HL Deb 12 July 1991 vol 530 cc1609-23

12.8 p.m.

Baroness David rose to move that an humble Address be presented to Her Majesty praying that the Education (Student Loans) Regulations 1991 (S.I. 1991, No. 1299), laid before the House on 5th June, be annulled.

The noble Baroness said: My Lords, in speaking to the Motion standing in my name on the Order Paper I should like to make it clear that the two Prayers will be taken separately. They are totally different subjects. They were printed separately on the Order Paper but on the list of speakers provided for noble Lords they have been grouped together.

In rising to move the Motion in my name I should point out that we opposed the student loans Bill when it went through this House. Nothing that has happened in the scheme's first year has made us change our view. We are still of the opinion that the scheme is a bad one. We were concerned, as were the NUS, the CVCP and the CDP, by a number of aspects and the operation of the scheme so far has borne out our initial concern. Despite a very low uptake—and I hope that the Minister, in reply, can tell us the percentage of those eligible who have taken up loans—the National Union of Students has had to deal with a number of complaints. I shall speak of some of the problems which have been encountered. The regulations we are discussing today could have provided the opportunity to rectify some practical problems, but that has not happened.

The application procedure, far from being a simple matter as suggested by the Student Loans Company, is complicated and confusing and has led to long delays in processing applications. Students who avoid taking out loans until they are in serious financial need are finding that it takes considerably longer to have their applications processed than the promised 21 days. There are no guarantees in the regulations. Perhaps the Minister will comment on this point.

The requirement by the SLC for applicants to provide contact names has already proved difficult in a number of cases, particularly with regard to the insistence on one of the names being that of a relative. Potential applicants are wary of giving that information as they do not know how it will be used. The general perception among students is that those names will be used in the debt collection process or even that the person named will be guarantor of the loan. In the case of students with no living blood relative or who are estranged from their relations, specific problems have arisen. I remember that we discussed these issues in Committee on the Bill. It would be helpful if those matters could be officially clarified. They are not dealt with in the regulations that we are debating.

The matter of identification—the requirement to produce a birth certificate—has led to delays. I should like to quote from a letter from the company to the NUS which states that: a student may change names whether by deed poll or marriage which of course would mean the information on a passport would be radically different to that on the birth certificate. Since our fundamental requirement is to identify individuals uniquely we have concluded that a passport is unsuitable and the birth certificate is required". That contradicts the experiences of students who have encountered difficulties in having their applications accepted by their colleges at the eligibility stage where birth certificates have been refused as a means of identification as a student has changed his name since birth. A more flexible approach could surely be used. That matter is not dealt with in the regulations. Perhaps I may say in passing that an old-age pensioner may obtain a bus pass in London by presenting a passport.

The insistence on repayment in paragraphs 4(1) (c) and 8(8) of the regulations being by direct debit from the borrower's bank or building society is not satisfactory. Students have been refused loans on the grounds that the type of bank account that they have does not operate direct debits. Many people genuinely dislike signing a direct debit, believing that they lose personal control of an important aspect of their finances. That could well act as a deterrent to potential borrowers. Perhaps the Minister will tell us whether some other method might be made available.

Perhaps we may have some clarification on repayment. Why was the threshold set at 85 per cent. of national average earnings? Why has it been decided not to take into account an individual's personal circumstances? That point is still unanswered and we should like a reply. Such an arbitrary arrangement sits uncomfortably alongside the Government's intention of doubling the number of students in higher education, given that that objective presupposes a considerable increase in the numbers of returning students, many of whom will have families to support as well as other commitments, such as mortgages.

I should like to give an example of a 29 year-old woman at Sheffield Polytechnic. She has had to leave both her home and her course because of loss of housing benefit and income support. She had lived in the same house for six years, but now sleeps on friends' floors. She cannot find vacation work. She has used up her grant and loan, totalling £2,690, and failed to obtain access funds. Her bank manager has told her that an extension of her £300 overdraft would not be in her best interests. She wrote to Kenneth Clarke. The reply that she received from the DES stated that she should seek help from educational trusts and charities and suggested that she should go to her local library to look in reference books for direction.

