Select Committee on Education and Skills Minutes of Evidence

Examination of Witnesses (Questions 200 - 218)



  200. Those who are disappointed, would you say they have had good value for their investment, or indeed has the taxpayer had good value for the investment in their higher education, if they are not able to get jobs which are at least reasonably well-paid?
  (Mr James) I think there are wider benefits to society of people carrying on in education, further education, or whether we are talking about higher education; so I would not want to make a sweeping statement about people who feel perhaps a bit disappointed with their earning potential, about whether that whole process was worthwhile. But what I certainly do believe is that if people argue that they are not happy with the amount of people going into higher education, or have a problem with the jobs that are available versus places for people going into education, that needs to be addressed separately. The way not to do it is to ratchet up the cost to the extent that certain people are priced out, and that is our fundamental fear with the current system. We believe access to education should be dependent upon your academic ability, on the grades that you get; it is a principle that we have held for a long time in this country. It should not be dependent upon your bank balance or your parents' bank balance, and the more you shift the cost onto the individual students, and we have seen a huge shift over recent years, and the proposals on higher interest rates would do so even further, the more you shift the cost onto individuals the more you move away from that ideal and move towards a situation where it is money that matters, not academic ability.

Valerie Davey

  201. You talked a bit about going back to the percentage of money which the Government spent, let us say, in 1996-97, but my understanding was that that was something like, on student grants and it was grants then, allowances, 42 per cent of the total amount which the Government was spending on higher education. So as the numbers increase, and I do not think the NUS have ever spoken about, we released the cap, as you know, as the Labour Party, on students, and you approved of that, and I am sure that is right, we want more students, we want the 50 per cent coming into higher education if we possibly can, so if you ratchet up the 42 per cent it becomes an incredibly large amount, to the detriment of the quality then of the courses and the provision that you get at university. So balancing that is part of the issue, and I would just like to hear what actually you feel students should be contributing and in what way. And then, a second point is that, from what we have heard, and I think from our experience over the last few years, the students are now, or should be, both individually, because they are paying something, because they are contributing, looking more discerningly at the course they are doing; but as a student union you are actually in the driving position, because the places are available, and how will you be able to use that position, you know it is a buyer's market, you are in a buyer's market position, how are you going to be able to use that?

  (Mr James) I think, in terms of the overall expenditure, we have made some submissions within the Comprehensive Spending Review, and will gladly circulate it round the Committee, about estimated levels of grant that we feel would be appropriate, and the total impact that would have. However, the cost, just to pick one example, of implementing the Cubie Report system in Scotland right across the United Kingdom would be in the region of £700 million, according to our figures, so you do not have to necessarily return expenditure up to 42 per cent, it could be significantly lower than that, and fund an extension whereby you are providing maintenance support for students from poor backgrounds, and fund a system where people are not paying tuition fees, at least paying tuition fees up front. We do support students making a contribution, and we do recognise the difficulties and the realities of governmental decisions, and that is why we are putting forward situations that we believe are fully costed but are also realistic. We believe though that students should make a contribution once they have benefited from their education, and we do believe that the system should not put individuals off from poor backgrounds. The biggest problem with the changes that were made in 1998, as far as NUS is concerned, is that they actually hit those poorest students the hardest, and individuals saw the cost of going to university more than double in the space of four years, so from a figure of just over £4,000 it has gone up now to £10,000, according to the Barclays survey, the NatWest survey and the other independent surveys. So that not only have people seen in the space of four years a more than doubling of debt, but the students from the poorest backgrounds have been hit the hardest. As very eloquently explained in Claire Callender's report, and the Department released the student income and expenditure survey, it is those students from the poorest backgrounds that saw the biggest increases in debt with the changes that were made in 1998; and therefore we believe it is those students that should receive the benefit of any increased expenditure. But we do firmly believe that without reversing some of those cuts, not necessarily all of them but some of those cuts, there will not be a solution to the student funding crisis that solves some of the access problems, and there will not be a solution that resolves the problem on the doorstep, which was one of the key reasons for the review in the first place.

