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Lord Peston: My Lords, I hope that I shall be forgiven for speaking to the amendment, No. 64B. The words "tuition fees" do not appear, although the noble Baroness, Lady Blatch, managed to mention them, as did the noble Lord, Lord Renfrew. But that is up to them because your Lordships are always incredibly nice and do not mind what anyone talks about, whether or not it is concerned with the amendment. The amendment is about the contingent maintenance grant.

Lord Renfrew of Kaimsthorn: My Lords, I thank the noble Lord for giving way. In a general sense, we are debating a Bill which the amendment amends. The remarks must relate to the Bill as well as to the amendment. That is what I was endeavouring to do.

Lord Peston: My Lords, the noble Lord is mistaken. The rules of this House--and I have been here longer than him--are that we try (at least some of us try) to debate the amendment before us. That does not mean that we succeed. I do not criticise the noble Lord--I am sure that if he were to look up my record he would find that I had occasionally drifted from the point. I simply believe that on this occasion we might as well stick to the amendment before us, which is concerned with maintenance grants and alternative ways of financing them.

I have bored your Lordships previously in pointing out that I wrote my first paper on student loans 35 years ago. A long time has passed since then. I have never embarrassed my right honourable and honourable friends in the other place by referring to the way in which they screamed at me for my reactionary views on the subject and of being in favour of loan schemes. They came to them slightly later than I did.

I was not the first person to advocate loan schemes. Two of my teachers had written papers on the subject. One was devoted to the Conservative Party and was an economist at the LSE and the other was absolutely devoted to the Liberal Party as it then was. What staggers me about the current position of the Conservative Opposition--I shall take the admonition and stick to that--is that the person regarded as the world's greatest figure in conservative economics, Milton Friedman, was the original advocate of loan schemes for students as being the right way to go. He was a figure the party opposite used to revere. I have to tell them that he is not yet dead, although he is old and would be astonished to hear the remarks made from the Opposition Front Bench and the Opposition Back Benches, as if it were to do with Conservatism, which amazes me. The noble Baroness may like to reflect on that matter.

The essence of the loan scheme was described by the noble Lord, Lord Milverton, better than any of us have managed on this side; and it is particularly favourable to under-paid clergymen. I think that is part of the point he intended to make, because assuming the Church of

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England continues with its relatively low remuneration for clergymen, I cannot believe that any vicar would have to repay a loan for his or her higher education. I take it that that is why the noble Lord feels that he has at least to abstain.

Lord Milverton: My Lords, the only loan that I have had from the Church was in connection with getting a car.

Lord Peston: My Lords, I should not be concentrating on the Church of England; I gather that Roman Catholic priests get an even worse deal.

The serious point mentioned by my noble friend Lord Desai is fundamental--that we should not approach student support in terms of the student's present position. The essence of the correct economics in the view of the Government is the prospective view: to say students are always broke today--and those of us who were students were always broke, no matter how much money we had--but that they are part of an affluent section of society and that we should look at people's income prospectively. I do not deny that that represents a major change, but I have been convinced for many years that that is the right way to approach student maintenance. It is to say the Government will invest in you so that you can be a student. But it is different from the Conservative loan scheme because we will essentially buy an equity interest in you rather than operate a fixed interest loan scheme and we will expect to be repaid if, viewed prospectively, your prospects turn out to be as good as we hope they will be. I hope that we can persuade noble Lords opposite of the essential correctness of that approach to student finance. I am absolutely convinced that that is the correct way to do it.

I can foresee technical problems arising. I was much more junior in the Treasury than the noble Lord, Lord Dearing, but I never trust the Treasury. Implicit in a loan scheme is that the size of the loan will rise as GDP rises so that the relative position of students does not deteriorate. I do not trust the Treasury to come through on that, but it will be for us to make points of that kind in due course.

I have no doubt whatsoever that it is the right thing to do. It means that the student will become independent from 18 and beyond and will essentially be the person who takes this decision. Noble Lords opposite may regard this as an extremely Right-wing view, but how well off the parents are is neither here nor there. What matters is that they are 18 years of age and more and grown up; and what matters in determining maintenance is how well off they are.