Why has the Student Loans Company made it clear that only one application may be made each year? There is nothing in the Act or regulations which suggests that that is the case. Such a lack of flexibility will penalise those students who wish to borrow prudently by borrowing only what they absolutely require, term by term. Perhaps the Minister will comment on that matter. Will a change be made here? The NUS asks that the commitment given to it that the SLC will never use debt collection agencies be written into the regulations. It would be reassuring to have that done.

Perhaps I may now turn to the question of the administrative costs of the scheme borne by the universities, polytechnics and colleges. On Third Reading on 29th March 1990 in this House, the noble Lord, Lord Beloff, moved an amendment, at col. 1007, proposing that: The Secretary of State shall provide to such institutions full compensation in respect of all work required in connection with the certification or otherwise of a student's eligibility". That amendment had wide support. There was a long discussion, in the course of which the noble Earl, Lord Caithness, stated at col. 1014: the Government are willing … to meet the reasonable costs of this scheme … the best way of getting it right is to have a commitment from the Government that they will meet the costs. That I have given". However, after further probing, he refused to accept the amendment and it was defeated by three votes—80 to 83.

The costs have not been carried by the Government. The average cost of completing each certificate has been £7. The institutions have received £3.50 and they asked in May that the amount should be increased to a minimum of £7 per certificate and uprated for inflation. I should like to remind the House that, when the banks were originally going to deal with the matter, they were to be granted a £12.50 handling charge. The institutions also pointed out that they had not received payment for certification completed in the spring term. The reply received from Mr. Vereker, Chairman of the SLC, stated: What the company actually pays next year will depend partly on what it can afford—and this fee is a large element in its budget … whereas it is an insignificant amount for most institutions". That is absurd. Besides £55,000 of fixed, non-recurrent costs, recurrent costs amounted to £390,000. It is well known how hard pressed universities and polytechnics are for money to carry out their rightful work of teaching and research. It is grossly unfair that they should have to carry any of the costs of administering a scheme that they did not like and were reluctant to take on. Do the Government agree that they have not carried out the commitment made by the noble Earl, Lord Caithness, on Third Reading to pay the costs? Perhaps they will think again about the matter.

The scheme has had its operational teething problems. The total cost has been much greater than the Government foresaw. Mr. Howarth admitted that it was twice as great. Will the Minister tell us the total costs incurred in the introduction, promotion and implementation of the scheme?

Given the problems and difficulties and the suggestions that I have outlined, it is clear that the scheme is in need of review, and sooner rather than later. Will the Government agree to that? It is wrong that there is still no provision for postgraduate students, part-time students, most further education students or for the over-50s. When the Bill was discussed, the Minister said that it would be easy to extend the scheme by regulation in the future. There is no such extension here.

I want to end with a few comments on students and debt. While many students will be in debt regardless of the scheme, it seems irresponsible in the extreme for the Government to have introduced a scheme which will force thousands of young people into high levels of debt without providing resources for debt counselling. In particular, it is virtually unheard of for loans to be made to people with no realistic indication of the level of interest to be carried by the loan, or of the level of repayments to be made. It is highly unsatisfactory that young people should be exposed to such levels of debt without being given either the information or the counselling that they need to make a reasoned decision which will necessarily have serious consequences for their future.

We must remember that grants are frozen and general entitlement to income support, housing benefit and unemployment benefit has been taken away. The vacation hardship grant has gone in spite of promises to the contrary that there would be a safety net. There are already stories of students this summer who cannot find jobs and who will be in complete penury if their parents are unable to support them. I have given one example. Access funds are woefully under-resourced. Will they be substantially increased next year? I hope that the Minister will tell us that that is so.

It is hard to believe that the present arrangements will encourage to enter higher education those students who come from the poorer sections of the community, those who dislike debt and are frightened of it and those whose families have not been accustomed to enjoying higher education while the richer and slicker students take out loans, make a quick killing by buying and selling electricity shares or merely investing the money at a high rate of interest. The scheme of support followed by this Government is highly unsatisfactory and not good for the future of education in this country.