  202. And your position, your role now, as NUS, do you see it changing?
  (Mr James) Certainly, we have worked with local student unions to encourage students who are dissatisfied, we have made a higher contribution to take advantage of that; but we believe our fundamental role is to represent students and to take those interests to the Government, and, given the huge changes on the student support side, that has to be our dominant focus. We do also, and I would like to make this clear to the Committee, do a lot of positive work, encouraging students to come in. We run a project with the Department about widening participation, called Partnerships for Progression, which tries to encourage students from backgrounds that have not applied to universities before to do it, via an entrance scheme run by the student union. We also publish on our website the information from the Department, fully explaining to people the funds that are available to them, the subsidised loans that are available to them, and we do make every effort to encourage and to ensure that people are not put off education.

  Valerie Davey: I think you deserve full credit. I think, in fact, you have moved ahead of the universities themselves in doing that, and that, again, has been part of our experience, in the past; so I hope you will go on with that. But also, I think, in time, you should be looking at the nature of not the flexible fees but the flexible courses and the different arrangements. That is for another time. Thank you.


  203. Let us just push you a bit on this. Is it not crocodile tears, on the one hand, to want to encourage students from poorer backgrounds to come into higher education, but then not to be able to will the means, the resources, to enable them to do so? Here is Professor Barr, he is offering you by this method three-quarters of a billion a year that could actually be targeted at poorer students, and as he, I think, convinced many of us on this Committee, as did Wendy Piatt and Claire Callender, the subsidy at the moment is going to those better-off families. Now is it not a strange position that, in a sense, you want to go back to the old system, where twice as much support went into student support in this country, compared with all of our international competitors, and at the same time here is a Committee where we have done many reports into early years, where there is enormous demand for Sure Start to be rolled out, educational maintenance allowances to be rolled out, and here we have the NUS saying, "We want it for everything," And is that an unreal position, for a President of the NUS to come before this Committee and say, "We want it all, but we don't want to make any sacrifices"?
  (Mr James) I do not believe that is our position. In terms of interest rates, our position to a situation of increasing interest rates is based entirely on the impact we think that will have. If, for example, we move to a situation of 8, 9 per cent interest rates, which would be the bank borrowing requirement, you would see a £10,000 debt increase ten years after graduation, just by taking up a normal full allowance, with no other debt included, increased to over £30,000.

  204. Has the NUS commissioned any independent, respected analyst to draw up these figures? You have, in the past, done that sort of thing, have you not?
  (Mr James) We have circulated, and will happily do so again, our figures on what we believe is the impact of commercial interest loans, to everybody for comment, but there is a mathematical lack of width when you are talking about, this is the percentage rate, this is the debt, this is the model it will be over time. And those models we believe will stand up to scrutiny and show very clearly a very high increase in debt, just at 9 per cent the £10,000 borrowed does return to a debt of just over £30,000 after ten years; that we believe would have a disastrous impact on access to education, would work against the widening participation agenda and the drive to end élitism in higher education. That is why we are opposed to loans. We do not believe that the solution to providing grants would be to charge commercial interest rates on loans, or higher interest rates on loans, because we believe those people who would pay that interest rate would be those people who do not get good jobs after graduation, and all the evidence shows that tends to be those people from the lower socio-economic classes who apply to university in the first place. So we are bound to be robbing Peter to pay Paul. If we want to solve the issue on student maintenance support then there will have to be a reversal of some of the cuts and there will have to be some new Government money; if there is not some new Government money in this review, we believe it is going to be impossible to resolve the problems that led to the setting up of the review. To return an element of expenditure on the student grant, based on the Scottish model, and to roll out the EMA programme right across the country, would still involve spending less of the total budget, spending less than John Major spent on student support back in 1997. Now we do not believe that is an unrealistic position for any of us to hold, we do not believe that is asking for it all and asking for something that could never happen, it clearly has happened in this country; the question is, do we want to make access to education and equality of access to education a priority. And as we move forward into the 21st century, with the ambitions for expanding the economy, the ambitions for an equal society and equal opportunity, where it is your academic ability not your bank balance that matters, I believe it is something that could be funded by the Government.

  Chairman: Now we are getting the picture.

