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“(1) Section 22 of the Teaching and Higher Education Act 1998 (power to give financial support to students) is amended in accordance with subsections (2) to (4).
(2) In subsection (2)(g) at the beginning insert ‘Subject to subsections (3)(A) and (3)(B),’.
(3) In subsection (2)(g) leave out from ‘section’ to the end of subsection (2)(g).
(4) After subsection (3) insert—
‘(3A) Other than in accordance with subsection (3B), no provision may be made under subsection (2)(g) relating to the repayment of a loan that has been made available under this section once the parties to that loan (including the borrower) have agreed the terms and conditions of repayment, including during—
(a) the period of enrolment on a course specified under subsection (1)(a) or (1)(b), and
(b) the period of repayment.
(3B) Any modification to any requirement or other provision relating to the repayment of a loan made available under this section and during the periods specified in subsection (3A) shall only be made if approved by an independent panel.
(3C) The independent panel shall approve modifications under subsection (3B) if such modifications meet conditions to be determined by the panel.
(3D) The approval conditions under subsection (3C) must include that—
(a) the modification is subject to consultation with representatives of the borrowers,
(b) the majority of the representative group consider the modification to be favourable to the majority of students and graduates who have entered loans, and
(c) there is evidence that those on low incomes will be protected.
(3E) The independent panel shall consist of three people appointed by the Secretary of State, who (between them) must have experience of—
(a) consumer protection,
(b) loan modification and mediation,
(c) the higher education sector, and
(d) student finance.’”—(Wes Streeting.)
Brought up, and read the First time.
With this it will be convenient to discuss the following:
New clause 3—Student loans: regulation—
“(1) Any loan granted under section 22(1) of the Teaching and Higher Education Act 1998, (“student loans”) irrespective of the date on which the loan was granted, shall be regulated by the Financial Conduct Authority.
(2) Any person responsible for arranging, administering or managing, or offering or agreeing to manage, student loans shall be regulated by the Financial Conduct Authority.”
New clause 5—Revocation of the Education (Student Support) (Amendment) Regulations 2015—
“The Education (Student Support) (Amendment) Regulations 2015 (Statutory Instrument No. 1951/ 2015) are revoked.”
This new clause would revoke the Education (Student Support) (Amendment) Regulations 2015, which moved support for students from a system of maintenance grants to loans.
New clause 6—Higher Education loans: restrictions on modification of repayment conditions—
“(1) A loan made by the Secretary of State to eligible students in connection with their undertaking a higher education course or further education course under the Teaching and Higher Education Act 1998 shall—
(a) not be subject to changes in repayment conditions retroactively without agreement from both Houses of Parliament;
(b) not be subject to changes in repayment conditions in the event of the loan being sold to private concerns, unless these changes are made to all loans, in the manner prescribed above;
(c) be subject to beneficial changes, principally to the repayment threshold, in line with average earnings.
(2) In section 8 of the Sale of Student Loans Act 2008, for subsection (1) substitute—
‘(1) Loans made in accordance with regulations under section 22 of the Teaching and Higher Education Act 1998 (c. 30) are to be regulated by the Consumer Credit Act 1974 (c. 39).’”
This new clause would ensure no retroactive changes could be made to student loan repayment conditions without agreement from both Houses of Parliament.
New clause 8—Access to support for students recognised as needing protection—
“(1) Within six months from the day on which this Act comes into force, the Secretary of State must, by regulations made under the Higher Education Act 2004 and the Teaching and Higher Education Act 1998,make provision for financial support for higher education courses offered to students with certain immigration statuses.
(2) The regulations specified in sub-section (1) must include, but shall not be restricted to—
(a) provision for persons who have been brought to the UK under the Syrian Vulnerable Persons Relocation Scheme, or any equivalent scheme, and their family members to access student loans on the same basis as refugees recognised in-country, and
(b) provision for persons who have claimed asylum and been granted a form of leave to remain in the UK to be eligible for—
(i) home fees for a higher education course if they have been ordinarily resident in the United Kingdom and Islands since being granted leave, and
(ii) student loans for a higher education course, if—
(a) they have been ordinarily resident in the United Kingdom and Islands since being granted leave, and
(b) are ordinarily resident in the United Kingdom and Islands on the first day of the first academic term of that course.
