§ Mr. Andrew F. Bennett (Denton and Reddish)
I beg to move,That the Education (Mandatory Awards) Regulations 1985 (S.I., 1985, No. 1126) dated 22nd July 1985, a copy of which was laid before this House on 26th July, in the last Session of Parliament, be revoked.
I want, first, to comment on the procedural farce behind the regulations. Twelve months ago the Secretary of State announced grant proposals for 1985–86. As a result of that, there was considerable outrage among Tory rank and file members, which caused so much upset that there was a lynch-gang of Tory Members of Parliament more or less out for the Secretary of State. The Secretary of State changed his mind almost overnight and announced to the House major new proposals on student grants and said that there would be a major review of student finance. In fact, the proposals did not help those students on the basic grant. Perhaps it was not even designed to help students. But what it did do was to ease the Government's problems with those parents who had incomes in the region of £30,000, and it appeared to buy off the Tory activitists and those hon. Members who were so incensed last year.
We heard nothing more about grants from the Government until it was announced in the spring that the Green Paper on higher education was to be delayed for a few months while a section on student grants was included. Eventually the Green Paper came out and we were told that the section on student grants had had to be left out and would come along in the autumn.
Meanwhile, in June, local authorities were told the details of the grant regulations so that they could calculate the student grants for September. It was only on 26 July that the Government laid the regulations before the House of Commons, the last day before the recess, thus ensuring that there could not possibly be any debate on student grants before we were well into the autumn term.
Instead of acting quickly to encourage debate in the House, the Government have used every device possible to delay opportunities for debate. The 40 days allowed have elapsed and we have had to table a motion to enable us to debate the matter. So concerned were the Government to avoid discussing student grants that, 14 days ago, in a written reply, the Government announced that they had abandoned their review of student grants. They did not even have the courage to come to the House to make a statement. All those who were concerned about student grants inside and outside the House were prevented from discovering the real reason why the Government had abandoned the opportunity for a major review.
Tonight's debate comes 12 months after the proposals were announced, two months after the money began to be paid out under the regulations, at a time when we cannot effect the regulations, and when a vote will have little practical effect. Perhaps Government Members are not interested in student grants. If they are, they will remain in the Chamber whether or not a vote takes place. We are too late to influence this year's regulations.
The Government must organise the regulations better next year, so that we have the proposals well before the summer recess. We should be given the details at the same time as they are given to local authorities. The 700 Government should make a clear statement now about student grants next year. We can make a rough calculation from the autumn statement, but students will be lucky to receive their 2 or 3 per cent. increase in grant. The Government should come clean and tell us by how much they intend to put up the grant next year.
Perhaps the increase will be so derisory that the Government want to wait until students have finished the term and are into the Christmas break. Perhaps after last year's experience they want to ensure that the House of Commons is not sitting so that hon. Members cannot get at them if their proposals are as unpopular as they were last year. Perhaps the Government want to ensure that at least the House is into the last week before the recess and is likely to give Ministers an easier ride. I urge the Minister to come clean tonight and to tell us what the student grant increase will be for next year. If he cannot tell us tonight, he must promise a statement within the next 10 days.
I congratulate the hon. Member for Buckingham (Mr. Walden) on his recent appointment. I wish him well. [Interruption.] It would be wrong to blame him, because he was not responsible. It is fair to blame his predecessor and the Government.
The Minister's first task should be to talk to students about their grants. He will talk to the National Union of Students, but he should talk to individual students and lecturers in higher education. He should try to sit in on meetings between students and welfare officers in the higher education institutions and at meetings between students and student union welfare officers.
Such discussions will reveal hardships. The hon. Gentleman will appreciate students' problems and discover how difficult it is for many students who are managing their own finances for the first time. They do not always spend their money wisely. Not all hon. Members spend their money wisely. They make mistakes. If a student makes a mistake, there is no room within the grant to recover. A student can fail throughout three years to recover, and so will not benefit from higher education.
§ Mr. Eric Forth (Mid-Worcestershire)
We are talking mainly about young people who are over 18 years of age, to whom we have probably mistakenly given the vote. They do not need our guidance, because they can now vote at general elections. Is the hon. Gentleman suggesting that we should give patronising guidance to such people because they cannot manage their own financial affairs? How can they be expected to guide this country's destiny when they cannot even manage their financial affairs at university?
§ Mr. Bennett
I am surprised that the hon. Gentleman should question whether 18-year-olds should have the vote. I should have thought that he would accept such a fundamental principle. It is unfortunate that many of them should find it difficult to manage their incomes for the first time. Difficulties usually arise because many students do not receive the full grant. Some of the money has to be provided by their parents. As the hon. Gentleman and many of his colleagues are only too well aware, many of them do not receive that money and have to manage on less than the full grant. No doubt the hon. Gentleman used to manage on his grant, but it was probably worth considerably more than it is today. It is now at almost its lowest value since its introduction in 1962.
The Minister should listen to what the students have to say. He would then discover that many students genuinely 701 have to make a choice between buying books at the beginning of term and going short of meals towards the end of term. Conservative Members should talk to students, because they would then discover that many of them do not attend lectures towards the end of term because they have run out of the cash with which to pay their travel fares. They would also discover that an increasing number of students are extremely worried about making ends meet. Some of them have their whole futures destroyed as a result of that worry. The Minister should be concerned about that.
Indeed, if the Minister goes round student campuses he will find that more and more students opt out of activities because of a lack of funds. They may obtain good degrees, but they will not benefit from the wider experience that could be gained from participating in such activities. Those activities would give them the skills and opportunities that would in turn enable them to obtain far more out of the higher education system. The hon. Gentleman might find himself forcefully reminded that the student grant is now worth 83 per cent. of its value in 1962 in relation to the retail price index. Indeed, it is worth only 52 per cent. when compared with average earnings. If a comparison is drawn between student grants, social security and unemployment benefit, student grants fare even worse. Students will firmly remind the Government that their grants are now 17 per cent. below the level of 1979.
