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between grants and loans. I urge my right hon. Friend the new Secretary of State for Education and Science to give further thought to that balance. I went to university only because I received a 100 per cent. grant, and I believe that the scheme should not deter suitably motivated and qualified people, particularly those from families who are not well off and who have no previous experience of university education. It is also important that the balance of the scheme should be best calculated to attract additional resources into higher education and to achieve the object of self-reliance, as far as that can be achieved among students.

I believe that most good parents, whether they are well off or badly off, if they are able to choose, would not wish their children to finish their education saddled with debt, and if this is the attitude of a good parent, it should also be the attitude of an enlightened state. When students go to university, the future for them is, in many cases, uncertain. They are uncertain how they will finish up eventually, and it is better for them to decide what they will do in life as free as possible from the burdens of debt. Account should be taken of the financial cost to students of going to university, and this has not been mentioned sufficiently, either in the White Paper or the speech of my right hon. Friend. By the age of 22, as compared with someone who went to work at 16 or 18, students are considerably worse off. I accept that they make the decision with their eyes open, and this is a thoroughly sensible decision, but they are making a personal financial contribution towards the cost of their further education.

Whatever my right hon. and hon. Friends in the Department of Education and Science say in these debates, I hope that, behind the scenes, in the discussions that they have with the Treasury, they will make it clear that if graduates earn more as a result of higher education--and that is by no means certain, because many would have earned large sums anyway--they will pay, in the course of their work by way of income tax, more to the Government. Therefore, there will be a financial reward for the Government. If they do not earn more as a result of higher education, the Department of Education and Science can fall back on the argument that was employed this morning that higher education benefits society as a whole.

Whatever the comparable figures tell us, the Department should consider the cost of benefits in kind in other European countries. I am familiar especially with France, Spain and Germany, which all have elaborate systems of subsidising students by means of cheap accommodation, cheap meals and many other direct benefits of that sort. I do not believe--indeed, the White Paper accepts this--that such benefits are taken fully into account when comparisons are made. The Government have carried out an excellent exercise in investigating the welfare of old people. They have done so to ascertain how much we spend on direct benefits such as sheltered housing and meals on wheels. There is room for a similar exercise, in comparative terms, in the reverse direction that deals with benefits in kind in education in other European countries. Direct subsidies should be identified in the calculations.

Within the financial disciplines that my right hon. Friend the Secretary of State has outlined, I believe that the grant element in the scheme should be as large as possible. I follow the suggestion made by my right hon. Friend the Member for Brent, North (Sir R. Boyson) that

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there should be some grants that constitute 100 per cent. of cost as a result of awards. The loan element should be as small as possible.

The White Paper tells us that the Government are open to suggestions for adaptation and replacement of provisions. I should like the Government to consider two changes. First, for those who are in receipt of maintenance grants, which are means tested, I should like there to be a cash option in lieu of a loan for those who do not wish to take up a loan. There is a substantial cost element in the administration of the loan scheme, and considerable cost over the period of the loan. If someone by his own efforts and initiative is able to do without a loan, there should be a financial reward for doing so. A cash option would take the student further towards the needs of his course without there being the need to take a loan. Secondly, I believe that universities should be encouraged by such means to provide more scholarships, in the way that they used to, to make it easier for people to take up work in the university, as is done in American universities.

For example, it is not sensible that students should have automatically to pay to have their beds made when at university. Some undergraduates are embarassed that they have to depend on someone for making their beds and must pay them for doing so. Changes could be made that would make life cheaper for students, and the univerisites should be encouraged to make them. Another option is the provision of part-time work.

I have referred to some of the benefits that might accrue from the provision of a cash option. Parents might be encouraged to contribute more if they thought that their children were getting benefit out of not taking up a loan. I hope that this consideration will be taken into account. It might be considered that it is a way of encouraging greater self-reliance, bringing more funds into the system and freeing young people from the burden of debt.

1.50 pm

Mr. Win Griffiths (Bridgend) : Our debate today is, in some senses, pointless because most of the statistical information in the White Paper about the cost of the scheme is meaningless and suitable for consumption only at a mad hatter's tea party or a gathering of the Chancellor's economic forecasters.

