Before we move on, I inform the Committee that there is a desire to reach clause 41. I am entirely in the hands of the Committee, but if we are to make that sort of progress, speeches will have to be shorter and interventions—some of which seem to have taken on a life of their own—will have to be appreciably shorter.
With this it will be convenient to discuss the following:
New clause 7—Educational subsidy—
'(1) All English and Welsh funding bodies shall present students with a voucher, redeemable only at an agreed course and institution, equivalent to the full support from the taxpayer for the fee and cost of that course.
(2) Such a voucher shall specify the amounts contributed by the taxpayer and by the individual graduate.'.
I have tabled a number of amendments to the clause. Even if I move amendment No. 276 and new clause 9 briefly, I hope that the Minister will none the less take them seriously as they reflect a great deal of concern expressed by colleagues outside the Committee.
I mentioned the latest Ofsted report on one of my primary schools, Highwood Player nursery and junior school. I think I said that it had been awarded ones and twos, which are the highest points that Ofsted can give, on everything apart from attainment, which received a five, one of the lowest scores. In other words, it is a great school with a superb head teacher, committed staff, great involvement of governors and a super environment, but it underachieves. It does so because a lot of the kids are in child protection measures. In many cases, they arrive at school unable to string a sentence together and there is no parental support.
Admissions policy can urgently address that problem by getting youngsters into school in the September of the year when they attain the age of five so that they do a full year in reception. My local education authority does not do that; it cannot because of cost. It is a very effective, hard-working and dedicated authority with good people throughout, but a lack of money stops it doing the very thing that would be benefit those kids most throughout their lives.
When we talk about the situation of graduates or students, we should put that into perspective by reflecting on the amount of money that we put into the education of those people relative to the under-fives—reception classes, Sure Start and so forth. We can all regale each other with figures, but in essence a middle-class welfare system operates. More and more money gets poured down the throats of people who are able to go to university, whereas people from tough working-class areas cannot get their kids into a reception class.
A reception class is one fifth of that child's life because they are only five. To be in a reception class for that one year allows them to receive an education for one fifth of their life prior to school. We should consider the impact that addressing that might have on some of the problems that we have all talked about. We need to gain that perspective because the amount of money spent is important. One of the best ways that we as taxpayers can get an idea about that is to have transparency and clarity on education spending.
My right hon. Friend the Minister often says that even with the new fee regime, £13 out of £14 will be provided by the taxpayer rather than by the graduate through repayments. I do not know whether that figure still stands or whether it has moved or been finessed a little. However, bearing in mind the order of the expenditure involved, a massive amount of money goes to those individuals, even under the new fee payment regime.
I have tabled a probing amendment to bring some clarity to the matter. I do not contend that it deals with things in absolutely the right way, but its purpose is to get my right hon. Friend to examine a system similar to that which operates in Australia, where the Government, as the agent for the taxpayer, issue a cheque to the student that is only cashable at the university that they are going to attend. There is a symbolism in doing that; it shows the student that many thousands of pounds are rightly being paid towards their course and that they have to make an additional contribution.
I hesitate to say that the matter should be kicked into a commission or any other body, and I do not expect to get an answer on from my right hon. Friend on the hoof, but transparency should be introduced to show the generosity with which the taxpayer treats undergraduates relative to those in further education, secondary schools and primary schools, and children under five. That would be a great benefit to both the taxpayer and the student, who is the main beneficiary.
As you rightly said in your earlier ruling, Mr. Gale, there is a general wish on both sides of the Committee that we should reach clause 41 rapidly, so I shall be brief.
I want to place on the record the fact that although I do not support every word of the amendment, and it will be interesting to hear the Minister's comments on its technical qualities or otherwise, the hon. Member for Nottingham, North has made an important point. Clarity about how taxpayers' money is used is highly desirable. For that reason, my party advanced the
proposition at a recent general election that all households should receive an independently verified statement on how all Government spending is allocated.
