Students: Financial Difficulties

HL Deb 17 February 1993 vol 542 cc1130-70

3.17 p.m.

Lord Addington rose to call attention to the financial difficulties of students; and to move for Papers.

The noble Lord said: My Lords, I must, first, thank all the many people who have put down their names to speak in the debate. I must admit, echoing the words of my Whip, that six minutes may be stretching the point of brevity on a subject as complicated as this, but I hope that noble Lords will be able to cover most of the points that they have in mind.

When we first started to discuss the Bill introducing student loans I exploited the fact that I was somewhat lacking in years by comparison with most of the rest of the House by saying that I had something of an advantage having been more recently a student than most noble Lords. I can no longer say that for two reasons. First, my noble friend Lord Redesdale stopped being an undergraduate in 1989 as opposed to 1988. The second reason is that we are now into a totally new system of finance. Before we progress any further into the subject we must, first, deal with those changes—where we have come from and where we are going.

The level of grant had fallen in real terms over a long period of time. There was a genuine case of student hardship. The grant was greatly subsidised by the social security system in a variety of areas and in a variety of ways, the principal one being that housing benefit was payable to students if they paid more than a certain amount of rent. That was a useful benefit for several reasons, the primary one being that it balanced out discrepancies in the cost of living as reflected in housing costs throughout the country. The people paying high rents had one advantage in that they could call upon the social security system to give them some support. Students in London, whose London allowance has never really made up for the extra costs, found that particularly beneficial as did students at my old university at Aberdeen, where people paid locally high rents for the simple reason that it happened to be the UK centre of oil production.

There were other benefits available to students, primarily during the summer vacation. Social security benefits were payable to those students who could not find paid employment. That meant that they had some social security income during the summer vacation, but at a very limited level. But it was there. Housing benefit was also still available to students throughout the holiday period if they happened to be living away from home.

When the student loan scheme came in, basically there were two problems to deal with. The first was an ideological one, which is slightly outside the scope of my debate today. So on that matter I shall restrict myself to saying that many of us felt that the idea of loans and of encouraging people to go into debt was not one that should be inflicted on students from the age of 18 onwards. It was something which not many people liked. There were dozens of other options open to the Government, such as increased grants or some kind of pay-back system, which is effectively a graduate tax.

These alternatives were not taken up and the Government adopted a loan scheme. The primary criticism of that scheme is that it does not provide adequate funding for undergraduates to have realistic living standards. It just did not happen. Initially the sum was £420. It might be said that that would be a benefit to the students because it would be on top of everything else. But it was not, for the simple reason that we removed students from the social security system.

I believe that the noble Lord, Lord Boyd-Carpenter, put the matter far better than I during the debates on the student loan scheme. We were saying that students were removed from the social security system but that they were not like other members of society. I still have been unable to think why they were removed. If we are paying them some kind of maintenance, we are assuming that their parents will not support them and therefore they are independent people. So why did we remove them from the system?

We have removed them from the system and we have not provided an adequate alternative. There is the access fund, which initially was about £25 million, for all students in the country in further and higher education and for postgraduates, plus the loan. On that loan interest is charged at the rate of inflation, which means that, even with stoppages for the periods when pay-back has to start, there is a debt accruing. Even if one charges interest at the rate of inflation, one is still charging a considerable amount of compound interest. That situation is continuing and we have nothing else to fall back on.

Now we have a situation where the classic student —that is, one who is aged about 20—has a guaranteed income which is less than it would have been if he were on social security benefits. His income is actually less than that which is regarded as being the bare minimum for living. Recent reports have severely questioned whether social security benefit is sufficient to enable someone to eat properly. We are saying that a student should survive on that.

The Government respond by saying that there has been extra money available and the student is available for work during the summer vacation. We have nearly 3 million unemployed—has the figure gone above that? If we had guaranteed full employment, the Government might have a point. I have not seen anything to suggest that the Opposition Benches are going to guarantee full employment for students or for any other section of society. As we have made a great deal of noise condemning the ex-regimes in Eastern Europe which guaranteed full employment, it would be rather strange if anyone here gave that guarantee. People become unemployed and therefore need something to stop them starving, because we do not want them to starve.

We are also speaking about students who are supposed to be an investment in the country's future. The only real natural resource which Britain in particular and the Western world in general enjoy over most of our potential competitors is that we have a better trained and better educated workforce. That is probably the only natural advantage that we can possibly expect to maintain, but we shall not maintain it for very long if we continue to restrict the student body.

Perhaps I may give noble Lords some figures. Students outside London can expect an income of £57.30 a week. That tries to back up the example which I have already given. On benefits, that amounts to £77.45. Such people are on less income. One must remember that students have higher living costs if they are to carry on with their studies. They occasionally need things such as more travel and books. Let us assume that an engineering student has £30 worth of textbooks to buy even if it is only two or three times a year. Where is he to find the money? To some extent the answer has been to borrow it from the banks. Overdrafts of £1,000 are regarded as being reasonably commonplace. The CVCP reckon that an undergraduate should regard an overdraft of about £400 as being part of his income. Taking the initial weekly figure that I gave noble Lords, £400 accounts for about seven weeks of a 14-week vacation at the same level and is below that of social security benefit. It is not that much money. We really have a problem.

There is then the access fund which started at the rate of £25 million, which is a sizeable sum of money until one begins to divide it between the hundreds of thousands of people who are eligible to claim on it. The general level of pay-out—I have taken an overall figure from the variety of figures that I have been given —suggests that about £300 to £400 is a fairly sizeable pay-out from the access fund.

Once again we must look to the person who does not have parents who are providing support. We have 3 million unemployed and many of them are white-collar and middle-class. That means that even students who have been traditionally thought of as being well-off, probably do not have parental back up. It is also worthy of note that the number of students who are not receiving a parental contribution has been increasing. One can combine that with another figure relating to the rolls of the public schools which are falling. That suggests that we have considerable financial problems even in that sector. The Government have been trying to encourage more people from non-traditional recruitment areas to come into higher education. These people are probably even more susceptible to unemployment and are less capable of getting part-time work or work in the holidays, which often comes from word-of-mouth contact. Therefore, we have a situation where we cannot fund people properly.

I have given noble Lords a series of statements about the level of funding. It can be said that that does not seem to make a great deal of difference because rolls are actually rising in a number of universities and other institutions. That is probably true as the Government have expanded ways into the universities, even if they have not expanded the ways in which students can afford to eat once they get there. What has come to light is that another body has become aware of student hardship. The citizens advice bureaux have found students becoming clients as the student loans legislation takes effect. That body stated that in the summer of 1992 41 per cent. of all the people inquiring of them for help, mainly about financial matters, were students. That was a section of the population which they were not seeing before the loan system came in. That was in July. In August the figure had reduced to 33 per cent. and in September to 26 per cent.

Students are having to meet the costs of holiday periods. Many have to pay rent on houses throughout the summer as well in order to guarantee themselves somewhere to live in the next year. It is sad that those institutions, which generally have enjoyed less prestige in the past, tend to be worse off when it comes to housing. Thus they cannot subsidise their students. So students who have not done so before, are going to citizens advice bureaux asking financial questions.

A series of striking examples of people who cannot meet their financial commitments because of the lack of vacation work was also given. One example was that of a 19 year-old student who had completed the first year of a three-year course. She visited a citizens advice bureau in Essex because she could not find a holiday job and her parents were on income support and could not afford to keep her during the long vacation. The current system means that we are effectively saying that that person must decide whether to starve during the summer or to leave the course. How else can people eat if they cannot get income support and cannot find a job? Other examples of that problem are also given. I could read out a list of them to your Lordships but that one example has probably made the point quite succinctly.

There is, however, another example of something else that has slipped through the Government's net. One citizens advice bureau reported the case of somebody on a sandwich course—that is, a student taking a year out between studies to work in industry. Such students are not entitled to claim benefit because they are on a course but they are supposed to be at work. However, there have been cases of students who have been unable to find jobs during that sandwich period. Not only were they sacrificing 20 per cent. of their degree course mark but they were unable to provide any income for themselves during that period. Other cases include that of the student who could only find a job for seven months of the year. Having been released to complete the project, that student was without any income at all for the other five months.

The final problem relates to a student who was sick during the summer vacation. A student with glandular fever was unable to claim benefit because he or she was still a student, despite having glandular fever and being incapable of working.

Surely this system has failed miserably. It depended on assumptions of parental support and people finding jobs, but we cannot guarantee that parents will have sufficient funds and will cough up the funding for their student children. I have not dealt with many cases because the variety of problems is so wide, but I hope that other noble Lords will deal with other problems. Unless parents can provide the money or the students can find work, students have no income. That is the difficulty. My Lords, I beg to move for Papers.

3.32 p.m.

Baroness Park of Monmouth

My Lords, I am very glad that the noble Lord, Lord Addington, has initiated this debate. Although there is much chapter and verse to be given, because of the shortage of time I shall address only some issues of principle, and in particular the problem of postgraduates.

Does the country need graduates? If it does, how can it best protect the national investment in the next generation of innovators and the creative talent which they represent? They are our brightest and our best, and we are in danger of wasting a priceless asset.

The present position is that the loan and a full maintenance grant together are not enough to enable those students without private means who formerly qualified for housing benefit and income support to live and work. A possible discretionary grant of £150 from the Access Fund does not close the gap. Employment in the long summer vacation to earn money has been hard and often impossible to secure for the past three summers. Unexpected redundancy has prevented parents from contributing to maintenance and has deprived some of a home to go to. The Vacation Hardship Allowance, described by the Government themselves as a safety net, was withdrawn in April 1991 before the new arrangement had been in place a year.

In my own university, Oxford, the 20 to 24 per cent. of undergraduates living in private rented accommodation (as a proportion have to do for one year out of the three), paid £2,132 in rent alone out of their total income (of full grant and loan) of £2,845. Those are the 1992 figures. They ended up with £3.06 a day for food, clothes, travel and books. They cannot get a bank overdraft of more than £400 and they can no longer count on earning money in the long vacation.

We are not talking about all students but we are talking about a substantial part of the student population. Much has been done to improve the school structure. Presumably when those taught there leave and enter higher education we intend them to do just that in the national interest as well as their own. However, under the present system they are expected to live on less than they would receive as young unemployed people.

The plight of graduates doing research is another matter of particular concern. They do not qualify for loans or benefits. The Access Fund can do relatively little for them. The median grant in Oxford is £188. They have the same serious housing bill as undergraduates and in many cases will already be carrying over debts from their undergraduate days. Moreover, those who receive grants from the British Academy and the research councils are seriously under-funded. The guidelines requires them to limit the work they do which is not connected with their research. Teaching and library work, or work as demonstrators, is limited and not well paid. Because they must work through the calendar year to complete their research, they cannot get—even if it were available—more lucrative work in the long vacation. To survive at all they are undoubtedly having to work for many more hours a week than a productive graduate student should.

