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Lord Beloff: My Lords, perhaps my noble friend will give way. My noble friend and his department will be saved a great deal of trouble if they simply re-read Hansard from when the student loan system was introduced. All these questions were then ventilated; all the possibilities were argued. The fact that the Government took no notice of what the House said is the reason why we keep coming back.

Lord Lucas: My Lords, occasionally we disagree with my noble friend Lord Beloff. I hope not too frequently because, hearing him say things like that from behind me can be distinctly unnerving. My noble friend Lord Beloff, the noble Baroness, Lady Williams, and others suggested that the Government should introduce some form of income contingent repayment administered through the tax or national insurance system. As I said, we shall look again at those systems. However, when we have looked at them in the past we concluded that loan schemes involving collection through the tax or national insurance systems are not the panacea that they are often made out to be. The administrative complexity and costs involved seem to be seriously under-estimated for employers as well as for the Government.

Baroness Williams of Crosby: My Lords, I do not want to bowl a yorker from behind at the Minister. However, I ask that he regard with great scepticism the kind of objections that the Treasury raises. It raises objections to almost every efficient scheme.

Lord Lucas: My Lords, I am sure that the noble Baroness has a great deal of experience of that.

There is a great deal of scope to amend the repayment terms within the broad framework of the current scheme and we shall certainly be looking at any submissions. A number of noble Lords suggested that there should be submissions to that effect.

The Government considered the possibility of collection through the tax or national insurance systems when the current scheme was being set up. But we concluded that the current arrangements were better. Despite the problems in paying out loans this year, we continue to believe that the system is fundamentally well

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designed. However, the proper place for a wide consideration of such issues is our review of higher education.

Earl Russell: My Lords, if the system is fundamentally well designed, why have the Government been unable to get anyone else to notice?

Lord Lucas: My Lords, to my best knowledge a great number of people have noticed, including those who set policy in the Labour Party and the National Commission on Education.

To turn to the principal subject of this debate: the current system of student support. As I have said, the Government believe that students are properly provided for in a fair and flexible system. Our belief is based on clear and powerful evidence. Let me set out the facts as we see them: students' total resources in grant and loan were increased by 25 per cent. when loans were introduced in 1990. Since then, resources have increased each year in line with forecast inflation. Students, as a group, are better off than they used to be.

Lord McIntosh of Haringey: My Lords, will the noble Lord permit me? Is he seriously saying on the one hand—?

Baroness Trumpington: My Lords, order! The noble Lord was not in the Chamber for the whole of the debate. My noble friend should be allowed to get on with his speech.

Lord Monkswell: My Lords, I thank the Minister for giving way. I have sat through the whole debate. I was not intending to intervene, but the statements by the Minister call for it. Can he explain to the House since when have students been better off?

Baroness Trumpington: My Lords, I really believe that my noble friend should be allowed to get on with his speech.

Noble Lords: No!

Lord Lucas: My Lords, I am quite happy to write to both noble Lords who have risen to give the statistics which underline the statement that I have just made. I can assure the noble Lord that that is a figure which we hold to.

The noble Earl, Lord Russell, suggested that student support might be inadequate because the SIES (student income and expenditure survey) underestimated benefits. The introduction of the loan scheme more than compensated most students for loss of benefit. The Government's assessment was not based on the figures given by students in the survey, but took account of figures from the Department of Social Security.

We treat our students very well compared with most other countries. Student loans are offered on very good terms. Interest is effectively nil in real terms and repayment can be deferred until income reaches 85 per cent. of national average income.

The Government are very conscious of the need to keep repayments at a manageable level. We shall review the repayment terms as necessary as the volume of debt decreases, let alone looking at them again as part of a higher education review.

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Student numbers and participation rates have increased dramatically and the drop-out rate from higher education courses has remained fairly steady. Public funding for mature students has held up and mature student numbers have increased rapidly.

All these facts go to show that young people are not deterred from entering higher education by our current support arrangements. They also provide, to our mind, convincing evidence that our overall policy is fair and reasonable and that the broad framework that puts the policy into effect is working satisfactorily.

The noble Earl, Lord Russell, suggested that there was some evidence of declining standards in universities in the United Kingdom. Quality assessments undertaken by the higher education funding councils suggest that the quality of teaching and learning in those subjects so far assessed continues to be satisfactory or better in 95 per cent. of cases and there is no evidence that the personal circumstances of students have affected that.

Lord Beloff: My Lords, will the noble Lord give way?

Baroness Trumpington: My Lords, no.

Lord Beloff: My Lords, I cannot agree with the Whip. This is perfectly normal; I took a part in the debate. I am entitled to ask my noble friend a question. Is it not a fact that all he has said so far is contradicted by the Committee of Vice-Chancellors and Principals in their communication to his right honourable friend? Is there much point in going on trying to tell us things when we have a much better source of information in that committee?

Since I may have upset the noble Lord, I am going to give him a present. I suggest to him that as England has won a test match it would be very interesting to be in Australia for the final test. I suggest to the noble Lord that he goes to Australia. I am perfectly willing to see public funds spent on that. In between watching the cricket he can find out why the Australian Treasury manages to collect money which the British Treasury is unable to.

Lord Lucas: My Lords, I hope that later in my speech I shall turn to matters which may answer part of the question which the noble Lord has just asked. We believe that there is no evidence that quality in British universities is declining. Indeed, the quality of exams and degrees is something which the universities themselves maintain. We trust them to do it and we have no doubt that they are fulfilling that function.

Of course, I have only painted the broad picture. Individual students' needs, both personal and for their courses, vary considerably. Our system of support has to respond to areas of potential hardship and it does so in several ways. First, there are a number of additional allowances which are payable on top of the main grant. There are allowances available for extra attendance on courses, to meet the needs of disabled students for personal help and equipment, for students with dependants and, for certain students, travel costs.

