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Dr. Hampson : The problem with that argument is that the Clydesdale bank and the Co-operative bank are

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offering loans. The only question is about the type of scheme. When the Government are subsidising the interest rates- -up to £5,000 for borrowing for vocational courses--the banks are happy to participate.

Mr. Oakes : Yes, but they do not want to administer the crazy scheme on behalf of the Government, and the Government admit that. If one considers the financial effects of the Bill, which was ordered to be printed as late as 22 November, the explanatory and financial memorandum states :

"The administration costs of the scheme will be in the order of £10 to £20 million and will be settled when contractual negotiations are concluded."

No firm contractual negotiations have yet been concluded. Discussions are going on, but the banks do not want to know. The reason is that they are in the business of attracting customers, and so are the building societies. They do not want young people, particularly highly educated young people, to think of them as an ogre or as the institution to which they owe money before they have begun to earn. They do not want that image, and so they do not want to participate in the scheme.

As my hon. Friend the Member for Blackburn said, the cost of the scheme will be horrendous. Considerable concessions were given to the banks. I understand that the banks have been offered a special rate of loan and that student loans will be exempt from the banks' balance sheets. Banks will be guaranteed higher than standard interest rates, and I believe that the Government are promising to indemnify the banks against a change of Government policy or a change of Government. Even with those inducements, the banks still do not want to know.

What about the procedure of the Bill? It is absolutely disgraceful that we should approach the issue in a four-clause, two-schedule Bill. The Secretary of State said that the Bill was drawn up as a parallel to the Education Act 1962. That was a very different thing. A duty was then placed on the Secretary of State for local authorities to administer a scheme that was already in existence. That Act was not a leap in the dark, but the student loans scheme is.

Clause 1 introduces the power to make orders and regulations subject to the negative resolution procedure. As my hon. Friend the Member for Blackburn said, such resolutions need not be debated by the House. Many prayers are tabled, but are not debated.

Clause 2 goes to extraordinary lengths about Northern Ireland. I see that the hon. Member for Antrim, North (Rev. Ian Paisley) is in his place, and I have no doubt that he will want to speak on the subject. Under the Northern Ireland Act 1974, the House assumed responsibility for Northern Ireland, and one of the fears was that orders could be swept under the carpet and dealt with by the House without any debate. It was therefore provided that most orders made under the Act had to be debated under the affirmative resolution procedure, and had to come before the whole House. Why do the Government want to sweep that away for education grants in clause 2, so that a whole province can be hauled into this scheme without any debate in the House?

Schedule 2 provides that the Secretary of State may make regulations about the amount of a loan, the rate of interest and repayment, and regulations that impose a duty on the governing bodies of higher education institutions to issue certificates of eligibility. All those matters can be decided by regulations made by the Secretary of State

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without any debate in the House. No Government and no Secretary of State should have such powers, and I would say the same if my party was in government. No Secretary of State should have unbridled and unlimited powers, and the House should not grant them, because the Secretary of State should be responsible to the House.

This Bill is a bad Bill for a number of reasons. It is bad for students and very bad for young people. It is bad for higher education generally. It is bad for the financial institutions, which do not really want to know it. It is bad for the democratic process in the House, as matters will not be debated but will be decided by Order in Council. Most of all, it is bad for Britain's prosperity, which is what we should all consider.

The Minister said that the scheme will reduce student costs by 6 or 7 per cent. If, for that, we reduce intake and accessibility to higher education, we shall have done a bad thing tonight for our country's prosperity.

6.20 pm

Mr. Alistair Burt (Bury, North) : I am grateful to be called so early in this interesting and important debate, the subject of which I have followed for the past three years while I have been Parliamentary Private Secretary to my right hon. Friend the Member for Mole Valley (Mr. Baker). During his stewardship of the Department of Education and Science, he was heavily involved with this issue. I enjoyed that time in the Department, working with civil servants and others there. It was an interesting time.

We are dealing with a matter that is rather more difficult than it ought to be because we are dealing with a change of culture. As my hon. Friend the Member for Buckingham (Mr. Walden) said at the conclusion of his remarkable and excellent speech, there is a difference of attitude between Britain and the United States. If we had been born and bred in one of the many countries where a loans system exists, we would not be having this debate ; we would deal with loans as a matter of course. Whenever we consider a change of culture, or a change from the norm, we have to go through this enormous rigmarole of believing that everything that went before is correct and that any change must be for the worse. In this case, that is simply not true.