The chief causes of general concern are, first, the high cost of rented accommodation and the absence of any targeted mechanisms to fund students who cannot afford to pay. Students cannot manage their finances if they have no money to manage. Housing is the one large cost they cannot control. They cannot begin to plan their finances if there are no certainties. A possible but unpredictable and insufficient discretionary grant from the Access Fund is not the same as a means-tested benefit. A second cause for concern is the very great stress and anxiety which are widespread among those students who have no money and who can no longer make up their shortfall by work in the summer.

Universities are deeply concerned about the effect which this palpable stress and anxiety must have on academic performance. I suggest that we, too, should be concerned. When we are investing taxpayers' money to spend extensively on higher education, we should spend enough. We are not talking about all students but about a very substantial minority. It seems plain good sense to ensure that the return on public investment in the education of our undergraduates is not diminished by the damaging effects of financial hardship and the consequent stress on students. It is already difficult enough to understand why a whole group of taxpaying citizens should have been arbitrarily excluded from access to benefits on the grounds that they had "opted out of the labour market" by "taking the decision"—which I should have thought that the country would want them to take—"to undertake full-time study". The argument is that the Government intended "to place the responsibilities for student support where it properly belongs—in the education system". I hope very much that in the light of the experience of the past three years that responsibility may be reassessed.

I have followed carefully, as I am sure has my noble friend the Minister, the work done by the Select Committee on Education in another place in the previous Session of Parliament. The evidence it received of student hardship from an extensive and fully representative body of opinion, which included the CVCP and, unusually, as the noble Lord, Lord Addington, said, the CAB, as well as the institutions, demonstrated clearly that there was both widespread and growing student poverty. We are now a year on and the situation is worse. It is my hope that my noble friend the Minister will, since I know that she cares about education, agree that there is now a need to take a fresh look at the mechanisms in place and to find a formula to provide targeted support within the educational system of funding—whatever it may be called—to alleviate the difficulties of those students who are in trouble.

Students are sensible people. They know that money is short, but they need to know also that their problems are recognised and that the Government will think again. I sat on the Hebdomadal Council with graduates and undergraduates and know them to be sensible, responsible, reasonable and brave. We should not destroy their spirit but be seen to listen to their just representations. They are citizens. They are also our future.

3.38 p.m.

Baroness White

My Lords, I, too, should like to offer my thanks to the noble Lord, Lord Addington, for initiating this debate which will be regarded with considerable interest in all the universities and colleges in this country.

In this time-restricted debate on the financial troubles of students, I shall confine myself to what I know best—namely, the position that we face in Cardiff where I have held various academic offices during the past decade or so. Our Welsh capital city accounts for not far short of 10,000 students in its main university institution, the largest unit being the Federal University of Wales. The Welsh College of Medicine, the nearby University of Glamorgan—formerly a polytechnic—the College of Music and Drama and other units of higher education add considerably to the total student population of the city. In other words, there are literally thousands of young people, not to mention more mature students, trying to find lodgings, trying to find opportunities to supplement their inadequate incomes and trying to span the hiatus when sources of income disappear in the long vocation.

I have recently consulted our experienced Dean of Students, senior members of staff in various departments and, of course, our student president and her able and dedicated colleagues. There is no doubt that the academic work of a significant proportion of students is suffering because of the time and effort needed under present conditions to make financial ends meet.

I shall not pursue the matter of student loans, inadequate and costly as they are proving to be. What is causing more anxiety, as was mentioned by the noble Lord, Lord Addington, is total personal indebtedness, especially the accumulation of bank overdrafts. As we all know, even two or three years ago some banks were all too ready to lend. Now some are cutting off credit quite savagely.

I have seen documented cases where properly negotiated overdrafts have been slashed without notice or consultation. What does one do if one's grant cheque, paid in at the start of a new term, is used to clear the overdraft without notice, leaving an impossibly small sum to meet essential expenses? For students receiving full grant, it can be fairly assumed that parental help is unlikely to be forthcoming. Students can wear themselves out taking early morning or late evening jobs, or in many instances both, at very low rates of pay. Some resort to undesirable work which interferes with academic studies and have to miss lectures or tutorials every so often. I cannot believe that spending hours, even days and nights, as subjects for relatively well-paid drug testing in the local hospital is the best use of academic time, especially when there are plenty of unemployed people to provide that service.

As long ago as May 1991, our principal, Sir Aubrey Trotman-Dickenson, currently Vice-Chancellor of the University of Wales, wrote to the Department of Education saying: The pressure of recession, redundancies and unemployment are putting great strains on the family unit, so that students receive less support, both financial and emotional, from home". Nothing has improved since that was written. The stresses increase almost daily.

In the current academic year more than half the students attending the Dean of Students' office are seeking financial guidance. An additional member of staff has had to be engaged merely to deal with money management problems. That has nothing to do with academic work or accommodation. Last term there were also almost 2,000 written applications for access grants.

Students have not just lost vacation allowances and seen the value of grants diminish. They are even more depressed by the knowledge that after successful graduation there is nowadays no certainty of a job, however hard one may have worked.

I conclude by reading the final sentence of one of the letters sent to me recently. Mr. Frank Harris-Jones, the Dean of Students at Cardiff, writes: I am sorry if my comments sound bleak, but I feel especially depressed by it all, because I have R. A. Butler and the 1944 Education Act to thank for funding my university course and in consequence my whole career". I do not know what the Minister thinks of R. A. Butler, but some of us respected him as a person who really cared about education and student welfare.

3.45 p.m.

The Lord Bishop of Newcastle

My Lords, I join in expressing gratitude to the noble Lord, Lord Addington, for having initiated the debate. All noble Lords will be aware of the difficulty because there may well be: no serious alternative to the introduction of a major contribution from private, as opposed to public, funds". Those words were taken from an article written by the vice-chancellor of one of our universities located in Newcastle.

The debate will no doubt concentrate upon the most equitable and generally fair means of arriving at the appropriate public and private contributions and will also seek to establish the point that cases of hardship are by no means so few and far between as is sometimes implied. The chief problem about which one hears in every part of higher education is the conjunction of two factors which, like the handles of a nutcracker, hold many students in their grip; namely, the loss of long vacation housing benefit and the discontinuation of social security benefit for full-time students. That affects their finances during the long vacation in particular.

If there could be just one change to the present arrangements, the most generally helpful one would be funding for the whole year, thus providing for the cost of maintenance during the summer vacation. That said, I should like to develop two other general points upon which noble Lords have already touched. The first is difficult to establish statistically, but there is some evidence that the present system acts as a deterrent to entering higher education for young people who come from families and areas which have not traditionally sent sons and daughters to university. There has been a remarkable increase in the proportion of young people in higher education in recent years, but that increase may not be so marked, or as marked as we should wish, in those families where the parents' income leads to the award of a full grant to a student.

No student can any longer manage on a full grant alone. The very fact that a full grant has been made means that the student may feel compelled to take out a loan. But debt culture and credit cards are thought by some to be characteristic of the affluent. Many of those who have few financial resources have a laudable abhorrence of debt. So, on the one hand, we may still be unable to attract into higher education bright children from such families, children who could well profit from a university education and as a consequence make a better contribution to the country's well-being, and, on the other hand, by making student indebtedness an almost inevitable part of the culture of those who gain a place we may he threatening standards of thrift, carefulness and honour which we lose or weaken at our peril.

The second consideration is different. I listen to my godchildren and young friends at university when they talk about their work. Sometimes I do not know whether they are referring to the work they have to do in connection with their course—writing their next essay or conducting their next experiment—or whether they are referring to the work they do perhaps in the vacation or more probably in the evenings, say, in a bar or some other place of entertainment. Surely in sending young men and women to a university we are not providing them with part-time education, a sort of liberal arts programme in which they can dabble if they please; we are hoping that they will engage in it with heart and mind and find it absorbing and compelling because, properly speaking, a university course should provide more than enough work for the ablest student. How regrettable it would be if study came to be thought of as a luxury or a pastime, to be contrasted with the real work which students do to keep body and soul together.

We all know that for years many undergraduates have had paid employment during the vacations. But there comes a point when the amount of such work interferes with their studies. Then the general public do not receive value for money in providing grants which enable young people to study. No doubt more detailed points will be raised during the debate. Particular difficulties are experienced by research students, mature students, those on sandwich courses and candidates for longer courses which have a clinical element.

We all know that it would not be realistic to expect the Government to go back on their general policy on the whole matter. However, I hope that the Minister will be able to express the Government's willingness to consider modifications to the present arrangements and say that they will take account of some of the more acute difficulties to which noble Lords will have drawn attention.

3.51 p.m.

Baroness Darcy (de Knayth)

My Lords, I too thank the noble Lord, Lord Addington, for providing us with an opportunity to discuss the problems facing students. Your Lordships will not be surprised if I concentrate on students with disabilities or if I say that they too have financial problems. However, I should like to start on a positive note.

The increase in 1990 of the disabled student's allowance has meant that many students with disabilities have been able to go on to higher education. SKILL, the national bureau for students with disabilities of which I have the honour to be president, states that the City Lit Centre, which provides support for deaf students in London, has seen sharp increases since 1990 in the number of deaf students. That applies in particular to those who use sign language, because in the first year the number doubled from eight to 16.

However, despite the increased allowance, some students find themselves in considerable difficulties. The first group comprises students who need more than the maximum amount of the disabled student's allowance. There are a small number of profoundly deaf students on lecture-intensive courses who are finding themselves out of pocket or missing out on lectures. The RNID has evidence to support this claim. A qualified sign language interpreter costs £15 per hour plus expenses. The non-medical helper's allowance pays for about 10 hours interpreting per week. At that level of education one needs highly-skilled interpreters and note-takers. They will probably need to take part in workshops and seminars if the student is to obtain the maximum benefit from the course.

In Scotland the problem has been overcome by discretionary top-up grants from central budgets. However, that is not possible in England and Wales because discretionary grants are the responsibility of the LEAs. It is not that the allowances have not been uprated; they have. Rather it is that for that small number of profoundly deaf students on lecture-intensive courses the maximum amount of grant has never been enough. I hope that the Minister will give some thought to that problem and how to solve it so that those students may obtain the maximum benefit from their education.

My second point relates to the means testing of the disabled student's allowance. I agree that it is reasonable that better-off parents should have less government help with students' living costs. But however well off the parents are they should not be expected to pay extra to put a student with a disability on an equal footing with his peers. Loans were introduced because it was recognised that many parents did not make up their contribution. Yet loans are insufficient to pay, for example, for an adapted computer for a student with MS or for readers for a blind student. If parents do not make up the contributions, students can be thousands of pounds short of the cost of their additional support needs.

Thirdly, I turn to part-time students. The welcome increase in the number of opportunities to study part time has been of particular value to students with disabilities because, as a result of the nature of their disability, some cannot study full time. Obviously, those students may be among the most severely disabled and therefore most in need of the disabled student's allowance. However, they are unable to claim that. I plead, as I am sure will many other noble Lords, for the Government to look into the question of help for part-time students.

