§ Mr. Gordon BrownTo ask the Chancellor of the Exchequer if he will estimate the number of students supported by covenants who, following the measures announced in the Budget will(a) receive an increase in grant from their local education authority and (b) receive no such increase; and if he will give (a) the saving to the Exchequer in withdrawal of the tax relief on student covenants and (b) the expected cost of any increase in grant payments which results from the Budget measures.
§ Mr. Norman Lamont[holding answer 12 April 1988]: Under the Budget proposals student covenants made on or after 15 March 1988 will not be eligible for tax relief. But students receiving payments under covenants made before 15 March will continue to be eligible for tax repayments under the previous rules. The changes in levels of grant paid by local education authorities apply essentially to new students.
The yield to the Exchequer from the withdrawal of tax relief on new covenants to students is estimated at £35 million in 1988–89 rising to £135 million by 1991–92. The cost of the increase in grant payments is estimated at some £15 million in 1988–89 rising to about £50 million in 1991–92.