HC Deb 13 December 1994 vol 251 cc758-9
5. Mr. Steinberg

To ask the Secretary of State for Education what representations she has received regarding delays in the processing of applications for student loans in the current academic year.

Mr. Boswell

My right hon. Friend has received a copy of a letter from the chairman of the Committee of Vice-Chancellors and Principals of Universities in the United Kingdom to the chief executive of the Student Loans Company, and 14 other letters about delays in the processing of loans. The Department has also received a number of telephone calls from students, their parents and higher education institutions.

Mr. Steinberg

In terms of what the Minister said, there appears to be chaos in the Student Loans Company. What will he do about the thousands of students who failed to get their loans this year? Will he explain a parliamentary answer that he gave me last week in which he said that he was considering putting private finance into that company? What will be the consequences of that in terms of interest rates for students who took out such a loan afterwards?

Mr. Boswell

Perhaps characteristically, the hon. Gentleman has managed to muddle two separate issues. First, there is currently what I consider to be an unacceptable delay at the Student Loans Company in relation to the repeat application procedure. I should acknowledge that more than 200,000 loans have been granted in the current year—the number has risen by over one third—but the new procedure has led to delays, partly owing to the inability of students to return their forms.

The company has written to the Committee of Vice-Chancellors and Principals explaining the position. We have encouraged the company to deal with it as a matter of urgency; it is doing so, and hopes to resolve the problem by Christmas. It has also undertaken, at our request, to examine the repeat application procedure, and we have invited the National Union of Students to join in.

The involvement of private finance, whether in the Student Loans Company or elsewhere, is kept under constant review.

Dame Elaine Kellett-Bowman

May I thank my hon. Friend for his efforts to tackle the problem? Students at my local university undoubtedly had problems, particularly—as my hon. Friend pointed out—with the repeat application procedure. I am glad that my hon. Friend has confirmed that he has no intention of privatising the Student Loans Company. The only pressing issue is the financing of loans.

Mr. Boswell

I am grateful to my hon. Friend for what she has said. We are anxious to tackle the position in conjunction with the Student Loans Company, and it is being addressed as a matter of urgency.

As for the longer-term prospects, I should remind the House that the whole purpose of the Student Loans Company was to offer students concessionary loans on very favourable terms, thus enabling them to pursue their studies. In a recent study of graduate employment, one of the newspapers listed a series of starting salaries, none of which would have required the initial repayment of loans by any of the employees.

Mr. Bryan Davies

Does the Minister recognise that the House will be shocked at the complacency with which he has approached the issue? He has issued not a word of apology to the thousands of students who have been deprived of essential resources. If the elderly had been deprived of the chance of obtaining their pensions, or the unemployed prevented from drawing their dole cheques, there would have been a national uproar. How can the Minister address the House with such complacency when students are denied the resources they need to sustain themselves at college?

Does the Minister not recognise that Members of Parliament are finding it difficult to get through to the Student Loans Company to protest about the situation on behalf of the students whom they represent? When will the Minister do something?

Mr. Boswell

Interestingly, the hon. Gentleman seems to have drafted his supplementary question before listening to my answer. I readily acknowledge that I was not satisfied with the position; nor, indeed, is the Student Loans Company, which is doing something about it as urgently as possible. As for the hon. Gentleman's specific point, his hon. Friend the Member for City of Durham (Mr. Steinberg) asked me about the number of representations that we had received and I gave him the answer—14. The position became apparent recently, and as soon as it became apparent we tackled it vigorously and urgently.

Mr. John Marshall

Did my hon. Friend say that there had been a 30 per cent. increase in the number of student loans paid out? Does the problem not lie in the fact that the Student Loans Company listened to inaccurate forecasts from Opposition Members, who said that there would be no demand for student loans? Does the increase not underline the fact that the scheme has become much more popular than the Opposition ever expected?

Mr. Boswell

The purpose of the loans is to be available to those who wish to avail themselves of them; the facility is intended to enable them to pursue their studies. The figure mentioned by my hon. Friend is not entirely accurate—he may have misheard me. The total increase this year is 35 per cent., and that is despite the administrative difficulties that I mentioned.