What irks Opposition Members so much is that the debate takes place against a background of higher education receiving enormous support from the Government. There are 200,000 more students in higher education than 10 years ago. There are more part-time and more mature students and there is extremely generous maintenance support. Labour cannot come to terms with that. As a result, Opposition Members persist in suggesting that, by proposing student loans, the Government have abdicated from their support for higher education. We know that that is not true. Higher education is a partnership between the Government, who will continue to fund tuition and the capital cost of buildings, and students. I do not believe that that partnership has been remotely equal--students should make a greater contribution.

It is important to keep a sense of proportion. It is just such a sense of proportion which puts Opposition Members in difficulty when they say what they might do to ensure that the number of students in higher education increases--something which we are determined to do. The grants system was perfectly adequate for a small higher

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education scheme, but it is inadequate for a larger and growing one. Robbins suggested that that would be the case.

Nick Barr of the London School of Economics has calculated how much it might cost to abolish the parental contribution, to return the grant to a serious level and to increase by at least 50 per cent. the number of grants available to expand higher education. He suggests that it would be about £2.25 billion. I do not believe that any Government could make that sort of commitment to higher education maintenance--we should remember that that has nothing to do with bricks and mortar and tuition. It is not realistic to make such a commitment to students. Labour has been dishonest, suggesting that it can make such a commitment.

If we want to expand higher education but know that we cannot do it through the existing grants system because it is inadequate for the purpose, the loans system is a useful way in which to supplement student maintenance while the student is in higher education. I believe that the scheme is useful and appropriate on three grounds. First, there is a moral argument in favour of loans. Secondly, they are not a disincentive. Thirdly, I believe that they are flexible. I shall deal first with the moral argument. We have heard many statements from Opposition Members of how immoral it is to demand from the student some backing for his or her higher education. What could be more immoral than a student having to depend on the state in the form of social security benefits or on parents? What could be more moral than for the individual student to say, "I have some commitment to my future and I am prepared to make an investment in it"? That seems entirely moral and appropriate.

Some of my lower-paid constituents are perfectly happy to make a commitment to higher education, although nobody from their families may have seen a university. They know that they and the rest of the country benefit generally from higher education, and they are happy to contribute to the education of doctors, teachers, scientists and others who receive higher education. If, however, they are asked for a greater commitment for the maintenance of students while at university, I think that they are entitled to ask, "What are they doing for themselves? Where is their commitment to their future?" We are presenting the perfect moral riposte. The student who no longer wants to have thrown at him the argument that he is a drain on the taxpayer--I do not believe that students are a drain on the taxpayer-- could thus demonstrate his commitment to his future. I shall deal, secondly, with whether loans are a deterrent. It has been suggested that the Government should predict, as have surveys done by the National Union of Students, what a deterrent a loans system might be. That is not the right approach. We should consider the experience of other countries and ask whether their loans systems have deterred people from going into higher education. We all travel to Europe and the United States. Do we see there a desperate shortage of people going through higher education because of a loans system? Of course not. They are used to it. They are perfectly happy with it. Moreover, the system suits students from low-income families. A task force that surveyed student assistance under the Canadian student loans programme in 1980 concluded :

"aid programmes were important and necessary elements in supporting students from lower income families".

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Loans were as effective as grants at encouraging participation by low-income students, but loans cost less and so enabled federal and provincial Governments to help more students without increasing the cost to the taxpayer.

If there is one thing we suffer from in Britain, it is lack of access for students from poorer socio-economic classes. The grant system has not dealt with that. I do not believe that access is governed by cost. I shall not go all the way with the argument that the loans system is a necessary adjunct to greater access, because I believe that access is controlled by different things, but there is no evidence anywhere in the world to suggest that the introduction of a loans system deters people from participating in higher education. We should note that West Germany has three times as many students in higher education from poorer socio-economic groups than Britain. The average loan there is about £2,000 a year. The system works for them ; it is no deterrent. I urge those who are worried by the deterrent argument to look not at predictions or the answers to surveys which suggest replies, but at the experience of countries all over the world. There such questions are answered. Several Hon. Members rose--

Mr. Burt : Would hon. Members be so quick to step into my grave? Thirdly, we know that Britain's higher education system needs expanding, and we want a flexible economic system in order to make that possible. The flexibility that the loan system gives in providing an extra channel of resources for the individual student will make an important contribution, particularly to those students who are dependent on means-tested grants from their parents but whose parents do not contribute fully. About 40 per cent. of parents do not make up the proper level of grant and their chidren are deprived of that element of money which they would otherwise receive. The loan will not be means tested so that for those who find it hard to make the parental contribution the loan system will provide a flexible way out. It will provide extra money, non-means tested, for the benefit of their youngsters.

