Examination of Witnesses (Questions 311
WEDNESDAY 22 MAY 2002
311. Good morning. It is good to see you back
here. We have seen you in the past, and it is delightful to have
someone in the House of Lords willing to give evidence. You will
be aware that we only have an hour of questions and we are starting
to write up our report so that we can have some influence on the
Government's departmental inquiry. We will be starting that process
this afternoon. I have already urged my colleagues to ask direct
and sharp, quick questions, so can we have reasonably sharp, quick
answers back? There is a lot to get through and this is a very
important inquiry. What is wrong with the present system of student
finance? Many of us would have argued that it has hardly bedded
down, and the results from the first full graduate intake will
not happen until later on this year. What is wrong with the present
(Professor Floud) It is much too complicated
so that hardly anybody actually understands it, in terms of its
impact on individual students. That imposes very significant burdens
on institutions that are trying to guide students through the
maze. Secondly, it appears to be, perhaps because of poor publicity
about the nature of the scheme, inhibiting students from entering
higher education, particularly whose who, for various reasons,
may be debt-averse. Those are the main objections.
312. How much hard evidence is there yet that
this new-ish system is putting off students from studying, who
otherwise would have studied?
(Professor Green) The student debt project is underway
at the moment and we do not have the results of that until December.
Already, there is some evidence emerging, particularly in terms
of social class and ethnicity, but we do not have the hard data
at the moment, and we will not have it until this year. We have
other studies that have been done by other people, and some work
has been done by Claire Callender, who you have already seen,
particularly in her most recent report for the GLC on the impact
on the students of London. It is quite clear that the size of
indebtedness, in terms of approaching higher education, is a significant
problem for certain groups of students, and does constrain their
choices. That reinforces the point that Roderick is making: one
of the problems with the current system is that not only is it
complex in terms of institutions guiding students through it,
but when students have to make a rational choice as to whether
or not they can and should take the risk of investing in higher
education, in terms of their contribution to it, it is very difficult
to make that in a rational kind of way. They do not know, until
they have applied, what the costs are likely to be. They cannot
make the decision before.
313. You represent the supply side of higher
education. What evidence have you got, as the great providers
of higher education, that you are not getting students that you
were getting under the old system? Where is the hard evidence?
You have pointed out one researcher, who we know well and who
we will be interviewing later this morning, but where are the
hard facts of student indebtedness, of them not paying off loans
and falling into debt? What is the hard evidence that universities
are picking up?
(Professor Green) There are two responses to that.
You gave one answer yourself: the new system is only three years
into that. It is only this summer that we will get the first graduates
who entered into the new system, so we do not have the trend data.
It is too early. The second area of hard evidence is the institutions
themselves, in terms of what happened over the last three years
and the extent to which they have been able to recruit and retain
students and the extent to which they have found that debt is
one of the problems.
314. Baroness Warwick, can I ask you a slightly
different question. There is a view that if the Government and
the Department had come back from this inquiry, generally, when
one anticipated it, with four or five ameliorating suggestions
and modifications to the system, and said, "fine, it is not
bedded down yet; we are doing something on the edges", people
would have said "fair enough". This inquiry has gone
on a long time, and we do not anticipate the results of it until
July. Has it not raised expectations that something root-and-branch
will be announced and should be announced?
(Baroness Warwick of Undercliffe) I am sure that we
would appreciate a root-and-branch review, particularly if it
is not only of student support. We want to ensure funding for
institutions to provide the resources to give students a decent
experience, irrespective of the institutions they attend, and
the review should address that point as well. The hard evidence
is that student numbers have held up. The anecdotal evidence is
that in those institutions that are attracting students and have
a history of attracting students from the poorer social backgrounds,
although students might be attracted, financial constraints are
making a difference in their choice whether or not they stay in
the institution. It is relatively anecdotal because, as Professor
Green says, we do not have systematic evidence to that effect.
But it is interesting to note that overall student numbers have
held up over the last three years. In terms of the nature of the
review, we simply await what the Government decides. I do not
know whether we can comment on just how radical it ought to be.
We have perceived that it is a very complicated system. We hope
that at least it will address the complexity of the number of
schemes that exist at the moment.
315. Is it your view that the current system
supports the students from the neediest backgrounds, or is it
your view that it merely subsidises those coming from middle-class
(Professor Floud) Clearly, there is an element of
subsidy involved, as indeed there is in virtually every public
service in every part of the welfare state that one is talking
about. At the moment, the system provides additional help to those
from low-income families, partly through the means-testing of
the tuition fee element but also through the system as a whole.
We believe that together with not just the loan element, but also
the different hardship grants, those are clearly and rightly targeted
towards those low-income recipients. The difficulty of that, as
I pointed out, is that the current system is simply too complex
for anybody properly to understand. We believe that that therefore
constitutes a disincentive.
316. How would you like to simplify the system?
(Professor Floud) We would like to simplify the system
in the direction of a simple grant for people from low incomes.
The next question is, obviously, how low is low? That is a difficult
question to answer.
317. Would that be means-tested, or the income
of the parents, and what happens if the parents are not giving
the grant for those who
(Professor Floud) That has been a constant and difficult
feature of all our systems for the last twenty or thirty years,
parents who do not make the expected contribution to their children's
education. All universities have attempted to argue to such parents
that they ought to be doing so. I do not think any scheme will
guard against that particular problem, other than a scheme which
does not look at parental income at all and simply provides grants
to the students. We have not got rid of that problem by the current
system and you cannot get rid of that problem until there is some
kind of means-testing, which almost inevitably has to be based
on the parental income.
318. Are universities, in general, under this
current funding system, having problems reclaiming fees from students,
and, if so, is that a large problem?
(Professor Floud) There is a problem, not with the
50 per cent of students who do not pay fees of course, although
there, but there are often administrative difficulties in dealing
with the local authorities concerned, and that particularly applies
in the cases of universities that were approved through the clearing
period. It can take several months to establish with the local
authority whether they are prepared to accept responsibility for
a particular student. That imposes a substantial cash-flow difficulty
and burden on the universities concerned. The Government instructed
us to institute instalment schemes for the payment of fees for
those who do have to pay fees. That, in my view, leads to a rather
silly situation in which we are obliged to offer instalments for
really trivial sums of money. The administrative costs of setting
up direct debits or other instalments in order to collect in perhaps
£20 or £30 three times a year for a student paying a
relatively small fee as a result of means-testing, is simply inefficient.
This is a silly system. The current system can be simplified administratively
and should be. It does not help that we have to deal with the
student, with the student loans company, and the local authority.
That system should be simplified.
319. Baroness Warwick, you commissioned your
research to look at student debt. You said that the fear of debt
is one of the factors deterring such applications, and that we
should address the issue urgently as part of our current funding
review. You were confident that a current research team would
offer new evidence for a useful policy debate about what we should
do about it. Has your research team evaluated the Barr/Crawford
(Baroness Warwick of Undercliffe) We have looked at
Nicholas Barr's proposals, along with a range of other proposals.