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Lord Monson: My Lords, before the noble Lord sits down, would he explain how the graduate income tax would work for graduates who leave to work abroad?
Lord Sewel: My Lords, the answer to that is: how would the Government's proposals work for those who leave to work abroad?
3.48 p.m.
Earl Peel: My Lords, despite the fact that agriculture and rural affairs did not get much of a mention in the gracious Speech, it does not mean that there is not a great deal of activity in that quarter. I am glad to say that farming fortunes have recently picked up a little, but how sustainable that will be remains to be seen. However, it is one thing for the farming community to try to cope with an unprofitable industry, but it is quite another when it tries to do so in the knowledge that the very structure in which farming has operated for so long is about to undergo a sea change.
I declare an interest as an owner of land which is subjected to several tenancies. However, I certainly subscribe to the view that most farmers recognise fully the need for a radical change in the subsidy system. It is no longer tenable for taxpayers' money to be used to support production and if farmers are to continue to receive support it is right and proper for it to be channelled in the direction of the improvement of the environment. So I welcome the principles behind Herr Fischler's proposals for decoupling support in his mid-term review.
But I believe it is imperative that, given the degree of flexibility open to member states in how they implement the proposals, Defra must not rush headlong into decisions that will affect the future of farming without very carefully considering the options.
As the noble Lord, Lord Grantchester, said—I take this opportunity to welcome the noble Lord back to your Lordships' House and congratulate him on his second maiden speech—the Government appear to be concentrating on two scenarios so far as concerns the new single payment. One scenario revolves around the individual historic entitlement calculated on what the farmer has received during the relevant period; and the second is a regional average payments system which, broadly speaking, means what it says.
We are led to believe—and I am pleased to see that the noble Lord, Lord Whitty, is in his place—that the Government are leaning towards the first scenario which, on the face of it, may appear the simplest to operate and the most equitable. But any farmer who changed his business operations during the relevant period on which the payment will be based could be in great difficulties and reliant on an untested—and almost certainly under-funded—appeals system if he is to receive a reasonable payment. I believe—I may be wrong—that some 1 million acres could fall within this category of uncertainty. I therefore suggest to the Government that if they pursue this route there could be very considerable difficulties ahead.
I ask the Government to consider also the case of a farmer who, encouraged by the new mood in agriculture, abandoned his intensive operations in favour of an extensive system of production geared towards environmental gain. However, because he did so at the end of the entitlement period but was still extensively farming during the entitlement period, under the new single farm payment he could receive up to, say, £600 a hectare. Compare this to his neighbour who converted to a more benign system just before the entitlement period. He may qualify for only, say, £100 per hectare. They are both farming in a responsible and sustainable fashion but the enlightened farmer who converted earlier is penalised to the benefit of the less entitled farmer who converted late. This cannot be an equitable solution. Once again it demonstrates the dangers ahead for the Government if they pursue this option.
The other method—that of regional average payments—remains a popular alternative with some. However, this, too, has its shortcomings. I believe that, as a broad brush calculation, more than 20 per cent of farmers would lose more than 20 per cent of their support. So, again, this option also produces problems.
As the noble Lord, Lord Grantchester, pointed out, two hybrid schemes are available. I urge the Government to consider seriously the one that broadly combines historic payments for animals and regional average payments for crops. This is not the time to go into details but this option could lead to a more sustainable system, which is exactly what the industry needs during this time of uncertainty.
Perhaps I may now say a few words about the recently published report of the noble Lord, Lord Haskins. In my view, anything that is designed to streamline the operations within Defra and to reduce the present confusion must be welcomed, and I am sure that there is much to be welcomed in the noble Lord's report.
I wholeheartedly applaud the idea of integrating the landscape and recreational dimensions of the Countryside Agency's responsibilities with the nature conservation role of English Nature. They are all inextricably bound up. Indeed, I remember that when we last discussed this issue—which I believe was back in 1996—I spoke in support of the amalgamations, which of course eventually took place in Scotland and Wales but not in England.
I would go further than the recommendations of the noble Lord, Lord Haskins. I can see no logical reason why the new agency should not embrace the responsibilities of promoting the economic viability of rural businesses in addition to the environmental stewardships. I say this because the objectives are all interwoven. Without a healthy, profitable rural sector the management of the countryside and all the sustainable conservation objectives that are so important to so many of us simply will not happen.
I end by saying to the Government that, despite my enthusiasm for much of what the noble Lord, Lord Haskins, recommends, I urge caution. The implications of the mid-term review in all its guises, along with the implementation of Sir Don Curry's level 1 and level 2 schemes, are truly profound as far as changes in the countryside are concerned. Between them they are likely to produce one of the most significant changes that agriculture has experienced for some time.