Moved, That an humble Address be presented to Her Majesty praying that the Education (Student Loans) Regulations 1991 (S.I. 1991, No. 1299), laid before the House on 5th June, be annulled.—(Baroness David.)

12.20 p.m.

Lord Addington

My Lords, this is one subject on which, were it not quite so important or quite such a mess, I should feel rather hesitant to speak. Everything has been said before. We have pointed out to the Government the hundreds of problems raised by this scheme. There has been criticism from all parts of the House; I see that the noble Lord, Lord Beloff, is in his place, and the noble Lord, Lord Boyd-Carpenter, joined this side of the House in pointing out to the Government how awful the scheme was. The noble Baroness could have said, "Here is Hansard. Read what it says about the student loans Bill. This is what has happened. Everything that we said would happen has happened".

The two main problems of the scheme are, first, that it does not provide enough money and, secondly, the safety net is removed. Those are the reasons that the scheme is such a disaster. The noble Baroness has done a good job in going over much of the fine detail and describing what is wrong with the scheme as it has been implemented. However, the basic problem is that the Government did not provide adequate compensation for the loss of benefits. Benefits would have meant keeping the whole grant system intact. We had something of a Heath Robinson contraption but it worked. Housing benefit during term time brought students' income up to a reasonable level by subsidising rents, and social security benefits preserved students from having no resources at all during the long vacation. When the Government removed the entitlement to social security they should have said that no student would be unemployed during the long vacation. In good Marxist tradition they should have guaranteed that unemployment would not exist.

That is the only way in which the scheme could work. Students need some form of income. If they are adults, they should not be dependent on their parents or other relatives. The noble Baroness illustrated the point. She described how someone was told to go and look in the charitable sector. Has the charitable sector been enlarged to the extent that it can cope with every student who cannot find a job in the long vacation? We are in the middle of a recession. We shall only discover how deep it is in the fullness of time. Unless something is done now about these problems, they will become very much worse.

Clearly the access funds must be expanded if we are not to take an immediate step backwards or if the last safety net of social security is not to be put in place once again beneath students who are on a financial tightrope. Perhaps the Minister can say that at least all the administration costs for the universities will be covered. If the universities have to take out of their budgets large chunks of money, ultimately it means that the students will be harder pressed to find resources for such things as books or will have to do more work by themselves, thus affording them even less time for part-time employment.

The Government must counsel students on handling the resources that they possess. I pointed out on numerous occasions to the Government and no one contradicted me—in fact I believe that I received the full support of the House —that at the age of 18 the vast majority of students are quite inexperienced at handling money. They have not been wage earners. When an 18 or 19 year-old goes to university he will have come straight from school or a college; he will not have been in employment and will have had no experience in handling money. For example they will not know about controlling direct debits which they may feel are frightening. They do not know how exactly to control their very small income, which becomes more important because it is a small income. More counselling must be made available. Moreover, many students will probably find that the banks are rather more amenable than they imagined. That is what I discovered when I spoke to students. But the students have to know how to approach the bank. If one panics and buries one's head in the sand, which is a very understandable reaction of many people who get into debt, the bank can do nothing and ultimately will try to recover the debt through whatever procedures are available to it. A bank is a financial institution; it has not been designed to support the education system.

Ultimately, the Government must be prepared to tackle this problem as a whole and try to replace all those provisions which they abandoned when they introduced the loans scheme. They must offer support during the long vacation—that is especially in question here—and find some way to regulate the regional variations in costs covered by housing benefit. Otherwise students will sink increasingly into debt. As the noble Baroness said, as indeed did almost everyone who spoke on the Bill, this scheme is a disincentive to every student who comes from a non-university background. Usually they are students from the poorer elements of our society. An economic definition is perhaps the best one to use. It cannot be expected that people who have no tradition of higher education or who do not have wealthy parents—poorer parents are by and large more likely to be unemployed in the present economic climate than those in the better-off brackets—or who come from the non-professional brackets, will increasingly enter higher education. We cannot expect to expand our university base.

