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Dr. Hampson : The hon. Gentleman should not shake his head because that issue was one of the 13 points. We have had 20 years since then of "Shirley-shallying" by Government after Government, Labour as well as Conservative. When Lord Preston was political adviser to the Department of Education and Science, at the time that the hon. Gentleman was an adviser to the Government, he advocated loans. It is extremely disappointing that, as in every other aspect of policy of the Labour Front Bench's policy review, here too, it is grubbing around for votes, student votes.

As my right hon. Friend the Member for Brent, North (Sir R. Boyson) has pointed out, everybody knows that the present system is far from perfect. We should not be debating the principle of whether we have loans, but the nature, scale and detail of the best loans scheme.

Mr. Harry Greenway : Is it not a fact that the average student borrows about £400 a year at present?

Dr. Hampson : It is, in part, the reason why there should no longer be a debate about the principle. As my right hon. Friend the Secretary of State pointed out, a student should invest against his or her future earnings. Obviously, we should like students over 18 not to be so dependent on their parents. I am sure that Opposition Members would advocate that, as has the National Union of Students many times.

The figures on what has been happening are damning. About 300,000 students in higher education are not getting their full whack of parental contribution or are getting no contribution. We have seen the value of the grant fall steadily under all Governments, but it fell most during the financial crisis of 1976, under the last Labour Government. That Government were the only Government since the war to reduce the rate of student participation in higher education. However, Opposition Members want to forget their track record.

We must produce a scheme that does more than produce only a modest financial gain to the system. We need a scheme that genuinely opens up access. That is the key reason why I changed my mind. Critics of the Government, such as the team from the London School of Economics, have been critical of the scheme, but all have said that the present extraordinarily generous grants system is an incubus on the growth of higher education. The high extra unit costs it causes deny us the ability to open up access. We have the only university system in the western world to have put hard limits on the numbers of students that universities and polytechnics can take. They could take more students--and they must--but we have said no, because that has been the edict from the Treasury. If it is at all possible, it must make sense to recycle money in the system so that more people can be put through it for the given available resources.

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I wish to reiterate what my hon. Friend the Member for Cambridge (Mr. Rhodes James) said to my right hon. Friend. The context cannot be ignored. My right hon. Friend has already made a strong statement, but I urge him to acknowledge the vital importance of distinguishing between the cost of education and the cost of maintenance. At this stage we should not be talking--or encouraging the universities and polytechnics to think--in terms of full-cost fees being paid by students through loans. We should certainly be encouraging a more open-market system of providing courses and drawing people into education.

However, we should be realistic about it. If 80-odd per cent. of medical students are already from social groups 1 and 2, where will we suddenly find a great new surge of students who are willing to pay the huge fees that medical courses would involve? If we are to open up the market, it must be with automatic funding of fees as now, so that students can shop around and we can have a more competitive system between institutions as students carry the money with them. Indeed, that is the trend we have begun by reducing the amount of direct funding and providing it more through students.

For heaven's sake, however, the impression should not be given that students will have to take loans to cover full-cost fees. That is what some vice-chancellors have said, and possibly they have done so to try to blackmail the Government to put more resources into higher education.

I must enter one caveat. If we are to have a more competitive and open system I urge my right hon. Friend to allow polytechnics, if they so wish, to change their names to incorporate the word "university". My right hon. Friend's predecessor did not allow that when we were discussing the Education Reform Bill. If we are to have an open market we should have level playing fields for all parts of the system. The polytechnic part of that system is regarded by most people as the second division, and that is unfair.

It is already true that the university system is not monolithic. There is diversification of standards and provision within that system and it is not fair that polytechnics are regarded as second best by so many parents, students and teachers. We should be able to refer to the university, or institute of science and technology, in Leeds or wherever. If the universities and the polytechnics were all considered universities, as in the United States, that could have a profound effect on achieving the open and competitive system that my right hon. Friend wants. I cannot understand why we so rigidly deny polytechnics their freedom in this respect. We gave them the power to change their names, but then we tell them that the Minister will veto any use of the term "university".