There is much anticipation and there is hope. But there is also fear and confusion. No matter what option the Government finally decide on in terms of single farm payments, there will be huge uncertainty both within the farming industry and Defra itself. I strongly recommend that any changes to the department and its agencies should not be contemplated until such time as everyone is ready and the effects of the mid-term review have been allowed to settle. There are some good proposals here, but I urge the Government not to run before they can walk.
3.57 p.m.
Lord Mitchell: My Lords, as someone who has had a substantial student loan, paid it back and lived to tell the tale, I should like to make my contribution by putting a real life perspective into the current debate.
When 5 per cent of the population went to university, the state could well afford to finance them. Now 50 per cent of our young people aspire to higher education—and this must be a good thing—but the bald truth is that the Government cannot afford to fund the complete tuition fee. Plus we must face the fact that, like so much else in our country, our universities have been crumbling due to inadequate finance. Truth be told, even our best universities are losing out in the global academic hierarchy.
When I was 21, I went to the United States to study for a master's degree in business administration. In those days no such degree was available in this country, and besides I wanted to see the world. I was accepted by Columbia University in New York city. I left England with £500 in my pocket, realising that not only would I have to pay my tuition fees but also that I would have to find money to live.
American universities work hard—harder than I had ever known. In my case, nine until six every day; one week off for Christmas and only a few days for Easter. But, despite this, I still had to work to eat and for four nights a week I worked as a waiter, living on tips. Even so, I could not afford my tuition fees.
In those days the tuition fees were 8,000 US dollars per term. The university helped a little but, for the bulk of the cost, I had to borrow. I came back to the UK in 1966 with a loan equalling 15,000 US dollars. We were given a three month settling-in time and then the repayment schedule kicked in. Unlike the current proposals, no consideration was taken of future income; there was no respite until salaries reached a pre-set level; you had a loan and you had to pay it back. My American colleagues were receiving salaries of around 12,000 US dollars per annum, but I came home to the UK, where my first job paid £750 per year.
Your Lordships can imagine how hard it was to survive. One year later, the pound was devalued against the dollar, the effect of which was that the principal that I had begun to reduce was increased in sterling terms even above its original level. I learnt an important business lesson—never have a foreign currency mismatch between principal and income. But I survived. To me that loan was never a debt: it was an investment. Was it worth while? Yes it was, thousands of times over. What did it teach me? That all that hard work got me my masters degree, but also that anything is possible if you set your mind to it. For me, it was a good lesson. I have no hesitation in saying that.
The Government are right to say that students should make a contribution. They are also right to say that different universities should be able to charge different levels of top-up fees, but that subject will run and run and I will not go on about it any longer.
I now turn to my real education passion, which is e-learning, and here I must declare my interest as a trustee of the eLearning Foundation and that my
employer supplies computer services to schools. E-learning is a great British success story. It is the process whereby children—as well as university students and adults—are able to learn either at school or at home using computers, not as a replacement for classroom teaching but as a complementary aid. The eLearning Foundation was set up two years ago with the simple remit to ensure that every child in this country has access to computer learning with the ultimate objective that all children should have their own computers, in their rucksacks, just as they have their pens and pencils. Our new chair is my right honourable friend Estelle Morris.Today, over one million children go to schools that are associated with the eLearning Foundation. The Department of Education and Skills has been hugely supportive of e-learning in general and my foundation in particular. I must thank my noble friend the Minister and the Secretary of State for their wholesome backing. The department's commitment to e-learning includes £280 million of e-learning credits; £195 million in laptops for teachers; and a £287 million commitment to ensure that all schools will have broadband capacity by 2006. The Government's target is for one computer for every eight children in primary schools and one computer for every five children in secondary schools by 2005. In my opinion that is too timid. In a knowledge based world we need to have higher aspirations.
There remains a massive problem associated with the so-called digital divide—that middle class children have computers at home and poor children tend not to. We simply cannot have our most disadvantaged children missing out on the very skills that could ensure their employment prospects in the future.
Does e-learning matter? Is it all worth while? I have visited schools in socially excluded areas that employ state-of-the-art technology, and the effect is dramatic. Hard evidence is now replacing anecdote that schools that embrace IT improve their results in SATS and GCSE. Staff and students are better motivated, school pride is enhanced and parents are becoming more involved. Most importantly, those young people are going into the world with 21st century skills. What we see for those lucky ones must be available to all.
