§ Motion made, and Question proposed, That this House do now adjourn. —[Angela Smith.]
§ 10 pm
§ Mr. David Drew (Stroud)I am delighted to have the first Adjournment debate of the new Parliament. I welcome you to the Chair, Mr. Speaker, and my hon. Friend the Member for Barking (Ms Hodge) to her new post as Minister for Universities. Her promotion is well deserved and I look forward to working with her during the next few years.
I am pleased to have this opportunity to talk about student debt. It is an issue to which I have given some consideration. It was pure coincidence that the topic of last night's "File on Four" was student debt. I cannot pretend that I did not listen to the programme, but many of the ideas that I intend to introduce tonight had already formed in my mind. The programme was an interesting one. I know that my hon. Friend the Minister declined to give an interview, for reasons that I well understand, but I hope that she will go on the record tonight on what I regard as an important topic.
Several people helped me to assemble the information for this debate. In particular, I should like to thank Wendy Piatt of the Institute for Public Policy Research and Christine Gillie, Gillian Allen and Paul Bolton of the House of Commons Library. I shall draw extensively on the work of Claire Callender of South Bank university, who is an acknowledged expert in the field. In the past couple of days I have been lobbied by the British Medical Association and the National Union of Students. The BMA's comments related specifically to medical students, whereas the NUS took a more general approach to the issues as they affect students. The NUS hardship survey is a worthy and interesting study that covers much of the ground that I hope to cover tonight. Finally, in April I had a meeting with constituents who are students in higher education—the sector on which I tend to concentrate. Although I shall paraphrase what they told me, I mean to reflect their views accurately, because they provided useful information about the problems that they face as students.
The case that I shall present acknowledges that there is a problem of student debt. That problem is not a new one: when I worked in higher education for some years prior to being elected to Parliament in 1997, it was clear that many students had difficulty managing their living expenses in addition to their studies. Too often, students missed lectures owing to other commitments—work commitments. With work being harder to find in those days, they had to turn up or risk losing their jobs and have difficulty continuing with their studies. To me the question is not whether the problem exists, but what its scale and nature are.
As I said, the problem is not recent, but it appears to be assuming a higher profile in the press and among students. I do not pretend that there is no anger, angst or anxiety about the number of people who get into difficulty. The problem of debt is not limited to students—it affects all manner of people in society—but it is especially relevant to younger students and to those who have the commitments of mature students. I am sure that it is an issue to which my hon. Friend the Member 146 for Nottingham, North (Mr. Allen) will allude in his Adjournment debate on Friday, in which he will explore reasons for low turnout. I received quite a lot of correspondence from students telling me that they would not vote and that one of the reasons was that problems of student debt had caused them to feel somewhat detached from wider society. It is easy to say that and it is difficult to draw supporting evidence. Even anecdotally, students seem to be saying that that is what they feel. We must at least take notice of that.
One of the major tenets of the case that I am presenting is that we do not know nearly enough about student debt. Despite two major investigations into the funding of higher education over the past five years—the Dearing and Cubie reports—more recently a major report from the old Select Committee on Education and Employment, which considered student retention, and a House of Lords debate in March, which considered student poverty, I argue that there is still a lack of knowledge about what is really happening. It is important that the Government undertake an investigation to ensure that they know the scale and nature of the problem.
We hear about a threefold increase in the level of debt since 1996. It must remain conjecture, but there is some evidence that that is possible, if not likely. We need to know whether that is the real situation. It is pleasing that the Minister's predecessor, Baroness Blackstone, said on a number of occasions that she was prepared to review what was happening. She said that if there was a case to be made that there were problems, she would take action.
This is not a new area for me to delve into. I tabled written questions over the last year of the old Parliament, and I was pleased to receive a response to one such question from my hon. Friend the Member for Croydon, North (Malcolm Wicks), when he was the responsible Under-Secretary of State. He referred to the need for a review. It was not necessarily an especially positive response, but I can read into it that the Government remain open-minded. I ask my hon. Friend the Minister for Universities at least, as a result of the debate, to review what the Government have been saying about student debt to ascertain whether we can launch a full investigation. If nothing else, England deserves a full investigation, every other part of the British Isles having had such an investigation into student debt. That has resulted in some changes, certainly in Scotland. I understand that changes are afoot in both Northern Ireland and Wales. It is probably true that England should follow suit.
