(1 day, 6 hours ago)
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18:59 - The House divided: - Ayes: 88 / Noes: 266 - Question accordingly negatived.
Joe Robertson (Isle of Wight East) (Con)
Labour is failing young people. Youth unemployment is up since Labour took office—it is now higher than in the eurozone. There are more people not in education, employment or training since Labour took office—now nearly 1 million. There is a midlife crisis in our economy, too. More than 2 million people aged between 50 and 64 are on out-of-work benefits. The deal for young people is bad, and it has been made worse by this Chancellor.
Too many young people are coming out of university with excessive debt, and they do not know what the future terms of their borrowing will be. If a private provider were to provide loans in this way, where someone did not know when they signed up what the interest rates, repayment deal or income threshold would be, that provider would be unable to enforce it—it would be unlawful. When it comes to this Government and the Chancellor freezing the threshold, for some reason those on the Government Benches think that is okay.
We have heard from Government Members who said that they joined the Labour party to fight for a better deal. We heard from the hon. Member for Kettering (Rosie Wrighting), who said that she is here to fight for her generation—generation Z. Is she not bitterly disappointed at the limp response from her Government now that they have power and can do something about intergenerational justice as she sees it? Instead, Labour Members come into this House to defend their Government increasing debt for students and freezing the earnings threshold at which those young people have to start repaying.
Mr Charters
I am on plan 2, and I had a targeted maintenance grant. I will ask the hon. Member a simple question: does he think it is a fairer system to have targeted maintenance grants in it—yes or no?
Joe Robertson
Let me ask the hon. Member a question, because his party is in government, he has power and he can change things. Does he think the system is fair? No, he does not, because he has already told this House that it is not. Is he not bitterly disappointed that his own Government have not got a plan to change it? If he does not like the system that existed before July 2024, why are his Government not changing it?
The Opposition have brought forward a plan, which we are debating today. It would mean that those on plan 2 student loans will not end up paying more and more above RPI, so the Government will not be making money out of them having a loan. That is a meaningful change. The Government can go further because they are in power. I hope that our party, by the time of the next election, will be able to offer more, but we have already announced that we would abolish stamp duty, helping young people. We have already announced that we would scrap bad courses that offer no real additional employment prospects for people who do them, other than leaving them saddled with debt.
It would seem that most Labour Members have history degrees, given the amount of time they have spent speaking about the last decade, but we are talking about the system that exists now. When I went to university, I accepted the principle that young people who went to university did not contribute enough to the education that they received. Under the Blair Government, undergraduates were asked to contribute more. Clearly there is a benefit for society in having an educated and graduate workforce to take up jobs as teachers and doctors, for instance, but there is also a great benefit for those who take up those jobs, because of the higher earnings involved. That is a principle I supported. It is a principle most people supported, and I still support it. However, we have plainly reached a tipping point for too many students. The personal debt is so high that they have no real prospect of ever paying it back. Some have degrees that give them no real opportunity ever to earn more than they would have earned had they been in a good apprenticeship—a good apprenticeship that the last Government gave them the opportunity to enter into.
Vikki Slade (Mid Dorset and North Poole) (LD)
My son is studying for a degree in musical theatre performance, and is due to graduate in a few weeks’ time. That may be something that the hon. Member thinks has no value. My son will probably spend a certain amount of time working tables and trying to make a living while he progresses in his career. He would not be able to be of use to people as a future teacher, a future councillor, a future communications officer or, perhaps, a future politician without that degree. Is the hon. Member suggesting that his degree has no value?
Joe Robertson
I am sure that the hon. Lady’s son’s degree is an excellent degree and that, hopefully, he will gain an excellent job, but that is not the case for every student. Too many students in this country are saddled with tens of thousands of pounds of debt. They do not know their repayment terms because they change, and some of them have degrees that will give them no additional prospect of a job to allow them to repay their debt. I hope that most of us can agree on that principle. It is therefore perfectly legitimate to ask this question: should we be putting an end to some of these institutions and courses when they are doing nothing for the young people involved?
This is not a deregulated market. In order to be able to offer a degree, an institution has to be licensed. There is no groundbreaking idea behind saying that certain courses are not of degree quality, and that the public should not be subsidising those courses. Governments already make decisions about that. It is the Conservative party that is proposing—for some reason the Labour Government do not want to do it—that young people who are sold a future that simply does not exist should not be saddled with debt, and the taxpayer should not subsidise them.
