BBC On The Record - Broadcast: 17.11.02

Interview: MARGARET HODGE MP, Minister for Higher Education

Confirms that the Government is considering asking students and their families should pay more toward the cost of university education.

JOHN HUMPHRYS: Our universities are in crisis. Every lecturer and Vice Chancellor has known that for a long time and now Margaret Hodge, the Minister for Higher Education, has said so herself. The problem is quite simple. More and more young people are going to university. That's been happening for years. But this government has encouraged a massive expansion of university education and hasn't provided the money to pay for it. The amount spent on higher education has gone up, but not by enough. There's also a long-term problem with paying for research and attracting the best brains. It costs money and the money simply isn't there. So the government's solution appears to be students should pay more - top-up fees. That's what's being considered. Make some students meet a much higher proportion of the real cost of their education. The Minister Margaret Hodge is with me. Mrs Hodge, you say a crisis, you say more money is needed. It has to come, does it, from individual students in the shape of top-up fees, that's the way to do it? MARGARET HODGE MP: No, it can come from three sources. We can either get more money from the taxpayer and increase public spending on higher education, we can try and attract more private money from businesses who get a benefit from the research that..and development on the new products that come out of higher education. Or, we can get money from students and their families and the issue we are addressing is how to get the balance right between those three contributors so that we can meet twin objectives which are really tough John to meet. Which is one, to maintain our excellence which we do need because it's the high quality research which will lead to the innovation, which leads to the growth, which leads to the jobs and on the other hand, how we ensure that our most talented young people, from whatever background, are able to access a place at a university without a fear of debt. HUMPHRYS: So top-up fees are in that mix? HODGE: Top-up fees are one of the things that are being considered and in January we will be putting forward our proposals. What we are trying to talk about now is some of the issues that confront us. If I can come to the student side of the formula. We have expanded student numbers, not just this government but the previous government and the previous government cut the unit funding for students, there's over a third cut in the amount of money that now goes to students. That has the implication on teaching standards, on the quality of the infrastructure, the capital buildings, on the facilities, the books that young people get. That is intolerable, so we have to tackle that. If you look at what a student gets out of getting a degree, it is quite...well it's quite good... HUMPHRYS: In terms of higher salary and all the rest of it at the end of it. HODGE: What we had was a recent OECD study which showed at the graduate premium, the extra money that you earn just by virtue of getting a degree, over your lifetime is somewhere in the region of four hundred thousand pounds. Now that's the benefit to the individual, then we have to ask should that individual, with the personal benefit, not contribute more towards the cost of their higher education. HUMPHRYS: If that's the benefit and it has been, some people question that. But nonetheless, let's accept that that's is the case, that there is a big benefit. You do have a manifesto commitment don't you, not to introduce top-up fees during the lifetime of this Parliament. So it cannot happen until we've had a General Election in the next three or four years. HODGE: We do have a manifesto commitment. What the strategy document is doing is looking at the universities over the next decade. I think we all strongly feel, is if we can't get our universities right now, we're at a crossroads, we will all pay the price over the long-term, getting the research right, maintaining the excellence, maintaining the international competitiveness, getting the teaching infrastructure right, so that you grow those skilled and qualified people to contribute to the knowledge economy. Those are really important challenges and we need to get them right now for the long-term future. HUMPHRYS: But you're not going - you say you haven't decided yet and you'll be deciding later. What you will not do though, is allow students, presumably universities rather, to charge students what they like. I mean in the case of Imperial College for instance, it might be fifteen thousand pounds a year, you wouldn't allow that, there would be a cap at some point, I am assuming. HODGE: You are trying to push me on the solutions that we are going.. the proposals we are going to be putting forward in January and I can't John, be drawn on them now. What I can say, is if you look at the figures it appears that students doget a good deal out of university. You also look at the international