In the context of the Bill, I am delighted that the hon. Gentleman should have lighted on the concept and phraseology of the voucher as a means of explaining the system to people. I waited with bated breath for him to go a tiny step further and indicate his full support for the Conservative proposal of pupil passports, which is merely half a step away from his new clause 7.
Whether one calls it a voucher or something else, the idea of bringing to the forefront of the student's mind exactly how much taxpayers' money is being made available for his education, and making it clear to the institution that it is receiving funding because that student has chosen to go there instead of somewhere else, is highly desirable and deeply commendable. It is one of the more elevating moments in our deliberations when the hon. Member for Nottingham, North so admirably embraces and expounds Conservative philosophy. I look forward to the Minister's reply.
I shall try to be quick.
Amendment No. 237 asks us to prescribe
''the information to be provided to an eligible student about the financial value of any grant''.
It is another amendment on which there is no problem in principle. My argument is that it is unnecessary.
The Education (Student Support) Regulations 2002 require us to inform eligible students about the financial value of the statutory support that they are entitled to receive under the regulations. Under the student finance delivery arrangements, applicants are sent a detailed notification letter, setting out their entitlement to all types of support provided under the regulations, including for those starting in 2004, when the £1,000 grant will be reintroduced, before it increases to £2,700 in 2006. Under the application timetable, those who apply by the prescribed deadlines will receive the letter in August, in advance of them beginning the course.
Even before the application process begins, we inform potential students through our websites, talks at local schools and promotional leaflets about the type and amount of support available for the forthcoming academic year. It is also worth mentioning that access plans, which must be approved by the director of fair access before institutions can charge higher variable fees, must show how the institution will make information on financial assistance available to students and prospective students. As we are already legally required to provide the information to applicants, and we have systems in place to do that, we see no reason to adopt the amendment. It is superfluous.
The hon. Member for Westmorland and Lonsdale took new clause 7 as my hon. Friend the Member for Nottingham, North proposing a voucher system, but it
is the opposite. We noted from Harrogate at the weekend that Her Majesty's official Opposition are developing a system that involves spending £3,500 to encourage people to leave the public sector and go into the private sector. In essence, that is not too different from top-up fees for six to 18-year-olds. However, my hon. Friend was right that we need to invest in state education, not in allowing people to opt out of state education and into the private sector.
My hon. Friend was talking about a voucher, but not in the way interpreted by the Opposition. I spoke about the matter at length with the Australian Education Minister, Brendan Nelson. I know that the amendment is a probing amendment, but the system that my hon. Friend proposed will not come about if we accept it. There will merely be lots of bureaucracy. In Australia, they ensure that every student going to university knows the proportion of money provided by the taxpayer and the proportion that they must provide through deferred fees. That is an important principle.
Brendan Nelson is not of our political persuasion; he is more a mix of Conservative and Liberal. However, he made the point that people welcome the system in Australia as putting into context the issue of a graduate contribution, with the lion's share provided by the taxpayer, as it will be in the UK. I will reflect on how we can do that, subject to Royal Assent, when we introduce the measures. Instead of legislating, there is probably a simple method that allows universities to do that, which is how it works in Australia. I will bear my hon. Friend's point in mind, but I ask him to withdraw the amendment.
Until the last minute of my right hon. Friend's contribution, I was thinking of poking gentle fun at him as going native as a civil servant rather than thinking politically. He knows that his officials have drafted the Bill well and effectively. I want him, as a politician, to involve people in what we are trying to do so that they understand what is happening. I openly say that until the issue became political, I did not know the difference between a bursary, a grant and all the other terms that have been banded about with ease in the Committee. Some of us still do not. We have been in meetings in which colleagues have not realised that, for example, we are restoring the grant or abolishing the up-front fee. That is because MPs cannot be abreast of every issue.
There is a level of ignorance among the current student population, many of whom, when one sits down and explains our intentions, understand and welcome them, although they are annoyed that they are part of the middle generation that does not benefit from a grant, but has to pay up-front fees. We must explain the situation. Even now, when we talk to people, as I do with secondary heads in my constituency, there is a large amount of ignorance. Some of that is politically inspired through talk of debt and attempts to make party political points, but much is based on not knowing the basis of the proposed scheme.