Fourthly, I turn to students in further education. The problems with the withdrawal of support for students with disabilities and learning difficulties when they reach the age of 19 should lessen when the Further and Higher Education Act 1992 begins to take effect. The good news is that last week the FEFC told college principals that from September 1994 such students will be covered for the whole course if they are below the age of 19 on 1st September of the year in which they start the course.

I also welcome the establishment by the FEFC of the specialist committee. It is important to monitor the impact of the new legislation on students with disabilities. I imagine that the committee cannot look at the problems which remain for part-time FE students or those who start their courses after the age of 19. They will have recourse only to discretionary grants, which are the LEAs' responsibility. If the committee cannot look at that issue I put in a plea to the Minister to consider who might be able to do so in order that those students too can benefit from the increased opportunities now available to students with disabilities.

3.55 p.m.

Baroness Seccombe

My Lords, I should like to add my thanks to the noble Lord, Lord Addington, for giving us the opportunity to debate this important subject. I am sure that all of us share the desire to see as many of our young people as possible leaving secondary education fully equipped to enter the higher educational institutions and with the necessary resources to do so.

It seems a very long time since my student days but even so my memory is crystal clear on the financial difficulties that I experienced at that time. But I believe that it was ever thus. Students from every generation have always felt under-funded and financially stretched—or perhaps in today's jargon and to be politically correct I should say "financially challenged". Students have always had to come to terms with the reality of deciding on priorities. That is not an easy thing to do but it is essential if one is to make ends meet.

I believe that from time to time we should remind ourselves of the very real strides that have been made to increase the number of young people who are fortunate enough to go on to further and higher education after leaving school. In 1989 the number was one million; that was an increase of 36 per cent. since 1979. In simpler terms the figures show that in 1979 one in eight young people went on to higher education. Today the number is one in four and it is increasing every year.

Of course, that can bring transitional problems at the beginning of the academic year while students try to find appropriate accommodation. But only about half of all students need to find private rented accommodation because 37 per cent. are placed in colleges and 11 per cent. live at home with their parents. In order to alleviate some of those problems, exciting initiatives have been taken by universities and colleges. For example, Sussex University is creating an extra 550 rooms by teaming up with the Kelsey Housing Association and the Bradford and North Housing Association. Stirling University has joined forces with the district council, Scottish Homes and the Dunfermline Building Society to build 185 rooms. Of course I could quote other examples.

It is for the universities to concern themselves with accommodation appropriate for and affordable by their students. The institutions are, after all, autonomous bodies responsible for deciding their own priorities within their available resources. The support given to students through grants and loans is now nearly 40 per cent. higher than when the grant only was available three years ago. That will be increased next year, thereby maintaining its value in real terms.

As the noble Baroness, Lady Darcy (de Knayth), said, it is good to know that students with extra needs—that is, the disabled and those with dependants—receive supplementary allowances such as housing benefit and income support. That gives special support and encouragement to those who might otherwise be unable to consider taking a course. I believe that it is for each individual to decide whether to invest in his or her own future. It seems to me that taking such decisions should not be based on reliance on the welfare system. Dependence of that nature is completely inappropriate, in particular as those who have qualifications almost always have a higher standard of living than those who choose to enter the labour market on leaving school.

There has been criticism about the whole system of student loans. However, I believe that the policy has been successful and has broadened the base of student support. I know that some Members of your Lordships' House believe that the top-up loans act as a disincentive to many potential students. That is difficult to believe when the number of full-time students has increased by 20 per cent. in the three years 1989 to 1991, doubling the figure for the previous three years.

There has been much discussion of the drop-out rate, but it is interesting to note the tables in the educational statistics for the United Kingdom for 1991. The data show that the UK ratios are among the highest in the 13 countries quoted, with only Canada and Germany exceeding the UK rate of 90 qualifiers per 100 new entrants. Italy has a record of only 33 per 100. Perhaps the grants-only system which they have in Italy is not the best way to ensure academic success.

Of course I understand the very real difficulties which a comparatively small percentage of students suffer, and we should see that they receive wise counselling. However, I feel that we can acknowledge the significant achievements gained and the initiatives taken in recent years to support and encourage young people to seek qualifications, an opportunity denied to so many earlier generations.

4 p.m.

Lord Cocks of Hartcliffe

My Lords, I too should like to thank the noble Lord, Lord Addington, for introducing this debate on the financial difficulties of students. By the time we reach the end of the debate, some latter-day Charles Dickens may find that he has enough material on the sufferings of students to write some fresh novels. The noble Baroness, Lady Seccombe, was right to remind us that those who suffer those appalling hardships—if they are successful—end up with a qualification which is the Open Sesame to a very rewarding career, often substantially remunerated. That is in sharp contrast to the position of those who do not have access to higher education and may spend their entire lives doing a repetitive clerical job or working on a factory production line. Therefore let us try to maintain a sense of proportion.

Two years ago I visited China on behalf of the Docklands Development Corporation. In conversation with my hosts, the two aspects of this country of ours which they mentioned were football hooliganism and homeless people. Perhaps a steady diet of CNN news is not the most objective way to learn about a country; but, nevertheless, the question of homelessness is serious. It places a great burden on councils. Not only councils such as Westminster but also boroughs in the East End of London such as Newham are facing appalling problems with the influx of homeless people.

That problem is not unrelated to our debate today. Most of our debates in your Lordships' House in the end boil down to one word: resources. When I explain our higher education system to people from abroad, they think that we are quite mad to pay out to send students away to study instead of them studying while based at home. They simply cannot understand it. One does not have to go abroad to find that, because in Scotland many students in higher education live at home. In Strathclyde the number is as high as 90 per cent.

There is no evidence to suggest that academic results are better if a student studies away from home rather than while living at home. If there was any such evidence, it would have been produced a long time ago to rebut the argument that I am putting forward. There is no suggestion that Scottish university education is in any way inferior to English university education.

I have made speeches on these lines before. I have been lobbied by students about my reactionary views. They tell me that going away from home is part and parcel of growing up, maturing, ripening and so on. When I suggest to them that they must therefore, apart from their own needs, also be pressing for the return of national service which extends that benefit of maturing away from home throughout the nation, they react with horror. I am written off as Genghis Khan. However, the same arguments apply.

I am grateful to the noble Baroness, Lady Seccombe, for putting the figures in simple terms. There are 1 million students in higher education, of whom half are in the private rented sector. Anybody who has been a Member of another place knows that probably a good half of one's casework relates to housing problems. That is not essentially a Member of Parliament's responsibility but that of the local council; but one cannot turn away people who come with such problems because if one does so that simply reinforces their whole experience of life up to that date. Therefore one does what one can. Of those 1 million students in higher education, approximately half are accommodated in halls of residence and other university accommodation and half are thrown on to the private rented sector. There they compete with people who, if they cannot compete successfully, join our monstrous queue of homeless people. Therefore, a very serious social evil is directly linked to the tradition in this country of sending students away from home to study if at all possible.

I have researched the subject over a period of years with the assistance of young people. If only 50 per cent. of our students in higher education lived at home and took the nearest available course, we could virtually clear up the problem of homelessness in three years, the duration of a normal degree course. We are asking for what might be considered a sacrifice on the part of the ablest and most gifted in our society to help the most deprived. Some £3 billion to £4 billion of resources would be tied up in a change of that nature and would become available for other uses.

It is very difficult to get the argument across because most of the opinion-formers and decision-makers in society are successful products of the system and cannot contemplate a change of this nature. Also, they want their own children to go through the same process as they went through. But I ask your Lordships to consider the proposal seriously because it would help to solve one of the gravest problems in our society today.

4.6 p.m.

Lord Broadbridge

My Lords, I too am grateful to the noble Lord, Lord Addington, for bringing forward this important debate. The financial difficulties of students is a subject close to my heart because I have two daughters in, respectively, their third and fourth years of higher education. That means that they both started in the now seemingly halcyon days of unfrozen student grants and the availability of housing benefit, income support and unemployment benefit—all now withdrawn. Those four measures—the freezing of grants and the withdrawal of social security benefits (students no longer get an interview at social security offices)—have made what was often for many students a precarious financial situation with them a wholly untenable situation without them and are, either individually or collectively, the main causes of student poverty.

Hardship is increasing in both severity and breadth. The Committee of Vice-Chancellors and Principals believes that the current financing shortfall for a standard single student after receipt of full grant and loan is approximately £1,100 per annum in the Home Counties.

Nor is the availability of emergency funds certain. The last resort funds—the access funds administered by the student's institution—have recently become far more uncertain as a prop. At the end of 1991 the number of awards was up by 80 per cent., but the amount paid in total rose by only 15 per cent. so that the average payment had fallen drastically.

The final twist to the financial screw has been the withdrawal of the Government's safety net for the financially bewildered, the local education authority paid vacation hardship allowance. That was withdrawn in March 1991 after only eight months of the new system of student support, which was then still an untried scheme, and against a background of great difficulty in finding vacation jobs, as many noble Lords have already said. That left many students technically bankrupt but had even worse overtones of governmental moral bankruptcy since the scheme's availability had been used to reassure—or perhaps bribe would be a better word—those in this House who were concerned about the loss of other benefits, for example, social security benefits. The allowance was pledged in this House on 15th May 1991. I ask the noble Baroness, Lady Blatch, not why her Government withdrew it, but rather: how could they bear to withdraw it?

I am thoroughly against young people ending their education and starting out in life in debt. According to a survey carried out last autumn by Barclays Bank and the National Union of Students, the average student will leave college with debts of £2,200. Four years ago, average debts were closer to a few hundred pounds. A majority of students cannot manage without some form of borrowing. The Barclays/NUS survey found that almost 50 per cent. had taken out government student loans, but the loans scheme does not yet account for as great a proportion of student borrowing as many believe. Last autumn it represented 31 per cent. of money owed; another 25 per cent. was owed to banks; 21 per cent. was owed to families, and six per cent. to credit card companies.

The problems arising from financial stringency are severe. Students at Anglia University are said in The Times Educational Supplement of 9th October last not only to work in vacations but in term time too. They not only do bar work and early morning sandwich making and cleaning, but several work night-shifts in a local jam factory. This must surely leave them exhausted at the times when they do do academic work, quite apart from the fact that for much of the time spent in the occupations quoted they should be working or, in one case, sleeping. The same source points out that accommodation costs, which can swallow up more than 70 per cent. of a student's weekly income, rose by 12 per cent. last year. Many have to rent a room in the private sector for the majority of their course, and to rent it for 52 weeks of the year.

Meals and books are probably the next greatest absorbers of overstretched funds. Many students, perhaps particularly the men, are poor cooks and rely on supermarket-type prepared meals for variety. These are inordinately expensive compared to staples and represent an unbalanced diet. But man cannot forever live on peanut butter sandwiches. Even second-hand academic books are surprisingly expensive compared to new ones; and, even worse, they are usually in rather short supply. However, they are essential for proper participation in an academic course and many of them have to be bought right at the year's start, often before a grant has arrived late.