The "File on Four" programme yesterday evening threw up some interesting and some worrying facts and statistics. It is estimated that there are about 3,000 plus students who are either currently suspended or excluded from universities because of their failure to pay off debts. One in six students drops out before completing his or her course of study. That is costing the Exchequer about £200 million. Figures that come from the former Department for Education and Employment's investigation suggest that about 89 per cent. of students admitted to some element of financial worries. It appears that 62 per cent. of students admit to working. Perhaps that is inevitable, but work brings some pressure to bear on students' studies.
Certain groups are disadvantaged, including students who are single parents or who come from ethnic backgrounds. These factors will bring particular pressure on their continuation as students. Obviously, they tend to 147 be those who face the greatest problems with student debt. Against that, according to the Universities and Colleges Admission Service, there is still a continuing increase in student applications. However, there seems to he some evidence that things become worse the lower down the social classes we go. There is certainly a continuing problem with mature students, which I mentioned during the passing of the Teaching and Higher Education Bill of 1998. I felt that the situation was disadvantaging those students. We need to consider carefully how mature students are encouraged into higher education.
The Government's record contains much on which we can congratulate them. They reacted swiftly to the Dearing report and brought forward the Teaching and Higher Education Bill. That changed the method of funding higher education and brought much-needed cash into the universities. Anyone who worked in or had connections with universities knew how parlous their state was. There were many arguments about what needed to be done to help individual students and to ensure that we invested properly in our economy and provided the productivity boost that is so desperately needed.
In some respects, therefore, the Government's record is one of which we can proud, especially as it will boost the amount of money going to the university sector by upwards of £1 billion by 2003–04. Some clearly opposed what they saw as the end of free higher education, but some of us never saw it as such; it was a system that inevitably helped the better-off and we had to look at ways in which we could help the less-well-off in their ability to access the system. I support the continuing aim of my party and my right hon. Friend the Prime Minister that 50 per cent. of under-30s should go into higher education by the end of the decade. That is a tough standard by which to be judged, and the party and the Government have to make sure that they deliver on it.
The Government have done many other good things on the back of that proposal. Many of us feel that the 16 to 19 group was most disadvantaged by the lack of funding and too many students did not fulfil their post-16 education, so it was a wise move for the Government to introduce the excellent educational maintenance allowance. In areas in which it was piloted, support of about £40 a week was given if parents' income was less than £30,000 per annum. From all the evidence, the allowance seems to be working well and I look forward to the roll-out to a national scheme, which, I believe, is gathering pace.
As the scheme has been so successful for the 16 to 19 group, I urge my hon. Friend the Minister to consider whether we should roll it forward for a further year into the first year of university education for members of disadvantaged groups who would not otherwise be able to take up their university places. Again, I support that idea, which has been expressed by others. Other help needs to be given, such as looking at whether we could rejig thresholds and whether we could ask people to pay their tuition fees at the end of their course, rather than at the start, as there seems to be a problem with the perception of those fees, if not the way in which they work in reality.
There are therefore many things that we could do, and we can now draw on evidence from certain parts of the British Isles. Evidence from the Dearing report and the 148 post-Dearing investigation suggests that we need to look closely at the way in which disadvantaged groups in particular are being encouraged to take up their places or otherwise. The Cubie report, which was the Scottish Executive's response to overcoming some difficulties experienced north of the border, came up with the idea of a graduate endowment package. That is an interesting idea for several reasons, but I am not sure that it is as progressive as some people maintain. If we are to have fees, the choice between whether they are paid at the beginning or the end of the course is the way to progress. Will my hon. Friend look at that and comment accordingly?
The recent Select Committee report, which I mentioned earlier, came up with a raft of 40 recommendations, many of which the Government could usefully take on board. Indeed, they responded positively to the report. Professor Callender of South Bank university has backed up her evidence to the Committee with her comments on the Radio 4 programme last night. She argued that we perhaps still have an overly traditional approach to higher education, which means that we have not been able to bring in to higher education the necessary number of people from other backgrounds. I see that as the broadening of higher education, rather than the existing deepening of the numbers of those who have come from certain sectors in the past and will do so in future.
There is certainly a perception of debt problems, and we need a proper in investigation of whether students from disadvantaged backgrounds are more risk averse and the questions that they need to consider if and when they decide to go into higher education. There is some confusion about the different mechanisms that are available: will my hon. Friend say whether it is possible to conflate different schemes to make sure that they are simple to understand, easy to operate and do not in any way prevent people from going into higher education?
