Education Bill
Debate between Baroness Verma and Lord Stevenson of Balmacara(13 years ago)
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Baroness Verma
My Lords, the amendment moved by the noble Lord, Lord Stevenson, seeks to place a statutory requirement in the Bill whereby the interest rate at which borrowers are charged while they are studying and until their first repayment is no more than the government rate of borrowing for the preceding financial year. I thank the noble Lord for raising this issue, and I hope that he will find my response helpful. I will not put it in the context of trick or treat.
The current system provides borrowers who go on to earn the highest incomes with an interest subsidy while they are studying. This amendment is unnecessary because high-earning graduates are well placed to contribute to the cost of their higher education, and it also makes it unprogressive. The new arrangements that we are proposing mean that, in practice, the only people who are affected by the decision to charge a real interest rate while studying are those high-earning borrowers who pay back their loans in full. Those who do not fully pay back their loans will see that part of their borrowing written off. What is more, charging a real rate of interest is part of a progressive package of reforms, and any proposal to change this rate of interest should be considered in the round.
The changes that the noble Lord is suggesting would have a significant cost and impact on the sustainability of the new student finance package. Our analysis shows that charging students the government rate for borrowing—currently, RPI plus 2.2 percentage points—means that we would have to find a further £100 million per year. If we were to reduce this further, as has been suggested, to an interest rate of RPI only, while studying, or if we were to extend this rate until the student makes their first repayment, it would mean the costs would be even greater. The Government are committed to the progressive nature of the repayment system and want to ensure that those who earn most and can afford it contribute most towards the cost of their education. I am sure that the noble Lord does not disagree with that.
The noble Lord spoke about women being affected disproportionately. We estimate that around 35 per cent of female graduates will repay less than those on the current system. This is in large part because since women are more likely to be lower earners, they are more likely than men to benefit from the features of the progressive repayment system, including the protection afforded by the higher repayment threshold.
We do not want to have a negative impact on disadvantaged groups, and that is why the Government are committed to ensuring that our universities remain open to everyone with the ability to succeed in higher education. Our equality impact analysis indicates that our student funding reforms will not have a negative impact on protected groups. With our new repayment terms, we estimate that around a quarter of graduates— those on the lowest incomes—will pay less than they do on the current system.
The noble Lord asked about Sharia-compliant loans. We are actively investigating the possibility of introducing an alternative finance system and are working with organisations such as the Federation of Student Islamic Societies and the National Union of Students. We are clear that we want a single student loan system that can meet the needs of the majority of students, where possible. We will seriously consider proposals to change the administration or presentation of the system in ways that can address the doubts that members of some faiths might have about accessing student finance. However, any proposals would need to ensure that the overall financial outcomes for government are the same and that all student loan borrowers are treated the same in accordance with existing legislation. It is important to get this right, and I know the noble Lord agrees with me that it may take a little longer, but the outcome must be absolutely right.
The noble Lord raised the RPI/CPI question. No single measure of inflation is appropriate for all purposes. It is important to view the package of reforms in the round. We need a student finance system that is progressive, sustainable and affordable for the taxpayer, and that is what we have delivered. A measure of inflation that brought in lower contributions from the highest earning graduates would require us to be less generous with the progressive elements of the system that protect our low earners.
The Government’s student finance package is progressive and sustainable. It rebalances investment in higher education so that there is less public subsidy and a greater contribution from those who benefit the most. This can only be right. Our proposals create a system that provides more generous support for students from lower-income households and protects low-earning graduates. We believe that this is a fair deal. For those reasons, I cannot accept this proposal but I am very happy to continue meeting the noble Lord to discuss his concerns further.
Lord Stevenson of Balmacara
My Lords, I thank the Minister very much for that and in particular for her closing remarks about continuing the discussions. I think it would be worth having a further round of that. I gather there is a date now in the diary and perhaps we can pick it up at that point.
I would like to make three small points, and one at the end. First, it was good to hear that the difference in the cost to the public sector of going from 2.2 per cent to 3 per cent was only £100 million a year. I say “only” in a casual, flippant way—of course it is a lot of money, I understand that, but it is not a lot if one has to balance the impact and the damage done because of the increase. I think that is worth bearing in mind. I am grateful to have that information and I will think about it.