4.3 p.m.
Baroness Byford: My Lords, no one can accuse this Government of not consulting widely in and on the countryside. They cannot claim to be unaware of the problems and needs of rural communities. The Curry report, the Haskins report and the three inquiries into the mishandling of the foot and mouth outbreak, all stress that rural areas have many problems that are different from those of towns. I remind the House of our family farming interest. The conclusions of those consultations, the recommendations of the reports and the much-vaunted concentration on joined-up government should combine to ensure that policy takes rural factors into account. I fear that that is not so in the gracious Speech.
Educational reform by this Government includes a great deal of very heavy micromanagement. For example, I am told that the DfES has produced more
than 200 pages of detailed "guidance" on how local education authorities should structure their formulae for school funding. It seems fairly obvious that an LEA concerned with several hundred inner-city schools will face rather different pressures and problems from a rural LEA with fewer schools but much greater distances between them. The DfES is "guiding" LEAs to put more and more of their financing into schools using age-weighted pupil units in place of base or school allocations. That militates against the continuing operation of many of our smaller schools, most of which are in rural areas.Schools are funded from local sources. They have to conform to national agreements. There is nothing wrong with that one might say, but if the necessary funding for the various government initiatives is not made separately available, it has to be taken from the school's budget. The smaller the school, the higher the ratio of income per pupil and the more difficult it is to pay for them. As recently as 7th November (at col. 552) Hansard contains a Written Answer that admits that government funding is not sufficient to pay increases to teachers on the upper pay scale who moved to point 2 in 2002. Will the Minister tell us how many teachers reached level 2 in 2002 and are therefore now eligible for advancement to level 3 but for whom there is no funding? Will she also clarify whether the Government intend to fund the cost of the extra pay each year following the award of a level 1? Small schools may have difficulty finding the money to pay these increases.
The whole question of funding was touched on succinctly by my noble friend Lady Hanham this morning. Indeed, she referred to the National Audit Office's report condemning the Government and their policies for calling for extra spending and then blaming local government, which is not fair.
The gracious Speech announces pilot school transport schemes, and I understand that LEAs may be allowed not only to raise existing charges but to introduce them where buses are now free. There are relatively few rural secondary schools and it is normal for older village children to travel more than three miles each way to attend school. Furthermore, primary school rolls are falling all over the country because of the declining birth rate. Government pressure to reduce surplus places allied to the greater linkage of funds with age-weighted pupil units will mean the closure of more village primaries. To charge for school transport, especially for those below the age of 16, will be to discriminate against rural children.
We await the details of the transport Bill, but I urge the Government to remember that cars are an essential way of life for rural folk. Any integrated transport system should be based on local community needs, especially those of local schools.
I now turn to housing. Lack of affordable housing is a problem for town and rural dwellers alike. In rural areas, average weekly wages are not only much lower than in urban areas, but the problem is all the more acute. The Government's record is a disgrace. Statistics show that 130,000 or so households are
without a permanent home of their own, while at any one time, 750,000 properties stand empty in this country. Of those, 20 per cent are in the public sector. In the rural White Paper of 2000, promises were made that 3,000 affordable houses a year would be built in small settlements. The record shows that that was not achieved. In 1997, some 2,020 were built, but in 2001 that figure had dropped to 1,371. Added to those figures is the fact that between 1997 and 2001, only 20 per cent of affordable housing was rural build. The Countryside Agency report of 2002 stated that public sector and social housing account for 14 per cent of total stock in rural districts, compared with 23 per cent in urban ones. Hopes have been raised, but targets have not been achieved.We await the details of the housing Bill. However, I should like at this stage to flag up the concern that was mentioned in an earlier debate about the "seller's pack". That issue is still causing great anxiety.
I turn to the planning Bill. Two consultation papers are currently out on the draft planning and policy statement PPS7 and on sustainable development in rural areas. Planning authorities should allow limited development to meet local business, community and identified housing needs, particularly in order to maintain the viability and vitality of smaller towns and villages. A positive approach should be taken to improve accessibility and community value of existing facilities such as village pubs, shops, village halls and schools.
Paragraph 18 of the consultation paper states that the reuse of existing rural buildings is usually preferable to leaving them underused, vacant or derelict—a point which I raised with the noble Lord, Lord Rooker, in an earlier debate. The rural districts of England contain more than 577,000 businesses which represent 30 per cent of England's total. Agricultural businesses account for 15 per cent of the total in rural districts. One way in which the Government can help current and future businesses is to encourage the spread of broadband or high-speed electronic communication. Currently only 3 per cent of rural businesses have broadband compared with 11 per cent in urban areas.
