Education (Student Loans) Bill

HL Deb 12 March 1990 vol 516 cc1392-452

8.29 p.m.

House again in Committee on Clause 1.

Earl Haig moved Amendment No. 5: Page 1, line 6, after ("maintenance") insert ("but not their tuition").

The noble Earl said: This amendment explains more clearly the purpose of loans. At present the wording of the first paragraph is incomplete. It is not explicit. It should mention both aspects—maintenance and tuition—within each of which there are problems over funding. On the tuition side the Government have something about which they can feel proud. An undertaking was rated at £750 per student in 1984. Extra moneys available from universities have been added. The problem of university funding was highlighted by the Oxford appeal.

Financial difficulties also affect art schools. In London there have been closures and amalgamations. In Edinburgh, due to cuts, students are being asked to find their own materials. This is particularly expensive in the craft departments. On the credit side, students are learning to economise and to save on materials. However, this makes experimentation difficult because mistakes and breakages—for example, in the stained glass department—are expensive. Students have to pay for the gas used in their kilns and sand blasters. At the end of the year they are faced with heavy bills for materials.

It is an expense which comes under the heading of maintenance although rightly it should come under the heading "tuition". Under the proposed scheme there will be a heavy welfare debit when on top of materials there will be the cost of food, lodging, poll tax and clothing. To art students, the loan scheme is unpopular. It is vital to phrase the wording of the Bill in as attractive a way as possible to make students feel that they will be on solid ground. The Bill aims to increase the numbers of students in particular from lower income families who will be able to play their part in the years ahead. It is all the more important to word it properly in order to attract students. Perhaps I may use an analogy about fishing. If one wishes to catch a fish one puts as attractive a fly at the end of one's line as possible.

At present the Bill is seen as a disincentive to students who hope to embark on lower paid careers in arts, teaching, nursing, the Church, social work and, in the short term, in medicine. For them, we must be clear about the bottom line which includes tuition as well as maintenance. Tuition is an expensive undertaking. It must be spelt out in the Bill as part of a good selling exercise. Otherwise we are bad communicators. I beg to move.

Lord Peston

I rise briefly to support the amendment of the noble Earl. His eye has caught a point that some of us missed. It is worth underlining it.

The Bill says in its introductory statement: An Act to provide … loans towards their maintenance". There is no doubt that that is what it states. The noble Earl may well say that when the Bill states "towards their maintenance" it means towards their maintenance and nothing else. If it means that, the point of the noble Earl, Lord Haig, is well taken and will be met by the Bill. I hope that is what it means and that the noble Earl, Lord Caithness, will be able to say that is exactly what it means. He will then have satisfied the noble Earl, Lord Haig, and those of us on this side of the Chamber.

Lord Renton

I agree with the noble Lord that the word "maintenance" used by itself implies that it does not cover tuition fees, and so on. I do not have a copy of the White Paper with me. Can my noble friend tell us how tuition fees will be paid for by those who do not have the means to pay them? Will they be paid for by grants, as frequently happens at present; or in what way?

Lord Adrian

Perhaps I may ask the Minister whether there is any planned intention to change the method of payment for tuition fees from that in place at the moment. In effect, is there any difficulty in accepting the amendment which implies that at least for the present there is no intention to change? To refuse the amendment might suggest that there was such an intention.

The Earl of Caithness

As the noble Lord, Lord Peston, pointed out to my noble friend Lord Haig, the amendment is unnecessary. That is due to the Bill's first substantive sentence in Clause 1(1) which would empower the Secretary of State to make arrangements only, for enabling eligible students to receive loans towards their maintenance". I can confirm to my noble friend that there are no powers in the Bill for the Secretary of State to make loans towards student's tuition costs. I noted exactly what my noble friend Lord Renton—who is the expert on drafting in this Chamber—said: that the concerns of my noble friend Lord Haig are already met in the wording of the Bill as it stands.

However, I do not rest my case at that. I understand the concerns that lie behind my noble friend's amendment. I wish also to respond to those directly. I can say to him and to the noble Lord, Lord Adrian, that the Government have no plans to change the arrangements whereby, in the case of students in receipt of a mandatory award, standard tuition fees are met from public funds as part of that award. Payment is made direct to the institution attended by the student. That element of the award is not means tested. The fees element is payable whether or not the student's parents are assessed on income grounds to make a contribution to the grant for living costs.

When the noble Lord, Lord Adrian, rose, I thought that he was going to argue against my noble friend's amendment because I know that it is part of the vice-chancellor's scheme that tuition fees could be catered for under a graduate tax principle. Let me just confirm again to my noble friend Lord Haig that I absolutely take his point, but I believe that it is already well catered for in the wording of the Bill.

Earl Haig

I thank the Minister for his undertakings and explanation. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Blackstone moved Amendment No. 6: Page 1, line 13, after ("State") insert— ("(aa) are commencing their courses on or after the academic year 1990–91").

The noble Baroness said: The amendment raises a simple issue. It is whether it is right to alter the conditions of study for existing students who started with an expectation of being able to complete their courses with grants rather than that half-way through their courses they would be asked to shift into a partly loan supported maintenance system.

The Government argued at Second Reading that students who started their course in October did so in the knowledge of the forthcoming student loans scheme. That would not be true of students who started their course a year earlier; in other words, third year students in October 1990. In any case, there is no evidence for the claim that students starting their courses last October were fully aware of the implications of the student loans proposal. More significantly, the proposal has yet to receive parliamentary approval and a student would be wholly entitled to think that the matter was still under discussion and that the principle might not be adopted.

For the Government to endorse any other assumption is to demonstrate very clearly their view of parliamentary sovereignty. Even if a student had accepted the likelihood of the Government getting the Bill through, there is nothing in the Bill which spells out to an existing student the level of the loan which he or she will receive, or any of the detail about how it will be paid. The Government confirmed at Second Reading the figures contained within the White Paper. But those figures could still be changed and in any case are likely to be changed very substantially in future years.

There are also practical arguments for phasing the scheme over a three-year period. First, existing students are more than likely to have incurred debts through having to supplement their grant. We know that many of them do so. The Bill proposes that second and third year students should effectively incur a new form of debt to set alongside those incurred from the beginning of their studies at the start of their first year. It would surely be better to enable students joining the scheme to do so with a clean sheet and to let them make their own decisions on spending arrangements within the known constraints of the loans which they are to be given.

The Government argue that loans at a nil rate of interest are advantageous to students who are otherwise forced to borrow commercially. In fact, it is difficult to avoid the conclusion that, the grant having been reduced by 21 per cent. in real terms since 1979—and indeed the Government have confirmed those figures—the financial difficulties of students are now being used against them in order to justify loans.

Imposing loans on students who have had to struggle financially during their first and second years—or, in the case of those students on longer courses, third and fourth years—will multiply those difficulties. Students in rented accommodation are dependent on housing benefit, which they will lose together with any income support which may have been claimed during the summer vacation. That will be the price for receiving a loan part of the way into their period at university or polytechnic. Therefore, students faced with a real cut in their income in their second or third years will question very seriously why the new scheme could not have been introduced gradually from October 1990 starting only with new students.

In addition, surely it would be better to bring in the changes gradually so that any of the administrative difficulties can be ironed out with one cohort of students rather than three years all being pushed into the scheme at once. In a discussion on Amendment No. 2 we heard about the benefits of delaying rather than rushing through this legislation to try to start all students on the scheme in 1990. I know that the views of higher education institutions will be very much in favour of starting on a more gradual basis.

When we discussed that amendment earlier this afternoon, the noble Baroness, Lady Young, said that academics always wanted to delay things. Speaking as an academic, in this case I am not in any sense asking for a delay and I am not concerned about delay. I am concerned about order and efficiency. I foresee administrative chaos this summer if this amendment is not accepted and if we are going to ask higher education institutions to process not only new students but all existing students, all in the course of two or three months over this summer.

The prime reason for moving this amendment is that the Bill retrospectively changes the conditions of study in our universities for approximately two-thirds of all our undergraduate students. Surely that is an undesirable precedent. I beg to move.

Baroness Young

When my noble friend comes to reply to this amendment I believe that it would be very helpful if he could set out in some detail just what will be the figures. When I read this amendment on the Marshalled List I could see the point which the noble Baroness was making. At first glance it appears that somebody will be disadvantaged. Therefore, I wish to be sure that my own understanding of the position is correct.

I may not be right but I should have thought that it was unlikely that students coming up next October do not know about student loans, because there has been quite a lot of talk about the subject in the newspapers and in the media generally for some considerable time and undoubtedly it will continue to be debated over the next summer term.

However, the point I particularly wish to make is that, as I understand the scheme, next October—and that is why I want to be quite clear—the grant will be increased (and there are three levels) and at the same time in the autumn of 1990 students overall will receive an increase in the amount of money available; that is, the £125 million. Of course, they will be eligible for a loan.

Therefore, my understanding is that in October students will be returned approximately in real terms to the position in 1979. In that sense, to delay an introduction of this scheme could put students coming up next October at a disadvantage vis à vis everybody else. I believe that it is quite difficult fully to understand all the figures. I hope that I have got this right. If so, it seems to me that it is to the advantage of students to be in the scheme next October, and that is what we want to see.

8.45 p.m.

Lord Addington

I support this amendment. The real issue here is that students who have entered on an undergraduate course prior to October 1990 will have done so through a system under which they have been funded by grants and not by loans. Therefore, they may have made their assessments of going into education on different grounds.

Effectively, we are changing the terms under which students are entering upon their educational studies. Students going back one year may well have just been aware, when they entered their courses, of a proposal similar to that at present before us. Any student going back further than that—that is, any student in his third, fourth or fifth year, because there are undergraduates on courses of that length—will not have known of or considered this loan scheme when he started his course.

I believe that there is a strong case for allowing students to finish their courses under the same terms as they entered into them. It simply is not fair to expect them to have this decision forced upon them as opposed to letting them finish their courses under the terms on which they started them. I believe that this is a principle of basic fairness which we should address.

Lord Boyd-Carpenter

There seems to me to be something in favour of this amendment in respect of current students. Students who have embarked upon their courses at universities or other institutions of higher education started on a certain basis, no doubt believing, rightly or wrongly, that that basis would continue during the normal term of their studies.

Therefore, unless they are prepared willingly to agree to change to the new position, it would seem reasonable that they should be entitled to hold to the position at which they started as students. That may seem to my noble friend to be unduly favourable to them. On the other hand, there is much to be said for saying that if people have undertaken obligations on a certain basis, they really should be allowed to complete their studies on that basis if they so wish. If they are prepared to waive that, that is another matter.

Earl Haig

I support the amendment which is designed to make sure that arrangements and agreements made with current students are adhered to and that provisions made for their support are not changed while in midsteam. Unless previous commitments are adhered to, there could be grave problems of financial adjustment for students from low income families who will be unable to make ends meet and will thus have grounds for resentment. We should not impose new regulations upon students who were already enrolled and who were unaware of the scope of the new regulations. Their positions would be safeguarded by exemption from the provisions of the Bill and the regulations.

Lord Adrian

I am much in agreement with what has been said already. However, I have one further concern; that is, that if students who are currently at the universities or polytechnics are not to come under the operation of the loan scheme, as I understand it, they will lose their social security benefits whenever that is promulgated, laid on the table or put forward under whatever mechanism is to be used.

Therefore, I believe that, if students in course are not to become eligible for loans, they should continue to be eligible for social security benefits, because, if they are not, they will be quite seriously disadvantaged.

Lord Renton

It is always wrong, as the noble Baroness said, for us to legislate in retrospect if we can possibly avoid it. It is especially wrong in financial matters, and it may be harsh on students who, for example, have done two years of a three-year course and who are just coming up to their final year, which is the most anxious of the three years. For them to find that the financial foundation of their studies is to be changed in a way that some of them may find less agreeable is something that we should avoid. I shall be interested to hear what my noble friend the Minister has to say about the amendment. I too, for the reasons given by my noble friend Lord Boyd-Carpenter, and others, have some sympathy with the amendment.

Earl Russell

I am in full agreement with what has been said by the noble Lords, Lord Boyd-Carpenter and Lord Renton. I do not believe that I am straining things by saying that we have here an argument of implied contract, which is something about which universities are careful when dealing with their students. When new courses and new degree regulations are introduced, it is pretty well invariably on the understanding that these apply only to those who will be admitted in the future and not to those who are already admitted. It is a principle which was accepted by the Government in a case about which they felt strongly—the abolition of academic tenure. That measure was to apply only to appointments made or contracts signed after 20th November 1987. That was a good. equitable principle. I was glad to see it there; I should like to see it here.

There is also some force in the points made by the noble Baroness, Lady Blackstone, about the risk of administrative chaos. The Committee knows that I am somewhat concerned about September 1990. It will be difficult to get the processing done in time. A reduction of one-third in the burden of work to be done in the first year could be helpful. It could even possibly just make the difference between a scheme which may just creep through and work and one that will not.

Now that we have passed Second Reading, if it works I shall be relieved. If the Minister were to accept the amendment, I hope that he will also give thought to the point about the social security regulations made by the noble Lord, Lord Adrian. That instrument, which I have now discovered is by the negative procedure, has not yet been published. I hope that it is not too late to introduce consequential revisions into it. I support the amendment.

The Earl of Caithness

The intention of the amendment is to make loans available only for students starting their courses in the academic year 1990–91 and thereafter. It is the Government's intention that loans should be available to all eligible students in the autumn of 1991, not just new entrants in that year. Of course, it is up to the students whether they take the loan or not. The reason is the one that I gave earlier this afternoon: the loan offers students more resources and we want all students to have access to the addition as soon as possible. My noble friend Lord Renton has misunderstood the scheme.

The uprating of the grant that we have already announced will be available in the forthcoming academic year is 5 per cent; but, as my noble friend Lady Young said, with the loan added—it is a genuine top-up loan—the total public support available to students will be increased by 25 per cent. compared with this year's grant. We think it fair that all students should have access to that loan. I have to disagree with the noble Lord, Lord Addington, who said that that was unfair. The grant is being uprated. In addition there is the loan scheme available with new money which will top up the resources available to students by 25 per cent. That is an excellent opportunity for students who wish to make use of it.

If the loan were denied to students already part way through their course, we should consider what other public support would be available to them. One alternative is that they should receive a grant equal in value to the grant and loan combined. The Government rule out that proposal on two grounds. One is equity and one is cost. It would not be equitable to have two parallel systems of support running together, with individual students allocated to one or the other according to the accident of the date of their entry into higher education. Providing the additional resources as grant rather than loan to all but first-year students—that is, to some 60 per cent. of the student body—would delay the point at which repayments would start to offset the cost to the taxpayer of supporting students' living costs. From the Benches opposite we have heard complaints about the cost of introducing the scheme as if its generosity were a fault. I am therefore surprised that Members opposite now want substantially to delay the date at which the scheme offers relief to taxpayers.

I was also interested in the argument about the complexities and extra administrative cost of the Government's proposal. If one envisages two parallel schemes of student support—the old one alongside the new—that is a more inequitable system than the one the Government propose. If there is to be, as in the words of the noble Baroness, Lady Blackstone, administrative chaos, there is far more likely to be administrative chaos with two schemes than with the one scheme proposed by the Government.

The noble Lord, Lord Adrian, raised the important question of social security and access funds and I have no doubt we shall come on to that in more detail later. I take on board what the noble Lord said. His concern to get that point right is shared by the Government.

My noble friend Lady Young picked up the argument that some students presently in higher education would not have chosen to start their courses if they had known that the loan scheme would be in place next year. The applications for places tell a different story, as my noble friend knows. The Government's proposals for loans have not had a disincentive effect. Applications for autumn 1990 stand at 6 per cent. higher than applications at the same point a year ago. Those applications have been made in the knowledge that the Government intend to supplement the grant with the loan and access funds. I am not at all surprised that the applications are higher than last year. Next year student resources will increase. The grant will be uprated and with the loan in addition students will have access to 25 per cent. more than this year. All eligible students should be able to make use of the loan facility if they wish and take advantage of the additional resources that it provides.