Finally and intriguingly, our student loan system, which looks set to absorb more and more of student debt, seems to be a copy of the widely successful United States Guaranteed Loan Program. In a journal article on student loans, subtitled Throwing out the Baby to Keep the Bathwater, an American now studying in the United Kingdom writes that: A true comparison of the two schemes, as implemented, is instructive since it provides a classic example of the present Government's proclivity for examining a foreign situation, and then deciding to create a British analogue which incorporates the worst aspects of the original model". In the USA the interest is, first, not applied until the loan becomes due nine months after the student finishes his or her course. In the United Kingdom it accrues at the moment a loan is taken out. Additionally and comparatively, the moneys loaned to supplement the United Kingdom student grants are meagre and bear a market-based interest rate. In the United Kingdom if a student takes out a government student loan in year one then during year one interest is being charged although not yet payable. In year two a further loan bears interest, plus interest from year one's interest, which has effectively become part of the capital loan. In year three a loan bears interest, plus interest on year two's interest, plus interest on the interest arising from year one. My mind boggles at continuing this to year four. But I thought that students went into higher education to learn their chosen subject, not to have to become a latter-day John Maynard Keynes.

4.14 p.m.

Baroness Perry of Southwark

My Lords, I too would like to thank the noble Lord, Lord Addington, for giving us an opportunity to debate what must be one of the more urgent topics facing us. As the expansion of higher education has been unprecedented in the last few years, some way must be found to sustain those students during the time they are in higher education. That there are many students now in higher education who are facing real hardship is undisputed. Of course the Government's access funds are very welcome indeed and they have helped very many students. But they have not been able —nor I believe, will they be able—to expand at the rate at which student numbers are expanding.

There are many contributory factors to student hardship which I would call unnecessary factors and which I believe could be tackled. It is not always a question of more money but of better management. One major contributory factor to student hardship has been the delay in the receipt of LEA grants from many LEAs where students have been left without help for long periods—for weeks or even months. A case came to my attention in my own institution only a week or two ago. It concerned a young civil engineering student who had not yet—this was on 4th February—received his LEA grant either for the autumn term or for the present term. He has been living on loans and hand-outs from other students throughout the whole of that period. I believe that this is unacceptable and the Government should put much more pressure on LEAs to pay students promptly.

Mature students with family responsibilities, of course, face particular difficulties and hardships. I was talking to a 26 year-old woman working for a degree in architecture in my own institution a few days ago. She tells me that she has a two year-old daughter whom she is supporting herself while undertaking full-time study. In order to do that, in addition to her grant she is working four nights a week, and there is no question that she is falling behind in her work and in her ambition to make herself independent and self-supporting.

The banks also have been far from sensitive to students' needs in recent years. It frustrates me that at one point they seem to be encouraging overspending and the taking out of large loans through credit cards and other facilities, and then at the drop of a hat when students, who are often inexperienced and unwise, overspend and run up debts, they foreclose in a totally arbitrary and very damaging way.

I have been given the story of another student at the new University of Plymouth, a second-year student who could not get a summer job and ran up an overdraft during the summer and at the beginning of the autumn. When her grant arrived the bank took the whole of it and withdrew her credit. Her tutors found her recently begging in the streets to enable her to continue her course. Again, this is totally unacceptable.

Students who have failed part of their course and have to retake it are in a particularly difficult position because they get no grant whatsoever. Again, from Plymouth I was given the story of one student who is struggling to live on a £715 student loan for the year, with £300 a term from the Access Fund, and is now telling his tutors that he will drop out of his course because he is quite unable to keep going.

These are real stories, and we all know that this hardship exists. However, I would suggest that the public purse is not limitless. We cannot go on simply demanding more and more money from the British taxpayer to support what is always going to be a minority and, as others have said, a privileged group, even though they do not feel very privileged at the time they are going through their undergraduate studies. Nevertheless, as others have said, they will become the better paid and the higher earners of our society.

The problem of how they should be funded both for maintenance and perhaps in part for the costs of their tuition requires a radical solution. It is a major problem. We have increased the expectations of young people and of mature students in society. Ways must be found to make it possible to meet those expectations without endlessly drawing on the public purse. I would commend to my noble friend the Minister at least an investigation into the Australian system, which has been introduced with apparent success in recent years. It involves the imposition of a 2 per cent. graduate tax, whereby students repay part of their maintenance grant from the Government. This seems to have been working well. It is ideal in the sense that it allows the repayment of the cost not to be spread throughout the whole tax system and to all taxpayers but only to those who have benefited.

I would also commend a recently published book by Nicholas O'Shaughnessy of Cambridge and Nigel Allington of Cardiff. The title is Light, Liberty and Learning: the idea of a University revisited. In fact the book is very largely about that title but it strongly recommends also a system whereby universities would receive a voucher for each student who came to them which would in part—though only in part—go towards the payment of fees, because tuition is rightly supported in large part from the public purse. Part is also passed on to the student as a maintenance grant. It is suggested the students repay this either through the imposition of a graduate tax or perhaps through their national insurance contributions. I know that the Inland Revenue always resists the idea of a dedicated tax, but I would argue that higher education is a private as well as a public benefit. It is a private benefit to those who will enjoy the benefit of it throughout life.

I particularly like the idea of repayment of money undertaken not as a huge and unbearable loan but rather in the form of a graduated payment which would cease entirely if the person paying it became unemployed or was obliged to stay at home raising a family. It would be matched entirely to his or her ability to pay. As the writers of the book say, it would be not a tax but a user payment simply administered through the tax system. I urge my noble friend to think of other ways to meet this increased demand—and it is an important demand—from our young people.

4.21 p.m.

Lord Redesdale

My Lords, I, too, wish to thank my noble friend Lord Addington for initiating this debate. I took great pleasure in thinking that I could speak on this subject with some genuine knowledge. As my noble friend has pointed out, I graduated from Newcastle University only in 1989. However, as regards the issues involved in this debate I know as little as most other people who have not graduated from university recently because of the changes that have been brought about through the reduced availability of student grants and the introduction of student loans. Many of the benefits that helped my student friends and flatmates to survive at university have disappeared. Perhaps we should consider what benefits have disappeared.

I accept that the majority of students will be able to fund their education. It is right that that should be the case as those students will then earn high salaries through having been students. I trained as an archaeologist. Therefore I do not think I could obtain a job which would pay off a student loan immediately. However, we are discussing the students who will find it increasingly difficult to avail themselves of higher education because they do not have the funds to repay a student loan. Others whose parents can support them financially will view student loans in a totally different way.

In the past seven years the Government have gradually eroded the resources available to students through alterations to the grant system and changes to the state social security and tax systems. Students have lost reclaimable travel expenses above the provision in the grant. The reclaimable travel expenses were introduced to help students who lived far from university and whose travel costs to and from home and during term exceeded the £139 allowed for in the grant. The reclaimable travel expenses were lost to students in 1986. The special equipment grants were also lost to students in 1986. Those were grants available to students in laboratory or studio-based subjects who had to pay for special equipment.

In 1988 tax covenants for students ceased. That step has placed additional burdens on parents who have to contribute to students' maintenance. Also in 1988 short vacation, unemployment and supplementary benefit were lost to students. Students' grants have to cover their living costs over the Christmas and Easter vacations in addition to the basic 30 weeks and three days for which they are intended. Also in 1988 the long vacation housing benefit paid during absence from term-time address ceased. As has been pointed out, students have to rent houses for the full year. No landlord will rent out a house on the understanding that it can be sublet to another tenant during the summer holiday.

Most students attend universities outside their home towns as those are the universities of their choice and also because the courses they wish to follow may not be offered in their home town universities. Some students therefore have to leave their home towns to study. Students who are obliged to carry on renting accommodation over the summer vacation when they are not there find that a great burden.

In 1988 and 1990 the entitlement in certain cases to free prescriptions for dental and optional treatment was lost. In 1990 social security benefits for full-time students were lost. Students can no longer sign on during the summer vacation if they cannot find work, even though the basic grant is not intended to cover that period of time. In 1991 the vacation hardship grant was lost. It seems that the safety net that could have protected students who are at the bottom end of the scale, who are vulnerable and who will be forced to consider leaving their courses if they find themselves in financial difficulties will be lost to the very students who will be most affected by the loss of benefit.

I do not believe student loans will compensate for the loss of benefit I have mentioned. That has been shown to be the case by the fact that the Access Fund had to be introduced. But that fund is woefully inadequate to cover the problems that many students face. In Newcastle there are 9,500 students who potentially could apply to the Access Fund. Some 1,000 students applied for help from the fund last year. If each of those students received £171 from the Access Fund, that fund would be entirely used up. That shows that the Access Fund system is not working.

4.27 p.m.

The Lord Bishop of Guildford

My Lords, previous speakers have already established beyond dispute that students are suffering financial hardship. I do not wish to repeat that point but I shall underline it by drawing attention to one or two less commonly mentioned areas. University chaplains report an almost universal increase in the number of students approaching them with debt problems. There is a corresponding increase in the number of students who approach welfare officers and others. There is further corroboration of student financial hardship from an unusual source. I am told that the profits from student union bars are down. That is the clearest evidence of student impoverishment.

I have received information on student financial hardship from my local university in Guildford, the University of Surrey. The cost of living in Guildford is every bit as high as it is in London; but the cost of living allowance for students in Guildford is an out-of-London allowance and that imposes financial hardship on students. A survey indicates that 24 per cent. of students are now taking part-time employment that lasts more than 10 hours a week. That is not only an indication of hardship but it is also an indication, as the right reverend Prelate the Bishop of Newcastle said, that students may not be giving their full attention to the rigour of academic discipline. They may be distracted and they may not be giving themselves to that leisured analysis of the world's problems which is part of the benefit of a university education that many of us have enjoyed. It is easy to blame the Government for this situation. That, after all, is one of our major national industries and it is one totally unaffected by the recession.

However, it is not adequate just to say to the Government that they ought to be producing more money. They have made mistakes, and the withdrawal of the vacation hardship allowance is an unhappy episode. Nonetheless, we cannot blame just the Government. We need a much more corporate response from many different elements in society. As the noble Baroness, Lady Perry, pointed out, the LEAs carry a substantial responsibility. I was appalled to read that over 24,000 students had to wait at least a fortnight before receiving their grant at the beginning of the academic year. That is inexcusable; and we ought to say that quite bluntly.

Again, student unions, though it is quite right that they should put before us the needs and anxieties of students in relation to finance, could do more in ensuring that students have access to debt counselling, financial advice, and proper budgeting. I was particularly impressed to see, for instance, a leaflet issued by the York university students' union helping people in this direction, and I hope that is reflected in other student unions in universities across the country.

Mention has already been made about the banks and how they could do much more to help students. It is sad that they seem to show a lack of sensitivity to the particular problems of these students, and not least mature students, where there seems to be evidence that they experience hardship even greater than others.

The noble Lord, Lord Cocks, thought that the problem might be solved in large measure if everybody went to their local university, and he hoped that might be resolved in three years. I think he would find that a number of universities would have significantly to change their arrangements, because there are many universities, such as the University of Surrey, which do not offer a complete set of courses across the subjects. Many students in our area would necessarily be trying to study technological subjects which are totally beyond me, and I suspect beyond a great many of them as well.