I turn now to what was not included in the gracious Speech. There was no hunting Bill. What are the Government's intentions? In another place, in debating the gracious Speech, at col. 338 of the Official Report for 1st December, Mr Alun Michael confirmed that, as the Prime Minister had made clear the previous week, the issue will be dealt with in this Parliament. How will that be achieved when, as has been upheld, the previous Bill impinges on human rights?
The gracious Speech also did not include a Bill on animal welfare, which has long been promoted by Elliott Morley and long looked for by many outside organisations. My understanding is that a draft Bill will be presented in spring 2004 and brought before Parliament if time allows. I ask the Minister whether there might not be a link between the non-appearance of those two Bills.
I began by saying that the Government have consulted widely, and it is true. However, the hard reality is that, unless action is taken urgently, agricultural and horticultural businesses will be at the whim of the current thinking of politicians. The Curry report and the Haskins report are both hugely important. The latter looks at the ways in which Defra evolves its policy and reflects how those policy decisions are delivered. Defra distributes more than £1 billion of its total £3 billion in more than 45 agri-environmental schemes. What a lot of people employed unproductively, and what a lot of time and money being spent in bureaucracy and form filling! That really must not continue.
For the sake of our countryside and our rural businesses, and of course for the long-term conservation of wildlife and habitat, the Government must urgently settle those details. CAP reform, however, is the more important issue. It is of prime importance that we agree how those payments should be made. Should they, as my noble friend asked earlier, be based on an historic, a regional or a hybrid system? What we must not do is burden agricultural businesses with added costs, making them uneconomic compared with other countries. The Government should clearly bear in mind the risk they run of exporting our food production and the effect that that would have on our balance of payments.
I believe that long-term food security is more important now than in years gone by. This year's June census gives a grim warning: 17,000 farmers and farm workers left the industry in England between 2002 and 2003. Nearly 85,000 have left the farming industry since the Government took office in 1997. I believe that opportunities exist; the development of non-food crops, for example, can bring great advantages. However, the Government's energy policy lacks direction and has failed to supply sufficient fiscal help. There is much to do. I hope that the Government will move from their consulting mode to an action mode.
4.15 p.m.
Lord Puttnam: My Lords, I am required to speak quite briefly, certainly too briefly to do justice to the challenge of achieving a sustainable future for the whole of this country's higher education sector. I should, of course, declare an interest as chancellor of the University of Sunderland. I have apologised in advance to the Minister for the fact that I was not in my place this morning. I chair the National Museum of Photography, Film and Television. We arranged to interview new directors this morning and some of them have flown in from overseas. No discourtesy was intended to the House, but I also avoided any discourtesy to prospective candidates for the job.
Everyone connected with our universities can only be grateful to the Government for acknowledging the hopelessly inadequate level of funding that has been suffered for years. The Government's proposed legislation is undoubtedly well meaning. I find myself in agreement with almost every word the Prime
Minister uttered last week in setting out the need for an early Bill. In fact, I disagreed with only two words. Unfortunately, those words were "these proposals". The scale, the nature and the urgency of the problem have already been clearly identified. That is the good news. The bad news is that the proposed remedy in the form of "variable" or "top-up" fees could quickly prove every bit as damaging and divisive as it will over time be seen to be hopelessly inappropriate to the scale and nature of the challenge.One of the great benefits I have derived from membership of your Lordships' House is the opportunity that it affords non-politicians such as myself to question former Ministers on their retrospective attitude to the effects of this or that piece of legislation for which they were responsible. In listening to them, I have been struck by a single recurring theme; that is, levels of under-investment that have been found acceptable by successive governments despite certain knowledge that, sooner or later, the piper would have to be paid. Any snapshot of the post-war years serves to highlight our continual failure to address the fundamental inadequacy of our transport infrastructure, our public education system and our health service. I could add to that list at great length, and every example I could offer would strike a resonant chord with one or other Member of your Lordships' House.
Now we are being asked to turn our minds to higher education funding. Better late than never, some will rightly mutter. But there lies the first and possibly the biggest bear trap. The lack of resources within the sector is so chronic and has been ignored for so long that anything looks like up. Sad to say, many—possibly even most—vice-chancellors have bought a "bill of goods" dressed up as the best or the only game in town. Shame on them; they should know better. There cannot be one of them who sincerely believes that the Bill, when published, will be the solution to the long-term problems of the sector, although a few—a very few—might privately believe that subsequent secondary legislation will enable them to have something close to the funding stream of their dreams. However, they also know that their security will be bought at the cost of undermining and possibly crippling the aspirations of the great majority of students and higher education institutions in this country.
