I am grateful for this opportunity to debate student hardship, which causes a great deal of concern not only to me but to many of my hon. Friends. Representations from students show the difficult circumstances in which they now find themelves, and those difficulties are the direct result of a series of disastrous Government decisions in recent years on student finance.
I am glad to see an Education Minister in his place. It is a long time since we had an opportunity to debate this issue. When it was last debated in November, the Government, by some strange quirk, decided to field a Social Security Minister who spent a great deal of time denying her Department's responsibility for student problems. I am glad that the winding-up speech will be delivered by a Minister who accepts responsibility for the welfare of students. However, some contributions should also be made by the Department of Social Security.
Over the past few years, the Government have followed the principle that gave birth to one of our more famous supermarkets—"stack 'em high and sell 'em cheap". The principle followed by the Government in higher education —if principle is not too dignified a term—is pack 'em in and slash their cost. The deliberate impoverishment of students has been part of Government policy in the welcome move towards increasing the number of people in higher education. However, no policy should make life increasingly difficult for those who participate in higher education, and Government policies have had extremely deleterious consequences.
What other group of people has been told that basic income should be frozen at 1990 levels? The grant component of higher education support for students is frozen at precisely that point. What other group of people would be told, "We know that this may prove to be inadequate, but we have a battle against inflation"? Britain still has higher inflation than many other countries in western Europe, and over the past three years there has certainly been a decline in the purchasing power of the student's pound. What other group of people would be told to take out loans and become dependent on finance that would have to be paid back with interest in the future? Such policies are implemented by a Government who bleat about the dependency culture even though they are deliberately inculcating exactly that dependency among a large section of our young people. It is detrimental for students to be placed in such an invidious position.
The Minister has written on several occasions—certainly once in response to hon. Members who raised the issue with him previously—that he believes that it is important that students are gaining greater independence and economic awareness. He believes that that is happening. Greater independence looks like a sick joke when students are being plunged into debt. I do not doubt that they are gaining greater economic awareness. Many are being taught some fairly harsh economic lessons by the Government: they are being taught about poverty, dependence on loans and how helpful it would be if one had a relatively prosperous father or mother.
I have not the slightest doubt that when Tory Members of Parliament send their offspring into higher education, in many cases after having spent thousands of pounds on secondary education in public schools, thereby increasing their children's chances of going into higher education, they bail out their offspring when they say that the level of parental contribution, assessed against the grant, is too low to live on. It is clear from all quarters that the support is inadequate.
Whereas it may be possible for members of the Conservative party, Tory Members of Parliament and some sections of the community to bail out their children and ensure that students get through this period without total impoverishment, that option is not open to large numbers of my constituents who have no spare resources to supplement the inadequate student grant.
I think that the hon. Gentleman will recognise that we managed to run a higher education system for a very long time on the basis of respect for students and the provision of the resources necessary to give them adequate grants. I do not remember the Conservative party telling the nation that it would set out gratuitously and deliberately to make life more difficult for students seeking to enter higher education.
The question is not apposite. Many features of our higher education system compare very favourably with those of other countries. For example, our success rate at graduate level is the envy of many countries, and there is a correlation between support for students and success rates. if the hon. Gentleman is suggesting that it would be more appropriate for us to adopt other countries' systems of financial support for students, he may also find that he is embracing the notion that more of our students should fail their courses, in line with other countries. That is not a particularly progressive or constructive way to view young people's education.
The Minister must face the problem that not only is the student grant inadequate, leading to dependence on loans, but all other means of supplementing student finances are effectively blocked. The Government have made it abundantly clear that there is to be no form of benefit support for students. That is a substantial loss. A study carried out by the students union of the university of Manchester has demonstrated that, for the average student in Manchester, housing costs have increased from between 45 and 50 per cent. of his income up to 71 per cent. That is a considerable slice of a student's income. It is a fact that students can no longer apply for housing benefit. The result—I am sure that the Government did not wish this upon the students—is that students are so impoverished that their standard of living is below the level of unemployed young people between the ages of 18 and 24. We are asking the young unemployed, who have an extremely difficult time, to exist on about £60 a week if they have access to housing benefit, but student support is only just over £50 a week.