If, as the Government hint in their autumn statement, students obtain only 2 or 3 per cent. in 1986, the situation will become even worse. The Minister should be well aware that the retail prices index does not fully reflect student costs. For example, book inflation is almost double the general level of inflation. If the Minister consults the students, he will hear many of them complain bitterly about the new travel grant arrangements and their effect on student activities. He will also hear them voice their concern about the way in which the Oxford DHSS tried to claim in the summer that covenanted income should be included in the calculation for entitlement to benefit—
§ Mr. Anthony Steen (South Hams)
May I ask the hon. Gentleman to help me on that point? My understanding is that a student with a full grant from the education authority can earn up to his tax-free allowance in his vacation without having to pay tax. However, if he has a covenant from his parents or grandparents up to the tax-free allowance, he can earn nothing without paying tax. Is the hon. Gentleman aware that if a student's parents, having paid tax, give him a donation equal to the tax-free allowance, he is allowed to earn a sum equivalent to the tax-free allowance? That does not make sense. Can the hon. Gentleman help me to understand that point?
§ Mr. Bennett
I do not intend to be diverted into that area. It is a matter that the hon. Gentleman should put to the Minister. He should be pressing him not to abandon the general grant review, and to ensure that the question of covenanted income and the way in which a student is affected by income tax rules are considered within that general review. The hon. Gentleman should be pressing the Government, not me, on that matter.
The Government should make it clear that they do not expect students to face again the experience that they had 702 in Oxford about covenanted income. It is unfortunate that those advising students have had to persuade them to revise the covenant forms to take that into account.
I hope that the Minister appreciates the grave concern of students about the impact of the Fowler review, as their life would be impossible if they could not claim supplementary and housing benefits in the long vacation. If he talks to them, they will tell him that loans are being introduced by the back door. A large number of students now have overdrafts, their credit card limits are overdrawn and they are increasingly finding themselves permanently in debt.
The Minister's first task is to listen to the complaints of students. He should understand their difficulties in obtaining parental contributions and recognise that increasing numbers of them do not actually receive that contribution.
I ask the Minister to talk to the mature students, many of whom I spoke to recently at their conference. They will tell him that the regulations for mature students have not been adapted to present-day circumstances, and especially to take into account the large number of people unemployed and the long periods for which they are out of work. The earnings requirement for a full mature grant is that the applicant must have been in work for three years. It is demoralising for someone who has been out of work for a long time, who then becomes a mature student, to find that not only is he starting from a low income, but is being penalised for having been out of work.
The Minister must be aware of the questions about allowances for dependants of mature students, especially the way in which illegitimate children are treated differently from legitimate children. That problem should have been sorted out when drawing up the regulations.
I am sure that the Minister will listen to the vice chancellors, the directors of the polytechnics and the principals of colleges. They will tell him firmly that they are alarmed by and concerned about the fact that student support is no longer adequate. If the Minister really delves into the matter, he will recognise that there is an acute crisis—something to which the Government have failed to address themselves.
After the Secretary of State's fiasco on student grants last year, he announced a major review, and people felt that at least the Government would listen to the arguments. Many of us were concerned that the Government would use the review to introduce loans, but thought that at least it would give everybody an opportunity to talk about grants and to press for improvements. Most of those who examined the problem had no difficulty in coming up with solutions and a long list of problems.
Why have the Government abandoned their review? The Minister will have thrown at him many times the contents of the Prime Minister's letter of 16 August 1978, in which she talked about what a Conservative Government would do about student grants. Six years later, we still do not know whether any of the promises in that letter will be kept, for we do not know whether the Government have conducted a major review of student grants.
The Minister's predecessor claimed that the promise had been kept and that the Government reviewed grants in 1981. The problem is that they did not publish anything as a result of that review. It now appears that, while it is claimed that the Government were reviewing grants for 12 months, there are no published results of that review.
703 There are, therefore, two possibilities. Either the Government have not carried out the review, or they have and the results are so embarrassing to them—because they have discovered the total inadequacy of student grants—that they are not prepared to publish them. They should have the courage to make public all the information that they received in the last 12 months and explain why they decided not to complete their review in a public form.
If the Government have abandoned the review, they should at least consider the whole question of mature students. In their Green Paper on higher education, the Government pointed out that, with falling numbers of 18-year-olds in the coming 10 years, they believed firmly that there should be more mature students. All who commented on the Green Paper, and those who gave evidence prior to it, made it clear that, in their view, even more mature students should be attracted in.
The present regulations, particularly as they affect mature students, discourage many people from going into higher education. There is a strong case for conducting an independent inquiry into the problems of mature students and their grants, and into the whole issue of whether we can design a grants system for mature students that encourages many more of them to come forward.
The Minister is likely to reply by saying, in effect, "It is all very well for the Opposition to criticise the Government for not spending more on grants. What would they do?" The Labour party has carried out a major review of grants and the report of that study, chaired by Lord Glenamara, will be published next week. We give a clear priority to support for 16 to 19-year olds, to ensure that they stay on in education and go into higher education. We see no reason why the grant cannot be restored to the 1979 level. We say that we need better grants for mature students on full-time and part-time courses and that we must begin to address the problem that many students do not receive the parental contributions that they should get.
§ Mr. Bennett
No, I shall not give way again to the hon. Gentleman. Only an hour and a half is available to debate this instrument and hon. Members could legitimately complain if Front Benchers take up too much time.
My hon. Friends and I believe that a demand exists for the fair treatment of students. Indeed, if the Government spent as much of the gross domestic product on education as was spent in 1979, about £2.2 billion extra would be available for education, and that would more than meet the proposals on student grants. How much will students receive in grant settlement for 1986? Will there be an opportunity for the House to discuss the regulations in detail, at a time when the House can influence them, rather than their being laid before us after local authorities have started implementing them and students have received the money?
Will the Government, if they will not reach their own conclusions on the review of student grants, at least publish the evidence and information that they receive? Will they consider holding an independent inquiry into the position of mature students? Will the Under-Secretary of State ensure that, in the next 12 months, Parliament is kept much better informed about what is happening with 704 student grants and that the Government do not hide behind written answers on important issues such as student grants?
§ The Parliamentary Under-Secretary of State for Education and Science (Mr. George Walden)
I thank the hon. Member for Denton and Reddish (Mr. Bennett) for his kind congratulations and the hyper-sensitive way in which he delivered them.
I am sure that all hon. Members are grateful for this opportunity to debate the subject of student support. It is an important area of higher education policy, and one that has provoked much discussion—perhaps even a little turbulence—in the past year. The debate provides an opportunity for the Government to explain the changes to the regulations that have been made this year and to give an indication of our general approach to the issue of student support.