Lord Boyd-Carpenter

Before my noble friend completes his argument, will he consider the point that I ventured to put forward that, if as he suggests the changeover is to the advantage of current students, they should be given the option of whether to go on to it or to remain on their present basis?

The Earl of Caithness

That leads me back to the argument that that suggestion would involve two schemes and a great deal more administrative complexity. My noble friend will wish students to be clear as to where they stand. The grant will be uprated in the forthcoming year. The loan scheme is in addition to it. One can see that the students are not put off and that they are enrolling in increased numbers for next year.

Lord Renton: I wanted to hear what my noble friend's explanation would be. Having heard it, I must withdraw my suggestion that for those students starting their third year the scheme would be disadvantageous. It would not on the facts given by my noble friend.

Earl Russell

The Minister never ceases to surprise me. He discussed the option, if the amendment were accepted, of paying to those affected a sum in grant that would be equivalent to the loan. He said that he ruled that out on the grounds of cost. I do not understand that, because the sum concerned is equal in both cases. The cost to the Treasury would be the same. All that would happen is that the Government would save the costs of administration. How that could amount to a net extra cost is more than I can understand.

I was also a little surprised by the noble Earl's insistence that we could not have two systems running together, because that is precisely the principle which in the case of academic tenure the Government accepted. I do not see the difference.

9 p.m.

The Earl of Caithness

It is a great compliment from the noble Earl that I keep him on his toes by surprising him. I did not say that one could not have two systems. I said—and I stick by it—that to have two systems was more complex and administratively more costly.

Baroness Blackstone

Does the Minister not agree that we will have two systems any way under the Government's proposals? We will continue to have a mixture of grants and loans. Local authorities will continue to spend quite a lot of time and effort dishing out grants.

To return to what the noble Lord, Lord Boyd-Carpenter, said, I think that it was an extremely pertinent and relevant question. If students will be so much better off under the Government's proposals, why not give them a choice and let them decide whether they wish to continue with the existing scheme with the grant uprated and remaining on social security and housing benefits, or opt for a loan? I can assure the Committee that the vast majority of students, given that choice, would prefer not to take on the additional debt of a student loan but to stay with the existing schemes. It is absolute nonsense to say that this will lead to additional administrative costs because two schemes already exist and will continue to exist.

Baroness Carnegy of Lour

Before my noble friend replies, does he agree with me that what the noble Baroness is suggesting—and also, rather more surprisingly, my noble friend Lord Boyd-Carpenter—that some people might be on benefit and some people might not be, that the change in the arrangements with regard to better housing benefit and so on will apply to some students and not to others, seems extraordinary. I would not have thought it was tenable.

The Earl of Caithness

My noble friend Lady Carnegy makes an extremely good point. I say to the noble Baroness, Lady Blackstone, however, that the loan is optional. To have two schemes side by side would add to the complexities and the costs.

Lord Peston

I am sorry to join in the debate, but we must get the economics and finances right. The fact is that we are starting from a base on which the Government have cut the real value of the grant by around one-quarter. That is the key initial fact. During the lifetime of this Government the real value of the grant has fallen by one-quarter. The correct base line, therefore, is to put the grant back by that quarter. That is the key base line.

The Government cannot claim that what they are now offering is something extra. It is not extra. It is remedying a defect from the past. The extra starts at that base line and there is no suggestion that the Government will provide anything above that base line. The noble Earl's argument therefore is quite simply wrong. That is the first point to bear in mind when debating this issue.

To add insult to injury, what essentially one is saying to the students who are already at university is that they ought to have gone there assuming that the Government were going to cut their grant even more in real terms, and now they are not going to cut it, are they not being kind? That is absurd. In other words, having done damage to students, the Government are then asking the students to thank them for removing some of the damage.

We should at least get the logic of the argument right and decide where we are starting from. Given that, it seems to me that the amendment tabled by my noble friend Lady Blackstone is entirely correct. We are behaving rather badly towards students who are already at university—unless we take a very cynical view that they expect the Government to behave badly and therefore the Government are not behaving badly. I cannot believe that the noble Earl wishes to proceed on that basis. The least he can do is to offer to think about the points raised.

I am sorry to say that I think the noble Lord, Lord Renton, was too easily convinced by his noble friend. The fact remains that a third year student at present is entitled to ask "Why can I not have a decent grant in the first place, because that is how I was admitted to university?" That is the question that has not been remotely answered by the Minister. I hope he will not now play the card which we have heard about, the so-called "new money". In the world of economics and finance there is no "new money"; there is only "money". That is what one discusses. The idea that there is some part of it which can be called "new" is simply a term of art which the Treasury, for reasons which are beyond me, uses. When I was in the Treasury there was no concept of "new money" and I am amazed that the Treasury has been taken in by the idea of "new money". All that we are concerned about is "money".

Baroness Seear

I do not wish to prolong the debate, but surely the position is quite straightforward—that these students came in under the expectation of certain conditions; a grant plus social security benefits. To put it bluntly, the noble Earl has not answered the accusation of bad faith. If he wants to keep faith with the contract which, formally or informally, was entered into, he needs to say to the students who are already at university that next year or until they finish their course they will have in real terms the grant that the Government offered them; it will not be increased by 5 per cent.; it will be at least 8 per cent. to 9 per cent. by the time we reach next year. They thought they were being offered 9 per cent. plus the maintenance of their social security benefits when they went to university. The noble Earl shakes his head, but that is what they understood they would receive.

The morality of the situation is wrong. Not only are we encouraging the young to get into debt in order to complete their education, but we are also saying that their lords and masters do not mind breaking a deal. I do not know what kind of youngsters one expects to produce if that is the standard which is set for them.

With new students one can make completely different contracts. But I see no difficulty in having those two sets of arrangements for students who entered under quite different conditions. Perhaps the noble Earl will answer that breach of faith accusation.

The Earl of Caithness

I do not think there is a breach of faith at all. I contest that because I contest the very basis on which the noble Baroness makes her assumptions. If a student qualifies for a grant—because a grant is means tested as the noble Baroness will be aware—there is no guarantee with regard to uprating. It is uprated annually by a varying amount. The noble Earl is highly critical of this Government. But I would draw his attention to the White Paper. He will find on page 6, Chart 4, which indicates that ever since 1962, when my noble friend Lord Boyd-Carpenter was Chief Secretary to the Treasury, the real value of the grant has been decreasing year by year. That is the beginning of the problem facing us in higher education.

There has been a reduction in the real terms value of the grant; there has been an increase for the need for parental contribution; and parents have not been able to make up that shortfall. All governments have faced exactly the same problem. Therefore we are in a new position and we wish to encourage more students to enter higher education. If we achieve that by getting back a contribution from the students we are providing new money—and it is new money, whatever the noble Earl may say. It is new money which, on top of an uprating of the grant this year, will be equivalent to a 25 per cent. increase.

The loan will be paid back in due course if certain criteria are fulfilled for the graduate. It eases the burden on the taxpayer and on the parents. As a majority of Members of the Committee now agree, it is right that students should contribute something. This year, with the uprating of the grant and the loan, we are able to increase the resources available to students by 25 per cent. That should be available to all students whether in their first, second, third, fourth or fifth year.

Lord Boyd-Carpenter

Will my noble friend answer my question? If the changeover in respect of a current student is to his advantage that should be apparent to him. Why should he not be given the option either to continue on the basis on which he became a student or to accept the, as my noble friend argues, more agreeable alternative? What is the objection to giving him the option and therefore not appearing to be going back on the basis on which he became a student?

The Earl of Caithness

While such a person was a student one would be running two parallel schemes which would add to the cost and the complexity of the operations.

Baroness Blackstone

I am disappointed with the Minister's reply in answer to concern on all sides of the Committee about the problems for existing students. The amendment deals with the guarantee given to existing students at the beginning of their courses that they would receive a grant subject to means teasting and other regulations associated with the grant. Now we are saying, "You will no longer receive a grant; instead you will receive a loan"—

The Earl of Caithness

No, with respect, they will continue to receive a grant which this year will be uprated by 5 per cent.

Baroness Blackstone

I take back my comments. Yes, they will still receive a grant; but it will be a grant plus a loan rather than a grant uprated by a more significant amount taking into account inflation and other costs.

A further point has been forgotten in the debate on the amendment. It is not the case that all students will be better off as a result of the new combination of grants and loans. Some students will lose their social security and housing benefits. Students who claimed both benefits because they were in need will be worse off, even with the 25 per cent. increase in the form of an uprated grant and a loan.

Many existing students have housing obligations. They live in rented houses or flats and have told their landlords or landladies that they hope to rent the accommodation until they complete their courses. They may now be in a situation in which they will be unable to do so.

A serious issue of principle is involved. I do not believe that such changes should be introduced retrospectively. It is impractical to do so because of the increasing demands that will be made on higher education institutions, which must certify three times more students if we accept the amendment. In view of both those factors and the concern shown on all sides of the Committee I must ask that we divide—

The Earl of Caithness

Before the noble Baroness takes a final decision I wish to take up an important point which was also raised by the noble Lord, Lord Adrian. I am sorry if I did not deal with the matter fully. The Government are concerned about students who are now in areas of high-cost housing and are in receipt of housing benefit. It is of concern to the Government to get the provision right. Currently it is being dealt with by the access funds, of which there are three, of £5 million.

I wish to reassure Members of the Committee that I shall listen to their comments on that matter and discuss them with my right honourable friend to make sure that we get it right. We are sympathetic and realise that some students in high-cost housing areas are in that position. We wish to make sure that the matter is properly sorted out and in forthcoming debates I shall be listening to Members' comments about that.

Baroness Blackstone

There are going to be very many demands on the access funds, which are not very large sums of money. I am doubtful whether they will cover all the claims that will be made on them. The issue of principle still remains and on that basis I ask the Committee to divide.

9.14 p.m.

On Question, Whether the said amendment (No. 6) shall be agreed to?

Their Lordships divided: Contents, 34; Not-Contents, 47.

DIVISION NO. 3
CONTENTS
Addington, L. [Teller.]	McCarthy, L.
Adrian, L.	Mackie of Benshie, L.
Airedale, L.	Mason of Barnsley, L.
Baldwin of Bewdley, E.	Ogmore, L.
Barnett, L.	Peston, L.
Beloff, L.	Ponsonby of Shulbrede, L.
Blackstone, B.	Prys-Davies, L.
Bonham-Carter, L.	Ross of Newport, L.
Boyd-Carpenter, L.	Russell, E.
Buckmaster, V.	Saltoun of Abernethy, Ly.
Butterfield, L.	Seear, B.
Carter, L. [Teller.]	Shepherd, L.
David, B.	Strabolgi, L.
Dormand of Easington, L.	Tordoff, L.
Haig, E.	Winchilsea and Nottingham, E.
Hatch of Lusby, L.
Jenkins of Hillhead, L.	Winstanley, L.
Kirkwood, L.

Arran, E.	Hives, L.
Balfour, E.	Home of the Hirsel, L.
Bathurst, E.	Johnston of Rockport, L.
Belstead, L.	Long, V. [Teller.]
Blatch, B.	Lothian, M.
Borthwick, L.	Lyell, L.
Brabazon of Tara, L.	Mackay of Clashfern, L.
Brougham and Vaux, L.	Mersey, V.
Caithness, E.	Mills, V.
Carnegy of Lour, B.	Mountevans, L.
Carnock, L.	Murton of Lindisfarne, L.
Colnbrook, L.	Peel, E.
Colwyn, L.	Reay, L.
Davidson, V. [Teller.]	Redesdale, L.
Downshire, M.	Renton, L.
Eccles, V.	Sanderson of Bowden, L.
Elton, L.	Stevens of Ludgate, L.
Ferrers, E.	Strathclyde, L.
Fraser of Carmyllie, L.	Strathmore and Kinghorne, E.
Goold, L.
Harmar-Nicholls, L.	Trumpington, B.
Hemphill, L.	Ullswater, V.
Henley, L.	Wynford, L.
Hesketh, L.	Young, B.

Resolved in the negative, and amendment disagreed to accordingly.

9.21 p.m.

[Amendments Nos. 7 and 8 not moved.]

Earl Baldwin of Bewdley moved Amendment No. 9: Page 1, line 15, at end insert— ("() The Secretary of State shall when designating institutions under subsection (2)(a) above and when prescribing conditions under subsection (2)(b) above secure that students traning as health care practitioners shall be treated not less favourably than other categories of student.").

The noble Earl said: Under Clause 1(2)(a) students at publicly funded institutions will be eligible for loans. Of those students at private insititutions, by inference some will be eligible and some will not. We do not yet know who the list will consist of. The purpose of the amendment is to secure that prospective health care practitioners will be among the sheep rather than the goats.

The particular concern that prompts the amendment centres on the British School of Osteopathy. Many Members of the Committee will have consulted osteopaths and will know the good work that they do. The BSO, founded in 1917, is an entirely private educational institution in central London, with charitable status and with no endowments. It runs a four-year full-time degree course, recently validated by the CNAA, which includes full clinical training. The current number of students on the degree course is 365, of whom quite a proportion are mature students.

It would be most undesirable if those training in this valuable field were put at a disadvantage compared with other students if a loan scheme came into force. It would be bound seriously to affect recruitment and the supply of good osteopaths would decline. The same is true of chiropractors, who do a similar job. The Anglo-European College of Chiropractic is another private college offering degree level training to aspiring health care practitioners. If these students are discriminated against, we can be sure that significantly fewer professionals will be available to deal with problems in our spines, muscles and joints in the future.

The Minister said at Second Reading (at col. 603 of the Official Report) that the list of designated courses at private establishments was now being settled. Can he now give us an idea of the kinds of course that will be designated, and in particular can he assure the Committee that those in the categories I have spoken of will be included? I beg to move.

Lord Colwyn

I support the amendment. As we have heard from the noble Earl, Lord Baldwin, students studying courses that are supplementary to medicine are playing an ever increasing role in the maintenance of our health today. It is important that this role is recognised and clarified in this clause of the Bill.

Earl Bathurst

I must declare an interest as one undergoing a course on chiropractic. I hope that nothing in the Bill will prevent future practitioners of this branch of medicine being attracted to it. The same applies to osteopathy, which is another valuable branch of medicine. I hope that the Minister will consider the amendment most carefully to ensure that the Bill does not disadvantage future chiropractors—I think that is the right way to describe them—or osteopaths. I support the noble Earl.

Lord Peston

I should like to say a few words on the matter. We are indebted to the noble Earl, Lord Baldwin of Bewdley, to the noble Lord, Lord Colwyn, and to the noble Earl, Lord Bathhurst, for raising a matter which we all seek to raise for the sake of clarification. The noble Lord, Lord Colwyn, put his finger on the key issue, which is not simply osteopathy or chiropractic but generally professions ancillary to medicine. What we know—and I think that this is an entirely correct development—is that these people are moving on from diploma level to the degree level. That is wholly to be welcomed. Many People are doing this and they are doing it via the CNAA, which is a helpful body in this regard. I do not believe that the Government would remotely wish to have any of those developments held back. It would be a great pity if the loans scheme could not accommodate such people.

I hope that the Committee will not be too shocked at what I am about to say. If the schools which undertake this training are regarded as being in the private sector, I hope that the Government do not regard this as a bad thing and that they are willing at least to show a certain tolerance towards private enterprise in the higher levels of education on occasion.

Obviously the matter was raised to enable the noble Earl to clarify the situation or, if he is unable to do so, to come back to us at some time in the future to tell us what the position will be generally of these professions which are broadly ancillary to medicine.

Lord Addington

I should like to support the amendment for the simple reason that people are studying to a degree level in a subject which is deemed to be useful and beneficial to society as a whole. Therefore, it would seem only just that they should receive as much support as anyone else who is undertaking a similar course. There are grounds for a certain amount of equity in the matter and I think that we should give these people that support.