Madam Deputy Speaker (Judith Cummins)
Order. I am now imposing an immediate four-minute time limit.
Danny Beales (Uxbridge and South Ruislip) (Lab)
I welcome the opportunity to discuss the student loans system. I took out a student loan under the plan 1 system. I am, fortunately, not young enough to have benefited from a plan 2, or, now, a plan 5 loan. However, despite having graduated with about £40,000 of student debt, I did consider myself fortunate—fortunate that I went to university under a Labour Government who had widened participation in higher education and created a fees, grants and loans system that enabled me to go to university and pay my living costs, which my single-parent family would not have been able to do without the grants that were, unfortunately, then cut by the Conservatives. I was happy to contribute towards my university education on the basis that most people at my school would not go to university, but a system that was one of contribution and fairness has become an aggressive system, and I believe it is time to review the plan 2, and now plan 5, loans systems.
I have heard from many of my constituents about the system as it is operating, including those at Brunel University. Recently, a teacher told me about the challenges of repaying her loan and how she is considering going part-time as a result of high interest rates. There are clearly a number of options that could be taken, such as changing the RPI basis to a CPI basis, capping lifetime interest costs and uprating the thresholds once again. Suggestions have also been made by the Good Growth Foundation.
It is important that, rather than going for any one of those changes, we properly analyse the options and the distributional impacts—work which the Conservative party clearly did not do given the half-baked proposals before us. It is quite baffling that the Conservatives moved this motion. Having been the architects of this regressive student loans system, having maintained the system for a decade, having continually frozen the repayment thresholds, and having trebled the fees when in coalition with the Lib Dems and cut maintenance grants for the poorest, they now pretend to be the party of students.
However, the mask has slipped in the last section of the Conservatives’ motion. They plan to pay for their minor change by reducing the number of people going to university. When they say that fewer young people should go to uni, they almost never mean that they should not, or that their children should not, and they do not mean that the universities in their constituencies should close. They are talking about other people, including those at universities such as Brunel in my constituency. They look down on the arts or “ology” courses that they feel have less benefit, and to be frank, that is elitism.
Alex McIntyre
My hon. Friend is making an excellent point about how, when the Opposition say they are going to cut funding for certain courses, they really mean that those courses will be available for wealthier students who can afford to pay for them without a Government subsidy. Does he agree that that will lead to a decrease in students from working-class backgrounds being able to access arts degrees?
Madam Deputy Speaker
Order. Members are being very generous with their time, but I remind them that I will be starting the Front-Bench speeches at about 6.40 pm, and we still have four more Back Benchers left to speak.
Danny Beales
I completely agree that everyone who would and could benefit from a university education should be able to go. We do not widen opportunities by cutting them.
John Burn-Murdoch’s analysis in the Financial Times has shown that other developed countries have increased participation in higher education and not seen the impact on graduate wages that we have seen. That is not inevitable as part of wider higher education participation. We have seen it because of the stagnation in the economy and of productivity caused by the last Conservative Government, not because of higher education participation.
There is a range of cost of living pressures on younger people. Yes, there are student loan costs, but there are also rising housing costs, the stagnation of wages more generally, childcare costs and renting costs, many of which need urgent action. I hear from young people in my constituency about the impact of starting a family or getting on the housing ladder. There was a generational compact that if people worked hard and got on, they would do better than their parents’ generation, but things we had come to take for granted were broken under the 14 years of Conservative Government.
Action was needed, and I am pleased that this Government are reforming and scrapping the broken leasehold system, capping ground rents and taking action on service charges. They have introduced the Renters Rights Act, which the Conservative party opposed. They are taking action on childcare with the 30 hours free childcare, and bringing down inflation and interest rates. I welcome the fact that the Chancellor and the Minister with responsibility for higher education have acknowledged that action is needed on student loans and are actively reviewing the student loans system. I hope that the Treasury Committee’s full inquiry, which is under way, will be fully and promptly responded to by the Government.
Let us be clear: the proposals before us would not solve the student loans system. They are a gimmick that would close participation and close doors of opportunity, which is exactly the opposite of what people and young people in this country need.
