Student Support (White Paper)

– in the House of Commons at 3:31 pm on 9th November 1988.

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Photo of Mr Kenneth Baker Mr Kenneth Baker , Mole Valley 3:31 pm, 9th November 1988

With permission, Mr. Speaker, I wish to make a statement about future arrangements for student support.

Two years ago I set up a review of student support to examine how the maintenance needs of students may be met. We have the most generous system of student support in the western world, yet fewer of our young people enter higher education than in other European countries.

In our 1987 election manifesto we said that the purpose of the review was to improve the overall prospects of students so that more are encouraged to enter higher education. We specifically mentioned top-up loans to supplement grants as one way of bringing in new finance to help students and to relieve pressure on their parents.

The review has now been completed. We believe that the cost of student maintenance should be shared more equitably between students, their parents and the taxpayer. The Government are therefore today publishing a White Paper which sets out our proposals to introduce a scheme of top-up loans for students. We propose that from 1990, in addition to their grant, all home students in full-time higher education, except postgraduates, will be eligible for a top-up loan averaging over £400 in a full year.

This top-up loan facility will not be means-tested. Students will be able to take up as much or as little of it as they wish. The present grant arrangements will continue, but the overall levels of grant will be frozen in cash terms at their 1990 levels. As the grant also incorporates in most cases a parental contribution, this means that over time the average parent will be paying less in real terms. From 1990, students' total resources in grant and top-up loan will continue to be reviewed annually. Any uprating to reflect cost increases will be applied only to the top-up loan facility until the top-up loan has risen to the same level as the grant and parental contribution taken together.

The top-up loans will not bear a commercial rate of interest. Under the Government's proposals, top-up loans will be offered at a real interest rate of zero. The principal to be repaid will be uprated each year in line with inflation. Repayments will not start until the April after students complete their courses. Furthermore, repayments will be deferred when a graduate's income is low for any reason.

In 1985, the Government announced their intention to remove students from the social security system. Accordingly, the Government will end the general eligibility of students for social security benefits, whether or not they qualify for top-up loans. Benefits will, however, continue to be available for students who are disabled or single parents, and for students' dependants.

The level of the top-up loan will more than compensate the great majority of students for any loss of benefit. We estimate that the average level of social security benefit which would otherwise be claimed in 1990–91 is about £150. That compares with our loan facility of £420 in that year.

I recognise, however, that there may be local circumstances in which some further help may be needed, and postgraduate and further education students will not have access to loans. I will establish, therefore, three access funds, each of £5 million, to provide support on a discretionary basis to students in special financial need. The funds will be for postgraduates, other students in higher education, and students in further education. Their operation will be reviewed after three years. They will be administered by the colleges, central institutions, polytechnics and universities throughout the United Kingdom; these institutions are best placed to understand the circumstances of their students.

The terms of the top-up loan scheme we are proposing are much more favourable than those of the borrowing on which many students rely at present. And instead of students having to rely on a social security system which was never designed for them, we shall be providing appropriate discretionary arrangements to help those in real need. This is a major step forward to achieving our target of more young people going into higher education.

In the Government's view, the top-up loan scheme is best administered by the financial institutions. I am now embarking on discussions with them. I shall also consult the funding councils and representatives of the local authorities and the higher and further education institutions about the other aspects of my proposals. The Government will bring forward a short Bill to allow the new regime to be introduced from autumn 1990.

These proposals represent an important step away from the dependency culture. Students will have a financial stake in their own future, and this will encourage greater economic awareness and self-reliance. The burden of student support on taxpayers and parents will be reduced. For the first time there will be a guaranteed extra source of income for students over and above their grants and parental contributions. By introducing top-up loans, we fulfil the undertaking we gave in our manifesto at the last election.

Photo of Jack Straw Jack Straw Shadow Secretary of State for Education

This White Paper will reduce access to higher education, increase student and parental debt and deter many students from entering higher education. It proposes that knowledge be mortgaged in the future.

Is it not to the shame of the Secretary of State that this document contains no significant proposals for dealing with the real scandal—the numbers of young people who are forced out of education at 16-plus because of financial and other pressures? Is the Secretary of State aware, that when the grant system was reasonably funded in the 1960s and 1970s, there was a significant increase in access for lower income homes? Does he not know that the grant system gave many of us our only chance of higher education, and that he is now seeking to deny to others opportunities which even many Ministers had for themselves?

Is not the principal reason why working-class participation has leveled off in the 1980s the Government's appalling record of having cut student grants by 20 per cent. in real terms, increased the burden on parents and reduced the number of home students at university between 1980 and 1986?

The Secretary of State's hon. Friend, the Under-Secretary of State, told us last week that public expenditure constraints have been so severe that they must inevitably lead to the progressive degradation of our finest universities. I quote the hon. Gentleman's document.

Will the Secretary of State confirm that it is simply fraudulent to describe the loans as top-up loans? He is not topping up the grant system but pulling it down. Will he confirm that he aims to replace at least half the grant and parental contribution with a loan? Will he confirm that the suggestion he made in the statement that parents will pay less in real terms is wholly misleading? If the parental contribution scale is frozen, many parents will have to pay significantly more. How does imposing such high burdens of debt on students and their parents square with the Prime Minister's injunction that people must be taught to live within their means?