I wonder whether Conservative Members have considered the privations that students face. I know that some people will say, "Students have always been poor. Our own generation at university was scarcely well-off, but it survived". The majority of students of my generation survived because we were able to obtain vacation jobs. We could not make our grants last throughout a full year unless we were able to have some earning powers during at least the long vacation.
Many of us had substantial earning power over the Christmas period because of the institution of the Christmas post.
The hon. Gentleman asked what was wrong with working during the long vacation. I do not think that anything is wrong with that, provided that students have access to work. The bald fact is, however, that students cannot obtain jobs during vacations. It is not possible in circumstances—
The hon. Gentleman is talking rubbish. He has said that Tory Members bail out their children. Perhaps he will name the Tory Members whom he has in mind. I have four children, all of whom managed to get jobs and work their way through in the way that he said he did. What is wrong with that? I do not understand why the hon. Gentleman thinks that it cannot be done now. The fact is that it can be done.
If the hon. Gentleman's children were able to obtain vacation jobs, that may reflect the rather more privileged position that they enjoy compared with that which faces many of the children from my constituency. There are unemployment rates of 16 per cent. in Oldham. In Manchester, a few road-sweeping jobs attracted more than 1,000 applicants. Many were graduates who had recently qualified at university. Students do not have much hope of easily finding casual vacation jobs that will enable them to supplement their income. That is a measure of the impossible situation that students face.
At one time, as my hon. Friend says, students were able to get jobs in various industries and in many other sectors. During the recession, those jobs are no longer available. As a result of the squeeze, local government—which used to make many jobs available to students during college vacations—is no longer able to offer vacation work. It does not have the necessary finance available to it.
I am grateful to my hon. Friend for his contribution. It reflects the grim situation that we all face. As unemployment moves inexorably towards 3 million, there are no jobs for students to take up.
Access funds are another aspect of support that the Government suggest for students, but the higher education institutions have always said that they provide inadequate support. It was predicted that the £25·8 million voted last year would be speedily exhausted because of the real hardship claims by students. During the past two weeks, the Labour party has carried out a survey of access funds, and almost 50 per cent. of the institutions surveyed have already exhausted their full entitlement. That means that students who still have almost three months to go before their next grant cheque and have no access to benefits and, in many cases, no possibility of supplementing their grants with jobs will find that when they apply to their institutions for help they will receive only the bleakest of answers.
Problems also confront students at the end of their courses. Unemployment is reflected in the extent to which this year's recruitment fairs have been operating at only half the level of previous years. Major companies have virtually abandoned graduate recruitment. After just three or four years at college, students are saddled with debts of more than £1,000. They cannot fulfil the Government's rosy view of how they can solve their debt problems, which is to get a job to repay those debts in a short period. For large numbers of students, graduate unemployment means no jobs and substantial debts once they have successfully graduated.
What does all that mean for education? I ask the Minister to reflect on just what perspective he believes the next generation takes of higher education in those circumstances. The moral must be clear, especially for the children of low-income families. Faced with the prospect of debt and of extreme difficulty in sustaining themselves through their higher education courses, children will decide that if there is a job available when they leave school, however poorly paid and low in prospects, it would be better to take that job than to follow the somewhat hazardous prospects of higher education. The Government's oft-declared objective, to increase higher education participation by children from lower-income groups and reduce the extent to which it is enjoyed predominantly by children from middle class homes, will suffer while student support operates at such an inadequate level.
If there is that long-awaited recovery in the economy and the beginnings of some green shoots—although most of us have failed to see them, despite the many Government promises—and if a few jobs are created, young people will seize those jobs rather than put themselves through three or four years of higher education, with all the difficulties that they face and limited prospects when they have graduated.
On the evidence of the past two years of increasing difficulties for students, I appeal to the Government to rethink the basis of student support. If they do not, students and staff of the battered higher education section of our education system, which has been quiescent in recent years—perhaps previously hoping that some of its difficulties would be overcome by a change of Government at the last election but now coming to terms with the fact that this Administration will be in power for at least the next three to four years—will press their grievances, and if they are not met students are bound to advocate their cause. That, as we know from the past, has often led to considerable disruption in higher education, to the cost of students, the education system and, ultimately, the nation.
