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6.58 pm
Mr. John Gunnell (Morley and Leeds, South): If evidence were needed that the Government have run out of steam and ideas, and are out of touch with what the British people need, it is provided by the Bill.
We are discussing the Bill on one of the first legislative days of the new Session, during which the Conservative Government will, presumably, suggest to the electorate that they should be re-elected to power and should continue in office. All the Government have so far offered to attract the electorate is a mechanism for shifting the responsibility for the failing system of student loans to the private sector. The nature of the Bill is demonstrated by the number of Conservative Members who are present to defend it, let alone to speak about it. They do not want to speak to it because there is little to say.
The Minister made no real case for the Bill, and it was left to the hon. Member for Wantage (Mr. Jackson) to make out a case for it. Unfortunately, his argument about the Bill was not in the Minister's speech because the Minister did not agree with it. The Minister did not share the hon. Gentleman's vision of universities as independent institutions, which would be freed up by the private sector and by the way in which those loans would be offered. Indeed, I am sure that the way in which the system has been structured makes it impossible for the hon. Gentleman's vision to become reality.
This is an unworthy start to a year in which, if the Bill before us is typical, unwanted legislation will be introduced. The Bill is largely irrelevant to higher education and is of no interest to private sector financial services companies. My hon. Friend the Member for Warrington, South (Mr. Hall) has just said that, as the financial services companies were not interested previously, if they are interested now, they must be interested only because of the bribes that are not made explicit in the Bill but are implied by it.
The Bill is of no interest to students; it is an attempt to pass the buck. It is uncosted and unwanted. As many hon. Members have said, the Bill has been introduced solely as a result of the effect that the student loans scheme has had on the public sector borrowing requirement. The Bill is an attempt to transfer as much as possible of that responsibility in the year to come.
We must ask who has demanded the change that the Bill will bring about. Has it been suggested by current recipients of loans? Have the universities asked for it?
They have not asked for it, and they say that they are not interested in it and do not believe that it is the way to proceed. Have the banks suggested it? Have the building societies, with their increase in powers and their acquisition of banking powers, asked for such a scheme to be introduced? The answer to each of those questions is no. The reaction of the people who are most involved is, at best, apathetic and, at worst, hostile.
The change does not appear to be wanted by anyone except the Conservative party, and the Minister made out a very poor case for it. He spoke about the fact that it would encourage partnerships between universities and the private sector, but the way in which the tendering process has been set up means that that will not happen. No relationship will be set up between a bank and an individual university institution.
The other case that the Minister made out for the Bill was that, as the banks have branches in every high street, it will be easier for students to use the system. An entire piece of legislation is introduced because high street banks are in range of universities and can do dealings with them easily. That is not a sufficient reason for legislation that is a mechanism for debt transfer. It will not make any difference to our higher education system. The Bill has an especially empty ring because higher education is important to the nation. Other hon. Members, such as my hon. Friend the Member for West Lancashire (Mr. Pickthall), have said what the priorities should be.
Higher education fails many students at present. The hon. Member for Ceredigion and Pembroke, North (Mr. Dafis) clearly demonstrated that access to university continues to be determined in good measure by wealth and social background, and that those people who have the least access to resources are especially likely to be affected by the Bill.
It is wrong for the hon. Member for City of Chester (Mr. Brandreth) to suggest that that is not so, and it is a misuse of the statistics, which continue to show that access to university depends on social background, however people--especially the Labour party when in power--have tried to erode that relationship. However, other work must be undertaken, and obviously it is not the measure before us.
We know that a great gap confronts those who have been in employment and want to return to further study. The Bill is not designed to help them. The argument that the Bill does not do what it was intended to do might be regarded as a poor criticism, but we must consider the plight of many mature students nowadays. As a result of the loss of the older students allowance, there is a widespread feeling that it has become a significant hardship for people who are in one career to pursue the means to enter an alternative career.
As other hon. Members have said, and as I experienced when teaching in university, mature students have a dedication to their task--a dedication that is often very heartening to teachers--and they turn in extremely good performances. It is especially disappointing that the Bill does nothing for those aspects of real need.
There can be few hon. Members who have not been asked to help in appeals for discretionary awards. During the current year especially, and in recent years, there has been a continual decrease in the amounts of money available for discretionary awards. In entire subject areas, it is almost impossible to obtain any grant for training. For instance, it has been said several times in the House that it is impossible to obtain a grant for the dance training that is available to people who have sufficient resources. The Bill does nothing for the range of students who are handicapped by the virtual disappearance of the discretionary grant scheme.