Some of my hon. Friends raised their voices at the comment of the hon. Member for Blackburn that I had likened what we are getting into with student loans to the community charge. I did that with an eye on my right hon. Friend the Member for Brent, North. Many of my colleagues welcomed the principle of abolishing the rates, but they did not look too closely at the details of the community charge until it was well down the line. That is my principal objection to the Government's current proposals.

My hon. Friends--one of them is not present at the moment--may have been critical of my remarks, but I believe that it would be better if we were talking about private money issued by the banks and collected by them.

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To the extent that that money is an unsecured loan, it needs Treasury guarantees. That is exactly where we started in 1979-80. We are now, however, talking about public money which the Government are paying the private sector, through a quango, to disperse. They will then pay the private sector to collect that money back. It will not be additional private money, but public money and considerable administration costs will be attached to it.

Time and again we start by trying to make things simpler, but end with more confusion. Students will be involved with at least four basic bodies. They will still be dependent on their parents because the £400 that we are offering will not avoid that. They will also be dependent on their banks and their credit cards, just as now. The German system provides £190 a month, not £400 a year. Our students will still be involved with their parents, the banks, the new quango, their own education institution-- university or polytechnic--and with their local education authority. Why is all that necessary? In 1979-81, my right hon. Friend the Member for Brent, North was largely instrumental in the work done on a banking scheme. Some of the issues were outlined in a document which said that the student "armed with his certificate"--from his institution could

"go to the local bank to negotiate a supplementary loan up to a set maximum".

What is wrong with that simple system? When one signed on at the college one could take that certification to the bank and receive an overdraft just as now.

Mr. Jackson : That is precisely what we are proposing.

Dr. Hampson : But we now have an institution that is owned by the banks collectively, which is sitting in Glasgow and which employs very expensive staff.

We should be able to do what was proposed in 1979-81. We have not got rid of the LEAs. In paragraph 19 on page 8, the document states :

"If a central agency for student loans were established there would be a strong case for centralising all mandatory student support, whether by loans or grants. It would make little sense for LEAs to retain responsibility for the grant element in a combined scheme ; such an arrangement would be confusing to the clients and a recipe for administrative confusion, and would certainly be more expensive overall".

The document also pointed out that when Rayner studied the present system he concluded that it was "chaotic, confusing and over-expensive". If we are to use the banks, which is an admirable notion, the money used should be the banks' and they should administer and collect it, provided that the Treasury gives an ultimate guarantee.

The proposal failed before because the banks insisted on the creditworthiness of the individuals and the Government rightly said that they could not allow that. The banks then said that the Treasury would have to give guarantees on every loan. In 1981-83, it was perfectly understandable that the Treasury resisted that proposal. We had a huge public sector borrowing requirement crisis and in those days the convention was that every guarantee, whether called or not, fell against the PSBR. Frankly, the world has changed somewhat. I cannot believe that we could not find the means by which the Treasury could guarantee defaulters after a time. That happens in so many other systems.

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Under the current proposed scheme, we will write off a debt after 25 years. It should be possible for the banks to do their best to get their money back, just as they do with any of their clients. Students will be valuable clients. Are we suggesting that students will borrow on a loan and then suddenly walk away from the bank and disappear into the blue and never have a bank account? There will be some defaulters, but the banks will pick up most of the loans and, to the extent that there will be a shortfall, I believe that it would be fair for the Treasury to guarantee paying back those loans, after a certain time.