If students are impoverished, if they receive the harsh lesson from the Government that reason will not prevail, the Government will have only themselves to blame for the reaction that will undoubtedly result.
I congratulate my hon. Friend the Member for Oldham, Central and Royton (Mr. Davies) on applying for a debate on such an important subject. I speak as the parent of a daughter who has just completed her second year at Chester college. Therefore, I have a vested interest—an expensive one—in the cost of keeping my daughter at college.
As my hon. Friend said, the problem is that for the younger generation of people we have made going to college or university dependent on their parents being both willing and able to contribute to their further education. I stress that they must be both willing and able, because the one is not satisfactory without the other. The situation is extremely difficult.
I spoke against student loans on several occasions at the time of their introduction. The concept is totally wrong, and the sooner we revert to the grant system the better. Loans are wrong, because to allow people in education to acquire a debt is nonsense. I know that the loans are effectively zero-rated, and that if earnings are below a particular level in subsequent years, the loan does not have to be repaid; but the simple fact is that the loan is seen as a debt with which students are saddled, and that is nonsense. Moreover, it would be a rare student who did not build up a debt in addition to the student loan resulting in two debts on completion of his or her education.
The statistics clearly show that those who have had the advantage of a university or college education earn more in later life than those who have not had such an advantage. Therefore, they will pay back not only their tuition fees but the whole cost of their education in the higher taxes that they rightly pay in a fair society on their higher income. That is fair, and that is the system that we should have. Student loans should clearly be scrapped, and the sooner we scrap them the better. I hope that, even at this late stage, the Government will admit that they have got it wrong and will not allow the system to continue for a third year.
The hon. Member for Bolton, North-East (Mr. Thurnham), who has now left the Chamber, said that it was easy for students to find jobs in the vacations. If the hon. Gentleman believes that, he does not live in the real world. In 1992, with the country in the longest and deepest recession that it has known since the war, it simply is not possible for students to find vacation jobs in most parts of the country. They cannot find work in factories, with local authorities or even at McDonalds or Wimpy bars because of the recession that the Government have created; moreover, they are not eligible for benefits, which is outrageous.
When I was on Burnley council, we used to employ students in a number of jobs during the vacations. Over the years, however, those jobs had to go as the Government squeezed local authorities' budgets and hammered their spending. Nowadays, authorities are rarely able to take on any temporary labour.
Housing costs and benefits are also an increasing problem. The Government must deal with the accommodation issue in any event. Some of the student accommodation that I have seen—not my daughter's, but that of other students—is of a very low standard. Much more properly run, properly maintained halls of residence are needed. Private sector rented accommodation should be properly supervised as well, as much of it is not only of a poor standard but increasingly expensive. Local environmental officers have not sufficient powers to supervise such properties: they need greater powers, the standards must be raised, and rents must be better controlled to provide value for money.
My hon. Friend the Member for Oldham, Central and Royton mentioned the access funds. In this instance, access is certainly not a flexible friend; for most people, the funds are a joke. Either they arc spread too thin, or the money has gone. Most student unions consider them an insult.
If we are to compete in the world, emerge from recession and keep the economy permanently out of deficit and financial difficulties, investment in education and training is crucial. It was one of the key issues at the time of the election; sadly, the people made the mistake of failing to recognise how different Labour's policy was. They did not realise that we considered investment in all levels of education and training to be vital.
Higher education is currently the subject of debate. The problems created by the Government will bar more and more people from continuing their education. The Minister will say that statistics show a higher percentage of people to be doing so, but he should bear in mind the number who are dropping out because financial pressures prevent them from concentrating fully on their studies and taking all their opportunities. The Minister and the Government must understand that, if they do not put that right, think again and change their policy, it will be the Government and the country which loses out. Not only young people in education but the nation as a whole will suffer, and will pay the price for this short-sighted folly and the hardship which will prove detrimental to this country's education and training opportunities.
