Student finance - House of Commons - 25 October 2001

Student Finance

Mr. Speaker: We now come to the main business-the first part of the third allotted Opposition day. I inform the House that I have selected the amendment in the name of the Prime Minister.

1.24 pm

Mr. David Rendel (Newbury): I beg to move,

"That this House believes that the best possible education of its citizens is both a principal duty of, and an immeasurable benefit to, any civilised society, and therefore deplores the rising levels of student debt and the resulting disincentive to continue in education post-school; condemns the failure of the Government to invest in Higher Education all the extra resources provided by the abolition of maintenance grants and the introduction of tuition fees; regrets that the conclusions drawn from reviews of student finance in Scotland and Wales have been ignored in Westminster; congratulates the Scottish Executive on abolishing tuition fees and restoring grants for students from low income backgrounds; believes that part-time students and students in Further Education should be treated fairly in comparison with full-time students in Higher Education; notes the recent decision by the Government to review student finance more widely; and calls upon the Government to abolish tuition fees in England, Wales and Northern Ireland and to put in place a fully funded support system, which will encourage more students, particularly those from low income backgrounds, to go into higher education."

May I begin by saying how pleased I am that my right hon. and hon. Friends have chosen to debate student finance today and that they have asked me to move the motion in our names? May I make it plain that I have nothing to gain personally from the abolition of tuition fees, although I do have considerable personal experience of paying them? I share with my hon. Friend the Member for Harrogate and Knaresborough (Mr. Willis), and, I understand, with the previous Secretary of State, the experience of having a child who was, unfortunately, involved in the first year of tuition fees. I have another son at university now, and my youngest son hopes to go to university in 2003, which, if all goes well, should be the last year of tuition fees.

So it is not for reasons of personal benefit that I am pleased that my party has given this issue the highest priority for debate today; rather it is because in June this year two issues stood out as being uniquely Liberal Democrat issues: free long-term care for the elderly and the abolition of tuition fees. We received massive support from the public on both issues, and they represent the two greatest errors that the Labour Government made in their first term in office. We said that tuition fees were "a tax on education", and we were right.

A sensible Government choose to tax things that they want less of; they avoid taxing things that they want more of. Liberal Democrats believe in education. We believe that education is one of the cornerstones of a civilised society. We believe that the best possible education for each individual in our nation is valuable not just for that individual, but for society as a whole. We also believe that education is not just about equipping the individual with the knowledge and skills that he or she needs for the

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jobs of the modern world, but about giving that individual the opportunity to make the most of his or her natural talents and abilities in every aspect of his or her life.

However, the student support system acts as a barrier to young people who want to go to university, particularly for the poorest students. First, there is the upfront payment of tuition fees-the tax on education. The Government have tried to argue that tuition fees are no disincentive. After all, they say, the poorest 50 per cent. or so of students will not have to pay them. But, of course, it is really nothing to do with whether the student is rich or poor. Almost all students are poor, and if it was only rich students who paid tuition fees, they would never have been worth collecting. No, the means testing is done, not on the student, but on the parent.

Some parents pay, but many see no reason why they should continue to subsidise their adult offspring, just because those offspring happen to be intelligent enough to be offered a place at a university. So the sons and daughters of comparatively well-off parents usually end up paying the tuition fees. Often such students end up even more deeply in debt than other students whose parents happen to be less well-off.

Where is the logic in a student finance system in which a graduate who enters a comparatively low-paid but socially useful job may have to pay off greater debts than a graduate who earns hundreds of thousands of pounds in the City, but whose parents happen to have been in less well-paid jobs? What is fair about that? Let there be no doubt that worries about debt are very real. Students can now expect to graduate with an average debt of £10,000, and often more. Of course, tuition fees make up only a part of that debt, and it is true that many students will not have to pay tuition fees.

