HL Deb 14 October 1985 vol 467 cc399-409

7.4 p.m.

Baroness David rose to move, That an humble Address be presented to Her Majesty praying that the Education (Mandatory Awards) Regulations (1985 S.I. 1126) 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 1985 laid before Parliament on 26th July, the day another place rose for the Recess and only three days before we did. The regulations came into force on September 1st. Last year I protested that the regulations came into force before they could be debated in either House. The Minister apologised for the delay. He said that he could give no commitment for 1985 but that the department would do their best. Their best is very poor. The situation is exactly as it was last year. I hope that the Minister will not pretend that 26th July is an improvement on 1st August. Last year he said that 1st August was an improvement on 9th August which was the date that the regulations were laid in 1983. I do not consider that a good enough response. The whole point is that Parliament should have the chance to speak and vote against the regulations if they feel so inclined before they come into operation. It was in June that the Local Education Authorities and the National Union of Students were notified of this year's plans. That being so, it seems ridiculous that the regulations cannot be laid immediately.

I am aware that the Minister explained that the supplementary benefits allowances have to be announced before the regulations are finally laid; and that that announcement normally comes in June. However, it seems to us that as these affect only the dependants of students, and one particular section of the regulations—Part 3 of Schedule 2—deals with this, that that part if necessary could be held over and the rest laid in time for comment in July. Can the Minister tell me whether there is to be any effort to improve the timing next year? It would be a great help to local authorities as well as Parliament.

It seems to me that the Government have behaved in the most extraordinary and unacceptable manner over the whole subject of student support. Ministers have been uncertain in their action: plans have been put forward and as hastily withdrawn, and commitments have been made but not honoured. Last year we had the minimum award reduced from £410 to £205, and rumour said that that was a first step to abolishing it altogether. Both my noble friend Lord Mulley and I asked for assurances that this was not so. The Minister replied. I quote from col. 291 of the Official Report of 25th Ocotober: 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".

I should not like to question the honesty of the noble Earl because I am sure he is a very honest man. However, it was after that disconcerting, to say the least, that only 18 days later, on 12th November, Sir Keith Joseph announced changes in the awards for 1985–86—the abolition of the minimum award; and tuition fees to be means-tested, which were previously of course paid in full for all students. We know what happened there. The middle classes, and the Tory MPs representing them, squealed and, as a result, Sir Keith back-pedalled fast and on 5th December retreated completely on the fees question. At the same time he announced a review of the student award system. Of course we are glad about the tuition fees but are very uneasy over the ending of the minimum award which may well mean hardship for a fair proportion of students who relied on it as their parents could not be relied on to pay up the whole or even a major part of what was expected from them.

The National Union of Students Undergraduate Income and Expenditure Survey—acknowledged to be a well-researched document—showed that 13 per cent. of all students on mandatory awards received the minimum award. This means that at least 50,000 students are affected by this change. The scale of Government saving on this is £10 million.

The vacillation of the Government can be seen again in their proposal for a review of student financial support. This was promised in December of last year as I said. One of the options to be discussed was the introduction of student loans. The review was confidently expected by the early summer. Instead on 12th July I understand that the Cabinet vetoed a paper by Sir Keith advocating the introduction of loans. Since then we have heard nothing of the review. This shows to my mind gross inefficiency and lack of foresight and makes it very difficult indeed for students and families wishing to plan their finances ahead, as most families would, so to do.

A further complication for students and families has come from Mr. Norman Fowler's Green Paper on the Reform of Social Security. In this paper the Government's ultimate aim for students in relation to social security provision is clearly indicated, but progress towards the achievement of that aim is stated to be contingent upon the outcome of the DES's consultation exercise on student support. The Government's aim for students in relation to social security provision is that students should not have recourse to welfare benefits but that student support should be the responsibility of the Department of Education and Science. In the absence of any proposal from Sir Keith, students face the unenviable situation of being written out of the welfare state with no corresponding compensation from the grant system. This would mean that a major decision of educational importance would have been taken by the Secretary of State for Social Services and not by the Secretary of State for Education and Science. This is a quite new problem facing students and their families. In the light of this situation the NUS believes—and we would certainly support them in this—that the status quo whereby students may continue to claim welfare benefits should be upheld until the Government embark upon a full and independent review of student financial support covering the responsibilities not only of the DES but also of the Department of Health and Social Security and the Department of Employment. Could the Minister give some assurance that the status quo will be upheld until that full and independent review has taken place? Students and their families should not be left in this uncertain, unsatisfactory and difficult situation.