The need is crucial and the case made so well by my hon. Friend the Member for Oldham, Central and Royton is overwhelming. The Government must think again, change their policies and give our people a better opportunity to go on to higher education.
I congratulate my hon. Friend the Member for Oldham, Central and Royton (Mr. Davies) on initiating the debate and on the powerful case that he has made for his constituents and for students in general. I also thank my hon. Friend the Member for Burnley (Mr. Pike) for the strength of his contribution. They both showed how great is the Labour party's concern about this important issue.
As this is my first opportunity to do so, I welcome the Parliamentary Under-Secretary of State for Further and Higher Education to his post. Because of his distinguished interest in the social sciences, it will not have escaped his attention that there were above average swings to the Labour party in the seats where higher education is especially important. We can hope only that the lesson that he learns from that fact is, as my hon. Friend the Member for Burnley explained, the need to change Government policy rather than to punish students and academics further for their dissidence, as some of his hon. Friends would like him to.
As my hon. Friend the Member for Oldham, Central and Royton said, the debate is timely to the point of urgency. The prospect facing tens of thousands of students this summer is grim. My hon. Friend rightly referred to the series of disastrous decisions on student support made in recent years. First, there are the cuts in the value of grants. Since their cash value was frozen two years ago they have been reduced by the rate of inflation. Then there was the introduction of student loans, the ending of entitlement to income support and housing benefit, and the cynical abolition of the vacation hardship allowance, combined with the difficulties which students have in finding vacation jobs, especially now in the depths of recession. There are also escalating rents, the pressure on institutions' libraries and the superinflationary rise in the cost of books. Those factors have all conspired to condemn students without other means of support to spiralling debt and the prospect of a summer of poverty.
Is not another of those problems the lack of access to computers? Many students have to pay for computer facilities because in many places insufficient facilities are available for all the students.
My hon. Friend is right. Of course we welcome the increase in the numbers of students in our educational institutions, but equally we deplore the fact that resources have not kept pace with that increase so that, as my hon. Friend says, facilities of all kinds, including essential equipment such as computers, come under enormous pressure. When students have to buy equipment themselves, that imposes a financial penalty which many of them cannot bear.
Our charge against the Government is that, faced with the prospect of deepening student hardship, they offer students and their parents nothing but complacency, incompetence and indifference. Clearly the Government have learnt nothing from the experience of last summer, when the situation was so serious that the National Association of Citizens Advice Bureaux dealt with so many cases that it was impelled to draw up a special report, entitled "Diminishing Options". It concludes:
On the basis of cases reported by Citizens Advice Bureaux, the basic student grants and loan alone are not providing an adequate income for many students and they are suffering considerable distress as a result. One of the groups hardest hit are students whose parents are on low incomes and also mature students who are fully independent and who have their own financial commitments. Some are considering giving up their courses, and there is a real danger that access to higher education for poorer people will be reduced.
That is backed by the requests for help received by the National Union of Students and the higher education institutions themselves, and the volume of mail on the subject that Members of Parliament receive.
The Government's response is to deny hardship—typified by the former Secretary of State for Education in his letter to Members of Parliament last year, and by his remark in the House that
I do not accept that the 'scores' of cases stand up to examination."—[Official Report, 12 November 1991; Vol. 198, c. 885.]
The Government also point to access funds as a source of help—and I dare say that we will hear more of the same tonight.
If the Government seriously expect students, their parents, and the rest of us to treat their claims with anything but contempt, they would have made an objective study of the extent of student hardship, and monitored the use of access funds. They have done neither.
On 8 June, I asked the Minister when he would undertake a survey of students' income and expenditure. He replied only that the Government would do so "as and when appropriate." On 25 June, I asked the Minister what representations he had received on the prospect of student hardship this summer, to which he gave no answer, and whether he intended to increase the availability of access funds. He replied:
We believe that the sums made available to the funds should be sufficient for their purpose, if properly targeted." —[Official Report, 25 June 1992; Vol. 210, c. 273.]
On 2 July, I asked the Minister how many institutions had already spent their access funds. He answered:
The information is not kept centrally."—[Official Report. 2 July 1992; Vol. 210, c. 663.]
He should certainly consider having it centrally recorded.
