrong, or would a lesser policy of maintaining the status quo be affordable?
Vince Cable
The hon. Gentleman may have forgotten, but I think he was a Member of the House when his party committed itself to not increasing tuition fees, under conditions where there was no financial pressure at all. We face severe financial constraints. That is the reality.
Vince Cable
No. I will continue.
We were driven to the logic of the Browne report, which the right hon. Member for Southampton, Itchen and his colleagues set up. In responding to it, we have done two things. First, one of the questions that I asked Lord Browne, which it never occurred to the right hon. Gentleman and his colleagues to ask, was how do we make the system more progressive? I had to ask Lord Browne that because it was not part of his terms of reference. As a result, the Browne report has come out with a series of recommendations, many of which we have accepted, that make the system significantly better than the one that we inherited.
Let me deal with one of those measures, which relates to part-time students. The right hon. Gentleman talked about part-time students, but he forgot to mention that their fees were left unregulated by the previous Government. He has not mentioned that two thirds of part-time students are postgraduates. That explains the anomaly and his question. For part-time students reading for their first degree, under the changes that we are going to introduce, there will be no up-front fees, which was the arrangement left behind by the previous Government. Part-time students get a significantly better deal under our proposals than they would have done under the Opposition.
Frank Dobson (Holborn and St Pancras) (Lab)
Will the right hon. Gentleman give way?
Vince Cable
I will take the intervention when I have finished the point. I am interested in the right hon. Gentleman’s views.
The second point that Browne adopted at our request in order to make the system more progressive was significantly to raise the threshold. The right hon. Member for Southampton, Itchen asked legitimate questions about the pricing of the threshold and what that means in real terms. Those are valid points, but he did not point out that when the Labour Government introduced their threshold they did not increase it at all. So we are making a perfectly valid comparison between £21,000 and £15,000, whether those are in today’s prices or 2015-16 prices. It is a significantly better system in which large numbers—roughly 25%—of low-paid graduates will be better off under our proposals than under the system that we inherited from the Labour party.
Frank Dobson
I have the honour to represent Birkbeck college. Has the right hon. Gentleman just said that people who already have a degree and go to Birkbeck for another one will not get any help?
Vince Cable
The arrangements for second degrees under the existing regime are quite different, as the right hon. Gentleman knows, from the arrangements for first degrees. The proposal is that we treat first degree part-time students considerably more favourably than they are treated under the existing arrangements. If he checks back with Birkbeck college and with the Open university, he will note that those universities regard our proposals as a significantly better arrangement than the one they currently have.
Shabana Mahmood (Birmingham, Ladywood) (Lab)
The Secretary of State is obviously having a difficult time answering questions about his policy in any detail. Let us try a straightforward question—yes or no. Is he going to vote for it? [Interruption.]
Vince Cable
Thanks to the shouting of the hon. Lady’s colleagues, I could not hear a word she said. Would she like to repeat the question?
Shabana Mahmood
I am happy to repeat the question. The right hon. Gentleman is obviously having a difficult time answering any questions about this policy. I am asking a straightforward question—yes or no. Is he going to vote for it?
Vince Cable
I have made it absolutely clear in all the interviews that I have given today that my wish and strong inclination is to vote for a policy that I believe in passionately—[Interruption.] This is a policy that I believe in. It is a significantly better policy than I inherited. It is right.
The hon. Lady knows, because it operates in her party as well as in mine and in the Conservative party, that decisions on who votes are taken collectively. We will take a collective decision—[Interruption.] The hon. Lady asked me a question. I am trying to give her an answer. [Interruption.] Does the hon. Member for Kingston upon Hull East (Karl Turner) want an answer or not? We will make a decision based upon the coalition agreement as it affects my colleagues and our Conservative coalition partners. That is how we will vote, and we will do it in a disciplined way, but my own views are clear. [Interruption.] This is a significant—
Mr Deputy Speaker (Mr Nigel Evans)
Order. Would hon. Members now please be quiet? I am finding it incredibly difficult to listen to what the Minister has to say, and if I cannot hear him, neither can they.
Vince Cable
No, I will not give way again. I have answered the question.
We will decide how we are going to approach the matter, under the coalition agreement. I am clear that the policy is significantly better than the one that we inherited. I am responsible for it and I have every intention of continuing to promote it.
Vince Cable
No, I will not give way again. I have dealt with the issue.
The issue of the Browne commission was raised, and I have made the point that I asked the commission to produce a policy that was significantly more progressive than the one that we had, and Lord Browne has done so. We have not accepted the commission’s report in its entirety, however; we have made significant changes to make it a better policy.
Vince Cable
Will the hon. Gentleman sit down and let me finish the point?
The Browne report—a report commissioned by the right hon. Member for Southampton, Itchen and his colleagues—recommended no limit on caps. I do not know whether the right hon. Gentleman remembers that. No limit was proposed, but we have proposed to limit the cap to a manageable and reasonable level that reflects the costs of universities. The report also suggested that—
Vince Cable
No, I am not giving way again.
The report also suggested that caps should be lifted without appropriate conditions for universities, but we are going to introduce those conditions. Let me explain them. We have responded in the circumstances that I have described to the need to make financial decisions; we have produced an outcome that a Labour Government would almost certainly have followed in very similar terms; and we have produced a policy that is more progressive than the one we inherited and better than the Browne report.
