Education: Student Support

HL Deb 30 January 1995 vol 560 cc1290-324

5 p.m.

Lord Addington

rose to move, That this House resolves that, before the commencement of the Education (Mandatory Awards) Regulations 1994 and the Education (Mandatory Awards) (Amendment) (No. 2) Regulations 1994, there shall be restored to students the same right to receive housing benefit and income support during the long vacation as the rest of the adult population.

The noble Lord said: My Lords, the Motion draws attention to a group of people—adult students in full-time education—who are denied the basic right of a safety net to guarantee a minimum standard of living. That is a long-winded way of saying that students have been denied the safety net of the social security system since the 1990 student loan regulations were introduced. That is a piece of legislation about which the House could probably stand up and say, "We told you so". Everything that we predicted when we debated the subject in 1989 has come to pass. Students have become increasingly worse off. They carry a heavy debt burden, and not just because of the student loan scheme. Even that, as we have all heard recently, is not working well. Students have been effectively left with a lower guaranteed standard of living than one could expect if one were receiving the basic income support and housing benefit package when unemployed. The majority of students will have a lower income than that regarded as the lowest capable of sustaining life in this country.

The history of the matter is interesting. With the indulgence of the House, I shall relate briefly what happened. Since coming to power, the Government have introduced a series of measures which, inch by inch, have effectively removed students from the social security system. For instance, students were unable to sign on and receive benefits during their first Christmas and Easter vacations. Then they could not claim housing benefit if they happened to be in university-provided accommodation. The present scheme then came into effect in 1990. When the scheme came into effect, there was a hardship allowance. That was withdrawn the following year.

I was in the Chamber when that happened. I remember being told that one of the reasons for the withdrawal of the allowance was that students were being encouraged to apply for it. In other words, they were being encouraged to take out a loan which was supposed to act as a backstop to enable them to have money during the long vacation.

The average student therefore can now expect an income of £61.35 a week throughout the year. The Department of Social Security calculates that a person on social security benefit paying rent at an average cost around the country would receive £71.15 per week throughout the year. There is therefore a shortfall of nearly £10 for people who have to buy textbooks. That person is receiving potentially £10 per week less than the basic income level. We then stick other expenses on top of that.

The Government's answer to the problem is that people can find jobs. Students can earn money in addition to the grant. We have heard from many distinguished academics in the House, including my noble friend Lord Russell, that we are encouraging most students to take on a full-time educational course. That means that they are not doing anything else. So how many hours a week is it acceptable for them to work during term? How many hours does that mean working behind a bar when one is lucky to get home by midnight having been on one's feet for several hours? How many hours will be acceptable when doing a course? Many educational establishments actively discourage their students from working.

The main issue we are debating relates to the long vacation. "Vacation" is probably no longer a good name for it, as it describes a period when there is potentially no income. The student can work. A student has 14 weeks in which to find a job. How many of those weeks will be spent searching for a job? It is conceivable that 14 weeks will be spent searching for a job. Once a job is found, what will the rates of pay be? We are talking about low paid casual work; for example, working in the local factory or stacking shelves. Many menial, low-paid jobs no longer exist in the production sector. I am talking perhaps about the packing industry, although I have probably offended members of your Lordships' industrial committee by using that expression. That type of work no longer exists because it is cheaper to do it by automation. We all know that large areas of the country have structural unemployment because unskilled employment no longer exists in many sectors.

We then turn to the service sector. Once again students may obtain part-time work at perhaps less than £3 per hour. If one works for 20 hours a week at less than £3 an hour, that provides £60 a week upon which to live. Students may be worse of then than they are during the term. So what is the case for not bringing them back into the system? I cannot see it. Students who will earn a good income during the greater part of the vacation will not sign on as an alternative. We are not talking about vast amounts of money.

Students now have to sign 12-month tenancies for their accommodation. That has occurred since I was a student. That means that students cannot even live at home during vacation and thus not have to pay for their accommodation. They have to maintain their term-time accommodation even if they are not there. They are legally obliged to ensure that the rent is paid. All those factors combine to result in students suffering financial hardship.

The ancient universities recently carried out a survey. They include Oxford and Cambridge and the four ancient universities in Scotland, in order of age—St. Andrews, Glasgow, Aberdeen and Edinburgh. The survey found that about 15 per cent. of all students had considered leaving university due to financial hardship. The figures are hard to come by because when a student leaves a university he usually just leaves. Students are ashamed that they have not managed to complete the course. Financial considerations may play a part in this. If a student has financial problems he may have been doing a job and his academic work may have been affected. Many students in the surveys that I have seen have said that having to work has affected their academic performance. Students will not say that that is why they have left. That is why the figures are so difficult to collect. However, all the anecdotal and circumstantial evidence suggests that financial hardship is having a real effect.

The Motion asks merely that we restore to students the basic safety net. Students form a large group of adults who are undertaking a period of study which, it is hoped, will benefit the whole of our society because those people will be better qualified. It will undoubtedly benefit students themselves also. We are not suggesting a major change such as housing benefit during term time, although that too would be welcome. In the past, before the regulations were introduced, that acted as a regional balance. In expensive housing areas housing benefit rose and so that provided a form of levelling out. We do not call for that in the Motion. We ask merely that students should not find themselves without an income. It is not the most radical suggestion that the Chamber has ever heard. If we are to allow students to carry on falling into debt, we shall cause more of them to fail unnecessarily. We shall thus waste our investment both in time and money. That is the nub of the argument. I beg to move.

Moved, That this House resolves that, before the commencement of the Education (Mandatory Awards) Regulations 1994 and the Education (Mandatory Awards) (Amendment) (No. 2) Regulations 1994, there shall be restored to students the same right to receive housing benefit and income support during the long vacation as the rest of the adult population. —(Lord Addington.)

5.10 p.m.

Lord Skidelsky

My Lords, I have considerable sympathy with the position advanced by the noble Lord, Lord Addington. There is no doubt that for some time the real value of the student grant has been falling and therefore the financial position of students, in so far as they rely on that grant, has deteriorated. However, the background is that during the past 15 or 16 years there has been an enormous expansion in the number of students in full-time higher education. Expansion has occurred for longer than that but it has accelerated during that period. The fall in the real value of the grant is a direct consequence of that mass expansion.

The number of students in full-time higher education has doubled during the past 15 years and is now about 930,000. That is one-third of those in the 18 to 21 age group and includes a large increase in the number of women students. The expansion has been widely welcomed; in fact, it has been demanded. Everyone is extremely happy that an increasing proportion of people in that age group should be going on to higher education. It is good for the economy and for their own personal life chances.

However, it has inevitably strained the education budget, on which there are increasing demands. The demand for expansion is not confined to the higher sector of education. There have been worrying signs that literacy and numeracy levels have declined in primary schools. There is a big demand for extra expenditure in that area. Some would say that that is the main priority in the education budget and governments must decide how to distribute limited resources between the different claims. That is true in all areas but in education it has posed increasingly difficult problems.

It is not obvious that in a climate of scarce resources one should give a high priority to increasing financial support for university students who, in most cases, will be able to live at home and to borrow money via student loans and the banks. They will also have the opportunity to take vacation jobs if they need them. The problem is one of success rather than failure, and of special hardships created by the success.

The noble Lord, Lord Addington, said that he is not asking for a large sum of money. I have worked out that if one-third of full-time higher education students receive these average benefit pay-outs as a result of the new entitlements that he suggests the cost for the long vacation will be about £443 million. That is a large sum of money. I plucked the figure of one-third out of the air. It may be much less than that but it is the possible magnitude of the amounts that we are considering. However, one thing is clear and all experience teaches it; that if one creates an entitlement the population claiming the entitlement will grow. Therefore, whatever the initial calculations, the amounts required to meet the entitlement will expand. We must bear that in mind.

Before supporting the proposals we must, first, establish the dimension of the problem and, secondly, decide how it might be met. The noble Lord failed to supply any quantitative data. He made general remarks, which were well taken—

Earl Russell

My Lords, is the noble Lord aware that when asked in a Question for Written Answer for quantitative data the Minister said that he was unable to supply it? Therefore, I do not believe that it is possible to blame my noble friend for being in the same position.

Lord Skidelsky

My Lords, I do not blame the noble Lord for being unable to supply the data. I say merely that policy should be based on information and if we want to find out how best to meet cases of hardship we must establish the quantitative amount of hardship. There are many ways in which we can try to deal with the issue and recreating the proposed entitlement may not be the most obvious. Further, what proportion of students cannot live at home during vacations because they have no homes or because family relations are too bad?

Lord Addington

My Lords, the point was not that they cannot live at home but that they must maintain property because of 12-month leases. Many students are legally obliged to maintain property throughout the long vacation.

Lord Skidelsky

My Lords, how many are legally obliged to do so? Those who have property with such leases are so obliged, but what proportion of the 930,000 students are in that position? My argument is that one does not establish a universal entitlement to crack a small problem, if it is a small problem. There are other ways of doing so.

I wish to know what proportion of students are in the situation in which they cannot live at home because they have 12-month leases which they cannot give up. How many full-time students cannot count on any parental support during the vacations? That is further data that we must have. I should be loath to create, or to recreate, a system of entitlements based on the idea that most students are homeless, are without parental support, or are so tied to leases that they cannot give them up during the long vacation. I believe that that is what the noble Lord is asking us to do.