On 3 July, I asked what assessment the Government had made of the need for additional financial support for students this summer. The Minister referred to his previous answer, and added:
We do not consider that additional provision is required."—[Official Report, 3 July 1992; Vol. 210, c. 713.]
The Government have learnt nothing from last year and have failed to assess student need for this year. They will not make additional student support available, and do not know how access funds are being spent. More comprehensive evidence that the Government could not care less about what is happening to students would be difficult to imagine.
The ultimate cynicism is that last summer institutions were allowed to bring forward 10 per cent. of access fund expenditure to the current academic year. What is the difference between last summer and this? None—except that last summer was the last one before a general election, and this summer is the one following it.
The Labour party is so concerned that, as my hon. Friend the Member for Oldham, Central and Royton said, we made our own survey of access funds depletion. Of a sample of 27 higher education institutions, just under half have already used all their current allocation. Nearly two thirds of them have less than £1,500 to see them and their students through the summer.
One institution attempted to bring forward funds from next year, and several more hope that they will be able to use some of next year's allocation in advance. It is plain for all to see that there will be a real crisis of student hardship this summer. It will be especially acute for students who are on low incomes, for older students and for those whose institutions have already run out of access funds. A Government who took their responsibilities to students seriously would act now. They would carry out their own immediate check on depletion of access funds, increase the size of those funds and replace the money that was pre-empted last year.
I ask the Minister to recognise at last the seriousness and urgency of the situation and to take those steps now to avert a summer of student hardship. I urge him also to introduce measures to restore vacation hardship allowance and to introduce a targeted system of housing benefit for students. That is what Labour pledged at the general election. Nothing less will do if we are to stop the crisis of student hardship becoming an ever-worsening annual event to the enormous cost of countless individuals and to the detriment of opportunities in higher education.
The Government are doing a grave disservice to the students of this country and to their hard-pressed parents. It is time that they dumped their failed policies on student support, addressed the crisis that is staring us all in the face and took the action that the Labour party has been urging on them for some time.
I congratulate the hon. Member for Oldham, Central and Royton (Mr. Davies) on his success in the ballot for the debate. It was welcome to hear the views of the hon. Members for Burnley (Mr. Pike) and for Oxford, East (Mr. Smith). I thank the hon. Member for Oxford, East in particular for his kind tribute to my academic credentials. It remains to be seen whether he will feel as generous after what I have to say.
I am all the more glad to take part in the debate as the Government have cause to be justly proud of their achievements in higher education generally and, in particular, with regard to student support. I must make it clear that I do not dismiss allegations of student hardship and I will endeavour to respond to the points that have been raised.
I must make it clear at the outset that no system of student support can protect every student against hardship. However, we have an impressive array of arrangements for that purpose and we shall certainly continue to monitor the situation carefully. Before I come to the main burden of my remarks, I will try to answer some of the specific points that have been raised.
The hon. Member for Oldham, Central and Royton began by saying that he thought that it was wrong for students to be deprived of benefits. He felt that students should continue to have support from the benefit system. The Government believe that support for educational purposes should he directed through educational channels. The decision to undertake full-time study is a decision to invest in one's own future rather than to enter employment straight away. Ever-increasing numbers of young and mature students are taking that decision.
As the hon. Members for Oldham, Central and Royton and for Oxford, East recognised, the expansion of student numbers has been considerable and has been achieved in a way that has maintained quality and access for all categories of students. In case the hon. Member for Oldham, Central and Royton leaves the debate with the impression that students are fundamentally worse off, as he suggested, I remind him that the grant and full-year loan together are more than 30 per cent. higher than the grant was on its own in 1989–90. That has more than compensated the majority of students for any loss of benefits. On top of that, the access funds to which Opposition Members have referred, worth more than £25 million this year, allow colleges to support students in financial need and can be carefully targeted.
It is wrong to say that student support is inadequate. The figures on the full package of support available to students, both from grants and from loans, make it clear that the system is generous and is meeting needs.
If the system is as generous and adequate as the Minister claims, what advice would he give a student this summer whose institution has already spent all its access fund, who is not entitled to income support or housing benefit, and who has exhausted the patience of his or her parents, bank and landlord?
