Student Finance

HC Deb 22 February 1995 vol 255 cc429-57 8.13 pm

Mr. Bryan Davies (Oldham, Central and Royton)

I beg to move, That the Education (Mandatory Awards) Regulations 1994 (S.I., 1994, No. 3044), dated 30th November 1994, a copy of which was laid before this House on 1st December, be revoked. I understand that with this it will be convenient to discuss at the same time the following motion: That the Education (Student Loans) Regulations 1994 (S.I., 1994, No. 3045), dated 30th November 1994, a copy of which was laid before this House on 1st December, be revoked. The debate takes place against a background of worsening student hardship and an increasingly defective system of student support. Those facts are undeniable, yet the Government are determined to press ahead and make further cuts in the grant next year, increase dependence on a flawed and failing student loans scheme and abolish the allowance paid to mature students for the extra financial needs that they have.

The Government have also clamped down on any increase in participation in higher education. They have frozen the number of places available. That is both economic madness and a social injustice. It represents a blunting of aspirations and a denial of opportunities for qualified students.. Even the CBI has called for a 40 per cent. graduation rate for young people. The Government have set their face against that advice and, just as with the economy, they demonstrate that they can organise a short-term boom, but in higher education, of course, that is followed by bust.

Dr. Keith Hampson (Leeds, North-West)

The hon. Gentleman and I have crossed swords on higher education for a great many years, from his previous time as a Member of Parliament. He does not acknowledge the greatest single expansion of opportunity that there has ever been in this country in higher education. The number of people going into higher education has increased from one in eight to one in three. The only time since the war that the numbers and the percentage fell was when he was a member of the previous Labour Government.

Mr. Davies

The hon. Gentleman is disregarding the record of the Conservative Government over 15 years. He should recognise that the Conservative party had been in power for almost a decade before it addressed the representations, which had been made right across the sector, of the necessity to increase opportunities for our young people. It then produced a short-term, five-year period of rapid expansion—I freely acknowledge that—not, I might add, bringing us up to the level of many of our competitors in advanced economies, but nevertheless creating a degree of expansion. Then we had the 1993 trauma of budgetary cuts, and instead of an education policy we saw an economic policy that caused a collapse of education provision.

The student loans scheme, in which we have been asked to place our confidence, is totally flawed and failing. It is universally derided. It fails on every criterion by which it should rightly be assessed. First, is the scheme fair or equitable? Loans are not available to part-time students, who must pay all their own fees and maintenance costs and make up 35 per cent. of the people in higher education.

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

As the hon. Gentleman has now accurately referred to the participation of part-timers in higher education, will he please explain why earlier he said, inaccurately, that the participation rate was frozen, without respect and without reference to the part-timers whose participation is not frozen?

Mr. Davies

The Government should be careful when taking responsibility for the expansion in the number of part-time students. The Government give precious little in the way of support or opportunity to part-time students; in fact, they have continually set their face against such participation, and—I shall refer to it later—there is one clear instance of a group of students whom the Government appear to be setting out to deter. The student loans system is also flawed in that it does nothing for the vast majority of postgraduates. Loans are concentrated on a minority in post-compulsory education.

Secondly, the scheme requires graduates to repay loans at a time when their earnings are likely to be at their lowest—shortly after they have entered the employment market. Yesterday, at Question Time, the Minister said that the average figure for a monthly repayment at present is £14, but that is because he has included all the people who are paying now for courses that they completed when they could borrow only small amounts and therefore are repaying minimal amounts and bringing the average down. Already for many students the sum is far higher and is bound to increase in the future as Government plans to cut grant and increase the loans develop.

Mr. Jon Owen Jones (Cardiff, Central)

Will my hon. Friend find time in his speech to refer to the fact that not only is the student loans scheme inadequate in giving security to students but even when mistakes are made—students in my constituency have waited as much as a term to have any money at all—there does not appear to be an adequate system to deal with the problems?

Mr. Davies

I pay tribute to my hon. Friend for being one of the first to bring to the attention of the House the flawed system that the Student Loans Company was operating and for identifying the large number of students before Christmas who were victims of the scheme's failure.

The Minister is quite prepared to see the level of loan repayments increase. The Committee of Vice-Chancellors and Principals estimates that by the end of the century students will owe as much as £96 a month. Therefore, we are not talking about trivial amounts. Yesterday, the Minister sought to suggest that at present the figures were low, concealing the full position.

The inescapable fact is that once graduates go above the low repayment threshold they must pay back amounts that bear no relation to their earnings. That is why there is no equity in the system. The latest figures show that even on the present minimal borrowings, more than 20,000 borrowers were in default status and more than 2,000 were subject to legal action.

Only 47 per cent. of students took out loans last year, compared with a Government estimate of 80 per cent. when they designed the scheme. In the first year, the take-up was only 28 per cent. The figure therefore has been creeping up only marginally. It is clear that a central plank of the Government's student support policy is just not delivering.

The third flaw in the scheme is that it does nothing to widen access to higher education for all social classes. Increased access depends primarily on increasing the number of places available—the very feature that the Government have frozen. It is clear that relative social class participation rates have not changed significantly for many years. The CBI confirmed that last year.

Finally, the loan scheme is grossly inefficient. It does not generate funds for higher education as the Government intended. Last year, only £19.8 million was repaid. That just about covers the running costs of the Student Loans Company. The administration of the scheme, referred to by my hon. Friend the Member for Cardiff, Central (Mr. Jones), has been appalling. My hon. Friend knows that I will reinforce his argument this evening.

Last year, there was chaos in the processing of loans under a new fast-track application system. Some 35,000 students had still not received their loans by Christmas, of which the company admitted that at least 8,000 cases were its fault. The company was besieged by complaints. It received 11,000 calls each day from anxious students who had been left high and dry. The chairman of the CVCP was moved to white in the strongest terms to the Minister about the deprivation and suffering that that abject failure had caused.

The assessor, a somewhat reclusive figure who is supposed to act as an ombudsman for students, has been paid £34,000 in the past four years, yet he has dealt with only three cases, in two of which he found in favour of the company while the third is still awaiting consideration. One of those was a case brought to my attention of a student who had withdrawn temporarily from a course because he had to undergo two serious operations. Despite being fully informed of the position, the company stepped in and activated a direct debit to withdraw funds from the student's bank account. The assessor found that the company had done nothing wrong. What sort of ombudsman is that?

Meanwhile, the Department for Education has commissioned an investigation into allegations of malpractice and mismanagement at the Student Loans Company. The National Audit Office has also announced its intention to conduct a further investigation. This is a disgrace and it demands a full inquiry. Imagine the uproar if pensioners or the unemployed had been deprived of their livelihoods. Why should students be treated any differently?

The Government claim that student poverty does not exist and that the resources available to students have been maintained in real terms. That simply is not the evidence of the figures or what experience tells us. Students are turning increasingly to part-time work. Some universities are beginning to look for jobs that they can create for students so that students can keep body and soul together. Where students cannot obtain part-time work, they increasingly have to have recourse to the banks and to friends and relatives. Those who are lucky can just about survive. Those who are not so lucky drop out.

Hon. Members have many surveys and the experience of their surgeries to tell them a completely different story from the one given by the Government. The CVCP conducted a survey last autumn which showed a worrying increase in dropout rates of 30 per cent. between 1991–92 and 1992–93 for reasons other than failure on the course. The chief executive of the Higher Education Funding Council for England was reported recently as saying: the system as a whole was under recruited last year, which indicates a fall in numbers in the late years of courses … My guess is that the reasons are financial, with people building up debts, looking around and saying 'I have to do something about this."'

Mrs. Helen Jackson (Sheffield, Hillsborough)

Is ray hon. Friend aware that in my constituency, with a high percentage of students in one part of it, one can see the enormous pressure on mature students in particular to continue their courses? Will my hon. Friend ask the Minister to comment on the difficulties faced by law students from families without substantial financial backing or professional wherewithal who find it impossible to finish their training because they have no financial assistance in the final year of the law degree to enable them to finish their practical work?

Mr. Deputy Speaker (Mr. Geoffrey Lofthouse)

Order. We have only one and a half hours for the debate and many hon. Members wish to speak, so long interventions of that nature do not help.

Mr. Davies

I am grateful to my hon. Friend for identifying a crucial area which should cause concern to which I hope the Minister will respond.

The problem is destined to get worse. I have a letter from the treasurer of Somerville college, Oxford, which says: Dear Parent or Guardian, The College would like to draw to your attention the finances needed for an undergraduate in Oxford … Government assistance, whether in the form of a grant or a loan, no longer provides sufficient funds to support an undergraduate in Oxford. I believe that Somerville was the college attended by the former Prime Minister, Baroness Thatcher. I wonder how her father, Alderman Roberts, would have responded to such a letter.

The brutal facts are that the Government have progressively whittled away the value of the maintenance grant, excluded students from benefit entitlements and taken away the vacation hardship allowance. The total weekly resources available to most students are less than those given to someone on state benefits. To cap it all, students who seek to flee today's appalling increase in prescription charges by applying for free prescriptions on the grounds of low income will find that the student loan is treated as notional income, regardless of whether they have availed themselves of the loan. That effectively means that the vast majority of our students will receive no help at all with those costs. As one of my hon. Friends graphically expressed it earlier this evening, prescription costs are 2,500 per cent. above what they were when the Government first came to power.