I must confess that I too was at first taken in by the seductive argument that tuition fees cannot possibly be a disincentive to those who will not have to pay them. However, I visited Durham university recently, and there I spoke to a first-year student who had come up only a month or so before. She described herself as coming from a working-class background. She told me that no less than four of her friends had decided not to go to university because they did not want to get into debt. They had heard about tuition fees, and they were frightened.

It does not matter whether the fear of debt is soundly based; it is the fear itself that produces the disincentive. So will the Government now finally admit that tuition fees and the perception of tuition fees constitute a barrier to young people who want to go to university? How long before the Government stop monitoring and wake up to the crisis in our higher education system? Students are fed up with monitoring-they want tuition fees to be abolished. A sensible Government levy taxes for education and not on education.

Tuition fees are of course only a part of the debt problem. Students must also maintain themselves. The Government fought the election saying that there was not a problem. They apparently saw no contradiction between their target of 50 per cent. participation and the system of student support that they introduced in 1998. During the campaign, however, the Prime Minister apparently woke up to the fact that young people and their parents do see a problem.

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In the review of student funding announced at the Labour party conference, one stated objective was to "tackle the problems of debt and the perception of debt".

The Secretary of State has explicitly recognised that debt is a barrier to access. On 4 October, she was quoted in The Guardian as saying: "I recognise that for many low income families fear of debt is a real worry and could act as a barrier to higher education. I want to make sure that our future reform tackles this problem."

The following day, the Chancellor was quoted in The Times Higher Education Supplement as follows: "As we examine the financing of universities and the problems of student loans and fees, the test will be to break down the barriers that hold people back, so that all, and not just those who can afford it, have the chance to make the most of themselves and their talents."

I suggest to the Minister for Lifelong Learning that if she has the Chancellor's backing, she has a much better chance than most of getting some extra finance into the system.

Mr. David Chaytor (Bury, North): If there is a direct relationship between cost and access, will the hon. Gentleman explain why, during the long period when there were no tuition fees and there was a 100 per cent. grants system, the proportion of young people from working-class backgrounds going to university did not increase? When such education was free, working-class people still did not go to university. Why was that?

Mr. Rendel: I am delighted to answer that intervention, because the hon. Gentleman raises an important problem. There are clearly reasons other than the fear of debt that influence the question-one of which is the number of children who go on to post-16 education. That is a particular problem for the sort of children to whom he referred. I am sure that the fear of debt and especially of having to pay tuition fees-even if, in practice, such students will not have to do so-are at least part of the important problem that we face.

The facts speak for themselves. According to the Barclays student debt survey, since the 1998 reforms, average student debt has roughly doubled from about £3,000 to about £6,000, and average debt on graduation is expected to rise from £6,500 in 2000 to around £10,000 in 2001. The National Union of Students estimates that that figure is more in the region of £12,000. It points to a recent debt survey by the University College London student union, in which only 12 per cent. of respondents expected to be debt-free on graduation. Of those expecting to be in debt, 38 per cent. expected to owe up to £10,000, 50 per cent. between £10,000 and £20,000, and 12 per cent. more than £20,000. Of those surveyed, 18 per cent. had considered dropping out altogether as a result of financial difficulties.

Even before the new arrangements were introduced, the student income and expenditure survey for 1998-99 found that 87 per cent. of full-time students experienced financial difficulties, and that 60 per cent. thought that such difficulties had damaged their academic performance. So why has it taken the Government so long to reach the conclusion that debt and the perception of debt represent a barrier to access?

At least we Liberal Democrats can now welcome the Government's decision to conduct a review-and we do. At last the Government have recognised that a disincentive is

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built into the system. Until now, they have maintained that there was no disincentive. Students, they say, can look forward to higher incomes later, but many students never receive those higher incomes. Even for those who do so, the costs are up front, while the benefits are three or four years down the line.