I have pressed my right hon. Friend and his officials to produce facts, to be shared with all hon. Members, on the number of people in each constituency who
would benefit from a full grant, and that is proving extremely difficult. We must get such information and clarify matters for people. I have that figure, but other Committee members have not received it officially from the Minister. I know that it is difficult to produce those figures, but it can be done. I hope that we try to sell this good policy in clear terms to people of all political persuasions.
Does my hon. Friend agree that information about the financial package, together with a balance between the individual and the broader social contribution, should be directed not just at those who are about to become students, but at those of a younger age? We must find a way to get that information across, otherwise misunderstandings will continue.
I am sure that that is the case.
My right hon. Friend has paid tribute to many colleagues in all parts of the House for their contributions to the Bill, and I think all Committee members will acknowledge that he has done an incredible job, particularly over the past four or five months, in broadening everyone's horizons and understanding of the Bill. He has been receptive to ideas on how to make progress, as he proved this afternoon. However, as he generously said that he would reflect on the issue, I ask him again to undertake to write to hon. Members, when appropriate, about how to get over a clearer version of what the policy means to the kids in our constituencies. We can then make our partisan points, but there must be a succinct way of explaining the policy. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
I beg to move amendment No. 275, in
clause 40, page 18, line 36, at end insert—
'(2A) After subsection (2), insert—
''(2A) Regulations under this section must make provision for the cancellation of a borrower's liability to repay his student loan when he—
(a) is a new eligible student, and
(b) has been liable to repay a student loan for a period which is equal to or greater than 25 years.''.'.
The amendment would put in the Bill the requirement for the regulations to include a provision to cancel outstanding debt after 25 years. I understand officials having reservations about including proposals that require updating and cross-referencing with different Acts, as it is a lot easier to put it all in regulations. However, we must ensure that the Bill does what it says on the can, as they say in advertising. It should state, with clarity, so that anyone can understand what it means, that if the Government want to abolish outstanding debt after 25 years, that is what will happen. That would make it easier to get the message across to colleagues, to people in education and, above all, to our constituents.
I shall be brief. The purpose of the hon. Gentleman's amendment is clear and understandable. He argues that it is desirable to have phrases on the tin—that is, in the Bill—rather than in regulations.
However, I am puzzled about the phrasing, especially the reference to a ''new eligible student'', because I would have thought that the purpose of the proposal could have been achieved without the proposed new subsection (2A). However, the Minister will no doubt advise us accordingly on the basis of the excellent advice he has received from his admirable officials.
There is nothing technically wrong with the amendment. It states ''new eligible student'' because the measure is being introduced for those who begin their university education in 2006. It does not apply retrospectively, unlike the higher repayments threshold, which will apply to all those taking out the student loan, whether or not they are subject to variable fees. One cannot run two different systems for deductions as that would be too horrendously complicated for employers and the Inland Revenue.
The proposal would apply to new students in 2006, and there was a reference to the gap-year argument. The reason for objecting to the amendment—''objecting'' is rather too strong a word—is that there would be no difference whatever in policy. I hope that my hon. Friend withdraws it.
The hon. Gentleman said that he hoped my officials would persuade me that they had serious concerns about the matter. I would have serious concerns about putting the precise figure in the Bill and I cannot understand the argument that regulations do not have an important role in legislation. We put things in regulations so that if we wanted to change 25 years to 20 years or 18 years—
Or to 30 years, we would not need to take up parliamentary time with primary legislation to do so. Governments of all political persuasions put such details into regulations. That does not mean that because it is not in the Bill, people will not know about it. I said in response to a previous debate that if anyone thinks putting things in the Bill makes it clearer, one has only to try to read a Bill to show that that is not the case.