I have three points of concern, which I have already mentioned to my right hon. Friend the Secretary of State. The first is in relation to disabled students. As my right hon. Friend knows, I have a particular concern for the arguments raised by the Royal National Institute for the Deaf which has lobbied on behalf of those whom it represents and other disabled students. It is clear that deaf students have lower salary prospects than hearing graduates. International comparisons for disabled student support show that many countries provide more generous support for such students than Britain has up to now. The Bill, through access funds, will give Britain an opportunity to top up the support that we currently provide for disabled students. I hope that my right hon. and hon. Friends will consider that matter carefully during the passage of the Bill. We do not have many disabled students in higher education and we want to encourage more. They have particular problems and their anxieties might be set at rest if we were to take the appropriate steps in the Bill.

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Secondly, we should look carefully at housing costs and the abolition of benefits which are a worry, particularly in some regions. It will do the Government no harm to examine that carefully.

Lastly, we need to make it clear that, contrary to the allegations made by Opposition Members, the scheme has nothing to do with the raising of loans to pay for tuition fees. It is all to do with maintenance. There is a balance in higher education between the Government and individual students. We all benefit from higher education and, as taxpayers and as a Government, we contribute to its bricks and mortar, to the teaching and to the resources available. But here is a cast-iron opportunity for the individual student to show his or her commitment to his or her future. The youngsters of Britain will respond to that challenge. They will see the loan system as an assistance, not a deterrent, and, in a few years' time, like many other parts of the world, we will wonder what this debate and this fuss have been all about.

6.32 pm

Mr. Simon Hughes (Southwark and Bermondsey) : This evening there are two bits of bad news. One is the Bill and the other is the result of the leadership election in the Tory party.

Mr. Jimmy Hood (Clydesdale) : On a point of order, Madam Deputy Speaker. The result of the leadership election of the Conservative party is that the Prime Minister has only 314 votes--

Madam Deputy Speaker (Miss Betty Boothroyd) : Order. Whatever interest that might create outside the Chamber, we are now dealing with the Second Reading of an important Bill.

Mr. Hughes : I was going to summarise the result as Finchley 314, Clwyd, North-West 33. There were 24 abstentions, so that means 57 dissatisfied Tories. Are they here now, is what we would like to know.

Madam Deputy Speaker : Order. I assume that the hon. Gentleman will now speak on the Bill.

Mr. Hughes : I was going on to say that I guess that that means that, sadly, policies such as those in the Bill will go on unchanged. Therefore, that means that the Opposition will continue having to expose the weaknesses of the argument and the proposed legislation. I want to take head on the arguments as to why this is a wrong Bill. Hon. Members have dealt with the constitutional impropriety of the Bill. The inadequacy of the Bill has not only been mentioned in this House. When my noble Friend Lord Addington spoke in the debate on the Loyal Address in the other place, he said that when he picked up the Bill from the Vote Office he thought that the middle must have fallen out of it, it was so thin.

For the reasons that have been given, no parallel can be drawn with the Education Act 1962, which introduced grants. This is a thin Bill simply because the Government have not yet been able to make arrangements for its proper implementation. No doubt it would have had much more substance had they been able to do so. However, rather than not go ahead with their commitment and find themselves in difficulty, they have introduced this shadow Bill--that is effectively what it is--and we shall no doubt spend all our time in Committee having to debate things that might be or might have been.

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As a result, the Government may find themselves in some difficulty in the other place, where I gather that even Conservative Members, and not just the noble Lord Beloff, are significantly unhappy about the fact that they will have the substance of the Bill only in secondary legislation. I must warn the Government that, contrary to convention, there may well be votes on this Bill's secondary legislation in the other place if it is earlier deprived of the substantive material which should be in the Bill.

We are being asked to change from a grant system to something which is not entirely a loan system but which in due course will become half a loan system--half grant, half loans. As has been pointed out, no other country has gone from an entirely grant system to a loan system.

Dame Elaine Kellett-Bowman : No other country has one.