I shall deal with the second issue first. As my right hon. Friend the Secretary of State announced on 12 November, the Government do not now intend to publish a consultative paper on student support. The reason for this is that the possibility of replacing maintenance grants wholly or partly with loans has been ruled out for the present. Taken together with the present economic situation, the implication of that is that we cannot contemplate any changes of the scale warranted by a consultative paper since any major improvements would need to be balanced by savings which would be both major and unpopular. I would note, with no unkind intent, in this connection that the Labour party appears to be having difficulty in agreeing the main proposals for its higher education charter and that, despite what one has heard, its proposals pay scant attention to the need to keep public spending within bounds.
Although the hon. Member for Denton and Reddish has promised us some figures next week, let me anticipate them by referring to what I am sure he would agree is a sound source—The Times Higher Education Supplement— which gives a provisional costing of the hon. Gentleman's promises at about £1 billion on top of present expenditure. I should like to add an innocent inquiry. Is that the same £1 billion that the shadow Chancellor—the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley)—has agreed to pour down empty mines and to give to other needy people, such as old-age pensioners? In other words, from where would £1 billion come?
§ Mr. Andrew F. Bennett
Does the hon. Gentleman accept that, between 1979 and now, the Government have reduced the proportion of GDP—[HON. MEMBERS: "Answer the question."] I am answering the question in my way. [HON. MEMBERS: "Oh."] How do hon. Members answer questions, except in their own way? Does the hon. Gentleman accept that, between 1979 and now, the proportion of GDP spent on education has been substantially reduced? This means that there is £2.2 billion less to spend on education. If we simply put that back, we would have answered the two questions that the hon. Gentleman posed.
§ Mr. Walden
The hon. Gentleman, in his anxiety to evade my question, has posed another question, the economic premises of which are extremely doubtful. National economic factors also underlie this year's grant 705 rate changes. I should like to make two points, neither of which is original. Both, however, are fundamental. First, the Government have a continuing commitment to control public spending and to pursue improved value for money in all areas. Second, our awards system is very generous compared with most other western countries. Few other countries provide mandatory grant support at the level and for such a wide range of students as here. I should like to stress that this is all the more remarkable when one considers that many countries—for example, Germany—have a much higher gross national product than we do. There are now some 450,000 students who are in receipt of full value awards in Great Britain and public expenditure on their maintenance alone is expected to total some £530 million in the current year. That leaves out of account the much larger subsidy still which is given through the provision of free tuition, of which the aggregate cost is in excess of £1,500 million a year. The Government do not grudge this. We are investing in one of the best possible places, the brain power of the future. But what can be afforded must be measured against other pressing priorities.
Those are the basic reasons for the changes in grant rates. As we have heard, rates have in general been increased by 3 per cent. That adjustment reflects what the Government believe to be a fair balance between the need to meet students' costs and the total expenditure which taxpayers and ratepayers can reasonably be expected to provide. It is worth noting that the overall direct contribution of students and their families towards a student's higher education is, on average, only some 10 per cent. of the total expenditure on maintenance and tuition costs. The other 90 per cent. is met by individual taxpayers, most of whom are unlikely to enjoy a higher education themselves or the higher salaries usually commanded by graduates. Whether or not one thinks that the cost of higher education is now fairly distributed between the taxpayer and the student beneficiary.and there are many who consider that the taxpayers' contribution is disproportionately high—it is right that students should share some of the burden which many have to shoulder in continuing to hold down public expenditure and thus help to regenerate our economy, to the ultimate benefit of everyone, student or not.
It has been claimed by the hon. Member for Denton and Reddish—if not here, in other forums—that the measures we have taken on student awards threaten our higher education system more generally. In particular, the charge has been levelled that we seek to control the numbers of students entering higher education through attacks on the grant system. That is simply and demonstrably not so.
The number of full value award holders has risen steadily and is now higher than ever before. This year there are estimated to be 457,000 compared with 369,000 in 1978–79 and a mere 98,000, let us not forget, in 1962–63 when the awards system was set up. This reflects the fact that there are of course more young people in the relevant age groups. I would, however, point out that the age participation index is at a historically high level and is forecast to rise throughout the next decade. For 1984–85 it was 13.7 per cent. compared with 12.4 per cent. in 1978–79.
It has to be recognised that the resources available for student support must be finite. It is vital that there should be careful and sympathetic management of the resources 706 available and that the burden of this sustained expansion in higher education should be fairly shared between those who stand to benefit most directly—students and their families—and the rest of the population. This is what we have aimed to achieve with this year's grant settlement.
The travel element incorporated in the grant has been increased by 5 per cent. which is rather more than the increase in the main rates of grant. Hon. Members will recall that the new arrangements introduced last year for meeting students' travel costs replaced the previous reimbursement system by the inclusion in the grant of a flat rate element for travel expenses. My right hon. Friend is satisfied that the new arrangements, which are administratively much simpler than those they replaced, are generally working well.
§ Mr. David Harris (St. Ives)
May I impress upon my hon. Friend that, whatever might be the case in the country as a whole, those arrangements are not working well for those few students who come from the Isles of Scilly? They have to travel a stretch of water before they even reach a railway or bus station. Will he impress or, his colleagues in the Department the need to reconsider the injustice caused to those students? Although few in number it is, nevertheless, an injustice.
§ Mr. Walden
I am grateful to my hon. Friend for pointing out that instance. Other similar instances have been brought to our attention. The Government would like to give the new arrangement time to prove itself and time for a new generation of students to move in under the present system to see how it affects their pattern of behaviour—for example, how close to the university they choose to live. I recognise that that would seem less applicable in the case mentioned by my hon. Friend.
§ Mr. Giles Radice (Durham, North)
Why are we continuing with two separate sets of regulations—one for Scottish students and one for English students who may be at the same university? They face the same problems and yet there are different arrangements for travel grants.
§ Mr. Walden
It is generally acknowledged that Scotland is the same country but rather different territory. The answer to the hon. Gentleman's questions is therefore obvious. It is clear that there is a greater proportion of home students in Scotland and the distances that they have to travel are much wider.
I now come to the subject of parental contributions. That has been a matter of striking a balance. The parental contribution scale has been indexed in line with increases in earnings. As a result about the same number of parents will be assessed for a contribution this year as last. The Government are determined to protect the position of students from less well-off families. That is why the lower part of the scale has been retained at its previous rate, which will help families earning less than around average income.
