Education (Mandatory Awards) Regulations 1984

HL Deb 25 October 1984 vol 456 cc278-96

3.20 p.m.

Baroness David rose to move, That an Humble Address be presented to Her Majesty praying that the Regulations [S.I. 1984 No. 1116], laid before the House on 1st August 1984, be annulled.

The noble Baroness said: My Lords, it is my privilege to move the Motion standing in my name on the Order Paper. It relates to the proposed annulment of the order known as the Education (Mandatory Awards) Regulations 1984 laid before Parliament on 1st August 1984, the day before the House rose for the Summer Recess. The regulations came into force on 1st September 1984. I should like to protest at that timing, as there was no opportunity to debate those regulations before they came into effect.

There seems no reason for treating Parliament in this way. The National Union of Students was informed of the likely decisions back in February and a circular went out to local education authorities at Easter. Therefore, the content of those regulations was known months before. One can only assume that Ministers deliberately decided to make debate impossible before the first grants under the new regulations were paid. This is particularly galling, as Mr. Peter Brooke, when the 1983 order was debated in Standing Committee on 10th November of that year, when there was criticism of the delay, said: the department has already stated its clear intention to achieve a better timetable in 1984–85".

Well, it has not. Could the Minister, when he replies, please give us an assurance that we shall have the opportunity to debate the 1985–86 regulations before they come into force?

It was particularly important to have a debate this year as there have been three major changes: in the way travel costs are treated, in the parental contribution scale, and in the minimum award. As the new method of allocating money for travel is so different from that operating in previous years, and as many students will be adversely affected, I shall speak of travel costs first.

Since the current grant system was introduced in 1962 it has always been acknowledged that the cost of a student's daily travel to and from college, and three return trips to the student's home, should be fully reimbursed. With effect from the current academic year new students will no longer be able to claim reimbursement of their travel expenditure above a fixed element within the main rate of grant. That is £100 for students living away from home and £160 for students living in their parental home.

After pressure from the National Union of Students and other interested parties, the DES have acknowledged that students already on course would not be in a position to change their travel patterns in the light of the new regulations, and in consequence new transitional arrangements have been introduced. Nevertheless, these transitional arrangements still involve continuing students in expenditure of £150 from their own pockets before they are enabled to claim reimbursement of any additional travel expenses. The transitional arrangements do nothing to ease the problem for all new students for whom the closing date for UCCA applications was 15th December 1983. This has meant that they have not been able to reconsider their choice of university or college with the new financial implications of those choices in their minds.

The introduction of this new policy on student travel costs will disadvantage many students. The NUS, from its surveys on student income and expenditure and on LEA awards, estimates that some 39 per cent. of all mandatory award holders will be out of pocket, with 35,000 students (10 per cent.) being out of pocket by at least £150, and as many as 7,000 (2 per cent.) having to find more than £350 from their own resources. Particularly badly hit by the new regulations are students living in their matrimonial homes and students studying in London.

Students in London on average incur three times the expenditure on travel that their colleagues incur. Indeed their expenditure is considerably higher than that incurred by Scottish students, who continue to get their travel costs reimbursed, as the Scottish Office considered, in the light of data collected, that their students were a "special case", in that their travel expenditure patterns were different from the rest of the United Kingdom.

Not only will students suffer pressure upon their scant resources but there are wider implications which affect certain institutions particularly. Some under threat will be Lancaster University, Warwick University—Canterbury University was mentioned by the right reverend Prelate the Bishop of Rochester when he asked a Question earlier in the summer—and Ulster University, all of whose students have to live a considerable distance from the institution. This may deter many students from making a free choice of where they wish to study, and these institutions could become ghost establishments. The new regulations will particularly deter students from mainland Britain wishing to study at the University of Ulster. The situation really is not different from that in Scotland.

The cost of travel will almost inevitably mean that a student chooses not the course that will best suit his needs but a university or college where he knows he will have little distance to travel. The other inevitable consequence—and this is already being felt—is the pressure on accommodation close to the institution that the student is attending.

Sir Keith Joseph, in answering a Question on 26th July this year on what assessment he had made of the effect that the new arrangements for student travel would have upon student housing choices, said in col. 754: None. It will be for individual students to decide how best to deploy the resources available to them within the overall grant.

A complacent answer, my Lords.

It seems quite extraordinary that no assessment was made of the possible consequences. Colleges are often in the centre or, in the case of the new civic universities, on the fringes of large urban areas, so that many students have to live considerable distances away. Portsmouth Polytechnic did some research in the mid-1970s. Thirty-five per cent. of all non-home based students lived between two and five miles from their institution, 19 per cent. between five and 10 miles away and, surprisingly, 10 per cent. over 10 miles away.

Polytechnic students in London tend to live a long way away—15 per cent. over 10 miles. There will be inevitable pressures on all accommodation near colleges, with perhaps unfortunate effects on other more vulnerable or disadvantaged groups. There will be increasing demand on a narrow and declining section of the housing market, the private rented sector. We already hear of problems of overcrowding, sharing, and multiple occupation.

Local authorities and housing associations will not be able to respond to the additional and unnecessarily imposed need, given the financial restrictions on their housing activities. It seems incredible that no thought seems to have been given to these inevitable consequences of the new travel arrangements. Will the department be doing any survey or conducting any research on this aspect?

