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Mr. Tony Worthington (Clydebank and Milngavie): Having that extra choice sounds like a great deal for students. How many have asked for it?
Mr. Forth: Students are not notorious for coming forward with imaginative ideas in the public arena. As we have often found, it is for the Government to give the lead. Again, as has so often been the case, we have proposed an imaginative scheme, which will benefit students in the long term. I am convinced that the wiser students will realise that immediately and the rest as time develops.
The capital investment in loans is immense--up to
£5 billion by the end of the decade. We want the private sector to find much or most of that and, indeed, to take on much or most of the risk. Personal lending at that level is not a natural activity for the Government. We do not have the experience or the expertise that the banks and building societies have. That is their business. They are better at providing a service and a range of financial products. They are better at developing and marketing those products.
Mrs. Anne Campbell (Cambridge):
How much interest have the banks and building societies expressed in the scheme?
Mr. Forth:
As has been made known, they have been engaged in discussions with Government officials for some time. The process is in the early stages. A draft tender document has been produced. If Second Reading is approved by the House, we propose to produce a tender document. The financial institutions will rightly want to see the fine print and how the matter develops. They will make their judgments on that basis, which is a perfectly normal aspect of the process.
Mr. Richard Tracey (Surbiton):
I suppose that in this day and age I should declare an interest. Two of my children are receiving university education. I am sure that my hon. Friend is well aware that all the high street banks offer preferential rates for overdraft facilities for students. They are all extremely helpful to university students and I am sure that they will all be extremely interested in the Government's proposal and that, overall, the students themselves will welcome it. As on so many things, the Opposition, of course, are in the dark.
Mr. Forth:
Yes. When my daughter was at university, I was always intrigued at the willingness of most students to take on bank overdrafts. That was their choice and they each handled it in their own individual way. We are offering students a further choice. They can go to the Student Loans Company or use existing arrangements provided by the banks, and we are now in the business of offering them yet further choice, from which I am sure that they will benefit. Students can see the benefits of the arrangements far more quickly than Opposition Members seem to be able to do. I confidently expect that, if we get the sort of ritualistic knee-jerk opposition from Labour Members today to which we have been used, in a few weeks or months--perhaps it will take them a few years in this case--they will come round to our point of view, as they have done on almost every aspect of education.
Mr. Robert Jackson (Wantage):
Would my hon. Friend cast his memory back to the time when we introduced student loans and the opposition that we had from the Labour party and the Liberal Democrats? They declared that the effect of introducing student loans would be that no more people would come forward to be students. Since then, has there not been an enormous expansion of higher education and an increase in the participation rates of people from less privileged backgrounds, in spite of everything that was predicted by the Opposition?
Mr. Forth:
Indeed. That intervention gives me the opportunity to praise the sagacity and foresight of my hon. Friend, who played such a role in the introduction of the scheme. He was right and Opposition Members were wrong. I hope that they will think carefully before they object ritualistically to this development in the market because even they would not want to be proved wrong yet again, although they must be getting used to it.
Mr. Mike Hall (Warrington, South):
In 1989, we were told that the banks were interested in student loans, but they pulled out. What is different now?
Mr. Forth:
Oh dear, the hon. Gentleman has not noticed what is different between 1989 and now. Surely he cannot have failed to notice the enormous increase and development of the higher education sector. He has obviously failed to notice that many hundreds of thousands of students have freely come forward, seen the benefit of student loans and taken them up. As for the financial institutions, they will make up their own minds as to what role they wish to play and how far they wish to take up the opportunities that are being given to them. This is an enabling provision and it is a matter for them about which they can make up their minds freely.
Mr. John Gunnell (Morley and Leeds, South):
The Minister tells us about the number of students who have taken up loans. What comment has he on the number of
Mr. Forth:
Those students are obviously so well catered for that they do not need to take up the loans. Opposition Members cannot have it both ways, as the hon. Gentleman seems to imply. The loans are there for those who wish to take them up, but there is no obligation. As for those who can manage perfectly well without the loans, I say well done and wish them luck.
Mr. Cynog Dafis (Ceredigion and Pembroke, North):
I shall mention this again later, but I have been speaking today to the welfare officer at the University college of Wales in Aberystwyth. He tells me that people from low-income families are fearful of taking up loans and are being forced into things such as part-time employment because of their anxiety about the debt that they will incur and the fact that they will cause difficulties for their parents as a result of taking out loans.