(3) In this section—
‘home fees’ means fees for a higher education course charged to persons considered as ‘qualifying persons’ under regulations made under the Higher Education Act 2004;
‘student loans’ means loans made to students in connection with their undertaking of a higher education course under the Teaching and Higher Education Act 1998.”
This new clause would allow all refugees resettled to the UK, as well as people seeking asylum granted forms of leave other than refugee status, to access student finance and home fees.
New clause 10—Student support: requirement to assess repayment terms—
“(1) The Teaching and Higher Education Act 1998 is amended as follows.
(2) In Section 22 (new arrangements for giving financial support to students)—
(a) in subsection (3)(b), after “and” insert “subject to subsection (3A)”
(b) after subsection (3) insert—
‘(3A) Regulations under subsection (3)(b) must include a level of earnings below which a person shall not be required to make repayments of such a loan.’
(3) After Section 22 insert—
‘(22A) Duty to assess consumer prices in determining terms for loan repayments
(1) In relation to regulations made under section 22(3A) the Secretary of State must, for each tax year, review UK consumer price inflation for the period since the last review under this sub-section.
(2) If the review concludes that consumer prices for the previous tax year have increased, the Secretary of State shall, by order, amend the level of earnings specified in regulations made under sub-section 22(3A) by the same percentage increase as consumer price inflation determined under sub-section (1).
(3) If the Secretary of State is not required to make an order under this section, the Secretary of State shall lay before each House of Parliament a report explaining the reasons for arriving at that determination.
(4) For the purpose of this section—
‘consumer prices’ means the Consumer Price Index;
‘consumer price inflation’ refers to the annual assessment made by the Office for National Statistics in the UK consumer price inflation Statistical bulletin.’”
Government amendments 14 to 16 and 20.
I am grateful for the opportunity to move new clause 2 and to speak to the other new clauses concerning student finance.
Millions of people across the UK have been mis-sold loans and will end up paying thousands of pounds more than expected as a result. The perpetrator of the mis-selling scandal is not an unscrupulous high street bank or a payday lender; it is our own Government. The victims are current students and graduates who were sold student loans on the basis of false assumptions and broken promises.
For the vast majority of students in England and the rest of the United Kingdom, Government-backed loans are an essential source of financial support to cover the cost of their tuition fees and the substantial costs associated with their studies, such as the rising cost of university accommodation, food and subsistence, course materials, and making the most of their student experience. In England, students are able to take out a tuition fee loan of up to £9,000 a year and an additional maintenance loan to cover living costs of up to £11,000 a year. As a result, English students now graduate with the highest levels of debt in the western world. Following the Government’s decision to axe non-repayable student grants for the poorest students, those from lowest-income households, scandalously, graduate with the most debt. It is a terrible iniquity in the system and one that I am glad to see the Opposition Front-Bench team addressing this afternoon.
Many students will not have forgotten that the decision to scrap student grants was not taken in this House, but down the corridor and up the stairs through a statutory instrument in a Committee of which most people have never heard. That is not how the Government should take major decisions on student finance. Students and their families were sold loans on the basis of a series of simple promises from Ministers: loans will be repaid only once students have left university; they will be repaid only after graduates start earning over £21,000 a year; graduates will repay 9% of everything earned above £21,000 a year; and the £21,000 figure will be uprated each year in line with average earnings from April 2017.
Around this time last year, however, buried in the fine print of the previous Chancellor’s autumn statement was an announcement that the repayment threshold will remain frozen at £21,000. As a result, graduates will end up paying more each month and thousands of pounds more over the 30-year lifetime of their loans. Worst of all, the change will affect not only future students, who can consciously decide to sign up to those repayment conditions, but thousands of existing students and graduates who took out their loans in good faith on the promise that the repayment threshold would increase from 2017. Not only does that retrospective change fly in the face of the principles of good governance, but it is deeply regressive. It is estimated that around half of graduates will never pay off their loans before their debts are written off by the Government. Such graduates, by definition on lower and middle incomes, will end up paying back thousands more over the lifetime of their loan, whereas the richest graduates will be able to repay their debts more quickly and accrue less interest.
