Student finance - House of Commons - 23 June 2003

Speech delivered on Mon 23rd Jun 2003

6.42 pm

Mr. David Rendel (Newbury): We have had an interesting debate, demonstrating a lot of angst in the Labour party on top-up fees, which is no surprise. We have long known that a number of Labour Members agree with the sort of policies that the Liberal Democrats have proposed. If one or two, such as the hon. Member for Cambridge (Mrs. Campbell), do not know the rest of our policy, I can only say that many Members on both sides have explained it at great length. They have obviously gone to great lengths to find out what Liberal Democrat policy is, even to the extent of reading LibDem News. I am delighted to learn that the only party political paper still in existence is so well read by hon. Members.

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The first point I want to pick up from the debate is whether the level of fees charged has any effect on the amount of money going into our universities. There has been widespread agreement that our universities are seriously underfunded. We need sources of funds for university research and teaching because the level of funding has sunk greatly, particularly since the big expansion of the universities began. Whatever the Minister may have said—he is new, and we cannot expect him to have read all the facts yet—tuition fees did not lead to any increase in funding for universities. In fact, funding per student fell and continued to fall for some years after tuition fees were introduced.

Four or five years later, the Labour Government, to their great credit, began to put a little more money into higher education. I am all for that. The Liberal Democrats have continued to say that we support the fact that the Labour Government are putting more money into higher education. The point is, however, that there is no correlation between the introduction of tuition fees and more money going into higher education. The two things are quite separate, as is always bound to be the case. Any Government will look at the national cake, try to decide how to divide it between personal expenditure and spending on public services, and then decide how the money for public services can be raised. Some will come from voluntary sources, such as people paying privately for health or education or businesses giving money for research in universities, and some will come from charges, such as charges for education or prescriptions. More will come, at the margin, from taxation. It is inevitable that any Government will decide first how the national cake should be shared, then how the money should be raised. The marginal part of Government revenue will always be taxation.

If the Government know their business at all, the level of fees cannot, therefore, have any real effect on spending in higher education and universities. Indeed, it would be a dereliction of the Government's duty if it were otherwise. The whole purpose of the Government must be to seek the best way to spend the national wealth on behalf of all the people. If that is their prime purpose, they must make that decision before they know how much will be levied in charges, and not afterwards. I fear that the university vice-chancellors who favour top-up fees are sadly deluded in what they think will be the result. The fact that tuition fees made absolutely no difference to the amount of money going into universities demonstrates my point.

I shall talk briefly about Conservative policy, but we shall have another opportunity on Wednesday to tear them to pieces. I look forward to that, and I feel sorry for the hon. Member for Daventry (Mr. Boswell) who will presumably have to defend his policies then. For today, I am glad that the Conservatives have come round to our point of view in opposing both tuition fees and top-up fees and in saying that they will never implement top-up fees, if ever they get the chance. I shall be delighted to have their support in the Lobby.

The hon. Member for Blackpool, South (Mr. Marsden) felt that top-up fees would help the less prestigious universities. If there is to be a market, however, and the Minister was insistent that the whole business of differential fees would cause a market between the universities, it must be the case that

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prestigious universities will gain the most in top-up fees because they will be able to raise their fees the highest and charge the greatest fees. Inevitably, the market will mean that the less prestigious universities do least well out of fees. The hon. Gentleman's argument that top-up fees are necessary to help the less prestigious universities is nonsense. I am afraid that that, to my mind, destroyed the whole basis of his speech. I fear that I did not pay much attention to the rest of it, for which I apologise to him.

Differential fees have also been raised, and there seem to be three main disadvantages to those. First, courses such as science and medicine could cost more, in which case we would reduce the student numbers for those courses that are exactly those in which the country needs to encourage more students to participate. What a bizarre use that would be of market forces. Alternatively, courses that cost more, such as science and medicine, will be charged at lower fees, but that, too, would be a bizarre form of market.

Secondly, the posher and more prestigious universities would be able to charge more. That would only widen the divide that is already there between the different resources going to universities. It would drive some universities into the ghetto, and it might drive others into liquidation, a threat that already hangs over some. If the threat worsens, I fail to see how the Government's policy of trying to widen the number of people going into higher education will be advanced.

Thirdly, if there are differential fees, poorer students will inevitably tend to go to the less well-equipped and prestigious universities. What will that do in terms of providing better opportunities for the young people in our country who come from less well-off families? The Minister suggested that he was slightly doubtful about whether the less well off would tend to choose the cheaper universities. I can only point him to MORI's "Student Living" report, which came out earlier this year, and which makes precisely that point. When MORI polled students, a great many said that they would choose a university according to cost if they did not have the money to pay for the most prestigious.

Mr. Chaytor: Will the hon. Gentleman give way?

Mr. Rendel: I am sorry, but we are behind time.

The fourth point is that higher education produces benefits, as most of us accept, for industry, society as a whole and the individual graduate.

We all accept, therefore, that all three should contribute to the costs of higher education. I stress that my party accepts that, because some people deny that we do.

Graduates do not all benefit to the same extent, however. Some receive much more as a result of going to university, yet, as my hon. Friend the Member for Harrogate and Knaresborough (Mr. Willis) pointed out, some people would earn more money over their lifetime if they had never gone to university, but had gone straight out to work. Even graduates in the same subject do not necessarily earn the same amount during their lifetime. Some will go into better paid jobs as a result of getting a degree, but some will be less well paid.

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Using income tax to fund our higher education system has the added advantage that those who gain most financially from their degrees pay more, while those who gain least pay less. That is a fairer way. If the burden of repayment falls equally on all those who obtain degrees, whatever their degree may be, we shall inevitably end up with a less fair system than if we funded it through income tax, which is contingent on the income earned throughout a graduate's life. Under an income tax-funded system, the burden is spread more widely, thinly and evenly.

Tuition fees and top-up fees will not in themselves put even one extra penny into higher education. Higher education should be funded by the three sources that benefit from it. They should contribute in proportion to the benefit that they gain.

This evening we have an opportunity for the Labour party to rid itself of the millstone around its neck, an opportunity to support widening participation and the needs of our economy and an opportunity to create a fairer society, which makes the best use of the potential of all its young people.

6.52 pm