Let us imagine that the proposed scheme began in 1966-67 and was based on the grant scheme at that time. Let us now take the assumptions in the White Paper, apply them to that time, and work out what would have happened over the next 20 years. The Government's scheme includes the hypothetical inflation assumption of 5 per cent., 3.5 per cent. and 3 per cent. thereafter. By 1986-87, each student would have required a loan of £172.05, and that loan would have been less than half of the Government grant. However, if we take the actual sum of money expended by the Government on the award scheme over the 20-year period, freeze the grant contribution in the first year--that is, 1967-68--and then top up the loan, by 1986-87 the student would have required a loan of £1,023.67. Let us take what happened to the retail prices index and top up the loan on that basis--by 1986-87 the student would have required a loan of £1,227.45.

Of course, the Government's scheme has a provision for a 50-50 split between grant and loan. In the real world of the 1970s and the 1980s, that provision would have

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come into effect in 1975-76. If those two components had been kept level until 1986-87, the student would have required a loan of £651 and the Government would have had to have pumped an additional £175 million into the grant scheme. If that was worked out on the RPI, the student loan would have been £729.37 and the Government would have had to have put an additional £220 million into the grant scheme. If we take the hypothetical scheme proposed by the Government and measure it against the reality of Government expenditure on the student grant scheme or against the retail prices index over that 20- year period we see that the Government would have had to have spent an additional £400 million to £500 million. The House can write off the statistics in the White Paper ; they are meaningless. 1.53 pm

Mr. Andrew Smith (Oxford, East) : In the four hours of this debate, as in the 11 months that we have been waiting for it, many questions have been raised on both sides of the House that are crucial to the future of student support and, indeed, to the whole of higher education. Those questions deserve answers, but none have been given. As the hon. Member for Leeds, North-West (Dr. Hampson) said, the Government have been short on effective detail.

Such is the dogmatic drive of Ministers to have their scheme in place--for reasons that have everything to do with ideology and nothing to do with practicality or economy--the Secretary of State has had the nerve to come here and tell us nothing new, yet expect the House to take on trust a scheme which is so deeply flawed that it negates even the very purposes for which the Government claimed they were introducing it. The first purpose was supposed to be to reduce the cost of student support on the public purse. The former Secretary of State said that the whole essence of the scheme was

"that the burden of student support on taxpayers and parents will be reduced."

The second stated aim was to increase access. The former Secretary of State said :

"I confidently expect that the numbers in higher education, in polytechnics and universities will increase because of our proposals."--[ Official Report, 9 November 1988 ; Vol. 140, c. 320.] However, even the Minister conceded in a written answer that the cumulative cost to the taxpayer over the next 19 years will be £1.62 billion, and that defaults and deferrals will cost the public £4.2 billion by 2027.

The hon. Members for Leeds, North-West and for Sevenoaks (Mr. Wolfson) rightly pressed Ministers for details of the scheme's administrative costs, which are over and above the horrendous figures that I have already mentioned. The Government have become very secretive about how all the figures add up. In written non-answers this week, the Under-Secretary of State, the hon. Member for Wantage (Mr. Jackson) refused to reveal how the Government intend to reimburse the banks and how they will assess recurrent costs beyond 1995. He stated :

"I cannot comment at this stage on matters which are subject to contractual negotiations. As we have made clear, the House will be informed of the major steps in the preparations for administration of the loans."--[ Official Report, 17 October 1989 ; Vol. 158, c. 89. ]

What about the details? What about the real costs? What about how they all add up? The reality is that the banks and building societies have the Government over a barrel,

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because they were foolish enough to invest reckless amounts of political capital in the scheme before the financial institutions were made to sign on the dotted line.

The House rightly demands to be told when the full cost will be announced. I hope that the Minister, when he replies, will give a categorical assurance that those figures will be put before the House before the Second Reading of any legislation to give effect to the scheme. When will we be told the true interest subsidy costs? We have pressed the Government for those figures for months, because they could account for as much as £3.75 million for each 5 per cent. of interest rate subsidy when the scheme matures.

I am not surprised by the distinct and striking lack of enthusiasm for the scheme that has been shown by Conservative Members.