It is fairly clear who the most disadvantaged groups are and why they struggle with student debt. They include parents, students with dependants, mature students, part-time students, students from ethnic minorities, students undertaking particular courses, such as medicine—as I have said, the British Medical Association drew my attention to some of the problems that such students have—and postgraduate students. I am not saying that all students in those groups suffer enormously from debt problems, but within those categories a good number of students face some difficulties.
The difficulties are well known, but they are worth repeating to ensure that everyone is aware of them. They include the loss not only of potential income as a result of giving up a job, hut can involve the loss of passported benefits. I have never completely understood why a loan counts as income, but some people are substantially worse off as a result and the Government should look again at the loss of such benefits. There have been some changes and perhaps further improvements could be made and the work taken forward. Ethnic minorities in particular can do badly because some Muslims will not draw down loans.
There are no easy solutions; otherwise, someone would have come up with them. As Professor Callender, the leading expert on student debt, admits, no large-scale study has been undertaken, and we need a large-scale longitudinal study of what students have done both before college, at college and afterwards. If they obtain a reasonable job, they should be able to pay off their debts, 149 but if they do not, they can face continuing problems. We need to reconsider the thresholds to ensure that they are right—£ 10,000 seems a low level at which to ask people to start repaying their debt. Again, I would ask for further investigation of that. We need to recognise that the most disadvantaged who are sometimes deterred by such problems are the very people whom we want to attract into higher education.
My meeting with my constituents brought out many of the matters to which I have alluded. They looked askance at some of the work of the banks and at overdrafts. They were totally opposed to the Russell group proposals, and I am pleased that the Government, in their manifesto, ruled out top-up fees. However, more still needs to be done to encourage people into higher education.
I am pleased to have had the opportunity to raise the matter today shortly after the general election. I hope that the Minister, in her first comments on the subject, will make some noises about the need for a review. We have now had three years of Dearing and it is about time that student debt was reviewed.
§ The Minister for Universities (Ms Margaret Hodge)I warmly welcome you to the Chair again, Mr. Speaker, and I congratulate my hon. Friend the Member for Stroud (Mr. Drew) on his re-election. He is an assiduous and dedicated worker for his constituents and he has had the just reward of securing re-election. I am sure that his constituents will be well served by his consistent and energetic efforts on their behalf.
I also congratulate my hon. Friend on securing this Adjournment debate, the first of the new Parliament, on an issue of importance to the Government, students, their families and teachers, and I welcome the opportunity to have a short debate on the subject.
Our manifesto sets out an exciting and challenging agenda for higher education. Our ambition is that by 2010 half of young adults under the age of 30 should enjoy the opportunity of participating in higher education. Personally, I relish that exciting and challenging ambition, as I believe that it provides enormous opportunities for the higher education sector. I hope and believe that the sector will embrace those opportunities with enthusiasm. After years of neglect, higher education is central to the Government's agenda. Our commitment to widening participation was a clear manifesto pledge. I believe that there has never been a better time for the sector, and I am delighted to have the privilege of holding my position as Minister for Universities at this Link. My task will be to consider how we achieve our objective. Clearly, I will need to think about all the barriers that inhibit the agenda for widening participation, including student debt.
In considering the future, I want briefly to pay tribute to my predecessors in the previous Government. My right hon. Friend the new Home Secretary and my right hon. and noble Friend Baroness Blackstone have left me with a strong legacy on which we can build a successful future, and I am sure that my hon. Friend the Member for Stroud will join me in recognising the important and lasting contribution that they have made to the higher education world.
We should not underplay the fact that higher education is a success story. In the "Education at a Glance" statistics recently published by the Organisation for Economic 150 Co-operation and Development, we top the league of OECD countries in our graduation rate. Those who choose to participate succeed in obtaining a degree at a higher rate in Britain. Our retention and attainment rate is second to none, and we should celebrate that. Interestingly, the retention rate has not changed with the new system of student support. Indeed, the drop-out rate has remained at about 17 per cent. since 1991–92, despite the change that we have introduced in student finance and the massive increase that we have enjoyed in student number.
My hon. Friend referred to the figures given in last night's radio programme. Although we must be concerned about a drop-out rate of 3,000 students from a cohort of 800,000 and will want to improve it, the figure should not cause us great concern and we should bear it in mind that we perform better than other countries.