Will the Secretary of State give the House a categorical assurance that the loans will not be extended to vouchers and tuition fees, as proposed in the Jackson memorandum? Will not such loans hit women disproportionately hard? Why does the Secretary of State not have the guts to admit that, as the Jackson papers have already told us, in private the Government care nothing about increased access and that the whole policy has been driven by the Chancellor's obsession with cutting public spending? Was the Tory Reform Group not correct to say that a loan scheme would

reduce … access to higher education … lower standards and … produce a new class of poor graduates"? Is it not true that the Secretary of State has failed to provide better opportunities for people at 16-plus, at 18-plus and in adulthood and has failed to improve the nation's skills? Instead of moving towards the 21st century, the proposals take us back to the 19th century. The Secretary of State has betrayed the nation's future.

Photo of Mr Kenneth Baker Mr Kenneth Baker , Mole Valley

The hon. Member for Blackburn (Mr. Straw) will want to study the proposals in detail. In reply to the point that he made about saving Government expenditure, I draw his attention to the fact that the net cost of the scheme to the Treasury will be £850 million, so there will be an increase in Government expenditure. I refer the hon. Gentleman to annex E of the White Paper, which contains a table showing the amount of money that will build up for the rest of the century.

In defending the present system, the hon. Gentleman is defending the indefensible. He is defending a system that has actually restricted access to higher education. The previous Labour Government, which the hon. Gentleman supported, not only restricted access but cut access to higher education and cut the number of students. The hon. Gentleman is defending a system in which 35 per cent. of students do not receive the full parental contribution.

Page 15 of the White Paper deals with parental contribution. We propose that from 1990, the grant plus parental contribution should be frozen and all increases applied to the loan top-up facility. The contribution scale will be changed to ensure that parental contribution does not rise to take up the entire amount. The chart shows that. After the scheme has been introduced, parents will be paying a substantially reduced amount to support their own children in higher education.

The hon. Gentleman was dismissive about the scheme. I remind him of the comments being made in higher education circles. The Times Higher Education Supplement—no supporter of the Government—says: The grant or loan debate is virtually over. The case for loans now has an unstoppable momentum. The hon. Gentleman said this afternoon, and to the papers this morning, that Ministers have benefited from the present system yet want to end the system from which they themselves have benefited. I had a means-tested award which I supplemented from my own savings. I had saved money during my period of national service. I also worked during the vacations. Many of my generation would have been very glad indeed to have the facility of a top-up loan on the terms that I have announced.

I remind the hon. Gentleman of the positive advantage of the system. It will provide a guaranteed extra source of income for students, over and above their present grants. It will reduce the burden on parents, who are already hard pressed. We are establishing three access funds and giving institutions the chance to tailor packages to attract more students.

The hon. Gentleman asked about the numbers staying on at 16. In three or four days' time, I shall be publishing more statistics showing that the number of children staying on at 16 has increased from 32 per cent. to 48 per cent., and that is the important point. The Government have increased the number of students in higher education by nearly 200,000 since we came to office. However, we cannot go much further by relying on the present system, and that is why we are committed to change.

The Labour party is committed to nothing in this matter. I consulted its manifesto this morning and it had nothing at all to say about students and student support. I challenge the hon. Member for Blackburn to tell us what his policy will be. He has been in charge of Labour's education policy for two years now and there is no such policy. Labour's education policy is a vacuum filled by Straw.

Photo of Mr George Walden Mr George Walden , Buckingham

I congratulate my right hon. Friend on the scheme, which is both sensitive and fair. Having said that, I should like to offer a little destructive criticism. At the centre of the debate is access. There are three aspects to access. The first aim is to get the mix of grants and loans right, and I think that my right hon. Friend has done that. The second and far more important aim is to improve the quality of schools, and my right hon. Friend is doing that. But there is a third aspect, to which I attach great importance, because the Government seem to want—

Hon. Members:

What is the question?

Photo of Mr Bernard Weatherill Mr Bernard Weatherill , Croydon North East

Order. I am aware that the hon. Member for Buckingham (Mr. Walden) has some interest in this matter. However, there is to be a debate and I would ask him now to come to his question.

Photo of Mr George Walden Mr George Walden , Buckingham

What is the attitude of my right hon. Friend the Secretary of State to the third aspect of access? It seems that the Government wish to generate a new generation of media morons by their broadcasting policy. I do not understand how that fits in with what my right hon. Friend proposes for the good of access or with what he is doing for schools. That is far more important for the promotion of social fairness than the mere mechanics of loans or grants.

Photo of Mr Kenneth Baker Mr Kenneth Baker , Mole Valley

I thank my hon. Friend for the work that he did on the student review when he was Parliamentary Under-Secretary of State for Education and Science. I also thank him for his support for the scheme that I have announced and for the reforms that we have been introducing in the education system. On my hon. Friend's last point about media morons, I do not believe that the proposals of my right hon. Friend the Home Secretary for the reform of television will necessarily lead to falling standards. There are various ways in which standards can be improved within those proposals, but that goes rather wider than the matters in my statement.

Photo of Simon Hughes Simon Hughes Shadow Spokesperson (Education)

Will the Secretary of State not admit that his announcement reveals that the Thatcherite monetarist wolf has at last been admitted to the Department of Education and Science, and that the hidden agenda is now revealed? Will the Secretary of State tell us what he proposes to do about tuition fees—the other item for which students may be asked to pay in the coming months?

Is it true that students will no longer even be statistics for social security purposes and that they will not qualify—except for discretionary awards—no matter how low their income? Why did the Secretary of State say not one word about increasing access or about the fact that the proposal represents the biggest disincentive to students from poor and working families to go on to higher education that has been announced since the second world war?