Dame Elaine Kellett-Bowman : I am very enthusiastic about it.

Mr. Smith : That makes only three Conservative Members in favour so far. Deep concern was expressed by the hon. Members for Cambridge (Mr. Rhodes James) and for Leeds, North-West and, in a fine speech, by the hon. Member for Chichester (Mr. Nelson), which I ask the Government to heed most carefully in their own interest. I do not blame Conservative Members for being so worried, because they are being invited by the Secretary of State and by the Under-Secretary to jump into a lake without even being told how much concrete is being tied round their necks.

Will the Minister give details of the indemnities being conceded to the financial institutions? I refer especially to that relating to a change of Government. Does the premium increase as Labour's lead in the opinion polls manifests itself to the financial institutions? Right hon. and hon. Members are right to question the constitutional propriety of indemnities being guaranteed by this House in advance of legislation--to say nothing of advance expenditure of the order of £7.5 million, including the salary of £55,000 plus a car, to which my right hon. Friend the Member for Chesterfield (Mr. Benn) referred. How can it be right to commit and to spend large sums of public money to the scheme even before the House has been given an opportunity to vote on its general principles?

As to the £55,000 job already mentioned, what scale of priorities and values is it that pays to the managing director of a loan scheme that will cause so much damage to higher education a salary that is double that paid to a professor in a British university who is a Nobel prize winner? What reflection is that of the Government's real values?

My hon. Friend the Member for Sheffield, Hillsborough (Mr. Flannery) pointed out with his customary vigour that, in respect of access to higher education, there is every reason to question the curious doctrine that by increasing the price of a service--as the scheme will do--demand and take- up will increase, especially among those who find that price most onerous in the first place. I dare say we shall hear something about international comparisons from the Minister. I hope that he will accept, from the outset, that Britain's present grant system has the considerable advantage of being very cost effective. The cost per graduate, at £9,000 is far lower than that in the

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United States where it is £19,000, and Japan where it is £14,000. I hope that he will also accept that loan schemes overseas in general suffer from high administrative and default costs.

All the evidence shows that the high levels of student debt involved in loans schemes act as a disincentive to the disadvantaged. During the Reagan years in America, the federal grant programme was cut, and participation by black students, among others, declined. Dissatisfaction with loans has reached the point where even the highly conservative state of Arizona has now decided to supplement the loans scheme with grants. My hon. Friend the Member for Denton and Reddish (Mr. Bennett) referred to West Germany, where the scheme is being changed because poor students are being discouraged by the way in which loans operate.

I fear that the Under-Secretary gave the game away about access to education by his language when he said to The Independent on 17 August :

"The American loans are available to a much wider range of students. You can imagine a 16 year old hairdresser will get a loan in the US. Most defaulters are in vocational colleges where you get those sort of people."

What sort of people does the Minister have in mind? They are clearly not the sort of people to whom access will be extended by his scheme.

Hon. Members will judge for themselves whether this is truly the language of opportunity, as the Minister would have us believe, or the haughty protection of privilege, as many of us suspect. We have yet to be told how the whole bizarre scheme relates to the previous Secretary of State's commitment to double the participation in higher education over the next 25 years. I challenged the Under-Secretary on this in my letter of 19 July, but he has not yet been able to supply me with an answer. Given the Secretary of State's staggering inability to deal with the basic question of how to double access, while maintaining that higher education cannot reasonably expect a greater share of public expenditure, frankly I am not surprised that he has a problem responding to our questions. I challenged the Under-Secretary on his estimate of the effects of withdrawing benefit from students, to which many right hon. and hon. Members have drawn attention. That singularly punitive policy would have catastrophic effects on the already meagre living standards of many students, especially in areas where accommodation costs are high, as my hon. Friend the Member for Newcastle upon Tyne, Central (Mr. Cousins) said.

The Minister ought to supply to the House this afternoon the answers that he has hitherto refused to give. It is particularly curious that a Government who profess to attach such importance to targeting, and to ensuring that money reaches those who really need it, attack support for students by getting rid of targeted housing benefit and promise to bring in a loans scheme which indiscriminately provides loans to wealthier students, as the hon. Member for Chichester said.