Graham Stuart (Beverley and Holderness) (Con)
It is a pleasure to participate in this debate. Graduates were promised a fair deal, and we have heard all the promises that were made from when the current Prime Minister stood to be Leader of the Opposition to the announcements that were made afterwards. People were told to work hard, go to university and have a shot at a better life, and that their efforts would pay off. On those principles, Labour Members entirely agree with those of us in the Opposition.
The Education Secretary knows that those things should be in place, because in 2023 she wrote that graduates will pay less under a Labour Government. She, the actual Education Secretary, said that graduates would pay less under a Labour Government. Now in office, she says:
“We are where we are.”
The Chancellor knows it, too. In January, she said the student loan system was fair and reasonable—in January, this year. Yesterday, suddenly, she admitted it was broken, but, importantly, not a priority.
And the Leader of the Opposition knows it. Last month, she said the current system created an unfair debt trap for graduates. But what is the difference? The difference is that the Leader of the Opposition has a plan—a plan to cut interest rates that no one would accept on a normal loan. The moment a graduate throws their cap in the air, unfortunately the Labour party sees a target to tax. We Conservatives see a dream to back—dreams like Sammi’s. Sammi, from Keyingham in my constituency, is one of the first in her family to go to university. She borrowed £40,000. She works in the medical field and makes a payment every month, but she now owes £46,000 because of interest rates that no one would accept on a normal loan. Graduates such as Sammi need to earn £66,000 before they even start to reduce their loans. By refusing to cap interest at the rate of inflation to help people like Sammi, as the Conservatives are proposing today, the Chancellor, who admits that the system is broken, is making them pay more for longer.
For too many, the degree that was meant to help them get on is now holding them back. That is why, in a tough situation, we are making tough proposals about finding courses that are not adding value. They exist. We have had Liberal Democrat and Labour Members suggesting that there is not a single course at a single institution in this country that should not be put under question. That is not the right attitude.
Under our plans, interest rates on plan 2 student loans will be capped at inflation, saving graduates tens of thousands of pounds. A doctor from Hedon, graduating in 2029 with £80,000 of student debt, will save £58,000 in lifetime repayments. An engineer from Roos with £40,000 of student debt earning £50,000 would clear their loan five years faster. So, when these young people enter the workforce or start a business of their own, they will have the space to build a future of their own: saving for a home, starting a family, creating something of value—fairness, a future, freedom.
People like Sammi are the risk-takers, the innovators and the builders of what is to come and they are being let down by this Government. That is the choice before this House tonight: vote for our plan to make effort pay again or do nothing, because it turns out that graduates are at the back of the queue. Colleagues on the Government Benches know the right thing to do. Deep down, the Education Secretary knows it and the Chancellor knows it. What they need now is the courage to do something about it.
Peter Prinsley (Bury St Edmunds and Stowmarket) (Lab)
Student finance is complicated. With thanks to my hon. Friend the Member for Glasgow South (Gordon McKee), who has been in and out of his seat all afternoon, I was able to produce a biscuit explainer today, which is available on all good social media channels.
Reforming the student finance system is not straightforward. It is a complex challenge—it is made much more difficult by the need to stabilise the economy, which is something that I obviously strongly support—but we must be clear that the task is harder because of the economic mess left behind by our predecessors: years of short-termism and under-investment that have constrained what can now be done.
Yet even within those constraints, the direction proposed by the Opposition is a bit flawed. The suggestion to scrap degrees, particularly in the arts and cultural sectors, is culturally dismissive, plainly disrespectful and insulting. It reflects a narrow view of value and ignores the real contribution of the creative industries to our economy and our national life.
Turning to the system itself, student finance is not neutral. It perpetuates an inequality. Those from less well-off backgrounds must take on larger maintenance loans simply to afford the cost of living, graduating with significantly higher debts than their peers. That undermines social mobility. Instead of higher education acting as a ladder of opportunity, the system has reinforced disadvantage. Those who start with less, leave with more to repay.
In reality, we all know that what we have is a form of a graduate tax—long-term, income-contingent and unavoidable for many—but without the clarity or fairness such a system should have. So we do need reform, but not through the Opposition’s plan; we must make a better plan. The Labour party is and will remain the party of working people, grounded in the principles of fairness, which means confronting systems that entrench inequality and replacing them with ones that expand opportunity. If we are serious about fairness, we must act—and act we will, for we will use the levers of the state to ensure fairness.