Mr. Hughes : That is right. Therefore, all the arguments about the effect of such a change on access elsewhere are invalid. No other country has in the past thought it sufficiently important to invest adequately in students to provide a full grant system rather than a partial grant system. It is no good the hon. Lady shaking her head despondently.

When the Select Committee on Education, Science and Art considered the matter only a couple of years ago--it had a Tory majority and it was chaired by a Conservative Member--it recommended the continuation of a grant system. It considered whether there should be a loan system and it concluded, without having all the inhibitions of being in government but representing parties across the Floor of the House, that the grant system should be retained because it was the single best way of ensuring maximum access.

I accept that we have not been very good at that. It is poor that only 8 per cent. of the lower socio-economic groups have gone into higher education, but that does not mean that we should take a step, for which there is no obvious precedent, that points towards a conclusion that will not increase access for people who have the least money to spend. There is no evidence to support the argument that to change from a system whereby people are funded either, if they are poor, entirely without any parental contribution, or, if their parents have larger incomes, partially by parental income, to one whereby they have to decide before they go into higher education whether they wish to take out a loan, will act as an incentive to continuing in education as opposed to going out to work to earn money.

Dame Elaine Kellett-Bowman : Will the hon. Gentleman admit that the greatest destruction of access to those from blue-collar families was the destruction of the grammar schools? If youngsters can be persuaded to stay on in education after the age of 16, there is a good chance that they will go to university, and in the grammar schools they did. Grammar schools in my constituency have a good access rate for the children of blue-collar workers, including some who are now in the Cabinet.

Mr. Hughes : First, most grammar schools were destroyed under a Tory Government. Secondly, that is not a provable case. Thirdly, as the Secretary of State was at pains to point out, access has increased in recent years, as it should have done, but we are still falling substantially

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behind all comparable countries ; in some cases so far behind that only 15 per cent. of our students go on to further and higher education compared with more than 50 per cent. elsewhere. There is a big difference between addressing that question by saying that people have to pay for a public service before they can benefit and the way that we pay for future increased social security expenditure through people contributing to occupational pensions. The latter is on the basis that, as one earns, so contribution is made. The former is on the basis that one takes on the liability speculatively in the belief that one will be able to make up later that cost incurred at the beginning. They are entirely different arguments.

No Minister has disagreed when we have said that those countries that have looked at their present mixed grant-loan system--Sweden, the Netherlands and Germany--are moving away from balancing it in favour of loans and towards balancing it in favour of grants, not least because they find that the former is inadequate for giving access to the groups that most need it and because debt repayments are growing rather than being reduced.

Mr. Jackson : The hon. Gentleman has heard the answer on this several times, but he keeps making the same point, which suggests that he is not prepared to listen. We are moving from a wholly grants system to a 50 : 50 grants-loans system. The Swedes are moving from a pretty well wholly loans system to a rather less than 50 : 50 grants-loans system. The Germans are moving to a grant-loans mix along the same lines, with the same sort of balance, as in the system that we are proposing. The crucial difference is that, while our grants and loans will be available to virtually 100 per cent. of full-time students, in Germany they are available to only 30 per cent.

Mr. Hughes : I have made the point that there is no exact parallel because we start from a different point. It is therefore also invalid for Ministers to say, as the Secretary of State did today, that we do so much better by our students because, per year, they get so much more support. We know the answer to that too. It is because, in many other places, the length of the course is significantly longer. Therefore, the amount that we contribute is good value for money. There should be more contributions, not fewer, and more from the public purse.

It is no good the Government trying to hide their embarrassment about saying that they are committed to education and the expansion of further and higher education, when at the same time, in public expenditure plans, not only does the Secretary of State start back-tracking on the commitment apparently made in January by his predecessor but we are clearly not funding higher and further education in any way that is likely to produce the increase in student numbers that the country desperately needs.

Mr. Straw : Is not the point about the international comparisons that, whatever the mix of loans and grants with which one starts, wherever there has been a shift to greater reliance on loans, access has been cut? That is why Sweden and West Germany are moving back the other way.

Mr. Hughes : That is the point that I made when we debated the White Paper, and it has been made elsewhere. That is why the Minister and his colleagues are under

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attack, not just from the Opposition and students who have an immediate interest, but from academics and even from Conservative Members.