I do not think that is a solution. We need far more radical solutions than we have yet faced. I was particularly glad to hear the noble Baroness, Lady Perry, also say that. I do not think that just modest adjustments to the present position will meet the situation. We have to be prepared to look much more radically at the situation. Is it not possible to think in terms of a graduate tax, or some other such process whereby the money can be recouped? It is right that we should try to re-establish the fact that higher education is not a right to which people have access, although I wish them to have access to it. It is a privilege, and we need to make that quite clear. Because it is a privilege, people should be ready to contribute towards the cost of it; but the present loan system is not satisfactory. As the Committee of Vice-Chancellors and Principals say, it is not adequate, not certain, not simple and not socially just. We need a much more radical solution.

I hope that the noble Baroness the Minister will be able to say that such investigations are being inquired into, because we need to ensure that there is increased access for people to higher education and that they should be ready to contribute in some way to the cost of it.

4.33 p.m.

The Earl of Limerick

My Lords, as others before me, I acknowledge the noble Lord, Lord Addington, for the opportunity to discuss this important subject. In so doing I declare my interest as the chairman of the London Guildhall University. In the limited time I shall concentrate on two topics. One is the issue of hardship itself, and the second, the Government's proposals, so far as they can be determined, for revising the financial arrangements for student unions.

The leading article in Higher of last Friday opened with the question, "What is student hardship?" and offered this answer: The most often cited measure is the growing volume of student debt. There is logic in that. And this hardship is increasing. There are reasons for this, and there is evidence in support.

Let me cite just three reasons out of many. The first is the increasing number of students who, to my knowledge, are receiving their grants late—a point already twice referred to—by weeks or even months. It seems that the London boroughs are the worst offenders in that regard. Almost one quarter of our own students sharing their problems with our student adviser last term cited that as a reason for their problems.

It is not for lack of self-help on the part of the students. The second reason is the increasing difficulty of supplementing income by working. In summer last year only 31 per cent. of our students were able to get vacation work. The average wage they received was £64 per week, of which on average £45 went on rent. That is not even a break-even situation to enable students to reduce their overdrafts. The third reason is that, despite the best efforts of staff, many sandwich course students do not get paid placements. If they can afford it they will take unpaid placements; if not, they must take placements unrelated to their courses.

A further consequence is the increasing number of students driven to seek earnings during term time and not just in the vacations, to the obvious detriment of their course work. Our student union now, from their own funds, pay for a full-time counsellor, and in the university we employ one and half people full-time equivalent on that work. Certainly no one is suggesting that students should be feather-bedded, coasting along without effort, and the students themselves are not suggesting that. But they do—and reasonably—expect to be able, with frugal living and good husbandry, to complete their courses. Increasingly, and tragically, increasing numbers are unable to do so.

Let me offer some quantification by reference to our own experience with the Access Fund. In the last academic year, using round numbers, my university received £160,000 of access funding. With 5,150 eligible students, that would enable support of 60p. per week if evenly spread. Of course it was not evenly spread. Nine hundred applied for assistance, and almost exactly half received some help in amounts varying from £50 to £1,200, the average being £380. About half of the awards went to students who were either totally self-supporting, generally in fact not receiving the assessed parental support, or to help with child-care costs, more than half of our students being mature. The evidence, as always, is inconclusive, but it is our belief that many of these students would have had to abandon their courses without a helping hand from the Access Fund. I hope that this will be well in mind when the fund is reviewed for next year.

I shall spend the remainder of my time on the question of student unions. My right honourable friend the Secretary of State for Education has promised some changes in their basis of financing. He has not spelt out the basis of his concerns so it is hard to offer intelligent comment. I can only speak for my own institution, where our student union provides, on a consistent and responsible basis, services well used and well valued by its members, being services which otherwise would have to be provided by the university itself.

In the process the students managing the union's finances acquire valuable experience, and they address their duties very seriously. By no definition that I can find could that part of their expenditure classified as "political" be said to exceed 2 per cent. If that is the focus of intended change, let us deal with it on a more rational basis than throwing out the baby with the bath water. Legislation certainly is needed to define the status of student unions, and no one would deny that expenditure from public funds should be subject to rigorous scrutiny.

However, references to the voluntary principle are no substitute for consultation on desirable changes; and it would be ironic indeed if the pursuit of freedom of speech were the occasion for producing far-reaching legislative proposals without proper discussion. If legislation is produced which is not preceded by such discussion, I believe that it might have an awkward passage through Parliament.

4.40 p.m.

Baroness Lockwood

My Lords, as the noble Lord, Lord Addington, indicated in his opening remarks, the truth behind today's debate is that, unlike other members of the community, there is no safety net for students. The assurances of the Minister for Social Security at the time of the Student Loan Bill in 1990 have proved sterile. Universities are being left with growing costs in administering the Access Fund, a fund which cannot cope with the needs of students.

I give two examples of problems from my own experience. In the University of Leeds, after earmarked deductions and an average rent of £32.50 per week, students are left with £17.67 per week to live on. In Bradford with a rent of about £25 per week, they are left with £24 per week to live on. That is still well below the government poverty line of £33.60 per week.

Those are the lucky students who receive the full grant, including parental contribution, and who take up the full loan. The position of students who do not receive a full grant is even worse. Out of the amount that is left, students still have to pay for poll tax, water rates, heating and lighting, and any essential equipment needed for their course, as well as food. At Bradford University, which is attempting to be completely computerised, that is likely to mean an individual computer for each student. It is no wonder that the student welfare officer cites students not eating for days and fainting for lack of food. The collection and distribution of food parcels is now routine throughout the year.

That is the position of full-time students. But I wish to refer to another group of students who do not receive the mandatory grant or the student loan. They are part-time students, a category which the Government would like to see grow in number. A recent circular from the funding council for England indicated that there would be a financial incentive to those universities which increased their part-time student numbers. Currently, excluding the Open University, in England there are about 137,000 undergraduates and higher level sub-degree students and about 86,000 postgraduate students on a part-time basis. Despite the pressures under which they operate, part-time students do well academically. Most are working, or unemployed, or are women at home with children. Many are single parents. All those factors make full-time study difficult. They have to pay their own fees, and the cost of books, travel and essential equipment out of their already taxed income. Most seek to improve or establish career prospects. A decreasing number are able to obtain discretionary assistance from a local education authority. At Birkbeck College, about 12 per cent. of those students have their fees paid by employers. Ironically it is usually the more highly paid students who receive that financial assistance.

Birkbeck College, part of the institution about which the noble Earl, Lord Limerick, spoke, leads in the field of part-time study. It has its own long list of severe financial hardship among its 4,200 part-time students. Its fees range from about £500 to £1,000 per annum depending on the course. Add to that books and travel and one arrives at a minimum of £900 for an undergraduate student to £1,390 for a post-graduate student. The nature of the university scene has completely changed. More than 50 per cent. of students are mature students. A growing number are part-time or associate students. Modularisation of courses will enhance that process.

As the right reverend Prelate the Bishop of Guildford stated, we need a complete reappraisal of the student grant and support system. There must be a system which is both adequate and equitable to all students. We cannot continue with the present hotchpotch system which leaves a large proportion of students in such financial hardship that their studies are jeopardised.

4.46 p.m.

Lord Moore of Wolvercote

My Lords, I endorse the many expressions of appreciation to the noble Lord, Lord Addington, for initiating this important debate. I speak because I thought that it might be of interest to have some impressions from the viewpoint of a centre which sees a wide cross-section of university students.

At Cumberland Lodge in Windsor Great Park we receive every year over 3,000 undergraduate and postgraduate students, including many from overseas, from about a dozen universities. We therefore obtain a good overall picture of the financial circumstances of today's student. Based on that experience I wish to make two points. The first concerns UK students. When I was at school in the 1930s hoping to go to university there were no grants and only two ways of getting to university: either to have parents who could afford to pay for you or to win a scholarship—and scholarships did not cover the full cost. As a result, many who should have gone to university did not do so, and the country was the poorer. I met many such people among my RAF aircrew friends during the war.

After the war, grants were introduced and the whole scene changed. Those deserving of going to university were able to do so without being prevented by lack of money. That was the position until about 10 years ago, when grants began to fall behind the cost of living. I do not argue for lavish style for undergraduates, but lack of money is now beginning to be a deterrent to undertaking a three or four-year university course.

The position of undergraduates and postgraduates has become much more serious as a result of unemployment making vacation jobs more difficult to find. Already we are in a situation where undergraduates are expected to take loans amounting to £2,000 over a three-year course in order to top up their grants. Even so, they are getting further into debt. At the age of 26 I came down from university and married, having to live on my salary of £396 a year as an assistant principal in the home Civil Service. I do not know what we would have done if we had been faced with paying off a loan as well.

For the sake of the future of this country we desperately need young men and women with university training. I ask the Government not to let the level of grants drop so much that money again becomes a real bar to university education.

My second point concerns overseas students in this country, and especially those from the Commonwealth. British university education has always been enormously attractive for students from the Commonwealth for three reasons: the English language, the quality and worldwide standing of our universities and the traditional links with Britain. Many of these students have gone back to occupy influential positions in their countries and their good will has proved invaluable to Britain. But fewer potential Commonwealth leaders are coming to university in Britain today. The disastrous decision in 1980 to introduce full cost fees for overseas students resulted in a large drop in the numbers coming from the Commonwealth. In terms of numbers, the position is now better, but the Commonwealth students are coming in the main from those countries where parents can afford to pay the UK fees—from Malaysia, Singapore and Hong Kong. Those from the poorer countries—Africa especially—in many cases cannot afford to come. That means that in the long run we shall inevitably have fewer links with such countries.

By contrast, students from EC countries get lower rates. These EC students are welcome and their presence is further evidence of the high standing of our universities, but we must not lose the Commonwealth students. The most helpful thing the Government could do is to extend the EC concessionary rates to students from the Commonwealth. The present situation, giving EC students preferential rates over those from the Commonwealth, is very difficult to justify and I hope that the Government will give careful consideration to making that concession.

4.51 p.m.

Lord Renfrew of Kaimsthorn

My Lords, in his useful speech introducing the debate, the noble Lord, Lord Addington, made a number of important points. One which I think is generally agreed is that most students today finish their degree courses substantially in debt. That is scarcely surprising, when they are invited to fund their courses through a student loan scheme. There is not necessarily anything wrong with that. Debt is not necessarily hardship and sometimes, in the course of the debate, in my view one is blurring the distinction between debt and hardship. But it is also clear, as we have heard abundantly documented, that there are many cases of hardship. The withdrawal of housing benefit, income support and so on has meant that many students, even when they have drawn on the financial resources available to them, find themselves on the margin. That is a cause for concern.

We live in a new world for students, a world where they have to concern themselves with the financing for their courses. It is a world, therefore, of financial uncertainty. I give the Government great credit for expanding the higher education sector and I do not think that they are in an easy position—it would not be easy for any government. Clearly the education budget is not infinitely elastic. Today we must probably accept that, if we are expanding education at such a rate in the higher education sector, it cannot all be free, with grants on a scale which we feel are adequate. That is to say, an element of self-financing is inevitable. So I respect the Government's dilemma and think that they have been right to try to move in that direction.