Alistair Burt (North-East Bedfordshire): I appreciate that the hon. Gentleman welcomes the review of student finance-we all would-but does he share my substantial concern and surprise that the review is being conducted entirely internally and cross-departmentally, so the very people who devised the system about which we are all complaining are devising the new one, too?

Mr. Rendel: I am grateful to the hon. Gentleman for making that point. I certainly share that concern, and I shall make a small offer in relation to it in a moment.

It is not just those who see themselves going into low-paid jobs who fear mounting debts. A recent British Academy report of graduate studies in the humanities and social sciences made two points. First, the United Kingdom is failing to attract sufficient numbers of the best British students to take PhDs in the arts, humanities and social sciences, and, secondly, debt is a major deterrent to potential PhD students.

Sadly, debt causes damage not only as a disincentive. It is clear that student finance has an impact on the quality of the university experience. The experience is valuable not just because it improves career prospects, but because it offers wider educational benefits-the pursuit of knowledge for its own sake, the coming together of people from different backgrounds, exposure to new ideas and ways of thinking and, of course, the gaining of greater personal independence and freedom.

So what are the implications of the fact that close to two thirds of students take up part-time work to help fund their way through university, or of a growing number of students opting to live at home because it is cheaper? Clearly, those trends mean less time to engage in the wider experience of university life, with all the extra benefits that that can bring.

The central problem is that the Government are committed to expansion but not to providing the money to pay for it. If they are serious about widening participation, they must address the funding issue. We know that that can be done. How do we know that? We know because it has been done. In Scotland, tuition fees have been abolished; grants for students from poorer backgrounds have been reintroduced. We Liberal Democrats are delighted that our Scottish colleagues were able to persuade the Scottish Executive to make those changes. The Liberal Democrats and the Labour party in Scotland have jointly proved that a better system is possible and can be afforded.

Diana Organ (Forest of Dean): Will the hon. Gentleman give way?

Mr. Jon Owen Jones (Cardiff, Central): Will the hon. Gentleman give way?

Mr. Rendel: I shall give way in a moment.

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The Scottish system is not the only possible way of financing students. Indeed, it may not even be the best one. We on the Liberal Democrat Benches are not dogmatic about that.

Mr. Jon Owen Jones: Well, give way then.

Mr. Rendel: If the Government wish as part of their review to discuss alternative proposals with us, we shall be happy to do so. I make that offer freely.

Diana Organ: The hon. Gentleman referred to the value of higher education and the Government's desire to increase participation in and access to it. Do he and his party agree, therefore, with the target of 50 per cent. of young people having access to higher education? Is he committed to that, as his party should be?

Mr. Rendel: The important issue is that students must have a quality university experience. There is no point in a target that results in more and more people going to university if the Government fail to meet the need to maintain unit funding for those students. If funding can be maintained, we would of course like the maximum number of students to go through university-if possible, even more than 50 per cent. of young people. If they can derive some value from their university experience, let us do that. However, without such valuable experience, doing so would be a waste of money.

Several hon. Members rose-

Mr. Rendel: I have taken enough interventions for the time being.

In replying to the debate, perhaps the Minister will take the opportunity to confirm or deny the rumours that the following options are under consideration in her review: first, the abolition of tuition fees; secondly, a graduate tax; thirdly, the restoration of maintenance grants, at least for students from less well-off backgrounds; and, fourthly, whether student loans will still be made available.

I hope that the Minister will also assure us that universities will not receive less money if extra resources are to be directed towards student support. The Government delude themselves if they believe that they can expand student numbers and deliver a world-class higher education system without a substantial boost in funding

The Secretary of State rightly said in her speech on 22 October: "Universities are not a birthright for the middle classes."

However, wider access to a bargain basement higher education system would be a betrayal of the young people the Government say they want to support. Just as higher education should not be a birthright of the middle classes, we must ensure that quality is available to all.

Our country needs a world-class system of higher education; our students deserve it. We need to provide grants, at least for students from less well-off backgrounds. However, tuition fees have no part to play in such a system.