HC Deb 12 November 1991 vol 198 cc1052-60

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Patnick]

1.53 am
Mr. John McAllion (Dundee, East)

This debate is taking place in the early hours of the morning, but the presence of so many of my hon. Friends underlines the importance which the Opposition attach to it, which contrasts starkly with the importance that the Government attach to it.

The debate is officially designated the subject of loss of student entitlement to housing benefit and income support". I do not think that there can be any quarrel with those terms. I suspect that not only would the Under-Secretary of State for Social Security concede that students have lost their entitlement to housing benefit and income support; she would probably boast that it is the Government's official policy that students should lose such entitlement.

On 23 August 1991 the Minister wrote to me setting out clearly the Government's attitude. She reiterated the Governments view first expressed by us in 1985 that the majority of full-time students should not have access to benefits as a means of supporting themselves whilst studying. That view—first expressed six years ago—has now been given effect, and it is universally accepted that students are denied housing benefit and, in the majority of cases, housing support. The disagreement between the two sides of the House arises in regard to the effect that that has on students.

The Government would have us believe that students have never had it so good. In a letter to my hon. Friend the Member for Glasgow, Central (Mr. Watson), the Prime Minister said that the Government's introduction of student loans had given students more money to cover their living costs—25 per cent. more in 1990–91 than in the previous year. He described that as a substantial real-terms increase and a generous package of support.

The Prime Minister is not alone in making such claims. They are made by all Ministers who are confronted with allegations of student poverty and hardship. In a "Dear Colleague" letter circulated to all Members of Parliament, the Secretary of State for Education and Science warned us earlier in the year to beware of students who came to us during the recess pleading poverty. He went on to repeat the Prime Minister's bland assurance that, far from experiencing poverty, most students were better off than they had ever been before.

The Secretary of State acknowledged that some students might be genuinely worried about their finances. He asked students, "Are you really trying hard enough to get jobs during the vacation? Don't just look for a job in jobcentres"—after all, the Government have closed down most of them—"but get out and actively look for temporary work elsewhere."

Mr. Huw Edwards (Monmouth)

"On your bike".

Mr. McAllion

As my hon. Friend says, it was a variation on the advice offered to the unemployed by a former Tory Minister. Such advice is becoming as offensive, ignorant and out of touch as it was when first uttered by the right hon. Member for Chingford (Mr. Tebbit) many years ago. The Government's claim that students are better off as a result of student loans simply is not true; nor is it true that loans make up for the loss of income support and housing benefit.

Let us look more closely at the Government's argument. In his "Dear Colleague" letter, the Secretary of State referred to the benefit that students could previously have claimed. He lumped together housing benefit, income support and unemployment benefit, arriving at an average benefit entitlement over the summer recess of £327. He did not explain how he arrived at that figure, but it turns out—conveniently—to be £93 less than the £420 student loan that the Government are now making available.

The Secretary of State concluded that students were now being more than compensated for the loss of their benefit entitlement. But how does he arrive at that figure of £327? Others have arrived at very different sums. Using the Government's own figures, the National Association of Citizens Advice Bureaux has calculated that an unemployed claimant aged between 18 and 24—as most students are—would have received £31.15 a week income support during the 12-week vacation: a total of £373.80. That is a much higher figure than the one given by the Secretary of State.

The association also calculated that, over and above income support, the same claimant would have received £360 in housing benefit, on a typical rent of £30 a week. It calculated that a typical out-of-work student entitled to housing benefit and income support could have expected to receive £733.80 over the 12-week vacation. It is that position of fundamental weakness and poverty that forces them to apply for the Government's student loans.

Ministers will try to hide from the reality. In his "Dear Colleague" letter the Secretary of State tells us that the uprating of student grants in 1990–91 was over and above the extra money made available through student loans. They say that an additional £420 in student loans and an uprating of 5.5 per cent. in grant is the basis for their claim that students have never had it so good—that they are getting more money now than ever before.

I have already dealt with the £420 loan, which does not even come near to compensating students for the loss of £733 in housing benefit and income support. But what about the 5.5 per cent uprating? When it was introduced in September of last year, the rate of inflation was almost twice 5.5 per cent.: it was 10.9 per cent. Admittedly we should compare the average rate of inflation for the whole of 1991 with the previous year. When we do so, we find that the inflation rate comes down somewhat, but it comes down to 7.9 per cent., which is still 2.5 per cent. above the Government's so-called uprating. The reality is that, far from being an uprating over and above other increases, this is yet another real terms decrease in students' real incomes. This year the grant has been frozen at last year's level, with no uprating for inflation.

