Undergraduate Debt (Hansard, 22 January 2003)

§ The Parliamentary Under-Secretary of State, Department for Education and Skills (Baroness Ashton of Upholland)
My Lords, a reasonable debt for an undergraduate is one that will fund a high quality education, give him or her the opportunity and skills to progress in their career and can be repaid at a reasonable rate over a reasonable time and m a reasonable manner.

§ Lord Forsyth of Drumlean
My Lords, is not the Minister ashamed to be a member of a Labour government who have abandoned the principle of free access to higher education, who plan to saddle undergraduates with debts of more than £20,000 to pay for their degrees and who are undermining the independence of universities by forcing them to change their entrance administration procedures to discriminate against middle-class students of proven ability?

§ Baroness Ashton of Upholland
My Lords, the answer to the question is "No". The noble Lord has asked the most topical of topical Questions as shortly I shall repeat the Statement made by my right honourable friend and we shall debate those issues. I am conscious that most noble Lords have not ye: had the chance to hear the detail of that Statement. However, if the noble Lord looks at the full range of the proposals that we have put forward, particularly in regard to students from poorer backgrounds, he will see that we have introduced grants and that we have increased the threshold at which university graduates will repay the money from £10,000 to £15,000. We are working closely with universities to ensure access for students who are capable of undertaking higher education. We are ensuring that we fund universities to provide that.

§ The Lord Bishop of Worcester
My Lords, does the Minister agree that the policy of moving from grants to loans, thereby increasing student debt, is shared between the two major parties which have formed governments over the past decade? We should all be concerned about the effect of indebtedness. Has the extensive research conducted at Exeter University on the effect of indebtedness on students' life expectations and view been considered by the Government in arriving at their conclusions? Do the Government feel that they are responsible for the changes in social attitude which are brought about by requiring students to be in debt at an age when they cannot possibly work out what they will be able to afford? Do the Government agree that a whole generation is being encouraged to carry into later life an attitude that debt is absolutely normal? Do the Government further agree that the student debt situation is, frankly, out of control?

§ Baroness Ashton of Upholland
My Lords, in the course of our deliberations on these issues we have indeed considered all the evidence that has been put before us. We have had many and extensive discussions, some of which have been reported in the media, others of which some noble Lords have been party to. We must recognise who needs to make a contribution and ensure that that is handled appropriately. We believe—we shall debate this matter when we discuss the Statement—that we have found a balance that enables students to make their contribution. They will repay the money when they earn a salary that is sufficient to enable them to make the repayments. We recognise that we need to give our poorer students some support. We believe that our solution is the best that we can achieve.

Baroness Blotch
My Lords, does the noble Baroness agree that there is increasing evidence that bright, talented young people who come from families with a tradition of going to university, or attending schools of which the Government disapprove, are suffering reverse discrimination in order to widen access? Will the Minister put hand on heart and say that standards 699 of entry will never, but never, be compromised in order simply to widen access to young people whose families do not have a tradition of going to university?

§ Baroness Ashton of Upholland
My Lords, what the noble Baroness and I need to debate is what we mean by standards of entry. I recognise that we must ensure that our universities are filled with the brightest and best students who can undertake a university education. There is no doubt on that point. As regards access we recognise that the concept of going to university does not form part of the background of many of our young people. Their families do not have a tradition of going to university. It is not something that they contemplate. Therefore, we must ensure that we work hard to give those young people opportunities. We must also recognise that, unfortunately, not all our schools give young people the best possible education. Many of our universities have already undertaken work, and will continue to do so, to recognise the breadth and potential of young people. I wholeheartedly agree that universities should accept those young people who will benefit from a university education.

§ Baroness Sharp of Guildford
My Lords, taking the Question at its face value, what advice has the department received from banks and building societies about the implications of high levels of student debt on mortgage loans? Do student debt repayments take precedence over mortgage repayments? As an unsecured debt would the financial sector regard it as a substantial prior obligation and limit the availability of mortgage lending accordingly?

§ Baroness Ashton of Upholland
My Lords, I cannot give the noble Baroness details of the bank and building society information that we have received although I am happy to find that out, report it to her and place the information in the Library. Banks and building societies consider the whole question of debt in relation to a person who is applying for a mortgage. As I said, by raising the threshold for repayment to £15,000 for all people who have attended university we are trying to ensure that people get a good start in life. Repayment will not apply while a person's income is below that figure. We are trying to ensure that people are able to lead a full life after university and gain access to mortgages and the other things that they require.