The hon. Member for Blackburn (Mr. Straw) has already referred to the noble Lord Beloff, who has no little credibility as an academic and is a Conservative whom the Government have always previously prayed in aid as somebody to whom serious attention should be given. He said that the student loan plan is

"absurdly inefficient and damaging to the students, their universities and colleges and the community at large".--[ Official Report, House of Lords, 23 November 1989 ; Vol. 513, c. 186.] That is partly because of its risk to access for the whole community.

Mr. Jackson : I am sorry to intervene again, but it is necessary to correct what has been reported incorrectly. In Germany, for example, the proportion of students from working-class backgrounds in higher education has risen from 16 to 18 per cent. since the introduction of the loans scheme.

Mr. Straw : That is not true.

Mr. Hughes : The change in other countries has been assessed and analysed, and all those countries that are reviewing their schemes are moving to increase the amount of grant and decrease the relevant proportion of loans. I am happy to sit down with the Under-Secretary and go through the figures, but the trend in all the other countries is in the opposite direction to the trend in Britain. We have the worst record on numbers, and we should be doing everything to increase those numbers.

We have no detail before us. The Bill effectively comprises one part of one clause and two small parts in the schedule. There was far more detail in the White Paper and in the consultants' reports, which we expected would have been transferred into proposed legislation. There is no mention of access funds, of the administrative body that is to be set up for which the senior executive post has already been advertised, of the way in which the money for the loans will be provided, or of what the intended initial sum would be--£420 has been mentioned--or of the way in which that will be reassessed. Furthermore, there is no mention of any arrangement with the banks because, as I hope that the Minister now accepts, no final arrangement has been made with the banks. Some of the banks have agreed to help draw up a proposal, depending on the passage of the Bill and on further details being worked out, but clearly there is no contract and nothing firm. The banks are obviously extremely unhappy because they stand to lose substantial numbers of customers. I hope that students and others will consider carefully which banks are subscribing and which are not subscribing to the scheme. If the Government believe in customer power, perhaps they will respond to the fact that customers of the present and future customers will use their power to tell the banks not just that they are against the scheme and will not support it, but that they will have nothing to do with the banks which commit themselves to the scheme.

Our opposition is not just that because we have no details and because all that we are being told is that we are changing from grants to loans. We know too that students

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will be disentitled from housing benefit, unemployment benefit and income support. Those are substantial reductions from the entitlements that people had begun to believe were part of the general panoply of the welfare state. I heard the hon. Member for Bury, North (Mr. Burt) say that he was worried about that. Many people are worried because the combined costs of deregulation of rents and the poll tax that students will have to pay next year, albeit at a reduced rate, will be more than the entire grant. Furthermore, in some parts of the country, because of high living costs, the amount of money left in students' pockets will be reduced from about £30 a week to about £6 a week within the year. My noble Friend Lord Ritchie has given the figures on this in the other place. That could be a real loss per student of over £1,000 a year. It is wrong and unfair to students to say that attitudes will change if their grants are replaced by loans. Many students find it difficult to survive. Many make substantial sacrifices to go to and stay on at further and higher education establishments. Many do other jobs to bring in money, and the vast majority are entirely financially responsible. At the moment, they have to go into debt to subsidise themselves. The difference that the Government are introducing is that they will have to go into official debt, authorised by the Government and probably at a high level. There will also be no great saving. We know that, for at least 13 years, there will be no saving to the public purse. There may be no saving for another decade after that. It is ludicrous to plan against an eventuality of increased access in the long term with a short- term provision that means that it will cost more to introduce a scheme about which there can be no certainty. This is a speculative venture.

I only wish that we were debating today a measure arrived at in an entirely different way. The reform of student finance could have been tackled completely differently. Consensus could have been sought, as it was in 1962. Instead of bullying the banks and undervaluing the students, there could have been debate with the people who know about these things to try to arrive at an agreed solution. There could have been, as the hon. Member for Buckingham (Mr. Walden) suggested, an experiment. We could have looked at certain systems, without introducing them wholesale with no ability to calculate their consequences.

We could have worked out a way to reduce dependency on parents. I believe that there should be a reduction in the parental contribution, because many parents do not pay it and students of such parents have great difficulty. There could have been a way to ensure adequate public funding, and I and my colleagues are not ashamed to say that we believe that there should be more public funding, for higher and further education. It is no good the Government saying that they cannot solve the problem simply because they are not willing to put more taxpayers' money into the kitty.