Perhaps the most pernicious, short-sighted and indefensible measure that we are debating tonight is the withdrawal of the means-tested older students allowance. It penalises all those who want a second chance at higher education. In a modern economy, people must be given the opportunity and encouragement to undertake learning throughout their lives. Abolishing the older student allowance does precisely the reverse. It has no educational justification whatsoever; it is simply a Treasury-led cut.

Mr. Richard Tracey (Surbiton)

I am grateful to the hon. Gentleman. As he is presumably not going to speak for too much longer, will he now put some figures on student grants? Will he tell the House what he thinks the right level of student grant should be? As my hon. Friend the Member for Leeds, North-West (Dr. Hampson) pointed out, one in three young people become students at our universities and colleges. What should their grants be, and how would a Labour Government pay for them?

Mr. Davies

As I pointed out this evening, the drop-out rates alone show that present resources are insufficient. Of course I am not prepared to give a figure now, but it is manifestly clear that the Government are serving students ill.

If the Government do not believe that the cut will deter mature students' participation in higher education, perhaps the Minister will tell me how he would respond to a letter that I received recently. It said: I have recently been offered a place at University which I was delighted to accept. This follows three years of studying at evening classes to obtain two A-Levels. As I work caring for adults with learning difficulties and have two small children it was not easy. You can imagine how devastated I feel to realise that I cannot, after all my efforts, accept this place due to the removal of the mature students allowance, which was to me worth £1,000 a year". It continues: The ironic thing is that my local college contacted me today to tell me that I had been chosen as one of the nominees for student of the year. How would the Minister respond to that letter? Would he tell its writer to apply for access funds?

The removal of the mature students allowance is a disgrace and the Minister should be ashamed of commending the order which contains it to the House tonight.

Mr. Llew Smith (Blaenau Gwent)

My hon. Friend mentioned that, for mature students, it is their second chance for an education. Does he accept that it is often not their second chance, but their last chance, for an education, and their last chance of escaping poverty in communities such as ours, where a poll on job vacancies one day last May showed that the average hourly rate was just over £3 a hour?

Mr. Davies

I am grateful to my hon. Friend. I am sure that the Minister will have heard his comments and I hope that he responds to the issues this evening.

Student support is failing. Students are in poverty and some get no help at all. We need a comprehensive system of support for lifelong learning, not a shambolic mess of half measures that fails just about everyone who comes near it. The Government should think again. I urge the House to revoke the orders.

8.33 pm

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

Even the best friends of the hon. Member for Oldham, Central and Royton (Mr. Davies) would not regard that performance as a magical speech. The hon. Gentleman missed his vocation as a magician. He sought to distract the House's attention with hair-raising and heart-rending stories of student poverty that had very little reference to the facts.

Sir Harold Walker (Doncaster, Central)

I received an anguished telephone call today from one of my constituents who was induced to undertake a three-year course, the first year of which expires this September, when I understand that student will face a cut of £1,000 in grant and, having been encouraged to take the course, will no longer be able to continue it. That is horrendous and disgraceful. Although £1,000 may be marginal for the Minister, it represents disaster for a student.

Mr. Boswell

I am always interested in interventions from the right hon. Gentleman. I shall investigate the case, but the figures that he has given me suggest that it almost certainly involves a non-mandatory award and may suggest some withdrawal of support by local authorities.

The hon. Member for Oldham, Central and Royton sought to weave a tissue of concern about student poverty. He said that the system was failing, but he did not say a word about the proposals on which he based his principled opposition to the orders. That is perhaps understandable, because the failure rate of Opposition Front Bench spokesmen on higher education is considerable.

In the past, the hon. Member for Birmingham, Perry Barr (Mr. Rooker) suggested that one possible option would be through funds from individuals using and directly benefiting from higher education. He then passed from the scene, but the hon. Member for Oldham, Central and Royton said just after Christmas that he would be prepared to consider a graduate tax. The hon. Member for Sheffield, Brightside (Mr. Blunkett) expressed interest by saying: I am interested in the tax related to income which is progressive and I shall explore that, but we are a long way from taking a decision. We have heard very little about that tonight, for the simple reason that the Opposition do not wish to say too much about their alternative proposals.

Tonight we are faced with a proposition to overturn regulations that will bring considerable benefits to students and that are essential for their welfare. The regulations validate for forecast inflation the main rates of grant and loan for the coming year and the supplementary maintenance allowances for students with additional needs such as disabled students and students with dependants. They are essential if students are to receive these increases, and they follow yearly increases since 1990–91 that have been consistently above the outturn rate of inflation. We did not hear that from the hon. Gentleman, but it is true.

As a result, the support available to students through the total grant and loan package in the current year is more than 5 per cent. higher in real terms than it was in 1990–91.

Dr. Lynne Jones (Birmingham, Selly Oak)

The Opposition accept that there has been an increase in the number of young people going on to higher education. Our concern is that people from modest family backgrounds or with modest means have great difficulty in embarking on a university course. How will the Minister's proposals help those people? We already know that students are having great difficulty. How will the Minister encourage people from poor backgrounds into higher education. Certainly someone from my background would not be able to enter higher education today.

In respect of mature students, I have a letter from the university of Birmingham, which is extremely concerned about the effect of these measures—

Mr. Deputy Speaker

Order. I have already pointed out to the House that long interventions deny those who are waiting the opportunity to speak in the debate. In a short debate of this nature, they are not helpful.

Mr. Boswell

Perhaps I can respond to the hon. Lady by saying that I entirely share her concern for the participation of less-favoured students or students from less-favoured backgrounds. It is a matter of record. The latest student income and expenditure survey, which is carried out independently, shows that the participation of those from relatively disadvantaged groups such as socio-economic class C1 or below is now rising above 50 per cent.

Before being interrupted—I do not propose to give way extensively, because I want to hear the Back-Bench speeches—I was going to refer to the older students' allowance. It is easy for the Opposition to take no notice of financial implications, but funding is always under pressure and we must always weigh our priorities. The withdrawal of the allowance will save £5 million in the coming year, then £10 million and £30 million progressively.

Mr. David Blunkett (Sheffield, Brightside)

It is disgraceful.

Mr. Boswell

The hon. Gentleman says that it is disgraceful. The allowance is means-tested—indeed, it is doubly means-tested. I suppose that this is a characteristic of Islington man, or whoever populates the Opposition Front Bench, which the hon. Gentleman may not have noticed. Unlike any other Government support, the older student's allowance is means-tested: students must have an income of £12,000 a year to qualify. It is not related to need; it is intended to cushion people experiencing a decline from a relatively more favourable salary.

As for the needs side, there is provision in the access funds, as well as the overall student support package. We do not feel, however, that giving an exceptional allowance to those on the highest incomes can any longer be justified.

Mr. Andrew Welsh (Angus, East)

Will the Minister give way?

Mr. Boswell

Almost for the last time.

Mr. Welsh

May I ask a brief question about the mature student's allowance? To qualify for the allowance next year, a student must be in receipt of it this year. What will happen to those who were receiving the allowance but left their studies for a year because of illness or other reasons? Will they still qualify?

Mr. Boswell

Yes, they will. We protect their position, as we protect the position of those currently on courses. I am talking about new students.

The regulations set out new loan arrangements for students studying in London who choose to live away from the parental home, but who—in the view of the local education authority—could conveniently live with their parents while studying. That special loan rate has been set above the parental home rate of loan, so students will still receive a cash increase compared with what they received this year.

I have already mentioned the uprating of student support over the past five years. That real-terms uprating followed a 25 per cent. cash increase in the main rates of student support when loans were introduced in 1990, which was more than adequate to compensate most students for the withdrawal of benefit in the same year. I should remind the House that particularly vulnerable students, such as single parents, have a continuing opportunity to receive benefit; but to restore students' benefits wholesale—housing benefit, for instance—would encourage the dependence on the welfare system that we have properly sought to eliminate.

Mr. Blunkett

Will the Minister answer a simple question? If I cut his salary by 30 per cent. and offered him a bank loan instead, would he consider himself to be better off?

Mr. Boswell

The hon. Gentleman may have overlooked the fact that the total cash package available to students includes the 1990 uplift of 25 per cent. He needs to draw a distinction, as I thought his party was seeking to in other contexts, between those who require social support because they are particularly vulnerable—I share the hon. Gentleman's concern for such groups—and those who are investing in their future through the medium of higher education, and whose future earnings are likely to be substantially greater than the earnings of those who are financing their time at university.

There are extra allowances for those who find it hard to stay at university, including disabled students, students with dependants and students who study for longer than the normal academic year. I take a particular personal interest in the fact that the access funds for higher education have been substantially increased for the third successive year, by a further £1 million to £22 million.

Dr. Hampson

I have always supported the loans scheme, but we must accept that the vice-chancellors in particular argue that there are problems with the current position. One of the central issues has been the invariable repayment system—the mortgage-type system. Is my hon. Friend investigating that? Even if we keep the present structure, could it be related to income?

Mr. Boswell

I am grateful to my hon. Friend for his intervention, because it enables me to pick up a point that was made earlier. We continue to keep repayments in the existing structure under review; if the figures escalate from the £14 that I mentioned to the House yesterday, we shall be prepared to consider whether and when it would be appropriate to vary the repayment periods.

As for moving to a different structure, my hon. Friend will know that we are carrying out a review of higher education. All matters can be considered, but we have no immediate plans to act because we believe that the scheme is well conceived and is broadly meeting its objectives.