The right hon. Gentleman poses a question about delay. What are the merits of delay as opposed to proceeding immediately? There are several reasons why it is desirable to make progress. First, the Browne commission was itself an extensive consultative process, and the right hon. Gentleman knows because he helped to set it up. There was substantial discussion and public hearings, and he probably deserves some credit for having established an extended process that was so open. Many of those debates have already been had, therefore, and the evidence is available on which to make decisions.
The second point is a practical one, which I am sure that the right hon. Gentleman understands. If the cap is going to be introduced for the academic year 2012-13, it has to be introduced quickly. There is a practical reason, and that is why we have to proceed, but there are a series of issues—he has listed some—on which we clearly need to consult and reflect further. He quite rightly says that we need more detail on the national scholarship scheme, and we have suggested that an arrangement could be used to benefit students from low-income families by providing free tuition through, let us say, the first year of their university career.
There are different ways of approaching the problem, and we would like to talk to the National Union of Students and to university bodies about the best way of giving incentives through the scholarship scheme to low-income families. The current arrangements do not work well, as the right hon. Gentleman knows because he presided over the policy for some years. We have not achieved the level of participation in higher education by families from that background that we should have. After his period in office, 57% of all pupils in higher education came from advantaged areas, and only 19% came from disadvantaged areas. Surely, after the failure of programmes such as the bursary scheme, it is right that we reflect on and consider the best way of using Government money to achieve higher participation.
The right hon. Gentleman asks also about the access conditions, and again it is surely right that we consider all the evidence available. I will write to the regulator about how the situation can be improved, but, if the right hon. Gentleman’s party has anything to tell us from its experience in government, I shall be very interested to hear it, because his Government set up the regulator six years ago, I think. As a result of that experience, the relative position of low-income students trying to get into the top third of universities has deteriorated. Their conditions of access failed as a matter of policy. Surely it is right that we consider further how we can make the policy work, and we shall do so.
Mr Denham
Before the right hon. Gentleman moves further beyond the Browne report, I must note that he referred to one issue that was at the core of the report: the uprating of the threshold. He and the Minister for Universities and Science have not yet said whether Browne’s proposal to uprate the threshold every five years in line with earnings will be made a statutory commitment. The Secretary of State has published figures that, he claims, show the system to be progressive—based on uprating by earnings every five years. Will he now tell the House whether that will be a statutory commitment?
Vince Cable
I can confirm that it is our firm intention to do exactly that. Whether the measure requires embedding in a statutory instrument is a matter on which we will seek advice, but I am very confident and very happy to have that commitment—the uprating by earnings of the threshold—made firm by law. How it is done—through a statutory instrument or subsequently—is a matter on which we clearly need advice. The right hon. Gentleman is quite right to ask the question, but he should perhaps remind Labour Members that he had an opportunity to uprate thresholds and never did so when in government, despite the fact that his Government’s financial position was more comfortable than the current one.
Clive Efford
The right hon. Gentleman is missing one important point in this debate. Throughout the country, students are demonstrating not because of his technical arguments, but because the Liberal Democrats made a point of saying one thing to them at an election and started to say something completely different within hours of the ministerial cars turning up. Students are listening to what he says tonight, and what they want to hear is, is he going to vote for the proposal, yes or no?
Vince Cable
I thought that that intervention might be worth waiting for, but the hon. Gentleman merely echoes his next-door neighbour on the Opposition Benches, the hon. Member for Birmingham, Ladywood (Shabana Mahmood), to whom I have given an answer.
I have sought to answer in correspondence some of the questions that the right hon. Member for Southampton, Itchen has asked, and I am happy to debate the technical points and to correspond further with him, because my colleagues should rightly have as much information as possible. That is how we intend to approach the debate. He said that the costings and calculations were not made available, but they have been made available—to him, his colleagues and the Institute for Fiscal Studies. The models are very complex ones that produce different outcomes depending on assumptions, and we are very happy to share them. We could have hidden them in a black box and pretended that the outcomes were true, but we have shared the assumptions and analysis and are happy to continue to do so.
Stephen Williams (Bristol West) (LD)
Debates at elections and the Browne report’s methodology have been mentioned several times, but is not one of the fundamental flaws in the deliberative process that Lord Browne went through the fact that, although the report could have been published before the general election, the then Secretary of State, Lord Mandelson, deliberately made sure that we could not have a constructive debate during the campaign, because the Labour party knew that the report paved the way for a rise in fees?
Vince Cable
Well, my hon. Friend knows the background, as he was shadowing the portfolio at the time and spoke to the individuals involved. He makes that point, and it is useful that I finish on this note—
Vince Cable
No, I will not take any more interventions.
The right hon. Gentleman and his hon. Friends commissioned the Browne report knowing perfectly well that what would follow from it was a recommendation significantly to increase the cap level for universities. That is what they were committed to, and that is what they would have done. We know, because of the financial position of the country and the commitments made by the former Chancellor and by my predecessor, that there would have been deep cuts in this Department resulting in a very substantial reduction in the support for universities, the consequences of which were inevitable.
It is sheer dishonesty and opportunism—[Interruption.] It is dishonest and opportunistic for the right hon. Gentleman and his colleagues to pretend that they would have done anything other than introduce recommendations to increase the graduate contribution, but with one significant difference from what we have done, because it never occurred to them that the graduate contribution should be made significantly more progressive. That is what we have done, and that is the proposition that I will be putting to the vote before Christmas.