Hard cases make bad law. There is no doubt that, from time to time, a small minority of students will find themselves in hardship, but the vast majority of students are very adequately helped by the buoyancy of student loans. It is somewhat surprising —the hon. Gentleman should recognise it —that the take-up of student loans is still less than 40 per cent., according to the latest figures. Given that those loans are available to students, that hardly suggests that hardship can be all that widespread or deep. If there were the problems that the hon. Gentleman suggests and on the scale that he talks about, students would be wise, and indeed they are still able, to apply for a loan before the end of the relevant period.
The hon. Gentleman is basing his argument on a very small part of the sample. He should take account of the fact that the majority of students still are adequately financed from grants, from holiday work or from parental contributions, or a mixture of those things, and that they see fit not to take out the student loan that is available from the student loans scheme.
If the Minister is not prepared to accept Opposition Members' concerns, does he accept that the Committee of Vice-Chancellors and Principals has expressed concern about student hardship and the quality of education that it is able to offer with available resources not matching the increase in student numbers?
I am aware that the increase in student numbers has been accompanied by a maintenance of quality in all its forms and that there is no sign from the figures relating to new entrants into higher education that anybody is being deterred from entering higher education by the arrangements that we have in place.
I link that comment with a point that was made by the hon. Member for Burnley. The drop-out rate from higher education is the lowest in the advanced world. It is about 5 per cent.—I speak from memory —which is much lower than in comparable countries. That is because we have an efficient, cost-effective education system which, on all the evidence, is not deterring new students. Indeed, the number of students has increased by 16 per cent. this year over last year. and we expect the number to continue to increase in future. As the hon. Member for Birmingham, Selly Oak (Dr. Jones) probably knows, current projections suggest that, whereas one in four of the relevant cohort is entering higher education today, it is likely to be one in three before the end of the decade. I do not accept the argument that students are deterred by the financial arrangements—quite the contrary.
Several Opposition Members made points about graduate unemployment and the difficulty in obtaining jobs. I accept that graduates may temporarily be finding it somewhat less easy to obtain employment of the type that they would ideally like, but the fact remains that investment in higher education is good for the young people in question. Ever-increasing numbers recognise that fact by entering higher education.
One of the many advantages of the student loans scheme is that if graduates cannot find work or are on low incomes for a while, they may defer their repayments for a year at a time. The possibility of deferral exists.
As for the point about vacation work to supplement the money available to students, I took the trouble just this afternoon to look at today's copy of the Evening Standard. In the section on hotel and catering—just one page—several jobs are available to young people. They include jobs as bar persons, catering assistants, sandwich bar assistants and other such part-time jobs which pay reasonable money and would be ideal to provide a supplement for many students. It is common knowledge that successive generations of students both in Britain and elsewhere have found it normal to supplement their income while at university by working part time.
I suspect that it is slightly fewer years since I was at university than since the Minister was a student. I certainly had to supplement my income when I was at university. I did several different jobs in the summer holidays. Does the Minister agree that student hardship is not simply a matter of grants versus loans—although I find it despicable that students have to start their working life with a debt hanging around their neck —and that the real issue is benefits? Thousands of students live in sub-standard housing because the Government refuse to allow them housing benefit. The amount of money that it would cost the Government is small. The Government's attitude is petty and mean-minded. Does the Minister agree that it would be better for all involved to reinstate housing benefit as soon as possible for students?
That is not the best way forward. The Government took the decision to withdraw housing benefit from students. It is available in only a small minority of cases for particularly vulnerable groups. It is right to concentrate on them. Supplementary allowances protect the most vulnerable groups.
Several hon. Members referred to the access funds. The hon. Member for Oxford, East referred to the survey of access funds carried out by his party. He should be careful not to draw sweeping conclusions from such relatively flimsy evidence. As I understand it—he will correct me if I am wrong—the survey covered a third of higher education institutions. It found that a third had completely exhausted their access funds and a third had no more than £1,500 left. He must realise that arithmetically that is a shaky sample. It implies in any case that for each finding one is talking about one ninth of the institutions. That implies that seven ninths are in a satisfactory position with the access funds and the vast majority target their money in the appropriate way.