The Government spoke about doubling the number of students by the year 2000. Their present course practically guarantees that the numbers will remain frozen. They may even be reduced, especially in the short-term, if they continue to fund higher education students in this way.

12.27 p.m.

Baroness White

My Lords, all those who have an interest in or hold some responsibility for the welfare of students in higher education must be most grateful to my noble friend Lady David for raising today the matter of student loans and these recently issued regulations. We are also most appreciative of the contribution from the noble Lord, Lord Addington, with his realistic description of the realities of the present situation.

We are now almost in mid-July. As I understand it, anyone who wants a loan based on the current academic year must complete his application within the next couple of weeks, accompanied by the necessary birth certificate, contact names and the other conditions mentioned by the noble Baroness. I suppose that if it has not been secured already one would be very lucky indeed to obtain a loan of any dimension based on one's studentship at the present time.

For some students the full horrors of ensuring vacation subsistence are only now fully sinking in. Meanwhile, university staffs understandably feel in need of some respite, after the hassle of organising the final examinations, degree ceremonies and so forth and before they tackle the problems of the new intake for next year. Surely in those circumstances one must strongly support the claim of the universities for realistic reimbursement of the cost of administration.

To suggest, as the DES has recently done, that the level of reimbursement should depend on what the student loan company can afford, is a gross breach of faith. Universities did not ask to be burdened with the responsibility of helping a student loans company to run its business. As my noble friend Lady David indicated, the universities were told by a Minister on the Government Front Bench in this House that they could expect reimbursement of their reasonable costs. That simply has not happened. The position would be even worse if a greater proportion of students took up the loans that might be on offer. The Government complain that too few students have taken up these loans. If one had a higher proportion one might reduce the unit cost but one would clearly increase the gross administrative expenditure. If that is not to be met in full, it is not very likely that universities will be keen to extend the scheme further.

It is not the fault of the universities but of Government that three separate sectors of administration now have to maintain similar, but not identical, records of the personal particulars of large numbers of students. The local education authorities have to do so because they handle the mandatory and discretionary awards which are available to the majority of students. The Student Loans Company has to maintain its records for top-up loans. The universities themselves are responsible for the administration of the access funds, quite apart from the normal records of fee-paying, college awards and the like. I suggest that there is not much of an incentive to universities to increase the burden of loans administration in that scenario.

As has been emphasised by the two preceding speakers, there is great reluctance among many students to avail themselves of loans, in particular among students from families who are not accustomed to living on credit. If I may say so respectfully, I thought that the noble Lord, Lord Addington, dealt with that point very well. When one considers the experience in recent times of borrowers in other contexts, one can understand a certain reluctance. Family pressures on students in areas such as South Wales, and even more so now in the rural districts of Wales, mean that many who might otherwise have been attracted by student loans are now desperately deterred from falling into debt if they can possibly help it. They are under great psychological pressure. Recent figures show that in Wales the proportion of full-time employees whose pay falls below the Low Pay Unit's poverty level is now 35 per cent., the third highest in the country.

One can therefore understand how difficult it is to persuade students to incur cumulative debts even on favourable terms. Quite rightly, the Government may claim that they are better terms than might be obtainable on bank loans. I am told by the Dean of Students in Cardiff—by far the largest unit in the federal University of Wales—that it is true that students from well-to-do families at first contemplated taking out student loans with a view to reinvestment. They then realised that as the current rate of interest on the student loans scheme is 9.8 per cent., that was perhaps not such a good idea. The percentage reflects last year's financial climate. As one can see from paragraph 7 of the regulations, one will always be a year behind the current inflation rate. For the next academic year that presumably will be somewhat more favourable. But why cannot students have the same advantage for example as those on the career development loans scheme, where interest accruing during the course does not fall directly on the student?