Lord Butterfield

Is the Minister prepared to indicate whether he has made any inquiries of the Royal College of Nursing and members of the nursing and allied professions who are intending to make theirs a graduate profession in the coming century? It could involve quite large numbers of people proceeding to some kind of degree in nursing. I think that it should also be regarded as a form of training which is valuable to the community. I should just like the Minister to indicate whether he has had the opportunity to talk to the nurses about the matter. I am thinking of the steps taken to bring into being the Briggs report of about 10 years ago.

The Earl of Caithness

I hope that I shall be able to settle all the concerns expressed by Members of the Committee in regard to this important amendment. I know full well the important part that osteopaths and chiropractors have played in keeping me in this Chamber in some sort of sensible shape.

Perhaps I may deal first with the point made by my noble friend Lord Colwyn about the wider basis. Many medical students take an intercalated science degree in the midst of their medical studies. The mandatory award is not automatically available for the science degree: it depends on the structure of the course. However, I am happy to reassure my noble friend that the loan will be available in every case. Medical students without the mandatory award for the science degree will therefore find the loan especially helpful.

The noble Lord, Lord Butterfield, asked about nurses. I think that he was referring to those taking part in Project 2000, as it is known. As he will know, the courses are supported by a bursary from the Department of Health and do not receive student support from the education system. The bursaries will be paid at a higher rate than student grants. It is for that reason that people following this training will not be eligible for the student loan.

I turn now to a point raised by the noble Earl when he moved the amendment. He referred to the other professions supplementary to medicine. I hope that the position is straightforward. The present support arrangements will continue. Where this takes the form of a mandatory award, the student loan will be available on top.

As regards osteopaths, the list of courses at private institutions is at the moment being settled. I can assure the noble Earl and the Committee that it will not be less extensive than the list covered for mandatory awards and that loans will be available more widely. I shall try to give more details to the noble Earl. I know he is concerned about these matters, as are others who have spoken. I shall obtain this information as soon as we have gone further with the finalisation of the list.

9.30 p.m.

Earl Baldwin of Bewdley

I am grateful to the Minister, but before he sits down perhaps I may say that I did not quite catch the last point. Was it that if students qualify, as they will, for mandatory awards in the private sector they will be eligible for loans? Is it as simple as that?

The Earl of Caithness

If they qualify for mandatory awards they will certainly obtain the loan. It is more extensive than just pure mandatory awards, so other people may benefit as well.

Earl Baldwin of Bewdley

I think I understood that. Obviously I shall not press the amendment. It was merely a probing amendment in order to obtain information. I shall carefully read what the noble Earl said. I am grateful for the clarification and I beg leave to withdraw the amendment.

Amendment, by leave. withdrawn.

[Amendments Nos. 10 and 11 not moved.]

Baroness Blackstone moved Amendment No. 12: Page 1, line 15, at end insert— ("(2A) Notwithstanding the provision of subsection (2) above as to eligibility, the Secretary of State shall by regulations made under Schedule 2 below secure that no person who has one or more dependants during a period of not less than five years at any time after the date for the commencement of repayments, and who does not in one of those years receive a personal disposable income above the level of any threshold for repayments applicable by virtue of regulations under paragraph 1(1)(i) of that Schedule, shall continue to be liable for outstanding repayments or interest after the end of that period.").

The noble Baroness said: Amendments Nos. 12 and 13 are grouped together. Their principal aim is first to deal with the potential disincentive that students with dependants may face in taking up a course of higher education. Secondly, they are to deal with the disincentive that graduates on low incomes with dependants may face when deciding whether to enter more highly paid employment later.

The concern is that graduates who have dependants with low or non-existent incomes will face having to repay much higher amounts by virtue of the effect of increasing the sum of the loan to be repaid according to inflation than people who would have higher incomes and would be able to repay much sooner.

Amendment No. 12 suggests that for people on incomes below the 85 per cent. threshold of national average income their liability to repay the loan should be ended after five years. Amendment No. 13 takes a slightly different approach. It suggests that students with dependants on low incomes should not have to repay any interest on their outstanding loans if they have spent five years below the earnings threshold. They will instead pay only the original sum loaned.

During the Committee stage in another place assurances were given by the Parliamentary Under-Secretary that various allowances in the mandatory award scheme for dependants would continue to be uprated to students with dependants. However, while this is welcome, it does not deal with the potential disincentive that arises out of the operation of the proposed scheme to students with dependants when they graduate. People who have child care responsibilities are more likely to be women than men. If access to higher education, particularly for women, is to be encouraged we must ensure that they are not put off by the fact that they will have to repay loans at a much higher level than others if they come back into full-time or more highly paid work after looking after young children.

Currently there are some 7,000 students in receipt of dependants' allowances. However, many students are likely to have children soon after the completion of their courses. Why should they not? It is almost certainly the case that the number of students and graduates falling into this category within two or three years of graduation is much larger.

Perhaps I may illustrate my concern. A woman graduate who decides to become a teacher may have two children within two, three or four years of graduation. As a result she then works part time for the next 10 to 15 years and earns below the threshold. She then wishes to return to full-time teaching—something which I am sure we all hope she would do since we desperately need the services of experienced women teachers in the context both of the current and the likely future shortages of teachers. She then finds that she faces a whacking great loan repayment the moment she passes the threshold. Is this really the way we wish to treat women who have decided to work part time in order to be able to spend more time with their children and who then wish to return full time to the labour force into socially valuable but not terribly highly paid work?

Many women nurses with families—an increasing number of nurses will be graduates—may come into the same category. I hope that in the interests of those with family responsibilities that they take seriously we shall accept Amendment No. 12 and release those with dependants who have remained below the earnings threshold after five years from the obligation to repay. I beg to move.

Earl Russell

I wish to support the noble Baroness, Lady Blackstone, on Amendment No. 12. I also wish to speak to Amendment No. 13. I well remember a debate initiated by the noble Baroness, Lady Turner of Camden, on 21st June last on the need to enable married women to rejoin the labour force should they wish to do so. During the past few minutes I have looked again at that debate, which was a good one. The Chamber seems to me to have been in general agreement on two propositions. The first was that this was properly an area where we should not interfere with freedom of choice. The noble Lord, Lord Henley, speaking for the Government, said that he regarded the Government's role as an enabling one. The second point that the whole Chamber seemed to be in agreement on was that it was very much in our national economic interest to make it easier for those married women who wished to rejoin the labour force to do so.

Those were powerful points. The question I wish to raise here is whether the Bill as it stands at the moment will assist in achieving those points. The effect of the scheme is that, when a woman takes out a loan and then marries and stays at home to look after children, as is her right if she wishes to do so, her debt will continue to accumulate. That means that when she considers the possibility of returning to work, with possibly fairly considerable additional expenses of child care to enable her to do so, a much increased poverty trap arises. The effect of that is to create a considerable incentive for the married woman to postpone returning to work until the age of 50, when the loan will be cancelled. Therefore there is an incentive to postpone entering the labour force perhaps for 10 years or five years or for however long it may be.

That deprives the economy of the woman's services for that period of time. That itself is a loss, but there is the further point that there are a great many employers who are not sufficiently appreciative of the merits of employees above the age of 50 and who are perhaps rather reluctant to give them appointments at all. I am sure every Member of the Committee regrets that fact. Therefore the net effect of this proposal, as the Bill has it, is to create a poverty trap which may keep married women permanently out of the labour force. I cannot see that that can possibly be in the country's interest.

We should also consider a possible Treasury view of this amendment. It is something that has to be faced with any amendment passed in this Chamber sooner or later. I think it is much better that we should consider the argument ourselves. When we propose any change involving a net public expenditure, we should consider whether it is likely to lead to further public expenditure or to an ultimate saving and possibly even to an ultimate net saving. We all know that if someone enters the labour force and takes a highly qualified job, perhaps as a teacher, he will pay taxes and national insurance and make a considerable contribution to the revenue from which the Exchequer will in the end benefit. We desperately need more people to enter teaching.

I can see the Exchequer's interest in recovering its loans. That is a perfectly valid point and one which I do not wish to ignore. However, if in the course of its determination to recover its loans, it ultimately has the effect of keeping women out of the labour force and deprives itself of its income tax, national insurance and possibly even of a considerable expenditure in VAT, the Treasury would be cutting off its nose to spite its face. In the long run not only would the amendment have a liberating effect on married women, which is badly needed, and reinvigorate the professions, which is badly needed. I believe it would also effect a net saving to public funds.

The Earl of Caithness

The amendments are intended to protect graduates who are believed not to be provided for adequately under the standard arrangements proposed. In both cases—Amendments Nos. 12 and 13—their liability for repayment or repayment at zero real interest would be disapplied.

The basis for the Government's opposition to the amendments is that there is no strong case for such special provision. The proposed arrangements offer sufficient protection, and do so without unnecessarily complicating the administration of the scheme. However, if in the light of experience it is found appropriate to make special provision for particular groups, that can be achieved through regulations. That highlights the value of the structure of the Bill. Enshrining special arrangements for particular groups in the primary legislation would be an inappropriate approach.

Perhaps I may deal with the amendments in detail. I turn first to Amendment No. 12 in the name of the noble Baroness, Lady Blackstone. I found the wording of the amendment rather strange in that the special advantage of cancellation of any outstanding loan is awarded after the five-year period when the need for such a concession would be greatest. That seems to me like locking the door after the horse has bolted.

The amendment raises the issue of cancellation of liability. It was not the Government's intention that cancellation should be used as a mechanism to specify groups exempted from the standard provisions. Cancelling a loan effectively means that the graduate is being given a non-means-tested grant. Such a provision may operate as a perverse incentive: people may deliberately seek to fulfil the criteria necessary to escape repayments. Cancellation also has a cost: additional administrative arrangements are needed and part of the stream of repayments is lost. Members of the Committee who have followed our debates closely are aware that repayments will be of the order of £400 a year—£8 a week—and will not be required on incomes under about £11,500 a year in current terms. I suggest to the noble Baroness that that is not a whacking great amount. There is no reason why graduates in those circumstances should not be able to manage repayments on that scale whether or not they have families. It is for that reason that I found it difficult to agree with the noble Earl, Lord Russell, that that would create a poverty trap for the wife in the circumstances he suggested to the Committee.

Amendment No. 13 brings into focus two of the terms of the scheme: what income should be taken into account in assessing their entitlement to deferment and the indexation of the loan. Let me comment first on the assessment of income. The Government's intention is that when deferment is claimed on low-income grounds it is gross income that should be taken into account. There will be no allowances such as are made in the tax system for individual commitments. The reason for that is in the tax system: since such commitments as mortgage interest are allowed for under income tax, allowing for them again in the student loans system would result in a double subsidy. There is no reason why a graduate with a mortgage, for example, should have a subsidy for it under the student loans scheme when a non-graduate with a mortgage could not.

Indexation is to apply throughout the life of a loan. The reason is straightforward: it ensures that the sum repaid is the same in real terms as the sum borrowed. Without indexation the graduate has an incentive to avoid repaying by one means or another for as long as possible, while inflation erodes the value of the debt. We believe that we should not provide incentives to avoid repaying. Nor is it right that graduates with families should enjoy their loan without indexation and so receive a second subsidy from the taxpayer. As I said a moment ago, reliefs for individual circumstances are properly provided through the general income tax system and should not be duplicated by parallel subsidies targeted on graduates only.

Let me sum up. Repayments will be modest and will not be received from those on low income. There is no basis for reasoning that the graduates in those circumstances singled out in the amendments will be unable to manage their repayments. However, if experience proves that special loan terms are needed for those or other groups, it will be possible to provide them through new regulations. It would be wrong to write special terms into the Bill at this stage without any evidence that they are needed or are the right solution for the difficulties which it is supposed that those groups will face. I repeat assurances already given. The effect of the loan scheme will be monitored carefully and, if adjustments are found to be needed, the structure of the Bill provides special flexibility to enable them to be introduced.

9.45 p.m.

Baroness Blackstone

I thank the Minister for his clarification. I am not sure whether I followed all the details about the offsetting of income tax, but perhaps I may read carefully what he said and come back on Report. Nor am I sure that I understood why repayments would necessarily be so modest if someone were to return to full-time employment after some years, by which time I should have thought he would have incurred quite high interest repayments. However, I am grateful to the Minister for telling us that there will be careful monitoring and that special provisions will be made for those groups which, on the evidence of that monitoring, appear to require additional help. On the basis of that promise, I beg leave to withdraw the amendment.

Amendment, by leave withdrawn.

[Amendment No. 13 not moved.]

Lord Peston moved Amendment No. 14: Page 1, line 15, at end insert— ("(2A) The Secretary of State shall by conditions prescribed by regulations subsection (2)(b) above or by regulations under Schedule 2 below secure that no terms of any scheme of loans made under this Act shall operate to reduce the proportion of women students below the proportion of such students attending courses to which Schedule I applied at the date of Royal Assent.").

The noble Lord said: The amendment concerns explicitly women's participation in higher education. Some of the points have already been raised under the previous two amendments and I shall not cover that ground again.

If we look at the Government's White Paper, we see some information to the effect that, happily, despite the great discrimination against women in our society, the fraction of women in higher education has risen. That is a good thing. Sadly, in lower socio-economic groups the fraction has not risen so drastically and women within those groups are not doing as well as we should like.

Those of us with direct experience of higher education can see. simply as a matter of experience, that there is more female participation. There are many courses on which women are now the dominant students where they were much more strongly discriminated against in the past. Although in terms of undergraduate experience matters have been improving, none of us would wish to be complacent and say that things had improved enough. The purpose of my amendment is to go beyond that and at least utter a word of warning that there is a danger that the Government's proposals place the position of women at risk. I put it no more strongly than that.

I shall concentrate simply on the proportion of women students going into higher education. There are further ramifications connected with discrimination against qualified women from that point on which one must consider. Various questions as to what is an incentive and what is a disincentive have been bandied around.

Women have an extra significance in the context of the amendments concerning part-time students which we debated earlier. Again, we have gone over that ground and I have nothing further to add. I simply underline the fact that I am aware of the position. My worry is that the Government say that students will bear a larger share of the costs of their maintenance in higher education. They regard that as one of the benefits of the changes that they are introducing.

The expression has to be "a larger share" because some noble Lords seem to be suffering from the misunderstanding that at the present time their students do not already bear a very large share of the costs of their education. They already bear an extremely large share of the costs of their education.

However, the Government said in their White Papers, and Government Ministers have said in various statements, that they expect students to bear more of the cost. On my own analysis, which I put forward at Second Reading, it would be particularly the case that women from the poorer socio-economic backgrounds are affected because, by definition, they get a full grant now whereas they will not do so under the new rules. If that is the case my fear is that we shall go back to the bad old days. Many of us have had personal experience of those days when the boys could go on to study and the girls could go out to work. I personally had experience of that. I was the beneficiary of it but my sisters were not. I fear that we place such women in danger.

I tabled the amendment simply to alert noble Lords to that matter. I noticed that when commenting on the two previous amendments the noble Earl said (I think these were his words): "We shall monitor the whole scheme very carefully". I suppose the worst that could happen is that we should see a cohort or two of women who would suffer and then the Government would step in. That is some reassurance although I am not sure it is as much as I should like. However, it is some reassurance.

Let me add—it is not something that is specific to this amendment, but, as the noble Earl appreciates, I cannot avoid rising to the bait—with regard to cancellation that occasionally in various debates in this Chamber—certainly in the debate on the Education Reform Act 1988—I predicted various events, most of which happened. Certainly I predict that as a result of the student loans Bill, within a not very long period of time the Government will be in the wholesale cancellation business. It may not be the desire to cancel but I assure the Committee that within the next 10 years it will be amazed to find how many of these loans are cancelled. That does not appeal to me. I should rather not be involved in this nonsense anyway. However, if the Government believe that they will not be involved in the cancellation business they have little idea of how these things work.

That is en passant. It is not about the amendment. However, as the noble Earl appreciates, I can never resist responding to points. The main point is to move forward particularly with regard to women in the poorer socio-economic groups. I do not wish us to take any more risks. I beg to move.