The noble Lord, Lord Addington, mentioned a safety net for students. Of course I agree that there should be a safety net but the question is how best to supply it. In 1994–95, £26.7 million has been provided for limited access funds. The noble Lord did not mention that. It is administered by universities and colleges to help students in serious financial difficulties. I believe that an expansion of such arrangements, if and when financial difficulties are established, is the way forward. After all, the people who administer the funds will know the personal circumstances of the students concerned and will be in the best position to judge the level of support that is needed. It should not be dealt with by way of entitlement to benefits that are generally associated with labour-market conditions and interruptions. One must deal with the problem through an extension of the facilities already available to students.

That brings me to the last general point that I wish to make. I am suspicious of any approach that treats full-time students as part of the labour market. They are not in that position. I am not sure whether the noble Lord, Lord Addington, believes that students should or should not be looking for vacation jobs. That varies in different countries. Many students would benefit from having jobs in the vacation, especially in the earlier part of their degree courses. But income support is related directly to the job market. If you do not believe that students should be in the job market because their studies will be disrupted, logically you cannot also call for income support under conditions related directly to the number of hours worked—less than 16 hours per week. Housing benefit is paid to people who cannot afford to pay their rent. That is not true of most students for most of the time that they are at university.

Everyone must be aware that there has been increasing hardship for students. There is a case for being more generous in order to meet that hardship. However, I do not believe that there is a case at all for recreating a system of entitlements which are bound to be demanded by more and more students as time goes on.

5.21 p.m.

The Lord Bishop of Chester

My Lords, I am grateful to the noble Lord, Lord Addington, for tabling this Motion for debate.

I begin by quoting from a Motion accepted by the General Synod of the Church of England. I should underline that that is a body elected from 43 dioceses of the Church of England and from all different sections of society. If a private Motion is debated there, it has to carry the maximum number of signatures. At the last meeting of the General Synod, the Motion was passed unanimously that it is: deeply concerned at the low level of financial support available to full-time students in higher education and requests Her Majesty's Government to consider means of alleviating the position". Therefore, that is well in tune with the Motion before us.

I am connected most closely with Liverpool University which generously gives out doctorates in different directions. The welfare officer of the Guild of Students at Liverpool University has given me a very careful breakdown which accords with the calculations given earlier by the noble Lord that there is a difference of £9.82 per week between the income of a full-time student and that of someone who is receiving income support and housing benefit, with the reminder that those on benefit receive also free prescriptions and other benefits. That is a considerable difference. Therefore, there is a sense of deep injustice about that for those students living away from home rather than being unemployed.

That concern is expressed in many ways. I am not concerned, neither can the Church be concerned, necessarily with those students who have parental support. Many of us, when we were students, benefited from parental support and many of us have suffered from having students of our own to support. We know that it is not an easy business and sometimes relationships become very difficult. But in speaking in the debate, my primary concern is with students who do not receive any such support; and there are quite a number of them. I do not believe that the figure is as high as one-third, but there are many such students.

Many students are living on a very tight budget. I wish to quote information given to me by a student who is a member of the chaplaincy at Liverpool University. Therefore, she is not a renegade or a beer-swilling student. She is trying to live sensibly and trying to get through her studies in order to graduate. She lives with three other girls in an apartment. On her careful budget that she has given to me, undramatically, she is left with £5 per week for food and heat. That girl does not want to take out a loan. The Government state that their reason for removing housing benefits and so on during the vacation is to make people more economically self-reliant. Her argument is that she wishes to be economically self-reliant and, therefore, does not wish to take out a loan. The argument goes both ways: she has been forced into taking out a loan against her will.

This subject is larger than the long vacation, but clearly we are concerned with the long vacation. However, before I turn to that, perhaps I may say that I know from my experience of Liverpool University that there has been an increase in the demands on the health and welfare resources of the university. More students are under stress and seeking counselling, and debt counselling is now commonplace in the university. That is a serious matter which we must consider.

However, we are considering the long vacation. How does one meet that challenge at a time when it is extremely difficult to obtain employment? Many of us, when we were students, found it extremely easy to obtain employment, but we are now living in a very different age.

Ideally, I should argue for an extra lock-on grant for the long vacation because the grant is already means-tested and that would be a way of taking it through into the vacation. I am sure that in that regard it will be argued that the grants are already thinly spread; that we wish to increase the numbers of people in higher education; and, therefore, to increase the size of the grant will reduce the numbers receiving higher education. Against that, I ask whether we want more students in increasing poverty or X number of students who can at least survive properly. I put that forward as a serious consideration. To my mind, that would be the best way forward.

The second way in which to tackle matters is for students to take out loans. The girl to whom I referred is very hesitant about the loan which she was forced to take out, as are many students, and, in particular, how it is to be repaid. Repayment is often to be made just at the time when students are taking on family responsibilities and just at the moment when they least want to repay it. Therefore, if that is the only answer, we should reconsider seriously how those loans are repaid. Linkage with income tax would take into account the circumstances of life at any particular time and I suggest that that would be a fairer way of repayment.

I imagine that neither of those suggestions will be acceptable. In view of that and in spite of the problems locally, which I recognise, in relation to administering housing benefit and income support, it seems that that is the only way in which to proceed unless the alternatives that I have put forward are accepted. If that is so, and the need is certainly there to be met in one way or another, I warmly support the Motion tabled by the noble Lord, Lord Addington.

5.27 p.m.

Baroness Williams of Crosby

My Lords, I too congratulate my noble friend Lord Addington for moving the Motion this evening. I should like also to congratulate the right reverend Prelate on what he said about it.

We now have a Secretary of State for Education who seems prepared to listen to some of the problems which confront those of us who are interested in educational matters. Therefore, I hope that she will consider very carefully this debate, and that the Minister who is to respond will consider all those suggestions which are intended to be helpful and positive.

Following on from what the noble Lord, Lord Skidelsky, said, we are clearly moving towards a different philosophy of student support, whether for good or for evil. That new philosophy is to base student support on a mixture of loans and the ability to meet the costs of higher education from private sources and away from the concept of grants.

I suspect that that is the philosophy, and I believe that the 10 per cent. cuts which started in 1994 and which should conclude in 1997 will not conclude in that year. I believe that we shall see a steady decline in the grant system to the point at which there is no longer a grant of any kind for maintenance.

I merely wish to register that there are two great drawbacks which should be put on the record. The first is that that is a particularly harsh system for those whose earnings after graduation are low; primarily those who work in the public service. Some noble Lords will know that at present I am a professor at Harvard University. It is one of the great problems of American education that many former students in low-paid employment are unable to pay back the sums involved in their education—and many of them are engaged in some of the most socially necessary jobs which any society has to offer.

The second point that I should like to make is that the system we have adopted in Britain is one that is extremely harsh on students who suddenly experience a change in their life circumstances, perhaps because of the death of a parent or because of disability in the family or because, for one reason or another, they are affected as regards their ability to gain employment after graduation. As I said, the system is peculiarly harsh with no element of fairness to those students who, for a variety of reasons, encounter financial responsibilities and commitments which they could not have envisaged when they took out the loan.

With regard to the system, and in response to the noble Lord, Lord Skidelsky, I should like to point out that of course one has to consider the numbers in higher education—indeed, the noble Lord is quite right in that respect—and we must also consider the desirability of an expansion in those numbers. However, one has also to consider how many students actually take degrees. As the noble Lord will know, in France and Germany, for example, and several other countries, a great many students enter university but far fewer actually complete their university and higher education studies. One of the great glories of this country is that a very large proportion of all our students goes from beginning to end of a university course because the work involved is so intensive and spread over a very short period.

I should also like to mention the fact that the British university structure is one with which the system that we are now moving to is peculiarly incompatible. Again, in American universities the provision for student jobs—many of them in the university itself, in libraries or in occupations such as a research assistant, a teaching assistant, and so on—actually complement the studies that the students are undertaking. That is not characteristic of the kind of jobs that our students undertake; for example, they take mostly bar jobs, waitressing jobs and jobs which are in direct conflict with the students' time and energy as regards their academic studies.

Implicit in what the Government want ought to be a major move towards discussing with the CVCP, and others in higher education, the possibility of deliberately planning for a much larger number of student jobs associated with and related to the university. Incidentally, I believe that it should also lead to a great willingness by the Government to pursue with employers within the public and private sectors the possibility of a major expansion of summer internships. In the United States and Canada, students find it relatively easy to get summer jobs which complement their education. As the right reverend Prelate has just said, it is increasingly difficult in Britain for students to find summer jobs. Moreover, summer jobs related to one's studies are virtually impossible to find.

My final subject relates directly back to the remarks made by the noble Lord, Lord Skidelsky. I respect the gritty frankness of his remarks and his willingness to associate himself with what is certainly an unpopular cause; namely, student loans as compared with student grants. However, I appeal to the noble Lord's own sense of intellectual coherence and his willingness to be frank about facts. I ask him whether he can really support the indefensible system of student loans which has been adopted in this country over the objections of the universities, of the other sectors of higher education, of students themselves and of virtually anyone else who knows anything about the subject.

The system is spread out over five years within which rigid, fixed amounts must be paid. There is virtually no flexibility at all under the system to allow for differences in circumstance, and the scheme is not related in any way to the income that students will earn. It means, for example, that those who enter the NHS as house doctors will find it incredibly difficult to repay loans because their earnings are so low in the early years of their profession. All of that makes the existing scheme quite straightforwardly indefensible. I am surprised—although, not altogether surprised—that the noble Lord, Lord Skidelsky, did not address himself to the existing scheme.

