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Mr. Straw : I shall give way for the last time.

Mr. Norris : Does the hon. Gentleman agree that, although he has listed a great many articulate interest groups who have expressed a view on the Bill, one group who are singularly under-represented in this argument are elderly income taxpayers? What has he to say to them about their tax contributions financing middle-class families and their children to enjoy an even higher standard of living in the future?

Mr. Straw : Parliamentary answers from the Under-Secretary of State and the debate on 20 October clearly established that the loan scheme between now and 2013, 24 years away, will cost more than the grant system that it replaces. If the hon. Member for Epping Forest (Mr. Norris) does not understand that, he should read annex E to the White Paper.

Given the extent of the opposition, why are the Government pursuing this madcap scheme? The speech by the right hon. Member for Blaby (Mr. Lawson) on his resignation as Chancellor was one of the strongest and most sustained pieces of controlled invective that I have ever heard delivered by a Member of this House against his own side. but the accolade for the very strongest goes to the noble Lord Beloff, a Conservative with a distinguished record of fighting the implementation of Conservative higher education policy, including the establishment of the private university of Buckingham. Speaking in the other place in the debate on the Loyal Address on 23 November he said :

"I am convinced that the loan scheme which has been evolved is so absurdly inefficient and damaging to the students, their universities and colleges and the community at large that one is tempted to wonder how any government department could have come up with so outrageous a set of propositions.

I remember that when it was first talked about in this House I warned the Government that if they were trying to act through a consortium of banks, they would find the banks very reluctant to co-operate. That has been borne out by experience. After all, a fishmonger sells fish ; that is his business. A banker lends money ; that is his business. One does not have to bribe a fishmonger to sell fish, but apparently the Government have to bribe the banks to lend money. Could we get further into absurdity?

One may ask : who is the author of so absurd a scheme? Some people say that it was thought up by a young man strong on ideology but weak on arithmetic and totally removed from the experience of ordinary students and ordinary families. Some people say, No, it was the work of the Under-Secretary of State for Education, Mr. Robert

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Jackson'. Some people say that those two explanations are not contradictory."--[ Official Report, House of Lords, 23 November 1989 ; Vol. 513, c. 186-7.]

Mr. Jackson : It is flattering to have a former professor of government at Oxford attribute so much interest to a mere Under-Secretary of State. The important point to note is that the banks have signed a contract to administer the scheme.

Mr. Straw : The important point to note about what the banks have signed is that, whatever they have signed, it is not a contract. Paragraph 10 of the "Memorandum of Understanding" says : "it does not create legal relations."

I offer the Parliamentary Under-Secretary of State some free legal advice. One of the principal elements of a contract is that it creates legal relations.

The first charge against the Government is of arrogance and the second is of incompetence. A senior Conservative--not from the Left of his party-- said to me in the Lobby that the loan scheme was so fundamentally flawed that he could only assume that it was put together by someone who wanted to discredit the idea of loans for all time. The scheme fails on every test that the Government themselves have set. The Government claim that the scheme will simultaneously reduce the burden of student support on the taxpayer, increase the resources available to students and improve access to higher education by freeing a flow of taxpayers' money for the future expansion of higher education. Each of those claims is utterly bogus, as the Secretary of State must know.

Mr. Nigel Spearing (Newham, South) : Is my hon. Friend aware that on 20 October I presented a petition from 600 medical students at the London hospital and Newham General hospital pointing out the potential damage to medical education in London, where costs will be high and where the students will not have the opportunity of working in their last three holidays, as the Secretary of State did? The scheme will especially affect women doctors and medical education in our capital city. The petition also asks for an inquiry into the damage that the scheme will cause. Is my hon. Friend aware that I have now had a card from the Table Office telling me that the Department of Education and Science is not carrying out its usual courtesy of observation on that petiton? Is that not wholly untypical of the Secretary of State, but wholly typical of the present uncaring and ignorant Administration?

Mr. Straw : I am not surprised that the Department of Education and Science is not responding to the petition because it has no answer to the fact that the loan scheme will cause immense damage to medical students and their careers. It is a further illustration of the contempt in which the Government hold this House and those who protest against the loan scheme.

Mr. Nicholas Bennett : Will the hon. Gentleman give way?