My hon. Friend made a very important point. When the Bill receives Royal Assent—we cannot do it before then because it would be insulting to the parliamentary process—we will ensure that people understand the detail and know exactly what it entails.
My hon. Friend is absolutely right. The New Statesman carried out an important analysis. People were asked whether they were for or against the Bill: at first, the group was 2:1 against, then the people doing the analysis drilled down to find whether the group knew that up-front fees were going or that the grant was being reintroduced, and found that a large percentage knew neither of those facts. The people were asked whether they knew that the repayment system was income-contingent or that one would pay less than one would now. By the time those doing the analysis got down to the people who knew those things, 2:1 against had turned to 2:1 in favour.
The important point is that, once the Bill becomes law, we cannot afford to sit back and not explain the
detail of the rather complex package being offered. I assure all hon. Members that we shall ensure that people understand the terms of the Bill. However, I suggest to my hon. Friend the Member for Nottingham, North that the amendment will not help the situation, so I ask him to withdraw it.
The Minister has touched on a very important question: what happens when, as I hope, the Bill becomes law? I shall not go into great detail, but leaving aside partisan politics, getting over what the Bill means to the kids who stand to benefit from it will be the most important part of the process. To be frank—I know that the Minister will listen carefully to this—Department for Education and Skills standard leaflets, good as they are, will not crack it. We are going to have to make a serious outreach effort, going to every school and getting the relevant information into the minds of everyone in the families whose kids can benefit from a £3,000 grant. The odd little advert will not do the job; pulling a sheet off a poster or having a photo call with my right hon. Friends the Minister and the Secretary of State will not be adequate. We shall have to do something far deeper if, as I know he is, the Minister is serious about getting the content of the Bill over to his constituents and everybody else's.
In view of what the Minister has said, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
With this it will be convenient to discuss new clause 9—Increase in threshold for loan repayment—
'(1) The Education (Student Loans) (Repayment) Regulations 2000 (S.I., 2000/944) are amended as follows.
(2) In the regulations specified in subsection (3), for ''£10,000'', there shall be substituted the words ''£10,000 up to the year ending 5th April 2005, and £20,000 with effect thereafter''.
(3) Those regulations are—
(a) regulation 13(4);
(b) regulation 15(5)(a);
(c) regulation 15(5)(aa);
(d) regulation 29(2)(a);
(e) regulation 29(2)(b);
(f) regulation 56(4)(a).'.
A few minutes ago, I warned the Minister against reading into my brevity in moving the amendment, which is imposed by the time constraints and the need to allow everyone to speak who wants to, that it is trivial. The amendment is probably as important as any that the Committee has considered, not because of the masterful drafting, but because of its symbolic meaning, not least to my hon. Friends in and outside the Committee.
The amendment deals with the serious question of where the income threshold for the repayment of student loans should be. The threshold now stands at £15,980 or so, which many colleagues think is relatively low. I listened to my hon. Friend the Member for Leeds, East (Mr. Mudie) talk persuasively about postmen, which is an occupation dear to the Minister's heart, and people with a second income coming into the family, who are by no means wealthy. Because of the way in which tapers operate, as they must in all systems relating to any sort of benefit, families just above the threshold could face quite a sudden taper.
Being a postman is a fine career, so I do not see why there should be any snobbery about it. I am surprised at the hon. Gentleman.
We must ensure that people outside understand what we are trying to do. A lot of people say, ''Well, we didn't have a grant last week, but now we've got a £3,000 grant, which we're going to pocket, thank you very much—but it is not enough.'' I am not representing that tendency, nor is any Committee member. However, there are problems. The reason why this matter is before the Committee is the justifiable fear that the taper slides off very quickly and will capture a lot of people who would benefit from a slightly higher threshold for repayments.
There is no magic in the figure of £20,000, although it is probably closer to the national average wage than the current threshold. Many colleagues have requested that that matter be put before the Committee for debate. I am sorry that, because of time, I cannot speak on the amendment at length, but I underline again that I would like the Minister to take the matter seriously, not least because of the serious concerns of colleagues who are not on the Committee about where the threshold is set.
