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Lord Whitty: I think that I can be of assistance. I have a number of technical comments which I will skip because the noble Earl already understands the technical problems involved. Let me reassure the Committee that we have no intention of introducing interest rates above the RPI level, and that we wish to bring forward, as early as possible, an amendment which will write in almost precisely what the noble Earl wishes. It will not be in the terms of this amendment, but it will have the overall effect of restricting the ability to charge interest to the RPI. We still have to discuss how to do that. I cannot give a guarantee that those discussions will be completed by Report stage. However, during the Bill's passage we shall bring forward such proposals. In the light of that reply, I hope that the noble Earl will feel able to withdraw the amendment.

Baroness Carnegy of Lour: Will the Government undertake to publish a statement quickly about that matter so that the students will know about it? With all the problems and considerations involved in trying to frame the Bill, the Government are forgetting the students and how they are reacting. They are alarmed about this. Talk about the future and how in the end they will be earning so much more that it does not matter what the interest rates will be, does not comfort them. It would be a great help if it were possible to publish something in simple terms quickly so that the students can understand the matter.

Earl Russell: I agree with what the noble Baroness has just said. I am extremely grateful to the Minister who has said everything that I hoped he might say. I am therefore delighted to be able to beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 94 not moved.]

Baroness Blatch moved Amendment No. 95:

Page 12, line 30, at end insert--
("( ) The Secretary of State shall ensure that, in any regulations made under this section in relation to any eligible student for any prescribed purpose for any academic year--
(a) the maximum amount of any loan made available to that student is no greater than half the prescribed cost of maintenance for such a student for that purpose for that year, and
(b) provision continues to be made for maintenance grants to be payable to such a student, subject to--
(i) a maximum amount of half the prescribed cost of maintenance, and
(ii) assessment of any contributions applicable in his case.").

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The noble Baroness said: This is an amendment about which I feel extremely strongly. I support the recommendation made in Sir Ron Dearing's report. On that I shall quote from paragraph 108 of the summary of his report which states:

    "We would be particularly reluctant to see any reduction in public subsidies being concentrated on students from the poorest families and even more reluctant to see the funding released by this, and more, being used to increase the subsidies for others".

I suspect that if the students for whom the noble Lord, Lord Davies of Oldham, now has a responsibility which he will be exercising materially over the next few years--I know that it is further rather than higher education--are watching, listening, or read about the debate, they will be deeply depressed by his approach to their plight. At the moment a student from a poor family receives 50 per cent. grant, takes up a 50 per cent. loan, and has no tuition fees. That same student is under no obligation to start paying back that loan until he or she is earning 85 per cent. of the national average wage which at the moment is £16,750. At the age of 50, or 25 years, whichever comes first, the loan is written off.

When referring to parents and students earlier, the noble Lord, Lord Whitty, was right when he said that no parent under the new proposal would be asked to pay any more. But the student at the lower end of the group is seriously disadvantaged by the scheme. How can the Labour Party introduce a scheme which leaves the poorest students with a greater burden of debt as they leave university than students who themselves are more affluent and come from more affluent families? I just do not know. I do not know how Government Members here will justify that to their own colleagues in another place, where I know there is serious disquiet, let alone to the students.

The students will have to borrow the whole of their maintenance, which will be just under £4,000 per year, or will be when the scheme is fully up and running. They will start to pay back their loan when they are earning £10,000 gross per annum. That is almost £7,000 less than the present threshold. I shall give three examples. I could give more, because we have had some actuarial work done on the repayment scheme. Let us take teachers who rise to the middle rank of teaching. If they are earning £12,000 throughout the period--I am not adding anything for interest, because if one adds interest and some or all of the tuition fees the burden is even greater--they would pay the equivalent of 1.5 pence income tax for 83 years. Of course, it will not be 83 years, because there is a cut-off point at the age of 65. That is if they have borrowed £15,000. If a student borrows £12,000, the period comes down to about 65 or 70 years. If a student earns £14,000 he will pay the equivalent of 2.57 pence income tax, and on a £10,000 loan he will pay for almost 28 years; if he borrows £15,000 he will pay for 41 years. On a £17,000 income, which is still modest and still below the national average wage, they will pay the equivalent of 3.71 pence income tax for 23.8 years.

