HC Deb 21 February 1995 vol 255 cc141-2
3. Mr. Pike

To ask the Secretary of State for Education what proposals she has to make changes in the operation of the student loans scheme.

The Parliamentary Under-Secretary of State for Further and Higher Education (Mr. Tim Boswell)

The Government have no current plans to introduce major changes to the loans scheme, but keep its operation under review.

Mr. Pike

Does the Minister accept that the student loans scheme is seriously flawed and very unfair? Once former students reach the threshold at which they have to begin making repayments, they soon start having to pay £70 a month, when they still have low incomes and increasing commitments. Why will not the Government recognise that the scheme is a waste of time, scrap it and introduce a fairer system?

Mr. Boswell

I am afraid that the hon. Gentleman is way off beam. The average repayment currently under the Student Loans Company scheme is £14 per month. Nobody need start repayments until his income has attained at least £14,600 per annum. That is a fair provision, which should be acknowledged.

Mr. Pawsey

I hope that my hon. Friend will disregard the ill-informed comments of the hon. Member for Burnley (Mr. Pike), who clearly knows as much about the student loans scheme as I do about black pudding manufacturing. Will my hon. Friend confirm that the interest-free student loans scheme will remain and that we shall not go down the route of a graduate tax, as some Opposition Members advocate?

Mr. Boswell

I can tell my hon. Friend, who I am sure is a dab hand at making black puddings in his spare time, that we have no plans to charge a commercial rate of interest for student loans, nor have we any plans to impose a graduate tax. I can tell those Opposition Members who hanker after this nostrum to get them out of their intellectual difficulties that the likely rates of tax under those provisions would be sufficient to alarm them and, indeed, students considerably.

Mr. Bryan Davies

Does the Minister not recognise that the Student Loans Company was besieged by student complaints—35,000 before Christmas—because it could not provide students with the resources they need? What on earth is going on when the assessor, who is meant to adjudicate between the company and student complainants, has dealt with three cases only in the past four years, has found in favour of the company on all three occasions and has been paid more than £30,000 for his pains?

Mr. Boswell

What I can say to the hon. Gentleman is that the fact that the assessor has been called in on only a limited number of occasions in the past suggests—as our evidence suggests—that the company's performance was satisfactory at its inception. The hon. Gentleman is well aware of the fact that the performance last autumn was not satisfactory.

Thanks to hon. Members on both sides of the House, Ministers and students themselves, we said that that was not satisfactory and that the company would have to deal with the situation. It has now done so, and it has also undertaken a full review of the repeat application procedure in which it is involving representatives of the Committee of Vice-Chancellors and Principals, the National Union of Students and others. That shows a responsive organisation which is anxious to help students and not the kind of caricature which the hon. Member for Oldham, Central and Royton (Mr. Davies) has already thoughtfully set out in the press release which I have.

Mr. David Martin

Does my hon. Friend recollect the scare stories that went around when the student loans scheme was introduced? It was said that the scheme would either put off students from poorer backgrounds from applying to university or prevent them staying there. That has not proved to be the case in Portsmouth. Can my hon. Friend give me some information on the national scene?

Mr. Boswell

Yes, I will readily give my hon. Friend that information. It is clear from the student income and expenditure survey which was published a year ago that, for the first time, the proportion of students from socially disadvantaged backgrounds exceeded 50 per cent. The existence of the loans scheme and the resources provided make that possible.