Mr. Straw : No, I have already given way to many hon. Members, including Conservative Members.

Each claim that has been made by the Secretary of State is utterly bogus. The facts are that under the scheme the burden of student support on the taxpayer will increase. The income of students, especially those from the poorest

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families, will be cut and access to higher education will be restricted. There will be and can be no freeing of any flow of funds for expansion.

Mr. Nicholas Bennett : Will the hon. Gentleman give way?

Mr. Straw : No, I have given way a great deal.

As we have established in parliamentary answers, there will be an increased cost to the taxpayer between now and at least 2015, more than a quarter of a century away.

Mr. James Pawsey (Rugby and Kenilworth) : Will the hon. Gentleman give way?

Mr. Straw : I will give way for the last time.

Mr. Pawsey : Is the hon. Gentleman aware of a parliamentary answer to me on 1 December? It says :

"the estimated net cost of the scheme is some £13 million in 2000 ; in 2005 there is estimated to be a net saving of some £37 million rising to some £49 million in the year 2010"--[ Official Report, 1 December 1989 ; Vol. 162, c. 440. ]

Mr. Straw : I am always aware of the questions that the hon. Gentleman tables because they always alert the Opposition to the fact that they are a plant.

Mr. Pawsey : It was not a plant.

Mr. Straw : The hon. Gentleman says that it was not a plant on this occasion. If he had bothered to read out the rest of the answer, we should have heard that the Parliamentary Under-Secretary referred the House to the answers that he had given to my hon. Friend the Member for Oxford, East (Mr. Smith). Those answers clearly established, with detailed tables, that cumulative savings will not arise until 2013. Well over £1.5 billion will be wasted in that period.

An early sign of that waste was given in the announcement by the Secretary of State that £492 million was to be spent on loans over the next three years. While the burden on the taxpayer will increase, most students will not benefit. The only students to benefit will be those who least need the help. Forty per cent. of all students are on a full grant. One quarter of those receive a full grant because they are older and independent of their parents and three quarters because their parents' income is so low that even this Government do not expect the parents to contribute to their childrens' upkeep at university or college. That 40 per cent. will be hit immediately by the loan scheme. Their cost of living increase is cancelled and their housing benefit entitlement is cancelled altogether. All that they receive instead is a loan which, in cash terms, cannot even meet what they have lost and which they will then have to repay. What is true without question for that 40 per cent. of students is almost certainly true of a further 40 per cent. of students who receive some grant and some parental contribution.

The Government have made much in their social security policy of the case for targeting of benefits, which has been their excuse for abandoning their pledged uprating of universal benefits such as child benefit. For student loans, they have turned the principle of targeting on its head. The rich student from the rich family is targeted for help from the state while the student from a middle or lower-income family will have that help taken away. Under the scheme, there will be no means test for the loan. The rich student can take out a loan at a subsidised rate of interest, invest it in a bank or a building

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society and at the end of the loan period clear £250 or £300 in interest, while still being able to repay the principal. What kind of public purpose is served by such beneficence to the already rich while students from poor and modest backgrounds lose out?

Mr. Nicholas Bennett : Will the hon. Gentleman give way?

Mr. Straw : It is that discrimination against those from low-income and modest backgrounds which gives the lie--for lie it is--to the preposterous claim that loans will improve access, especially for those from working-class and ethnic minority homes. Loans will increase the price of a higher education, and a higher price will mean a reduction in the demand which otherwise would exist. From 1962 until the early 1980s, the grant system led to a threefold expansion in the proportion of children from working-class homes who benefited from higher education. Loans will most surely cut down the opportunity that so many of us from such homes have enjoyed in the past.

Mr. Nicholas Bennett : Will the hon. Gentleman give way?

Mr. Straw : That fact emerged with crystal clarity from a survey published yesterday by the National Union of Students. Particular groups will be hit by the scheme, such as all those at Scottish universities, medical students and those taking nursing degrees. Entry into key but lower -paid professions will be hit. Teaching is an example.

