I take that point, Madam Deputy Speaker, and I shall be guided by you.
I would be the last person to imply that one would receive an inferior education from a university that used to be a polytechnic. My patch contains the university of Glamorgan, which is a superb institution, many of whose students live at home. The hon. Member for Harrogate and Knaresborough makes an interesting point. If many thousands of students decide that they want to live away from home, it throws up questions about the financial model that he talks about.
I shall deal briefly with the Conservatives' proposals, although I should have liked to deal with them at length. Perhaps we will have an opportunity to do so at some stage in the future. The Conservatives have said that they will keep our income-contingent repayment scheme. We need to follow the logic of that carefully, to see how income-contingent repayments would work with high interest rates. Income-contingent repayments are not like a mortgage. How much one pays in regular monthly payments depends on what one earns, not what one owes. People pay in proportion to their income above a threshold. So if someone is on low earnings, their repayments are low. If someone earns less than the threshold, the repayments stop altogether. That means that the loan takes longer to repay. With our system, that is not a problem, because the interest we charge just matches inflation. It does not matter if someone takes longer to repay: they only ever repay what they borrowed in real terms.
However, with real rates of interest, it is very different. If someone takes a long time to repay, because their earnings are lower, the interest racks up and they pay back a lot more. If someone takes a career break, perhaps to start a family, the interest really begins to mount up. Two years ago, we exemplified some revealing case studies for the Education and Skills Committee and I hope that hon. Members will take a look at them. If interest rates were about 8 per cent., a low earner with a £10,000 loan who took a career break could easily have to repay £60,000, or six times what they borrowed. In contrast, a city earner with high earnings and no career break would repay just £15,000. It is hard to see how that is fair.
Under the Conservative proposals, where would the money come from? It would not come from high earners. They would repay their loans quickly, so the burden of high interest rates would not fall on them. In fact, the extra money would come from medium and low earners, especially anyone unfortunate enough to take a career break. They would take the longest to repay and thus would bear the greatest burden of that policy. What impact would that have on widening participation? Greater interest rates would mean greater risks for the individual. Those less sure about entering higher education—the very ones we are encouraging to think about it—would be put off in their droves.
Do the Conservatives' sums add up? We have identified at least three serious holes in the arithmetic. They have underestimated by £400 million the likely fee income by using data from 2003–04 instead of estimates for 2009–10. They have underestimated by £300 million the income lost the to the Exchequer if the student loan debt book is given away. Nor do the Conservatives' proposals make any provision to deal with the unfortunate consequences of high interest rates, and the cost of writing off loans for policy reasons. That is not tenable, and putting it right could cost another £400 million. So the Conservatives' sums are out by as much as £1 billion a year. Their new policy is grossly unfair, and the sums do not add up. I shall leave for another day the question of whether the Conservatives' proposals are actually feasible to implement. We have two different proposals from the Opposition parties, but as I said at the beginning, neither is a practical alternative.
Everyone in this House knows and values the contribution made to national life by Lord Dearing. He has done great work in education for this and for previous Administrations. All have valued his independent approach. His committee of inquiry on higher education, in 1996 and 1997, espoused the principle that students should contribute to the cost of their higher education, and that led us to the introduction of fees in the first place. I remember it well because I took the Bill through the House and, temporarily, I was the most hated man in Britain. I am sure that someone took over from me fairly quickly. The logic of that conclusion is as strong today as it was then, if not stronger. Students should make a contribution, but it is better if they do so as graduates, and that is what our fee deferral plans allow for. Of course they must also contribute in a fair and affordable way. That means avoiding the shockingly regressive proposals from the Conservative party, which would have those who benefit least from their higher education paying the most.