§ Mr. Steen
I am aware that my hon. Friend is new in the Department. I wonder whether he will consider that there seems to be discrimination in favour of those students who receive state money. A student receiving state money can earn up to £2,205 without paying any tax. If a parent gives a student a covenant equivalent to £2,205 the student has to pay tax on every penny that he earns above that figure. Even though his parents may receive £700 back he cannot earn £2,205 to look after himself without paying 707 tax. That acts in favour of the state that gives the grant and not in favour of private enterprise and the individual. Will he consider that matter?
§ Mr. Walden
I wonder whether my hon. Friend will mind if I answer that question in two parts. First, I prefer, for reasons that he will understand, not to comment on covenants and income tax as that is more properly for my right hon. Friend the Chancellor of the Exchequer. My hon. Friend mentioned private enterprise and I shall later touch upon a new measure of relief that is planned under the order to give a little more inducement to students to earn money during term. I am grateful to him for drawing that complexity to my attention and I shall study it.
Many families with residual incomes of about £12,000 or less will pay less under the regulations. I should like to stress that point. We have, however, been obliged to steepen the slope of the contribution scale for families with above average income, thereby increasing their parental contribution in real terms. Our general aim in this respect is to introduce a progressive and, therefore, fairer contribution scale.
Hon. Members will recall that the Government announced last year that parents at the upper end of the scale would be assessed to contribute towards designated tuition fees. However, following the deep concern expressed in many quarters that this would mean too sharp an increase in parental contributions, we decided to withdraw the proposal. There are no plans to reintroduce it.
The Government have also decided to abolish the minimum maintenance award of £205. I know that the decision has been a source of concern on both sides of the House. The reason for it is that we concluded that it would not be equitable to insulate top income families from increased contributions when higher contributions than hitherto would be required from parents with rather lower incomes. So this measure, too, should be seen as part of our general aim to introduce a more progressive system. But it is a balanced system, which tries to avoid extremes. That is why relatively well-off families, although they may be asked to pay for the whole of a student's maintenance needs, will have a limit on their overall contribution of £4,000 if they have more than one award holder.
As my right hon. Friend announced last November, without these changes the cost of student awards would continue to spiral; with them, the country will be better placed not only to meet the cost of awards for an increasing number of students, but to contribute towards increased provision for science and technology in the universities and research councils.
I turn to the other changes in the regulations. Few are contentious and, indeed, I believe that many of them have been generally welcomed.
We have aimed, first, to help certain refugees and other students whose parents might normally be assessed for parental contributions. It has been brought to our attention that such parents could face difficulties in their home countries if they were contacted for assessment purposes, and that it can be extremely difficult for money to be sent from certain countries to the United Kingdom. The regulations have therefore been amended to allow local education authorities to waive the assessment of a parental contribution where they are satisfied that seeking it might 708 jeopardise a student's parents or where it would not be reasonably practicable for the parents to send an assessed contribution to this country.
Secondly, we have widened the definition of independent status to include periods spent on the Manpower Services Commission's youth training scheme and periods spent in receipt of severe disability allowance. The regulations have been amended so that time spent in either of these ways will henceforth be counted for the purpose of establishing a student as independent of his parents and hence not liable to assessment for a parental contribution.
Third—here I come to the point raised by my hon. Friend the Member for South Hams (Mr. Steen)—the regulations have been amended so that students' term-time earnings will have no effect on their grant. Under the previous regulations, any term-time earnings in excess of £400 resulted in a pound-for-pound reduction in grant. The amendment is consistent with this Government's stated aim of encouraging greater self-support by students.
§ Mr. Clement Freud (Cambridgeshire, North-East)
If a rich and prosperous industrialist went to university, would his earnings be free of tax during term time?
§ Mr. Walden
It seems unlikely that that situation would arise. Therefore, it seems unnecessary to comment on that point.
Finally, the regulations have been amended to bring the assessment of income more closely into line with tax practice. As a result of last year's Budget, income derived from bank interest is now paid to savers net of tax, as has long been the case with income from building society interest. We have therefore amended the regulations so that, in assessing students' and parents' income, any interest received net of tax will be grossed up by the standard rate of tax.
I will refer briefly to the remaining changes which represent essentially technical adjustments to the regulations.
First, it has been a long-standing policy that a student should not be entitled to an award for a first degree or comparable level course if he has previously successfully completed such a course, regardless of whether or not public support was received for the previous course. The regulations have therefore been amended to ensure that correspondence courses leading to first degree and comparable qualifications are taken into account in determining a student's entitlement to an award.
Second, under the regulations students who attend a course for a period in excess of 30 weeks and three days receive for the excess period support in the form of a supplementary maintenance payment. Exceptionally, students of Oxford or Cambridge university qualify for this so-called extra weeks' allowance after 25 weeks and three days. Previously, Oxford and Cambridge students were able to claim this allowance after 25 weeks and three days even though they had been spending a year of their course at another institution, studying alongside students who were eligible for the allowance only after 30 weeks and three days. To remove this anomaly, the regulations have been amended so that payment of the extra weeks' allowance to Oxford or Cambridge students begins after 25 weeks and three days only when they are studying at Oxford or Cambridge.
Finally, where a student leaves a course part way through the year the regulations require that his grant 709 entitlement be adjusted accordingly. Although it has long been the practice that in such cases any assessed parental contribution be correspondingly adjusted, the regulations this year have been amended to ensure that this adjustment is made.
I shall take up briefly some of the points made by the hon. Member for Denton and Reddish. He spoke about the timing of the regulations and I acknowledge and regret that it causes problems for local authorities. I shall not weary the House by reading out the record on timing since 1962 when the mandatory awards were initiated. If I did, the hon. Gentleman would discover that the regulations have always been laid in July and August under successive Governments.
§ Mr. Andrew F. Bennett
That has always been wrong and there is no merit in perpetuating a bad practice.
§ Mr. Walden
I am sure that the hon. Gentleman is aware that there are real difficulties that involve the social security system, which make the present timing of the regulations almost unavoidable although it causes problems for local authorities. We shall try to do better in future.