Dr Ben Spencer (Runnymede and Weybridge) (Con)
I am going to talk about hope and fairness, to which many Members across the House have referred in their speeches. It is important that everyone has hope for the future, but particularly the next generation.
There are many challenges facing younger people at the moment, from youth unemployment, with the graduate jobs market unfortunately in decline, to the uncertain world we live in. The people who will inherit this world from us are concerned about conflict in the middle east, the position of our defence, and the direction in which our country and society are going. It is younger people who have borne the brunt of the decisions made during covid, and it is younger people who will have to deal with and find solutions for the changing demographics in our society, particularly the ageing population. It is important now more than ever that the next generation—the younger generation—has hope for the future, and we Conservatives have a plan to bring that back. The key to that plan is fairness.
Our motion today goes to the heart of fairness. It is fair to say that the repayment system for the people paying back plan 2 loans, with the thresholds and the interest at 3% above RPI, has essentially turned into some form of Ponzi scheme. The Conservatives have a plan to start resolving that. As has been said, it would not be possible to get these loans on a commercial basis; they are fundamentally unfair, and we have a plan to go about fixing it.
When we talk about education more generally, we talk about the fact that all different types of education have intrinsic value. There is no hierarchy between people who go to university or further education, people who do apprenticeships and people who go straight into work. It is about providing the right education for the individual person. Whether someone has gone to university or done an apprenticeship—whatever route they have gone down—it does not make them a better or worse person. The key is that it is the right plan for them. It is only fair that we reverse some of the historic biases against apprenticeships in particular, and that is why I am so pleased that apprenticeships and vocational training are central to the motion that we will be voting on later.
Fairness means fairness both to the taxpayer and to the people taking the courses. I intervened on both the Minister and the Liberal Democrat spokesperson, the hon. Member for St Neots and Mid Cambridgeshire (Ian Sollom), to ask whether they would at least concede that there are some courses—particular courses at institutions across the country—that are really not worth it because they are not value for money and will not help the student.
Ian Sollom
I thank the hon. Gentleman for giving way; I did not cover myself in glory when I responded to his point earlier, and I would like to take another bite of the cherry. The point I was trying to make was that simply basing it on salary value is not the only way to assess value. The right way to do it is through the regulator, the OfS, and to take that as just one element of many. The OfS should drive that. Would the hon. Gentleman make salary value the primary driver for all courses? [Interruption.]
Dr Spencer
I think that my right hon. Friend the Member for East Hampshire (Damian Hinds), sitting behind me, will give a more extensive answer to that question in a moment. There are lots of ways to measure degrees. An example that I often give is the degree in David Beckham studies, which I think existed. I am a big fan of David Beckham, by the way, but I am not sure how many degrees in David Beckham studies we need, or how it would benefit the economy or the individual. Critically, I am not sure that taxpayers should be subsidising that. All our constituents are contributing to this system, and it is only fair that we ensure that there is value for money for taxpayers, as well as for the people taking the courses, and that there is a broader contribution.
It is absolutely right that, as part of this motion, we look at fairness in the system, particularly to make sure that degrees, which are regulated, give the value that they are purported to give, and that we do not have fake degrees or degrees with a disproportionate difference between the offering—what people think they are going to get—and the outcomes. When people are starting on a degree course, it is important for them to know where they can expect to be in five or 10 years’ time and what their status in society will be, so that they can make informed choices given the substantial cost, in terms of both time and money, of their investment.
On that basis, I wholeheartedly support the motion and look forward to voting for it later tonight. I hope Labour Members do so as well, because this motion brings back a bit more hope and a bit more fairness to the system.
Damian Hinds (East Hampshire) (Con)
It is an honour to be the final Back-Bench speaker in this debate. I do not feel like I am at the back of the queue; I am just not at the front.
It is good to see some Liberal Democrats with us today. We know that student finance is a particularly important subject for debate in the Liberal Democrat party. In fairness, though, the Vince Cable plan, sometimes also known as plan 2, is not only about the Liberal Democrats. The Conservatives were also in government at that time, in coalition with the Liberal Democrats. We shared responsibility. The whole thing was largely based on the Browne report, which had been commissioned by the previous Government under the other Brown, who somehow managed not to mention it during the course of the 2010 general election. To be fair, the existence of a real interest rate in both the Browne plan and the Cable plan was intended to make the system more progressive. None the less, it has become clear over time that that system needs to change. It has also become clear that, with all the pressures on young people and graduates at the present time, including unemployment, now is not the time to squeeze them further on the repayment threshold.