Naturally current concern centres on the vacation problems. As the noble Lord, Lord Addington, emphasised, very few students can obtain decent holiday work this year. It is quite ridiculous for the Government to pretend that that is not so. We may not have to resort to soup kitchens for students—that was headlined this week in one of the newspapers in South Wales—but paid work is very scarce indeed. Meanwhile payments to landladies to retain out-of-college accommodation are a must for many of our Cardiff students. If they do not retain their accommodation during the vacation by paying for it, we know from experience that there will be chaos in the first two weeks of next term, with students sleeping on the floor and very little academic work attempted.

When the reality of the situation—as fully recognised by the college authorities—was brought to the notice of the DES this week, a spokeswoman said, "Of course there is a £25 million access fund to get anybody out of trouble". That is a myth, as Sir Aubrey Trotman Dickenson, our Principal at Cardiff, tried to explain to the DES in recent correspondence. We were encouraged to use the access fund much earlier in the academic year to meet the needs of present students who are within the official categories. In Cardiff alone we have spent not far short of a quarter of a million pounds through the Government access fund, including about £12,000 that we had managed to accumulate in interest, and several thousands of pounds of the Welsh Church fund money which we have at our disposal.

I am told that, while global figures for next year have been announced, as at mid-July we do not have individual college details of the amount of the access fund for next year, which will start at the end of August, still well within the difficulties of the summer vacation. Nor do we know the conditions for access funds which may be laid down for next year. If someone does not apply before the last day of July for a student loan and has to rely for help on access funds, it is completely unrealistic to suppose that university administrators can achieve what they consider an intelligent administrative job. As was put to me by one of our most experienced administrators, the attitude of the DES is "simply out of touch with reality".

Finally, perhaps I may refer briefly to a class of student in which I am particularly interested—those attending the residential adult colleges. Those students were cut off, as were other students in mid-course, from vacation housing benefit or income support. But they are not eligible for student loans. I spoke earlier this week to the warden of Coleg Harlech, which is the only such residential college in Wales. The warden said that the students were in an impossible position. They have been cut off in mid-course from the benefits which, until April of this year, they had every expectation of receiving. The college is in no position to suggest that they should receive access funds because the money is not available, having already been disbursed.

I do not wish to take any further time of the House. However, I hope that between the three of us we have convinced the Government that the regulations before the House solve virtually none of the problems with which university administrators are now confronted.

12.38 p.m.

Baroness Park of Monmouth

My Lords, I am most grateful to have been given the opportunity to speak. I had not originally intended to do so until I heard the interview on the radio this morning with the Minister responsible for higher education. Is the Minister aware that all those who share the Government's stated wish to create wider access to higher education are deeply concerned about the major problems which face students this summer?

On the radio this morning the Minister claimed to have increased support for students by 25 per cent. That appears to have taken no account of the loss of housing and social security benefits, which must represent substantial sums, and the withdrawal of the vocation hardship grant which was hitherto available but which was withdrawn abruptly.

Is the Minister also aware that it bordered on the cynical for his honourable friend to go on to say that he was sure that the ingenuity of students would find them jobs during the long vacation? This is a time of recession which rightly concerns us all and which is affecting exactly those parts of the economy where students might hope to find such jobs. In any event, the solution is not open to those carrying out post-graduate work. They, too, have no access to loans. It was also suggested in the same interview that universities should have better budgeted their special access funds. How does one manage funds which were never sufficient in the first place? I shall not take up the time of the House by repeating figures which have already been discussed. However, I am deeply concerned that the Government should demonstrate both good sense and generosity in recognising that a real problem exists which at least requires an urgent review of the provisions for emergency help, in particular the vocation hardship grant.

12.41 p.m.

Lord Cavendish of Furness

My Lords, I do not know whether it is appropriate to thank the noble Baroness, Lady David, for praying against these regulations. However, I thank all noble Lords who have taken part in the debate. It is always good that such subject matters are aired from time to time. Perhaps I may amplify upon the regulations and respond to the many points that have been raised.

These regulations are made under the Education (Student Loans) Act 1990. They provide the framework for the second year of the student loans scheme. They are modelled closely on the first regulations which were subject last year to the affirmative resolution procedure.