The other big issue raised in 1981 was an absolutely basic political one. We are talking about young adults, and we asked why they should be dependent on a system that palpably failed--the parental contribution. One alternative to consider is simply to replace the parental contribution. One could still expect such a contribution from the top income earning families. It is a good Conservative principle that the family should look after its own if capable of so doing. Richer families are obviously more capable of maintaining--not paying the tuition fees--their children in higher education. Obviously there is a case for providing loans on an easier and more generous basis than under the scheme proposed. In that way the vast bulk of students would not have to depend on their parents. We do not know what the current options have been or what the arguments against them have been. We have not seen any working paper, but I do not see why there should be any trouble in providing the House with that. So far, why my right hon. Friend has pitched for the particular proposal before us is not convincing. It looks suspiciously as though it is the worst sort of compromise. It is patched up all over the place in different elements of the scheme, and it is a compromise especially in relation to the Treasury. Let us consider the interest-free argument. I have a feeling that the Treasury is uptight about the overall scale on which it will have to provide the money. So we have a tight ceiling on the global amount and a low ceiling at which each student can borrow. In future, every year when the Department of Education and Science tries to raise the total for the loans scheme or to raise the level available to an individual, the Treasury will have an almighty argy-bargy about it. In return for the limits imposed it looks as though it has been agreed that to make the scheme more saleable to the public there should be no interest charge. That is nonsense given some of the principles involved--to circulate money on as large a scale as possible to give more people greater access to higher education. There should be an interest charge and it need not be a big one--virtually every other similar system has interest charges ranging between 3 and 4 per cent. It is still extraordinarily cheap money and such interest charges change the gain factor in terms of the amount of money available for other students. What is the advantage of the loan being interest-free? It would be far better to do something further about parental contributions.

The scheme will not be seen to be fair and will not meet with public and student acceptance unless we get the repayment proposals right. In that regard I agree entirely with my right hon. Friend the Member for Brent, North. That was the conclusion of all the Government working papers between 1980 and 1983. The argument then advanced was that the Inland Revenue would not act as a debt collection agency for the Government. I suspect that

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it will not cause what my right hon. Friend the Secretary of State called "excessively burdensome" bureaucracy. There is no evidence that it will be excessive. All operations such as this will be burdensome, and the present system using the new quango will be burdensome. The real Treasury argument was that it would be a rotten precedent because there might be others in Government who wanted to use the Inland Revenue computer to obtain money from people. That is the real issue and it is a perfectly valid argument. However, the Government have to judge which is the worse of the arguments. It might be better to use this system because it would result in a much better loans scheme, one which would ultimately save the Treasury money and-or provide access for more students in higher education. That is the route that the Department of Education and Science wanted to take, and that is the route that was taken in Australia. Why is it that, even within the English-speaking Commonwealth, this supposedly critical principle that the Treasury stands by has been so obviously and often breached?

That alternative is the only way successfully to relate the repayments to income. Instead we are proposing a broad cumbersome threshold of 85 per cent. of the national average income before repayment begins. Beyond that, no matter what the differential incomes are, students pay back at a fixed rate. We should have a simple coding change for the period of borrowing, not a graduate tax for life, and this is where I differ from my right hon. Friend the Member for Brent, North. If earnings rise or fall, if someone was ill or out of work, there would be an automatic change. That must be the way to do it.

The alternative of using national insurance takes a broad-brush approach and is not so finely tuned. It breaches a principle of the fund. We could possibly introduce an employers' skill levy as an alternative, although I do not particularly advocate that. We could have a skill levy which would be collected by employers and which could even go for other aspects of training, as well as paying off loans for higher education. There are loans for training through the MSC and perhaps we could dovetail them. There are a number of alternatives, all of which have more attractive features than those recommended to the House. Why have they been rejected?

Would a loan scheme provide a disincentive? If the repayments are finely tuned and equitably related to income, the problem of disincentive will be much less. But it would be wrong for Conservative Members not to take account of the points raised by some Opposition Members who said that the change from the present to the new system would create some disincentives. I stress that the DES recognised that, and in earlier papers said :

"It is however most important to emphasise that while the effects on participation of the introduction of loans cannot be accurately predicted they must include a risk of decline at least initially. Experience abroad cannot serve as a guide here since in almost every foreign case the introduction of loans increased the public support available for education."

During the short period of readjustment, until attitudes come into line, there will be some disincentive. However, Ministers are correct to say that there is no positive correlation between the level of financial help offered to students and participation rates. Evidence from around the world shows that that is so, but in the short period of readjustment from the present to the new system we might find a problem.

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I beg my right hon. Friend the Secretary of State not to saddle us with a second-rate system, not to rush ahead too fast, but to pause, to be more cautious and to reconsider the detail. My right hon. Friend has earned a reputation of being a genuinely listening Minister. I urge him to listen now so that we may have more of a financial return from the system, more students entering the system and a fairer system.

Several Hon. Members rose--

Mr. Deputy Speaker : Order. I hope that the House will continue to bear in mind my earlier appeal for brief speeches.