To turn to parental contributions, last year saw the beginning of higher contributions from parents in the middle and higher income brackets. Of course we want the richer members of the community to help the poorer. I want to make that clear in case the Minister comes back and says, "Surely the Labour Party is for a redistribution of wealth?" But the speed with which the Government have changed the contributions makes for difficulties for those in the middle income bracket; those with a joint income from husband and wife of £13,000 plus.

The level of parental contribution has gone up even more steeply for those with a joint residual income of £15,000 plus. This could well prove a deterrent to parents contributing to their children's educational costs for a period of three or four years. Anything that deters our more talented and gifted young people from attaining the education and training they need for the society—the highly technological society—in which we now live can only be to the nation's disadvantage. We are already very short of qualified people, particularly in engineering and science, where often more than three years' study is needed.

I should like to give one example of the sort of contribution now being asked of parents. Take a family where husband and wife together—together, remember—are earning £16,000 a year and have one child about to go to university and one aged 15. They would be left after tax and national insurance payments with a net income of £ 11,822. Their residual income for grant purposes would be £15,160. Their contribution to the grant would be £1,229; that is, 10.7 per cent. of their net income.

This is a large percentage. It is not altogether surprising that parents are not always keen, probably are just not able, to pay. Forty three per cent. of parents assessed for parental contribution do not pay their contribution in full or in part. Is the Secretary of State not worried that we may be losing students of potentially high calibre, students that the nation desperately needs, from the higher education system? In these new regulations there is just one bonus, and this is only for the better off. No family will be asked to pay more than £4,000, and that will be a help to rich parents with more than one child in higher education.

Of course, we all know that the Government want to reduce public expenditure, but is as sudden and drastic a change as that begun last year and continued this year wise or fair? People need to plan ahead Since 1979–80 the Government have increased the amount parents are assessed to pay towards student grants by a staggering 270 per cent., corresponding to an increase from £84 million in 1979–80 to £230 million in 1985–86. The Government, by way of comparison, can expect to pay £527 million on student financial support in maintenance awards and travel costs, so as much as 43 per cent. of the total bill for support is paid—or should be paid—by parents.

I now want to say something on travel costs. The system for reimbursing them was changed last year when a fixed amount of £105 was put into each grant for students living away from home and £ 160 for those at home. Great anxiety was expressed that this would mean hardship for many students, even if a few got a little benefit. It was "rough justice", as Mr Peter Brooke admitted.

Concern has been expressed by a wide variety of groups: the Committee of Vice-Chancellors and Principals, the Committee of Directors of Polytechnics, the ACC and the AMA. Pressure is put on accommodation near colleges, possibly to the detriment of other sections of the community. Evidence from the universities of Kent, Lancaster, Warwick, Hull and East Anglia shows that significant numbers of students are unable to find accommodation near to their institution and are incurring considerable expenses for daily travel into college.

What several of us asked last year was that some survey or monitoring should be carried out to assess what effect the new arrangements for student travel were having, particularly as Sir Keith said in July last year that no assessment had been made before the change. Could we please be told if the department has made, or is intending to make, any survey? Mr. Peter Brooke in fact gave a commitment to monitor the effect. Is that commitment to be honoured? 1 know that the University of London has conducted a survey, but the results are not yet published.