If we are to support the idea of a move from grants to loans, we must, first, soften that move in the way suggested by my noble friend, Lord Addington: we must allow for some redress for hardship. Everyone from universities who is present in the Chamber knows perfectly well that the access funds do not amount to an adequate safety net; they amount to a ragged net which is full of holes. Secondly, we must accept greater flexibility and a link to the income earned after graduation in the way that has happened with the Australian scheme, which is a great deal fairer than ours. Thirdly, there must be recognition of the fact that students would not be entitled to universal benefit as suggested by the noble Lord but rather to the means-tested benefits such as housing benefit and income support. Until we have a much better framework, I urge the House to accept the annulment of the grant awards as suggested by my noble friend, Lord Addington. I am very honoured to be present and to be able to support my noble friend this evening.

5.35 p.m.

Lord Beloff

My Lords, it is a particular pleasure to follow the noble Baroness. Since the noble Baroness faced me across the table of the Oxford examination school, some years ago, we have confronted one another on many occasions, usually on educational matters. However, this evening is an exception in that we are, for once, in total agreement. I find nothing with which to quarrel in what the noble Baroness said, but I should like to expand on it a little.

As the noble Lord, Lord Addington, said, many speakers in your Lordship's House—all, I believe, with university experience—warned the Government when the loan scheme was established that, even if it was correct in principle (as I believe it is to say that people who derive benefit from society at large might, in later life, be under a moral obligation to repay some of it) it was bound to be a tragic disaster. Indeed, the particular scheme mentioned by the noble Baroness and which the Government adopted was a disaster. It had no merits compared with the Australian scheme to which the noble Baroness referred.

Even I—and I believe my noble friends on that occasion—thought that, at any rate, it would actually work and that the loans would be forthcoming. We also thought that when students applied for loans their letters would be answered and their telephone calls dealt with. However, we now know from the Committee of Vice-Chancellors and Principals which has reported on the matter that nothing could be further from the truth. It is not only a bad scheme, it is also a scheme which has been administered with monstrous incompetence. In fact, looking at the record of the Student Loan Company makes me think that Lambeth Borough Council is a model of business efficiency.

Why did not the Government adopt what was urged upon them; namely, a recovery of some of the costs of higher education through the taxation system, either by means of income tax, national insurance or in some other way which could be clearly related to income and repayable when the income was actually available?

The Government never gave any conceptual argument. They stated that the Treasury said it was not possible: it was technically too difficult for the Treasury to work out a scheme for recovering money in that way. If the Australians can do it, one might think that we could also do it. But, apparently, that argument is not convincing. There is a curious aspect in the whole story. Noble Lords may be aware that the Chancellor of the Exchequer is proposing to sell off the Treasury building in order to provide better for its refurbishment. I urge the Minister to inform his right honourable friend that it is not the building that needs refurbishment; indeed, it is the chaps inside it.

We are fighting a very difficult battle to try to introduce sense into the system. We cannot cover the entire range of hardship. I, myself, have seen the surveys that have been carried out by the ancient universities, especially the University of Edinburgh. There is no doubt that a considerable degree of hardship exists which will, inevitably, lead to the lowering of academic standards. You cannot be worried about whether you can afford a meal the next day and at the same time contemplate the finer points of Aristotelian logic, or whatever it may be. That is a really serious question of which I think many students, particularly the more serious students, are very well aware. They are aware that their great opportunity is being affected by this situation.

There are also categories of students whose existence the noble Lord, Lord Skidelsky, omitted altogether—the mature students. We are always told that education should be a continuous process and that we want more people to go back to higher education at a later stage if they have missed it at an earlier one. But the whole scheme at the moment is heavily biased against mature students for whom many benefits are not obtainable. There is, of course—I am encouraged here by the presence of the noble Lord, Lord Dahrendorf, who knows a great deal about this—also the question of postgraduate students. Why cannot the college of the noble Lord, Lord Dahrendorf, attract more British students to its magnificent programmes of postgraduate research? It is because the provision of support for postgraduates is almost totally lacking.

The noble Lord, Lord Skidelsky, says all this is a consequence of expansion, and expansion has been much applauded on all sides. As noble Lords will be aware, I am unconvinced. My own feeling is that there is no point expanding a system unless you have thought out the way to pay for it. It is quite clear that when this expansion was accelerated—by a very high proportion, as the noble Lord, Lord Skidelsky, said—no serious effort was made to see how it would be paid for. It is being paid for either by putting additional burdens— administrative as well as teaching—upon university staffs who, if not yet reduced to the student level of poverty are moving in that direction, or at the expense of the students themselves. I see no benefit to the economy or to the national well-being by putting out into the world a number of graduates who, by reason of their circumstances if nothing else, are not going to be able to make the contribution which a generation ago we would have expected of someone with a graduate degree.

Therefore, this is a situation which really demands a great deal more thought than is being given to it. The National Commission on Education funked this. The Labour Party's commission on social justice has funked it also. It is time that, from all sides of the House and from all sides of the political spectrum, we began to ask ourselves what is the point of having a system which is badly run, which creates so much hardship and which is unacceptable to the universities themselves as well as to their students. What is the point of this? Is it not better to say that we now need to think very carefully before we go any further with expansion? The CBI wants to have another huge burst of expansion from 30 per cent. of the age group to 40 per cent. but the CBI's pronouncements on public affairs are nearly always beside the point.

Before we do anything of that kind we really must ask ourselves what to do. I have a tiny glimmer of sympathy with the noble Lord, Lord Skidelsky. My favourite solution would not perhaps be the solution that the noble Lord, Lord Addington, has put forward. But in the absence of anything seriously proposed—and in the absence, for instance, of a great increase in the amount of money available to universities to deal with hardship cases, which would be the simplest short-term solution—I feel the House has no option but to support the Motion of the noble Lord, Lord Addington.

5.44 p.m.

Lord Redesdale

My Lords, I would like to make a short speech based on my own experience as a student. Many noble Lords here will be surprised to learn that I obtained a degree in Newcastle. I left Newcastle University in about 1989. I remember that student loans were on the horizon and I remember a cry going up from all of us who were leaving, "Thank God it will happen to somebody else"! Unfortunately for the students around today, it has happened to them.

I wish to point out a few of the realities on the ground today in Newcastle. One of the points that I wish to underline is the fact that the Government have been successful in their attempt to raise the number of students in higher education. That very success has led to some of the major problems for students in Newcastle. I wish briefly to consider two areas: housing and jobs. I know that both areas have been covered by other noble Lords.

I wish first to consider housing. One of the problems with raising the number of students in Newcastle is that it has placed a massive burden on the available housing stock for students. The vast increase in student numbers has meant that there is now a great deal of competition for housing. The houses have not got any better; they are still the same dumps that I stayed in but they now cost double the amount that they cost in my day. I remember renting a house in Fenham in the west end of Newcastle for £14 a week. The price gives an indication of the kind of house it was. I visited that same area and asked students about houses there. The houses there today are still in the same state as when I lived there—in fact they are probably worse—but they are now being rented out at the average rate for Newcastle which is £35 a week.

As regards the point about houses being rented out for 12 months of the year, it obviously does not make any sense to a landlord who is renting out commercially to rent out for anything less than 12 months of the year. The customers of those landlords are students and why should the landlords leave their houses empty over the summer period? Problems can arise if houses are left empty over the summer period. The one good asset in the house I rented was a marble fireplace. However, I remember returning after the holiday to find that it had been stolen. That was rather annoying because we did not get our deposit back. Someone had broken into the house over the summer period and stolen the fireplace. That is an indication of what Fenham was like.

I now turn to jobs. The increase in the number of students has meant a decrease in the number of jobs available to students. The jobs available to students are very limited in nature. At the time we last debated this matter I visited Newcastle and I went into McDonald's and asked whether I could get a job there. The staff said I would be put on the waiting list. If one has to be put on the waiting list for a job at McDonald's, that shows there must be a massive scarcity of jobs because the work there is so badly paid.

The only jobs that are available in some areas are bar jobs. However, due to the unemployment in the area, there is competition for those jobs with people living in Newcastle. Sometimes employers in the area will not employ students for those jobs. As regards summer vacation jobs, if one is a student in Newcastle—I know this from what my friends have told me—and one wishes to obtain a job there, one has to lie and say that one is not a student. If one does not do that, one will not be employed because employers know one will only be employed for a short period of time.

Those are just some of the problems. Although one is bound to keep one's accommodation for the summer period—and I calculated that for 12 weeks in Newcastle one would pay £420 at the lower end of the housing market, which is a significant sum for a student to have to pay—one might have to move away from Newcastle to find a job. That will be a problem in any town with a student population.

The noble Lord, Lord Skidelsky, estimated the cost of the scheme as £443 million. Perhaps I am cynical, but taking into account the rise in student numbers and the fact that a third of those between the ages of 18 and 21 are now students, there must be an enormous saving to the taxpayer because if they had stayed at home and had not become students they would have received benefits. Considering that there is a large amount of unemployment in that age group there must be a saving to the taxpayer.

There is no safety net for students at present. There should be a safety net for the summer period. It is difficult to spot student poverty because it is an age group which will not be the most visible. If one takes out a loan one will probably be able to pay it off, but that does not mean that student poverty does not exist. It is a growing problem.

I hope that the Minister will give one commitment when he sums up and will agree to review the access fund and the university hardship funds. That is the only safety net which exists at present. Many noble Lords are concerned that that is not an adequate safety net because so many fall through it. I hope that the Minister will give a commitment to take another look at the matter.

5.52 p.m.