No, the present proposals will not do. For a start, this entire funding argument is being distorted by an entirely legitimate need for consolidation in the sphere of what I will term "Big Science". I entirely accept the necessity for capital-intensive "centres of excellence" which cannot be generally replicated around the country. These will tend to attract the majority of ambitious young scientists, and, as a realist, I am prepared to live with the distortions to which this concentration of power and money will inevitably lead. But these very particular circumstances do not apply to the vast majority of departments at our universities.
Irrespective of any assurances you may hear, these proposals will, in short order, lead to the emergence of significant differential fees as, for the very first time, a wholly unwelcome marketplace emerges within our state provision of public education.
In many parts of the country the very notion of debt is abhorrent, and that attitude is most prevalent in those self-same communities in which this Government have made real inroads in breaking down generations of prejudice—a fear and prejudice that insists that universities are just "not for the likes of us".
Of those who actively seek the creation of elite, expensive institutions I ask, having graduated with flying colours, do we not want the very brightest and best of our young people seriously to consider a career in the public sector? That being the case, I very much doubt that the mountain of debt that they will be carrying will be much of an encouragement.
I believe myself to have been born a citizen of a great country. More than anything I want my grandchildren to be citizens of a great country. Surely our sole reason for being in this place is to help make that possible. But I do not believe that this country has much of a future if we fail really to crack this issue of university funding. Having read and heard a great deal, my every instinct tells me that these present proposals which, when fully implemented, will raise some £1.25 billion a year, will prove inadequate to meeting one of the great challenges of this new century. That instinct was supported by an article by the Chancellor, Gordon Brown, in The Times this morning in which he said:
- "The reason we seek to broaden access to universities is that only by drawing on the widest pool of talent, from whatever social background, can we achieve for Britain the excellence our economy requires".
My own preference, which I shall go into in more detail should the Bill obtain a Second Reading in this House, is a hypothecated graduate tax underpinned by the issue of a higher education bond. I shall suggest that the bond is designed to raise some £20 billion and is underwritten on a 50:50 basis by the Government and the universities themselves collectively. Not only would the sum raised go a long way towards achieving that frequently invoked nirvana, a world-class HE sector, but it would do so in a flexible, equitable and, I hope, sustainable manner.
If I may, I shall address my final remarks to colleagues in my own party. Not only do I believe that I was born into a great country, I also believe myself to be a member of a great party. Like many of your Lordships I expect to be campaigning for that party in the not too distant future. This Government have much of which they can be justifiably proud, not least in the area of education. It is those achievements I should like to shout from the rooftops. However, I
have no idea what I shall answer when asked, as inevitably all of us will be, "Which manifesto commitments will you renege on this time?"Perhaps because I am not a lawyer I shall not resort to the kind of semantic evasion I have recently heard offered as a means of wriggling out of our self-created dilemma. Surely all of us in this and another place have an overwhelming interest in promoting trust in our political system, not undermining it.
In conclusion, my deepest dread is that 20 years from now I shall find myself shuffling down these corridors passing another generation of men and women who express only regret for their missed opportunities, most particularly for the timid and inadequate manner in which they addressed what might well be remembered as the great university funding crisis of 2004.
4.24 p.m.
The Duke of Montrose: My Lords, I was struck by the welcome in the Minister's opening speech—unfortunately, he is not present at the moment—for the area of the gracious Speech that concerned a fairer and more just society. I am sure that is something that the Minister has cherished for some time. It may appear slightly strange for someone in my position to say that the question of what is just and fair may depend on one's own situation.
I must declare an interest as a farmer and livestock rearer, as I speak on those subjects. I wish to touch on two points: the countryside in general and an issue that specifically concerns Europe. For very many of those involved, one of the attractions of being a farmer or rural landowner is that it has been possible to sustain the impression that a rural life means living a life of independence within your own acres. There was a flexibility to choose what line of production would best suit your situation and your temperament. Farming was regarded as an essential element of the national life, and the "honest toil" celebrated in literature and verse was seen as thoroughly beneficial in taming nature and allowing all kinds of useful things to flourish, although some of the Minister's remarks showed how much that attitude has changed. Many of the ways in which government offered to underpin production left a lot of room to sustain that impression. But in fact, what with the progress of science and with government and EU subsidies and regulation, all of those things have become progressively less and less true, and the public seem to be less and less convinced that money provided to sustain those activities is to their benefit.