The hon. Member for Oldham, Central and Royton was not ready to concede that there are more students in higher education than ever before. Nearly one in three of our young people now enter higher education, compared with one in eight when the last Labour Government were in office. Student numbers will increase by some 22,000 in the year to come, and will continue at a record level in the planning period through to 1997–98.

Our policies have helped to ensure, and will continue to ensure, that higher education is no longer merely the privilege of the wealthy; I share the concern of the hon. Member for Birmingham, Selly Oak (Dr. Jones) about that. That expansion would not have occurred if we not been prepared to grasp the nettle, in the teeth of opposition from the Labour party, and find a means of widening opportunities.

Mr. Tracey

Will my hon. Friend give way?

Mr. Boswell

For the last time.

Mr. Tracey

Will my hon. Friend say a word or two about what he is doing to shake up the Student Loans Company? Although in my experience students are rather in favour of loans—they accept that they will have very good opportunities—

Mr. Deputy Speaker

Order. That point does not arise from the regulations.

Mr. Boswell

I may deal with my hon. Friend's point in a moment.

Mr. Deputy Speaker

Order. I hope that the Minister will not do so; I have already ruled that the point does not arise from the regulations.

Mr. Boswell

I am grateful for your ruling, Mr. Deputy Speaker.

I need to make the point—because the hon. Member for Oldham, Central and Royton did not—that total available public funding for English universities and colleges will increase by some 3 per cent. between the current year and next year, to a record £4.5 billion. That is the system that the hon. Gentleman considers to be failing, or to be on its last legs. Student support through grants and loans will amount to a further £1.7 billion, producing an overall public total of £6.2 billion. In a difficult public expenditure climate, that is a remarkably good show: it will ensure that the participation rate of young and older people is maintained within the target, which is already over 30 per cent.

Respecting the point that you made about the orders, Mr. Deputy Speaker, I shall now turn to the student loans to which one of them relates. I shall deal with both their quantity and the delivery of the system. The Student Loans Company certainly experienced difficulties last term; I acknowledge immediately that those difficulties caused real problems for students, and were not acceptable. They arose because of a new application process that was intended to speed up payments for repeat borrowers. The process did not work as well as it should have; nevertheless, it is worth pointing out that some 336,000 loans were paid by the company this year, compared with 246,000 last year. The system is not failing but extending itself, and it is increasingly accepted by students.

The company has set up an urgent examination of the administrative difficulties, and—together with, at my suggestion, the Committee of Vice-Chancellors and Principals and the National Union of Students—is considering what action is necessary to avoid any recurrence. My right hon. Friend the Secretary of State and I have taken a close interest: we have asked for a full report from the board, and we are anxious for proper decisions to be taken to ensure that the problems do not occur again.

I think, however, that it is wrong for the Opposition to confuse their uneasiness and equivocation about the case for changes to the loan system with the controversy that they tend to drag in—the oldest possible red herring—about the administration or, in a sense, the propriety of conduct of the Student Loans Company. There have been problems this year, which I have acknowledged, but we continue to believe that the system is fundamentally well designed.

Indeed, the point made by the hon. Member for Oldham, Central and Royton about the relatively low load on the assessor makes the point that the same demand, concern and failure did not exist in earlier years. The assessor will have to consider the points that have been made to him, although I hope again that the House will recognise that the first port of call for complaint is the company. That is as it should be.

We hear calls for some more radical changes. It is easy, for example, to call for an income contingent repayment scheme. The existing scheme is already income contingent. Graduates need pay nothing until they are earning nearly £14,600 per annum. Figures from the incomes data service were quoted in the Financial Times today. They showed that the average graduate starting salary was £13,800 per annum, which is below that other figure. It is therefore not surprising that, as of 1 February, 45 per cent. of borrowers have taken advantage of the concession. They have deferred repayment of their loans. That is exactly as intended.

The hon. Member for Brightside confused formal defaults with those of people who are not yet in that position. The figures are lower than he anticipated. The number of people who are not paying is clearly a small proportion of the total number of loans extended.

It is easy to call for cure-all loans through a tax on the national insurance system. They would be complicated to administer and would have to be paid for. The hon. Member for Brightside is beginning to trail the idea of slinging graduate taxes around the necks of students indefinitely. On graduation, many of them will take out mortgages for house purchase at substantially higher rates than the projected or likely rates of student loans.

Having said that, we are far from complacent about higher education. We care too much about it for that and it is too important to this country for that. Last autumn, my right hon. Friend the Secretary of State for Education announced a wide-ranging review in consultation with all the people who have an interest. We are considering the purpose of higher education and its future size and shape. In the light of views submitted to us on those fundamental issues, we shall move on to review funding and student support arrangements to ensure that they continue to be appropriate at the turn of the century and beyond.

The guiding principle behind student loans—that students should make some financial contribution to the cost of their attendance in higher education—is finding increasing favour with the people involved. They include the Committee of Vice-Chancellors and Principals, the Royal Society, the Borrie Commission on Social Justice, the National Commission on Education, and even, fleetingly, the Labour party. The number of students applying for loans continues to rise. The hon. Member for Brightside seemed to regard the increase from 28 per cent. to 47 per cent. as a marginal increase. I call it not far short of a doubling. The signs for this coming year are that participation will reach close to 60 per cent. The loans are a major part of the scene and students generally accept the principle of loans and their part in investing in their future.

The system offers a fair deal for parents, for taxpayers and, because repayment terms are equitable, for students. I warmly commend the regulations to the House.

Mr. Deputy Speaker

In the 50 minutes available for the rest of the debate, no fewer than eight hon. Members hope to catch my eye. I hope that hon. Members who are fortunate to be called early will bear that in mind.

8.53 pm

Mr. Mike Watson (Glasgow, Central)

I regret that we are having this debate and that it is necessary. I accept your stricture, Mr. Deputy Speaker, on the amount of time available. I shall address my remarks to the mandatory awards regulations.

As I represent a constituency that contains two universities and six colleges of further and higher education, I am only too well aware of the effects of student loans. I served on the Committee that considered student loans. Many of the things that my colleagues and I argued against in relation to those regulations have come to pass.

A constant stream of students complain to me about one aspect or another. They complain that they have great difficulty in pursuing their studies, which we never had to face. I suspect that the Minister, when he was a student at New college, Oxford, never had to contribute towards his education. I see no difference between then and now. We are of a different generation. The Government expect today's students to make a financial contribution when few of our generation faced that necessity. We were able to study at a time and within an environment that were much more favourable than today's. Hon. Members should remember that when they consider this matter.

The shameful decision to abolish the older students' allowance is perhaps the unkindest cut of all. It hits students who have missed out on higher education the first time around and who are hoping to get a second bite at the cherry. They may have missed out through no fault of their own. Many will now have the door slammed in their face again. The decision is particularly perverse because the number of mature students receiving the allowance has increased dramatically in the past five years.

Figures supplied to me by Ministers in the Scottish Office, Northern Ireland Office and the Department for Education show that dramatic increase. There are some 7,200 such students in Scotland, 500 in Northern Ireland, 32,500 in England and Wales. In Scotland, the figure has increased by 300 per cent.; in England and Wales, it has increased by 250 per cent. in the past five years. Clearly, that shows that demand exists for the allowance, contrary to what the Minister said. He says that students claim for it, but that it is not necessary. Of course it is necessary. It is a means of entering higher education for people who have never had the opportunity to do so.

Dr. Robert Spink (Castle Point)

Will the hon. Gentleman give way?

Mr. Watson

I am sorry, but I cannot give way because of the restriction on time.

The total cost of the mature students' allowance, aside from the administrative costs, which Ministers have told me they cannot calculate, is £34 million to £35 million a year. That will be the saving when it is abolished. We should put that in the context of the total education budget. The sum barely ripples the water. Clearly, the reason for doing away with the older student's allowance is to save money.

All the evidence we can assemble shows that mature students in higher education have greater financial difficulty and suffer much heavier debt than their younger counterparts. We have recognised for some time that students over the age of 26, particularly those coming from employment, have difficulty in making the transition from a wage to a student income. In many cases, mature students are giving up a job in the hope of ultimately bettering themselves and their employment opportunities through achieving a degree.

Since 1989, the number of mature students has increased. They now form 17 per cent. of students in higher education. I can hazard only a guess as to what that figure will be five years from now. I suspect that it will dramatically decrease. The abolition of the older student's allowance is a regressive step that can be only a disincentive to people hoping to enter higher education.

An even greater injustice is being done to people hoping to enter education this year through the older students' allowance. They applied in good faith before December last year and in the belief that they would receive the allowance. The Government have turned around to them and said, "We gave you that guarantee, but we changed the rules of the game after the game was in progress." The applications are in and a number of potential students are caught in that trap. Whatever the merits, and I cannot see any, of the proposal, it is entirely unjust that people who applied in good faith will not receive the allowance.

Another aspect of concern involves home students aged over 50. Such students are not even eligible for a student loan. Anyone entering higher education at the age of 50 will be especially badly affected. I hope that, if he does reply, the Minister will give some consideration to the people caught in that trap.