Baroness Park of Monmouth

My Lords, I too am grateful to the noble Lord, Lord Addington, for promoting the debate. We have all received statistics on student finances which are deeply disturbing. I propose to quote very few, but that is not for lack of data.

It is claimed by the Department of Education that such evidence as is available is fragmentary, anecdotal and insufficient to justify the immediate and urgent review of policy which I believe to be essential. Is it really not enough that the vice-chancellors at their meeting with the new Secretary of State on 2nd December pressed her to review the level of student support as a matter of urgency and said that many students were now in real poverty and that the question was wider than the balance between grant and loan? Is it not enough that the students themselves have carried out reviews of 1,718 students at St. Andrews, 1,266 at Edinburgh, 3,062 at Aberdeen, 767 at Glasgow and 1,000 at Lancaster), all of which tell the same story of serious financial strain?

I could cite many detailed statistics provided both by those surveys and by the CVCP's student financial support survey of home full-time students in the autumn of 1994 which demonstrate clearly the substantial number of students suffering a degree of financial stress and real hardship over long periods. That is seriously damaging to their academic work and hence to their prospects in a society which urgently needs good graduates, not students who have been driven to become only part-time students while notionally taking a full-time course because they are obliged to take low-paid jobs with long hours in term time, even in their last year, to survive.

Employers are looking for bright graduates with transferable skills. They expect much more from a graduate than proof of academic quality. They are looking for young men and women who, in addition, have acted, made music, communicated, been part of teams, taken initiatives or led expeditions. How are students who are already only part-time students because they are stacking shelves at Sainsbury's when they should be spending Saturday nights deciding how to run the world (which is what we did in my day) to afford the time to learn those skills which make a rounded human being and which are part of a university education? This is the time when the young can explore new ideas, make friends for life, learn to respect other points of view—in short, enjoy a truly catholic education. That is the experience good employers are looking for, and many of today's students are not getting it, to the great loss of our country.

There are four issues which I urge the Government to address with immediate practical measures without delay. The first is to create forthwith an additional interim means-tested payment in lieu of housing benefit but directed to the rent and accommodation problem while a proper review of student poverty is carried out. I have never understood or agreed with the Government's extraordinary thesis that students going into higher education have deliberately removed themselves from the labour market and thus disqualified themselves from entitlement to social security benefits, but I am prepared to see some logic in requiring money for students to come from the education budget. But some such money is urgently needed.

In the past, Ministers have said that they wanted, first, to increase the total resources available to students and, secondly, to increase students' economic awareness and self reliance. As I said in an earlier debate, it is difficult to learn to manage money when you have none to manage. Can the Government suggest how to manage a budget based on the following figures? In 1995–96 the maintenance grant outside London will be £2,040 and the loan available will be £1,150 (or £840 for those in their last year). Therefore the total will be between £3,190 and £2,880. The median rent, countrywide, is £42 per week—per room, not per house—for a 52-week year (landlords do not work in academic terms) or £2,184 per annum. That leaves the student without private means (who are the students we are talking about) with between £1,006 and £806 for all other purposes for the whole year. That is between £20 and £15 a week to cover food, heat, books, travel and sometimes council tax.

The Minister will say, "There are those splendid access funds". The difficulty is that those funds serve both undergraduates and postgraduates and the latter receive no loans and need help. Now mature students are to lose their allowances, so they too will need help. Secondly, only between one-half and one-third of applications can at present be met, even partially. It is worth noting that the vast majority of those receiving access funds last year were living in rented accommodation, so that is undoubtedly where the need lies.

However, the whole infrastructure of student life is suffering. One shocking example is the lack of access to libraries, whether to terminals or to books. Edinburgh University library bought no books at all for six months because of lack of funds. If students cannot buy textbooks at £20 each or more and cannot borrow them how are they supposed to do their academic work?

Why should we press for an interim subsidy, whatever we may call it and from whatever pocket of the Exchequer it may come, pending an early review and a fresh approach to student funding? It is because we see a valuable national asset being frittered away. At present, students are living in a state of total uncertainty. They are existing on a variable and unpredictable mix of the student loan, the maintenance grant, possible money from the access funds, possible private or bank loans, occasional possible parental help and possible short-term, part-time jobs with low pay and long hours. Many cannot expect parental help. Most cannot get a decent job in the long vacation which might, as in the past, help them to clear bank debts as they go along. Some are precluded from that anyway because of course work. Only a small number will get help from the access funds, and universities are precluded by law from using their funds to subsidise students. How on earth can anyone plan his or her finances in the face of so many imponderables which are beyond control? I find it disgraceful that student unions have to carry out extensive and complicated debt arrangement counselling as one of their chief functions.

I argued earlier for an interim mechanism to introduce one more element of certainty into students' finances: that they should have the grant, the loan and an interim payment of some kind while the whole system of financing is reviewed and rethought. I agree with other noble Lords that that payment might be made through the existing countrywide mechanism of access funds and could be presented simply as a significant increase in those funds. For instance, in Oxford, 60 per cent. of this year's applications for access fund which are awaiting consideration are from undergraduates living out and therefore liable to pay 52 weeks' rent.

Another simple and thoroughly useful recognition of the need to improve the present appalling lines of communication between students seeking loans and the Student Loans Company would be the immediate provision of a Freephone line for students to use. One of the many problems which students have encountered is the virtual impossibility of getting through by telephone, as they seek to do after successive letters and applications have vanished into the black hole either of a computer or a pending tray. It is surely disgraceful that a student can exhaust a £5 telephone card, bought especially to ensure that he or she actually gets to talk to someone, and still gets no further than being put on hold and dealt with by the answerphone. I know that students have urged that there should be a Freephone link with the Student Loans Company only to be told that that is a Department for Education decision. I appeal to the Minister to please make that decision now.

That lack of communication, coupled with gross inefficiency on the part of the Student Loans Company in dealing with its proper business, has extended even to face-to-face contact. The student loans consultative group, itself made up of representatives of large student unions selected by the loan company, was unable to obtain an interview for three months, while the backlog of 35,000 unprocessed applications built up. It was finally seen in January of this year.

Perhaps I may urge the Minister to lose no time in asking the Secretary of State, whose coming—I am happy to agree with the noble Baroness, Lady Williams of Crosby—has brought such a breath of fresh air and common sense to education, to set up without delay a review body. This should include representatives of the CVCP and the appropriate student bodies such as the NUS and some of the larger student unions—for instance, the Ancients and others such as Manchester, London and some of the new universities, and rethink the whole method of student financing.

In my view, there should be an independent audit, not a domestic one, of the Student Loans Company. Could not the National Audit Office do that? The Student Loans Company should be required to account for its proceedings and to operate a better management structure in future, with more staff allocated to the processing of applications as opposed to the pursuit of debt. I understand that that was done in December in order to clear the backlog. That principle should be maintained.

Students themselves could make some valuable suggestions. They have a great deal of sense. Just as the Government have had the common sense and honesty to revise their policies and management processes for child support, so must they make the Student Loans Company work or scrap it. It has not worked hitherto, although there are hopeful signs of a better approach to problems with the departure of its unlamented head. This is the moment to do some radical rethinking. The Government regard all surveys—and, of course, statistics can be interpreted variously—as tending to be skewed in some way. It should surely be possible to devise questions which will provide honest answers.

The other area in which there needs to be radical rethinking is the method of repayment. Other noble Lords have spoken about that. I say only that I strongly support the proposal, made and rejected long before the recent Labour commission, that repayment should be income related, with repayment linked directly to pay level and collected probably through the national insurance system. Under the present system, whereas in Hansard of 25th January 1994, at col. 950, the then Minister in this House quoted a repayment figure of a mere £11 a week, the figure for a student going down this year will be something like £70, and that figure will rise to £96 per month within five years. That is a daunting prospect.

I have said nothing about the proportion of students who are dropping out, because as yet there is no mechanism for establishing whether the reasons were solely financial. However, the combination of no money, no way of planning to secure it, and the effects on work and future prospects of continual anxiety and stress must be a powerful factor.

We are asked to believe that there is a feelgood factor in the country arising from a gradual and welcome improvement in the economy. I hope that we do begin to feel that. Too many students, however, are experiencing the "feelbad" factor. It is in the power of the Minister to persuade the Secretary of State to exert her undoubted energy and goodwill to change students' lives. All it needs short-term is free phones, a better use of staff in the Student Loans Company, a major increase in access funds, and the setting in train of an objective and radical review, in consultation with the CVCP and student bodies, both of student finances and of the operations of the Student Loans Company. I cannot but wonder whether that monstrous animal should survive.

Long-term, I hope that we shall see a different formula for recovering loans, and a real hope that students will once again be full-time students, able to use the resources of their universities to the full and to emerge as valuable graduates.

6.8 p.m.

Baroness David

My Lords, I must apologise for failing to put my name down in time to get it on the list, but I did want to speak about the effects of government policies over the last number of years on student finances, which I consider to be disastrous as I think quite a few people tonight have also said. I felt that it was important that a good number of us said how totally unsatisfactory are the present arrangements that the Government have put in place.

From September 1986 when students lost their entitlement to supplementary benefit and unemployment benefit during the Christmas and Easter vacations, things have gone from bad to worse—housing benefit withdrawn and vacation hardship grants gone, among others. Then the flawed Education (Student Loans) Bill was introduced; and what an appalling mess the Student Loans Company is now in since the new fast-track application system for loans was introduced in May last year. Chaos and widespread student hardship have resulted. Of 320,000 forms for loans sent out, for the current academic year, only 60,000 were ready for processing at the start of the new term. Thousands of students were left without loans. The company was forced to take on extra staff to try to clear up the mess it had created. Eleven thousand telephone calls a day were being received. At the end of December 1994—that is, at the end of the first term of a new academic year—35,000 students had not received loans. In the context of steep grant cuts, this meant significant student deprivation and suffering.