I referred earlier to the Minister's distinguished credentials in social science. Does he accept that a random sample of 27 out of 100 or so of higher education institutions is a good and indicative sample? We found that 44 per cent. had totally exhausted their fund and 63 per cent. had less than £1,500 left. The overwhelming probability is that that is typical of the higher education institutions and their students. The survey is a solid basis for supposing that there is, indeed, an imminent crisis of acute student hardship this summer.
We take the view that it is for higher education institutions to decide on the allocations. In the previous year they were able to bring forward a portion of that money. We should target on the most needy students, because that is what the funds are designed to do. They are designed not to be a flat-rate, across-the-board supplement for all students, but to be targeted on those in greatest need.
I am grateful to the Minister for giving way again. He referred to the fact that last year institutions were able to pre-empt 10 per cent. of the access funds from the current year's expenditure. If it was right to do so last year, why is it not right this year? Will he give a commitment that institutions can draw on next year's access fund?
It was right to do so last year because it was at an early stage in the access fund arrangements. We believe that it is now right to continue on a regular basis and not to have that arrangement for the coming year.
I should return to the main thrust of my remarks. There are some widespread misconceptions about financial support for students, some of which have been mentioned in the debate. For the benefit of the House, I shall set out five key facts about the situation of students.
First, we have increased students' resources substantially in the past two years. Grants and loans form the central elements of our support package. The full-year loan, together with the grant, now gives students over 30 per cent. more than the grant two years ago. This autumn, we shall uprate average student support from grant and loan by a further 4·5 per cent., thereby maintaining its value in real terms. As a result, full-year support this autumn will be nearly 40 per cent. higher than the grant alone in 1989–90. That represents a substantial real-terms increase. It has been achieved at a time when some members of society have been much less fortunate financially. Students should recognise that. In other words, a considerable number of the people who contribute to student support, through the tax system, are less well off than the students themselves, and one needs to consider that.
In addition, it is often forgotten that we are continuing to uprate the supplementary allowances that are payable with the grant. This autumn, we shall increase them by 4·5 per cent. I think that the hon. Gentleman knows from his experience of such matters that they go to, among others, mature students, students with dependants, disabled students and those studying at their colleges during the vacation. They provide an important additional resource for many students with additional needs, and that is a good example of the targeting in which the Government believe.
I am grateful to the Minister for giving way again. Much of our discussion has been about students in higher education. Is he satisfied with the current financial provision for students in further education, because many students in local colleges in my constituency have been complaining about the low level of support that they get from their local education authorities?
The hon. Gentleman is right to use those words—it is for local education authorities to decide on the support that they can allocate to students. It is not for central Government to step in to suggest increases, or changes in the system. I am satisfied with the present arrangements. It must be for local education authorities to determine to what extent they support students.
The access funds are worth more than £25 million in total this year. They enable institutions to provide discretionary support for students in financial need. We have taken care to ensure that the distribution of the access funds to institutions is weighted to reflect regional variations in the cost of accommodation, for example. For this academic year, institutions can provide help from the funds at any time up to 31 August.
Secondly, we have started to reduce in real terms the average parental contribution to the grant. It is now frozen in cash for those parents whose residual incomes rise in line with national average earnings. Such parents will find that they are paying less and less in real terms over time. Indeed, they are already paying less than last year. Those whose income rises faster than average earnings may pay a little more out of their higher income. Conversely, those whose income does not rise as fast as average earnings will pay less in cash than they did before. Many other parents, of course, are not assessed for any contribution at all. As a result, the loans scheme is now starting to share the cost of student maintenance more fairly between students themselves, their parents and the taxpayer. I regard that as an equitable sharing of the burden of student support.
The Minister has said that the parental contribution is fixed by the grant regulations. Does he accept that the majority of parents give more than their set contribution—if they can do so—to avoid their children suffering hardship? In some cases parents will go short to ensure that their student children do not suffer. Those extra parental contributions hide the real problem.
