Education (Student Support) (Amendment) Regulations 2015 — Motion to Regret

– in the House of Lords at 7:15 pm on 25th January 2016.

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Moved by Lord Stevenson of Balmacara

That this House regrets that the Education (Student Support) (Amendment) Regulations 2015, which change the existing student support arrangements so that new students starting full-time courses after 1 September 2016 will no longer qualify for a means-tested maintenance grant, will result in a significant decrease in participation in higher education by those in low-income groups, older students, female students, and students from ethnic minorities (SI 2015/1951).

Relevant document:18th Report from the Secondary Legislation Scrutiny Committee

Photo of Lord Stevenson of Balmacara Lord Stevenson of Balmacara Shadow Spokesperson (Business, Innovation and Skills), Opposition Whip (Lords), Shadow Spokesperson (Culture, Media and Sport) 7:30 pm, 25th January 2016

My Lords, I start by declaring an interest; I have two children currently enrolled in British universities. I think both attend, although I am not absolutely sure about the second one—but I want to make sure that that is on the record. I am also very grateful for the excellent work of the Secondary Legislation Scrutiny Committee, which alerted your Lordships’ House to the regulations that we are discussing in its 18th report.

The Government are proposing, under these regulations, to take grants away from around 500,000 of this country’s most disadvantaged students and replace them with maintenance loans, to be paid back when their earnings exceed £21,000 a year. The Government estimate that this will save £2.3 billion by 2020-21. My first point is that a change of this magnitude, which could affect more than 500,000 people, ought to have been made by primary legislation. According to the House of Commons Library, there were 395,000 students on full grant and 135,000 on partial grant in 2014-15. This SI affects a very significant number of people.

I checked with our Library over the weekend, and the last higher education Bill to go through your Lordships’ House was in the summer of 2004. Here we have Ministers trying to shut down parliamentary scrutiny by introducing major changes to the negative procedure, when we all know that SIs cannot be amended and that no formal approval is required in either House. It is not a proportionate way of proceeding, even if the powers are in the substantive legislation.

My second point is that this measure was not included in the Conservative Party manifesto. This U-turn comes just four years after grants for students from disadvantaged backgrounds were hailed by the Government as an essential element in their higher education strategy. Could the Minister explain the thinking behind this change of approach, given that the previous higher education Minister, the noble Lord, Lord Willetts, who unfortunately is not in his place, said that ever since tuition fees were raised in 2012, the Government had acknowledged that maintenance grants were central to ensuring that higher education was still accessible for poorer students? The noble Lord said that tuition fee rises were,

“progressive, because they help to encourage people from poorer backgrounds to go to university, because of the higher education maintenance grant”.—[ Official Report , Commons, 3/11/10; col. 940.]

This is not of course an isolated proposal but part of a pattern. It mirrors, for example, changes that removed NHS bursaries for nurses and other staff. It has been foreshadowed by changes that the Government have made in the support for further education over the past three or four years.

We put down this regret Motion today to hold the Government to account over what I see as a major policy change. It seems to many observers that the Government have been on the defensive all the way through this process. There was very little detail to be had when the Chancellor first mooted this change in the summer Budget, and not much more in the Autumn Statement. It was only when the National Union of Students raised the alarm about the impact of the policy and threatened a judicial review over the lack of consultation and the failure to publish the equality assessment that we began to see what was going on.

The generation of students entering further and higher education from September 2016 are going to be saddled with even greater debts—or “income-contingent tax liabilities” as the Government like to call them—than they were already likely to be from their course fee loans of £9,000 per annum going up. The IFS said in a press release summarising its briefing note on the summer Budget 2015:

“Students from households with pre-tax incomes of up to £25,000 (those currently eligible for a full maintenance grant) will have a little more ‘cash in pocket’ … But they will also graduate with around £12,500 more debt, on average, from a three-year course. This means that students from the poorest backgrounds are now likely to leave university owing substantially more to the government than their better-off peers”.

The IFS also states:

“The poorest 40% of students going to university in England will now graduate with debts of up to £53,000 from a three-year course”.

Note the use of “debt” rather than “income-contingent tax liabilities”—the IFS certainly calls a spade a spade. All this is backed up by the Sutton Trust, which says:

“Shifting grants to loans may move them off the balance sheet, but it could also put off many low and middle income students and tip the balance against their going to university”.

In a recent publication, million+ says that research from the NUS published last week by Populus shows that parents are concerned that the Government’s plans to scrap the maintenance grant will discourage their children from applying to university. The change could also have a serious impact on postgraduate enrolment, since it is clear that the abolition of grants will increase individual student debt significantly. Indeed, the range of groups affected by these changes is daunting. The equality analysis published last November concedes that black and minority-ethnic students in particular will be disproportionately worse off. As for older learners, it says:

“Mature students will be disproportionately impacted by the policy proposals”.

The Government have also conceded that disabled people will be badly affected by this decision as well as by the decision to delegate responsibility for much of the disabled student allowances schemes to institutions.

The equality analysis also raised the question of discrimination because of concerns among some Muslim students about taking out interest-bearing loans. Can the Minister update us on the discussions which took place during the last Government on the introduction of sharia-compliant loans? Finally, it also states that female students will be particularly affected given their “significant overrepresentation”, as it is described, in populations currently receiving grants.

These damning details from the Government’s own equality analysis should surely give Ministers pause for thought. Does the Minister have anything to offer which might ameliorate these shocking findings? These issues need to be addressed urgently, otherwise any progress towards making higher education more diverse, particularly at postgraduate level, will be jeopardised.