Paul Holmes

  205. You ran a campaign back in February where you pointed out that, after paying rent, a student would have £29 a week, and somebody on Jobseeker's Allowance would have £42 a week, so you would be better off being a jobseeker rather than being a student. Have you got any hard evidence, because one answer to that is, well, the students can go and work behind the bar in the middle of the week, and all the rest of it, and supplement that way; have you any hard evidence of how students working more and more in term time has any effect on the academic quality of the degree that they produce?
  (Mr James) We do have quite a bit of evidence of people who have to work during term time, and the impact that has; we have it both from students at work surveys, that we have done jointly with the TUC, and again we will very gladly circulate that to the Committee. But there is also evidence from other reports, both the Cubie Report in Scotland and, indeed, Claire Callender's report for the Department for Education, which highlight the impact of extended working hours on study and highlight the detrimental effect that it has. There have also been two noticeable shifts. The £29 figure that you quoted was the average figure; in places like London there has been some excellent work done by Unilever on this, around London weighting. In places like London, where the rent is far higher, you actually find some students have to take out the full student loan just to pay their accommodation costs for the year, and then have to go out and get bar work to pay for all their food, all their travel and all their academic requirements, like books. So there is a huge discrepancy at the moment between income and expenditure. So the key things that we would be looking for would be a resolution of that issue, and the situation where students would have access to greater funding.

  206. We are just now getting the first wave of students through as graduates who have the full impact of loans, and everything, and are getting the average £10,000 to £14,000 debt. Is there any evidence starting to emerge of whether those students go on to look for loans to buy flats, cars, to start work, to go on to do post-graduate work, or whether there is a credit difficulty because the banks, or whoever, say, "No, you're already £14,000 in debt, so you're not a good credit risk"?
  (Mr James) I think there is widespread evidence on the ground, it has not yet been pulled in to formal evidence, and we are looking forward to a number of reports that we believe that the Government will be doing, as well as reports that other stakeholders in higher education will be doing. But we believe it will have a major impact on post-graduate study, particularly with the average being £10,000, that means that some people are on £15,000, that there is a big shift away from that, and it will have an impact both on post-graduate study and on mortgages. We dread to think what the application figures would have been like, for example, for PGCE courses if it had not been for the decision, some 18 months ago, to offer a large bursary to encourage people to take up those courses; and in other sectors, which have not received such a bursary, we believe there will be a decline. But also, furthermore, there is a secondary point to the question you asked before, about the impact of part-time work, there has also been a lot of evidence now that students from socio-economic classes 4 and 5 are turning away from professional courses, because they are choosing courses where they can actually work their way through their degree, and that people from those backgrounds are not in a position to study courses like medicine or law. And, indeed, in some of the Parliamentary Questions and Answers that we have seen, back at the end of January, it was very evident that in every single category, bar one, of all the professional subjects the proportion of students from socio-economic classes 4 and 5 had fallen, in some cases dramatically, in all bar one. And we believe that is a secondary impact of the student at work debate and the fact that people do not have enough money to live on whilst at university.

Mr Pollard

  207. I come at this from the perspective of working full-time, bringing up a family and doing my higher education; but I have great sympathy for the position that students find themselves in currently. Professor Barr and Dr Crawford suggested earlier on that if students had universal access to a loan that included living allowance things would be much better all round. And I would suggest that, if you think of, one of the complaints made is that credit cards are widely used by students, with interest rates of 15 per cent, and even higher than that in some instances, they have to be repaid as you are going along, which means that you are in a double bind, almost. Now it seems to me that if Professor Barr's theory was followed it might be much better for many more students, in that you would not have to pay back until you were down the track and earning a salary. I take the point you made about teachers and other professionals who have not decided. I just wonder, have you got a view about that?
  (Mr James) We certainly would like to see the subsidised student loan expanded, and we would actually agree with them on that point, but we disagree about how it would be done, or indeed the motivation for doing so; but we do believe that the loans should be increased to allow people to borrow more money at the subsidised rate. Unfortunately, at the moment, there is that massive shortfall between income and expenditure, and that is having a very negative effect on a large number of students; but we also believe that if an element, for example, of maintenance grants were to be reintroduced and that went alongside the current loan that would equally need to drive to improve the amount of money available to students, whilst not overall increasing the debt that they were to end up in. And, in terms of the overall figures, I think the evidence earlier was quoted that people would borrow, say, £5,000 of the Government loans and £5,000 on credit cards and other loans; in actual fact, if you borrow the three student loans that the Government offers, that alone takes you to over £10,000. So any extension of that would be seeing a very large initial debt, and that is why we believe it should be an element of a grant that needs to be reintroduced, rather than necessarily expanding those loans for evermore.

