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Chris Grayling: I have given a specific example, taken from the hon. Gentleman's manifesto, involving a newly qualified nurse, to show that a significant repayment burden would still be placed on newly qualified members of staff in a key part of our economy where we desperately need more people. We should not provide disincentives to people to join those professions. The danger is that if we use our student finance system to

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penalise new entrants to the public services that are crying out for people, we will not get the people needed to populate those public services in the future.

The hon. Member for Newbury (Mr. Rendel) referred to what has been done in Scotland, but my hon. Friend the Member for Isle of Wight (Mr. Turner) mentioned the Barnett formula. The truth is that while the Barnett formula exists, it will always be possible to do more in Scotland than in the rest of the country, because taxpayers in all other parts of the country—including those in the less well-off areas of the north of England, such as that represented by the hon. Member for Bury, North (Mr. Chaytor)—will continue to subsidise taxpayers in Scotland. While the Barnett formula exists, the Administration in Scotland will continue to be able to do things that are not possible in other parts of the country.

I believe strongly that the magic 1p policy is hugely disingenuous. During the election campaign, I heard a senior member of the Liberal Democrat party say on the radio, "If we could only put 1p extra on income tax and charge a higher rate overall for high earners, we could solve the problems of our public services once and for all." Well, if Liberal Democrats really believe that they are genuinely fit only to be a minor party, that is how they should remain.

Matthew Green (Ludlow): Would the hon. Gentleman like to remind the House which of the three party manifestos was fully costed by the Institute of Fiscal Studies?

Chris Grayling: As I have just said, the hon. Gentleman is a member of a party that proposed a capital programme for schools that could not have been achieved without spending huge sums. That policy is simply not credible.

The No. 1 priority is to reduce the repayments burden in the early years for today's students. I emphasise the phrase "today's students", because this issue concerns students who are in education today and who will leave with substantial debts in forthcoming summers. We need to find a better way to deal with that in future—not through the rushed review that the Government are carrying out and not through policy made on the hoof at the party conference, but through a long, substantial, real review that delivers a workable solution that will endure, not simply last another four years until people discover that it has not worked either.

We need to do other things. There are plenty of anomalies in the way in which student finance is handled. A constituent contacted me a few weeks ago to ask, "Why do I have to pay a separate licence fee for the television in my room because the four of us who share the house just happen to have four different tenancy agreements?" Such anomalies in the financial framework surrounding our students must be addressed. We need to deliver the support, get rid of anomalies and find a better way of doing things.

Let us not forget that it was a Conservative Government who expanded participation in higher education from 10 per cent. of young people to more than 30 per cent. Let us also not forget that it was a Labour Government who ended the principle of free higher education for all.

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3.10 pm

Mr. Kelvin Hopkins (Luton, North): I am very pleased to have an opportunity to contribute to the debate, and to debate with my hon. Friend the Minister for Lifelong Learning. She kindly invited me—along with one or two colleagues on the Labour Benches—to a private meeting a few weeks ago to discuss these matters, and I put my view to her. I thought that I was alone at that meeting in expressing the dangerously radical view that we needed to reconsider abolishing fees and paying for the restoration of maintenance grants from general taxation.

I was therefore absolutely delighted when the very next day an apparently well-sourced leak appeared in the newspapers suggesting that the Government were to conduct a review and might restore grants and abolish fees. I cannot tell my hon. Friend how pleased I was about that. I hope that the review will, indeed, come up with such policies. I have no doubt that during the review there will be certain pressures from the Treasury. I shall do everything that I can to support my hon. Friend in her struggles with the Treasury on those matters.

I was one of 33 Labour Members who opposed the decision three years ago to impose fees and abolish grants. I did that with great reluctance; clearly, rebelling in the Lobby is very difficult and painful for everyone, and it certainly was for me. However, I had a view at that time, which I have held consistently, that the Government's decision was wrong. The fact that we are to have a review shows that the Government have listened, are listening and are going to change their policies, which is very welcome.

Sadly, I disagree with my hon. Friend the Member for Bury, North (Mr. Chaytor). I agree with him on almost everything, but I find him unconvincing on the subject of higher education student finance. However, I hope that we shall always remain friends in other respects.

Students are often portrayed as fortunate in enjoying the advantage of a university education. Indeed, I had one myself and feel fortunate as a result. However, students forgo several years of employment—certainly three years, often four and sometimes as many as six years, especially if one includes education from the age of 16—and the income that they could derive from that.

