Education (Student Loans) Bill

HC Deb 05 December 1989 vol 163 cc172-258

Order for Second Reading read.

Mr. Speaker

I repeat what I said earlier this week. There is a great demand, and I welcome it, for right hon. and hon. Members to participate in our debates these days. There is a great demand today and I shall have to put a limit of 10 minutes on speeches between 7 and 9 O'clock. Again, I appeal to hon. Members who are fortunate enough to be called before that time to bear that limit in mind.

Mr. Simon Hughes (Southwark and Bermondsey)

On a point of order, Mr. Speaker. We are about to debate the Second Reading of the Education (Student Loans) Bill. In the Queen's Speech, the Bill was announced with the following words: A Bill will be introduced to supplement students' grants with loans. There is no provision in the Bill that deals in any particular with the loans, their amount, their funding, their arrangements or any other such details. This is a point of order to you to determine whether it is proper that we should debate today a Bill that has none of the detail that we were told that it would have by that short sentence in the Queen's Speech. That is germane and necessary before any proper consideration can be given to the Bill.

Mr. Speaker

The House has not yet heard the Secretary of State explain exactly what is in the Bill. The hon. Gentleman can raise the matter if he is called, and if he does not like what he hears he can vote against Second Reading.

4.25 pm

The Secretary of State for Education and Science (Mr. John MacGregor)

I beg to move, That the Bill be now read a Second time.

I shall be dealing with the matter raised by the hon. Member for Southwark and Bermondsey (Mr. Hughes) at some length during my speech.

The House debated student loans only recently—on Friday 20 October—and I do not wish to repeat all the points that I made then, but I think that it is worth restating three basic points by way of background. First, the Bill provides for loans as a top-up to student grants for maintenance, and for maintenance only. That is made clear in the long title, at the very beginning of the Bill.

Our present mandatory grant arrangements were introduced by the Education Act 1962, following the Anderson report, which envisaged higher education student numbers eventually reaching 175,000. There was no conception then of the way in which higher education would expand in the 1970s and 1980s. This autumn, there were more than 1 million full-time and part-time students in higher education, 400,000 of whom are in receipt of maintenance grant awards. That is compared with the 175,000 originally envisaged.

Dame Elaine Kellett-Bowman (Lancaster)

My right hon. Friend has stated clearly that clause I says that the Bill provides for top-up loans for maintenance grants alone. Will he draw attention to the somewhat misleading petition presented by the National Union of Students, which links student loans and tuition fees, as many of us are very much opposed to tuition fees but in favour of student loans?

Mr. MacGregor

It is made absolutely clear throughout the Bill that the provisions refer to maintenance grants and not to tuition fees. That will be made clear to everybody.

Mr. Harry Greenway (Ealing, North)

Will my right hon. Friend give way?

Mr. MacGregor

Very well.

Mr. Greenway

I apologise to my right hon. Friend, but it is an important point. I am grateful to him for explaining that the Bill will deal with maintenance grants. Is he aware that those of my constituents who are in higher education have still not been paid their maintenance grants by Ealing council, and that many of them have been forced into debt in connection with housing, food and everything else and so obliged by the inefficiency of Ealing council to take out loans at high interest rates? Ealing council, which is Labour-controlled, says that it opposes student loans but students have written to me and have been to see me to ask me to support the Bill so that they may obtain loans at a reasonable rate.

Mr. MacGregor

I hope that the Labour-controlled Ealing council will get on with it. There is no doubt that loans at a real interest rate of zero such as those that we propose—I shall deal with that later—would have helped all the students in their present predicament with Ealing council.

Mr. Jack Straw (Blackburn)

Will the Secretary of State give way?

Mr. MacGregor

I have hardly progressed with my speech, but I shall give way to the hon. Gentleman if he wishes.

Mr. Straw

I am grateful to the Secretary of State, because, as he says, he has hardly started. He has just said that the Bill will not cover tuition fees. Will he give a categorical commitment to the effect that it is the Government's policy that tuition fees will continue to be met in full from the public purse?

Mr. MacGregor

I should have thought that what we have done this year has made that absolutely clear, despite some of the suggestions that we heard in advance of the Autumn Statement. It was clear in the Autumn Statement—I cannot make it clearer, and the Bill cannot make it clearer—that the loans are for grants for maintenance.

I am aware that many right hon. and hon. Members wish to speak. As I have given way three times and I have hardly begun my speech, I hope that it will be understood that, in the interests of those who want to make speeches, I shall have to contain myself and not give way further.

The expansion in student numbers, unforeseen when the present system was introduced, is reflected in the costs to the taxpayer of the grant system. It has risen, at 1990–91 prices, from £236 million in 1962–63 to more than £600 million in 1989–90. Clearly, both the numbers and the cost to the taxpayer have risen considerably.

My second background point is that our system of student support is substantially more generous than that in any other comparable country. The latest comparative figures are for the years around 1984 but the relative position will have changed little since then, and the figures are revealing. They show that the public funding for students is £30 per student in Japan, £40 in Italy, £70 in West Germany, £180 in France, £275 for the United States and £750 for the United Kingdom. The figures are dramatic and bear out my point.

We anticipate substantial further expansion of higher education numbers in the years ahead. I have already reaffirmed my predecessor's expectations of something like a doubling in the numbers over the next 25 years.

Mr. Simon Hughes

No, the Minister has not done that.

Mr. MacGregor

I have said that so many times that I do not know how often I must continue to say it. I have said it again now, and perhaps the hon. Member for Southwark and Bermondsey (Mr. Hughes) will believe me.

At the time of the Autumn Statement, I announced provision of an extra £750 million to fund an expansion over the next three years, which would take the index of participation of the relevant age groups from 16 per cent. to 19 per cent. in those three years. Here is proof of action backing words: if that rate is carried forward over 25 years, it will actually more than double student numbers.

It is not going to be feasible to ask taxpayers to bear the extra burden of student maintenance at that rate over the years ahead. We already have a higher proportion of our university expenditure going to student maintenance support than most other countries. We are indeed generous in this area with regard to maintenance, particularly when we consider how other countries provide for maintenance and residence support. Most other countries have loans systems, some depend on loans heavily rather than grant, but none is so grant-oriented. By our proposals we shall in most cases, be moving only some small way in their direction, and their examples demonstrate that loans do not inhibit access.

It is important for the House to note that most of the taxpayers who are contributing to that support will have earnings levels throughout their working life which will always be lower than the incomes which students can expect to earn for most the time after they have graduated. I must stress that.

Mr. Dafydd Wigley (Caernarfon)

rose—

Mrs. Rosie Barnes (Greenwich)

rose—

Mr. MacGregor

I must make progress, because I have a lot to say. I have already given way a great deal.

I have now set out the background to the Bill. Its purpose is to implement the proposals set out in the White Paper "Top-Up Loans for Students" published in November 1988. It is worth repeating the Government's objectives as set out in that White Paper. They are to share the cost of student maintenance more fairly between the taxpayer, students' parents and the students themselves.

Mrs. Margaret Ewing (Moray)

Will the Secretary of State give way?

Mr. MacGregor

I will give way to the hon. Lady in a moment, after I have made a little more progress.

Other objectives of the Bill are to reduce, over time, the contribution to students' maintenance that is expected from parents and to reduce, over time, direct public expenditure on grants. The objective is also to increase resources available to students and to implement the Government's decision to remove students from the social security benefits system, which was never intended to be a form of support for student maintenance. It is also intended to reduce students' sense of dependency on the state and promote an awareness of self-reliance and investing in their future, which will bring with it, as in other countries, a greater readiness to obtain value for their investment in their courses.

Mr. Richard Caborn (Sheffield, Central)

Will the Secretary of State give way?

Mr. MacGregor

I will give way in a moment.

I am confident that that is the right way forward. Our scheme will benefit students. It will increase the maximum resources available to them while they are studying by nearly a quarter and it will give them greater independence from their parents. It will benefit their parents by cutting the contribution expected of them, over time, by nearly half. It will also benefit taxpayers because part of the burden of student support will be shifted from taxpayers at large to graduates.

Mrs. Ewing

How will the Minister's plans benefit disabled students seeking access to higher education? Additional expenses are built into their courses and they may not find employment at the end of their courses to enable them to repay their loans. In passing, will the Minister refer to the four-year degree course in Scotland and the implications of the new Bill for that?

Mr. MacGregor

I will refer to the hon. Lady's points about disabled students later in my speech. One of the difficulties with so many hon. Members wanting to intervene early in my speech is that they pre-empt the natural flow of my speech.

The hon. Lady's point about Scottish student grants was discussed at length in a previous Question Time. I myself am a beneficiary of a four-year course in Scotland. Although I did not have a maintenance grant, I got scholarships and earnings during university vacations. Those who wish to have and can benefit from the four-year course in Scotland—I am aware that a considerable number of English students wish to do so—will not find that the cost of a small additional loan repayment will outweigh the benefits of that course. The choice is for them to make.

Mr. Alex Salmond (Banff and Buchan)

rose—

Mr. MacGregor

I will not give way. I must get on.

I refer next to the Bill, and, later in my speech, I will deal with a number of general issues arising out of the proposals.

I have seen some criticisms of the form of the Bill. I believe that they are totally misguided and I wish robustly to defend our approach. I shall spend some time on this matter, because many hon. Members have raised it.

Our approach is right for three good reasons. First, it follows precedent. The nearest analogy is the Education Act 1962, which introduced the maintenance grant system for which these loans will now be a top-up. This Bill follows pretty well precisely the shape and approach of that Act. [Interruption.] The hon. Member for Blackburn (Mr. Straw) can make his points later. Perhaps he will allow me to develop mine, instead of constantly interrupting me.

Like the Education Act, the Bill identifies the purpose for which loans may be made and those to whom they may be made, as with grants. Like it, the Bill sets the framework, on eligibility and on qualifying institutions, and the ground to be covered in regulations and other arrangements. Like it, the Bill leaves the detail of loan rates and conditions, just as for award rates, to regulations made under the negative resolution procedure. I have not heard any complaints about the way in which student grants procedures are undertaken, in terms of parliamentary accountability or in other ways. We follow that precedent.

Mr. James Wallace (Orkney and Shetland)

rose—

Mr. MacGregor

I will not give way. I must finish my three points.

My second point is that, like the Act before it, the Bill covers the crucial issues. Schedule I is explicit and precise in its definitions of the categories of higher education courses and the kind of institutions to which the loan system will be applicable. Schedule 2 stipulates in some detail—I will come to it—the ground to be covered in regulations and other arrangements. So the notion that the Bill gives me "unlimited powers" to make loans is utter nonsense. I have not heard such charges made about grants.

Thirdly, the Bill follows the 1962 Act in providing the flexibility, through regulations, to revise year by year such things as the amounts of loans, the period and manner of repayments, the deferment or cancellation of a borrower's liability, and even changes to eligibility. I should have thought that that is very much in both Parliament's and the students' interest.

For Parliament, can it really make sense that such details as the size of the loan each year and conditions that we might wish to change in the light of experience should be the subject of regular primary legislation? No one argues that for grants.

I want to mention specifically a very important point. We shall, of course, monitor closely the effects of the introduction of the scheme. We have already carried out, in 1987 and 1989, three surveys of students' income and expenditure. We shall continue to commission periodic surveys in this matter and others if that is shown to be desirable. [HON. MEMBERS: "So what?"] The flexibility that the structure of the Bill gives us will allow us to act speedily and effectively on the findings of our monitoring. That is "so what", and it is very sensible. That flexibility will also benefit students. They will not wish to wait for a place in the parliamentary primary legislative queue to get an uprating in loan amounts or a beneficial change in eligibility.

Let me give a specific example. The House should understand this matter, because the critics on this score are totally wrong. This summer, a case in relation to student grants, which is our parallel, was raised by my hon. Friend the Member for Canterbury (Mr. Brazier). It related to a very technical point about a clergyman who, for many years, had worked in another European Community country but who had now returned to live and work in the United Kingdom. Owing to the technicalities of the regulations, without a change, the grossly unfair situation would have arisen that, because the son and daughter of my hon. Friend's constituent had not had three years' ordinary residence in the United Kingdom, they were not eligible for maintenance grants, whereas other European Community citizens resident here for a shorter period would have been. We were able to change that and to make grants available to those students by regulation. Without that approach, as embodied in this Bill, they would have had to wait for primary legislation to make that small change. I do not believe that the House would feel that that is in the interests either of Parliament or of the students.

Mr. Julian Brazier (Canterbury)

Does my right hon. Friend agree with two points on this—first, that it was an exceptionally hard case? The gentleman in question had given his whole working life to the Church and was on an income of less than £9,000 per year, yet he was unable to get any grant for his daughter who was on an extremely expensive music course. Secondly, does he agree that, besides reflecting the sensitive and speedy way in which the Minister concerned handled the application—I saw him about it in July and it had been fixed by September—it could not have been done had we not had a flexible framework in the legislation, depending mainly on secondary legislation?

Mr. MacGregor

My hon. Friend is right. It would have deprived a student who, through a technicality, would not have been able to undertake that course. My hon. Friend makes his point very well. Indeed, it would have deprived such a student of ever having the chance to go on such a course, because it would not be possible to find a place in primary legislation for dealing with such a narrow technical point. That is what we are proposing in the Bill.

I hope that the House will agree that these are powerful reasons for having this Bill in the form it is. Those who criticise it have to justify why they are not criticising also the parliamentary arrangements for student grants.

Mr. Wallace

The Secretary of State has made comparisons between the 1962 legislation and the Bill, so will he tell the House what references that Act makes to Scotland? The only specific reference to Scotland in the Bill appears to be, ominously, with regard to insolvency and sequestration of estates. Will separate regulations be made by the Secretary of State for Scotland? Finally, recognising that in recent years the principal of Aberdeen university has talked about reducing the Scottish university degree course to three years, does the right hon. Gentleman agree that this could be yet another burden that puts a nail in the broad-based traditions of Scottish education?

Mr. MacGregor

On the first point, the Education Act 1962, which I have with me, contained some technical requirements relating to Scotland. Such requirements are not really necessary in the Bill. Clearly, it will be for us to decide exactly how the regulations are followed through in any case, but I believe that the Bill applies perfectly sensibly to Scotland.

I turn now to the detail of the Bill itself. The heart of it is in clause 1: this gives the holder of my office power to make loans for student maintenance within the policy described in the White Paper and according to the arrangements set out in schedule 2.

Clause 1 and schedule 1 empower the Secretary of State to provide funding for loans for students' living costs. They define the students eligible for loans in terms for the courses they attend. These must be higher education courses of at least one academic year's duration. They must be provided at institutions which receive support from public funds, or at other institutions to be designated for the purpose under regulations.

The clause also provides for the Secretary of State to prescribe in regulations other conditions of eligibility, such as residence conditions and the exclusion of students aged 50 or over. We intend that students will not be excluded on the basis of their financial record and there will be no means-testing.

Clause 2 enables the provisions, which extend directly to England, Wales and Scotland, to be extended by order to Northern Ireland.

Clauses 3 and 4 make the necessary financial provisions—on which more later—and give the short title, interpretation and extent.

Schedule 2 identifies the main administrative elements of the loan scheme to be prescribed in regulations. It goes into considerable detail and requires the Secretary of State to specify the amount of the loan and the arrangements for repayment, deferment and cancellation. It sets out the basis for calculating the zero real interest rate which will apply to the loans. The Secretary of State shall be empowered to require higher education institutions to issue certificates of eligibility to their students. There is provision to arrange for third parties to undertake administration of the loans, which must include machinery for handling appeals. Finally, the schedule modifies bankruptcy law by excluding from a student borrower's bankruptcy any sum advanced by way of loan and the corresponding debt.

As I have already explained, the details of the loan scheme will be in regulations, and we shall lay those before the House in the usual way. The arrangements to be made will be built on the basis of clause 1 and schedules I and 2, just as the whole apparatus of mandatory awards is built on section 1 of the Education Act 1962.

Since I have just mentioned section 1 of the 1962 Act, let me make it clear that that section is to remain on the statute book: local education authorities will continue to have the duty to make mandatory awards: there is no question of abolishing the student grant. Once the loan component of student support reaches the level of the maintenance grant and parental contribution—that, of course, will be some considerable way ahead, in the early part of the next century—we intend that the two will continue in parallel.

Mr. Straw

The Secretary of State has slid over a central part of the White Paper, which proposes that the real value of the grant should be reduced and that the grant should be replaced by student loans. Is that still the Government's policy?

Mr. MacGregor

I did not slide over it. It has been clear all the way through and I have made it absolutely clear here that we are intending that the level of the maintenance grant and parental contribution will be reduced in real terms, of course, because I have talked about a fairer distribution of the burden—[Interruption.] I make two points about this. First, that position will not be reached until the early part of the next century, as I have emphasised, and, of course, there is the opportunity for review at any stage during the 1990s. Secondly—I shall come to this later—it behoves those who pretend that we can go on financing that degree of higher education expansion by continuing to place a burden on parents and taxpayers to say how they would do it. I shall come to that later also.

Mr. Simon Hughes

rose—

Mr. Caborn

rose

Mr. MacGregor

In fairness to the many hon. Members who wish to speak, I should now get on with my speech. I am sure that that is the mood of the House and that that is what people—[Interruption] It is perfectly fair—

Mr. Simon Hughes

rose—

Mr. MacGregor

No, I am not giving way. It is perfectly fair—[Interruption.] No, I am not giving way, because it is important that we now proceed with the debate.

I turn now to various issues on which the public debate has also focused so far. I have already referred to the fact that most other comparable countries have loan schemes, but it is worth stressing to the House that we shall continue to be putting more emphasis on grants rather than loans than nearly all of them, and our loans scheme itself will have more generous conditions than most.

For example, loans are a top-up to existing grants and are concentrated on maintenance only. Others have fewer grants and loans for fees. All students may take out a loan; there will be no credit conditions. The interest rate will he in real terms zero, which is clearly a preferential rate. That means it will be beneficial to those students who currently have commercial loans. Repayment will commence only in the April following graduation, and then only if income is above 85 per cent. of the average wage.

Let me illustrate that point by giving an example. A student embarking on a three-year degree course outside London and taking up the loans during those three years to the full extent, and then earning a salary just above the likely deferment threshold in 1994—that is, just above 85 per cent. of the average wage threshold—would make an annual loan repayment of little more than 3 per cent. of his or her net income. That puts the position clearly in context. I would add that deferral terms are much more generous than, for example, in the United States, which is why I would expect default rates and individual difficulties to be much different here from there.

But what is common to other countries is that, even with less generous terms than ours, access to higher education in those countries has not been inhibited. That brings me to access. I do not believe that the introduction of loans to top up maintenance support will impede access. Loans are top-up loans: they will provide more money to students while they are studying— for all students. There will be no credit rating. In that way, the Government will establish the conditions for wider access.

In addition—this is an important point which has not yet had sufficient attention—the parental contribution over the period will be cut by nearly half. We know that some 40 per cent. of parents—two out of every five—do not pay their student children the full sum for which they are assessed. Our scheme will reduce the burden on families with student children. The aggregate parental contribution, and the average parental contribution, will be frozen in cash terms.

The effect is that parents, as their incomes rise in line with the general trend, will pay less and less in real terms. They will feel this as a saving equivalent to the rate of inflation. It will also mean that many students will be less dependent on their parents.

I have seen a recent survey purporting to show that some young people assert that they would not go on to higher education were a loans scheme in operation. Many will share my scepticism about the usefulness of evidence derived from such surveys. If people are asked if they want a loan rather than a grant, it is pretty obvious what they will reply. One would get the same answer about business loans or grants, and so on, but that begs a lot of questions. It is also important to consider some of the questions posed by that survey.

The response to the National Union of Students' sample was limited to 40 per cent. of all those asked. Therefore, the response is more likely to have come from those who are against loans—yet, despite that, many more said it would make no difference to their decisions. It is not at all clear whether those questioned were given a proper account of the loan proposals that we are actually making. Was the alternative put to them? It is unrealistic to suppose that the alternative to a loan is a bigger grant. Unless there is a student contribution, the alternative is a continuing decline in the value of the grant.

Above all, I have serious doubts as to whether such statements represent accurate predictions of what others will do in future. Students know the value to them of a degree—the educational and cash value. Let us fully acknowledge the first and not be ashamed of the second. I have no doubt that increasing numbers of students will wish to invest in their higher education in future.

Mr. Simon Hughes

rose—

Mr. MacGregor

I shall give way, but this must be the last time.

Mr. Hughes

The Secretary of State has said that his proposed scheme will not harm access to higher education. He has talked about predictions. Can he predict whether the number of students applying for courses in the next two years, when the loans scheme is operating, will be fewer or greater than those who would apply under a better funded grant scheme? We believe that loans will be a substantial deterrent to access to higher education, and the people share our fear.

Mr. MacGregor

Since I gave way to the hon. Gentleman, I hope that he will be comparatively reasonable in his speech, as I know that a number of my hon. Friends want to speak. The experience of other countries that operate loans schemes offering much less generous student support than our own is that such schemes do not inhibit access. I do not believe that that survey gives an accurate prediction of the future. There has been a large increase in the number of students going on to universities and polytechnics this year, and they will be the first students to whom the loans scheme will apply. In practice, therefore, the number of students has already increased.

It is in the nature of a loan that it has to be repaid. Most graduates' incomes are well above the incomes of non-graduates. With a zero real interest rate on the loan, they should not find repayment of their loans a difficulty. I have already illustrated that.

We do not propose to exempt any categories of graduate from repayments, but I repeat two points that the Government have already made clear many times. First, those following long degree courses may well need longer periods of repayment, and we are considering that sympathetically. Secondly, as I have already said, students with low or no incomes at any point in time will not be penalised: in those cases, repayments will be deferred.

Let me take this opportunity to repeat that, in the Government's view, the repayments should be real repayments and should not be hidden away in the tax or national insurance systems. Today, one newspaper said that, although it supported the concept of loans—it is important to stress that support to the Opposition Front Bench—there had been no convincing rebuttal of the suggestion that loans should be repaid through tax or national insurance. I dwelt at length on this in my earlier speech to the House. Our reasons for not adopting such a scheme are practical. We do not wish to add to bureaucracy, or to place additional burdens on employers. More fundamentally, we want to encourage students, through the loans scheme, to see their higher education as their own investment in themselves.

Mrs. Maureen Hicks (Wolverhampton, North-East)

rose—

Mr. MacGregor

I am sorry, but I cannot give way again.

The students should know that they are borrowing money from, and repaying it to, the taxpayer.

I know that there are some who continue to argue for a graduate tax. I do not see virtue in a differential tax which affects graduates irrespective of whether their income is low or of how much they contributed to their own higher education costs.

Our estimate is that the social security benefits received over a full year by the average young single student would amount to £210 in 1990–91. Among those in this group who actually claim, we estimate that the average receipt would be £315. So the top-up loan, averaging £420, will more than compensate most students for any loss of benefits. We are, however, setting up the access funds to cater for students who may need further financial help.

It is unhelpful and misleading to take the outside, extreme case and to suggest that that will apply to most or all students. It is clear that that is not so, but in cases of extreme difficulty we have set up the access funds. They will be there for those who genuinely demonstrate that they need further financial help.

Mr. Wigley

rose—

Mr. MacGregor

I am sorry, but I cannot give way again.

The three access funds will be funded under existing powers. I will make regulations under section 100 of the Education Act 1944 to enable me to pay grant to the governing bodies of direct grant-maintained and assisted institutions of further and higher education, in respect of expenditure they incur in giving financial assistance to their students. Sections 131 and 132 of the Education Reform Act 1988 provide that the Universities Funding Council and the Polytechnics and Colleges Funding Council respectively shall be responsible for administering funds, made available by the holder of my office for the purpose of providing financial support for the provision of any facilities and the carrying on of any other activities". That provision will enable the operation of the grant.

Concern has also been expressed about disabled students and disabled graduates. The existing support provided for disabled students through the social security system will continue, unaffected by the introduction of loans. Unlike other students, they will not be excluded from the benefits system: the loan will be a net addition to their resources. The deferment provisions were designed with the difficulties of disabled graduates, among others, very much in mind.

As to the banks, I should like to make it clear that we have never asked them to express an opinion for or against the loans scheme as such. That is a decision for Government and Parliament to take.

Mr. Robert Rhodes James (Cambridge)

rose—

Hon. Members

Give way.

Mr. MacGregor

I believe that it is the wish of the House that I should continue.

We have simply asked the banks to assist in the administration, on a contractual basis, because they have the branch network—

Mr. Rhodes James

rose—

Hon. Members

Give way.

Mr. MacGregor

It is important that I continue. Because the banks have the branch network—

Mr. Rhodes James

rose—

Mr. MacGregor

I shall give way in a moment.

Because of the noise from the Opposition Benches, I am not clear whether that point was heard. Let me repeat that all we have asked the banks to do is to assist in the administration, on a contractual basis. We have done so for two good reasons. Those banks have the branch network and the experience of lending.

As the House knows, I announced on 16 November that I had reached agreement with ten major banks on the next steps. Those banks have formed the company, to be known as the Student Loans Company Limited, which is undertaking the necessary preparatory work.

I made it clear that, subject to the passage of the necessary legislation and to final agreements being reached between Government and financial institutions, the Government intend to enter into a contract with Student Loans Company Limited for the administration of the loans scheme itself. I have placed in the Library of the House copies of the memorandum of understanding signed by the participating banks and a report by Price Waterhouse on stage 2 of the preparatory work on the scheme.

It was always clear that some banks would not wish to join in from the outset; that was their decision. We needed enough banks to join in a national network, which is what we have got. Banks and other financial institutions cannot commit themselves to participate in the scheme until they have seen the terms of the brochure which will appear in due course. Those terms are still the subject of negotiations between us. Our aim is to ensure that the scheme is likely to be underpinned by a broadly based network of institutions, the services of which will be available to students. That will also be to the benefit of students.

Mr. Rhodes James

If the scheme is so marvellous, why is it not in the Bill?

Mr. MacGregor

I am sorry that my hon. Friend was not listening. I should have thought that the basis was exactly the same as that for the grants scheme. If there are objections on the grounds of parliamentary accountability, they apply also to the grant scheme. I would have concluded that the vast majority of hon. Members would believe that it is to the benefit of students to have the ability to change the scheme, often to their benefit, by secondary legislation, rather than primary. I have already shown by example why that is so.

Mr. Wigley

rose—

Mr. MacGregor

I cannot give way for the moment. The hon. Gentleman will have plenty of time to make his point.

Clause 2 concerns expenditure. I take this opportunity to set out again the loan figures, together with our forecasts of expenditure and related matters. Our intention is that the maximum full-year loan facilities for 1990–91 will be: £460 for students attending institutions in London; £420 for students at institutions outside London; and £330 for students living at home, with some adjustment to the corresponding final-year figures.