Finally, it is also important to note that this policy does not exist in isolation. The cumulative impact of the rise in tuition fees, the scrapping of maintenance grants and the freezing of the repayment threshold all point towards a more hostile environment for those thinking about higher education. What is driving these panic measures from the Government? Is it a belated recognition that the whole set of financial assumptions about the repayments that underpin the trebling of student fees in 2012 is, as we predicted, producing a black hole for them and for future taxpayers?

Removing maintenance grants makes no economic sense. The IFS conclusion is that this change will not improve government finances in the long term. It states:

“The replacement of maintenance grants … will raise debt for the poorest students, but do little to improve government finances in the long run”.

The IFS points out that the rationale behind this is clearly political. The Government will gain in the short term because current spending on grants counts towards current borrowing—clearly bad—while current spending on loans does not impact on borrowing until the debt is written of at the end of the 30-year repayment period, which is good for current Treasury Ministers.

The change helps the Chancellor to balance the books in this Parliament even though it will be at the cost of higher borrowing three decades or so into the future.

On 11 January this year, the Prime Minister gave a speech on life chances, referred to in the previous debate, explaining how the Government intend to transform the lives of the poorest in Britain. He said that his Government’s mission was to,

“look each … child in the eye and say, ‘Your dreams are our dreams. We’ll support you with everything we’ve got’”.

It is a good line and I sincerely wish it were true. But the reality is that there is a growing disconnect between the rhetoric and the action. Scrapping maintenance grants sends out a message that runs counter to any prospect of increased social mobility. This policy will impact heavily on women, the disabled, black and ethnic-minority students and older learners. To cap it all, it will end up being more expensive than the current grants system.

The Government should bring forward a higher education Bill. If we had it here today, we could have been discussing how to realise the wider benefits of having more people educated to degree level in our country and how best to fund that investment in our future prosperity and to properly support every young person in the country to develop themselves to the best of their ability. I challenge the Minister to convince us tonight that these regulations are the right thing to do and that her Government are supporting our young people with everything we have. I beg to move.

Photo of Baroness Garden of Frognal Baroness Garden of Frognal Deputy Chairman of Committees

My Lords, I welcome the noble Lord, Lord Stevenson, securing a debate on these regulations and join with him in his regrets.

There has been widespread concern at actions the Government are taking which place additional burdens on those least able to accommodate them. The Liberal Democrats will feel particularly outraged at these regulations. As the junior coalition partner, we were notoriously unable to implement our policy of no tuition fees, but we were able to use our influence in government to fend off some of the harsher proposals of our coalition partners, to produce a fairer system for students from lower-income backgrounds and to give incentives and support to those who might be deterred from further learning.

I was Government Whip in the coalition Government, working for the noble Lord, Lord Willetts, as Universities Minister, as the noble Lord, Lord Stevenson, has already quoted. He understood fairness and we were delighted when he said that the proposals would,

“encourage people from poorer backgrounds to go to university, because of the higher education maintenance grant”.—[ Official Report , Commons, 3/11/10; col. 940.]

The way in which these changes are being brought in—through the back door, as it were—seems to indicate that the Government are rather ashamed of them, and hoped to sneak them through without having to face the music of their impact. They are, indeed, a backward step.

Of course any additional support in the form of loans is welcome, but that really is not relevant to this argument. Maintenance grants have the great advantage of being non-repayable. The sums, of up to £3,387 a year, certainly do not allow students to live the life of Riley, but they can make all the difference to a student struggling to pay for the necessities of life and study—rent, food, other bills and the items they need for their learning. They have enabled some of the most disadvantaged to participate in higher education, many the first in their families to do so, without the burden of additional debt.

Changing grants to loans is a very significant move for those who will see their university debts soar. I, too, was startled at the Institute for Fiscal Studies warning that,

“The poorest 40% of students going to university in England will now graduate with debts of up to £53,000 from a three-year course, rather than … £40,500”,

which is already an eye-watering amount to this cohort.

Those who will be most deterred by additional debt include those the Government most need to engage in education. Women, for example, tend to be more debt averse than men as well as being a large proportion of this population. Disabled students have the additional deterrent of changes to the disabled students’ allowance, which we were debating only last week. Adult learners and black and minority ethnic learners are more aware of the burden of loans, which they are unlikely ever to be able to repay.

What benefit will this bring to government finances? It will be disproportionately little in comparison with the damage it will do to encouraging social mobility and building an inclusive graduate population. Many of these loans will never be repaid anyway, but for the students they will be there as a reminder of a debt instead of a grant that can be long forgotten.

The Government should be facing up to skills shortages in the population and tackling the increasing divisions between rich and poor. We need to encourage learners to improve their skills and knowledge, to be ambitious, to fulfil their potential and thus to make a greater contribution to the economy and to the well-being of themselves and the country.

These regulations will do nothing to encourage those from less advantaged parts of society to work hard and achieve. The Government did not need to do this. It was not a manifesto commitment. As the National Union of Students rightly said, the decision is “undemocratic and ill-considered”. There has been no effort at thorough consultation with those people and organisations most affected by the changes.

Would the Minister please clarify for the House the justification for saddling the poorest students with the greatest debt? In coalition, my party argued consistently for measures to encourage—not deter—women, adult learners, ethnic minorities and disabled people. What are this Government doing to encourage these learners? What consultation will be put in place before such a damaging change is inflicted on those learners we most wish to be helped to fulfil their potential?

I urge the Government to think again about these mean-spirited and harmful changes.

Photo of Baroness Deech Baroness Deech Chair, Equality Act 2010 and Disability Committee

My Lords, most speakers tonight will focus on cost and the increased debt that will accrue to students if these grants are converted to loans. I want to explore an effect that, in my view, is far more serious and damaging to the Government’s aspirations for higher education. The effect of ending grants designed for food and rent costs, is that more students will have to stay at home for their studies. I will explain briefly that this will eventuate in a decrease in social and academic mobility and a ghettoisation of universities.