Photo of Mr Kenneth Baker Mr Kenneth Baker , Mole Valley

I should perhaps have replied to the hon. Member for Blackburn on the question of tuition fees. I said at Question Time yesterday: There is a great debate on the funding of higher education, both here and overseas. There is also a growing desire among institutions for greater independence. The Government have no proposals for students in receipt of mandatory awards to contribute part of their tuition fees, but higher education institutions have a legal right to charge tuition fees, and to prevent them doing so would require legislation."—[Official Report, 8 November 1988; Vol. 140, c. 155.] I have made it clear that I wish to see that debate mature and develop. It has nothing to do with the White Paper that I have put before the House.

With regard to access, the hon. Member for Southwark and Bermondsey (Mr. Hughes) must address the fact that other countries with schemes of grants and loans have very much higher records of access than we have. One of the features of our education system is that student support in the United Kingdom is uniquely high. At the 1984 prices given in the White Paper, it is £750 per student in the United Kingdom compared with £70 in West Germany, £180 in France and £30 in Japan. Yet in all those countries a higher proportion of children, especially from blue-collar families, go into higher education than is the case in this country.

Photo of Mr James Pawsey Mr James Pawsey , Rugby and Kenilworth

Is my right hon. Friend aware that his statement will be widely welcomed, especially by the 70 per cent. of parents who currently make a parental contribution? Will he confirm that the loan will be in addition to the grant prevailing at the time of its inception? With regard to the view expressed by the hon. Member for Blackburn (Mr. Straw) that children from blue-collar families will be dissuaded from taking up higher education, I do not take that view, but I should be pleased to hear my right hon. Friend's comments on that point.

Photo of Mr Kenneth Baker Mr Kenneth Baker , Mole Valley

I re-emphasise what I said to the hon. Member for Blackburn. We are reducing the burden on parents and taxpayers. Chart 8 on page 15 of the White Paper sets out the effect. Over time, the parental contributions will come down by nearly half. That will be a great help to many hard-pressed parents and their children.

I confirm that the loans will be in addition to the grants. I have already announced the increase in grant for 1989–90. There will be a further increase in 1990–91. That level will then be frozen and the loans will be on top of that.

On the very important question of access, I have already said that it is good news for this country that a higher proportion of children of 16–plus are staying on at school. That must be welcomed in all parts of the House. It is a very significant increase—up to 47 per cent. of the age band for 1988. That increase is good news and it has grown strongly in the past few years. In terms of access to higher education, socio-economic groups C2, D and E constitute 61 per cent. of the 18-year-old population in this country but supply only 21 per cent. of university entrants and 27 per cent. of polytechnic entrants. For the universities, that proportion has remained static since about 1970, so the present system, to which the Labour party is wedded, has not increased the proportion from blue-collar families. That is what we want to do and I believe that that is what we shall achieve.

Photo of Hilary Armstrong Hilary Armstrong Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson

I am disappointed with the White Paper. Is the Secretary of State increasing access to education or merely to debt? If he were really interested in increasing access to education, he would have addressed the problem of mature women who are trying to get back into higher education and have to use the part-time and discretionary grant award scheme. Listening carefully to the right hon. Gentleman, it seems to me that no attention whatever has been paid to that aspect. For those women, the loss of all social security benefits and entitlements will be a major—

Photo of Mr Bernard Weatherill Mr Bernard Weatherill , Croydon North East

Order. As I have said, there will be a debate on this. Will the hon. Lady please ask a question?

Photo of Hilary Armstrong Hilary Armstrong Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson

What real hope can the Secretary of State offer to mature women seeking to get back into higher education?

Photo of Mr Kenneth Baker Mr Kenneth Baker , Mole Valley

A growing number of mature students, both male and female, are now entering higher education. Many of them do not qualify for any sort of grant or, for one reason or another, for the various benefits of the social security system. I confirm that they will be eligible to participate in the loan scheme.

Photo of Mr Keith Hampson Mr Keith Hampson , Leeds North West

Is it not true that despite the generosity of our grant system, the proportion of university entrants from the unskilled, manual worker category has steadily fallen? Does not the vast bulk of the higher education world know full well that no Government could indefinitely continue with the current system?

Although my hon. Friend's scheme is most welcome, will he take it further and abolish all parental contribution and make access to loans available to that critical group of part-time university and polytechnic students who currently receive no state help?

Photo of Mr Kenneth Baker Mr Kenneth Baker , Mole Valley

I am sure that some people will say that the scheme goes too far and others that it does not go far enough, so I probably have it about right.

I appreciate what my hon. Friend has said, but he is not quite right. There has not been a decline in the number of students from blue-collar families. As the White Paper shows, the number has risen slightly. The survey carried out for the Robbins committee shows that 3·2 per cent. of 21-year-olds whose parents were in manual occupations had entered full-time higher education by 1962. The comparable figure for 1985 was 6·9 per cent. It is a disappointing rate of progress over the years and, in some of our universities, it has not moved at all. Any increase has been mainly in polytechnics.

Photo of Elliot Morley Elliot Morley , Glanford and Scunthorpe

Does the Secretary of State accept that many caring parents will not want their children to begin life with crippling debts around their necks and, instead, will make up the contributions? Will he admit that he is merely passing contributions on to parents at a time of crippling mortgage rates and a crisis in the rented housing sector? Will not many people start life with a disadvantage because his scheme will deter those in the lowest income groups from entering higher education? When the right hon. Gentleman talks about dependency, does he mean cutting income for the poor and cutting taxes for the rich? Is that his idea of the dependency culture?