Financial experts and advisers are rightly furious. In an astonishing performance in a Bill Committee evidence session, Money Saving Expert’s Martin Lewis described the Government’s decision to break their commitment to students as “abominable and disgraceful”. The Government will argue that the small print of student finance regulations makes the change entirely permissible and reasonable, but as Martin Lewis told the Committee:
“Looking at students as consumers, if they had borrowed money from a commercial lender, the Financial Conduct Authority would have struck out in a second the idea that, five years after announcing that the repayment threshold would go up from £21,000 in April 2017 with average earnings, that would be frozen.”––[Official Report, Higher Education and Research Public Bill Committee,
c. 38, Q55.]
It is important to bear in mind that the Government’s promise to students and applicants was not just in the marketing material of Government and of universities, which understandably assumed that the commitments would be lasting, but written in black and white by the former higher education Minister, now Lord Willetts. Having worked with Lord Willetts over a number of years, I have no doubt that he made that undertaking in good faith. He could not have possibly known that a future Chancellor, or a future Government, would not only break that commitment, but apply it retrospectively.
Banks would not get away with mis-selling on this scale, and neither should our Government. I have teamed up with Martin Lewis to put forward amendments to the Bill. The amendments, which I am delighted to say have cross-party support, will prevent Ministers from making retrospective changes to student loans that would penalise existing students and graduates.
New clause 2 would put in place some architecture through the appointment of three independent advisers, who would look carefully at any proposals that, retroactively, make changes to student loan repayment conditions. They would apply a number of tests: is it to the benefit of the majority of graduates; do the Government believe that to be the case as a result of consultation; have the Government made a case that the proposal would be progressive in effect; and would it help some of the most disadvantaged students or graduates? If those conditions are passed, the Government might be able to proceed, because, clearly, this House would not want to prevent the Government from making positive changes that would benefit graduates. What those tests would do is prevent Ministers from behaving as the previous Chancellor did, which was to make changes in the small print of the autumn statement and apply them retrospectively after commitments have been made in good faith.
New clause 3 would also bring student loans within the scope of the Financial Conduct Authority. Despite the existence of an independent student loans company, Ministers have still found ways to flout regulations for the benefit of the Treasury and to the detriment of students and graduates, which is really quite appalling.
My hon. Friend is making an extremely powerful case. Does he not think that, had this happened in another context, the behaviour might have been described as fraudulent?
I entirely agree with my hon. Friend, which is why the student loans system should be brought within the scope of the Financial Conduct Authority. Had a high street bank or a payday lender behaved in such a way, there would be outrage everywhere, including in this House. The Financial Conduct Authority would mount an investigation. The Treasury Committee, of which I am a member, would ask questions. It seems that a Chancellor can just decide to save a few quid in the autumn statement and make retrospective changes that would penalise existing students and graduates.
This is an issue not just of fairness and equity for existing borrowers, but fundamentally of trust. What is to stop future Governments from making changes further down the line about all manner of things, including interest rates, repayment periods, tapers and thresholds? On that basis, how can current or prospective students have confidence that promises being made today will be kept tomorrow? To be honest, this is a very personal issue for me. Some years ago, Martin Lewis, from Money Saving Expert, and I agreed to work with the coalition Government on an independent taskforce on student finance information. Martin was invited to take part because of his widespread reputation as one of the most trusted people in the country when it comes to financial advice and saving consumers money. It was felt, quite rightly by Lord Willetts— then the higher education Minister—that Martin would be an independent voice on those matters and someone whom people could trust. Martin then asked me to work with him as his deputy, with Lord Willetts’ agreement, on the basis that I had recently completed my term as president of the National Union of Students.
Although I opposed the decisions that had been taken by successive Governments around higher education funding and student finance, I believed that it was critical to take part. I thought it would be appalling if a single student was deterred from applying to university on the basis of misunderstanding the information. If students look at the information and the student finance system and decide to make a different choice, that is for them, but I thought that it would be a travesty if a single student was deterred on the basis of misunderstanding and misinformation.
We went round the country visiting schools, colleges and universities and we appeared in the media, promoting the Government system—not on its merit, but on the facts of the system. We served what I thought was an important public duty and purpose, but we were misled—inadvertently—which means that we therefore misled students and graduates up and down the country. We told them that the repayment threshold would go up in line with earnings from April 2017; that is what we were told by Ministers at the time. That is what students, teachers, parents, family members and advisers were also led to believe.