It is already the case that teenagers from better-off families are more likely to attend top universities than those from low-income backgrounds, even though more students from less well-off backgrounds are attending university. Some 5% of poor students went to Russell Group universities according to the latest statistics, compared with 12% from more affluent homes. It is very likely that this is simply because the teenager from a comfortable home can afford to go to any university of his or her choice throughout the country, knowing that they are able to pay the rent and all the added costs of living away from home, while the less well-off student is increasingly forced to attend whatever university is close to home. Average rents for students living away from home are around £400 a month and over £500 in London. Therefore, of course the less well-off London student will live at home, even though academically and socially his or her choice might be Oxford or Cambridge.

Much though those top universities have done to make themselves affordable by way of bursaries, the prospect of adding to one’s debt will be off-putting for the student from a modest background. Government Ministers of all parties are frequently heard to complain that disproportionately few poor and ethnic minority students attend Oxford and Cambridge. These proposals will make that situation far worse, and undermine all the imaginative and extensive efforts made by top universities to reach out to underprivileged students all over the country.

It is also the case that students from ethnic minority backgrounds are already more likely to study close to home, maybe in part because their parents are fearful of letting them go too far away. To take away from them the maintenance grant, the one factor that could help them place their foot on the ladder of opportunity and independence, is short-sighted and will retard, if not block, the integration of youth of all backgrounds into a better educated society—an aim allegedly close to the heart of the Government, and indeed to all of us.

More than 20% of students live at home, and the number is already rising. The better-off ones are more likely to live away from home. Of course, many students freely choose to live at home; I am concerned with those from whom choice will be taken. What is wrong with living at home and studying at your local university because you cannot afford any longer freely to choose to move away? There is the time and expense of commuting, especially in London; exclusion from the networks formed by those who live in halls or shared accommodation; and the evening social life. If university becomes a 9 to 5 existence, they are missing some of the university experience, are less likely to make friends and will feel less involved in campus activities.

Without maintenance grants, students are more likely to take jobs, which might cause their academic work to suffer, whereas the better-off ones can still rely on their parents’ support. The student who lives at home delays that important moment of learning to be self-reliant, living on a budget, cooking and mixing with all sorts.

It is absolutely vital that students of different backgrounds get to mix with those who have the same academic and career aspirations as they do. This is the key to integration and to a healthy, undivided society. A student who has grown up in a part of the country heavily populated by one ethnic group stands to gain enormously—as does the whole of society—by going off to a university in another region, meeting others and learning to live and study with them.

Academic studies have shown that there is very marked ethnic segregation in our school system. Far too many children are attending schools where their own ethnic minority within the UK context is actually a majority. They are segregated in school education by faith and by ethnicity. They do not learn how the other half lives, how to challenge the prevailing culture, how to share experiences, how to appreciate multicultural living, how to criticise and how to aspire to a life different from that of their parents. The most segregated areas for very young pupils include Bradford, Birmingham and Bolton, among others.

If we extend this analogy into student life, it must be wrong that a student who, as a school pupil, spent their time in one community only continues to do so by studying at the local university and living at home. Moreover, they are being deprived of academic choice. If, because they have no maintenance grant, they cannot afford to leave home, then they cannot study the course that is right for them and is academically the most suitable, because it is not offered at their local university.

In sum, what the Government are doing by removing maintenance grants is not merely saving money but reinforcing segregation. Poor and ethnic minority students will have taken from them that golden opportunity at a critical age to widen their horizons and leave home for another part of the country. Academic choice will suffer. Racial and social integration will be put back. Better-off students will continue to surge ahead in educational opportunities, and universities will become as segregated in their make-up as some schools in some parts of the country already are.

If the Government believe what they say about every pupil fulfilling their potential, about all young people living in harmony in a society open to all and equally accessible to all, they must restore maintenance grants. Can they explain how to avoid real social and academic harm resulting from this penny-pinching measure?

Photo of Baroness Shephard of Northwold Baroness Shephard of Northwold Conservative 7:45 pm, 25th January 2016

My Lords, I have just three points to make. I shall be very brief, because many other noble Lords want to participate in this important debate.

First, many here will well remember the anxiety that many of us felt about the possible effects on student participation rates in higher education in 1998, when students became responsible for paying upfront tuition fees, and more recently—there have been many changes since then, but to take just one example of other changes—when tuition fees were raised to £9,000. Many believed at the time that those measures would have a particularly adverse effect on the higher education participation rates of young people from poorer families, thereby affecting not only their life chances but, longer term, the national economic effort.

In fact, according to UCAS, the proportion of young people in higher education eligible for free school meals has increased by a percentage point a year since 2012, and the number of young people from places in England with the lowest HE participation—I come from one of those areas—has increased year-on-year from about 19,000 in 2012 to about 22,500 in 2015. As Universities UK pointed out in its report of June last year:

“There is no evidence that the funding reforms of 2012 have deterred young, full-time students from applying to university. Numbers of applications from all socioeconomic groups have been increasing steadily”.

My second point is that in the past—this may be an explanation for that steady increase in participation rates of children from poorer families—increases and changes in student fees have been accompanied by grants, loans and bursaries and, in 2012, a 10% rise in the maintenance grant for poorer students. It is therefore welcome that, as part of this proposed switch from grants to loans, the maximum available finance for poorer students will rise by about £500 a year to more than £8,000. This has been welcomed by, among others, Sir Les Ebdon of OFFA.

