Higher Education Bill

[back to previous text]

Mrs. Campbell: Forgive me if I am wrong, but I thought that when the Liberal Democrats had a policy on the national minimum wage, it was a regional, rather than a national policy. Perhaps the hon. Gentleman might have argued then for regional variation in the national minimum wage, whereas he now seems to be arguing against the equivalent proposal.

Mr. Rendel: Part of the reason for a regional policy for the national minimum wage is to encourage employment into areas where housing prices are low. That is the long-term solution to the problem.

James Purnell (Stalybridge and Hyde) (Lab): I, like other hon. Members, have some sympathy with the amendment. As someone who was briefly a chair of housing in an inner London borough, I know that

Column Number: 590

there are genuine difficulties in finding housing for people who are not, by the standards of the south-east, particularly poor. However, now that I represent a seat in the north-west, I should also tell my hon. Friend the Member for Cambridge that there is a real anger at what is perceived to be a larger share of public spending going to the south-east to address its problems. She talked repeatedly about somebody in Greater Manchester and their housing costs. Perhaps we could turn that into the Greater Manchester question—not the West Lothian question.

Many of my constituents would say that, for example, a large amount of money goes to transport in the south-east to tackle congestion there and a large amount of money deals with social housing there. On health and equality, people in my region live five to 10 years less long than people in my hon. Friend's region. As has already been mentioned, in local government, the spending formula already distributes money unevenly. To exacerbate that by treating the symptoms rather than the causes of inequality would create quite genuine anger and make it more difficult for someone like me to sell this Bill to my constituents.

I do not want to repeat the comments made by my hon. Friend the Member for Bury, North (Mr. Chaytor), because I agree with all of them. I want to amplify a couple of points that my hon. Friend the Member for Cambridge made in response to a couple of interventions. She said that she wanted the adjustment to be more precise and more flexible than on a regional level. I can understand that, because the point made about regional variations is absolutely right. However, the danger is that if the definitions were made on the basis of local authorities, the other problem of boundaries between local authorities would become much worse. If regional policy was introduced, there would be a problem of one person in one street receiving a certain level of grant and another in another street receiving another. If local authority definitions were used, that problem would occur all over the country. It would happen between Barking and whatever the rich place next to Barking is. There would be widespread difficulties concerning house price variations. There are practical difficulties. Even at regional level, it would be such a blunt instrument that some people who are well off because house prices in their area are low would receive a benefit that they did not need, or there would be the opposite problem, and massive boundary problems across different local authorities.

There is also the practical problem of people working in one area and living in another, and how that would be dealt with. Like my hon. Friend the Member for Bury, North, I have a very well-off area a few miles down the road from where I live. Some parts of Stockport are much better off than parts of Surrey, and with similarly high house prices. In some areas of Stockport, house prices have doubled in the past two or three years. It would be very dangerous to build policy on the shifting sands of house prices.

The solution to the problem is to deal with the causes of regional inequality, not the symptoms. We need to ensure that there is greater economic

Column Number: 591

development in the regions of the north, and proper investment in their infrastructure. The Government are doing that, and we hope that the problem that my hon. Friend the Member for Cambridge wants to tackle will lessen over time as that investment is made.

As hon. Members have said, the fact that house prices are starting to converge is evidence that people are deciding that they would be better off living in an area of lower-cost housing rather than struggling and living in very cramped accommodation in the south-east. People make choices. If they live in the south-east on an income of £25,000, they will not be living in a house that is worth £250,000 or £300,000, but will be living in cheaper accommodation, sharing accommodation, or commuting. In return, they have the advantage of a thriving economy, very low unemployment, and the investment that I mentioned earlier.

My final fear about the amendment is that it would be self-defeating. I am no economist, but awarding grants to people with a higher level of income in one part of the country would make buying houses in that area more attractive. The same is true of school places: house prices rise in areas with access to local schools that people find attractive. In the end, the adjustment would simply be played out in higher house prices in the areas that received that benefit. It would serve only to accentuate the economic inequalities that we should seek to redress. I therefore cannot support the amendment, because it would be very hard justify to my constituents. It would worsen the problem that it is designed to solve.