Again, it is off the point, but the remarks of the noble Baroness, Lady Park, struck home to me. Times have changed and students in most universities earn income. I have been extremely irritated on a number of occasions when I have been told that I cannot teach at a certain hour because no one will be there because they will be in Sainsbury's stacking shelves. The greatest university system in the world, that in the United States, has no difficulty at all with students who earn. When I was at Princeton the rich students were incredibly rich, beyond

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anything I had ever seen, and the poor students used to serve the rich students in the refectory. I do not think it did the poor students any harm and I am not sure that it did the rich students any harm. I am reactionary about this kind of thing, but I can live with the idea of students earning money.

In regard to what determines whether one goes to university, I believe overwhelmingly that the Minister is right and that the view that it is determined by marginal cost is not right. I also agree that for the kind of person we are trying to attract to higher education the situation is incredibly bewildering, and we have to explain what it is about. It is nothing to do with loan schemes. When I was 16 and thinking of going into the sixth form I remember my father asking why I did not want to go out to earn money, and I said that I wanted to go to university. He asked me: "What is a university?" I had not the faintest idea. I thought with any luck it would be just like school and I could go on without having to do much work and passing exams, which I have managed to stick to for the rest of my life.

The serious point for those who wish to address the issue of participation is that we still have a long way to go and I am appalled at the social class mix in universities. The entree is in the schools and in education. A proper contingent loan scheme cannot be harmful, and I am absolutely convinced that it is the right way forward. I very much hope that my few words have convinced the noble Baroness opposite to say that is the right way forward and that she will withdraw the amendment.

Baroness Blackstone: My Lords, I asked whether I could pick up on one or two points made earlier in the debate and I hope that the noble Baroness accepts that.

I am grateful to the noble Lord, Lord Tope, because he was quite right to reprimand me for referring to noble Lords opposite without indicating that I meant noble Lords on the Conservative Benches, not those on the Liberal Democrat Benches.

Our plans are in accordance with the principles of the Dearing Report and we have built on those principles, as the noble Lord, Lord Dearing, stated. We endorse the Dearing case for student contribution to tuition fees and share Derek Dearing's concern about targeted support towards living costs. We have acted on Dearing's call for extra provision for students in need. We are implementing contingent loan repayment arrangements as recommended by Dearing, with repayment through the Inland Revenue.

The Government are abolishing grants because they believe that a system of grants no longer has a place in a modern student support system. It is right that students' living costs should be met out of their future earnings and in part by their parents, if they can afford to do so. We stated clearly in our manifesto that we would abolish grants and replace them with income contingent loans, and that was accepted by the National Union of Students. We have no intention of going back on that manifesto commitment. We believe that it would be more acceptable, on balance, to mitigate the fee and

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not charge poor students for tuition but abolish living cost grants and replace them with a loan to be paid back later.

The noble Baroness, Lady Blatch, stated that we rushed our response to the Dearing Committee's report. But as the noble Lord, Lord Dearing, said, discussion took place between himself and the Secretary of State before his report was published. We had time to think about it. We responded rapidly and decisively. Having inherited a worsening financial crisis in higher education, we could not stand by idly once Dearing had reported. We had to act quickly, and that quick response resulted in an extra £165 million for the higher education sector in this coming financial year. I believe that the HE sector is grateful for that and that it wishes to see the Bill enacted as soon as possible.

Nor did we leave students and their parents in the dark during the summer as important decisions were made. That is why we mobilised our information campaign so quickly. LEAs and institutions have been notified of the details of the new procedures. We have consistently kept them informed of developments and will continue to do so.

When one considers the scale of our information campaign and the positive response we have had to it, it is deeply unconstructive of noble Lords on the Conservative Benches to persist in suggesting, as did the noble Baroness, Lady Blatch, earlier, that students are in the dark. We know from research conducted some time ago that a high proportion of would-be students had read the information and understood what the new arrangements meant to them.

Student awareness of the new arrangements and how they affect them has continued to increase. We have continued to provide information. Most recently, we published and disseminated through appropriate channels advice to disabled students.