I turn to the parental contribution scale. With effect from this academic year the DES has amended the method for means-testing for parental contribution. First, they have increased the threshold at which parents start to make a contribution from £7,100 to £7,600, in line, as usual, with average earnings. That is a move that we welcome, but they have also reversed their former policy of tailing off contribution as parents' income increases with a system where they now require a higher contribution from parents in the middle and high income brackets.

The effect of this change means that parents with a residual income of over £12,000 per annum are having to pay a much higher contribution than in the past, and indeed parents with a residual income of around £18,000 will have to find an extra £466 for their child's grant over and above the amount required last year. It must be remembered that that residual income may of course be made up of both parents' earnings.

In a letter dated 16th August 1978 to the former Chairman of the Federation of Conservative Students, Mrs. Thatcher herself promised to: conduct a thorough review of student grants. In that review highest priority will go to a reduction in the parental contribution".

The reality is that the present Government have imposed a "backdoor tax" on parents and have substantially reduced the state contribution to student awards while expecting parents to contribute to the state shortfall. There have been a number of letters from parents in the papers recently complaining about this, and I shall quote from just one that appeared in the Guardian a few days ago. This is from two teachers who are parents: As so often in recent years, there appears to be a positive discrimination against the larger family with a moderate income, in so far as those with higher incomes and fewer children are protected by the minimum grant arrangements. Under the new formula for the calculation of parental contribution, our assessment has been increased by a factor of 250 per cent. from around £1,000 in the three previous years to above £2,500 for 1984–85 with the same number of children at university.

The third change is in the amount of the minimum award. Further evidence of the imposition of a backdoor tax upon parents has been the introduction this year of a reduction in the minimum award. This has been halved, reduced from £410 to £205, with parents being asked to make up the shortfall. Not only is this a blow to the degree to which students can be independent from their parents, but it is a severe blow to the significant number of students whose parents refuse to complete the necessary assessment forms and refuse to make up the parental contribution. The 1982–83 survey showed that only just over half the parents paid their assessed contribution and 12 per cent. of students received over £200 less than could be expected.

There is evidence of a good deal of borrowing from banks and of overdrafts. The same survey shows that 56 per cent. of students had overdrafts at some point in their courses and that 33 per cent. ended their last term overdrawn. Loans, in fact, are coming in by the backdoor, too.

Students who would like to be independent are finding it increasingly difficult, with the present unemployment situation, to get vacational jobs. Some students manage to find work in term time, but that is not satisfactory for their academic work, particularly when, as in some cases, 20 hours per week were being put in. There have been rumours that the halving of the minimum grant this year is the first step to its abolition next year. When the Minister replies, will he reassure us that this is not so and that the parental contribution scale will not demand even more of parents next year.

Thus, there is a cumulative effect from these changes to the regulations. The impact will be profound for both students and parents. In discussions with the National Union of Students, Mr. Peter Brooke gave a commitment to monitor the effects of the new regulations on travel costs. We want to ask the Minister how the monitoring is to take place and when a report will be forthcoming.

These three substantial changes in the regulations this academic year have been made without the benefit of any hard evidence from the Government. The only information available on travel costs was collected in Scotland and, as a result of this information, the Scottish Office decided against following the example of the DES and has retained the old reimbursement system.

The National Union of Students, on the other hand, has collected and presented in three major forms information which shows the current climate for students whose resources are coming under attack from all quarters. In the last year the NUS has published its annual local education awards survey, its accommodation costs survey, and its independently conducted income and expenditure survey. The Secretary of State has copies of all these documents.

Mr. Peter Brooke, at a meeting with the NUS president and officials on 28th September last, said that he accepted the information on travel produced by the NUS as correct to within 10 per cent.—which is the normal margin of error in statistical calculations.

In the last five years since the Government came to power the student grant has declined in real terms by some 10 per cent. Indeed, with the abolition of the system of reimbursing excess travel expenditure for many students there will be a much greater decline in the value of their grant. During the same period, due to the financial constraints placed upon the higher educational establishments, there has been an increase in real terms in costs for accommodation. Accommodation and food now account for approximately 75 per cent. of annual income, as against 62 per cent. in 1979.

The NUS is due shortly to present its annual submission to the DES concerning the grant regulations for 1985–86. The main point of the claim will be an education allowance for all 16-to 19-year-olds; a minimum allowance for all post-16 students which would provide parity with the allowance for young people on the youth training scheme—£30 a week is proposed.

In the EEC report on youth training, debated in this House last Monday, one of the recommendations was that this age group should have a common status and income. I very much hope that that will be accepted by the Government.

The NUS is asking for a 14 per cent. increase in the main rate of grant to restore its real value to the 1979 value. On travel, it is proposing a return to the reimbursement system, but with three different fixed elements within the main rate in order to ease the administrative burden on the LEAs, which we admit was heavy and which, one presumes, was a major reason for the change. It is suggested that the minimum grant should be £1,200, reflecting the claim of a minimum of £30 per week over a 40-week period, excluding the summer vacation.

