HC Deb 18 June 1986 vol 99 cc1059-68 4.14 pm
The Secretary of State for Education and Science (Mr. Kenneth Baker)

With permission, Mr. Speaker, I should like to make a statement on student support.

The measures just announced by my right hon. Friend the Secretary of State for Social Services mark a return towards a system in which support for students will be provided through the single channel of the educational maintenance system. It is a limited step, taken in close consultation with my Department. I am, however, convinced from the many representations I have received that it would be very difficult to make further progress towards disentangling students from the social security system without a wider examination of the whole structure of student support.

My right hon. Friend the Secretary of State for Scotland and I, in association with the Secretary of State for Social Services, have therefore decided to institute a comprehensive review of all aspects of financial supprt for students in Great Britain studying at first degree or equivalent level. It will examine the maintenance needs of students and the extent to which they should be provided for from public funds, having regard to other actual and potential sources of support, including loans.

The study will be carried out under the chairmanship of my hon. Friend the Parliamentary Under-Secretary of State for Education and Science, the hon. Member for Buckingham (Mr. Walden). The Scottish Education Department and the Department of Health and Social Security will be represented on it and the Education Departments of Northern Ireland and of Wales will be associated with it. The review will be carried out within Government, but we shall be open to representations and advice from every source. We shall undertake extensive consultations and consider international comparisons. The outcome of the review will itself be in the form of published proposals for public discussion and consultation.

Meanwhile, because the Government recognise the needs of students, we have mitigated the proposed removal of benefit whilst maintaining the level of compensation through the grant system originally proposed. Subject to the agreement of Parliament, the maintenance grants of students living away from home will be increased by £36 per annum from the beginning of the academic year 1986–87. This will be in addition to the increase of 2 per cent. which my predecessor announced on 16 December and will result in an overall increase of 4 per cent. on present rates for students living away from home. That is higher than the current rate of inflation. A similar addition to grant will be made in Scotland. A paper setting out detailed grant rates is being placed in the Library. The main rates of grant applicable to Scottish students are being given separately in a written answer by my right hon. Friend the Secretary of State for Scotland today.

Student numbers in higher education are at an all-time record level. We want still more to benefit. The Government stand by the principle of access to higher education for all who have the necessary intellectual competence, motivation and maturity, regardless of parental income. We want to ensure that students will neither he deterred from entering higher education nor handicapped in their studies by lack of means. But in doing so we must have regard to the claims on national resources. That is why I think that the time is ripe to investigate with an open mind all possible forms and sources of support.

I hope that the House will welcome the review which I have announced today.

Mr. Giles Radice (Durham, North)

I welcome the Government's partial retreat from their original proposals on social security entitlement for students. However, I agree with my hon. Friend the Member for Oldham, West (Mr. Meacher) that they should be withdrawn altogether until the review is complete. Can the right hon. Gentleman, unlike his right hon. Friend the Secretary of State for Social Services, tell the House how many students will lose out as a result of the revised proposals? Is he aware that his statement conveniently ignores the fact, recently admitted by the Minister with responsibility for higher education, that the real value of the student grant has fallen by one fifth in real terms since 1979? The statement holds out no prospect of a significant improvement.

Does the right hon. Gentleman accept that his in-house review, with its restrictive terms of reference, ignores the financial needs of non-degree students and pupils who stay on in full-time education after the age of 16, although both groups are vital to the future of this country?

Finally, is the right hon. Gentleman aware that his attempt to present the idea of a review of student grants as a promising new beginning has a hollow ring for those of us who remember the previous so-called comprehensive review, which was set up in humiliating circumstances by his predecessor in December 1984 and unceremoniously abandoned last autumn? What guarantee is there that the latest review, for which the right hon. Gentleman has given no completion date, will not suffer a similar fate?

Mr. Baker

As to whether we should postpone the changes announced by my right hon. Friend the Secretary of State for Social Services until the review has been completed, I remind the hon. Gentlemant that the Social Security Advisory Committee recognised that there was an element of double counting in allowing supplementary benefit and unemployment benefit for the short vacations. Those are the two principal changes being made. As my right hon. Friend said, the administrative costs of dealing with those very small claims this year was out of all proportion for the social security system.

I accept that the value of the grant has fallen by about one fifth or £90 million in real terms, but I remind the House that social security payments have risen to more than £120 million within the system. Housing benefit, which was principally introduced about four years ago, accounts for about £50 million for that. I should also point out that although grants have been cut, the number of students has risen by 80,000 under the present Government whereas under the Labour Government it fell by 2,600.