figures and what's interesting there, is we currently spend far more of our higher education cake on student support than any of our competitor countries, American, Korea and Japan. And Korea is an odd one, because Korea has massive participation and yet spends far, far less on student support. So what then appears to be happening is working class young people don't appear to be put off by the lack of student support in a country like Korea. HUMPHRYS: But if you're no.....just to deal with that fifteen thousand a year that I mentioned from Imperial College. If you are now prepared to rule that out, you will scare people to death. I mean...and certainly working class students and their families, no way could they afford those sorts of fees. HODGE: What I can say to you now, is we want to ensure we have a system in place that makes certain that any young talented person, whatever their background can develop their potential, go to university and contribute back into the economy. One of the scandals of the higher education system, is that from the time you and I went to university, when... HUMPHRYS: Well I didn't actually, I left school at fifteen..but there we are. HODGE: Right, well there you are. Okay, well certainly when I went to university, six or seven per cent of young people went to university. Now we are up to about a third of eighteen year olds, about over forty per cent of under thirty year olds. Yet in all that period, and even going back to these sort of so-called golden era when we had grants and no tuition fees, there has been absolutely no change in the socio-economic composition of those who go to university. HUMPHRYS: Well, there has been a bit hasn't there, there has been a bit. I mean a lot more..the increase in the number of poorer kids going to university was....I'm quoting the chairman..the Vice Chancellor, what used to be called the Vice Chancellor, he says a very clear four fold increase in poorer children and only a two fold increase in better off children. HODGE: Well, the absolute numbers are up, so of course... HUMPHRYS: And proportionately as well... HODGE: No, in the proportionate number it's in the opposite direction. If you look at the number from the top three groups and the proportion of those who went in 1960 and compare that today, and the proportion in the number of the bottom three groups who went in the 1960s and compare that today, that gap has actually grown. Now that's not an indictment of any other previous government. I think it's an indictment of us all. HUMPHRYS; And what's absolutely clear is that if you now start imposing fees it is the working class kids and middle class people with not very much money who are going to suffer the most, that is simply obvious isn't it? HODGE; Well we have to ensure that we have a system in place that again makes sure that no young person with talent is put off going to university because of the cost. But can I just say it is much more complicated John. Were that it was only just money. The real issue about getting more of our talented working class young people into university is as much about keeping them on in full-time education at sixteen rather than going out for a job then, making sure they raise their attainment levels so they get the appropriate qualifications, getting them to aim higher, raise their aspirations. HUMPHRYS; But you won't do that, is my point, if you start imposing these fees, and if you start talking as Stephen Byers, former Education Minister of course did in the Guardian last week, if you start talking about the ceiling being twenty-five thousand, the cut-off point being twenty-five thousand that'll scare an awful lot of people. I mean what is poor - what's your definition of poor. I know you don't want to go down the road of detailing your policies, because you haven't arrived at them yet, but nonetheless when you think about a poor family in relation to this issue, what's poor? Twenty-five thousand and above is not poor, is that what you're saying? HODGE; Well, it depends how much you ask of them, when you ask of them and I think those are the sort of issues that we're attempting to tackle now. We don't want young people to be put off going to university because of money. Let me just again put it into its context. At present nobody whose family income is less than twenty thousand pays even the thousand pound contribution to fees and they get access to a loan which is just under four thousand pounds a year. Between twenty and thirty thousand there's a taper, so actually, only four out of ten current people in the system pay the full contribution to the fees. That's where we are at the moment. Now there are students who do complain as indeed do commentators, that people are leaving university with a debt of in excess of ten thousand. HUMPHRYS; Not just students, Mr Triesman, your own General Secretary of the Labour Party, he complained too, bitterly about top up fees, just a while ago. HODGE: Well, let's put it into its context. Set that money against the four hundred thousand pounds on average that people will earn over their lifetime. Set that money