Annex E of the White Paper shows the financial effects of the loans scheme, net of access funds and administrative costs. The table in that annex is based on a series of deliberately cautious assumptions, including a constant 10 per cent. default rate. If default were 2 per cent.—a more plausible figure—it would bring forward to 2000 the year in which savings outweigh outgoings.

Mr. Wigley

On a point of order, Mr. Deputy Speaker. Earlier in the debate the Secretary of State said that he would respond to the point about the needs of disabled students raised by the hon. Member for Moray (Mrs. Ewing). The matter has been raised with the Minister in briefings on behalf of disabled people, and clearly he has not responded. Is there any redress for the House when the Secretary of State refuses to meet commitments that he gave earlier in the year?

Mr. Deputy Speaker (Mr. Harold Walker)

I have no responsibility for what appears in a Minister's speech. We are at the start of the debate and doubtless during the debate there will be opportunities to raise matters relevant to the Bill.

Mr. MacGregor

In the interests of many hon. Members who wish to speak, I did not want to give way again. I have already referred to disabled students. We take that matter seriously. If points are made during the debate, my hon. Friend the Under-Secretary of State will certainly respond to them when summing up.

Administration costs will not be precisely known until contracts have been concluded, but will be in the range of £10 million to £20 million in the first three years.

The hon. Member for Blackburn attempted to make play of the fact that in the early stages the loans scheme would cost the taxpayer more. It is inherent in any loan system that outgoings exceed repayments for an initial period. That indicates graphically that we are increasing resources for students. The hon. Gentleman's criticism brings us to the heart of the matter, which is that we have recognised that some change in student support methods is required for the period of expansion ahead to avoid an increasingly heavy burden on taxpayers—most with lower incomes than graduates—and on parents. We have been clear and realistic about that.

What is the Labour party's alternative? Although the hon. Member for Blackburn complains about the higher cost, I assume that he would not wish to offer the student less in total than we are. However, he makes it clear that his party's alternative is a continued exclusive reliance on grant. On the assumption of the already published figures and the basis that the grant would not be less generous than the loans policy, but that both would replace social security benefits, that system would cost £145 million in 1990—91, assuming a 100 per cent. take-up of grant, which we would expect.

In total, the costs of the loans scheme and access funds would be £135 million. That is not a big difference in year one, but is slightly less expensive. However, if the Labour party proposes to continue social security benefits, the extra cost could rise to £65 million in year one. We should like to be clear about the Labour party's position on that.

During the decade, the amount will accumulate. The extra costs of paying grants instead of loans would continue year in, year out, whereas the loans proposal promises savings for both parents and taxpayers. The loan repayments will then start to come in on an accelerating scale.

Mr. Straw

No.

Mr. MacGregor

That is bogus. There are considerable changes in the 1990s, which I am spelling out to the hon. Member for Blackburn.

Mr. Straw

rose—

Mr. MacGregor

I shall not give way again.

This shows two things: first, the point at which loan outgoings are overtaken by repayments; secondly, the point at which the totality of repayments is greater than the totality of outgoings—[Interruption.] That is in balance. Obviously, the hon. Member for Blackburn does not understand, and I do not want to spend much more time explaining it to him. The point he misses is that he is being critical of the cost of the loans scheme in the 1990s, but his alternative throughout the 1990s would be more expensive. I am about to tell him by how much.

I have already said that, in the first year, it could amount to £65 million. During the decade it will accumulate because the extra costs of paying grants instead of loans will continue year in, year out, whereas the loans proposal promises savings for both parents and taxpayers. In the second half of the 1990s, the loan repayments will start to come in on an accelerating scale. Therefore, on White Paper assumptions only, the difference between the schemes would be £165 million in a single year by the year 2000 or £225 million, depending on the Labour party's position on social security benefits. That means that, before too long, we shall see a widening gap in the burden on taxpayers and parents produced by our proposals and that produced by the Labour party's proposals as I understand them.

However, even more significant, the White Paper assumptions on increased student numbers are already out of date. This year's Autumn Statement expenditure plans are based on considerably higher numbers, so the extra cost of the Labour party's alternative would be a good deal higher.

What is the Labour party's alternative? Is it the proposal put forward in early-day motion 117 by some of the colleagues of the hon. Member for Blackburn, aiming towards a living grant of two-thirds average wage levels"? I hope that the hon. Gentleman will repudiate that now. He has been bobbing up and down, so perhaps he will bob up and repudiate that now.

Mr. Straw

I am glad that the Secretary of State has given me a chance to intervene in his speech. He refused to do so earlier when I gave the figures, not that we had produced, but that he had produced in answer to questions from the Opposition, to show that there would be no cumulative savings on loans until 2013.

The Labour party's position is made absolutely clear in the policy review. We shall continue the grant system and increase its real value as resources allow—[Interruption.] There is no dubiety about that.

How does the Secretary of State's assertion about the cost of the grant system being greater than the cost of the loan scheme fit with annexe E, which shows that in every year between now and 2002 the loans system will be a greater burden on the Exchequer than grants, even if they are uprated in line with prices? The Secretary of State made an important commitment at the start of this debate, when he said that he categorically committed the Government to paying the full cost of tuition fees for the increased number of students to which he is now pledged. That must mean a dramatic increase between now and the end of the century in public expenditure on higher education. Is he committed to that, and to what amount?

Mr. MacGregor

I have explained the point about cumulative savings. The hon. Gentleman is simply not prepared to accept that the Labour party's alternative during the 1990s will cost taxpayers and parents—or possibly just taxpayers—a good deal more for student maintenance alone. I noted—I assume that this is the point of the hon. Gentleman's answer—that he has already repudiated the proposal put forward by some of his colleagues in early-day motion 117. I hope that he will make his position clear. Alternatively if it is to finance the higher student numbers through a non means-tested grant at the same levels as the totals we are making available today or at higher levels, that will clearly be more expensive.

In any event, I hope that everyone will have noted the weasel words "as resources allow". No wonder those weasel words came into it, for the right hon. and learned Member for Monklands, East (Mr. Smith) has already spiked the hon. Gentleman's guns by saying: We are all agreed that we cannot spend what has not been earned. We recall the experience of the last Labour Government when they failed to earn and thereby totally failed to meet their expenditure commitments. No wonder the hon. Gentleman uttered the weasel words "as resources allow".

Our position is more honest and is more likely fairly to finance higher education expansion. That is why the hon. Member for Blackburn has been careful not to commit himself to anything today—[Interruption.] He is behaving as though he is still a superannuated students leader—engaging in a massive con trick, giving the impression of spurious promises without substance, attacking us in the hope that nobody will notice his weasel words.

By contrast, we are making realistic proposals to underpin our objective of substantial expansion in higher education. By making available a loan facility to top up maintenance grants, the Government are providing a valuable extension of the resources of support available to students. The cost of supporting students' maintenance will be shared more equitably between taxpayers, students' families and the students themselves. Students, with a loan on generous terms, will have a greater personal stake in their own higher education.

I commend the Bill to the House.

5.11 pm

Mr. Jack Straw (Blackburn)

The Bill contains one operative clause. Three and a half years of public debate and almost universal criticism of the proposed loans scheme are compressed into just three lines. Forty-eight pages of the loans White Paper and 68 papers of two successive consultants' reports are reduced to 27 words. Those 27 words give the Secretary of State power by ministerial diktat to establish whatever loans scheme he chooses and to deny to Parliament and the people who elected us any serious opportunity properly to scrutinise the detailed effect and operation of the scheme, for there is no detail in the Bill.

We have before us three lines and 27 words by which this wretched Government tell the rest of the world that they have no interest in reasoned argument and the views of others. The Bill is a grave abuse of parliamentary democracy. It is an enabling Bill. It confirms the march of an "elective dictatorship," as the former Lord Chancellor, Lord Hailsham, described the Government earlier this year.

The Bill gives more power to the Executive, with less parliamentary check on their discretion, than legislation such as emergency powers and defence of the realm measures designed for wartime emergencies, and it is so arbitrary in scope that it would today be thrown out by the Parliaments of East Germany, Poland, the Soviet Union and Hungary—[Interruption.] Indeed, the drafting might even bring a blush to the face of a member of the Russian politburo. Yet the Bill produces no shame in the Secretary of State. When it comes to contempt for parliamentary democracy and abuse of power, he and the Government know no shame.

It is fitting that the Second Reading of the Bill should take place on the day of the contested election for the Conservative leadership, for nothing symbolises better than this measure the arrogance and incompetence of the Government and the fact that, with honourable exceptions, the parliamentary Conservative party is packed full of cowards, sycophants and wimps who know what is right but vote for what is wrong. The Bill will receive its Second Reading by the same large majority which has driven through ill-considered, half-baked legislation such as water privatisation, social security legislation and the poll tax. Recently, in a newspaper, the hon. Member for Leeds, North-West (Dr. Hampson) issued this warning to his colleagues: We are potentially into another poll tax scenario in which MPs"— Conservative Members— welcome the principle of loans without waking up until it is too late for its practical repercussions.

The Parliamentary Under-Secretary of State for Education and Science (Mr. Robert Jackson)

In reliving his past as president of the National Union of Students, perhaps the hon. Gentleman will explain why, if this sort of enabling approach is so inappropriate, the Labour Government, when they had the opportunity for many years, did not repeal section 1 of the Education Act 1962, which provides for making grants in exactly the same way as our proposal for making loans.

Mr. Straw

There is a profound difference between the 1962 Act and this legislation. First, section 1 of that Act imposes a clear and justiciable duty on local authorities to pay grants. This measure imposes no duty on the Secretary of State to do anything; it gives him the widest possible arbitrary discretion to establish a loans scheme without any possibility of its detail being properly scrutinised by this House. Secondly, the 1962 Act was far longer. Thirdly, it was an all-party measure. Fourthly, it was based on more than 20 years' experience of local authorities and the Department running a grants scheme, whereas this measure is based on no such experience.

As I was saying, the hon. Member for Leeds, North-West warned his colleagues that they were potentially into another poll tax scenario". But this Bill is worse than the poll tax measure, for even that dreadful Bill contained much more detail and constrained the powers of Government to a greater extent. On the BBC Radio 4 "Today" programme on 27 November, the Secretary of State was asked why no detail was contained in the Bill. He declared that that was "a normal procedure." The interviewer then asked: …is it so short because you don't actually know what you want to do? When the Secretary of State replied, "Not at all," he was asked: So what do you want to do? The right hon. Gentleman answered: We will come forward with details of the scheme and we have illustrated one poss … one approach in the White Paper … we can do so partly during the debates but we can do so properly when the regulations come forward. Can we take it from that that the scheme in the White Paper is just a possibility, as the right hon. Gentleman suggested on radio? Is it just an illustration and not necessarily the scheme that will be brought into effect? If so, what scheme will be brought into effect?

Mr. MacGregor

It will be possible for any Secretary of State to come forward with proposals to change the level of loan and to change the eligibility in the light of reviews to deal with the sort of situation that I illustrated in relation to grants when answering my hon. Friend the Member for Canterbury (Mr. Brazier). I should have thought that the House would regard that as a sensible step to take.

Mr. Straw

Far from being sensible, the right hon. Gentleman is saying that it will be possible for any Secretary of State, by negative resolution or by regulations, to impose a completely different loans scheme from that suggested in the loans White Paper and to do so without any proper scrutiny by Parliament.

In that BBC interview, the Secretary of State suggested that Parliament could "debate and approve" the detail of the regulations made under the Bill. Who was the right hon. Gentleman trying to deceive? Later tonight the House will have one and a half hours in which to debate a crucial order on teachers' pay and negotiating rights. That instrument will be unamendable, but at least under the terms of the teachers' pay legislation the Minister must, by law, lay the order before Parliament before it can come into effect. In this Bill, the power to make regulations is subject only to the negative procedure, by which Parliament has no automatic right to debate or approve the regulations before they come into effect and no right to amend them.

Mr. MacGregor

There is considerable detail in the Bill about the kind of scheme that we propose to have; schedules 1 and 2 contain considerable detail. As for giving details when one wants flexibility year by year, we are following the process applied to grants. Is the hon. Gentleman saying that we approach the grants system year by year in the wrong way and that that is a great abuse?

Mr. Straw

I have already dealt with the fact that there is no parallel between the loans legislation and the grants legislation. What is more, everyone knew how the grant system was to be administered. That was the purpose of imposing a duty on local authorities. Under this scheme there is no detail about the administration of the loans, and no detail will ever by written into law about the administrative arrangements with the banks.

The scale of the Government's arrogance and contempt for the views of others can only be measured against the ever-growing mountain of opposition to this loan scheme. When the Government started on this road they promised wide consultation before any scheme was implemented —the exact words of the Government's response to the Education Select Committee as long ago as 1979–80. The former Secretary of State, the right hon. Member for Mole Valley (Mr. Baker), said much the same when he announced the student loans review in June 1986. Is it any wonder that people become so cynical about this Government when what has characterised this consultation has been the Government ignoring everyone they have consulted? No institution of any standing and no individual of any standing now supports the measure. Even the Government's best friends have deserted them —[Interruption.] This proposal was not in the manifesto. The manifesto contained a promise to bring in legislation to supplement the student grant system—[HON. MEMBERS: "That is what we are doing."] By their comments, Conservative Members show their ignorance of the effect of the scheme, for this loan scheme does not supplement the grant scheme—it replaces it. That is clear from the White Paper and the Bill.

Mr. John Marshall (Hendon, South)

Will the hon. Gentleman accept that university grants will continue under the White Paper proposals?

Mr. Straw

The Secretary of State has admitted—under duress—that the idea of the loans White Paper is that the real value of the student grant should be cut by half. That is not a supplement—it is the replacement of half the grant.

Students and parents oppose this scheme. So, too, do vice-chancellors, who say in a scathing note that the form of the Bill means that there will not be a proper opportunity for Parliament to debate the scheme. An overwhelming majority of Conservative Members who have ever bothered to think about the scheme also oppose it. In the debate on 20 October, opposition to the scheme came not only from the predictable Conservative critics of the Government's higher education policies, such as the hon. Members for Cambridge (Mr. Rhodes James) and for Leeds, North-West (Dr. Hampson), but from the hon. Member for Sevenoaks (Mr. Wolfson), who voiced unease about the simultaneous loss of benefits to students and the impact on lower-paid careers. It also came from the hon. Member for Hendon, North (Mr. Gorst), who questioned the practicality of the scheme, from the hon. and learned Member for Feltham and Heston (Mr. Ground), and from the hon. Member for Chichester (Mr. Nelson), who correctly described the Government's arguments about access as bogus—and said: far from helping poorer people to gain access to higher education, the scheme will amount to an indiscriminate subsidy to the middle classes who need it least."—[Official Report, 20 October 1989; Vol. 158, c. 422.]

Dr. Keith Hampson (Leeds, North-West)

As the hon. Gentleman has mentioned me so often, I should remind him that his right hon. Friend the Leader of the Opposition shared many platforms with me when he was Labour education spokesman. He used to attack the middle-class, highly subsidised, elitist higher education system in this country and was prepared to consider a loan scheme so that people from better backgrounds would be able to contribute to prevent poorer families from paying through taxation for the benefit of better-off families.

Mr. Straw

That is complete fantasy and fabrication.

Mr. Caborn

I represent a poor constituency in which about 18 per cent. of the young people are unemployed. The removal of social security benefits, rent rebates and income support will have a devastating effect. Contrary to what the Minister has said, it has been calculated—not by the student unions, but by professionals in the DSS—that students aged under 25 currently in receipt of rent rebates and income support will be £1,240 per year worse off. I remind the Minister that since rents were deregulated they have risen by 25 per cent. and students now pay on average £30 per week. Students aged over 25 will be some £1,400 or more worse off. This will have a profound effect on people from inner cities who want access to higher education but who will be denied it by what I have described, quite apart from the loan scheme.

Mr. Straw

My hon. Friend is exactly right. If we take account of the fact that the real value of the grant has been cut by 23 per cent. in the past 10 years and that it will be cut again under the Government's policies, and that housing benefit will be cut, there is no question but that many students from lower-income families will be plunged into severe hardship.

Outside the House, the opposition of many Conservatives to this scheme is well known—for example, that of the Tory Reform Group, which counts among its numbers the Leader of the House, the Secretary of State for Wales, the Secretary of State for Health, the Foreign Secretary, and perhaps even the Secretary of State for Education and Science who, in a previous incarnation, was political secretary to the former Conservative Prime Minister, the right hon. Member for Old Bexley and Sidcup (Mr. Heath).

Today, however, there is opposition to the Bill from inside the very temple of Thatcherism—from the high priests themselves, such as Professor Alan Peacock, who is now executive director of the David Hume Institute. He wrote to The Times after the last debate that it was almost generous to describe the scheme as a dog's breakfast. Opposition has also come from Stuart Sexton of the education section of the Institute of Economic Affairs—a former adviser to the previous Secretary of State, Lord Joseph. He demanded in The Daily Telegraph that the scheme be scrapped, saying that if ever a subject got the Government in a tangle it is the student loan scheme". The result is a bureaucratic nightmare and one which produces no immediate savings for the public purse"—

Mr. Steve Norris (Epping Forest)

rose—

Mr. Straw

I shall give way for the last time.

Mr. Norris

Does the hon. Gentleman agree that, although he has listed a great many articulate interest groups who have expressed a view on the Bill, one group who are singularly under-represented in this argument are elderly income taxpayers? What has he to say to them about their tax contributions financing middle-class families and their children to enjoy an even higher standard of living in the future?

Mr. Straw

Parliamentary answers from the Under-Secretary of State and the debate on 20 October clearly established that the loan scheme between now and 2013, 24 years away, will cost more than the grant system that it replaces. If the hon. Member for Epping Forest (Mr. Norris) does not understand that, he should read annex E to the White Paper.

Given the extent of the opposition, why are the Government pursuing this madcap scheme? The speech by the right hon. Member for Blaby (Mr. Lawson) on his resignation as Chancellor was one of the strongest and most sustained pieces of controlled invective that I have ever heard delivered by a Member of this House against his own side, but the accolade for the very strongest goes to the noble Lord Beloff, a Conservative with a distinguished record of fighting the implementation of Conservative higher education policy, including the establishment of the private university of Buckingham. Speaking in the other place in the debate on the Loyal Address on 23 November he said: I am convinced that the loan scheme which has been evolved … is so absurdly inefficient and damaging to the students, their universities and colleges and the community at large that one is tempted to wonder how any government department could have come up with so outrageous a set of propositions. I remember that when it was first talked about in this House … I warned the Government that if they were trying to act through a consortium of banks, they would find the banks very reluctant to co-operate. That has been borne out by experience. After all, a fishmonger sells fish; that is his business. A banker lends money; that is his business. One does not have to bribe a fishmonger to sell fish, but apparently the Government have to bribe the banks to lend money. Could we get further into absurdity? One may ask: who is the author of so absurd a scheme? Some people say that it was thought up by a young man strong on ideology but weak on arithmetic and totally removed from the experience of ordinary students and ordinary families. Some people say, 'No, it was the work of the Under-Secretary of State for Education, Mr. Robert Jackson'. Some people say that those two explanations are not contradictory."—[Official Report, House of Lords, 23 November 1989; Vol. 513, c. 186–7.]

Mr. Jackson

It is flattering to have a former professor of government at Oxford attribute so much interest to a mere Under-Secretary of State. The important point to note is that the banks have signed a contract to administer the scheme.

Mr. Straw

The important point to note about what the banks have signed is that, whatever they have signed, it is not a contract. Paragraph 10 of the "Memorandum of Understanding" says: it does not create legal relations. I offer the Parliamentary Under-Secretary of State some free legal advice. One of the principal elements of a contract is that it creates legal relations.

The first charge against the Government is of arrogance and the second is of incompetence. A senior Conservative —not from the Left of his party—said to me in the Lobby that the loan scheme was so fundamentally flawed that he could only assume that it was put together by someone who wanted to discredit the idea of loans for all time. The scheme fails on every test that the Government themselves have set. The Government claim that the scheme will simultaneously reduce the burden of student support on the taxpayer, increase the resources available to students and improve access to higher education by freeing a flow of taxpayers' money for the future expansion of higher education. Each of those claims is utterly bogus, as the Secretary of State must know.

Mr. Nigel Spearing (Newham, South)

Is my hon. Friend aware that on 20 October I presented a petition from 600 medical students at the London hospital and Newham General hospital pointing out the potential damage to medical education in London, where costs will be high and where the students will not have the opportunity of working in their last three holidays, as the Secretary of State did? The scheme will especially affect women doctors and medical education in our capital city. The petition also asks for an inquiry into the damage that the scheme will cause. Is my hon. Friend aware that I have now had a card from the Table Office telling me that the Department of Education and Science is not carrying out its usual courtesy of observation on that petiton? Is that not wholly untypical of the Secretary of State, but wholly typical of the present uncaring and ignorant Administration?

Mr. Straw

I am not surprised that the Department of Education and Science is not responding to the petition because it has no answer to the fact that the loan scheme will cause immense damage to medical students and their careers. It is a further illustration of the contempt in which the Government hold this House and those who protest against the loan scheme.

Mr. Nicholas Bennett

Will the hon. Gentleman give way?

Mr. Straw

No, I have already given way to many hon. Members, including Conservative Members.

Each claim that has been made by the Secretary of State is utterly bogus. The facts are that under the scheme the burden of student support on the taxpayer will increase. The income of students, especially those from the poorest families, will be cut and access to higher education will be restricted. There will be and can be no freeing of any flow of funds for expansion.

Mr. Nicholas Bennett

Will the hon. Gentleman give way?

Mr. Straw

No, I have given way a great deal.

As we have established in parliamentary answers, there will be an increased cost to the taxpayer between now and at least 2015, more than a quarter of a century away.

Mr. James Pawsey (Rugby and Kenilworth)

Will the hon. Gentleman give way?

Mr. Straw

I will give way for the last time.

Mr. Pawsey

Is the hon. Gentleman aware of a parliamentary answer to me on 1 December? It says: the estimated net cost of the scheme is some £13 million in 2000; in 2005 there is estimated to be a net saving of some £37 million rising to some £49 million in the year 2010"—[Official Report, 1 December 1989; Vol. 162, c. 440.]

Mr. Straw

I am always aware of the questions that the hon. Gentleman tables because they always alert the Opposition to the fact that they are a plant.

Mr. Pawsey

It was not a plant.

Mr. Straw

The hon. Gentleman says that it was not a plant on this occasion. If he had bothered to read out the rest of the answer, we should have heard that the Parliamentary Under-Secretary referred the House to the answers that he had given to my hon. Friend the Member for Oxford, East (Mr. Smith). Those answers clearly established, with detailed tables, that cumulative savings will not arise until 2013. Well over £1.5 billion will he wasted in that period.

An early sign of that waste was given in the announcement by the Secretary of State that £492 million was to be spent on loans over the next three years. While the burden on the taxpayer will increase, most students will not benefit. The only students to benefit will be those who least need the help. Forty per cent. of all students are on a full grant. One quarter of those receive a full grant because they are older and independent of their parents and three quarters because their parents' income is so low that even this Government do not expect the parents to contribute to their childrens' upkeep at university or college. That 40 per cent. will be hit immediately by the loan scheme. Their cost of living increase is cancelled and their housing benefit entitlement is cancelled altogether. All that they receive instead is a loan which, in cash terms, cannot even meet what they have lost and which they will then have to repay. What is true without question for that 40 per cent. of students is almost certainly true of a further 40 per cent. of students who receive some grant and some parental contribution.

The Government have made much in their social security policy of the case for targeting of benefits, which has been their excuse for abandoning their pledged uprating of universal benefits such as child benefit. For student loans, they have turned the principle of targeting on its head. The rich student from the rich family is targeted for help from the state while the student from a middle or lower-income family will have that help taken away. Under the scheme, there will be no means test for the loan. The rich student can take out a loan at a subsidised rate of interest, invest it in a bank or a building society and at the end of the loan period clear £250 or £300 in interest, while still being able to repay the principal. What kind of public purpose is served by such beneficence to the already rich while students from poor and modest backgrounds lose out?

Mr. Nicholas Bennett

Will the hon. Gentleman give way?

Mr. Straw

It is that discrimination against those from low-income and modest backgrounds which gives the lie —for lie it is—to the preposterous claim that loans will improve access, especially for those from working-class and ethnic minority homes. Loans will increase the price of a higher education, and a higher price will mean a reduction in the demand which otherwise would exist.

From 1962 until the early 1980s, the grant system led to a threefold expansion in the proportion of children from working-class homes who benefited from higher education. Loans will most surely cut down the opportunity that so many of us from such homes have enjoyed in the past.

Mr. Nicholas Bennett

Will the hon. Gentleman give way?

Mr. Straw

That fact emerged with crystal clarity from a survey published yesterday by the National Union of Students. Particular groups will be hit by the scheme, such as all those at Scottish universities, medical students and those taking nursing degrees. Entry into key but lower-paid professions will be hit. Teaching is an example.

A recent study by the Institute of Manpower Studies makes it clear that the proportion of graduates entering teaching has already slumped from 8 per cent. in 1980 to 4 per cent. in 1988. More graduates now train for the law than for teaching. The proportion entering teaching will slump still further if the loan scheme goes through because the income level below which a graduate can defer his loan is set so low that it will catch new teachers. Those with careers with low initial earnings but with high pay prospects will be able to defer loan repayments, but those who go into careers in which the starting salary may be broadly acceptable but which have poor career prospects will not. That will lead to an absurd situation in which young barristers will be able to escape repayment, but young teachers will not. [HON. MEMBERS: "Quite right."] Conservative Members say that that is quite right. It is no wonder that we now face the most terrifying shortage of teachers that we have seen for decades. The Government are not only keeping down the pay of teachers and causing their morale to collapse, but they will impose loan repayments on young teachers when they seek to eke out a meagre living from their salaries.

Mr. Nicholas Bennett

Will the hon. Gentleman give way?

Mr. Straw

I have already said that I shall not give way.

In the debate on 20 October, as today, the Secretary of State sought to link loans with the Government's plans to expand higher education. The House may recall that it was once Government policy—or at least the policy of the former Secretary of State—to double the numbers in higher education over a 25-year period. On 20 October when I asked the Secretary of State how that was to be paid for, he said that I should wait to hear the answer of his hon. Friend the Parliamentary Under-Secretary of State. However, when I asked his hon. Friend in the debate, he said that he had "nothing to add" to the answer given by the Secretary of State. One month later we obtained the answer. The Secretary of State told The Guardian in an interview on 24 November that the commitment to double numbers has been dropped. The article said: he denied that Mr. Baker's commitment had ever been agreed Government policy and insisted that no Government could ever plan beyond three years in financial terms". I have read the Secretary of State's rebuttal, which appeared in The Guardian on 27 November. He said that the report was totally misleading. He never once said that it was wrong or that quotations attributed to him were wrong. He said: I reaffirm the points set out by Kenneth Baker in his speech earlier this year … when he foresaw something like a doubling of numbers in higher education over the next 25 years". The Secretary of State did not say then or today—if one listens with great care to his words as we did—that he is committed in the same way as the previous Secretary of State to a doubling of numbers. That was not the previous Secretary of State's expectations or foresight—it was his policy. So far the Secretary of State—despite his earlier words—has ducked that one.