There is no guarantee that access will not be damaged. No answer has been given to the concerns expressed about deaf students and students suffering from many other disabilities, who will necessarily incur hundreds, if not thousands, of pounds' worth of extra costs in completing their courses. No answer has been given to the concerns expressed on behalf of mature students, many of whom give up well-paid jobs to return to education. Many of them already have difficulties, especially those who have

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families. Above all, no answer has been given to the concerns about the poorest students of all, who are already finding life extremely difficult and who will find it substantially more difficult in future.

What about longer courses? In England, no answers have been given to the concern expressed about dentists, medical students, architects and vets. In Scotland one starts from the premise that courses are longer, but hardly anything has been said about Scottish students, either.

Mrs. Ray Michie (Argyll and Bute) : My hon. Friend is aware of the Bill's serious implications for the unique Scottish education system and the broad four-year degree courses that we have north of the border. Did my hon. Friend note that, during the long speech of the Secretary of State, the right hon. Gentleman never once mentioned Scotland? [ Hon. Members-- : "Yes, he did."] He referred only to the four-year degree course. I think that my hon. Friend will agree that that is disgraceful, coming from a supposed Scot--or ex-Scot. I hope that the Minister responsible for education in Scotland will tell us that the Government propose to take Scottish universities out of the ambit of the London-based Universities Funding Council immediately.

Mr. Hughes : My hon. Friend is right. The Secretary of State mentioned Scotland only once, when he said that he had been a beneficiary of the Scottish system. It is a bit rich for him now to make proposals that will do more harm to Scottish education--the system from which he benefited --even than to education elsewhere in Britain.

Conservative Members find the arguments against the scheme unpalatable but their logic is fundamentally flawed. They say, "We cannot afford to pay more grant, because more people will be entering higher education and that will cost the Exchequer more." If the argument is that entering higher and further education increases one's ability to earn well, there must surely come a time when more than 50 per cent. of young people enter further education and, presumably, eventually they will all be earning more. They will then be able to pay their way and make their contribution. The logic of the taxpayer funding the student--the person who earns most paying most- -is eminently applicable if the Government argue the numbers of students will be expanded.

The increased resources which the Bill will provide are primarily the increased resources that the students will have to find. The Government's attempt to prevent an increase in dependency will result only in increased dependency on credit. The only access that will be increased will be the use of little plastic cards. It will be a sad day for education in Britain if this shadow of a Bill is passed. My only hope is that, given that the Government have found it so difficult to get anyone to support it so far, it will disappear completely before it completes its stages here and in another place. 6.52 pm

Mr. Allan Stewart (Eastwood) : Before I come to my remarks on the Bill, I hope that the House will allow me to say one sentence on another matter. May I, on behalf of my hon. Friends, congratulate my right hon. Friend the Prime Minister on the massive and overwhelming vote of confidence that she has received as leader of the Conservative party--

Hon. Members : Hear, hear.

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Madam Deputy Speaker (Miss Betty Boothroyd) : Order. I called the hon. Member for Eastwood (Mr. Stewart) to take part in the debate, and I hope that he will now do so.

Mr. Stewart : The purple passages in the speech of the hon. Member for Blackburn (Mr. Straw), who opened for the Opposition, had some entertainment value, but what was most interesting about his speech was what he did not say about the Labour party's policy. We have heard from him that he is in favour of grants, but when asked, "At what level?", he says that he is in favour of grants at the level that resources allow. The ringing cry will go round the campuses of Britain : "Trust us lads. We'll see what we can do." Perhaps the hon. Member for Oxford, East (Mr. Smith) would like me to give way to him so that he can tell the House where Opposition Members stand on early-day motion 117 in the names of the hon. Member for Bradford, North (Mr. Wall) and others. Does that reflect Opposition Front Bench policy? I note that the hon. Gentleman is silent.

The Opposition have failed to understand the basic reasoning behind a loans and grants system. As the right hon. Member for Halton (Mr. Oakes) said earlier, higher education is an investment. Because it is an investment that benefits society, there should be a grant element. But because it is an investment that also benefits individuals, a loan element is also justified.