I do not know whether the Labour Front Bench intends to restore the level of student grant to what it was in 1979. In a speech last Friday the Deputy Leader of the Labour party seemed to put some kind of bridle on the hon. Member for Durham, North (Mr. Radice). Durham wants to spend but Sparkbrook says "Whoa". A newspaper headline on Saturday read: '"Expansion not on' Hattersley tells dons". On the hon. Gentleman's final question about the review and why I have announced it, I should state clearly that when I assumed responsibility for this office I looked at this question and decided that a review was clearly needed. That is why I have announced it today.

Mr. Harry Greenway (Ealing, North)

Does my right hon. Friend accept that there are two classes of student today—those on full grants and those whose grants are expected to be topped up by their parents, some of whom cannot afford to do so? Will he examine that aspect to ensure a more even situation for all students? Will he also seek to restore the grant lost through inflation?

Mr. Baker

The review will certainly look into that aspect. Student support now comes from two sources—from grants and from the social security system — and that is the sum of money that the review will consider. I have stated that loans are not ruled out as a means of topping up grants in recognition of the very point that my hon. Friend has made.

Mr. Michael Meadowcroft (Leeds, West)

Does the right hon. Gentleman accept that one of the major flaws in his statement is that the review is to be conducted within Government and that it is impossible to welcome a review when the membership of the review team is to come from the same ideological straitjacket as the right hon. Gentleman?

Why does the right hon. Gentleman exclude the 16 to 18-year-olds, and why is his proposal confined to first degrees or equivalent? Will the review be sufficiently cross-departmental to include Manpower Services Commission funding which often stops people going into training or education when it could be used for that purpose?

Does the reference to loans mean that the outcome is cash limited and that if the right hon. Gentleman cannot get any more cash on the table when the review findings come out there will be a return to loans? Is he aware that loans already exist? They are known to students as overdrafts.

Mr. Baker

As I said in my statement, the review will be cross-departmental because other Departments are involved, principally the DHSS but also the Scottish and Welsh Departments. The review will be wide and thorough. My hon. Friend the Parliamentary Under-Secretary of State will be starting on it later this summer —[Interruption.] It will have to be thorough because it is the first review of student grants for 25 years.

Mr. Andrew F. Bennett (Denton and Reddish)


Mr. Baker

With great respect, it is the first for 25 years.

I am glad that a Liberal Member raised the subject of loans, although he should perhaps clear his channels of communication with the leader of the SDP, who made an important speech at Stirling university in February indicating a fundamental change in student support and floating the idea that student support should be operated by the universities and polytechnics themselves and that students should be given not only the student support money but part of the tuition fees to take around to address different institutions. The leader of the SDP also said that students would be able to take out loans for topping up, so there seems to be some support in part of the alliance for the concept of loans.

Mr. Robert Rhodes James (Cambridge)

I welcome the announcement of a thorough and comprehensive review, but may I impress upon my right hon. Friend that the voices of industry, business and schools must be heard as well as those of higher education and Government? Will the review include the problems of parental contributions and the wider problems of financing research and academic salaries?

Mr. Baker

Financing research and academic salaries are rather separate matters, but I warmly endorse what my hon. Friend said at the beginning of his remarks. The review should certainly cover the attitudes of schools and the other aspects that he mentioned. I am concerned about the disincentive for 18 and 19-year-olds to go into higher education. This has been well measured over the years and probably owes more to the social attitudes and quality of education in schools than to cash considerations.

Mr. Max Madden (Bradford, West)

Does not the Secretary of State owe it to students to give a clear statement of the date given to the review team to complete its work? Will he undertake that all evidence submitted will be published? In view of the dramatic reduction in the real value of grants since 1979, does he not also owe it to students to state that new money will be available for a substantial increase in student grants when the review is completed?

Mr. Baker

The review will examine the whole question of student support. which might be a mixed system of grants and loans or grants and sponsorship. All these ideas are opening up. For example, Mr. Ball, who is warden of Keble college and chairman of the board of the National Advisory Body for Public Sector Higher Education, which includes the polytechnics, made a proposal last week recommending grants for two years and loans and sponsorship for the third year. Ideas of that kind will have to be examined.

The evidence will be public. I am sure that the various bodies will make it public themselves. If they do not do so, we shall make it public unless they ask for it to be held confidential, as some of it might be in matters of this kind.