On the tendering process in the Bill, we should persuade the Minister to tell us more about the criteria on which he will award the contracts to four financial institutions in each region. We have said that it is unlikely that any institution will be enthusiastic about winning the contracts that go with the scheme. To ensure genuine competition, the tendering process must cause people to be anxious to bid and to win the contract. Banks and building societies have demonstrated no interest in the
scheme, so the likelihood of the Minister being able to choose between a series of institutions that have made competitive bids is minimal. There will be no loss leaders.
One institution will have responsibility for the loans in England and Wales, another in Scotland and another in Northern Ireland. In those circumstances, the relationship is not with the university but with the person who takes out the loan. Therefore, partnership arrangements similar to those that exist in the United States of America will not develop in the United Kingdom as a result of the measure.
The partnership arrangements in the USA exist because there is a plethora of universities--public and private-- and many universities have direct links with a specific institution. Those arrangements work well in places such as Stanford university, California, and the Massachusetts Institute of Technology, where various successful companies are involved and strong relationships have developed.
However, similar arrangements will not develop as a result of the scheme proposed in the Bill. If it comes about, the scheme will be composed of arrangements between banks and a mass of borrowers. However, for the reasons given by my hon. Friend the Member for Warrington, South, obviously the enthusiasm does not exist to create a competitive position. That will lead to special hardship for those students who are least well off.
Let us consider the table that was recently supplied in the annual report of the Student Loans Company. It is interesting to note that the proportion of students deferring was 43 per cent. in the first year, 54 per cent. in the second year and 60 per cent. in the third year for which they should be making payments. Deferments will be considerable, and banks will be reluctant to take on such a scale of debt.
In returning to the issue, why have the Government not noted the fact--made clear in his memoirs--that if Kenneth Baker had known--[Interruption.] I am sorry, Mr. Deputy Speaker; I should have referred to the right hon. Member for Mole Valley (Mr. Baker), but I know that corrections are made in the record. The right hon. Member for Mole Valley made it clear that he would have persevered with a system directly involving the Inland Revenue. Why does the Minister pour scorn on the Australian system, which seems to work much better?
Why do we not introduce a system aligning students' repayments with the resources available to them, enabling them to repay their loans as they progress in their careers?
Given that it would involve much lower administrative costs, why do we not adopt a system that would genuinely help students?
Mrs. Maria Fyfe (Glasgow, Maryhill):
As has already been pointed out today, the subsidy from central Government to the banks that is proposed in the Bill would require £1,500 for each private loan. The Minister has not denied that. It is absurd: as I pointed out earlier, the basic grant for the next financial year will be only
£1,257. We are giving more money to the banks' shareholders than to individual students. I would rather give the money to the students, and I do not think that
Earlier, I mentioned the report about student poverty in Scotland that was published in August by the Scottish citizens advice bureau. The Minister said that he had seen students in beer bars. Must every student beer bar in the country close before the Minister accepts that there is such a thing as student poverty? The report demonstrated conclusively that, for all the Government's denials, student poverty exists and, indeed, is widespread. Students who are perfectly capable of achieving their degrees and diplomas are having to give up because of mounting debts.
In Scotland, there is a four-year honours degree course, because the first year is the equivalent of an A-level course in England. That means that Scottish students experience even more debt. Students who become ill fall foul of a system that does not allow for any such human frailty: grants are refused to students who wish to repeat a year because of ill health. Students have been known to leave courses because delays in getting grant cheques to them have left them with no money to live on.
According to the report, a student in Grampian sought advice from the SCAB about bankruptcy because--as a 19-year-old first-year student--he owed a total of £2,000 to the bank, the Student Loans Company and the university for accommodation. The SCAB has observed a general increase in the number of student clients seeking debt counselling. That may not be altogether surprising, but it should shock us that the bureau has had to send students to charities that provide free food.
The fact is that students are probably the only category of people who can end up with literally no income. They have no access to emergency funds, such as a crisis loan from the social fund. Grants and loans combined amount to less than the average weekly benefit. That exerts an unacceptable pressure on young men and women. We should ease their path towards higher and further education, rather then making it an obstacle course.
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