My hon. Friend gives me an opportunity to explain briefly what we are doing by raising the threshold from £10,000 to £15,000. He would like us to go further, and increase it to £20,000 and to put that in the Bill, whereas the current threshold—or the proposed threshold that comes in to operation in the 2005–06 academic year—is dealt with by regulations.
Let me repeat that we cannot have two separate systems of threshold operating for an income-contingent payroll deduction through the Inland Revenue. All those who are on the current threshold for repaying their student loan—83 per cent. of students take out a student loan, so there has been an awful lot of them since we introduced income-contingent student loans in 1998—benefit from that. For new students from 2006, the fee loan gets rolled up with the maintenance loan, and it is paid back on the basis not of what they owe, but of what they earn.
By moving the threshold to £15,000, we make a substantial improvement, not only for future students, but for past and present students. Now graduates
earning £16,000 a year repay £10.38 a week. Under our proposals, that figure drops to £1.73. There are no tricks and no small print. It is a simple reduction in payment.
Chris Grayling rose—
The hon. Gentleman is itching to get in, but he will have to wait for just a second.
Those earning £15,000 a year currently pay £8.65 a week. That will drop to nothing, because people have to earn more than £15,000 to begin repayment. The average starting pay of a graduate is now £19,000, but last year's figure of £18,000 has been widely quoted, so let us focus on that. Someone on that income currently repays £13.85 a week; when the threshold goes up, that payment will decrease to £5.19. Finally, for someone earning £20,000 a year, the weekly repayment will halve—decreasing from £17.30 to £8.65 a week. That effect continues all the way up the salary scale. Graduates pay 9 per cent. of the difference between the threshold and what they earn. Someone on £60,000 a year currently pays £86.54 a week; that will decrease to £77.88 a week.
If we spent an awful lot of money—and it would be a lot of money—to raise the threshold to £20,000 a year, we would benefit not only graduates who are on low incomes, but those who earn such high salaries that no one would think that we ought to concentrate further student support money on them.
I have a lot of sympathy for the Minister's argument, but will he confirm for the record that the changes to payments made by graduate that he is describing will not affect the overall amount that they end up paying, but simply defer payment to later years?
Yes, they simply defer payment to later years. As we mentioned in a debate last week, more than a million students—I cannot remember the exact figure—are still paying back money under the old mortgage-type repayment scheme. There is nothing between any of the political parties on repayment of loans. It is the fee loan that is the issue. The previous system had the benefit of the money being paid back pretty quickly. When people were earning a penny more than average earnings, which, as the hon. Member for Daventry (Mr. Boswell) pointed out, would now be £26,000 a year, they had to pay the full amount over five or seven years. No account was taken of whether one's salary went down again or whether one left the workplace; one simply had to repay it.
All the changes do is defer payment. This is a considerable part of our argument. The words ''income-contingent'' do not send the blood coursing through the veins, but they are the central feature of our proposal. An argument has been made that we should use a different method—a graduate tax. With such a tax, a person would not know the amount that they would have to repay; they would repay for the rest of their life, and repay not just their contribution but that of others. Our provisions have all the beneficial features of the graduate tax—including payroll deduction, Inland Revenue implications, payments increasing and decreasing with earnings—
without some of the downsides that Dearing highlighted, one of which is that, with a graduate tax, if a person has the odd £50 or £100 lying around, he cannot make lump sum payments to pay off the loan more quickly, whereas he can with our system.
I have great respect for the views of my hon. Friends the Members for Nottingham, North and for, I think, North-West Leicestershire (David Taylor). [Interruption.] Sorry; if hon. Members are not on the Committee, I do not have their constituency. I doubt that, in the light of everything else in our student support package, my hon. Friends would want to spend at least £475 million more. If that money were around—it is not; there is no more money, as this is a very expensive package—I do not think that we would put it into raising the threshold. We would put it into a larger grant or something that focused the money on the students about whom we are concerned.