Mr. Roger Sims (Chislehurst)

I congratulate my right hon. Friend on recognising the significance of these problems and instituting a review so soon after taking office. Will the review take into account the disparities which now exist among authorities in relation to discretionary and mandatory grants as this leads to some apparent injustices?

Mr. Baker

I can confirm my hon. Friend's last point.

Mr. Frank Field (Birkenhead)

Does the Secretary of State realise that the total increase in the student grant that he has announced today, inadequate as it is, is twice the increase in the old-age pension? Would it be right for Britain's 9 million pensioners to conclude that that is where they come in the Government's pecking order?

Mr. Baker

That question would be best directed to my right hon. Friend the Secretary of State for Social Services. I believe that I have secured a pretty good deal for students this year in that the basic grant is going up by 4 per cent., which is more than the rate of inflation.

Mr. J. F. Pawsey (Rugby and Kenilworth)

Despite some of the carping comments from Opposition Members, will my right hon. Friend accept that the review will be thoroughly welcomed not only in the House but by those in higher education? His reference to student loans will be widely welcomed. We hope that it will receive favourable consideration by the review body. May I ask for further advice? In regard to the 4 per cent. increase that he mentioned, does that mean effectively that at least for this year the grant has been inflation-proofed?

Mr. Baker

The grant for those students who are not living at home has been inflation-proofed. I think this will be welcomed by many students. As to loans, that is a matter which is very much a matter for public debate. Various schemes have been put forward in the student world itself and in the academic world. They relate not just to student support but to the whole financing of higher education. There is now a greater fluidity and mobility in the thinking on that subject than for many years.

Mr. Dennis Skinner (Bolsover)

Is the Minister aware that in all his answers about the thoroughly comprehensive review he has —inadvertently, I assume—forgotten to tell us the completion date? Am I right in assuming that the review will not be finished before, say, August 1988, or is it that two years for him is only a short time in politics?

Mr. Baker

I think that it will be completed before that. I should think that it is likely to be completed in the course of the next year. Then it will be a public consultation document. [HON. MEMBERS: "Oh!"] Surely that is what the House and the country would expect. Surely I am not expected to hold a review under a Government Minister and to slap the result on the table and say "That is that." We want to hear wide views and comments from the many people who are affected.

Mr. Alan Howarth (Stratford-on-Avon)

Is my right hon. Friend aware that there will be a widespread welcome among many anxious students and their families for the decision to re-establish the review and in particular for his willingness to contemplate a properly structured loans element? Can he see any way other than through loans whereby students can be disentangled from the clutches of the social security system and whereby all who are academically qualified may have an equal opportunity to enjoy higher education other than in conditions of penury?

Mr. Baker

The main thrust of what my right hon. Friend and I have said today is to disentangle students from the social security system. I think that enjoys wide support across the House. In the Beveridge report, which I studied last week, he specifically recommended that students should not be eligible for unemployment benefit. We are not making that change at the moment. Under what my right hon. Friend has said today, students will still be eligible for supplementary and unemployment benefit during the long vacation. One cannot withdraw those benefits without having a review to replace them with other forms of support. I do not exclude schemes of sponsorship by industry or a form of loan, possibly on a subsidised basis.

Mr. Gordon Wilson (Dundee, East)

In attempting to recast the grant structure for students, will the Secretary of State take into account a possible serious knock-on effect if loans were to be institutionalised? Does he realise that Scottish universities offer courses on a four-year basis and that that could be a substantial disincentive to students coming to Scottish universities?

Mr. Baker

I understand that. That is why a Scottish Minister will be closely involved with the review.

Mr. Anthony Steen (South Hams)

Clearly the Government cannot have a bottomless pit of expenditure on student grants. Is it not right that the Government are spending £2,800 million on student grants? Does my right hon. Friend agree that the review body should examine the question of interest-free loans? Does he agree that students cannot always survive on the grants that the Government give? With the problem of unemployment they may not be able to find work to augment their grants. Therefore, interest-free loans would be an important step forward.

Mr. Baker

Certainly the review body will examine that. It is fair to remind the House that, compared with other western developed countries we have a uniquely high level of student support — three to five times higher per student compared with Holland and Germany, and significantly higher than in Denmark, France and Italy. The difficulty in Britain is that the two systems— the social security system and the educational maintenance system—have become tangled. It is in the interests of everybody to sort that out.