In the short time available, I will talk primarily about apprenticeships and degrees. In particular, I want to focus on the necessity of concentrating on quality apprenticeships.
Damian Hinds
I will, but I will start by telling my hon. Friend about the lack of quality in some previous apprenticeships. I draw the House’s attention to the 2012 National Audit Office report on adult apprenticeships. I have time for only a couple of very short excerpts. The number of apprenticeships had increased dramatically in the three years up to 2012. The vast majority of apprentices were over 25. One in five apprenticeships lasted fewer than six months. Only one third of apprenticeships were at an advanced level, compared with something like 60% in France. In a separate study, there was the amazing discovery that, at that time, one in five apprentices—and this was to rise even further—did not even know that they were on an apprenticeship, so poor, thin and flaky were those courses.
So, yes, Madam Deputy Speaker, we reformed the system. First, in 2012 we introduced the minimum length of one year. We then had the substantial package of reforms in 2017 to make sure that there would be 20% of time off the job and to introduce the apprenticeship levy. It included the move from frameworks, which were sort of tick-box standards in many cases, to proper standards that would be designated and designed by employers and would have a proper end-point assessment to guarantee that that person had learned those occupational standards. And yes, of course the number of people on apprenticeships then fell.
The Government amendment says that they want to reverse the decline in apprenticeships under the previous Government. The reality is that the number of apprenticeships first grew like crazy under the previous Government as a result of the Apprenticeships, Skills, Children and Learning Act 2009, and then it came back down following our reforms to make the apprenticeships higher quality and more exacting.
In 2010, the 280,000 figure was still lower than the 340,000 that we achieved in government. Now it looks like the Government are set on restarting that rollercoaster by reducing the standard of apprenticeships.
Alistair Strathern
I will not claim that the apprenticeship system that the previous Government inherited was perfect, but he is right that at its best it was about getting hard-to-reach young people into skilled jobs that they would not otherwise be able to reach. Countless young people and employers in my constituency, as well as the fantastic charity Amazing Apprenticeships, constantly cite standards as a barrier, not an enabler.
Damian Hinds
I am grateful to the hon. Gentleman for his intervention, but we need quality apprenticeships. That is why I regret the fact that the independent Institute for Apprenticeships is being dissolved to be replaced by Skills England, which is not independent, does not have guaranteed business involvement in setting standards, and has now been moved from the DFE to the Department for Work and Pensions.
I regret that the Government are watering down end-point assessments, and I regret most of all that the new minimum length of an apprenticeship is eight months, down from 12 months. By the way, a 12-month apprenticeship is already short by international standards, and it is now being reduced even further to eight months. Try telling a German captain of industry that an apprenticeship can be done in eight months. There is nothing wrong with eight-month training courses, just do not call them apprenticeships. Call them something else so that we maintain the standard, brand and integrity of an apprenticeship.
The Government say, “We are doing all these things. We are reducing the standards and making it easier to access the cash and pass the course, and we believe that we may be able to grow the numbers.” I should actually apologise to Labour Members, because I think it insults their intelligence when they are given a piece of paper and asked to read something that says: “We believe that with our plan the number of apprenticeships will grow.” Of course it is going to grow—it could not fail to grow. The point is that it is not a like-for-like increase in the number of apprenticeships.
Madam Deputy Speaker, I know I am out of time. I had a load more to say—perhaps another day. Thank you for calling me.
Neil O'Brien (Harborough, Oadby and Wigston) (Con)
In January, the Chancellor was saying that the student loans system was “fair and reasonable”. She now admits —as of yesterday—that it is broken. In one sense, we have won this debate even before it started. The Government say that they are looking at these issues, but they would not be looking at them if it were not for the Opposition raising them, and I do not find the promise to “look at these issues” very reassuring, given their track record.
In the run-up to the last election, the Education Secretary promised: “Graduates, you will pay less under Labour”. Unbelievably, that is still up on her website. Instead, Labour has increased fees so that graduates are paying more, not less. On top of that, the Chancellor has cut the repayment threshold in real terms so that graduates are paying a further £250 a year. Actions speak louder than words.