As so ably expressed by my noble friend Lord Peel, I feel that we are now facing a watershed. Most of that air of independence is being swept away and once again the state is taking over. It is perhaps a little difficult to say whether the state should be regarded as Britain or Europe but, whichever it turns out to be, it does not imply a fundamental difference. The state, of course, is taken to be acting on behalf of the people and therefore any rights of the individual that are being diminished are somehow wonderfully increasing the rights of large numbers of others.
That may seem fairly incontestable when we are dealing with something like access rights, which of course we have seen being enacted on a rather wider basis in Scotland than is proposed in England and Wales. In Scotland it is proposed that access can be exercised anywhere but in the curtilage of a domestic dwelling or school. But, wherever it occurs, it is a diminution of the right of the individual property owner.
The new philosophy is very much that we should be paid to put on a show for those who wish to escape the harsh realities of their lives and be able to wander curiously in the fresh country air without finding anything that will give them offence.
There is also a new wave of enthusiasm for community ownership, most easily conceived as community ownership of woodland, but gradually being rolled out into ownership of property, and in most cases receiving handsome financial assistance from public funds. However, there is an awkward question that lies behind the community woodland proposal in particular. Woodlands require management and even those on the scale of the Forestry Commission are currently losing money—in that particular case several million pounds a year. How will things work when there is a burden of losses to be met by the community, perhaps in one year or perhaps in more than one year?
As many of my noble friends have said, by far the biggest change to our understanding of what constitutes a rural way of life is likely to come from the mid-term review and the complete decoupling of agricultural subsidies from production. As it stands, this appears to be the most likely option offered by the mid-term review of the CAP to be chosen for this country. This seems at first glance to be the most radical simplification of all the myriad forms, returns, permits and applications that the industry could ever conceive and, if that was all, we would all be likely to send up a big cheer.
However, as many of your Lordships will be aware, coupled with that requirement is a stipulation known as cross-compliance. Certainly, to my knowledge, in Scotland, and more than likely in the remainder of the country too, this will be centred mainly on the requirement for everyone who is receiving the single farm payment to agree to what is termed a "whole farm plan". This will be drawn up to suit the criteria of the administration which will have a fairly pre-conceived idea of what produces the most public good. In the nature of this kind of thing, any desire for innovation or variation from what has been laid down is liable to be acceptable only after considerable persuasion and negotiation. The shape of the countryside will be taken in hand by the Government.
As someone who has care of and responsibility for animals, I should like briefly to express my thanks to my noble friend Lord Soulsby for flagging up so much our problems with health for animals. I also want to mention a regulation currently being considered in Brussels that has its roots among the public perceptions that I mentioned. It is the proposed
regulation for the welfare of animals in transport. It plans to bring in far more onerous criteria than those in the Welfare of Animals in Transport Order 1997, the current rule in this country. Any problems that have arisen have tended to be from a flouting of those existing criteria, which have been accepted as thoroughly practical and are in use as the basis of some of the highest animal welfare schemes in the country. The new proposed regulations have created great concern for all sectors of the livestock industry, but particularly for the sheep sector and remote areas.We live in a country of immense climatic and geological variability. We have a livestock industry that depends on transport to ensure the welfare of that livestock, because it requires to be moved from one part of the country to another. I draw noble Lords' attention to a study carried out for one remote area, by the Highlands and Islands Development Board, of the effect of the proposals. It estimates that, for sheep moving within Scotland, the proposals will cost producers an extra 75p per head. For those moving beyond Scotland, they will cost £2 per head. For cattle, they will cost £6.15. That may not seem much but, when calculated over the total animal movements for that area alone, the cost is £1.65 million, in an industry that is severely stretched. Do the Government know any scientific reasons that can be advanced for those EU proposals? What attitude do they expect to take in the negotiations?
Under our old support systems, farmers liked to feel that they had the ability to cope with all the changes that a commodity trading market could throw at them. The next stage will offer new and greater challenges. Like my noble friend Lord Peel, I ask the Government, if they are making haste, to do so very cautiously.
4.32 p.m.
Baroness Perry of Southwark: My Lords, in the very wide topics that we are debating, I wish to talk about policies on higher education, as other noble Lords have done. Those policies have two overriding priorities. The first is that we do not waste any human capital. Everyone who wishes to go into higher education and is qualified to benefit from it should be able to do so. The second priority is that the universities are sufficiently well funded and free from government interference to provide the right and most suitable kind of higher education for the vastly increased number of students now entering the system.