However—my noble friend will be aware that a “however” usually comes in at this stage when I am making points about education, and I pay tribute to the extremely valuable and passionate points made the noble Baroness, Lady Deech—the Department for Business itself acknowledges that the prospect of increased debt may deter some low-income households from undertaking higher education. It is for this reason that I strongly urge my noble friend to ensure that the effect of these changes is closely monitored. I ask this in the name of social mobility. The Government’s 2015 higher education Green Paper commits them to doubling the proportion of students from areas where participation is low by 2020. This is an admirable objective in line with many other policy areas where the Government’s pursuit of greater social mobility is succeeding. It would be regrettable if that progress in social mobility were to be checked at this stage for the sake of an omission of careful monitoring of the effects of these measures on precisely the groups already referred to by the noble Baroness—and those that I suspect will be mentioned by other noble Lords who will contribute to the debate. I know that my noble friend will undertake to keep a more than close eye on the way that this develops.

Photo of Baroness Kennedy of The Shaws Baroness Kennedy of The Shaws Chair, EU Justice Sub-Committee, Chair, EU Justice Sub-Committee

My Lords, I thank my noble friend Lord Stevenson for bringing the Motion of Regret to the House. I feel more than regret; I feel alarm and despondency. I share the word used by the noble Baroness, Lady Garden: I feel a sense of shame that we have embarked on this step without proper legislation. I have to say to the noble Baroness, Lady Shephard, that monitoring itself will be too late. The consequences will be very obvious for the groups about whom I am going to speak.

The removal of the maintenance grant from the poorest and most disadvantaged is something with which I am very familiar. The reason is that back in the mid-1990s, the noble Baroness, Lady Shephard, appointed me to lead a small commission to look at some of the problems that had arisen over the funding of further education at the time. One thing that became very apparent was that for the poorest in society, the route to higher education is often via further education. It became clear in the report that eventually came from the work I was deputed to do by the noble Baroness, who was a most remarkable and fine Secretary of State in those years, that many people who had been failed by the system—young women who had got pregnant in their teens, boys who had become disaffected and sometimes got into trouble and people whose families went through problems when they were at a crucial point in their schooling—missed out on the golden ladder, so familiar to people in this House either for themselves or for their children, of going through school and proceeding into university. For many, the route back into education was through further education, and further education is the ladder into higher education.

I still see such people regularly because, at the end of the reporting I was commissioned to do, the further education world put together a little foundation which bears my name, for which I continue to raise funds and to which I contribute, to create bursaries for students of the category I described: those who try to use further education to better themselves, the very people I so often hear described as those who should be given opportunities. This Government claim to be totally committed to aspiration. I know, because of that little foundation, the Kennedy Foundation, that those people are often hardest hit by the current funding system. It is a hard business, taking out loans when you are the mother of young children, when you are from a really disadvantaged family and have no safety net or back-up from other members of your family. We contribute a bursary to them. It is not a significant sum of money, but if they did not also get the maintenance grant, they would not go to higher education at all.

This will be a deprivation; I have no doubt about that. We do not have to use more than our imagination to know that there will be a great cohort of young people—people in their 20s and early 30s—who will not go back into education because the idea that they will not get such support will be too much of a disincentive. That should be a source of shame to all of us, but certainly to the Government.

I have listened to what others have said. I was very moved by the comments of the noble Baroness, Lady Deech. It is true: those who are poorest do not want to do the business of going off to university. Even in my youth—I was brought up in Glasgow in a family where no one had gone on to higher education—almost everyone who went to the schools that I went to went to the local university because they just could not afford to go somewhere else. I flew the coop and it changed my life, and I want that for other people from my background. I urge the Government to think about this again, because I think that not enough thought went into it. The cost to the lives of people is too great. The numbers are not huge, the money is not that huge, and I think we will pay a terrible price. I would ask the Government to think again.

Photo of Lord O'Shaughnessy Lord O'Shaughnessy Conservative 8:00 pm, 25th January 2016

My Lords, I wish to speak in support of the Government’s higher education policy and against the content of the Motion—and, in particular, the contention that these changes will result in a,

“significant decrease in participation in higher education by those in low-income groups, older students, female students, and students from ethnic minorities”.

We have been here before. The doom-mongers have been making these claims about the changes to the higher education system for about 20 years. This is not a party-political point; those doom-mongers were in the Conservative Party in the late 1990s, they were in the Liberal Democrat Party in the early part of the 2000s, and now they are in the Labour Party. At each point they have been proved wrong. I had a small responsibility for working on the policy that brought about the current system, working with my noble friend Lord Willetts.

It is worth remembering what the purposes of these reforms are. The first is to share more fairly the burden of cost between the taxpayer and those who go to university and benefit hugely over their lifetime in terms of income. Therefore, it is only right that they should share some of the cost. It is also designed to set higher education institutions free. Finally, specifically, it is designed to get more disadvantaged students into higher education. It was on that basis that the Liberal Democrats went through an incredible amount of political pain to support the reforms of the coalition Government; it is exactly the same reason why the Labour Government introduced the reforms that they did in the late 1990s and early 2000s, introducing whatever you want to call it—an income-contingent tax liability, or a loan system. What it amounts to is a time-limited graduate tax, which is, I think, all the rage at the moment on the other Benches.

It is important to remember the remarkable benefits that these changes have brought about. We have a record number of students—a 3.1% increase in the number of people entering UK higher education in 2015—and more students from disadvantaged backgrounds. The proportion of English students from disadvantaged backgrounds is up from 13.6% in 2009 to 18.5% in 2015. Part-time students studying for their first degree also get student loans now, and graduate contributions have become more affordable. By sharing out the burden more broadly, graduates now have to earn £21,000 before they start to pay back.