The Government need to reflect very carefully on what message it would send to each of those groups if future Governments can come along and retrospectively change the system to suit the Treasury. It is a terrible, terrible precedent that undermines trust not just in the student finance system, but in politics as a whole. We are not so far from a general election, or indeed from a referendum campaign, to know that trust in politics in this country is at rock bottom. People do not trust politics and they do not trust politicians. From my experience of this place in the past 18 months, I can say that, for all our disagreements, I have great pride in our political system and in the way in which it works. However, when it comes to decisions such as these, I completely understand why politicians are held in such low regard. On too many occasions, politicians have said one thing and done another. On higher education and student finance, politicians have said one thing and done another. Since the coalition Government put their reforms through, with cross-party agreement and with—to be fair to them —concessions to the Liberal Democrats in government, every single concession has been undone. Student grants have been scrapped. The emphasis on widening participation in a number of respects is now weaker. Now we find that many of the actual repayment conditions, which Mr Clegg would argue were some of the more progressive elements of the system, are also being undone. This is an issue about trust not just in the student finance system, but fundamentally in politics as a whole. Martin Lewis says:
“If you sign a contract, both sides should keep to it. If you advertise a loan, the lender should be held to the terms it was sold under.”
It is a total disgrace that, although the UK is widely regarded around the world for its excellent laws and regulatory environment, there seems to be one exception, which is student loan contracts. That is why I hope that, this week before this change kicks in, the new Chancellor will take the opportunity to reverse the decision in his autumn statement. The Chancellor and the Prime Minister could go some way to rebuilding trust in politics. I also urge the Government to support new clauses 2, 3 and 6, which would ensure that no Government could be tempted to behave in this way again. It is scandalous and unjustifiable and it sets a very dangerous precedent. That is why I hope that we will see some progress on this today.
When we reformed student finance in 2011, we put in place a system designed to make higher education accessible to all. It is working well: total funding for the sector has increased and it is forecast to reach £31 billion by 2017-18. It is vital to our future economic success that higher education remains sustainably funded.
Last year, the current Leader of the Opposition announced that he was keen to scrap tuition fees. Senior Labour party figures have criticised that, saying that it was not a credible promise to make, with Lord Mandelson, among others, noting that Labour had
“to be honest about the cost of providing higher education.”
Of course, it was not just Lord Mandelson. The former shadow Chancellor, Ed Balls, went further when he noted that his party’s failure to identify a sustainable funding mechanism was a “blot on Labour’s copybook”.
The Opposition need to explain how they would fund their alternatives. The Labour party has said that scrapping tuition fees and restoring maintenance grants would cost £10 billion. At a conservative estimate, this would cost £40 billion over a five-year Parliament. Not allowing high-quality institutions to increase their fees by inflation would deprive the sector of a further £3 billion by the end of this Parliament, but Labour would like to go further still. Increasing the repayment threshold for post-2012 student loans by average earnings would cost more than £6 billion by the end of this Parliament. Uprating it for all loans would cost over £7 billion. Where is all this money going to come from?
By contrast, the OECD has praised our student loan system that this Government introduced in England. It said that we are
“one of the few countries to have figured out a sustainable approach to higher education finance”.
The Minister is talking about the affordability and sustainability of systems. Does he acknowledge that when the proposals to change the student funding system were put to this House back in 2012, it was on the understanding from his predecessor, Lord Willetts, that the resource and budgeting charge—the uncollectable level of student debt—would be at around 28%? That prediction was rubbished by many experts in the sector and from the Opposition Benches, and gradually, over the lifetime of the Parliament, the percentage went up into the 30s and the 40s, to the point where it became unsustainable. The unsustainability of the system that the Government created was then dealt with by imposing that burden on students by varying the charges and the deal on student loans in the way that my hon. Friend Wes Streeting described.
The estimation of the RAB charge is still broadly in that ballpark, with the current estimate being between 20% and 25%, so it is not substantially different.
On new clause 2, Wes Streeting suggested that an independent panel should approve any changes to terms and conditions for student loans. However, the key terms and conditions governing repayment of the loan are set out in regulations made under section 22 of the Teaching and Higher Education Act 1998. The repayment regulations are subject to scrutiny under the negative procedure, which allows Parliament to call a debate on any amendments. It is right that Parliament, rather than an unelected panel, should continue to have the final say on the loan terms and conditions.
