Tim Yeo on tuition fees

The tuition fee issue belaboured the Prime Minister again. The Conservative leader, Michael Howard, said he was trying to bully his backbenchers into supporting a policy which ran directly contrary to what the party promised in its election manifesto. He further claimed that bringing in tuition fees could make universities poorer.

But, apart from opposing the idea of tuition fees, do the Conservatives have a coherent alternative?

The Shadow Education Secretary put his party's policy for the future of our universities to Dr Terence Kealey, the Vice-Chancellor of the University of Buckingham and Professor Nicholas Barr of London School of Economics.

JEREMY PAXMAN:
With us now are Dr Terence Kealey, a life-long Tory I believe you are, and Professor Nicholas Barr of the LSE. Now before you guys put questions to Tim Yeo, can I take up that point that Robert Jackson made there. On what item of political philosophy is your position based?

TIM YEO MP
(Shadow Education Secretary):
It's based on our belief that the future of universities depends on their continued freedom from government interference. We believe that the establishment of the access regulator, which is a big part of this policy, the bill we saw it two weeks ago, makes clear that no university can charge a penny in top-up fees, until it is it has submitted for approval a plan to the access regulator, that therefore, universities will be required to give up the control that historically they've enjoyed over their own admissions policy.

PAXMAN:
So if there were no regulator, there would be no problem?

YEO:
That would remove one of our objections. The second one is that we believe that access to universities for students, should be on the basis of ability to learn, and not ability to pay. And it's clear to us, that even under the government's proposals, which involve a cap on the fees that universities can charge, a cap of £3,000, the debts, the debts that the next generation of students have to incur, could be as high as £30,000 per student. That's the level at which it starts to become a deterrent to students, even from middle-income families.

PAXMAN:
Dr Terence Kealey, your witness for a few minutes?

DR TERENCE KEALEY
(Vice-Chancellor, University of Buckingham):
Your policy's based on concern for university freedom. The universities are very un-free at the moment. They can't even have the freedom of the corner shop down the road for charging and setting fees. This policy of the government enables the universities to move towards real economic freedom. Once you have that, you have freedom in all other areas. Why therefore, do you not support the concept that the students paying the university, means the universities become free?

YEO:
Because, as I've explained it doesn't give universities that freedom. No university can charge a penny of top-up fees until it has submitted to the regulator, who is a bureaucrat, appointed by the Secretary of State, salary set by the Secretary of State, who reports only to the Secretary of State, not to Parliament, on issues, which the Secretary of State directs him to report on. This is the person, who has to approve a plan which you and your colleagues in the universities, must submit for his approval. We don't know what that plan should include. Because the regulations made by the Secretary of State, have not yet been published even though Parliament's going to debate this issue next week. So we don't know the issues which the regulator can direct you to make your plan on. But he has that power. Even after he's approved your plan, if you don't implement it in the way that the regulator thinks you should he can fine you. So the idea that this policy, of the Labour government is giving universities any freedom at all is completely flawed.

DR KEALEY:
Let's take this point. There are hundreds of directives that come to universities from a myriad of government agencies and bodies. It is a burden that the universities suffer. This is one marginal one. But there is a more fundamental political point. When this scheme was first proposed about a year ago, what the Conservatives could have done is said, "This is What Margaret Thatcher and Keith Joseph tried to do" this is pure Tory policy. Relief of burden for the tax-payer, the beneficiary pays. Why didn't the Conservative Party say "This is in the national interests rather like invasion of Iraq, your party believe to be in the national interests, why didn't you choose to work with the Labour government" so that instead of all the concessions going to the left-wing of the Labour Party and Liberal Democrats you could have worked together under privy council rules for the benefit to Britain to create a better bill?

YEO:
I'm glad that you've now acknowledged that the proposal from the government, the bill which we're going to fight, doesn't reduce the regulation, it actually increases it. It increases it in my view in a substantial way. The costs of which will be borne almost entirely by the universities. The bill only sets aside £500,000 to pay. The rest of the cost also is borne by the university. But the reason why when the government published its White Paper a year ago, it's been arguing about this policy inside the Labour Party for a year now, it still can't make sense of it, it keeps changing it. Week to week the landscape is changing. But the reason why we opposed the policy is because we believe it is an attack on university freedom. And it is the first step to making access to university based on ability to pay. Because you know, that the £3,000 cap, which is at the moment what the government proposes, will soon raise. You want it to be raised. The universities believe that the £3,000 cap won't give you the money you need. You're right. The policy only works if fees increase up to £10,000, at which level they'll represent a real deterrent to the students, I'm concerned about. The students, who graduate from your universities, might be a teacher...

PAXMAN:
He's more or less said what he's going to say.

DR KEALEY:
The point is you've only got to look at other countries; the best universities in the world are in America. These are independent. The Tories should be embracing for Britain, is independent universities, free of all government regulation. But the role of the State is to pay the fees for the poor, to facilitate the poor so that you end up with a perfect market in that the universities are free, but you, the government will say that you'll facilitate students to go to universities through loans and grants.

YEO:
I agree that we want to see the universities made freer. Which is why, if this bill does go through Parliament, I fear it will, if it does, we will repeal the act which has imposed on universities a more regulated structure than anything we've had before in this country. And more regulated than the American model, which you're keen to embrace. The one area where we've got something to learn from the United States is that their universities enjoy higher levels of endowment than the British universities. That's good. I'm happy to sit down with Charles Clarke, the education secretary and if he agrees to drop this bill, next Tuesday, as I hope he will, and then I'm willing to debate, and involve you and your colleagues, about how we can talk about this.

DR KEALEY:
That is terrific. Why have you not suggested that before?