Baroness Carnegy of Lour

There is a point which needs to be considered in this amendment. It relates very much to the amendment of the noble Baroness, Lady Blackstone, and may refer to others to which we shall come. We are all thinking very hard of how the scheme will affect individual categories of students, and we are quite right to do that. We must think about it very hard and vote very carefully. But we are not thinking about how everybody else will react, and, if there is to be a shortage of teachers in the future, about the need to get women to return to teaching. Certainly if I were the leader of a local authority in the future and knew how desperately one needed women teachers to return to work, I would consider how to attract them.

Often one way to attract a particular person into a job is to pay removal expenses, or whatever. In this case perhaps one will simply say, "We shall write off your student loan". There would be absolutely nothing wrong with that. Employers outside the public sector will certainly do that if they want to obtain somebody. I should have thought that local authorities would also do it. It is very possible.

In a scenario in which so many people will have a student loan of this kind allowed for by legislation, that is something which may become a habit. I do not believe that the only solution is to suggest that people do not have to pay. There will be other ways as well. It will become a part of the labour market.

Lord Peston

I must reply to the noble Baroness. It is a matter to which I have given a very great deal of thought. It is a broader point than the question of women that we now raise. Let me add that I certainly would expect the employer to meet the cost of the loan. To take an obvious example—the brilliant young economists I produce—I shall say to them, "When you go to an interview you should ask whether they are going to pay off your loan". That will be my advice to them.

I can see the class of person I am considering being able to do that. I cannot see the local authorities, given the present financial stringencies, having to recruit teachers and being able to compete in that market—quite the contrary. I should like to refute the noble Baroness's point that the cost of the loan will not be borne by the student. The cost will be borne by the employers. They will then pass the cost forward so that in the end, in a very roundabout way, it will be borne by the taxpayer via the cost of consumer goods. That is the economic argument, if anyone is interested in the esoterics.

My key point is this. I have given the matter much thought. I believe that there will be a distinction between the private and the public sector. In areas such as teaching the money will not be there.

Baroness Carnegy of Lour

I am thinking of the scale of the sum. When a person finishes, for example, a three-year degree course, between £1,500 and £2,000 will have been borrowed. In a few years that will increase by £1,000 or £2,000. To write off a loan of £4,000 or £5,000 to obtain a new teacher in current financial terms is not out of the way for a local authority when one considers the other factors involved in attracting people. If Members of the Committee ask their local government friends how they attract the right people into the right job, they will find that that is not out of the way. It is not the answer to the proposals in the Bill, but it is part of what will happen in the future.

Baroness Seear

The point overlooked by the noble Baroness, Lady Carnegy, is not what may happen when a person applies for a job, having undertaken a degree course perhaps some years earlier and then having started a family. The debts will have built up. I do not much fancy the idea of a labour market in which one relies on going to the employer and saying, "By the way, you will pay off my debt, won't you?" I do not think that that is good practice. However, that is another matter. What is being overlooked in this discussion is whether people will take the courses in the first place. I find the vague prospect that in the future, when one has passed all one's exams, the employer will like one so much that he will pay off all the debts an unconvincing argument. Will a young woman who is deciding whether or not to go to university, or an older woman coming back to take a course—we have now been told that they will receive no encouragement to do so part-time while they are at home—say, "I shall pile up the debts in the hope that they will be paid somehow later on"? Or will she say, "I shall not bother to go to university. The risk is too great. I do not want the debt. I do not know what will happen in the future"? That is what requires monitoring. The issue is whether it will freeze the numbers entering the courses.

I agree with what the noble Lord, Lord Peston, said about the practice in many families where there is a choice between the boy and the girl. If money is short in the family they put it on the boy. It may be very regrettable but we have all seen it happen. I do not believe that it has disappeared.

I have been connected with a company scheme providing a supplement for employees to go to university. Once it was under way, the percentage of girls attending university shot up because the family income was being supplemented. When families could receive the money from another source to send the girl, the ratio of boys to girls was fifty-fifty. There is good evidence to support that. The scheme has been running for 10 years. When the money is not the issue, girls get a look in; when money is short, girls do not. I do not believe that the prospect of an employer 15 years later paying off the loan will be a counter argument of any great strength.

Baroness Blackstone

I very much agree with everything that the noble Baroness, Lady Seear, has said but I should like to return to the remarks of the noble Baroness, Lady Carnegy. Her argument seems to be totally self-defeating.

The purpose of the Education (Student Loans) Bill, as I understand it, is to pass on some of the maintenance costs of higher education to the students who benefit so that the taxpayer has to contribute less. If all employers, including local authorities, end up paying off loans for students we shall be back to the taxpayer paying for higher education by the most extraordinarily roundabout route involving a complicated student loans system and through employers having to negotiate with graduates on whether they pay, how soon they pay, and so on. In addition we shall be faced with even higher community charges (or should I call it a poll tax?) than we have at the moment. I cannot think that that will be terribly popular.

10 p.m.

Baroness Young

I believe that everybody in this Chamber understands the point of the amendment of the noble Lord, Lord Peston, and, indeed, the two preceding amendments because in a sense they all deal with a similar point; namely, access for women, whether they are women undergraduates or women graduates who wish to return to full-time employment and who have families.

I believe that we all share a concern about this because clearly it is a very important point. Perhaps I may try to interpret what my noble friend Lady Carnegy said. I do not believe that she was saying that every student would have his loans paid off but I can envisage individual cases where that could be the case. However, if we return to the students who will not have their loans paid off, which is the point of this amendment, I should like to make three points.

First, one must remember that, whether we like it or not, many students are currently in debt to the bank. I am sorry to say that in many cases they are in debt to more than one bank and the more I have discovered about this Bill the more such cases I have found. At any rate, they are already in debt, so that the debt question arises from that.

Secondly, I believe that we should all be very pleased about the fact that the number of women undergraduates has risen considerably over the past 10 years from 42 to 46 per cent. of all students. That is still not quite high enough, but the numbers are increasing. The point about that statistic is that the numbers are increasing against a background in which the value of the grant has declined. Therefore, although every undergraduate is worse off in real terms, the number of women has increased. In a sense the argument that it has become more difficult has not applied in the past 10 years for whatever reason. I am not sure that I am particularly pleased that the value of the grant has declined, but that is a fact. I am pleased that the numbers of women have increased, and, hence, the unofficial loan scheme.

It seems to me that, once we get into a position where people do know much more precisely what they will receive, there is no reason to suppose that the future will be more difficult for women than the immediate past has been. However, in case that were to happen—and this is where I hope my noble friend will reiterate what he has already said—I think it very important that the scheme should be monitored. It is a new scheme and none of us knows how it will work out.

Perhaps I may tell the noble Lord, Lord Peston, who has told us about his gloomy predictions all of which have come true, about an experience of mine in education. When I was first a Minister in 1979 in the DES, I had to take through your Lordships' House our proposals on charging overseas students full fees. I well recall a debate at about Christmas time 1979 when I had the entire House against me. A colleague of the noble Lord, Lord Peston, said to me, "I was watching how you were going to get out of that debate". The upshot was that there was horror on all sides of the House and 10 years later we have more overseas students than ever before.

Baroness Seear

Yes, but—

Baroness Young

Before the noble Baroness leaps to her feet, I was very interested to read in the Oxford magazine, which dropped through our letterbox on Saturday, that universities are now starting to worry about the number of students coming from the European Community. Therefore, all sorts of things happen and work out differently.

The noble Baroness, Lady Seear, may well say they are not the same sort of students. However, all I am saying is that the terrible prognostications that there would be no overseas students have not come to pass and things have worked out rather differently. The truth of the matter is that we do not really know what will happen in this case. What is important—this is a very serious point—is that, if the statistics are adverse as regards women, the disabled or poorer students, then the Bill should make it possible to monitor the position.

Baroness Seear

I cannot let the noble Baroness get away with that about the overseas students. It is of course true that the numbers have increased, but she is well aware that the universities and colleges have gone hawking their courses around the world attracting the wealthy student, as against a time when I was teaching them at the London School of Economics when we had large numbers of students from developing countries who were hard up and paid for in all sorts of ways—fifth cousins sending contributions, and not sending them which was even worse. That is how they reached the colleges. We have the students, but we have kept out many good students whom we previously had.

Earl Russell

I feel that I should apologise to the noble Baroness, Lady Carnegy of Lour, for joining the queue to answer her, but for the moment she seems to have volunteered for the part of lightning conductor. The repayment of loans by employers is among the obvious possibilities. It causes some misgivings on these Benches: first, because if it is done by private employers it is capable of increasing our industrial costs, which is something that concerns Liberal Democrats considerably. A small increase in industrial costs can be a major disadvantage in competitiveness, which is often a matter of narrow margins. I am not convinced that that is the best place for costs to fall.

As for local authorities paying off student loans, I am doubtful about that. It may be possible in some places, but we have a measure which has just come into force and which was designed, so we have many times been told, to restrict local authority spending. It is tending to have that effect. I cannot see any local authority in London possibly being able to take on the job of paying off student loans. They have enough to do to recruit teachers, even at the fairly low salaries they have at present. Also, I do not see how the noble Baroness's proposal relates to the alleged discriminatory effect of loans set out in the amendment. The point of that is of course that women, because they tend to bear children, are often out of the labour force for a number of years. I do not believe that the noble Baroness proposes paying off loans for women and not for men. To address the point of the amendment, there would have to be reverse discrimination, which I do not think that she was proposing.

I should also like to comment briefly on the point that the noble Baroness, Lady Young, was making, which we have heard many times in these debates, about the decline in the value of the grant not having a deterrent effect upon applications. The crucial question, of course, is whether entering undergraduates are aware of how hard up they will be. We see them all during their first week. Almost invariably the answer turns out to be no. In fact, if one looks at other circumstances, people are incurable optimists. If one looks, for example—to take a slightly out of the way example, but it is the first that comes into my head—at statistics on Elizabethan privateering, most people lost money out of it, but there was always the dream that they would be the lucky ones. That is what is keeping them coming. It is not the actual facts of the case. If the actual facts of the case become more widely perceived, we may be in bad trouble.

Baroness Blatch

The supporters of the amendment, as with others that we shall debate later, are clearly concerned that the loan scheme will adversely affect certain groups' participation in higher education. There is no evidence from the operation of loan schemes in other countries that they have had that effect in practice. On the contrary, the government scheme is designed to increase participation. It will do that in two ways: first, by increasing the resources available to students; and, secondly, by relaxing the constraint on the number of students the taxpayer can afford to support.

I should like to assure my noble friend Lady Young on the point that she makes about monitoring and to remind her of the commitment contained in the White Paper, that the Government will continue to monitor the effects of the introduction of the loan scheme. If the proponents of the amendment are right in perceiving adverse effects—I do not agree with them—it will be possible to make the necessary changes swiftly by amending the regulations. I have made the point before but it is worth repeating, that the regulation-making power is essential to ensure that the scheme can be refined and developed.

Amendment No. 14, moved by the noble Lord, Lord Peston, refers to the participation of women in higher education. It requires the Secretary of State to make any necessary changes to the regulations, and the noble Lord seems to appreciate the flexibility of the regulation-making powers when it suits him.

There is no evidence that women have been deterred from higher education by loans. In the United States, where reliance on loans is heaviest, women now make up more than 50 per cent. of entrants to higher education. There is not there the general provision for repayments to be deferred when income is low, which will be an especially important feature of our scheme for women. Deferment will be assessed against their income only; it is important to note that a husband's income will not be taken into account for the purposes of assessment. That means that a woman graduate who is without personal income while raising a family will not be required to make repayments. Therefore the negative dowry argument is a myth as far as our scheme is concerned.

I am grateful for the remarks made by my noble friend Lady Carnegy of Lour with regard to the range of inducements which will apply or could apply to persuade women to return to work. One need only think of the number of schemes that are already in place from local education authorities and indeed the Government to encourage people to return to teaching. It is also important to note that it will be a matter for employers. However, I am not detracting from that group of women for whom this will not apply.

It is also important for me to comment on the points made by a number of people, including the noble Baroness, Lady Seear, with regard to the inability of women to pay. It has been repeated throughout the debate that inability to pay is addressed by extending the period over which people will repay loans. If we refer only to current prices, I do not think the requirement of paying approximately £400 a year, which is around £8 a week, for those earning above £11,500 a year will act as a deterrent for people to return to work.

I return to the point at which I started. I believe that the loans scheme will be a help to all students. It does not discriminate against women and therefore I do not believe that it will be necessary to make special provision for women. I also want to repeat that we shall monitor the effect of the scheme carefully. If experience shows that special arrangements are needed for this or any other group, the regulation-making powers provide the flexibility needed to allow such arrangements to be introduced, subject to the scrutiny of Parliament. However, it would be quite wrong to fix in the Bill special provision for these groups before there is any evidence that there is a need for them or that the solution proposed would be the right one for their circumstances. In the light of what I have said, I hope I can persuade the noble Lord to withdraw his amendment.

Baroness Seear

Before the noble Baroness sits down perhaps she can answer the question which I raised on a number of occasions and to which I have not yet had a reply. We are constantly told that loans will not be a deterrent to people in this country because they have not been a deterrent in other countries. That seems to me to be a very odd argument. Up till now these courses have been free; students have not had to pay. While they were free they have not attracted sufficient women and people from lower income groups. On the Government's own labour market argument, if the idea of education cannot be sold when it is free, do they think it can be sold when it is not free?

Baroness Blatch

It is probably an over-simplification to say that education is free. We know that in the combination of parental and state support a large number of students have a shortfall because parents are not meeting their obligation to the student. In that case students resort to banks and other institutions for their loans at very high rates of interest, and, indeed, have to cope with repayments while they are still students. If we add to that the students who are in receipt of full grant by a combination of parent and state support but who still resort to expensive loans, whichever way one looks at it to describe the situation as a "free" service is not entirely correct.

I return to the basic assumption that we make and repeat the caveat that the scheme will be monitored. If we believe that it adversely affects women or any other groups it will be reviewed. But the extension of the period over which people repay the loan so that the value of the repayment is kept at around £400 a year—equivalent to £8 a week—I do not believe will act as a serious deterrent to students. It is an act of faith. We promise to monitor the situation and if there are any adverse effects the system will be reviewed.

10.15 p.m.

Lord Peston

I wish to make three concluding comments which I had intended to save until next Monday. However, I may as well make them now. The Government often make an international comparison, but they must stop the ad hoc approach. Either they make a full set of international comparisons or none at all. For example, in Sweden there is massive state support for 16 to 18 year-olds; then they have loans, whether or not they are reducing those. If the Government are about to announce massive support grants for 16 to 18 year-olds I should be interested, but they are not. In many countries there is enormous subsidy of student housing and food but I have not heard the Government mention that. In the United States there is open access to higher education and a completely different system. Therefore, one cannot make such simpliste comparisons. That is not an acceptable way of looking at the issue. I had intended to save that point until Monday but I have made it now. One cannot say, "They have loans and such and such", without looking at all the other relevant matters.

Secondly, I thought that my noble friend Lady Blackstone clearly put forward the point of who would bear the cost of the loans even better than I did. When the Government have had time to think the matter through I shall be interested to know whether their ultimate position is that students will not bear the cost of the loans. Essentially that was said by the noble Baroness, Lady Carnegy; that they will be borne by firms and in the public sector therefore they will be borne by the taxpayer. If the Treasury economists can think of something clever between now and next Monday I shall be interested to hear the rebuttal of that view. I was more convinced by it than by my own argument.

The noble Baroness, Lady Blatch, said that it was an act of faith in terms of the effect on women. I do not agree; I believe that it is an empirical proposition. It is a straightforward issue. We shall see. The noble Baroness does not believe that it will have an adverse effect on women; I say that it will have such an effect on women from poorer socio-economic groups. We do not need to look for divine response. In a few years we shall have the relevant data and one of us will rise in your Lordships' House and say that we were mistaken. If that happens early enough—which it will not—the Government will agree to modify the loan scheme in order to take account of that, as the noble Earl said. We shall not do that: we shall abolish the scheme so we shall not have the same problem.