Mr. MacGregor

That is not true.

Mr. Straw

If that is not true, I will be happy to give way to the Secretary of State. Before I do, perhaps the Secretary of State will answer the question that he refused to answer on 20 October or today. The Secretary of State gave an important categorical commitment that the total tuition costs in higher education of an expansion—whether a doubling or less—would be met from the public purse.

We all know that the costs of tuition far outweigh the cost to the public purse of maintenance. Therefore, the Secretary of State's statement means that, under Conservative policy, the burden of public expenditure on higher education expansion will increase significantly. That is in complete variance with his other statements, in which he says that the share of public spending borne by higher education cannot increase. If I am wrong, I should be delighted if the Secretary of State would intervene and tell me where I am wrong.

Mr. MacGregor

I have made it clear in previous speeches that there cannot be a huge increase in the proportion of GNP spent on higher education in any country. That is accepted throughout the Western world. The importance that we attach to higher education expansion is shown by the priority that we gave to it in the Autumn Statement and the public expenditure plans—it is in the public expenditure plans that the reality of expenditure is shown—and by the extra £750 million that we intend to provide over the next three years.

Mr. Straw

The House will note that the Secretary of State did not use that opportunity to deny the comments attributed to him in The Guardian or to put on record a commitment to a doubling of the numbers in higher education over a 25-year period. The Secretary of State also failed to square his personal commitment given to the House that the public purse should meet the cost of tuition completely with his weasel words that there could be no significant increase in the share of public spending borne by higher education.

The Secretary of State was once Chief Secretary to the Treasury, where he used to make high-flown speeches about hard work, prudent planning, careful management and how to achieve value for money. It is a great pity that he has not applied some of those principles to the Bill. The hundreds of millions of pounds to be spent on loans does not go into the pockets of students in need but into a vast black hole of defaults, deferrals and administrative costs. It is time that Conservative Members woke up to the fact that there are not only the administrative costs of the loan scheme but the double administrative cost of running a grant scheme, albeit at a diminished rate, alongside the cost of the loan scheme. By 1995, more students will be defaulting or deferring their loans than will be paying them back. An army of debt collectors will be created. Earlier the Parliamentary Under-Secretary of State said that loans will be made available to European nationals, so the army of debt collectors will be chasing around Europe seeking out graduates who have defaulted on their loans. The House has still not been told the full cost of the scheme because the Secretary of State does not know those costs and cannot say what price the banks will finally extract from him.

If the Government's competence has been sorely tested in the conception of the scheme, it has been completely exposed in its execution. For more than a century the public service has had extensive experience in the administration schemes of benefits, grants and loans to members of the public. All that experience has been cast aside by the Government because of the Prime Minister's pathological obsession with the possibility that the public service might be better able to administer anything than the private sector. Instead of the public service administering the scheme, the banks have been asked to run it, and what a pantomime the negotiations with the banks have become.

Originally the negotiations were between the Government and the Committee of London and Scottish Clearing Banks. Then three of the committee's members decided to boycott the negotiations. Those three were Lloyds, the Bank of Scotland and the Clydesdale bank. The Government then had to establish their own front organisation for those banks willing—at that stage—to participate in the scheme. Even the remaining banks have shown themselves to be profoundly unhappy about the scheme. In the original Price Waterhouse report the banks said that they wanted an additional payment over and above that needed to cover costs and profit for the remaining risk that they were taking on. The banks said that the remaining risk was not a financial risk but a risk that their reputation could be impaired by their involvement". We are told that the participating banks agreed to the so-called "memorandum of understanding" published on 16 November only after panic and arm-twisting by the Secretary of State. On close examination of the document, the banks have agreed nothing. All costs are to be met by the taxpayer and not by the banks. The banks that have signed the document are not bound to participate in the scheme, but can withdraw at any moment. Participants are protected against all liability—and, to ensure double protection, clause 10 of the agreement announces that it does not create legal relations". Since the Parliamentary Under-Secretary of State described a contract that has been signed with the Government, perhaps now or when he replies he will give a categorical undertaking that no private or secret sweeteners have been offered to the banks for them to participate—hon. Members may laugh, but that is what happened over Rover—and that all material documents have been laid before the House. The Parliamentary Under-Secretary of State is also laughing. He seems to dismiss that.

When I wrote to the chairmen of the participating banks to inform them that the Labour party would end the scheme, the chairman of the National Westminster bank, Lord Alexander of Weedon, wrote to me to say that his bank was in no sense promoting or supporting the introduction of the student loans legislation.

That statement is welcome but if the National Westminster bank is not promoting or supporting the legislation, it is inexplicable and inconsistent that it should have agreed to throw a lifeline to the Government to bail out the administration of the scheme.

The National Westminster bank has 42 per cent. of the student market. Students, parents and colleges are not fools. They detest this scheme. They have economic power and are already using that power to shift their accounts to other non-participating banks. I asked the chairman of the National Westminster bank and the other banks whether they believed that the best interests of their shareholders were served by participating in the scheme when they must see that they will suffer grave and tangible loss of market share and serious if incalculable damage to their reputation. Why should any bank these days want to be the lickspittle of a Government supported by barely one third of the electorate?

The Secretary of State again today repeatedly claimed that the British system of student support is one of the most generous in the Western world. That is untrue in many respects. What is true is that, although the British system may not be the most generous, it is the most efficient. Students spend less time obtaining a degree than in other countries and far fewer drop out. The cost of producing each graduate compares favourably with other countries. In that efficiency, the grants system has played a significant part.

Loans, by contrast, are unfair and inefficient. In the United States, for every three students who have a loan, one drops out. The default bill is now $1–6 billion and countries which in the past the Secretary of State prayed in aid, such as West Germany and Sweden, are returning to a grant system. The shift to loans began in 1982 in West Germany and has led to lengthening of courses, a high wastage rate and a collapse in the number of working-class students going to college. The same has happened in Sweden. Both countries have announced the reintroduction of a partial grant system.

The Bill is a fraud. It is a fraud on students, promising them more but giving them less. It is a fraud on parents, promising to reduce their children's dependency but actually making it greater. It is a fraud on the taxpayer, promising to cut the cost of student support but increasing it for each of the next 25 years. Through this Bill, Ministers are perpetrating a fraud on Parliament, pretending that the House can scrutinise a measure without details or reasons being produced. The measure is meretricious and disreputable. It will put a mortgage on knowledge and a debt charge on skills. It shows a contempt for Parliament and a disregard for the needs of higher education and of the economy. It is unworthy even of the present Secretary of State and we shall oppose it in the Lobby today.

5.50 pm

Mr. George Walden (Buckingham)

Over the years I have followed the evolution of the Opposition's attitude to student loans. It moved from a first phase of intellectual dishonesty to a second phase of political opportunism. Tonight it has entered a third phase, which is procedural disingenuousness.

No discussion of student loans should ignore the beginning of the era of debate on loans which was Lord Robbins' report in 1963. He produced a highly prescient report on the whole question of student expansion. He is treated by the Opposition and the academic world as a semi-divine entity because the report forshadowed the expansion of higher education. The Opposition and, I regret to add, the academic world failed to recall that, although Lord Robbins rejected loans, he said that as higher education continued to expand and more women entered—as they have done, particularly under this Government—the time would come when there would have to be an experiment with student loans. He gave three reasons, which I should have thought would appeal to the Opposition: first, social equity, secondly, disruptive justice, and, thirdly, the need to encourage a sense of financial discipline and self-reliance among students. It seems to me that his prognostication has come true.

The hon. Member for Blackburn (Mr. Straw) implied in his criticism of the Government's procedures that they are rushing into student loans, but it is more than a quarter of a century since the Robbins report was published. It seems perfectly reasonable to move ahead with this highly tentative and limited system of loans, but I shall come back to that point later.

I admit that the Opposition have moved on from the abject intellectual dishonesty of not recognising, even in their own terms of social equity, the importance of student loans in Lord Robbins' report. They have done so at a time when we are once again considering the mass expansion of higher education. They have moved on from their initial stance because they have lost, absolutely and decisively, the public debate which has been going on for several years.

Anyone who listened carefully to the hon. Member for Blackburn would have discovered that a critique of student loans in principle was almost entirely lacking from his speech. He gave no undertaking to scrap any system put in place by this Government.

Mr. Straw

I have given that undertaking. I did so on 20 October, and I have done so outside the House.

Mr. Walden

I am glad that the hon. Gentleman has made that statement. It brings me to the second phase of the Opposition's attitude to student loans, political opportunism. The hon. Member for Blackburn says simultaneously that he will finance a mass expansion of higher education while not charging anyone fees and that he will not only maintain but increase the grants system. He says that all those net costs will fall on the Treasury at precisely the time when there will be a huge expansion in the elderly population.

We are back to the old Labour party. It is not a new party but the old party of political opportunism which dishes out unsustainable promises to both old and young with complete contempt for public opinion and intelligence. Everyone knows that what the hon. Gentleman promises is unsustainable. It has not been done and cannot be done in any other country, even in countries richer than Britain. I have in mind the United States of America, West Germany and France, each of which has a gross national product greater than ours. It is dishonest for the hon. Gentleman to attempt to assure the House and public opinion that a future Labour Government will give preferential treatment to our students when there will be a distortion in the population balance in a country with continuing economic problems. It is false, and it is political opportunism.

Mr. Nicholas Bennett

In the event that a Labour Government were elected, a few students would have had loans in the intervening period. The hon. Member for Blackburn (Mr. Straw) did not tell us what would happen to those loans. Would a Labour Government repay the student or the bank, or encourage the student to renege on the loan?

Mr. Walden

My hon. Friend makes a useful complement to my speech.

To move on to a more fundamental point, in the past few years we have been in danger of misdirecting our attention to a matter that is essentially peripheral to the expansion of higher education. Even if the arrangements are implemented, students will pay for only between 6 and 7 per cent. of the true cost of their higher education. With an impending expansion of higher education, of course we should focus our attention on cost and who will pay, but above all we must consider quality. What is the point of putting more people through higher education if in 20 or 30 years the degrees awarded are not worth the paper on which they are written? Some countries have gone through that process. In considering how to prevent loss of quality we must ask ourselves how we can deploy the limited available cash in such a way that quality will not be compromised.

The only future for this country, which is a middle-ranking power facing the resurgence of an economic colossus in Europe in the shape of a united Germany, lies in a highly and extensively educated population with expanded higher education of quality. While we discuss tonight the exact way in which the 6 to 7 per cent. of the cost will be apportioned, what will happen to the prospects for quality? We have seen what has happened with GCSEs. There has been a miraculous increase of 50 per cent. in A grade passes in two years. We all know that that represents dangerous educational inflation. The A-level examination councils are now working to dilute A-levels to increase the number of people who will have the necessary qualifications on paper to go into higher education.

The danger is that, while we are fiddling around on the periphery with this piddling sum—that is exactly what it is—which is to be repaid by people who will have benefited from higher education to earn relatively high salaries, we shall see a slow erosion in the quality of higher education which has been by far the best aspect of British education.

I am in favour of the Government's proposal on student loans, not because it will bring in much money in the short term, but because, if it is administered carefully —I have no delusions about the intricacy and complications of that, having handled it a little myself—it will limit the outgoings at a time when we are trying to expand higher education.

I believe that we should increase spending on education. If a Government have spare money to spend on education, they should invest it in ways which will guarantee the continuing quality of higher education. By that I mean that we should start with nursery schools. We should have 100 per cent. high quality nursery provision if we are to keep up with the future Japanese of Europe—the Germans. Teachers should receive higher pay in return for much higher performance. All that involves large sums of money. Although the hon. Member for Blackburn could say this without any intellectual difficulty, I cannot honestly bring myself to argue for greater public expenditure on nursery schools and greater expenditure in return for quality in secondary education and simultaneously suggest that I shall give students exactly what they want in higher education. That is a dishonest position, and I hope that the hon. Gentleman will reconsider it.

If an American were in the Strangers' Gallery tonight listening to the Opposition and he knew the position of the National Union of Students in this, he would go away saying to himself, "What gives with the Brits? Are the privileged young who will not be unemployed but will do well and will start on a salary of over £10,000 a year so selfish that they do not want to repay a mere 6 or 7 per cent. of the cost of their education? What kind of young population does Britain have?"

I do not believe that the Labour party or the NUS represents the true views of young people. If we explain to them the demography that we shall face, the fact that we shall have an aging population and that they will be far better off than the average, we shall appeal to their generosity. If we explain to them that we are asking them to pay only a mere 6 or 7 per cent. in return for which they will get a life chance 100 times greater than anyone else, they will understand the issue. It is a sad day when the Opposition pitch their appeal to the young of this country at such a low level.

6.2 pm

Mr. Gordon Oakes (Halton)

I oppose this ill-conceived Bill on the grounds of principle, practicability and procedure. As the hon. Member for Southwark and Bermondsey (Mr. Hughes) said in his point of order, it is an abuse of the House to present an innovation in four clauses and two schedules and rely entirely on regulations.

Before you came to the Chair, Mr. Deputy Speaker, Mr. Speaker advised us to make short speeches because many hon. Members on both sides wished to speak. For that reason, I shall not take any interventions. It is not meant as a discourtesy. My experience is that interventions can add up to 50 per cent. to the time of a speech, and once one starts giving way, one must continue, otherwise hon. Members think that they have been singled out in some way.

In our debate on 20 October, the Under-Secretary of State for Education and Science said that past Labour Governments had taken a considerable interest in the idea of student loans." —[Official Report, 20 October 1989; Vol. 158, c. 438.] That is true. In 1976, I was appointed Minister of State at the Department of Education and Science with special responsibility for higher education. Hon. Members who were Members of Parliament at the time will remember that we were going through an extremely difficult time. All spheres of policy and all Departments were looking at money carefully. Student loans was one of the first questions to arrive on my desk. It had been around for years, but I was a new Minister in a new climate, so we had to consider the matter afresh.

I was morally opposed to the idea of students having to pay for their education and maintenance, but I had to swallow that and examine the issue on its merits. Several difficulties arose. Whatever the scheme and no matter how one looked at it or tried to avoid it, poorer students would be hardest hit. That was the inevitable result. Then there was the problem of the Scottish universities which have four-year rather than three-year courses of study. It would create a considerable anomaly if we had a scheme in one country and not in the other. There was the problem of medical students and others whose degree courses inevitably take five or six years. The Swedish solution was considered. Social Democratic Sweden had a loans system, but even in 1976 the Swedish Parliament and Government were having doubts about the administration of that system.

All those objections to the scheme have not gone away. They are precisely the objections that remain today. The scheme will hit the poorest students most, and there is the problem of longer courses at some universities and of longer courses according to the subject being studied.

I saw an excellent article in The Economist of 15 July which concluded that the Swedish scheme costs more than just giving the students the money. The Swedish and West German Governments are beginning to realise that, yet we are considering this discredited scheme.

I said that I opposed the Bill for three reasons, and I shall deal first with my opposition in principle. The hon. Member for Buckingham (Mr. Walden) said that my hon. Friend the Member for Blackburn (Mr. Straw) had not dealt with the principle. I firmly believe that education is an investment in the future of the country. It is not expenditure. The United Kingdom has coal and some oil, which will eventually run out, but precious few other raw materials. The one asset that we have and on which we have survived for decades is the skill, ability and education of our people. That is the root of the matter. Any Government of any complexion who ignore that do so at their own peril.

Fifteen per cent. of our population receive some form of higher education. That is half the number of our competitors France and Germany, and one quarter of the United States figure. We live in a highly competitive world and face the prospect of a united Germany, as the hon. Member for Buckingham pointed out, yet that is the percentage of the population receiving higher education.

According to the Government in a written answer printed in Hansard on 29 June at column 539, 5 per cent. of socio-economic groups 3, 4 and 5—not the poorest. but the poorer sections of the community—are in receipt of some form of higher education. They represent 60 per cent. of that age group. What a waste of talent. If education means anything and if Britain is to survive, let alone progress, we need to use the skills of all young people—girls and boys, black and white, from poor homes or rich homes. We cannot do that if we educate 5 per cent. of the 60 per cent. who make up a certain socio-economic group.

Student loans will make the situation worse. As my hon. Friend the Member for Blackburn said, there is a sharp difference between a rich young student, who can put the money in a building society, pocket the interest and pay the loan back, and a poor student who will have the burden round his neck if he gets a degree or finishes a course and goes into employment.

The scheme could not come at a worse time. The Government are perfectly well aware that, demographically, there will be a shortage of young people during the next few decades. If we add to the burdens of young people by reducing access to universities, that will have a disastrous effect. We should encourage more people to take training or degree courses, but the scheme will encourage fewer people to do so.

On principle, it is a bad scheme. It is the duty of a nation to educate its young people, and pay for the maintenance of those young people while they receive education. That is my firm belief.

I understand that 120 organisations responded to the Minister about the loans White Paper, and 95 per cent. of those organisations said that they were opposed to the scheme. One Tory county council wholeheartedly supported it. Who wants the scheme, apart from a few people in the Government? I am convinced that many Conservative Members do not want it.

Who has opposed the scheme? The National Union of Students violently and bitterly opposes it. [Laughter.] Some hon. Gentlemen laugh. They treat the NUS as an outpost of the Albanian Communist party. That is the standing, in Conservative Members' eyes, of the body that represents organised students in Britain. If hon. Members think that the NUS does not speak in accordance with the wishes of its members, let them look at their postbags and the letters that they receive from students. They are not all prepared, mass-produced letters, although we all get that kind. They are carefully thought out, hand-written letters from the students concerned and some are from students whose parents are Conservative voters. Students are opposed to the scheme.

The universities, polytechnics and institutions of learning are all opposed to the scheme, and I believe that the majority of parents are opposed to it. Parents are not taken in by being told that they may have to pay less money, because they want to secure the best education for their children. Many parents are prepared to pay for that education, if they can afford it. They know that the scheme will not save them money.

What about the lending institutions? They want no part of the scheme. My hon. Friend the Member for Blackburn mentioned that Lloyds bank, the Bank of Scotland and the Clydesdale bank have pulled out. I have yet to hear of any bank or building society that enthusiastically espouses the scheme, and yet they are in the business of lending money.

Dr. Hampson

The problem with that argument is that the Clydesdale bank and the Co-operative bank are offering loans. The only question is about the type of scheme. When the Government are subsidising the interest rates—up to £5,000 for borrowing for vocational courses —the banks are happy to participate.

Mr. Oakes

Yes, but they do not want to administer the crazy scheme on behalf of the Government, and the Government admit that. If one considers the financial effects of the Bill, which was ordered to be printed as late as 22 November, the explanatory and financial memorandum states: The administration costs of the scheme will be in the order of £10 to £20 million and will be settled when contractual negotiations are concluded. No firm contractual negotiations have yet been concluded. Discussions are going on, but the banks do not want to know. The reason is that they are in the business of attracting customers, and so are the building societies. They do not want young people, particularly highly educated young people, to think of them as an ogre or as the institution to which they owe money before they have begun to earn. They do not want that image, and so they do not want to participate in the scheme.

As my hon. Friend the Member for Blackburn said, the cost of the scheme will be horrendous. Considerable concessions were given to the banks. I understand that the banks have been offered a special rate of loan and that student loans will be exempt from the banks' balance sheets. Banks will be guaranteed higher than standard interest rates, and I believe that the Government are promising to indemnify the banks against a change of Government policy or a change of Government. Even with those inducements, the banks still do not want to know.

What about the procedure of the Bill? It is absolutely disgraceful that we should approach the issue in a four-clause, two-schedule Bill. The Secretary of State said that the Bill was drawn up as a parallel to the Education Act 1962. That was a very different thing. A duty was then placed on the Secretary of State for local authorities to administer a scheme that was already in existence. That Act was not a leap in the dark, but the student loans scheme is.

Clause 1 introduces the power to make orders and regulations subject to the negative resolution procedure. As my hon. Friend the Member for Blackburn said, such resolutions need not be debated by the House. Many prayers are tabled, but are not debated.

Clause 2 goes to extraordinary lengths about Northern Ireland. I see that the hon. Member for Antrim, North (Rev. Ian Paisley) is in his place, and I have no doubt that he will want to speak on the subject. Under the Northern Ireland Act 1974, the House assumed responsibility for Northern Ireland, and one of the fears was that orders could be swept under the carpet and dealt with by the House without any debate. It was therefore provided that most orders made under the Act had to be debated under the affirmative resolution procedure, and had to come before the whole House. Why do the Government want to sweep that away for education grants in clause 2, so that a whole province can be hauled into this scheme without any debate in the House?

Schedule 2 provides that the Secretary of State may make regulations about the amount of a loan, the rate of interest and repayment, and regulations that impose a duty on the governing bodies of higher education institutions to issue certificates of eligibility. All those matters can be decided by regulations made by the Secretary of State without any debate in the House. No Government and no Secretary of State should have such powers, and I would say the same if my party was in government. No Secretary of State should have unbridled and unlimited powers, and the House should not grant them, because the Secretary of State should be responsible to the House.

This Bill is a bad Bill for a number of reasons. It is bad for students and very bad for young people. It is bad for higher education generally. It is bad for the financial institutions, which do not really want to know it. It is bad for the democratic process in the House, as matters will not be debated but will be decided by Order in Council. Most of all, it is bad for Britain's prosperity, which is what we should all consider.

The Minister said that the scheme will reduce student costs by 6 or 7 per cent. If, for that, we reduce intake and accessibility to higher education, we shall have done a bad thing tonight for our country's prosperity.

6.20 pm

Mr. Alistair Burt (Bury, North)

I am grateful to be called so early in this interesting and important debate, the subject of which I have followed for the past three years while I have been Parliamentary Private Secretary to my right hon. Friend the Member for Mole Valley (Mr. Baker). During his stewardship of the Department of Education and Science, he was heavily involved with this issue. I enjoyed that time in the Department, working with civil servants and others there. It was an interesting time.

We are dealing with a matter that is rather more difficult than it ought to be because we are dealing with a change of culture. As my hon. Friend the Member for Buckingham (Mr. Walden) said at the conclusion of his remarkable and excellent speech, there is a difference of attitude between Britain and the United States. If we had been born and bred in one of the many countries where a loans system exists, we would not be having this debate; we would deal with loans as a matter of course. Whenever we consider a change of culture, or a change from the norm, we have to go through this enormous rigmarole of believing that everything that went before is correct and that any change must be for the worse. In this case, that is simply not true.

What irks Opposition Members so much is that the debate takes place against a background of higher education receiving enormous support from the Government. There are 200,000 more students in higher education than 10 years ago. There are more part-time and more mature students and there is extremely generous maintenance support. Labour cannot come to terms with that. As a result, Opposition Members persist in suggesting that, by proposing student loans, the Government have abdicated from their support for higher education. We know that that is not true. Higher education is a partnership between the Government, who will continue to fund tuition and the capital cost of buildings, and students. I do not believe that that partnership has been remotely equal—students should make a greater contribution.

It is important to keep a sense of proportion. It is just such a sense of proportion which puts Opposition Members in difficulty when they say what they might do to ensure that the number of students in higher education increases—something which we are determined to do. The grants system was perfectly adequate for a small higher education scheme, but it is inadequate for a larger and growing one. Robbins suggested that that would be the case.

Nick Barr of the London School of Economics has calculated how much it might cost to abolish the parental contribution, to return the grant to a serious level and to increase by at least 50 per cent. the number of grants available to expand higher education. He suggests that lit would be about £2.25 billion. I do not believe that any Government could make that sort of commitment to higher education maintenance—we should remember that that has nothing to do with bricks and mortar and tuition. It is not realistic to make such a commitment to students. Labour has been dishonest, suggesting that it can make such a commitment.

If we want to expand higher education but know that we cannot do it through the existing grants system because it is inadequate for the purpose, the loans system is a useful way in which to supplement student maintenance while the student is in higher education. I believe that the scheme is useful and appropriate on three grounds. First, there is a moral argument in favour of loans. Secondly, they are not a disincentive. Thirdly, I believe that they are flexible.

I shall deal first with the moral argument. We have heard many statements from Opposition Members of how immoral it is to demand from the student some backing for his or her higher education. What could be more immoral than a student having to depend on the state in the form of social security benefits or on parents? What could be more moral than for the individual student to say, "I have some commitment to my future and I am prepared to make an investment in it"? That seems entirely moral and appropriate.

Some of my lower-paid constituents are perfectly happy to make a commitment to higher education, although nobody from their families may have seen a university. They know that they and the rest of the country benefit generally from higher education, and they are happy to contribute to the education of doctors, teachers, scientists and others who receive higher education. If, however, they are asked for a greater commitment for the maintenance of students while at university, I think that they are entitled to ask, "What are they doing for themselves? Where is their commitment to their future?" We are presenting the perfect moral riposte. The student who no longer wants to have thrown at him the argument that he is a drain on the taxpayer—I do not believe that students are a drain on the taxpayer—could thus demonstrate his commitment to his future.

I shall deal, secondly, with whether loans are a deterrent. It has been suggested that the Government should predict, as have surveys done by the National Union of Students, what a deterrent a loans system might be. That is not the right approach. We should consider the experience of other countries and ask whether their loans systems have deterred people from going into higher education. We all travel to Europe and the United States. Do we see there a desperate shortage of people going through higher education because of a loans system? Of course not. They are used to it. They are perfectly happy with it. Moreover, the system suits students from low-income families. A task force that surveyed student assistance under the Canadian student loans programme in 1980 concluded: aid programmes were important and necessary elements in supporting students from lower income families". Loans were as effective as grants at encouraging participation by low-income students, but loans cost less and so enabled federal and provincial Governments to help more students without increasing the cost to the taxpayer.

If there is one thing we suffer from in Britain, it is lack of access for students from poorer socio-economic classes. The grant system has not dealt with that. I do not believe that access is governed by cost. I shall not go all the way with the argument that the loans system is a necessary adjunct to greater access, because I believe that access is controlled by different things, but there is no evidence anywhere in the world to suggest that the introduction of a loans system deters people from participating in higher education.

We should note that West Germany has three times as many students in higher education from poorer socio-economic groups than Britain. The average loan there is about £2,000 a year. The system works for them; it is no deterrent. I urge those who are worried by the deterrent argument to look not at predictions or the answers to surveys which suggest replies, but at the experience of countries all over the world. There such questions are answered.

Several Hon. Members

rose—

Mr. Burt

Would hon. Members be so quick to step into my grave?