I have tried to get some rationale for the cut—I got none from the Minister in his speech. The proposal is clearly an attempt to save money, albeit a relatively small amount. I managed to find two answers that he gave in December last year to questions on the savings that would arise. In one, he said that this was an additional allowance which was not targeted at any specific maintenance requirement that a student might have. As I have tried to demonstrate, that is not true. First, the older student's allowance is means-tested; and, secondly, older students tend to have extra commitments such as families and mortgages, which younger students do not have. The National Union of Students survey on value for money found that the total average debt for students aged over 26 was £6,105. That compares with an average total debt of about £2,500 for those in the 17 to 21 age bracket.

I throw back at the Minister the fact that, when we started studying, our generation did not leave university with a debt around our necks and the burden of having to pay that off. The main problem for us was finding a job. Of course, that problem still exists, but hanging over the heads of graduates now is the fact that if they get a job that earns them more than £14,000 a year—not a massive salary these days—they have to start paying back the debt. We must appreciate that students over the age of 26 have additional burdens over and above the loans which, if they want to go into higher education, they will be forced to take.

The Minister also said in that parliamentary answer that, because of the continuing pressures on public spending, extra support could not be justified. He is saying that £35 million throughout the United Kingdom cannot be justified. The hon. Member for Castle Point (Dr. Spink) may grin and think this is funny, but I wonder how many of his constituents will ask him how he voted when the mandatory regulations were discussed on 22 February. I hope that he will be able to say to them, "Yes, I voted to abolish them because I think that that is in your best interests."

The regulations cannot possibly be in his constituents' best interests. The implications are clearly more important for the public sector borrowing requirement than for the future of education, yet they involve minimal savings.

Dr. Spink

rose—

Mr. Watson

I cannot give way because I do not have time. No doubt the hon. Gentleman will seek to catch your eye, Mr. Deputy Speaker.

The Minister has already spoken in rather scathing terms about what he has described as hard luck stories about students who will be denied a place in higher education. He may not thank me for doing this, but I intend to refer to the case of one of my constituents, which made my blood boil when it came to my attention.

The constituent is called Jane Pepper and she lives in the Langside area of my constituency. She is 29 years old and has worked in the civil service—the Department of Social Security—since 1986. She decided that she wanted to broaden her job prospects and opportunities, so this year she enrolled at the Glasgow college of food technology to do an access course. That course has no other purpose than to help people gain access to university. It has no value on its own. It does not lead on to another degree.

While Jane Pepper is doing that course, she is receiving assistance through maintenance, course expenses and travelling expenses of about £3,000. When she applied for a university place—she has been offered places at three universities for the academic year starting October—under the old student's allowance she was entitled to about the same amount—just over £3,000. It was on that basis that she applied for a university place.

As I said, the rules have been changed after the game has started. I want to refer to something, although it may not be within the Minister's direct responsibility. The further and higher education charter for Scotland, which was issued in 1993, states that, before applying, a person would want to assess the costs of embarking on a course and how much financial support he or she might get.

The Government trumpet their citizens charters. They tell us that it is all part of open government and enabling people to question the way that the Government govern. Jane Pepper asked those questions, was given answers, applied for a course, was accepted and now has been told, "We are scrubbing what we said; forget it and go back to square one." She cannot go back to square one because she has given up her job. She is left in no-man's land, where she will be considerably worse off. She believes that, over a three or four-year course, she will be about £4,000 a year worse off. I challenge the Minister to tell me how she is supposed to make that up other than through a loan, which will be an albatross around her neck when she finishes her course.

I want to conclude my speech with a quote from Jane Pepper's response to the position in which she now finds herself. It is quite instructive and should be quoted in the House. She said: I am now faced with the prospect of a grant of £1975.00 per academic year which I simply cannot manage on financially. I am very angry and bitter, and feel betrayed by a government whom I have worked hard for"— there is an irony there— for many years. If I had known this before I left my post in the civil service, obviously it would have had a bearing on my decision to leave my job. It seems likely that if these grant cuts are imposed I will be unable to pursue my degree … What the Government will then be faced with is yet another individual claiming social security"— that is another irony— adding to the ever lengthening list of government unemployment statistics. Consequently, the government, by their actions, are forcing individuals in my situation to become unemployed which seems ironic. That is the appalling position in which Jane Pepper and, I suspect, thousands of other people throughout the country find themselves, with the rules of the game being changed after they began to play it. It is unfair and unjust and the Government must reverse their decision.

I end with what is, perhaps, a sting in the tail for my own Front-Bench colleagues. The Labour party is putting up a spirited campaign on the regulations. I hope that my hon. Friends the Members for Oldham, Central and Royton (Mr. Davies) and for Sheffield, Brightside (Mr. Blunkett) will give a commitment that a future Labour Government will reinstate the money that is being lost. Mature students are entitled to it. They missed the boat first time around and they must be given a second chance. If the allowance is not reinstated, they may be denied that opportunity. This Government are at fault; it must be for a Labour Government to put matters right.

9.5 pm

Mrs. Jacqui Lait (Hastings and Rye)

It is ironic that, yet again, we are seeing the familiar shape of debate, where Labour Back Benchers are demanding more public expenditure and the Labour Front Bench is desperately ducking, diving and weaving to avoid giving any commitment. Labour Members talk about £35 million here and £35 million there as though that is the sort of money that we put in a charity box. The money we put in a charity box adds up. Every single Labour Back Bencher is trying to persuade those on the Front Bench to commit themselves to further public expenditure.

As my hon. Friend the Minister said, the various options put forward by the Labour Front-Bench team are contradictory, to say the least. There was the suggestion of a graduate tax. What happens to the poor graduate? Is it every high earner who will pay graduate tax? For how long will a graduate pay tax? [HON. MEMBERS: "Life."] Yes, for life. Will it be on top of the normal tax that they will be paying? The hon. Member for Sheffield, Brightside (Mr. Blunkett) said, "That is a good idea, let's investigate it". Talk about putting off decisions—

Mr. Deputy Speaker

Order. I am waiting for the hon. Lady to refer to the regulations that we are supposed to be debating. So far, she has not done so.

Mrs. Lait

I shall come to the regulations immediately, Mr. Deputy Speaker. I was so provoked that I felt that I had to point out that a great deal of money is involved in the orders.

Those of us who remember our student days and how we were supported have a somewhat rosy view. I was one who benefited from the Robbins expansion, when the new technological universities were established—one of which was in Glasgow. At that time, a number of hon. Members were living on student grants. Indeed, many of us were living on very little. It was almost part of the flavour of being a student. Today's students are pleading poverty when, in fact, they are much better supported than we were in the 1960s. I remember that I lived on £2 a week. If that were uprated in line with inflation, the equivalent now would he £25 a week. There is not a great deal to choose between what I lived on as a student and what students have to live on today. I managed it, I am here and so will they be.

Students are broadly better off with the student loans system than they were. I for one would regard it as a total income package, not as an option for a grant or a loan. One takes the whole package and lives within that package.

One need not pay back the loan until one has an income of more than £14,500, which is not what one would expect on leaving university, and the Student Loans Company's terms are that one pays interest at the rate of inflation. If I, or any other hon. Member, were offered interest rates at the rate of inflation, we would all jump at the offer. That system is especially generous.

Mr. Gerry Steinberg (City of Durham)

How big an overdraft did the hon. Lady have when she came out of university?

Mrs. Lait

I had no overdraft, but my husband owed an overdraft of £150 to the Royal Bank of Scotland, which he was paying back then at genuine rates of interest, which were considerable.

Mr. Steinberg

The hon. Lady had no overdraft.

Mrs. Lait

There are plenty who did, and they have managed very well on it. That is part of growing up, part of learning to manage money, and it does no one any harm.

Dr. Spink

If a student is not prepared to invest in his own future, why should the pensioner living in my constituency, who pays a few pounds a week tax on her pension, be prepared to invest in the student's future?

Mrs. Lait

I could not agree more with my hon. Friend, and I am grateful to him for mentioning that.

There is no evidence that students are being deterred by the loans system. There may he an element of becoming used to the loans system, but there is no evidence of deterrence. An increasing number of students from social groups C1, C2, D and E are entering the system, which can only benefit our country in the long run.

I should be grateful if the Minister would tackle an argument concerning discretionary grants. Those grants from local education authorities, especially for the performing arts, have decreased in the past five years. The higher education awards are now about 50 per cent. of those that were made in 1991. The director of the London Contemporary Dance school is a constituent of mine, and he brought that problem to my attention. I should be grateful if the Minister would consider some way whereby the discretionary element could be amended.

One of the great successes of the past 15 years has been the enormous expansion in cultural activity, which is profitable and valuable to our society. Job opportunities therefore exist for an increasing number of people involved in the performing arts. It would appear sensible for our grant and loans system to adapt to that demand in the marketplace and to allow people who wish to take up awards in places such as the London Contemporary Dance school to have access to grants on the same basis as, for example, those who go to conservatoires.

Mr. Peter Bottomley (Eltham)

I wish to reinforce what my hon. Friend says. Under paragraph 10(1)(e)(ii) of the Education (Mandatory Awards) Regulations 1994, the Secretary of State has the power to designate courses. If my right hon. Friend the Member for Old Bexley and Sidcup (Sir E. Heath) could include music when he was Prime Minister, should we not recognise both the dramatic arts and dance, as my hon. Friend says, and would it not be about time to give at least a limited number of such places, rather than giving so many places at universities, where people can do drama in their spare time rather than doing it properly?