A recent study by the Institute of Manpower Studies makes it clear that the proportion of graduates entering teaching has already slumped from 8 per cent. in 1980 to 4 per cent. in 1988. More graduates now train for the law than for teaching. The proportion entering teaching will slump still further if the loan scheme goes through because the income level below which a graduate can defer his loan is set so low that it will catch new teachers. Those with careers with low initial earnings but with high pay prospects will be able to defer loan repayments, but those who go into careers in which the starting salary may be broadly acceptable but which have poor career prospects will not. That will lead to an absurd situation in which young barristers will be able to escape repayment, but young teachers will not. [ Hon. Members :-- "Quite right."] Conservative Members say that that is quite right. It is no wonder that we now face the most terrifying shortage of teachers that we have seen for decades. The Government are not only keeping down the pay of teachers and causing their morale to collapse, but they will impose loan repayments on young teachers when they seek to eke out a meagre living from their salaries.

Mr. Nicholas Bennett : Will the hon. Gentleman give way?

Mr. Straw : I have already said that I shall not give way. In the debate on 20 October, as today, the Secretary of State sought to link loans with the Government's plans to expand higher education. The House may recall that it was once Government policy--or at least the policy of the former Secretary of State--to double the numbers in higher education over a 25-year period. On 20 October when I asked the Secretary of State how that was to be paid for, he said that I should wait to hear the answer of

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his hon. Friend the Parliamentary Under- Secretary of State. However, when I asked his hon. Friend in the debate, he said that he had "nothing to add" to the answer given by the Secretary of State. One month later we obtained the answer. The Secretary of State told The Guardian in an interview on 24 November that the commitment to double numbers has been dropped. The article said :

"he denied that Mr. Baker's commitment had ever been agreed Government policy and insisted that no Government could ever plan beyond three years in financial terms".

I have read the Secretary of State's rebuttal, which appeared in The Guardian on 27 November. He said that the report was totally misleading. He never once said that it was wrong or that quotations attributed to him were wrong. He said :

"I reaffirm the points set out by Kenneth Baker in his speech earlier this year when he foresaw something like a doubling of numbers in higher education over the next 25 years".

The Secretary of State did not say then or today--if one listens with great care to his words as we did--that he is committed in the same way as the previous Secretary of State to a doubling of numbers. That was not the previous Secretary of State's expectations or foresight--it was his policy. So far the Secretary of State--despite his earlier words--has ducked that one.

Mr. MacGregor : That is not true.

Mr. Straw : If that is not true, I will be happy to give way to the Secretary of State. Before I do, perhaps the Secretary of State will answer the question that he refused to answer on 20 October or today. The Secretary of State gave an important categorical commitment that the total tuition costs in higher education of an expansion--whether a doubling or less--would be met from the public purse.

We all know that the costs of tuition far outweigh the cost to the public purse of maintenance. Therefore, the Secretary of State's statement means that, under Conservative policy, the burden of public expenditure on higher education expansion will increase significantly. That is in complete variance with his other statements, in which he says that the share of public spending borne by higher education cannot increase. If I am wrong, I should be delighted if the Secretary of State would intervene and tell me where I am wrong.

Mr. MacGregor : I have made it clear in previous speeches that there cannot be a huge increase in the proportion of GNP spent on higher education in any country. That is accepted throughout the Western world. The importance that we attach to higher education expansion is shown by the priority that we gave to it in the Autumn Statement and the public expenditure plans--it is in the public expenditure plans that the reality of expenditure is shown--and by the extra £750 million that we intend to provide over the next three years.

Mr. Straw : The House will note that the Secretary of State did not use that opportunity to deny the comments attributed to him in The Guardian or to put on record a commitment to a doubling of the numbers in higher education over a 25-year period. The Secretary of State also failed to square his personal commitment given to the House that the public purse should meet the cost of tuition