Responsibility for any changes in social security benefits rests with my right hon. Friend the Secretary of State for Social Services. He will undertake consultations before the introduction of any new measures. I can assure the hon. Gentleman that we are alive to the implications of any such changes, especially for mature students.
The hon. Member for Denton and Reddish implied that bank loans have created new problems and that students are getting into debt. We must recognise that most students are old enough to behave responsibly with banks and that most banks—this is my experience—have a fairly responsible attitude to lending. This is an area from which the nanny state can stand back for a moment and assume that individuals, especially students, are old enough and sensible enough to look after their own interests.
§ Mr. Walden
I shall not—[Interruption.] I hear some comments from my hon. Friends behind me about the time. I am aware especially of the length of my speech. However, this is a detailed subject. I conclude my remarks by commending the regulations to the House.
§ Mr. Clement Freud (Cambridgeshire, North-East)
I welcome this short debate. I shall be as brief as I can in making my contribution to it. The history of the debate is that it was originally to be a prayer. The hon. Member for Durham, North (Mr. Radice) and I spent many happy morning hours queueing outside the Table Office because of the amazing procedure that we have in this place. The hon. Gentleman finally beat me when I arrived one morning at 6 o'clock to see that he and his butler were already present. They were cooking eggs and bacon prior to an early morning meal.
I welcome the Minister to his position. I am given a nod, for which I am grateful. It was good news that we were to have in his position a man untainted by the smell of the manure of power. We believed that it would be helpful to the higher education sector if we were to have someone at the Department with new thoughts. Having heard his speech, I feel that within it there was a sort of 710 hopelessness, which we have come to associate with those in his office, but after that speech he can only improve, and I wish him well.
I wish I could believe that the regulations were part of a plan that would benefit education, but, I must tell the Minister, as I am sure he knows, that their purpose is to cut the student population to fit the projected and available budget. We regret that.
In the Green Paper the Secretary of State talked about the new Robbins principle. He confirmed that courses in higher education should be available to all those who would benefit from them and who wished to do so, but he qualified that by saying, "provided the benefit justifies the cost." Who is the arbiter of that? It will come as no surprise to anyone to learn that the Secretary of State is the sole arbiter, the sole person to see whether the "benefit justifies the cost", whatever that may mean.
The regulations against which we were going to pray and which we are now seeking to revoke are another nasty and devious way of making the Department of Education and Science's discredited projections and demands become a reality. I say again, with fear of boring the House, that higher education is being sacrificed on the altar of monetarism. That is not a policy to benefit education. We wonder whether the Government have a policy. [HON. MEMBERS: "What is the hon. Gentleman's policy?"] I shall come to that in a moment.
Let me run through the changes. The overall level of student grant has been increased by half the rise of inflation. That is a real term decrease of over 2 per cent., and the Minister well knows that the RPI does not reflect the student cost of living. Since the Government came to power there has been a 17 per cent. decrease in real terms. The minimum grant has gone, and with it has gone the gesture towards independence. I believe that that was a cost-effective gesture because it recognised that higher education was an investment for the nation as well as for the individual.
§ Mr. Freud
I shall not give way.
We would argue that it is right for the state to pay towards the support of its future. An ensured income is gone for 50,000 students. Parental contributions, as the House will know, are notoriously unreliable when it comes to income for students. The scales of parental contributions are changed. The Secretary of State is masquerading as a radical, as a convert to progressive contribution. The net result is a parental contribution increase of 270 per cent. on the 1979 figures. The proportionate cost to parents is up and the Government's share is down. It is privatisation with a vengeance.
§ Mr. Freud
Before 1979 one received an allowance for having a child in higher and further education. When tax allowance became child benefit, that went, because child benefit goes at the age of 19.
I want to talk briefly about changes in the travel grant. The Minister said that it had gone up fractionally by 5 per cent. That is rough justice, but there is more roughness than justice. I wonder whether the Department has looked carefully into cases of hardship, such as the case raised by the hon. Member for St. Ives (Mr. Harris), who talked 711 about the children of the Isles of Scilly. For instance, does the Minister know what happens at Lancaster university, where 1,300 students live in Morecambe? The fares that they have to pay instantly disadvantages those students by over £100. The problems at Warwick and East Anglia are not very different.
I believe that the saving on the entire package is around £30 million a year. That is about 250 yards of the Falklands airport runway. Some of it will go to science—about half, I think—but not all. There is no guarantee that that will go on.
In a nutshell, the regulations undermine the higher education system, cause hardship to the student population and substantial misery to parents. Some parents pay 19 per cent. of their net income before tax, after mortgage and life assurance, thus a couple on the same salary as the Minister receives has to pay £2,478 for the maintenance of one student at university. Anxiety does nothing for the environment in which the student has to learn. Anyone involved in higher or further education will tell the Minister that a worried, hungry or broke student is not an easy student to teach.
The Secretary of State has a preference for students to be financially dependent on ever-decreasing grants, rising parental contributions and jobs, although I guess that in the best of all worlds he would have liked students to borrow the money.
The Department of Education and Science has no policy, and every question that I have asked has shown that it has not done its homework either. Is the Department qualified to gauge what parents can afford? The answers that I have been given say no. Does it know about the availability of jobs? It has no idea. Does it know how to judge the effect on student take-up? The answer is no. It is trying to limit student take-up to the available money—the money that the Department has available.
By its very negativism the Department has disqualified itself from being able to be questioned. What better example than the Green Paper on student support, which was cancelled because loans were shown to be a nonstarter? When the Minister next sees the Secretary of State, perhaps he will tell him of the disservice to the House of making a statement at the Dispatch Box and rescinding that statement by a written answer to a planted question. I say "planted" advisedly, because the question did not ask "when" he would publish the statement, but "whether" he would do so, presupposing that it would not be published.
That must not be allowed to be used as an excuse for silence. In the absence of any lead from the Department, we get creeping Fowlerism. When Phil Woolas, president of the National Union of Students, went to see the Minister's predecessor, he was told that decisions in respect of supplementary and housing benefits would be taken by the Department of Health and Social Security alone. The Department of Education and Science would have to wait to find out how its students would be able to support themselves. We believe that higher education is an investment—[HON. MEMBERS: "Who is we?"] We on these Benches. The Government feel that until we have an upturn in the economy they cannot spend more on that sector. I want to make it clear that we believe that there will be no upturn in our economy until we invest in higher education.