After persistent criticisms of the new system in Northern Ireland, a survey was made which revealed that 37 per cent. of students were adversely affected, but as the survey included 13.5 per cent. of students on minimum awards who had never been able to claim reimbursement for travel the facts on which the survey was based were not satisfactory and the figure of 3 7 per cent. was no doubt a considerable underestimate of those suffering hardship.

The value of the main rate of grant has again fallen as the increase of 3 per cent. is well below the rate of inflation at 5, nearer 6, per cent. To be equal to the 1979–80 level an increase of 17 per cent. would be necessary. The grant is worth nearly a fifth less than six years ago, precisely when accommodation costs in the university sector for self-catering accommodation have risen by 68 per cent. and in the public sector by 73 per cent. This is worrying.

A student needs funds for essential books and equipment, and the price of these has risen, too. The erosion of the grant means that students are having to seek other sources of income. Part-time work is by no means always available. Loans and overdrafts from banks are resorted to, and quite large debts result. In the Daily Telegraph only last week there was an account of 72 students at Kent University with debts ranging from £20 to £4,000. They were being told to pay up or lose their place. The NUS survey back in 1983 put Britain's undergraduate overdraft at £13 million, and it is thought that that figure would now stand at £ 15 million.

The banks are encouraging students to make use of all their lending facilities, and are competing with each other for custom. I picked up a brochure in my own bank in Cambridge last week and it certainly is very seductive and enticing. It really is a case of loans by the back door, and may be leaving students at the end of their career in higher education with a very bad debt.

Having made a number of complaints and criticisms of the Government regulations, I must admit that there are two of them we are pleased about. One is that the periods when the student was in receipt of training under the YTS, or in receipt of severe disablement allowances, are to count as periods during which he has supported himself out of his earnings; and the other is that in certain circumstances a parental contribution will no longer be applicable where the parents are residing overseas. But apart from that we feel that the Government have got themselves in a real tangle over the whole question of student support. That applies as much, if not more so, to l6-to 19-year-olds as to those in higher education whom we are considering today. It has been a sad story of muddle with no well-thought-out strong and consistent policy line being followed.

I hope Ministers are feeling some shame about the events of the last year and that a proper review of student support will be made in conjunction with the DHSS and the Department of Employment very soon, and that we shall have the review before us early in 1986. Can the Minister give us any hope on that? I beg to move.

Moved, That an humble address be presented to Her Majesty praying that the Education (Mandatory Awards) Regulations (1985 S.I. 1126) be annulled.—(Baroness David.)

7.19 p.m.

Lord Ritchie of Dundee

My Lords, may I first apologise that I was not here for the first few moments of this debate? I should like to say that we on these Benches are indebted to the noble Baroness, Lady David, for moving this Prayer (if that is what you do to a Prayer) so that we may have the opportunity to express some of our feelings on the contentious question of the present economies. The noble Baroness has voiced with admirable force nearly all the feelings which we have on these Benches and I have very little to add to them. But I should like to speak briefly on three aspects of the current situation which are of particular concern to us.

I have no exact computation of the total sum likely to be saved by these economies, but I understand that it is likely to be about £25 million. Can we have an assurance from the noble Earl that this sum will be, or is being, spent on improvements to our scientific resources as originally proposed by the Secretary of State?

This brings me to the second point I want to stress and here there is an irony. The removal of the minimum award and the swingeing increases in the parental contribution cannot help acting as a disincentive to students aspiring to higher education. One may argue that a determined young person will find a way, but many young people of 18 are influenced by their parents and cannot hold out against a refusal to pay the full amount and against strong discouragement. The sum result may be that when the promised scientific resources become available there will not be enough students to take advantage of them. As the noble Lord, Lord Adrian, said in a debate in your Lordships' House: If we are to see, as I fear we shall, more students forced into debt by the inability or even the unwillingness of their parents to pay, it will not comfort us much at the university to think that their hardship is supporting the research councils. If this change were in turn to discourage some from going to university to read science the decline in our science base would be reinforced.". I should like to say in parenthesis that the necessity that is put upon the students of working to make both ends meet can undermine their efforts at university. I heard only today of a young man whose father firmly believed that he would have achieved a better degree had he not had to spend his vacations working in order to survive. It seems to me that this is one more example of the Government's cheeseparing, the overall effect of which will do more to depress and discourage enterprise—in this case higher education—than to give it fresh impetus by constructive redistribution of financial resources.