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completely with his weasel words that there could be no significant increase in the share of public spending borne by higher education. The Secretary of State was once Chief Secretary to the Treasury, where he used to make high-flown speeches about hard work, prudent planning, careful management and how to achieve value for money. It is a great pity that he has not applied some of those principles to the Bill. The hundreds of millions of pounds to be spent on loans does not go into the pockets of students in need but into a vast black hole of defaults, deferrals and administrative costs. It is time that Conservative Members woke up to the fact that there are not only the administrative costs of the loan scheme but the double administrative cost of running a grant scheme, albeit at a diminished rate, alongside the cost of the loan scheme. By 1995, more students will be defaulting or deferring their loans than will be paying them back. An army of debt collectors will be created. Earlier the Parliamentary Under-Secretary of State said that loans will be made available to European nationals, so the army of debt collectors will be chasing around Europe seeking out graduates who have defaulted on their loans. The House has still not been told the full cost of the scheme because the Secretary of State does not know those costs and cannot say what price the banks will finally extract from him. If the Government's competence has been sorely tested in the conception of the scheme, it has been completely exposed in its execution. For more than a century the public service has had extensive experience in the administration schemes of benefits, grants and loans to members of the public. All that experience has been cast aside by the Government because of the Prime Minister's pathological obsession with the possibility that the public service might be better able to administer anything than the private sector. Instead of the public service administering the scheme, the banks have been asked to run it, and what a pantomime the negotiations with the banks have become.

Originally the negotiations were between the Government and the Committee of London and Scottish Clearing Banks. Then three of the committee's members decided to boycott the negotiations. Those three were Lloyds, the Bank of Scotland and the Clydesdale bank. The Government then had to establish their own front organisation for those banks willing--at that stage--to participate in the scheme. Even the remaining banks have shown themselves to be profoundly unhappy about the scheme. In the original Price Waterhouse report the banks said that they wanted an additional payment over and above that needed to cover costs and profit for the remaining risk that they were taking on. The banks said that the remaining risk was "not a financial risk but a risk that their reputation could be impaired by their involvement".

We are told that the participating banks agreed to the so-called "memorandum of understanding" published on 16 November only after panic and arm-twisting by the Secretary of State. On close examination of the document, the banks have agreed nothing. All costs are to be met by the taxpayer and not by the banks. The banks that have signed the document are not bound to participate in the scheme, but can withdraw at any moment. Participants are protected against all liability--and, to ensure double protection, clause 10 of the agreement announces that

"it does not create legal relations".

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Since the Parliamentary Under-Secretary of State described a contract that has been signed with the Government, perhaps now or when he replies he will give a categorical undertaking that no private or secret sweeteners have been offered to the banks for them to participate--hon. Members may laugh, but that is what happened over Rover-- and that all material documents have been laid before the House. The Parliamentary Under-Secretary of State is also laughing. He seems to dismiss that.

When I wrote to the chairmen of the participating banks to inform them that the Labour party would end the scheme, the chairman of the National Westminster bank, Lord Alexander of Weedon, wrote to me to say that his bank was in

"no sense promoting or supporting"

the introduction of the student loans legislation.

That statement is welcome but if the National Westminster bank is not promoting or supporting the legislation, it is inexplicable and inconsistent that it should have agreed to throw a lifeline to the Government to bail out the administration of the scheme.

The National Westminster bank has 42 per cent. of the student market. Students, parents and colleges are not fools. They detest this scheme. They have economic power and are already using that power to shift their accounts to other non-participating banks. I asked the chairman of the National Westminster bank and the other banks whether they believed that the best interests of their shareholders were served by participating in the scheme when they must see that they will suffer grave and tangible loss of market share and serious if incalculable damage to their reputation. Why should any bank these days want to be the lickspittle of a Government supported by barely one third of the electorate?

The Secretary of State again today repeatedly claimed that the British system of student support is one of the most generous in the Western world. That is untrue in many respects. What is true is that, although the British system may not be the most generous, it is the most efficient. Students spend less time obtaining a degree than in other countries and far fewer drop out. The cost of producing each graduate compares favourably with other countries. In that efficiency, the grants system has played a significant part.

Loans, by contrast, are unfair and inefficient. In the United States, for every three students who have a loan, one drops out. The default bill is now $1.6 billion and countries which in the past the Secretary of State prayed in aid, such as West Germany and Sweden, are returning to a grant system. The shift to loans began in 1982 in West Germany and has led to lengthening of courses, a high wastage rate and a collapse in the number of working-class students going to college. The same has happened in Sweden. Both countries have announced the reintroduction of a partial grant system.