Thirdly, we know that Britain's higher education system needs expanding, and we want a flexible economic system in order to make that possible. The flexibility that the loan system gives in providing an extra channel of resources for the individual student will make an important contribution, particularly to those students who are dependent on means-tested grants from their parents but whose parents do not contribute fully. About 40 per cent. of parents do not make up the proper level of grant and their chidren are deprived of that element of money which they would otherwise receive. The loan will not be means tested so that for those who find it hard to make the parental contribution the loan system will provide a flexible way out. It will provide extra money, non-means tested, for the benefit of their youngsters.

I have three points of concern, which I have already mentioned to my right hon. Friend the Secretary of State. The first is in relation to disabled students. As my right hon. Friend knows, I have a particular concern for the arguments raised by the Royal National Institute for the Deaf which has lobbied on behalf of those whom it represents and other disabled students. It is clear that deaf students have lower salary prospects than hearing graduates. International comparisons for disabled student support show that many countries provide more generous support for such students than Britain has up to now. The Bill, through access funds, will give Britain an opportunity to top up the support that we currently provide for disabled students. I hope that my right hon. and hon. Friends will consider that matter carefully during the passage of the Bill. We do not have many disabled students in higher education and we want to encourage more. They have particular problems and their anxieties might be set at rest if we were to take the appropriate steps in the Bill.

Secondly, we should look carefully at housing costs and the abolition of benefits which are a worry, particularly in some regions. It will do the Government no harm to examine that carefully.

Lastly, we need to make it clear that, contrary to the allegations made by Opposition Members, the scheme has nothing to do with the raising of loans to pay for tuition fees. It is all to do with maintenance. There is a balance in higher education between the Government and individual students. We all benefit from higher education and, as taxpayers and as a Government, we contribute to its bricks and mortar, to the teaching and to the resources available. But here is a cast-iron opportunity for the individual student to show his or her commitment to his or her future. The youngsters of Britain will respond to that challenge. They will see the loan system as an assistance, not a deterrent, and, in a few years' time, like many other parts of the world, we will wonder what this debate and this fuss have been all about.

6.32 pm

Mr. Simon Hughes (Southwark and Bermondsey)

This evening there are two bits of bad news. One is the Bill and the other is the result of the leadership election in the Tory party.

Mr. Jimmy Hood (Clydesdale)

On a point of order, Madam Deputy Speaker. The result of the leadership election of the Conservative party is that the Prime Minister has only 314 votes—

Madam Deputy Speaker (Miss Betty Boothroyd)

Order. Whatever interest that might create outside the Chamber, we are now dealing with the Second Reading of an important Bill.

Mr. Hughes

I was going to summarise the result as Finchley 314, Clwyd, North-West 33. There were 24 abstentions, so that means 57 dissatisfied Tories. Are they here now, is what we would like to know.

Madam Deputy Speaker

Order. I assume that the hon. Gentleman will now speak on the Bill.

Mr. Hughes

I was going on to say that I guess that that means that, sadly, policies such as those in the Bill will go on unchanged. Therefore, that means that the Opposition will continue having to expose the weaknesses of the argument and the proposed legislation. I want to take head on the arguments as to why this is a wrong Bill.

Hon. Members have dealt with the constitutional impropriety of the Bill. The inadequacy of the Bill has not only been mentioned in this House. When my noble Friend Lord Addington spoke in the debate on the Loyal Address in the other place, he said that when he picked up the Bill from the Vote Office he thought that the middle must have fallen out of it, it was so thin.

For the reasons that have been given, no parallel can be drawn with the Education Act 1962, which introduced grants. This is a thin Bill simply because the Government have not yet been able to make arrangements for its proper implementation. No doubt it would have had much more substance had they been able to do so. However, rather than not go ahead with their commitment and find themselves in difficulty, they have introduced this shadow Bill—that is effectively what it is—and we shall no doubt spend all our time in Committee having to debate things that might be or might have been.

As a result, the Government may find themselves in some difficulty in the other place, where I gather that even Conservative Members, and not just the noble Lord Beloff, are significantly unhappy about the fact that they will have the substance of the Bill only in secondary legislation. I must warn the Government that, contrary to convention, there may well be votes on this Bill's secondary legislation in the other place if it is earlier deprived of the substantive material which should be in the Bill.

We are being asked to change from a grant system to something which is not entirely a loan system but which in due course will become half a loan system—half grant, half loans. As has been pointed out, no other country has gone from an entirely grant system to a loan system.

Dame Elaine Kellett-Bowman

No other country has one.

Mr. Hughes

That is right. Therefore, all the arguments about the effect of such a change on access elsewhere are invalid. No other country has in the past thought it sufficiently important to invest adequately in students to provide a full grant system rather than a partial grant system. It is no good the hon. Lady shaking her head despondently.

When the Select Committee on Education, Science and Art considered the matter only a couple of years ago—it had a Tory majority and it was chaired by a Conservative Member—it recommended the continuation of a grant system. It considered whether there should be a loan system and it concluded, without having all the inhibitions of being in government but representing parties across the Floor of the House, that the grant system should be retained because it was the single best way of ensuring maximum access.

I accept that we have not been very good at that. It is poor that only 8 per cent. of the lower socio-economic groups have gone into higher education, but that does not mean that we should take a step, for which there is no obvious precedent, that points towards a conclusion that will not increase access for people who have the least money to spend. There is no evidence to support the argument that to change from a system whereby people are funded either, if they are poor, entirely without any parental contribution, or, if their parents have larger incomes, partially by parental income, to one whereby they have to decide before they go into higher education whether they wish to take out a loan, will act as an incentive to continuing in education as opposed to going out to work to earn money.

Dame Elaine Kellett-Bowman

Will the hon. Gentleman admit that the greatest destruction of access to those from blue-collar families was the destruction of the grammar schools? If youngsters can be persuaded to stay on in education after the age of 16, there is a good chance that they will go to university, and in the grammar schools they did. Grammar schools in my constituency have a good access rate for the children of blue-collar workers, including some who are now in the Cabinet.

Mr. Hughes

First, most grammar schools were destroyed under a Tory Government. Secondly, that is not a provable case. Thirdly, as the Secretary of State was at pains to point out, access has increased in recent years, as it should have done, but we are still falling substantially behind all comparable countries; in some cases so far behind that only 15 per cent. of our students go on to further and higher education compared with more than 50 per cent. elsewhere.

There is a big difference between addressing that question by saying that people have to pay for a public service before they can benefit and the way that we pay for future increased social security expenditure through people contributing to occupational pensions. The latter is on the basis that, as one earns, so contribution is made. The former is on the basis that one takes on the liability speculatively in the belief that one will be able to make up later that cost incurred at the beginning. They are entirely different arguments.

No Minister has disagreed when we have said that those countries that have looked at their present mixed grant-loan system—Sweden, the Netherlands and Germany—are moving away from balancing it in favour of loans and towards balancing it in favour of grants, not least because they find that the former is inadequate for giving access to the groups that most need it and because debt repayments are growing rather than being reduced.

Mr. Jackson

The hon. Gentleman has heard the answer on this several times, but he keeps making the same point, which suggests that he is not prepared to listen. We are moving from a wholly grants system to a 50:50 grants-loans system. The Swedes are moving from a pretty well wholly loans system to a rather less than 50:50 grants-loans system. The Germans are moving to a grant-loans mix along the same lines, with the same sort of balance, as in the system that we are proposing. The crucial difference is that, while our grants and loans will be available to virtually 100 per cent. of full-time students, in Germany they are available to only 30 per cent.

Mr. Hughes

I have made the point that there is no exact parallel because we start from a different point. It is therefore also invalid for Ministers to say, as the Secretary of State did today, that we do so much better by our students because, per year, they get so much more support. We know the answer to that too. It is because, in many other places, the length of the course is significantly longer. Therefore, the amount that we contribute is good value for money. There should be more contributions, not fewer, and more from the public purse.

It is no good the Government trying to hide their embarrassment about saying that they are committed to education and the expansion of further and higher education, when at the same time, in public expenditure plans, not only does the Secretary of State start back-tracking on the commitment apparently made in January by his predecessor but we are clearly not funding higher and further education in any way that is likely to produce the increase in student numbers that the country desperately needs.

Mr. Straw

Is not the point about the international comparisons that, whatever the mix of loans and grants with which one starts, wherever there has been a shift to greater reliance on loans, access has been cut? That is why Sweden and West Germany are moving back the other way.

Mr. Hughes

That is the point that I made when we debated the White Paper, and it has been made elsewhere. That is why the Minister and his colleagues are under attack, not just from the Opposition and students who have an immediate interest, but from academics and even from Conservative Members.

The hon. Member for Blackburn (Mr. Straw) has already referred to the noble Lord Beloff, who has no little credibility as an academic and is a Conservative whom the Government have always previously prayed in aid as somebody to whom serious attention should be given. He said that the student loan plan is absurdly inefficient and damaging to the students, their universities and colleges and the community at large".— [Official Report, House of Lords, 23 November 1989; Vol. 513, c. 186.] That is partly because of its risk to access for the whole community.

Mr. Jackson

I am sorry to intervene again, but it is necessary to correct what has been reported incorrectly. In Germany, for example, the proportion of students from working-class backgrounds in higher education has risen from 16 to 18 per cent. since the introduction of the loans scheme.

Mr. Straw

That is not true.

Mr. Hughes

The change in other countries has been assessed and analysed, and all those countries that are reviewing their schemes are moving to increase the amount of grant and decrease the relevant proportion of loans. I am happy to sit down with the Under-Secretary and go through the figures, but the trend in all the other countries is in the opposite direction to the trend in Britain. We have the worst record on numbers, and we should be doing everything to increase those numbers.

We have no detail before us. The Bill effectively comprises one part of one clause and two small parts in the schedule. There was far more detail in the White Paper and in the consultants' reports, which we expected would have been transferred into proposed legislation. There is no mention of access funds, of the administrative body that is to be set up for which the senior executive post has already been advertised, of the way in which the money for the loans will be provided, or of what the intended initial sum would be—£420 has been mentioned—or of the way in which that will be reassessed.

Furthermore, there is no mention of any arrangement with the banks because, as I hope that the Minister now accepts, no final arrangement has been made with the banks. Some of the banks have agreed to help draw up a proposal, depending on the passage of the Bill and on further details being worked out, but clearly there is no contract and nothing firm. The banks are obviously extremely unhappy because they stand to lose substantial numbers of customers. I hope that students and others will consider carefully which banks are subscribing and which are not subscribing to the scheme. If the Government believe in customer power, perhaps they will respond to the fact that customers of the present and future customers will use their power to tell the banks not just that they are against the scheme and will not support it, but that they will have nothing to do with the banks which commit themselves to the scheme.

Our opposition is not just that because we have no details and because all that we are being told is that we are changing from grants to loans. We know too that students will be disentitled from housing benefit, unemployment benefit and income support. Those are substantial reductions from the entitlements that people had begun to believe were part of the general panoply of the welfare state. I heard the hon. Member for Bury, North (Mr. Burt) say that he was worried about that. Many people are worried because the combined costs of deregulation of rents and the poll tax that students will have to pay next year, albeit at a reduced rate, will be more than the entire grant.

Furthermore, in some parts of the country, because of high living costs, the amount of money left in students' pockets will be reduced from about £30 a week to about £6 a week within the year. My noble Friend Lord Ritchie has given the figures on this in the other place. That could be a real loss per student of over £1,000 a year.

It is wrong and unfair to students to say that attitudes will change if their grants are replaced by loans. Many students find it difficult to survive. Many make substantial sacrifices to go to and stay on at further and higher education establishments. Many do other jobs to bring in money, and the vast majority are entirely financially responsible. At the moment, they have to go into debt to subsidise themselves. The difference that the Government are introducing is that they will have to go into official debt, authorised by the Government and probably at a high level.

There will also be no great saving. We know that, for at least 13 years, there will be no saving to the public purse. There may be no saving for another decade after that. It is ludicrous to plan against an eventuality of increased access in the long term with a short-term provision that means that it will cost more to introduce a scheme about which there can be no certainty. This is a speculative venture.

I only wish that we were debating today a measure arrived at in an entirely different way. The reform of student finance could have been tackled completely differently. Consensus could have been sought, as it was in 1962. Instead of bullying the banks and undervaluing the students, there could have been debate with the people who know about these things to try to arrive at an agreed solution. There could have been, as the hon. Member for Buckingham (Mr. Walden) suggested, an experiment. We could have looked at certain systems, without introducing them wholesale with no ability to calculate their consequences.

We could have worked out a way to reduce dependency on parents. I believe that there should be a reduction in the parental contribution, because many parents do not pay it and students of such parents have great difficulty. There could have been a way to ensure adequate public funding, and I and my colleagues are not ashamed to say that we believe that there should be more public funding, for higher and further education. It is no good the Government saying that they cannot solve the problem simply because they are not willing to put more taxpayers' money into the kitty.

There is no guarantee that access will not be damaged. No answer has been given to the concerns expressed about deaf students and students suffering from many other disabilities, who will necessarily incur hundreds, if not thousands, of pounds' worth of extra costs in completing their courses. No answer has been given to the concerns expressed on behalf of mature students, many of whom give up well-paid jobs to return to education. Many of them already have difficulties, especially those who have families. Above all, no answer has been given to the concerns about the poorest students of all, who are already finding life extremely difficult and who will find it substantially more difficult in future.

What about longer courses? In England, no answers have been given to the concern expressed about dentists, medical students, architects and vets. In Scotland one starts from the premise that courses are longer, but hardly anything has been said about Scottish students, either.

Mrs. Ray Michie (Argyll and Bute)

My hon. Friend is aware of the Bill's serious implications for the unique Scottish education system and the broad four-year degree courses that we have north of the border. Did my hon. Friend note that, during the long speech of the Secretary of State, the right hon. Gentleman never once mentioned Scotland? [HON. MEMBERS: "Yes, he did."] He referred only to the four-year degree course. I think that my hon. Friend will agree that that is disgraceful, coming from a supposed Scot—or ex-Scot. I hope that the Minister responsible for education in Scotland will tell us that the Government propose to take Scottish universities out of the ambit of the London-based Universities Funding Council immediately.

Mr. Hughes

My hon. Friend is right. The Secretary of State mentioned Scotland only once, when he said that he had been a beneficiary of the Scottish system. It is a bit rich for him now to make proposals that will do more harm to Scottish education—the system from which he benefited—even than to education elsewhere in Britain.

Conservative Members find the arguments against the scheme unpalatable but their logic is fundamentally flawed. They say, "We cannot afford to pay more grant, because more people will be entering higher education and that will cost the Exchequer more." If the argument is that entering higher and further education increases one's ability to earn well, there must surely come a time when more than 50 per cent. of young people enter further education and, presumably, eventually they will all be earning more. They will then be able to pay their way and make their contribution. The logic of the taxpayer funding the student—the person who earns most paying most—is eminently applicable if the Government argue the numbers of students will be expanded.

The increased resources which the Bill will provide are primarily the increased resources that the students will have to find. The Government's attempt to prevent an increase in dependency will result only in increased dependency on credit. The only access that will be increased will be the use of little plastic cards. It will be a sad day for education in Britain if this shadow of a Bill is passed. My only hope is that, given that the Government have found it so difficult to get anyone to support it so far, it will disappear completely before it completes its stages here and in another place.

6.52 pm

Mr. Allan Stewart (Eastwood)

Before I come to my remarks on the Bill, I hope that the House will allow me to say one sentence on another matter. May I, on behalf of my hon. Friends, congratulate my right hon. Friend the Prime Minister on the massive and overwhelming vote of confidence that she has received as leader of the Conservative party—

Hon. Members

Hear, hear.

Madam Deputy Speaker (Miss Betty Boothroyd)

Order. I called the hon. Member for Eastwood (Mr. Stewart) to take part in the debate, and I hope that he will now do so.

Mr. Stewart

The purple passages in the speech of the hon. Member for Blackburn (Mr. Straw), who opened for the Opposition, had some entertainment value, but what was most interesting about his speech was what he did not say about the Labour party's policy. We have heard from him that he is in favour of grants, but when asked, "At what level?", he says that he is in favour of grants at the level that resources allow. The ringing cry will go round the campuses of Britain: "Trust us lads. We'll see what we can do." Perhaps the hon. Member for Oxford, East (Mr. Smith) would like me to give way to him so that he can tell the House where Opposition Members stand on early-day motion 117 in the names of the hon. Member for Bradford, North (Mr. Wall) and others. Does that reflect Opposition Front Bench policy? I note that the hon. Gentleman is silent.

The Opposition have failed to understand the basic reasoning behind a loans and grants system. As the right hon. Member for Halton (Mr. Oakes) said earlier, higher education is an investment. Because it is an investment that benefits society, there should be a grant element. But because it is an investment that also benefits individuals, a loan element is also justified.

The hon. Member for Southwark and Bermondsey (Mr. Hughes) talked about the constitutional argument. Somewhat unusually, Opposition Members have criticised the Bill for being too short; generally Bills are criticised for being too long. As a former Scottish Office education Minister, I had the duty of administering the grant system which in Scotland is run not by local authorities but by the Scottish Office. In the light of that practical experience, I can tell my hon. Friend the Under-Secretary that I would be appalled at the prospect of primary legislation being introduced to cover every change in the grant or loan system. Of course, changes in detail arise from time to time, and it is appropriate to implement them by regulations.

We have heard the charge that loans would be a disincentive to access by lower income groups. As the very good briefing note available to all hon. Members from the Library explains, experience in Canada, Sweden and America shows that working-class students are willing to borrow to finance tuition or—as in this case—living expenses. The Canadian study is particularly interesting. It points out that those from lower socio-economic groups are more willing to take on loans than those from higher socio-economic groups. That is precisely what one would expect, because the returns from higher education are likely to be more marked for those entering it from low income groups than for those with a higher income background.

Family resources affect the likelihood of qualified students entering higher education, but the effect is on the parental contribution. That is the potential determinant. Under the Bill, the parental contribution will fall in real terms. Under a top-up scheme, the inability to borrow can no longer be a constraint and willingness to borrow is wholly unrelated to present family income. It is not a charge against a student's present income but will be related to his or her perception of future income—the difference between what he or she expects to earn as a graduate and as a non-graduate respectively. That is why access will be widened. The real constraint imposed by the parental contribution will be lessened and guaranteed loans will be repayable out of future income, not out of present income.

In a lengthy intervention, the hon. Member for Argyll and Bute (Mrs. Michie) mentioned the Scottish four-year degree. I should point out that there are also three-year Scottish degrees. Like my right hon. Friend the Secretary of State, I am a beneficiary of the Scottish system. Indeed, I gained the same degree in the same course from the same university, although not at quite the same time.

Let us consider the financial position in 1990. A graduate on a four-year Scottish degree course would incur £600 more in debt than a student on a three-year degree course. People who claim that that extra debt will be a disincentive are saying that the student incurring that debt for the fourth year sees the year as less valuable than the cost of the loan. We are talking about 6 or 7 per cent. of the total cost of the education. If repayment of that percentage is enough to discourage students from taking a four-year degree course, why should the taxpayer pay the extra 93 per cent.?

Mr. John Marshall

I thank my fellow beneficiary of the four-year Scottish degree system for giving way. Does he agree that the Scottish four-year degree course at the University of St. Andrews has always been heavily subscribed by students from south of the border, despite the fact that there are financial disincentives in the short term in their applying for those courses?

Mr. Stewart

My hon. Friend is absolutely right. I do not believe that there will be any disincentive with regard to the four-year loan system. Those who argue that there will be a disincentive argue that students place a very low value on the fourth year. If that is their argument, why should the taxpayer pay the rest of the money?

I am aware of the constraints on time. In conclusion, I believe that the present system is manifestly unsatisfactory. There is an overriding need for the right balance in the payments made by the taxpayer, the students and their parents. In the long term there is an overriding need for a system that is stable and acceptable to society as a whole. I believe that this Bill achieves that.

Several Hon. Members

rose—

Madam Deputy Speaker

Order. There is a constraint on time. Speeches should be limited to 10 minutes between now and 9 pm.

7.2 pm

Mr. Win Griffiths (Bridgend)

The only good thing that can be said about the Bill is that it has probably saved a forest or two by its brevity. Apart from that, it is an affront to our democratic procedures. It is a legislative outrage that so little detail can be presented to the House before the Bill enters Committee. The Bill is an educational irrelevance as well as an administrative and very costly nightmare.

Let us consider the Government's claims for the Bill. They claim that it will spread the costs among the parent, the student and the taxpayer. They really mean that the Government are desperate to cut their commitment to the maintenance of students in higher education. It is no good Conservative Members shaking their heads; that is exactly what the Bill will do.

Many students receive a full grant and social security benefits because their housing and other costs are so high and the grant is so small. Despite receiving the full £420 loan available for students outside London, they will still be much worse off under the new scheme when the system is changed to a 50 per cent. grant and a 50 per cent. loan. When the Government talk about spreading costs, they are simply using Orwellian "newspeak." The Government want to cut the costs involved in the maintenance of students in higher education.

I want now to consider the cost forecasts. The figures presented in the White Paper are based on the assumption that there will be no increase in student numbers. They are based on the fact that the Government believe that only 80 per cent. of students will take up loans. The figures assume that in the first year inflation will be 5 per cent., in the second year 3.5 per cent. and 3 per cent. thereafter.

In the Select Committee on Education, Science and Arts the Minister admitted that he thought that there would be a 100 per cent. take-up of loans and that invalidates the table in the White Paper. As far as we can understand, there is a commitment to a continuation of the increase in student numbers in higher education. The White Paper takes no account of that. Furthermore, we must consider the Government's inflation statistics which seem to come from the Mad Hatter's tea party in "Alice's Adventures in Wonderland."

Over the past 20 years inflation has been less than 3.5 per cent. only twice. In the Tory years it has averaged 8.7 per cent. and it was just a little higher than that under a Labour Government. The rate of inflation is roughly the same under both Labour and Conservative Governments. However, over a 20-year period, the rate of inflation is more than double the estimates used for calculating the figures in the White Paper. If I had longer than five minutes to speak, I would read out the figures to show that the record of Labour and Conservative Governments on inflation since 1967 are comparable, although the Labour rate was a little higher.

When the Secretary of State said that the rate of interest on the loans would be nil, he meant that the loans would be revalued every year based on the rate of inflation. If that is not a kind of interest payment, I do not know what is. In two years under the Conservative Government the rate of inflation was higher than the then bank interest rate. I wonder what the real figures might have been if the Government had bothered to consider inflation rates over the past 20 years and then calculated the cost of the scheme. I am sure that if they had done that the picture would have been very different.

The Government also claimed that the plan is to increase resources available for students. The Secretary of State said that the average amount taken by students in social security benefits is £210 and that the £420 maximum loan would therefore give a student more resources. However, the Secretary of State knows that that average figure is disingenuous. It does not give the House a completely true picture. When the Minister replies, perhaps he will tell us how many students over the past year claimed benefits in excess of the £420 which a student would receive in the first year or above the £310 that it is planned a student should receive in his final year of study. I believe that we will discover that a considerable number of students will be affected.

Currently, of all students in receipt of mandatory awards where parental incomes are taken into account, 30 per cent. of students receive a full grant. In Wales about 35 per cent. of students receive a full grant. In five Welsh counties the uptake of full grant is even higher. In Gwent and Gwynedd it is almost 45 per cent. and in Dyfed, Mid Glamorgan and Powys it is almost 40 per cent. Students in Wales will be particularly hard hit by a system which provides half a loan and half a grant. Those students will find that, in effect, their incomes will be capped.

The Government have introduced a new concept in the provision of state services. That is, some people who use the service will be expected to make a substantial contribution to its cost. Conservative Members have asked, "Why should someone who has not used the higher education system make a contribution to the maintenance of students who are involved in it?" They are enunciating a principle which, of course, paves the way for the introduction of a full loan scheme at a later date. They will not be prepared to give a cast-iron commitment that, at some future date, they will not deign to go beyond the 50:50 split and introduce further loans.

The Government claim that the Bill will increase access. Nothing could be further from the truth. I was the eldest of seven children. I had a full grant, but I still had to work at Christmas time and in the summer. I took a stake in my own future by forgoing the opportunity to take a job at the age of 15. My parents had already made sacrifices for me, and they continued to make sacrifices for my brothers and sisters who went to university. It is rubbish to talk about this scheme giving students a stake in their own future. Many people have taken a stake in their own future by being prepared to forgo the opportunity to earn money from the age of 15 and, instead, take up higher education. Furthermore, I am quite sure that my taxation contributions in the past 20 years or so have more than made up for the cost of my education.

Education is not a burden. The Secretary of State constantly used the word "burden". Education is an investment in our future, and I sincerely hope that the scheme will be rejected.

7.12 pm

Mr. James Pawsey (Rugby and Kenilworth)

The explanatory and financial memorandum to the Bill states: The Bill, which gives effect to proposals outlined in the White Paper, 'Top-Up Loans for Students'". I mention that because, in a reply to a parliamentary question, my hon. Friend the Under-Secretary of State for Education and Science stated: On the assumptions made in the White Paper, 'Top-Up Loans for Students' . . . the estimated net cost of the scheme is some £13 million in 2000; in 2005 there is estimated to be a net saving of some £37 million rising to £49 million in 2010." —[Official Report, 1 December 1989; Vol. 162, c. 440.] In other words, the answer to my question is on the same level playing field as the White Paper, so like is being compared with like.

Hon. Members with reasonably long memories on education will recall that when the Education Reform Act 1988 was introduced Opposition Members criticised its length. They said that it was too much, too complex and covered too many issues. This Bill is criticised for precisely the opposite reasons. Opposition Members say that the Education (Student Loans) Bill is too brief. Clearly, they are more interested in opposition for its own sake than in opposition for any real, cogent or constructive reason. This Bill is short and concise. It sets out the framework for intended legislation, with detail to be found in regulations. Its raison d'être is the need to attract more students to advanced education and, at the same time, to generate more funds.

I support student loans because they represent new money. The proposed £420 is additional to the existing grant. That point was made by my right hon. Friend the Secretary of State when he opened the debate. No hon. Member can doubt that there must be a limit to the number of students whom taxpayers can afford to support on the present grants only basis. I do not believe that the taxpayer should be soaked for every single student penny. The loan, which is interest-free and not repayable until the student is earning 85 per cent. of the national average wage —about £9,500 on current standards—will form an important addition to student finance. In addition, women who start families will not be required to repay the loan until they actually start to earn. There will he no such thing as a negative dowry.

My hon. Friends and I have been touched by the great concern expressed both within and outside the House about the likely level of default and about bankers' profits. We have heard figures from the United States which would curdle the blood of any true blue British banker. As all hon. Members should know, the principal reason for the high incidence of default in the United States is that there is no general provision for graduates to defer payment when their income is low. That contrasts sharply and unfavourably with what the Government are proposing. If we need to seek an indication of student default we can look to Scandinavia, which is much closer to home and where the level of default is between 1 per cent. and 2 per cent.