Photo of Mr Kenneth Baker Mr Kenneth Baker , Mole Valley

I do not believe that parents will rush in to make up the loans for their children because about one third of parents already do not take up the full parental contribution. The children of those parents will be the major beneficiaries of the loan scheme.

Photo of Julian Brazier Julian Brazier , Canterbury

I congratulate my hon. Friend on his excellent statement. Is he aware that the nearest university to Europe—the university of Kent at Canterbury—is to have a seminar on this very subject next week? I shall regard it as a privilege to put the case for removing a proportion of the burden that currently rests on taxpayers—many of whom are poor people—and placing it on those of us who were privileged to enjoy university education.

Photo of Mr Kenneth Baker Mr Kenneth Baker , Mole Valley

I thank my hon. Friend for his support. The whole essence of the scheme is that the burden on the taxpayer and the parent will be reduced.

Photo of Mr Roy Beggs Mr Roy Beggs , East Antrim

Having been a teacher for 27 years, may I assure the right hon. Gentleman that young people stay at school after the age of 16 because they have no other choice? There are no jobs for them. May I lodge a protest about the scheme on behalf of the poor families in Northern Ireland, which has the highest unemployment rate in the United Kingdom? They cannot afford to support their able children so that they can benefit from education and escape from the poverty trap. Will the right hon. Gentleman take account of the special difficulties and needs of students in Northern Ireland?

Photo of Mr Kenneth Baker Mr Kenneth Baker , Mole Valley

The proposals that I have announced relate to the whole of the United Kingdom. Many students are prepared to make an investment in their future. When graduates leave college, in whatever part of the United Kingdom, they go into much better and higher paid jobs than do many others in our society. The average is very much higher. An analysis in the White Paper shows the return to an individual student from engaging in higher education to be about 25 per cent., which is a very high return. We are inviting students to make an investment in their future and I believe that many will do so, from whatever part of the United Kingdom they might come.

Photo of Dr Rhodes Boyson Dr Rhodes Boyson , Brent North

Does my right hon. Friend agree that practically every other country in the free world has a loans system? Will he consider introducing a travel loan system so that Labour education spokesmen can visit Sweden, which is by no means a Conservative country and has an excellent loans system?

Photo of Mr Kenneth Baker Mr Kenneth Baker , Mole Valley

The Swedish system started out in the way that I am proposing today. In the 1960s the Swedish Government decided to freeze grants, as I propose today, and to introduce top-up loans. They let that system run on to the present system where only 10 per cent. of the expenditure is on grants and 90 per cent. on loans. They went too far and are now increasing the grant element back to 30 per cent. We are proposing that grant and loans together—[Interruption.] Let me answer one point at a time—will balance out at 50:50. Student support will be provided half by loans and half by grants and parental contribution. The default rate in Sweden is about 1 per cent.

Photo of Mr Martin Flannery Mr Martin Flannery , Sheffield, Hillsborough

It is always interesting to hear the Secretary of State pretending that a draconian cut in education is progressive. Is it not a fact that the serried ranks behind him, due to the riches of mummy and daddy, are bound to—[Interruption.] That is the reality. Is it not a fact that our record on young people staying on in education after 16 compared with that of the great countries of the world is appalling? We are at the bottom by miles. Japan and the United States have twice—

Photo of Mr Kenneth Baker Mr Kenneth Baker , Mole Valley

The hon. Gentleman talked about our position in relation to the great countries of the world. I remind him that in France the percentage of university entrants from blue collar groups rose from 23 per cent. in 1975 to 30 per cent. in 1980, although the cost of higher education in our country, where we have had no increase, is four times greater than the cost in France.

Photo of Mr Malcolm Thornton Mr Malcolm Thornton , Crosby

As one who has expressed concern over the way in which the present system has failed to meet the needs of students, may I welcome the fact that the Government have grasped this nettle? Nevertheless, we are concerned about access and the effects that increasing debt may have on students. I was interested in my right hon. Friend's comments on the conversations that he will have with banks and institutions. We are bothered about the mechanics of the scheme. Can he tell the House how he expects these conversations to go and to what purpose?

Photo of Mr Kenneth Baker Mr Kenneth Baker , Mole Valley

The Government firmly believe that it would be better for the scheme to be operated by banks, building societies and other financial institutions than by some Government quango. I am now entering into discussions about that, but there are certain parameters to any scheme that I set out. The obligation to repay the loan should spend on the income of the graduate. That is to say that a student who has a low-paid job on graduation should have his obligation to repay the loan suspended until he reaches a certain pay level. That part of the paper is rather green and there are various suggested alternatives. That is particularly important for women graduates who get married and have no source of income.

Photo of Mr Kenneth Baker Mr Kenneth Baker , Mole Valley

I am grateful to my hon. Friend for her support.

Secondly, the loan will be written off and cancelled either 25 years after it has been incurred or if the person has reached 50. Naturally there will be no recovery of loan should a graduate die. [HON. MEMBERS: "Oh."] We shall cancel it out. Thirdly, the obligation to repay the loan will not start until the April after the student has finished the course, which will probably be the previous June.

