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Mr. Forth: In this country, unlike many other European countries, there is no upper age limit in the mandatory awards scheme. I can only say to the hon. Lady, and hon. Members present on both sides of the House, that as soon as one makes an understandable plea for one group of students, one must take the responsibility of identifying where the money would come from to fulfil that purpose.
Mr. David Blunkett (Sheffield, Brightside): Answer the question.
Mr. Forth: The hon. Member for Sheffield, Brightside (Mr. Blunkett) is muttering across the Dispatch Box. Perhaps he would ask his hon. Friend the Member for Oldham, Central and Royton (Mr. Davies) to say, when he speaks, whether Labour Members are prepared to answer those questions themselves. [Interruption.] There is no point in the hon. Member for Brightside laughing, because if he were ever to be within a million miles of government, he would find that it was almost entirely a matter of making very difficult choices.
Mr. Blunkett: I made difficult choices for seven years.
Mr. Forth: The hon. Member for Brightside is saying, from a sedentary position, that he made difficult choices for seven years, when presumably he bore some responsibility for running Sheffield's finances. If he is suggesting that we take his track record in running Sheffield's finances as his claim to be in government, God help us if it ever happens.
Mr. Blunkett: I cannot resist placing on record what the Audit Commission said about my time as leader of Sheffield city council, which was that we delivered the best public services in Britain, and Sheffield was a shining example.
Mr. Forth: At whose expense did the hon. Gentleman deliver the best public services in Britain? The rest of the country might well have something to say about that.
We are already more generous than most other countries. Students with a mandatory award pay no tuition fees, which is not true of many other countries sometimes cited as paragons by those who criticise us. Our maximum grant is greater than that in France. Japan, often held up as a shining example in education, offers no grants. In some countries, interest payments are greater than inflation; in some, repayment is not income contingent. One would therefore have great difficulty in finding any country that is doing better than we are.
Our scheme provides a good balance between the needs of student, parent and taxpayer. I shall describe briefly the way in which our proposed system would work.
Private financial institutions would be invited to bid for the right to offer subsidised loans. That would probably be for a period of five years. Loans would be made on comparable terms to those offered by the Student Loans Company, and we envisage selecting up to four other lenders.
Students would then be able to choose either public or private loans. If they chose the private sector, they would choose between the successful bidders. If not, they could still opt for a public loan from the SLC. We shall make arrangements to ensure that students could not obtain a loan from more than one source in any one year.
In choosing a private loan, students would have access to a better, more convenient and comprehensive service through lenders' branch networks. They could link loans to other financial products and services.
I have no doubt that private sector competition will lead to more attractive products. What do students have to gain from the uniformity based on an equal minimum? I believe that we have moved on from that, and I believe that more and more students recognise that.
I shall summarise the Bill's provisions.
Clause 1 contains the main provisions of the Bill and specifically gives us the power to pay subsidies to private sector lenders. Subsection (1) amends section 1 of the Education (Student Loans) Act 1990 to add that power. Subsection (2) covers the Bill's schedule and makes consequential amendments to the 1990 Act and schedules. They reflect the fact that we would have twin public and private tracks for loans.
Clause 2 allows a similar provision to be made for Northern Ireland.
Mr. Harry Barnes (North-East Derbyshire):
When the Education (Student Loans) Act 1990 passed through the House, it was opposed by people of all shades of political opinion in Northern Ireland, ranging from the Democratic Unionist party to--outside the House--Sinn Fein. The only party in Northern Ireland that gave any support to the 1990 Act was the Conservative party, which was of no significance in Northern Ireland.
As clause 2 would apply the measure before us to Northern Ireland by the negative procedure, should not that clause be changed so that the House has a chance to discuss, under the affirmative procedure for statutory instruments, whether the provision should extend to Northern Ireland, where there is absolute opposition to the student loans scheme?