Mrs. Lait

My hon. Friend reinforces my argument, and I should be grateful if my hon. Friend the Minister would peruse the report that I understand my right hon. Friend the Secretary of State has received from the Arts Council for England, to reach some decision to help those schools which are providing high-class education in the performing arts, for which there is growing demand.

9.12 pm

Mr. Don Foster (Bath)

The Minister was obviously not impressed by the speech of the hon. Member for Oldham, Central and Royton (Mr. Davies), but the Minister can at least claim credit for managing to produce a gasp of amazement from his audience during his speech. He certainly amazed many of us when he told us that we were here debating opposition—to paraphrase his words—to measures that will be of great benefit to students.

In reality, we are discussing two orders that continue the breaking of a clear promise given by Conservative Governments. All hon. Members present know and recall that the White Paper that led to the setting up of the student loans system said clearly that the maximum grant would be maintained at the 1990–91 level. In 1990, that was reaffirmed by the Education Minister of the day, Baroness Blatch.

The orders that we are debating are obviously moving in the direction that the Government announced last year, whereby they are breaking that promise, because the level of grants and loans will be broadly balanced by 1996, which means a decrease in grant of 27 per cent. and an increase in loan of 120 per cent.

It is important that the impact of these measures is considered in the context of what is happening in higher education now. The Minister is right to talk about an increase in student numbers in higher education. The former Secretary of State, the right hon. Member for Oxford, West and Abingdon (Mr. Patten) used to boast that the increase in the number of students was the equivalent of 12 new universities. However, both the right hon. Gentleman and the Minister have failed to admit that they have not provided the resources that would have been necessary for the creation of 12 new universities.

I am sure that the Minister will not disagree with the figures that show that, in the past four years, public funding has decreased by 26 per cent. per student and, as the Minister said, student numbers have increased by 44 per cent. It is no wonder that there is a worsening of the staff-student ratio in higher education, that students are facing more and more problems when they try to find books in libraries, that there are overcrowded lecture theatres and that there is a growing backlog of repairs and maintenance for university and higher education buildings.

While universities have had to cope with that, they have also had to cope with the problems created by the equivalent of these orders last year. They will now have to face the problems that will be created this year. More and more students will face increasing hardship and difficulty as they are unable to find the means to support themselves adequately.

The Minister constantly fails to acknowledge that, even if we add together the maximum amount of grant and the maximum amount of loan possible under these orders, the combined amount still means that the vast majority of students will have an income that is less than they would have acquired had they been registered as unemployed. They are about £10 a week worse off.

Another way of putting it is that, under these orders, students who take out the maximum grant and get the maximum loan will have about £50 to £20 left as disposable income to pay for food, heating, travel, books and sometimes even the council tax. It is no wonder that the Committee of Vice-Chancellors and Principals—it is fairly independent in these matters—has estimated that the average annual shortfall of a student's income is well over £1,000.

The growing problem of student poverty is set to rise as a result of these orders, which fail to recognise some of the greater than inflationary increases that students will have to face. That includes significantly rising accommodation costs, the increased cost of domestic fuel because of—

Dr. Spink

Will the hon. Gentleman give way?

Mr. Foster

I am happy to give way if the hon. Member for Castle Point (Dr. Spink) wants to make a serious point so that students can learn whether he supports measures that, in many cases, will leave them in poverty. The hon. Gentleman may care to say whether he believes that the orders should be altered to put increased money into the pockets of the vast majority of students who have learnt today that they face significantly increased costs for their prescriptions—well above the rate of inflation—because of the disgraceful way in which the Government have introduced prescription increases.

The orders and the figures contained within them continue to break the Government's promise. They will continue to ensure that many students will have considerable difficulties. All the surveys that have been undertaken now show that a growing percentage of students are contemplating having to give up their university course because of financial hardship. Last weekend, I spoke to students at St. Andrews, where a survey showed that 15 per cent. are contemplating giving up. A National Westminster bank survey showed that 21 per cent. of students are considering dropping out.

As has been said by many other hon. Members, the 5,400 full-time students over the age of 50 will be badly hit yet again. Last year, in a similar debate, I said that those people could not apply for loans and therefore suffered considerable reductions in their income. That is the case again. Last year, the hon. Member for Lancaster (Dame E. Kellett-Bowman) intervened on my speech and berated me. She said that what I was saying was putting off older students because I had failed to mention the older students' allowance. I shall certainly have to fail to mention it this year because, of course, the Government have abolished it. I wonder what the hon. Member for Lancaster feels about that.

Hon. Members have touched on another problem that is important to mention again. More and more students, because of hardship, are having to take jobs during term-time as well as during vacations—I have no real objection to that. That is obviously undermining the quality of their work and affecting the quality of our higher education. Many surveys demonstrate that only too clearly.

I also agree with the point made by the hon. Member for Oldham, Central and Royton (Mr. Davies) that it is a great pity that the regulations do not extend provision to part-time students. I also agree with his noble Friend Lord Morris of Castle Morris in another place, who said in a debate on a similar issue last month: The present system of financial support for students is chaotic, inequitable and inefficient."—[Official Report, House of Lords, 30 January 1995; Vol. 560, c. 1313.] Unfortunately, it was a great pity that an opportunity to provide assistance for students by supporting a Liberal Democrat initiative to introduce the possibility of students receiving benefits during the long vacation in that debate was not supported by Labour peers. It is hardly surprising, therefore, that we see articles such as that in The Times Educational Supplement.

Dame Elaine Kellett-Bowman (Lancaster)

rose—

Mr. Foster

As I referred to her, I am happy to give way to the hon. Lady.

Dame Elaine Kellett-Bowman

Would the hon. Gentleman care to say how much the various things that he and his colleagues suggest would cost?

Mr. Foster

rose—

Dame Elaine Kellett-Bowman

Hang on a minute. He may have forgotten that, when he had the great honour of going to the Royal Lancaster grammar school, he was described as being muddle-headed and unable clearly to formulate his ideas. It seems that he has not improved as his tutors thought he could.

Mr. Foster

I am grateful to the hon. Lady for reminding me of that report. Indeed, I shared it with the hon. Lady at the time. Nevertheless, she is right to question how much such initiatives would cost. The Minister has said how much the reinstatement of the older students allowance would cost. That stands on the record and my party is committed to that reinstatement. My party has made an attempt to estimate the cost of the introduction of benefit support during the long vacation—about £250 million if there was a maximum take-up.

The hon. Member for Lancaster is, however, unaware that her Government are unable to provide such a figure. When the Government removed the entitlement of young people to income support and housing benefit and were then asked how much they had saved, they were unable to tell us. Nor, subsequently, have they been able to say how much reinstatement would cost. So I hope that the hon. Lady will not be critical of my party's attempts at least to come up with some figure.

Mrs. Lait

Will the hon. Gentleman give way?

Mr. Foster

No, because many hon. Members want to speak.

It is important that we place on record the acknowledgement of the Minister that there have been problems with the Student Loans Company. The way in which the company has been administering student loans has certainly not been right. Many students have got into considerable difficulty because of that failure.

Mr. Boswell

Just for clarification, does the hon. Gentleman accept that I said that I was not satisfied with the administration of the student loans scheme in respect of the autumn term? That remains my view and our position.

Mr. Foster

I am grateful to the Minister for making that clear. Of course he is well aware that, by December, 35,000 students had not received their grant cheques, which caused appalling difficulties. It is not surprising that the Minister acknowledges that that is that totally unacceptable.

It is crucial that we place firmly and clearly on the record that the amount of money available to students while studying is currently inadequate. It is hardly surprising that there is increasing hardship among our student population, that they are therefore taking on jobs in term-time, which does not help their degrees one iota and that an increasing number are dropping out or considering it. Those and other problems in higher education will not be solved by the sort of measures being introduced by the Government tonight. Therefore, I hope that hon. Members will vote against the orders.

9.24 pm

Mr. Peter Luff (Worcester)

I benefited from a full grant while at university and I do not relish supporting the introduction of loans, but I can genuinely see no alternative.

There has been a dramatic increase in participation rates in higher education, which has been grudgingly acknowledged by the Labour party. The rates have risen to one in eight from one in three, and funding that increase is an enormous challenge for any Government. Maintaining the old grant system would have represented a massive call on the taxpayer and it was right that the Government should seek to strike a fair balance between the interests of taxpayers and the beneficiaries of the education.

If there were any evidence that students were being deterred from entering higher education, I would be worried. But the evidence is not there. In the two years before the introduction of the loans system, the number of students entering our institutions of higher education rose by 10 per cent. per annum. In the two years immediately after the introduction of the loans system, the rate of increase was 20 per cent. per annum—hardly evidence of the scheme being a disincentive.

If there were evidence that the orders had any disadvantageous effect on the lower socio-economic groups and their participation in higher education, I would be concerned. The House would do well to remember that in Germany, where the loan component of grants is higher than here, the proportion of students from lower socio-economic groups is three times higher than in the United Kingdom. What is more, contrary to what we heard from the Labour party's Front-Bench team, the position is improving. More students from less well-off families are entering higher education in this country.

Among first-year students in 1992–93, the proportion of students from A and B social grades fell from about 55 per cent. to 49 per cent., with a similar increase in the proportion of students from C1, C2, D and E backgrounds. That good news contradicts the bad news that we heard from the Labour Front Bench.