In the debate on higher education on 14th March this year in this House I urged the Government to review the whole system of both student mandatory awards and the present 16–19 tangle. This will require cross-departmental co-operation between the DES, the Department of Employment and the Department of Health and Social Security. I was cheered to hear the noble Lord, Lord Young of Graffham, in the debate last Monday say that he was chairing a committee composed of junior Ministers and senior officials from those departments and from the Department of Trade and Industry. I hope very much that that committee will look at this whole grant question.

It is now nearly a quarter of a century since the publication of the Anderson report on the grant system on which our present system is based. It is high time for a new look.

I hope that the review will take evidence from both Government departments and relevant nongovernmental bodies, with the results being made public at the earliest opportunity. The National Advisory Body in its Strategy for Higher Education in the Late 1980s and Beyond, at page 37 in the section on student support says, in paragraph 8.43: We therefore urge that the DES should institute a major review of the system of fees and of student support with the declared objective of identifying ways in which both might be adjusted to increase access and encourage student demand in the light of our recommended priorities".

There was feeling all round that a change is very much overdue.

Can we have some commitment from the Government that this review will take place? Can we have an absolute assurance that there will be a monitoring of the effect of these very important and major changes to the award regulations in 1984–85, which we believe will cause great difficulties for a great many students in higher education in this country? I beg to move.

Moved, That an Humble Address be presented to Her Majesty praying that the Regulations [S.I. 1984 No. 1116], laid before the House on 1st August 1984, be annulled—(Baroness David.)

3.38 p.m.

Lord Kilmarnock

My Lords, the House is indebted to the noble Baroness for praying against these regulations and thus giving us the opportunity for this short debate. The noble Baroness has made most, if not all, of the points which arise from the regulations. I want to concentrate on one area—books. It is manifestly obvious that courses cannot be pursued without the proper material, of which books are by far the most important. There is, as I understand it, no notional sum built into the grant for books in the same way as the basic £50 for travel. Since 1963 the value of the maintenance grants has been steadily eroded. Yet more and more students are being forced to use part of their maintenance money on buying books as a result of the enforced cutbacks in library purchases.

If a small group of, say, six or seven, has to queue for the only library copy of an essential book for the course, it is obvious that those at the tail of the queue will be forced to buy it if they are to pursue their course competently and conscientiously. Even if there are five copies for a course of 20 students, the same thing may happen.

My noble friend Lord Donaldson of Kingsbridge raised this whole question in a very trenchant speech which he made on his own Unstarred Question on 24th March 1983 when he gave the figures on university library purchases as they were at that time. Since then more recent statistics have become available, and, judging from a report from the National Book League on library book spending in universities, polytechnics and colleges between 1978 and 1982, there is no reason to think that the experience has been any better since. There are two passages that I should like to quote. The first is this: In the 1978–79 academic year, the average expenditure on books and periodicals per student (full-time equivalent) in the UK's 53 university and university college libraries was £57.50. Four years later, in 1981–82, the figure for average expenditure on books and periodicals had risen by 20 per cent. to £69.06. During that period, however, the retail price index for books rose by 53 per cent. and a comparable index for periodicals (Blackwells) by 45 per cent. All this amounts to an effective reduction in real expenditure of books and periodicals of over 19 per cent. per full-time equivalent student." It also appears to be the case from this report that at only seven of the 53 institutions that I have mentioned did bookspending rise to keep up with inflation and at six universities real expenditure on books actually fell by half over those four years.

It is clear that some types of course require more books than others. A student on a scientific course may be able specifically to work with perhaps a single text book for a short time but a history student who is covering his period in depth obviously will need a considerable array of reading matter. It is also clear that the slender financial resources of students cannot be expected to make good the deficiencies of provision in their libraries' book stocks.

There is one further point on books which I should like to raise with the noble Earl. There have been some very ugly rumours circulated in the press recently that the Government plan to impose VAT on books. This would make the situation even worse, and certainly would lead to demands from universities to reimburse them for their VAT costs and therefore the imposition of VAT would be counter-productive. It would in fact be pointless. But even if the Government did that, the individual student would still be faced with an even higher cost for his or her own individual book purchases. I hope very much that the noble Earl will be able to assure us this afternoon that the Government have no such intention and that the press reports are mischievous and wrong.

Before I sit down I should like to ask the noble Earl what the Government consider they are achieving by their constant erosion of the educational potential of this country. We understand perfectly the search for a new relevance. We do not think that all the Government's initiatives have been bad. The new 14-to-18 year old technical and vocational scheme is clearly an important experiment. The introduction of the new AS-level to run in tandem with A-level is to be welcomed. It appears in fact to be a version of the I-level scheme put forward by the now defunct Schools Council, which we have been advocating for several years. We do not believe that the MSC is the devil incarnate running roughshod over the educational establishment, and we do not believe that any purpose is served by a civil war between the trainers and the educators.

But we do think that the constant snipping and squeezing of lifelines to the mainstream educational system is, to say the very least, shortsighted. However much you train, however much you persuade industry to put into training and however shrewdly you try to select the topics and disciplines most relevant to the future, you cannot possibly manage to predict future requirements in job-specific skills or the balance between one industry and another, for example, 10 years from now, with any great exactness. What you can say—and I believe that most employers would support this—is the formation of a whole person able to cope with and adapt to the shifting demands of the labour market and the needs of society very much depends on the general education service—nursery, primary, secondary, further and higher—of this country.