It has been argued that a high measure of taxpayer support is necessary to guarantee admission to advanced education, but since 1979 the real value of the student grant has fallen by at least 10 per cent. The hon. Member for Blackburn (Mr. Straw) said that it had fallen by 23 per cent. Despite that real reduction, there are almost 200,000 more students in higher education, and the percentage of 18 and 19-year-olds entering higher education has increased from less than 13 per cent. to more than 14 per cent. There is thus no reason to argue that a reduction in grant equals a reduction in student numbers. That is demonstrably untrue.

However, I share some students' apprehensions. I have met a number of delegations and, in general, they are apprehensive about the loss of social security benefit. Incidentally, Beveridge, the great initiator, never foresaw a situation in which students would be the beneficiaries of social security payments. If it is argued that with adequate funding for their support they would not need social security benefit, I return to my general principle that the proposed loan will be part of their support.

With regard to access funds and the part that they have to play, the problem is not their number but their size. The access funds totalling £15 million are inadequate. I again urge my right hon. Friend the Secretary of State and my hon. Friend the Under-Secretary of State to reconsider the amount of funding. The sum should be substantially increased. Access funds will be required to assist young people, especially those from disadvantaged sections of our community, who wish to enter advanced education. If they are to be assisted to any marked extent—and that must be one of our principal aims—access funds must be increased.

Most graduates can expect to receive substantially more remuneration than non-graduates. As students benefit most from higher education, why should the tax paid by those who leave school and start work at 16 materially assist those attending university? Can it really be fair or just that the non-graduate should be called upon to subsidise the graduate? Economic analysis shows that graduates receive a personal return of about 25 per cent. on their investment in higher education. Society's return by contrast is only between 5 and 8 per cent.

The hon. Member for Bridgend (Mr. Griffiths) says that loans will discourage young people from blue-collar homes from entering advanced education—

Mr. Win Griffiths

It will.

Mr. Pawsey

That point is made as though the present system worked to their benefit, but currently, although they account for 60 per cent. of the population, they only manage 21 per cent. of university admissions.

Mr. Win Griffiths

rose—

Mr. Pawsey

No, I cannot give way. They account for only 21 per cent. of university admissions or 24 per cent. of admissions to polytechnics, so the present grants system does not seem to be an outstanding success for working-class youngsters.

A further reason why I support top-up loans is that about 4 per cent. of parents do not make the full parental contribution and students have to make good the shortfall in various ways. Many, for example, borrow and, if they do, they borrow at commercial rates of interest, which compare unfavourably with the zero rate of interest proposed in the legislation.

I am absolutely convinced that a mixed system of grants and loans is fairer. It at once represents better value for the taxpayer and improved access to higher education. I urge my right hon. and hon. Friends to support the Bill.

7.21 pm

Mr. Martin Flannery (Sheffield, Hillsborough)

In the age in which we live, under this Government, we receive lectures on the Health Service from a Cabinet whose members never use it. We receive lectures on the education service from a Cabinet whose members never use the public service. Practically all the Cabinet come from wealthy homes and went to prep or private schools and to Oxbridge, and although they lecture us about what we should do for our children, they have always depended on mummy and daddy. That is a fact of life for this Cabinet, although I am not saying that it applies to every Conservative Member.

The scheme is really a cut. It is a cut made in a foundering economy. Indeed, the Government are having to make such cuts—they have no choice. The economy has foundered so badly that one Chancellor of the Exchequer has resigned and his place has now been taken by another. Furthermore, an election has now taken place that nobody ever thought would take place. I have not yet heard the result—[Interruption.] Well, in other words, there is a crisis in the Government and—

Mr. John Marshall

rose—

Mr. Flannery

No, I shall not give way because I have only 10 minutes in which to make my speech.

This is not one but two debates, although they are essentially the same. They are both about how to cut the education service. One is about keeping down the wages of teachers and school conditions and the other is about how to cut students' money. That cut is not so much a plot as a necessity. The Government have to make that cut—they have no choice. Having seen the whirlwind coming, Ministers continually visit America to study schools there. The Americanisation not merely of our economy but of our health and education services is now well under way.

However, the Government who are now making these cuts had access to a boon that no other Government in Europe have had. One of my hon. Friends has costed the money that the Government have received from North sea oil at at least £80 billion. We did not have the benefit of that. From selling the family silver, the Government have received at least £30 billion—even after the massive advertising on a grand scale, hitherto unknown, involving public and taxpayers' money.

Those are the people who are lecturing us about what we should be doing, yet the Government know full well that they are looting the common exchequer. Although more millionaires than ever are emerging and they are growing richer than ever, just outside the House people are sleeping in cardboard boxes. When Opposition Members try to set that right, the Government drag up all kinds of arguments to try to prove that we are somehow in the wrong; but we are not in the wrong. We know that the students will now take a kicking and a beating from the Government and that many of them will no longer enter areas that they have previously been able to enter.

As I said a month ago, I am one of only a few hon. Members who had experience of higher education before the grant system. Only a handful of ordinary boys and girls could get to university on the few scholarships available. The others could not go. Many of them took up teaching so that they could get a loan from their local education authority for two years. When I came back from the war, it took me four years to pay back my loan. Despite all the boasting from Conservative Members, some former students in America are in penury as a result of trying to pay back their loans and pay off their mortgages, yet that is what the Government are driving us towards. The Government have driven our economy to such desperation that their own party is now in deep crisis and they are trying to shift that crisis on to us.

However, there are some who realise the present serious condition of education. The Committee of Vice-Chancellors and Principals has briefed the Opposition on this, stating that it believes that such a scheme should ensure that students have enough to live on while they study and that it does not deter increasing numbers from applying for higher education.

Although it has been said that more people enter advanced education in America and West Germany, that has nothing to do with grants; it is because those countries have much stronger economies than we have. Indeed, even the Italians and the French now have more powerful economies than we have. That means that they can afford advanced education without the grants that we would give. Nevertheless, ours was the most advanced system when we helped more students to take up higher education, but our economy has foundered since then and has driven the Government into a loans system.

The hon. Member for Wantage (Mr. Jackson) knows of the Committee of Vice-Chancellors and Principals because he is a former don. The Committee said that such a plan should be simple, that it should provide adequate means and that it should not deter students from poorer families. It concluded that the White Paper failed to satisfy any of those criteria.

The loans scheme, which Conservative Members have praised so much, will cut, stabilise or freeze grants, yet it will take more money from the taxpayer—and from the students themselves. It will also remove the housing and other benefits that students so urgently need, so it is socially unjust.

The loans scheme could deter students from entering higher education. Of course, it will not deter the rich students. It will not deter the sons or daughters of the present Cabinet. Like the cuts in the Health Service, the scheme will not affect them because, like the Prime Minister, they can still go private. Members of the Cabinet can do all that, but they still lecture us about how we should deal with our education system—the one that we built. I remind Conservative Members that Robert Peel built the National gallery for the poor—for those who could not afford pictures of their own. However, the Government's hard-heartedness and their lack of care for ordinary people mean that this and similar schemes will be heaped on working people.

It is likely that the scheme will stop students becoming doctors, teachers and graduate nurses. Conservative Members have no intention of facing reality, but they should study the briefing from the Royal College of Nursing, which deplores the fact that the number of graduate nurses will decrease. I note that several of my hon. Friends nod their heads in agreement, but Conservative Members are not interested in briefs that give them facts. They are interested only in briefs that uphold the necessity to cut the Health Service, and attack the ambulance service and the education system. They are interested in briefs that help their people. Eventually, Conservative Members will leave the scene because they will be kicked out, but they will do so with pockets full of loot from the common exchequer. They have not used that loot on education, on building hospitals and so on.

The scheme is vicious. It is anti-education and anti the poorer student. It is deplored by nearly every group in this country except those who sit on the Conservative Benches. The scheme should be kicked out, because it is against the interests of ordinary people. Conservative Members may smile, but they are well-heeled, and they know it. They do not like hearing the truth; instead, they give a nice smile. When the Labour party gets the chance, however, the scheme will be thrown out.

7.30 pm

Mr. John Maples (Lewisham, West)

The Opposition have sought to confuse the issue and to make it much more complicated than it is. Both parties are agreed that they want to double the number of students in higher education in the next 20 years. The simple problem is who will pay for that increase and how that cost will be shared among taxpayers, parents and students.

The issue is relatively simple. Will we double the £500 million a year currently spent by the Government on student support? Will we increase parental contributions, or should some of the burden be put back on to students? I believe that the right solution is to put some of the burden back on to students. The other alternatives would never allow us, or any other Government, to double the number of students in higher education.

The loan proposals will enable the number of students to increase. It will also greatly help those who rely on parental contributions, as we know that those contributions are often not made. More money will be made available for all students. The proposals will especially help students from the poorest families, as the amount of total grant and loan will be increased by 20 per cent. They may be poor students, but they will not be poor graduates and the time when they need help is when they are students.

The debt repayments will not represent a significant portion of a graduate's income. When the scheme is in operation the maximum debt that a student will be able to incur is about £3,900. To repay that over five years requires a payment of £ 15 per week. Over 10 years, the cost would be £7.50. We know that the average graduate earns about 30 per cent. more than the national average income. After tax, a graduate's income represents an additional £3,000 per year in his pocket compared with the earnings of a non-graduate. We are talking about 25 per cent. of that additional £3,000 being needed over five years to repay the loan, or 12.5 per cent. of that income being needed for 10 years. I do not believe that that is an unreasonable burden, nor is it likely to discourage people from participating in higher education.

At a time when real incomes are rising extremely fast, it is right to start to shift some of the burden from public expenditure to private, and at the same time to allow the Government to reduce taxes. Student loans are an example of where that can be done to great benefit.

The Opposition have criticised the scheme as they believe that it will inhibit access and that it will be costly to administer. If I felt that their criticism about access was justified, I should be against the scheme. That scheme, however, will make more money available to students from the poorer families and it will help those who are discouraged from higher education because their parents do not make up the total contribution. In future it will be unnecessary for them to demand so much from their parents.

We do not need lectures from the Labour party about access. Between 1975 and 1979 the number of full-time students at universities and polytechnics rose by 1 per cent. Between 1979 and 1987 the number rose by 20 per cent. Whatever mistakes we have made, they are obviously nothing like those made by the Labour party. I do not believe that the scheme will have any effect on access, and I believe that participation in higher education will go on growing, as it has in the past decade.

Germany and Japan are often held out as examples of more successful economies than ours because their education and training are better. During the period of their great success, those countries operated 100 per cent. means-tested loans and offered no grants. A higher percentage of our adult population have degrees than is the case in West Germany. It is extremely difficult to construct an argument to prove that the scheme will hinder access to higher education.

I suppose that the hon. Member for Blackburn (Mr. Straw) had to find some basis on which to oppose the scheme—after all, that is his job—and, as is common in the Labour party, he followed his prejudices, wrapped himself up in social concern and trailed a lot of red herrings through his argument in an attempt to confuse it. The same goes for the other leg of the Opposition argument, relating to cost.

The hon. Member for Oxford, East (Mr. Smith) has written articles and asked many questions trying to prove that the cost of the scheme is much greater than estimated. I am not sure whether he is trying to say that we are spending too much on the scheme. He has said that we should do more for students, but at the same time he appears to be arguing that we are doing too much. I should have thought that he would welcome our efforts.

The Labour party would be likely to spend more and achieve less. In its policy review, it says that it wants to retain grants and to review the parental contribution. Subsequently it has said that it wants to abolish the loans scheme. At the same time, however, the Labour party has said that it wants to double the number of students in higher education. The only way it could do that would be through far more public expenditure than we propose.

The Opposition argue that the Government scheme will result in an increase of £660 million in public expenditure by 2001. By 2012, however, the net additional cost to public expenditure will be zero and, thereafter, the scheme will result in a negative cost—a reduction in public expenditure—of £200 million per year. If the Labour party simply turned the loans to grants and did not ask for repayment, the deficit by 2001 would be £1,525 million. By 2012, instead of the accumulative deficit being zero, the cost to the Exchequer would be £4.1 billion. Thereafter, the costs would increase by £200 million per year. In other words, the Labour party would incur an additional £400 million per year on public expenditure. If, on top of that, the Opposition sought to make some reduction in the parental contribution, the cost would be even greater. The parental contribution totals about £300 million per year. If the Opposition reduced that by one third, a further £100 million would have to be found from public expenditure. If the number of students doubled, that cost would increase to £200 million per year. That means that the Labour party would be spending about £600 million per year more than we propose to spend.

If I were Secretary of State for Education and Science and the Chancellor told me that I had £600 million per year to spend on higher education and on encouraging more people to take up such education, I cannot imagine that I—or, indeed a Labour Secretary of State—would spend it in the way proposed by the Labour party. It is all fiction, as we know that the shadow Chancellor has said: We are all agreed that we cannot spend what has not been earned. If that means postponing some of our social ambitions—we may have to do this. My right hon. Friend the Secretary of State also quoted that remark. It is a fair bet that the £600 million additional expenditure proposed by the Labour party would be one of the early postponements. The Labour party would be unable to increase public expenditure, but it would not agree to loans, so there would be no way of increasing the number of students. Once again, the Labour party wills the end but not the means.

We are faced with a simple problem—the problem of who is to pay. I believe that shifting a small part of the financial burden on to students will mean that the number of students will increase and that more support can be given to individual students and we can reduce the burden on taxpayers and on parents. I do not believe that the scheme will affect access and it will certainly reduce long-running costs. It is a truly Benthamite solution and everyone—students, parents and taxpayers—will benefit.

7.38 pm

Mr. Peter L. Pike (Burnley)

I wish to speak against the Bill. I do not agree with the hon. Member for Lewisham, West (Mr. Maples) that it is a simple issue. We recognise that money spent on all levels of education represents an investment in the future of our nation which will benefit it. We are prepared to spend money on that important service.

The Government keep challenging us on the question of payment. We have said that we are prepared to increase taxation for those most able to pay and those earning the most who have benefited the most under the present Government. We are prepared to put up taxation from 40p in the pound to 50p in the pound. This is one service—

Mr. Jackson

Will the hon. Gentleman tell the House how much money these tax changes will generate and compare that with the £600 million estimated by my hon. Friend the Member for Lewisham, West (Mr. Maples)?

Mr. Pike

I should not have given way because I do not have time to go into detail about that—[Laughter.] Conservative Members laugh, but I shall deal with that aspect when we have a proper debate without time restrictions. I cannot do so now, particularly as the Secretary of State talked for nearly an hour when he opened the debate. We are debating one of the nation's most important principles: educational opportunity. One reason why my hon. Friends and I are in the Labour party is that we believe that there are some things in life to which all people should have a right regardless of their ability to pay and background. One such is education and another is health care. Fate has determined that this week the Government are trying by various measures to remove people's rights to both these essentials.

We are anxious to increase the opportunities for people to be educated. Only 5 per cent. of the 18-year-olds in the socio-economic groups 3, 4 and 5 entered higher education in 1987–88, despite the fact that they represent more than 60 per cent. of that age group. That should be a matter of concern for Conservative Members. Why are only 5 per cent. of young people in that group able to take advantage of educational opportunities?

Mr. Tim Janman (Thurrock)

rose—

Mr. Pike

I shall not give way because the 10-minute rule is in operation.

We must take into account the fact that people within those groups have ability and should receive educational opportunities, which is what we are arguing for. The former Secretary of State for Education and Science said: I confidently expect that the numbers in higher education, in polytechnics and universities will increase because of our proposals."—[Official Report, 9 November 1988; Vol. 140, c. 320.] The Secretary of State's speech this afternoon has not convinced me for one moment that that will be true. I believe that the exact reverse will be the case and fewer people will be able to receive university education if these proposals are forced through. Many people have referred to the opportunities for university education in France, Germany and the United States. It would benefit this nation if we followed their example.

This is a squalid, enabling Bill in a long series of such Bills. It is time for Conservative Back Benchers to be as concerned as Opposition Members that Members' rights are continually eroded by the powers given to the Secretary of State without those proposals being debated in the House. We are moving in the wrong direction, as is reflected by the Bill.

Schedule 2(1)(c) provides that the Secretary of State can make provision for the deferment or cancellation of a borrower's liability in respect of a loan. While the loan is deferred, it continues to attract interest—although the Government claim that it is not interest. However, to increase the amount owed by the inflation rate is at least the equivalent of an inflation-linked interest rate. Whatever the Government call it, they cannot get over that fact. In many cases the repayments will be deferred for many years which will create tremendous administrative problems. I accept that the Government have said that repayments can be deferred if the borrower is not earning 85 per cent. of the national average earnings.

This is one proposal—if time permitted I could give several other such illustrations—about which we do not have the nitty-gritty or the facts to debate properly because this is an enabling Bill. That is deplorable and Conservative Back Benchers should be concerned about the Government's increasing tendency to remove hon. Members' rights to debate issues before decisions are implemented.

On 20 October I asked the Secretary of State whether he accepted—Conservative Members have accepted this today—that people who have had a university education earn on average 30 per cent. above the national average and, therefore, the higher taxes that they pay would cover the cost of maintaining them while they were at university. That seems a perfectly reasonable and sensible proposal. With the exception of the poll tax, which does not take into account someone's ability to pay, most taxes are fair, and income tax is certainly fair because it is based on ability to pay.

This afternoon the Government have skirted round the loss of benefits that students will suffer. It is clear that many students will lose more in benefits than they will receive in loans, which is regrettable.

Whenever the Government consider education, they fail to recognise the challenges facing the nation. They fail to recognise that education is an essential investment in this nation's future and the need to ensure that everybody in this country, regardless of background, should have an equal chance to receive education. The Government's dogma, their attitude that come what may they must cut public expenditure and the Prime Minister's—and therefore the Cabinet's—obsession that public expenditure should govern everything the Government do mean that they judge issues only by the amount of Government expenditure. They fail to ensure that we tackle these problems positively.

This is a bad Bill which does nothing to ensure or enhance people's educational opportunities. When students graduate from university and are faced with the expenditure of setting up their own homes, the Government's proposals will burden them with debt repayments. The Bill is bad for the nation's education and should be rejected.

7.50 pm

Mr. David Davis (Boothferry)

Much of the case put by Labour Members so far hinges on two arguments: that the introduction of loans will reduce participation overall in higher education, or will reduce the participation of those in the less well advantaged groups. Either outcome would constitute a poor result for our policy, if either were true. In fact, there is no distinguishable correlation between the existence of grants or loans and the take-up of higher education.

That may seem odd, because one might expect that a subsidy plus the advantage of a 40 or 50 per cent. increase in income would lead to a great take-up of higher education, but experience of take-up in West Germany and Sweden, which have predominantly loan-based systems, is no worse than experience in this country. That should be explained clearly when we say that loans will not curtail higher education for our youngsters but will have the opposite effect.

In making my case, I will develop a point put first by my hon. Friend the Member for Eastwood (Mr. Stewart) and then by my hon. Friend the Member for Rugby and Kenilworth (Mr. Pawsey). For this purpose I shall cite three cases—a youngster from a very low income family, a youngster from a very high income family, and one from a family in between. I shall examine those cases from the point of view of parental contribution to see what effect that contribution has on the decision whether to go to university or college.

We have heard that 35 or even 40 per cent. of students do not receive a full parental contribution.

Mr. Jackson

It is 40 per cent.

Mr. Davis

With the very low income family, no parental contribution applies, so I can set that case to one side. At the other extreme, the high income family typically will have a lot of discretionary income and, if it is a managerial or professional family, will have some experience of higher education and therefore an understanding of its value. Indeed, such a family will probably already have been paying school fees, perhaps of £6,000 or more a year. For that family, a payment of £2,000 plus would not represent a great deal.

The difficult case occurs with what I have heard described as the class three person, perhaps a relatively well paid skilled manual worker. The family income for such a worker is now significantly more than £300 a week. That family will have to find over £1,000 to send its offspring to school, a large sum for such a family.

We must remember that the head of that household himself probably left school at 15 or 16 and went on to do an apprenticeship for a pittance for several years. He has no experience of the value of higher education and could reasonably reach the conclusion that it was not a good investment, for he or she will see all of the costs but none of the benefits.

Mr. Harry Barnes (Derbyshire, North-East)

Is the hon. Gentleman aware that the examples he is giving could be of people who are in professions which are badly paid? They may be social workers, school teachers and others who earlier in their lives were graduates and who have the same understanding of higher education as those in higher income groups.

Mr. Davis

The hon. Gentleman is making my case. I was about to deal with the very cases to which he referred, and I will do so later. Meanwhile, I am making a clear case affecting a large number in the population in the income categories of which I have been speaking.

Let us not forget that the decision on this issue is not made by the beneficiary—the person who will receive a 40 per cent. gain in income. The decision is pushed on to the parents rather than on to the youngster. The Bill moves that decision, at least in part, back to the beneficiary, the youngster, and that is a key issue in the debate.

Opposition Members have suggested that what is proposed will become a millstone for that beneficiary later in his or her life. That argument ignores the practicality of the timetable of the imposition of the scheme. It goes through the whole of the 1990s, and we have heard in other debates that throughout the 1990s there will be a demographic shortage of young workers. In other words, there will be more than enough demand for every available graduate leaving university.

Companies searching for new graduates will pay off the loans. In other words, companies will bid against each other to pay them off. Rather than a millstone, it will enable youngsters to see where they can get the best return on their education. Instead of being a millstone, it will be an economic lodestone.

7.55 pm

Mr. Roy Beggs (Antrim, East)

The proposed student loans scheme, together with freezing parental contributions and grant in cash terms from 1990–91, will cause unnecessary hardship for students in Northern Ireland and in other areas of high unemployment and deprivation.

To deny most full-time students in further and higher education income support, unemployment benefit and housing benefit is a further attack on the least well off in society. Disabled students will not be well served by the proposals.

I can only assume that those radical advisers who were responsible for promoting these new measures for financially supporting students have limited knowledge of the struggle to make ends meet experienced by students from less-well-off backgrounds. "Access funds" to provide discretionary support in individual cases of financial need for students losing entitlement to benefit will not be an acceptable alternative. Harold Wilson, when Prime Minister, was given a clear message from Northern Ireland after his "spongers" remark. We in Northern Ireland are not spongers, and the Government should not attempt to make our students beggars and borrowers.

It is generous of Government not to abolish parental contributions and to provide parents with the option of paying more, thereby requiring the student to borrow less. That may be acceptable in the affluent south and south-east of England, but many parents in Northern Ireland—where there is a higher cost of living, lower than average national income and higher unemployment—cannot afford to pay more.

Every young person in Northern Ireland and throughout Great Britain, irrespective of class, creed or sex, whose academic achievements qualify him or her for further or higher education should automatically qualify for sufficient grant to enable qualifications to be obtained which will ultimately lead to gainful employment. A highly educated and skilled population will help us to bring economic prosperity to Northern Ireland. Education is the soundest investment we can make.

I do not believe in encouraging anyone to borrow or to get into debt, and least of all in burdening with loan debt students who have enough stresses and strains to cope with already. Loan sharks are causing a lot of trouble in my constituency. I should hate to think that students would ever get into their clutches. That is why we should pay students grants and let them pay their way.

It must be a matter of concern, especially to those who have read the huge document, "The Higher Education Demands Survey: Final Report" commissioned by the Department of Education and Science, when the reseachers Cormack, Miller, Osborne and Currie, looking at the proposed change from a grants to a loan-grant system, said that one third of students had reported that they would reconsider their decision to enter higher education in the event of a loans scheme replacing student grants.

The final paragraph in the chapter dealing with student loans said: Overall, therefore, it must be concluded that the introduction of a loans policy as a replacement to the existing grant system could radically alter both the size and social characteristics of participation in higher education by Northern Ireland students. The survey did not take into account the precise loan system being promoted by the Government; it came to general conclusions, however, that back up the fact that there is a real risk that students from poorer backgrounds and Roman Catholics would be more likely to reconsider entry into higher education.

If the loans scheme is introduced to Northern Ireland, it will more adversely affect the prospects of students from working-class backgrounds of getting into further and higher education than it will affect those of students in Great Britain. At present in Northern Ireland, entrants into higher education reflect a good balance of Protestants, Roman Catholics and females. To deny opportunities to Roman Catholic students from poorer families will lay the Government open to allegations of discrimination against Catholics and provide the very evidence that is needed to confirm them. I firmly believe that no student should be denied the opportunity to realise his or her full potential in our education system, but I have nothing in common with the small Republican group of graduates who offensively dishonour the state that has provided them with a full and free education.

The proposed system of student loans will not encourage greater participation by students in further and higher education in Northern Ireland. The Government must further examine international evidence which shows that loans schemes and a desire to avoid debt are diminishing the proportion of poorer students entering higher education. There can be no comparison betwen the ability of wealthy West German parents to support their students and that of parents on low incomes in Northern Ireland to do so.

Dissuading less well-off students anywhere in the United Kingdom from entering higher education may well sentence their offspring in succeeding generations to missing the obvious advantages of higher education. Acknowledging the fact that demand for higher education outstrips its provision in the Irish Republic, can the Secretary of State give us an assurance that the high level of entry qualifications demand in Northern Ireland and the increasing demand from students from the Irish Republic are not already disadvantaging many able Northern Ireland students and preventing them from obtaining places in higher education?

Ulster Unionists want legislation in this House to be applied to the United Kingdom as a whole, but we cannot welcome this Bill, which will be applied later to Northern Ireland through the Order in Council procedure. All hon. Members should be concerned that we are being asked to approve a blank cheque to cover any sums required by the Secretary of State for making payments under the Act. I fear that the estimated low costs of introducing the scheme may prove higher than those of the present grant and maintenance system in the long term.

Finally, I ask the Secretary of State to review the additional burden placed on parents in Northern Ireland, who are already paying much higher rates for their homes than are paid in some parts of Great Britain for similar properties and whose children are required to pay the poll tax when studying in Great Britain. That injustice should be removed by exempting Northern Ireland students from the poll tax while they are studying in Great Britain.

I urge the House to reject this scheme. The Government are gambling with the educational prospects of many potential higher education students. We cannot risk losing opportunities of higher education.

8.4 pm

Rev. Ian Paisley (Antrim, North)

Because of the time limit, I shall sum up my arguments against the Bill in eight points.

First, I reject and oppose the Bill because it cushions the rich and discriminates against the poor. Secondly, it will discourage students from going in for courses that do not offer a high-salary profession on graduation—art and the social sciences will suffer. Great gifts in these fields could be lost to the nation. An unbalanced student body is bound to lead to an unbalanced society.

Thirdly, the scheme will harm female and disabled students who, on graduation, do not generally enter high-salary jobs but who will be lumbered with a heavy debt.

Fourthly, Northern Ireland graduates will suffer even more than the GB counterparts, for graduates of Northern Ireland are underpaid compared with those in the rest of the country and, for them, the paying back will be much harder.

