I am pleased to have the opportunity to debate the London Metropolitan university. It is with great pride that I speak in support of the university and its students and staff, but I am greatly concerned about what is happening and the institution's future.

The London Metropolitan is a new university, in the sense that it is a conglomeration of former universities—London Guildhall university and the university of North London—and former polytechnics. Most of its buildings are in my constituency, in Holloway road in north London, and in the constituency of my hon. Friend Emily Thornberry. However, a considerable number of buildings are to be found in the constituency of Mr. Galloway. Unfortunately, he cannot be here today, but he has done a great deal of work to support the students and staff in his constituency.

London Metropolitan university is unusual in that it has a large student body, most of whom are not traditional university students—that is school leavers or post-gap year students. Its students tend to be much older, their backgrounds tend to be much poorer and their previous educational achievements tend to be considerably less than those in other universities.

The university is a model of access to higher education for people from poorer and disadvantaged backgrounds, so it is exactly the kind of institution that the Government, in their many statements on widening access to higher education, have strongly promoted and supported. We should recognise that fact when considering the crisis through which the university is going and, above all, how we are to get out of that crisis. I hope the Minister will give me some good news about the likelihood of Government intervention to assist us out of this crisis.

I am delighted that the hon. Gentleman has secured this debate, and I entirely agree with him. He will be aware that some of my constituents are involved in the university, either as students or as staff. I see no reason why they should suffer because a number of administrators have made errors over the years, and I hope that the Government will ensure that they do not.

I thank the hon. Gentleman for that intervention. I agree with thrust of what he says, and I shall return to that subject in a moment.

I shall put things in context by citing figures on widening participation. The latest figures show that 97.3 per cent. of LMU students come from state schools or colleges and that 42.9 per cent. come from lower socio-economic groups. Across the UK, 21.5 per cent. of students in higher education institutions are mature students, but at the LMU the figure is 51.9 per cent. Of the 4,050 full-time undergraduate entrants to the LMU in 2006-07, 52.6 per cent.—more than 2,000—were mature students. In addition, there are 3,565 part-time students—the LMU ranks 18th in the UK on that statistic. In 2009-10, the LMU will receive £5.5 million for its widening participation activities, the funding being based on the number of students deemed to be the widening participation category, for which the LMU ranks 19th in the UK. The university also helps students with particular problems. We should recognise all those facts in our debate.

I shall come to the background to the problem in a moment, but first I want hon. Members to understand the context in which students study at London Metropolitan. My constituency has a combination of housing types. Some 31 per cent. is owner-occupied housing, while 70 per cent. is council or private rented accommodation. Many people earn well below the average income, but they do their best to struggle by. I have met many who have had the opportunity to study at the London Met, including single parents with large families living in difficult housing and experiencing all that goes with that. They found the university helpful and supportive, and it was able to assist them to get through their courses.

Post-school students living in nice halls of residence in Oxford have their own rooms, their own support system and enough money. I do not begrudge that, but those students are doing pretty well. By and large, London Met students live at home and do not have such facilities or support—for them, studying is much harder. The students' completion rate, and the possibility of them dropping out or wanting longer to complete their courses, is a matter that comes up all the time. I want the Minister and hon. Members fully to understand London Met's accounting procedure.

I appreciate the background of students at London Metropolitan university—many come from my constituency. However, I suspect that the reason for the drop-out rates does not lie entirely with the students' social background. We must also consider what the university offers.

My hon. Friend is right. I am not trying to apportion everything, but I want hon. Members to understand the context in which many students are studying. I shall deal with the accounting procedure in a moment.

The hon. Gentleman makes a powerful case about the benefits given to disadvantaged youngsters by the London Metropolitan university. Perhaps one should recognise that dropping out is not necessarily a huge negative; reaching a certain stage of education is a great advance on not having started.

They can go back.

The hon. Gentleman makes a fair point, and as my hon. Friend Dr. Gibson pointed out, there is also the possibility of going back at a later stage or even going on to another institution. Such matters should be taken on board by the Higher Education Funding Council and as part of the Government's assessment of the performance of education establishments.

I shall give an example of the way in which many students value the institution. I quote from a letter, although I shall not name the individual as it would be invidious. It states:

"I work part time and would not be able to flourish in the same way without this particular course at this particular university. There weren't any other options for someone like me, who is a bit older than the average graduate, and returning to further education. This course and in fact all the other courses available at the university are like a jewel in a whole ocean of courses and colleges. This place allows access to education for people from all walks of life who would not normally be able to get a place in education at this level."

It is worth remembering that.

Does the hon. Gentleman accept that what he asserts in relation to London Metropolitan university—I entirely agree with him—also applies to a number of the other new universities and colleges created since 1992, many of which are within a short distance of central London?

Yes, it applies to other universities and colleges, but the extent of cuts proposed for London Metropolitan and the loss of student places does not apply to others. The Met is in a class of its own, given the financial problems that it faces, and that is why I am pleased to have secured this special debate.

Does my hon. Friend agree that teaching in universities these days has an international aspect? The university's institute for Cuban studies, a subject that is interesting in itself, attracts attention from students across the world, who go there to talk about what is happening in the Caribbean and other parts of the world. More and more universities in this country depend on international contacts and on students from overseas paying astronomical fees. It seems to me that the London Met has started something by looking at poorer countries with poorer students. It is making relationships across the world, and that is worth a five-star rating.

The university has been innovative through many of its special sections, departments and courses. The institute for Cuban studies is a good example, as is the working lives research institute. The university should be congratulated on and praised for establishing courses on such subjects as sustainable tourism.

My concern, however, is about the problems faced by the university. The HEFC has a duty and obligation to count the number of students in colleges, and module and course completions. Essentially, the funding of the rest of the university's life is based on those figures. When an audit was undertaken by the HEFC, it concluded that student numbers and completions had been over-counted. As a result, huge cuts have been made to the university's budget for future years and there has been a request for repayment. We are talking about very large sums: £38 million is to be repaid, and about £10 million a year will be cut from the university's funding indefinitely. As a result, 550 full-time equivalent jobs—that probably adds up to 800 people, because many staff are part-time—will go. In addition, many jobs for hourly paid lecturing staff and others on short-term contracts will be lost, although the number is unquantified. Student numbers will fall by about a third, so 5,000 student places will be lost if this financial package goes through. That would be devastating for any institution.