It is also worth thinking that we have the opportunity to compare what would happen if we went back to the old system, because it is running in Scotland. In Scotland there are no fees, yet the poorest fifth of Scots are three and a half times less likely to go to university than the best-off, and that figure is two and a half times in England—it has improved. There is also less financial support available in Scotland, precisely because the taxpayer has to share the entire burden. So the opportunity for the poorest young people has increased, and would restricted by plans to scrap fees. Specifically, these reforms have had a benefit for disadvantaged pupils. The maintenance loan has risen, as my noble friend Lady Shephard, said; there is much more support than was there before. Also, under the access agreements that universities now have, they are planning to spend £719 million in 2015-16, up from £407 million in 2011-12. So, overall, the amount of support for disadvantaged students and the number of students who are studying is increasing.

The final point to bear in mind here, which is critical, is that, as a result of sharing the burden more broadly, we have more students going to university, which is an ambition shared by everybody, throughout the House. An estimated 60,000 more young people are going to university every year because of these reforms. It is important to see these reforms in the round; if you do so, it is difficult to argue that they have done anything other than increase participation and, in particular, increase participation for disadvantaged young people.

Photo of Baroness Sharp of Guildford Baroness Sharp of Guildford Liberal Democrat

I join others in thanking the noble Lord, Lord Stevenson, for bringing this Motion of Regret before the House—and I join others in supporting it. I do so because it is very clear from the analysis by the Institute for Fiscal Studies and others that this move will impact more heavily on students from poorer families who, up till now, have received substantial maintenance grants to help off-set the considerable debts that they incur from the cumulative effect on tuition fees over three years. As my noble friend Lady Garden said, that amounts to something like £43,000 at the moment. The result of this would be to raise that debt by some £17,000, up towards £60,000.

The numbers involved in this are not trivial. In 2014-15, 42% of students in this country got a full grant, while 14% got partial grants. More than 50% of students currently benefit from the maintenance grant in one form or another; that is approximately 500,000 students—very considerable numbers. As BIS’s own impact assessment makes clear, and as others have mentioned, it will disproportionately affect those such as black and ethnic minority students and women.

Photo of Lord Winston Lord Winston Labour

I am grateful to the noble Baroness for giving way. Could she clarify a point that is puzzling us on these Benches? It has been stated that students undertaking part-time studies can get their grant in full; that is the impression that has been given. Is that correct? I know that she has spent a lot of time discussing part-time students and their remuneration.

Photo of Baroness Sharp of Guildford Baroness Sharp of Guildford Liberal Democrat

The answer, I believe, is that until now part-time students have had no maintenance grants. One of the beneficial effects of this—I was going to mention it later—is that it has enabled the Government to extend maintenance grants to part-time students. That is one group of people who will be better off. But is it is noticeable that among the students who will be affected are, as the noble Baroness,

Lady Kennedy, said, mature students—those who come to university late. They have shown already, by the way they have reacted to the introduction of high tuition fees, that they are much more risk-averse than younger students.

Perhaps I should declare an interest as a member of the all-party Higher Education Commission, which a couple of years ago published a study of the financing of higher education. The evidence that we took included a short survey of quite a number of students and their reactions to this. An interesting fact that emerged from the survey was that the 18 year-olds knew very little about the financial effects of the debts they were taking on. As far as they were concerned, it was all a long way in the future. They felt, as I remember I felt when I was 21 and people were talking to me about pensions, something along the lines of, “I couldn’t care less”. Later on one realises how important these things are.

It became clear that older students, on the other hand, are worried about taking on further debt. Many of them already have mortgages and children, and are trying to manage their costs. They are much more worried about taking on debt than younger people are. That was one reason why, among mature students, who are disproportionately also part-time students, there has been an enormous drop in numbers. There has been a 45% drop in the number of part-time students since the introduction of tuition fees.

I feel strongly about all these issues. I accept that under the present repayment terms the actual amount repaid will remain at 9% on all income over £21,000 each year. The only difference is that those from lower-income households will have bigger debts, which for many of them will remain for 30 years. The Institute for Fiscal Studies reckoned that under the old system, before the introduction of these new measures, 73% of student loans would never be fully repaid. The measures before us will mean that more students from lower-paid households—these are the students who tend to go into lower-paid jobs—will have bigger debts, and that proportion can only increase.

As the noble Lord, Lord Stevenson, pointed out, there is a certain amount of creative accounting which enables the Government to take some £2 billion off the books today, with the idea that it will be picked up 30 years hence, in never-never land. There are only two good things about this. First, it has enabled the Government not to cut the adult education budget in money terms. I was very pleased about that. Secondly, it has enabled them to put some funding into maintenance grants for part-time students.

But I am particularly sorry to see this measure involving maintenance loans, because the previous system, along with the national student scholarship scheme and all the fair access measures taken in 2012, was part of the compact between the coalition partners on the introduction of full-cost tuition fees. My former leader in the other place, the right honourable Nick Clegg, went to considerable trouble to ensure that the introduction of fees would not impact more toughly on students from lower-income backgrounds. This measure seems to me to be yet another cynical unwinding of the coalition agreements.

What were very carefully balanced measures to promote equity are now being cast aside with remarkably little thought.

Photo of Lord Berkeley of Knighton Lord Berkeley of Knighton Crossbench

My Lords, may I make a point, not as an expert on the figures—we have heard from them in various parts of the House—but to suggest that the Government might be walking into a false economy here? I say this as someone who, as a broadcaster, has talked to artists, musicians, novelists and other people who have made the creative economy glow—a glow in which the Government frequently feel able to bask. Many of those people who came from very impoverished backgrounds feel that they owe their success, their chance in life, to the support they got at a moment when they needed a maintenance grant.