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Secondly, social security benefits have continued to be available for certain vulnerable groups, disabled students and students who are single parents. Partners of students are also able to claim, subject to the normal rules. Last but by no means least, the Access Funds are there to help those students who are in particular financial difficulty but whose needs are not met by the broadly defined support arrangements. The funds are worth £26.7 million in 1994-95. This total will rise to £28 million from 1995-96; the third substantial rise in three years.

There will always be some students who get into financial difficulties that the system of student support cannot overcome. No practicable system will ever be perfect. But we are not aware from evidence in our possession of any properly researched evidence of more widespread hardship. We have heard today a number of individual examples. We have also heard information from surveys. What we need to move to now is the sort of quality of research which noble Lords who are active academics will recognise. If I were to try to convince an academic who believed that, say, 16th century monks were largely celibate, that he was wrong, by quoting one or two examples, he would not take me seriously. What we require is some properly researched evidence and universities are in the best possible position to supply that. They run the Access Funds and they see the hardship. The noble Earl, Lord Russell, has given us several examples today of his own experience. If that were to be distilled into something which was made available to the Department for Education, you may be certain that we would take that seriously.

The Motion tabled by the noble Lord, Lord Addington, calls for students to be given, during the long vacation, the same rights to housing benefit and income support as the rest of the adult population. The Government have long believed that a general student dependence on benefits is inappropriate and undesirable.

The benefit system is there to serve social and not educational purposes. Students should look to the student support system while they are studying. We are confident that the additional resources provided through student loans and the Access Funds have more than compensated most students for the unavailability of benefits since 1990. A blanket restoration of eligibility to benefits would once again foster the sort of dependency that we sought to end; it would be inefficient and it would discourage students from looking for vacation work. My noble friend Lord Skidelsky pointed out the sort of amounts that he estimates might be involved. I have no government estimate with which to compare that.

The noble Lord, Lord Addington, said that students would receive more from social security than they receive from student support. It is not legitimate to compare social security with student support. Students are now expected to bear some of the costs of their own support because higher education is an investment in their own future. Social security is designed for those who are involuntarily dependent on resources provided by the Government. Some groups, such as single parents

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and disabled students, have retained their eligibility for benefits throughout the year but that is for specific reasons related to their particular conditions.

We are convinced that our present approach with closely targeted provision is preferable in every way to a return to reliance on social security. In this context, the noble Baroness, Lady Williams of Crosby, suggested that summer jobs and other employment should be provided by universities. That is an interesting idea. It is, of course, primarily for the institutions themselves to consider what jobs they might want to provide either by way of course-related jobs for their students, as the noble Baroness suggested, or otherwise, but we would encourage them to think along those lines.

Even if almost everyone who has spoken in the debate had not raised the subject of the Student Loans Company, I would have wished to do so. I would not wish to reply to the debate without apologising for the way in which the Student Loans Company failed tens of thousands of students so badly last autumn. The picture which the noble Lord, Lord Morris, paints in terms of figures is, I believe, broadly accurate. I will write to him after the debate to confirm the exact figures. The Government were, and are, extremely concerned by that lapse from the extremely high standards that we have come to expect from the company. Both the company and the Government have taken action to remedy the problems as fast as possible. The backlog has now almost entirely been eliminated. The company is devising measures to avoid any recurrence and will take them out to wide consultation as soon as possible. I am very comforted by the confidence which the noble Earl, Lord Russell, places in my honourable friend Mr. Boswell.

The noble Lord, Lord Morris, asked certain other specific questions. Since he was kind enough to give me a bit of time to look up the answers, I shall do my best to give them to him. The noble Lord asked about allegations of impropriety at the Student Loans Company and about the plans of the National Audit Office to conduct a further study into the company's operations. I can confirm that my right honourable friend was made aware last October of the allegations made against certain executives of the company by a former employee. She immediately ordered an investigation, as part of which Coopers & Lybrand were contracted to carry out a forensic audit. The investigation is nearing completion and its full conclusions will be reported to the Public Accounts Committee in the usual way. It would not be appropriate for me to comment any further at this stage.

The National Audit Office's work programme is, as noble Lords will know, a matter for the Comptroller and Auditor General. However, I understand that the National Audit Office plans to undertake a study of the value for money being achieved at the Student Loans Company. The plans for the study are not yet finalised, but I believe that it is unlikely to cover matters relating to the impropriety investigation.

The noble Lord also asked whether the Government have plans to privatise the loans scheme or to introduce commercial interest rates. The Government keep the operation of the loans scheme under review, but I can

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assure the House that we have no current plans to privatise the scheme—nor do we have any intention of requiring students to pay commercial interest rates. That would in any case require primary legislation.

The noble Baroness, Lady David, asked whether the Student Loans Company was too hard on defaulters. It is the company's duty to protect the taxpayers' money and we believe that it is firm, but not excessively so. Borrowers are given every opportunity to apply for deferment or to begin repayment before the company instigates court action.

The noble Lord, Lord Morris, also quoted a number of other figures. I shall write to him to confirm whether they are accurate.

I have listened carefully to what noble Lords have said today. I hope that I have been able to reply to the main points that have been made. I shall review Hansard tomorrow and write in reply to any substantive points that I have missed. As I said, we firmly believe (on the basis of the evidence that we have) that students enjoy a reasonable level of support during their studies. By providing this support and funding a huge expansion of higher education, the Government have shown their wholehearted commitment to students and to higher education. If the noble Lord, Lord Addington, chooses to press this to a vote, I urge your Lordships to vote against the Motion.

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