12.4 pm

Mr. Henry McLeish (Fife, Central) : There have been few occasions in the post-war period when there has been a consensus about the need to expand entry into higher education. Interestingly, there have been few occasions when higher education has been so high on the political agenda. Why, instead of discussing access, equal opportunity and excellence, have we today become bogged down in debt, debtors, deferrals and defaulting? There seems to be a mean response to what should be a time of enthusiasm and imagination about the expansion of the higher education sector.

My hon. Friends have eloquently expressed the public policy issues involved, which are worth repeating. First, Ministers have given no assurances that introducing such a scheme will improve access. That issue should form part of the debate which will continue in future months. Secondly, it is quite clear that, at least in the initial period and in the next century, a high financial burden will be paid by the taxpayer for the loans scheme. The Government must tell us why, when the initial intention was to reduce the burden on the state, the scheme being devised will increase the burden over the next 20 to 25 years.

The third issue shows the difference between the Government and the Opposition. Why do the Government constantly talk about investment in education without giving adequate attention to their economic performance and the nation's needs generally? The balance of the debate in the Conservative party has swung far too far away from the nation and its economic performance to the burden which is exerted on the individual.

Fourthly, the Opposition recognise that the Conservative party is fast becoming the party of increasing debt. Is it right that, after a four-year course, in the mid-1990s students will face a level of indebtedness which will not only worry them when they leave university or higher education but will be a burden on them when they are studying? They will have to face the problem of how to cope with this level of indebtedness.

The hon. Member for Leeds, North-West (Dr. Hampson) tackled the problem of the proposal's workability. There is a particularly Scottish dimension to this debate. There are no Scottish Conservative Members in the Chamber this morning. Where are the Scottish Office Ministers? Where is the Education Minister? Is this not important? Where is the Secretary of State for Scotland? It is important to put on record that while people throughout the country are genuinely concerned

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about higher education, a portion of the Conservative party clearly does not find it suitable, convenient or interesting enough to be here.

There is a higher proportion of Scots in higher education than of citizens from elsewhere in the United Kingdom. There are currently 83,000 full-time students and a great proportion have state awards. Therefore, when the Government devise and prepare to implement the proposals they must bear that factor in mind.

An important social class factor must also be taken into account. In the United Kingdom the proportion of skilled, partly skilled and unskilled parents who send their children to university is approximately 29 per cent. of the total. In Scotland it is 34 per cent. The key issues of access and indebtedness have always been associated with those who may have difficulty obtaining the finance to undertake higher education courses. There will be an additional financial burden on Scottish students and parents which will have a higher impact on them than on those in the United Kingdom. The problem of the four-year degree course has been highlighted by hon. Members. Figures can always be debated and statistics can always be misconstrued, but two specific figures are now under discussion. It is possible that in the mid-1990s, not far off the year 2000, Scottish students will be faced, after a four-year course, with debts of approximately £10,000 over five years. How many parents have made the quantum leap from the concept of a top-up loan to such a level of indebtedness? Let me put it another way ; those students will be faced with a mortgage repayment of £97 per month.

According to the Government propaganda that is being put about, the loan is a top-up--an extra into which students can dip if they wish. The harsh reality, however, is that, if inflation continues to accelerate over the next two or three years, parents will very soon be faced with a 50 per cent. so-called top-up. The Government should be warned that student loans- -as is clear to both educationists and to parents--could do to higher education what the poll tax is doing to local government ; and the Conservative party is already in a state of disarray over the electoral impact of that tax.

Let me say a little about the workability of what could be objectively described as a harebrained scheme. The document that gives the game away is the Price Waterhouse report, published in May 1989 and commissioned by a group of bankers--the Committee of London and Scottish Bankers--working closely with the Department of Education and Science. We have heard much this morning about the quangos that have been set up. Why the need for this new bureaucracy? The answer is simple : individual banks and banking institutions want nothing to do with the scheme. Clearly their financial judgment is of a much higher order than that of education Ministers.