My hon. Friend the Member for Nottingham, North is absolutely right in everything that he says. Every piece of analysis indicates—I think that the whole Committee will agree on this—that the central thing that will encourage the young person none of whose neighbours, friends, siblings or other family have gone to university to apply to university is the help that that young person will get while he or she is there. In a sense, the state will be the proxy ''wealthier parent'' for poor youngsters. All of us, on our incomes, would step in if a child were in trouble. The grant is very important to poor youngsters, and the fact that they would not pay their fee back until they were at a certain income level is crucial to the whole package.
My final point is that if two or three years from now we decide, for whatever reason, that we can raise the income threshold to £20,000, the amendment having been made to the primary legislation will make that difficult to achieve. It is best to leave the matter to regulations, rather than sticking a figure in primary legislation.
I wonder whether my right hon. Friend will help me in respect of the additional expenditure. He seems to infer that the repayments that under my amendment would start at £20,000 would be at the same level as those that are currently paid at £20,000—in other words, that we would forgo any repayment income in the £15,000 to £20,000 income bracket. I am trying to read the mind of my hon. Friend the Member for North-West Leicestershire, who was kind enough to suggest the amendment to me, but I think that the idea was that when a graduate reached an income of £20,000 they would start at a higher level of repayments, because they would be on the average graduate starting salary and would therefore be able to pay a little bit more. In other words, there would be no income loss. I do not expect my right hon. Friend the Minister to answer that off the cuff, but perhaps he will be kind enough to think about it, and perhaps his officials could reply.
That does not work. The amendment would still leave the 9 per cent. repayment over the threshold. The amendment would not work out as my
hon. Friend says. Not only would it not do so, but it is questionable whether it should. If we lose the 9 per cent. mechanism, which ensures that the amount of money brought in relates to movement in the retail prices index—there is no need for an RPI mechanism when the wages from which we are deducting 9 per cent. will go up—that would skew the system disproportionately.
I quoted the figure of £8.65. People earning £20,000 a year now pay £8.65 a week. They pay off some of the debt, but the burden is not onerous. The effect of the amendment would be that they would pay nothing when they earn £20,000 a year. Committee members have to be absolutely sure of that. That is another reason why I urge my hon. Friend to withdraw the amendment.
I am prepared to accept that the amendment is technically defective. However, the overall aim is to regear repayments from a base of £20,000, which would net the same amount of fees. Will my right hon. Friend drop me a line to tell me how severely that would effect the repayments from £20,000 upwards?
The hon. Gentleman raises an important point. In the light of the fact that the Minister has placed it on record that the amendment as worded would cost about £430 million, does hon. Gentleman accept that that is probably a greater additional public spending commitment than he had hoped for or intended? Might he come back on Report with a slightly differently worded amendment that is designed to make progress along the line that he has set out, but at rather less cost? A lot of people would be intrigued if that were to be his view.
I think it was Oscar Wilde who said, ''Advice is the most precious gift of all because it is normally given by those who need it most themselves.'' Rather than take policy lessons from the Conservatives—as they keep telling us, they do not have any policies at the moment—I will sit on the hon. Gentleman's suggestion. However, rather than table more amendments on Report—I am sure that the colleagues to whom I have referred will do that anyway—I will rest with leaving it with the Minister to see what the gearing effect would be. It would certainly be more than 9 per cent., but I wonder whether it would be way over the top in terms of repayments.
The hon. Gentleman may be swimming against the tide. Is he aware that the Government's policy, as set out in the small print of the regulatory impact assessment, is to shift the relationship between the threshold and earnings in the other direction, as one of the means of paying for the improvements made to the student support package in the rest of the Government's proposals?
I am very grateful for that information.
To finish, I light-heartedly mentioned officials on a couple of occasion. I want to put on record that the officials who I have dealt with on the Bill have been very open and have been extremely helpful in helping
hon. Members come to terms with a difficult Bill. I thank them.
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 40 ordered to stand part of the Bill.