Our record internationally is good. The report of the Education Information Network of the European Community, known as Eurydice, published 18 months ago, said that there was a trend towards extending the system of loans in a number of member states. It said: the percentage of students assisted in Luxembourg, the 'new' German Lander (former East Germany) and the United Kingdom is high (between 76 and 90 per cent.). The proportions of students receiving support in Belgium … Spain, France, the 'old Länder' of the Federal Republic of Germany and Ireland are smaller (between 18 and 34 per cent.). The proportions of financially assisted students are smallest in Greece, Italy and Portugal (between 2.5 and 10–15 per cent.). I would have more sympathy with the Labour party if the loans imposed on students had punitive rates of interest or terms of repayment, but they are the most generous loans that I have heard of in the financial system.

We cannot underestimate the rate of expansion of the higher education system. In 1993–94, there were 100,000 extra students—the equivalent of 12 new universities. It is only fair to ask students to join the taxpayer in funding that system as they will reap most benefit from it. The student will be the highest gainer.

I would have more respect for Labour Members' opposition to the order if they had a realistic alternative, but they do not. They notably ducked the point made by my hon. Friend the Member for Surbiton (Mr. Tracey) about how much money they would dedicate to their grand, brave new vision of student support. They are muddled on the possibility of a graduate tax on students.

According to The Times Higher Education Supplement of 6 January, the office of the hon. Member for Sheffield, Brightside (Mr. Blunkett) recently confirmed that a tax to be imposed on students throughout their working lives was being considered. But the hon. Member for Oldham, Central and Royton (Mr. Davies) suggested this was a 'narrow and crude concept' which was unlikely to carry much support within the party. The Times Higher Education Supplement stated that the hon. Member for Birmingham, Perry Barr (Mr. Rooker) described Mr. Blunkett's remarks on graduate tax as 'a careless use of language. It was pure ignorance. It was quite clear he said it without thinking the whole thing through."' I say, amen to that.

The chairman of Conservative Students, Andrew Reid, said in a letter in the same edition of The Times Higher Education Supplement: What is typical, though, of the Labour party is that its first instinct is to tax the successful rather than to contemplate less punitive forms of financing our students at university. That is what the measures represent.

We have heard a lot about vacation jobs and students taking jobs in term time. I wonder what Labour's plans for a minimum wage would do for the availability of work for students, during vacations or at any other time.

I would like to raise a question with the Minister concerning section 10(e)(ii) of the mandatory awards order which gives the Secretary of State the power to designate new courses for which students will be eligible for mandatory grants. It provides statutory footing to address the problem of discretionary grants for students of dance and drama which obviously concerns many hon. Members in the House.

Section 10 lists a bewildering array of subjects and courses which attract mandatory awards. Many of those subjects will benefit the country through the graduates who practice them. But dance and drama are excluded; they are left to the whim of local education authorities.

Students of music receive mandatory awards, but students of dance and drama do not. A sociologist will receive a grant, but a dancer will not; a medieval historian will receive a grant, but an actor will not. Why is that so? The arts, including dance and drama, provide jobs and tourism revenue—which is more than can be said for many of the academic disciplines which attract automatic mandatory grants.

Our dance and drama schools are among the finest-if they are not the finest—in the world, but student applications to them are drying up at an alarming rate because of the lack of eligibility for mandatory awards. The order gives the Secretary of State the power to correct that state of affairs. It would be economic and cultural folly to let those disciplines die. I am encouraged by the new priority that Ministers seem to be attaching to that area and I hope that they will use the power conferred by the order to correct the position in time for the start of the new academic year.

9.30 pm

Mr. Gerry Steinberg (City of Durham)

The Education (Student Loans) Regulations 1994 constitutes a further attack on students. The student grant has been reduced by 8 per cent. on top of the 10 per cent. reduction last year. As we have already heard, the mature student allowance will be phased out from 1995–96, which means that those students who are 29 years of age at the beginning of their courses will lose about £1,000 in grant. Those students tend to have families to support and other financial commitments. Tonight's order can have only one result: less people will enter higher education in the future.

Student loans are the most unfair way of funding students. The system is morally wrong. Those students who have no real need of a loan can get one at very low rates of interest, but those who need financial help desperately and who have already accumulated large debts often find themselves in even more debt. The Government have destroyed the grants system which, although not perfect, was much fairer than the present system. They deliberately reduced the level of grants and then introduced student loans.

The Government's record in the area of student financial support is absolutely deplorable. Since 1979 they have systematically eroded student support. The level of student support has never been generous, but at least before 1979 students could enter higher education without the threat of amassing huge debts and without constant financial worries. Students also had welfare benefits to fall back on, but the Government have destroyed that position and they continue to erode it further in the orders that are before us tonight.

Through a series of measures, the Government have reduced students in the main to living below the poverty level. Student grants were systematically reduced in value by more than 30 per cent. and income support, unemployment benefit and housing benefit were withdrawn. In 1990–91 loans were introduced to substitute the amount of money lost by students through the reduction in grants.

The scheme was so bad—I was serving on the Committee which examined student loans at the time—that the major banks refused to have anything to do with it; they turned it down. As student grants have been reduced, student loans have increased and that trend continues in these orders. The huge reduction in the grant of 10 per cent. in 1994 and more than 8 per cent. this year is an absolute outrage. The full grant is virtually the same as it was 10 years ago and, therefore, in real terms it is worth much less.

It is no wonder that students have acquired large overdrafts with their banks and are also in debt to the Student Loans Company. Before the general election in 1992, the Education Select Committee investigated student hardship. As far as I was concerned, it was quite clear from the evidence that we received that students were finding it increasingly difficult to exist without getting into considerable debt. However, as that evidence was said to be anecdotal, it was ignored by Conservative Committee members. Consequently, the report fizzled out as the general election approached.

But it was clear to those who were prepared to listen to the representations from students, student bodies and university staff—from lecturers to vice-chancellors—that tremendous hardship prevailed among many students. It was also clear that the accumulation of considerable debt was escalating, and that huge numbers of students were unable to meet the costs of accommodation, food, books, travel and so on out of the financial support which they were receiving. They just did not have enough money to meet their basic needs.

We discovered that students were not only working in their holidays, if they could find work—I approve of that—but were having to work during term time to exist, and that is frankly scandalous. Under the orders, a student under 50 will receive a grant of £2,040 and a loan of £1,150, for a total of £3,190. That will provide a weekly income of £61.35. The weekly income of a person under 25 on benefit includes income support of £36.15 and housing benefit of £35, making a total of £71.15 per week. A young person under 25 is £9.80 better off on the dole than in higher education, while a student over 25 is £19.35 worse off than being on the dole.

Huge numbers of students are living below poverty levels. While there is no doubt that many students manage very well because of their parents' contributions, there are many students who have substantial debts and who experience real hardship, particularly older students who will be devastated by the orders. A system which places thousands of young people in severe debt and hardship is fundamentally wrong, and is a deterrent to poorer would-be students.

The Student Loans Company is dreadfully inefficient, and that also has a bearing on student hardship. Students get further into debt with their banks as they wait for their loans to be processed. The Minister recently told me in a letter that the present system of student loans eased the burden on the taxpayer. Perhaps he could explain how that works when, in 1993–94, the Government were owed £752 million in unpaid loans and had in fact received only £20 million in repayments. In Committee, I remember clearly that the then Minister told us that the scheme would not break even until after the year 2000. At this rate of non-payment, the scheme will never break even. So much for easing the burden on the taxpayer.

The Minister told me recently that the student loans system had reduced in real terms the contribution expected from parents. That may be all well and good in theory, but I assure him from personal experience that it works in the opposite direction. If more students are underfunded and accumulate more debt, more will depend on parental help.

The Minister claimed that students will have a good deal in 1995–96 because their total support will rise by 2.5 per cent. That is a joke. Their grant will go down, their loan will go up and their debts will increase. Is that good news for students? I do not think so. The whole system is morally wrong. It is unfair and, apparently, unworkable. Student support needs to be totally re-examined. Like everything else that the Government have done, privilege and wealth will determine opportunity, and not ability.

9.37 pm

Mr. Andrew Welsh (Angus, East)

I shall be brief because of the time constraints, and not because I do not have a great deal to say on a subject about which I feel extremely strongly.

As a product of the Scottish educational system, I benefited from—and strongly believe in—the democratic principles which encourage every child to develop as fully as his abilities will allow in an integrated system from primary to higher education, irrespective of income or social background. The Government seem intent on reversing a principle that has been entrenched in the Scottish democratic intellect and that has served my country well over the generations and centuries.

The ability and encouragement of all to benefit from the education system has been a gift to the Scottish people, and the results have been a gift to the wider world. I am afraid that the Government are forgetting those lessons. I fundamentally disagree with the Government's educational finance policy which will eventually and effectively cut vast swathes of the population off from higher education.

The November Budget not only made clear that the 30 per cent. cut was continuing, but proposed the abolition of the allowance paid to students over 26 years old from next year. I was a mature university student, and I am frankly disgusted that the present generation will not be allowed the benefits and the assistance which helped me to undertake a university degree course. Mature students clearly have greater financial burdens and commitments and they carry heavier debts than their younger counterparts. They now constitute 17 per cent. of students in higher education. So the abolition of the mature student's allowance is regressive, shortsighted and unfair to the many students who are committed to courses that began when it was available.

I have heard no rationale for this move, apart from some apparent cash savings. I have certainly heard no educational reasons for it. The Government have offered no rationale for the abolition of the mature student's allowance, so I hope to hear one from the Minister tonight.