Let me highlight the dangers that I feel the Government should address. Price Waterhouse spent an immense amount of time on its study--three weeks! --and the Government have spent even less time assessing the implications. I am sure that, if we wished to promote our view, the distribution of the Price Waterhouse report to

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every Conservative Member and every banking institution in the country would be the best way to capture the essential absurdity of the scheme.

For the banks the scheme is foolproof. No market machinery is involved ; this is not the market responding to a Conservative call to widen access by expanding the volume of cash in the system. According to the criteria used to devise this "vehicle", as Price Waterhouse describes it, loans will be kept

"off the balance sheet of the participants".

Everything will

"be funded by Government, including default liability", and there will--or should--be

"effective arrangements for pursuit of defaulters".

The Government will pay the bill for that as well. Start-up and running costs will be fully recouped--and all of this madness is to be in operation by September 1990.

A more revealing section of the report deals with debt collection. This is the other reason why the quango was needed : individual banks do not want abusive students criticising debt collection procedures locally. As the Price Waterhouse report makes clear, the reason for setting up the organisation in Glasgow--the Sunday Times advertisement last week was the first step in this crazy process--was that, of the 200 staff envisaged, more than 50 per cent. would be debt collectors. The explanation is simple : any loan scheme, especially in America, reaches a critical stage at which the loan debt ratio becomes a burden on the public purse, and a massive debt collection service is therefore necessary to ensure that the number of people paying back the debt is greater than the number involved in either deferrals or defaulting.

The report goes into more detail about how this bizarre affair is to be handled by the Government. We are told of an

"incentive scheme to minimise bad debts",

and appendix III, statement 8 informs us that

"Payments would be made to loan collection staff This will provide direct motivation for all collection staff to be enthusiastic in pursuit of debts. This bonus will be paid out of the institutional incentive above. Compliance with agreed collection procedures would be required."

So there we have it. The Government pay for the loan and the quango and underwrite the initial costs, the debt collection and the debt collection agencies. It is impossible that a Government who were either competent or knowledgeable could embark on the implementation of a document that is not only bizarre but barely conceivable. That document is, however, the Government's bible. Perhaps when he replies the Minister will tell us why the Government are departing from some of its findings.

I mentioned the loan debt ratio. According to appendix VI, statement 1,

"In 1995, the average number of defaulters is expected to be 41,600 according to the DES."

It is estimated, however, that the total value of money sent to the debt collecting agencies--this is not within the quango, but one step removed from it--will be a massive £64 million in one year. Here is another brilliant solution : the Government, if they implement the report, will allow debt collecting agencies to come in and, for a fee of 20 per cent., cream off £5 million of that. The Government, however, will collect only £22 million at best from that £64 million. This is the stuff of comic strips. Clearly the Minister will want to distance himself from some of the more ridiculous proposals in the report--or possibly to confirm that the Government are about to embark on setting up such an agency in such a way.

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Those are only a few of the gems contained in the Price Waterhouse report, which is essential reading for all who are interested in the efficacy of public expenditure and in the future of higher education.

The Treasury implications are such that the scheme must surely be a subject for either the National Audit Office and the Public Accounts Committee or the Treasury Select Committee. If higher education is to be reduced to a set of bounty hunters being paid a commission to bring in the debt, and if students are to have restricted access to higher education because of the cost to a household, we are hearing a sorry and shabby tale about the government of higher education by the present ministerial team. I hope that the Government will think again, and I am given a measure of confidence by the fact that the Secretary of State is not only a Scot but an ex-Treasury Minister. I hope that the sanity of the Treasury will be combined with the Minister's Scots canniness to produce a better scheme than the one that we are debating today.

12.19 pm

Mr. David Evans (Welwyn, Hatfield) : I wholeheartedly endorse the principle of student loans and welcome the Government's proposals as a positive step in the right direction. I find totally unconvincing the arguments advanced against the proposals. The arguments in favour are compelling.

