Student Loans

HC Deb 23 October 1990 vol 178 cc178-80

4. Mr. Darling

To ask the Secretary of State for Education and Science if he will make a statement on the operation of the student loans scheme and access funds.

The Parliamentary Under-Secretary of State for Education and Science (Mr. Alan Howarth)

The loans scheme is up and running and the access funds are in place. The Student Loans Company opened for business last month and I am delighted to tell the House that, as of yesterday, 14,500 students have already applied. The company is operating very efficiently, as I saw when I recently visited it.

Mr. Darling

If the student loans scheme is so good, why have only 14,500 students applied for it? Why are the Government spending £1 million on advertising the scheme, especially when, yesterday, Edinburgh university announced a freeze on all staff recruitment because of its dire financial position? Do the Government accept that money should be spent on funding our university education, or are they happy for it to fall further and further behind as the rest of Europe races ahead?

Mr. Howarth

The hon. Gentleman overlooks the fact that funding in real terms has increased by some 9 per cent. during the period of this Government and, last year, in cash terms, an additional 10 per cent. was made available. During the three years of the present survey about £1 billion will be added to higher education expenditure for all purposes. Universities, far from being deprived of funding by the Government, have had a significant increase in funding and, correspondingly, are increasing the opportunities available to students in higher education.

Mr. Quentin Davies

Will my hon. Friend take this opportunity to give the House an idea of the impact of the introduction of student loans on applications for student places this year?

Mr. Howarth

I am extremely encouraged, as is the House, I hope, that 14,500 applications have already been made to the scheme. In response to the first point of the hon. Member for Edinburgh, Central (Mr. Darling), I believe that that is an encouraging start to the scheme, especially considering that universities and polytechnics returned for the new academic year only in the past fortnight.

Mr. Andrew Smith

May I welcome the Minister to his new responsibilities? I should point out, however, that the 14,500 applications that he has just mentioned represent less than 2.5 per cent. of the Government's target of take-up. Is not that an abject failure? Does he believe that the student loans scheme offers the means by which students can pay supplementary fees for courses?

Mr. Howarth

Supplementary fees are not under discussion. The student loans scheme is designed to support student maintenance. The hon. Gentleman should not ignore the central fact that our new system of student support means more money for students. The uprated grant and the new loan represent an increase of 25 per cent. on last year's grant. There is no question but that it is welcome to students and all the indications are that this autumn enrolments have again risen substantially.

Rev. Martin Smyth

Does the Minister accept that although there has been an increase in university funding, the Committee of Vice-Chancellors and Principals believes that the money spent on advertising the loans scheme could have been better spent on better direct grants to students and on funding colleges?

Mr. Howarth

It is absolutely right that the scheme should have been publicised to students—the higher education institutions asked the Student Loans Company to undertake a publicity campaign. It must be right that students should be helped to be aware of the new entitlement to a loan, and students are finding it attractive. The higher education institutions have been thoroughly briefed on the procedures and students have been made aware of the opportunity available to them. We have already witnessed an encouraging number of applications for loans in the first fortnight of the new academic year and all the signs are that the scheme will be a great success.

Mr. Burt

Is not it true that Opposition Members and representatives of the National Union of Students spent a lot of time during the passage of the student loans Bill trying to frighten students away from applying to higher education institutions in order to make out their case that student loans would deter such applications? Will my hon. Friend confirm that applications for university and other higher education institutions this year verify the continual upward trend of students going into higher education? Does he agree that the student loans Bill made no difference at all?

Mr. Howarth

My hon. Friend is right to suggest that there has been a politically motivated campaign to discredit a scheme which is intended to work for the benefit of students. The only achievement of the NUS in its campaign against student loans was to cause a large traffic jam on one occasion in London. It has had to accept that students are welcoming this new opportunity and I was pleased to note that, recently, it advocated that its members should take advantage of the scheme.