against how we're asking it back, because we don't say to people, give it back straight away. We say when you earn over a certain level, we don't charge a real commercial interest rate on the loan in the way again.... HUMPHRYS; So might you have some sort of graduate tax then, so that they would pay it back out of higher taxation once they're earning the money? HODGE: You don't have to be a Brain of Britain to think of how the options that are on the table..... HUMPHRYS; So that's one of them? HODGE; That - there are a range - you know it's how much you pay, how you pay, when you pay. Those are the sort of things that we are looking at. HUMPHRYS; Okay, but one of the dangers here, a very obvious danger here is that you'll end up with a two-tier system of university education. You'll have the most well off kids being able to go to the, as it were the Ivy League universities, Oxford, Cambridge, Imperial College and so on. The poorer children and working - middle class children as well whose parents can't afford these high fees not being able to go to them, they'll go to the old polytechnics or whatever it happens to be. That's a serious problem isn't it? HODGE: Let me say a number of things on that. First of all universities are different and I think we have to acknowledge that difference. You and I know that, every employer knows that. HUMPHRYS: Absolutely, huge difference. HODGE: Huge differences. So don't let's pretend that a degree in theology perhaps from Luton is the same as a degree in accountancy from Oxford. So there are differences currently in the system. That's the first thing to say. The second, I'm absolutely passionate, John about ensuring that access to all universities, but particularly to our top universities is based on talent and the real difficult issue that we're all trying to tackle is how we protect that passion and that determination together with ensuring that your top universities are properly funded. That's the circle we've go to square. It isn't easy. Why have we've been at it for such a long time? But it's the one that we're determined to find a viable solution. Now I think when we come out with our decision, let me say that, we're not going to keep people - everybody happy, because as I said last week, there's isn't a free lunch in this world around how you properly fund your universities and ensure access for students. There isn't a free lunch in that one. But what we've got to do is try to be fair between the student and their family and between the taxpayer, between the university and the individual. HUMPHRYS; It's an awful lot of people you're not going to be able to keep happy isn't it, including the Chief Secretary to the Treasury, Paul Boateng, your colleague, because he attacked the Tories, I was reading his speech only this morning. Tory policy he said, is to use top-up fees. The result he sent on to say, would be two-tier public services with choice only for the privileged few. So in other words, he thinks you would end up with a two-tier system. HODGE: Well, we're not going to end up with a two-tier system, in terms of ensuring that talented young people from working class backgrounds can't access our top universities. We do have a system where universities are different, have different strengths and I think to pretend that doesn't exist in the current university sector, I think, is a bit na�ve. HUMPHRYS; So you'd accept then that - I mean Tony Blair obviously believes, or says he believes passionately in a meritocracy. The trouble with this system is, it's fine if you have the merit - I mean this proposed system- possibly proposed system, it's fine if you've got merit and money. If you've only got the merit under this top-up system you're going to have to struggle. HODGE: No, if you've got merit and no money we have to find a way of ensuring that merit actually succeeds and money doesn't inhibit. HUMPHYRS: Very difficult to see. HODGE: Very difficult John, and that's why we're spending proper time trying to get a sustainable long term solution. HUMPHRYS; And you accept that the problem applies to middle income people as well as the poorest. In fact in a sense possibly even more if you put a limit on something like twenty-five thousand a year for instance? HODGE: Yes, I mean let me just say one thing to you about... HUMPHRYS; If you would make it fairly brief I'd be most grateful. HODGE: Okay, well, everybody wants to be able to pay, but remember this is terrible British disease. Going to university is seen by us as a cost. It's actually an investment, it's an investment which gets you better jobs, better prospects, much more exciting career opportunities and therefore we've got to persuade middle classes, working classes as well as the traditional elite that this is good for them as well as good for Britain. HUMPHRYS; Margaret Hodge, many thanks. HODGE: Thank you.
NB. This transcript was typed from a transcription unit recording and not copied from an original script. Because of the possibility of mis-hearing and the difficulty, in some cases, of identifying individual speakers, the BBC cannot vouch for its accuracy.