I pay tribute to parents who make a substantial contribution towards the costs of their children's education. It is right and proper that they should. Most parents that I know with children in that category strive to do just that.
Those contributions represent part of the burden that is borne by parents and it is quite right that the increments of financial support available to students in the coming years should be taken up principally by the loan, which is not means-tested and which is a buoyant source of finance.
I mentioned vulnerable students earlier and it is important that the funds for such students are now rightly directed through the existing funding channels. We have ensured that those students remain eligible in certain cases for housing benefit and income support. As hon. Members are aware, those students include disabled students, lone parents and those with dependent children. Many other students did not claim those benefits when they were available some time ago. For them, the new grant and loan package has presented them with a big gain in resources.
Many students find income from other sources as a result of part-time work in term time or summer jobs. Opposition Members must acknowledge that from their constituency experience. The facts are clear. A recent survey by the National Union of Students, for what it was worth, suggested that 65 per cent. of students found work in summer 1991. They earned about £800 on average, which is not insignificant. That money represents an increment and is in addition to other streams of income available to students.
I have already spoken about the loan facility, which is generous and buoyant. Let me remind Opposition Members of the generous terms of that scheme. Loans are indexed to the rate of inflation. Last year, that meant an indexation rate of 9·8 per cent. This year, it has been 5·8 per cent.—a full four percentage points lower. That is a consequence of the Government's success in reducing inflation. For next year, the rate will be the increase in the retail prices index in the year to June. We shall announce that figure tomorrow. I look forward to seeing what it is. I should be surprised if it did not offer good news for students and borrowers under the loans scheme. There is also generous provision for borrowers whose incomes are no more than moderate. Under the present arrangements, they can defer their repayments if their gross income is £1,055 a month or less. From September, that threshold will rise to £1,130 a month, equivalent to more than £13,500 a year. Taken together with the indexation rate, that means that student loans are available on far more favourable terms than any other form of credit. They are the best deal in town. Loans are here to stay. The hon. Member for Oldham, Central and Royton devoted the bulk of his speech to calling on the Government to get rid of the student loan scheme, but I must tell him that we intend it to expand gradually in time so that it takes up proportionately more of the weight of student support.
Last year, only 28 per cent. of eligible students actually took out loans, despite the fact that the scheme was widely publicised. This year, take-up has been considerably higher. Nevertheless, we expect that, by the end of the academic year in a few weeks' time, at most 40 per cent. of eligible students will have taken out loans. It is their right to make that decision, but our policy has always been to make the extra money available and to leave it to the students to decide whether to borrow those resources. However, that does tell us something about alleged student hardship. It suggests that many students are able to manage on the grant alone, supplemented by other income. The fact is that many simply do not seem to need all the resources that the Government have made available.
There is now widespread and increasing agreement that students should make some contribution to the cost of their higher education. Of course, they do not contribute while they are studying. They start to repay after they have completed their course and then only when they have started to earn reasonable incomes. In time, many will enjoy a much higher income than the taxpayers who paid for the costs of their education. I agree with the hon. Gentleman on that. Thus, by spreading the cost of student support, we can pay for the rapid expansion of higher education that we have seen—and welcomed—in recent years. We must not forget the extraordinary surge in participation that higher education has witnessed. It is proof positive that our financial arrangements for student support have not deterred an increasing number of people going into higher education. In 1979, only one young person in eight entered higher education. It is now one in four. And, as my right hon. Friend the Secretary of State made clear at Portsmouth recently, we now expect participation to reach one in three well before the year 2000. [Interruption.]
I do not claim that the resources available to students during their studies enable them to live in affluence. But I do believe that they can enjoy a reasonable level of support and that there is a satisfactory system in place. Next year, full-year students living away from their parents' home and studying outside London will have £2,980 available to them in grant and loan. Those studying in London can get £3,675. Many students receive supplementary allowances with the grant. Others receive access fund payments. A few in special categories receive benefits. Many can get part-time or vacation jobs if they wish to top up those resources.
By providing these greatly increased resources and funding the huge expansion of higher education, the Government have shown their whole-hearted commitment to students and to higher education. We know that, in time, that commitment will pay dividends for the individual concerned and for the nation as a whole.