So what is the answer, assuming the necessity of economies? Nobody can pretend that the present system has ever been entirely satisfactory and the present piecemeal undermining of it is less satisfactory than ever before. I echo the words of the noble Baroness in referring to the undertaking that was made by the Secretary of State last December that a review should be taken of the whole student support system with a view to possible radical change. We are awaiting the results of this review, which hopefully will make proposals that are more constructive and encouraging to young people than the present measures.

Lord Darwen

My Lords, it is some 35 years since I made my maiden speech and this is the first speech that I have made from the Liberal Benches. I am afraid my colleagues will not be very pleased with what I am going to say. When I went to Manchester University I had no grant. My father paid no fees for me. What I had to live on was the money that my wife earned through taking in student lodgers, which was very little. I acknowledge that in those days our expectations of living were very much lower than they are today. We had no car, no freezer, no fridge, no hoover, and so forth, but we got along. We were quite happy and 1 worked hard. We had a family. I really feel very strongly indeed that students today ought to earn what they get. They ought to earn it by their diligence in achieving a good degree or whatever it is they go in for. The grant should only be made if they perform. I favour the repayment of grants by those students who do well and gain very high paid jobs.

7.25 p.m.

The Earl of Swinton

My Lords, I am sure that the whole House will be grateful to the noble Baroness for the opportunity to debate the subject of student support this evening. I shall try to answer her questions about late timing, but I am afraid she will not be very satisfied at the end. The Government recognise the difficulties that a late announcement can bring and are as anxious as are the LEAs that the new rates of grant and parental contribution scales are issued as early as possible. For 1985–86 we released the new contribution scales and gave an indication of the change in the main rates dates in November 1984. The timing of the announcement of detailed rates will inevitably vary from year to year depending largely on the scale of any changes that we wish to make and the need to consult other interested departments. We had hoped to achieve an early announcement this year but the interdepartmental consultations held us up. In the event, 31st May was the earliest date by which the main rates could be issued. As the noble Baroness herself said, supplementary allowances cannot be calculated until DHSS rates and supplementary benefit are published. It was not until mid-June that supplementary benefit rates became available this year.

As to the awards regulations themselves, these were formally laid before Parliament, as the noble Baroness said, on 26th July. I was going to say that this was a slight improvement on 1984, but it is a considerable improvement on the year before when it was 9th August. So at least the noble Baroness could give us credit for that. The date of the announcement of supplementary benefit rates prevents regulations being laid much earlier, but I have much sympathy with what the noble Baroness said and I shall certainly take the suggestion she made, what might at face value seem to be a good idea, to my right honourable friend in the hope that something can be done.

Student support is an important area of higher education policy, and one which has provoked much discussion in the past year. This debate provides an opportunity for the Government to explain the changes to the regulations which have been made this year and to give an indication of our general approach to the issue of student support.

It may be convenient to deal with the second issue first. As my right honourable friend announced last December, the Government have undertaken a fundamental review of the present arrangements for student support, concentrating on first degree and sub-degree levels. In the course of this review, the Government have examined the possibility of introducing student loans, but have rejected this option. We are nevertheless looking at other ways of making improvements to the awards system, and my right honourable friend is considering the publication later this year of a consultative paper which would invite views on the issues raised.

It remains the case, however, that our awards system is still very generous when compared with those in most other countries of the western world. Here I would say to the noble Lord, Lord Darwen, that I do not think the Government want to go as far as he does along the line of making students earn their own living as they work their way through college. Had we all the money in the world we should like to spend it.