Students under the present system are a great deal better off. If one is going to lose a grant, paid for by the state, which is replaced by a loan, which the students

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pay throughout their working lives, that is a burden on poorer students which I find almost impossible to justify. I believe that Sir Ron was right. He started by believing that that was the right way to go. Sir Ron and his team looked at the possibility of removing maintenance grants. After a long period of consideration, they came to the conclusion that it would disadvantage students from lower income families. I speak today for those students. He therefore reinstated his recommendation.

Before the ink was hardly dry on that report, the Government came out with a response and set that recommendation aside. They did not merely remove the grant system from students, they added tuition fees. It is that package which we reject entirely. I hope there will be some sympathy for the idea that maintenance grants be retained for the lowest income students. I beg to move.

Baroness Carnegy of Lour: This is a serious matter. It looks as if the Government did not take time to study all the modelling that the Dearing Committee did, which revealed to it that this approach would not work. I do not know whether that is true. The Government made a rapid announcement. They probably had their own reasons for doing that. When it was made, none of us knew what the implications were. Those members of the Dearing Committee whom I know were astonished at the proposal and believed that the report could not have been studied. If that is so, and if the wrong solution has been reached, perhaps the Government should change tack. The situation is sufficiently serious.

The National Union of Students has not concentrated on the problem. I do not know whether that is because of its loyalty to the present Government and of its wish not to make things difficult. All the figures I have were produced by the St. Andrews Student Association. The students at St. Andrews, who are not affiliated to the National Union of Students, believe that the students are being let down by that body. Perhaps the NUS is behaving with a good conscience because it believes that it has a duty to support the Government. That makes an even greater case for the Government to look seriously at the issue.

I am sorry to keep quoting the students at St. Andrews, but the issue is important. They further stated that the previous government did away with housing benefit. The Labour Party were very much against that. I did not like it myself, although with a heavy heart I agreed to it on a number of grounds which existed at the time. Of course, it was in the light of the student funding regime which was then in place.

That regime is being changed to a great extent. The package of fees and maintenance means that even in the first year a badly off student will lose £685 more than a well off student. That being the case, perhaps we should table an amendment on Report to make it possible for students again to receive housing benefit. The short term problems present the difficulty. When a young person first goes to university he or she does not look ahead at how to become a QC. I have no children and therefore I have not experienced these problems. However, I have

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met young students a number of times and they feel that people will be extremely put off. They also believe that the proposal is immoral.

It is disappointing that new Labour should take such a step. I should be horrified if my own party did so, but I am even more horrified at new Labour doing it. I hope that the Government will look seriously at the problem to see whether they should swallow their pride, look again at the Dearing Report and do something slightly different.

7 p.m.

Baroness Warnock: Having heard the figures produced by the noble Baroness, Lady Blatch, it is impossible for me to remain silent about the two issues which I feared would arise. First, the number of students will decline; it is happening already. The thought of poorer students incurring the kind of debt that has been outlined is a serious deterrent, particularly when firms such as Marks & Spencer provide good training programmes. Pupils can join straight from school and be paid while they are training. With higher education leading students into the kind of debt about which we know, and with the existence of such alternatives, the number of students will further decline.

I worry more about the second issue. The trend of declining numbers entering the teaching profession will continue. The salaries earned even by teachers in secondary schools are extremely low by the average national standard. Recently, I read a job description of a head of department at a not very rich independent school. The maximum salary offered was £21,000, which one would be unlikely to receive until one's 30s or 40s. From what we have heard from the noble Baroness, Lady Blatch, the proposal would deter people going into teaching. Large-scale debt would be inevitable for someone from a poor family having to take out the full loan for the entire university career.

We have heard about the distinction between, say, medical students and all others. Almost all science degree courses are now for four years, as are modern language degree courses at most universities. Realistically, the number of three-year degree courses is small. It is not only medical students and dentists who have long undergraduate lives but also architects, vets and others. We must concentrate our minds on whether the aims of encouraging more people into higher education and of recruiting more teachers are compatible with the proposals relating to loans.

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