Photo of David Blunkett David Blunkett Opposition Spokesperson (Local Government & Poll Tax), Member, Labour Party National Executive Committee

Is the Secretary of State saying that longevity or the ability to string out repayment will be an advantage in not repaying the loan? Is he telling the House that taxpayers would rather subsidise financial institutions through lower interest rates than invest directly in the future of both young people and this country? Far from a culture of access, this is a culture of Visa and American Express.

Photo of Mr Kenneth Baker Mr Kenneth Baker , Mole Valley

It is the student who will be subsidised in that the student will not have to pay the going commercial rate for the loan, which students must pay on their overdrafts at present. Surely the hon. Gentleman would agree with that. It is part and parcel of the scheme. I should add that if there has been a deliberate attempt to string out a loan or to default, it will not be cancelled when the person reaches 50. We thought that that proposal would make the scheme slightly more attractive.

Photo of Mr Peter Hordern Mr Peter Hordern , Horsham

Can my right hon. Friend say whether the repayment of the loans will be less at the beginning and greater towards the end? Will he confirm that the net cost of the scheme to the Government will be greater than the present one?

Photo of Mr Kenneth Baker Mr Kenneth Baker , Mole Valley

I have already made it clear that the scheme will involve considerable cost in the initial years. My hon. Friend asked about the length of repayment. On page 16 of the White Paper we set out a provisional scheme for how repayment builds up. We envisage that for £1,396 over three years there will be a repayment of about £300 a year for about five years. It is possible that repayment of larger debts will take longer than five years. We do not rule out the possibility of offering a discount for prompt payment, as offered under the German scheme. That is part of the discussions that we shall have with the banks.

Photo of Mrs Rosie Barnes Mrs Rosie Barnes , Greenwich

Does the Secretary of State agree that in order to increase the uptake of higher education, particularly among lower income students, the staying-on rate at 16 must be markedly increased? Will he consider introducing a means-tested benefit for 16 to 19–year-olds to encourage children from lower income families to stay on at school rather than leave to supplement their own and their family's income?

Photo of Mr Kenneth Baker Mr Kenneth Baker , Mole Valley

That proposal was put forward by the hon. Lady's party at the general election, and in the past the Labour party has toyed with a payment at 16. First, it is expensive. Unmeans-tested, it would cost £700 million to £800 million; means-tested, it would be less. Secondly, the idea of means-testing boys and girls at school, with some receiving payment and others not, is unattractive.

The real argument against the hon. Lady's case is that we are already getting more young people staying on at 16. The rise to 48 per cent. of that age band is encouraging and is happening now.

Photo of Mr Harry Greenway Mr Harry Greenway , Ealing North

Will my right hon. Friend confirm that his commitment to equality of opportunity of access for all to higher education is underlined by the fact that there is no tuition fees element in this package? Will he ensure that there is none in future? Can he confirm that the average student in higher education today borrows about £340, so we already have loans on that basis? Can we look for some considerable improvement in the student grant in 1990 when this new scheme is introduced?

Photo of Mr Kenneth Baker Mr Kenneth Baker , Mole Valley

We published a profile of student expenditure in the White Paper and I recall that that is at present about the average level of a student overdraft.

My hon. Friend asked about access. I remind him that many years ago, in his famous report, Robbins stated that when many parents were only just beginning to acquire the habit of contemplating higher education for such of their children, especially girls, as were capable of benefiting by it, it was probable that a system of loan would have an undesirable disincentive effect. But that if as time went on the habit became more firmly established, the arguments of justice and distribution and of the advantage of encouraging individual responsibilty might come to weigh more heavily and lead to some experiment in that direction.

Photo of Mr Dafydd Wigley Mr Dafydd Wigley , Caernarfon

Does the Secretary of State accept that in areas of high unemployment and low income—where no holiday jobs are available and where there may be a cultural reluctance to take on loans —as a result of today's statement students who have the ability to go on to higher education will not do so? How does that encourage the development of education?

Photo of Mr Kenneth Baker Mr Kenneth Baker , Mole Valley

I draw the hon. Gentleman's attention to the blue pages at the back of the White Paper, where there is an analysis of the reluctance of various socio-economic groups to take on loans. I remind the hon. Gentleman that various groups of students who do not benefit from grants will do so from the loan. At present, 50,000 students at universities or polytechnics doing mainly professional courses of one sort or another do not qualify for a grant, but they will for the loan. Students who do not qualify for awards of any sort will benefit from the loan. Students whose awards are abated and whose parents do not make up the full amount will benefit from the loan. I draw the hon. Gentleman's attention to the three access funds that I am establishing. I am giving money to universities, polytechnics and colleges so that they can devise various access courses and packages, scholarships and bursaries of their own.

Photo of David Curry David Curry , Skipton and Ripon

Is not one of the principal differences between our system of higher education and that of the continent the fact that many students on the continent attend local universities, live at home and are maintained by their parents? Is that one of the reasons why there is greater access of blue collar workers on the continent? As our present system has failed in that regard, is it not good sense to change it?

Photo of Mr Kenneth Baker Mr Kenneth Baker , Mole Valley

I do not think that that change will be implicit in the scheme. The pattern here may change over the years, but I confirm that on the continent there is a greater pattern of students studying at their local universities. Students here shop around the country, which substantially adds to the expense of our higher education system.