I will not bore your Lordships with lots of names, but I could reel off pop stars, painters, novelists—you name it—who, had it not been for this support, might not have been able to make the contribution to our creative economy that they have. We should tread very carefully in cutting off funds to that section of our community.

Photo of Lord Winston Lord Winston Labour

My Lords, I declare an interest as a paid employee of Imperial College London, which is a Russell Group university, and as chairman of the Royal College of Music and chancellor of Sheffield Hallam University in Yorkshire. I am sure that the noble Baroness understands that these are very different higher educational institutions and that they will all be seriously worried about this measure. One issue is that this seems to have been slipped under the wire without proper discussion in the House of Commons and has now come to be debated only as a result of my noble friend’s excellent Motion of regret. A key issue here is the debate on higher education altogether. I fervently hope that the Minister will do something to ensure that there is a proper debate about the Green Paper that is currently being processed, because a number of measures in there are very serious.

I will not detain the House for long, because I have not prepared a speech, and I do not intend to prepare speeches. But I must tell the Minister that I remember vividly a graduation ceremony at Sheffield Hallam University when a 55 year-old, rather ageing-looking man came up to me with tears running down his cheeks and told me, “This university has completely changed my life”. This is not just an isolated example; it happens every day in Sheffield.

Since I started as chancellor 12 years ago, Sheffield’s economy has been transformed in a remarkable way by people who would never have gone to university, from families who had no idea about university, who desperately need every bit of support they can get to get there. This has made a massive difference to the economy of Sheffield. The moment you get off the train at Sheffield station and walk up towards the university, you can see what has happened in that city, which was deeply depressed after the loss of steel, coal, cutlery, and much of the engineering that went on in that city.

That transformation has been very much a result of Sheffield Hallam University and its relationship with that community.

But the fact of the matter is that these measures will affect “rich” Imperial College as well. To live in South Kensington will cost those less well-off students a great sum of money. As a result we will undoubtedly lose students, who will decide not to apply even though they are good enough to do engineering at one of the best universities in the world; bear in mind that so many of our universities are in the top 10 in the world. We must do everything we can to nurture them. As regards the Royal College of Music, there is no question that many of our musicians will always be desperately underpaid, rather poor, and will often come from underprivileged families, and it is very important that that get every bit of support that they can.

I regret that we have to discuss this now. I have to say to the noble Baroness, Lady Shephard, who was rightly regarded as an outstanding Secretary of State, that that change in the applications to many universities is happening now. Indeed, at Sheffield Hallam we are beginning to see that fewer students are applying. This is not unusual in many of the newer universities, and it may of course apply certainly to home students in some of our universities such as those in the Russell Group. So I urge the Government to think again and press them to have a proper debate on the future of higher education in the near future.

Photo of Lord Howarth of Newport Lord Howarth of Newport Labour 8:15 pm, 25th January 2016

My Lords, this policy of removing maintenance grants and replacing them with loans, whichever way you look at it, is reckless. It is reckless fiscally. In the early 1990s, I was Higher Education Minister when the Government of that time introduced the original system of maintenance loans for students in higher education, but we did so on a very carefully circumscribed basis. Looking across the Atlantic to the United States of America, where there was a very extensive system of student loans, we saw how unhappy were the consequences, both financially and in human terms. That approach, taken by that Conservative Government, was reasonable and responsible and is in strong contrast to the approach now being taken by this Conservative Government. The Institute for Fiscal Studies has explained to us how the policy we are now debating is a device to enable the Chancellor to achieve a modest additional reduction in his deficit by 2020—political window-dressing for him, but the price that will be paid is a much more significant increase in national indebtedness in years after that.

It is reckless financially: the Government are quite deliberately proposing to create bad loans. It would appear that their business model is that of the purveyors of sub-prime mortgages; the fact that they admit it does not make it any better. They intend to dump a poor-quality loan book on the financial system in the future. That is cynical. We expect a Government to act with prudence and integrity in such matters.

It is reckless in terms of the life chances of people who come from disadvantaged communities, in contradiction to the Prime Minister’s professions. This policy will be socially regressive: Ministers are setting out to tempt with additional cash in hand people who come from lower-income households, knowing very well that such people will leave university with larger debts than their peers from better-off households.

As the Minister who also introduced the disabled students’ allowance, I feel particularly strongly about the accompanying policy to freeze that allowance. In their equality impact assessment, the Government admit that this policy will bear disproportionately on disabled people, although they say that it will not do them that much harm. However, if you are disabled, a little goes a long way, and I would add that such a policy is surely discriminatory. The whole purpose of the disabled students’ allowance was to enable disabled people to experience higher education on a basis equal with non-disabled people, so it cannot be right to freeze the allowance for disabled students, who are increasingly disadvantaged.

Those who resist the cash bait will probably do so because they are deterred by the prospect of taking on a substantial additional personal debt. That is extraordinarily retrograde when we know that our economy urgently needs a higher level of skills across wider sections of the population so that we stand a chance of improving our national productivity and competitiveness. The noble Baroness, Lady Deech, made an important point about the retrogressive effect of confining to studying close to home students from poorer households who do not want the debt, thus making them unable, unlike their counterparts from better-off households, to avail themselves of the full range of opportunity in higher education.

The policy is contrary to the whole ethos and principle of the welfare state, which is to redistribute resources and opportunity across the lifespan, so that people contribute when they are able to do so but, when they need support, they get it in health, social security and education—precisely the support that this measure is going to reduce. That is part of the principle of fairness. That principle of the welfare state is what binds us together as a society and, as my noble friend Lady Kennedy said, it is shaming that the Government neglect such a principle.

The policy is reckless in terms of intergenerational fairness. The Government are intending to ask our children and our grandchildren to pick up the tab for it. They should not behave like that—it is a betrayal of the generations to come.