For students more generally, the cost of the removal of benefit entitlement and the freezing of maintenance grants has been about £1,070 in lost benefits and about £810 from the freezing of the grant. That £1,880 loss compares with the maximum loan entitlement of £1,120, and it assumes that students do not find paid work during the summer.

Surveys at Aberdeen and Edinburgh universities have shown the practical effect of the Government's policy. Student grant no longer covers the average yearly rent; even with a loan, students have to look elsewhere for money. According to the surveys, students work an average 12 hours a week in term time. That can only put pressure on their academic work and their health. The Edinburgh results show many students paying rents over the summer to secure accommodation for term time.

Average rents have risen by 41 per cent. in four years—the Government have certainly not covered that increase—and 76 per cent. of all students work all or part of the summer, assuming that they can find work. Most students are therefore unable to cover their debts.

Government policy is placing in doubt the whole principle of equal access to higher education for all, regardless of background. My party rejects the Government's position. We believe that education is a right, not a privilege, and that everyone should have proper access to higher education, regardless of financial status.

The SNP is making a commitment to abolishing loans and giving all students a decent grant, index-linked for inflation and independent of parental income. That fits well with Scottish educational tradition. Nothing less will ever be acceptable—a lesson that I wish the Government had learnt.

9.41 pm

Mr. Boswell

With the leave of the House, I should like to say that I have listened with interest to the debate. We take seriously the problems that students may encounter and we shall carefully consider all the points that have been made. But I have not heard from the Opposition parties, in support of their claims for higher expenditure, any realistic appreciation of how it is to be financed.

There has been a great deal of discussion of the older students allowance. The hon. Member for Glasgow, Central (Mr. Watson) referred to it at some length. We understand from the Student Awards Agency for Scotland that Jane Pepper, who is on an access course, may be eligible for the older student's allowance as a continuing student. We suggest that she pursue that with the agency.

The hon. Member for Edinburgh, Central mentioned the sum of £35 million for the allowance. I should point out that it is not a small amount; indeed, it is greater than the sum of the access funds.

In conclusion, I refer to the helpful and positive contributions of my hon. Friends the Members for Hastings and Rye (Mrs. Lait) and for Worcester (Mr. Luff). I listened carefully to them, particularly to their suggestions for more funding for the arts. There are some practical problems with the route that they have suggested, not least the considerable expenditure involved in extending provision for the mandatory award. But we are concerned about the practical outcome—

It being one and a half hours after the commencement of proceedings on the motion, MR. DEPUTY SPEAKER proceeded to put forthwith the Question necessary to dispose of it, pursuant to order [17 February].

The House divided: Ayes 243, Noes 284.

Division No. 84]	[9.45 pm
AYES
Abbott, Ms Diane	Beckett, Rt Hon Margaret
Ainger, Nick	Beggs, Roy
Ainsworth, Robert (Cov'try NE)	Beith, Rt Hon A J
Allen, Graham	Bennett, Andrew F
Alton, David	Benton, Joe
Anderson, Donald (Swansea E)	Bermingham, Gerald
Anderson, Ms Janet (Ros'dale)	Berry, Roger
Armstrong, Hilary	Betts, Clive
Ashton, Joe	Blunkett, David
Austin-Walker, John	Boateng, Paul
Barnes, Harry	Boyes, Roland
Battle, John	Bradley, Keith
Bayley, Hugh	Bray, Dr Jeremy

Brown, N (N'c'tle upon Tyne E)	Hinchliffe, David
Bruce, Malcolm (Gordon)	Hodge, Margaret
Burden, Richard	Hoey, Kate
Caborn, Richard	Hogg, Norman (Cumbernauld)
Callagnan, Jim	Home Robertson, John
Campbell, Mrs Anne (C'bridge)	Hood, Jimmy
Campbell, Ronnie (Blyth V)	Hoon, Geoffrey
Campbell-Savours, D N	Howells, Dr. Kim (Pontypridd)
Caravan, Dennis	Hoyle, Doug
Cann, Jarnie	Hughes, Kevin (Doncaster N)
Chidgey, David	Hughes, Robert (Aberdeen N)
Chisholm, Malcolm	Hughes, Roy (Newport E)
Church, Judith	Hughes, Simon (Southwark)
Clapham, Michael	Hutton, John
Clark, Dr David (South Shields)	Illsley, Eric
Clarke, Eric (Midlothian)	Ingram, Adam
Clarke, Tom (Monklands W)	Jackson, Glenda (H'stead)
Clelland, David	Jackson, Helen (Shef'ld, H)
Clwyd, Mrs Ann	Jamieson, David
Coffey, Ann	Jones, Barry (Alyn and D'side)
Connarty, Michael	Jones, Ieuan Wyn (Ynys Mon)
Cook, Frank (Stockton N)	Jones, Lynne (B'ham S O)
Corbett, Robin	Jones, Martyn (Clwyd, SW)
Cousins, Jim	Jowell, Tessa
Cunliffe, Lawrence	Kaufman, Rt Hon Gerald
Cunningham, Jim (Covy SE)	Kennedy, Jane (Lpool Brdgn)
Cunningham, Rt Hon Dr John	Khabra, Piara S
Dalyell, Tam	Kilfoyle, Peter
Davidson, Ian	Liddell, Mrs Helen
Davies, Bryan (Oldham C'tral)	Litherland, Robert
Davies, Ron (Caerphilly)	Livingstone, Ken
Davis, Terry (B'ham, H'dge H'I)	Lloyd, Tony (Stretford)
Denham, John	Llwyd, Elfyn
Dewar, Donald	Loyden, Eddie
Dixon, Don	Lynne, Ms Liz
Dobson, Frank	McAllion, John
Donohoe, Brian H	McAvoy, Thomas
Dowd, Jim	McCartney, Ian
Dunnachie, Jimmy	Macdonald, Calum
Eagle, Ms Angela	McFall, John
Eastham, Ken	McKelvey, William
Enright, Derek	Mackinlay, Andrew
Etherington, Bill	McNamara, Kevin
Evans, John (St Helens N)	MacShane, Denis
Ewing, Mrs Margaret	McWilliam, John
Fatchett, Derek	Maddock, Diana
Field, Frank (Birkenhead)	Mahon, Alice
Flynn, Paul	Mandelson, Peter
Forsythe, Clifford (S Antrim)	Marek, Dr John
Foster, Rt Hon Derek	Marshall, David (Shettleston)
Foster, Don (Bath)	Marshall, Jim (Leicester, S)
Foulkes, George	Martin, Michael J (Springburn)
Fraser, John	Martlew, Eric
Fyfe, Maria	Maxton, John
Galbraith, Sam	Meacher, Michael
Galloway, George	Meale, Alan
Gapes, Mike	Michael, Alun
George, Bruce	Michie, Bill (Sheffield Heeley)
Gerrard, Neil	Michie, Mrs Ray (Argyll & Bute)
Godman, Dr Norman A	Milburn, Alan
Godsiff, Roger	Miller, Andrew
Goding, Mrs Llin	Mitchell, Austin (Gt Grimsby)
Graham, Thomas	Moonie, Dr Lewis
Grant Bernie (Tottenham)	Morgan, Rhodri
Griffiths, Nigel (Edinburgh S)	Morley, Elliot
Griffiths, Win (Bridgend)	Morris, Estelle (B'ham Yardley)
Grocott, Bruce	Morris, Rt Hon John (Aberavon)
Gunned, John	Mowlam, Marjorie
Hain, Peter	Mudie, George
Hall, Mike	Mullin, Chris
Hanson, David	Murphy, Paul
Hardy, Peter	Oakes, Rt Hon Gordon
Hattersley, Rt Hon Roy	O'Brien, Mike (N W'kshire)
Henderson, Doug	O'Brien, William (Normanton)
Heppell, John	O'Hara, Edward
Hil, Keith (Streatham)	Olner, Bill

O'Neill, Martin	Smith, Chris (Isl'ton S & F'sbury)
Orme, Rt Hon Stanley	Smith, Llew (Blaenau Gwent)
Pearson, Ian	Soley, Clive
Pendry, Tom	Spellar, John
Pickthall, Colin	Steel, Rt Hon Sir David
Pike, Peter L	Steinberg, Gerry
Pope, Greg	Stevenson, George
Powell, Ray (Ogmore)	Stott, Roger
Prentice, Gordon (Pendle)	Strang, Dr. Gavin
Primarolo, Dawn	Sutcliffe, Gerry
Purchase, Ken	Taylor, Mrs Ann (Dewsbury)
Quin, Ms Joyce	Thompson, Jack (Wansbeck)
Radice, Giles	Timms, Stephen
Randall, Stuart	Tipping, Paddy
Raynsford, Nick	Touhig, Don
Redmond, Martin	Turner, Dennis
Reid, Dr John	Vaz, Keith
Rendel, David	Walker, Rt Hon Sir Harold
Robinson, Geoffrey (Co'try NW)	Wallace, James
Roche, Mrs Barbara	Walley, Joan
	Warden, Gareth (Gower)
Rogers, Allan	Wareing, Robert N
Rooker, Jeff	Watson, Mike
Rooney, Terry	Welsh, Andrew
Ross, Ernie (Dundee W)	Wicks, Malcolm
Ross, William (E Londonderry)	Williams, Alan W (Carmarthen)
Rowlands, Ted	Williams, Rt Hon Alan (Sw'n W)
Ruddock, Joan	Wise, Audrey
Salmond, Alex	Worthington, Tony
Sedgemore, Brian	Wray, Jimmy
Sheerman, Barry	Wright, Dr Tony
Shore, Rt Hon Peter
Short, Clare	Tellers for the Ayes:
Simpson, Alan	Mr. Jon Owen Jones and Mr. Stephen Byers.
Skinner, Dennis