  208. You would think that allowing Professor Barr's theory that you get living allowance and the tuition fees, that students would go along then and be still borrowing the credit card money and having foreign holidays, and so on?
  (Mr James) I certainly think that, for a large number of students, those students who do have to work throughout their course, they would value the opportunity to be able to borrow more money at the subsidised rate, and that is something that would actually be beneficial. Also maybe I would like to remind the Committee, in this issue of student hardship, it has been a long-standing one, the amount of money students have had to borrow has not changed overall over the last eight, or so, years, and I believe, in opposition, I think it was David Blunkett, as the Shadow Secretary of State for Education, called student hardship, the lack of cash people had access to, a national disgrace and a badge of shame on this country. So we were hoping, with all the other changes, that we would actually see an increase in the amount of money students could get access to; that clearly has not happened, and we are hoping, the current student funding review, as well as returning maintenance support for the poorest students, we can see an increase in the access to subsidised loans for those students who need it.


  209. Owain, can I just press you on one point, and that is, it would be seen as remiss of us if we did not say to you, or ask you a question, along the lines that MORI and the Minister of State and others do comment on the fact, yes, we do believe, and this Select Committee, looking at access, believe, that there are poor students who are suffering under the present system, but we believed those were a small percentage. And, the fact is, many of us represent university towns, and we do see a level of expenditure by students, that is confirmed by MORI, in terms of £25 a week on alcohol, by the burgeoning bar culture round every city centre, which is supported by students, not very often by local people, but we see, our constituents walk past the university, the centre of towns, and see a lot of young people living a pretty good lifestyle. And there is quite a lot of evidence that the money people borrow, or the money people use from their working experience, is to support a lifestyle that is not essential to the studying. Now a lot of my constituents do not have the benefit of higher education, and have not had that benefit, yet they see people living what they would regard as pretty high on the hog, as students; and yet here you are, before this Committee, saying, "Well, we want more". Is that a fair summary, to say a lot of students have a pretty good life on the incomes they get at the moment?
  (Mr James) I think we do not want more for those students who are, the small minority of students, we believe, certainly, enjoying that lifestyle. If the average expenditure is something like £25, as quoted in the MORI report, well we know there are a large number of students who do not spend any money at all, on anything other than their course, as they are struggling to get through; those people who are dropping out for financial reasons, I think, find it pretty upsetting when they hear that perception of students, of drinking. But we are not arguing for more money for those students from better-off families who perhaps are in a position to enjoy that sort of social life.

  210. But a lot of the research is saying that you are, that your position actually is very conservative, you are saying, "We don't want to lose any money, but we don't want to give any either to harder-up people in our sector, or indeed into the EMA sector." The impression I am getting, you are doing a passionate and excellent brief for a vested interest, and I understand why you are coming at it like this, but is not the implication of what you are saying pretty tough news for EMAs, for Sure Start, or for anything that would be regarded as progressive, in terms of higher education?
  (Mr James) I do not believe that is the case at all. What we are arguing for is for targeted support to those students from the poorest backgrounds. We have seen over the last four years the costs of going to university more than double, we have seen student debt increase by more than £1½ billion a year. We do not believe saying "We can find the solution to the grant problem by putting student debt higher over here, or by moving to higher rates of interest" is a solution; we believe that the new money should be targeted at exactly those who need it. We are not arguing that that money should be spent across the system, but we are arguing that any further changes, robbing Peter to pay Paul, will not lead to a solution on student funding. What needs to happen, if we want to move towards a solution, is we need to have some of the massive cuts of recent years reversed, and we need to see some new money reintroduced, targeted at those who need it. That is a solution ultimately that the Scottish Parliament found, it is a solution ultimately that the Welsh Assembly is looking towards, and it is a solution that I certainly believe the British Parliament needs to look at. And if people at Westminster want to solve the problems of student funding then they have to recognise that at some level that will involve some extra financial commitment, not just jiggling the money around.