The Bill is a fraud. It is a fraud on students, promising them more but giving them less. It is a fraud on parents, promising to reduce their children's dependency but actually making it greater. It is a fraud on the taxpayer, promising to cut the cost of student support but increasing it for each of the next 25 years. Through this Bill, Ministers are perpetrating a fraud on Parliament, pretending that the House can scrutinise a measure without details or reasons being produced. The measure is meretricious and disreputable. It will put a mortgage on knowledge and a

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debt charge on skills. It shows a contempt for Parliament and a disregard for the needs of higher education and of the economy. It is unworthy even of the present Secretary of State and we shall oppose it in the Lobby today.

5.50 pm

Mr. George Walden (Buckingham) : Over the years I have followed the evolution of the Opposition's attitude to student loans. It moved from a first phase of intellectual dishonesty to a second phase of political opportunism. Tonight it has entered a third phase, which is procedural disingenuousness.

No discussion of student loans should ignore the beginning of the era of debate on loans which was Lord Robbins' report in 1963. He produced a highly prescient report on the whole question of student expansion. He is treated by the Opposition and the academic world as a semi-divine entity because the report forshadowed the expansion of higher education. The Opposition and, I regret to add, the academic world failed to recall that, although Lord Robbins rejected loans, he said that as higher education continued to expand and more women entered--as they have done, particularly under this Government--the time would come when there would have to be an experiment with student loans. He gave three reasons, which I should have thought would appeal to the Opposition : first, social equity, secondly, disruptive justice, and, thirdly, the need to encourage a sense of financial discipline and self-reliance among students. It seems to me that his prognostication has come true.

The hon. Member for Blackburn (Mr. Straw) implied in his criticism of the Government's procedures that they are rushing into student loans, but it is more than a quarter of a century since the Robbins report was published. It seems perfectly reasonable to move ahead with this highly tentative and limited system of loans, but I shall come back to that point later.

I admit that the Opposition have moved on from the abject intellectual dishonesty of not recognising, even in their own terms of social equity, the importance of student loans in Lord Robbins' report. They have done so at a time when we are once again considering the mass expansion of higher education. They have moved on from their initial stance because they have lost, absolutely and decisively, the public debate which has been going on for several years.

Anyone who listened carefully to the hon. Member for Blackburn would have discovered that a critique of student loans in principle was almost entirely lacking from his speech. He gave no undertaking to scrap any system put in place by this Government.

Mr. Straw : I have given that undertaking. I did so on 20 October, and I have done so outside the House.

Mr. Walden : I am glad that the hon. Gentleman has made that statement. It brings me to the second phase of the Opposition's attitude to student loans, political opportunism. The hon. Member for Blackburn says simultaneously that he will finance a mass expansion of higher education while not charging anyone fees and that he will not only maintain but increase the grants system.

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He says that all those net costs will fall on the Treasury at precisely the time when there will be a huge expansion in the elderly population.

We are back to the old Labour party. It is not a new party but the old party of political opportunism which dishes out unsustainable promises to both old and young with complete contempt for public opinion and intelligence. Everyone knows that what the hon. Gentleman promises is unsustainable. It has not been done and cannot be done in any other country, even in countries richer than Britain. I have in mind the United States of America, West Germany and France, each of which has a gross national product greater than ours. It is dishonest for the hon. Gentleman to attempt to assure the House and public opinion that a future Labour Government will give preferential treatment to our students when there will be a distortion in the population balance in a country with continuing economic problems. It is false, and it is political opportunism.

Mr. Nicholas Bennett : In the event that a Labour Government were elected, a few students would have had loans in the intervening period. The hon. Member for Blackburn (Mr. Straw) did not tell us what would happen to those loans. Would a Labour Government repay the student or the bank, or encourage the student to renege on the loan?

Mr. Walden : My hon. Friend makes a useful complement to my speech.

To move on to a more fundamental point, in the past few years we have been in danger of misdirecting our attention to a matter that is essentially peripheral to the expansion of higher education. Even if the arrangements are implemented, students will pay for only between 6 and 7 per cent. of the true cost of their higher education. With an impending expansion of higher education, of course we should focus our attention on cost and who will pay, but above all we must consider quality. What is the point of putting more people through higher education if in 20 or 30 years the degrees awarded are not worth the paper on which they are written? Some countries have gone through that process. In considering how to prevent loss of quality we must ask ourselves how we can deploy the limited available cash in such a way that quality will not be compromised.