Few other countries provide mandatory grant support at our level and for such a wide range of students as is applicable here. There are now some 450,000 students who are in receipt of a mandatory award in Great Britain and public expenditure on their maintenance alone is expected to total some £530 million in the current year. This leaves out of account the much larger subsidy still which is given through the provision of free tuition, of which the aggregate cost is in excess of £1,500 million a year.

It is against this background—and the overriding need to curb public expenditure on all fronts—that the changes in grant rates this year should be viewed. These have in general been increased by 3 per cent. This adjustment reflects what the Government believe to be a fair balance between the need to meet the rising cost of being a student and the total expenditure which taxpayers and ratepayers can reasonably be expected to provide. It is worth noting that the overall direct contribution of students and their families towards a student's higher education is, on average, only some 10 per cent. of the total expenditure on maintenance and tuition costs. The balance is met by individual taxpayers, most of whom are unlikely to benefit from the higher education which they are helping to pay for. Whether or not one may think that the cost of higher education is now fairly distributed between the taxpayer and the student beneficiary, it is right that students should share some of the burden which we all have to shoulder in continuing to hold down public expenditure and thus live within our means as a nation.

Although the main rate of grant has been increased by 3 per cent., the travel element incorporated in the grant has been uprated by 5 per cent. Noble Lords will recall that last year new arrangements were introduced for meeting students' travel costs, which have been mentioned by the noble Baroness, Lady David, whereby the previous reimbursement system was replaced by the inclusion in the grant of a flat-rate element for travel expenses. My right honourable friend is satisfied that the new arrangements are generally working well. We have said we will look at this, but we would wish to see the present system in operation for some time before deciding whether any further changes are called for.

I now turn to the question of parental contributions. Here again the Government have sought to strike a fair balance. The parental contribution 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 average income from the real increases resulting from the steeper scale that has been introduced. This has been done by retaining the lower part of the scale at its previous rate. We have, however, steepened the slope of the contribution scale for families earning more than average income, thereby increasing their parental contribution in real terms. Our general aim in this respect is to introduce a more progressive, and therefore fairer, contribution scale.

The noble Baroness, Lady David, drew attention to what she regarded as being the plight of those parents from the middle income levels. Ministers appreciate that the increases in parental contribution are in some cases steep. However, the new scales are aimed at carrying further the approach which we adopted for the 1984–85 settlement; namely, that higher contributions should be required from those best able to pay, so that the families with lower incomes could be protected from the savings that we had to make. I think here the noble Baroness was, in some way at any rate, in agreement with us. I should have found it far more difficult to defend the continuation of a regressive contribution scale, whereby the higher the income of the family the smaller the proportion of their incremental income they were asked to contribute.

Noble Lords will also recall that the Government announced last year that parents at the upper end of the scale would be assessed to contribute towards designated tuition fees. However, following the deep concern expressed in many quarters that the increase in parental contribution was too sharp, we decided that it was right to withdraw this proposal.

The Government have also decided to abolish the minimum maintenance award of £205. I think the noble Baroness was very kind and fair to me in saying that I was probably not being dishonest, but that I did not know what was going on. I did actually know what was going on. I can give the absolute assurance that at the time of last year's debate no decision had been taken to abolish the minimum maintenance award. The fact that it was taken shortly afterwards I think excuses me from having to apologise to the House in any way.

I know that this decision has been a source of concern, but we concluded that it would not be equitable to insulate higher income families from increased contributions when higher contributions than hitherto would be assessed from parents whose incomes are lower. This measure also is in line with our general aim of introducing a more progressive system. However, although higher income families may be asked to pay for the whole of a student's maintenance needs, those families with more than one award holder will benefit from a limit on their overall contribution of £4,000.

I think I can now, partly at any rate, give the undertaking for which the noble Lord, Lord Ritchie of Dundee, asked me. That is that, as my right honourable friend the Secretary of State announced last November, savings from these changes will not only assist in meeting the costs of awards and other unavoidable commitments but will also contribute towards increased provision for science and technology in the universities and research councils.