The policy is reckless, too, in terms of truth. The Conservative Party did not tell voters in its manifesto at the election last year that it intended to introduce this change. That was cowardly. In this measure the Conservatives are reneging on the commitments made by David Willetts, now the noble Lord, Lord Willetts, to Parliament in 2012—in good faith, I am absolutely certain. He assured Parliament that any financial hardships that might be created by the trebling of tuition fees would be mitigated by the continuing availability of maintenance grants. However, the Government are dishonouring that commitment and, in doing so, they are acting to the detriment of trust in government and respect for politicians.

The policy is also reckless constitutionally. Here they go again, introducing major change affecting a large number of people, with major expenditure implications, by way of a statutory instrument. That is in defiance of the conventions of Parliament. It is an abuse. The noble Lord, Lord Strathclyde, in the report of his review urged the Government not to leave too much in legislation to be provided for by way of statutory instruments. We know that the negative resolution procedure makes accountability of the Executive to Parliament almost non-existent, and we know—the noble Lord, Lord Strathclyde, has said this too—that the whole system of parliamentary scrutiny of statutory instruments needs to be overhauled.

Your Lordships’ House is, in one of its most important functions, a guardian of the constitution. We have not voted down this particular statutory instrument but I believe that, had we done so, we would have been well within our rights, because it is for us, again and again, to prevent as well as we can abuse of power by the Executive. The House of Commons, dominated by the Executive, will never do that reliably; we, at least, have to accept that that is part of our responsibility. The noble Baroness, when she seeks to defend this policy at the Dispatch Box, should blush.

Photo of Baroness Evans of Bowes Park Baroness Evans of Bowes Park Lord in Waiting (HM Household) (Whip)

My Lords, I thank all noble Lords for their contributions to this debate. Let me briefly address the points raised about the parliamentary process for scrutinising statutory instruments before I come on to the substance of the debate.

The regulations were laid before both Houses on 2 December 2015 and were made under powers granted by the Teaching and Higher Education Act 1998. The instrument was prayed against in the other place and a debate took place in committee on 14 January, which was followed by a full opposition day debate on 19 January. So this SI has followed the procedure agreed by Parliament. But of course, as ever, we have had a further extremely valuable debate in your Lordships’ House today.

Let me start by placing this instrument in the context of the Government’s higher education policy. As noble Lords have said, we have a higher education system to be proud of and a worldwide reputation for excellence, with three universities in the world’s top 10 and the most productive research base in the G7. We have lifted the cap on student numbers, putting into practice Lord Robbins’s famous principle that university places,

“should be available for all those who are qualified by ability and attainment”.

We have seen record numbers entering higher education, including record numbers of students from disadvantaged backgrounds, as my noble friends Lady Shephard and Lord O’Shaughnessy highlighted. The OECD has said that England is,

“one of the few countries to have figured out a sustainable approach to higher education finance”.

When Lord Robbins set out his principle in the early 1960s, participation in higher education was around 5%. That figure is now approaching 50%, something that we should be proud of. However, in this context of rapidly growing student numbers, funding universities sustainably can be achieved only by asking students to meet a greater part of the cost of their education, paid not upfront but out of their future earnings. This reflects the principle that, if you benefit from higher education and secure higher lifetime earnings than taxpayers who do not go to university, you should contribute to the cost of your education. It is vital to the continuing success of the sector that the cost of higher education is sustainable for government and the taxpayer, so that more young people can undertake the transformational experience of going to university. In short, we cannot have social mobility without sustainability.

Offering increased loans for living costs instead of grants allows the Government to make significant progress against their fiscal mandate but offers more upfront support to students for their living costs: up to 10.3%, or £766, more additional support in 2016-17 for eligible students—money that they will then have to spend during their time at university on, for instance, rent and all the other things your Lordships have mentioned.

Noble Lords have referred to the equality analysis that the Government have published, and a number of issues it covers have been raised in the debate, in particular in relation to the potential impact on disadvantaged groups and those with protected characteristics. The Government carefully considered these before laying this instrument. That is why, alongside the potential risks that the equality analysis identified, a number of mitigating factors were also outlined, including, as I mentioned, the increase in living cost support in 2016-17 for students from some of the most disadvantaged backgrounds, the fact that graduates do not have to pay anything back until they earn over £21,000 and, of course, the fact that graduates earn considerably more over their lifetime.

This is far from all that the Government are doing to ensure the widest possible access to higher education. The Prime Minister has set out his ambition of doubling the proportion of people from disadvantaged backgrounds entering higher education and increasing the number of BME students at university by 20% by 2020. The sector is our partner in achieving these goals. In response to a request from the Government, Universities UK has set up a social mobility advisory group to report to the Universities Minister. It will provide advice and action to widen access to higher education, including on meeting the Prime Minister’s ambitions. I have absolutely no doubt that it will keep a very close eye on the broad effects of government policy in this area. To back this up, in 2016-17 universities expect to spend £745 million on measures to support the success of disadvantaged students. That is up significantly from £444 million in 2011-12.

Any higher education provider who wishes to charge above £6,000 for a full-time course must agree an access agreement with the Director of Fair Access and as part of this agreement the institution must devote a proportion of the fee income above £6,000—typically around 25%—on measures to support widening access and support for disadvantaged students.

We certainly do not want to see the kind of academic segregation about which the noble Baroness, Lady Deech, expressed concern, and that is why we and universities are focusing on a variety of measures, particularly outreach into schools. For instance, students of Northumbria University and Newcastle University are working in school programmes in which undergraduates work as tutors in schools, raising aspiration and attainment among the students they engage with. The University of Nottingham devotes access money to mature students, offering them mentors in order to improve their chances of completing their courses.