Photo of Mr Win Griffiths Mr Win Griffiths , Bridgend

Will the Secretary of State confirm that one of the major reasons for the failure to open access to unskilled children is the way in which the grant has been cut since the end of the 1960s? Will he look at the access figures for unskilled children for 1955, 1965, 1975 and 1985 and note what has happened as the value of the grant has decreased? How much in real terms will the grant be worth to each student in 2027—the last year for which we have figures in the White Paper—compared with its value in 1962, when I began my university career?

Photo of Mr Kenneth Baker Mr Kenneth Baker , Mole Valley

I should need some notice to give figures for the period between 1962 and 2027. I shall endeavour to extract them for the hon. Gentleman and write to him. The hon. Gentleman asked me to make various comparisons between the years and I shall do so, but I am sure that the pattern will show that access has remained static. I remind him that under the present system we spend more on student support from public funds than comparable countries. We spend more per student, more as a proportion of higher education current expenditure, more as a proportion of total current expenditure for education and more as a proportion of gross national product. We are spending much more than other countries through a combination of grants and loans, which attract more people into higher education.

Photo of Mrs Elaine Kellett Mrs Elaine Kellett , Lancaster

Will my right hon. Friend accept that I am delighted that he has so carefully safeguarded the position of women who marry, have children and therefore do not repay the loan until they are in receipt of a reasonable income? Does my right hon. Friend agree that the participation rate of manual and blue collar workers would be infinitely higher if the Labour party had not destroyed grammar schools, from which many members of the Shadow Cabinet benefited before entering university?

Photo of Mr Kenneth Baker Mr Kenneth Baker , Mole Valley

My hon. Friend broadens the argument rather considerably. I do not want to go back into history as I prefer to talk about the future. I am sure that the various changes we are putting in hand through the Education Reform Act 1988 will substantially improve the quality of education in the future.

Several Hon Members:

rose——

Photo of Mr Bernard Weatherill Mr Bernard Weatherill , Croydon North East

Order. I am bound to have regard to the other business on the Order Paper. We shall be dealing with Lords amendments to two important Bills and the House need only look at the selection list to appreciate how much work we have to do. I shall allow questions to continue for another 15 minutes, but I ask hon. Members to keep their questions as brief as possible so that brief answers may be given.

Photo of Mr Tam Dalyell Mr Tam Dalyell , Linlithgow

What assessment has been made of the effects of this scheme on teacher recruitment? As the vice-chancellors are extremely concerned about the quality of teacher recruitment, may we have the names of the vice-chancellors who support the scheme?

Photo of Mr Kenneth Baker Mr Kenneth Baker , Mole Valley

As far as I know, no vice-chancellor has seen the scheme because it has been prepared and made available to the House today. What the hon. Gentleman might be referring to are the views that have been advanced by various vice-chancellors in the continuing debate on the funding of higher education institutions. We are reviewing teacher recruitment. Clearly it is one of my responsibilities to ensure a good flow of teachers over the coming decade for the introduction of the national curriculum. We shall bring forward proposals to deal with that.

Photo of Mr David Madel Mr David Madel , South West Bedfordshire

Do the changes in student support mean that the Government think that there should be a change in the length of university terms and degree courses? If that happened, it would have an impact on student finances.

Photo of Mr Kenneth Baker Mr Kenneth Baker , Mole Valley

That is a separate matter. It is interesting that higher education institutions are more flexible about the nature of a degree course. The traditional degree course of three years for one subject has given way in many universities to combined subjects. I visited a university last week that is combining with its local polytechnic to have a master of science course over four years. That is an interesting development whereby students can cross from polytechnic to university on a combined course. I want to encourage such an experiment, not chill it off. There is nothing implicit in the scheme about the length of degree courses.

Photo of Mr Harry Ewing Mr Harry Ewing , Falkirk East

I have known the Secretary of State for 18 years. Is he aware that it is pathetic to listen to him introducing such extreme Right-wing ideas on higher education? The Secretary of State mentioned loans, but does he understand that many students who will need the loan will not ask for it because they will know full well that they will be unable to repay it? However the Secretary of State dresses up this scheme, it is a deliberate attempt to exclude from university education youngsters in lower socio-economic groups. When three years ago at the Tory party conference the right hon. Member for Old Bexley and Sidcup (Mr. Heath) said that the Tory party was determined to write off the education prospects of generations of youngsters, he could never have dreamt for a minute that his former parliamentary private secretary would introduce such a scheme.

Photo of Mr Kenneth Baker Mr Kenneth Baker , Mole Valley

I am astonished to hear these proposals described as extreme Right-wing ideas. Does the hon. Gentleman appreciate that Socialist Sweden did this in the 1960s? Does he appreciate that the Labour Government of Australia are going much further than this scheme and are introducing a tax on students for their tuition fees? Does he realise that the Labour Government of New Zealand are proposing a tax on students? Many people will say that my scheme is rather modest compared to those proposals.

Photo of Mr Anthony Coombs Mr Anthony Coombs , Wyre Forest

I welcome this reform of the system—despite expenditure five times greater than the European average, it has failed with regard to blue collar access—but does the Secretary of State agree that it will not only improve access but give students more investment in their education, from which they will benefit financially in the future, and will lead to a more flexible form of funding for continuous higher education throughout life, which will become more important in the future?

Photo of Mr Kenneth Baker Mr Kenneth Baker , Mole Valley

The flexibility point is important. We are leaving it to the institutions, universities and polytechnics to decide how they should operate their access funds. That will introduce a degree of flexibility. I hope that many imaginative ideas will come forward from them on tailored packages of support for particular types of courses and particular students. I am sure that that will lead to more of our young people going into our colleges, polytechnics and universities.