It is folly to underfund that service and to seize on falling rolls as an excuse for indiscriminate cuts rather than taking the opportunity of long-overdue improvements. It is folly to introduce, as these regulations do, travel regulations which make it more difficult for students to get to the universities where they have been offered a place which is suitable for their abilities. It is folly to impose cuts which make it impossible for university and other libraries to buy enough books for their students, and it is folly to erode maintenance grants to the extent that students who are forced to buy books as the result of the library cuts are unable to do so. Incidentally, it is also bad for the United Kingdom publishing industry.

Finally, it is my hope that the Government will take seriously what has been said and what is yet to be said here this evening and that they will recognise that some of this relentless pressure on our universities and their students can be nothing but damaging in the long run to the efficiency and prosperity of the country.

3.45 p.m.

Lord Mulley

My Lords, I would join with the noble Lord in congratulating my noble friend Lady David for giving us the opportunity for debating what in my opinion is a very important subject—not only the actual problems of the grants but the consequences that are likely to follow from the way things are going within this field. Before commenting briefly on some of the points that my noble friend Lady David made—because, as the noble Lord, Lord Kilmarnock, said, she has covered the ground extremely well—I should like to endorse what Lord Kilmarnock said about the cost of books. It was my good fortune to have as tutor in politics two distinguished Members of your Lordships' House but I would not want to hold either of them responsible (or for your Lordships to hold them responsible) for what has happened subsequently in my political career. One of them said: "Of course, the object of reading PPE (philosophy, politics and economics) at Oxford is that you do not really learn anything about the subject but you should have a very good acquaintanceship with the bibliography over the field".

Recollecting the length of the book list that I was given at that time, I suspect that at present it would take the whole of one's grant to buy them and there would be nothing left for any other purpose at all; because it is not only the case that books have risen very much more on average than the cost of living and statistics that have gone into the compilation of grants, but also libraries have been cut back. A lot of universities trying to maintain other aspects of their work have cut back on library provision. I have heard this from many quarters. It is extremely difficult even for the students to borrow the books. As the noble Lord, Lord Kilmarnock, has said, there is a great distinction between students in a perhaps more practical field of study where they spend a good deal more time in laboratories and lectures than in some other subjects where it is desirable that they should have a wide acquaintance with the literature involved.

Quite apart from the actual books for study, one of the advantages I always feel of the university is that it is one time when people can read, and should be encouraged to read, outside their own subject. Indeed, with the pressures now under the present grants applying to students, I doubt very much if they would have the funds even to buy paper-back books of a very wide kind; and on the few occasions that I have recently stayed in college rooms, I have noticed that the students' libraries are a lot thinner and smaller than they used to be some years ago.

I think that the worst feature of the present grant system is the way that the Government have gone back on all the commitments that they made prior to becoming the Government and all the things that they said to me and to my predecessors about the way the grant system was devised. I do not think that anybody who voted Conservative in 1979 expected for example that the parental contribution would change from 22 per cent. in 1979 of the total cost of student maintenance to 39 per cent. in 1984, with all the likelihood of that figure increasing. Indeed, I am told by the results of research that over the same period between 1981 and 1984 the parental contributions in total have gone up by 117 per cent. and the public fund provision for student maintenance has gone down by 5 per cent. I do not somehow seem to have read anything about this in the Conservative Manifesto for either the last election or the one before. One of my noble friends says, "Maybe it will be in the next one"—but I have a feeling that this will be something which is only in the small print. While we have to accept that there is a parental responsibility and that parents should provide, we are not living in the general economic circumstances when parental incomes in real terms are increasing. Indeed, in many families it is the very reverse.

I endorse what my noble friend Lady David has said about the need for a complete look at the whole question of the grants system, apart from these student cuts. I believe that the current grant, depending on how much is allowed for travel in view of the changed practice of which my noble friend spoke, has dropped about 10 per cent. in real terms since 1979. The noble Lord, Lord Kilmarnock, referred to the matter of books; and we know that in one or two other fields of expenditure, such as when students have to eat out, or live in college and university institutions, charges have gone up, I would suspect, rather more than the average annual increase in the retail price index. So I think there has been a reduction in the real income available to students even if their parents have paid their full contribution; although of course in many cases they do not.

What will be a very real problem for many students is the reduction in the minimum grant from £410 to £205. There has been speculation recently that this will be reduced further, or even abolished altogether. We shall be most anxious to learn from the noble Earl when he comes to reply what assurances he can give on this point—namely, that there is no intention to reduce the minimum grant still further. The minimum grant, of course, goes to wealthy parents. I am sorry to say that it is some of the wealthiest parents who are the least generous in the provision that they make for their sons' and daughters' education. It may be that there are differences of view about whether they should or should not go to university and so on. But I have come across quite a number of students whose parents could certainly have paid the whole cost of the education with no great hardship, but in fact they gave their children very little or nothing, so that they had to depend—and it is increasingly difficult now—on finding work during the vacations to supplement the minimum grant to which they were entitled.

I hope therefore that we can get some guidance from the noble Earl that these matters are being taken very seriously by his right honourable friend the Secretary of State, who I know is a man with a very real interest in education and young people. I would hope that we could have an assurance that the submission which was sent only last week by the National Union of Students to the department will be given the most serious consideration.