I anticipated that the Minister would point out how permissive the terms and conditions were, which is why I suggested that student loans should be regulated by the Financial Conduct Authority. The sad truth is that I agree with him. As new clause 6 suggests, Members of both Houses should have a role in shaping the terms and conditions, but Ministers, whether in the Treasury or the Department for Education, have shown that they cannot be trusted to hold to their word. That is the indictment and that is why the amendment was tabled.
The hon. Gentleman mentioned the Financial Conduct Authority. I remind him that it was under the Labour Government that Parliament was invited to confirm, as it did, that student loans were exempt from regulation under the Consumer Credit Act 1974 when the then Labour Government passed the Sale of Student Loans Act 2008. The hon. Gentleman should look back at his own party’s record on the issue.
New clause 3 proposes that student loans should be regulated by the Financial Conduct Authority. I share the hon. Gentleman’s desire to ensure that students are protected, but student loans are not like the commercial loans of the sort regulated by the FCA. They are not run for profit and are available to all, irrespective of their financial history. Repayments depend on income and the interest rate charged on them is limited by legislation. The loans are written off after 30 years with no detriment to the borrower. By contrast, lenders regulated by the FCA are obliged to assess the credit-worthiness of all their borrowers, and the affordability and suitability of the loan product for each borrower. Were the FCA to regulate student loans, that could affect the ability of some students to obtain them.
It would be perfectly possible for the FCA to regulate within the scope of the student finance system. The Minister talks about the suitability of borrowers; I am talking about the suitability of lenders to keep their word. I am not asking for the FCA to regulate students. I am asking for the FCA to regulate Ministers, who cannot be trusted.
The key terms and conditions are set out in legislation—it is the law that binds us—and are subject to the scrutiny and oversight of Parliament. FCA regulation is therefore unnecessary, as students are already protected. Our system allows the Government, through these subsidised loans, to make a conscious investment in the skills base of our country. I should have thought that Labour Members would welcome that.
New clause 5 would revoke the 2015 student support regulations. These regulations replaced maintenance grants with loans, which increased support for students on the lowest incomes by over 10%. Revoking these regulations would reduce the support available for students from some of the most disadvantaged backgrounds, while costing the taxpayer over £2.5 billion per year. Opposition scaremongering about this policy risks deterring students from attending university. The sustainable system that we have put in place has enabled us to remove the cap on student numbers and offer more support for living costs than ever before.
New clauses 6 and 10 would require the repayment threshold for all income-contingent student loans to increase in line with either earnings or prices. Loan repayments continue to be based on the ability to pay, and graduates earning less than £21,000 were not affected by the threshold freeze. Those who benefit from a university education are likely to go on to earn more than taxpayers who do not go to university, so it is only fair that graduates should contribute to the cost of their education. Uprating the repayment threshold for all income-contingent student loans, as new clause 6 proposes, would cost about £5 billion in the first year due to a reduction in the value of the loan book. Thereafter, it would increase the resource account and budgeting charge by about 7%.
That represents a decrease in the capital value of the loan book.
The cost of uprating by the consumer prices index, as new clause 10 proposes, would be less, but still significant. These costs would need to be paid for by taxpayers, many of whom will be earning less than the graduates who would benefit from the threshold increase.
New clause 10 relates to access to support for students recognised as needing protection. This is an important issue which was raised by Paul Blomfield in Committee, and is already addressed, as we have discussed, within the student support regulations. I am pleased to say that those who come to this country and obtain international protection are already able to access student support. Our regulations have for some time included provision for those granted refugee status or humanitarian protection, and their family members.
Those persons entering the UK under the Syrian vulnerable persons relocation scheme, and granted humanitarian protection, will be eligible, like UK nationals, to obtain student support and home-fee status after only three years’ residence in the UK. Persons on the programme are not precluded from applying for refugee status if they consider that they meet the criteria. Those with refugee status are uniquely allowed to access student support immediately, a privilege not afforded to UK nationals or those granted other forms of leave. There is a distinction in international law between such status and that of those in need of humanitarian protection.
Recently the Supreme Court upheld the Government’s policy of requiring most persons, including UK citizens, to be ordinarily lawfully resident in the UK for at least three years immediately prior to starting their course in order to be eligible for student support. The amendment would allow people who may subsequently be required to leave the country to access taxpayer funding for their study.
