Examination of Witness(Questions 460-479)|
MBE, a Member of the House of Commons, Minister of State for Lifelong
Learning and Higher Education, Department for Education and Skills,
Wednesday 12 December 2001
460. You yourself admitted that the present
system is extremely complex and difficult to understand. When
HEFCE were with us they said it was, in part, a matter of communications;
that students did not understand the present system, let alone
potentially any future changes. So are there aspects of the present
system which you will specifically want to retain, and are there
flaws with it that you are looking at specifically?
(Margaret Hodge) I am not in a position to say what
we are going to retain or not going to retain. Nothing is ruled
in, nothing is ruled out. It is that sort of a situation. On the
simplification issue, it is an incredibly complex issue and means-testing
works in different ways for different pots of money. I think it
is the result of trying to target resources very finely, which
is a good principle to underpin your approach, but if you become
too sophisticated in that it becomes too complicated for the individual
to understand. So there are huge complexities around how you get
this bit of money, that bit of money to support students with
a family, for example, or even disabled studentsall those
allowances. We are going to look at trying to make it an easier
system to comprehend. I do also think there are communications
issues. We have got to make that better.
461. Despite the targeting, would you agree
that because of the minimal interest on loans, in fact, it is
still the middle and wealthier classes who have done better by
the present system?
(Margaret Hodge) I think they would not think that,
because they are all being asked to pay fees.
Valerie Davey: A relatively low level of fee,
when you take into account the fact that the Government is still
funding 90 per cent of it. That is a communications issue as well,
is it not? I have come across students who think they are paying
the fee. There is a huge area of misunderstanding. Parents
- I am sorry, I should be questioning you, not discussing my views.
Chairman: We are all enjoying this.
462. Let me put it bluntly: parents who have
paid independent school fees think paying the fee for higher education
is wonderful. Let us be quite clear. To move on from there, however,
the universities themselves need to have students. Everyone on
this Committeecertainly the membership this morningagrees
that the target of the review is to ensure that a future system
enables more youngsters from lower socio-economic groups. Is that
an ultimate criterion for this review?
(Margaret Hodge) That is a key criterion, yes.
463. That is exactly where we are focussing.
(Margaret Hodge) Yes.
Valerie Davey: Thank you.
464. We have some slight concerns. EMAs have
become something of a totem, and I think it is the role of this
Committee to look at things that become a fashion and a fad. We
do hope the pilots are very closely looked at because HEFCE, who
we interviewed on Monday, said they were very concerned. So we
had one view coming out of the department saying there has been
a 5 per cent increase in participation rates in EMA pilot areas,
with HEFCE saying "Patchy, not sure, more difficult than
that." The Committee would be very concerned. This is a large
amount of Government expenditure, and will get much larger if
it is rolled out as a national programme. We are very keen that
we get it right. As you know, Minister, increasingly, the focus
is shifting to 14-18. That is where we are losing so many talented
young people. We hope EMAs are not going to be looked at in too
rosier a glow; they have got to be part of a systematic evaluation
of what really works for these people.
(Margaret Hodge) I completely concur with that view.
The only thing I would say to you is that looking at them they
appear to be the most effective intervention we have discovered
so far, not just to increase participation but, more importantly,
to increase retention and attainment levels. We have got to wait
for the research to come out, and they are expensive (and there
is some dead-weight expenditure around them, so HEFCE is right
and I think we would agree with that) but it is also very difficult
to think of another tool that has been as effective.
465. This Committee suggested one, Minister,
as you know. We suggested very strongly in our Access report,
earlier this year, that if it was linked with a much higher premium
to universities who attracted young people from poorer postal
code areas, that would have been (and I see your PPS smiling at
this because he was part of the Committee) beneficial. A lot of
the evidence we took said that if you moved it up to 20 per cent
in real money, with EMAs on the one hand and the ability for universities
to go down this supply chain on the other, that could be a much
more effective tool in returns of getting a return on your investment.
(Margaret Hodge) You need to incentivise universities
to reach out in the way that they do in America and, traditionally,
have not done in the UK, so that they actively go out and recruit
and attract students from non-traditional backgrounds. You need
incentives in schools for them to raise standards and aspirations,
and you need incentives for individuals to keep them in full-time
education and training.