I should like to focus on the two principal and fundamental arguments in favour of student loans. First, it encourages a greater sense of responsibility on the part of the individual and that can only be a good thing. It is certainly good for students, who will be in a better position to assess their own needs, to determine priorities and to appreciate the value of money. Critics have palpably failed to grasp that this sense of responsibility can be achieved to the financial benefit and not the detriment of students. Most students in Britain in full-time higher education depend wholly or in part upon parental contributions. That creates a burden for parents, some of whom are unable or unwilling to meet the demands. As a result, about one third of all students who need the help of parental contributions do not receive it. In some cases the shortfall is considerable. The proposals try gradually to remove much of the burden from some parents and ensure that students have far greater control of their own resources. Making a loan available at a new rate of interest ensures that students have the money which for many would not have been forthcoming from parents and which they would have had to borrow. That money would have been interest bearing.

It is significant that the proposed size of the loan, at least in the initial stages, although relatively modest at about £420 a year, is probably still higher than the average overdraft run up by students over the course of an academic year. Therefore, the average student will be a net beneficiary under the Government scheme. As I have said, parents will also benefit, the locus of responsibility shifting from the sometimes unwilling parents to the consumers of education. The education system and society generally will also benefit. The consequence of the second principal reason for the change is that students will appreciate education far more. The problem with the existing system of automatic grants is that it is overgenerous. Bright students in secondary education know that the grant is automatic. A smooth

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passage from sixth form to university or polytechnic, courtesy of the state, is taken for granted and hence higher education tends to be taken for granted.

At the end of the day the students graduate, but in the process they are far less demanding of the system than their counterparts in other countries. Elsewhere it is far more common for students to have to bear part or all of the cost of their education. As a result, they take education far more seriously and demand more from it. They also apply themselves with more vigour to their work. After all, it is their own money that they are spending to obtain a good education. Who is likely to want to pay for that out of his own pocket only to achieve a poor result at the end of three or four years in higher education?

I have already effectively dealt with some of the arguments against the system. Relative to many countries, the system of loans proposed is generous. In both the long and short terms students will not suffer. The loan will enable them to achieve a good education and potentially, for the reasons that I have given, an even better education than they can obtain at present. That will enable them to get good jobs.

We are currently in a period of demographic downturn, and commerce and industry are competing vigorously to attract students. Increasingly a degree will become a passport to a good and well-paid job. Students know that when they apply and will have no worries about repaying a loan. After all, it is a modest loan at privileged rates when they have graduated. The prospect of a good job is likely to draw students into higher education from working-class and middle-class backgrounds. I see no grounds for suggesting that it will work against working-class students. In so far as students from working-class families are discouraged from going to a university or polytechnic, the constraint is essentially cultural. As far as money is relevant, it is in terms of the attraction of achieving an immediate money-generating job and not in terms of the cost of higher education.

For graduates who go into important but low-paid vocations, the loan repayments can be deferred and in some cases written off. There is, thus, no discouragement for those who continue to enter low-paid occupations. I find little force in the arguments against the loan proposals. They are weak and the arguments in favour of loans are convincing.

Could the proposals be improved? The one modest suggestion that I have is that there should be a bigger differential between home students and those who come from some distance. Under the proposals, undergraduates may be tempted to reduce their cost of living at home and attend a home town university or polytechnic. That is not necessarily desirable in terms of encouraging greater independence and responsibility. In many cases it may not even be possible. Of course, there may be geographical factors and for many students there is no nearby university or polytechnic and increasingly we are likely to see more specialisation in education. With the greater emphasis on centres of excellence which the Government have encouraged, there is a greater likelihood that students will have to travel some distance to attend the most appropriate seat of learning. Some account must be taken of their learning needs. That can best be done through a greater loan facility and I hope that the Minister will consider such a

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differential. That would improve what is already a good scheme and one which in principle has my wholehearted support.

12.26 pm

Mrs. Margaret Ewing (Moray) : I hope that the speech by the hon. Member for Welwyn Hatfield (Mr. Evans) will be read not only by existing and aspiring students, but by everyone who is interested in education. I found quite horrifying the bias and prejudice in that speech. That was greatly against the philosophy of the debate, which was evident even in Opposition speeches, because we have addressed the issue of student finance and higher education finance. It does not help the debate one whit to hear such bias and prejudice being put forward in such a manner.