What it comes down to is that the Government are so obsessed with their private market dogma that they are wantonly and expensively setting out to destroy the ladder of opportunity provided by the right to grants which many right hon. and hon. Members on both sides of the House have been fortunate enough to benefit.

Why will the Government not listen and learn? Why will they not listen to the clear message coming from their

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own Back Benches? Why are the Government so determined to take so little notice of the responses they have received to the White Paper that they will not even publish them? It was left to me to write round, to analyse the replies and to deposit the information in the Library. Could that have had anything to do with the fact that 95 per cent. of the respondents opposed the scheme?

Is the Secretary of State aware that the former special adviser to his Department, Mr. Stuart Sexton described the scheme in yesterday's edition of The Daily Telegraph as

"a bureaucratic nightmare, and one which produces no immediate savings for the public purse"?

What is it, I wonder, that makes this Government and their Education Ministers so special that they think that they are right about student loans and everyone else is wrong? What do Ministers have to say to those in their own party who have grave reservations, as we have heard today, about the scheme? What do they have to say to their predecessors who took pride in the opportunities that the extension of grants opened up to people? My hon. Friend the Member for Blackburn (Mr. Straw) quoted from the pamphlet issued by the Tory Reform Group, of which I understand the former Secretary of State, who initiated the idea of a loans scheme, is a patron. The Tory Reform Group pamphlet said :

"The results of changing the system would be to reduce working class access to higher education, to lower standards and to produce a new class of poor graduates."

What do the Government have to say to a former Chairman of the Select Committee on Education, Science and Arts and chairman of the Conservative parliamentary education committee, Sir William van Straubenzee? In his 1987 submission to the Government review of student finance, Sir William wrote of student loans :

"It is no good encouraging children from low income families to stay on at school until they are 16 or 18 if you are going to slam the door in their face at the precise moment when they are in greatest need of tangible financial assistance. I can think of no policy which would be more successful in shattering the aspirations of young people."

What do Ministers have to say to the people of Scotland, with their fine educational tradition, which--as my hon. Friends the Members for Fife, Central (Mr. McLeish) and for Glasgow, Hillhead (Mr. Galloway) pointed out- -is particularly threatened by loans? What do they have to say to medical students for whom loans could mean debts of £14,000 or more? The hon. Member for Sevenoaks rightly mentioned the problems facing paramedical staff entering the Health Service. What do Ministers have to say to student nurses? In responses to me the Minister for Health has persistently refused to rule out the possibility that Project 2000 nurses will find their bursaries changed into loans. Do Ministers honestly believe that the public want student nurses to be burdened with such debts? Will the Minister take the opportunity today to give the House a categorical assurance that student nurses will not be burdened with debt under the Government's loans scheme?

The scheme is already discredited. It is unpopular and shot through with contradictions. It is a mortgage on knowledge--costly, inefficient and a barrier to access. It is--with the tuition fees proposal--the thin end of the wedge in the drive towards a private market in higher education that is not wanted and which will not work in any way consistent with the full and fair educational opportunities that Britain needs.

Opposition Members believe that the future of our people--as individuals and as a community--depends on

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opening up opportunities on the basis of ability to benefit, not on restricting them on the basis of ability to pay. As the party of opportunity, the Labour party will oppose this mean- spirited and damaging scheme every inch of the way.

If the Government will not listen to representations and respond to the numerous letters and petitions that they have received, if they will not listen to reason and drop it now and if Conservative Members cannot make Ministers see sense, it will be left to a Labour Government to repeal this appalling students loans scheme when we are in office--and repeal it we shall.

2.9 pm

The Parliamentary Under-Secretary of State for Education and Science (Mr. Robert Jackson) : I want first to congratulate my constituency neighbour and good friend, the hon. Member for Oxford, East (Mr. Smith), on his first appearance at the Dispatch Box as Opposition spokesman. Long may he continue to adorn that position. One of the most fascinating features of this debate has been the undercurrent of bad conscience on the Labour Benches. That was highlighted by my hon. Friend the Member for Leeds, North -West (Dr. Hampson) in his excellent contribution to the debate. I am grateful to him and to my colleagues who supported the principle of the Government's policy.