  211. Owain, the fact is that many people on this Committee, who are deeply concerned about the future of higher education in our country, given a pot of money, would say that, absolutely, our priority has to be investment in high quality teaching, that is paying teachers well, in higher education, consistently investing in research, and, indeed, encouraging universities to take a lead, rather than the regeneration of their towns, cities and regions. And that is why, in a sense, many of us believe a move from 42 per cent, that Val Davey mentioned, to something more like 20 per cent, which is the international average, is a healthier situation?
  (Mr James) I actually think that the submissions that we have made are not arguing for a full return to 42 per cent, we just believe it has gone too far and too low. And, in terms of the case that we are putting forward, we are arguing for that money to represent and to go towards students from the poorest backgrounds; that money will then be spent in the local communities, and in terms of expenditure will actually go out and have ramifications anyway for local economies. But particularly we believe that that money has to be spent, targeted at those students who need it; if we do not, the price that we pay is that we have access to education decided by people's financial ability. We already have the growing evidence of people moving away from professional courses, from socio-economic classes 4 and 5. And we do support the commitments to 50 per cent participation, but that will not be achieved, the whole point of 50 per cent is to generate a strong economy, 20, 30 years down the line, by a skilled workforce, looking at the models such as Germany, where you have a higher percentage of people going into higher education, and that will not be achieved, 50 per cent will not be achieved by using student support as an area to make cut-backs.

Ms Munn

  212. I wanted to talk a bit more about this issue of debt, because I think what is unhelpful to the discussion is broad figures, which have said there is so much debt, without clarity; is that the student loan debt, or does that include other debt, which people are leaving university with? And that goes back to this whole point, that if you were able to borrow a larger amount, whatever the interest rate, even if it was a higher interest rate, and you were then going to pay that back later, you would not be borrowing money now, effectively, through credit cards, or whatever, which are adding to the debt. To me, that is quite a powerful argument, whatever background you are from, that you actually delay paying interest, you are going to pay it at a much lower rate, and you are not running up debts on credit cards, etc., as you go along?
  (Mr James) To clarify the figure, the £10,000 figure that we are quoting as the average debt, the NatWest survey, the Barclays survey, as well, is based on your total debt, so it will cover the Government money you borrowed from the Government and your other debts on leaving university. We believe that it should be expanded; but the only way to achieve that is not by moving to commercial interest rates, there are other ways of expanding student loans to pick up that credit card debt. So we would agree wholeheartedly with that drive.

  213. But if we go back to what David Chaytor was saying earlier, and what was said, we are not talking about commercial interest rates, we are actually talking about a relatively small, additional increase over the current rate, and we are talking about deferring paying that. Surely, that is better than huge rates of interest on credit cards now, which are feeding into that? Because what worries me enormously, and I saw this when I went to hear young people in the UK Youth Parliament, is that figures get bandied around, whether it is £10,000, and Paul sits here and says £10,000 to £15,000, it is that which puts people off going, rather than a real appreciation of what it means. And I went to a local comprehensive school, and I am one, of a number of my friends at that time, who went to university, one out of maybe a group of seven or eight of us, and the difference between what I have earned and what they have earned is just phenomenal. And I worked in the public sector, so it was not huge amounts, relatively speaking, but what is wrong with the system that is being proposed over here?
  (Mr James) Ultimately, we believe, it is because those people who will pay the price for those higher interest rates will be those people who take lower-paid jobs, who are then having to pay back more than those people who go into the City, because they have a longer period of repayment due to the high interest rates. And we believe that those people will be the people required to subsidise that expansion; and it could be you could get an expansion, which we support, we called for that expansion, through other mechanisms, it is not the only way to achieve it by moving to commercial interest rates.

  214. But, even so, because I was a social worker my level of what I was earning was different from other graduates, I was still so much better off than the people who never went. And deferring it over that period, the impact that it would have on me, because I make the decision about what level job I went into, not on the basis of money but the basis of what I wanted to do, that would still be better than the system now, which may be putting people off, and people are having to pay back loans to credit card companies at much bigger amounts?
  (Mr James) It would certainly be better to expand the student loan system so people did not have to take up debt with credit cards, and I would support that 100 per cent. But we do believe, if you move away from a situation whereby student loan debt is fixed at inflation then you see a situation where the fear factor of that debt will actually increase, people will perceive it as "Not only do we owe £10,000," or £12,000, or £15,000, "but we're actually paying that at something above the rate of inflation." The more that gets, the closer that gets, to commercial rates, the higher the fear factor will be. I also want to point to just two other pieces of evidence, one around the perception of debt; we do do a lot of work, and we will continue to do so, encouraging people into higher education, we do believe it is still a good deal, even under the current financial support systems, which we believe are deterring some people, but the fundamental problem has been that the cost of going to university has more than doubled in the last four years, that is what is creating the factor.