Secondly, the Minister said that the proposed changes will not have an adverse impact on admissions, but I think I am right in saying that the reduction in admissions reported last week was highest among mature students and women. That is a worrying sign. It may not be reflected when the full admissions figures come in, but even at this early stage of admissions, which is primarily for medicine, veterinary science and Oxbridge, those reductions are worrying and we need to bear them in mind.
Thirdly, on the point of whether or not the loans as currently proposed are Sharia compliant, I am grateful to the Minister for saying what she did on that. This is something that we perhaps could do by correspondence because we share a common wish that this works out well and that there is not an artificial or even a real division between the systems of loan that are appropriate across the whole country.
Finally, although it is fantastic that both full-time and part-time students who go on to higher education will be able to do so free at the point at which they enter the system, there is a price to pay for that. Underneath all the rhetoric, the truth is that this is a progressive system only because out of it will come a very large number of people—perhaps 50 per cent of the cohort—who do not earn enough to go on to a statutory repayment basis. It is a sort of race to the bottom and a crude way of depressing wages, and that cannot be right. There must be a better way of getting this across. If the progressive nature of this is really a way of separating out those who are benefiting from higher education and get more than the average wage in the country from those who do not, the phrase that is being used—those who earn more should contribute the most—begins to sound more like a graduate tax than anything else. Having said that, I hear what has been said tonight and I beg leave to withdraw the amendment.
Lord Stevenson of Balmacara
My Lords, I shall also speak to Amendment 89ZA in the names of the noble Baronesses, Lady Brinton and Lady Sharp of Guildford, and myself. We are of course delighted that the Government have accepted that the statutory payment due date for all those studying part-time will be the April which falls four years after the start of their course. A potential injustice has been avoided and the change represents a step towards breaking down the barriers to part-time study.
Once this Bill becomes law, the situation seems to be that part-time fees are set to go up from about £1,000 per annum, which is the latest DES figure, to £6,750. Part-time students will not be eligible for maintenance loans or grants as they are at present but such students will have to borrow to pay the much higher fees that are going to be charged. I worry about this radical change to the current position and whether the existing range of part-time students, who are mainly mature, female and people who say that they missed out the first time around, will continue to enrol on part-time courses.
I have some questions to leave with the Minister. Why are the Government regulating part-time fees when the existing system seems to be working? If a university is setting a fee which it thinks the market will bear and the Government are prepared to extend its voucher system to part-time students, why put in an inducement to raise that fee, which will be hard to resist, to £6,750? Why not try it for a year or two and, if necessary, regulate at that point if it is not working?
As has already been said, not all university part-time course structures fit neatly across four years and not all students wish to study at the same level of intensity each year. It must be to the student’s advantage to study at the pace that best suits their lifestyle and commitments. Universities have reacted to that by becoming more flexible in terms of evening and weekend study, and study outside the traditional academic year.
Given that, I have some sympathy with the case that has been made by million+ that it would be much more helpful for students if universities were able to charge part-time fees on a pro rata basis linked to the credits undertaken and the full-time fees set by the university for the course in question.
HEFCE currently provides £368 million to institutions to support them with the additional costs of attracting and retaining students from the most deprived areas and those in receipt of disabled student allowances. The early years allocation from this fund has led it to attract 20 per cent of its newest students from the 25 per cent most disadvantaged communities in the country, 12,000 current students with registered disabilities and 18,000 students who access higher education through targeted access, taster and opening programmes. When the Minister replies, perhaps she will reassure us that the earmarked funding of this nature will continue. I look forward to hearing the answer to these questions.
Baroness Verma
My Lords, first, I thank my noble friend and the noble Lord for their warm welcome to the Government’s response. The amendment in the names of my noble friends Lady Brinton and Lady Sharp, and the noble Lord, Lord Stevenson, seeks to extend the repayment due date. I also thank them for championing this point and apologise for the delay in arranging a meeting with my right honourable friend the Minister for Universities and Science and myself. As noble Lords know, I take pride in delivering on my commitments and I am sorry that there has been this delay.