Under those regulations the scheme has operated smoothly and efficiently this year. It has made more money available to students. Full-year loan and grant have been 25 per cent. higher this year than the grant alone last year. By 10th July more than 191,000 students had applied for loans. The Student Loans Company had made loans worth more than £64 million. I take this opportunity to pay public tribute to the staff of the company, who have worked so hard to ensure the success of the scheme.

Before the regulations were drafted the department asked a number of bodies for their views; for instance, the local authority associations, the Committee of Vice-Chancellors and Principals, the Committee of Directors of Polytechnics, the Standing Conference of Principals and the National Union of Students. The views expressed by all those bodies were given full consideration. We must all ensure that the scheme continues to operate successfully to the maximum advantage of its student customers. These regulations have been drafted in that spirit.

The regulations contain the loan rates for the academic year 1991–92. Those rates entail a further significant increase in student support. Full-year support will this autumn be more than 30 per cent. higher than two years ago. As the loan grows relative to the grant it is likely that many more students will wish to take up loans on the generous terms offered.

Our success in driving down inflation shows the benefit of linking loans to the RPI. In the coming academic year student loans will be linked to the June 1991 RPI. That figure was announced today after the noble Baroness spoke and has remained unchanged at 5.8 per cent. Loans indexed at that rate remain an attractive prospect.

We have also taken steps to ensure that borrowers with moderate incomes may defer repayment. We have increased the deferment threshold in line with average earnings to an annual equivalent of more than £12,600. Most of those earning above the threshold will repay over five years. Those who take out loans for five academic years or more will repay over seven years. Monthly outgoings will be manageable; that is, about £30 a month in cash for a student who started a three-year course last autumn.

Several noble Lords have taken a keen interest in the special arrangements for the repayment of loans by disabled borrowers. They will have noted that the existing provisions have been extended in the new regulations. These reflect the Student Loans Company's policy which has been discussed in detail with bodies representing the disabled.

The company will disregard certain disability-related benefits when assessing income for deferment. The company may allow borrowers receiving such benefits to postpone repayments or repay over a longer period. If their income is higher than the deferment threshold but they incur major special costs the company may allow them to postpone repayments for a year at a time. Such postponement may last longer if the borrower is unemployed and declared long-term unfit for work. Moreover, it may last until the loan is cancelled if the borrower is unemployed and declared unlikely to be fit for work again. The company is working closely with such organisations as the Royal National Institute for the Blind, the Royal National Institute for the Deaf and SKILL, the National Bureau for Students with Disabilities. Very good relationships have been established with those bodies. I would expect the house to welcome that, especially the noble Lord, Lord Addington. However, he did not do so when he spoke.

I shall now address the points that were raised by your Lordships. It was said that the take-up rate of the loans has been poor. As at 10th July more than 191,000 students had applied for loans and more than 166,000 students had received them. That represents 30 per cent. of eligible students. The company will continue to issue loans until the end of July.

Borrowers must pay by direct debit as at present unless the company agrees otherwise. Direct debit is quick and cost effective. We believe that it is in the interests of the borrowers, the company and the taxpayer. The regulations merely place beyond doubt that a student must sign a direct debit mandate before taking out a loan.

The issue of birth certificates was raised. Students born in the United Kingdom must produce their birth certificates to show information that is vital to the processing of their application. The Student Loans Company needs to know their full names at birth, and the date, country and place of birth. Birth certificates provide that information which the company uses to generate a reference number for each student. It is essential for the efficient administration of the scheme and it also protects the taxpayer and the student against possible fraud or mistaken identity. The noble Baroness, Lady David, raised specific complaints upon which I cannot comment. However, I should like to look more closely into them.

The noble Baroness, Lady David, mentioned the case of a student at Sheffield Polytechnic who is in financial difficulties. Again I cannot comment upon the matter. The polytechnic was this year paid some £250,000 in access funds to help students in financial difficulties. It is free to decide how to target those funds effectively. The noble Baroness, Lady David, and the noble Lord, Lord Addington, asked about the cost of administering the scheme in the financial year 1991–92. The company's budget for administrative costs is £12.17 million excluding VAT. We believe that costs during the next few years will be in the range of £10 million to £20 million as we have consistently forecast. We believe that the public expenditure savings will outweigh the costs in the medium term.