The first undercurrent among Opposition Members is that although they try to deceive themselves, they appreciate full well the way in which the present grants system takes from the have-nots and gives to the haves. A quarter of all income tax is paid by individuals with incomes below £10,300, but the average income of a working male graduate in his thirties is about £20,000 and 25 per cent. of dependent students come from families with incomes in excess of £20, 000. That is the first reason why there is a certain unease among Opposition Members. They are in the false position of defending policies which tax the poor to support the better off.

Mr. Straw : There is no unease on the Opposition Benches. The Parliamentary Under-Secretary of State has described the disgraceful circumstances achieved after 10 years of Conservative rule. The burden of taxation has been shifted from the rich to the poor. In case he is not aware of it, the Opposition have opposed that shift at every Budget and we believe that those with the broadest backs, who earn the greatest incomes-- as a result of being graduates as for any other reason--should pay much higher rates of taxation and that those on the lowest incomes should have much lower rates of taxation.

Mr. Jackson : The hon. Gentleman knows perfectly well that Labour Governments have taken a considerable interest in the idea of student loans and that is one reason why there is unease.

Another reason for unease on the Opposition Benches is that the Labour party policy in Opposition is one which they will not be able to sustain when they enter Government. That is reflected by the evasiveness exhibited by the hon. Member for Blackburn (Mr. Straw) in relation to the cost and funding of Labour's plans about which we heard so little.

Some hon. Members on the Labour Benches, if not the hon. Member for Blackburn, will understand the

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significance of the statement made by the right hon. and learned Member for Monklands, East (Mr. Smith) when he told the Labour party conference :

"We are all agreed that we cannot spend what we have not earned if that means we have to postpone some of our social ambitions, then we may have to do so".

What is the consistency between that statement and the line being taken on student support by the Opposition? They will abolish the student loan, which presumably means that they will continue to pay to students the welfare benefits which our top-up loan scheme is designed to replace. Now it is true that that would save the Exchequer some money--the difference between the cost of welfare benefits for students and the cost of our top- up scheme ; a difference which represents extra money for students provided by our scheme.

However, the Opposition are not claiming that they will merely dispense with the top-up loan. They will at least have to match the net addition to student resources which our top-up loan represents. The hon. Member for Southwark and Bermondsey (Mr. Hughes) must be aware that, far from cutting the resource available for students, our proposal will restore student total resource to its 1979 level and also cut the parental contribution almost in half. That point is significant for my hon. Friends.

Dame Elaine Kellett-Bowman : I have sat through the whole of this debate and I have not even had a cup of tea. I must make two points. I hope that my hon. Friend the Parliamentary Under-Secretary of State will consider increasing the access funds and will also adopt a system of remitting the loans of those in the top 20 per cent. of results at the end of the time. That would be a very valuable incentive.

Mr. Jackson : I note my hon. Friend's points. I have some sympathy with them, but they must be considered with the opportunities that are available.

The Opposition are following in the Government's footsteps and are talking about doubling the number of students in higher education. Student grants at 1989 levels cost the taxpayer about £500 million a year. Double that--very crudely--is £1,000 million.

Is that implied promise of grant expenditure of £1,000 million a year credible? To get a fix on this, let me remind the House that, on the unlikely assumption that taxpayers' behaviour would not change, the total revenue generated by Labour's plans to increase the top rate of tax by 10p will probably yield little more than some £2 billion of new revenue. Is it credible that they should spend more than half of this on student support? And all for what? Presumably, its purpose is to enhance access through a grant system which has encouraged only 6.9 per cent. of the children of manual working class parents to gain access to full-time higher education. My right hon. Friend the Member for Brent, North (Sir R. Boyson) made some penetrating remarks on that point and my hon. Friend the Member for Chichester (Mr. Nelson) should take note of them.

No wonder there are bad consciences on the Labour Benches. Her Majesty's Opposition know--I detected some hints of this in the speech of the hon. Member for Denton and Reddish (Mr. Bennett)--that if there is to be a substantial expansion of higher education and that if the participation of all social groups in higher education is to

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be expanded, it can only be by doing what every other advanced country does. What is necessary is that students should be enabled to anticipate a fraction of their future earnings as graduates to pay a fraction of the costs of undertaking their studies.