The only future for this country, which is a middle-ranking power facing the resurgence of an economic colossus in Europe in the shape of a united Germany, lies in a highly and extensively educated population with expanded higher education of quality. While we discuss tonight the exact way in which the 6 to 7 per cent. of the cost will be apportioned, what will happen to the prospects for quality? We have seen what has happened with GCSEs. There has been a miraculous increase of 50 per cent. in A grade passes in two years. We all know that that represents dangerous educational inflation. The A-level examination councils are now working to dilute A- levels to increase the number of people who will have the necessary qualifications on paper to go into higher education.

The danger is that, while we are fiddling around on the periphery with this piddling sum--that is exactly what it is--which is to be repaid by people who will have benefited

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from higher education to earn relatively high salaries, we shall see a slow erosion in the quality of higher education which has been by far the best aspect of British education.

I am in favour of the Government's proposal on student loans, not because it will bring in much money in the short term, but because, if it is administered carefully--I have no delusions about the intricacy and complications of that, having handled it a little myself--it will limit the outgoings at a time when we are trying to expand higher education.

I believe that we should increase spending on education. If a Government have spare money to spend on education, they should invest it in ways which will guarantee the continuing quality of higher education. By that I mean that we should start with nursery schools. We should have 100 per cent. high quality nursery provision if we are to keep up with the future Japanese of Europe--the Germans. Teachers should receive higher pay in return for much higher performance. All that involves large sums of money. Although the hon. Member for Blackburn could say this without any intellectual difficulty, I cannot honestly bring myself to argue for greater public expenditure on nursery schools and greater expenditure in return for quality in secondary education and simultaneously suggest that I shall give students exactly what they want in higher education. That is a dishonest position, and I hope that the hon. Gentleman will reconsider it.

If an American were in the Strangers' Gallery tonight listening to the Opposition and he knew the position of the National Union of Students in this, he would go away saying to himself, "What gives with the Brits? Are the privileged young who will not be unemployed but will do well and will start on a salary of over £10,000 a year so selfish that they do not want to repay a mere 6 or 7 per cent. of the cost of their education? What kind of young population does Britain have?"

I do not believe that the Labour party or the NUS represents the true views of young people. If we explain to them the demography that we shall face, the fact that we shall have an aging population and that they will be far better off than the average, we shall appeal to their generosity. If we explain to them that we are asking them to pay only a mere 6 or 7 per cent. in return for which they will get a life chance 100 times greater than anyone else, they will understand the issue. It is a sad day when the Opposition pitch their appeal to the young of this country at such a low level.

6.2 pm

Mr. Gordon Oakes (Halton) : I oppose this ill-conceived Bill on the grounds of principle, practicability and procedure. As the hon. Member for Southwark and Bermondsey (Mr. Hughes) said in his point of order, it is an abuse of the House to present an innovation in four clauses and two schedules and rely entirely on regulations. Before you came to the Chair, Mr. Deputy Speaker, Mr. Speaker advised us to make short speeches because many hon. Members on both sides wished to speak. For that reason, I shall not take any interventions. It is not meant as a discourtesy. My experience is that interventions can add up to 50 per cent. to the time of a speech, and once one starts giving way, one must continue, otherwise hon. Members think that they have been singled out in some way.

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In our debate on 20 October, the Under- Secretary of State for Education and Science said that past Labour Governments had "taken a considerable interest in the idea of student loans."--[ Official Report, 20 October 1989 ; Vol. 158, c. 438.]

That is true. In 1976, I was appointed Minister of State at the Department of Education and Science with special responsibility for higher education. Hon. Members who were Members of Parliament at the time will remember that we were going through an extremely difficult time. All spheres of policy and all Departments were looking at money carefully. Student loans was one of the first questions to arrive on my desk. It had been around for years, but I was a new Minister in a new climate, so we had to consider the matter afresh.