However, I wish to emphasise one consequence of the present arrangements which I find very worrying. It is a point already emphasised by the right reverend Prelate the Bishop of Newcastle. It is the extent to which these adverse financial circumstances deter pupils from low income families from entering the higher education sector at all. For that reason I fear that some of them will not show up in the statistics of student hardship because they do not even enrol as students. There are good arguments to suggest that it is precisely students from low income backgrounds who are reluctant to take on a debt burden in order to undertake or complete their courses. Students from more affluent backgrounds are perhaps more easily persuaded of the merits of low interest loans and, of course, there are real merits in them.

I know that the colleges in Oxford and Cambridge experience considerable difficulty in attracting appropriate numbers of students from lower income backgrounds, although the colleges' endowment funds allow them to offer significant hardship grants. I believe that it is the case that a lower proportion of such students enter higher education in this country than in various other education systems.

The suggestion that, quite apart from the grant problem, some universities are thinking of charging "top up" fees is deeply disturbing, since once again it is students from low income backgrounds who are most likely to be deterred.

The Government have grasped the nettle and introduced an element of self-financing. I do not feel that that is wrong in itself, but we are not at present getting it quite right. The burden of debt introduces hardship for some, and that has been the main theme of this debate, and appropriately so. But equally important, it is introducing a deterrent for many.

A number of noble Lords suggested that the situation needs reviewing and I think the time has arrived when that is the case. The solution may well be a graduate tax. I think that the noble Baroness, Lady Perry, made a good point in emphasising that. It was advocated by a number of groups, including, I believe, the Committee of Vice Chancellors and Principals, at the outset. The Government would do well now, in reviewing the matter, to ask other groups—including the National Union of Students and the CVCP—how, within an overall budget figure, they feel the system could be better operated. I am sure that there is a case for increasing the budget figure in view of the hardship element, but self-financing is here to stay. However, it must be a self-financing system that does not introduce the deterrent element, for I fear that there is a real danger that our fine record in developing and maintaining a higher education system open in practice to all—that is, to all students suitably qualified—may not be sustained. It would be a sad day if university education in this country were felt to be available once again only to those with the means to afford it.

4.56 p.m.

Lord Butterfield

My Lords, I wish to open by re-emphasising our debt of gratitude to the noble Lord, Lord Addington, for this debate. As is so often true when one is batting late in the batting order, I am delighted with the many points that have been made.

I spend some time, in my decrepitude and old age, being attacked by people who say, "The students are a dreadful lot, some of them were drunk the other day", and similar remarks. I wonder whether it would be appropriate if I could use some of the ripostes that I have had to use in the field to support and encourage the Minister in the battles that she must have in the Department of Education, standing up for our students and no doubt letting her maternal instinct towards them express itself.

Minister, I wish first to say: please close your ears to some of the things that I hear: for example, "I believe that the bar takings in your college bar went up last year. How on earth can you say that any students are hard up?" Of course, some people drink and others do not have enough money to drink. Please do not be wooed by that argument. Others will produce all kinds of arguments such as: "We know that some of your hardship funds were not taken up last year. What on earth is this cry that the students are hard up, if they can't even be bothered to apply?" There are two reasons for that. One is that it becomes common knowledge among the porters and in the common rooms if people apply for grants. Some of them, bless them, are too proud to come forward if they can possibly manage. I admire them for that, but I see that the door is being left open for the thought that they cannot be very hard up if they are not prepared to apply.

I was terribly hurt, worried and distressed to hear of a girl who has been begging in the streets. Cambridge streets are full of musicians, I do not know whether any are musicians from the colleges but they certainly play very well. I give them my 10p whenever I can.

Minister, I wish to encourage you in your struggles on behalf of our seed-corn, the young people who are well endowed and reaching out for the future. They will need every skill they can produce when the financial situation begins to change and the sunshine industries look for the likes of our present students. Incidentally, do not forget that those sunshine industries may also include the leisure industries where those much-reviled young people on the arts side may come forward and be able to show the rest of the world that we still have great young artists in the making.

I was very taken with the powerful argument of the noble Lord, Lord Cocks, which I have heard before, encouraging people to stay at home and go to university. I would not be opposed to that. I think that some feel a desperate need to get away from home and try their wings, but I believe that the great civic universities might well increase their public relations effort to get people to stay at home. We have with us a member of the Committee of Vice-Chancellors and Principals, and I have not had a chance to take that up with her. But I do not think that the Minister should completely neglect the noble Lord's proposals but should see whether that is a way of reducing the overall demand on student funds.

In my remaining minute, I should like to tell noble Lords that when I was at Nottingham I had one lady student who came to see me to say: "Vice Chancellor, I think you should know, and I would like to give you warning, that I am going to have my common-law husband in my room with me next year". She was appalled when I replied: "My goodness, you will be my heroine. If you can take two people into your room, it can become a general rule and we will have double bunks everywhere". I heard no more about the matter. I do not know whether it is a possibility—I am not suggesting that there should be mixed rooms. But it is true that in American rooms there are two young men or two young women in many bedrooms. We should not forget that as a possibility. Perhaps the universities would be willing to look into it. I am not sure what the educationists might say to me, but I am old and decrepit and before long I shall slip away out of their grasp.

Finally, I was in Australia at the meeting of the Association of Commonwealth Universities when the then Minister of Education for Australia was beginning his drive for the 2 per cent. tax on the loans the students were to get. He was reviled by the academics. Now it appears that it has worked. It is awful to think that one will have the first tax aimed at a certain repayment, but I hope that we can encourage the Minister to give serious consideration to it. We are talking about a very important part of our society. It is worth cutting new ice to try to support our young students.

5.1 p.m.

Lord Gainford

My Lords, my gratitude to the noble Lord, Lord Addington, is based on the opportunity to pursue my concern about student finance which began last November, when I asked a quick question about the possibility of student fees being tax-deductible. I declared my interest as a student of the Open University and was grateful for the good wishes and encouraging noises from noble Lords.

The Open University is an educational institution which is part-time and self-funded. Students study at home but attend tutorials and summer school. The only qualification for entry is the ability to read and write. Students are of all ages. All want to better themselves, either to improve their present careers or, in the case of unemployed, retired or senior citizens, to seek new directions. Great encouragement and assistance are given to handicapped students. I will give a small example. My own wife is handicapped, and it was arranged that we (I am her helper as well as a fellow-student) did not have to attend an exam centre. With an invigilator present, we wrote our exam answers sitting across our dining-room table.

To obtain a degree a student must obtain six credits. Most students study one course a year. A pass is obtained not only by sitting an exam, usually held in October, but on the marks obtained with written assignments. A pass provides the student with a credit. There are shorter courses which produce just half a credit. The majority of Open University students pay their own fees, but loans and grants—as has been said —are not easy to obtain, particularly if one is over 50 years of age. In order to meet shortfalls between income and expenditure, the Open University has had to raise its fees by well above inflation rate. Since 1979, tuition fees have risen by more than 70 per cent.

The estimated average cost to a student for a six-credit course at 1992 prices is £2,500. On top of that sum is the cost of the set books and the week's attendance at the residential summer school. That is further expense. There is the matter of travel to tutorials, and costs for stationery, use of computers, telephone calls and postage. Parent-students have to arrange childcare in order to attend tutorials and the handicapped students have their own particular problems and expenditure. It all adds up.

The university operates a means-tested financial assistance fund. The fund has to be cash limited. Since 1990, awards to new students for their initial tuition fees increased by 70 per cent. For 1993 the Open University has budgeted over £2 million for financial awards. However, I am informed that the demand is so great that quotas are likely to be imposed to protect the interests of continuing students.

Her Majesty's Government encourage increased participation in higher education by opening opportunities for so many young people. But there is another category of persons who need assistance. Those are the mature and senior citizen professionals. Part-time education is a cost-effective way in which they can be encouraged to contribute valuable talents to industry and business. I therefore urge my noble friend the Minister to give serious thought to lessening the financial hardships of many adult part-time students.

5.6 p.m.

Lord Rix

My Lords, I am most grateful to the noble Lord, Lord Addington, for instigating the debate. I have already apologised to the noble Lord and to the noble Baroness, Lady Blatch, for the fact that I might now be considered to be a trifle tangential. I am aware of the romantic notion that poverty encourages study and that working late at night in a freezing garret by the light of a candle is good for the soul. But those who praise that lifestyle have not, I suspect, tried it. Certainly it is not one recommended by the CVCP, nor, I believe, by Dr. Faustus, who went to the devil in somewhat similar circumstances.

As a member of the Arts Council and as chairman of the Arts Council drama panel, I want to raise specifically the issue of discretionary awards granted by local authorities for courses concerned with dance and drama. I was delighted that the noble Lord, Lord Butterfield, touched on that.

In the time of good Queen Anne, as noble Lords may know, actors were still termed, in line with Elizabethan precedents, "rogues"—not "and vagabonds"—"rogues and sturdy beggars". We are rapidly returning to the time when those training for the profession will probably be known as beggars. I doubt the roguery, and the sturdiness will rapidly be undermined by lack of both food and funds.

I was personally lucky in that I never had to gain my training through being a student. The war was on and there was a desperate lack of actors. Those not fighting were either too young or too old or what was euphemistically known as "temperamentally unsuited for active service". I would like to assure noble Lords that I fell into the first of those categories. But, as in today's debate, I was in those days at the bottom of the bill.

However, young people now are faced with convincing hard-pressed local authorities to fund places at their discretion or with being pushed into degree courses which will gain them a mandatory award but which may be quite unsuitable.

In the field of dance and drama, training in the real world is probably more important than in many other areas, and it is that which is being lost. The Arts Council has been asked by the Department of National Heritage to look into the decline in discretionary awards from local authorities. I hope that I can have the assurance that the Department of Education will be just as interested as I am in seeking a solution to that problem.

While there are courses in dance and drama in universities, vocational training in that field is provided through independent academies or schools, none being centrally funded and all being dependent on student fees. Most UK students need a discretionary grant from their local authority in order to pay those fees. The number of students turning down places because of the lack of a grant for fees has increased significantly since last year. It is estimated that 40 per cent. of dance and drama students are unable to take up the places that they have been offered. We are facing a loss of revenue to schools and their possible closure—but how much talent is being lost?

More and more, only better-off families will see that kind of training as an option and as a result the profession will be impoverished. It would be an extremely unbalanced profession, with no recruits from ethnic minorities or working-class backgrounds. The system of discretionary grants is not working. It is not providing equality of access, guarantee of quality, economic efficiency or appropriate accountability. Direct central funding to the schools would ensure such outcomes. There would be an efficient and effective use of public funds and schools would be able to select students on the basis of talent and focus on raising standards.

