Other amendments of section 22 of Teaching and Higher Education Act 1998
Mrs. Anne Campbell (Cambridge) (Lab): I beg to move amendment No. 213, in
clause 40, page 18, line 36, at end insert
'(2A) After subsection (2) insert
''(2A) In determining the levels of residual income below which a parental contribution shall not be required in respect of any grant for an eligible student, regulations under this section must establish different levels for each region reflecting such indices of the cost of living in different regions as the Secretary of State considers appropriate.''.'.
The Chairman: With this it will be convenient to discuss amendment No. 214, in
schedule 6, page 33, line 23, at end insert
Mrs. Campbell: One of the interesting things about the process of a White Paper and then a Bill is the change that takes place in the course of that evolution. I appreciate the way in which my right hon. Friend the Minister has listened to the fears expressed by Back Benchers and has managed to modify the Bill quite considerably to accommodate those concerns.
'9A In section 43(1) (general interpretation), insert
(a) Wales, and
(b) the regions of England specified in Schedule 1 to the Regional Development Agencies Act 1998.''.'.
When we began this process, the White Paper originally said that there would be grants of £1,000 for those whose family income was under £10,000 a year. That was then changed to families with incomes under £15,000 a year. It later became a grant of £1,500, available to those from families with incomes under £15,000 a year. We have now seen a further change with the roll-up of the fee remission of another £1,200, making a total grant of £2,700, and a bursary of £300, which adds up to a final figure of £3,000. That is a good deal for people from lower-income families. I no longer have the concerns that I had about students from very low-income families being deterred from going to university. What is now on offer is much better than the current situation. I believe that more students from poorer backgrounds will be encouraged to go to university under the Government's proposals.
However, I have a concern and I hope to be able to push the Minister a little further this afternoon on it. There are students who come from families who do not appear to have a very low income but who live in an area that has high-cost housing. That is the case in my constituency and in those of my hon. Friends who have subscribed to the amendment. The problem was first brought to my attention by my hon. Friend the Member for Reading, West (Mr. Salter), who has great
Column Number: 583
concerns about families in his constituency who do not appear to be on very low incomes but who have small disposable incomes.
I have examined comparable house prices in different regions and areas. There are huge discrepancies. You will be sorry to hear, Mr. Gale, that I do not have the figures for every Committee member, but I have focused on a couple of places to illustrate the point that I am trying to make about the huge differences. The figures were taken from the Land Registry, and they are recent, having been last updated on 4 February this year. In the constituency of my hon. Friend the Member for Reading, West, the average price of a two or three-bedroom terraced property is £156,000; in Greater Manchester, it is just over £68,000; in Salford, it is £58,000. In parts of London, the figure is much higher. Greater London's average price for such a property is £271,000, but that varies: in Barking and Dagenham, the figure is £158,000 and in Kensington and Chelsea it is about £1.5 million. Cambridge is very expensive compared with many of those places, although not with Kensington and Chelsea's £1.5 million: the average cost of a terraced house in Cambridge is about £234,000. I am seeking to illustrate that the disposable income of somebody who lives in a very high-cost housing area such as my constituency will be far less than that of people who live in cheaper housing areas.
I have also examined the mortgage repayment for an average Cambridge terraced house costing £234,000. Assuming that the purchaser had a deposit of about £25,000, they would be paying their mortgage on £209,000. The Council of Mortgage Lenders average interest rate for the past month was 4.19 per cent. Using that figure and the Moneyfacts mortgage calculator, the monthly repayment on a repayment mortgage for that property over 25 years works out at £1,125. That is consistent with Nationwide's figure of £1,238 as the monthly repayment.
Let us consider someone in Cambridge who comes from a family at the top end of the income scale at which a grant would be payable, with an income of around £33,000. The take-home pay on a salary of £33,000 would be just over £2,000 a month, out of which one might pay £1,125 in mortgage costs, thus leaving a disposable income of about £1,000 a month. That is not a great deal for a family that may consist of two adults and two teenage children. Now let us consider the same calculations for a family in Manchester. First, I remind the Committee that one can buy a terraced house in greater Manchester for £68,000. If we make the same assumptions as before and allow for a deposit of £25,000, mortgage repayments of £43,000, and take-home pay of £33,000, the mortgage calculation would be £225 a month, thus leaving £1,941 of disposable income.
There is a huge difference between the disposable income of those two hypothetical families, who have the same income but live in different areas. In Cambridge, they would have a disposable income of about £1,000 a month, whereas in Manchester it would be almost £2,000 a month.