§ Mr. Neil Hamilton (Tatton)
The only remark that I shall content myself with on the speech by the hon. Member for Cambridgeshire, North-East (Mr. Freud) is that he is a good deal more convincing and entertaining as an advocate when he is being paid for it.
§ Mr. Hamilton
The hon. Gentleman's parade of platitudes and special pleading, in which he followed the hon. Member for Denton and Reddish (Mr. Bennett), was welcome only in so far as he welcomed my hon. Friend the Minister to his new responsibilities. That was all the more welcome because in his constituency he has one of the finest examples of an entrepreneurial university. It is an example that other universities might follow with profit.
However, I regret that in his remarks the hon. Gentleman ruled out—
§ Mr. Hamilton
The hon. Gentleman asks me what I meant by what I have said. If he listens a little longer, he may discover.
§ Mr. Hamilton
So far as I am aware I have said nothing that requires to be withdrawn. [HON. MEMBERS: "Withdraw."] I will withdraw any mention of the hon. Member for Cambridgeshire, North-East if that satisfies the House. It will certainly satisfy the rest of the country.
In his speech today my hon. Friend the Minister once again ruled out any prospect of introducing student loans. In my view, that is greatly to be regretted. In the midst of the great controversy that occurred in relation to last year's student grants settlement that was one of the options that many Conservatives were led to be believe would be seriously considered. Another desirable reform—education vouchers—was proposed while we were in Opposition but rejected when we came to office. Many Conservative Members are wondering whether this is another example of what one of my right hon. Friends referred to as "post-war funk" at the Department of Education and Science as both those proposals represent highly desirable means of enfranchising many people who currently have no choice whatever in the education system.
This year we plan to spend about £700 million on student maintenance grants and it is right to inquire into the morality of that. My hon. Friend the Minister cogently pointed out that those in receipt of the grant can generally look forward to enhanced earning power in the future and that the grants come out of taxes paid by people who will not enjoy those advantages. As Professor Lord Bauer pointed out equally cogently, overseas aid is mainly paid for by poor people in rich countries and given to rich people in poor countries. The same immoral aspect is to be found in the student grant system. I therefore wonder why the Government have decided against even a consultation exercise in relation to student loans as I believe that the advantages would be great, not just for the taxpayer but for the students themselves.
§ Mr. Michael Fallon (Darlington)
There would also be an advantage for students who at present cannot obtain 713 grants. Many of my constituents who live in the Durham county council area are refused grants for courses that would be eligible for grant in other education authority areas.
§ Mr. Hamilton
My hon. Friend is quite right. Another disadvantage of the present system is that it restricts the amount of money going into education and especially into higher education because of the pressures on Government spending which exist under any Administration. In 1963 the Robbins report looked forward to 17 per cent. of people in the student age group being in higher education in 1980, but the figure has steadily declined and is now only 12 per cent. A loans system would be a means of infusing the education system with more funds.
This country is almost alone among western industrial countries in not having some kind of loan system in addition to or in place of student maintenance grants. The experience of other countries is an eloquent testament to the value of such a system. We have introduced a highly effective loan guarantee scheme in relation to small businesses. There is no reason why the same logic and reasoning should not be applied to higher education.
The injustices of the parental contribution system as it now operates have been pointed out by many hon. Members on many occasions. Such contributions now have to be made in 60 per cent. of cases, but the majority of those parents do not make the grant up to the extent expected of them and 7 per cent. refuse to make any contribution at all. The students affected therefore have a tough time and as there is no structured borrowing system to cover student loans they find it very difficult to borrow the money and to survive as happily as those who are paid for by the taxpayer.
I believe that students would also be more concerned about the quality of the education that they receive if they were not so dependent on state largesse and if it actually cost them something to obtain the benefits which in due course will be translated into economic improvement for themselves.
I welcome the change in the regulations to ensure that students will now be able to work during term time—I have always thought that a good thing—and to get paid for it. This is commonplace in other countries. For example, in the United States, between a third and a half of students work in order to support themselves, either wholly or partly, during term time. They usually do so on the campus and do jobs such as laundering, cleaning work, gardening, administrative work in the libraries and so on.
§ Mr. Christopher Hawkins (High Peak)
The Minister said that it was a rarity for rich industrialists to go to university or polytechnics, but it is not a rarity on business administration courses. If no limit is put on the concession that people can earn what they like, that will provide a marvellous tax fiddle for the rich—they just sign on at a polytechnic course and their earnings will become tax-free.
§ Mr. Hamilton
My hon. Friend is, I think, mistaking the import of the regulations. I encourage him to look at them again in a little more detail, because I do not think that is their consequence.
By providing students with the opportunity of supplementing their income in this way, we would be providing them with a ready and effective source of cash that would not distract them from their studies.
714 A study on this had been carried out in the United States by Professor Alexander Astin of the University College of Los Angeles. He examined the careers of 200,000 students at 350 colleges and concluded that if a student works for up to 20 hours a week on the campus, he or she is more likely to complete the course successfully. Therefore, there is nothing in the argument that this would be a distraction from academic studies.
§ Mr. Robert B. Jones
I am grateful to my hon. Friend for making that point. Indeed, my own father paid his way through university in the United States by working at night. That encouraged an attitude of independence, which is precisely what we seek from students. Is not it extraordinary that the hon. Member for Cambridgeshire, North-East (Mr. Freud) should attack the Government for their attitude towards parental contributions, saying that it diminished independence, while at the same time being against a loans system, which would give students true independence?
§ Mr. Hamilton
My hon. Friend is quite right. Mention has already been made of the NUS grants campaign. I notice that Mr. Phil Woolas, the president of the NUS, said that the NUS was targeting certain Members of Parliament in marginal constituencies to try to put pressure on them by threatening to refuse to vote for them at the next general election if they do not support the NUS proposals for an increase in grant. It is interesting that my own constituency does not feature on the list of marginal seats nor, happily, does that of my hon. Friend the Member for Darlington (Mr. Fallon). Mr. Woolas said:Where the sitting MP is in a targeted student marginal we will put it to them straight—back our case for adequate student finance or we will vote you out.That is an example of the kind of political corruption that student grants bring into our governmental system. If we ended the closed shop in student unions, we might turn the tables on Mr. Woolus, and perhaps the students would vote him out.