The last group of amendments includes some technical Government amendments relating to alternative student finance. Unless hon. Members show an interest in them, I will move on to my conclusion.
This Government are committed to a sustainable and fair student funding system. We are seeing more people going to university than ever before, and record numbers of students from disadvantaged backgrounds. Our funding system has enabled us to lift the cap on student numbers and, with it, the cap on aspiration that it represented. I hope the Opposition can see that if their amendments were not pressed, the student funding regime would remain sustainable, working in the best interests of students and taxpayers.
The Minister briefly addressed new clause 8, although in anticipating it, he understated and, to some degree, misrepresented the actual position. Let me therefore explain the new clause, for which I think there is support on both sides of the House—I think there was some discomfort on the Government Benches in Committee when it was voted down.
New clause 8 would allow all refugees resettled to the UK, as well as those young people who, having made an application for asylum, are granted a form of leave other than refugee status, to access student finance and home fees. It would be of particular benefit to Syrian refugees resettled to the UK under the Government’s own policy, so it is perhaps not surprising that there is support for it on both sides of the House. Only small numbers of people would be affected, but as those of us who have dealt with such cases know, it would have a huge impact for the individuals.
Let me explain the context. Currently, individuals with refugee status can access student finance and qualify for home-fee status from the moment they are awarded their protection. That is where the Minister was economical with the truth in his comments about the new clause, because those with a slightly different status—that of humanitarian protection—are treated differently: they have to be able to show that they have been ordinarily resident for at least three years at the start of the academic year to be able to receive financial support.
The group most affected by that different definition are those Syrian refugees currently being resettled to the UK under the vulnerable persons resettlement programme, as they are granted not refugee status but humanitarian protection. The result is that a young Syrian refugee who arrives in the UK today would not qualify for student finance until the start of the academic year in 2020. The only exception is if they are resettled to Scotland, where the Scottish Government—I commend them for this—have introduced a special fee status for resettled Syrians, allowing them immediate access to student finance.
Subsection 2(a) would ensure that all resettled refugees, no matter what status they are given, and no matter where they live in the UK, could access student support immediately. Subsection 2(b) would make student finance available for those who are granted humanitarian protection after making an application for asylum. As set out in the immigration rules, humanitarian protection is granted to people who face a real risk of suffering harm if they return to their home country. That includes the risk of facing the death penalty, torture or inhumane treatment, or their lives being at risk due to armed conflict. Now, the future of those who are granted humanitarian protection after applying for asylum is clearly in the UK. If their future is here, they should be enabled to build their lives here. They should be allowed to access university education not simply to build their lives but to contribute fully to our society.
Subsection 2(b) would also provide access to student finance and home-fee status for people who have applied for asylum and then been granted another form of immigration leave. Again, in these cases, the Government have accepted that the immediate future of these individuals is in the UK, so they should be given every opportunity to contribute and develop, yet they face significant hurdles in doing so. The reason is that, in 2012, the last Government changed the rules so potential university students in this situation could no longer access student finance. They would also have been reclassified as international students, meaning they would face higher fees.
Unsurprisingly, the Supreme Court found that the Government’s rules were discriminatory. I realise the Government have not been doing very well in the courts recently, but this is a slightly earlier case—the Tigere case. As a result of the Supreme Court ruling against the Government, the Government changed the rules and introduced the new criterion of long residence. What that means is that young people who have gone through the asylum process—including children who arrived as unaccompanied asylum-seeking children—and who are unlikely to meet the long residence criterion, will have to watch their school peers go off to university, leaving them behind.
I have a constituent in just that position. They went through school, they did well, they were ready to go to university and they had a university place secured, but they were told that they had not yet met the esidency requirements. They are going to be sitting around for another year or two, waiting until they do meet the residency requirement. That is a waste of their time, a waste of their potential and a waste of everybody else’s time. That is the perverse situation we are in, isn’t it?
My hon. Friend is absolutely right. Not only is this a waste for the individual, but we as a society are cutting off our nose to spite our face. It is a waste of potential for all of us, when we could benefit from that person’s higher education.
New clause 8 is not about creating special circumstances for refugees—the Minister falsely contrasted the position on refugees, humanitarian protection and UK students—and others who have arrived in the UK seeking asylum. Instead, it is about removing the existing barriers preventing young people who came to the UK seeking protection, and who are capable of attending university, from fulfilling their potential, so I urge him to think again.