Column Number: 584
Mr. Willis: The amendment is an interesting one, and raises a crucial issue about differential house pricing and costs. However, does the hon. Lady accept that, in Cambridge, there will be people who earn £33,000 and live in housing association properties with relatively low rents, whereas there will be others on the same income who live in expensive homes? Does she presume that each of those students would get the same grant?
Mrs. Campbell: Someone who has lived in a housing association property for some time may earn £33,000, but there is no way that someone coming into the city on that kind of salary would qualify for a housing association property. The Hundred Houses Society, a housing association in Cambridge, told me that it would not be able to offer a property to anyone earning over about £18,000 a year. That makes it almost impossible for anyone earning between £18,000 and £30,000 a year to live in the city, because they would not be able to afford the rent or mortgage repayments, and they would not qualify for local authority housing or for housing association properties. There is a real dilemma there. I do not say that that situation exists in all expensive housing areas, but it is certainly true in my constituency.
For a mortgage payer in Cambridge to be as well off as someone earning £33,000 in Manchester, they would need to earn £8,400 more a year. In other words, in Cambridge, one would have to earn £41,400 a year to be as well off as someone in Manchester earning £33,000 and paying a different mortgage.
Mr. James Plaskitt (Warwick and Leamington) (Lab): I follow the drift of my hon. Friend's argument, but as she seeks to redress the situation by establishing different levels for each region, will she define how she intends the word ''region'' to be used?
Mrs. Campbell: I hope that there may be a fairly liberal interpretation of ''region'', because I know that there are some low-cost areas in the eastern region. For example, houses in Suffolk and some parts of Norfolk are much cheaper than in my constituency. The sensible approach would be to say that areas that achieve area cost adjustment through their local authority funding mechanisms
Mr. Plaskitt indicated dissent.
Mrs. Campbell: I am sorry that my hon. Friend is shaking his head. Perhaps he is unaware of the difficulty that low-income families have surviving in expensive parts of my constituency. It would be helpful to make use of a mechanism such as the area cost adjustment, which is already in place.
Alan Johnson: I thought that amendment No. 214 defined regions as those
''specified in schedule 1 to the Regional Development Agencies Act''.
Column Number: 585
That would give no flexibility and would define regions in accordance with the regional development agency's boundary. That is a genuine point. Perhaps I have misread the amendment, although I do not think that I have.
Mrs. Campbell: I confess that when I read the amendment again, I realised that it might exclude my constituency, so I was trying to encourage the Minister to think about it flexibly. Nevertheless, whether we take regions or county council areas, to which the area cost adjustment currently applies, the principle is the same, and the figures that I chose to illustrate my point demonstrate the problems of living in high-cost housing areas.
Mr. Plaskitt: Let me explain why I am concerned about my hon. Friend's proposal. Let us imagine a typical terraced property in Leamington. A similar-sized property just 10 miles away in the city of Coventry would be about one third of the price, but both properties would be in the same region under any system of regionalisation.
Mrs. Campbell: There will obviously be big differences. People will choose to live in areas that they can afford and within travelling distance of where they want to work. It is difficult for teachers, social workers, postal workers, bus drivers and council workers, such as refuse collectors, to live anywhere near Cambridge, and they tend live outside it, where housing is cheaper. I cannot accept that families in high-cost housing areas feel anything like as well off as families in low-cost housing areas, because their disposable income is much lower. That would certainly apply to many students.
I am grateful to my hon. Friend the Member for Nottingham, North (Mr. Allen) for finding out what percentage of students in the constituencies of members of the Committee would qualify for the full grant if they managed to achieve the two A-levels needed to enter university. In several constituencies, the percentage is very high. As he said, 65 per cent. of students in his constituency would qualify for the full grant, while 41 per cent. in mine would qualify, at the current rates. That illustrates that Cambridge is not full of very high-income families. There are low-income families, who find it difficult to survive, because of the high housing costs.
I am suggesting that the family income threshold for those who qualify for the full grant should be a higher in high-cost areas than in lower-cost areas. Currently, the full grant goes up to an income of £15,950 a year, and some grant is payable to those with an income right up to just over £33,000 a year.
I am glad that Cambridge university has recognised the problem and deals with it in the way in which it structures its bursaries. Cambridge is suggesting that bursaries be available to students with family incomes of up to £35,000 a year. We may need to recognise that some families need a higher income in order to achieve the same standard of living as others. I am sure that this will prove to be an interesting debate.
Column Number: 586
We must also recognise that students from families with little disposable income are the most reluctant to go to university. It is for that reason that the Minister and Labour Back Benchers have campaigned so hard to get a grant in place to support those we want to encourage to go to university. I very much hope that the Committee will give that proper consideration and come to the conclusion, as I have, that there should be different thresholds in high-cost housing areas.