Mr. Forth:
My opinion now--although I shall check for the hon. Gentleman--is that, as he knows, that is the usual way of dealing with Northern Ireland in most public Bills. It is generally a satisfactory arrangement, but later in the debate or during my speech in reply, if I am given permission to do so, I shall specifically discuss that matter.
However, I am not sure whether, even in the case of Northern Ireland, one wants to start singling out parts-- however distinguished--of the United Kingdom and treating them differently from others. I am aware of no
reason why students in Northern Ireland should not receive the benefits of the Bill's provisions that students elsewhere will receive, but I shall return to that subject later.
Clause 3 contains financial provisions in relation to subsidy and administrative costs arising from the Bill. Clause 4 contains the citation provisions and extends the Bill's provisions to Great Britain.
The 1990 Act set a framework for public loans based on regulation. That system works well for grants and loans, but I do not believe that it is appropriate for the private sector. Instead, tightly drawn contracts would protect students: in particular, deferment rights and a retail prices index maximum on interest rates would have to be safeguarded. In other respects, I consider it sensible to employ a light touch.
Mr. Bryan Davies (Oldham, Central and Royton):
Opposition Members recognise that the funding of students in higher education poses significant policy issues. We do not have a closed mind on those issues, but we believe in clear principles, on which the funding of such students should be established. We intend to test the Bill against those criteria.
First, any system of student funding must encourage, not discourage, access to higher education for people from all social backgrounds. Indeed, active measures should be taken to ensure that participation in higher education reflects the wider composition of society. Although the Minister pointed out that higher education opportunities had been expanded, he did not mention the fact that we have not succeeded in encouraging an increasing proportion of students from less well-off homes: the proportion of students from social classes A and B has remained relatively unchanged during the past decade, despite the changes in student numbers.
Secondly, student funding should protect, and aim to enhance, the quality of higher education, which is a vital national asset and should not be sold short.
Mr. Gyles Brandreth (City of Chester):
The hon. Gentleman may have different information from that which I received from the Department. I understood, however, that the recent survey showed that in social grades A and B, the numbers taking part in higher education had fallen by about 6 per cent., but that there had been a corresponding rise in the proportion among the lower social groups. That, I think, contradicts what the hon. Gentleman said. I am sure that he will want to put the record straight.
Mr. Davies:
The hon. Gentleman should recognise how marginal the changes are. Two thirds of higher education entrants come from relatively well-off homes, and that
Thirdly, student funding should be equitable between different groups, rather than discriminating on the basis of, for example, modes of attendance. The Minister was unable to tell us whether the Bill would extend to part-time students. Given the issues raised by the current system, under which loans are available only to full-time students, I should have thought that such an important matter could at least have been clarified--to say nothing of the additional point made by my hon. Friend the Member for Cambridge (Mrs. Campbell) about mature students.
Fourthly, any system of student funding should be fair to both students and the taxpayer. That means that it must be efficient and progressive, and should set out to ensure that no student suffers hardship.
The Government's proposals meet none of those criteria. The Bill is ill considered and divisive; it is a pathetic response to the problems faced by higher education students, and to the global challenge that we, as a society, face to improve the performance of our education system. The Bill simply transfers to the private sector all the failings of the current student loans scheme. Instead of one good scheme, we shall have two bad schemes. Although the Minister set out to defend the existing scheme, the general experience of students, and of Opposition Members, is that it is already deeply flawed.
In fact, the scheme is universally condemned. It requires graduates to repay loans over a five-year period at the start of their careers, when their earnings are at their lowest. That places a considerable burden on graduates, and leads to high deferment and default rates. Some 43 per cent. of students defer repayments, and 7 per cent. are in default.
The system is unfair. It does nothing for further education and part-time students--unless, that is, the Minister is to announce an important new progressive stance. Such a change in his position has certainly not been heralded. We should like clarification of that before the end of the debate. Loans are concentrated among a minority of those in post-compulsory education, and only 55 per cent. of those people have taken advantage of the scheme. Students recognise its flaws.
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