What are we left with? First, with the withdrawal of housing benefit and income support and their replacement by student loans, students now get less, not more, money. Secondly, the so-called uprating has also meant that, in real terms, there is less, not more, money for students. Ministers can claim until they are blue in the face that students are getting more money and that they have never had it so good, but they cannot justify those claims by reference to the facts, which show that students are significantly worse off than they were previously. As a far better man than anyone in this House once said, "facts are chiels that winna ding", even for Tory Ministers.

The citizens advice bureaux evidence compared student incomes with the incomes of those who are in receipt of income support, which represents the minimum subsistence level below which no one in our society is meant to fall. What are these minimum subsistence levels? For a single claimant in the age bracket 18 to 24, it is £1,619.80 in income support per year, plus £1,560 for full housing benefit. That amounts to a total yearly income of £3,179.80. What is the subsistence level for students? It is £2,265 for the full grant and £420 for the student loan—in total a yearly income of just £2,685. That is almost £500 below the minimum subsistence level for the poorest people in our society.

That level of income has been described by the Prime Minister and the Government as a generous settlement for students, but the citizens advice bureaux provide a very different description. They say that student grants, taken together with student loans, cannot provide enough to cover even the most basic needs of the poorest members in our society. The Prime Minister answered a question that I put to him earlier this year by referring to the fact that he did not believe that I live in the real world. In view, however, of what he said about student support, compared with what the citizens advice bureaux say about student support—the citizens advice bureaux deal with real students suffering real hardship in the real world, while the Prime Minister hides himself away behind locked gates in 10 Downing street—there is only one conclusion that can be arrived at: that the citizens advice bureaux are right, because they live in the real world. The Prime Minister and all the other Ministers are wrong because they do not live in the real world.

Their reply will be, "What about the access funds?" Given that only £25 million were allocated to access funds for the whole of the United Kingdom, the answer must be, "What about the access funds?" The Government's intention was that these funds would be a way of helping with one-off exceptional circumstances affecting only a small minority of students, but the reality is that once again they have been shown to be completely wrong. Throughout the country access funds have been stretched way beyond the limit. Many colleges ran out of money long before they ran out of students needing help. The Minister of State, Scottish Office, shakes his head, but he knows that the Government conceded this point when they announced that they would allow colleges to anticipate up to 10 per cent. of next year's allocation to relieve the pressure on this year's inadequate allocation.

In Dundee in the first year more than 2,000 students applied to the access fund and more than £300,000 was allocated to them. It is not enough. The truth is that we are dealing not with one-off exceptional cases of hardship, affecting only a small minority of students, but with a widespread and damaging problem affecting thousands of students.

During the recess I held a number of surgeries in Dundee colleges, which were specifically for students. I was not short of students who applied for help in the most distressing of circumstances: mature students with spouses and children, who had been denied housing benefit and income support to which they had previously been entitled; landlords pressing for rent payments and students with no money to pay; arrears of rent building up; poll tax arrears building up; overdrafts being extended; electricity supplies being cut off, in some cases to parents and children. Again and again I heard the same story of deepening poverty driving students to take the decision to drop out of education.

Recently Aberdeen university carried out a survey which revealed that 15 per cent. of students were considering quitting their courses because of financial hardship. That is an appalling situation, but it is made more appalling because it mainly affects students from the poorest backgrounds, those whose parents are on low incomes and who get no financial help from their parents because they cannot afford to give it. Mature students with young families, who are on their own financially and are burdened with the heaviest of financial commitments, are having to scrape by on an inadequate student grant and an even more inadequate student loan.

Dundee is an area of high unemployment, with few jobs to be had. I came across a number of cases where, in an attempt to increase their chances of employment, people had returned to college to try to get better qualifications. However, because they had been unemployed, they had not earned enough money in the previous three years to qualify for the mature student allowance, and so it was denied to them. They also lost their entitlement to housing benefit and income support, upon which they had been very dependent as they were unemployed. Many had children. Under income support regulations they were allowed £17 for each child every week, but under the student grant regulations they were allowed just £8 for each child per week. They too have children, with similar needs, but they are allocated much less because, rather than staying on the dole, their parents wished to return to college and get qualifications to get them back into work. All of those things were barriers, discouraging and preventing access to education for the poorest people in our society. Those are the people who need access to education most of all.

All those facts give the lie to the Government's claim that they are extending educational opportunity to everyone and that they are genuinely interested in creating a classless society. I am prepared to be convinced that that is not the case and that the Government mean well and intend to try to open up educational opportunity to everyone, no matter their class background. But if I am to believe that, when the Minister replies to the debate she will have to commit herself to two very simple propositions: first, that the Government will institute a full review of student financial support as a matter of urgency; secondly, that they will commit themselves to restoring to all students the housing benefit and income support that the Government have taken away from them. If that commitment is not made, the Government stand condemned of having betrayed a whole generation of the poorest people in our society by taking away their only means of escaping from poverty, access to education opportunity.