Many borrowers (over 20,000–7.7 per cent. of those in repayment status) were in default at the end of July. Legal action was in progress against 749 borrowers and judgments had been received or enforced against a further 1,483.

Students do not like getting into debt, and the right reverend Prelate made that clear in his remarks. It is a heavy burden and more and more almost inevitably are in bad debt—up to several thousand pounds at the end of their courses. One survey indicated that nearly half of all undergraduates are finding it difficult to pay their way through university and a quarter are turning to term time jobs. That is not good for their work. In particular, one hears about the number of hours per week which a great many are working. A survey last year showed that, nearly nine out of 10 academics strongly agree or agree that financial hardship is damaging students' academic achievements". Some students have given up altogether. Access funds, which are available only if a loan has been applied for, have proved totally inadequate for need. That has been pointed out by a good many speakers.

I would like to speak of postgraduate students, who face particular problems. This is linked to the decrease in discretionary awards. The Gulbenkian survey shows that they had fallen to 1,700 in 1993–94 from 4,000 in 1990–91. They and part-time students and mature students have had to face many more problems than the ordinary undergraduates who can claim a grant, albeit any grant is now a very reduced one. The average proportion of those in debt rose by nearly 20 per cent. among postgraduate students at St. Andrews. I was there last Saturday, as it happens.

Conditions for students have got worse, too. The increased numbers of students have not been provided with increased facilities. Libraries have not enough space for the larger numbers, nor enough books for their needs, as has already been pointed out. Because of inadequate funds more and more students are relying on books from libraries. The demand for study space in libraries has increased, too, for many reasons, but one is the result of cramped and cold living conditions. Student numbers have gone up by 70 per cent. in the last seven years; library provision by only a few per cent. Many universities have responded to these needs by having longer opening hours. Oxford and Cambridge colleges have long offered overnight study facilities. Bath University library opens until midnight in term-time but the new study centre which it is building will be open all night. More universities should follow these good examples. The rise in accommodation costs—faster than inflation, as the noble Lord, Lord Redesdale, said—is another cause of students getting into debt. Payment for rent takes up such a very large proportion of a student's income.

Could the Government not accept that all is not well in the financing of higher education? Could they institute a proper financial review—as was suggested by the noble Lord, Lord Beloff, the noble Baroness, Lady Park, and others—and not only of higher education but also of further education, as it does not seem fair that an 18 year-old at university should be treated very much more favourably than an 18 year-old in a further education college?

What one fears will happen is that it will be only the well-off who will be able to afford a university education, that it will become for the elite, available to those with well-heeled parents. It is very disturbing that those without considerable support from parents or relations will become reluctant to take on the daunting financial responsibilities and the possibility of large debt at the end of their course that now seems inevitable for a great many young people. This I find deeply disturbing. The possibility of equality of opportunity and education for all up to degree standard will become more and more remote. And that is bad both for individuals and for the country.

6.13 p.m.

Earl Russell

My Lords, not for the first time I should like to thank my noble friend Lord Addington for introducing this subject and for speaking about it with so much expertise. This has been an excellent debate. If someone were to read the Official Report without knowing anything of our names, he would not be able to guess from what has been said to which parties we all belong. The voice of experience seems to be unanimous. I must also declare an interest, both as a university teacher and as a parent. In both those capacities I have reached the same conclusion—that the basic package of support is short by approximately £1,000 a year. In this profession we seem to be fated to be Cassandras: our remarks do not get attention until it is too late for them to be of any use. I remember very vividly sitting on these Benches almost seven years ago waiting to make my maiden speech and listening to my noble friend Lord Jenkins of Hillhead saying that if present policies were to continue this country would be without a world class university in the 1990s. I can still remember the shock and horror which came back from the other side of the House when he said that. The word "alarmism" flashed by a telepathic signal across the Chamber. That remark looks a lot more on the spot now than it did then. One of the biggest reasons why it does so is the collapse of the system of student financial support. I agree with everything said by the noble Lord, Lord Beloff, about the funding of expansion and I will say that, though we have more students in higher education, whether more students are getting more education is something as regards which I have very profound doubt.

We might pause a moment to think why the funding of higher education has been a problem all round the world in the past 20 years. It is the clash of two tendencies. One is that higher education is a quality market. In a quality market competition does not lower the price; it increases it. If one thinks, for example, of fighter aircraft, in 1940 to have the second best fighter aircraft in the world was worth nothing. So one does not think in a quality market of saving a few pounds; one thinks of making the product better. The tendency in all the world's great universities, with the growth of more expensive ways of tackling the big sciences, has been to drive the cost down. That is inevitable. At the same time it has been the tendency of the world in the late 20th century to want to move towards a greater degree of equality and to spread privilege more widely. Those are both good tendencies, but until we can accept that they are capable of conflicting we shall not be in a position to come anywhere near planning our higher education.

I wish to touch on one or two small points. We have heard a good deal about the recent misfortunes of the Student Loans Company. I should like to thank the Minister, Mr. Boswell, for being kind enough to have a meeting with me on that subject about three weeks ago. I found I was pushing on an open door. When one is pushing on an open door, one stops pushing, just as when one is in a hole one stops digging. I did not feel that anything I could do could make the Minister more determined to do something about it than he was already. I agree, though, with what has been said by the noble Baroness, the right reverend Prelate and my noble friend Lady Williams of Crosby about repayment.

Two basic problems arise from this debate. One is that the total package of student support is not big enough. The other is that, even if it were big enough, the breach in the universal safety net will cause hardship. However, I think we need to split these matters up. I shall deal first with the total inadequacy of the package.

The real measure of that is the number of students who are now regularly in employment. That point has been made from every quarter of the Chamber. The right reverend Prelate made it particularly effectively. A lot of universities, including my own, have always had a rule that students may not take full-time paid employment during full term. A lot of universities, including my own, now have institutions to help undergraduates to find such employment during term. One does not get into that kind of position lightly. One does not make the tremendous cultural revolution in one's own thinking involved in encouraging the students to get jobs during term unless one knows very well that what they are getting is not enough or anything like enough. That cultural change is an enormous one and a measure of all our experience of what is really wrong.

I do not think everyone is up to date with it. The noble Lord, Lord Mackay of Ardbrecknish—I gave him notice that I intended to quote this—said on Monday 16th January: most full-time students I know are not seeking employment".—[Official Report, 16/1/95; col. 401.] I am sorry that his acquaintance is so limited. If he would like to come down to King's at lunch time one day, I will enlarge his acquaintance. The noble Lord also said (col. 401): I should have thought that those two conditions—being a full-time student and actively seeking work—cannot apply concurrently". There I agree with what he says. What I am not so sure about is that he agrees with government policy—because for most people it is not now possible to be a full-time student without getting paid work. The effect of that on their academic work is as the noble Lord, Lord Beloff, described it. I cannot put it more strongly than he did. I will let him speak for both of us.

A certain number of comments will always be forthcoming when we try to make these points. Some people will say that it was ever thus. The last time that that point was made in this Chamber I reviewed my memory bank while the speaker was on her feet. It was true that I could think of six cases which were as bad as anything that happens now. But those were my worst six cases in 30 years before the present system came into being. When I compared them with the worst six cases of my past two weeks, they were identical. That is a measure of the change that has come about.

People may ask why the Government got it wrong. It is a fair question. I think the answer is that the survey that was carried out by Research Services Limited when the new system was being brought in, estimating how much money students were getting from social security, got it wrong. I believe the reason was that those who completed their questionnaire filled it in wrongly. That, I suspect, was because, since people read the newspapers, they were afraid of a massive campaign against them for scrounging. If so, I hope that they learn their lesson and are more honest next time they fill in a survey.

I agree with my noble kinsman Lord Henley that one cannot blame the Government for believing independent research. But after four-and-a-half years the Government ought to begin to wonder whether research that contradicts the experience of everyone who knows anything about the subject was perhaps wrong.

It may be said that if the situation were this bad, students would not continue to go to university. I speak to every new pupil of my own in his or her first week and explain roughly what the financial position is. I meet utter incredulity. They have no idea that it is like that. Six or nine months later they turn up and say, "You were quite right". But they do not go to university believing that it will be the way that it is. So the Government cannot rely on the number of applications to prove that matters are all right.

Then there is the safety net. Even if the basic package were all right, there would always be unexpected cases: people who fall ill during the long vacation, who of course cannot get jobs; people who do not get any support from their parents, in some cases because their parents have thrown them out; people who transfer courses, which happens for perfectly good reasons, and who may end up doing a three-year course on two years of grant; people who suffer an accident or an injury, something that is not covered by an insurance policy—a misfortune that leads to extra costs; people whose parental contribution cheque bounces—and during the recession we have had a good many of those instances, which are not the fault either of the parent or of the student; and exactly the same category of people as are entitled to social security in every other walk of life, namely, those who try to find work and cannot. Finding work in Bournemouth during the Christmas vacation is, I have learnt, particularly difficult. If one cannot find work, one ought to have, simply because one is a human being, entitlement to support from the social security system. It is a citizen's right.