§ Lord McColl of Dulwich
My Lords, will the Minister answer the question so far as concerns medical students, who have to spend five or six years in training, bearing in mind that the number of people applying to study medicine has fallen in the past few years?

§ Baroness Ashton of Upholland
My Lords, as the noble Lord may know, the position with medical students is currently that the first four years of their payment are treated as are those of other students, and that contributions are made from the Department of 700 Health. Within the Statement, I will be able to cover that point more fully, but the recognition is that we will again seek to support such students. My right honourable friend the Secretary of State for Health is looking at how, as other government departments do, the Department of Health can support students willing to work in the medical professions and the broader public sector, to ensure that we have the high-quality calibre of people that we would wish to have.

§ Lady Saltoun of Abernethy
My Lords, have the Government taken into account that a university degree is not necessarily a guarantee of a well-paid job on leaving, or ever?

§ Baroness Ashton of Upholland
My Lords, the evidence suggests that on average a university graduate will earn 50 per cent more than someone who has not been to a university. There will be general recognition across the House that university graduates do well in our economy, and rightly so. We have a threshold of repayment precisely so that those people who go to university and do not reach that level of income will not pay.

§ Lord Stoddart of Swindon
My Lords, is the Minister aware that in the Labour Party that I joined in 1947, the idea of charging university tuition fees and saddling students with a debt of up to £20,000 would have been complete anathema? When was it that the Labour Party dropped the idea that education and training of young people was of benefit to the whole community for a long period, and therefore deserved to be paid for by the whole community?

§ Baroness Ashton of Upholland
My Lords, I agree that education and training is of benefit to the whole economy. Indeed, our access-widening strategy is based on the premise that we need a highly skilled economy if we are to compete in the global economy in which we are now situated. However, what happened in the era that the noble Lord described is no longer the situation. We have more students coming into universities, and rightly so. We have a thriving economy in which many people benefit from a higher education, and in which we wish to see contributions made towards that higher education by those who will benefit from it in the broader sense. It is also true that taking the money out of general taxation means that the people who do not go to university are funding something that they are not able to receive.

§ Baroness Carnegy of Lour
My Lords, did I understand the Minister to say, in answer to the question from the Liberal Democrat Front Bench, that the Government are formulating policy to increase student debt without having resolved how that debt will relate to mortgage interest debt?

§ Baroness Ashton of Upholland
No, my Lords, I did not mean to imply that at all. I said that I did not have information about the specific conversations that will 701 have gone on. I hope that by the time we come to the Statement and questions on it, I will have that information and will relay it to the House.

§ Lord Lucas
My Lords, should £15,000 really be the base level for starting to repay debt? That is about £7.50 a working hour., which is what cleaners are paid in London. Is that what graduates are going to do as jobs?

§ Baroness Ashton of Upholland
My Lords, the noble Lord, Lord Lucas, gave the game away by talking about cleaners in London. We have to look at what is happening around the whole of the British economy in terms of income rates. He will know that the average income is around £20,000 to £25,000 per annum. We believe that, for starting salaries, that enables people to get into the economy and start work, and that it is a good point at which to introduce the repayments.

§ Lord Forsyth of Drumlean
My Lords, given that the Prime Minister, the Chancellor of the Exchequer and the present Home Secretary, although then Secretary of State for Education and Employment, all gave absolute assurances that top-up fees would not be introduced for universities, what confidence can we have in anything that the Government say in future?

§ Baroness Ashton of Upholland
My Lords, noble Lords can have absolute confidence. What my right honourable friends all said was that during the lifetime of this Parliament we would not introduce top-up fees. That is an important point, because we have done what good governments should do. We have stuck to that promise and made our position clear for the lifetime of this Parliament. Electors will make their choice between a government with clear policies and an opposition with none.

§ Baroness Blatch
My Lords, the noble Baroness made a great point of pay for graduates being higher by about a half. Does she agree that university academics, on whom the quality in our universities depends, are well below that line and earn much lower pay? Only this morning, a student who had graduated as a scientist was offered £12,000 a year for a scientific job with DEFRA in the North East. He decided to take a job for £15,000 a year driving lorries. How can the Government base their policy on a false premise?

§ Baroness Ashton of Upholland
My Lords, I agree wholeheartedly that there is a real issue around academic pay. When we come on to the Statement, I will say—I am happy to say some of it now—that we are looking to invest substantially in recruitment and retention, to ensure that universities have the resources that they need. The whole formula is based on the responsibility of the individual, the responsibility of the state, and the responsibility of other institutions with which higher education interacts such as industry, to enable the universities to invest in research and in teaching and learning. It is on that that the formula should be judged.