I rise to add a brief footnote to new clause 10, which is in my name, and to say things that other people in the room possibly cannot say.
Liberal Democrats hesitate, for some reason, to talk about university fees. I have no particular embarrassment—I voted against top-up fees under Labour, and I voted against the increases under the coalition. In both cases, though, I made dire predictions about take-up, which certainly were not fulfilled, and take-up in both cases carried on. Unfortunately, I was right in my predictions about the political consequences of breaking our contract with the electorate. I believe we were tricked into that by a very clever Chancellor, and there was very little saving in the end to the Exchequer, contrary to what some of my colleagues supposed at the time.
It was a painful process, and Wes Streeting, who introduced this section of the debate, pointed out that it involved a certain number of concessions to the Liberal Democrats. What we are looking at now is the elimination bit by bit, piece by piece of those concessions, starting with grants and moving on to access and so on. So the policy has clearly worsened, and what we have currently, with the raising of the threshold, is nothing short of a scandal. A contract has been broken; there has been a one-sided redefinition of the terms of the loan. In any other context, as Martin Lewis quite correctly said, that would lead to legal action. The only reason legal action is not possible in this case is the small print, which, as far as most undergraduates are concerned, was very, very small indeed.
New clause 10 is simply an attempt to avoid a repetition of that bad situation by defining a minimum level of earnings and a mechanism for adjusting it in a rational, open way. It would avoid partiality, exploitation, misunderstanding and—the hon. Gentleman mentioned this briefly—the lack of trust, which is absolutely crucial. That, surely, is the way to go.
I rise to speak to Labour’s new clause 5, which would revoke the Education (Student Support) (Amendment) Regulations 2015, which moved support for students from a system of maintenance grants to loans. I also rise to speak to Labour’s new clause 6, which follows on from the excellent speech made by my hon. Friend Wes Streeting on new clauses 2 and 3.
At a time when the Government’s own Social Mobility Commission reported only last week that our nation is facing a crisis in social mobility, it is a travesty that I have to stand here today to talk about the problems caused by scrapping maintenance grants and replacing them with a further loan, disproportionately affecting students who come from a low-income background. As this House knows, students in the UK already face the highest levels of student debt in any European country. Figures from the Institute for Fiscal Studies show that the average student in the UK will leave university saddled with £44,000-worth of debt, and the Sutton Trust has suggested that the figure could go even higher. This figure is only the average; for students from low-income backgrounds, it will be much higher, and these changes will make it higher still.
Labour Members have pledged to bring back the maintenance grant. My hon. Friend Angela Rayner, in the Bill Committee and recently at the Labour party’s north-west conference, gave powerful testimony as to why that is. It is not just because we cannot afford to lose these people from our economic process, or just because it will help to aid social mobility generally; it is because by doing so we will empower hundreds of thousands of people who will otherwise lose their life chances, or be in danger of that, under this process. There were half a million students in the last year before the Government scrapped the grant, many of whom were in higher education in further education colleges. If a significant number of those students do not take out loans because, for a variety of reasons, they do not wish to do so or are unable to do so, we will increase still further the progressive weakening that this Government have put on to the higher education and FE sector, which is currently servicing some 34,000 students who got the grant in the last year before the Government scrapped it, including a significant number of people in my own constituency pursuing higher education at the excellent Blackpool and The Fylde College.
The Government—I give credit to them for it—have put into the Bill the ability for FE colleges to have their own degree-awarding powers, and Blackpool and The Fylde College is one of those, but it is rather perverse then to introduce something that will weaken the support for such colleges. The Government seem not to think in holistic terms about further education. Taking people in higher education in further education colleges out of the equation will weaken the economic and social base of those colleges. The Government do not give anywhere near enough attention to that.
Will the hon. Gentleman allude to how Labour intends to pay for all these benefits, because I think I am right in saying that it was to be via corporation tax?
The hon. Lady must be a mind reader because I am just coming to on that issue.