The Government may invoke costs. If so, they have not thought all round the problem. My noble friend Lord Redesdale made the point that in many cases students are in competition for jobs with ordinary members of the public. I know that some work in the students' union. But if—to take actual examples—I find my pupils behind the till at Waitrose or behind the counter at Liberty's, they have taken jobs which would otherwise have gone to ordinary members of the public. Because they have those jobs, somebody else is on income support. So the Department of Social Security is paying just as much as it did before; it has merely shifted its saving from one person to another. That is not a particularly useful process.

The Government will undoubtedly invoke the Access Funds. The Access Funds might possibly be useful if they were designed simply to deal with unexpected hard cases. What those funds cannot possibly deal with is a system which is short by £1,000 per student. There is simply not that kind of money in the system. I do not believe that the Minister will deny that. But if they were to deal even with the hard cases, I am not sure whether trebling them would be enough.

The Minister may say that social security is not the ideal means of educational support. If he says that, I shall not argue with him. It is true, just as it is true that social security is not the ideal form of support for people in full-time employment. But in both those cases, if the support that they receive from their normal occupation drops below benefit levels, then as citizens they should have an entitlement to social security support. It is for one thing the only way to create pressure to keep their income up to a level on which body and soul can be kept together.

People may say, "In that case we cannot have the expansion that we want". I say: there is no point in expanding higher education unless what you are expanding is in fact higher education. If people cannot get about £1,000 a year more than the size of the present package, I will advise them in public, as I have done before and, if need be, will do again, that it is much better not to go to university at all.

6.27 p.m.

Lord Morris of Castle Morris

My Lords, Alexander Pope, at the end of The Dunciad, writes as follows: Lo! thy dread empire, Chaos! is restor'd; Light dies before thy uncreating word". That well describes the situation revealed to us by this debate, for which the House is deeply indebted to the noble Lord, Lord Addington. And how many times in recent years has the noble Earl, Lord Russell, reminded the House that the academic standards of many university degrees have fallen because students are now forced to waste their time earning money in term and throughout vacations simply to pay their bills?

On 17th March 1993 I myself pointed out that students of English Literature, my own subject, no longer have time to read the plays of Shakespeare. Assume a reading speed of about 30 pages an hour, and it takes 469.9 hours to read Shakespeare. Assume that a student works a 40-hour week, and it takes 11.7475 weeks (doing nothing else) to read Shakespeare. A long vacation, for which the student now receives no extra financial support, is about 12 weeks. He could not read Shakespeare. He does not read Shakespeare. He gets a job because he has to. And the fact that students now have to fight to get paid jobs in the summer vacation is proof positive, if we needed it, that academic standards have indeed fallen in most of our university subjects.

Lord Skidelsky

My Lords, would the noble Lord accept that the proportion of students getting first-class honours degrees and 2.1s has been steadily rising over the period about which he is talking? If he would accept that, why does he think that that has been the case?

Lord Morris of Castle Morris

My Lords, the proportion has gone up. The reason for that is much more complex than saying simply that standards have risen or that standards have remained the same. There are many ways of getting through examinations, as the noble Lord, Lord Skidelsky, will know better than most; and 2.1 s and Firsts are not a very simple register of the full educational achievement of a student on a university course. It may be an indication that the students have learnt how to pass certain examinations, which may now be set in quite different ways from the traditional ways. But there is no simple relationship between rising standards and the number of Firsts and 2.1s. The present system of financial support for students is chaotic, inequitable and inefficient. It is chaotic because it is, as we have heard from all sides, an ideological mishmash of maintenance grant, loan and the so-called "access" funding, which is really a pitifully small hardship fund.

The value of that maintenance grant declined steadily through the 1980s—by 24.1 per cent. between 1978–79 and 1990–91. In 1979, the standard maintenance grant was 24 per cent. of average earnings; in 1993–94 the grant plus loan amounted to 18 per cent. of average earnings. Access funds provided for universities to give that "targeted" assistance to the most needy are utterly inadequate at a mere £27 million this year.

What sticks in the Government's throat is that the maintenance grant is a grant—that is, it does not have to be paid back. That is anathema to them. So the loans scheme was established in 1990 and, after the banks refused to take it on, a new scheme was produced and a new company—the Student Loans Company—was set up to administer it. The result, to which I shall return in some detail, is chaos.

The Student Hardship Survey conducted at Aberdeen University in September 1994 shows a picture which is as typical as it is disgraceful: 39 per cent. of students had a job during the past academic year; the jobs averaged 12 hours a week; the average wage was £2.90. Yet 77 per cent. anticipate that they will need a job in the next academic year; 78 per cent. said that they were in debt at the end of the last academic year; the average debt, excluding student loan, was £233; and 54 per cent. said that they received money from parents or relatives, excluding the parental contribution, at an average of £371.

But it is not only chaos; it is inequitable chaos. As we heard, postgraduates, part-time students and mature students over 50 are simply not eligible for loans—loans which are shortly to amount to 50 per cent. of all student support. The present scheme, created since 1990, remains geared to full-time undergraduates, even though the composition of the student body has radically changed in recent years, as the Government fully knew that it would.

By 1991–92, 35 per cent. of higher education students in Great Britain were part-time. There are now approximately 30 per cent. more of those students than there were five years ago. Despite their number and despite their importance, they are not eligible for student loans or for other forms of support. It is as clear as day—and has been for many years—that the distinction between full-time and part-time students is vanishing like the morning mist; and that it is the part-time, the postgraduate, the mature and the further education students who are suffering most.

Mature students, as any university teacher will tell you, are often among the very best students. When I was a Principal in the University of Wales, we recruited them joyfully, and they usually out-performed their junior colleagues every year. The Liverpool John Moores University has the highest proportion of mature students in the country, most of them from the local area. At present, the benefits available to them are greater if they are unemployed and claiming income support and housing benefit than if they are mature students. And of course the phasing out of the older students' allowance will exacerbate their position. If they happen to be over 50, it is hardly worth bothering to apply.

Let us take one particular case. There is a mature, divorced student. She had qualified and worked as a nurse, but because of illness she was unable to continue working as a nurse and so had to retrain. She decided to go to university. Poor woman! She is over 50 and so cannot apply for a student loan. She had been unable to work before entry to her course, and so she was not eligible for the mature student's allowance. So her basic and only grant is £2,040. Not surprisingly, she has arrears and an overdraft to contend with. She is in her first year of study. On top of that, come the cuts in grants over the next two years. The only other assistance is from the Access Fund and that is extremely limited. What would Her Majesty's Government advise that woman to do—get on her bike?

The student support system is chaotic and inequitable. But it is also pathetically inefficient. That from a government which exhorts us all to adopt good business practice, seek value for money, set targets and achieve them, make efficiency gains every year and cut the costs to the consumers of education.

The story of the Student Loans Company since its birth in 1990 is a well known disaster. If it were not so ruinous to so many potential students, it might well make a hilarious farce of the kind that the noble Lord, Lord Rix, used to adorn at the Whitehall theatre. At all events, the Student Loans Company has been caught with its trousers down.

Perhaps I may present to your Lordships the information that I have gathered, from usually reliable sources, and ask the Minister to comment on what I say, item by item, when he comes to reply. To assist him to do so, I have given him some notice of what I intend to say.

As I understand it, only 47 per cent. of eligible students took out loans in the academic year 1993–94, and only £19.8 million was repaid. A total of £751.6 million remains outstanding on previous years. At 31st July 1994, 20,628 borrowers (7.7 per cent. of those in repayment status) were in default. I do not think that there is much argument about that.

The "fast-track" application system was introduced last May. Students who had received loans in 1993–94 were sent their application forms during last summer. I repeat what, to my surprise, my noble friend Lady David has already told the Minister. There were 320,000 forms sent out, but only 60,000 were ready for processing at the start of the new term. Is that correct? Loans were significantly delayed, and thousands of students spent weeks trying to secure them. The company was forced to take on extra staff and extend its hours to cope with the problem. Is it true that at one point it was receiving an estimated 11,000 telephone calls per day? Is it true that at the end of last month the company admitted that 35,000 students had still not received their loans?

I am informed that the company itself has been the target of allegations of corruption and incompetence, which suggest serious abuse of corporate expenses and contravention of Whitehall rules on the acceptance of hospitality from clients. Is that true? Is it true that the Department for Education has been forced to employ Coopers & Lybrand to investigate those allegations, and that its report will be presented to the Public Accounts Committee next month? Is it further the case that, notwithstanding that report, the concerns of the National Audit Office are such that it has announced separate plans to conduct a further investigation into the company's operation?

Finally, is it true that the Department for Education documents leaked last November show that the Government have considered privatising that loans scheme and that under one of the options considered students would be charged a commercial interest rate on their loans? If so, it would add a pleasing touch of grim graveyard humour to an otherwise sorry situation, since it would be another example, like British Rail, of the Government failing to control a situation and then crying out to the private sector to haul them out of the soup. If those facts are correct, I must ask Her Majesty's Government "What do you allege as your excuse?"

Student support is chaotic, inequitable and woefully inefficient under this Government. Student hardship has never been greater or more widespread. Students have only two options: walk out or take paid work. Evidence is now emerging that student poverty and indebtedness have led to increased drop-out rates. The CVCP report that full-time students leaving their courses for reasons other than failure between 1991–92 and 1992–93 increased by over 30 per cent.

The Chief Executive of the Higher Education Funding Council for England said recently, While the number of entrants held up, the system as a whole was under-recruited last year which indicates a fall in numbers in the late years of courses. It looks as though people are taking career decisions to break their courses—my guess is that the reasons are financial, with people building up debts, looking round and saying 'I have to do something about this'".