We should celebrate also the fact that we are now enjoying an 18 per cent. real-terms growth in publicly planned spending on higher education in the six years to the financial year 2003–04, That is occurring against a background of unit funding falling by a third between 1982–83 and 1997–98. This year, there has been a real-terms increase for the first time. We should also celebrate the increased participation in higher education year on year. I point out to my hon. Friend that this year's figures show that the number of applications made by students under the age of 21 rose by 1.4 per cent. Interestingly enough, however, applications made by students in the 21-to-25 age group rose by 5.6 per cent. Although a worry remains in respect of more mature students, under-25s are applying at an increasing rate.
I assure my hon. Friend that we will continue to keep student debt under review and we will want to consider it if we find that it is a barrier to widening participation. Equally, I must say to him that the issue of student support will always be one of balance between the financial contribution made by the taxpayer, the student and the graduate. Those three aspects must always be balanced. He will be interested to know that we are still among the highest spenders on student support as a proportion of higher education spend. We are third after New Zealand and Canada, and spend 35 per cent. of higher education spend on student support, compared with an OECD average of 18 per cent.
Widening participation among people from lower socio-economic groups, to whom my hon. Friend drew attention, is a key issue. The rate has remained stubbornly low since 1993. The lowest socio-economic groupings have remained at 25 per cent. Although participation by people from professional backgrounds was 55 per cent. in 1991, it is now 70 per cent. However, the closest correlation is not with student finance but with prior attainment. To widen participation we must therefore tackle that issue urgently. We are doing that.
My hon. Friend mentioned our support for more disadvantaged groups. We have a good record on that. I accept that, as he said, the system is complicated, and we will consider simplification. However, I shall give examples of the grants that we have introduced to ease the way for students from poorer backgrounds, and I hope that my hon. Friend will accept that we are making progress.
My predecessors introduced the excellence challenge programme, which has £190 million over three years. It focuses on education action zones and excellence in cities 151 areas. It buys much support, such as mentoring, master classes and summer schools. More important, it facilitates the introduction of bursaries at £2,000 per bursary, which is an outright grant for poorer students who live in such areas. We have quadrupled the money for access bursaries and hardship funds, which have been available since 1997–98. As well as increasing funding, we have introduced reforms to ensure that we target the money more effectively and earlier in the student's life in a higher education institution.
We have done a huge amount, with which I was associated in my previous ministerial role, to support students with disabilities. For example, we have tripled the available allowances, stopped the means testing of the disabled student's allowance and extended allowances to part-time students and postgraduates.
My hon. Friend did not seem to realise that we have done much to help students with children. For example, there is a school meals grant, which is worth £245 for each child under 11 and £265 for children from 11 to 16. We have introduced a generous child care grant, which covers 85 per cent. of the actual costs of child care. I am delighted that we have been able to raise the limits of eligible child care costs to £135 for one child and 200 for two children. We have also introduced grants for travel, books and equipment, an extra dependants grant and an access bursary grant for students with children.
On students from ethnic minorities, the picture is not as pessimistic as my hon. Friend suggests. The participation of students from ethnic minorities in higher education is higher than that of white students, although they come in at a later stage. The challenge is the 152 transition between higher education and work, where ethnic minority students encounter disadvantage and possibly discrimination.
We have tried to alleviate the burden on students who enter higher education. For example, we expect that 50 per cent. of students will not pay fees this September because of the increased contribution thresholds that we have set parents. Eighty-five per cent. of mature students will not pay fees.
We must have regard to the debt that students could incur in relation to their lifetime earnings. Not only are those earnings as mach as 25 per cent. higher, but the Russell group found that, on average, graduates earned approximately £400,000 extra in their lifetime. That must be set against a student debt of less than £10,000.
My hon. Friend asked me to consider several specific matters, such as when fees were paid, the position of Muslim students, and the threshold for repaying loans. I assure my hon. Friend that we shall continue to keep those issues and other options under review.
These are exciting times for higher education. We are changing a system that catered only for the elite so that it provides opportunities for a much greater range of people. Of course, we want to ensure equality of opportunity and to maintain and enhance the quality of teaching as we expand participation. That is the challenge for us in this Parliament. I accept it with relish, but also with trepidation and humility. I am delighted that my hon. Friend has shown an interest in one of the issues with which we must deal. I assure him that I shall continue discussions with him and others who share that interest to ensure that we break down barriers to participation and widen access to higher education as part of providing opportunity for all.
§ Question put and agreed to.
§ Adjourned accordingly at half-past Ten o'clock.