Alan Johnson: I, too, recognise the genuine problem to which my hon. Friend the Member for Cambridge refers. I believe that she will be one of the delegates whom I am meeting tomorrow to talk about it. I share the view expressed by the hon. Member for Westmorland and Lonsdale (Mr. Collins) in that I cannot think of a solution to the problem of how we deal with grants. I am, however, sure that the amendment does not provide a solution. I will take time to explain that statement, which in no way detracts from the problem that my hon. Friend the Member for Cambridge and other colleagues have described.

My hon. Friends for Bury, North and for Stalybridge and Hyde made very eloquent speeches, but I will start with the wording of the amendment. My point is technical, but it goes further than that. The amendment refers to residual income and parental contribution, but parental contribution does not come into it. It did with fee remission, and it does with loans. We means-test 25 per cent. of the loan because we expect a parental contribution, but parental contribution does not come into it in the case of the grant now that fee remission is rolled up with grants. However, that is a minor point.

It is not the case that residual income is the same as disposable income, and that house prices will therefore be a factor. This year, we are moving to residual income for the first time. Residual income is not defined like that. It does not deal with disposable income, but makes a £1,000 allowance for each

Column Number: 592

dependent child, and considers pension premium payments and maintenance payments. It also excludes any income earned during their studies by adult students whose income is assessed for grant. Using the term ''residual income'' will not do what my hon. Friend the Member for Cambridge wants it to do.

4 pm

Mr. Graham Allen (Nottingham, North) (Lab): It is notoriously difficult to come up with answers as Committees are proceeding, but my right hon. Friend the Minister has generously accepted that there is a problem. He has also established that there is no obvious answer at the moment. There are, however, a number of commissions and inquiries that relate to the issue. He does not have to give an answer now, but will he give some thought to whether consideration of the problem that he and other colleagues have identified comes within the remit of the various commissions and whether they could come up with something that satisfies us, perhaps not in the next year, but over the next couple of years?

There is a genuine problem, and the answer is not for someone to get on their bike and sell their house. There must be something equally ingenious such as the system that we now have for repayment of fees on an income-contingent basis, which no one had thought of before. An answer can be divined, and perhaps the Minister will put that question before one of the commissions.

Alan Johnson: As always, my hon. Friend makes a good point. However, he talks about one of the commissions when in fact there is only one—the independent commission that will come into play three years after the introduction of variable fees. We could ask the commission to consider the issue but, even with its brain power, it would find it difficult to solve the problem in a simple way, and if we cannot solve it in a simple way and we are going to introduce the complexity and uncertainty that the amendment would introduce, it is not worth going down that route in the first place.

There is a serious problem relating to residual income, but there is also a problem with how the proposal would work. Let us think it through. There are a lot of us northerners on both sides of the Committee—adopted northerner though I may be, along with others on the Government Benches. We could go for one of two systems. We could keep the existing baseline and say that those who are below the £15,000 level get the full maintenance grant and then it is tapered up to £33,000 a year. We could implant on top of that a shadow scale to reflect the cost of living in the area, but in that case there would be a serious problem.

I can imagine someone living in Slough selling a valuable house in the Thames valley and moving to Hull, where it is probably possible to buy a whole street for a relatively low price. The person might have an income of £25,000 or £30,000, which meant qualification for the full grant, but next door might be someone on £25,000, and only £900 of the grant would be received. Then the grant would have to be

Column Number: 593

reassessed because the person was living in a different area, with all the complications that that entailed. That would involve an enormous amount of extra money, because there would be the grant, which is expensive as it is, and we would be adding an extra tier on top. From reading the amendment, however, I think that what my hon. Friend the Member for Cambridge suggests is worse than that, because it would establish different levels for each region, so there would be, for example, a Yorkshire and Humber scale, a north-west scale and a Merseyside scale. There would be a regional scale as defined by the regional development agency boundaries.

Previous Contents Continue

House of Commons home page Parliament home page House of Lords home page search page enquiries ordering index

©Parliamentary copyright 2004
Prepared 9 March 2004