I emphasise that it is not an act of faith but a straightforward test of the scheme: will it work one way or the other? I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Earl Russell moved Amendment No. 15: Page 1, line 15, at end insert— ("(2A) The Secretary of State shall by conditions prescribed by regulations made under Schedule 2 below secure that any scheme of loans made under this Act shall make adequate provision in respect of eligible students who are likely by reasons of the nature of their course to incur additional costs in respect of equipment, in materials or other expenditure, such that those students are not disadvantaged in relation to other eligible students.").

The noble Earl said: The amendment is designed to meet the problem of equipment. It is specially designed to meet the problems of particularly expensive courses—for example, medicine—where the cost of equipment can amount to a substantial proportion of the total student costs. They can give rise to significant problems.

A more general problem lies behind the issue. It is an area in which the thinking of the DES is far from adequate. I am sure that the noble Earl will correct me if I am wrong, but I understand that the theory is that the present maintenance grant is putatively assumed to include an element for the provision of equipment. First, it does not cater for the problem of the many particularly expensive courses. Secondly, I do not believe that anyone teaching in a university supposes that undergraduates can spend money from their grants on books or equipment.

Since the introduction of this Bill, on three occasions I have set fairly recent books, which were available in the bookshops, for study by undergraduates. They came back to me, as they regularly do, saying, "We are sorry. We cannot do this essay because someone has taken the books out of the library." That happens to all of us every day and all the time. I have tried saying to the students, "If you want you can buy these books at the bookshop across the road. They are available in paperback." The cost was perhaps £3.95, £7.95, or thereabouts.

On one of the three occasions I was successful. Judging by what she wears I deduced that this particular undergraduate is probably one of those lucky few whose parents pay a good deal more than the required parental contribution. On the faces of the other two undergraduates I saw an expression of real and intense fear which was about to turn into real anger until I hastily reassured them that if the situation created difficulties I would set a different essay on a different topic with different books available.

There is simply not the money available to pay for equipment. Even the alleged 25 per cent. increase, which is in fact a good deal less, having been calculated at 1988 prices which are now out of date, will not be sufficient. Unless we have some separate provision for equipment and that separate provision is to some extent calibrated to the particular courses that undergraduates are taking, we shall find a worsening of our present rapidly increasing difficulties in teaching people what we ought to teach them because students cannot afford what they need. I beg to move.

Lord Renton

One understands and has some sympathy with the purpose of this amendment. But it is beyond the scope of the Long Title of the Bill; beyond the powers given to the Secretary of State in Clause 1; and beyond the scope of Schedule 2 to which the amendment is attached. In the circumstances I do not see how the Committee can possibly accept the amendment.

The whole of this scheme is for the provision of finance for student maintenance. We understand that in the course of technical studies, for example, there will be equipment used and maybe materials also. But that is not what this Bill is about. Therefore, it would surprise me very much if my noble friend on the Front Bench were to do more than utter sympathy. He cannot accept the amendment.

Baroness David

In answer to the noble Lord, Lord Renton, the present maintenance grant for students is supposed to cover items like books. So why should this maintenance grant be expected not to do that?

Lord Addington

I wish to reiterate the last comments for the reason that under the current grant system people are expected to purchase a certain number of books. It is accepted that students buy books. It is realised by very many people that the current grant level means that students are almost totally dependent on the library. The problem gets worse as students proceed with their courses because the books they have to buy become more and more complicated and specialist.

Thus libraries suddenly find themselves with one or two copies only of a book and 30 or 40 students trying to borrow them. The libraries try to fight back by saying that they have a short-term loan system for their books. So students spend hours and hours queueing up to use a book for two or three hours. Where student finance is involved, attention should be paid to such basic factors as the ability to obtain the right textbook. If the Bill does not address this point—and the noble Lord, Lord Renton, is usually correct on these matters—steps should be taken to enable people to get their hands on the money they require for certain tools. Textbooks are the most glaring example. I did not undertake a science course or a course in medicine so I cannot comment on other specialist equipment. But if people are expected to use books, and if libraries are not to be expanded dramatically, we must provide the means to enable students, especially students on full grants to whom we should devote most attention, to meet these demands. Otherwise, the measure will be a total failure.

Earl Bathurst

I declare an interest as a trustee of a small charity which is able to give grants for exactly the purposes described by the noble Lord who has just spoken. I am surprised by the amount of equipment and the cost of equipment which boys and girls require. It is regrettable that the charity has little money but it is able to help.

I take note of the point made by my noble friend Lord Renton. Perhaps the Bill addresses this point and perhaps it does not. But I beg the noble Earl who is to reply and his colleagues to bear in mind the increased costs borne by students, especially those who are studying technical subjects and, funnily enough, artistic subjects. Sometimes students have to attend extramural courses. We can give only a small contribution but to the students it is a considerable contribution. If the Bill in any way endangers the ability of students to obtain equipment and clothing too, which is important on certain courses, I hope that the noble Earl and his colleagues will be able to consider the point at another time.

Baroness Seear

I ask the Minister to recognise that to skimp on books is to spoil the ship for a ha'p'orth of tar. In any decent university, one can manage without staff better than one can manage without books. We shall be down to this ghastly business which one sees in a few places where students rely on taking down lecture notes. That is the absolute opposite of anything that can be described as a decent university education. One has to have books or one might as well shut up the whole place.

The Earl of Caithness

The present grant system provides for special circumstances with a range of additional allowances. These include, for example, allowances for extra weeks' attendance, vacation hardship and costs incurred by disabled students as a result of attending their courses. For 1989–90 the extra weeks' allowance is worth £45.05 for someone studying away from home outside London; up to £50.95 a week is payable during the vacations in cases of hardship; and the disabled students allowance is worth up to £765. As I understand the scheme before the Committee, these will not be affected by the Bill.

The top-up loan facility will be offered at different rates, according to whether the student studies away from home in London, or elsewhere, or continues to live in the family home. This will parallel the differences which already exist in the rates of mandatory grant. We do not think that further differentials should be introduced. The loan offers students a facility that they can draw on to the extent that they wish, and use for whatever purpose they wish. I believe the Committee will agree that it would not make sense to earmark a part of the facility for a particular purpose. We believe that the choice over how to use the money should be a matter for the student.

At this point perhaps I may take up a comment made by the noble Earl, Lord Russell, about the 25 per cent. increase. It is a 25 per cent. increase on current cash prices, not the 1988 prices; so the noble Earl, who thought that students were not getting such a good deal as I said they were getting, is wrong and they are getting the deal which I said they were going to get.

Specific mention was made of the grants for special equipment. We all know from experience with the special equipment grant—which was abolished in 1986—that there were all kinds of problems with making differentiated provision for this purpose. As I undertstand it, although I am certainly not an expert in the matter, one of the reasons why the special equipment grant was abolished was that the scheme was so costly and complex to administer.

10.30 p.m.

Earl Russell

I must confess to being disappointed with that reply. I am truly surprised to hear books described as a "special circumstance". They are a circumstance without which people cannot be adequately educated. I entirely agree with my noble friend Lady Seear that it would be better to do without all the staff and keep up the number of books.

I also think that when the noble Earl says that students may draw on the loan facility to the extent desired he is not facing up to the extent to which the maximum sum being proposed, even now, is not adequate. If people have to choose between buying a book and having a meal, they will normally choose to have a meal. Moreover, young people tend to have healthy appetites. Unless there is a sum set aside for provision of equipment—that is, books or whatever else may be necessary to do the course—we shall find our teaching becoming impossible.

I listened very carefully to what the noble Lord, Lord Renton, said. I fear that he may be right. But at least tabling the amendment has served to draw attention to an ambiguity. The word "maintenance" as contained in the Bill is used in ways which may or may not cover equipment. Tabling the amendment has served to draw attention to the question of whether maintenance does or does not cover equipment. That is a question to which I should be glad to hear the noble Earl say that further consideration will be given.

I must admit that the underlying thrust of the amendment is that equipment ought not to be considered under maintenance as it seems to be at present and that in future it ought to be considered as a separate matter. Nevertheless, in view of the remarks made by the noble Lord, Lord Renton, I should not dream of pressing the amendment to a Division. In the circumstances, therefore, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Addington moved Amendment No. 16: Page 1, line 15, at end insert— ("(2A) The Secretary of State shall by conditions prescribed by regulations under subsection (2)(b) above secure that any student otherwise eligible in accordance with subsection (2)(a) above who is attending the fourth or subsequent year of a course of higher education (or vocational training forming part of such a course) shall for any period in which they are not earning as part of such a course or training, incur no liability in respect of any loans payable for that period.").

The noble Lord said: The amendment is designed to ensure that those who are undertaking courses of more than three years—which is the length of course which is talked about virtually without exception in the White Paper and thus I perceive it to be behind the Government's thinking on the Bill—do not incur extra loan debt as a result of the course.

The groups which would benefit, or rather be put on a more even footing, by not incurring this extra debt would include such people as those studying for a BA in order to become teachers and those studying foreign languages. The first case has already been discussed at great length in this Committee tonight and the current shortage of teachers is a matter about which I do not think anyone could have failed to hear ad infinitum over the past few years. When it comes to languages, 11 believe that, with 1992 hard upon us, we should be considering whether everyone should have more access to language teachers and that we should tie the two points in together. Also people with better language training would be available to businesses. Some of the people doing these language courses are paid, but many are not.

Personal experience leads me to refer to one group which has stuck in my mind—Scottish students. In Scotland higher education is based on a four-year honours course. This means that the basic four-year course which leads to an honours degree—that is, a degree of the same standard as the English three-year degree—will actually be worked against by the Bill. The four-year course in Scotland is based on two years of general study, which means that a student can go on to take a non-specialised three-year general degree which is not of anywhere near the same standard or the four-year course, which is of honours standard and the equivalent of the English course.

The reason for this is primarily that Scottish students do not do A-levels; they do highers over one year, in several subjects. They do not do the English specialist A-level course. This A-level specialisation is currently under review by the Government, or so we have been told, on the grounds that it is far too specialist far too soon. In other words, the A-level is a wonderful exam for getting people ready to go to university in certain specific subjects. Thus at the beginning of the courses in England and Wales students' options on the course are already decided by their A-levels to a large extent. The students are already channelled. If they make a mistake with their A-levels they are thus channelled into a situation where their "any choice" degree work is curtailed.

In Scotland they do not have this problem because they take a wider range of subjects to begin with. Their groundwork preparation has a wider basis.

That is why they have the course. Thus, if people are affected by the extra debt incurred by the extra year in Scotland, their choice of places where they can take their degree will be dramatically limited because they are not as well prepared as their English counterparts to do a degree in England or Wales.

The English students who go to Scotland have far more choice but may have decided that they want to take the more indirect approach to their degree, or they may not be quite so sure about which degree they want to do. Thus they will want a greater choice. This has the benefit that fewer people will drop out if they find themselves studying subjects that they do not like or for which they are unsuited beyond their school education.

There were certain movements afoot in England to apply for a first-year introduction course that gave students a better taste of a subject which has disappeared over the past few years. When I first thought about going to university, this was an option at several places, but it rapidly disappeared under financial strictures.

Effectively, we must consider whether all those who are on four-year courses will face a far greater disincentive than those who choose to do three-year courses. We must also consider that students coming from the normal schools in Scotland who do not have access to the A-level exam will have a very much reduced choice and also be under far greater financial stringency when they come to make that choice. I beg to move.

Lord Colwyn

I have some sympathy with this amendment which covers in a much broader sense my own Amendment No. 45 which we shall discuss next Monday. It is much more important to me to hear what my noble friend the Minister has to say this evening, rather than rehearse any arguments that I shall use for my amendment, which is concerned with loans for the longer courses for health care practitioners. I hope that the noble Earl will be able to give some encouragement to students about to embark on four, five or six-year courses. I look forward to returning to the matter in more detail next Monday.

Lord Butterfield

I rise to make a few remarks about the problems facing students in medicine, veterinary medicine, dentistry and increasingly in engineering. I do not wish to pre-empt what may be discussed under a later amendment, but it seems to me that ways may well have to be found so that students who are going to embark on these long courses are able to be covered by grants or bursaries for what we would call the clinical part of their subject.

A very important part of the argument for that is that once a person becomes part of the clinical services in medicine, dentistry or veterinary work, his opportunities for augmenting his income by vocation work disappear. I wish to make the point that if we do not take such steps we shall have an interesting swing of the pendulum from the present delightful mixed social class, high ability classes in these subjects. There will be a slow drift back to the kind of medical students the Committee may remember were depicted in the film "Doctor in the House". It is inevitable that the deans of the medical, veterinary, dental and perhaps even the engineering schools may find that, to an increasing extent, they are receiving applications from people who can undertake such long courses without feeling that they are incurring too large a debt.

I wish to refer to some calculations that were sent to me by the Royal College of Physicians. I know that these calculations correspond closely with some that the noble Lord, Lord Flowers, was going to present. They show that by the end of the fifth year examinations, assuming a 5 per cent. inflation rate and roughly present prices, medical students will be in debt to a level of about £8,000. That is the kind of debt which may inhibit poorer households and that is what I am worried about. I hope we can find a way of treating the first three years, which constitute the scientific, psychological and general foundation to the course, as if they constituted an ordinary undergraduate BA course, and of making some special arrangement for the clinical course with its special circumstances where, although I dread to put this on the record, the plain fact is that the students will be apprentices. I believe some kind of special arrangement will have to be made in the latter case.

Lord Peston

I hope the noble Earl will take the opportunity to clarify one or two areas of this amendment. I shall not deal with the matter of long courses per se which has been spoken about adequately. However, I should like some information on how the loans scheme will work for degree courses which involve a vocational year. This year often comes in the middle of such courses. Will the loans incurred in the academic years ahead of the vocational year build up at the implied rate of interest during the vocational year? That would act as a disadvantage for courses with a vocational year, which many of us think are very good.

Further, I should like some information on the position regarding what one might call the professional year. A pharmacist, for example, may obtain his degree but he cannot become a professional pharmacist until he has had a year's experience in a pharmacy. If he is earning a sufficiently small sum of money he may not have to repay the loan, but as I understand it he will certainly incur a growing cost to the loan because of the implied interest during that year. Many other disciplines may involve at least one year, if not more, of such professional training when students are earning a sufficiently low income not to repay the loan, but as I understand the scheme they will not merely retain the liability to repay but that will grow at the rate of inflation. It seems to me that the danger there is that that will act as a disincentive to precisely those kinds of activities which on all other grounds are highly desirable. Many of us believe that pretty well all degree courses should include a vocational year and that the straight old-fashioned three year degree is somewhat obsolete.

I raise these points entirely for information purposes, as I could not quite understand how the suggested regulations will take those matters into account. I have expressed the worst scenario and the noble Earl may well have something more positive to say. However, I believe the situation could be threatening to a number of rather important professions, most of which but not all are connected with medicine.

10.45 p.m.

Earl Russell

I should like to support the amendment. I support both what my noble friend Lord Addington said about Scotland and what the noble Lords, Lord Colwyn and Lord Butterfield, have said about medicine. Other people are also affected, and the British Dental Association, for example, is very much concerned. Before the subject is left, somebody ought to put in a word for Greats at Oxford, which, as many Members of the Committee know, is capable of providing an excellent education.

The inevitable effect of a fourth year is that the cost increases. If the Government's principles have any force at all they must recognise that increasing the price of a particular subject to the student is liable to deter students from undertaking that subject. We have to consider whether that is socially desirable. Do we, for example, really want fewer doctors? Do we want fewer people going to university in Scotland?

Scotland has a very distinctive education system, although I was extremely surprised to see that the Parliamentary Under-Secretary, speaking in Standing Committee B, denied that there was such a thing as a separate Scottish education system. I very much hope that that is not the view of the Government because it is a piece of anglocentricity of the sort which from time to time puts the principle of the Union under threat. I very much hope that it will be withdrawn.