2.9 am

The Parliamentary Under-Secretary of State for Social Security (Miss Ann Widdecombe)

rose—

Mr. Ernie Ross (Dundee, West)

Come on, get on with it. Do better.

Miss Widdecombe

The hon. Gentleman's attitude does not do justice to the seriousness of this debate. I take the matters raised by the hon. Member for Dundee, East (Mr. McAllion) very seriously and I suggest that we debate them in a sensible manner.

I am grateful to the hon. Member for Dundee, East for raising these issues. He has mentioned most of them in earlier correspondence with me and I see many hon. Members on the Opposition Benches who have also mentioned them, either in correspondence or in parliamentary questions. I especially welcome my hon. Friends from the Scottish Office to the debate.

The hon. Gentleman will know that the changes made to students' entitlement to housing benefit and income support were not made in isolation. The withdrawal of most full-time students' entitlement to those benefits took place at a time when substantial additional resources were being made available to students through the education system. The issues were discussed many times both in this House and in another place last year, and the social security regulations which gave effect to the changes were fully debated and approved by both Houses. Nevertheless, it would be helpful if I were to explain the background to the Government's overall policy on the financial support of full-time students.

As long ago as 1985 we set out our intention to remove students' general entitlement to certain benefits. Since that point we have taken a number of steps to reduce students' reliance on benefits. That culminated in the general withdrawal of income support and housing benefit in the 1990–91 academic year.

Our view then, which is undiminished today and is at the centre of the debate, is that it ought not to be the function of the social security system to support students, not only because of the administrative burden placed on the Department's local benefit offices and local authorities, but because there already exists a maintenance system for those in full-time education. Therefore, as I have frequently said in letters to Opposition Members and to my hon. Friends, we regard the support of students as the proper duty of the education system, rather than of the social security system, although there are exceptions that we support under the social security system.

The Government have often been accused of singling out students for special treatment under the rules. That is because there are alternative sources of financial support—provided from public funds—available to them. Opposition Members may wish to argue about the level of those funds. The thrust of the debate is whether the education system or the social security system is the right source of student support. I should have hoped that there was some consensus on both sides of the House that the responsibility for student support should remain with the educational maintenance system.

Our commitment to that principle was given greater weight by the fact that benefit claims for students frequently presented administrative problems out of all proportion to the amounts of benefit finally awarded and the duration of the benefit periods. Benefit offices faced periodical surges in claims which were complicated to assess and frequently resulted in no award of benefit being made. It seemed to us nonsense that the benefit system should be duplicating the role of educational provision in that way. It also seemed undesirable for students to become dependent on benefits while in full-time education. Social security benefits are intended to assist those people who, for whatever reason, find themselves in circumstances where they are unable to support themselves and those circumstances could not reasonably be avoided.

Of course, we recognised that we would have to provide the wherewithal for students to support themselves. In the current academic year, the full-year loan facility plus the grant is more than 30 per cent. higher than in 1989–90. This support is 6 per cent. more than was available in 1991.

These increases will have resulted in the vast majority of students being better off overall. Research commissioned by the Department of Education and Science indicated that the average loss of benefits among students who actually claimed them—and they were a minority—would have been some £327 in the past academic year. By comparison, the average loan available is £420.

However, we are well aware that there are some students who, even with the increase in support from the grant and loan, may experience financial difficulties. That is why the Government have established the access funds.

It has been a fashion among Opposition Members—indeed, this was reported by the hon. Gentleman tonight—to suggest that the access funds alone are intended to compensate for the withdrawal of benefits generally and that the £25 million, which he correctly quoted, must, therefore, be inadequate. This is not the case. These funds are only one element of the package of extra resources for students which I mentioned a moment ago.

As I have already said, most students will have extra financial support available to them without having to call upon the access funds. Those funds are there to assist students who face particular financial difficulties and who, as a result, may not be able to take up or resume their studies.

I think that it would be helpful if, at this point, I were to remind the House that we have made special provision for students in certain groups. Hon. Members will appreciate, I am sure, that there are some students who have financial needs above and beyond those of their peers. I am thinking in particular of disabled students and students with children. The benefit regulations make specific provision for those students, or in some cases their partners, to receive both income support and housing benefit provided that they meet the general qualifying conditions for those benefits. The new top-up loan provides additional resources for those groups as well as for other students. The existence in the benefit system to which they have access of a generous £10 weekly disregard on income from a top-up loan means that many students in those vulnerable groups will be better off under the new arrangements.