Faced by that proposition, which is well understood by all men and women of goodwill, including many of Labour's academic sympathisers, the Opposition have decided, to their shame, to fall back on an entirely opportunistic attack on a policy which they know in their hearts to be right.

In this debate, Opposition spokesmen--I am thinking particularly of the hon. Members for Blackburn and for Oxford, East--have made much play of their interpretation of the costs of the Government's proposed scheme.

Mr. Straw : Before the Minister deals with that point, will he deal with funding the expansion of higher education? I put that central question to the Secretary of State who, even with the aid of a script provided by the Parliamentary Under-Secretary of State, could not answer me. The Conservative Government propose to double the numbers in higher education over a 25-year period. The greater part of the cost of doing that will be in tuition, not maintenance. How do the Government propose to pay for it? Will any part of it be paid for from the public purse? What is the trend of public spending? Are we to assume from the evasive answers of the Secretary of State that the Government plan to make students pay the full costs of their tuition as well as their maintenance, but that they do not have the guts to say so?

Mr. Jackson : The words of the Secretary of State are clear and I am happy to echo them. I have nothing to add to what he said. We have heard much talk about costs. There has been some criticism from Conservative Members and not much frankness from Opposition Members. I ask the House to bear in mind three points when it looks at the complex issues involved in the assessment of the costs of our proposed student loans scheme. All hon. Members will be able to assess the scheme when our negotiations with the financial institutions are reported. We are not ready yet but we will be shortly.

First, all reasonable men will know that making projections of matters of this kind is an art and not a science. For example, the Government have used an assumption of an 80 per cent. take-up. My personal view, for what it is worth, is that because student loans will be popular, the take-up is likely to be higher than 80 per cent. At the same time I believe, in common with my hon. Friend the Member for Rugby and Kenilworth (Mr. Pawsey), that the default rate is likely to be considerably less than the 10 per cent. that we are illustrating. One factor tends to increase costs ; the other tends to reduce them. Obviously, it is impossible to construct infallible predictions and that applies as much to the Opposition as to the Government.

However, the difference between the Government and the Opposition is that our proposals will produce savings for potential redeployment, whereas the Opposition's proposals will simply continue to increase expenditure indefinitely. [Interruption.] I should not have thought that the hon. Member for Blackburn would want to pursue that point, having been so worsted on it during his speech.

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The second point which I hope that hon. Members will bear in mind when they assess the cost of the scheme is the distinction between default and deferral. The Government's scheme provides generous arrangements for deferral, but we will be tough on default. We envisage that all graduates with an income of 85 per cent. of the national average income will be able to defer their obligation to repay. Such deferral will affect not the costs of the scheme but only the profile of repayments. Default is another matter. As I have said, I believe that the default rate in our scheme is likely to be well below the 10 per cent. which we have illustrated in our projections. Frankly, I do not believe that British graduates will be more dishonest than are those in Scandinvia, where default is no more than 1 or 2 per cent.

A third aspect of costs is crucial. We have had some exchanges about this point. The Opposition are seeking to blur a vital distinction between the two different ways of defining the point at which savings arise under any loan scheme--not just this one. The first and most important point is that at which the balance between current outgoings and current income from the scheme has moved from red to black--the point at which there is more money coming in by way of repayments than money going out in the way of disbursals. The other way of looking at this matter is to focus on that point at which the total flow of funds coming in exceeds the total outgoings since the inception of the scheme.