I have two questions for the Minister in this part of my contribution. First, does the HEFC's counting process take sufficient account of the difficulties faced by some students, especially those from poorer backgrounds, those living in difficult housing conditions and those facing other related issues? As Adam Afriyie pointed out, such people do not necessarily complete the whole course, but they might well use the modules that they do complete to gain a place somewhere else or to better themselves in some other way. I get the feeling that a degree of punishment might be involved for those students and types of completions.

Secondly, on a difficult and more delicate area, what happened within the university to allow this systematic approach to reporting to lead to such a devastating consequence for the university itself? Apparently the figures became known to the vice-chancellor and the university's governing body some time last year. In December, the governing body discussed redundancies but, bizarrely, the unions were not informed of the possible redundancies until two months later. A question mark therefore hangs over the management style of the former vice-chancellor and the flow of information. May we please have an independent inquiry to which unions, staff and many others can give evidence so that we can establish the truth?

The vice-chancellor subsequently tendered his resignation, but he will remain on the university's payroll for a further six months. He therefore remains an employee of the university, albeit not in office, while a further vice-chancellor has been appointed.

Will my hon. Friend communicate to the Chamber what the vice-chancellor's salary might be—vice-chancellors are known to be shelling it in?

I do not know what Brian Roper's salary is. I believe that the figure is known, but all I know is that it has many noughts after the first figure—I think that there are at least six digits. Others might be able to help.

My hon. Friend might wish to know that, as I understand it, Mr. Roper's salary is in the vicinity of £150,000, although I do not care to speculate about his expenses.

I do not want this debate to turn into speculation about Brian Roper's salary.

Why not?

Because, although it is important and interesting, I am far more concerned about the loss of 550 jobs and 5,000 students potentially losing the opportunity for a university education.

I congratulate the hon. Gentleman on securing this debate. Last week, I attempted to bring together both sides in my office to try to figure out whether there was any common ground. Sadly, the managers refused to meet the others, so we had to have two separate meetings, which did not actually work. The point was made that we must consider not only the numbers, which he is quite right to put to the Minister, but another issue: the university has some specialities that are almost unique to it, such as cabinet-making. The only other university in the UK that offers such a course is Buckingham, which is a private university, and the people we are talking about are not the kind who will go there to get these skills. This is not just about the raw numbers, but about what happens when those numbers fall. When that happens, some of these specialities will simply disappear, which will be a major loss.

That is a very fair point. Clearly, a relatively small but specialised department, such as the one to which the right hon. Gentleman refers, cannot be reduced by one third. Either it gets closed down altogether, or it is funded properly. Some departments must either be funded properly or not be there at all, because otherwise the situation is simply not viable. This degree of cuts calls into question the viability of many courses and, indeed, much of the university itself.

I am interested to hear that the right hon. Gentleman attempted to meet people from the university. When I first heard about these problems, I contacted the university and the two major unions involved—Unison and the University and College Union. I discussed with the unions their concerns, the problems that their members face and all the rest of it. I asked repeatedly for meetings with the vice-chancellor and the board of governors. One of the meetings was cancelled almost an hour before it was due to be held, and that is just one chapter in a series of such events. Only after I had met the HEFC, together with representatives of Unison and the UCU, did the university get back in touch and ask for a meeting to discuss the situation. It was concerned that I had gone to the HEFC without discussing it with the university first. Well, I am sorry, but I am the Member of Parliament for the area and, like all hon. Members—we all have constituents—I must go wherever I can go to get answers to my problems. However, the vice-chancellor has now resigned and a new one has been appointed.

I congratulate the hon. Gentleman on securing this debate. Due to my former job as shadow Minister for higher education, I have been following this matter for some time. Perhaps he can help with something that has been puzzling me. Why does he believe that Government figures show that, in 2005-06 and 2006-07, the LMU reported non-completion rates of between 2 and 4 per cent., when it would be expected that such a university would report figures closer to 30 per cent? Why did the university get it so wrong? Why did the HEFC not pick it up much earlier?

That is a very interesting question—I am looking for the answer myself. It has been reported in the Times Higher Education. I had raised in this House the question of the very high drop-out and non-completion rate from that university, and suddenly it fell to a very low figure. I hope that the Minister will answer that question. If not, I hope that the university or the HEFC can provide some answers. The questions that we are asking—I am not speaking from a particularly partisan point of view—all point to the need for a proper inquiry into what went wrong. Above all, we need to try to get through this crisis so that we see not the decline of the institution, but its sustainability and development. It is important that I make the point that I have not come here to bury the LMU any more than anybody else in the Chamber.

Other hon. Members wish to speak, so I shall not say a great deal more. I would like the Minister to understand the degree of anger and concern locally and within the teaching and student bodies. I hope that the new vice-chancellor, Mr. Alfred Morris, who just left the university of Lampeter and was previously at the university of the West of England—he has a reputation of dealing with places in trouble—understands the importance of taking staff into his confidence, of working with them to get around the problems, and of not heading solely down the road of redundancies. He should also be absolutely clear about the finances involved.

As I understand it, the HEFC has loaned £38 million to the university to help it through this particular crisis, and it is prepared to negotiate the repayment time. The predictions of the university's future financial problems are exaggerated in the extreme, which leads the board in one direction only—that of immediate redundancies. The board has advertised for voluntary redundancies, but did not get full take-up. If it persists with this financial strategy, we will be looking at compulsory redundancies. A day of strike action has already been called by the UCU and there might well be others. A demonstration is planned this weekend in the Holloway road in support of the university and its staff. I hope that the Minister will recognise the strength of feeling around this issue and take the following action. First, he must set up an inquiry into what has happened at the university. Secondly, he must provide us with all information on the funding that has already been given to the university, and on the current arrangements that have been offered by the HEFC. He must be prepared, if necessary, to intervene on this matter.