I hope that the Government can find it in their hearts at least to say that they will think about the effects of the problem of the course of longer than three years. I am sure that there are other examples that we have not thought of and that if we leave the Bill to go on the statute book in the form in which it now stands we shall be distorting the market for graduate intake for many years to come.

The Earl of Caithness

This is another amendment intended to protect a certain category of student—those on long courses—by cancelling part of their liability for repayment. My general comments with regard to Amendments Nos. 12 and 13 apply here as well. We believe that the arrangements proposed offer sufficient protection but, if experience shows that special provision is necessary, it can be made through regulations. It would be inappropriate to make provision in primary legislation when we are not clear that such special provision is necessary or that we have identified the most appropriate solution for the problem.

The amendment in the name of the noble Lord, Lord Addington, provides for cancellation of loans covering any additional years of a course beyond the first three years. We take the view that a loan facility for each year of a course, irrespective of length or subject, is the right approach. I acknowledge that this will lead to a larger debt but the long courses in many cases lead to higher incomes.

I look forward to debating Amendment No. 45 in the name of my noble friend Lord Colwyn. When at this hour of the night one has only reached Amendment No. 16 the thought of getting to Amendment No. 45 is a great excitement. However, I do not see why my noble friend wishes to restrict the provision to health care. It was the noble Lord, Lord Butterfield, who broadened the scope of the debate. As I believe the Committee is aware, the Government are examining the possibility of allowing longer repayment terms for those on courses longer than four years so that the annual repayments are not too burdensome.

Lord Peston

Perhaps I may interrupt the noble Earl, because I am trying to learn. In the case of a four-year sandwich degree course, of which one of the years would be a vocational year for which I believe a mandatory award is not available in usual practice, is he now saying that a loan would be available for the vocational year?

The Earl of Caithness

I had intended to come to that specific point, otherwise I shall deal with it later because I want to make sure that I have the right answer. Perhaps I may repeat, because this is an important point for all those Members of the Committee who are concerned, that we are looking at courses which are longer than four years so that annual repayments do not become too burdensome.

The noble Lord, Lord Addington, drew a distinction between A-levels and the broader range of highers in Scotland. What he said is generally true, but about 80 per cent. of Scottish pupils going directly into higher education now do a sixth year at school before doing so, as I am sure he will be aware. About 25 per cent. of entrants to Scottish four-year degree courses are from out with Scotland and generally have A-level qualifications. That points to the value of a four-year course in its own right.

The noble Lord, Lord Addington, was sensible to have gone to a Scottish university from Norfolk. What he said did not fall on deaf ears. My noble friend Lord Sanderson of Bowden is listening carefully and, as I am sure the Committee is aware, my right honourable friend the Secretary of State received the benefit of a four-year course in Scotland. That is why we shall ensure that annual repayments for those courses longer than three years will be manageable for borrowers. It would be pointless to introduce a scheme under which a significant minority of borrowers found it extremely difficult to repay their loans. We are considering whether provision is necessary from the beginning of the scheme and we shall continue to monitor that aspect of the scheme once it is under way. If changes are necessary, they can be introduced through regulations.

I have failed to answer the noble Lord, Lord Peston. Perhaps I may do so at another time.

Lord Addington

I must apologise for my zealousness as a convert to the Scottish education system, having suffered under the A—level system. I am glad that the distinction between the two is being made clear. A—levels channel you very early into the specific subjects and you do not have much chance to break out, especially if you follow a single honours course in England or Wales. The Scottish system is nearer what we are told exists and I am glad to hear that it is receiving some consideration. The noble Earl did not put down a blanket shutter on any form of review in the future.

Even after sixth-form study, the highers are probably not quite of a sufficiently high technical level for someone entering a straightforward course in England. I hope that the Minister will bear that point in mind because even sixth-form study, which is more a preparation for the method of studying rather than the acquisition of technological knowledge, is not that good a preparation for entering such courses. The A—level is good for preparing you over two years to study for one subject if you happen to be good at that subject. That was one of the problems that I tried to point out, but the noble Earl has given a hint of sufficient light at the end of the tunnel to allow me to beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness David moved Amendment No. 17: Page 1, line 15, at end insert— ("(2A) The Secretary of State shall by regulations made under subsection (2)(b) above secure that any scheme operable under arrangements made in accordance with this section and Schedule 2 below shall make such provision for the maintenance support of mature students as appears to him to be necessary to promote access by such persons to higher education. (2B) In this section, "mature student" means a person otherwise eligible for a loan who is at or above the age of 25 years.").

The noble Baroness said: Both these amendments involve mature students. The first requires the Secretary of State to monitor closely and review regularly the maintenance support for mature students in the interests of safeguarding and encouraging access to higher education. The second allows all mature students to be eligible for loans without an age limit.

With numbers in the 18 age group declining, mature students will be a large and important element in higher education. They already form 25 per cent. of students. It is essential both to attract them and to keep them when one has enough of them. During the Standing Committee stage in another place, the needs of mature students were recognised in part. In principle at least the Government recognise that mature students require special attention. The main evidence of that is in the maintenance of the mature student allowance—a special allowance for certain students over 26 when they begin their course. The Minister, Mr. Jackson, stated: I also give him [Andrew Smith, higher education spokesman for Labour in the Commons] the assurance that he seeks on the mature student allowance. That will continue. It will not be frozen and it will be uprated each year in the same way as other allowances".—[Official Report, Commons, Standing Committee B; 25/1/90; col. 502.]

Despite several pleas from Members on all sides of the Chamber, there seemed to be no recognition of the existing problems of mature students, of the possible disincentive effect of loans for students or of the effect of the exclusion of students over 50 years from the loans scheme. The Equal Opportunities Commission, in an otherwise neutral response to the White Paper, stated: Whilst we consider that the proposed scheme will treat women and men equally in respect of availability, access and repayment, we are nevertheless concerned that people aged 50 and over will be excluded from its provisions. Our experience of the financial needs of mature women returning to education after a period of domesticity, or seeking a new direction, leads us to doubt the White Paper's assumption that people over 50 will be better able to rely on other resources during their studies. We would therefore welcome the removal of this age-related eligibility criterion, so reflecting the new regime's ultimate aim of widening access to higher education".

According to the DES leaflet produced last month, Top up loans for students: the Government's proposals, the reasoning behind the no loan over 50 proposal is that students embarking on higher education at that age can be assumed to have accumulated other resources on which they can rely in place of the loan.

I think that that is not at all a safe assumption. Many women, particularly if they are from non-traditional student backgrounds, are unlikely to have savings over £4,212. This is the sum in today's monetary terms that students will eventually be required to contribute towards their maintenance costs.

think it is worth noting that as the retiring age for men has come down, that for women has risen slightly. In 1971, 51 per cent. of women aged 55 to 59 were economically active; in 1988 the figure was 53 per cent.

There are a few facts which are worth noting from the Office of Population Censuses and Surveys survey, which was commissioned by the DES, on mature students' incomings and outgoings. It showed that 54 per cent. of mature students received at least one state benefit in addition to child benefit; 76 per cent. of mature students had an outstanding debt of 12 months' duration; there were proportionately fewer mature students from social classes 1 and 2 than in the rest of the student population; and students from social classes 3, 4 and 5 were most likely to have higher debts.

With the increase in numbers of mature students and the desire of the Government to encourage more, it is clear that there will be considerable extra hardship for a sizeable proportion of the student population as a result of abolishing benefits. I hope that we shall be told some of the Government's thinking on mature students, many of whom have absolutely no help with fees or maintenance. Older people—those 50 and over—have a powerful case for improved educational opportunities. Almost all of them missed out on the post-war improvement of education. Only one in 10 of those now aged 50 carried on at school after the age of 16 compared now with one in two. Yet it was their taxes which paid for the schooling and higher education of a much larger proportion of the next generation. I think that they deserve some consideration.

As I said at Second Reading, I believe that noble Lords who are actively engaged and most of whom are well over 50 will take a sympathetic look at this amendment. I beg to move.

Lord Renton

There is nothing in the Bill to prevent what the noble Baroness wants to have done. However, no doubt she is anxious about what may or may not be in the regulations. That is the point we are on.

I do not believe in legislation by White Paper, but the Government have invited us to consider the White Paper in order that we may see how the Bill may be implemented by them. If we turn to page 13 of the White Paper, at paragraph 3.3 again there is encouragement for the noble Baroness in regard to people up to the age of 50. It says: The loan facility will be offered to all full-time home students in higher education … up to the age of 50"— that is, except for post-graduate students.

Then in paragraph 3.5 a very important principle is laid down which I do not think we should ignore. It is stated like this: A student embarking late in life on study at first degree level has not the opportunity thereafter to repay the loan". That must be the normal situation and one that we should not ignore. The paragraph goes on: The facility will therefore be available to students aged 50 or over at the start of their course. Students embarking on higher education at that age can be assumed to have accumulated other resources on which they can rely in place of the loan. They will continue to have access, as now, to the other elements of the mandatory awards regime". I would just add this. The Treasury will always be looking at the amount of money spent on the student loans scheme. Although it may be of only marginal influence, shelling out money to any great extent to students aged over 50 means that students of a younger age who need the loan facilities much more might not receive them. I hope that my noble friend Lord Caithness will not accept these amendments.

Baroness David

I must make an apology to the Committee. Although I said that I was speaking to two amendments, I did not name the second amendment. It was Amendment No. 22 which states: No scheme made under arrangements in accordance with this section or regulations made under Schedule 2 below shall exclude any person from eligibility for a loan on grounds of age". I apologise for that omission. However, I made the point that it is not correct to think that that age group will have accumulated enough money necessarily to be able to repay the loan easily. However, I made the point that women are working until a later age now and will be earning for longer. With increased qualifications they could therefore earn a higher sum and would then be able to repay their loan.

11 p.m.

Earl Russell

I should like to support Amendment No. 17 and speak also to Amendment No. 22. The presence of mature students is a vital part of the education of other people in a university. It is important for a community that all are involved. That was a factor I missed badly at an American university. The vast majority of students were drawn from one nationality. Similarly, if they are too uniformly drawn from one age there is a loss of educational value. I remember very vividly, for example, when teaching a police inspector on secondment from Bramshill. I set him a question on why the 15th century ecclesiastical authorities failed to root out heresy. He immediately pointed out, first, that the main centres of heresy were on jurisdictional boundaries; and, secondly, that even if other people did not agree with the heretics they did not mind them enough to inform on them. I was watching the face of an 18 year-old sitting across the room who suddenly realised—in a way that I could never have got over to him—that these were real problems about real people. For that reason I should be very sorry to see mature students discouraged.

I take the point of the noble Lord, Lord Renton, about legislation by White Paper. I agree with him that there is no other way that we can go about it. It is the 50 years cut-off that concerns me. The point that the noble Lord, Lord Renton, made about the period of repayment demands thought. But we are told in the government leaflet—again not in the Bill—that we are looking at a period of repayment of five years. A person aged 50 to 55 can be presumed to have five earning years in front of him or her in which repayment is possible.

I find the point about savings unconvincing. That comes from what I regret to say seems to be becoming a vanished world. It comes from a world before the explosion of mortgage debt that we are currently seeing, from days when it was a great deal more possible to build up a body of saving on a professional income than it is now. I do not think that we are facing up to the extent to which we are becoming an indebted country. My honourable friend, Mr. Taylor, in a Question in another place on 30th November last, elicited the information that the total volume of private debt in this country, including mortgages, has now risen to the startling sum of £378 billion. It is in the light of that figure that I am not entirely convinced by the argument in the White Paper about savings. I should like to support the amendment.

The Earl of Caithness

Before I reply to Amendments Nos. 17 and 22, perhaps I could return to the previous amendment and answer the point made by the noble Lord, Lord Peston, who asked about sandwich courses. If a grant is available during a sandwich year, the loan will also be available. However, I understand that a grant is not generally available if the student is paid during the sandwich year, in which case there will not be a loan available either in those circumstances.

Mature students, who are the subject of Amendment No. 17, have everything to gain from the loan scheme. Those with families will not in general lose access to benefit. For them, the loan will be a net increase in resources. In many cases mature students already incur substantial debts at commercial rates. For them the opportunity to substitute borrowing under the very favourable terms of the scheme will be major help. For all, the 25 per cent. increase in the new package compared with this year's grant will be welcome.

Amendment No. 22 in the names of the noble Baroness, Lady David, and the noble Earl, Lord Russell, relating to a student's age would remove the age limit proposed by the Government for the loans scheme. The Government propose that the loan should not be available for students aged 50 or over at the start of the course. Although the noble Earl, Lord Russell, did not like that, I am sure that he will be pleased to know that that age limit is generous compared to other countries which operate loans schemes where I gather that the limit is more commonly fixed at 30. The grant will continue to be available to students over that age although inflation will erode its real value. As the Committee knows, the grant includes payment of the standard tuition fees, but we judge that students over the age of 50 should not benefit from a further subsidy from the taxpayer towards living expenses through the medium of the loan.

I put it to the Committee that students of that age can be expected to rely in part on their own resources. Of course my noble friend Lord Renton was right to point out that it would also be inappropriate that students of that age should take on a repayment obligation when their remaining years of earning will be limited. The age restriction would be imposed as a condition of eligibility by regulations made under Clause 1(2)(b).

One specific point was raised by the noble Baroness, Lady David, when she referred to mature students and child benefit. I assure her that child benefit is not affected by the Government's proposals. Students with dependent children will retain their entitlement to social security benefits, including child benefit.

Baroness David

I thank the Minister for that reply although I cannot say that it pleased me very much. I do not quite understand the argument that because mature students already have debts, they will want to involve themselves in more. I do not believe that that follows at all.

I disagree with the point about the over-50s not having the opportunity to repay. I think that as women are staying in work longer, they will not have great problems in repaying the loan before they are 65.

I shall not pursue this matter tonight. However, I shall certainly return to mature students on Report. This evening, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn. [Amendment No. 18 not moved.]

Baroness Seear moved Amendment No. 19: Page 2, line 10, at end insert— ("(3A) The Secretary of State shall in respect of any eligible student who is a parent at the date on which a loan will be payable in any year make available adequate additional provision to such a person in respect of childcare costs.").

The noble Baroness said: This is a narrow but rather important point about certain categories of mature student whom we seem to be discussing at some length, although this may also apply to some younger students; that is, the question of help with child care for those students who have responsibility for children.

Many women wish to train in order to return to work at an age at which in many ways it is highly desirable that they should. An obvious example is women who wish to return to teaching but who need to study in order to obtain the required qualifications. That is very desirable. Those students will have children for whom they are responsible. The point has been made in previous debates in this House that the cost of such child care can be prohibitive. Women who are responsible, who want to take that kind of course with teaching in mind, are not going to allow their children to be looked after, not only at pre-school age but during school holidays and other times, unless they are satisfied that the provision is good.

Good provision is expensive. The Government recognised that fact in relation to employment training for single parents. If one has child-care costs in addition to the costs of study in many cases one will not study. A generous allowance of £50 a week for child care has been allowed to single parents when they take such courses. The same is necessary for women in higher education. The argument that they have husbands who can pay does not meet the problem. Husbands may be reluctant to see them take those courses. They involve costs to the family. If in addition they have to meet the child-care costs—many of those women are at the right age to take such courses—the women will not take the courses.

I urge the Government to look seriously at this proposal. This evening's discussion about mature students has revealed some curious attitudes on the part of the Government. There is the idea that resources are available for married women. What resources? A great many of them have not earned any money for a long time. They have no money of their own. They have to persuade their husbands to pay for anything of that kind.

The Government want to tap that valuable source of woman-power, especially for all the occupations that they are likely to choose—we hope they will not be restricted—where we know that there will be shortages: teaching, nursing and social work. We are short of people for those jobs. For Heaven's sake, surely the sensible thing to do is to invest money in this type of provision so as to get those women back to work. They will pay back the cost in tax in a short time. I beg to move.