To get elected as Labour leader, the Prime Minister promised to abolish tuition fees. Instead, he has increased them. He used to say, “We need to end the scandal of spiralling student debt,” but now he is letting it spiral. When the Minister says, “We will look at it,” we are not reassured. I thought the best speech of the afternoon was from the hon. Member for Gloucester (Alex McIntyre), who said in plain terms that he would not prioritise fixing this problem and would spend the money on something else. That kind of blunt honesty is better than the line from the Chancellor, who says “Graduates, your call is very important to us. Please continue to hold, and eventually perhaps we will do something about it.”
This system was set up with the best of intentions, but I have been arguing against it for as long as I have been in this House. The above-inflation interest rates have long been recognised as a problem. That is why our 2022 reforms abolished real-terms interest rates for all future students, but now we need to go back and end these unfair challenges for past students too.
There are lots of different ways to explain how unfair the current system is. Those on plan 2 are paying back far more than they ever borrowed. The typical plan 2 graduate needs to earn £66,000 a year just to keep track with the interest. The total volume of money owed by plan 2 students is increasing every year, even though no new loans are being taken out and they are paying back billions every year. Between the lower and upper interest rate threshold, for every additional £100 a graduate earns, they repay an extra £9, but their debt also accrues an additional £7.20 in interest. In fact, a plan 2 graduate who has £69,000 or more of debt—a doctor or someone like that—sees their debt increase faster as their earnings and repayments increase, because the interest effect outweighs the repayment effect. It is a totally perverse system.
Adam Thompson
The hon. Member talks about the effect of interest over time. Given that the loans are eventually written off under the current system, can he tell me what threshold a salary would have to be at for the proposed changes in interest to make any realistic difference over the course of a graduate’s entire life?
Neil O’Brien
Yes, and I am grateful for that question. Under our proposed reforms, four fifths—80%—of plan 2 graduates would benefit and pay less over their lifetime. The hon. Gentleman can look up all this stuff on the IFS website if he wants to check.
There are so many personal stories here. The other day, one doctor was recounting how she graduated with £75,000 of debt, has worked hard for years and has paid off every year, but she now owes £90,000.
Neil O’Brien
Perhaps the hon. Gentleman will tell me why he thinks that is fair.
Mr Charters
The hon. Gentleman referenced the IFS report. He will know that it has costed his proposals and that for the plan 2 cohort there would be a capital cost of £30 billion to £40 billion—I believe that could be a gaping hole. It is a seriously uncosted policy, is it not?
Neil O’Brien
If the hon. Gentleman reads to the end of the IFS report, he will see that it costs our proposal in single-digit billions, and we have explained exactly how we will pay for it—I will come to that in a moment—so there is no gaping hole whatsoever. No wonder so many despair, with more broken promises from the Government and ever-rising debt, and no promise of action at any particular time.
How we would pay for our proposal—this goes to the hon. Gentleman’s question—is equally important. Since the last Government created the longitudinal education outcomes dataset, we have had much better data on which degrees do—or do not—provide economic value for students and taxpayers. Economic value is not the only value put on higher education, or any kind of education, but rather than simply pushing more young people towards courses that the Government’s own data show us do not benefit them—they do not help them, and they leave them feeling like they have been mis-sold and betrayed, with a lot of debt and nothing much to show for it—we need to have a rethink. The current approach is not working.
Since the election, youth unemployment has risen to levels significantly above the eurozone’s for the first time in a generation. That is mainly as a result of the Government’s decision to target lower-paid people for tax increases and to increase regulation, but it is not helped by the Government’s unbalanced approach to skills, based on an endless expansion of university courses whether they are any good or not.
Neil O’Brien
Just one moment.
Analysis by the IFS found that total returns on going to university will be negative for about 30% of both men and women—and that is based on the cohort from the noughties. The problem now is probably even bigger because the graduate premium has declined further. As a result, many graduates now earn so little that they will never fully repay their student loans, leaving the taxpayer to cover about £8 billion in losses every year. That is why we would restore the number controls that existed for 70 years and use that to reduce the number of people who are on courses that are not good value for the taxpayer and not helping the young people, either.
To listen to Labour Members, anyone would think that there was not a single bad course, that every single course is totally brilliant and that there is no prospect of ever reducing spending on any single course. That is a fantasy world. We do not say about any other type of public service that every single instance of it is completely brilliant and there is no scope for improvement. We would use the savings from our proposal not just to abolish real interest rates on plan 2 loans but to double the number of apprenticeships for 18 to 21-year-olds so that quality apprenticeships are a real choice at age 18.