Mr. Charles Kennedy (Ross, Cromarty and Skye)

in view of his statement and his earlier answer, will the Secretary of State confirm that the Scottish Education Department will be represented fully by a sponsoring Minister, that is, his hon. Friend the Minister at the Scottish Office who is responsible for education, in what the Secretary of State has described as the most thorough review in 25 years? Will the Scottish representatives on the review body take the opportunity to bring again to the attention of his Department additional living allowances for students at universities in cities London which have exceptionally high living costs? In the Scottish contest I think particularly of Aberdeen for obvious reasons. Will the review consider the potential for extending the principle of additional living allowances beyond London to other cities in Britain?

Mr. Baker

Clearly the review body will examine such points. I assure the hon. Gentleman that a Scottish Minister will be involved. There are often many things that we can learn from the Scottish educational system.

Mr. Patrick Thompson (Norwich, North)

Having pressed for this fundamental review on student finance, I should like to join many of my hon. Friends who welcome it. That welcome will also be reflected in Norwich where the fundamental review is very much required by those involved in the university of East Anglia and elsewhere. Does my right Friend agree that higher education is so vitally important that we must attract finance into it in all possible ways? Does he agree that in the fundamental review we must try to find alternative ways of getting finance into higher education for the benefit of young people so that the endless wrangling with the DHSS over finance may cease?

Mr. Baker

I hope that one of the prizes that will come out of the review will be a fundamental examination of the inter-relationship of student support with the financing of universities, polytechnics and institutes of higher education. One of my ambitions is to increase the participation of 18 and 19-year-olds in higher education. We have done very well since 1979 with a further 80,000 full-time students. I want to see progress above that figure.

Mr. Tam Dalyell (Linlithgow)

Having two children on four-year courses at Edinburgh university, may I ask the Minister what is the objection to either he or the Under-Secretary reading out the written answer so that the Scots may question him on it?

Mr. Baker

That is not a matter for me. I have tried to answer as well as I can. As regards universities, of course I have responsibility for those in Scotland.

Mrs. Edwina Currie (Derbyshire, South)

Does my right hon. Friend accept that his statement about the review will be very welcome on this side of the House, and that many of us wish it more luck than the last one? Does he agree that it is extraordinary that the main form of finance for students comes as non-returnable grants from the state? Is it not time tha we exploited other areas of society and in particular future employers? Should we not encourage them to take more interest in and to give more financial support to students whom they will be recruiting later?

Mr. Baker

I have sympathy with that approach. Many companies—larger and medium-sized ones for the most part — have sponsorship schemes and sponsor students in one way or another both at first degree and at postgraduate level. That is one area where I hope that the review body will be able to see an expansion of involvement of other sources of finance.

Mr. Andrew F. Bennett (Denton and Reddish)

May I congratulate the Secretary of State on maintaining the tradition of his predecessors—every time the heat is on student grants, they set up an inquiry? He will recall that, when the Prime Minister was in opposition in 1978, she promised students a fundamental inquiry. The right hon. and learned Member for Warrington, South (Mr. Carlisle) set the hon. Member for Brent, North (Dr. Boyson) on to a grants review in 1982. When it failed to come up with proposals for loans, it was quietly abandoned. The right hon. Member for Leeds, North-East (Sir K. Joseph), when under pressure 18 months ago, set up a review of student grants which was quietly abandoned when the pressure was off.

What guarantee is there that this review will be carried through? What will the timescale be? We were assured on all of the previous occasions that I have described that the fundamental work and the collection of information had been done. May we have a rather shorter timescale? Will the right hon. Gentleman include in the review mature students and access courses for mature students? If the Secretary of State for Social Services does not know how many winners and losers there are in the propsoals, does the right hon. Gentleman, because last time around, even the Prime Minister could answer a question about that?

Mr. Baker

The review body will have to consider the implications of its findings for mature students. I have already been frank with the House about the time. I think that the body will report next year. As for the certainty of the review, I have announced it at the Dispatch Box of the House of Commons and it will happen.

Mr. Dalyell

On a point of order, Mr. Speaker.

Mr. Speaker

Order. We are still in the middle of questions on the statement. We have a ten-minute Bill, another statement and an important debate ahead of us. Some of the hon. Members who are rising in their places wish to take part in that debate. I shall allow questions on the statement to continue for another five minutes, during which I hope that most hon. Members who are rising in their places will be called.

Mr. Dalyell

On a point of order, Mr. Speaker.

Mr. Speaker

I shall take the point of order at the end of the statement.

Mr. Dalyell

My point of order arises out of the statement.

Mr. Speaker

I shall take it at the end of questions on the statement.