Baroness David

I strongly support the amendment. The need for child-care facilities is beginning to be recognised more and more readily. I have an interesting list of the various universities and colleges which provide help in this way. It is also interesting to see how expensive such provision is in a good many cases. A joint college nursery for staff and students was set up at Cambridge University in the 1970s. It has now been almost entirely taken over by the staff. The students have been pushed out.

It is also interesting to note that in another place Mrs. Gorman has introduced a Bill (the Tax Relief for Household Employers Bill) which will allow tax relief on earned income in respect of the earner's employment of home helps, child minders and other workers in cases where such employment is essential to the earner's availability for work. It should equally be available for women taking degrees. All that is very much in the air, and I hope that the Government are paying attention to the matter, because as the noble Baroness has said, education is an investment. II is an investment to have more of those people better qualified. Goodness knows, we need them. I hope that we shall receive a sympathetic response.

Baroness Blatch

The Government are committed to broadening access to higher education. Mature students are presently among the groups which are under-represented. We all accept that it can be especially difficult to study and at the same time care for young children; but to make additional provision in the form of a bigger loan would be inequitable because students with children would be faced with relatively larger repayments—

Baroness Seear

I was hoping that instead of a loan the Government would stump up and pay for child care.

Baroness Blatch

Paragraph two of my reply may be more helpful. Instead, we shall retain the dependants' allowances payable with mandatory grant. The 1989–90 allowance was worth up to £1,455 for a spouse or adult dependant or a first child where there is no dependent spouse or other adult dependant. Additional allowances are payable for other children, depending upon their age. The 1989–90 allowances range from £305 for a child under 11 to £1,165 to a young person aged 18 or over. Eligible students will also continue to receive the mature students' allowance, worth up to £840 in 1989–90. The level of the 1990–91 allowances will be announced shortly.

In addition, both single parents and students' dependants will retain their entitlement to social security benefits. For single parents the entire top-up loan will be an additional resource. Student parents will also be candidates for assistance from the access funds.

Child care is not just a matter of cost. The growing recognition of the need to provide childcare facilities such as crèches for working mothers and single parents will not pass by the higher education institutions. There will be increasing demand from students and they will choose institutions with reference to the extent and quality of the provision offered. This is, however, entirely a matter for the institutions concerned.

The Government believe that the scheme they propose is appropriate to the needs and circumstances of all eligible students, including those with children. The additional allowances payable with the mandatory grant will continue. As well as being unnecessary, additional provision of this nature would add cost and complexity to the scheme.

I invite the Committee to reject the amendment, but before I sit down, it is important to say that the Government consider this issue to be very important. However, it is a question of how we help these young people. In the light of what I have said I hope that this amendment will be 'withdrawn but if it is pressed I hope that it will be rejected.

11.15 p.m.

Baroness Young

Before the noble Baroness, Lady Seear, replies, perhaps I could clarify one point. The comments of my noble friend Lady Blatch were extemely helpful. However, a very important point for the future and one about which people are very concerned is child care costs. It was difficult to take in all the figures given on dependants' allowances, but I assume that they apply separately to the wife and do not include the salary of the husband. If the answer is not available immediately I should be happy if the noble Baroness gave it a later stage, either in Committee or on Report, to clarify the point. I assume that that is the case because I think that that applied at earlier stages of the Bill. It is important that the assessment should be quite separate.

Perhaps I may raise one other point. A married woman with small children considering a degree course—which will be a complicated matter no matter how generous the provision for child care or anything else—is unlikely to contemplate a full-time course away from home. Presumably she will be living at home and attending a reasonably local university or polytechnic. That said, do I understand that not only the allowances but also the grants would still apply as they would to a student living at home?

Baroness Blatch

I take my noble friend's latter point first. With regard to the person studying from home, maintenance costs would probably not apply. Grant would apply and allowances would continue to apply depending upon the particular circumstances of the person concerned.

With regard to the initial matter my noble friend raised, I am afraid I shall have to write to her. I understand that the answer is rather complicated and concerns means testing. I assure other noble Lords who may be interested in the reply that copies of the letter will be sent to all who wish to see it.

Baroness Seear

I should like to digest at leisure what the noble Baroness said when I am rather more awake. However, I hope that the whole question of child care and the cost of it will be very carefully considered if it is desired to persuade these women to return.

In so far as the grant will be means tested, I hope the husband's income will not be taken into account. In many cases that would mean that the very people whom it is desired to have back would not find it easy to return. The husbands may have the money but it does not in the least mean that they would part with it for this particular purpose.

Throughout the evening we repeatedly heard as an argument against carrying out various suggestions that it will make the scheme more administratively complex. We must not allow the administration tail to wag the educational dog—if that is not too complicated a way of putting it. It is a remarkably bad argument to say that something which should be done cannot be done because it is inconvenient for the administration. That is an argument put forward by administrators and should always be fiercely contested and I do so now. At this time of night, and until I have seen the allowances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Earl Russell moved Amendment No. 20: Page 2, line 10, at end insert— ("(3A) The Secretary of State shall by regulations made under paragraph 1(1)(c) of Schedule 2 below provide that a person who has been an eligible student for the purposes of this section but who, by reason of illness or accident is unable to complete the relevant course of higher education, shall cease to be so eligible and their liability shall by such regulations be cancelled.").

The noble Earl said: I wish to speak also to Amendment No. 21. These amendments deal with students who must intermit their course. They provide that in that case the interest shall not accumulate; that the debt shall not grow during the period of intermission. Secondly, in the case of students who are unable to complete their course, it is provided that the debt shall be cancelled.

Often one does not realise how many people suffer misfortunes. During the past three months I have come across someone who nursed a girlfriend through a psychiatric breakdown; someone nursing a dying mother; and someone recovering from a third attack of malaria. Fortunately, all those people will complete their courses. However, regularly we find that for one reason or another some people must be advised to withdraw or to take a year off because for medical or other reasons they are too far behind to be able to do themselves justice.

It will become more difficult to advise such people if one is in the process of advising them to take on a much larger debt. Furthermore, we must accept that a high proportion of those who will be affected by the amendments are psychiatric cases who often make a full and complete recovery. However, by definition, psychiatric cases are not always rational. Therefore, faced with the prospect of additional debt, they are likely to become much more agitated. It can make the situation more difficult to deal with.

It would be better if one were able to advise those facing such difficulties on genuine educational grounds. University teachers should not have to act as auxiliary bank managers in advising people about what they will do to their future financial prospects. This is a simple humanitarian amendment and I do not believe that, in the end, it will cost much. In the case of people who do not complete their course the reason behind the loans proposal would not apply. The loans proposal is justified on the grounds that it is equitable because graduates earn higher incomes. However, such an argument cannot apply in the case of those who do not graduate.

I hope that, although he may not agree to the amendment here and now, the noble Earl will find it in his heart at least to say that he will take it away and think about it. I beg to move.

Baroness Blackstone

The reasoning behind the amendments is that it is unjust that someone who fails to complete a course through no personal fault should be further penalised by having a debt to repay. Similarly, it is unfair that a student who takes longer to complete a course because of illness should face an additional repayment burden. The extra interest accrued would increase the repayments compared with those of a student who completed a course within the usual period.

Students who have the bad luck to fall ill for a considerable period of time will be particularly disadvantaged. Students who are unfortunate enough to be forced to drop out of higher education because of illness or accident have a double handicap. At first they have the disappointment of failure to gain a degree. They will feel that it is failure not to get the degree that they and their parents very much hoped for. Students who have not managed at the end of their course to obtain a higher education qualification are very unlikely to benefit from the increasing earnings which the Government have constantly told us is the basis for this Bill and for recouping some of the maintenance costs of higher education from the students themselves.

Since that is a central principle behind the Bill it would be quite wrong to expect students who are not graduates either to repay the capital or the interest on the loans. I support these amendments.

Earl Bathurst

Will the noble Earl extend his amendment and, if not, what will my noble friend who is to reply say about the position of a student who is injured in a genuine sport or game at university and who may be out of action for five or six months or even a year? Would that situation apply to the noble Earl's amendment? If so, I shall be very interested to hear what the noble Earl has to say in reply because such incidents happen.

The Earl of Caithness

Once again we are discussing amendments which are intended to protect a certain group of graduates. I refer the Committee to the comments that I made concerning Amendments Nos. 12, 13 and 16 which I shall not repeat now except to emphasise that the flexible structure of the Bill permits changes to be made through regulations should monitoring reveal that adjustments are necessary.

Amendments Nos. 20 and 21 would make special provision for students who leave their courses or delay completion as a result of illness or injury. My noble friend raised a point about injury and I saw the noble Earl, Lord Russell, nodding his head in agreement with what my noble friend said. The noble Earl, Lord Russell, was right to say that it is anticipated that graduates will have a potential for a higher salary when they leave. Therefore, I wonder whether he will agree with me that even those who have sat for part of a course of higher education can have an additional value in the labour market.

Someone who has successfully completed part of a degree course may expect to achieve higher earnings on average than someone without any higher education. Therefore, it is surely right that that person should be asked to repay the loan which he has taken up. We do not believe that it would be equitable for the taxpayer to give a further subsidy to former students in such circumstances. I reassure my noble friend on that point because I can understand his concern. We must remember that what we are asking a graduate, or someone who has taken part of a course, to repay is the loan only when lie reaches 85 per cent. of the national average earnings which at the moment is £11,500.

If the work that the person did on the higher education course does not lead to a salary that takes him above that level he is under the deferment provisions that we have provided for and he is protected in that way.

Baroness Blackstone

Can the Minister tell the Committee what evidence there is that students who have failed to complete a degree course actually have higher earnings than other people with similar earlier qualifications, like two or three A—levels?

The Earl of Caithness

I did not say that it was a guarantee. I asked the noble Earl, Lord Russell, whether he would agree with me that there was potential for that. I answer the noble Baroness by saying that if that person does not receive the expected income that he might have got from completing the course, and that income does not take him above 85 per cent. of the national average wage, then the deferment provisions arise.

11.30 p.m.

Baroness Young

Perhaps I may ask my noble friend to consider a further point. There could be one or two very hard cases indeed. It is arguable that if one has completed one and a half years of a university course the chances are that one will get a better job. But I can envisage the case of a student who has a terrible accident—I do not know whether this is what the noble Earl, Lord Russell, had particularly in mind—and is therefore seriously handicapped. Such a student will not earn very much at all. Is there no provision within the Bill or the regulations to remit a loan if it is clear that because of illness or accident it will not be possible to repay it? I do not know the answer to that question but it is matter which should be considered at some stage.

I am certainly not in favour of a general proviso to remit a loan for someone who drops out of the course for a rather feeble reason. One has to take care not to open a door which it would be quite improper to open and which it is not intended to open. But I see that there could be a few hard cases. I wonder whether my noble friend would like to consider this point and perhaps tell us at a later stage what he thinks.

Baroness Seear

I should like to reinforce what the noble Baroness has just said. Those who have worked with students know that a small percentage drop out as a result of breakdown. I assure the noble Earl that any idea that those people will get good jobs because they have had one and a half years at university, a breakdown and psychiatric treatment, is absolute pie in the sky. They are the most difficult people to help. To say that they will not have to pay it back because they are not receiving 85 per cent. of average national income is only deferring repayment. They still have that debt.

Only a small number drop out but these cases happen all the time. Those in higher education know that it happens. Such people are terribly difficult to help and to place afterwards. Some of us have had them around us for a very long time. I ask the noble Earl to take the point away and consider whether something can be done to cancel the debt so that such people do not have this additional worry. They are a difficult group to help.

The Earl of Caithness

I have listened with particular care to what my noble friend Lady Young, supported by the noble Baroness, Lady Seear, has said. The deferment provisions which I mentioned earlier will come into effect if their income is not up to the expected level for repayment and in due course the stage will be reached when the person is aged 50 and the loan is cancelled. But without any commitment I should like to study carefully in the Official Report what my noble friend has said.

Earl Russell

Those words offer a valuable small crumb of encouragement. I welcome them. I welcome also what the noble Baroness, Lady Young, has said. I do not believe that one should talk about the higher potential earnings of non-graduates. As my noble friend Lord Addington has reminded me, employers ask about qualifications. They do not ask about educational experience. I know that we used to be told once upon a time that there were regular applications from people claiming to be failed B.A. We do not get those now.

The Minister might usefully think—and I hope he will—about increased debt for those who intermit for a year. This also covered cases of physical injury. I remember a recent case of a smashed elbow joint which is healing extremely slowly. That is the sort of situation where the pupil ought to be able to think freely, without financial anxiety, about the possibility of intermitting for a year to allow recovery and, therefore, more efficient writing.

The point which underlies all this is that many of us would like to be able to advise our pupils on educational decisions on educational grounds. The intrusion of financial calculations into this kind of decision may perhaps be a part of market forces, but I am not convinced that it leads to good education. However, the Minister has offered a crumb of comfort and I too should like to read very carefully what is recorded in the Official Report. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 21 to 23 not moved.]

Baroness David moved Amendment No. 24: Page 2, line 11, after ("may") insert ("after consultation with such persons as appear to him to be concerned").

The noble Baroness said: The purpose of this amendment is to probe the likely use of the power to add, or remove, types of course from the list giving rise to eligibility. Schedule 1 defines courses of higher education for which an eligible student can receive a loan. Clause 1(4) provides for the Secretary of State to amend Schedule 1 by order. I assume from the Explanatory and Financial Memorandum that this is a negative instrument and therefore that there may be no discussion in Parliament on the matter.

The amendment asks for consultation prior to the Secretary of State making the order and provides an opportunity to find out what changes the Government have in mind. The definition in Schedule 1 of higher education includes all courses defined as higher education by the Education Reform Act with the exception of postgraduate courses and with the addition of the Scottish Vocational Education Council courses and courses higher than the higher level of the Scottish Certificate of Education. The list is comparable to that for which mandatory grants are available, but includes Higher National Certificate and other sub-degree courses and professional examinations above A-level standard. At present these are excluded from mandatory awards.

The White Paper states in paragraph 3.39 that one of the conditions will be that students must be full time. However, that condition is likely to be a condition referred to in Clause 1(2)(b). The principal extension to eligibility is courses in further education; for example, A-level and sub-higher education vocational courses. Many students undertake these courses full time and are likely to lose housing benefit under the new regulations, although some may receive funding from the further education access fund. Although we welcome the fund, the £5 million that the Government are proposing to devote to further education is minimal. When questioned about the matter in the Standing Committee on 23rd January 1990, the Under-Secretary of State, Mr. Jackson, (at col. 418) thanked MPs for proposing new categories of student who would be eligible for loans and stated: Our general position is that although it may be desirable to extend the scope as resources allow, it is important to get the scheme up and running first. Any case for extending its coverage will have to be considered not only in the light of general policy and availability of resources but on the merits of the argument in each instance. I intend …. to pay close attention to the impact on recruitment of the extension of student support through the broadening of the categories of course that the loan can cover".

Will the Government please state what indication they will use to monitor the recruitment of higher education students in order to extend the student loans to further education students, especially to those on courses that will enable them to gain access to a higher education course? Further, will they consult on those indications? The amendment seems to me to be very reasonable and one to which I should have thought the Government would certainly agree. I beg to move.

The Earl of Caithness

I always find the noble Baroness, Lady David, convincing in her arguments and sometimes she is even more convincing than usual. I thought that she was particularly persuasive tonight. As she will be aware, the Government always consult before taking any action. In my view it is probably right that we should put this on the face of the Bill. I should, however, like to check between now and the next stage of the Bill's proceedings the wording of what is proposed. In the circumstances, if the noble Baroness feels able to withdraw her amendment, I shall see whether something can be done in the matter at a later stage.

Baroness David

I am delighted and, I must confess, even slightly surprised. It is not very often that the Government agree to an amendment. I thank the noble Earl very much and agree to withdraw the amendment. I look forward to that of the noble Earl.

Amendment, by leave, withdrawn.