Bringing back the maintenance grant would help to enable over half a million students from low and middle-income backgrounds to go on to higher education. Rumour has it that in the autumn statement this coming Wednesday, the Chancellor is set to announce a further cut in corporation tax, helping only those at the top. We are asking the Government to reconsider this position. Our policy, which has been costed, of bringing back grants would be the equivalent of a rise of less than 1% in corporation tax. Do the Government not believe that this rise would be more beneficial to our nation as a whole—
No, I will not—the hon. Lady has had one go. Let me proceed because we do not have a lot of time.
Do the Government not believe that that rise would more beneficial to our nation as a whole than pushing ahead with a policy that benefits only a relatively small number of large corporations, and not even a big range? If the Government are serious about supporting social mobility, they need to do something about it. The Minister, in a rather Panglossian way, went on about all the terrible things that were predicted when loans were introduced not having come to pass, but that is actually not true, or certainly not true across the board. We have seen what a disaster the introduction of advanced learning loans for level 3 was for over-24-year-olds. Only 50% of the £300 million that was allocated for them was taken up, and that money has been sent straight back to the Treasury. Now, unabashed, the Government want to serve up the same recipe to 19 to 24-year-olds.
“Nudge” has been a fashionable word in the Conservative party in recent years—indeed, Lord Willetts wrote quite a lot about it—but it is possible to nudge people away from things as well as towards them. As the Minister well knows, the quality impact assessment on grants and loans let the cat out of the bag on the difficulties that would be faced by all the groups who desperately need access to higher education, such as women, disabled people, people from the black and minority ethnic communities, and care leavers. No wonder Ministers were so keen to bury this issue in a Delegated Legislation Committee. It took our efforts in bringing it to an Opposition day debate at the beginning of the year to have a decent debate on it.
The Government need to think again on this. I give notice that we will press our new clause 5 to a vote.
How does the hon. Gentleman explain the fact that covering the figure of £12 billion would mean a rise in corporation tax of between 4% and 5% rather than the 1% that he stated? Is it not the case that surely we need business and industry to be making money in order to create the jobs and opportunities for students once they leave education?
That was a hell of a lot more than two seconds, but I forgive the hon. Lady. We need to look at this issue in the context of our proposal, to which I have already alluded.
New clause 6 deals with yet another regressive policy that has been highlighted during the passage of this Bill. My hon. Friend the Member for Ilford North spoke about some of the significant issues in this regard. The students affected will end up having to pay more than they were loaned as a greater proportion of their income. To those who have, more will be given, because they can pay their loans back more speedily; from those who have not, more will be taken. The Government seem to have been disregarding in their education policy the fact that there is a regional and demographic dimension to this as well. Constituents of mine taking up a graduate job in the past 12 months will have had a more reasonable ability to hit a threshold that was supposed to be uprated on a regular basis. Students in parts of the country where starting incomes for graduates are much lower than in London and the south-east will be particularly badly hit by this proposal.
Does the hon. Gentleman accept that the situation he describes particularly hits students in places like Northern Ireland where starting salaries are much lower? Does he also accept that the Minister’s point about the affordability of this is a red herring, because when the loans were sold to students, surely the cost of raising the thresholds was taken into consideration? The Government cannot now go back and say, “We want to rewrite the rules.”
The hon. Gentleman is absolutely right, as he is to make that point about the situation for students in Northern Ireland. When we discussed this matter in the Opposition day debate and again in Committee, we made the point that students in Northern Ireland, Wales and Scotland—the students of all of the devolved Administrations—would be affected by this process. It is nonsense for the Government to say that this will not make any difference. The Minister said to my hon. Friend Paul Blomfield that the RAB charge was now okay, but as my hon. Friend said, it is only okay because this Government—the Minister and the rest of his colleagues—have created a Frankenstein’s monster that is going to cause problems for so many thousands of students.
I cannot better the powerful speech that Martin Lewis made when he came to give evidence to the Committee. The Minister may feel that new clause 6 is unnecessary because his Government would never renege on their promises to students or retrospectively change the terms of a loan agreement. Unfortunately, they have already done so once. We would prefer both Houses of Parliament to look at this when such changes are made by the Government. We therefore want the Government to respond on new clause 6, and if my hon. Friend the Member for Ilford North pushes new clause 2 to a vote, we will support him. We give the Government fair warning that, whatever the result of the vote in the House tonight, I am sure this subject will get a very strong airing in the House of Lords, because it is economically, morally and socially indefensible.
Question put, That the clause be read a Second time.
The House divided:
Ayes 180, Noes 278.