Fifthly, the scheme discriminates against potential students from working-class backgrounds, whether Protestant or Roman Catholic. I support what my colleague the hon. Member for Antrim, East (Mr. Beggs) said—Sinn Fein has indeed lobbied on this matter. I dissociate myself entirely from that lobby, but decent, ordinary, working-class Protestant and Roman Catholics will be discriminated against by the scheme and the prospect of debt will put many of them off the idea of a university education altogether.

Sixthly, money will not ultimately be saved. Taxes will eventually have to be increased to pay for the interest not charged and to make up for the many defaulters under the scheme. The scheme does not make good business sense.

Seventhly, the scheme strikes at the whole structure of further education. In the long run, we cannot afford not to invest money in the education of our families. A fully funded grant system that takes proper account of students' well-being when studying and of the ability of their parents to meet their educational requirements is what we should be planning; we should not be discussing a system of debts.

Even if everything else in the Bill were in order I would still oppose it, because at its heart there lies a time bomb, specially sent by the Government, to remove another vestige of democracy from Northern Ireland. The explanatory memorandum says that the Bill is not to apply to Northern Ireland, yet in clause 2 the Government remove from the representatives of Northern Ireland the few rights that they have left.

Those rights are that an affirmative resolution be brought before both Houses when changes are made, but this Bill sacrifices that procedure and introduces the negative resolution, which means that the Order in Council will take effect immediately. It can be prayed against, but when does the House have time to hear those prayers? Many of us have signed such prayers but they have been neither heard nor heeded. I want to know why the Government have put that time bomb right in the heart of the Bill.

So we are not discussing the Bill; we are discussing a decree to hand over tremendous power to the Secretary of State. But for us in Northern Ireland the Bill goes further than that. We in Northern Ireland have only one opportunity to discuss matters. We had a debate last night and how long did it last? It lasted for one and a half hours.

I was handed today a massive Order in Council on education, which was like a book. I was told that next week I should have three hours to discuss it. The order changes the whole education system in Northern Ireland lock, stock and barrel, yet our representatives are told that they will be permitted to discuss it for only three hours. We cannot, of course, amend the order or do anything about it.

I warn hon. Members from Great Britain that they are starting on the same road in this Bill. The medicine that they have served to Northern Ireland and that they have voted for Northern Ireland will be put down their own throats. They will realise that this Government will take from them the vestige of their democratic right to discuss matters properly in the form of a proper Bill. All hon. Members should be concerned about that. They are voting for a decree to hand over immense power to the Secretary of State. That is a carefully laid time bomb with a kick-strap on it which would do honour to the IRA. When we kick the strap, we shall blow up any vestige of democracy.

Mr. Jackson

No.

Rev. Ian Paisley

The hon. Gentleman may be annoyed by my remark, but it is a fact. If he were a Back-Bench Member, he would be the first to cry out against the Bill. It is because he has now moved from the Back Benches to the Front Bench that he feels that he should not cry out against it.

Mr. Jackson

All of us would object to being compared with the IRA.

Rev. Ian Paisley

I said that the Bill was like an IRA bomb and that when one kicks the strap, it will explode.

Why is such a power put into the Bill and the order? Why can we not properly discuss and amend the provisions? The Under-Secretary of State knows that I am not suggesting that he is in any way like the IRA. He need not make a big fuss about my comment, because I was using a metaphor. If he does not understand that, he had better come to Northern Ireland to find out how the Ulster people speak. I thought that he had some knowledge of how the Ulster people speak and how they do business.

When the House votes for the Bill, it will vote away its powers and its authority. The House is giving a blank cheque to the Secretary of State to carry on and it will have no say in what his final plans will be or how they will be executed.

8.12 pm

Mr. Gerry Steinberg (City of Durham)

I fully support the sentiments of the hon. Member for Antrim, North (Rev. Ian Paisley). The Bill is a disgrace because it contains no details about what is to happen and the scheme will be introduced by regulation with little debate in Parliament. The Government's excuse for the introduction of top-up loans is that it will give students a grasp of economic reality. That is true, although it will be a grim reality. The value of the present grant has fallen so sharply in the past few years that the students' grasp of economic reality is unquestionable. To compensate students for their losses and to sharpen their awareness of money management, they will now have to pay for their education by borrowing the money, presumably on the pretext that the more hardship one suffers, the greater the lesson one will learn.

Durham university, which is in my constituency, has well over 4,000 students. The Government's loan plan could mean student debts of £7 million to £10 million at universities such as Durham. Many substantial companies are facing bankruptcy trying to repay investment borrowing of less than £10 million, yet the Government want to put students in the same boat. A debt of that size has serious implications for students, for the university and for the city. Some students will have difficulty with their rent and the pressure is likely to result in poor academic achievement and greater stress.

Despite the huge wave of opposition to the loans scheme, the proposals are for grants and parental contributions to be frozen at their current levels. Students will be debarred from claiming housing benefit, income support and unemployment benefit, and from next year they will have to pay a proportion of the poll tax, which will also affect many of them adversely. Some students will lose social security benefits to a greater value than the amount of the proposed loan, so they will be allowed the dubious entitlement of being able to take out an even bigger loan.

There is a misconception that all graduates are irresponsible, lazy, beer-drinking layabouts who are set to move into cosy, well-paid jobs. There may be a few like that, but others after three or four years of study will enter jobs with a salary no higher than if they had not gone to university. The motive for going to university should not be money, but the pursuit of knowledge in an area of expertise. Students should choose a subject for which they have a particular ability and in an area to which they can eventually contribute their skills.

Will students be expected in future to scan the prospectus for courses that will land them in lucrative jobs for which they have no aptitude? If a potential arts student were persuaded by lucrative rewards to choose a science degree, grave problems would result if and when he realised that the course was not for him. Will aesthetic subjects be pursued only by the rich? The result will be either fewer graduates or graduates of poor quality. Who would want to train to be a teacher with the prospect of a large loan, due to the length of the course, and then a relatively low income with which to repay it? A teacher would almost certainly be in debt anyway if he or she wished to buy a house or start a family. Yet that is the profession which is in desperate need of 18-year-olds who want to train for it.

The Government have claimed that the scheme will simplify the system. I remember the same fine words being spoken last year when they claimed that the social security reforms would simplify the system. If that is the case, we can all watch out for a system that is hugely complex, impenetrable and unintelligible. If higher education is to be an attractive prospect for students, there must be full provision for student financial support. Financial status should not be a factor when deciding whether to enter higher or further education, as the pursuit of educational goals is in the interests both of the individual and of society.

The scheme is geared towards creating a student population which is wealthy, white and male. Social groups which are already under-represented in higher education will be discouraged from seeking places and students seeking to follow courses in the arts, social sciences or non-vocational subjects will think twice. The Government say that they intend to expand access to higher education. I am delighted to hear that, but I should be interested to know how that can be achieved if students do not receive adequate financial support. The widening of access would involve attracting groups not traditionally represented at university, such as working-class students and mature students. I cannot imagine that many from those groups will be tempted into higher education when it involves living with a debt burden for several years afterwards.

The Government will be in a quandary. On the one hand, they want to admit more students despite the demographic trend of a fall in the number of 18-year-olds. On the other hand, they do not want to fund those students through higher education and they want them to exist on increasingly less money. Students deserve a far better deal than that.

During the present Government's term of office, the parental contribution, which represented 30 per cent. of mandatory awards in 1979, has risen to 86 per cent. and the grant has declined by more than 21 per cent. in real terms since 1979. The spectre of loans must be removed and the grant must be restored to its 1979 level before the Government's fine words about access can be taken seriously. As the present grant is barely adequate, freezing it and encouraging students to take out huge loans and to proceed through their academic life with that burden is hardly an attraction.

Mr. Janman

Will the hon. Gentleman give way?

Mr. Steinberg

No. The hon. Member for Thurrock (Mr. Janman) has just come in. He should sit down.

Loans will increase dependency on parental support, especially over the summer holiday, which is unfortunate for the 40 per cent. of students whose parents do not provide the full amount. A wider variety of students must come forward from more varied backgrounds with varying experiences and ages.

The banks have poured scorn on the scheme and are not falling over themselves to participate in it. They are no doubt aware of the student opposition to the scheme and understandably they will want to avoid a possible boycott.

It is a fallacy that the scheme will save taxpayers' money. The setting up of the procedures necessary to administer the scheme will be costly and complicated. The Government are playing down just how costly and complicated the scheme will be. If, as the Government intend, there is a 100 per cent. take-up, the system will not begin to pay for itself until well into the 21st century. It will take even longer if administration costs reach £150 million per year as is estimated by some. By that time it will have taken so long for the system to be remotely worth while that it will be nothing more than a liability.

Who is the system designed for? It is certainly not designed for the student. It is another Tory money-grabbing exercise. As total student awards are now costing the taxpayer £850 million, freezing them is a desirable prospect for the Treasury—not forgetting the £65 million that it will be saving in stopping eligibility for social security benefits. Increasing grants to a decent standard would encourage more students to consider going into higher education and so cost the Government more money. Although the Government are tight-lipped about the future of the loan system, a decline of the grant in real terms will lead to its gradual disappearance.

If we wish the universities to be places of restricted access and a privilege for the few, this system is the right way to go about it. Fewer young people receive higher education in the United Kingdom than in South Korea. The scheme is a form of hire purchase which treats education like the latest sports car—fine for those who can afford it, but the majority will have to do without.

8.22 pm

Mr. Steve Norris (Epping Forest)

Like many colleagues on both sides of the House, I went through university on virtually the maximum grant. I know that that experience is not uncommon. However, what distinguishes my case and, I suspect, that of most hon. Members is that my parents, who had little money available, made up the parental contribution required. It was not a large amount but they did make it up. One of the great pleasures that I have in Epping Forest is to represent the mother of the hon. Member for Blackburn (Mr. Straw).

Mr. Straw

She did not vote for the hon. Gentleman.

Mr. Norris

There is more room in heaven for a sinner who repents.

Mr. Straw

Would the hon. Gentleman care to place on record his congratulations to my mother, as she has just been chosen for a safe Labour ward in the Epping Forest district?

Mr. Norris

I would indeed. I had intended to send her a copy of this Hansard, as she is a frequent correspondent. I am sure that she too paid her full parental contribution.

It is important to note that 41 per cent. of the parents assessed for a contribution do not make the full contribution. As my hon. Friend the Member for Boothferry (Mr. Davis) pointed out, those entitled to the full grant do not involve themselves in this arena.

Ironically—I am sure that hon. Members on both sides will accept this—it is by no means the case that that 41 per cent. are the poorest. It is sad and all too common that many of the students finding themselves without the means to survive, from their parents and grant combined, are amongst the wealthiest. As hon. Members have said, that is because their parents do not believe that education is of any particular value and do not know why they should contribute to their child's education at that level. Therefore, they leave the child to fend for itself.

There was talk earlier of the new arrangements being regressive. It was said that the system of loans was regressive because it impacted most on the poor. However, all the evidence shows that the opposite is true. The evidence shows that what would be regressive—if it were practicable—would be to abolish all parental contributions. That would cost about £2,250 million in a full year. No doubt it would happen "when resources allow", or whatever mealy-mouthed phrase we now have to learn in respect of Labour education policy. More importantly, it would mean that the wealthy would be treated the same as the less well-off. That would be regressive. The advantage of the loans scheme is that it allows the student to overcome regression because, regardless of parental income, the facility will be there. Whether the student is supplementing a full parental contribution or—sadly—using the loan to make up an absent parental contribution, at least a facility would be provided. Such a facility has been denied by successive Governments, especially Labour Governments, since the grants scheme was introduced.

I am concerned about the way in which the scheme will ensure that we take students out of the social security system. I see in his place—he has been here throughout the debate—my successor, the hon. Member for Oxford, East (Mr. Smith) to whom, as ever, I wish well. He will know—as I do—that in Oxford the Department of Social Security office and the local authority found it difficult to provide a service to the genuinely needy—those in the community who needed instant access to the social security system because they had a pressing need for funds—because at times the office was legitimately besieged—I make no complaint about that—by students in higher education. Whatever definition we adopt for social security, it cannot be used to supplement higher education. It is bizarre to have that element in our funding of further and higher education.

I welcome the new arrangements, which will mean that officials in the Department of Social Security and in housing benefit offices will be able to concentrate on those who need their help. It will be for students to take advantage of a combination of grant and loan to fund their eduction. Surely that is one of the major advances in the Bill.

I endorse the concept of the Bill, even if it will take some years to turn the balance. It seeks to redress the balance between the student, the parent and the taxpayer. Opposition Members do not seem to have an answer for the elderly, low-income taxpayer who is funding middle-class children and helping them to become even better off as they enjoy the substantial benefits of higher education.

It is all very well for Opposition Members to point out that in the first, second and third years the scheme will be more expensive. We accept that—it is obvious. The Secretary of State is in an odd position if he is now to be criticised for spending more on the new system. I am the first to accept that the system means that in due course we will turn the corner to a point at which students will be accepting not a hugely greater but at least to some degree a greater reponsibility for the financing of their own education.

I welcome that, if only because what distinguishes my earning capacity and that of my brother from that of my father and mother who grew up in Liverpool after the war is that I had the advantage of attending university and, as a result, moved on to a different plain of earnings. They did not begrudge what it cost them to provide me with that finance. By any standards, any student who is given the great advantage of a university education should be prepared to take more responsibility for financing it than the present arrangements allow. I commend that element of the new scheme.

My last point is about the terms of repayment. I welcome the fact that the Bill is short. I commend one or two important observations on repayment terms to my hon. Friends on the Front Bench. There is an argument for being careful about the relationship between repayments and starting salary. It is important that we do not discriminate against, for example, jobs in research and in less high-profile areas of adult life where salaries are perhaps not high. We want to ensure a steady stream of competent graduates into what are acknowledged to be the less well-remunerated professions. It will be perfectly within the powers of the Secretary of State to ensure that the reasonable attitude that he has said he is prepared to adopt on repayment is extended to ensure that repayments are not burdensome in jobs with low starting salaries.

Another important element which the Secretary of State should consider is inflation. I enter this caveat on the definition of nil interest rates in real terms. That is fine as long as there is a Conservative Government who believe in combating inflation even at the expense of raising interest rates. In that case, interest rates are likely to be higher than inflation. However, the Labour party's attitude would allow inflation frequently to run ahead of the rate of interest. In those circumstances, everyone would lose and the provision would operate to the disadvantage of the students. The Bill has such merits that I welcome it and commend it to the House.

8.31 pm

Mr. Mike Watson (Glasgow, Central)

I am grateful for this opportunity to contribute to the debate, as I represent a constituency where some 15,000 students live. Universal opposition to the top-up loans has been expressed to me by those students in several different forms. The last time that the matter was debated in the House, I presented a petition on behalf of some of the students. My hon. Friend the Member for Newham, South (Mr. Spearing) said that he had received a response to those petitions to the effect that no action was to be taken. I have received similar information, which will not be acceptable to my constituents who are students or the parents of students.

Universal opposition has been expressed to the Bill. As we have already heard, of the 120 or so organisations which responded to the White Paper, 95 per cent. registered opposition. One might ask why the Government bother to consult when, even if such levels of opposition are expressed, they still introduce the legislation in the form originally intended. Opposition is coming from many sources, some of which one would not normally expect to encounter. The Committee of Vice-Chancellors and Principals and the Royal College of Nursing are among them.

We are already aware that the British Medical Association has been politicised by the Government to an extent that no one would have expected; now the Royal College of Nursing is apparently going the same way. I have received a communication from it asking me to oppose the Bill on Second Reading. It said: the average nurse graduate usually starts on a salary of £8,025 pa … Yet nurses will have to repay the same loan as any other graduate, albeit with repayments strung out over a longer period". That is cold comfort. It went on: Applied to nursing, the RCN believes student loans threaten to undermine the future development of the profession, which will ultimately be to the detriment of both the NHS and patient care. I also received communications from the principal of the Robert Gordons Institute of Technology and a director of Glasgow college, two of the Scottish polytechnics. Again, they outlined their opposition to the loans plan. They are not individuals or organisations who are normally sympathetic to the policies of the Labour party. Nor are the banks, but to say that they are luke warm would be too kind in describing their reactions to the proposals. After arm-twisting and several concessions, some of the banks are now willing to go along with the plan but, to their credit, two of the three major Scottish banks have said that they will have nothing to do with it.

It was noticeable that, of the eight Conservative Members who took part in the Adjournment debate on 20 October, only one was in favour of the proposal. It is also noticeable that of those Members, only one has spoken this evening. I take it that the others had other diplomatic engagements.

I have three main areas of anxiety. First, the proposals will reduce still further access to higher education. Secondly, everyone will be worse off as a result of the introduction of a loans scheme. Thirdly, Scottish students and colleges and universities will be hit disproportionately hard.

One of the problems of speaking late in the debate is that other speakers have already used up one's arguments. My right hon. Friend the Member for Halton (Mr. Oakes) and my hon. Friend the Member for City of Durham (Mr. Steinberg) have said that take-up of higher education is 15 per cent., some 6 per cent. lower than that in South Korea. That is a damning statistic.

Particularly damaging for those thinking of going into higher education is the decision to deny students unemployment and housing benefit and income support. That will compound the problem. Conservative Members have said today that the loans scheme is about students being responsible and made to bear a burden. However, many students bear a considerable burden as a result of their studies. For students who cannot rely on their parents to subsidise them, there is already a student loans scheme. They have been bearing the burden through bank loans, bank overdrafts, parental loans or charity from other members of the family.

No one, from the Minister to Conservative Back Benchers, has explained how top-up loans will increase access to education. They have denied that there will be a detrimental effect, but they have said nothing positive. I and my hon. Friends remain to be convinced, because we have been given no evidence.

It is a truism to say that everyone will end up worse off. Students will experience greater hardships in two ways. First, as a result of having undertaken studies, they will be required to go cap in hand to their parents for a subsidy or to the banks for loans to make sure that they have enough to get by.

I have been given some figures by the National Union of Students. I was dismayed that, while the president of that union was in the Gallery, Conservative Members rubbished the organisation. It may not have the resources or facilities of the Ministers' back-up team, but it is a well-resourced and well-respected organisation. It has produced figures which show the extent to which students will be worse off as a result of loans. I refute the figures quoted by the hon. Member for Eastwood (Mr. Stewart). He said that the average loan will be £600. The figures from the NUS research show how the repayments will depend on the rate of interest that the students are asked to pay. The loan will be at least £400 a year and up to £1,400, outwith London depending on the rate that must be paid. The question of who will be worse off refers to parents. It is not true that, because the burden of parental contribution will be raised from parents, they will not have to make a contribution.

The vacation period is a crucial aspect of loans. If a student cannot find a job, how is he or she to pay his way during the vacation? Housing for students is at a premium, so if they cannot afford to pay for houses or flats over the summer, they cannot be guaranteed housing of a reasonable standard when they return. The only people to whom they can turn are parents. The vacation aspect has been completely disregarded by the Government.

Then there is the question of the Exchequer and its losses. It has been estimated that the scheme will cost the Exchequer £1.6 billion more than the cost of grants. That was the figure quoted to my hon. Friend the Member for Oxford, East (Mr. Smith) in a parliamentary answer on 21 March this year.

The Government admit that, as repayments start to be made, we shall reach a point where the scheme will cost less than the present system. The date is estimated to be as late as 2026—in other words 35 years after student loans are first introduced.

Students who take out student loans in the first year will be grandparents, if not great-grandparents, by the time the scheme begins to break even. No Government have ever introduced a policy proposal based on financial and economic assumptions over a 35-year period. I ask hon. Members to imagine what they might have thought of 1989 back in 1954. Who could possibly have imagined the position that we face now? To make proposals based on what will happen so far in the future is economic, not to mention educational, lunacy.

At a time when higher education is seriously under-resourced, it is a disgrace that public money is to be wasted in this way. For the same sum, grants could have been increased, parental contributions reduced and more places funded in higher education over the next decade. The Government should seriously consider that, even at this late stage.

All too little has been said or thought about Scotland in preparing the legislation. Scottish students will face additional financial burdens. I am pleased that the hon. Member for Eastwood has returned, because I shall address some of my remarks to his earlier comments. He was not in the Chamber when I quoted the figure of £600, which he said would be the total cost of the scheme to students. That is not true. Simply to add a fourth year for Scottish students has a compounding effect which is likely to mean additional costs of 60 per cent.

We must consider not simply Scottish students or English and Welsh students at Scottish colleges and universities, but courses throughout the United Kingdom for doctors, architects, various art students and vets which are longer than three years. Additional years impose additional burdens. It is particularly galling that the Secretary of State for Scotlnd can say that he has considered the matter but does not believe that any special provision for Scotland is necessary. People who apply for courses at Scottish colleges and universities will weigh that up and see that they are punished for applying to them. That is an insult to Scotland and its unique system of education, which is done a grave disservice by this proposal.

People in Scotland are not bought off by the proposal that the loans headquarters should be based in Glasgow. Some 250 jobs, most of them debt collecting, are not welcome. We give as firm a no to that as to the remainder of this discredited, costly, unwarranted and unwanted Bill.

8.42 pm

Mr. John Marshall (Hendon, South)

The hon. Member for Blackburn (Mr. Straw) said that a future Labour Government would increase the real value of grants as resources allow. What happy memory has that conjured up? In 1974 a Labour spokesman would have said that he would increase the real value of the hospital building programme as resources allow or that he would increase the real value of nurses' pay as resources allow. British students are far too intelligent to be fooled by a conditional promise. They can look at the record and see how badly the Labour Government behaved and how badly a future Labour Government would behave.

The White Paper has been warmly welcomed by parents who find the present system of parental contributions a major burden, the thousands of students who do not receive discretionary awards, many of my constituents in Hendon, South, the 40 per cent. of students who do not receive their full parental contribution, and the 40 per cent. of students who have overdrafts at commercial interest rates and who in future will have to pay only a nil real interest rate.

The White Paper incorporates a simple element of social justice. Both society and students benefit from higher education. We are assured that, generally speaking, those who enjoy higher education subsequently enjoy incomes 30 per cent. above the average for society as a whole. Surely those who enjoy such massively higher incomes should contribute to the benefits of higher education.

The irony is that we have the most generous system of university support and the lowest percentage of people in higher education. It is no use Labour Members talking about South Korea and asking why it does better. Why do other countries do better? They have a different system of university support. Does that not suggest that our system is failing? It is surely madness for Labour Members to say that the system must not change but that its results are useless. Surely that underlines our case and undermines theirs.

It must be obvious that our proposals will eventually produce savings which can be used to provide more places in higher education. We must ask ourselves whether it is better for the privileged to go to university with the present grant system or for more places to be provided in higher education. I am sure that everyone will agree that there should be more places in higher education and will recognise that only the Government can provide them.

We have heard the most cant and hypocrisy from Labour Members talking about access from the lower socio-economic groups. No one has done more to harm the educational opportunities of those groups than the Labour party and Labour local education authorities. It is no accident that the children of inner London have little chance of going to university. The Inner London education authority has the worst education results of any education authority. It is no accident that it was the Labour party which led the campaign to abolish grammar schools. How many children from lower socio-economic groups left grammar schools able to go on to universities?

Mr. Straw

Will the hon. Gentleman give way on that point?

Mr. Marshall

No, I have a limited time to speak, unlike the hon. Gentleman who spoke for far too long, which is why I have a limited time.

How many children leave our state comprehensive schools qualified for university? To increase access to universities for the lower socio-economic groups we need to encourage more children to stay on at school longer and to improve their results. The two great reforms to encourage children to stay on at school have been Conservative reforms. It was my right hon. Friend the Prime Minister who raised the school leaving age to 16 and the Conservative Government who introduced GCSE, which is encouraging more children to stay on at school.

Mr. Rhodes James

A Conservative Government also introduced student grants instead of loans.

Mr. Marshall

That was a semi-sedentary intervention without the permission of the hon. Member speaking.

The Conservative party, through the Education Reform Act 1988, has done more than any other political party to improve the results in our schools. It is that combined policy of encouraging pupils to stay on at school and to improve their results which will ensure that more children from the lower socio-economic groups go on to university.

I listened with interest to what the hon. Member for Glasgow, Central (Mr. Watson) said about the Scottish higher education system, and I yield to no one in my admiration of it. My late father spent 30 years serving Scottish universities and I was connected with them for 12 years. The reason why Scottish education has always been deservedly popular is that it has an intrinsic worth and uniqueness not shared by the English system. It may be significant that a large number of students from south of the border have always been willing to go to St. Andrews university where they know that the politics are sound and the education even better. I do not believe that the introduction of our proposed loan system will discourage one student from attending St. Andrews or any other Scottish university. Indeed, it will encourage many more to do so.

Medical students know that the return that they will get at the end of the course from their salary will be so large that they can certainly afford to repay the relatively modest loan.

I hope that universities in Britain will become more flexible and more market-oriented as a result of the Bill.

Why do universities not introduce a four-term year? Is anyone seriously suggesting that the great universities of the United States suffer from lower esteem because they have four terms a year? Of course they do not, and there is no reason why British universities could not do the same. Is anyone seriously suggesting that graduates of Buckingham university suffer because they graduate more quickly than those of other universities?

Mr Straw

What did Lord Beloff say about the scheme?

Mr. Marshall

Because a man is right 99 per cent. of the time does not mean that he is right 100 per cent. of the time. Labour infallibility may be a good religion, but it is not good politics.

The students at Buckingham university do not suffer because they have a shortened academic year. I do not believe that some of our universities have considered the potential of shorter university courses, and a longer university year. If they did that, it would be to the benefit of universities and of their students.

8.51 pm

Dr. Dafydd Elis Thomas (Meirionydd Nant Conwy)

The hon. Member for Hendon, South (Mr. Marshall) referred to the fact that politics at St. Andrews university were sound. We can vouch for that because the hon. Member for Banff and Buchan (Mr. Salmond) is a graduate of St. Andrews, and I see that he is sporting the St. Andrews university tie. However, I shall not enter the arguments about Scotland, although I agree with the hon. Gentleman about four terms a year. I have taught in adult education and at the University of Wales—sometimes I still do—and I support the principle of four terms for mature students and first entry students.

The debate is not about education policy, but it is a debate that we have been having for many years about reductions in state support from the taxpayer for a portion of the cost of supporting students—that is, the cost of their homes and lodgings rather than tuition.

The Government plan to introduce a loans scheme which will provide a 50:50 grant and loan scheme, although that is not provided for in the Bill, as my hon. Friend the Member for Caernarvon (Mr. Wigley) said on another occasion. What is not clear is how that scheme will interrelate with the changes taking place in income support, unemployment benefit and housing benefit schemes.

I should like the Minister to respond to a point raised by my hon. Friend the Member for Caernarvon—the way in which the special access funds will be used and applied to disabled people, particularly those with communication difficulties who need communication support. I refer particularly to deaf people. Hon. Members have been lobbied by a number of groups who are concerned that the loan scheme, particularly in the future, will have to bear half the burden of the day-to-day cost of student support as opposed to tuition.

It is important that we consider the additional support costs required by disabled students. The Minister has not responded clearly enough to that, either during the debate on 20 October or today.