Photo of George Galloway George Galloway , Glasgow Hillhead

It would appear that, even in the damper regions of the Department of Education and Science, the barbarians are through the gates. This is a Government who know the price of everything and the value of nothing. Is the Secretary of State aware that there are already student loans, and they are called bank overdrafts? Hundreds of student constituents of mine are up to their ears in debt. The right hon. Gentleman mentioned the Robbins principle. Is he happy that he will go down in history as having replaced the Robbins principle with the begging bowl Baker principle of higher education?

Photo of Mr Kenneth Baker Mr Kenneth Baker , Mole Valley

I quoted from Robbins, who clearly foresaw the introduction of a loan. The hon. Gentleman attacks our proposals. What is the Labour party's policy?

Photo of Mrs Maureen Hicks Mrs Maureen Hicks , Wolverhampton North East

Is it not fair to say that the opportunity of top-up loans will further enhance the opportunities for students by making them more responsible for their actions, more appreciative of the opportunity to go to university or college and, most of all, more selective in their choice of course so that it can match the job market when they come out of college or university?

Photo of Mr Kenneth Baker Mr Kenneth Baker , Mole Valley

I could not have put it better myself. I agree with my hon. Friend.

Photo of Mr Kenneth Baker Mr Kenneth Baker , Mole Valley

Not at all. The hon. Gentleman was not in the Chamber when I made my statement and answered most of the questions, so I ask him to read the White Paper.

My hon. Friend the Member for Wolverhampton, North-East(Mrs. Hicks)said that we are inviting students to make a financial investment in their future. It is right to do that, because those students will move into substantially higher paid jobs. With greater responsibility, they can much better decide the kind of courses they want to undertake. We want to ensure that the system is sufficiently flexible for them to have a wider choice.

Photo of Mr Terry Fields Mr Terry Fields , Liverpool Broadgreen

Would it not have been more honest for the Secretary of State to say, "The message for working class families and youth is that there is no future in our system. We do not need an educated working class, so we are putting barriers on access to higher education for working people"? Will the right hon. Gentleman take it from me that youth and students will fight him, and other Labour Members and I will join them to defeat this class-based legislation?

Photo of Mr Kenneth Baker Mr Kenneth Baker , Mole Valley

I am sure that there is no meaningless barricade that is not filled by the hon. Gentleman. I ask him to compare the recruitment figures for the Liverpool polytechnic and the Liverpool university under the Conservatives with the recruitment figures under Labour.

Photo of Mr Tim Janman Mr Tim Janman , Thurrock

My right hon. Friend is to be congratulated on bringing forward these long overdue proposals. Does he agree that the current cost of the many thousands of students who take out overdraft facilities because their parents do not make up the contribution is far higher than the zero real interest rate which my right hon. Friend has announced in what essentially amounts to a formalisation of the current system? Does my right hon. Friend agree that his announcement will increase access? Can he quantify that increase in access? Finally—

Photo of Mr Bernard Weatherill Mr Bernard Weatherill , Croydon North East

Not "finally". In fairness to other hon. Members, three questions are enough.

Photo of Mr Kenneth Baker Mr Kenneth Baker , Mole Valley

As I have said, since 1979 there has been a substantial increase of nearly 200,000 students. We have set ourselves a target of increasing, in the lifetime of this Parliament, by 50,000 the number of higher education students. I think that we are likely to reach that target this year, two years before the next election. [HON. MEMBERS: "Oh."] Is that not good news? Is not the Labour party glad to know that there will be 50,000 more students in higher education and there are still two more glorious years to run, perhaps three—I am not announcing the date of the election.

I thank my hon. Friend the Member for Thurrock (Mr. Janman) for his support. My proposal will certainly lead to more access. We have set ourselves high targets, and we shall reach them.

Photo of Keith Vaz Keith Vaz , Leicester East

The Secretary of State will recall that he recently visited Leicester university. He will remember that for two reasons: first, he was hit by a very large pot of yogurt—which I deplore, because it was a waste of yogurt—and, secondly, he had a meeting with the president of the students union in Leicester, who spoke about the fact that students at Leicester university were suffering from the low grants. Given the Government's obsession with polling and market research, can the right hon. Gentleman point to a single piece of research that will show hon. Members the likely outcome of these proposals on access to further education? How many student organisations did the right hon. Gentleman consult before he wrote these proposals?

Photo of Mr Kenneth Baker Mr Kenneth Baker , Mole Valley

I was delighted to meet the hon. Gentleman in Leicester, but I am sorry that he was not walking with me shoulder and shoulder through his supporters.

I have answered several times the point about access. I confidently expect that the numbers in higher education, in polytechnics and universities will increase because of our proposals. The numbers have increased consistently over the past few years and will continue to increase. We are providing a possibility of greater resources for the great bulk of students.

Photo of Mr Spencer Batiste Mr Spencer Batiste , Elmet

I welcome my right hon. Friend's announcement generally which will leave the overwhelming majority of students far better off. I particularly welcome the proposal for access funds which will be set up to provide for the hard cases which are inevitable. My right hon. Friend said that these funds would be administered by the higher education institutions. Within what criteria established by my right hon. Friend will those institutions administer those funds?