The idea that a student does not appreciate his responsibility or the value of money is ludicrous. I lived on a student grant and I can assure the hon. Member for Welwyn Hatfield that every student knows about value for money and accepts his responsibility by working during vacations and at weekends to try to supplement the grant. My generation was slightly more fortunate than the present one in that at least we had job opportunities in the summer months.

I endorse the comments of other Opposition Members about the failure of the Scottish Office to have a representative here and about the absence of Scottish Conservative Back Benchers. Perhaps when the Minister is winding up, he will tell us whether an invitation was extended to the Scottish Office, or whether Ministers there showed any interest in the fact that the debate was taking place. We knew about this debate about three months ago and there is no excuse for any hon. Member not keeping a space in his diary in order to be present. It is a tragedy that they are not here today. No doubt, the Under-Secretary will use as one of his arguments that the Department of Education and Science has responsibility for universities in Scotland. That is one of the tragedies that we have to face up to in Scottish education. The recommendation of the Scottish Tertiary Education Advisory Council, that the Scottish universities should be brought more effectively into line with the rest of the Scottish education system, should have been accepted. As a matter of courtesy, Scottish Members and Ministers should have been present. Certain aspects of higher education come under the auspices of the Secretary of State for Scotland, and he attached his name to the White Paper.

I am sorry that the Secretary of State for Education and Science is not here because, through my maiden name, I belong to the clan MacGregor. We must come from different sects of that clan because we come to the debate from different ideological approaches. The concept of universality of access to education at primary and secondary schools should be extended to tertiary education, by ensuring that the funding is there to allow people that direct access.

Underpinning the debate is the issue of times and circumstances. There are generation gaps. I am the child of one of the 5 per cent. of unskilled manual labourers, who went to university in the 1960s as part of the post- war bulge, which resulted in that wonderful headline, "The

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bulge goes to university." The times and circumstances were such as to enable children such as me to have, for the first time, the opportunity of university education. When I think of my parents' generation, I realise that the skills, talents, abilities and intelligence that they had was never allowed to come to fruition because they had to leave school at the first opportunity, usually to supplement meagre incomes. The tragedy is that that was a loss not just to the individuals but to the common weal, because they could not bring their developed talents into play in advancing our society.

The White Paper contains a disincentive to children from the lower socio- economic groups that will prevent them from entering higher education. My father, as a farm worker, would never have contemplated allowing me to go to university if that had meant taking out a loan. Debts and loans are still alien to huge sections of the working class. They are not people who run around with credit cards and have vast overdrafts. They try desperately to make ends meet, and have a tradition of independence.

We have heard that there is a decrease in the numbers entering university and higher education institutions as a result of the devaluation of grants, housing benefit cuts and, in Scotland, the poll tax contributions, all of which are making it more difficult for people from lower socio-economic groups to take advantage of education. We are not talking about top-up loans. If we were talking about such a facility being made available, at some point, to students, it would be a different matter. Instead, we are talking about a system that will eventually replace the grants system--the very system that extended access to education to people such as me. The proposals in the White Paper will take us back to the times and circumstances before the grants system and we should resist that with vigour and energy.

Much has been made of the 250 jobs that will be created in Glasgow as a result of these proposals. However, these jobs pale into insignificance when we see the impact of cuts on our universities--the closure of departments at Aberdeen, the redundancies of academic staff, the threat to the veterinary college in Glasgow and the closure of the dental school in Edinburgh. The 250 jobs at Glasgow are no compensation for the way that our university system has been undermined by severe cuts in financing and research grants. The White Paper has implications for the four-year honours degree course, and this has concerned all hon. Members representing Scottish constituencies. It would be useful if those hon. Members who do not know about the Scottish education system understood why we have a four- year honours degree system. We have always believed that education should be a broad rather than a narrow experience and in high school, youngsters take several highers rather than one or two A-levels. The university system is built on top of our schools system and results in a broad-based degree, with little early

specialisation. As a result, students at Scottish universities can switch in the middle of their degree courses and still complete their degree course within three or four years. The hon. Member for Stirling (Mr. Forsyth) should be here because he benefited from that at Saint Andrews. He started off taking one degree and switched to another subject--presumably in privatisation, at which he seems to be an expert.