I was grateful that the Minister replied to my parliamentary question but, with the greatest respect, sympathy is not enough. The HEFC is funded wholly by the Government. We expect it to act on behalf of Government policy, and we expect Ministers to intervene when necessary to protect jobs, courses and students. Neither those who are threatened with losing their jobs nor those who will be unable to go to university in the future are responsible for the auditing, the funding, or the accounting arrangements, and I do not see why they should be punished.

I guess my hon. Friend may be able to help me in this matter. The head of the HEFC is now moving to another university vice-chancellor's job somewhere in the Midlands. Does he think that there could be a problem arising from the fact that that organisation has gone solid at the base?

Not at all. Some weeks ago, I had a very useful meeting with Professor David Eastwood, the former chief executive of the HEFC, and both the unions. The professor has now gone to be vice-chancellor of the university of Birmingham and his successor has been appointed. I and a number of colleagues are meeting them in the House on Friday afternoon to continue the dialogue.

I want the Minister to tell me that the Government understand our feelings. I want him to say how wrong it is to punish staff and students for the misdemeanours of others. We want an open public inquiry and, above all, we want action to defend London Metropolitan university. Such institutions are the gateway to education for many people who, for so long, have been denied access to university-standard education. At a time of crisis and recession, people turn to such institutions for opportunities to expand their lives and their education. Can we show some support, sympathy and understanding of the fact that it is those who caused this crisis who should be punished for it? Those who did not cause the crisis should not have to pay the price for the misdemeanours of others. We need this university and this opportunity, and I look to the Minister for assistance in his reply.

I congratulate Jeremy Corbyn on securing this important debate. As he knows, one of the constituent colleges of the LMU at the time of its merger in 2002 was London Guildhall university, which is located in my constituency. At that time, there was a view—it may have been an urban myth—that there was central Government pressure to create London's largest university.

I am lucky enough to represent a number of universities, including some internationally acclaimed names, such as Imperial college, which is alma mater for my hon. Friend Adam Afriyie, the London School of Economics and King's college London. I am every bit as proud to represent the LMU. I worked quite closely—perhaps not so much in recent years—with a number of people from what was the London Guildhall university and is now the LMU in relation to its phenomenally successful Aimhigher initiative, the outreach of which the hon. Gentleman mentioned in his contribution.

The LMU appeals to a much wider range of students than many other universities. Moreover, it tries to appeal to a catchment area that would, to a large extent, have been excluded some 20 or 30 years ago. As I have said, there are a number of similar universities either within London or just beyond London, which have an international flavour and a large number of mature students. As someone who was the product of the state school, albeit a grammar school, and who ended up going to university at Oxford, I am aware that we have to extend far more broadly. I am saddened by the fact that because my old college is poorer than most Oxford colleges, it has to charge higher fees. As a result, the league tables suggest that it has very few state school students—around 40 per cent. rather than 60 per cent. However, that is not because it has not tried to reach out in the way in which the hon. Gentleman has suggested.

I have to rise to the bait. The hon. Gentleman did not name his college. Will he tell me how poor it really is, so I can check it out?

I suppose that was putting my foot in it. I was at St. Edmund hall, which is not a terribly wealthy college. Founded in the 13th century, it only achieved independence from its richer neighbour Queen's college in 1958. We will move on. I will not rise further to the bait of Dr. Gibson on this or any other related matters.

I respect the fact that the LMU has plans to take responsibility for its own problems. Under its new senior management, it has a plan in place. While I share a number of the concerns expressed by the hon. Member for Islington, North and am interested to hear what the Minister has to say in that regard, it has to be said that no university is owed a living. Although I appreciate the fact that the hon. Gentleman worries about the institution and the number of jobs at stake, I have a bigger concern about the students, who have expended considerable money and goodwill in signing up for a course. For the course or the resources to be cut halfway through is tough, particularly given the recessionary pressures. I graduated just over 20 years ago, and left university without any debt. I had a full grant for which I am very appreciative, especially when I speak to undergraduates today about the huge debts that they are racking up. In many cases, mature students eke out relatively modest savings to study at universities such as the LMU. For them to have the course cut or the lecturers removed halfway through is little short of disastrous.

The Government must think seriously about where the university sector goes from here. The sector receives some £8 billion in public money, yet, in many ways, universities face very little threat of closure if they are seen to fail. I worry that there are some failing universities. There is an assumption that they should always be shored up regardless of their difficulties. Representing as I do the financial services sector, an argument could be made—probably by the hon. Member for Islington, North—that we have spent a lot of money bailing out banks. I have not always supported Government policy in that regard. There is a fundamental issue of moral hazard. We have an environment now in which people—whether they are vice-chancellors, governors of universities or directors of international investment banks—feel that however much trouble they get into, they will be bailed out, which can only encourage the very worst practices.

I do not want to detain my hon. Friend for very long, but I want to make a point. He has talked about the generality of universities. I guess that most people would agree that no institution has the right to a living, but this is a particular and peculiar type of university. The hon. Member for Islington, North has pointed out the nature of the people that it takes through its doors. It takes a great deal more effort to encourage those people to believe that they have a right to be in such a place. Sometimes they have no family support and struggle while they are at university. That is unlike many of middle classes, who take it as their right to move on to higher education. These students do not believe that they have such a right and think that the whole culture is against them; they are making a break. Therefore, this is a special case, and we need to think carefully if we want to encourage more people from such areas to have a shot at improving their lives. Universities such as this must be sorted out, so they can do just that.

My right hon. Friend makes a valid case. It is fair to say that a number of universities—Thames Valley and Luton, for example, which are no further away from his constituency—have a similar ethos. Indeed, one of the difficulties facing the LMU is that it got too big and unwieldy following too many mergers, when it should have had more of a collegiate feel.

The harsh reality—perhaps I am taking words out of the Minister's mouth—is that the LMU is being forced to repay more than £50 million after auditors found that the drop-out rates were higher than stated. It has been overpaid through the funding mechanism by some £15 million a year since 2005, which is why it is in its current difficulties.

We should have substantial public investment in higher education and, clearly, the nation is going to face some very difficult times with public expenditure in the years to come. Although we should not necessarily ring-fence funding, I probably share the view of many hon. Members in saying that we should ensure that we do not penny-pinch too much on education, including higher education and, in particular, on one of the biggest Cinderella areas, further education, and on compulsory school education up to age 16 or beyond, depending on how the law changes in future.