466. So you will be looking at our suggestions
that came out of that report?
(Margaret Hodge) I always look at all of your suggestions.
467. Minister, would it not be sensible to complete
the review of the Educational Maintenance Allowance, understand
that information, and then look at student support in higher education?
Surely, the two should go together rather than being done separately.
If you are going to achieve this 50 per cent target, I think this
Committee has heard evidence it is going to come via FE. It seems
to me that that, clearly, is where we need to target our resources.
We have heard from HEFCE that once students get the necessary
qualifications to get into university, then get into university
they do. So surely these should be together. Are FE students,
or kids at secondary modern schools in my constituency, going
to get the crumbs after middle-class students have got a bit of
extra money? Why not do it all together? If we are looking at
50 per cent then, surely, we need to look across the whole picture
and identify where help is needed most in order to reach that
(Margaret Hodge) The first thing to say is that prior
attainment is crucial, but we think that among the lower socio-economic
groups there is fear of debt. So it is not just the prior attainment.
The second thing is that we are looking, in the round, as part
of the Comprehensive Spending Review. Every review has implications
for other bits of the system, but we are clearly having regard
to the funding for students in FEas, indeed, we are for
adult students, who we have not talked aboutas we think
about the general support for students. The third thing to say
is 16-19 year-olds and the support they get is different. You
cannot say it is the same thing. The EMA is £900 a year.
As the Chairman and a number of us would know, that would not
pay the accommodation costs in many universities. The other thing
is that the EMA comes weekly, whereas the HE student has a lot
of up-front payments. It is easy to say it should be 16 right
through, but of course the 16-19 year-old still gets access to
things like free prescriptions, which when you come to the student
funding regime they are not eligible for except in very particular
468. But it is all money that you have got to
argue with the Treasury over.
(Margaret Hodge) Of course.
469. What is going to best enable the department
to meet its target? What is the best way to use the money that
it gets from Treasury to reach that target?
(Margaret Hodge) Not just in one pot. You are going
to have to put in lots of pots. The balance between the pots will
be reflected in the CSR bid and, we hope, in the final allocation.
470. Will this review also be cross-departmental,
so that indeed the elements of social security are taken into
(Margaret Hodge) Yes.
471. What will you be saying to the Chancellor,
or your other colleagues, about child allowance at 16-18?
(Margaret Hodge) I think my view on that is the incentive
has to go to the individual student. Why do a lot of working-class
kids choose not to stay on? They want money in their pocket, they
want to earn. They cannot wait to earn. Maybe their aspirations
around jobs means that they do not need the qualifications, and
they are scared of debt. I think there is a debt aversion issue
around there. I think part of the incentives that you must have
for 16-19 year-olds is money in the pocket of the student.
472. Can I ask you one more thing in terms of
where we are going? It does seem a bit odd that there has been
a bit of a sea-change in the argument (I hope you can see this
from the departmental perspective) but from where we are sitting
there has been a distinct shift in the kind of level of discussion
over this past short period since the Prime Minister's speech
to the Labour Party Conference, where he emphasised this review
into student finance. There has been much more emphasis and people
are talking much more intensively about this FE sector. I have
got a campaign in my own constituency at the moment, from the
Huddersfield Technical College, that really does leap off the
page when you look at the troubles that the FE sector is under
in terms of much lower pay than comparable jobs in regular education
establishments, such as comprehensive schools. There is real under-investment
in terms of core funding in FE. Here is FE strugglingand
it is the very sector you are going to be looking to to help you
with your 50 per cent target. As Jonathan said, you are excluding
that from the review, which is probably the most sensitive part
of your overall package.
(Margaret Hodge) We are not excluding the needs of
the FE sector from our preparation for the Comprehensive Spending
Review. We are not. What we are doing in the two reviews is we
are having a fundamental look at what we want HE to look like.
We had a fundamental review of FE in setting up the LSC. That
has resulted in that structure. The student funding issueand
I have been over it beforeis there because we think it
is important to do it for 2010 and we think it is important to
get it right having taken this very dramatic and very brave step
of saying that we want
473. What we are saying, Minister, is that probably
it is your FE sector which is going to deliver on that, and you
are obsessing a bit, in the department, about post-18 funding.