NOES
Ainsworth, Peter (East Surrey)	Butler, Peter
Aitken, Rt Hon Jonathan	Butterfill, John
Alexander, Richard	Carlisle, John (Luton North)
Alison, Rt Hon Michael (Selby)	Carlisle, Sir Kenneth (Lincoln)
Allason, Rupert (Torbay)	Carrington, Matthew
Amess, David	Carttiss, Michael
Arbuthnot, James	Cash, William
Arnold, Jacques (Gravesham)	Channon, Rt Hon Paul
Arnold, Sir Thomas (Hazel Grv)	Chapman, Sydney
Ashby, David	Churchill, Mr
Atkins, Robert	Clappison, James
Atkinson, David (Bour'mouth E)	Clark, Dr Michael (Rochford)
Atkinson, Peter (Hexham)	Clarke, Rt Hon Kenneth (Ru'clif)
Baker, Rt Hon Kenneth (Mole V)	Clifton-Brown, Geoffrey
Baker, Nicholas (North Dorset)	Coe, Sebastian
Baldry, Tony	Colvin, Michael
Bates, Michael	Congdon, David
Batiste, Spencer	Conway, Derek
Belingham, Henry	Coombs, Anthony (Wyre For'st)
Bendall, Vivian	Coombs, Simon (Swindon)
Beresford, Sir Paul	Cope, Rt Hon Sir John
Biffen, Rt Hon John	Cormack, Sir Patrick
Bonsor, Sir Nicholas	Couchman, James
Booth, Hartley	Cran, James
Boswell, Tim	Currie, Mrs Edwina (S D'by'ire)
Bottomley, Peter (Eltham)	Curry, David (Skipton & Ripon)
Bowden, Sir Andrew	Day, Stephen
Bowis, John	Deva, Nirj Joseph
Boyson, Rt Hon Sir Rhodes	Devlin, Tim
Brandreth, Gyles	Dicks, Terry
Brazier, Julian	Dorrell, Rt Hon Stephen
Bright, Sir Graham	Douglas-Hamilton, Lord James
Brooke, Rt Hon Peter	Dover, Den
Brown, M (Brigg & Cl'thorpes)	Duncan, Alan
Browning, Mrs Angela	Duncan-Smith, Iain
Bruce, Ian (Dorset)	Dunn, Bob
Burns, Simon	Durant, Sir Anthony
Burt, Alistair	Dykes, Hugh
Butcher, John	Eggar, Rt Hon Tim

Elletson, Harold	Kynoch, George (Kincardine)
Evans, David (Welwyn Hatfield)	Lait, Mrs Jacqui
Evans, Jonathan (Brecon)	Lang, Rt Hon Ian
Evans, Nigel (Ribble Valley)	Lawrence, Sir Ivan
Evans, Roger (Monmouth)	Legg, Barry
Evennett, David	Leigh, Edward
Faber, David	Lennox-Boyd, Sir Mark
Fabricant, Michael	Lester, Jim (Broxtowe)
Fenner, Darne Peggy	Lidington, David
Field, Barry (Isle of Wight)	Lightbown, David
Fishburn, Dudley	Lilley, Rt Hon Peter
Forman, Nigel	Lloyd, Rt Hon Sir Peter (Fareham)
Forth, Eric	Lord, Michael
Fox, Sir Marcus (Shipley)	Luff, Peter
Freeman, Rt Hon Roger	Lyell, Rt Hon Sir Nicholas
French, Douglas	MacGregor, Rt Hon John
Fry, Sir Peter	MacKay, Andrew
Gale, Roger	McLoughlin, Patrick
Gallie, Phil	McNamara, Kevin
Gardiner, Sir George	Maitland, Lady Olga
Garnier, Edward	Malone, Gerald
Gill, Christopher	Marland, Paul
Gillan, Cheryl	Marshall, John (Hendon S)
Goodson-Wickes, Dr Charles	Marshall, Sir Michael (Arundel)
Gorst, Sir John	Martin, David (Portsmouth S)
Grant, Sir A (SW Cambs)	Mates, Michael
Greenway, Harry (Ealing N)	Mawhinney, Rt Hon Dr Brian
Greenway, John (Ryedale)	Merchant Piers
Griffiths, Peter (Portsmouth, N)	Mills, Iain
Grylls, Sir Michael	Mitchell, Andrew (Gedling)
Gummer, Rt Hon John Selwyn	Mitchell, Sir David (NW Hants)
Hague, William	Moate, Sir Roger
Hamilton, Rt Hon Sir Archibald	Monro, Sir Hector
Hamilton, Neil (Tatton)	Montgomery, Sir Fergus
Hampson, Dr Keith	Nelson, Anthony
Hanley, Rt Hon Jeremy	Neubert, Sir Michael
Hannam, Sir John	Newton, Rt Hon Tony
Harris, David	Nicholls, Patrick
Haselhurst, Alan	Nicholson, David (Taunton)
Hawkins, Nick	Norris, Steve
Hawksley, Warren	Onslow, Rt Hon Sir Cranley
Hayes, Jerry	Oppenheim, Phillip
Heald, Oliver	Ottaway, Richard
Heathcoat-Amory, David	Page, Richard
Hendry, Charles	Paice, James
Heseltine, Rt Hon Michael	Patnick, Sir Irvine
Hicks, Robert	Patten, Rt Hon John
Higgins, Rt Hon Sir Terence	Pawsey, James
Hill, James (Southampton Test)	Peacock, Mrs Elizabeth
Hogg, Rt Hon Douglas (G'tham)	Porter, Barry (Wirral S)
Horam, John	Porter, David (Waveney)
Hordern, Rt Hon Sir Peter	Portillo, Rt Hon Michael
Howard, Rt Hon Michael	Powell, William (Corby)
Howarth, Alan (Strat'rd-on-A)	Rathbone, Tim
Howel, Rt Hon David (G'dford)	Redwood, Rt Hon John
Hughes, Robert G (Harrow W)	Renton, Rt Hon Tim
Hunt, Rt Hon David (Wirral W)	Richards, Rod
Hunt, Sir John (Ravensbourne)	Riddick, Graham
Hurd, Rt Hon Douglas	Rifkind, Rt Hon Malcolm
Jack, Michael	Robathan, Andrew
Jackson, Robert (Wantage)	Robertson, Raymond (Ab'd'n S)
Jenkin, Bernard	Robinson, Mark (Somerton)
Jessel, Toby	Roe, Mrs Marion (Broxbourne)
Johnson Smith, Sir Geoffrey	Rowe, Andrew (Mid Kent)
Jones, Gwilym (Cardiff N)	Rumbold, Rt Hon Dame Angela
Jones, Robert B (W Hertfdshr)	Ryder, Rt Hon Richard
Jopling, Rt Hon Michael	Sackville, Tom
Kellett-Bowman, Dame Elaine	Scott, Rt Hon Sir Nicholas
Key, Robert	Shaw, David (Dover)
Kilfedder, Sir James	Shaw, Sir Giles (Pudsey)
Kirkhope, Timothy	Shepherd, Colin (Hereford)
Knapman, Roger	Shersby, Michael
Knight, Mrs Angela (Erewash)	Sims, Roger
Knight, Greg (Derby N)	Skeet, Sir Trevor
Knight, Dame Jill (Bir'm E'st'n)	Smith, Sir Dudley (Warwick)
Knox, Sir David	Smith, Tim (Beaconsfield)

Soames, Nicholas	Trend, Michael
Speed, Sir Keith	Trotter, Neville
Spicer, Sir James (W Dorset)	Twinn, Dr Ian
Spicer, Michael (S Worcs)	Vaughan, Sir Gerard
Spink, Dr Robert	Viggers, Peter
Spring, Richard	Waldegrave, Rt Hon William
Sproat, Iain	Walden, George
Squire, Robin (Hornchurch)	Waller, Gary
Steen, Anthony	Ward, John
Stephen, Michael	Wardle, Charles (Bexhill)
Stem, Michael	Waterson, Nigel
Stewart, Allan	Watts, John
Streeter, Gary	Wells, Bowen
Sumberg, David	Wheeler, Rt Hon Sir John
Sweeney, Walter	Whitney, Ray
Sykes, John	Whittingdale, John
Tapsell, Sir Peter	Widdecombe, Ann
Taylor, Ian (Esher)	Wiggin, Sir Jerry
Taylor, John M (Solihull)	Willetts, David
Temple-Morris, Peter	Wilshire, David
Thomason, Roy	Winterton, Mrs Ann (Congleton)
Thompson, Sir Donald (C'er V)	Winterton, Nicholas
Thompson, Patrick (Norwich N)	Wolfson, Mark
Thornton, Sir Malcolm	Yeo, Tim
Thumham, Peter	Young, Rt Hon Sir George
Townend, John (Bridlington)
Townsend, Cyril D (Bexl'yh'th)	Tellers for the Noes:
Tracey, Richard	Mr. Timothy Wood and Dr. Liam Fox.
Tredinnick, David

Question accordingly negatived.