The second point--the point at which cumulative savings will occur--will obviously come later than the first point. Whether disingenuously or perhaps because of simple intellectual failure--I think it is probably disingenuously--the hon. Member for Blackburn and his colleagues have focused on when cumulative savings, rather than current savings, will occur. Which is the more important of those two--current or cumulative? On the argument about freeing financial resources for redeployment--the essential point--it is current savings that matter ; the savings that arise when the scheme goes from red to black. That point will almost certainly be reached near the turn of the century, in time to provide additional resources for the expansion of higher education and for the promotion of access which we anticipate as the number of 18-year-olds starts to rise again after the demographic dip of the mid 1990s. [Interruption.] Opposition Members should pay me the courtesy of at least listening to what I am saying, rather than continuing ceaseless chattering. Let me now say a few words about the London School of Economics scheme from Messrs Barnes and Barr, which has attracted the support of my hon. Friends the Members for Cambridge (Mr. Rhodes James), for Leeds, North-West, and for Sevenoaks (Mr. Wolfson). In response to the political advice that we got from the hon. Members for Glasgow, Hillhead (Mr. Galloway) and for Newcastle upon Tyne, Central (Mr. Cousins), all hon. Members apart from my hon. Friend the Member for Chichester, supported the principle of the Government's policy. On Barnes and Barr, my right hon. Friend the Secretary of State has set out some of the reasons why we reject their approach. Let me amplify. The Barnes and Barr scheme has two components. First, they evisage that the money for the student loan should be provided by the private sector, on the argument that this would immediately release funds for redeployment elsewhere in higher education ; and secondly, that the employers of graduate manpower, and

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perhaps also the graduates themselves, should be responsible for the repayment of the loan, using the mechanism of the national insurance contribution.

The Government looked carefully at the idea of using private sector money. As it happens, like my hon. Friend the Member for Leeds, North-West, that was my personal preference when I started work on this issue after my appointment. The reason that approach was rejected is quite simple. From the beginning we believed that three political requirements must be met in the interests of students : first, that all full-time students should be entitled to the loan irrespective of their credit rating ; secondly, that no positive interest rate should be charged ; and, thirdly, that the obligation to repay should be deferrable if a graduate's income is below a certain level.

My right hon. Friend the Member for Brent, North, in an admirable speech, was mistaken when he thought that our plans might contain some negative dowry. I noticed that my hon. Friend the Member for Rugby and Kenilworth corrected him on that point.

I wonder whether any of us could get a loan on terms such as these from any private bank. I imagine that a request for such a loan would fall on deaf ears from even the most listening of banks.

In short, the Government decided that the money committed to this loan scheme would have to be public money because of the need to structure the scheme to the advantage of students in ways which would be inconsistent with the principle of private sector funding. Meanwhile, quite apart from considerations pertaining to the theory of public finance, there is a purely practical point. Is there any serious reason to believe that operating a loan scheme on the terms envisaged by Messrs Barnes and Barr-- including the arrangements the Government propose in the interests of students--would attract the willingness of any private sector financial operator to lend? It is certainly worth noting that there is not a single student loan scheme anywhere in the world built on Barnes and Barr lines-- but there are many which have operated successfully for years on the principle of loan rather than tax, which underlies the Government's proposals. No, I fear that there is a blunt message for all supporters of the principle of student loans, wherever they stand in the political spectrum. Barnes and Barr have constructed one of those "fudge and mudge" positions beloved of the chattering classes--in favour of a graduate contribution, but against the Government's way of implementing it.

The essential fact that must be appreciated is that this Government have at long last grasped the hoary nettle of student loans. The Government's scheme is the only scheme in town. Those who wish to see the introduction of student loans must think long and hard about how far they press their preferred nostrums. I hope that they will not put their panaceas before the basic principles.

I turn briefly to the other Barnes and Barr argument about using the national insurance system as the mechanism for repayments. My right hon. Friend the Member for Brent, North linked repayments and the tax system, but as my right hon. Friend the Secretary of State pointed out, there are practical difficulties with that, notably the importance of not introducing new complexities into the national insurance systems and the need to avoid imposing additional burdens on employers.

Let me focus, however, on the issue of principle. From the point of view of the student, the mechanism of the tax

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system, or of national insurance--especially if paid by the employer--is a very remote mechanism. If we employ it, the fact of an obligation to repay something of the costs of undertaking their studies will tend to escape the attention of the student. But is this desirable?