We also need to maintain a commitment, as my right hon. Friend has said, to expanding and widening the social mix of students, but our universities need to be much more publicly accountable. I am extremely fearful that we lack such accountability. There is a sense that the LMU is too big and unusual to be allowed to fail. I am not saying that we should pull the plug on it or on other universities, but it would be bad to send the message that however incompetently a university or whatever institution is run, the Government are ready to bail it out. Institutions throughout the public sector, whether universities or, dare I say it, financial institutions, should not be too big to fail, not least because that might encourage risk-taking and sloppy management in future generations.

[Mrs. Janet Dean in the Chair]

I realise that other hon. Members wish to contribute to the debate. London Metropolitan, part of which is in my constituency, finds itself in a very sad situation, and this debate is important. I appreciate that much more work will go on between the Department for Innovation, Universities and Skills and the institution in future. However, the message has come through loud and clear that a lot of students, who would not have had the opportunity to experience first-class, first-rate further and higher education in previous eras, run the risk of missing out on many of the dreams and aspirations that they have worked hard to build up. It is vital that something is done, but I appreciate that some of the Department's problems with the institution will be difficult to solve. I am nevertheless cheered to the extent that there at least seems to be a plan, and I am encouraged by the new management, even if they have some troublesome months and years to come.

I am grateful for the opportunity to speak in this important debate.

A great many of my constituents attend the LMU, and I have had hundreds of letters about its financial crisis over many months. As we have heard, a disproportionate number of the students at the LMU are older students, women students and black and minority ethnic students. Far from having family support as they go through university, they often have to support families, and are the single head of their households. My concern is not the staff, although any redundancy is extremely regrettable, but those students.

LMU is one of a range of higher education offers for people who are older, or who have jobs and families: Birkbeck, a London university college that offers excellent degrees based on evening classes, the Open university and others are adapted to the needs of non-traditional students. However, let me say this: when we talk glibly about access to higher education, my view, as someone who spends a lot of time working on and paying attention to what happens in the black community in relation to education, is that it is not only about access to higher education, but about access to higher-quality education.

I draw the House's attention to the unspoken apartheid in higher education in London. The Russell group, including Imperial and the LSE, is largely white, and some of the former polytechnics are largely black and minority ethnic. The LMU has many unique courses and excellent members of staff, and features in the top 10 of any league table one cares to mention. I strongly believe that schools should not use the class background or race of their students as an excuse for underperformance, and the same is true of higher education institutions. It is precisely because I am concerned about the life chances of older students, black women and people of all nationalities who have struggled and beaten all their expectations and those of people around them to go to university that I am concerned about standards at the LMU in future.

I understand that the funding problems stem partly from the much-higher-than-average drop-out rate and partly from the fact that the majority of students at the LMU complete their course in four years rather than the standard three. I also understand—people have talked about bad management and the funding council—that there was a degree of collusion between the funding council and the university in misreporting for years before the former finally decided to pull the plug. That may be the responsibility of management, but it is also the responsibility of the funding council, which could and should have addressed the issue in a much more measured way, much earlier, to avoid this crisis for students.

My concern is, first and foremost, that the students should not suffer in this time of financial crisis.

I asked Jeremy Corbyn why the drop-out figures, which the hon. Lady has mentioned, were not picked up by HEFCE or the university. Has she received any information that university departments were told to suppress drop-out information? My information is that that is exactly what they did. Far from being a cock-up, this was a conspiracy.

I do not dispute what the hon. Gentleman has said. As I have said, there was a degree of collusion between the funding council and management, which has now reached a crisis. Who is suffering? It is not the people at the funding council, but the students. That is my concern.

I want the rights and aspirations of the students and the range of courses, as long as they are high quality, to be protected. That is particularly true of the specialities, whether cabinet making or the study of Cuba, for which the LMU is renowned. I want the quality of the education offer to my constituents to be not only maintained but increased. There is no reason at all—I do not care what people say about the class or colour of undergraduates—why the LMU should bump along in the bottom 10 per cent. I want standards to be maintained and driven upwards. The background of students should not be an excuse for failure in any of our educational institutions.

I want the funding council to help, by whatever mechanisms are available, the LMU to get through this period without the students suffering. I also want Ministers and the funding council to look at their funding systems and schemes to ensure that they properly reflect the realities of student bodies in such institutions.

Given that we often look on universities as regional centres of education, and that students can move between them on exchanges, will my hon. Friend consider the possibility of financial collaboration between them, instead of rivalry? Why do they not work to support each other? The three universities should work together to serve the community—let us have some money from Imperial going into London Met.

More collaboration may well be part of the answer, but we must get the management and running of London Met right before there can be any notion of collaborating with other institutions.

We must look at our funding mechanisms. The funding council has not treated London Met fairly; it colluded in the situation up to a certain point, but then there was a cliff-edge crash, and the university faces potential cuts.

I wrote to the Minister about this issue many months ago, but I was disappointed with the response that I received, because he simply referred me to the funding council. Let me make a general point. We in Parliament have seen all sorts of core Government functions outsourced to organisations such as the funding council over the past 20 years. Although those functions have been outsourced, they are wholly funded and owned by the Government, and Ministers cannot hide behind such institutions. I am not suggesting that, having set up the funding council, Ministers should second-guess every decision, but it should be possible for the Government to intervene in special cases, if Members of Parliament have come to them. London Met is a special case, and Ministers have hidden behind the funding council for too long.

There is a range of issues about the management of London Met and about how we can help it through the present period financially so that students do not suffer. However, there is also an issue about whether the funding council considers the circumstances of institutions that have high drop-out rates despite the best efforts of their staff. When colleagues come to the Minister with special cases such as that of London Met, I urge him not to brush us off by referring us to the funding council. I think that every Member present has written asking him to focus on the special issues at London Met. Although there may be singular problems at the university, events there also raise general issues about further and higher education, which it is wholly appropriate for a Minister to focus on and get involved in.