The very breadth of our degree course enables that facility to change. Furthermore, it is much more compatible with the degree courses of our European

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counterparts. At a time when we should be mindful of the European dimension in education, we should take cognisance of how close the Scottish education system is to the systems that are applied elsewhere in Europe. I believe that many students south of the border would benefit from many of our ideas.

The Government's proposed scheme would lead to severe financial difficulties for Scottish students. The illustration in the White Paper shows a student commencing a degree course in 1990 and graduating after three years with a debt of £1,438. On the same projection, a Scottish degree student commencing his course in the same year but not finishing it until a year later would have a debt of £2,161. That is a difference of nearly 50 per cent. That would result in pressure for curtailing the length of Scottish courses, and we in Scotland would resist that strongly. When Principal McNicol of Aberdeen university suggested that one way of dealing with the severe cuts being experienced by the university would be to curtail the four-year honours degree, there was outrage throughout the country. The suggestion was condemned and rejected. We do not want to see the breadth of our Scottish education system being curtailed as a result of financial pressures.

It should be remembered that the funding council stated that institutions running shorter courses and thus increasing the throughput of students should be rewarded with extra funding. That sounds ominous for Scottish degrees.

We are arguing not only about the pound in the students' pocket, although that is an important feature in the debate. We are arguing also about how universities and institutes of higher education are funded and how best the traditions of our universities can be preserved and enhanced.

We are all aware of the money that is available to the Government. North sea oil revenues have already been mentioned, but I would describe them as Scottish revenues. It was ludicrous that Aberdeen university, the oil capital of Europe, was having to close departments because the Government would not fund them. Political decisions will decide what are to be our spending priorities, and the priorities of the Scottish National party and of Plaid Cymru are very different from those of the Government. The Government seem to prefer to spend on Tridents rather than to ensure that we have a decent education system.

12.38 pm

Mr. Mark Wolfson (Sevenoaks) : I support the principle of the scheme in general but I want to raise several issues with my ministerial colleagues. I agree that there may be some risk in the areas of uptake in the scheme that we are suggesting, but I believe that it is a proper and balanced risk which it is right for the Government to advocate to the long- term benefit of higher education. Many of the fears that have been voiced today are exaggerated. I regret that the hon. Member for Southwark and Bermondsey (Mr. Hughes) is no longer in his place. The hon. Gentleman talked of the sacrifice that students make to go to university. I suggest that that is an emotive and inaccurate description. Students are taking a conscious choice to use an opportunity and are not making a sacrifice. I believe that my view would be borne out during a conversation with any student who is

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participating in university education, irrespective of his or her financial circumstances. Students recognise university education as an opportunity. Most of them enjoy it enormously and see benefits flowing from it in the opportunities that it offers them for later careers.

Concerns were expressed equally clearly and fully by university administrations when we were talking about overseas students' fees several years ago. The Government proposals were resisted root and branch, but the results have been nothing like as disturbing as the university people suggested at the time.

As other hon. Members have said, the present position is unsatisfactory. It begins with the problem of those who do not stay at school long enough to receive sixth-form education. Sufficient numbers will not be staying on at school, which is an area where one of the problems facing increased intake to universities may occur. That problem must be firmly and continuously addressed.

There is a need for students from a wider range of what I call the socio- economic groups to be attracted to higher education. All universities want that, and especially Oxford and Cambridge which have that as a firm policy. I believe that their resistance to the Government's proposals is based on an erroneous view. The current parental contribution is a continuing problem for students, especially those who do not have a university background within the family. The Government's scheme will give many of them a greater opportunity because they can make a conscious decision to manage their own affairs.

I do not think that loans, in themselves, are bad--and neither does the Government's scheme propose to remove grants. The subject of today's debate is top-up loans ; it is not a change from grants to loans. That is of fundamental importance. There are those who will say that it is the thin end of the wedge and that, ultimately, there will be no grants, only loans. That is an erroneous view--

Mr. Jackson : I am intervening in my hon. Friend's excellent speech to confirm that the Government's proposal is to move to a 50-50 grant-loan system. It is the sort of system now evolving in other countries, which are moving from loans to a mix of grant and loan on a 50-50 basis. We are moving from a grant-only system to a 50-50 mixed grant-loan system.

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