The Minister need not fear for the Government's popularity or for himself if he goes down the road towards student loans to introduce more freedom and flexibility into higher education. The Federation of Conservative Students, the largest student body in the country with more than 14,000 members, is also in favour of moving towards loans. I therefore encourage him to consider this matter again.
§ Mr. Max Madden (Bradford, West)
My hon. Friend the Member for Denton and Reddish (Mr. Bennett) said that the grants system was in crisis. That is clearly the case, because wherever we look at education today there is crisis. We have teachers in revolt over their deplorably low salaries; many schools are literally falling down through decay and disrepair; there is great concern among university teachers about the level of investment in higher and further education; and the grants system is a mess. I understand that the committee of vice-chancellors has described the situation as being in an advanced state of decay and the NUS, in a restrained comment, described the grant system as being unsatisfactory and accused the Government of attempting to sweep the issue under the carpet.
The truth is, as has been said, that the Government promised a thorough review of the grant system. That has 715 not come about for the reasons that my hon. Friend outlined, but that in no way avoids the necessity for a thorough and comprehensive review of income support for all students. Indeed, I would strongly urge that that review be wholly independent and look at the income support of all those in full time education after the age of 16.
It is clear that student grants are too low. I will not go into the details which have been referred to by other hon. Members but it is clear that the value of student grants has fallen by something like 17 per cent. since 1979–80. It is also clear that a large number of students are facing considerable difficulties in trying to support themselves and at the same time undertake proper studies to secure their degrees and to advance their careers in their chosen subject.
We have also heard in this debate about the difficulties caused by the parental contribution. I understand that many students are caused considerable hardship as a result of their parents failing to pay part or any of their assessed contribution. Indeed, a survey carried out on behalf of the NUS found that as many as 43 per cent. of students did not receive the full amount due from their parents. That represents real hardship. The Government and successive Ministers have had great difficulty when challenged to say how they intend to overcome that. That situation will not ease given the extent of low pay and other difficulties which so many people are facing.
Many students are also facing difficulties over travel costs. Students used to be allowed to claim the travel costs that they incurred over a £50 element built into the grant. In November 1983 the Government announced the replacement of that system with a flat-rate payment of £100 for those who lived away from home or £160 for those who lived at home and travelled to college. Again the NUS conducted a survey which found that 47 per cent. of students living at their parental home spent more than £160 on travel while 32 per cent. of those living away from home spent more than £100 on travel. What the Minister has said tonight on travel costs is welcome, but clearly it does not go far enough. Indeed, it does not reflect the recent news of a substantial increase in rail fares—as much as 8 per cent. or 10 per cent.—which will clearly affect many students in the coming year. Again, it makes the case for the Government announcing as early as possible what the grant will be for the coming year.
§ Mr. Madden
He did indeed. We are obviously aware of the hon. Gentleman's difficulties as he comes new to the post, but nevertheless we hope that by another planted question or some other means he will be able to say very soon what the grant for 1986–87 will be. We should remind him that if that grant is to come anywhere near restoring the value of the grant it should be well over £2,100.
I regret that much of this debate has been conducted against a giggling clack of Conservative Members who have shown their usual interest in education matters by keeping up a sustained barrage of giggling and laughter throughout most of the debate which will not go unnoticed by those students and others involved in education who take an interest in these matters and the way in which they are debated in the House.
Bradford university is in my constituency. As a result of cuts in 1981, Bradford, Ashton and Salford universities 716 suffered exceptional and deep cuts. It is estimated that the cuts took about £6 million out of the local Bradford economy. If the Government continue to refuse to pay a grant—which does not reflect the loss in value of the grant lost since 1979—they will again inflict damage on the economies of Bradford and other university cities. I hope that they will take that into account when reaching decisions on the grant for 1986–87.
The Federation of Conservative Students apart, students recognise that they are campaigning to protect and increase their income. They have common cause with those who are trying to increase child benefit and pensions. They share a common objective with those fighting to defend the welfare state and to ensure that unemployed, sick and disabled people who depend upon the state, receive benefits which enable them to lead worthwhile and useful lives.
We are investing in students. They are investing their lives for the benefit of our society. It is incumbent upon us and the Government to ensure that they have the maximum support; that they are encouraged to study.
We want to broaden access to higher education. One of the major indictments of this Government's policy is that it denies access to higher education to young people from working class homes. We want to revoke the order, which does nothing to help students or higher education.
§ Mr. Tony Marlow (Northampton, North)
I do not ask for any more money, rather that the money available is more justly distributed. The balance for student finance could be made up if the Government were prepared to lean on our cartelised clearing banks. I cannot believe that any Conservative Government would wish to start from here. No Conservative Government could or would, of their own volition, dredge up such a cocktail of injustice.
How can one say to an 18-year-old "You are an adult with all the rights and responsibilities of adulthood unless you happen to come from a relatively well-off family"? Let us look at the problem from the adult student's view. Is it right that for every three who receive a grant as of right, another seven are dependent on the financial good will and resourcefulness of their parents; not only that, that they have to rely upon the administrative diligence of their parents? I do not know how many people realise what a bureaucratic nightmare it is to fill out a second tax return on behalf of one's student children.
What does one say to a young person qualified for university who has fallen out with his parents or whose parents do not believe in higher education? Is he less equal in the state's eyes? Is that a correct concept for a party of one nation? What does one say to the daughter whose parents have relatively restricted means and whose real residual income bears no relation to the calculation set out by the local education authority? What does one say to a daughter whose parents decide that they will fork out for their son but not for her? I declare a modest interest—not to my own advantage, but purely as an illustration. I have five children, aged between 14 and 22. I wonder whether the Government have any idea of the cost and difficulty of bringing up five children, and of getting them through A-levels. Do they really think that there is cash available for the older siblings when the younger ones are still at home?
What advice would the Government give to a family with one child in private education and one child in higher 717 education when the family cannot afford to finance both? Would the Government suggest that they take the child out of private education? The state would then pay for his education and there would be money available for the child in higher education. Is that Conservative Government policy? Why is it that those students who are financed by covenant are taxed on all their earnings when their more fortunate colleagues, who get a full grant from the state, obtain a tax allowance as well? Is there a feeling somewhere in Elizabeth house that students can control how they are financed?
