HC Deb 04 July 1989 vol 156 cc135-8
1. Mr. Thurnham

To ask the Secretary of State for Education and Science whether he now has any proposals to amend the payment deferment arrangements for student top-up loans to include suitable categories of disablement.

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

Under the arrangements we propose, deferment of repayment will depend on graduates' incomes. Disabled graduates will benefit from those arrangements in the same way as other graduates.

Mr. Thurnham

Will my hon. Friend confirm that disabled students will have full access to social security benefit? Will he re-examine the scheme to see whether he can provide disabled students with larger top-up loans and longer terms for repayment?

Mr. Jackson

I certainly confirm that, as the White Paper makes clear, disabled students will continue to be able to claim social security benefits and disability allowance, where appropriate. When we set the level of grants that will operate from September 1990, the question will have to be resolved of what to do about the existing allowances in the grant for disabled students. The Government will certainly consider the position sympathetically.

Mr. Ashley

Does the Minister recognise that additional costs for disabled students are very high and that the jobs that they will take up will not pay enough to allow them to repay loans? Therefore, instead of minor adjustments to student top-up loans, is not a complete reappraisal of the grants for disabled students required?

Mr. Jackson

Support for disabled people in general is a matter for the Secretary of State for Social Security. I know that he has considered the matter sympathetically and that there have been considerable improvements in recent years. I do not believe, however, that there is a case for substantial additions beyond the deferment of the obligation to repay that we propose for disabled people who have had the benefit of higher education. One has to think in terms of a category of disablement which is taken care of, dealing in general with people who are disabled and then the concessions that will be available to disabled students in terms of access to social security and additional allowances.

Mr. Gerald Bowden

I was slightly reassured by what my hon. Friend said about reconsidering grants to disabled students. In view of the representations that I and many hon. Members have received from deaf and blind students, we appreciate the excessive obstacles that they must overcome to take advantage of higher education in the same way as sighted and hearing students. Is there not a case for considering an entire reappraisal of the grant allocation to such students rather than the top-up loan scheme?

Mr. Jackson

There are already allowances for disabled students in the grant. We shall consider their future in the context of the overall review of the grant that will have to be made before the new regulations come into operation in September 1990. We shall certainly be looking at that sympathetically.

2. Mr. Pike

To ask the Secretary of State for Education and Science what representations he has received since his recent statement on student top-up loans.

The Secretary of State for Education and Science (Mr. Kenneth Baker)

Since my statement on 19 June, I have received 63 representations.

Mr. Pike

Does the Secretary of State recognise that this policy is absolute folly and that it will reduce educational opportunities? Does he recognise, too, that it will go counter to the intention of the Secretary of State for Health to increase degree opportunities for nurses and that it will force more nurses out of higher education and back into traditional training, which will be worse for both the National Health Service and for nurses?

Mr. Baker

I do not agree with the hon. Gentleman. As I have said on many occasions, we are the only developed country that does not have a system of top-up loans alongside grants. In all those other countries a higher proportion of the relevant age band goes into higher education. It has not acted as a disincentive in other countries, and I do not believe that it will here.

Mr. Pawsey

When my right hon. Friend responds to those representations, will he make a particular point of stressing that the top-up loan scheme will enable substantial additional numbers of students to go into higher education? Will he further make the point that there must be a limit to the amount of taxpayers' support available to students and that, therefore, we are finding a new form of funding? Will my right hon. Friend refer to the three access funds and, if it is at all possible, will he consider increasing them to more than the proposed £5 million each, totalling £15 million?

Mr. Baker

On the latter point, I note what my hon. Friend has said and I am sure that he appreciates that that will be a matter for discussion later in the year in the public expenditure survey round. I also note what my hon. Friend said about the level of access funds. On the other point that my hon. Friend made, I remind the House that the disentitlement to benefit next year for students will amount to about £65 million, but the extra resources available through top-up loans will amount to £167 million. That is a substantial increase and it means more money for more students.

Mr. Simon Hughes

Why was the Secretary of State economical with the truth when he answered questions on his statement of 17 June about the cost of top-up loans? Why did he talk about the start-up and administrative costs only and not include inflation, the cost to the Department of Education and Science and the ongoing running costs? Surely the reality is that with every additional student there will be additional costs far in excess of what he estimated. If the right hon. Gentleman does not come clean he will be shuffling off the coils of his office with the words of Sir Walter Scott ringing in his ears: O what a tangled web we weave, When first we practise to deceive!"