Why would we do that? Recent data shows that five years after finishing a course in 2018, the average level 4 apprentice was earning £32,000; by contrast, the average graduate was earning just £26,500 and the lower quartile of graduates were earning £19,000 or less. In many cases, a high-quality apprenticeship can be a better option than a low-value university course. That is why we would make that change.
Alex McIntyre
Labour Members have asked Conservative Members repeatedly if they can name a course or an institution that they would cut. The hon. Member for Runnymede and Weybridge (Dr Spencer) had to make up a course in David Beckham studies—as far as I understand, that never existed—to make the point. Does the hon. Gentleman have a real course in mind, or are his made up as well?
Neil O’Brien
We have already talked about that. If the hon. Gentleman wants a full list, he can go on my Substack and see a whole bunch of different institutions with low returns. He can also do better than that: he can look on the DFE’s website and see that many courses lead to low earnings. [Interruption.] It is not my purpose here to single out individual courses.
We have talked quite a lot about creative arts. The Institute for Fiscal Studies says that only 4.5% of those degrees represent a positive return to taxpayers. Some people will look at a statistic like that, say that it is only worth it for taxpayers 4% of the time and say, “That is not a problem. Let’s carry on shovelling money into something that is only working 4% of the time.” Other people would say, “We have to make choices, and we could use that money, which the Government continue to shovel into low-value courses, to fund more high-quality apprenticeships and cut repayments for betrayed plan 2 voters.”
Let me be clear: the current system is unfair. The Government admit it is unfair. Like so many other things, they say they will look at it. This is a Prime Minister who we can always rely on to do the right thing once we have dragged him by the nose to do it. As the former Deputy Prime Minister says, time is running out for this Labour Government, and it is time for them to stop moaning, grow a pair and fix this problem that they have moaned about.
The Parliamentary Under-Secretary of State for Work and Pensions (Andrew Western)
Let me begin by stating the obvious: the issues with plan 2 loans are a legacy of the previous Government. Plan 2 borrowers in England are undergraduate students who began their courses between 2012 and 2023. The loans were designed, implemented and operated by the previous coalition and Conservative Governments. When we were elected, we immediately recognised the pressure. We uplifted the plan 2 repayment threshold in 2025 to £28,470 and will increase it again to £29,385 next month, ensuring that it is higher than average graduate salaries three years after a course has finished. Before we came into Government, for most of the time that plan 2 loans have existed, the repayment threshold has been frozen—for 10 years during the Tory Government.
This is a system that we would never have designed. We have heard plenty today about its flaws, the worry it causes and the pressure on graduates. We have had, as we often do on Opposition days, a spirited debate. I will begin my comments on some of the contributions that we have heard by thanking my hon. Friends the Members for Reading Central (Matt Rodda), for Erewash (Adam Thompson), for Stevenage (Kevin Bonavia), for Uxbridge and South Ruislip (Danny Beales), for Bury St Edmunds and Stowmarket (Peter Prinsley), and in particular my hon. Friend the Member for Gloucester (Alex McIntyre) for an especially powerful contribution.
I single out my hon. Friend the Member for Kettering (Rosie Wrighting), who continues to be a champion in this place for young people not only in her constituency but up and down this country. When I came to this place, my maiden speech was about generational inequality. Based on her description, I think that I have timed out in my ability to call myself a young person, so I am delighted that we have my hon. Friend here holding that torch and continuing to fight and to make the case for young people.
Turning to the shadow Secretary of State, the right hon. Member for Sevenoaks (Laura Trott), we have had some serious chutzpah from the Tories today, opening with the fact that this Labour Government have increased fees—fees increased for sustainability purposes but certainly not trebled, as the Conservative party did. She spoke of the threshold freeze being unfair. April’s increase is our second in two years—as many as they managed in 12 years post introducing the plan 2 scheme.
The shadow Secretary of State labelled the motion a new deal for young people, but why on earth is a new deal required? It is because the Conservatives trebled fees, scrapped maintenance grants, oversaw a 40% cut to youth apprenticeships, and drove the number of NEETs up by a quarter of a million in their last three years in government. By contrast, under this Government, young people are getting a new deal, with a new target of two thirds of young people in an apprenticeship or at university, our youth guarantee and our jobs guarantee, because we understand that young people need support to thrive, especially after 14 years of the Conservative party.
