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My Lords, Amendment 444, in my name and that of the noble Lord, Lord Storey, seeks to mirror the rules around the benefits system, which require the Secretary of State to uprate benefits automatically each year in line with inflation unless he passes, as is currently the case, law to freeze them. The clause would mean that similar procedures have to be followed in uprating the starting point of £21,000 for repayment fees. Under the current tuition fees system, a graduate starts to repay their fees only if they are earning about £21,000 a year. One of the principles we agreed in coalition was that this threshold should rise in line with inflation from April 2017 so that only those earning a decent salary are repaying their fees. This is important in ensuring that only those who can truly afford to over their careers pay back the full £9,000 a year fees.
Liberal Democrats therefore strongly oppose the bad-faith decision of the previous Chancellor to freeze the repayment threshold. This effectively amounts to a change in contract terms for those with fees to repay that would be wholly unacceptable in any private business dealing. It is no wonder that Martin Lewis, who helped explain the Government’s original scheme, has sought legally to challenge this unfair retrospective action. The freeze means that people on relatively low incomes will start paying back fees, meaning those on low and middle incomes will end up paying back more while those on the top salaries, who will pay off their fees before they reach the 30-year cut-off, will be unaffected.
The issue is even more important considering rapidly increased inflation due to Brexit. Our amendment therefore seeks to provide a mechanism to ensure that the repayment level must rise with inflation. It uses rules around social security benefit increases to require the Secretary of State to consider whether prices have changed over the last 12 months—ie, inflation has taken place—and, if so, to increase the repayment threshold by a similar level. This would therefore require a new order every year to be placed before Parliament, ensuring the Government can never again unilaterally decide to freeze the point at which students start to pay.
Liberal Democrats hesitate, for good reason, to talk about university fees. We suffered the political consequences of breaking our contract with the electorate. The Chancellor was very clever, but there was very little saving in the end to the Exchequer and there were 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 and there has been a one-sided redefinition of the terms of the loan. In any other context, as Martin Lewis quite correctly said, this 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 small indeed.
This amendment 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 lack of trust, which is absolutely crucial. That, surely, is the way to go. The Government would be doing the right thing by accepting this amendment. I beg to move.