Access is fundamental. Any structure that higher education adopts must be sufficient to ensure that the access is to the right kinds of courses, fitted both to the needs and abilities of students and to the needs of the economy and employers outside. Incidentally, I have no problem with the Government's target of 50 per cent. That came not from the Government in the first case, but from the CBI after some very careful study of what the overall demands of the economy would be.
However, we should remind ourselves that that economy is very diverse. The idea of graduate employment being restricted to a fairly small number
of elite jobs is no longer at all credible in a knowledge economy. As other noble Lords have said, there is a wide range of needs in the economy now for highly educated people, which includes everything from the most esoteric of physicists or engineers to the well educated retail manager, hotel manager or surveyor, and nurses and teachers of course in the professions.If we are to meet the needs of both the students and the economy, it is important that our system is diverse. I am concerned that the Government's proposals for the £3,000 maximum fee do not encourage diversity. As the noble Lord, Lord Sewel, said, all the signs are that the universities are already saying that they will all charge a flat £3,000 fee for every course and in every kind of institution. That sum simply does not give enough headroom to get the kind of variation that the Government rightly seem to want. It will force the system into uniformity instead of the diversity that we are rightly seeking.
Let us look at the possibility of adequate financing for the universities. The sum of £3,000 per student is simply not enough. As many noble Lords have said, UUK's estimates are of a £3 billion shortfall, and the £3,000 fee will deliver only half that. Of the £1.5 billion that on the Government's best estimates it will deliver, one third is quite properly set aside for bursaries. Assuming that the Treasury coughs that up in the years before the loans start being repaid, only £1 billion at best will go into universities, which is only a third of what they really need.
That is an overall figure for all universities. I cannot but declare my interest in my university of Cambridge. Like many of the other top research institutions, it must be able to continue to compete in the international market with universities in the United States and elsewhere where the funding is much better. Having chaired for five or more years 11 of Cambridge University's appointment boards in the sciences, engineering and medicine, I know at first hand how desperately difficult it is to recruit the really top researchers that our country needs in our best universities, when they are being offered not only twice as much, but sometimes five times as much as we can afford to pay them here, by universities in the United States.
After many years of working and being involved in higher education, my conclusion is that the most important thing that we can do for universities is to set them absolutely free to raise appropriate fees for those students who are well able to pay. Almost half the students at our top universities come from schools where their parents have been paying anything from £12,000 to £20,000 a year for their education. Why should they pass from the sixth form of such a school to a university that they get for £2,000, £3,000 or £4,000 a year? That seems wrong.
It also seems wrong that the Government are attempting to interfere with the academic freedom of the universities in the nature of the students whom they recruit and accept. In every democracy, the government have traditionally stepped back at arm's length in any question of admission to universities,
even though funding is given. The access regulator seems an affront to all who believe in the freedom of the university system.It is because of that that I very much welcome the letter that the very respected Council for Industry and Higher Education has written to the Secretary of State. It states:
- "We also want our higher education to be innovative and responsive to an expanding range of needs. This is more likely to be achieved with less central intervention. Each institution, like any other business, should tell people what they will get for their money, price accordingly and let the customer choose".
A priority in higher education policy is that no student who is capable of benefiting from higher education and wishes to go into it should be denied the opportunity because they or their parents are unable to pay. It is for that reason that I beg the Government to consider the importance of a proper bursary scheme, well publicised, funded and founded, to allay the fears of students from less well-off families that they will acquire debts that they will be unable to pay. Those frighten them in perception more than reality, as the Government will argue, but that may be enough to put them off, which saddens me greatly.
So I very much welcome the announcement made last week by Cambridge University that, despite its financial difficulties, it intends to provide the one-third of its students, who in the Government's proposed maintenance grant for poorer students will qualify, with bursaries of up to £4,000 a year. It is not intending to do that entirely from its fees but from fundraising. I ask myself how many universities have the range of alumni among whom fundraising can successfully be done, as it can, it is to be hoped, at Cambridge. Very few will be able to match that conclusion.
I therefore beg the Government to consider setting the universities free to charge reasonable fees. I am sure that Cambridge, if it were left free to set its own market fee, would be able to charge its wealthy students much more and therefore be enabled to give much more to its poorer students. I do not accept the Government's proposals as they stand. I believe that they will discourage the less well-off students; they will not provide sufficient money to bridge the gap in university funding; and they will not encourage the necessary diversity.
4.41 p.m.
Baroness Warwick of Undercliffe: My Lords, I, too, shall speak on higher education in which I declare an interest as chief executive of Universities UK.