In the many letters that my hon. Friend has had from her constituents, has anyone said whether they have an alternative place to go to in the event of their department or course closing? What are their thoughts for the future?

The reason why I am so concerned about this issue is that many of the students who have written to me are really in a panic. There may be alternatives, but these students do not know about them. They have often screwed up all their courage and got together every penny that they have to go to university, which is something that they never thought that they would do when they were younger. Now, thanks to a combination of the university's management and the actions of the funding council, the rug has been pulled from under them in what are difficult times for all our constituents. People really are in a panic, and they deserve better from the management of London Met and from Ministers, because this issue has been bubbling under for a long time.

Redundancies may be inevitable at London Met, and more may need to be done to improve management there. We may also need to move away from an assumption that institutions can excuse underperformance—whether academic or management underperformance—by pointing to undergraduates' class or race background. That is no excuse for anything. All those things may be true, but I ask Ministers at this point to focus on the students, for whom going to university means so much more than it did even to me, the Minister and other Members in the Chamber. The Minister should focus on the students and stop hiding behind the funding council. He should intervene to ensure that students do not suffer in this transition period and that the funding council knows that it cannot apply one-size-fits-all funding solutions to universities up and down the country whose demographics and social context may be very different.

We owe these students something. We should not have spent 12 years as a Government talking about education, education, education. We should not have spent 12 years as a Government talking about skills, the need to go forward and increasing access. Whatever problems it may have had in the past, London Met has reached a crisis, and we have not stepped in swiftly to protect the interests of the students and my constituents.

London Metropolitan is on the edge of my constituency, on the other side of the Holloway road. Many staff and students are constituents of mine, and a number of them have written to me, because they are concerned about the university's dire financial problems and its future. Several interns, both international and local, who have worked in my office have come from the university, and I receive a weekly update on their concerns about what is happening in the university. The university is clearly in a serious situation, because it has to pay back £40 million of public money, which it has been wrongly paid. That will require significant restructuring, which will no doubt have a serious effect on staff and students.

As my hon. Friend Jeremy Corbyn said, London Met has done a great deal of work on widening participation, and it runs a variety of successful courses promoting inclusion. Although it depends on how we count these things, one way of assessing Islington shows that it is the sixth poorest borough in Britain, while another shows that it is the eighth poorest. Either way, we are poor and, unfortunately, we have suffered from low levels of academic achievement historically. Universities such as London Met play an important role in attracting students who would not have considered university in the past.

The university's vice-chancellor has now resigned, and an interim vice-chancellor has been appointed. However, it remains unclear how incorrect information about non-completions led to the university being overpaid. Others have referred to an error by the administrators, but I spent 20 years as a criminal lawyer dealing with cases that looked very much like this one, and I do not understand why the police have not been involved.

Does my hon. Friend support the view, which I expressed earlier, that we need the Government to order an inquiry into the management and running of the university? In the meantime, we need to protect staff jobs and the students. We need to sort the problem out now and for the future without blaming those who are, after all, the victims.

My hon. Friend anticipates my very next point. In the current circumstances, we need a proper inquiry into how on earth these things have happened. What has happened is unfair not only to the students and the staff, but to the taxpayer, because a trick has been played on us and we have overpaid the university, which is now in a desperate financial situation.

I ask the Minister and HEFC to look again at the issue. We must have better data auditing, because what we have seen until now really will not do. I agree with others that it is extremely unfortunate that the students suffering most come from the backgrounds that they do. Many people may to be blame, but the one group who are not to blame are the students.

I intend to call the Front-Bench spokespeople now. We have more time than normal, so I intend to divide the time equally, unless the Opposition Front-Bench spokespeople want to leave more time for the Minister.

I did not intend to take even the 10 minutes that the three spokespersons normally take in the last half hour of a debate, because there are many points to which hon. Members with a direct constituency interest will want the Minister to respond. I simply warn Adam Afriyie, who will follow me, that I may be briefer than normal.

First, I congratulate Jeremy Corbyn on securing a debate that was obviously very important to him, and to his constituents and those of his constituency neighbour, Emily Thornberry. Of course, the issue must be seen against what is a pretty dire background for many students throughout the country. UCAS applications show that for the first time in many years, there will be probably be unmet demand in the summer, the clearing that normally takes place will not happen, and trading up may not happen either. The Government are to some extent culpable in those matters, but we are dealing with an institutional matter—the misreporting of statistics by a higher education institution to the funding council.

Some of what has happened is due to the complex modular way in which students study at London Metropolitan university, as opposed to the more traditional courses at some of the universities that have been mentioned, such as St. Edmund hall, which Mr. Field attended, and where everything depended on finals. At London Metropolitan, as at many newer universities, there is a modular course of study, and the funding and the teaching grant is made up in a complex way.

I am interested to hear the hon. Gentleman say that what the administrators were being asked to do was all very complex; it was complex, but not that complex—they are university administrators after all.

I think that if I had finished my point I would have got to that myself; none the less, that intervention is well made, because what I was about to say was that while the situation is indeed more complex than that of many other universities, the failure that has occurred is none the less a major one, by the perhaps well paid management of a university, and, indeed, there are serious allegations, as Mr. Wilson twice pointed out. The situation is uncertain for 34,000 students and for the applicants who must have put in, in the current oversubscribed UCAS system, applications to study at London Metropolitan university in September. They must be full of uncertainty and worry about the institution to which they have applied. There is also uncertainty for the staff. I understand that 330 redundancies are contemplated in a total of more than 500 job losses by the university.

The hon. Member for Islington, North said that a troubleshooter, in the form of Alfred Morris, has arrived at the university to try to sort out the mess, having previously, in what people in Bristol thought was his retirement, helped out the university of Wales, Lampeter, and Trinity university college, Carmarthen. He is better known to people in Bristol for having been for many years the director of Bristol polytechnic, overseeing its transformation into the university of the West of England, Bristol, which is now one of the most successful universities in the country. I wish him well in the mission that he is undertaking at London Met.