I will not weary your Lordships by going into the details of the very substantial facts that the National Union of Students have put together about the whole set of problems they face, but it seems to me to be a serious submission based on research and real facts which we do not have in support of the regulations currently before us and I would like to be given an assurance that serious attention will be given to this submission. I see that it was sent only on Monday of this week by the students to the department. Of course, we would not expect an answer to all the points this afternoon, but I am sure that some assurance will be appreciated.

Finally—and I will be brief because I have raised this matter before in your Lordships' House and in a sense it is not directly relevant to the particular problems of our national students—I would hope there could be another look at the definition that is applied as to who is a "home" and who is an "overseas" student, because one hears of some very hard cases: for example, soldiers who have served continuously in Germany have found that their children are denied grants. As I say, I hope another look can be given at the definitions, on the one hand, and also at the whole question of the enormous differential between home and overseas students in the matter of fees.

I think that this differential is one of the most stupid and narrow things that have ever been done. I admit it was started in a tiny way by my own Government—but not by me. I knew that once a differential was opened up it would get wider and wider. The situation now is that very few students who used to come to this country are coming. They are going to universities in France, Germany or other continental countries, or to the United States.

In the longer run we are going to lose the business that has often come in the past, because when students who have been educated here as young men become leaders in their own countries, their contacts are here and they tend to look to English magazines and English firms for their supply. In fact, I met a Greek friend this very week who asked me if I could get him a report of Marks and Spencer's—he is in the retail trade. He said, "I want to take it back because my nephew will never read anything about Britain because he was educated in the United States: all he looks to for information are journals from the United States".

Loss of business is bound to happen, particularly in higher technology, engineering and so on, if we make education virtually impossible—as in many cases it has been made impossible—by this very high level of fees we are charging, not only for undergraduate but more particularly for postgraduate studies. I would hope that this could be looked at again in the context of the review of the financing of universities, for which I thought that my noble friend Lady David made a very strong case. I hope that we can have some information from the Minister which will give us a little encouragement, although I know it is not your Lordships' practice to vote in favour of a Motion such as that on the Order Paper.

3.58 p.m.

Lord Graham of Edmonton

My Lords, I wish very briefly to intervene and I apologise for not having put my name down on the list and given the Minister notice. My noble friend Lord Glenamara has on more than one occasion during the current year raised on the Floor of the House the special problems of the students at Newcastle Polytechnic. In his unavoidable absence today—he would have liked to be here—I shall raise some points that he would have wished to make in the debate, upon which I should be very grateful if the Minister could perhaps reply to my noble friend direct. My noble friend will certainly be reading Hansard.

May I begin by paying a warm tribute to the very able way in which my noble friend Lady David has encompassed the three main concerns, and not just that of the student body. I think we have to be quite clear that, although students are at the sharp end of the punishment which is the net result of these changes, it is not only students but also communities and parents, and ultimately our nation, who are going to be damaged.

I want to give one or two illustrations to the Minister which I hope he and his advisers will take away and reflect upon. Great play has been made by the Minister about consultations that took place before the regulations were conceived and laid. He knows of the very strong reaction to the meaningless way in which those consultations took place and we now have, as my noble friend Lord Mulley said, some pretty hard evidence about the dire consequences of the situation.

I want to give the House some illustrations which my noble friend Lord Glenamara has given to me and which were given to him by the Newcastle Polytechnic. Let us consider this primarily in respect of the impact of the changes in the travel award. There is the case of a second-year student who is undertaking a BA government and public policy course. The cost of public transport from his home will be £296.80. The remarks column of this document states that he is a mature student with a family. If he moved to Newcastle he would claim a two-homes grant of up to £590, but his family life would be severely disrupted. The calculations exclude vacation journeys to the polytechnic library.

I have here another case of a student doing a BSc in mechanical engineering and he, too, is a second-year student. If this student used public transport it would cost £400 and his working day would be from 6.30 a.m. to 7 p.m. He would have to move to Newcastle and claim the higher grant. In the case of another student in his first year undertaking a course for a BA in accountancy, his public transport costs are £300. He would have to move to Newcastle and would claim the higher grant. Another student in the first year of a BA business studies course has public transport costs of £550. This student's wife works in the home town. He would not be able to continue his course.

Another BSc student in the second year of a course in mechanical engineering has public transport costs of £414. I ask your Lordships to bear in mind that this is against the grant of £110. This is based on the £160 limit. This married mature student would lose £7 a week and could continue on his course only with a considerable reduction in living standards. He could not really consider a second home in Newcastle. Those are some illustrations.

It may very well be that the Minister and his advisers are not aware of them, but if they are aware of them it is no good the Minister saying that there are swings and roundabouts and that most students will benefit. If you are one of the students whom I have listed, no matter who else benefits and by how much, such a change will have very serious consequences. I should like to tell the Minister what I am told by the Newcastle Polytechnic is likely to happen in those situations. Many students will move to Newcastle and claim the living away from home grant, costing the local authority an additional £385, which I am sure the Minister would not want. Alternatively, they will claim a two homes grant of up to £390 or will leave their courses midway, wasting not only their own considerable effort, commitment and skills, but also the LEA money.