Valerie Davey: I happen to have twin daughters, one of whom went to university and one of whom worked. My hon. Friend can imagine the fertile debates in our household as the one in work paid tax in order to pay for her sister at university. Does that seem fair?

Mr. Hopkins: Provided that taxation is progressive and redistributive, taxation is fair. I should like to think that my hon. Friend's daughter who went to university will pay considerably more tax in her lifetime because she will receive a higher income.

Valerie Davey: They will pay exactly the same.

Mr. Hopkins: My hon. Friend disagrees, but the fact is that graduates earn more than non-graduates once they have made the sacrifice in those early years. Financing people through that period so that they can attain qualifications and therefore pay higher taxes later in life that meet the cost of their education is a fair deal.

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Those students are privileged in the sense that, in general, they will have a better life because they have a degree than someone who does not. Of course, that does not apply in all cases. However, students pay higher taxes and they are vital for our economy. We must have well-qualified people throughout our economy; indeed, we are seriously worried about skill shortages. Recruiting people with the right skills and qualifications is proving difficult. Although unemployment is much lower than when the Conservative party was in power, we are suffering from skill shortages that must tackled.

The Prime Minister was right to suggest that we should increase the number of those who go into higher education to 50 per cent. of the population, because it is good not only for those people but for society and our economy. To achieve that, we must guarantee students financial security while they are in higher education.

Many people say that it is good for students to work while they are studying. That is not always so. In the past, when only the scions of the upper class went to university, they did not have to work. They were dilettantes, who lived the life of Riley while they were at university. Perhaps they would drop in to the odd lecture and talk to the odd tutor, but, by and large, they drifted through university and into one of the well-paid professions. Doubtless some of them drifted into the House.

That was the life of the upper class; we now live in a more democratic, egalitarian age when many more people go into higher education. That is essential for them and our economy. We must find ways of supporting students because they do not have the resources that the rich enjoyed in the past. It is right for the state to support them while they are studying.

We should regard students not as privileged youngsters but people who do a job for themselves and society, which therefore pays them an income while they do that job of studying. If students saw matters in that light, I believe that they would concentrate better on their studies. It is preferable to following the traditions of the dilettante upper class of the 18th century.

Students who have education maintenance allowances in my local sixth form college show greater diligence and a tendency to turn up to classes more often. They believe that their EMA might be taken away if they do not turn up. All the tutors there strongly favour EMAs because they have encouraged students to work harder and to turn up. I ask my hon. Friend the Minister to extend that pilot scheme to the rest of the country. It will cost money, but reap dividends. As my hon. Friend the Member for Bury, North said, if we are to increase participation among post-16 students, we must encourage more marginal students to stay on in education.

There are many families with non-traditional backgrounds in my constituency. Some are from ethnic minorities and others are from working class backgrounds with no tradition of going into higher education. Remaining in education beyond the age of 16 was perceived as strange. Indeed, when my wife wanted to become a teacher, her father said, "What do you want to do that for? Get out and get yourself a job, love." She persisted, went to teacher training college and became a school teacher, but it was a struggle because she came from a background that was culturally unused to higher education.

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We are overcoming that barrier; more students are staying on, but we remain a long way behind competitor countries. We must make it easier for students from the sort of backgrounds that I have described to go into post-16 education and on to higher education. The 50 per cent. goal will be achieved if we can persuade people to stay on at 16 and undertake pre-university studies.

We are considering a big issue, which is important for our future. That is recognised on the doorstep. In Luton, North, it was the second biggest issue after the health service, about which everybody was worried. I was surprised that education was the second biggest issue because the number of people in Luton, North who go to university is below average. It is a working-class area and fewer people go to university, but the feeling on the doorstep was strong. That applied to the less well off in some of the council estates and to some of the middle-class areas; people who had previously voted Conservative but swung to Labour perhaps because they had been enlightened in middle age. However, they realised that our traditional approach of state funding for public services was vital for a civilised society. They voted for us on that basis in 1997, and they were a bit shaken when part of it seemed to be taken away in the legislation on grants and fees.

I said on the doorstep that I felt strongly that we must change that policy, and I am delighted that the Government are now reviewing it. I look forward to the restoration of maintenance grants, the abolition of fees, and the achievement represented by 50 per cent. of students entering higher education.

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