The hon. Member for Islington, North mentioned the social composition of the student body at London Met, and called it a model of its kind in widening participation. I understand from the information supplied for the debate that 43 per cent. of the student body come from socio-economic groups 4 to 7, as Ms Abbott mentioned. The student body is older than is traditional, and there is a very high intake from the black and minority ethnic community. London Met specifically targets those groups, to meet its mission to widen participation. We would applaud it for doing so, and it is all the more of a shame that its administrative systems have failed to catch up with its educational mission.

Mr. Duncan Smith, who is no longer in his place, mentioned the skills that students learn at the university, such as cabinet making. I understand that silversmiths are also trained there. Perhaps more relevant to the modern economy, there are also many students studying media and music technology courses at the university. Those degrees will be essential to Britain's future as we build an economy that will depend largely on the creative industries.

I am pleased that the hon. Gentleman has mentioned the specialist courses, because some of them are cutting edge, and very specialist, such as courses in sustainable architecture and civil aviation. There are a great many courses, and the place is doing well. For all the failings of the management in reporting and accountancy, the university as a whole should be congratulated on its innovative behaviour and its introduction of wider participation in education. That is why I passionately defend it.

The hon. Gentleman is right; the university should be congratulated on fulfilling its mission for its intake and educational programme, to enable its students to contribute to the modern economy.

To conclude, I have a few questions for the Minister. First, the hon. Member for Islington, North has called for an inquiry, and the hon. Member for Hackney, North and Stoke Newington called for intervention by the Department, and those are probably necessary, given the seriousness of the situation financially, the effect on students, and the allegations that the hon. Member for Reading, East has repeated. London Met is a merged university, as the hon. Member for Cities of London and Westminster said, formed from London Guildhall and North London universities. Normally, when mergers have taken place in the past, such as that between the old University college Cardiff and University of Wales Institute of Science and Technology, or the new merger creating the university of Manchester, the funding council and the Department offered a great deal of assistance to bring about a successful merger. I wonder whether that now needs to happen—in retrospect—at London Metropolitan. However, there is a need for both an inquiry and intervention to make sure that the university's internal procedures and departments are as robust as they could be in controlling their costs and in providing that reporting functions work as they should.

I have two questions of a general nature about the sector. Let us hope that London Metropolitan university will prove to be the last instance of a university plunged into a desperate financial crisis. Given the current economic circumstances, however, that may not be the case. Is the Minister aware of any other universities that are in difficulty because of misreporting of statistics to the funding council? What action, if any, has the funding council taken against them to recover funds? It appears that the LMU is in a unique situation, but its administrators cannot be the only ones who have had a discrepancy in their statistics. Finally, does the Minister foresee any other intervention being needed by the funding council and his Department? Many universities, whether they are dependent on international fees or the domestic market, will be in economic difficulty, given the pressing global economic situation.

I congratulate you, Mrs. Dean, on the dynamism of the chairmanship, which changed halfway through the debate.

The debate is timely, first because there was a sit-in at the LMU last week, and secondly because it is important, if there are to be redundancies and courses are threatened, that we should hear a clear account from the Minister of how the Government will respond. I visited the LMU in March and I was immediately struck by the good work that was done there. To establish a unified institution in such a short time, from a merger in 2002, was a great testament to what had been done. Secondly, the contribution to widening participation is tremendous and is clear in the statistics, which show that 97 per cent. of people at the university are from state schools, and 43 per cent. are from lower socio-economic groups. The figures that I find interesting are those showing the percentage of mature students—52 per cent.—and the total of 3,565 part-time students.

My concerns are greatest about those groups in particular, as they are exactly the type of students that we want in higher and further education. They are fitting their studies around caring for children, perhaps, and around their employment. They make an economic contribution to the country and a contribution to the social fabric to society, as well as upskilling and reskilling, which is at the heart of the Leitch agenda. My concern is about the continuation of the excellent work that is being done with such students. Another thing that struck me was that for a relatively new university, the LMU is doing incredibly well in research. In fact, in one or two categories, it is almost a world leader. From a zero start, it has gone quickly to the forefront.

There is no doubt that in the next five or 10 years, models of learning will change. If the Minister has been to the LMU, he will know that it has a lab that serves 280. So advanced is the LMU that students can get iPods and download lectures before they go to them. Away from the main lecture theatre, they can interact online with the course material that they are studying. That is pretty much a revolution in how people learn. That is exactly the kind of evolution in education shown by both the Open university and Birkbeck, and it is ingrained at London Metropolitan university. I am incredibly impressed by what the LMU has done. It would be a shame if the challenges that it is facing curtailed any aspect of what it does, because it could well be a model for the future.

I welcome this debate and thank Jeremy Corbyn for securing it. Another important aspect to consider is the concept of value added. It is easy to look at a league table and say, "Well, they're this far down the league table in this area," but it is important to recognise where the students come from and where they will end up. It is important to recognise the benefit of the contributions made by those who do not complete a course but might come back later and those who are first-generation university students, even if they take four years to complete a course that others might take three years to complete.

Many of the students starting at London Metropolitan university are first-generation students from disadvantaged backgrounds. I agree that that is no excuse whatever for not having a successful education outcome, but it must be recognised as a starting place. They have difficult family circumstances and have many extra burdens not shared by the rest of our students. There are also cultural and language differences. I am sorry, but if a student embarks on a higher or further education course and English is not their first language, that must be recognised in the outcome they achieve at the end of the course.

I congratulate my hon. Friend, who is making a powerful case, particularly for the US community college system, which uses dropping in rather than dropping out and in which people can pay for education at a rate that they can afford. Does he agree that that should be accelerated in the UK?

That is almost the perfect intervention at this point. My hon. Friend and I worked together during his time on the shadow Innovation, Universities and Skills team, and he is a strong advocate of the neighbourhood college scheme in the US. There is no doubt that London Metropolitan performs the function of a neighbourhood college as much as it does that of a traditional higher education institution. There is no doubt that there are great benefits to the concept of dropping in, gradually stepping up one's educational level and not necessarily doing things in one large chunk. As I said, models of education are evolving, and I wonder whether that will not become the predominant model.