Mr. Michael Stern (Bristol, North-West)

I join those of my right hon. and hon. Friends who have congratulated my right hon. Friend, especially on that part of his statement which puts student loans back on the agenda. Does my right hon. Friend agree that, to bring ourselves into line with what is regarded in the rest of the world as an acceptable level of student support, the grant element must inevitably fall?

Mr. Baker

The review body will have to examine that. It is quite true that there is a variety of means of support for students in other countries. In America, for example, support involves a higher element of loans, many of which are cancelled by the employer when the graduate is employed. The review body must examine that type of arrangement. I assure my hon. Friend that the review body will deal with the issues that he has raised.

Mr. Patrick Nicholls (Teignbridge)

Does my right hon. Friend agree that the review will be especially welcome to those of us who have urged his Department to examine student grants? Does he further agree that that review must be conducted on the understanding that it is no answer to say that our system of student maintenance is better than that in any other country? The system is deteriorating, and something positive must come out of the review.

Mr. Baker

I think that I am right in saying that, since the student grant was established in its current form in the 1960s, it has steadily declined in real terms. There is pressure on whatever Government are in power, therefore. We need a complete overhaul of the system and I hope that that is what the review will lead to.

Mr. Christopher Chope (Southampton, Itchen)

My right hon. Friend's announcement is excellent news for students, hut does he agree that much damage has been done by the uncertainty of the past few months? Will he therefore give a deadline by which the review should be completed? Does he agree that to let it drag on, perhaps well into next year, would be damaging to students who are anxious about their future? Will he say that the review will be completed by Easter?

Mr. Baker

I am reluctant for obvious reasons to give a specific date for completion. The review must be thorough and take account of comparisons of many other countries. I expect the review to report during next year. I understand the urgency.

Mr. Peter Bruinvels (Leicester, East)

Although I welcome my right hon. Friend's announcement, which is useful for all students, does he agree that British universities are the best in the world? Is it not therefore a privilege rather than a right for our students to go to university? Does my right hon. Friend agree that once students get to university they must aim to get qualified? If there was the incentive of a part grant, part loan system, would they not do even better?

Mr. Baker

I think that some would. Our best universities are certainly the best in the world, but my statement also refers to polytechnics, some of which are absolutely outstanding. I visited one in north Staffordshire last week, the computer department of which comes third after Imperial college and the computer department at Cambridge university. It is a great triumph for a polytechnic to get to that standard.

Mr. John Browne (Winchester)

Is my right hon. Friend aware that this comprehensive review will be widely welcomed by students, centres of learning and industry'? Is he further aware that loans will be welcomed? Does he agree that there is a real fear among students at a time of high unemployment about what will happen to the servicing of loans if the students are unemployed? Does he agree that such a loan should be on a soft basis—that debt service should be geared to future employment and salary levels?

Mr. Baker

Terms of loans and the extent of softness or the subsidy required will obviously concern the review. I understand what my hon. Friend says.

Mrs. Elaine Kellett-Bowman (Lancaster)

Does my right hon. Friend agree that the softness or interest-freeness of the loan is not nearly as important as the fact that repayment should not start until salary levels reach a certain point, as that would avoid the reverse dowry on girls?

Mr. Baker

I accept the problem that my hon. Friend has described. One of the reasons why the review must consider practice in other countries is that they have considerable experience of operating such systems. It is not as if we are breaking new ground. There is plenty of experience to learn from on the continent and in America. That is why the review body must take full international comparisons into account.

Mr. Robert McCrindle (Brentwood and Ongar)

In regard to inflation proofing, would I be unduly rash to assume that, between now and when the report is ready for implementation, student grants will increase broadly in line with the rate of inflation?

Mr. Baker

My hon. Friend is asking me to anticipate the discussions that I shall have later this year with my right hon. Friend the Chief Secretary to the Treasury. I think that I have shown good evidence of the token of the Government's concern today in that the level of grants for students who live away from home will be 4 per cent. higher this year, which is higher than the current rate of inflation.

Mr. Dalyell

On a point of order, Mr. Speaker. It may not be within your knowledge that the Parliamentary Under-Secretary of State for Scotland returned from his official visit to Mexico solely to be here for the statement on student grants, and for no other possible reason. As the Secretary of State referred in his statement to written answer, and as Scottish universities are affected rather differently, would it not have been at least sensible to have allowed the Under-Secretary of State to make a statement so that he could be cross-questioned on it?

Mr. Speaker

I am afraid that that is not within my knowledge. We had better have the next statement.