The noble Baroness, Lady David, mentioned debt collecting agencies. The Student Loans Company's objective will be to recover loans cost effectively. The great majority of students will wish to repay. We do not wish to disguise from them that they are entering into a commitment and that that is a serious matter. For those who cannot afford to pay there are generous deferment arrangements but if borrowers seek to evade their responsibilities and refuse to pay, the company will take such action as is deemed necessary, which could involve court action.

The noble Baroness asked how much the company will pay next year. The company is considering carefully with the Committee of Vice-Chancellors and Principals, the Committee of Directors of Polytechnics and the Standing Conference of Principals of Colleges the size of the fee for the coming academic year. There will be an announcement in due course.

The noble Baroness mentioned delays in paying the loans. I believe that the company is efficient. Its target is to pay loans within 21 days of receiving applications, making due allowance for the prompt return of the loan agreement by the student. It is achieving that target in the vast majority of cases. Total success depends upon students completing their application forms correctly.

All noble Lords mentioned access funds. Access funds will increase to £25.8 million next year compared with £25 million this year—a 3 per cent. increase. Given that the full year's support for 1991–92 is 30 per cent. higher than two years ago, we consider that next year's provision for access funds will be sufficient if properly targeted by the institutions.

Lord Addington

My Lords, when will the access funds cover the full loss to students resulting from loss of housing benefit?

Lord Cavendish of Furness

My Lords, we believe that the overall package has achieved that and more. The noble Lord, Lord Addington, said that this was a dreadful and unpopular scheme. However, he did not say what he or his party would do or what it would cost. He asks for more money almost every time he speaks. To give the noble Baroness her due, she spoke about various aspects of the scheme from her great knowledge but the noble Lord makes a blanket request for more funds. Where are they to come from?

Lord Addington

My Lords, this matter has been gone over many times and I had assumed that the noble Lord had read Hansard, which contains various suggestions which we have made. We are merely asking that students should be treated in exactly the same way as everybody else in our society.

Lord Cavendish of Furness

My Lords, to listen to some noble Lords one would imagine that we were towards the bottom of the international league table in the way in which we treat students. It may interest the noble Lord to know that among the advanced countries we are equal second or third as regards the proportion of full-time higher education students receiving government assistance. The figure for the UK is 82 per cent. against the figure of 12 per cent. for socialist France. Our treatment of students is, has been and remains absolutely outstanding and we have a record on that of which we are proud.

The noble Baroness, Lady David, asked why there should be one application each year. I believe that it is reasonable to expect students to plan their finances. They can apply at any time during the academic year. If they apply in the first term, they can ask for the loan to be paid in three instalments. There is the necessary flexibility. Borrowers may defer payments for a year at a time if their income is below 85 per cent. of the national average earnings; namely, £12,660 per year. Any outstanding loan is cancelled after a fixed period, normally 25 years or if the borrower dies. Setting the threshold at 85 per cent. of the national average earnings ensures that borrowers whose incomes are low need not repay for a year at a time. We believe that that is fair to the taxpayer and the borrower.

The suggestion was made that loans will deter students. I do not believe that there is any evidence of that; in fact, the reverse is true. Participation is increasing rapidly. In 1990 new enrolments were up by 10 per cent. provisionally and we expect a further increase this autumn in the number of full-time students in higher education.

All noble Lords have been worried about the scheme encouraging debt among students. Schemes such as this are widely used internationally. I understand the anxieties but I do not believe it is unreasonable to expect young people to start taking responsibilities, particularly when they are making perhaps the most important investment which they will make in their lives.

As regards vacation support, access funds can be made available at any time in the academic year up to 31st August. We have given the institutions greater flexibility by withdrawing the previous requirement for 85 per cent. of the academic year's allocation to be spent by the end of the financial year. Most eligible students have not applied for a student loan and that suggests that many have sufficient resources.