My right honourable friend has listened carefully to the debate in this House. He has considered all the arguments and has asked his officials to have those further discussions. While we are not able to accept the amendment as it was laid, I am pleased to confirm that through secondary legislation we will set the repayment due date for part-time students as the April which falls four years after the start of their course or the April after a student leaves their course if that is sooner. A letter has been laid in the House Library to this effect, and I am pleased to note that this change has been resoundingly welcomed by the sector.
My noble friend Lady Brinton asked about widening participation. To ensure a fair deal for poorer students, we have announced a new £150 million national scholarship programme to support students from disadvantaged backgrounds. I will write to my noble friend on HEFCE’s widening participation funding. I also hope that she and the noble Lord will take the opportunity later this week to discuss this and all other issues raised by noble Lords today with my right honourable friend.
My noble friend and the noble Lord asked about regulation. My noble friend proposes a more rigid system of regulation than that put forward by the Government. We do not believe that there is evidence that such a system is needed. Our proposals establish a common framework within which higher education institutions have flexibility to set their own pricing. They need to be sensitive to the level of pricing that potential students will bear. Part-time students may simply not accept charging over and above the relevant proportion for their full-time equivalent. Our proposals protect students by ensuring that their loan will cover the full amount charged and by securing investment in widening participation and fair access. We will of course carefully monitor the new system and, if we need to, we will review and revisit it.
The noble Lord, Lord Stevenson, asked about the regulatory burden. This cap will enable higher education providers to set their own charges as they do now but up to a maximum amount specified in regulations. We do not believe that this will cause an unnecessary regulatory or administrative burden. Our proposals establish a common framework.
I look forward to further discussions with the noble Lord, Lord Stevenson, and my noble friends Lady Brinton and Lady Sharp. This week, my right honourable friend will speak to them and I hope that we will have some fruitful discussions. Therefore, I hope that my noble friend will withdraw her amendment.
Education Bill
Debate between Baroness Verma and Lord Stevenson of Balmacara(13 years, 1 month ago)
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Baroness Verma
I suspect that my answer will not satisfy the noble Lord, because I am not satisfied with it either. However, I will read it out, then look at my civil servants to give me a better response at some point. Looking at the existing loan portfolio now, I do not think that we can give the response that the noble Lord wants.
Lord Stevenson of Balmacara
That has been interesting. A relatively small point at the end of a Bill that is about something else has revealed an interesting range of issues that we may have to come back to at Report. I thank the noble Lords, Lord Peston, Lord Sutherland, Lord Knight and Lord Foulkes, and the noble Baroness, Lady Sharp, for their comments and for illuminating and extending some of my points. As the noble Lord, Lord Foulkes, said, the purpose of discussions at this stage of a Bill is to discuss some of the underlying issues and principles and, if possible, get some illumination on the thinking behind the Government’s plans and understand better the consequences of what they are doing.
I am afraid we did not really get much illumination, and we tended towards the end to run into a sort of blame game. If it was not our fault for having been in Government when the first arrangements were made, it was our fault for not having supported what is currently proposed. Indeed, at one point I heard the Minister say that we should not be discussing this now but should wait for the Higher Education Bill soon to come into this House.
Baroness Verma
No, what I said was that there are issues coming up in the Higher Education White Paper that is under consultation. That is a good forum for concerns such as those raised by the noble Lord, Lord Peston. That is the place where that would be discussed far more fruitfully than here today.
Lord Stevenson of Balmacara
We beg to differ on that. Actually, I agree on the essence—that a lot of what has been raised today needs to be discussed in a wider context. It is a great pity that we are not able to do that because of the strange way in which the Government have been developing policy in this area. We had an announcement about the funding system detached from the student loan system which is in this Bill. We had a White Paper at the very end of the previous Session but we do not yet know when the Bill that will follow is due, and we are therefore not able to tie all these things together. That is the point I was trying to make.