The Government may not provide a solution to these problems, but there is an easy solution available to all those moderately successful couples who have children in higher education, children with the potential for it, or even available to those who may have children with the potential for higher education. They can get divorced, or if they are more far-sighted, they can go in for planned illegitimacy. In that way they will pay less personal tax, they will be able to have a larger mortgage and, when the time comes, they will not have to pay any damned deemed parental contribution. Is that the course of action the Government want our people to pursue? Is that what the party of the family really believes in?
§ Mr. Mark Fisher (Stoke-on-Trent, Central)
Like other hon. Members on both sides of the House, I welcome the debate and congratulate the Minister on his appointment. I am sure that all hon. Members will appreciate having as the Minister for higher education someone with his extremely distinguished academic background. If his political acumen is half as distinguished as his academic and intellectual achievments so far, the House, and higher education in general, will benefit.
The Minister's start was not however, as auspicious as he or the House might have liked. As the hon. Member for Cambridgeshire, North-East (Mr. Freud) said, the Minister appeared to flounder and then drown in the prose of his departmental brief. He might be well advised to throw away that brief or to rewrite it radically next time. I am sure that there were some ideas of his own struggling to emerge from that rather crabbed prose.
The important subject of higher education cannot be addressed in the very short time available. The House does not debate higher education nearly enough, yet the plight of students and the state of their income is enough to give anyone cause for concern over the state of education and the future of industry. It should be the subject of serious and sustained debate in the House.
The Minister had a chance tonight to explain the Government's thinking and to lay out the principles behind it. He should have stood at the Dispatch Box and told us what the grant for 1986 and 1987 would be. He should have told the House what principles it would be based on, and he should have explained to the 450,000 students waiting to hear what will happen to their financial provision next year. He wholly failed to do that. He did not even attempt to outline his thinking. Even though he is new to his job, he should realise that the Secretary of State announced this year's grant more than 12 months ago. Why should students have to wait even longer, perhaps for a written reply that is sneaked into the Official Report, before being able to understand what will happen in 1986 and 1987? When the Minister replies, he really should address himself to that. However, as he wholly 718 failed to do so in his opening remarks he may not do so when he replies, but he should at least tell us when he will announce the sum and explain the workings behind assessing it.
The Minister should explain the Government's priorities. There are various ways of considering student grant. It could be considered as a matter of social justice, on a comparative basis against the income that students could be earning had they not elected to go on to higher education—we must attract the necessary quality of mind for the future development of our country—on a simple cost basis against the retail prices index and the increased travel costs that students face, or as a question of efficiency. Any of those criteria or a combination of them, could be employed by the Minister. I hope that he will help the House understand the issue by saying which of those criteria he will apply. At the very least, the Minister should tell students this year what will happen to them in 1986–87.
§ Mr. Walden
I am grateful for the brief time that I have available to reply to the many points raised on both sides of the House, which I shall do rapidly for obvious reasons.
The hon. Member for Cambridgeshire, North-East (Mr. Freud) must have been thinking up his obscure reflections on the corruption of power rather than listening to my speech on the state of education. He spoke of the undermining of the educational system, whereas I went to particular lengths to explain that one reason why we are constrained to take what I would describe as a responsible and realistic attitude towards student grants is the rise in the number of students in higher education and the fact that there is a limited pool of resources on which that larger number can draw. There was no reflection of that in his remarks, although I am not remotely surprised by that.
The hon. Gentleman seemed to be very sorry for students—so am I. There is no getting away from the fact that there has been a reduction in the purchasing power of their grants—incidentally, ever since mandatory grants were introduced in 1962. That is a point worth remembering.
The hon. Gentleman also seemed to be very sorry for parents—so am I, for obvious reasons. They must pay more, and one sympathises with them on that score. He showed no sympathy for the taxpayer. I must repeat that many people paying tax on a low level of income are supporting those privileged to go on to higher education who will earn high salaries later in life.
On the position of Lancaster university, I am aware in general terms of the difficulty there and at other places. The Government are watching to see whether any local initiatives arise to solve the problem. I am watching to see whether the pattern of student accommodation changes to alleviate the problem.
My hon. Friend the Member for Tatton (Mr. Hamilton) concentrated mainly on student loans. I want to stress that the Government's position is that there is no intention to introduce them at the present time. I am sure ant he is aware of the main reasons why we are reluctant to do that. The first is the initial expense involved, the second is that student loans risk hitting the lower income section hardest, and the third is that even where they operate on the Continent, there appears to be a high degree of administrative complexity. Our present system is complicated enough, and we do not want to replace it by 719 something even worse. I want to stress again my phrase, "at the present time". No one can accuse the Government of not having given the question of student loans a fair debate.
The hon. Member for Bradford, West (Mr. Madden) called the present system a mess. I describe it more as a patchwork, although I admit that it looks better from a distance than from close up.
The question of income support for all students is more a slogan than a serious suggestion. The cost of that has been estimated at more than £500 million.
I am sorry to have to confirm that the figure of 17 per cent. that has been mentioned in relation to the fall in student incomes since 1979 is roughly correct. I again draw attention to the fact that the real value of student grants has fallen since 1962. Maybe it is another case of Governments in the past having promised rather too much too soon.
I agree that parents not giving their children the full assessed amounts is a lamentable situation. Even the NUS acknowledges that the shortfall is sometimes quite small; it is not just a case of 43 per cent. getting no contribution from their parents. They may be £50 short.
§ Mr. Walden
I agree, and the Government would welcome constructive suggestions on how we might help to overcome the problem, short of legislation, which I would regard as a sledge hammer.
Moving from patchwork to cocktails, though the message is the same, my hon. Friend the Member for Northampton, North (Mr. Marlow) seemed to develop a moral philosophy of student grants which, as usual, I 720 found impressive and deeply felt. However, having started on what seemed to be a high moral level, he finished by advocating immorality. The position is that, where parents do not ordinarily live together, the parental contribution is assessed on the income of whichever parent the local education authority considers to be most appropriate. This income may include maintenance payments from the other parent.
The hon. Member for Stoke-on-Trent, Central (Mr. Fisher) seemed more concerned with prose style than substance, though I thank him for his elaborate welcome, part of which I pocket and the rest of which I reject.
§ It being one and a half hours after the commencement of proceedings on the motion, proceedings thereon lapsed pursuant to the Order of the House [22 November].