With the rapid decline in the availability of local authority discretionary awards, many of us would like to know what the Government intend to do to protect and encourage funding for both dance and drama training. We are lucky in that we have progressed from an era when only the rich benefited from education to one in which some form of further education is at least known to exist by all. But can we all take advantage of that opportunity? Regrettably, I must conclude that we cannot.

On many occasions I have had the privilege of speaking on behalf of people with a learning disability—people who in many cases can and do speak for themselves when the educational opportunities exist to help them do so. Access to adult education for people with a learning disability is not a mere pastime but an essential step forward. It may seem less important to fund classes for basic cookery or simple numeracy, but in terms of producing full participating citizens in our society it is crucial.

I realise that the debate centres on the financial difficulties of students. But I wish to know from the Minister how the Government intend to ensure that sufficient education is available for people with learning disabilities and whether they intend to produce guidance for local authorities on the provision that must be made for people with learning disabilities if they are to learn the basic living skills of life. To me it would be a luxury to talk of the amount of money in the pocket of a student with a learning disability when the vast majority have no access to adult education at all and too often in the current climate have no hope of ever living off anything other than state benefits.

It was Samuel Butler who wrote: An art can only be learned in the workshop of those who are winning their bread by it". I was one of the lucky ones. There was a war on—I could practice my art. Now, thank goodness, peace reigns, but poverty for students—mature and teenage alike—plus poverty pleaded by local authorities, is denying a basic grounding for thousands of those eager to learn and then win their bread from the knowledge gained.

5.13 p.m.

Earl Russell

My Lords, in the past two weeks some 20 per cent. of my working time has been used in trying—usually unsuccessfully—to solve the problems of students who, through no fault of their own, are spending too long earning money to be able to do the amount of work the college would otherwise require of them. Some of them involve stories of hardship as great as any mentioned by my noble friend Lord Addington, including one student who has been attempting to live on £20 a week. On two occasions I have been faced with a situation so urgent that I thought it my duty to default on an ordinary commitment to the inconvenience of my other pupils in order to deal with the problem. It makes my point that those inconvenienced felt that I had my priorities right. Therefore in declaring my interest as a university teacher and as a parent I do so with some feeling.

I always admire, when there is a stampede in the House, those who stand against it, even though I may be part of the stampede. I congratulate the noble Baroness, Lady Seccombe, on her speech. But if she believes that it was ever thus she has no idea of the gravity of the present situation. I have been listening to student problems for 33 years and I have never known anything remotely like the present situation.

The average amount of work done by under-graduates has halved since I came back from the United States in 1984. Financial difficulties account for some 80 per cent. of that change. The two right reverend Prelates hit the nail on the head; it is students doing jobs during term time which is the hub of all our difficulties. The figure supplied by my own students' union is that 67 per cent. of them are doing jobs for an average of 10 hours a week in the term. It is a difficult subject on which to obtain honest answers to a survey. I believe that that figure is an underestimate and the accurate figure would be nearer 75 per cent.

It makes it extremely difficult for the students to do that for which they are obtaining their grants; in fact, it interferes with the object of the exercise. The noble Baroness the Minister will probably raise three arguments against what I have said. She will refer to the low take-up of student loans. I advise all my pupils individually to take the student loan, so I know something about it. I find regularly that they prefer to work during term rather than take up the student loan; they have just that dislike of going into debt which was expressed by the noble Lord, Lord Boyd-Carpenter, during the passage of the loan Bill in this House. That is not the noble Baroness's problem; it is my problem. But I ask her not to misinterpret that low uptake.

Secondly, the noble Baroness will probably point out that the proportion of first and upper second degrees has not fallen. In my opinion ability is constantly rising. I do not believe that I am the only academic who feels that penalising an undergraduate for not doing work that he could not do is a bit like penalising a dyslexic for his spelling. That therefore conceals a sharp fall in the amount of work done by undergraduates.

Thirdly, the noble Baroness will quote the continuing flow of applicants. I see them in their first week. It is clear that they do not know what they have let themselves in for. They think that the grant is still meant to cover the whole of their expenses. It may be worth remembering what Mrs. Rumbold said about child benefit; it is deep in the culture. So is the assumption that students live off grants. They do not.

The total amount of grants plus loan in London is £3,675 a year. The college advises overseas students that the minimum amount that they need to live on is around £5,000. That discrepancy may be £100 or £200 too high. But it is in the right target area. Mr. Nicholas Scott on 20th April 1990 admitted that student incomes are below social security benefit level, and the National Association of Citizens Advice Bureaux now calculates that in London they are £474 per year below benefit level and in the provinces £459 below. That is a national problem compounded during the recession by parental contribution cheques bouncing.

That is the sort of situation in which the social security safety net is vital. But it is not available. The noble Baroness will say that there is not enough money. But there is a point of economy beyond which the job is not worth doing at all. We have not only reached that point; we have passed it. I have advised sixth formers, and will advise them again if asked, that it is not worth doing if they cannot obtain any more money than the Government provide. I advise them to take a year off and earn money before they come up. If they cannot do that, they should not do it at all.

5.19 p.m.

Lord Judd

My Lords, I am sure that the House is deeply grateful to the noble Lord, Lord Addington, for having made this excellent debate possible.

Higher education should be a liberating experience for those enjoying it. It should enable them to throw themselves into their books and learning and to savour the stimulus of associated cultural and social activity in a community of scholars. It should be an enriching investment in talent, excellence and character, all indispensable and vital to our nation's future. Instead, as we have starkly been reminded, it is for far too many students a cramping, anxious time of acute financial stress, a time when potential is never fulfilled because of the basic struggle to survive.

This academic year the Student Loan Company recorded 89,000 applications by November 1992–60 per cent. up on 1991. One high street bank reports that 44 per cent. of students have overdrafts. Recent research at Leeds Metropolitan University reveals that expenditure exceeds income for 40 per cent. of students and that for half of these it exceeds it by more than £1,000 per annum. Across the country students fear that they will never be able to repay their debts and it is obvious that this discourages potential students from low income households.

The Committee of Vice-Chancellors and Principals is conducting a survey of student support. Its interim report reveals that the success rate in applications for access funds on the valid grounds of hardship dropped from 79 per cent. in 1991–92 to 60 per cent. in 1992–93. Indeed, the pressure on access funds has begun to call into question their effectiveness. One institution reported in the survey argued that, amounts awarded to individuals are often too small to deal effectively with their problems". As announced in the last Autumn Statement the total resources for grant and top-up loans will be increased by 2.75 per cent. in line with GDP. However, consistent with government policy, the grant element will again remain frozen and the increase in resources will be reflected solely in the loan. Even with the loans the National Association of Citizens Advice Bureaux has calculated that a student receiving the maximum grant and loan for 1992–93 could receive almost £460 less than the basic income support level of an unemployed claimant aged under 25 receiving the lower rate of income support together with housing benefit, a level which is widely recognised to represent the poverty line.

Paradoxically, whatever the well-founded anxieties about the adverse effects on study of too much time spent earning, the financial difficulties of students are compounded by the increasing non-availability of vacation and term-time jobs, hitting sandwich course students especially hard, often leaving them with no prospect of alternative support. Medical students are at a special disadvantage because they have little time in which to earn. This inevitably favours those from more affluent families. Difficulties are also aggravated by the steady decrease in the number of discretionary grants which cash-strapped local authorities now make and by the decreasing number of grants for postgraduate studies.

The case histories of students facing difficulties are distressing. The special report of the National Association of Citizens Advice Bureaux made sober reading. The House will be grieved that some students, it seems, have even in desperation turned to prostitution. A student at Bristol University told the Guardian newspaper how she was paid £40 for her services, enabling her to survive financially for another two weeks. She had been £1,100 overdrawn, her bank was demanding payment of her overdraft and she had had three student loans. Her parents could not help.

There must be acute concern for the well-being of our student population. It is high time that the Government gave a clear indication of how, on a basis that is demonstrably fair, they intend to fund their much repeated commitments to higher education. As things stand, the whole sector is being undermined by an atmosphere of insecurity and, frequently, of sordid struggle to keep going. What should be creative years are for too many becoming desperate years. What should be a fulfilling experience is becoming a nightmare.

For the immediate future I hope that the Minister can give three specific undertakings which the Committee of Vice-Chancellors and Principals seeks. First, will the Government undertake to ensure that access funds become what they should be—namely, hardship funds—and that they will be increased in line with expansion of student numbers rather than just by the rate of inflation? Secondly, will they reinstate housing benefit as a targeted and therefore cost-effective benefit? Thirdly, will they extend the review of student support by the DFE to cover postgraduates and part-time students, with particular reference to the present ineligibility of part-time students for loans? Will the Government ensure that the DFE review covers the complete academic year, including the summer vacation?

I would suggest that in the context of this very poignant and indeed moving debate—indeed, in the name of civilised values—there is a need for urgent action.

5.25 p.m.

Baroness Blatch

My Lords, in the time available it will not be possible for me to do justice to this very important debate. But I shall do what I can to address the points made and I will of course write to noble Lords whose points I miss.

I am grateful to the noble Lord, Lord Addington, for choosing this subject for the debate because it gives me the opportunity to show how this Government can be proud of their achievements in higher education generally, despite what has just been said by the noble Lord, Lord Judd, and can take credit for the system we now have for student support, which is working well.

Let me deal first with our overall commitment to higher education. There are now more than one in four young people entering higher education compared to one in eight in 1979, when the Conservative Government came into office. That is a remarkable achievement. And beyond that, by the year 2000 we expect it to rise to one in three. Public funding for higher education now stands at record levels and will total over £4 billion in 1993–94.

The Autumn Statement provided for 8.5 per cent. growth in full-time equivalent student numbers next year which will enable the current record levels of participation to be maintained. Looked at in broad national terms, opportunities for participation in higher education have never been better.

But this debate is about the financial situation of individual students. I recognise that that lends a different perspective. Let us look at the realities. There are many misconceptions about the arrangements for student support. I hope the House will bear with me if I set the debate in context. We introduced the present student support arrangements in 1990, after announcing our proposals in the White Paper Top-up Loans for Students published in 1988. The previous system of publicly funded grants and parental contributions had been with us since 1962. A radical overhaul of the system was, I think all noble Lords will agree, by then long overdue.

Expenditure on grants had not kept pace with the increase in student numbers. There had been a fall in the real value of the grant to the individual student. Added to this the burden of the parental contribution had become increasingly heavy. That system was unsustainable.

In the absence of any other form of support from education funds, students were turning to the benefits system for extra help. But the benefits system was never designed to support students; nor should it have been. It was for the education system to find ways of funding students. The student loans scheme, introduced in 1990, provided the answer. It complements the existing awards arrangements in a way which largely eliminates the need for students to look elsewhere for help.

The declared aims of the new student support arrangements were: to share the cost of student support more equitably between the students, their parents and the taxpayer; to increase the resources available to students; to reduce the parental contribution over time; to reduce direct public expenditure over time on grants; to reduce students' dependence on benefits; and to increase students' economic awareness and their self-reliance. Those were the aims and I believe that we are well on the way to achieving them.