Mr. Forth:
I understand the hon. Gentleman expressing a point of view having talked to someone directly involved with that small proportion of students who get into difficulties. That is, after all, the role of the person to whom the hon. Gentleman spoke. The overall picture, however, is quite different. The figures irrefutably show that the lower-income groups have come forward in ever greater numbers in the past few years to take advantage of higher education. Whether it is the taking out of loans--which benefits lower-income groups more--or the sheer numbers, the evidence is there.
I suspect that if the hon. Member for Ceredigion and Pembroke, North (Mr. Dafis) spoke to other Opposition Members and compared notes, he might well find that, depending on their background and the income available to them, students may or may not want to resort to the loan scheme. That is a matter of choice for them, but I do not believe that it creates any additional pressure. I am sure that hon. Members who have taken an interest will know that the average loan outstanding at the moment is some £1,400 and that the average repayment for those who have had a loan is about £18 per month. It is straining it a bit for anyone to suggest that that is particularly onerous or burdensome on individual students.
Mrs. Maria Fyfe (Glasgow, Maryhill):
Will the Minister tell the House the amount of grant available to students in each of the past five years and the amount of maximum loan available in each of those years? Is it not the case that the figures clearly demonstrate that students have been forced into loans because their grants have been smashed?
Mr. Forth:
No, the figures would demonstrate--I do not have them in front of me, but I can certainly provide them to the hon. Lady either later in the debate or perhaps in writing--what we have always said as a matter of stated policy: that we wanted to shift the burden of student finance, gradually and in a controlled way, from the 100 per cent. reliance on grants, which was the case in the past, on to loans.
I should be interested to hear from Opposition Members, perhaps from the hon. Member for Glasgow, Maryhill (Mrs. Fyfe) or her colleagues on the Front Bench, whether the Opposition would do things differently or reverse the process and, if so, where they would find the money. It is a
legitimate subject for debate. We have laid our cards on the table. We have said over and over again that we ought to shift the burden from grant to loan. The Bill is a further development in that process.
In the longer term, there are other advantages in having the private sector more closely involved in higher education. We are encouraging education-industry links across the board. Those links mean better understanding. The resources and expertise of the private sector will become available to education. Education will therefore meet employers' needs more effectively. In that way, there is a co-operative approach that can only benefit both business and education. Providing subsidised loans, whether public or private, entails a cost to the taxpayer, but we seek to ensure that those policy objectives are realised in the most cost-effective way.
The expansion of higher education since the Government came to power in 1979 is startling. Student numbers have doubled. Almost one in three young people now enter full-time higher education, compared with only one in eight in 1979. The number of mature entrants has risen by over 150 per cent., a rate nearly as fast as for young entrants. There were 174,000 graduates in 1993--70 per cent. more than in 1979. Among European Union countries, only Denmark has a higher graduation rate. We spend more per higher education student than any other European Union country. We run a system that is both efficient and generous. We have transformed it from an elite system to one for all, which no longer caters for a privileged few supported by privileged families and the taxpayer.
Those important changes will last as long as anything that the Government have achieved. Opposition Members say that they support expansion, but this Government have achieved it. What we need to do now is pause and consider the next steps. We are consolidating the participation rate at some 30 per cent. over the next three years, to enable universities to concentrate on maintaining and improving quality in teaching and research, which is of the highest priority. It will give us an opportunity to conduct a wide-ranging review, which will look at the purpose, size and shape of higher education. It will also look at the contribution that higher education makes to the economy, and how it prepares young people for employment and prepares people throughout their working lives for the opportunities that they seek. Those issues require careful thought and we intend to issue a consultative paper in the new year.
In the meantime, however, it makes sense to press ahead with this Bill to improve the loans system. The landscape has changed rapidly since the House debated the 1990 Act. That may be an answer to the question put by the hon. Member for Warrington, South (Mr. Hall). At that time, all we heard from Opposition Members was that it would all end in disaster, students would not take out loans and students from poorer families would be denied access. That has all turned out, patently and demonstrably, to be untrue. Student loans are a great success. Many Opposition Members--I hope that we shall hear more of this during today's debate--now believe that loans are here to stay, in one form or other. It warms my heart that this is yet another example of Opposition Members eventually coming round to accepting an established Conservative principle.
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