Mr. Baker

The hon. Gentleman's contribution makes one thankful that the leadership of his party is in the hands that it is—and that is saying a great deal.

The hon. Gentleman's facts are wrong. I made my statement on 19 June, not on 17 June; that was the first fact that he got wrong. The costs of the scheme are set out clearly in the White Paper, under the heading "Costs and Savings". Inflation is allowed for and the costs that I gave to the House are contained in the Price Waterhouse report on the recurrent and running costs. If the hon. Gentleman wants to engage in a serious debate on the matter he must first educate himself in the facts.

Mr. Marlow

I think I am right—my right hon. Friend will correct me if I am wrong—that higher education does not come free. Somebody must pay for it. As it is inappropriate that parents should be responsible for their adult children and also totally inappropriate that the vast majority of taxpayers, who do not enjoy and are unlikely to enjoy the benefits and privileges of higher education, should pay more than a certain amount for higher education, is it not right that those who are to receive the benefits and privileges of higher education should find some of the money for their own benefit and education?

Mr. Baker

My hon. Friend puts his finger on an important point. The White Paper said that in 1984 student support for living costs per year was about £700 a student in Britain, £70 in Germany and £30 in Japan. We have a generous system of support for students. We believe that it is reasonable for the costs of the living expenses of students to be borne by three parties: the state—the grants will continue—their parents, whom we assess for contributions, and the students themselves through what will be a generous top-up loan scheme.

Rev. Martin Smyth

Does the Minister recognise that there is concern in education circles about the scheme, which was notably expressed yesterday by the chancellor of the university of Ulster? Last week two leading academics said that they would welcome the interest-free loan for themselves because it was tax free, but were worried that poorer families would not wish to put themselves into debt.

Mr. Baker

Protections are built into the scheme, one of which is that the obligation to repay the top-up loan will not start for nine months until after a student has left university. There will be no obligation to repay until the salary of the graduate is at least 85 per cent. of the average national wage. At the moment there is almost no graduate unemployment and those graduates who are unemployed are so by choice. Most graduates have salaries a third to a half higher than the national average wage.

Mr. Andrew MacKay

Is my right hon. Friend aware that many taxpayers who have not had the benefit of further education and, as a consequence, are unlikely to have the same salary expectations as graduates, would see the top-up loan as a useful personal investment for students? They would resent paying the entire bill, as at present, for further education.

Mr. Baker

That is a very fair point. The Opposition want more generous and higher grants, but they must come out of taxable income, which is paid by many people who, as my hon. Friend said, have never been or are never likely to go to university or polytechnic. It is also unlikely that their families will do so. It is reasonable to say that people who attend higher education institutions should make a substantial investment in their own future. The Economist estimates that that investment has a pay off of about 24 per cent. It is entirely reasonable that students should be expected to make some contribution on terms that are the most generous of any top-up loan scheme that I have seen in the western world. I believe that our scheme will be very popular.

Mr. Straw

The Secretary of State is deliberately confusing his Back-Bench Members—[Interruption.] Perhaps they are confused already. The right hon. Gentleman knows that the taxpayer will pay more for the new scheme than he currently pays for the student grant scheme, but the student will get less. It is another example of the shambles of the scheme.

If the right hon. Gentleman is so confident about the costings of the scheme, why does he not publish the Price Waterhouse report? Why does he not publish the detailed costings done by his Department, including debt collecting, set-up, depreciation, central Government and college costs? He knows that the costings in the White Paper are both selective and defective. Why does he not publish the costs of the indemnity which, according to last Saturday's Financial Times, is being demanded by the banks not only against a change of Government, but against a change of Government policy? What is the premium on that indemnity, or is the risk so great that no one will take it?

Mr. Baker

The risk of this Government changing and giving way to a Government who would be damaging to the country is not very substantial and would be an insurable risk.

The Price Waterhouse report was commissioned by the Committee of London and Scottish Bankers. I shall be having a word with the committee's chairman later. My preference is to publish the report and I hope to place copies of it in the Library later this week.

I refer the hon. Gentleman to the statistics in the White Paper which set out the costings of the scheme. He must realise that the scheme will be welcomed by many hundreds of thousands of students, such as the 120,000 students who currently do not receive any grant because they are means-tested out of it; the 160,000 students whose grants are reduced by the means test; and the 50,000 students who do not receive mandatory awards. All those people will benefit substantially from the top-up loan scheme.