Hear also the words of the Cadbury Report for the CBI—the CBI, not all of whose members are fully paid-up members of the Labour Party. The report said, The Government's approach should be fundamentally revised so that the UK aims for a minimum graduation target of 40% … of young people by the year 2000. Significant increases in higher education participation by mature people should also be expected. This would meet the vital need to upskill the existing workforce". I agree with every word of that, except the nasty word "upskill", which makes me want to outwalk and upthrow.

We on these Benches have great sympathy with the protest against these orders implicit in the Motion of the noble Lord, Lord Addington. But the orders are subject to the negative procedure and would only be withdrawn by the Government if there were a prayer against them. Whatever we may think about the Motion moved by the noble Lord, Lord Addington, it is certainly not what I would understand—I speak in deference to the right reverend Prelate—as any form of prayer. The Motion, therefore, would be simply an expression of the House's opinion—if it were to be passed—which the Government can ignore or accept as they see fit. As such, it could be seen as something of an exercise in futility.

Nevertheless, it makes important points and I would emphasise that we on these Benches are wholly opposed to the implications of the two orders. Having said that, I hope that the noble Lord will be content with the expression of opinion in debate and not press his Motion to a Division. The reason for this is simple. Power, as Mao Tse Tung is reported to have said, grows out of the barrel of a gun. If the orders are to be withdrawn, there are procedures for so doing—the prayer, the gun out of which power grows. We would not support them for reasons which my noble friend Lady Hollis gave the House last week in the debate on the Cleveland order, and the whole matter of our attitude to secondary legislation. If there is no serious gun, while welcoming the expression of opinion, we see no point in firing off blank shots.

6.45 p.m.

Lord Lucas

My Lords, we have had a constructive and often passionate debate. I can assure the noble Lord, Lord Morris of Castle Morris, that although, as he says, this Motion would not in any way annul the orders, we shall pay close attention to everything which was said today.

We believe that students are properly provided for in a fair and flexible system of support. I shall enlarge later on why we hold to that view. However, we keep an open mind on the issue. We are ready to listen to criticism and noble Lords who have spoken may think that that is a good thing in the context of today's debate. We fully accept that we should pay careful attention to the needs of specific groups of students within the broad framework of support. Quite clearly we are not thinking in the same terms as the noble Earl, Lord Russell, or the noble Lord, Lord Morris, when they talk implicitly of an extra £1 billion for student support.

As noble Lords will know, we are conducting a wide-ranging review of the higher education system. Once we have crystallised our views on its aims and purposes, on what education it should be providing to whom, we shall turn to the questions of funding and student support. All that has been said today and any further evidence which noble Lords and others may subsequently offer, will be a welcome contribution to that review. My noble friend Lord Beloff will no doubt be comforted by that commitment.

In 1979 one in eight young people were going on to higher education. Now, almost one in three enters higher education, and those from social classes C1 and C2DE are in the majority. The numbers of mature students have also increased dramatically. The Government are proud of those achievements.

There was some opposition to student loans when we introduced them in 1990. The debate now is not about whether students should contribute, but about how they should do so. There seem to be plenty of models to choose from, each with its own protagonists. Some call for a graduate tax or for a national insurance surcharge. Some want a system for student support based entirely on loans, yet others call for students to contribute towards the cost of their own tuition as well as their maintenance.

I shall not venture on to those farther shores today. I can give the right reverend Prelate the Bishop of Chester and the noble Baroness, Lady Williams of Crosby, the comfort that we shall seriously be considering all the alternative models proposed. If they have specific points at which they want us to look, they should add them to the many submissions that we are already receiving on the review.

Lord Beloff

My Lords, perhaps my noble friend will give way. My noble friend and his department will be saved a great deal of trouble if they simply re-read Hansard from when the student loan system was introduced. All these questions were then ventilated; all the possibilities were argued. The fact that the Government took no notice of what the House said is the reason why we keep coming back.

Lord Lucas

My Lords, occasionally we disagree with my noble friend Lord Beloff. I hope not too frequently because, hearing him say things like that from behind me can be distinctly unnerving. My noble friend Lord Beloff, the noble Baroness, Lady Williams, and others suggested that the Government should introduce some form of income contingent repayment administered through the tax or national insurance system. As I said, we shall look again at those systems. However, when we have looked at them in the past we concluded that loan schemes involving collection through the tax or national insurance systems are not the panacea that they are often made out to be. The administrative complexity and costs involved seem to be seriously under-estimated for employers as well as for the Government.

Baroness Williams of Crosby

My Lords, I do not want to bowl a yorker from behind at the Minister. However, I ask that he regard with great scepticism the kind of objections that the Treasury raises. It raises objections to almost every efficient scheme.

Lord Lucas

My Lords, I am sure that the noble Baroness has a great deal of experience of that.

There is a great deal of scope to amend the repayment terms within the broad framework of the current scheme and we shall certainly be looking at any submissions. A number of noble Lords suggested that there should be submissions to that effect.

The Government considered the possibility of collection through the tax or national insurance systems when the current scheme was being set up. But we concluded that the current arrangements were better. Despite the problems in paying out loans this year, we continue to believe that the system is fundamentally well designed. However, the proper place for a wide consideration of such issues is our review of higher education.

Earl Russell

My Lords, if the system is fundamentally well designed, why have the Government been unable to get anyone else to notice?

Lord Lucas

My Lords, to my best knowledge a great number of people have noticed, including those who set policy in the Labour Party and the National Commission on Education.

To turn to the principal subject of this debate: the current system of student support. As I have said, the Government believe that students are properly provided for in a fair and flexible system. Our belief is based on clear and powerful evidence. Let me set out the facts as we see them: students' total resources in grant and loan were increased by 25 per cent. when loans were introduced in 1990. Since then, resources have increased each year in line with forecast inflation. Students, as a group, are better off than they used to be.

Lord McIntosh of Haringey

My Lords, will the noble Lord permit me? Is he seriously saying on the one hand—?

Baroness Trumpington

My Lords, order! The noble Lord was not in the Chamber for the whole of the debate. My noble friend should be allowed to get on with his speech.

Lord Monkswell

My Lords, I thank the Minister for giving way. I have sat through the whole debate. I was not intending to intervene, but the statements by the Minister call for it. Can he explain to the House since when have students been better off?

Baroness Trumpington

My Lords, I really believe that my noble friend should be allowed to get on with his speech.

Noble Lords

No!

Lord Lucas

My Lords, I am quite happy to write to both noble Lords who have risen to give the statistics which underline the statement that I have just made. I can assure the noble Lord that that is a figure which we hold to.

The noble Earl, Lord Russell, suggested that student support might be inadequate because the SIES (student income and expenditure survey) underestimated benefits. The introduction of the loan scheme more than compensated most students for loss of benefit. The Government's assessment was not based on the figures given by students in the survey, but took account of figures from the Department of Social Security.

We treat our students very well compared with most other countries. Student loans are offered on very good terms. Interest is effectively nil in real terms and repayment can be deferred until income reaches 85 per cent. of national average income.

The Government are very conscious of the need to keep repayments at a manageable level. We shall review the repayment terms as necessary as the volume of debt decreases, let alone looking at them again as part of a higher education review. Student numbers and participation rates have increased dramatically and the drop-out rate from higher education courses has remained fairly steady. Public funding for mature students has held up and mature student numbers have increased rapidly.

All these facts go to show that young people are not deterred from entering higher education by our current support arrangements. They also provide, to our mind, convincing evidence that our overall policy is fair and reasonable and that the broad framework that puts the policy into effect is working satisfactorily.

The noble Earl, Lord Russell, suggested that there was some evidence of declining standards in universities in the United Kingdom. Quality assessments undertaken by the higher education funding councils suggest that the quality of teaching and learning in those subjects so far assessed continues to be satisfactory or better in 95 per cent. of cases and there is no evidence that the personal circumstances of students have affected that.

Lord Beloff

My Lords, will the noble Lord give way?

Baroness Trumpington

My Lords, no.

Lord Beloff

My Lords, I cannot agree with the Whip. This is perfectly normal; I took a part in the debate. I am entitled to ask my noble friend a question. Is it not a fact that all he has said so far is contradicted by the Committee of Vice-Chancellors and Principals in their communication to his right honourable friend? Is there much point in going on trying to tell us things when we have a much better source of information in that committee?

Since I may have upset the noble Lord, I am going to give him a present. I suggest to him that as England has won a test match it would be very interesting to be in Australia for the final test. I suggest to the noble Lord that he goes to Australia. I am perfectly willing to see public funds spent on that. In between watching the cricket he can find out why the Australian Treasury manages to collect money which the British Treasury is unable to.

Lord Lucas

My Lords, I hope that later in my speech I shall turn to matters which may answer part of the question which the noble Lord has just asked. We believe that there is no evidence that quality in British universities is declining. Indeed, the quality of exams and degrees is something which the universities themselves maintain. We trust them to do it and we have no doubt that they are fulfilling that function.

Of course, I have only painted the broad picture. Individual students' needs, both personal and for their courses, vary considerably. Our system of support has to respond to areas of potential hardship and it does so in several ways. First, there are a number of additional allowances which are payable on top of the main grant. There are allowances available for extra attendance on courses, to meet the needs of disabled students for personal help and equipment, for students with dependants and, for certain students, travel costs.