I was rather puzzled by what the noble Baroness, Lady Park, said because she implied that students will have less money up-front while they are at university. That is not true. In fact, students who are in some financial difficulty will have more money. They will have access to a £250 hardship fund and we have doubled access grants which are to support such students.

The noble Baroness said also that she thought it was important that we should support students who wish to serve the community. We are doing that. We are having an income-contingent scheme, unlike the present one, so that those graduates who wish to support the community in jobs which are lower paid will not have to pay back so quickly.

The noble Lord, Lord Renfrew, suggested that increased loans will deter less well-off students and those unaccustomed to debt. I can only repeat what I said. Loans have not deterred less well-off students in the past from going to higher education. It seems to me that there is absolutely no reason why they should in the future. By far the most important factor in determining whether a student gets into a university or goes on to higher education is the level of attainment which that student reached at school. Quite simply, if a young

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person achieves good A-level results, whatever his social background, he is likely to go into higher education. Financial considerations are secondary in making that decision.

Nevertheless, the key point is that providing maintenance support in the form of loans does not act as a disincentive. That is the evidence. We must look at the evidence rather than simply staring it in the face and pretending that it is not there. Perhaps I may express the matter in another way. There is no evidence to suggest that grants help to encourage students from lower socio-economic groups to enter higher education. What matters is that students have access to the funds they need while they are studying.

We must put right the under-representation of lower socio-economic groups in our higher education system which, up until now, the system we have had in place has so lamentably failed to do. We shall do so by creating a level playing field leading up to, and in, sixth forms by developing a school system focused increasingly on progression for all who have the ability; and by raising standards, expectations and achievements. The measures we are introducing to create excellence in schools are all about that. We must try to make sure that talented students from lower social groups have the same opportunities and expectations as their peers from better-off backgrounds to achieve the grades that they need to go on to university.

We are introducing a new and fairer system of loans, accepting the principle that students who benefit greatly from higher education should pay back their living costs as graduates when they can afford to do so. No one will be expected to pay for the cost of their higher education living costs up-front.

5.30 p.m.

Baroness Blatch: My Lords, I am grateful to the noble Baroness for her remarks at the beginning of the debate and for the full response she made at the end of it. But, again, almost everything that the Minister said misses the particular point of my amendment.

At least the noble Lord, Lord Dearing, threw some light on why we had such a precipitate response from the Government in relation to the Dearing Report. It had not emerged at all throughout the whole of the discussions both here and in another place that before the report was published the Government had discussed openly the conclusions of the report and that that was the reason for such a speedy response.

Nor has the £165 million extra money found for higher education this year anything whatever to do with this Bill. It is to do with the rescheduling of payments, and the noble Baroness knows that. Therefore, that money was found irrespective of this Bill and independently of it. It is one-off money which I suspect, over time, will need to be built into the base revenue for higher education.

The noble Baroness referred to a 1 per cent. student increase from school leavers this year. However, she did not refer to the fall of 11.5 per cent. of those aged 21 plus and the fall of 15 per cent. for those aged

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25 plus. Nor did she refer to a 15 per cent. fall in the numbers of those entering on a four-year course to become primary school teachers. That is something the country can ill afford.

The noble Baroness and others who support the Government's stand make much of the very generous repayment schemes which will be available to students. That is the same whether the student is affluent or from a poor family. The volume of loan will be twice as great for a student from a poor income family that it will be for a student from an affluent one.

The noble Baroness made much of the Salisbury convention. The manifesto, in relation to maintenance grants, did not mention the package in the context of the introduction of tuition fees. Nor did it mention that those grants would be abolished completely and in the first year of this Government. That was one promise that was not made quite specifically.

The noble Baroness invoked the National Union of Students as being in support of this measure. I have spoken at length to that body and it says that its acquiescence was secured before the election in the context of some phasing-out of maintenance grants but not in the context of the introduction of tuition fees at the same time. A confidence trick was played on those students and they accepted it without knowing the full facts.

I am pleased that it was the noble Lord, Lord Peston, who made the comments that he did about the poor students serving the rich students. The noble Lord said that he saw nothing wrong with that. It was the most patronising comment I have heard as regards students from low-income families.

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