  215. But for people who have never, ever, considered going, the issue that is has doubled is not an issue; the issue is, they are being told, under the current system, "You're going to have £10,000 worth of debt." If they are told instead that, rather than get a job which pays £10,000, £15,000 a year, "You have an opportunity of getting a job which pays £25,000, £30,000 a year, and that at the point that you reach this level you will be paying back a certain amount," I think they are going to go for it?

  (Mr James) We do have students going and doing exactly that, making those arguments, trying to encourage people to carry on in education, and I really strongly would not want our position to be perceived as somehow we were against that; we want to widen that participation. Students currently now are going into schools with a poor track record of access, arguing that those students should consider higher education, trying to sell continuing in education to them. However, the overall impact of the changes that have been made has been to put that price up; and it is not just NUS that are saying it, the independent reports, the figures that Claire Callender has highlighted, the National Association of Head Teachers, not normally an organisation we are in alignment with, have all said that if we do not see a return of maintenance grants for those students from the poorest backgrounds then debt will be a deterrent factor, putting people off applying. So I agree wholeheartedly with you that more needs to be done to sell higher education, we need to convince them of the values of it, but the fact is that all of the different organisations out there are united in saying that unless a solution is found to the student grants issue for students from the poorest backgrounds then there will not be a solution, however hard we try to sell it. The overall perception of debt amongst people going to university is that actually they will end up with a debt lower than they actually will end up with; so if there is a perception problem at the moment with debt, it actually works the other way round, people going into universities, first years, beginning their course, set their average debt figure at a much lower rate than the one we know they will end up with.


  216. Could you take Meg Munn's point, that she wants people not to have that debt figure?
  (Mr James) Yes.

  Chairman: And some of the attraction of Professor Barr's argument is you take that sum away from the cloud that hovers over your student members' heads. But, last question to David Chaytor.

Mr Chaytor

  217. You said that you want to see an increase in the size of the loan available, to take account of the point about credit card borrowing, but, if you want to see that whilst at the same time maintaining the subsidised rate of interest, surely you are then increasing the total subsidy spread across all graduates and reducing the amount of available money that could be targeted on those who need it most?
  (Mr James) All I would point to are some of the solutions that the Scottish Parliament, that the Welsh Assembly and other reports have found to this, whereby they have looked at trying to restrict access, and they have looked and addressed the issues of people getting access to loans that should not be getting access to it by introducing a stricter element of means-testing on that loan; and, in return, they have found the cash to expand the loan and the cash to provide some maintenance support for students from the poorest backgrounds. That, I believe, would be a healthier solution than a solution which looks at increasing the interest rates that people need to pay, because we strongly, strongly believe, by definition, the people who will pay that higher interest rate will be those who take lower-paid jobs and do not pay it off straightaway.

  218. So just to clarify, you want to see an increase in the total then available but an increase in the means-testing for eligibility to that?
  (Mr James) That would be one solution. In the Comprehensive Spending Review submission, we have covered a number of the different issues, and we have presented things that we believe add up realistically as a financial package. But if you were faced with a choice of the two then certainly keeping away from commercial interest rates, we believe, would be a better system.

  Chairman: Owain James, Lindsey Fidler, we have very much enjoyed it, we hope you have enjoyed it; come to see us again. We have pushed you a bit, as you would expect us to. So thanks again to all those people today. And can I say just one thing. I was walking along this corridor only yesterday and suddenly found a cupboard with two or three people enclosed in it, and they are the people who actually televise our proceedings, and their heating or ventilating system had broken down, and that was the only reason that I saw that these people work in such appalling conditions. And can I say to them, keep up the good work, and I hope your air-conditioning comes back very soon. Thank you.

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