We need your support to keep TheyWorkForYou running and make sure people across the UK can continue to hold their elected representatives to account.Donate to our crowdfunder
My Lords, Amendments 446, 449 and 449B are in my name. Amendment 446 is a reaction to the fact that Conservative education policy has had a detrimental effect on the education and life chances of those from low and middle-income backgrounds. We can trace that back to 2010, when Labour left office, with 71% of state-educated pupils going to university. By 2014, that had fallen to 62%.
The change from maintenance grants to loans is a regressive policy, introduced last year, that will leave students from low and middle-income backgrounds facing higher debts, which they may never be able to repay; we will discuss this in a later amendment. Bringing back the maintenance grant, which is what is proposed in this amendment, is a necessary move to ensure there is that investment in our young people, helping more of them access a university education, and providing the country with the highly educated and highly skilled workforce that we need.
English students already face some of the highest levels of student debt in Europe, with the average student graduating with anything up to £50,000 of debt. This is a particular problem for students from low and middle-income backgrounds, who are more likely to need to rely on loans to fund their studies. It is well known that students from more affluent backgrounds do not need a loan—they may take one out because it provides access to cheap money—but for low and middle-income students, that is not an option; they have to take that loan out. Increasing the amount of debt they face by replacing grants with loans could act as a disincentive that will stop some of them pursuing higher education at all.
It may well be asked: if you were to reintroduce this, what would it cost? Labour has in fact costed it. We reckon it would cost about £1.5 billion in each academic year but our policy is quite clear and has been stated before: we would raise corporation tax by 1% to 1.5%. By funding the policy in this way, it is a direct correlation: companies would be contributing to the education and training of the highly skilled, highly trained workforce that is needed to help Britain’s economy thrive in the 21st century. It would be a cause and effect in that respect.
I heard what the noble Lord, Lord Willetts, said about Amendment 449. I bow to his greater experience and, indeed, direct involvement in this until quite recently. The Student Loans Company appears to be a law unto itself. In many ways, it seems out of control. Repayment levels are well below projections and there is very little confidence in the company. The loans are regarded as a non-contingent tax liability, not a normal loan, and therefore they are not regulated. I hear what the noble Lord, Lord Willetts, said, and there are reasons for that, but the money has to come from somewhere. I accept that for those seeking a loan affordability is an issue. We are very concerned about the way in which the Student Loans Company operates.
Just a few minutes ago, in a quite unrelated set of amendments, we were treated to a further example. When the noble Baroness, Lady Goldie, told us that one of the reasons why the sharia-compliant finance product could not be introduced—and she did not appear to have the faintest idea of when it would be released—was that the Student Loans Company needed time to get its processes into suitable order. So thousands of Muslim students are forced to wait while the Student Loans Company dithers. That is symptomatic of the way in which that organisation operates. The Student Loans Company does need proper regulation, if not by the Financial Conduct Authority, then by some other means. If the noble Lord, Lord Willetts, thinks it is operating satisfactorily, he should say so, but I would be very surprised if he does.
The last amendment I will speak to is Amendment 449B. It traces back to when the noble Lord, Lord Willetts, was Higher Education Minister. In the 2015 Autumn Statement the then Chancellor announced that the repayment threshold on student loans was to be frozen at £21,000 from April 2017, instead of being uprated in line with earnings, as was promised in the marketing materials and in writing from—and I am not trying to score particular points—the noble Lord, the Minister at the time. That is an important point.
Labour MPs submitted a raft of amendments to this Bill in another place that were designed to stop retrospective changes to student loans by Ministers, and to bring them under regulation by the FCA. The key issue is that millions of students have taken out loans with an understanding that the threshold would increase with earnings, and have had their loans changed retrospectively and regressively. I say to both Ministers opposite that that is the sort of underhand tactic that undermines the public’s trust in politics and politicians, and that alone would be sufficient reason to overturn this decision. Worse, however, the change places additional financial burdens on poorer students and sets a dangerous precedent. It also falls short of the standards that we would expect from the private sector, where the FCA has the power to stop this happening.
The noble Baroness, Lady Garden, outlined the effect on students. Our amendment would prevent any changes to the repayment of a student loan after the terms and conditions of repayment had been agreed. This would apply to existing loans after the commencement of the Act, and it would ensure that such a situation would not recur by bringing loans under the regulation of the Consumer Credit Act 1974. These amendments demonstrate the need to regulate the student loan market and would provide the protection that students need and, we believe, deserve.