Clause 40 - Other amendments of section 22 of Teaching and Higher Education Act 1998
Higher Education Bill
3:15 pm
Mrs Anne Campbell (Cambridge, Labour)
One of the interesting things about the process of a White Paper and then a Bill is the change that takes place in the course of that evolution. I appreciate the way in which my right hon. Friend the Minister has listened to the fears expressed by Back Benchers and has managed to modify the Bill quite considerably to accommodate those concerns.
When we began this process, the White Paper originally said that there would be grants of £1,000 for those whose family income was under £10,000 a year. That was then changed to families with incomes under £15,000 a year. It later became a grant of £1,500, available to those from families with incomes under £15,000 a year. We have now seen a further change with the roll-up of the fee remission of another £1,200, making a total grant of £2,700, and a bursary of £300, which adds up to a final figure of £3,000. That is a good deal for people from lower-income families. I no longer have the concerns that I had about students from very low-income families being deterred from going to university. What is now on offer is much better than the current situation. I believe that more students from poorer backgrounds will be encouraged to go to university under the Government's proposals.
However, I have a concern and I hope to be able to push the Minister a little further this afternoon on it. There are students who come from families who do not appear to have a very low income but who live in an area that has high-cost housing. That is the case in my constituency and in those of my hon. Friends who have subscribed to the amendment. The problem was first brought to my attention by my hon. Friend the Member for Reading, West (Mr. Salter), who has great
concerns about families in his constituency who do not appear to be on very low incomes but who have small disposable incomes.
I have examined comparable house prices in different regions and areas. There are huge discrepancies. You will be sorry to hear, Mr. Gale, that I do not have the figures for every Committee member, but I have focused on a couple of places to illustrate the point that I am trying to make about the huge differences. The figures were taken from the Land Registry, and they are recent, having been last updated on 4 February this year. In the constituency of my hon. Friend the Member for Reading, West, the average price of a two or three-bedroom terraced property is £156,000; in Greater Manchester, it is just over £68,000; in Salford, it is £58,000. In parts of London, the figure is much higher. Greater London's average price for such a property is £271,000, but that varies: in Barking and Dagenham, the figure is £158,000 and in Kensington and Chelsea it is about £1.5 million. Cambridge is very expensive compared with many of those places, although not with Kensington and Chelsea's £1.5 million: the average cost of a terraced house in Cambridge is about £234,000. I am seeking to illustrate that the disposable income of somebody who lives in a very high-cost housing area such as my constituency will be far less than that of people who live in cheaper housing areas.
I have also examined the mortgage repayment for an average Cambridge terraced house costing £234,000. Assuming that the purchaser had a deposit of about £25,000, they would be paying their mortgage on £209,000. The Council of Mortgage Lenders average interest rate for the past month was 4.19 per cent. Using that figure and the Moneyfacts mortgage calculator, the monthly repayment on a repayment mortgage for that property over 25 years works out at £1,125. That is consistent with Nationwide's figure of £1,238 as the monthly repayment.
Let us consider someone in Cambridge who comes from a family at the top end of the income scale at which a grant would be payable, with an income of around £33,000. The take-home pay on a salary of £33,000 would be just over £2,000 a month, out of which one might pay £1,125 in mortgage costs, thus leaving a disposable income of about £1,000 a month. That is not a great deal for a family that may consist of two adults and two teenage children. Now let us consider the same calculations for a family in Manchester. First, I remind the Committee that one can buy a terraced house in greater Manchester for £68,000. If we make the same assumptions as before and allow for a deposit of £25,000, mortgage repayments of £43,000, and take-home pay of £33,000, the mortgage calculation would be £225 a month, thus leaving £1,941 of disposable income.
There is a huge difference between the disposable income of those two hypothetical families, who have the same income but live in different areas. In Cambridge, they would have a disposable income of about £1,000 a month, whereas in Manchester it would be almost £2,000 a month.