In this context, let me quote the view of another figure associated with the London School of Economics, Professor Ashworth, who recently commented in a letter to The Guardian :

"Students who pay are, in my experience, more critical and demanding of the teaching that they are offered allowing not only for the maintenance of standards but also for their increase." I ask the House which approach to student loans is most likely to realise professor Ashworth's desired effects. Will the new student attitudes he wishes to promote be best secured by the remote mechanisms of the NIC or the tax system, coming into operation years after a student enters higher education or will they be better promoted by the Government's proposed scheme, which will operate to affect student attitudes from the first week of the first term? In this debate we have heard many theoretical arguments against the principle of student loans. Those who argue in that way should remember that the Government are not producing a

never-before-heard-of adventure in launching a programme of student loans. Many countries operate the system and we should consider how the British system compares with the systems of other countries. We are offering one of the most generous student loan schemes anywhere in the world. It will be available to a higher proportion of the student body than is the case almost anywhere else. In the Federal Republic of Germany, for example, it applies to only 33 per cent. of students and to only 12 per cent. in Japan. The loan and parental contribution together will give the British student a larger total resource than elsewhere. Similarly, if we look at details, our scheme is more generous. We are envisaging a 0 per cent. real interest rate, unlike student loans in Norway, Sweden, the Netherlands and the United States.

Our plan envisages arrangements for deferment when income falls below a certan level, unlike the United States. We are providing that mature students can borrow up to the age of 50, unlike other countries that have an age cut-off of 30.

The most cursory study of other countries' experience will provide evidence of the fallaciousness of much of the reasoning we have heard from Opposition Members. Let me sum up the international experience of student loans by reporting on the experience of my hon. Friend the Member for Buckingham (Mr. Walden) who preceded me in my job and who started the work on the student loan scheme. He visited Sweden and he asked the Socialist Minister for Education why Socialist Sweden was so attached to student loans. He was told that there were two reasons

It being half past Two o'clock, the motion for the Adjournment of the House lapsed, without Question put.

Column 450

Health Services (Basildon)

Motion made, and Question proposed, That this House do now adjourn.-- [Mr. Patnick.]

2.30 pm

Mr. David Amess (Basildon) : This is the first Adjournment debate I have had since we decided to turn the Chamber into a television set. I am appalled by that action and I believe that my vote against the televising of our proceedings was entirely vindicated.

I am pleased to have this opportunity to talk about our most excellent National Health Service, especially the high quality of health care that we enjoy in our local district. The Minister visited one of our local hospitals not long ago I know how impressed he was with the staff and general provision of health care.

The chairman of our health authority, Mrs. Joan Martin, is excellent and her work was recognised by her mention in the Queen's birthday honours list. Mr. Richard Taylor, who has just left the authority for promotion elsewhere, has done a sterling job for a number of years as general manager although I did not always agree with every decision that he made. I have every confidence that our new manager, Mr. Ken Sharpe, will do an equally admirable job. In our district we are extremely fortunate to enjoy such dedicated, hard-working and capable staff. The doctors, nurses, consultants, auxiliaries and general support staff are absolutely marvellous. My wife has already had three babies at Basildon hospital and, God willing, will have her fourth this spring. She is a regular user of the NHS and can vouch for the high standards of local health care. Against that background the House will want to know about my health authority's response to the White Paper, "Working for Patients". I am glad to say that it has given a most positive response as is demonstrated by an application for consideration as a self-governing trust. The health authority and Essex county council social services committee, under the excellent chairmanship of Mrs. Lillian Greenfield, warmly welcome the Government's response to Griffiths and to community care. They accept continuing responsibility to meet the medical, nursing and associated health care needs of individuals. They are determined to improve the care of all those in our community with health disabilities.

Only last week that committee and the health authority held a conference entitled "Partnership, Griffiths and the Elderly". There is a tremendous fund of goodwill within Basildon and Thurrock to seek a common framework for the provision of such services and determination to improve further the collaboration between all agencies.

I know that my hon. Friend will welcome the fact that a new community care team is being formed to enable some of the elderly people currently occupying acute beds due to the lack of alternative accommodation and care to be discharged and to receive community support, which will enable them to live more independently. I was involved with the giant Department of Health and Social Security during its last year of existence and I believe that I am well placed to pay a warm tribute to the then Health Ministers on their excellent work on putting together the White Paper "Working for Patients". The foundations they laid are now being built upon by an equally admirable team of Health Ministers.

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