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5.55 pm
Mr. David Rendel (Newbury): I am delighted to have the chance to participate in this debate. I want to speak mainly about education and students in particular. It is interesting that those two subjects were scarcely mentioned in the Budget speech yesterday. It is also interesting that the Government have chosen not to allocate a particular day to the subject of education during the Budget debate. After all, it is the subject that they originally based their whole government on, saying that it was the most important aspect of public spending. Now it seems to have dropped way down the list of priorities, and I deeply regret that.
I want to make two other quick points before I move on to education, the first of which concerns the question which was, in a sense, at the heart of the Budget—that of the 1p extra tax on incomes for health. This is an interesting concept because it is neither a direct income tax nor a direct national insurance tax. Under this new tax, 1p is being levied on everybody's income above a certain basic allowance, which is very similar to how an income tax works. Indeed, if one were beginning to introduce an income tax with no suggestion of its being progressive, that is exactly what it would be: 1p tax on income above a certain allowance.
On the other hand, national insurance for employees is at present levied above a certain allowance, as is income tax, but it also has a top-level cut-off. In that sense, it is very different from this new tax, which goes right the way through the income scale up to the top. Although, sadly, this new tax is not as progressive as the present income tax system, it is nevertheless closer to an income tax than to a national insurance tax. It is interesting, by the way,
that people talk about a 1p levy, because, of course, 2p will be levied on income: 1p from the employee and 1p from the employer.If anyone doubts that there is a close connection between the new tax and income tax, it is worth thinking about what would have happened at the last general election if the Labour party had pledged in its manifesto not to raise national insurance contributions, but had made no such pledge about income tax. If it had done that, it could have done precisely what it did yesterday. It could have said, "All right, we will introduce a new 1p levy on income tax—because we did not promise not to raise income tax—but you can be sure that we won't touch national insurance. That is not changing at all." It could then have done precisely what it did yesterday, and said, "We are keeping to our pledge, because we are only raising income tax." That demonstrates clearly that the Government are simply playing with words when they claim that they have kept to their pledge not to raise income tax, by raising only national insurance.
Mr. Rendel: I shall give way, but I will take only one intervention.
Mr. Connarty: The Chancellor said that everyone, businesses as well as individuals, will benefit from a better health service. It is correct to levy the business community as well as the working population.
Mr. Rendel: I did not say that it was not right to levy the employers. That was not the point I was making. I was saying that the employees' side of the provision is much more like an income tax than a national insurance contribution. The Chancellor's and the Labour party's pretence that they have carefully kept to their pledge because they have raised only national insurance and not income tax is, frankly, an attempt to fool the populace at large, but I do not think that they will be fooled.
I also want to make a brief point about social services. We were promised today that there would be a 6 per cent. increase in the amount allocated for social services. That is desperately needed, as everyone in the country knows that social services are particularly underfunded at present. What horrified me in the Secretary of State's statement this afternoon was that he seemed to think that 6 per cent. was going to be enough. He seemed to suggest that, with that increase, it would to be easy for local authorities to end the problem of bed blocking, and to take everyone out of hospital who was ready to come out. Indeed, he threatened that he would fine local authorities if they did not do that.
In West Berkshire, we have had cuts worth much more than 6 per cent. Our social services funding has been cut by about 30 per cent. in the past few years. In spite of that, West Berkshire is still spending 50 per cent. more than its standard spending assessment—more than the Government say it should be spending now, let alone when it has taken on the extra people who are blocking the beds in our hospitals. If my local authority is fined in future for failing to take people out of hospital when it has been given this pitiful amount compared to what is needed, it will feel very hard done by, and I would not blame it.
I shall now deal with the problems of students and education as a whole. It is a glaring omission that students were not mentioned in the Chancellor's speech. There was little about education, and almost nothing about higher education. The only time he mentioned higher education was when he said that
- "education will receive the priority to deliver further substantial improvements, not just in our schools but also in"—
- "our universities and colleges."—[Official Report, 17 April 2002; Vol. 383, c. 588.]