Secondly, social security benefits have continued to be available for certain vulnerable groups, disabled students and students who are single parents. Partners of students are also able to claim, subject to the normal rules. Last but by no means least, the Access Funds are there to help those students who are in particular financial difficulty but whose needs are not met by the broadly defined support arrangements. The funds are worth £26.7 million in 1994–95. This total will rise to £28 million from 1995–96; the third substantial rise in three years.

There will always be some students who get into financial difficulties that the system of student support cannot overcome. No practicable system will ever be perfect. But we are not aware from evidence in our possession of any properly researched evidence of more widespread hardship. We have heard today a number of individual examples. We have also heard information from surveys. What we need to move to now is the sort of quality of research which noble Lords who are active academics will recognise. If I were to try to convince an academic who believed that, say, 16th century monks were largely celibate, that he was wrong, by quoting one or two examples, he would not take me seriously. What we require is some properly researched evidence and universities are in the best possible position to supply that. They run the Access Funds and they see the hardship. The noble Earl, Lord Russell, has given us several examples today of his own experience. If that were to be distilled into something which was made available to the Department for Education, you may be certain that we would take that seriously.

The Motion tabled by the noble Lord, Lord Addington, calls for students to be given, during the long vacation, the same rights to housing benefit and income support as the rest of the adult population. The Government have long believed that a general student dependence on benefits is inappropriate and undesirable.

The benefit system is there to serve social and not educational purposes. Students should look to the student support system while they are studying. We are confident that the additional resources provided through student loans and the Access Funds have more than compensated most students for the unavailability of benefits since 1990. A blanket restoration of eligibility to benefits would once again foster the sort of dependency that we sought to end; it would be inefficient and it would discourage students from looking for vacation work. My noble friend Lord Skidelsky pointed out the sort of amounts that he estimates might be involved. I have no government estimate with which to compare that.

The noble Lord, Lord Addington, said that students would receive more from social security than they receive from student support. It is not legitimate to compare social security with student support. Students are now expected to bear some of the costs of their own support because higher education is an investment in their own future. Social security is designed for those who are involuntarily dependent on resources provided by the Government. Some groups, such as single parents and disabled students, have retained their eligibility for benefits throughout the year but that is for specific reasons related to their particular conditions.

We are convinced that our present approach with closely targeted provision is preferable in every way to a return to reliance on social security. In this context, the noble Baroness, Lady Williams of Crosby, suggested that summer jobs and other employment should be provided by universities. That is an interesting idea. It is, of course, primarily for the institutions themselves to consider what jobs they might want to provide either by way of course-related jobs for their students, as the noble Baroness suggested, or otherwise, but we would encourage them to think along those lines.

Even if almost everyone who has spoken in the debate had not raised the subject of the Student Loans Company, I would have wished to do so. I would not wish to reply to the debate without apologising for the way in which the Student Loans Company failed tens of thousands of students so badly last autumn. The picture which the noble Lord, Lord Morris, paints in terms of figures is, I believe, broadly accurate. I will write to him after the debate to confirm the exact figures. The Government were, and are, extremely concerned by that lapse from the extremely high standards that we have come to expect from the company. Both the company and the Government have taken action to remedy the problems as fast as possible. The backlog has now almost entirely been eliminated. The company is devising measures to avoid any recurrence and will take them out to wide consultation as soon as possible. I am very comforted by the confidence which the noble Earl, Lord Russell, places in my honourable friend Mr. Boswell.

The noble Lord, Lord Morris, asked certain other specific questions. Since he was kind enough to give me a hit of time to look up the answers, I shall do my best to give them to him. The noble Lord asked about allegations of impropriety at the Student Loans Company and about the plans of the National Audit Office to conduct a further study into the company's operations. I can confirm that my right honourable friend was made aware last October of the allegations made against certain executives of the company by a former employee. She immediately ordered an investigation, as part of which Coopers & Lybrand were contracted to carry out a forensic audit. The investigation is nearing completion and its full conclusions will be reported to the Public Accounts Committee in the usual way. It would not be appropriate for me to comment any further at this stage.

The National Audit Office's work programme is, as noble Lords will know, a matter for the Comptroller and Auditor General. However, I understand that the National Audit Office plans to undertake a study of the value for money being achieved at the Student Loans Company. The plans for the study are not yet finalised, but I believe that it is unlikely to cover matters relating to the impropriety investigation.

The noble Lord also asked whether the Government have plans to privatise the loans scheme or to introduce commercial interest rates. The Government keep the operation of the loans scheme under review, but I can assure the House that we have no current plans to privatise the scheme—nor do we have any intention of requiring students to pay commercial interest rates. That would in any case require primary legislation.

The noble Baroness, Lady David, asked whether the Student Loans Company was too hard on defaulters. It is the company's duty to protect the taxpayers' money and we believe that it is firm, but not excessively so. Borrowers are given every opportunity to apply for deferment or to begin repayment before the company instigates court action.

The noble Lord, Lord Morris, also quoted a number of other figures. I shall write to him to confirm whether they are accurate.

I have listened carefully to what noble Lords have said today. I hope that I have been able to reply to the main points that have been made. I shall review Hansard tomorrow and write in reply to any substantive points that I have missed. As I said, we firmly believe (on the basis of the evidence that we have) that students enjoy a reasonable level of support during their studies. By providing this support and funding a huge expansion of higher education, the Government have shown their wholehearted commitment to students and to higher education. If the noble Lord, Lord Addington, chooses to press this to a vote, I urge your Lordships to vote against the Motion.

Lord Addington

My Lords, I must first thank all noble Lords who have spoken in this enlightening debate, which has shown the almost total lack of confidence in the current scheme. The noble Lord, Lord Slcidelsky, said that he was not sure whether I had the right suggestion; but he did not like the current scheme very much in any case. That was as near as the Government got to a wholehearted endorsement in the debate.

I feel that it is the function of this House to ask another place to think again. With one or two minor exceptions, that is our only real function. In those circumstances, I feel that when we see something that we think is wrong, we should ask another place to think again. If we do not do that, there is very little point in us being here. In those circumstances, I commend the Motion to the House.

7.7 p.m.

On Question, Whether the Motion shall be agreed to?

Their Lordships divided: Contents, 38; Not-Contents, 86.

Division No. 1
CONTENTS
Acton, L.	Harris of Greenwich, L.
Addington, L. [Teller.]	Howell, L.
Beaumont of Whitley, L.	Jenkins of Hillhead, L.
Beloff, L.	Jenkins of Putney, L.
Chester, Bp.	Kilbracken, L.
Dahrendorf, L.	Lawrence, L.
Darcy (de Knayth), B.	Lester of Herne Hill, L.
David, B.	Longford, L.
Donaldson of Kingsbridge, L.	Mar and Kellie, E.
Falkland, V.	McNair, L.
Fisher of Rednal, B.	Meston, L.
Hamwee, B.	Mishcon, L.

Monkswell, L.	Taylor of Blackburn, L.
Park of Monmouth, B.	Thomson of Monifieth, L.
Rea, L.	Tordoff, L.
Redesdale, L.	Warnock, B.
Rodgers of Quarry Bank, L.	White, B.
Russell, E. [Teller.]	Williams of Crosby, B.
Seear, B.	Wyatt of Weeford, L.
NOT-CONTENTS
Addison, V.	Craig of Radley, L.
Astor of Hever, L.	Craigmyle, L.
Astor, V.	Cranborne, V. [Lord Privy Seal.]
Boardman, L.	Cumberlege, B.
Borthwick, L.	Dean of Harptree, L.
Brabazon of Tara, L.	Denham, L.
Bridgeman, V.	Dilhorne, L.
Brougham and Vaux, L.	Dixon-Smith, L.
Burnham, L.	Dundonald, E.
Butterworth, L.	Faithfull, B.
Cadman, L.	Flather, B.
Carlisle of Bucklow, L.	Fraser of Carmyllie, L.
Chelmsford, V.	Goschen, L.
Chesham, L.	Greenway, L.
Clark of Kempston, L.	Hacking, L.
Cochrane of Cults, L.	Haig, E.
Colwyn, L.	Harmar-Nicholls, L.
	Henley, L.
	Hesketh, L.
HolmPatrick, L.	Pender, L
Howe of Aberavon, L.	Peyton of Yeovil, L.
Howe, E.	Quinton, L.
Hylton-Foster, B.	Rankeillour, L.
Inglewood, L. [Teller.]	Rawlings, B.
Kilmarnock, L.	Renton, L.
Kimball, L.	Renwick, L.
Lauderdale, E.	Rodger of Earlsferry, L.
Leigh, L.	Rodney, L.
Lindsay, E.	Shaw of Northstead, L.
Long, V.	Skelmersdale, L.
Lucas, L.	Skidelsky, L.
Lyell, L.	St. Davids, V.
Mackay of Ardbrecknish, L.	Stanley of Alderley, L.
Mackay of Clashfern, L. [Lord	Stewartby, L.
Chancellor.]	Stockton, E.
Marlesford, L.	Strange, B.
Mersey, V.	Strathclyde, L. [Teller.]
Miller of Hendon, B.	Thomas of Gwydir, L.
Mills, V.	Torrington, V.
Moyne, L.	Trumpington, B.
Murton of Lindisfarne, L.	Ullswater, V.
Norrie, L.	Vivian, L.
Northesk, E.	Whitelaw, V.
Orkney, E.	Wynford, L.
Pearson of Rannoch, L.

Resolved in the negative, and Motion disagreed to accordingly.

House adjourned at a quarter past seven o'clock.