The hon. Gentleman is right that the university has a good record with local students, people returning to education and so on. That also carries the disadvantage that many such students live in difficult family or housing situations. They are often trying to maintain one or even two jobs as well. As he rightly said, that makes course completion within conventional parameters very difficult. The Higher Education Funding Council must recognise that in adopting an accounting procedure for such institutions.

I thank the hon. Gentleman for that intervention. Perhaps another great benefit of this debate is that it will push home the point that not everybody comes from a traditional background. If, according to the Leitch agenda, we want to reskill, upskill and get mature learners back into education to learn new skills, we need exactly that kind of model. HEFC, the Government and the Department need to realise that the stigma attached to non-traditional styles of learning has got to go. They are the way forward, and that is why this debate is useful. Hopefully that message will get through, and the funding streams and how they work will be reconsidered.

The big question is who or which group of people is responsible for the crisis. Before I come on to that, I shall point out, as other hon. Members have done, that there are two groups who are not responsible. The first is the majority of the staff of London Metropolitan university, who did not contribute to the erroneous accounting or the poor leadership and management that might have led to the difficulties. We must bear that in mind, and the hon. Member for Islington, North made a good case on behalf of the staff.

The second group of people who are blameless is the students, who have done their best to make their way into higher education. Many of them are paying fees. It is interesting to note that 8,000 international students from 155 countries write cheques to the LMU to conduct their studies, which subsidises to a certain degree the studies of some UK students. Students are now terrified that they will not be able to complete a course that is perhaps one of the biggest commitments that they have made in their lives to education—it is a major step forward and a major development for their life chances. The students are not to blame, and they are my primary consideration.

So who is to blame? It seems clear that there has been a management failure; the vice-chancellor has stepped down. However, it has come through loud and clear in other Members' comments that the Higher Education Funding Council may well have played a role. If there were nudges and winks—"Well, we may overlook those numbers of non-completions for a couple of years"—that is a serious matter. The allegations are significant. It is the least that the Minister can do to hold an inquiry—we should look not just at the role that HEFC thought that it was playing, but step back and see whether any collusion took place.

Does the Minister believe that the current HEFC funding rules adequately reflect support for part-time and modular learning? More than that, are the accounting errors at London Metropolitan university a one-off? Does he have any reason to believe that the misdeclaration and the slight tweaking of drop-out rates in a direction favourable to funding have happened anywhere else? Given the staggering size of public finance troubles at the moment, what steps has the Minister taken to ensure that more careful attention will be paid to overpayments in future? What specific steps have been taken to ensure that we do not find out next year that the same thing has happened somewhere else?

What assurances can the Minister provide that the quality of teaching at London Metropolitan university—I certainly admired what I saw when I visited—will not be adversely affected by the clawback of £15 million over three years and the £38 million? In addition to what HEFC has done, what discussions have he and his Department had with HEFC to help the LMU improve its data reporting in future? There is a bigger question concerning the viability of higher education institutions. I am sure that the LMU's situation—an organisation getting into difficulty, for whatever reason—will not be a one-off. We have heard calls for the Government to step in and consider the situation, including a call from the Liberal Democrat Front Bench for direct intervention to sort it out. If it looks as if the LMU will not make it—if it cannot pay back the £38 million loan and is in danger of going bankrupt—will the Minister and his Department allow that to happen, or will they step in?

I am grateful to my hon. Friend Jeremy Corbyn for securing this debate.

Hon. Members have touched on important issues such as widening participation, particularly in London. I associate myself with what has been said about the contribution of London Metropolitan university to widening participation in north London. The statistics show that we have increased the number of young people and adults from poorer socio-economic backgrounds who go to university—my constituency, Tottenham, has seen an increase of 100 per cent., and there has been a commensurate expansion in widening participation in Hackney, Waltham Forest and Islington. We all acknowledge that alongside universities such as Middlesex, Greenwich, Thames Valley and East London, London Metropolitan university has made an important contribution to that in the London region.

London Metropolitan university has been important for women returners, black and ethnic minorities, people who are claiming asylum in England and those who speak English as a foreign language. It has achieved excellence in its research and contributions in architecture, the built environment, communication, culture and media studies, social work and social policy, education, pure maths and American studies. People rightly feel strongly about this university. I agree with my hon. Friend Ms Abbott that many young people at the institution were not lucky enough to go to grammar school and Cambridge, as she did. They have had very different opportunities, which is why it is so important that we ensure that that institution has a future.

I will describe the history of what has happened at the institution, as we understand it. The crux of the problem is that the information on student numbers submitted by London Metropolitan university for the three academic years from 2005-06 to 2007-08 were shown to be inaccurate by the subsequent audit. The funding council's concerns escalated over time. Previous audit work had identified problems with the university's returns, which prompted further investigation.

The Minister has mentioned that concerns were flagged up in previous inquiries. Were he or his Department aware of those concerns before the major crisis arose recently?

I will come to that.

The data on student numbers that form the basis for the capitalised teaching grant that HEFCE pays to universities contained inaccuracies. Those inaccuracies led to an overpayment to London Metropolitan university of about £36.5 million. Discrepancies in student number information of that scale were unknown in the higher education sector.

The Department and HEFCE are in regular dialogue. Concerns were expressed when the first audits began in 2005-06. However, the scale of the problem did not become apparent until the last audit period. As Adam Afriyie would expect me to say, it is right and proper that the Department allows the funding council to deal with funding decisions in relation to institutions.

I thank the Minister for being so generous in giving way. To press my point a little further, the Department was aware that there were concerns over the declaration of student numbers or completions before the final audit that caused the current crisis. Did it have concerns about any other higher education organisations at the same time?

Given the breadth of our universities, it will not surprise the hon. Gentleman that the funding council keeps us informed of a number of issues in relation to a range of institutions. Students and staff write directly to the Department about institutions. We are aware of a range of issues in different institutions. As I have said, the scale of this situation is unique, and it is of particular concern.

When was the Department first informed of these problems? What was its response to HEFCE and to the university? Why did the governors apparently keep this information secret from many people until this January?

I will deal with all those points in my speech. I would prefer to do it in that way rather than through separate interventions.

May I ask a question? The Minister may address it in the course of his speech. In order to build up the £36.5 million that is owed through overestimating the number of students going through the university, by how many students was the university short each year with nobody seeming to notice?

