A middle-aged man like me needs to approach the subject of student finance with a degree of humility, for I was one of the lucky few who did not have to pay tuition fees and although I did not qualify for anything more than the minimum grant, many of my contemporaries did. The key fact about university when I was growing up was that it was just that: the exclusive preserve of the lucky few. Universities were bastions of privilege and the nation was poorer for it, as were millions of people whose lives would have been enriched in every sense by a university course.
It was Tony Blair, of course—remember him?—who first recognised that many more people could benefit from university education and started us down the road of reforming student finance so that we could widen participation. It was Gordon Brown—remember him?—who asked the noble Lord Browne to suggest further reforms of student finance. And it was Vince Cable and Mr Clegg who bravely impaled themselves and their party on an irresponsible campaign pledge and introduced the system of tuition fees we have today.
At every stage in this journey towards a student finance system that allows anyone with the necessary grades to be offered a university place, we have heard the same howls of outrage and the same predictions of disaster from the same sources. “Participation will plummet,” they intone, “The poorest will be put off,” and just as predictably at each and every stage these shroud wavers and doom mongers have been proven wrong, as my hon. Friend Seema Kennedy reminded us. Why have they been proven wrong? Because, as my hon. Friend James Cartlidge pointed out, individual students observe the benefits that flow to university graduates, look at the repayment terms for student loans and calculate, quite correctly, that they will have to repay their student loans only if they themselves are benefiting from higher wages.
My hon. Friend Huw Merriman said that the loans he took out were the best investment he has ever made, and my hon. Friend James Morris talked about the returns on higher education, which in terms of lifetime earnings, interestingly, are even higher for women than for men. The truth is that student loans are not like ordinary commercial loans and it is frankly a disgrace that Opposition Members are willing to mislead would-be students by pretending that they are.
A commercial loan is often secured against specific assets, which can be seized if the individual cannot make the repayments. With a student loan, no bailiff is going to knock on a door and take a television if a low income means people cannot afford to repay it. A commercial loan will charge a rate of interest from the very first day and the poorer the person is, the higher the interest rate is likely to be. With a student loan, the interest rate is held at a lower rate until the student starts earning over £25,000 a year, and the amount they have to repay in any year is limited to 9% of their income over £21,000. A commercial loan and all the accumulated interest will still be hanging around someone’s neck in 40 years’ time if they have not managed to pay it off. The balance of a student loan is written off after 30 years.
There are two ways to fund university students. We can limit access, undermine the quality of university teaching and get the general population, most of whom have not benefited from a university education, to foot the bill; we could call that the SNP approach. The alternative is to offer anyone who has the capacity to benefit from a university course the opportunity to do so, and to put in place a system of subsidised student finance which asks those who do go on to benefit to contribute while protecting those who do not from the need to repay the loans. That is the Conservative approach; it was also the approach of the Liberal Democrats when they were a party of government and of the Labour Government under Tony Blair and Gordon Brown.
One thing is clear at the end of this debate: a party’s attitude towards student finance is a leading indicator of its fitness to govern. In opposition, a party will take the irresponsible route in an attempt to curry favour with the National Union of Shroud-wavers—sorry, I mean Students. In government, it will suddenly discover the merits of a sustainable system of student finance that is fair to students and taxpayers alike.
If we are ever to see another Labour Government—and on the basis of the party’s current performance, that may be a very long time in coming—I confidently predict that they will quietly drop their opposition to the system of student finance put in place by Governments of all parties over 20 years, and that is why—