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House of Commons

Thursday 29 January 2009

The House met at half-past Ten o’clock


[Mr. Speaker in the Chair]

Business Before Questions

Manchester City Council Bill [ Lords] and Bournemouth Borough Council Bill [ Lords]

Motion made, and Question (15 January) again proposed,

Hon. Members: Object.

The debate stood adjourned; to be resumed on Thursday 5 February.

Canterbury City Council Bill, Leeds City Council Bill, Nottingham City Council Bill and Reading Borough Council Bill

Motion made, and Question (15 January) again proposed,

Hon. Members: Object.

The debate stood adjourned; to be resumed on Thursday 5 February.

Oral Answers to Questions

Innovation, Universities and Skills

The Secretary of State was asked—

Student Finance

1. Mr. Lindsay Hoyle (Chorley) (Lab): How many people defaulted on student loan repayments in each of the last two years. [252514]

The Minister of State, Department for Innovation, Universities and Skills (Mr. David Lammy): Figures for England show that about 90,000 student loan borrowers defaulted on student loan repayments for a month or
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longer in each of the last two years. In 1998, we introduced income-contingent repayment loans. It is generally not possible to default on those loans.

Mr. Hoyle: Obviously, the shock is the fact that 90,000 people defaulted; I am sure that the Minister is very worried about that, too. What extra support can we provide to assist students during the current economic crisis? The reach of credit crunch does not stop; it affects everyone, and, obviously, students are facing that pressure. What extra help can we give students, so as to ensure that people still feel they can go to university and are not frightened off from doing so? That is key for the future; what can the Minister say to us about that?

Mr. Lammy: I am grateful to my hon. Friend for championing this issue; he has done so not only in relation to his constituency of Chorley, but by bringing it constantly to the attention of Ministers. Under the old-style loans introduced by the Conservatives in the 1990s, there can, effectively, be a default after just a month of debt, and, as my hon. Friend will understand, students often move accommodation and move in and out of jobs, so that 90,000 figure makes the problem of serious default—default for longer than six months and up to a year—appear a lot larger than it actually is. In terms of new graduates coming out of university in the autumn, my right hon. Friend the Secretary of State met student recruiters and those responsible for careers in our higher education system just before Christmas, and I will meet them again this week. We are looking at an internship scheme, and at encouraging employers in the private, public and third sectors to over-recruit into it. We have also increased career development loans—

Mr. Speaker: Order. May I say that perhaps the Minister can write to the hon. Gentleman on this issue?

Mr. Tim Boswell (Daventry) (Con): While absolutely not wanting to discourage any overseas student from coming to this country, can I have the Minister’s assurance that he will pay particular attention to the position of overseas-domiciled students who can now avail themselves of student loans, because if there is any suggestion that this country is a soft touch and that those students can come here and then will not have to repay their loans, that will run the risk of discrediting the whole show?

Mr. Lammy: I know the hon. Gentleman has taken up this issue and asked questions about it, and I want to reassure him that European legislation will ensure that we are able to engage closely with the tax agencies in European countries. That will enable us to collect the right details to ensure that students coming here from Europe repay the loans they have taken out to pursue their education in this country.

Miss Anne Begg (Aberdeen, South) (Lab): While defaulting on their loan is always difficult for any student, may I advise my right hon. Friend not to go down the same route as in Scotland, where one political party promised that it would write off all student debt? It got elected and discovered that it could not do that, and that there is no such quick fix. [Hon. Members: “Which party?] It was the Scottish National party. Students voted believing it was going to deliver on that
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promise, but it turned out to be a mirage. Can I get the assurance that this Government will not give such false hope to students?

Mr. Lammy: That was a shameless act of politicking because, in the end, it was taxpayers’ money that was involved. It was a foolish thing to do, and I can assure my hon. Friend that we will not be doing that on this side of the border.

Dr. Evan Harris (Oxford, West and Abingdon) (LD): While I accept that the income-contingent loans are better than what went before, does the Minister accept that the level of graduate debt is much higher now than it was 10 years ago, and will he further accept that it tends to hit women graduates harder because they stay in debt longer for reasons we understand?

Mr. Lammy: The hon. Gentleman will be aware that the repayments of the loans kick in once income reaches a sufficient level, that there are repayment holidays for people if they fall on hard times, and that there are exceptions, such as for those with disabilities or mental illness. It is true that this is a loan system, but the terms of those loans are the best available in the country.