We have heard the familiar arguments today about how the scheme will affect educational take-up, but the debate is not about that. It is about the Government's attempt to reduce their public expenditure commitment to student support.

Many of the arguments that are being rehashed about access are unproven. The Government seem to be saying that the scheme is likely to increase access, because at present it is appallingly bad. That seems to be a baseless argument. The fact that we have an age participation rate, a women's participation rate, an ethnic minority participation rate and a class participation rate that are inadequate compared with—

Mr. Jackson

I have had many friendly discussions with the hon. Gentleman in the past. The argument about access is simply that the main determinant appears to be the scale of education. If one extends the scale, access will get better. The argument behind the student loans scheme is that it will provide more money to expand the system.

Dr. Thomas

The Minister has clarified the position, and I agree with him that the determinant of participation is the scale of the system. We are returning to the old arguments about universal benefits of the 1960s, when we talk about the need for general provision of social service and of education—of which the Robbins report was the higher education component—in order to ensure greater participation. However, it is not proven to me when I consider the system in other countries and hear the advice of leading academics and people who are concerned about how their schemes operate.

There was a good study of the American system in the Financial Times of 24 November 1989, just after the Bill was published, which quoted Mr. Roger Koester, the associate director of financial aid at Northwestern university, as saying: Students are no longer making education decisions based solely on their academic talent, but on starting salaries. We are breeding a far more mercenary group of students. No doubt that is what the Conservative party would like. It is significant that some experts in the United States say that that country and its great academic system have only a few years grace before they are forced to overhaul the way that students pay for higher education. We may find that United Kingdom students are having a new loans and grants scheme inflicted upon them, whereas the United States is having to move—

Dr. Hampson

The United States system, of which I have experience, and systems in other countries are having to be reviewed, because the sheer cost of the loans scheme is forcing them to cut back, as we saw in the Reagan years. They do not want a more costly scheme of full grants for all students.

Dr. Thomas

The whole point of a comparison with the United States system is to consider the level of deferred payments and of defaulting and whether the system is a burden on individual students. We will go down that road if we rely on the loans scheme for our support.

Concern about the total cost of the scheme, and recovery costs in particular, has been stressed. In the United States, total federal spending on the guaranteed student loan programme component of higher education is one third of £3 billion. That is being spent on substituting private sector bank loans to students and the rest is being eaten up by paying the default rates. That gives us a clear warning about a loans scheme. I see that the Minister is indicating dissent. I shall let him do that from a sedentary position, otherwise I shall not complete my speech in the time available.

We are also worried by the fact that the Government regard the scheme as a solution to the problem of access to higher education. We must devise a policy for higher education that makes it much more flexible in terms of access. I refer to flexibility of course structure, and flexibility as between the designations of further, higher and recurrent education, so that students are attracted at all stages of their careers. It is extremely unlikely that a loans system which imposes additional burdens on earners will attract people back to the education system, especially for retraining.

Graduates who return to higher education for further training and others who decide to go into higher education later in life will provide many of the skills needed in the economy in the next century. I know that the Minister cares deeply about this, but any deterrent to people participating in higher and continuing education will inhibit the flexible skilling that the economy needs.

For all those reasons, we shall oppose the Bill. We are especially worried that the existing hardship schemes that are operated voluntarily by student unions and universities are being used to the full. I have been lobbied by students who tell me that such funds are often swallowed up early in the term. Already students in the grant system are having to borrow or take overdrafts of £300 or £400 a year. That shows the pressure that is already on them. A loans scheme will only increase that pressure. The Government want that. They want a clear financial incentive in higher education. They want to turn it into a marketable commodity, as they have tried to do with the rest of the economy.

9 pm

Mr. Anthony Coombs (Wyre Forest)

I strongly support the Bill because it is right, and it is about time that we asked students to repay some of the investment that is made, often by much lower-paid taxpayers compared with students' potential earnings.

The Bill seems at last to be tackling the new realities at the end of the 20th century and the beginning of the 21st. In the next century, the successful economies will not be those which are natural resource or capital based; they will be the knowledge-based economies. Charles Handy, of the Institute of Personnel Management, has calculated that 30 years ago 30 per cent. of the population worked in knowledge-based industries, but that 70 per cent. will do so by the end of this century. Because we rely purely on a grant-based system and parental contributions, we have unnecessarily handicapped ourselves.

Mr. Straw

Is the hon. Gentleman suggesting that people who work in factories do not apply any knowledge?

Mr. Coombs

I suggest—I am sure that Professor Handy does, too—that a significantly higher proportion of jobs in the 21st century will require higher education qualifications. We handicap our scope for economic growth by relying purely on grants and parental contributions.

Student loans are not exactly new. The Anderson committee of 1960 rejected them only because it estimated an increase in higher education to 175,000 students by the end of the century rather than the 400,000 that we now have. In 1963, Robbins said that once the habit of contemplating higher education is more firmly established, the arguments of justice in distribution and the advantage of increased individual responsibility"— through a system of loans— may come to weigh more heavily and to lead to some experiment in that direction. In 1985, Lord Glenamara and others in the Labour party—in a paper entitled "Student Financial Support"—effectively accepted the principle, but rejected loans in practice because they were concerned about repayment difficulties, especially for low-paid groups and people who had career breaks.

The upshot of all that was that nothing was done and Britain was left with a system of student maintenance which was expensive, gave relatively low access and was socially regressive. Britain spends more on higher education than any other European nation except the Netherlands. My right hon. Friend the Secretary of State has already given, at constant 1984 prices, the United Kingdom figures for average maintenance support compared with our industrial competitors. The United Kingdom spent £270 per student, West Germany £70 and Japan only £30. Moreover, grants in Britain are available to 80 per cent. of the student population, which is much higher than anywhere else in the industrialised world, far more than any other country with the exception of the Scandinavian countries. That amply demonstrates the generosity of our system.

Mr. Janman

My hon. Friend was right to quote Lord Robbins. Another aspect of the early 1960s was the Anderson committee which, in 1960, recommended the current system, envisaging about 175,000 grant awards per year whereas we are now running at more than 400,000 grant awards per year. The system was first started when people did not realise what the total cost to the taxpayer would be.

Mr. Coombs

That is precisely the point that I was making earlier. I concur with what my hon. Friend says.

The loan system being introduced will be universally available to 100 per cent. of the population. Comparing that with similar loan facilities available in other countries, we find that in Canada they cover only 30 per cent. of the population, in France they are used for emergencies only and cover less than 1 per cent. of the population, and in Japan they cover less than 12 per cent. of the population. Even in the United States, where they were pioneered, loan facilities apply to only 25 per cent. of the population.

Despite our generous system of student support, our participation rates are significantly lower than those of our industrial competitors at 14 per cent. compared with 28 per cent. in Germany and 44 per cent. in the United States, and a considerably higher rate is expected in other competitor countries, particularly in south-east Asia. That is the greatest challenge to the mythical proposition that loans will necessarily mean less access.

One does not need a great amount of cynicism to realise that the National Union of Students will not fall over itself to accept loans when it has previously been offered grants. But even its own survey, showing that at present only 7 per cent. would forgo a university education with a loan scheme, is belied by the fact that figures for student entry this year are some 2 per cent. up, despite the fact that the loan scheme will no doubt impact on their higher education in future years.

My hon. Friend the Member for Rugby and Kenilworth (Mr. Pawsey) made the valid point that, although the grant has shown a reduction in real value of some 25 per cent. since 1979, there have been 180,000 extra students. In the past two years, social security support has declined, as have parental contributions, but that has had no effect on student access—indeed, rather the opposite, as students have, rightly, increased their employment income, as they are expected to do in other countries in the vacations and at other times by more than 51 per cent. in the past two years alone.

As my hon. Friend the Member for Bury, North (Mr. Burt) said, the moral argument is that it can only be right that the 15 per cent. of the population who have the opportunity of a university education, and who are subsidised by the 85 per cent. who have not—especially as a quarter of the income tax paid in Britain is paid by people with incomes below £10,400 per year—should make some contribution towards the university education that they receive. Ultimately, access to higher education in Britain will depend on the numbers suitably qualified in our schools, not on the type of student maintenance available.

The scheme shows no evidence of being a deterrent. It is socially more progressive and it will provide a higher level of income support and encourage independence if parental contributions are halved. Except perhaps in the early-day motion put forward by the hon. Member for Bradford, North (Mr. Wall), which amounts to spending an extra £3.5 billion of taxpayers' money each year, I have heard no credible alternative which addresses the problem of increasing participation in higher education in Britain over the next 20 years and does not involve a loan system. It is a practical alternative and one that will be accepted by the people and by future students. I strongly support the scheme and I congratulate the Government on bringing it forward.

9.10 pm

Mr. Harry Barnes (Derbyshire, North-East)

I heard the hon. Member for Cambridge (Mr. Rhodes James) speak in the debate on the White Paper, so I exempt him from the criticisms that I shall now make of the Government and Tory Members. They do not have any serious interest in education. They are interested only in education as real estate. They judge education and educational advances by assessing the real estate of the mind and its development and the price that can be paid for it and the earnings that people can make after receiving a university education. They look at education like that rather than discussing what it is about and how we should be directing it.

Education should be about opening people's minds and giving them the wit and intelligence to turn their hands to anything and to tackle problems in life. Increasingly, the Government are interested only in closing people's minds, limiting and restricting their horizons and making them pick up specific attitudes and regurgitating them. That is contrary to the spirit of liberal education at all levels.

The contributions made by Tory Members made me worry about higher education institutions, because many said that they are products of British universities, but they put forward arguments that had no concern for the values that there should be in an education system, or for the notion that education is about understanding situations. It is not about getting facts and regurgitating them, but about analysing and discussing them. If one analyses situations and understands other people's arguments, it is easier to remember the facts and details.

The hon. Member for Swindon (Mr. Coombs) used many statistics. If one were a university undergraduate going into an exam, it would he difficult to use figures such as those. To do that, one would have to be like Leslie Welch, the memory man, but he did not necessarily understand what he was repeating. The hon. Gentleman had to follow his notes very closely to give us that information. If people investigate and analyse situations, they often find that the information they need is attached to that analysis. Sometimes, they do not understand where it has come from, but they have understood it, not because they have volumes of encyclopaedic information available to them but because they have argued the information out.

In education, we need a questioning attitude so that we investigate matters, which will give us an opening into what we are investigating. When we have solved that problem, it opens up far more questions than it answers. Such an attitude and approach would help us to handle the economic problems that the hon. Member for Swindon mentioned, because people would have their wits about them and could advance. The flowering of understanding should take place in higher education institutions in particular.

What is education for? It is to help individuals to develop so that they can lead full lives and realise their potential. In Britain, we place many stumbling blocks in the way of people's progress. We must not find yet another stumbling block in the form of a student loans system. We also want an intelligent society. We want people to discuss and argue, to participate in the democratic process and to make collective decisions. We would do well to remember in Britain the flowering of the democratic process that is taking place in eastern Europe.

There is another reason why education is especially important at the moment: we are undergoing a technological revolution. We can no longer depend on raw materials for our survival; to survive these days, we must begin living on our intelligence. If we fail to educate our people, we shall fail to earn a position in the world. Economic and social factors are both very much to the fore.

I shall not detain the House much longer, as I know that the hon. Member for Cambridge wishes to develop the argument further. Among those who will be hit by a student loans scheme are those adults who are prepared to sacrifice a tremendous amount in the present and perhaps some of their earning potential in the future by giving up good jobs, and who are prepared to take risks. No one ever seems to talk about students who fail. How are they to earn the money to pay back the loans?

No one is in a worse position than women—both those who return to education and those who enter it for the first time later in life. They bear a heavy burden, and when they have completed their education they may have to take time off work to have families and so on. The last thing they need is the additional burden of a loan, especially as they tend also to enter badly paid jobs such as speech therapy.

People from working-class backgrounds and members of the ethnic minorities will also suffer. They already feel that they have to open many doors to complete their education. If we place yet another closed door in their way, they will give up. We should be encouraging them to push open those doors, and that can be achieved only if the state provides the necessary resources.

9.17 pm

Mr Robert Rhodes James (Cambridge)

My right hon. Friend the Member for Kincardine and Deeside (Mr. Buchanan-Smith), who is not as well as one would wish, has asked me to convey this message to the House. If I had been able to attend the House, I would certainly have been speaking against the proposals and possibly voting against them as well. I certainly would not have supported the Government's policy. I have spoken so often on this subject, in the House, in my constituency and elsewhere, and my views are so widely known that I shall not need to trespass long on the patience of the House. I still find it baffling that, after two years of apparently deep consideration of the problems of student finance, the Government have come up with a widely disliked and extremely complicated scheme, which will be horrifically costly in the initial period and which, in my judgment, will act as a serious deterrent to many potential students. The scheme also runs counter to the Government's declared policy, which I warmly support, of dramatically increasing student numbers. Ministers say that there is no contradiction, but I beg to differ.

We all know that the extravagant hopes and expectations of the early 1960s, when the Conservative Government embarked on an enormous expansion of higher education and introduced student grants, turned into disappointments. We must look back on that period. Certain academics and former students should reflect on their roles at that time. However, I fear that that is history. The House and the former Labour Government should share the blame of which there is plenty to go round.

Some time ago, the Prime Minister invited me to take on responsibilities in these matters. I visited every university and polytechnic in the country. I reflect on the fact that I played some part in saving Coleraine from being closed. I learned certain things then. I discovered in certain famous institutions that there were bad debts and in certain not-so-famous institutions I discovered superb debts. I came across wonderful teachers and bad teachers. I was struck by the great diversity.

I strongly supported Sir Keith Joseph's proposals in 1981 because they were urgently and desperately needed. In private, vice-chancellors told me that they agreed with those proposals, but in public they would denounce the Government. Reforms were urgently needed. I discovered much that was bad and lamentable. However, I discovered a wonderful spirit among students. I attended many public meetings, but did not experience any outcries.

I recall that Durham university at the time was developing a cricket ball for the blind. It was successful; a superb example of applied technology for a social purpose. In that connection, I sometimes think of Mr. Dexter. [HON. MEMBERS: "Oh, no."] I also recall a professor at Newcastle polytechnic who had the opportunity to go to Cambridge and Oxford, but he decided to stay in the north-east because he had a deep commitment to the area.

If I had been involved in the Government's new proposal, I would have introduced a real top-up loans scheme to be administered by the institutions themselves and not by the banks or some monster in Glasgow. I would not have proposed a plan in which the loans element would be at the expense of the grant. I dislike the Government's scheme in principle and in practice, and I will vote aainst it tonight.

9.22 pm

Mr. Andrew Smith (Oxford, East)

A distinguishing feature of the Government's students loans proposal is that the more time Ministers have to consider it, the less information they are prepared to put before the House. Instead of learning more about the scheme, hon. Members learn less. We might have hoped that Ministers would have carried this "Alice's Adventures in Wonderland" course to its logical conclusion and made the Bill disappear altogether so that only the grin of the former Secretary of State for Education and Science was left.

The present unfortunate Secretary of State for Education and Science, on taking up his office, could have taken the opportunity to dump all his predecessor's ill-judged, ideologically motivated measures and set education on a course that was better for the country and for the Conservative party. As it is, he has chosen to stick to the very worst proposals and dilute what was better. The sympathy that hon. Members might have felt for him is accordingly evaporating even more quickly than the information in the Bill.

As my hon. Friend the Member for Blackburn (Mr. Straw) said, it is nothing short of a constitutional outrage that such an important change in higher education which affects the opportunities of so many people should be brought forward in this shameful fashion, denying the House the information upon which to make a reasoned judgment.

The key point at issue is that the Bill has been specifically designed to minimise the time and opportunity for public knowledge and debate of the central elements of the legislation to put the scheme into effect. Let us examine some of the important information that Parliament is still not being told about.

Hon. Members are not being told about the amount of the proposed loans, how they will vary for London, outside London or for home students, or how repayments are to be made. We are not given details of the access funds about which the hon. Members for Bury, North (Mr. Burt) and for Rugby and Kenilworth (Mr. Pawsey) expressed concern. We are not told about the withdrawal of social security benefits or any exemptions. We are not being told what the student loans company is, what it is to do, or how it is to work.

Hon. Members are not being given any breakdown of the administrative and start-up costs. As several hon. Members have pointed out, we are not being told anything to mitigate the damage that the Bill will do in Scotland. We are not being told anything about the damage to nursing as a graduate profession. That point was stressed by my hon. Friends the Members for Sheffield, Hillsborough (Mr. Flannery) and for Glasgow, Central (Mr. Watson). We are not being told of any measures to help people such as medical students who are on especially long courses and face even greater outstanding debts at the conclusion of their studies. The Secretary of State's advice that longer repayment periods are being seriously considered will be of scant comfort to people in that position.

We are not being told of any help for disabled students such as the deaf, on whose behalf the Royal National Institute for the Deaf wrote to hon. Members yesterday reminding us that deaf students do not receive social security payments and seeking an access fund and an overhaul of disabled students' allowances. How can Ministers ask hon. Members to approve the Bill without addressing those matters? We are not told much. Hon. Members are being asked to vote in ignorance for ignorance.

One of the main reasons why the Government are in such a mess with the proposal and why they have resorted to this shabby expedient of an enabling Bill is that they are vague and confused about the purpose that they are seeking to achieve in the legislation. We are told variously that it is to save money and that it will do students good. We are told by the Secretary of State that it will not impede access. But the Under-Secretary of State and the hon. Member for Rugby and Kenilworth and others have said that it will extend access—perhaps a significant difference. It bears repeating that, even on the Government's own figures, there will be no cumulative savings for taxpayers to the year 2026 with the 100 per cent. take-up which the Under-Secretary of State has said that he hopes to achieve, and no cumulative savings until 2014, even with 80 per cent. take-up. Over the next two decades the Government are seriously proposing to spend £1.6 billion on giving students less. That money is being taken from the taxpaying pensioners to whom my hon. Friend referred.

It is a pleasure to take part in a debate with the hon. Member for Epping Forest (Mr. Norris). He gave an excellent exposition of why he fared somewhat better with the more affluent voters of Epping Forest than he did with those of most modest means in Oxford, East.

Hon. Members have heard claims and counter-claims about overseas experience. My right hon. Friend the Member for Halton (Mr. Oakes) and others have argued that is makes no sense for the United Kingdom to opt for loans precisely when other countries, notably Sweden and West Germany, are moving from them by increasing the proportion of grant. That view has much to commend it. Other hon. Members such as the hon. Members for Bury, North and for Hendon, South (Mr. Marshall) have argued, as have Ministers, that loan schemes in various other countries co-exist with higher participation rates than in Britain.

There are two important points to make about that. First, if hon. Members consider the number of students graduating as opposed to entering higher education, they will note that Britain's relative performance is much better. Chart H of the Department's own White Paper shows that 27 per cent. of the relevant age group in the United Kingdom have graduate qualifications, compared with 25 per cent. in France, 21 per cent. in West Germany and 18 per cent. in the Netherlands—all countries that operate student loans schemes. That is testimony to the cost effectiveness of the grants system and to the relative efficiency of British higher education in thereby holding down the rates of drop-outs and retakes which poorer financial systems of support foster.

Secondly, it is a plain logical fallacy to suppose that, simply because higher participation may coexist with loans schemes elsewhere, the shift to a loans scheme here would in any way increase participation. The proposition that increasing the effective cost of something will, by some mystical means, increase demand or take-up is an affront to common sense and flies in the face of the evidence available.

Ministers will be aware of the survey that was published yesterday by the National Union of Students which showed that 16.2 per cent. of respondents stated that they would not go into higher education if the Government brought in the scheme. That proportion rose to 23.6 per cent. among students from low-income families.

Mr. Ian Bruce (Dorset, South)

When the hon. Gentleman says that students will not take up university places, does he not find it strange that during the past 12 months, when they have been clearly told that there will be a student loans scheme during their period of higher education, they have come forward in greater numbers?

Mr. Smith

Obviously they have confidence in the prospect of a Labour Government coming to power at the earliest opportunity and repealing the scheme. If the hon. Gentleman had been here for the debate, he would have heard the arguments on that.

Ministers will also be aware of the survey carried out by the British Medical Association Students Group, showing the serious effects of the scheme for those contemplating studying medicine.

As for the claim that the scheme will be good for students and, in the words of the Secretary of State, that it will reduce students' sense of dependency on the state, and will promote a proper sense of self-reliance and responsibility."—[Official Report, 20 October 1989; Vol. 158, c. 375.] the Government cannot have it both ways. They cannot expect the House to accept simultaneously the contradictory assertions—on the one hand, that the scheme will hurt and that students will therefore think carefully about what they are getting and how they will pay the loan back, and, on the other hand, that the scheme will attract people who have previously not taken advantage of grants to take advantage of the loans. The scheme can hurt or it can help, but it cannot do both.

In practice, it will hurt, especially the proposal uniquely to penalise students by taking away their access to income support and housing benefit. There is no doubt that the scheme will most hurt those students from poorer backgrounds, those studying in London and, as the hon. Members for Antrim, North (Rev. Ian Paisley) and for Antrim, East (Mr. Beggs) have said, students in Northern Ireland.

The Research Services Limited study, "Student Income and Expenditure Survey", which was commissioned by the Government, showed that 70 per cent. of students from C2, D and E backgrounds receive some money in benefit, as compared with 44 per cent. of those whose parents are in social class A. The sums involved are significant, with average students in receipt of housing benefit receiving on average £286, rising to £310 for working-class students and £499 for those studying in London. There is no doubt that the removal of such sums will cause hardship and that cannot but act as a disincentive for poorer students.

The Government clearly have no idea about how this loans Bill ties in with the previous Secretary of State's commitment to double participation in higher education over the next 25 years. As my hon. Friends the Members for Bridgend (Mr. Griffiths) and for City of Durham (Mr. Steinberg) have ably pointed out in their excellent speeches, there is a glaring inconsistency in the information being provided to the House. All the Government's projections of costs and savings relate to chart 5 in the White Paper, which shows participation of the relevant age group rising from just above 15 per cent. in 1990 to just above 18 per cent. in the year 2000. In the tables estimating the financial effects of the loans scheme it is said: The estimate is based on the hypothesis that the number of students eligible for loans grows in line with the projection shown in Chart 5 up to the end of the century, then remains constant thereafter. Ministers talk about increasing access and about doubling the number of students in the next 25 years, but all the costings that we have been able to squeeze out of them—the £1.6 billion cumulative cost in the next 20 years—are based only on a marginal increase in participation between now and the end of the century. No clearer evidence could hardly be available to show that Ministers either have not done their sums on costs or that they do not understand the implication of what they are saying about access, or possibly both.

I challenged the Under-Secretary about that in a letter dated 19 July to which I have not yet received a reply. That silence speaks volumes for the weakness of the Government's argument on how they will pay for the expansion of access to which they say they are committed.

Faced with all that, to say nothing of annual default rates of more than 100,000 after 2010 and deferral rates of more than 700,000 in the same year and onwards, no wonder that the poor old banks do not know which way to turn or what to do for the best. I never thought that I would get applause at student rallies for the banks. One need only say the Co-operative bank, Lloyds, Bank of Scotland or Clydesdale to have them cheering to the roof-tops.

The Under-Secretary should say how the scheme will be administered. In a written answer to me he said that students will be obliged to seek a loan at a branch of one of the participating banks. Will he clarify that a student needing to take out a loan will not need to hold an account at the bank providing it? Will he confirm that a Co-operative bank customer can go along to a participating bank, which, in return for the £12 fee paid by the Government, will do all the administrative work and pass the loan amount provided by the Government to that student's Co-operative bank account at no charge to the student or to his bank? The non-participating bank will incur no risks, no additional administrative costs, and will not face queues of students filling in loan claim forms who will then clog up the counters at the beginning of the academic year. It will also not suffer any damage to its reputation in the eyes of students. It appears that the costs, the risks and the administration will fall on the participating banks in return for which they will receive £12 per application and a pat on the back for acting as an administrative arm of the Government. Will he confirm that that is broadly the picture? Is he surprised that some banks would prefer not to take part?

Mr. Walden

rose—

Mr. Smith

I shall not give way as I am running out of time.

The question that has come up time and again is why the Government have not listened to the volume of opposition expressed by all groups that have responded to the White Paper. If the Government will not listen to students, to colleges, informed commentators, the banks or to us, why will they not listen to their colleagues here and in the other place who have no confidence in the proposals?

The House is confronted with an apology of a Bill. Its very omissions speak volumes for the weakness of the case that Ministers have attempted to put to us. If they are really convinced of the strength of their loan proposals, why have they not had the decency, to say nothing of the constitutional propriety, to set out those proposals in full before us? It is not as though the Government have not had enough advice. So far they have spent no less than £451,223 on the consultants, Price Waterhouse. It looks as though that company and debt collectors will be the only ones to get any benefit from the Bill.

I agree with my hon. Friend the Member for Burnley (Mr. Pike) that the Bill is squalid. Frankly it stinks as it reeks of Ministers' fear as to what the House and the other place would do if the full details were included in the Bill. It reeks of the sweat that Ministers are now in because they are trying to meet the Government's self-imposed deadline of having the scheme up and running by next autumn. The Bill shows contempt for the House and the best interests of higher education in this country. It will pave the way for entry to higher education to depend more on ability to pay and less on ability to benefit.

As we heard in the debate on 20 October, many Conservative Members are opposed to the likely practical implications of the Bill, its high administrative—and particularly public expenditure—costs. In addition, others such as the hon. Member for Cambridge (Mr. Rhodes James) rejected it for its effects on access and because it starts to dismantle the system of grants which we believe, and Conservative Members were once proud to believe, most effectively opens up opportunities for higher education.

This is a thoroughly bad Bill, as expensive in its costs as it is disastrous in its consequences. It will be bad for our country, higher education, students, and especially those people we wish to attract into higher education. It has been brought before the House in a thoroughly shabby way. It invites rejection from hon. Members on both sides of the House who should stand up for educational opportunity and reject it.

9.41 pm

The Parliamentary Under-Secretary of State for Education and Science (Mr. Robert Jackson)

It is always agreeable to follow the carefully prepared diatribes of the hon. Member for Oxford, East (Mr. Smith) and I look forward to our further encounters in Committee when his advice is rejected as it will be today.

We have had an interesting debate which has been notable for the substantial contributions made by Conservative Members. With all respect to my hon. Friend the Member for Cambridge (Mr. Rhodes James), what has been said from this side of the House has been more representative of Conservative opinion than what was said in the previous debate.

Many issues have been raised in the debate and I shall make my way through them in turn. These include the nature of the Bill, international comparisons, access, student attitudes to loans, equity and social justice, the disabled, and housing and social security benefit. I shall try to address all those subjects in the short time that I have.