I simply say to the Minister that, if what he has been setting out is a more equitable means of using a limited sum of public money, surely individuals who are as hard-pressed as students undertaking a course ought not to undergo any worsening of their existing position. I am not talking about feather-bedding or public largesse. I am talking about a group of people who, by and large, are not having it very easy. Is the Minister setting out to create some kind of obstacle course over which the dedicated, committed student has to jump until, finally, he becomes qualified and better able to lead our nation?

The Minister has an opportunity in this debate to make some reassuring noises and statements and if he will undertake to look very carefully at hardship—and it ought not to be too much of a hardship for him to do that—and will say something that is helpful either to local authorities or to students who are placed in an impossible situation, then I will be very grateful and I know that my noble friend Lord Glenamara will be grateful too.

4.5 p.m.

The Earl of Swinton

My Lords, I am sure that we are all grateful to the noble Baroness, Lady David, for raising in this place an important area of education policy and one which we have not for some time had the opportunity to discuss as fully as we have today. May I first apologise for the delay which the noble Baroness quite rightly mentioned at the beginning of her speech. I shall try to explain the reasons why these mandatory grants regulations were not laid before Parliament until the last minute.

They are dependent upon the supplementary allowances. The supplementary allowances cannot be calculated until the DHSS rates of supplementary benefit are published and, in fact, it was not until mid-June that the supplementary benefit rates became available this year. However, there was some improvement in the 1984 timetable for the announcement of the supplementary allowances. This occurred because the link with the DHSS rates was broken in the case of certain important allowances, including that for extra weeks of study, making it possible to announce them as part of the 16th April package.

In fact, the Education (Mandatory Awards) Regulations 1984 were formally laid before Parliament on 1st August 1984, and this was an improvement on last year, when the equivalent regulations were laid on 9th August 1983. Of course, I acknowledge and accept that the date of our rising for the Summer Recess was not a great deal of help. We cannot, I am afraid, give a commitment for next year, except to say that we will do our very best. But I am, of course, particularly grateful to the noble Baroness for giving me an opportunity to explain to noble Lords the Government's record in this key area since we came into office.

The system of mandatory awards which we are discussing today came into operation in 1962, following the report of a committee of inquiry established by the then Minister of Education and the Secretary of State for Scotland under the chairmanship of Sir Colin Anderson. Previously students did not enjoy a statutory right to maintenance support. But as a result of the Anderson report, this assistance was granted to them by a Conservative Government as part of the Education Act 1962, and it is a privilege that they still enjoy today.

Since the Anderson Committee reported, successive Governments have continued to give effect to the principles set out in the report and this Government are no exception. In a period when the Government have sought to reduce public spending over a wide range of areas as part of their general economic strategy, they have continued to find the resources necessary to maintain the mandatory awards scheme. Indeed, more students benefit now from public support through the awards system than ever before. Since we came into office, the number of full value award holders has risen from 369,400 to the 439,500 we estimate this year—an increase of almost one-fifth.

This is hardly the erosion of our education system to which the noble Lord, Lord Kilmarnock, referred in his speech. May I say to him on books, since I have mentioned his name, that there is in fact a notional sum within the grant for books. But the NUS survey evidence, which has been brought to our attention by all speakers this afternoon, suggests that the students spend that sum not on books, but on other things.

So far as VAT on books is concerned, the Government are committed to shifting the burden of taxation from taxes on earnings to taxes on spending. This means that the indirect tax base may have to be further extended so that income tax can be further reduced. But the Government have no set views at present on how this might best be done.

Furthermore, our awards system is extremely generous and is regarded with envy by many overseas. No other country in the western world provides statutory grant support at the level we do—and for such a wide range of students. This year total public expenditure on fees and maintenance is forecast to be some £706 million. Most other western countries include a loans element in one form or another in their student support arrangements, but here students receive the majority of their maintenance support by means of a non-repayable grant. No wonder, then, that students abroad, as the noble Lord, Lord Mulley, said, look enviously at the British award system and seek, where they can, to take advantage of it.

It is of course very easy for noble Lords sitting on the Benches opposite to say that we have not done enough, or that we have not been generous enough, or for them to concentrate on one or two areas where they believe the Government have not been as generous as they should have been, or as they would have been. But I am sure that noble Lords on all sides of the House will take note of what the Government have done under the very real constraints under which they must work—constraints which of course do not apply to noble Lords opposite.

I should now like to say a little about each of the changes introduced under the regulations which we are debating today. I shall start, naturally enough, with grant rates. These, as we have heard, have been increased by 4 per cent. That increase represents, as it has always done in the past, a compromise between students' aspirations, their needs and the total sum it is reasonable to expect taxpayers and ratepayers to provide for the maintenance support of a privileged group of young people, many of whom will go on to earn enhanced salaries after graduation as a result of their publicly funded studies. I appreciate that the increase was not as generous as some students and their representatives would have liked, though I am sure that very many students appreciate that the taxpayer—including of course their own parents—does not have a bottomless purse and that this year's settlement is reasonable. Moreover, I am sure that students understand that they, in common with other groups in our society, cannot expect to be insulated from the harsh economic realities of life.

Given our success in reducing the rate of inflation, then, this year's settlement is I believe a fair one—for students, whose needs should continue to be met for the period which the grant covers, and for parents and for taxpayers and ratepayers who foot most of the bill.