Mr. David Willetts (Havant) (Con): The Minister referred to his national internship scheme. Will he confirm that after I spent a Saturday afternoon chasing him round the TV studios, it became clear that there is no Government-funded national internship scheme and that the companies that he has identified as providing internships made it clear that no extra internships were intended on top of the ones already announced? Will he also confirm that the Government made a clear commitment to review the student loan regime, that the review will take place this year and that the review of student finance will look forward to ideas for the future and not simply be historical?

Mr. Lammy: The first thing to say is that we are doing all we can to work with employers, careers services in universities, the National Union of Students and students themselves to ensure that students have the best choice and the best portfolio of things they can do when they graduate in the autumn. That compares very well with what was effectively the youth training scheme—YTS—when the Conservatives were in power; nothing was offered then. [Interruption.] The internship scheme was begun in a conversation that the Secretary of State had before Christmas with Microsoft, Barclays and others. I have continued those conversations—indeed, I was talking to Barnado’s just yesterday. So, there will be an increase in internships later in the year, and that will happen alongside the career development loans and all the other things that will be on offer at the end of the year. As the president of the NUS has said, this is not a time for panic; it is a time for proper information. I would ask the hon. Gentleman to bear that in mind when he is making public statements.

Stephen Williams (Bristol, West) (LD): Students who graduate in about five months’ time will probably face an uncertain future, and many of them will never have experienced a recession before. Even those who get a job will still face a pernicious repayment regime for their student loans—a 9 per cent. flat-rate tax and a relatively unfair rate of interest. The rate of interest is
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meant to be subsidised by the Government, but it is at 3 per cent., and that is above the bank lending rate and above the probable expected rate of inflation, which is zero. Is it not time that we had more flexible arrangements for setting that rate of interest, to ensure that graduates are not being penalised at this uncertain economic time?

Mr. Lammy: The hon. Gentleman calls for flexibility. Is that the Lib Dem approach to fees—saying one thing at the election and something else afterwards? Could he cite one bank in the country where someone could get a loan at a rate as low as the current retail prices index? He could not, but that, in effect, is what is available to students.

Motor Industry

2. Mr. David Drew (Stroud) (Lab/Co-op): If he will bring forward proposals to improve training opportunities for those employed in the motor industry. [252515]

The Secretary of State for Innovation, Universities and Skills (Mr. John Denham): Earlier this week, my right hon. Friend the Secretary of State for Business, Enterprise and Regulatory Reform announced a £2 billion package to support the automotive industry for the future, and skills support is an integral part of that. Train to Gain has already been developed to meet the specific needs of the automotive sector. We announced on Tuesday our willingness to boost Government investment in skills for the sector through Train to Gain from £65 million to £100 million. My officials are now working with range of companies on training packages that will help work forces be ready for the upturn.

Mr. Drew: I thank my right hon. Friend for that answer, and I very much welcome the statement made earlier in the week. Will he just say how wide his definition of the motor industry is, because we are not just talking about the car industry, and we must ensure that there are opportunities for component suppliers and the heavy goods side of the industry? Does he understand the problem for people on short-time working, which is that although they welcome the opportunity to train and upskill themselves, they have to buy their time for training? They should not be losing out twofold: by being on short-time working and having to pay the time for their own training. Does my right hon. Friend agree that the Government should examine that problem and provide help?

Mr. Denham: I welcome what my hon. Friend has said. He will be aware that none of what I have been talking about would be possible if the Conservative policy to abolish Train to Gain had been implemented. [Interruption.] I think that a cut of £1 billion was the suggestion.

We have already taken up arrangements with Nissan and JCB—that gives a sense of the breadth of the approach—to provide training on down days when there is short-time working. Ensuring that we can do that is a key, flexible use of our training money, but it would be cut by the Conservative party.

Miss Julie Kirkbride (Bromsgrove) (Con): Can the Secretary of State clarify what new money will be available for the motor industry in a broader context
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and for training, given that when the Under-Secretary of State for Business, Enterprise and Regulatory Reform, the hon. Member for Dudley, South (Ian Pearson), announced the package to the House earlier this week, he said that it was entirely consistent with the pre-Budget report that was announced in November?