The noble Baroness, Lady David, also asked me about students and the benefit arrangements. I can say that any change that may occur to students' entitlement to benefits would of course be a matter to which Ministers would give due consideration, taking into account the outcome of the review of student support or, indeed, any consultations which may follow it.

I turn now to the other changes in the regulations before us today. These changes are less contentious, and I believe that many of them have been generally welcomed. Indeed, some of them have been welcomed by the noble Baroness, Lady David, this evening. First, the Government have listened sympathetically to the case made on behalf of certain refugees and other students whose parents might normally be assessed for parental contributions. We know that such parents could face difficulties in their home countries if they were contacted for assessment purposes, and that in some countries where these parents reside it can be extremely difficult for money to be sent to the United Kingdom. The regulations have therefore been amended to allow local education authorities to waive the assessment of a parental contribution where they are satisfied that it might result in jeopardy to the parents or where it would not be reasonably practicable for the parents to send an assessed contribution to this country.

The Government have also responded to representations that periods spent on the Manpower Services Commission's Youth Training Scheme should be counted for the purpose of establishing independent status under the awards regulations. The regulations before us today have therefore been amended to give effect to this change. In addition, periods spent in receipt of severe disability allowance will henceforth be counted for the purposes of establishing independent status.

The regulations have also been amended so that students will be allowed to retain without limit any term-time earnings without any effect on their grant. Under the previous regulations there was a limit on such income of £400 without reductions in grant. This amendment is consistent with this Government's stated aim of encouraging greater self-support by students. That may give some comfort to the noble Lord, Lord Darwen.

Finally, the regulations have been amended to bring the assessment of income more closely into line with tax practice. As a result of last year's Budget, income derived from bank interest is now paid to savers net of tax, as has long been the case with income from building society interest. We have therefore amended the regulations to provide for any interest received net of tax to be grossed up by the standard rate of tax.

I hope that noble Lords will agree that this is a sensible and modest package of amendments. Changes of a more radical nature would have been inappropriate in view of the wide-ranging review now being undertaken of our student support system.

In conclusion, I commend the Education (Mandatory Awards) Regulations 1985 to your Lordships, and I hope that the noble Baroness will withdraw her Prayer.

Baroness David

My Lords, may I ask the Minister just one question? I am not quite clear whether this review, which is still promised, is to be undertaken by the three Secretaries of State—the Secretary of State for Education and Science, the Secretary of State for Health and Social Security and the Secretary of State for Employment. If this is not to embrace all those three, it does not seem to me that is to be a very satisfactory review. Also, when is this review going to be with us?

The Earl of Swinton

My Lords, the review is being undertaken by the Department of Education and Science. They may well be consulting other departments; I do not know. I can only say that the review is being considered by my right honourable friend and it may—I cannot put it stronger than that—be published later this year.

Baroness David

My Lords, I thank the Minister for his quite lengthy explanation and reception of what has been said by the three noble Lords who have spoken. I still feel that it is not very satisfactory about the lateness of the laying of the regulations, because although the LEAs may know roughly what the regulations are to contain they cannot do their detailed sums and get their grant cheques out to the students until they really know the fine detail. That makes it very difficult, not only administratively for the LEAs but also for the students, who may not receive their cheques until too late.

As regards the concern of the noble Lord, Lord Ritchie, I think that the savings are rather greater than he said, and in fact I should have thought considerably greater. I was very surprised by the figure of £1,000 million a year, which the Minister said the DES gave in tuition fees. I should like to query that figure because it is certainly very different from the one which I thought was right. However, it may be that I had better leave that point. Perhaps the Minister can write to me and tell me how that figure is made up. I should be very interested to hear, as it is so very different from the one that I had.

However, as we know that these regulations are now in force, I think I must perforce withdraw my Motion.

Motion, by leave, withdrawn.

Viscount Long

My Lords, I beg to move that the House do now adjourn during pleasure until 7.50 p.m.

Moved accordingly, and, on Question, Motion agreed to.

[The Sitting was suspended from 7.40 until 7.50 p.m.]