Student Finance

Part of Bill Presented – in the House of Commons at 9:24 pm on 22 February 1995.

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Photo of Peter Luff Peter Luff , Worcester 9:24, 22 February 1995

I benefited from a full grant while at university and I do not relish supporting the introduction of loans, but I can genuinely see no alternative.

There has been a dramatic increase in participation rates in higher education, which has been grudgingly acknowledged by the Labour party. The rates have risen to one in eight from one in three, and funding that increase is an enormous challenge for any Government. Maintaining the old grant system would have represented a massive call on the taxpayer and it was right that the Government should seek to strike a fair balance between the interests of taxpayers and the beneficiaries of the education.

If there were any evidence that students were being deterred from entering higher education, I would be worried. But the evidence is not there. In the two years before the introduction of the loans system, the number of students entering our institutions of higher education rose by 10 per cent. per annum. In the two years immediately after the introduction of the loans system, the rate of increase was 20 per cent. per annum—hardly evidence of the scheme being a disincentive.

If there were evidence that the orders had any disadvantageous effect on the lower socio-economic groups and their participation in higher education, I would be concerned. The House would do well to remember that in Germany, where the loan component of grants is higher than here, the proportion of students from lower socio-economic groups is three times higher than in the United Kingdom. What is more, contrary to what we heard from the Labour party's Front-Bench team, the position is improving. More students from less well-off families are entering higher education in this country.

Among first-year students in 1992–93, the proportion of students from A and B social grades fell from about 55 per cent. to 49 per cent., with a similar increase in the proportion of students from C1, C2, D and E backgrounds. That good news contradicts the bad news that we heard from the Labour Front Bench.

Our record internationally is good. The report of the Education Information Network of the European Community, known as Eurydice, published 18 months ago, said that there was a trend towards extending the system of loans in a number of member states. It said: the percentage of students assisted in Luxembourg, the 'new' German Lander (former East Germany) and the United Kingdom is high (between 76 and 90 per cent.). The proportions of students receiving support in Belgium … Spain, France, the 'old Länder' of the Federal Republic of Germany and Ireland are smaller (between 18 and 34 per cent.). The proportions of financially assisted students are smallest in Greece, Italy and Portugal (between 2.5 and 10–15 per cent.). I would have more sympathy with the Labour party if the loans imposed on students had punitive rates of interest or terms of repayment, but they are the most generous loans that I have heard of in the financial system.

We cannot underestimate the rate of expansion of the higher education system. In 1993–94, there were 100,000 extra students—the equivalent of 12 new universities. It is only fair to ask students to join the taxpayer in funding that system as they will reap most benefit from it. The student will be the highest gainer.

I would have more respect for Labour Members' opposition to the order if they had a realistic alternative, but they do not. They notably ducked the point made by my hon. Friend the Member for Surbiton (Mr. Tracey) about how much money they would dedicate to their grand, brave new vision of student support. They are muddled on the possibility of a graduate tax on students.

According to The Times Higher Education Supplement of 6 January, the office of the hon. Member for Sheffield, Brightside (Mr. Blunkett) recently confirmed that a tax to be imposed on students throughout their working lives was being considered. But the hon. Member for Oldham, Central and Royton (Mr. Davies) suggested this was a 'narrow and crude concept' which was unlikely to carry much support within the party.The Times Higher Education Supplement stated that the hon. Member for Birmingham, Perry Barr (Mr. Rooker) described Mr. Blunkett's remarks on graduate tax as 'a careless use of language. It was pure ignorance. It was quite clear he said it without thinking the whole thing through."' I say, amen to that.

The chairman of Conservative Students, Andrew Reid, said in a letter in the same edition of The Times Higher Education Supplement: What is typical, though, of the Labour party is that its first instinct is to tax the successful rather than to contemplate less punitive forms of financing our students at university. That is what the measures represent.

We have heard a lot about vacation jobs and students taking jobs in term time. I wonder what Labour's plans for a minimum wage would do for the availability of work for students, during vacations or at any other time.

I would like to raise a question with the Minister concerning section 10(e)(ii) of the mandatory awards order which gives the Secretary of State the power to designate new courses for which students will be eligible for mandatory grants. It provides statutory footing to address the problem of discretionary grants for students of dance and drama which obviously concerns many hon. Members in the House.

Section 10 lists a bewildering array of subjects and courses which attract mandatory awards. Many of those subjects will benefit the country through the graduates who practice them. But dance and drama are excluded; they are left to the whim of local education authorities.

Students of music receive mandatory awards, but students of dance and drama do not. A sociologist will receive a grant, but a dancer will not; a medieval historian will receive a grant, but an actor will not. Why is that so? The arts, including dance and drama, provide jobs and tourism revenue—which is more than can be said for many of the academic disciplines which attract automatic mandatory grants.

Our dance and drama schools are among the finest-if they are not the finest—in the world, but student applications to them are drying up at an alarming rate because of the lack of eligibility for mandatory awards. The order gives the Secretary of State the power to correct that state of affairs. It would be economic and cultural folly to let those disciplines die. I am encouraged by the new priority that Ministers seem to be attaching to that area and I hope that they will use the power conferred by the order to correct the position in time for the start of the new academic year.