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7.15 pm
Mr. Tony Worthington (Clydebank and Milngavie): As many hon. Members have said, this is a strange Bill. There has been no demand for it from students, universities or the Student Loans Company--or, I suspect, from the Department for Education and Employment. I do not believe that the Bill has come from that Department; I believe that it has come from the Treasury. If we could debate it on that basis--on its merits, indeed--the debate would have some reality, but the Government are afraid to admit that the Bill concerns the transfer of money from the public sector borrowing requirement.
I am told that the Bill is about choice, but none of the people I have mentioned asked for it. They exercised their choice: they did not want it. The private sector, too, has exercised its choice, saying, "We want nothing to do with the Bill." The Government have said, "We will try a little sweetener. Here is a bit more: then perhaps you will exercise your choice." Public money is involved in this public Bill, whose purpose is to subsidise the private sector so that it will enter the arena.
We are to gain the expertise of the private sector. I thought that we gained that when Mr. Ronald Harrison was appointed to run the Student Loans Company. Mr. Harrison, however, was dismissed last year, after bringing the skills and expertise of the private sector to the company, and wrecking it.
I do not share the Government's respect for the banking system--their view that expertise exists and that we are not tapping into it. If we ask which sector should now be concentrating on its proper job of investing in British industry, the answer should be the banks. If we could persuade them to do that, rather than trying to entice them into using their skills, they would be doing their job.
I find it odd that, having established the Student Loans Company a few years ago in Glasgow--the jobs in Glasgow are very welcome--the Government should seek to create unemployment in that city. As the Bill states, if it succeeds, the company in Glasgow will be scaled down, and people working there will cease to be employed. That is one of the Bill's central purposes. In a policy that no one wants, the Government are seeking to endanger 3,000 jobs.
The Minister shakes his head, but it is in the explanatory and financial memorandum:
Mr. Forth:
I thought that the hon. Gentleman was above the kind of irresponsible scaremongering in which he is now indulging. To the extent that loans would be provided by the banks instead of the Student Loans Company, it is self-evident that SLC staff numbers would be reduced. There can be no doubt about that. Equally, the Student Loans Company must continue to exist, as the Government have given a guarantee that we shall always provide an alternative. Is the hon. Gentleman suggesting that it is beyond the professional expertise of the management in Glasgow to administer change?
Mr. Worthington:
The Minister does not contradict what I have said. Does he deny the memorandum, which says that the legislation will lead to an increase in the number of staff employed by the Department for
Labour Members base their assertions on the evidence that they are given about student poverty. Inevitably, that is not the best-quality evidence: it tends to be anecdotal evidence from student welfare officers, for example. A defect of the Student Loans Company is that it has no responsibility for researching the consequences of its actions, and the Department for Education and Employment has also shrugged off its responsibilities in that regard. If the Government were serious about their policy, they would conduct thorough-going research into the consequences of their measures to create student support. However, the Government will not do that.
I have examined the sums of money involved. My hon. Friend the Member for Glasgow, Maryhill (Mrs. Fyfe) referred to the cost of a Scottish degree. I have examined the cost of taking a Scottish degree and going on to teacher training, which involves five years of study.
This year, a student loan is just less than £1,400. So the cost of becoming a teacher in a Scottish school is a minimum of £7,000--five times £1,400. Students must pay back that £7,000 over five years--which involves a weekly payment of £27--as soon as they receive a salary of £15,000 per year. It cannot be fair that, when a Scottish schoolteacher receives a salary of £15,000 and begins to settle down with a family, buy a house and establish a career, he or she must pay £27 per week in a totally inflexible manner. Is there any legislation to address that problem? No, we have only this nonsense legislation that does not tackle the basic issues.
The Bill does not address the quality of education in Northern Ireland. The Northern Ireland peace process is in a fragile state. As Northern Ireland has more students and fewer university places than anywhere else in the United Kingdom, 44 per cent. of Northern Ireland students must travel to mainland Britain to take up university education. For reasons associated with the troubles, many of those students do not return to Northern Ireland from mainland Britain.
It is a serious problem: 44 per cent. of higher education students leave the Province, and, overwhelmingly, they do not return. That is a serious educational consequence, but the Bill does not explore how more students from Northern Ireland could study in that country.
The Bill also fails to deal with the consequences of the fact that more Northern Ireland students come from poorer backgrounds--about 34 per cent. of students from Northern Ireland are from social classes D and E, compared with 29 per cent. in England and Wales. More students from Northern Ireland than anywhere else are recipients of full maintenance grants, and they also face the additional cost of travelling from Northern Ireland to the mainland.
Mr. Edward O'Hara (Knowsley, South):
My hon. Friend the Member for Warrington, South (Mr. Hall) talked at some length about the supposed element of choice in the Bill. Let us judge the legislation by the Government's own terms: what choice does it offer? We have already exposed the concept of the choice that is offered to parents of schoolchildren: they may exercise a preference of school for their children, but they have no real choice--it is the schools that exercise choice.
Under the proposed student loans system, students may prefer to go to a finance house--perhaps because of the inducements that such an institution may offer them--to apply for a loan. However, any choice in the matter will be exercised by the finance house. It will be a case of selection according to creditworthiness. I assure hon. Members that a typical student from my constituency would have no choice at all.
We are talking about the proposed introduction of a two-tier system of student loans: those students who can do deals, and those who cannot; those who have the power, and those who do not. The supposed choice and diversity in respect of schools has led to divergence and division, and it is the same with the proposed dual-track system of student loans. Students will have no choice, and there will be no real diversity: there will be only divergence between those who will have the opportunity to pay off their loans at preferential rates when they start working, and those who will begin their working lives with fixed mortgages around their necks.
As my hon. Friends have said, the purpose of the Bill is to fiddle the public sector borrowing requirement and to massage the figures down. It is an exercise in creative accounting, and it will be achieved at a price. The basis of the Bill is flawed, and no less flawed are the procedures that the Bill allows the Secretary of State to follow in order to implement the new system by September 1996. The Bill gives extraordinary powers to the Secretary of State to incur expenditure when negotiating terms with finance houses. It literally offers a blank cheque, and that is a disgrace. It is necessary from the Government's point of view because, by presenting the proposal in this manner, they have passed the negotiating whip hand to the finance houses. They have loudly signalled their lack of interest, and their interest will be aroused at a price. That is not surprising, when one considers what the finance houses must risk: unpredictability of demand, risk of default and the loss of good will among valuable student clients.
Not only the finance houses, but the students and the Committee of Vice-Chancellors and Principals, reject the proposal. They recoup only half the cost of managing the present system, and they envisage an added administrative burden from managing a dual loans system.
In short, the Bill is not just mediocre: it is tawdry in its conception and in its purpose. It is unloved by both the agents and the clients of the proposed system. It is irrelevant, and it does nothing to address the faults of the present system of student financing, which is complex, confusing and inequitable, and the cause of much student hardship. Above all, the present scheme exposes the Government to the accusation that they are rationing higher education at a time of retrenchment, and are wasting a pool of national talent.
"The number of staff employed by the Student Loans Company will be reduced as a result of the Bill".
Fewer jobs will be lost if the Bill fails.
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