Turning now to parental contributions, again the Government have sought to provide a fair settlement. First, the parental contributions scale has been indexed so that about the same number of parents will be assessed for a contribution this year as last. We have also sought to protect families earning less than around the average income from the real increases resulting from the steeper scale we have introduced. We have done this by retaining the lower part of the scale at its previous rate. We have, however, chosen to steepen the slope of the scale for families earning more than average income, thereby increasing their parental contribution in real terms.

Ministers have also decided to halve the minimum award from £410 to £205. At this point I should like to satisfy both the noble Baroness, Lady David, and the noble Lord, Lord Mulley, by denying categorically that any decision has yet been taken to reduce the award of £205 for next year.

Lord Mulley

My Lords, will the Minister convey to his right honourable friend the point that we should very strongly object if further consideration of the award meant that it was to be reduced?

The Earl of Swinton

My Lords, I shall certainly do that. I regret that this story has appeared in some sections of the press. So far as I know, there is absolutely no truth in it. Ministers also appreciate that this decision has led to unease on both sides of the House, but they have concluded that it would not be equitable to insulate higher income families from increased contributions when larger contributions would be assessed from parents whose incomes are lower.

I am sure noble Lords will appreciate that these decisions were not taken lightly. The savings resulting from this measure form part of a package which was necessary to keep public spending within the limits we had set. Faced with the need to make savings in higher education, Ministers—unlike noble Lords opposite—had to decide where savings should be made. They judged it preferable to make these savings on student awards rather than in other areas; for example, in the provision for the universities or for science.

Ministers were also faced with the equally difficult decision of how to achieve those savings. One possibility would have been to have kept down the main rate of grant. Ministers rejected this option because it would have been regressive and hit students from least well off backgrounds hardest—I am sure that this is something which appeals to noble Lords on the other side of the House—and because it would have run counter to the Government's general policy of encouraging wider access to higher education from all social groups. Ministers therefore concluded that the most equitable way forward would be to introduce the new scales incorporated into the regulations we are debating. I commend this difficult decision to noble Lords.

We have heard that these changes will result in more students suffering hardship, due to their parents' failure to make up their assessed parental contribution in full. This is a point which the noble Lord, Lord Mulley, made very forcefully. At this stage this is merely conjecture, but I urge all parents—as Ministers of successive Governments have done—to make up their assessed contributions in full. They should not overlook the help which deeds of covenant can offer in this respect.

Ministers were pleased to learn from the NUS survey that non-payment of assessed parental contribution is a less widespead problem now than it was a decade ago and they hope that this trend will continue. But this certainly does not mean that Ministers—in particular my right honourable friend—are complacent. I hope that publicity will be drawn to this point and to the fact that parents should pay their contributions in full. But it would be idle to pretend that the Government could solve the problem altogether by simply abolishing the parental contribution system. We estimate that the cost of doing this would be some £250 million per annum. It would therefore not be possible to contemplate abolition now or in the foreseeable future, just as it has not been possible for successive Governments to contemplate it in the past.

I now turn to the new arrangements which we have introduced to deal with students' travel and which have taken up a large part of our debate this afternoon. I recall, of course, that these proposals were criticised by several of your Lordships earlier in the year. I responded to those criticisms at that time and I remain convinced now that the changes which we have made are right.

The former method, under which students were able to claim reimbursement of expenditure which they had incurred in travelling to and from their place of study, was administratively cumbersome and inefficient and therefore inherently expensive. It gave no incentive to students to seek the most economical way to travel, as they knew that the taxpayer would ultimately foot the bill. Furthermore, the old arrangements implied an open-ended commitment to public expenditure and to a significant amount of public spending. Noble Lords may care to note that this year the department will be spending some £39 million on students' travel—not an inconsiderable sum.

I am sure that noble Lords who have spoken so eloquently on the new arrangements hold no brief for an inefficient and expensive system. I am sure, too, that they would agree that the Government must guard the taxpayers' interests and ensure that public money is disbursed as wisely as possible and that this area of expenditure should be kept under as close control as is possible.

Lord Graham of Edmonton

My Lords, I am sure that this House would not countenance administrative inconvenience. I am also sure that the House accepts that this was one of the prime reasons for the change in the system by the Government. If, however, one of the consequences of the change is to cause the kind of hardship which I have illustrated, the Government must surely recognise that change for purely administrative convenience may drive away good students from universities or, as my noble friend Lady David pointed out, induce students to look more closely at universities which are nearer to where they live, though they may not be the right universities for the kind of studies they wish to pursue.

The Earl of Swinton

My Lords, if the noble Lord, Lord Graham of Edmonton, will bear with me for a minute, I hope to be able to offer a fairly satisfactory answer to his question. Inevitably any change in the system of reimbursing actual cost to a more broadly based approach will mean that while some students will gain, others will lose. Ministers understood and acknowledged this when they first put forward their revised proposals, but they were aware, too, that very many more students would gain under the new proposals—by the increase in the grants to which I have referred—than would lose.

Some 56 per cent. of full value award holders—around 235,000 students—made no claim for excess travel reimbursement in 1982–83, the latest year for which we have data. All of these students will gain either £50 or £110 under the new arrangements, depending upon whether or not they live with their parents. Those claiming less than £50 or £110 respectively will gain, too, reducing the number of losers still further.

