Sir Julian Lewis: I obviously welcome that the fees charged will be limited, but I presume that the colleges will be able to choose the packages that they offer, so is there a danger that they will be less inclined to offer modules if they cannot charge extremely exorbitant rates for them?

[Sir David Evennett: I know that my right hon. Friend has a touch of cynicism. I am an optimist, and I believe that the colleges will want to take up the opportunity, because that will show the success of what they are doing. They are part of the local community, so they need to get real. We will have to discuss that point further. I encourage my right hon. Friend to beat the drum in the colleges in his constituency and to tell them that it is their civic or local duty – whatever we want to call it – to do these kinds of things. But we should be wary of what he says. ...]

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[Aaron Bell: ... For too long, young people have been encouraged towards unsustainable degrees. We have a fixed model, pushed under the Blair Government, of three-year courses that all charge the same fees. When that Government introduced tuition fees, the original idea was that different institutions would charge different amounts, but that is not how the free market resolved the problem. It was apparent that if a provider charged less than the maximum – originally £1,000, and later £3,000 or £9,000 – it would be advertising itself as inferior, and no provider wants to do that because they all want to have the badge.

In practice, of course, there are inferior courses and universities that are not as good as others, yet people are paying the same for every course at every university. There is no proper market signal to young people as to what is valued in the marketplace and the world of work. The Bill introduces a new method to make sure that students access courses at a fair price, and pricing modules and short courses proportionately will go a long way towards getting the market signal out to our young people, and to older people who take advantage of lifelong learning, as to what is valued.]

Sir Julian Lewis: I recall some of these debates and it was predicted at the time that the universities, in particular, would behave in precisely the way my hon. Friend has described. I am a little bit concerned about the people who did a course that was not really viable in terms of qualifying them for a practical career. How, if at all, will they benefit from this legislation, given that, presumably, they may have used up their three years’ worth of learning allocation?

[Aaron Bell: I am not sure whether my right hon. Friend was in the Chamber earlier when I intervened on the Secretary of State on precisely that point. This comes with a four-year entitlement. It is not perfect and people will have used up entitlement; I discussed this last week in the Tea Room with the Minister for Skills, Apprenticeships and Higher Education, who is in his place. The flexible loan is worth £37,000 at today’s prices – four lots of £9,250. Those who did a three-year course and found it did not do much for them may have the opportunity to do a one-year course now. When people are a bit older and wiser, they can often get as much out of a one-year course when they really want to do it as they did in three years when they were at university and perhaps were too busy in the bar, on the football pitch and so on. I take the point made by my right hon. Friend the Member for New Forest East (Sir Julian Lewis) and thank him for sharing his experience of those debates from back in the early days of the Blair Government. However, I do think that the Minister and the team in the Department for Education have considered this point, and I think it is one reason why they have set this at four years rather than three. ...]

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Sir Julian Lewis: I thoroughly endorse the direction of my hon. Friend’s [David Johnston's] thoughtful argument. Does he agree that, even at the Russell Group university end of the spectrum, there has been a serious issue with grade inflation? So many people – a large majority, I think – are now awarded first and upper second-class honours in institutions where, 20 years ago, one in 10 might, if they were lucky, have got a first-class degree, that it becomes difficult for employers to pick out people for the right reasons and for the right jobs.

[David Johnston: I completely agree with my right hon. Friend. Part of the reason why that has happened is that young people feel, “I’m making an investment here. I’m paying £9,000 a year. I’m not doing that for you to give me a 2:2 or a third at the end of it.” There has therefore been this pressure on universities – often, unfortunately, with the threat of legal action from parents who can afford it – to inflate the grades people are given. This is another unintended consequence. ...]