Liberal Democrats welcome the extra money for universities and colleges. Although the figures came out in a parliamentary answer to a question that I tabled, the Government have not yet fully admitted that funding per student from the public sector has fallen by 6.7 per cent. since Labour came to power in 1997. It would therefore take more than 7 per cent. to put that back up even to the figure the Government inherited from their predecessors. It is welcome that we are at last getting some of that money from the public sector.
That money may be going to universities and colleges, but nothing is going into the student finance package. That is a criminal failure by the Government to finance a sector of the public service that desperately needs more funding. It is in line with what we are told the Chancellor keeps saying to the Prime Minister and to the Secretary of State, which is that whatever happens in the student finance review, there will be no more money overall. Most of us had hoped that that was the Chancellor's position, and that the Prime Minister and the Secretary of State would have the strength to overrule him and to insist that more money should be available as a result of the student financial review to be published in the summer. It looks as though that will not be the case.
That is odd, because the Labour party is well aware of how many votes it lost in the general election on this issue. At the end of last year, the Chairman of the Select Committee on Education and Skills said that the Government had
- "got the collywobbles . . . after a successful campaign by the Liberal Democrats during the election."—[Official Report, 6 November 2001; Vol. 374, c. 144.]
The Secretary of State has explicitly recognised that debt is a great barrier to access, which the Government are rightly determined to improve. She said:
- "I recognise that for many low income families fear of debt is a real worry and could act as a barrier to higher education. I want to make sure that our future reform tackles this problem."
It is also odd because of the effect on students. Students now leave university with an average debt of £10,000 and rising. The National Audit Office has confirmed the danger to the student population that that lack of finance is causing. It reported on student participation, and
confirmed that people from poorer backgrounds are significantly less likely to participate in higher education following the Government's changes. It said:
- "Since 1998–99 . . . final removal of the means tested grant is likely to have widened the gap between social classes."
The NAO has reported that 47 per cent. of students have to take on work to fund their educational experience. According to the National Union of Students, full-time students work on average 11 hours a week—what does that do to their educational experience? Research at Newcastle university suggests that 35 per cent. of students with a job would get a higher-class degree, and a better grade for every year they spent at university, if they were not in employment.
For all those reasons it is odd that the Government have failed to put more into student finance this year, but one thing is even odder. At the heart of this Government and this Budget has been the theme of the NHS and what should be done to improve it. This afternoon's statement made it clear that the Secretary of State for Health expects to employ some 15,000 more doctors as a result of these changes. Doctors have to undertake not just a three-year but a five-year course, at least, before even qualifying—and they must undertake much more training after that. The five-year course must often take place in London, which is one of the most expensive areas for students.
For doctors, it is not just a question of a £10,000 debt when they leave university. Even now the amount averages £13,350, and 40 per cent. of those qualifying end up with a debt of at least £15,000. The sum is increasing constantly as the new system becomes fully operational.
My early-day motion 875 was tabled some time ago. It refers to the problems of students who undertake long courses. It has attracted signatures from Irish Members and nationalist Members, and I am pleased to say that there are signatures from Labour Members as well as members of my party. Sadly, however, there has not yet been a single signature from a Conservative Member. The Conservatives are simply not interested in the problems of students undertaking long courses.
In case anyone has any doubts about the disincentive caused to those considering taking up medical careers, let me point out that the intake of one London medical school this year consists of some foreign students—that is good news, of course, because it means more money—and some students who have been educated at independent schools. Not one of those students was educated in the public secondary school sector—there is a disincentive for you.
If we really want to encourage those from poorer backgrounds to enter the medical service, we must do something about the funding of medical students. It is idiotic to aim for an increase of 15,000 in the number of doctors in this country unless we are prepared to ensure that there is a much smaller financial disincentive for those who want to take medical courses at medical schools. We need a bit of joined-up government, between the health and the education services.
Many students and their parents had assumed that the current review would lead to a better, more generous financial package. The Chancellor has now made it clear
that students can expect nothing overall. The Government admitted that they were shocked by the effect of this issue on their vote at the general election. Well, students and their parents will have one last chance, before the spending review is out, to send the Government the message that we need more money for student finance. That chance will come on 2 May, and I hope that the voters will take it.
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