The hon. Member for Southwark and Bermondsey (Mr. Hughes) talked about the constitutional argument. Somewhat unusually, Opposition Members have criticised the Bill for being too short ; generally Bills are criticised for being too long. As a former Scottish Office education Minister, I had the duty of administering the grant system which in Scotland is run not by local authorities but by the Scottish Office. In the light of that practical experience, I can tell my hon. Friend the Under-Secretary that I would be appalled at the prospect of primary legislation being introduced to cover every change in the grant or loan system. Of course, changes in detail arise from time to time, and it is appropriate to implement them by regulations. We have heard the charge that loans would be a disincentive to access by lower income groups. As the very good briefing note available to all hon. Members from the Library explains, experience in Canada, Sweden and America shows that working-class students are willing to borrow to finance tuition or--as in this case--living expenses. The Canadian study is particularly interesting. It points out that those from lower socio- economic groups are more willing to take on loans than those from higher socio-economic groups. That is precisely what one would expect, because the returns from higher education are likely to be more marked for those entering it from low income groups than for those with a higher income background. Family resources affect the likelihood of qualified students entering higher education, but the effect is on the parental contribution. That is the potential determinant. Under the Bill, the parental contribution will fall in real terms. Under a top-up scheme, the inability to borrow can no longer be a constraint and willingness to borrow is wholly unrelated to present family income. It is not a charge against a student's present income but will be related to his or her perception of future income--the difference between what he or she expects to earn as a

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graduate and as a non-graduate respectively. That is why access will be widened. The real constraint imposed by the parental contribution will be lessened and guaranteed loans will be repayable out of future income, not out of present income.

In a lengthy intervention, the hon. Member for Argyll and Bute (Mrs. Michie) mentioned the Scottish four-year degree. I should point out that there are also three-year Scottish degrees. Like my right hon. Friend the Secretary of State, I am a beneficiary of the Scottish system. Indeed, I gained the same degree in the same course from the same university, although not at quite the same time. Let us consider the financial position in 1990. A graduate on a four-year Scottish degree course would incur £600 more in debt than a student on a three-year degree course. People who claim that that extra debt will be a disincentive are saying that the student incurring that debt for the fourth year sees the year as less valuable than the cost of the loan. We are talking about 6 or 7 per cent. of the total cost of the education. If repayment of that percentage is enough to discourage students from taking a four-year degree course, why should the taxpayer pay the extra 93 per cent.?

Mr. John Marshall : I thank my fellow beneficiary of the four-year Scottish degree system for giving way. Does he agree that the Scottish four -year degree course at the University of St. Andrews has always been heavily subscribed by students from south of the border, despite the fact that there are financial disincentives in the short term in their applying for those courses?

Mr. Stewart : My hon. Friend is absolutely right. I do not believe that there will be any disincentive with regard to the four-year loan system. Those who argue that there will be a disincentive argue that students place a very low value on the fourth year. If that is their argument, why should the taxpayer pay the rest of the money? I am aware of the constraints on time. In conclusion, I believe that the present system is manifestly unsatisfactory. There is an overriding need for the right balance in the payments made by the taxpayer, the students and their parents. In the long term there is an overriding need for a system that is stable and acceptable to society as a whole. I believe that this Bill achieves that. Several Hon. Members rose --

Madam Deputy Speaker : Order. There is a constraint on time. Speeches should be limited to 10 minutes between now and 9 pm. 7.2 pm

Mr. Win Griffiths (Bridgend) : The only good thing that can be said about the Bill is that it has probably saved a forest or two by its brevity. Apart from that, it is an affront to our democratic procedures. It is a legislative outrage that so little detail can be presented to the House before the Bill enters Committee. The Bill is an educational irrelevance as well as an administrative and very costly nightmare.

Let us consider the Government's claims for the Bill. They claim that it will spread the costs among the parent, the student and the taxpayer. They really mean that the Government are desperate to cut their commitment to the

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maintenance of students in higher education. It is no good Conservative Members shaking their heads ; that is exactly what the Bill will do.

Many students receive a full grant and social security benefits because their housing and other costs are so high and the grant is so small. Despite receiving the full £420 loan available for students outside London, they will still be much worse off under the new scheme when the system is changed to a 50 per cent. grant and a 50 per cent. loan. When the Government talk about spreading costs, they are simply using Orwellian "newspeak." The Government want to cut the costs involved in the maintenance of students in higher education. I want now to consider the cost forecasts. The figures presented in the White Paper are based on the assumption that there will be no increase in student numbers. They are based on the fact that the Government believe that only 80 per cent. of students will take up loans. The figures assume that in the first year inflation will be 5 per cent., in the second year 3.5 per cent. and 3 per cent. thereafter.

