Examination of Witnesses (Questions 280-299)
WEDNESDAY 26 FEBRUARY 2003
MS MANDY
TELFORD, MR
CHRIS WEAVERS,
DR SOFIJA
OPACIC AND
MS LINDSEY
FIDLER
280. If you had a choice, though? You have got
one pot of money and the Secretary of State is not getting any
more from the Chancellor. Where would you put that money in terms
of providing greater access? If that is the starting point, would
it be back-end paying off fees, or would it be taking that money
and increasing the maintenance allowance—increased from
£1,000 to whatever—and, also, raising the amount which
you means-test in order to access that maintenance grant?
(Ms Telford) So that is a maintenance grant plus upfront
tuition fees?
281. No, no. The Government has said they are
going to pay off tuition fees, which ordinarily people would pay
off back-end. Yes? After their degree.
(Ms Telford) Not always.
(Ms Fidler) Can we just clarify?
282. The Government has said the fees will be
paid off after graduation. So that is a cost to the Exchequer.
Would the Government be better in taking that money that they
are going to use to pay off those fees post-ed and actually providing
greater maintenance allowances in advance—when one considers
access and the points that Mandy Telford has made about the small
amount of grant and the means test?
(Ms Fidler) And, therefore, maintaining an upfront
fee that was differentiated? Is that—
283. No. Does anyone else understand what I
am talking about? I will have one more stab at this and then shoot
myself, I think.
Chairman: Jonathan is going to have one
more stab. As they say on University Challenge "Please
listen carefully".
Jonathan Shaw
284. It may well be me. It more than likely
is. The Government are giving up to £1,000 to students whose
parents are earning less than £10,000. Those are small amounts,
which is the NUS' position. What the Government have said, also,
is that they will pay the fees of poorer students after they have
graduated. Would it be better for everyone to pay their fees and
we take that money that the Government would spend on paying off
those fees and give it front-end, so increasing the maintenance
allowances and also raising the threshold against which the maintenance
allowances are assessed? You have got one pot of money. Where
would you put it?
(Ms Telford) I think what we would say, if we had
one pot of money, is that we would revert back to the suggestions
in both Scotland and Wales, on Cubie and Reece, which was, essentially,
that the money is targeted to students from the poorer backgrounds
and given as a grant upfront, then everybody pays regardless of
their backgrounds back-ended once they are earning a certain amount
of money.
Chairman
285. What is coming over is that—I know
it is a very old expression—you want your cake and eat it
too. I do not think this session is going to be televised but
you would be coming over as pretty selfish and rather greedy as
the NUS, would you not? You do not want to pay anything and you
want everything. At the same time, when one looks at your evidence,
you cannot make up your mind. Do you want to help poor students
or do you want to help large numbers of students from quite affluent
backgrounds? Is there no moral crusade in the NUS any more that
you want to help poorer students? If you do, sometimes it is difficult
because you have to penalise the ones who are better off to help
the poorer ones.
(Ms Telford) I think there is a huge moral crusade
in the National Union of Students. We are trying to ensure our
members are not saddled with debt and not saddled with hardship.
What this debate is about is the maintenance grant and it is about
paying for fees.
286. So morally you only care about your members
and not the poor people out there that do not get any higher education
but have to pay the tax?
(Ms Telford) Of course we do.
287. It does not come out of your literature.
(Ms Telford) What we are debating at the moment is
targeted maintenance grants and the paying for fees whether they
be upfront, back-ended or top-up fees. The student loan, which
we are not asking to be scrapped at all, is still there, is still
going to be a personal debt to the student and is still a debt
that they are going to have to take out to get—
288. I would not think you would want to get
rid of the loan, it is interest-free. Not many of my constituents
get interest-free loans.
(Ms Telford) Almost.
Chairman: No, with inflation it is interest-free.
Valerie Davey
289. That is the issue I wanted to come on to.
I was at the meeting at which Charles Clarke congratulated you
for your very persuasive argument to keep the virtually interest-free
maintenance. Yet do you have any idea what it costs the Government
every year to subsidise the virtually interest-free loan?
(Ms Fidler) What is Nicholas Barr's figure at the
moment?
290. It is something like £800 million
and it will go up under the new system to well over £1 billion
a year. That is the subsidy just for the loan, on which I know
of students who are absolutely delighted because they are re-investing
that money. Those are the ones who are able to re-invest the money
and do very well. When the Bristol Chamber of Commerce, the Junior
Chamber of Commerce, met me many years ago now, that was the element
they were critical of, because they were saying "If I have
to invest in a business I have to take out a bank loan."