The structure of the Bill has been raised by many hon. Members, including the right hon. Member for Halton (Mr. Oakes) and the hon. Member for Antrim, North (Rev. Ian Paisley). A great deal of play has been made of the way in which the Bill is drafted. We have been told that it is a constitutional outrage and the hon. Member for Antrim, North compared it with an IRA bomb, which was an analogy in poor taste. The structure of the Bill is identical with the structure of the Education Act 1962 providing for student grants which has not been subject to any complaint during the 20 or so years of its operation.

The hon. Member for Blackburn (Mr. Straw) gave no cogent explanation as to why it was inappropriate to follow the path laid down in the 1962 Act. Anybody who thinks for more than a minute about how to administer a grant or loan system will see that the legal arrangements that we envisage are the only sensible ones. We are taking power to provide money for loans and to table regulations for the administration of loans on the model of the grant provisions. We had a valuable testimony from my hon. Friend the Member for Eastwood (Mr. Stewart) who has been responsible for running the grant regulations in Scotland, as I have in England and Wales.

My hon. Friend the Member for Canterbury (Mr. Brazier) made an important intervention in the speech of my right hon. Friend the Secretary of State when he pointed out how it was possible to use the flexibility given by the regulation-making power to the advantage of his constituents. There have been many such cases. Let us hear no more of this totally bogus argument.

Dr. Hampson

When my hon. Friend is putting flesh on this thin skeleton of legislation, will he consider two developments? One is to try to get more of the banks' own money into higher education by co-operation between the Treasury and the Department of Employment in extending the career development loans system that we already have, which uses some Government subsidy to assist the banks in lowering interest rates so that we can help as wide a range of students as possible. The second is not to go to a full 50:50 loan and grant but to have a higher grant element, as the United States has in its basic educational grant, to help get more participation from families on low incomes.

Mr. Jackson

I hope that my hon. Friend will assist us in Committee to improve the Bill. It will be open to the House to amend the regulations and it will be possible for the House to take a view about whether it is desirable to have a 50:50 loans scheme or to change it in other ways.

Mr. Straw

How can this House amend regulations?

Mr. Jackson

The regulations come before the House for debate, as they have done for a long time in respect of grant legislation.

The issue of international comparisons was raised by, among others, my hon. Friend the Member for Bury, North (Mr. Burt) and the hon. Member for Antrim, East (Mr. Beggs), and much play has been made of that. There are many different systems of student support. Indeed, if one imagines a sort of spectrum of generosity towards the student, the British system, as my hon. Friend the Member for Wyre Forest (Mr. Coombs) pointed out, is almost certainly the most generous in the world. It provides for free tuition, free maintenance grants for nearly all students—certainly for all full-time students—and at a generous level. The result is that Britain is spending a higher proportion of GDP on student support than any other country and spending a higher proportion of its higher education expenditure on student support.

At the other end of the scale, Japan is probably the least generous. The Japanese charge for tuition, they have no grants, only loans, and those loans are available to only 10 per cent. of students. I echo the words of my hon. Friend the Member for Hendon, South (Mr. Marshall) in saying that Japan has more students in higher education than we have, which suggests that there is no correlation between student support arrangements and participation.

Our proposals will create a loans system which will be among the most generous in the world. It will be available to all full-time students. The loans scheme in the Federal Republic of Germany, for example, is available to only 30 per cent. of students. Ours will be at a real zero rate of interest. That is to be compared with the positive interest rates which are commonplace in other loan schemes. We are moving towards a 50:50 ratio of loan to grant. Compare that with the movement in the Federal Republic and with the position in other countries in northern Europe.

We are making extensive provision for deferral if incomes fall below 85 per cent. of the national average income—about 10,000—a facility that is not available in United States loans system. In view of what has been said about mature students, it is important to remember that under our proposals loans will be available until age 50. Many countries cut off entitlement to a loan at age 30. Our proposals are for a generous loans scheme.

Mr. Salmond

The Minister will be aware that there is a higher participation rate in university education in Scotland than south of the border. Has he seen the calculations of NUS Scotland? Using the Government's figures, but substituting a 6 per cent. inflation rate, at the end of a four-year degree course the outstanding debt will be 60 per cent. greater than at the end of a three-year degree course. Will that not be a substantial disincentive to participate in the four-year Scottish course? Does the Minister accept those figures, and does he intend to do anything about that?

Mr. Jackson

The calculations of the NUS are not correct and I believe that the value of the fourth year to many will be such that they will be prepared to pay a reasonable sum for it.

There has been much discussion about access, and I shall not recite the names of all those hon. Members who referred to that important question. The issue of increasing participation in higher education by students from working-class backgrounds is too important to be left to the superficialities espoused by the Opposition.

Let us start with the facts. Britain has relatively poor working-class participation, despite 30 years of generous grants which have mainly benefited the children of the middle-class—I do not complain about that, but it is a fact. The hon. Member for Burnley (Mr. Pike), having admitted this, asked why it should be but suggested no answer. The answer has not much to do with student support—it is that working-class children are less inclined to stay on at school after 16. My hon. Friends the Members for Lancaster (Dame E. Kellett-Bowman) and for Hendon, South were right to say that the Labour party is in no position to lecture us on this point as it was largely responsible for dismantling the ladders of working-class opportunity.

Rather than emphasise that negative point, I wish to emphasise the positive point that if the most important determinant of access is the staying-on rate, we can look forward to an expansion in higher education because the staying-on rate has risen from 34 per cent. when the Labour party was last in office to 42 per cent. now, and the rate of increase is rising. We believe that the number of children staying on at 18 will increase, and the evidence is that there is no class differential in entry to higher education among those who have stayed on to 18.

Mr. Win Griffiths

rose—

Mr. Jackson

There is no reason to suppose that a working class 18-year-old will be deterred from entering higher education by the introduction of a loan. If he is bright enough to enter higher education, he will be bright enough to see the benefits that will accrue to him not only in educational terms—the hon. Member for Derbyshire North-East (Mr. Barnes) was right about that—but in terms of future income. Such students will see that student loans will add to the resources available to support them while they are studying and they will recognise that it will be a risk-free investment, because they will not be obliged to repay after graduation if they cannot do so. As my hon. Friend the Member for Eastwood observed, it is extraordinary to argue that any price higher than zero will deter someone from higher education. Either that grossly undervalues higher education, or it grossly underestimates the intelligence of younger people.

Mr. Pike

rose—

Mr. Jackson

Student attitudes to loans were evoked by the hon. Member for Oxford, East. In common with other Conservative Members, I think it a bit of a joke for the National Union of Students to use taxpayers' money to ask students whether they would prefer a free gift to a repayable loan. The union did not need to invest taxpayers' money in that inquiry to derive the answers that it was seeking. The real question is what students are doing, not what students are saying in reply to politically motivated surveys.

As has been pointed out, this was the first year of recruitment of young people who knew that the Government planned to introduce student loans in their second year, and my hon. Friend the Member for Wyre Forest actually understated the effects. This year the evidence available suggests there has been a 5 per cent. increase in recruitment to universities, a 13 per cent. increase in full-time students going to polytechnics and a 10 per cent. increase in the number of part-time students going to them. Those facts shed light on the false proposition that young people will not enter higher education if there are to be loans.

Mr. Andrew Smith

rose—

Mr. Jackson

I do not have much time.

I want to say a word about the argument that the scheme is a subsidy to the rich, which was advanced by the hon. Members for Blackburn and for Antrim, North and, in the last debate, by my hon. Friend the Member for Chichester (Mr. Nelson). No doubt my predecessors shared my experience of dealing every week with letters about young people whose parents refuse to fill in the forms to assess their income and hence their parental contribution. Surveys have shown that 41 per cent. of parents do not pay their full assessed parental contribution, so I must tell hon. Members who think that our loans will be a subsidy for the rich that I listened to their arguments with some bitterness, because I know that many will find that the loans enable them to take part in higher education when their parents refuse to support them.

The hon. Member for Sheffield, Hillsborough (Mr. Flannery) referred to social justice and equity. In our analysis in the White Paper, we explained how the return to the taxpayer in terms of an economic investment in higher education could be compared with the returns to the individual graduate. As my hon. Friend the Member for Epping Forest (Mr. Norris) argued, there is no doubt that graduate earning power is greatly enhanced by the experience of higher education. At present, the graduate makes no financial contribution and the taxpayer has to pay for the whole of that education. As my hon. Friend the Member for Lewisham, West (Mr. Maples) argued, one quarter of all taxpayers are on incomes below the national average and the difference between their incomes and those that graduates can expect is considerable. From the point of view of equity in public expenditure, student grants are a system of taking money from the less well off and giving it to the better off. I wonder about the equity and social justice of that position.

A number of speakers, especially my hon. Friend the Member for Bury, North, referred to the disabled. I have had several meetings with representatives of groups for the disabled. I have listened carefully—and we shall continue to listen carefully—to what is said. I emphasise that the student loan will be additional for disabled students and that there will be no disentitlement to benefits. In addition, disabled graduates will be able to benefit from the ability to defer repayment if their income is below a certain level. We have made it clear that we are prepared to review the arrangements in relation to grant support and we shall monitor the effects of student loans on disabled students. If the legislation is passed, as the Government propose, we shall have the flexibility to respond to the results of that monitoring by amending the regulations. If we put such provisions in the primary legislation, as the Opposition wish us to do, we should probably not be able to respond for many years.

The Government have carried out two surveys which provide information about student use of supplementary benefit and housing benefit. From those surveys, we know that as many as 40 per cent. of all students do not claim any benefit. We also know that the average claim amounts to about £315 per year per student claimant, which means that a top-up loan of £420 would be not only a complete addition to the resources of the 40 per cent. who claim no benefit, but a substantial addition to the resources of most of the rest. There will also be the access funds for those who are out of pocket. I note what has been said on several occasions by my hon. Friend the Member for Rugby and Kenilworth (Mr. Pawsey) and we shall review the question of the access funds to take care of any genuine difficulties. I emphasise that we intend to continue to monitor and to survey the picture. If we have the means to do so—and if the Opposition will allow us to do so—we shall be able to take action through the regulation-making power in the Bill.

Several hon. Members have raised the question of the cost of not having loans. The Opposition have tried to make much of the simple, natural, logical fact that with loans there is a period when one pays out before money comes back. We have to compare the cost of our proposal with the cost of the Opposition's alternative, about which they have been coy. We were told that they would increase the grant "when resources allowed". Resources do allow, and the Government are making that provision now in the form of the student loan.

If the Opposition simply replaced our proposed loan with a grant—that is, a grant with a 100 per cent. take-up instead of a loan with an 80 per cent. take-up—and if they kept social security and housing benefit entitlements, their scheme would be more costly than our scheme from year one. Our scheme will yield savings compared with their proposals from year one. I noted that my hon. Friend the Member for Lewisham, West calculated that by the beginning of the next century it stacked up into a difference of hundreds of millions of pounds in the costs of the schemes.

The burden of repayment will not be all that heavy. For the average course, it will be about £400 per year. which compares with the cost of a ski-ing holiday—and about 1 million people from Britain went on ski-ing holidays last year. [Interruption.] My predecessor made a distinguished speech on these issues. When he visited Sweden—

Question put, That the Bill be now read a Second time:—

The House divided: Ayes 301, Noes 220.

Division No. 8]	[10 pm
AYES
Adley, Robert	Devlin, Tim
Aitken, Jonathan	Douglas-Hamilton, Lord James
Alexander, Richard	Dunn, Bob
Alison, Rt Hon Michael	Durant, Tony
Allason, Rupert	Dykes, Hugh
Amery, Rt Hon Julian	Eggar, Tim
Amess, David	Evans, David (Welwyn Hatf'd)
Amos, Alan	Evennett, David
Arbuthnot, James	Fallon, Michael
Arnold, Jacques (Gravesham)	Field, Barry (Isle of Wight)
Arnold, Tom (Hazel Grove)	Fishburn, John Dudley
Ashby, David	Fookes, Dame Janet
Aspinwall, Jack	Forman, Nigel
Atkins, Robert	Forsyth, Michael (Stirling)
Baker, Nicholas (Dorset N)	Forth, Eric
Baldry, Tony	Fowler, Rt Hon Norman
Batiste, Spencer	Fox, Sir Marcus
Bellingham, Henry	Franks, Cecil
Bendall, Vivian	Freeman, Roger
Bennett, Nicholas (Pembroke)	French, Douglas
Bevan, David Gilroy	Gale, Roger
Biffen, Rt Hon John	Gardiner, George
Blaker, Rt Hon Sir Peter	Garel-Jones, Tristan
Body, Sir Richard	Gill, Christopher
Bonsor, Sir Nicholas	Gilmour, Rt Hon Sir Ian
Boscawen, Hon Robert	Goodson-Wickes, Dr Charles
Boswell, Tim	Gorman, Mrs Teresa
Bottomley, Peter	Gorst, John
Bottomley, Mrs Virginia	Gow, Ian
Bowden, Gerald (Dulwich)	Grant, Sir Anthony (CambsSW)
Boyson, Rt Hon Dr Sir Rhodes	Greenway, Harry (Ealing N)
Braine, Rt Hon Sir Bernard	Greenway, John (Ryedale)
Brandon-Bravo, Martin	Gregory, Conal
Brazier, Julian	Griffiths, Peter (Portsmouth N)
Bright, Graham	Grist, Ian
Brown, Michael (Brigg & Cl't's)	Ground, Patrick
Browne, John (Winchester)	Grylls, Michael
Bruce, Ian (Dorset South)	Hague, William
Buck, Sir Antony	Hamilton, Hon Archie (Epsom)
Budgen, Nicholas	Hamilton, Neil (Tatton)
Burns, Simon	Hampson, Dr Keith
Burt, Alistair	Hanley, Jeremy
Butcher, John	Hannam, John
Butler, Chris	Hargreaves, A. (B'ham H'll Gr')
Butterfill, John	Hargreaves, Ken (Hyndburn)
Carlisle, John, (Luton N)	Harris, David
Carlisle, Kenneth (Lincoln)	Hayhoe, Rt Hon Sir Barney
Carrington, Matthew	Hayward, Robert
Carttiss, Michael	Heathcoat-Amory, David
Cash, William	Heddle, John
Channon, Rt Hon Paul	Hicks, Mrs Maureen (Wolv' NE)
Chapman, Sydney	Higgins, Rt Hon Terence L.
Chope, Christopher	Hind, Kenneth
Churchill, Mr	Hogg, Hon Douglas (Gr'th'm)
Clark, Hon Alan (Plym'th S'n)	Holt, Richard
Clark, Dr Michael (Rochford)	Hordern, Sir Peter
Clark, Sir W. (Croydon S)	Howard, Michael
Clarke, Rt Hon K. (Rushcliffe)	Howarth, Alan (Strat'd-on-A)
Colvin, Michael	Howarth, G. (Cannock & B'wd)
Conway, Derek	Howe, Rt Hon Sir Geoffrey
Coombs, Anthony (Wyre F'rest)	Howell, Rt Hon David (G'dford)
Coombs, Simon (Swindon)	Hughes, Robert G. (Harrow W)
Couchman, James	Hunt, David (Wirral W)
Cran, James	Hunter, Andrew
Currie, Mrs Edwina	Hurd, Rt Hon Douglas
Curry, David	Irvine, Michael
Davies, Q. (Stamf'd & Spald'g)	Irving, Charles
Davis, David (Boothferry)	Jack, Michael
Day, Stephen	Jackson, Robert

Janman, Tim	Price, Sir David
Johnson Smith, Sir Geoffrey	Raison, Rt Hon Timothy
Jones, Gwilym (Cardiff N)	Renton, Rt Hon Tim
Jones, Robert B (Herts W)	Riddick, Graham
Jopling, Rt Hon Michael	Ridley, Rt Hon Nicholas
Kellett-Bowman, Dame Elaine	Ridsdale, Sir Julian
Key, Robert	Rifkind, Rt Hon Malcolm
King, Roger (B'ham N'thfield)	Roberts, Wyn (Conwy)
King, Rt Hon Tom (Bridgwater)	Rost, Peter
Kirkhope, Timothy	Rowe, Andrew
Knapman, Roger	Rumbold, Mrs Angela
Knight, Greg (Derby North)	Ryder, Richard
Knight, Dame Jill (Edgbaston)	Sackville, Hon Tom
Knowles, Michael	Sayeed, Jonathan
Lamont, Rt Hon Norman	Scott, Rt Hon Nicholas
Lang, Ian	Shaw, David (Dover)
Latham, Michael	Shaw, Sir Giles (Pudsey)
Lawrence, Ivan	Shaw, Sir Michael (Scarb')
Lee, John (Pendle)	Shelton, Sir William
Lennox-Boyd, Hon Mark	Shephard, Mrs G. (Norfolk SW)
Lester, Jim (Broxtowe)	Shepherd, Colin (Hereford)
Lightbown, David	Shersby, Michael
Lilley, Peter	Sims, Roger
Lloyd, Sir Ian (Havant)	Smith, Tim (Beaconsfield)
Lloyd, Peter (Fareham)	Soames, Hon Nicholas
Luce, Rt Hon Richard	Spicer, Sir Jim (Dorset W)
Lyell, Sir Nicholas	Spicer, Michael (S Worcs)
Macfarlane, Sir Neil	Squire, Robin
MacGregor, Rt Hon John	Stanbrook, Ivor
MacKay, Andrew (E Berkshire)	Stanley, Rt Hon Sir John
Maclean, David	Steen, Anthony
McLoughlin, Patrick	Stern, Michael
McNair-Wilson, Sir Michael	Stevens, Lewis
McNair-Wilson, Sir Patrick	Stewart, Allan (Eastwood)
Madel, David	Stewart, Andy (Sherwood)
Major, Rt Hon John	Stewart, Rt Hon Ian (Herts N)
Malins, Humfrey	Stradling Thomas, Sir John
Mans, Keith	Sumberg, David
Maples, John	Summerson, Hugo
Marland, Paul	Tapsell, Sir Peter
Marlow, Tony	Taylor, Ian (Esher)
Marshall, John (Hendon S)	Taylor, John M (Solihull)
Marshall, Michael (Arundel)	Taylor, Teddy (S'end E)
Martin, David (Portsmouth S)	Tebbit, Rt Hon Norman
Mates, Michael	Temple-Morris, Peter
Maude, Hon Francis	Thatcher, Rt Hon Margaret
Mawhinney, Dr Brian	Thompson, D. (Calder Valley)
Maxwell-Hyslop, Robin	Thompson, Patrick (Norwich N)
Mayhew, Rt Hon Sir Patrick	Thorne, Neil
Mellor, David	Thornton, Malcolm
Meyer, Sir Anthony	Thurnham, Peter
Miller, Sir Hal	Townend, John (Bridlington)
Mills, Iain	Townsend, Cyril D. (B'heath)
Mitchell, Andrew (Gedling)	Tracey, Richard
Mitchell, Sir David	Tredinnick, David
Moate, Roger	Trippier, David
Monro, Sir Hector	Trotter, Neville
Montgomery, Sir Fergus	Twinn, Dr Ian
Morrison, Sir Charles	Vaughan, Sir Gerard
Moss, Malcolm	Viggers, Peter
Moynihan, Hon Colin	Waddington, Rt Hon David
Neale, Gerrard	Wakeham, Rt Hon John
Neubert, Michael	Walden, George
Newton, Rt Hon Tony	Walker, Bill (Tside North)
Nicholls, Patrick	Waller, Gary
Nicholson, David (Taunton)	Walters, Sir Dennis
Nicholson, Emma (Devon West)	Wardle, Charles (Bexhill)
Norris, Steve	Warren, Kenneth
Onslow, Rt Hon Cranley	Watts, John
Page, Richard	Wells, Bowen
Paice, James	Wheeler, John
Patnick, Irvine	Whitney, Ray
Patten, Rt Hon Chris (Bath)	Widdecombe, Ann
Patten, John (Oxford W)	Wiggin, Jerry
Pawsey, James	Wilshire, David
Peacock, Mrs Elizabeth	Winterton, Mrs Ann
Porter, Barry (Wirral S)	Winterton, Nicholas
Porter, David (Waveney)	Wolfson, Mark
Portillo, Michael	Wood, Timothy
Powell, William (Corby)	Woodcock, Dr. Mike

Yeo, Tim	Tellers for the Ayes:
Young, Sir George (Acton)	Mr. Alastair Goodland and
Younger, Rt Hon George	Mr. Stephen Dorrell.
NOES
Abbott, Ms Diane	Davies, Ron (Caerphilly)
Adams, Allen (Paisley N)	Davis, Terry (B'ham Hodge H'I)
Allen, Graham	Dewar, Donald
Alton, David	Dixon, Don
Anderson, Donald	Dobson, Frank
Archer, Rt Hon Peter	Doran, Frank
Armstrong, Hilary	Douglas, Dick
Ashdown, Rt Hon Paddy	Dover, Den
Ashley, Rt Hon Jack	Dunnachie, Jimmy
Ashton, Joe	Dunwoody, Hon Mrs Gwyneth
Barnes, Harry (Derbyshire NE)	Eadie, Alexander
Barnes, Mrs Rosie (Greenwich)	Evans, John (St Helens N)
Barron, Kevin	Ewing, Mrs Margaret (Moray)
Battle, John	Fatchett, Derek
Beckett, Margaret	Faulds, Andrew
Beggs, Roy	Fearn, Ronald
Beith, A. J.	Fisher, Mark
Bell, Stuart	Flannery, Martin
Benn, Rt Hon Tony	Flynn, Paul
Bermingham, Gerald	Foot, Rt Hon Michael
Bidwell, Sydney	Forsythe, Clifford (Antrim S)
Blair, Tony	Foster, Derek
Blunkett, David	Foulkes, George
Boateng, Paul	Fraser, John
Boyes, Roland	Fyfe, Maria
Bray, Dr Jeremy	Garrett, John (Norwich South)
Brown, Gordon (D'mline E)	Golding, Mrs Llin
Brown, Nicholas (Newcastle E)	Gordon, Mildred
Brown, Ron (Edinburgh Leith)	Gould, Bryan
Bruce, Malcolm (Gordon)	Grant, Bernie (Tottenham)
Buchan, Norman	Griffiths, Nigel (Edinburgh S)
Buckley, George J.	Griffiths, Win (Bridgend)
Caborn, Richard	Grocott, Bruce
Callaghan, Jim	Harman, Ms Harriet
Campbell, Menzies (Fife NE)	Hattersley, Rt Hon Roy
Campbell, Ron (Blyth Valley)	Haynes, Frank
Campbell-Savours, D. N.	Healey, Rt Hon Denis
Canavan, Dennis	Heffer, Eric S.
Cartwright, John	Henderson, Doug
Clark, Dr David (S Shields)	Hinchliffe, David
Clarke, Tom (Monklands W)	Home Robertson, John
Clay, Bob	Hood, Jimmy
Clelland, David	Howell, Rt Hon D. (S'heath)
Clwyd, Mrs Ann	Howells, Geraint
Cohen, Harry	Howells, Dr. Kim (Pontypridd)
Cook, Robin (Livingston)	Hoyle, Doug
Corbett, Robin	Hughes, John (Coventry NE)
Cousins, Jim	Hughes, Robert (Aberdeen N)
Crowther, Stan	Hughes, Roy (Newport E)
Cryer, Bob	Hughes, Simon (Southwark)
Cummings, John	Hume, John
Cunliffe, Lawrence	Ingram, Adam
Cunningham, Dr John	Janner, Greville
Dalyell, Tarn	Jones, Barry (Alyn & Deeside)
Darling, Alistair	Jones, leuan (Ynys Môn)
Davies, Rt Hon Denzil (Llanelli)	Kennedy, Charles

Kilfedder, James	Quin, Ms Joyce
Kirkwood, Archy	Radice, Giles
Knox, David	Randall, Stuart
Lamond, James	Reid, Dr John
Leadbitter, Ted	Rhodes James, Robert
Lestor, Joan (Eccles)	Roberts, Allan (Bootle)
Lewis, Terry	Robertson, George
Livingstone, Ken	Robinson, Peter (Belfast E)
Livsey, Richard	Rooker, Jeff
Lloyd, Tony (Stretford)	Ross, William (Londonderry E)
Lofthouse, Geoffrey	Rowlands, Ted
McAllion, John	Salmond, Alex
McAvoy, Thomas	Sedgemore, Brian
McCrea, Rev William	Sheerman, Barry
Macdonald, Calum A.	Sheldon, Rt Hon Robert
McFall, John	Shore, Rt Hon Peter
McKay, Allen (Barnsley West)	Short, Clare
McLeish, Henry	Sillars, Jim
Maclennan, Robert	Skinner, Dennis
McNamara, Kevin	Smith, Andrew (Oxford E)
Madden, Max	Smith, Sir Cyril (Rochdale)
Mahon, Mrs Alice	Smith, Rt Hon J. (Monk'ds E)
Mallon, Seamus	Smith, J. P. (Vale of Glam)
Marek, Dr John	Smyth, Rev Martin (Belfast S)
Marshall, David (Shettleston)	Soley, Clive
Marshall, Jim (Leicester S)	Spearing, Nigel
Martin, Michael J. (Springburn)	Steel, Rt Hon David
Maxton, John	Steinberg, Gerry
Meacher, Michael	Stott, Roger
Meale, Alan	Strang, Gavin
Michael, Alun	Straw, Jack
Michie, Bill (Sheffield Heeley)	Taylor, Mrs Ann (Dewsbury)
Michie, Mrs Ray (Arg'l & Bute)	Taylor, Rt Hon J. D. (S'ford)
Miscampbell, Norman	Taylor, Matthew (Truro)
Mitchell, Austin (G't Grimsby)	Thomas, Dr Dafydd Elis
Molyneaux, Rt Hon James	Turner, Dennis
Moonie, Dr Lewis	Vaz, Keith
Morgan, Rhodri	Walker, A. Cecil (Belfast N)
Morley, Elliot	Wall, Pat
Morris, Rt Hon A. (W'shawe)	Wallace, James
Morris, Rt Hon J. (Aberavon)	Wardell, Gareth (Gower)
Mowlam, Marjorie	Wareing, Robert N.
Mullin, Chris	Watson, Mike (Glasgow, C)
Murphy, Paul	Welsh, Michael (Doncaster N)
Nellist, Dave	Wigley, Dafydd
Oakes, Rt Hon Gordon	Williams, Rt Hon Alan
O'Brien, William	Williams, Alan W. (Carm'then)
O'Neill, Martin	Wilson, Brian
Orme, Rt Hon Stanley	Winnick, David
Owen, Rt Hon Dr David	Worthington, Tony
Paisley, Rev Ian	Wray, Jimmy
Patchett, Terry	Young, David (Bolton SE)
Pendry, Tom
Pike, Peter L.	Tellers for the Noes:
Powell, Ray (Ogmore)	Mr. Frank Cook and
Prescott, John	Mr. Martyn Jones.

Question accordingly agreed to.

Bill read a Second time, and committed to a Standing Committee pursuant to Standing Order No. 61 (Committal of Bills).