The noble Lord, Lord Stevenson, asked about changes to NHS bursaries. The current system for funding health students was not working. Last year, the cap on applications meant that we had to reject 37,000 applications from people who wanted to study nursing. By introducing loans, we can scrap that cap and train up to 10,000 more nurses as well as increasing the up-front support these students receive.

On the question of sharia finance, the noble Lord rightly said that the coalition Government was the first to seriously explore a sharia-compliant student finance product. The Government have consulted and, upon reviewing the consultation responses, the Government supported the introduction of sharia-compliant “takaful” alternative finance product available to everyone. Our commitment was reaffirmed in the Green Paper, but we need primary legislation and we are actively looking at an appropriate vehicle through which to bring this forward.

I will also deal with the questions on the value of savings of this proposal which a number of noble Lords have mentioned, including the noble Lord, Lord Stevenson, and the noble Baronesses, Lady Garden and Lady Sharp, among others. The switch from maintenance grants to loans will save £2.5 billion per year from the fiscal deficit. This is a substantial contribution towards delivering on the Government’s fiscal mandate. However, of course, I acknowledge that a proportion of the loan outlay may not be repaid by students. Therefore, we forecast that the long-term annual economic savings will be around £800 million a year.

A number of noble Lords mentioned the Institute for Fiscal Studies research, which last summer estimated the long-term annual savings to be around £270 million. At that time the IFS was working on the information it had available, but the Treasury’s estimate of the Government’s cost of borrowing has fallen since then, which is why we now estimate that these savings will be more like £800 million a year.

This Government offer young people more than one high-quality route to a successful future. Higher education can be a life-changing experience but so, too, can an apprenticeship. That is why the Government are committed to seeing 3 million apprenticeship starts in England by 2020.

We are also committed to enabling access to higher learning by other routes. For instance, we have announced for the first time—to make this clear to the noble Lord, Lord Winston—that we will be introducing maintenance loans for part-time students, and the recent changes allowing access to government support for part-time study towards a second degree in some STEM subjects will be extended further. It has also been confirmed that from September this year students aged up to 60 undertaking postgraduate masters would be able to access government loans for the first time.

The Government are able to make these changes because they are ensuring that higher education is funded sustainably. That is what this instrument helps to achieve. I hope I have addressed all the points raised by noble Lords in the debate and that the noble Lord, Lord Stevenson, will be sufficiently reassured to withdraw the Motion.

Photo of Lord Stevenson of Balmacara Lord Stevenson of Balmacara Shadow Spokesperson (Business, Innovation and Skills), Opposition Whip (Lords), Shadow Spokesperson (Culture, Media and Sport) 8:33 pm, 25th January 2016

I can answer that—no—but I would like to take a little longer.

I apologise to the noble Lord, Lord Willetts, for not spotting him in his place when I started my speech. He must have slipped in. Two brains are obviously much easier to hide than one. I am sorry that he was not there. We have had Hamlet without the prince. Where is the speech? Surely the architect of this wonderful policy, as we have heard it described, should have been there shouting from the rafters. Can I encourage him to rise? No.

We have had a good debate and I thank all those who have contributed. It could allow us to look forward to further discussions on higher education and, if it does so, allow us to probe some of the assertions of the noble Lord, Lord O’Shaughnessy, that somehow the garden is blooming, roses are flowering everywhere and higher education is in a good state. It certainly is not. It is time that we got some real discussion and debate going on this.

It was useful, in another sense, that we got some rather interesting insights into the internal debates under the last Conservative Government from my noble friend Lord Howarth and under the coalition Government from the noble Baronesses, Lady Sharp and Lady Garden, and others. I think there is more to come on that, and I look forward to hearing it as it dribbles out over the next few years.

This policy does not enhance social mobility; we have heard that echoed all around the Chamber. Despite the good points made by the noble Baroness, Lady Shephard, monitoring is not enough. We have heard that the golden ladder of opportunity that is represented by access to higher education will be destroyed, and life-changing opportunities will be removed. We are working on shaky constitutionality: the Minister skated over why we are doing it this way. We may well have fulfilled the letter of the law, but I do not think that we have fulfilled the spirit of it.

This policy does not save money in the long term, despite the Minister’s assertions. If it is, as seems to be the case, simply a bit of creative accounting, as the noble Baroness, Lady Sharp, called it—I could not possibly comment—to get away with changing the RAB charge in the short term, it is mean-spirited, and leaving it to the burden of future generations cannot be right. Indeed, we are talking about very long timescales, where we really cannot assert what is going to happen to earnings or people’s working lives. Therefore, we are talking about trust. Do we have sufficient ability in looking at this to trust our instincts about it?

The noble Lord, Lord Berkeley, and my noble friend Lord Howarth mentioned the intergenerational impact, and that is a real irony. Many of us were the beneficiaries of full fees and full maintenance grants. I would not be here if I had not had that benefit or that chance in my earlier life. I wonder whether the students of the generation that is being disadvantaged by this statutory instrument will ever forgive us for encouraging them to take out the loans and debts for a future that might be so different that it might eliminate the graduate premium that they were promised. Somebody said—I think it was my noble friend Lady Kennedy—that it was shaming to be associated with this policy. I do not wish to be so, and I wish to test the opinion of the House.

Division on Lord Stevenson of Balmacara’s Motion

Contents 138; Not-Contents 155.

Motion disagreed.

Division number 3 Education (Student Support) (Amendment) Regulations 2015 — Motion to Regret

Aye: 136 Members of the House of Lords

No: 153 Members of the House of Lords

Ayes: A-Z by last name

Tellers

Nos: A-Z by last name

Tellers