David Cameron: Fees changes are fair

On the eve of the crucial Commons vote on university funding, Prime Minister David Cameron today sought to win over doubters with a speech promising the Government's proposed fees package will be "sustainable, competitive and fair".

As students staged sit-ins and rallies in protest at the plan to treble the maximum tuition fee to £9,000, Mr Cameron used a speech in east London to acknowledge the "passion" of those opposing his plans.

But he insisted that their passion was "drowning out some of the truth" about the package on offer from the Government.

Mr Cameron insisted that his plans would widen access to university, create incentives to improve the quality of courses and leave the poorest graduates better-off than under the existing system.

Denouncing the current funding arrangements as "unsustainable, uncompetitive and unfair", Mr Cameron said: "Today I want to explain the real truth about what's going on, why we need change and why the change we are proposing is the best option we've got."

Mr Cameron rejected critics' claims that the Government is simply seeking to save money by removing state subsidies and heaping the burden of university funding on to students' shoulders.

In fact, the loans, grants and scholarships proposed by the Government will increase in value from £7 billion to £12 billion by 2015, he said.

But he said that sticking with the funding status quo would be possible only with a "radical" reduction in the numbers of students or by increasing Government spending.

Even in good economic times, Government spending alone could "never be a sustainable way of funding the growth in student numbers" and the need to keep up with international competitors, he said.

And in the current straitened circumstances, there are no "pots of money" for Government to dip into to help universities.

Hiking taxes to pay for higher education was "just not acceptable" because it would mean that non-graduates on low incomes would be subsidising the degrees of those who will earn more than them.

The existing system gave universities no real incentive to improve, because they get most of their money from central government, rather than having to compete for students' fees.

And universities' role as an "engine for social mobility" has "stalled" because of an "unfair" system which has seen a decline in the number of children from poorer households going to the top universities over the past few years, he said.

"We want more people to go to university, not less," said Mr Cameron. "So we have to find a new way of funding higher education in this country...

"We have no choice: we need change, we need to put the funding of our universities on a sustainable footing - and it's right that when it comes to doing this, successful graduates pay their share."

And he added: "I think it's clear that long-term, responsible reform of higher education means:

"Making it more sustainable, by asking successful graduates who go on to earn a good salary to make a bigger contribution.

"Making it more competitive and more responsive - with students calling the shots, and universities bending over backwards for them.

"But most importantly, making it fairer - opening the doors of universities to everyone, regardless of where they're from."

The graduate tax backed by Labour and the National Union of Students was "anti-aspiration, anti-success, anti-people who just want to get on and do the best in their lives", said Mr Cameron, who accused Ed Miliband's party of "the worst sort of opportunism" for backing it.

It was "simply not affordable" because it would take until 2041 before it produced enough money to fully fund higher education. It would centralise all university funding, removing the incentive for universities to compete for students. And it would encourage a "brain drain" of graduates moving overseas to avoid paying for their higher education.

Mr Cameron said a graduate tax would also cost many students more in the long run than the Government's proposals, as they would start paying as soon as they were earning £6,475 and would carry on paying for the whole of their working lives.

"With our new system, the poorest quarter of graduates will pay back less overall than they do currently," said Mr Cameron.

"And everyone will pay less per month than they do now."

Students and parents will not be required to pay a penny in fees upfront under the Government's proposals, said Mr Cameron.

He rejected the argument that the prospect of debt will put potential students off going to university, arguing: "They can tell the difference between upfront fees they pay now or contributions they make when they are earning money later."

Graduates will not start repaying fees until they are earning £21,000 - and will stop paying if their income drops below that level or they stop working to look after children. Payments will be made at a rate of 9% of earnings over the £21,000 threshold for a maximum 30 years.

Mr Cameron said the proposed fees would produce "sustainable" funding for universities, which would have 60% of their income from private sources and 40% from the state, rather than 60% from the state as at present.

The system would make universities more competitive by putting spending power in the hands of students, putting pressure on universities to drive up standards.

And the Government's proposals were "the fairest option on the table - fairer than the current system and fairer than the graduate tax too", said the Prime Minister.

He gave the example of a graduate care worker on £23,000, who would pay back loans at £44 a month under the current system or pay £38 a month under a 3% graduate tax, but would pay only £15 under the Government's scheme.

"This is the real truth about our plans," said Mr Cameron.

"They will put universities on a sound financial footing and make future expansion affordable.

"They will create a dynamic university sector that can compete with the very best in the world.

"And because the rich will pay more and the poor will pay less, they will put fairness back at the heart of our university system."