I know that the hon. Member for Dundee, East is particularly concerned about students' ability to meet accommodation costs from within their resources. Clearly, this is one area of student expenditure that can vary quite markedly throughout the country. The student grant has always been intended to provide for accommodation and therefore to some extent reflects variations in costs. The regional variation in the level of grant has been, and continues to be, reflected in the way in which housing benefit for eligible students is calculated. Housing benefit is not payable for the first £16.25 of rent outside London or £23.45 of rent within London for any student. For some years housing benefit has not been available to students in halls of residence or similar accommodation. Therefore, students generally only really looked to housing benefit to top up their accommodation needs and only then if they were in property not owned by their college.

In fact, only about half of young higher education students live in privately rented accommodation. The Department's own statistical information suggests that in May 1989 fewer than 15 per cent. of students were claiming housing benefit and only 2 per cent. claimed in the summer vacation.

In recent months a good deal of concern has been expressed about students no longer having access to benefits over the summer vacation. The impression one gets is that, in the past, every student relied on income support, at least over the summer period. That is a fallacy. In the summer of 1989 DSS local offices kept a count of student claims; there were 135,000 during that long vacation. That represents less than a quarter of the student population affected by the benefit changes. Clearly, some students called upon the access funds in the summer period. In July, the higher education institutions were told that they could anticipate up to 10 per cent. of their access fund allocation for the 1991–92 academic year.

The hon. Member for Dundee, East called on us to promise a review, but that comes down to a running review and immediate flexibility. In this academic year the Department of Education and Science has also provided additional guidance to institutions administering the access funds. That is intended to assist them in determining how the funds might best be dispersed. The Government remain of the view that the educational establishments are well placed to assess the financial needs and priorities of their students.

Mr. McAllion

In common with the Minister from the Scottish Office, the Minister rightly says that the institutions are best equipped to know the needs of their students. Those responsible for the access funds at Dundee university wrote to me to say that their funds had run out even before the summer recess had begun. There was no additional help for students who found themselves in trouble in the summer. What advice would the Minister offer to a student who has a full student grant and a student loan but who is still £500 below the income support level, the minimum subsistence level for any individual in society? That student is unable to get help from his educational institution because it has run out of its access funds. What should that student do?

Miss Widdecombe

The grant and loan system is designed to cover the entire academic year, not just part of it.

Secondly, access funds are administered by the institutions, which are best able to decide what is needed. We have reviewed the problem that occurred and, as I said, we have issued additional guidance to such institutions to try to make sure that the problem does not recur. Students, with a combination of loan, grant and access funds, are well provided for over the course of an entire year.

Hon. Members will be aware that the access fund allocations for the current academic year have already been made. As before, their distribution among institutions takes account of student numbers and regional variations in housing costs. The institutions are required to monitor their use of the access funds and the Secretary of State for Education and Science has undertaken to review the operation of the funds in due course.

The hon. Member for Dundee, East raised a number of important issues this evening. I am grateful for the opportunity to put the Government's views on the matter, but underlying all that I have said is a fundamental conviction that the education system, not social security benefits, should provide for the maintenance of students.

It makes no sense for two such complex systems of financial support to attempt to meet the same needs other than in the most exceptional circumstances. The educational maintenance system is specifically designed with the financial needs of students in mind and we have made substantial new resources available to ensure that those needs are met.

Mr. Huw Edwards

Why do the Government believe that for people on low incomes in employment the social security system, especially through family credit, has a vital role to play, yet for people on low incomes in education the social security system, through housing benefit, plays no role?

Miss Widdecombe

Because, until the Government introduced family credit, there was no comprehensive assistance for people in work on low incomes in terms of the benefits system. There is assistance available for students' education through the educational maintenance system and what is currently in operation is the best method for the support of students. There is no point in running two systems side by side.

If the hon. Gentleman has specific cases of hardship which he wishes to raise, there is a straightforward means of doing so. He should write to the Secretary of State for Education and Science setting out the problems, and the same goes for problems in respect of Dundee university. If there is a specific matter in the system which is the Minister's responsibility and which is causing concern, the Minister can respond to it.

I see no point in taking an already elaborate system and running it alongside another elaborate system, rather than having one straightforward source of student income. Indeed, it must be more comprehensible to, and dignified for, students to get the whole of their resources from the education system rather than from a mixture of social security and the education system. So there is an administrative advantage and an advantage in terms of comprehensibility in having a single system. The Government's point is made.

Question put and agreed to.

Adjourned accordingly at twenty-three minutes past Two o'clock.