Mr. Denham: That is absolutely right, but what we have been doing is changing the way in which the Train to Gain system operates to meet the needs of businesses in the downturn. So in addition to the money that we are making available to the automotive industry that is perhaps intended for some of the larger companies, we have also said that up to £350 million of Train to Gain money would be available in small packages for small and medium enterprises. We are keen that that should also be used by component suppliers and others in the automotive industry. The critical point is that while we are building investment in Train to Gain to £1 billion a year, following the pre-Budget report, the hon. Lady’s party has said that it would do away with that funding. That is the wrong thing to do.

Lynda Waltho (Stourbridge) (Lab): I agree with my right hon. Friend that to abolish Train to Gain at this point would be absolute madness, and the principal of Stourbridge college—I was speaking to him this morning—agrees. My right hon. Friend has been to Stourbridge and seen the fantastically successful Train to Gain programme there. People are pleased that the programme has been relaxed to include redundant workers. However, especially in light of recent redundancies in the midlands, we need to remove the limit on redundant workers entirely, so that the programme can be responsive to particular local needs and help people train to gain and get back into work.

Mr. Denham: I very much enjoyed my visit with my hon. Friend to her local college in Stourbridge earlier this year and I was very impressed by the work it has done in leading the Train to Gain consortium that would be abolished by the policies of the Conservative party. The truth is that we are making the system more flexible. We are saying to colleges that they will have the option, especially with pre-level 2 skills, of being rewarded for success in getting people into work through training and not just for helping them to achieve an accredited qualification. We are always making the system look more flexible.

We also announced additional money at the beginning of the month of up to £83 million to create an extra pool of money for further education colleges to respond to the needs of those who have lost their job and been out of work for some time. That will be a flexible package of funding that colleges can tailor to the needs of the individual.

Mr. David Evennett (Bexleyheath and Crayford) (Con): Does not the Secretary of State appreciate that the deadweight cost of Train to Gain and its failure to engage with SMEs is undermining attempts to provide meaningful training? Will he keep the Train to Gain money, but redirect it to apprenticeships and further education colleges that are better placed to respond to local needs?

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Mr. Denham: May I welcome the hon. Gentleman to the Opposition Front Bench and congratulate him on his appointment? We look forward to continuing the debate with him.

At the beginning of the month, the deputy director of the CBI addressed a large audience of employers on the subject of the downturn, and he said that Train to Gain is just what business needs. If that is the view of Britain’s largest employer organisation, the Conservatives’ policies and approach, with their proposals for cuts at exactly the wrong time—£610 million of cuts in my Department to start on 1 April, although they have not explained where those cuts would be made—are wrong, and they need to change.

Andrew Miller (Ellesmere Port and Neston) (Lab): Will my right hon. Friend agree to take a flexible approach to bids that come before him—pursuant to the observations made by my hon. Friend the Member for Stroud (Mr. Drew)—to ensure that both the supply chain and manufacturers obtain benefits from this scheme? Will he also, in the context of my constituency, ensure that there are no delays in developing the West Cheshire college, which will be an integral part of delivering the needs of the vehicle industry in my area?

Mr. Denham: It is not just a matter of being flexible, because we have indicated our willingness to do that. The compact that we have with the sector skills council for the manufacturing sector makes the use of the money much more flexible. Our ideal, actually, is to create a situation where within an area such as my hon. Friend’s we can comprehensively address the whole sector—that is, the major lead manufacturer as well as the supply chain. Maintaining the supply chain is every bit as important at the moment as maintaining the main plant. That is what we are aiming to achieve.

As for west Cheshire—I know that my hon. Friend is ambitious for his college—we have been looking to ensure that the training capacity is already in place to enable us to gear up training for the car industry in the way that he describes.

Higher Education

3. Mr. Brooks Newmark (Braintree) (Con): What progress has been made on widening participation in higher education. [252516]

10. Mr. Andrew Robathan (Blaby) (Con): What recent progress has been made on widening participation in higher education. [252523]

The Minister of State, Department for Innovation, Universities and Skills (Mr. David Lammy): We continue to make encouraging progress with widening participation in higher education. The latest UCAS figures show that acceptances from England for 2008 are up by 7.4 per cent. on the same point last year, and this year’s figures are the highest ever. That means that there are more students in higher education than a year ago, including a higher proportion from poorer backgrounds.

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