We then heard about the range of options that the Conservatives want to secure for young people, that it is a Conservative choice to be able to earn and learn through apprenticeships or to go to university, but that was not the choice that young people had. They hammered apprenticeships for young people, and that is one of the reasons why we face the challenges in the system that we do today.
We heard from the Liberal Democrat spokesperson, the hon. Member for St Neots and Mid Cambridgeshire (Ian Sollom), in what I thought was a very considered contribution. I always think that it is incredibly brave for a Liberal Democrat to speak in any debate about fees, loans and so on.
Andrew Western
I will not because I am short on time—I am sorry.
While I do think that a Liberal Democrat should be wary, the hon. Member for St Neots and Mid Cambridgeshire made an important point in his defence of degree courses with which I agree.
The hon. Members for North Dorset (Simon Hoare) and for Hinckley and Bosworth (Dr Evans) attacked the Government for acknowledging the problems of the system and for saying that we recognise that work is needed, there is much to do, but we will look at it. When we say there is much to do, there are messes left all over the place. What exactly are we talking about? We are talking about a legacy of starved further education funding. The Conservatives oversaw a 40% drop in youth apprenticeships. They drove up child poverty, ravaged Sure Start, scrapped Building Schools for the Future, broke the SEND system—and that is just their legacy for children and young people, before I even get to the fact that they left the NHS on its knees. Their damage, the mess they left, has a long tail, and we must never forget that that damage cannot be fixed overnight.
Dr Luke Evans
Given that the Minister has just listed a great big set of problems facing students, what does he say to students when the Chancellor has said that they are not at the front of the queue?
Andrew Western
What I say is that students, like everybody else, benefit from an improved NHS and from a range of interventions that this Government are making, but we cannot change everything overnight.
The hon. Member for Bromley and Biggin Hill (Peter Fortune) commented that young people not in employment has rocketed under this Government, which is an interesting take given that the number of NEETs is 14,000 lower now than it was at this point last year, but it increased by 250,000 in the Conservatives’ final few years in office.
We then heard from the hon. Member for Solihull West and Shirley (Dr Shastri-Hurst). I simply reiterate the comments made in the intervention from my hon. Friend the Member for York Outer (Mr Charters) about the rubbishing of the Conservatives’ proposal already done by the Institute for Fiscal Studies.
The hon. Member for Isle of Wight East (Joe Robertson) mentioned youth unemployment figures, and I absolutely agree that these are a concern. We are not complacent on this issue, so he will welcome the youth guarantee, the jobs guarantee, the increase to apprenticeship funding, the shift to more apprenticeships for young people, the revised target of two thirds of young people either in an apprenticeship or at university, and the update to our approach to encourage technical learning while earning. He will also be pleased to know that, unlike him, I do have a history degree, so I have no problem looking at the Conservatives’ record of the past 10 years. I absolutely appreciate that they do not want to be held to account for the mess they left, but sadly they devastated this system, and it falls to us to resolve the problems they left.
We then heard from the hon. Member for Runnymede and Weybridge (Dr Spencer), who said that all forms of education have intrinsic value, which leaves me somewhat confused given the Conservatives have made a compelling argument today for scrapping a number of degree courses and they ran down the number of apprenticeships available to young people.
I want to briefly come to the contribution of the right hon. Member for East Hampshire (Damian Hinds), because he is always considered in this area and, indeed, I consider him an expert on this subject. I cannot pretend to be familiar with the Brown and Cable plans, but it is important to pick up a point he made around the vast majority of apprenticeships being taken by people over 25. I believe that that is a problem in the system. That is why we are creating foundation apprenticeships and that is why—[Interruption.] I am not suggesting—[Interruption.]
Madam Deputy Speaker (Judith Cummins)
Order. I want to hear what the Minister has to say.
Andrew Western
Thank you, Madam Deputy Speaker. I did not attribute a time period to the hon. Gentleman’s comments. I am simply stating that it is a fixed intention of this Government to seek to address that and to ensure that more young people under the age of 25 can access apprenticeships.
Yet again in these Opposition day debates, we see a Conservative party that continues to run away from its record and that brings forward overnight solutions that, in this case, have already been discredited. It is not fit to govern and would never solve this problem for young people.
Question put (Standing Order No. 31(2)), That the original words stand part of the Question.