Why are you not investing in your future at—I would not
argue for the going rate—at least the middle term at which
the Government borrows, so that something is paid back on that
loan?
(Mr Weavers) We would certainly recognise that there
is a very small minority of students who do use the loan amount
in that way. Certainly from personal experience it is a very small
number. However, the way the system is run on the current levels
of interest payable, which equates to approximately the rate of
inflation, means that those people graduating and going to less
well-paid backgrounds are accumulating a much higher debt. The
current system means very positively that the person who goes
to become a teacher and pays off their loan over the period of
20, 30 or 40 years or maybe gets it written off at retirement
does not actually pay off more over the course of their career
than the very fortunate person who then goes to work in the City
of London and is able to pay their loan off over a couple of years.
Any system that introduced either a commercial rate of interest
or any form of higher rate of interest would penalise the less
well-paid, public sector worker on graduation to the benefit of
the person who goes off to work in the City of London as a investment
banker, or whatever else, which clearly is a very positive thing
that we want to prevent from happening.
291. I understand that argument and I have heard
it put very persuasively, indeed, by Margaret Hodge herself. However,
the actual figure of about £1 billion—are you really
saying that is the way you want £1 billion of higher education
expenditure from this Government spent? Of all the priorities,
that is where it should be spent?
(Ms Telford) Basically, the NUS does not support raising
the interest rate on loans because it would mean that those who
are the poorest graduates will pay the most for the rest of their
lives. The richest graduates will pay it off quickly and the poorest
will be paying it off forever and, therefore, accruing lots of
interest. It will also prohibit take-up by certain groups. For
example, Muslim students are not allowed to get themselves into
debt and, therefore, will not be allowed to take out the government
student loan because it will have a commercial interest rate on
it.
Valerie Davey: I take your point, but
just recognise that it costs £1 billion.
Chairman
292. So we cannot have any interest on student
loans because of the minority of Muslim students who might be
put off by this. Is that your defence?
(Ms Telford) No, and also because we would like to
protect the poorest graduates in society because they will be
the ones paying for it longer.
Mr Jackson
293. Do you think it is entirely rational to
assume in your implicit economic model that if there is a substantial
amount of student debt to be repaid from subsequent earnings there
will be no change in the structure or distribution of those earnings?
(Ms Fidler) I am sorry. Can you repeat the question.
294. I think it is fairly straightforward. Do
you think it is rational to assume that there will not be any
change in the amount of money that graduates get paid when they
have additional claims arising from their debt acquired as students?
(Ms Fidler) Employers will not increase wages as a
result?
295. Including public sector employers.
(Ms Fidler) It is a problematic area because we are
only hypothesising at the moment. We do not know.
296. There has been some experience with student
loans for maintenance, and the arrangements that have been made,
for example, to pay reductions in debt for people going into teaching.
(Ms Fidler) But it is unlikely that, for example,
graduates going into the voluntary sector are going to be able
to have their earnings increased by voluntary sector organisations
because there simply is not the money in that sector to increase
wages. It is very difficult to expect employers across the board
to increase wages in lieu of graduate debt.
297. What proportion of students go into the
voluntary sector?
(Ms Fidler) I cannot answer that. I do not have the
figures for that.
Ms Munn
298. I just want to clarify two points. You
are saying that you like the idea of independence and young people
being treated as independent from their parents post-18, except
when it comes to tuition fees when you do not want students from
poorer backgrounds to pay tuition fees?
(Ms Telford) No, that is not what we are saying. We
are saying that under the current situation students from poorer
backgrounds do not have to pay tuition fees because their parents
will be assessed but if the fees were back-ended then it would
be the independence at 18 argument. We would also like to see
the student loans being assessed on students' individual income
rather than their parents' income.
299. So you would say that the Government is
saying at the moment the poorest of students—and quite a
lot of students—do not pay the £1,100 fee, and you
are saying they would have to pay that because they would be paying,
back-ended, the whole of that amount or up to £3,000 if it
was a differential fee?
(Ms Telford) We would say that if there has to be
a graduate contribution then it would have to be based on graduate
wages. That is the important thing. It would have to be once you
have financially benefited from your education. What we recommend
is £25,000. It does not matter where you have come from,
it does not matter what your parents earn; what matters is what
your graduate salary is.
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