The cost of student support is now shared more equitably. Students—although they contribute nothing while studying —will contribute a fair share once they have graduated and started to earn a good income. That has reduced the burden that would otherwise have fallen entirely on parents and taxpayers.

The resources available to students have increased very substantially. Since the introduction of the student loans scheme, full year students can now receive nearly 40 per cent. more from grant and loan than they received from the grant alone three years ago. This increase has been achieved at a time when other members of our society, including those in employment, have not been as financially fortunate.

Parental contributions are now indeed falling in real terms. The introduction of loans has allowed us to reduce the burden on parents and that is, I believe, extremely important for many families in these difficult times. Those parents whose income has risen in line with the rise in average earnings have seen their contribution to their children's grant held steady in cash terms for the past two years.

In conformity too with the original objectives, students' dependence on benefits has been greatly reduced. But I would like to remind the House that we have not removed students' entitlement to benefit altogether. Housing benefit and income support remain available for students in vulnerable groups. Ending students' wider dependence on social security benefits, however, has, along with the introduction of the loan, contributed to an increasing economic awareness among students and a greater self-reliance—the final one of our original objectives.

The arrangements we now have are true to the objectives we set for them. One of the strengths of the arrangements is their flexibility to meet individual circumstances. The present system not only consists of grants and loans. The Government have not neglected those students whose particular circumstances give rise to additional needs. As well as the main rates of mandatory grants and student loans, there is a range of supplementary allowances. Extra, means-tested allowances are available for disabled students. I take note of what the noble Baroness, Lady Darcy (de Knayth), said about that. It is about ordering priorities, and for the moment they are means-tested.

There are also allowances for students with dependants and for older students. These have continued to be uprated in line with the basic grant plus loan. In particular, the three allowances available to disabled students are widely seen as generous. They are £4,430 on top of the grant and loan system for the non-medical personal helper; £3,325 again on top of the loan advance system for major items of specialist equipment; and a further £1,110 available for other incidental expenses for a disabled person, again on top of the grants and loan system. Those allowances are in addition, as I have just said, to the main grants and loan system and any other allowances which may be paid.

On top of that, the Government have made available access funds worth over £26 million this year. These are for the minority of students who are in particular financial difficulty and need more help than the grant and loan system can provide. Mature students, many of whom have family commitments, students facing high accommodation or travelling costs and single parent families are among the principal beneficiaries from these funds.

In spite of that, we continue to hear calls from time to time for the restoration of benefits and the abolition of loans. Some people believe that this would alleviate student hardship. Perhaps I can put the record straight. When loans were introduced they were set at a level above that of the average amount of benefit claimed. Most students have more money available through grant and loan than they ever claimed in benefit. Under the present system support for students is now primarily and rightly directed through the educational programme. The benefits system exists to help those people in our society who are in involuntary difficulty, although, as I indicated earlier, access to benefits remains an option for the most vulnerable groups.

I believe it will be clear from this that there are substantial resources available to students and the Government have honoured their obligations to provide and, where possible, increase these funds.

What then are the facts about student hardship? Facts, unfortunately, are hard to come by. We all know of individual students who are in financial difficulties, but without wanting to seem unduly harsh about this, I agree with my noble friend Lady Seccombe that 'twas ever thus. Some students, for reasons that may or may not be within their control, always run out of money faster than others. There have of course been several surveys of students' finances in recent months, some of which were referred to today. But these have generally been based on small or partial samples from which it is hard to draw any reliable conclusions. Such evidence as they have offered certainly has not pointed conclusively to widespread hardship. I will place greater reliance on the comprehensive survey of student incomes and expenditure, following up earlier such surveys, which the education departments have commissioned. The survey is now well under way, and we shall have the results later in the year.

That will give us hard data. In the meantime, all I can say is that other broader indications do not support the argument that hardship is widespread. For example, still under half of eligible students are actually taking out the loans on the very generous terms which we are offering. I suggest to the noble Earl, Lord Russell, that some of his energies could be directed to persuading those young people to take advantage of what I believe is a generous loan.

Earl Russell

My Lords—

Baroness Blatch

I appeal to the noble Earl. Time is extremely short and we have not one minute more allowed to us in the course of the debate. I will take up the noble Earl's particular point after the debate.

It may come as something of a surprise to the House, but it does suggest that more than half of the student population is finding it possible to manage on their grant alone, supplemented by any other income they may have. The fact is that far from students being hard up, many of them do not seem to need all the resources that we have provided. Of course, cautiousness about debt may play some part in students' avoidance of loans if they can get by without. It is right that they should think twice about these things. But any who look into it will know that the student loans scheme has generous provisions to defer repayments until the former student's income has risen to a point where repayment can be afforded.

Another indicator that hardship is not as widespread as some would have us believe is the sheer growth of student numbers that I referred to at the beginning of my remarks. Young people are certainly not being deterred from entering higher education; and from what we can tell they are not having to give up because of financial difficulties on any large scale either. My noble friend Lady Seccombe gave us the figures. We are third in the international league not only for the number of students entering higher education but also staying to the end of their courses.

Drop-out rates from universities remained broadly stable between about 10 per cent. and 12 per cent. throughout the 1980s and early 1990s and there are certainly no grounds for thinking that the new student support regime has driven them up.

It may be worth putting on record exactly what students are receiving. With grant and student loan combined, it amounts to £58 per week for 52 weeks of each year. If one takes the number of weeks for the average course, it is £99 per week for students during course time. Any course which lasts more than 30 weeks is given extra funds pro rata to that. That is for students out of London. In inner London students receive £70 per week for the full 52 weeks in the year and £120 per week for term time weeks, which again, if it is more than 30 weeks, increases pro rata according to the length of the course.

The actual burden of repayment also needs to be well understood in this Chamber. No student is required to pay during the period of taking the loan. It starts in the April after the course is completed and no student pays one single penny back to the Government until he is earning at or above 85 per cent. of the national average income, which at this moment is £13,560. Until a person is earning £13,560 he does not begin paying but when he does he pays over a five-year period. That is not burdensome.

What is more, if a student wishes to remain partially in the voluntary sector or to take low-paid work, or for one reason or another does not ever earn £13,560, which is indexed for inflation each year, then he will not have to pay that back if he either reaches 50 years of age or he has been within the system for 25 years. Loans can be deferred year after year if young people are not earning sufficient to pay them back.

As regards the point made by the noble Lord, Lord Moore of Wolvercote, I believe I have dealt with it in saying that the system is not a deterrent to young people. The value of the grant plus loan in 1979 has been fully restored today. The noble Lord, Lord Cocks of Hartcliffe, has spoken before on the point that he believes that if more students—he did not say all students—took courses in universities and institutions closer to home, it would have some impact on the issue of homelessness. It has been said that that is not an entirely straightforward concept. I understand that the savings in money are not great in that we give a disproportionate grant to those students who learn from home. Nevertheless, it is indisputable that if fewer students required housing, more housing would be available for the homeless. That can certainly give us all food for thought.

The right reverend Prelate referred to counselling and advice. I agree absolutely with his point and am pleased that most university and higher education campuses have systems for offering counselling to students who may need it.

My noble friend Lady Perry, the noble Lord, Lord Broadbridge, the right reverend Prelate the Bishop of Guildford and others were concerned about local authority inefficiency. I agree absolutely. It is monstrous for students to have to wait a day longer than is absolutely necessary to receive what is their due, especially when we are talking about something that involves only a mechanistic function for local authorities. I promise the House that I shall redouble the efforts of my department to put pressure on local authorities to make sure that young people receive their grants on time.

My noble friend Lady Perry, the noble Lord, Lord Butterfield, and other noble Lords have pressed me to reconsider the idea of a graduate tax. This was discussed previously and we have been urged to consider also the idea of collecting payments through the national insurance system rather than the loans scheme. That has been studied carefully and in some detail. Collecting loan payments through national insurance would not be straightforward. In particular, it would pose real problems for employers in collecting and accounting for payments from graduate employees. Payment through the national insurance system would not necessarily be able to deal with the problem of graduates with low incomes.

The difficulty with a graduate tax is that it would not distinguish between those graduates who receive public support for their higher education and those who do not. A system which was so sensitive and which did distinguish in this way would be administratively extremely complex. A loan, on the other hand, relates only to those who have made use of the facility and gives the student the choice of how much to borrow.

The noble Lord, Lord Addington, drew comparisons between student support and income support. I should say, first, that that is not a legitimate comparison. Students are expected to bear some of the cost of their support themselves on the ground that higher education is an investment in their own interest. Income support is designed for those who are involuntarily dependent on resources provided by the Government. However, I should add that, as the grant is equivalent to £58 per week for 52 weeks per year for students out of London and £70 per week for 52 weeks per year for students in London, a student's income probably compares favourably with that of someone on unemployment benefit.

Like other noble Lords, the noble Lord, Lord Broadbridge, was concerned about vacation hardship. It is alleged that the withdrawal of the Vacation Hardship Allowance in 1991 subsequently contributed to student hardship in the summer vacation. However, the fact is that that is simply not so. The allowance was withdrawn because it was no longer needed. Very few students ever claimed the allowance before it was withdrawn and the Government's new support arrangements make more resources available to students to compensate for the loss of that part of their assistance.

I believe that I have dealt with the point about students not being asked to pay back the loan until the April after they have finished their course. I do not believe that the burden of repaying the loan acts as a deterrent.

The right reverend Prelate said that the loan system was not adequate, not certain, not simple and not just. We could argue for a long time about what we all believe is adequate, and the Government have taken a view about what should be borne by parents, students and taxpayers. We rest our case on that judgment. Students can be certain—if they qualify, the loan is certain. I believe that the system is simple. It is not difficult for students to apply. I believe also that the system is just.

The noble Baroness, Lady Darcy (de Knayth), was concerned about means testing. As I have said, it is a matter of priorities.

My noble friend Lady Park of Monmouth spoke about the disproportionate effect on postgraduates. Again, most postgraduates are not eligible for loans, but those who are supported by central government, bursaries or the research councils have continued to have their maintenance allowance uprated each year.

The noble Earl, Lord Limerick, referred to the proposals for student unions. I understand what he said. He expressed his concern about the maintenance of services for students. I can advise him that that matter will be taken into account in the proposals.

The noble Lord, Lord Addington, was also concerned about sandwich students. Institutions are responsible for doing all that they can to obtain placements but can, if necessary, make alternative arrangements for full-time provision on college premises, thus entitling students to grants and to loans.

Time is running out. Unlike many others in this recession, students' income and status have been protected. I believe that we have reason to be proud of this country's flexible and relatively generous student support arrangements. They are all of a piece with our wider achievements in higher education.

Lord Addington

My Lords, I thank the noble Baroness for her reply, although it fell far short of the mark and misinterpreted the situation. The noble Baroness claimed that a student on a full grant with a loan would receive £58 per week. Perhaps I may remind her that somebody below the age of 24, living away from home and receiving social security benefit could expect to take home about £66 per week. Bearing that in mind, I beg leave to withdraw my Motion for Papers.

Motion for Papers, by leave, withdrawn.