I was morally opposed to the idea of students having to pay for their education and maintenance, but I had to swallow that and examine the issue on its merits. Several difficulties arose. Whatever the scheme and no matter how one looked at it or tried to avoid it, poorer students would be hardest hit. That was the inevitable result. Then there was the problem of the Scottish universities which have four-year rather than three-year courses of study. It would create a considerable anomaly if we had a scheme in one country and not in the other. There was the problem of medical students and others whose degree courses inevitably take five or six years. The Swedish solution was considered. Social Democratic Sweden had a loans system, but even in 1976 the Swedish Parliament and Government were having doubts about the administration of that system.

All those objections to the scheme have not gone away. They are precisely the objections that remain today. The scheme will hit the poorest students most, and there is the problem of longer courses at some universities and of longer courses according to the subject being studied.

I saw an excellent article in The Economist of 15 July which concluded that the Swedish scheme

"costs more than just giving the students the money."

The Swedish and West German Governments are beginning to realise that, yet we are considering this discredited scheme.

I said that I opposed the Bill for three reasons, and I shall deal first with my opposition in principle. The hon. Member for Buckingham (Mr. Walden) said that my hon. Friend the Member for Blackburn (Mr. Straw) had not dealt with the principle. I firmly believe that education is an investment in the future of the country. It is not expenditure. The United Kingdom has coal and some oil, which will eventually run out, but precious few other raw materials. The one asset that we have and on which we have survived for decades is the skill, ability and education of our people. That is the root of the matter. Any Government of any complexion who ignore that do so at their own peril.

Fifteen per cent. of our population receive some form of higher education. That is half the number of our competitors France and Germany, and one quarter of the United States figure. We live in a highly competitive world and face the prospect of a united Germany, as the hon. Member for Buckingham pointed out, yet that is the percentage of the population receiving higher education.

According to the Government in a written answer printed in Hansard on 29 June at column 539 , 5 per cent. of socio-economic groups 3, 4 and 5--not the poorest, but the poorer sections of the community--are in receipt of

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some form of higher education. They represent 60 per cent. of that age group. What a waste of talent. If education means anything and if Britain is to survive, let alone progress, we need to use the skills of all young people--girls and boys, black and white, from poor homes or rich homes. We cannot do that if we educate 5 per cent. of the 60 per cent. who make up a certain socio-economic group.

Student loans will make the situation worse. As my hon. Friend the Member for Blackburn said, there is a sharp difference between a rich young student, who can put the money in a building society, pocket the interest and pay the loan back, and a poor student who will have the burden round his neck if he gets a degree or finishes a course and goes into employment.

The scheme could not come at a worse time. The Government are perfectly well aware that, demographically, there will be a shortage of young people during the next few decades. If we add to the burdens of young people by reducing access to universities, that will have a disastrous effect. We should encourage more people to take training or degree courses, but the scheme will encourage fewer people to do so.

On principle, it is a bad scheme. It is the duty of a nation to educate its young people, and pay for the maintenance of those young people while they receive education. That is my firm belief. I understand that 120 organisations responded to the Minister about the loans White Paper, and 95 per cent. of those organisations said that they were opposed to the scheme. One Tory county council wholeheartedly supported it. Who wants the scheme, apart from a few people in the Government? I am convinced that many Conservative Members do not want it.

Who has opposed the scheme? The National Union of Students violently and bitterly opposes it. [Laughter.] Some hon. Gentlemen laugh. They treat the NUS as an outpost of the Albanian Communist party. That is the standing, in Conservative Members' eyes, of the body that represents organised students in Britain. If hon. Members think that the NUS does not speak in accordance with the wishes of its members, let them look at their postbags and the letters that they receive from students. They are not all prepared, mass-produced letters, although we all get that kind. They are carefully thought out, hand-written letters from the students concerned and some are from students whose parents are Conservative voters. Students are opposed to the scheme.

The universities, polytechnics and institutions of learning are all opposed to the scheme, and I believe that the majority of parents are opposed to it. Parents are not taken in by being told that they may have to pay less money, because they want to secure the best education for their children. Many parents are prepared to pay for that education, if they can afford it. They know that the scheme will not save them money.

What about the lending institutions? They want no part of the scheme. My hon. Friend the Member for Blackburn mentioned that Lloyds bank, the Bank of Scotland and the Clydesdale bank have pulled out. I have yet to hear of any bank or building society that

enthusiastically espouses the scheme, and yet they are in the business of lending money.

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