YEO:
I have said on record that I'm keen to take part in a debate with the higher education establishment, the Vice Chancellors and representatives of the students to about how we can meet are genuine funding needs.

PAXMAN:
Can I ask you one small point of the 89 Vice Chancellors, how many of them actually support your position?

YEO:
Well, you've picked up this from Radio 4 the other day.

PAXMAN:
I am afraid I haven't, I was asleep.

YEO:
Your researchers may have done.

PAXMAN:
You claim to speak for the universities. How many of the Vice Chancellors support you?

YEO:
I don't.

PAXMAN:
You've done it all the evening?

YEO:
I am concerned about their future. When I lay out the details of the Conservative Party...

PAXMAN:
You're not going to answer that?

YEO:
Yes I am. Give me a chance.

PAXMAN:
How many of the 89?

YEO:
When I've laid out the details of the policy I'm confident that a significant number will.

PAXMAN:
So the answer is, right now, none?

YEO:
They don't know the detail of the policy. They don't know the detail of the government's policy.

PAXMAN:
Neither do members of your own party. Doctor Barr?

PROFESSOR NICHOLAS BARR
(London School of Economics):
Everybody's agreed on the objectives, improving the quality of higher education and access. The government's proposals do both. They spend money to promote access by restoring grants and increasing the maintenance loan. The government proposals bring in up to £1.4 billion for universities in additional fee income which with the existing fee income is getting on for an extra £2 billion for universities. Now, where in your proposals is there money to promote access? You say you're concerned about students. Where in your proposals is there money to improve the quality of universities?

YEO:
Well, the first way you promote access is by not pricing students out of the market. Charles Clarke himself in the debate in the House of Commons suggested that the way to attract students to certain courses perhaps there is a shortage of physics students is to price those cheaply. I say therefore, the way to ensure we attract more people to study is to ensure the price doesn't deter them. The price of access to university in the future, when the fee cap's raised from £3,000, as you want it to be, many other Vice Chancellors on record are saying they don't think the cap will remain at £3,000 for long. When it's raised the level of debt that the next generation of students has to incur will run into tens of thousands of pounds.

PAXMAN:
Is that an answer to your question?

PROFESSOR BARR:
No.

PAXMAN:
It is a different point?

YEO:
I was asked how we were going to promote access. I say we'll do it by not pricing courses out of students' reach.

PROFESSOR BARR:
Access requires money. Where's the money coming from? Quality requires money. Where's the money going to come from?

YEO:
The money will come from, first of all by dropping the government's policy. The level of income raised is over £1 billion of which 10% has to be given back in bursaries by the universities to poorer students. The costs attached to the bill, you may not have had time to read the notes. They are detailed in the notes. The costs of the extra loans to pay for the top-up fees, and the costs of the loans to pay for the loans which will pay the tuition fees, which are paid up-front, they're detailed in the notes. Those two alone amount to £635 million. Then there's the cost of the maintenance grants. They're going to be over £1,000 a year for poorer students. That's another £450 million. So we have, coming into universities, just under £1 billion net. The costs of the bill just over £1 billion. What Charles Clarke has told us is that the costs have to be met from the government's, from the department's existing higher education budget. That's what he told me on the floor of the House on Thursday. If that is the case, the net income to universities as a result of the government's policy, will not increase by a single penny. Now, the only hope is to persuade Gordon Brown to increase the departmental budget.

PROFESSOR BARR:
Lots of numbers being thrown about. I will leave out my numbers. Higher educational policy institute, respected institutions, the extra income for universities will be between £1.2 billion and £1.4 billion. There will be money for students for grants to promote access. It is true that the loans, because of the interest subsidy, introduced I may say so by a Conservative government, not one of the best features of the present system, we could probably agree that over time that would need to be adjusted. But there is extra money for students and universities. Where's that coming from?

YEO:
Let me be clear. The first thing we'll do is actually create extra money by stopping the government's proposal. At the present time...

PROFESSOR BARR:
This is tricks with mirrors. Bringing in extra money from the income of future graduates to help today's poor and help universities. Where's that coming from under your proposals?

YEO:
The figures the government has published were attached to the bill on Thursday. We had the bill published, the notes have been published. They acknowledged that the costs, the costs attached to the extra loans and access arrangements and higher maintenance grants, they exceed the amount of the universities. So there are two possibilities here.

PROFESSOR BARR:
What you are saying is that any loan scheme, gives out money first, and it comes in later.

YEO:
No. I'm not saying that. The costs of the loan, the interest subsidy, the fact that a certain amount has to be written off and administration costs are shown on notes attached to the bill. The government has shown that the costs run at over £1 billion. There are two possibilities. One is that Gordon Brown doesn't give the department extra money. In which case the extra fees will be clawed back.

DR KEALEY:
Blair promised that would not happen. He Promised that on Thursday.

YEO:
He may have promised that. But in Parliament today, Tony Blair said they could not give that assurance. But let's assume that he gets the money from Gordon Brown. The effect will be that for every pound into the hands of you and the universities, I welcome that, the tax-payer will have to pay £1.20.

PROFESSOR BARR:
That is not true. You are throwing around smoke and mirrors. Let me put one final point to you. The government proposals are that five sixths of higher education costs will come from the tax-payer. The remaining one sixth will be paid from better-off graduates. If you say it's going to be paid for by the tax-payer you're saying that that last sixth comes from tax-payers, 82% of whom have never been near a university. You may wish to say that. I would be sorry to hear that.

PAXMAN:
We're going to leave it there. Thank you very much.

This transcript was produced from the teletext subtitles that are generated live for Newsnight. It has been checked against the programme as broadcast, however Newsnight can accept no responsibility for any factual inaccuracies. We will be happy to correct serious errors.