Photo of Mr Kenneth Baker Mr Kenneth Baker , Mole Valley

I want to give only the broadest guidance because I want to leave as much discretion as possible in the institutions' hands. It is a novel feature of our proposals that we regularly provide the universities and institutions with funds of their own, whereby they can provide their own scholarships and bursaries and tailor-make certain proposals for particular types of courses for particular students. Universities used to do that in the past to some extent and some universities around the world do it. Under the American system, where there is much more access throughout the social classes, it is common for universities and colleges to have quite large funds of this sort so that they can tailor particular proposals for particular students. It is for individual students to approach individual universities and polytechnics and come forward with their own proposals. I am sure that eventually Labour Front-Bench Members will support that.

Photo of Mr Dale Campbell-Savours Mr Dale Campbell-Savours , Workington

Is not the reason why well-heeled Conservatives want these changes the fact that many of them are making maximum contributions, and they want to save money? That is what Tories have told me. Is it not true that, under the Government's scheme, Tories will have an excuse for saying to their kids, "Take out a loan and fund your education, because I shall not pay for you any more"? This is the real reason behind the proposals: the Conservatives do not want to dig into their pockets.

Photo of Mr Kenneth Baker Mr Kenneth Baker , Mole Valley

That is an extraordinary proposition. The hon. Gentleman has supported a Government whose actions led to parents digging into their own pockets. The grant was means-tested under Labour and it is means-tested now. This means that a third of parents do not dig into their pockets and make a full parental contribution. As my hon. Friend the Member for Thurrock (Mr. Janman) rightly said, this loan facility means that young people will be able to make up the amount which is not made up by their parents.

Photo of Mr John Marshall Mr John Marshall , Hendon South

Does my right hon. Friend accept that his statement will be warmly welcomed, especially by those on non-mandatory courses? Will he therefore ignore the brickbats made of straw? Does he recognise that most people realise that access to higher education greatly increases a person's earning capacity and that most people would be pleased to be offered a loan at a nil rate of interest?

Photo of Mr Kenneth Baker Mr Kenneth Baker , Mole Valley

I am sure of that and I am sure that there will be a substantial take-up of the loan. I completely agree with my hon. Friend's earlier comments. The loan will be taken up. Many people will realise that they are making a good investment in their future. I confirm that graduates' earnings are much higher than average earnings.

Photo of Mr Roy Hughes Mr Roy Hughes , Newport East

Does the Secretary of State appreciate that he is defenceless against the accusation that these proposals are highly detrimental to the interests of the children of working-class families? Does he also appreciate that even Korea, in percentage terms, trains more of its youngsters than we do? When will the Secretary of State and his Government recognise that if we are to build a successful economy we need to train all our bright youngsters, irrespective of social considerations?

Photo of Mr Kenneth Baker Mr Kenneth Baker , Mole Valley

I agree with the hon. Gentleman, but he has to address the question why we have such a substantially expensive system of student support that is not achieving the objectives that he wants. Countries that have much less expensive systems of student support have a very much higher proportion of students in higher education. Only 10 per cent. of that age group in the United Kingdom study for degrees, compared with 20 per cent. in France, 15 per cent. in West Germany and 25 per cent. in Japan. All those countries have some system of grants and loans.

Photo of Mr Nicholas Bennett Mr Nicholas Bennett , Pembroke

My right hon. Friend knows that there is much greater access to higher education in the United States and that many students work their way through college. Will he put into perspective the proposed loans? Almost the first thing that most students do when they graduate in this country and get a job is to go to their bank manager for a loan to buy a car.

Photo of Mr Kenneth Baker Mr Kenneth Baker , Mole Valley

I am sure that that happens. My hon. Friend's comparison with America is interesting. There is a very much higher level of borrowing at all levels of access in America. It has led to many more young people in America going to college; that is one of the successes of the American system. I want many more of our young people to go to college, and I am quite sure that that will be the result of the proposals that I have announced.

Photo of Mr Andrew Bennett Mr Andrew Bennett , Denton and Reddish

I can see no mention in the White Paper of the number of additional students that the Secretary of State thinks will gain access to higher education. Can he tell the House how many students he thinks there will be as a result of his proposals?

Will the right hon. Gentleman also confirm that he is taking away the right of students to claim housing benefit, unemployment benefit and income support? Will he admit that for very many students that means that they will be £275 worse off and that the loan will only just about cover their benefits? Is he not setting up a special student social fund under which students will have to repay benefits rather than receive them? Will the Secretary of State also confirm that, while better-off parents will contribute rather less, those on lower incomes will progressively have to make a greater contribution to student grants?

In the Government's plastic society, far from students getting their flexible friend, the Baker card will be a visa to 25 years of debt. It will certainly not be a passport to greater access.

Photo of Mr Kenneth Baker Mr Kenneth Baker , Mole Valley

The hon. Gentleman's final remarks were a trifle strained and a trifle contrived. As for his important questions about disentitlement to benefit, our estimate is that in 1991 the average, spread over all students, that they will claim in benefits will be about £150. However, we estimate that about 50 per cent. of students will not claim. For those students who do claim, our estimate is that the figure comes out at just below £300. The figure that we are recommending for the first year is an additional loan facility of £420. For the second year, it will be £504. They will have greater access to an even larger amount of money.

Several Hon. Members:

rose——

Photo of Mr Bernard Weatherill Mr Bernard Weatherill , Croydon North East

Order. I shall not take points of order now; I am on my feet. May I say to those hon. Members whom I have not called that I hope that there will be an opportunity to debate this matter—possibly during the debate on the Loyal Address—when I shall give them precedence.