In the Select Committee on Education, Science and Arts the Minister admitted that he thought that there would be a 100 per cent. take-up of loans and that invalidates the table in the White Paper. As far as we can understand, there is a commitment to a continuation of the increase in student numbers in higher education. The White Paper takes no account of that. Furthermore, we must consider the Government's inflation statistics which seem to come from the Mad Hatter's tea party in "Alice's Adventures in Wonderland." Over the past 20 years inflation has been less than 3.5 per cent. only twice. In the Tory years it has averaged 8.7 per cent. and it was just a little higher than that under a Labour Government. The rate of inflation is roughly the same under both Labour and Conservative Governments. However, over a 20-year period, the rate of inflation is more than double the estimates used for calculating the figures in the White Paper. If I had longer than five minutes to speak, I would read out the figures to show that the record of Labour and Conservative Governments on inflation since 1967 are comparable, although the Labour rate was a little higher.

When the Secretary of State said that the rate of interest on the loans would be nil, he meant that the loans would be revalued every year based on the rate of inflation. If that is not a kind of interest payment, I do not know what is. In two years under the Conservative Government the rate of inflation was higher than the then bank interest rate. I wonder what the real figures might have been if the Government had bothered to consider inflation rates over the past 20 years and then calculated the cost of the scheme. I am sure that if they had done that the picture would have been very different.

The Government also claimed that the plan is to increase resources available for students. The Secretary of State said that the average amount taken by students in social security benefits is £210 and that the £420 maximum loan would therefore give a student more resources. However, the Secretary of State knows that that average figure is disingenuous. It does not give the House a completely true picture. When the Minister replies, perhaps he will tell us how many students over the past year claimed benefits in excess of the £420 which a student would receive in the first year or above the £310 that it is

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planned a student should receive in his final year of study. I believe that we will discover that a considerable number of students will be affected.

Currently, of all students in receipt of mandatory awards where parental incomes are taken into account, 30 per cent. of students receive a full grant. In Wales about 35 per cent. of students receive a full grant. In five Welsh counties the uptake of full grant is even higher. In Gwent and Gwynedd it is almost 45 per cent. and in Dyfed, Mid Glamorgan and Powys it is almost 40 per cent. Students in Wales will be particularly hard hit by a system which provides half a loan and half a grant. Those students will find that, in effect, their incomes will be capped.

The Government have introduced a new concept in the provision of state services. That is, some people who use the service will be expected to make a substantial contribution to its cost. Conservative Members have asked, "Why should someone who has not used the higher education system make a contribution to the maintenance of students who are involved in it?" They are enunciating a principle which, of course, paves the way for the introduction of a full loan scheme at a later date. They will not be prepared to give a cast-iron commitment that, at some future date, they will not deign to go beyond the 50 : 50 split and introduce further loans.

The Government claim that the Bill will increase access. Nothing could be further from the truth. I was the eldest of seven children. I had a full grant, but I still had to work at Christmas time and in the summer. I took a stake in my own future by forgoing the opportunity to take a job at the age of 15. My parents had already made sacrifices for me, and they continued to make sacrifices for my brothers and sisters who went to university. It is rubbish to talk about this scheme giving students a stake in their own future. Many people have taken a stake in their own future by being prepared to forgo the opportunity to earn money from the age of 15 and, instead, take up higher education. Furthermore, I am quite sure that my taxation contributions in the past 20 years or so have more than made up for the cost of my education.

Education is not a burden. The Secretary of State constantly used the word "burden". Education is an investment in our future, and I sincerely hope that the scheme will be rejected.

7.12 pm

Mr. James Pawsey (Rugby and Kenilworth) : The explanatory and financial memorandum to the Bill states :

"The Bill, which gives effect to proposals outlined in the White Paper, Top -Up Loans for Students' ".

I mention that because, in a reply to a parliamentary question, my hon. Friend the Under-Secretary of State for Education and Science stated :

"On the assumptions made in the White Paper, Top-Up Loans for Students' 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 £49 million in 2010."--[ Official Report, 1 December 1989 ; Vol. 162, c. 440. ]

In other words, the answer to my question is on the same level playing field as the White Paper, so like is being compared with like.

Hon. Members with reasonably long memories on education will recall that when the Education Reform Act 1988 was introduced Opposition Members criticised its length. They said that it was too much, too complex and covered too many issues. This Bill is criticised for precisely the opposite reasons. Opposition Members say that the

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