I warmly welcome Her Majesty's announcement of the Government's intention to introduce a higher education Bill in this Session. There are several excellent and welcome elements to this Bill, but I want to concentrate on that which is most controversial; that is, tuition fee increases. I commend the Government for taking the tough decision to include this controversial Bill in the legislative programme and I urge noble Lords to support its passage through this House.
Her Majesty's Government have a grave responsibility to do what is right and necessary and not just what is easy and popular. In standing by their conviction that urgent action must be taken to safeguard the future of higher education, Ministers have chosen the difficult path. But, in my view, it is the right one.
The Government are often accused of not listening—but in this case they have listened to what the universities have been saying. They have also listened to what this House has been saying about the urgent need to find a solution to the university funding crisis. They now offer this House and another place an opportunity to act. I think it is now almost universally accepted that universities need more resources. The real debate is about who should pay, how much and when.
At this point, I want to commend to the House the contribution made by the noble Lord, Lord Dearing. Like the noble Lord, in his seminal report, I believe that all those who benefit from higher education should contribute to its costs when they see that benefit. And I can say that Universities UK believes that it is fair to ask graduates, who gain most from higher education, to pay something towards the costs of their tuition.
But we now find ourselves at a crossroads. The Government want to give universities the freedom to raise their fees for full-time undergraduate students up to £3,000. They want to give institutions the freedom to chose whether they charge the maximum amount or something lower. They want to give institutions the same freedom and flexibility to set full-time undergraduate fees that they already have—and have managed responsibly—for part-time, international and postgraduate students and, as my noble friend the Minister said this morning, which the Open University has had since its inception. It is worth recalling that at least 50 per cent of all students already pay variable fees.
A number of alternatives have been discussed. I believe that the idea of a flat-rate increase of £2,500 is being circulated in another place. As others have said, even the Government's proposal will go only some way towards redressing the funding crisis. Of course, any increase in the current fee would help, as the noble Lord, Lord Puttnam, pointed out, but, in my view, the Government's option offers the best chance of beginning to bridge the funding gap. I am convinced that the way forward lies with a flexible fee structure. I believe that all universities will benefit from the new degree of freedom offered by variable fees.
Much of the unease about the Government's proposals for variable fees has centred on the idea that it will somehow create poor universities for poor students. I am convinced that will not happen. First, all universities will be better off under the Government's proposals, and so all students will see the benefit of that. Secondly, it is by no means clear that some universities will charge £3,000 for all their courses while others will charge much less for theirs. It is much more likely that course fees will vary within institutions, with most charging more for some courses
and less for others. The variable system proposed by the Government will give vice-chancellors the freedom and flexibility to respond to local conditions and to stimulate demand for courses where demand has been weak in the past, such as some languages and science courses. Do we really want to tell universities that they should be prohibited from cutting course fees? Universities need the same flexibility in relation to full-time undergraduates as they have for other students.Thirdly, the Government propose to increase the level of financial support for the poorest students. Currently, around 42 per cent of students do not pay fees. Universities have been discussing with the Government the best ways to ensure that these most disadvantaged students are in no way worse off as a result of the proposed changes. And with their increased income from fees, the universities will be in a better position than ever to offer additional assistance to the students who are in most need.
Combined, these factors mean that the students from the poorest backgrounds, who may well be those most likely to be put off by the prospect of debt, are likely to be no worse off under the proposed system than under the current one. That means that no poor student should be put off attending even the most expensive course. And other students will also benefit because none of them will pay any fee at all until graduation.
What the Government propose is that we ask potential students to make a considered investment in their future—an investment which, as my noble friend Lord Mitchell so lucidly demonstrated, is clearly worth it. There is plenty of evidence from the benefits graduates enjoy in terms of higher earnings, more choice and opportunity, social mobility and even health.
What is more, despite the increase in the number of graduates in the UK, emerging evidence shows that the earnings premium is increasing. There is plenty of help for those most likely to be cautious. The repayment threshold and zero real rate of interest protects those who take a long time to repay their loans because their income is low, or because they take career breaks.
In my lifetime, I have seen higher education transformed from the preserve of a fortunate elite to something to which everyone can aspire. I passionately believe that this is right and necessary for social justice and economic success.
This Government are not afraid to make tough choices. They could have settled for a quiet life and ignored the implications of continued neglect of higher education. They have instead demonstrated their commitment to higher education through the introduction of this Bill. Noble Lords will know that Universities UK will be taking an enormous interest in the details of the Bill once it is published, but I have no hesitation whatever in welcoming its inclusion in the Address.
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