Many students will obtain temporary employment. In a recent survey conducted by Barclay's Bank, 60 per cent. of students rated their chances of obtaining summer employment as either good or very good and almost half expected their vacation income to exceed £1,000. The disabled and lone parents are eligible for housing benefit and income support.

The noble Lord, Lord Addington, was worried about students getting increasingly into debt. For those earning less than £11,580 per year the repayment may be deferred. As I said, the 1991 regulations increased the threshold to £12,660 in line with the increase in average earnings. I believe that monthly repayments should be manageable for those earning above that threshold.

My noble friend Lady Park said that loans do not compensate for lost benefits. Loans compensate most higher education students for any benefits forgone.

Most students claim no benefits and the entire loan is again for them. We believe that the access funds will continue to help students in financial difficulties.

The question was universally asked about the unfairness of institutions paying for the administration of the scheme. There are strong feelings about that, which we have recognised. Discussions are taking place between the company and the institutions and I expect an announcement to be made before long.

It is alleged that students are worse off. We have provided the resources to end the need for students to rely on benefits. Full year support from the uprated grant and loan is 25 per cent. higher than the support from grant alone last year. I shall study with care the Official Report and if I have omitted anything, I shall be pleased to write to noble Lords.

The student loan scheme will allow the continued growth of higher education which we all wish to see. Higher education is now expanding rapidly. Ten years ago only one in eight people entered higher education. That figure is now one in five and we expect it to be one in three by the end of the decade. This year new enrolments were 10 per cent. higher and we expect a further increase this autumn.

With the introduction of loans, the cost of that growth will be shared more equally between students, parents and the taxpayer. Loans enable students to anticipate their own future income as graduates and to obtain substantial extra resources when they are most needed. The regulations build on those which your Lordships approved last year. They will help a good scheme to work better and I commend them to the House.

Baroness White

My Lords, I am sorry that the noble Lord found it impossible to answer a single one of my questions.

Lord Cavendish of Furness

My Lords, I apologise to the noble Baroness. A large number of questions were asked. The noble Baroness asked—

Baroness White

My Lords, I do not wish to take up the time of the House as there are other debates to take place today. No doubt the noble Lord will take the trouble to write to me on some of the points which I raised.

Lord Cavendish of Furness

My Lords, I repeat my apologies and I shall certainly write to the noble Baroness.

1 p.m.

Baroness David

My Lords, I should like to thank all those who have spoken in support of my Motion. It was notable that nobody spoke in praise of the Government. I am sure that the Minister took a lot of trouble in drafting his answer, but it showed little flexibility. The points that I raised indicating that difficulties have occurred are clearly not going to receive attention. The only area in which there appeared to be a bit of give related to administrative costs. I am relieved to hear that there will be further discussion on that subject and I hope that the outcome will be good.

The Minister said that the scheme has worked efficiently. The points I raised showed that there are a good many ways in which it does not work efficiently. Identification, the time taken for the applications to go through and the repayment by direct debit have all caused problems. Clearly nothing in that regard is to change.

The Minister made no comment on my request for counselling about debt. I made the point with regard to repayment that it is bad to go into debt without knowing what one's commitments will be. That is the difficulty. We are glad to hear that inflation is down to 5.8 per cent., though it was hoped that the figure today would be lower. Presumably next year they will be paying 5.8 per cent. on their loans but repayment this year is based on the 9.8 per cent. figure for inflation from the previous June. Therefore, those who obtained loans this year will be carrying a larger debt ahead

There was much anxiety about what is to happen this summer. I hope that, if evidence arises showing that students are suffering real hardship, the Government will reconsider the matter. That was generally viewed as something that will cause trouble. The Minister made much of the access funds but they have clearly not been sufficient. I noted that he said that they are to be increased by £800,000. That represents only a 3 per cent. increase and therefore does not even compensate for inflation. I am sure that it has not been adequate to help the students.

We shall watch with interest to see what happens during the course of the next few months. I hope that the Government will be more flexible. If there is evidence that things are bad I hope that they will make further concessions towards the students. I beg leave to withdraw the Motion.

Motion, by leave, withdrawn.