[Amendments Nos. 25 to 31 not moved.]

Clause 1 agreed to.

Schedule 1 [Courses of higher education]:

Lord Peston moved Amendment No. 32: Page 3, line 4, at end insert: ("1A. A taught second degree course.")

The noble Lord said: I am aware that it is late at night but this is an important amendment and therefore it is necessary for me to speak to it. I implied or stated in my Second Reading speech that if we were interested in experiments with loan schemes what we should do is precisely not what the Government are doing. We should take an area like taught masters degree courses where no mandatory awards are available. One can go for competitive awards but students largely finance themselves.

My inclination for many years has been to say that since I have always been interested in exploring loan schemes—as an economist naturally I would be—the area of exploration would be the taught masters degree. There we could gain some experience of how to run a loan scheme. We could check what I believe to be the case, namely, that the taught masters degree is a particularly good investment.

It is also an area where, taking the longer view of the future of the economy, we shall have more people taught at that level. My own view is that the taught masters course is a more sensible way of proceeding than the extension of the undergraduate degree to four years. For a great many reasons I have felt that this is precisely the area where we ought to examine loan schemes. To use the words of the noble Earl, since quite a number of my students finance their masters degrees by borrowing from the banks, I should be happier—and certainly they would be happier—if they were then able to borrow from the Government at possibly more favourable rates.

There are many grounds for saying that that is where I should have liked to have seen the experiment. Where I particularly did not wish to see the experiment with loans, as opposed to other methods of repaying the grant, was in the undergraduate area. I feel that I ought at least to delay our proceedings this evening for a few moments to place those remarks on record. As an economist I feel so strongly about this that if it were not this hour I should wish to divide the Committee in order even more strongly to place on record my views. However I hasten to assure noble Lords that 1 have no intention of doing that.

To summarise, as someone who takes the question of student finance seriously and who is open to arguments, including those on student loans, if I had a free choice and it were up to me where we carried out our first experiments, this is the area I would select. I am particularly disappointed that this is precisely where the Government say that they will absolutely not do it. If ever we had a case where the Government had got the whole matter completely wrong, it is this one. I beg to move.

Baroness Seear

I wish to support this amendment very strongly. I was interested to hear what the noble Lord, Lord Peston said. A long time ago, I, like the noble Lord, arrived at the conclusion that there was a strong case for loans for taught masters courses. It is extremely important that the Government should recognise that finance for these courses is highly desirable. By definition, the people coming on the taught masters courses are, by and large—but not exclusively—the cream of the undergraduate population. We talk about quality. If we want quality we must develop the ablest people among the students to the highest degree possible. That means the taught courses with expansion in undergraduate courses. I do not know whether the noble Lord, Lord Peston, will agree with me, but I have observed a tendency, to put it bluntly, to do a slightly more mass produced job on the undergraduate courses than some of us would think desirable. This has partly been because there has been an increasing reliance on the fourth year of the taught masters in order to give the quality of teaching to the people with the greatest level of ability. What I can see happening, if we do not provide loan provision for taught masters courses, is that the mass produced approach to the undergraduate courses—undergraduate students are apparently to be taught without books according to what we have been discussing recently—will go ahead and we shall lose the quality in the undergraduate courses without picking it up again by providing good masters courses for the people who are capable of taking them.

If we want to keep quality in the academic world and in the world outside where the graduates go to work—we desperately need to maintain quality—it is important that these courses should continue. However, they will not continue if no loan finance is available to them. Once these youngsters have acquired loan debt at the end of their undergraduate courses, they will not be willing to finance themselves, with a debt already round their neck, if they can obtain some kind of a job at the end of their undergraduate courses. We shall lose heavily by not developing the potential of people of the highest level of ability. I hope that the Government will not make up their minds firmly about this measure and that they will at least lake it back and think about it again.

11.45 p.m.

Lord Addington

I should like to add a few words to this discussion. Many acquaintances of mine and my brothers and sisters who have finished their first degree courses were confronted with the possibility of undertaking higher academic work. Many of them were worried about the financial problems that that implied and about the fact that they may not be suitable for a different type of academic work that was more research based. Surely a taught masters degree which provided some form of financial support so that they did not face quite the same degree of financial burden would be a good idea. I am of course assuming that the Government would not charge these students competitive interest rates but interest rates at the same level as those for undergraduates. That would mean that these students would at least attempt to find out whether they were capable of undertaking higher academic work.

As our technical burden for industry and virtually any form of commercial activity we are engaged in in an increasingly complex world increases, we shall need more experts who have extended their academic training. Therefore I suggest that any scheme that gives people at least some form of cushioning and some guaranteed form of financing as they attempt to find out whether they are capable of following a more specialised path would be advisable.

The Earl of Caithness

Let me make it absolutely clear that the Government are firmly committed to improving the supply of very highly qualified manpower. This commitment is reflected in the number and value of awards available to postgraduate students and in the care and rigour with which these are allocated.

The needs for support of postgraduate students are different from those of undergraduates. This is recognised in the very different arrangements currently made for them. These arrangements are closely targeted on the areas of work for which postgraduate courses, especially the specialist taught courses, prepare students. Thus the majority of government support for them is channelled through the research councils which are well placed to make sure that the money is efficiently and effectively deployed. The students apply on a competitive basis; this ensures that only those of very high calibre are successful. Some 7,000 students are supported through the research councils on a mixture of taught courses and supervised research and 1,000 through British Academy studentships.

Postgraduate awards are tax-free and are mostly larger than mandatory awards. In 1989–90 the rate of grant was £3,725 for a research council studentship living away from home outside London. The Committee will be pleased to note that unlike mandatory grants, research council awards have retained their value and are worth more in real terms than in 1979. The rates for 1990–91 will be announced shortly.

I believe that the current system of support for students on taught postgraduate courses is fair and efficient. The level of the award will continue to be uprated annually, unlike mandatory awards, and the students will thus not need loans for their support.

On the question of loans I should like to take the noble Lord, Lord Peston, up on one point. He said that he would like to abolish our scheme. I should like him to make clear what he would put in its place, because I believe that that is important for our discussions; how much that would cost; and whether he has cleared those proposals with his right honourable friend the Member for Monklands, East. I do not expect him to reply tonight but I hope that he will have time to consider the matter for a later stage.

On the other hand, I was greatly encouraged by the fact that the noble Lord, Lord Peston, appeared to see some advantages in the student loan scheme. Although he preferred loans for the taught second degree course rather than what we have proposed, the mere fact that he showed enthusiasm for them gives me hope of convincing him of the full merits of our scheme.

At this time of night I should obviously like to read with care what the noble Lord and the noble Baroness have said. I hope that they too will in due course read what I have said.

Lord Peston

I thank the noble Earl for that reply. I repeat that we shall abolish the scheme. The noble Earl will have to wait—not very long now—for an exchange of positions. He will then hear precisely what I have to say on these matters.

I think that it is a bit thick. I was advocating this sort of scheme before the noble Earl or the Government had thought of loan schemes.

Baroness Seear

Is there not some doubt about that? I thought that the noble Lord's party was going to abolish us, so he will not be in a position to do that, will he?

Lord Peston

We appear to be having a great number of different debates on what we are going to do. I assume that I at least and perhaps the noble Baroness will be here for a little longer. If we are not I shall have to go back to being a retired professor of economics. Indeed, that might be a much more satisfactory way of spending my time.

As I said, I have lectured on the subject for a great many years. The people who have come lately to it are the Government. Many of us thought the matter through much earlier. The Government have latched on to it. They do not understand it and have got it wrong. It is too late for me to go over the history of thought on repayable grants, loans, and so on. I resent the fact that it is suggested that I am the one who has been converted when I can produce writings going back a long time.

Where were we? Despite all the badinage, my main point is that what I said about the masters degrees was not concerned with research council awards. I am perfectly well aware of the research council awards. They are good schemes. My point is that I do not see us expanding the full awards in order to finance masters degrees. I see the need to expand masters degrees. I believe that a worthwhile experiment could have been undertaken via the loans approach.

It is late. The noble Earl said that he would think about what one or two of us had said, and so we may come back to the subject anyway. With those remarks, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Blackstone moved Amendment No. 33: Page 3, line 4, at end insert— ("1A. A course of supervision in connection with a research degree.").

The noble Baroness said: Some of us on this side of the Chamber had hoped that we would complete the first day of Committee on 12th March rather than running into 13th March. I shall be very brief in the hope that we may still achieve that, although it is rather doubtful.

Some of the arguments have already been put by my noble friend Lord Peston in relation to postgraduate students on taught masters degrees, and they apply also to postgraduate students on research degrees. It is vital that we continue to have a substantial number of our most intellectually able and talented students continuing to study for Ph.D. and D. Phil. degrees or whatever a particular university terms the degree that is awarded at the end of the period of research. Those students obtain awards through the research council on a competitive basis, but those awards are very low and quite difficult for students to live on. For students on science, engineering and medical postgraduate courses, the rates last year were £3,700 outside London and £4,600 in London. The rates were rather lower for students in humanities.

Students who decide to study for a research degree which normally takes not less than three years make considerable sacrifices in living on that low income while they obtain their higher degree. Many of them are dependent on housing benefits in order to allow them to live in reasonable accommodation and make ends meet. As I understand it, the Bill will make postgraduate students ineligible for housing benefit just as undergraduate students are to be made ineligible, yet, at the same time, postgraduate research students will not qualify for a loan. In other words, we are taking something away from them and we are giving them nothing in return other than the possibility of going to an access fund where they will have to plead poverty to a new group of people when, under the present system which is set up and running, they may receive housing benefit.

I am not clear what the advantage is of taking that group of students out of housing benefit where there is an established scheme under which their income is properly assessed and regional differences in housing costs are already taken into account, to establish another scheme involving an access fund. Even if they were able to obtain support through an access fund, it seems strange that we should exclude that category of students from the possibility of taking up a loan if they are in financial difficulties on the low amount of money that is available for funding postgraduate awards for research students. Many will find it hard to make ends meet. It seems to me that that category should be included in the Bill. I beg to move.

The Earl of Caithness

I explained at some length on the previous amendment why the Government do not intend loans to be made available to postgraduate students. I said then that I should look carefully at what had been said, so I now say to the noble Baroness that I hope that she will read what I have said.

The arguments apply with particular force in the case of students working for a research degree. Those students have access to a system of government studentships designed to ensure that a sufficient number of our brightest young people continue to take research degrees, especially in subjects which are important to the future economic health of the country. As I understand the situation, many of them are able to supplement their income with earnings from teaching or related work. Thus, they do not need loans in quite the same way as undergraduate students. The noble Baroness was right to mention the question of housing benefits and to draw attention to the access funds. Again, I noted that point carefully for my future discussions with my right honourable friend the Secretary of State.

Earl Russell

Before the noble Earl sits down, perhaps he will answer the point made by the noble Baroness, Lady Blackstone, regarding the logic of taking postgraduate students out of the social security system without giving them access to loans. I must confess that the logic of the Government's position escapes me.

The Earl of Caithness

We believe that not all students should receive housing benefit, although those who are disabled will still be able to claim housing benefit. That was a basis of the scheme. We then thought it right to have the access funds for areas of particular hardship, as the noble Earl knows. We should then separate the students who are studying on a first-time course from those whom we are discussing under the terms of the amendment. As I said, I understood the situation of the two types of student to be different. That is why within the resources available we have been able to offer loans to one which are not means tested but not to the other.

12 midnight

Baroness Seear

If I understood what the noble Earl said, there will be a restricted number of places and resources for people doing research—supervised research students—and they will be selected according to somebody's criteria of what are important subjects to study. I should dearly like to know who are the people who will say which subjects are to be studied. It is in the nature of research that you do not know what people will come up with; otherwise it would not be research. Who is it? What are the qualifications of the people who will make the judgments about what should be researched?

Is the noble Earl aware—I am sure that he is—that, for example, there has been a big demand in American industry for people with degrees in philosophy? I very much doubt whether that would have been a subject picked out as being of particular value. In many ways nobody is in a position to know what are the best topics to research. One has to take people of real calibre who will discover things of real value. The idea that there is somebody outside to tell us what should be researched is an insult to the intellectual community.

The Earl of Caithness

As I understand the situation, support is provided for postgraduates through government funded bursaries and studentships, which are distributed mainly by the research councils and the British Academy. Some are paid for by the department itself. Therefore it will be the research councils that will make the decisions about which the noble Baroness asked.

Baroness Blackstone

I am still not quite clear why postgraduate research students should have benefits removed from them but not be eligible for loans. I do not think that we have had a satisfactory answer on that. I was also interested in what the Minister said about the possibility of research students supplementing their income with teaching and other related work. It was true at one time but it is becoming more and more difficult for postgraduate students to do, partly because of the financial constraints under which universities are operating, which mean that there is very little spare financing available to take on research students to do that kind of teaching. It happens a little but on a very small scale and many of them cannot get such work.

But I am grateful to the Minister for his reply. Certainly I have no intention of pressing this amendment tonight. I shall read what he said. Meanwhile I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness David moved Amendment No. 34: Page 3, line 23, at end insert ("including a course in the performing or visual arts").

The noble Baroness said: The purpose of this amendment is to make students on courses in the performing or visual arts eligible to receive loans. Under the Bill as it stands only students on advanced courses in the arts, such as drama or music degrees, would be entitled to loan support. This would mean that many students on other arts courses would be left to the mercy of the discretionary award system.

The NUS Local Authority Awards Survey 1989—which is the only national survey of discretionary awards that is recognised by the DES as authoritative—allows that there is a wide variation in the policies of local authorities in making discretionary awards for visual or performing arts courses. While many authorities offer awards, the total numbers per authority vary, as do the amounts. Of the 92 (out of 104) authorities responding to the survey, 11 did not make any awards for art college diplomas and 12 did not make awards for vocational arts courses. In the field of dance some authorities would only offer assistance with tuition fees.

In view of these wide variations both in the availability of awards and in the amount, often due to the low level of funding that local authorities face as a result of the low level of priority accorded to such courses, it is vital that the problem of finance for arts students is considered. There are many examples of famous artists and dancers who have made it the hard way. What we rarely hear about is those who fail to make it because of lack of finance and not owing to lack of ability.

Music students have a particular problem. They cannot supplement their income by working in vacations because they have to practise every day for many hours a day. Another problem is with the conservatoires in England. Five top ranking institutions are in London where we know that the cost of living is particularly high.

I have a great deal of interesting information about music students. However, as the hour is so very late I shall restrain myself and not talk about them now. There is a very real problem, I assure the Minister. I hope that he will carefully consider the amendment. It is of great importance. I hope that the Government—who are occasionally accused of being philistine—will take a very nice view of the amendment so that we can change our assessment of the way in which they consider these matters. I beg to move.

Baroness Blatch

The overall effect of Schedule 1 taken as a whole is to provide for all courses of higher education below post-graduate level to attract the loan, subject to being provided on a full-time or sandwich basis and being of at least one year's duration. The fact that the schedule takes more words to say that is due to the need to make it quite clear which courses these are in practice.

So far as I am aware, no course of the kind I have described is excluded; nor is it the Government's intention that any should be. Against that background, courses of the kind mentioned by the noble Baroness may be covered by one of several provisions in the schedule. If they lead to a qualification of the kind specified in its first three paragraphs, then they are designated by virtue of those paragraphs. If they do not, but lead to a professional examination of a high enough standard to be regarded as higher education, they are covered by paragraph 6. If they do not lead to a professional examination but are still of a sufficiently high standard to qualify as higher education, then they are designated under the terms of paragraph 7.

I make no apology for labouring the point because it is as well to be absolutely clear. I hope that I have persuaded the Committee that the amendment is not necessary and therefore can be withdrawn.

Baroness David

I thank the Minister for what I think is an encouraging response: that these courses are probably covered under those paragraphs under Schedule 1. I shall read carefully what the noble Baroness has said and consult. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 1 agreed to.

Baroness Blatch

I beg to move that the House do now resume.

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

House resumed.