Ministers were also concerned that the interests of particular groups of claimants whose travel requirements could not be easily catered for under a nonreimbursement system were protected. Special provision has therefore been made for those studying abroad or away from the main place of study and, I am glad to say—for noble Lords will know that this is a subject very close to my own heart—for the disabled. Furthermore, in response to the representations made to them during the consultative period earlier this year, Ministers have made special arrangements for those who were on courses before 1st September this year and who face unavoidably very high travelling expenses. So, while I accept that some students will be made worse off under the new arrangements, again the effect of the change must be viewed in its proper perspective.

A number of noble Lords have spoken forcefully both today and before the Recess about students whom they expect to be made worse off and about particular local problems of which they have specialist knowledge. Here I would say that nobody has made these points more forcibly than the noble Lord, Lord Glenamara, and, in his absence, the noble Lord, Lord Graham.

Ministers acknowledge that some students will find themselves worse off than they are now if they continue with their existing travel arrangements—though one of the aims of the new system is to encourage students to seek the most cost-effective means of travel, where they have not done so in the past. Ministers understand, too, that in some cases the scope available to students to change their travel patterns may be limited. But they believe that in many of the cases which have been put to them students will be able to find solutions which will reduce their present levels of travel spending and not leave them significantly worse off than they were before.

Noble Lords will understand, I am sure, that it would not be sensible to try to tackle local problems, if they do indeed arise—and I am sure they do—by an across-the-board increase in the provision for travel. That would involve an enormous deadweight cost and would be an inefficient way to disburse taxpayers' and ratepayers' money. They will understand, too, I am sure, Ministers' natural reluctance to contemplate any change which would make the present regulations more complex than they are already, or would make the job of local education authorities more difficult in administering those regulations. Indeed, that would run counter to one of the main reasons for the changes we have made; administrative simplicity.

It is also reasonable, before considering whether any further amendments to the arrangements are necessary, to give students sufficient time to adapt to the new arrangements, and the new system a chance to settle down. In addition, of course, any changes introduced for the benefit of any one particular group could only be made at the expense of others.

For all these reasons, then, Ministers will be reluctant to contemplate any immediate change in the present system, but I can say—and here I hope that I can bring words of comfort to the noble Lord, Lord Graham, and others—that if, once the new system has had a chance to settle, Ministers are presented with compelling evidence that some students are facing hardship as a result of the new arrangements and a means is available to overcome any such problems in an administratively efficient way, they will look at them again. That, I am sure all noble Lords will acknowledge, is reasonable, sensible and generous.

I turn now to the three other improvements made in this year's regulations, which are important and about which—perhaps not surprisingly—we have heard nothing this afternoon. Ministers have listened sympathetically to the case made—particularly by medical students, but of course applying to all students in both universities and the public sector who study on longer courses—for an increase in the allowance for extra weeks of study. While they do not accept that the weekly rate of grant for extra weeks should be equivalent to the average weekly value of the award, Ministers decided that, in addition to a 4 per cent. increase in line with main rates of grant and the incorporation of an amount pro rata to the new flat rate travel provision, the extra weeks' allowance should be increased. A significant real increase of £2.80 per week is therefore incorporated into the regulations.

Ministers have also listened sympathetically to representations that all periods when a student was either in, or available for, work should be counted for the purposes of establishing independent status under the awards regulations. The regulations before us today have therefore been amended to give effect to this.

Finally, the regulations have been amended significantly to increase the sum a student may receive by way of sponsorship from his employer or prospective employer without losing grant. Indeed, the allowance has been more than doubled from £540 per annum to £1,200, and for students under the National Engineering Scholarship there is an even larger increase—from £795 to £1,500. Students may now receive a total of £1,600—or for National Engineering Scholarship students £1,900—by way of sponsorship and other income before their grant is affected. It is to be hoped that these increased sponsorship levels will help to attract able students to courses related to the wealth-creating parts of our economy—including courses leading to careers in vital new technologies.

My Lords, in conclusion, I commend the Education (Mandatory Awards) Regulations 1984 to you.

Baroness David

My Lords, I should like to thank noble Lords who have taken part in this short debate. I was particularly glad that the noble Lord, Lord Kilmarnock, mentioned books and the threat of VAT; but I am not so reassured by what the Minister had to say on that subject. I thank the noble Earl for his spirited defence of the regulations and for saying that the Government will pay attention if there is evidence of real hardship.

The Minister did not really answer my question about monitoring, but we hope that there will be monitoring and some research into how these new regulations affect students; that is very important. And, although one can congratulate the Government on having more students at the higher education level, that is partly because there are more in that age group at the moment. But it is not much use their being there unless they have the wherewithal to make a really profitable thing of their three years in higher education, and we fear that that may not happen under these new regulations. I particularly hope that the travel arrangements will be thoroughly monitored.

The Minister did not say whether there will be any review of the whole grant system. This is one of the most important points of all. But we have had an opportunity to have a good discussion on the new regulations—and we have not discussed regulations for some time—and I look forward to having the regulations before us rather sooner next year, so that we may debate them before they come into force. I beg leave to withdraw the Motion.

Motion, by leave, withdrawn.