(Margaret Hodge) No. Both the FE sector and the secondary
school sector are going to play absolutely crucial roles in providing
the young people with Level 3 qualifications to meet our target.
Absolutely key. If you look at how we are plotting how we can
get to the 2010 target, it does not start at 18, it does not start
at 16, it goes back to 14.
474. Minister, with great respect, you are giving
us the impression of water-tight inquiries. One on student finance
post-18, a water-tight one in terms of the broader review of higher
education, and another one which is the spending review application.
The worry is, if we have a review of student finance post-18 which
takes a lot of resources, you will not have those to spend on
FE which some of us think is emerging as the crucial area for
(Margaret Hodge) We have to get the balance right,
Chairman. If I can say so, FE has, this year, had a 12 per cent
increase in funding. Next year it is getting a 3 per cent increase.
This is after an endless cut in funding in a Cinderella service
under the previous government. Indeed, (and Val is the only one,
I think, who was part of a Committee with me at the time) our
very first study when I was in your position was to take a fundamental
look at the FE sector, because it was so badly resourced and so
badly funded. The evolution of the Learning and Skills Council
and all we are doing about inspection and quality raising in the
FE sector, I hope, will give you some assurance that FE is very
much at the centre of our concerns in a way it has never been
before. FE has always been the Cinderella service of education.
What we are trying to do is lift it out of that to fulfil its
proper role. You inevitably have to look at things in a discrete
way and then you have to look at the relationship between them.
What I can assure you of is that the team and the department is
not losing sight of the relationship between these discrete reviews
and the overall budget direction of where we want to get to. Honestly,
we are not.
475. Is there a target date for when your review
is going to be complete on student support?
(Margaret Hodge) No, but we hope as soon as possible.
476. In one sense I am a bit puzzled as to why
you need to undertake an extensive review because there have been
two very good reviews already in a quite recent period. Professor
Rees gave us evidence on Monday afternoon about the review she
has done for the Welsh Assembly and, of course, there is the review
which has been implemented in Scotland. Both of those reviews,
separately, have come up with more or less the same conclusions,
that the present system of fees and loans is not working very
well, it is a disincentive to poorer students and that it should
be replaced in various ways, including students paying after they
have begun work rather than while they are still students. Why
do you need to undertake an extensive review when you have those
two bodies of evidence already?
(Margaret Hodge) I may be wrong on this but my feeling
is that the Welsh review did not actually come out with a recommendation
about how fees should be paid. What they did say was that it is
right to have a contribution from the individual towards the cost
of their higher education. So, I think what the Welsh review did
more was to define what they saw as the problem rather than to
come forward with real policy specifics.
477. On Monday there was a clear recommendation
that, in principle, it was better for students to pay when they
are working. Indeed, Professor Rees went into the detail of saying
they should not start repaying until they are earning £25,000
rather than 80 per cent of average earnings, which is the present
level. That way you will be excluding the students who go into
the lower-paid public professions but you would be getting the
payment back from the more affluent students who go on into the
more well-paid professions. One of the arguments behind the fees
and loans system was that students who tend to benefit from being
graduates and get better-paid jobs should, therefore, pay it back,
which is fair enough, but surely it should be the students who
do go into better-paid professions rather than ones in the public
(Margaret Hodge) We are obviously looking at the Welsh
review. I have not been to it for a few months but I saw it more
as an analysis of what they saw was wrong rather than a detailed
prescription of what we should put in its place. We are looking
at that and the Scottish experience, although it is early days
478. Will you be calling people like Professor
Rees to talk to you about the research?
(Margaret Hodge) No, we are not reviewing in that
way; what we eventually hope to produce is a paper for consultation.
I hope the Committee will have some input into our deliberations
before we come to a final decision.
479. The real argument, surely, is that the
Labour Government in 1997 acted in haste in terms of the findings
of the Dearing Report and got it rather wrong.
(Margaret Hodge) It is always easy to be wise after
the event. I think the brave action was to expect that students
should make a contribution. What is so interesting is that that
was 1998 and here we are, three years on, and nobody now challenges
that principle. That was a pretty radical principle. Beyond that,
whether the details were right, is what we are looking at in our
Chairman: I am going to switch tack now, for
a moment, because I want to make sure that my colleagues do not
get discontented. David Chaytor is looking at the cost of the
Learning and Skills Council administration.