I hope that I will address that point in my remarks.

The difference with London Metropolitan university is the scale of the problem. The overpayments were unusually large. The funding implications are so significant because the university claimed that large numbers of students had completed a full year, when the evidence shows that they had done substantially less. That is the central point in the case. The university was making returns that were false.

Does the Minister have reason to believe that at any point when the university started making false or falsified returns, it was given to understand by the funding council that doing so would be okay?

I will come to that issue.

Non-completion is a significant issue at the university. HEFCE's funding policies are rightly designed to encourage universities to help their students to complete the studies for which they have paid tuition fees. HEFCE has provided substantial funds to help institutions to improve retention, and my hon. Friend the Member for Islington, North concentrated on that point. London Metropolitan university has received a substantial amount of money compared with other institutions to help it to retain students. In 2007-08 it received £6.9 million, which was reduced to £3.9 million this year. That money was given to help students to stay in the institution, notwithstanding the over-reporting that has taken place.

I understand the Minister's argument, but does he not find it strange, as I do, that the university was submitting non-completion rates 13 times lower than the norm? Rates of 30 per cent. should have been expected, so why did his Department not pick that up for years? It is incredible that his Department and HEFCE were not on top of the situation.

I want to finish the entirety of my remarks. I have said that this is a serious situation, and I want to discuss where responsibility lies.

Under section 65 of the Further and Higher Education Act 1992, HEFCE has a legal power to reclaim grant money that is paid in error, and after due consideration the council decided to invoke that power in December last year. My Department's agreement to that decision was neither required nor sought, but it is hard to quarrel with the reasoning behind it. We all know that times are difficult, and it is important that any funding body is cognisant of students in organisations as well as the method of funding that is allocated to other organisations in the higher education sector. For that reason, the council sought to discuss with the institution how it could mend and solve the problem.

The council was mindful that reclaiming such a large sum immediately could send London Met out of business, so it decided instead to recover the money in a phased and managed way that would both protect the continued viability of London Met and allow it to carry out the significant institutional restructuring that would be required. Accordingly, the council agreed with the university a schedule for recovering the grants that would spread repayments over five academic years.

Repayments on that scale cannot be made painlessly, but I hope and believe that the schedule of repayments that has been agreed will allow London Met to preserve its distinctive and valuable mission and to begin, through its restructuring programme, building for a more sustainable future. Nevertheless, I am aware that, on 19 February, the then vice-chancellor of London Met e-mailed all staff to inform them that the university would seek to reduce its staffing by up to 550 posts by July 2010. The university has since made it clear that more than half the posts will be lost through a mixture of voluntary and compulsory redundancies, and that the balance will be through natural wastage.

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I shall not give way, because I want to make some progress. According to the briefing note that the university has circulated to hon. Members to inform this debate, further details about possible redundancies are likely to emerge later this month following consultation with trade unions.

I am anxious that my right hon. Friend completes his speech, but he has spent a fair amount of time reciting facts that all of us know, and I would hate for him to come to the end of the time available without having responded to specific questions that have been posed to him from all around the Chamber. Let me remind him of a couple of them. What steps has he taken to make sure that the quality of teaching at London Met is safeguarded? What discussions has his Department had with the funding council about London Met? Finally, will it, or any other college in a similar situation, be allowed to go bankrupt?

On the last question, I think I have indicated that I have no expectation that that college will go bankrupt. If my hon. Friend lets me progress, I can tell her that the university will be able to apply for a strategic development fund when it restructures and gets into proper discussions with the funding council about the way forward. That is the first thing, but the university has not done that yet.

My hon. Friends the Members for Hackney, North and Stoke Newington and for Islington, North are well aware that my constituents go to that university too—indeed more of mine do than theirs. They also know that many of us have campaigned, over many years, to ensure that universities in other democracies in other parts of the world are autonomous and free from government interference. It might be nice for the local Minister to go in and start organising a university's finances, but we live in a democracy in which this Parliament has voted for that autonomy and maintains it. That means that the Government cannot intervene in any situation in which a university is in discussion with the funding council, but we are seeking to ensure that students at the university can complete their courses. The university has not applied for emergency funding for students, indicating that it is not worried that students will not be able to complete courses. We are seeking to ensure—this point was raised by Mr. Duncan Smith—that the funding council is absolutely cognisant that where there are vulnerable subjects, which we must ensure are available across the university system.

May I bring the Minister back to the redundancies and the financial model under which the university is working? It is funded enormously from the public purse, as are most universities, and it is pursuing a redundancy strategy that does not appear to be necessary in terms of its current financial difficulties. Many people from the university are concerned, as am I, that an excessive number of redundancies are being planned, and that there is an attempt to restructure without any real understanding of the need to maintain courses and staff and student numbers. I understand what the Minister has said about the autonomy of universities, but they are not autonomous; they are funded by the public. His job, as the Minister, is to take care of the public purse and ensure that moneys spent on higher education are spent appropriately.

I take seriously the prospect of redundancies and the worrying risks that they place on people. It is probably premature to reach a conclusion on that issue, particularly given that the new leadership of the institution has come into place only recently. The university has not yet made a bid for strategic development funding, which will be important to how it reshapes and restructures its courses.

Even at the best of times, losing one's job is a serious business for anybody, and I recognise what many lecturers have done over many years at that institution. I cannot guarantee their jobs, but I can promise that any person who is made redundant from London Met will have access to a full package of support for the unemployed, including training support, as one would expect the Government to make available. I also assure hon. Members that all London Met students who are currently enrolled will be able to complete their studies in the normal way. London Met has made no applications to the funding council for emergency support for students, but I hope and expect that any such request would be considered sympathetically.

That summarises where we have got to with the institution. The university has announced only recently the appointment of Alfred Morris, a vice-chancellor with tremendous experience of turning around institutions. It is for him to begin to determine the future of London Met.

And the inquiry?

There will, of course, be an independent inquiry, and an inquiry by the National Audit Office into the financial arrangements for universities, which will have particular regard to the London Met situation. With that, I hope that my hon. Friends in what is a difficult situation in north London will understand that all of us are doing our best.