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10.18 pm

The Minister for Universities (Ms Margaret Hodge): I warmly welcome you to the Chair again, Mr. Speaker, and I congratulate my hon. Friend the Member for Stroud (Mr. Drew) on his re-election. He is an assiduous and dedicated worker for his constituents and he has had the just reward of securing re-election. I am sure that his constituents will be well served by his consistent and energetic efforts on their behalf.

I also congratulate my hon. Friend on securing this Adjournment debate, the first of the new Parliament, on an issue of importance to the Government, students, their families and teachers, and I welcome the opportunity to have a short debate on the subject.

Our manifesto sets out an exciting and challenging agenda for higher education. Our ambition is that by 2010 half of young adults under the age of 30 should enjoy the opportunity of participating in higher education. Personally, I relish that exciting and challenging ambition, as I believe that it provides enormous opportunities for the higher education sector. I hope and believe that the sector will embrace those opportunities with enthusiasm. After years of neglect, higher education is central to the Government's agenda. Our commitment to widening participation was a clear manifesto pledge. I believe that there has never been a better time for the sector, and I am delighted to have the privilege of holding my position as Minister for Universities at this time. My task will be to consider how we achieve our objective. Clearly, I will need to think about all the barriers that inhibit the agenda for widening participation, including student debt.

In considering the future, I want briefly to pay tribute to my predecessors in the previous Government. My right hon. Friend the new Home Secretary and my right hon. and noble Friend Baroness Blackstone have left me with a strong legacy on which we can build a successful future, and I am sure that my hon. Friend the Member for Stroud will join me in recognising the important and lasting contribution that they have made to the higher education world.

We should not underplay the fact that higher education is a success story. In the "Education at a Glance" statistics recently published by the Organisation for Economic

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Co-operation and Development, we top the league of OECD countries in our graduation rate. Those who choose to participate succeed in obtaining a degree at a higher rate in Britain. Our retention and attainment rate is second to none, and we should celebrate that. Interestingly, the retention rate has not changed with the new system of student support. Indeed, the drop-out rate has remained at about 17 per cent. since 1991-92, despite the change that we have introduced in student finance and the massive increase that we have enjoyed in student numbers.

My hon. Friend referred to the figures given in last night's radio programme. Although we must be concerned about a drop-out rate of 3,000 students from a cohort of 800,000 and will want to improve it, the figure should not cause us great concern and we should bear it in mind that we perform better than other countries.

We should celebrate also the fact that we are now enjoying an 18 per cent. real-terms growth in publicly planned spending on higher education in the six years to the financial year 2003-04. That is occurring against a background of unit funding falling by a third between 1982-83 and 1997-98. This year, there has been a real-terms increase for the first time. We should also celebrate the increased participation in higher education year on year. I point out to my hon. Friend that this year's figures show that the number of applications made by students under the age of 21 rose by 1.4 per cent. Interestingly enough, however, applications made by students in the 21-to-25 age group rose by 5.6 per cent. Although a worry remains in respect of more mature students, under-25s are applying at an increasing rate.

I assure my hon. Friend that we will continue to keep student debt under review and we will want to consider it if we find that it is a barrier to widening participation. Equally, I must say to him that the issue of student support will always be one of balance between the financial contribution made by the taxpayer, the student and the graduate. Those three aspects must always be balanced. He will be interested to know that we are still among the highest spenders on student support as a proportion of higher education spend. We are third after New Zealand and Canada, and spend 35 per cent. of higher education spend on student support, compared with an OECD average of 18 per cent.

Widening participation among people from lower socio-economic groups, to whom my hon. Friend drew attention, is a key issue. The rate has remained stubbornly low since 1993. The lowest socio-economic groupings have remained at 25 per cent. Although participation by people from professional backgrounds was 55 per cent. in 1991, it is now 70 per cent. However, the closest correlation is not with student finance but with prior attainment. To widen participation we must therefore tackle that issue urgently. We are doing that.

My hon. Friend mentioned our support for more disadvantaged groups. We have a good record on that. I accept that, as he said, the system is complicated, and we will consider simplification. However, I shall give examples of the grants that we have introduced to ease the way for students from poorer backgrounds, and I hope that my hon. Friend will accept that we are making progress.

My predecessors introduced the excellence challenge programme, which has £190 million over three years. It focuses on education action zones and excellence in cities

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areas. It buys much support, such as mentoring, master classes and summer schools. More important, it facilitates the introduction of bursaries at £2,000 per bursary, which is an outright grant for poorer students who live in such areas. We have quadrupled the money for access bursaries and hardship funds, which have been available since 1997-98. As well as increasing funding, we have introduced reforms to ensure that we target the money more effectively and earlier in the student's life in a higher education institution.

We have done a huge amount, with which I was associated in my previous ministerial role, to support students with disabilities. For example, we have tripled the available allowances, stopped the means testing of the disabled student's allowance and extended allowances to part-time students and postgraduates.

My hon. Friend did not seem to realise that we have done much to help students with children. For example, there is a school meals grant, which is worth £245 for each child under 11 and £265 for children from 11 to 16. We have introduced a generous child care grant, which covers 85 per cent. of the actual costs of child care. I am delighted that we have been able to raise the limits of eligible child care costs to £135 for one child and 200 for two children. We have also introduced grants for travel, books and equipment, an extra dependants grant and an access bursary grant for students with children.

On students from ethnic minorities, the picture is not as pessimistic as my hon. Friend suggests. The participation of students from ethnic minorities in higher education is higher than that of white students, although they come in at a later stage. The challenge is the

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transition between higher education and work, where ethnic minority students encounter disadvantage and possibly discrimination.

We have tried to alleviate the burden on students who enter higher education. For example, we expect that 50 per cent. of students will not pay fees this September because of the increased contribution thresholds that we have set parents. Eighty-five per cent. of mature students will not pay fees.

We must have regard to the debt that students could incur in relation to their lifetime earnings. Not only are those earnings as much as 25 per cent. higher, but the Russell group found that, on average, graduates earned approximately £400,000 extra in their lifetime. That must be set against a student debt of less than £10,000.

My hon. Friend asked me to consider several specific matters, such as when fees were paid, the position of Muslim students, and the threshold for repaying loans. I assure my hon. Friend that we shall continue to keep those issues and other options under review.

These are exciting times for higher education. We are changing a system that catered only for the elite so that it provides opportunities for a much greater range of people. Of course, we want to ensure equality of opportunity and to maintain and enhance the quality of teaching as we expand participation. That is the challenge for us in this Parliament. I accept it with relish, but also with trepidation and humility. I am delighted that my hon. Friend has shown an interest in one of the issues with which we must deal. I assure him that I shall continue discussions with him and others who share that interest to ensure that we break down barriers to participation and widen access to higher education as part of providing opportunity for all.

Question put and agreed to.

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