I do not think we disagree in principle on what any Government would have to do in these situations. We want to fund our universities to the best level possible and we accept the principle that those who benefit from that should contribute to it. The problem is that I do not think the system that is coming out is the right one. The noble Lords, Lord Foulkes and Lord Knight, put a fairly precise finger on the first of my questions, about the difference between RPI and CPI, and I am afraid that I did not think that the answer that the Government came up with was at all credible. We will need to return to this on Report.
On the social inclusion points, I heard the Minister and I admire her aspirations. However, I think that there will be severe problems for women, particularly those in lower-paid occupations, and for mature students. Although I understand that negotiations are continuing about Sharia law compliance, I am worried about this and I hope it will be taken back and discussed seriously. If it turns out this is not a Sharia-compliant issue or is sufficiently close to problems that will cause the Government to reflect on it, we perhaps need an early decision; we are moving quite fast with this Bill and it would be difficult to change it later on, even this month.
On the question of why 3 per cent, I do not think that the Minister gave us much; 2.2 per cent from 3 per cent may not sound a lot but it would make a huge difference in terms of whether loans are keeping pace in value or are increasing in an overall race to the bottom.
On the question of the student loan sell-off, there is more to make of this, and we will need to return to it because I think it is driving some of the policy here. Unless we can get an absolutely clear answer on that, we will have to return to it. However, this is Committee and we have had a very good discussion so I beg leave to withdraw the amendment.
Baroness Verma
Absolutely, and I would encourage any other noble Lord who would wish to be at that meeting to indicate that they would like to be present, so that we can offer an invitation to whoever wishes to be there.
Lord Stevenson of Balmacara
My Lords, me too. I would like to come to that. It would be fascinating. I am sure the noble Lord, Lord Foulkes would be present in spirit even if his considerable bulk was not present in fact at the occasion. We will bear in mind his useful and helpful interjections during the debate on these two amendments.
Lord Stevenson of Balmacara
I thank the noble Baronesses, Lady Brinton and Lady Sharp, for their amendment, which has won the day. The speech of the noble Baroness, Lady Brinton, was indeed very eloquent, as has already been said. One point which I would like to finesse back to the Minister was that in considering the question of the timing for which loans should be available for part-time equivalent to full-time study for degrees, she also made the point—which I tried to make, but did not make it so well—that institutions have a long and distinguished history of setting good levels of fees for part-time courses. It is not clear at all to me why the Government feel they need to regulate.
The documentation I have seen suggests that there is a fear that if the new loan system comes in, institutions cannot be trusted to restrict the level of fee, when it comes down to it. Again, that might be worth waiting for, to see, and to have the power to intervene if necessary. As the Minister said, there may be a number of institutions who, for good and persuasive reasons, decide to cap fees much lower down the scale, in which case the figure of 75 per cent of £9,000 is otiose, and we should bear that in mind as we go forward.
I also thank the other speakers in this debate, because although mine was a probing amendment, I did want to raise the points that have been raised. I think they were picked up. I am delighted that the Minister has reassured the Committee about the equivalence of interest payments between full-time and part-time students; that is important. I am delighted that she is going to take back the arguments we made today, and I hope that at Report or earlier, we will be able to have some good news. On that basis I would like to withdraw my amendment.
Lord Stevenson of Balmacara
Which is the point I was about to make. The sheer serendipity of being able to do this does not make it right. Earlier points on other amendments, which were about the need of the whole country to work out how we pay for higher education, and to make sure that those who benefit from it also contribute back, do not get caught by this amendment. However, it may be worth further discussion, and I look forward to hearing what the Minister says.
On Amendment 147A, as has already been said, this is presumably the first of a number of points to be discussed as we get more to the market that the students will be dominating in future places, because in order to do that they will need this sort of information. I agree with the noble Lord, Lord Sutherland, that this is a tad more difficult and complex than any standard university secretary would be able to respond to. However, it gets the right message across, which is that there is not very much information available for students to judge what sort of university they are going to. The courses are beyond their experience by their very definition, but as for the way in which they are taught and the amount of student contact, there is already enough circulating to make this an interesting area, which we will track with interest.
There has been a report in the papers today that comments from students that have been surveyed about what they thought about university courses in relation to fee levels of £9,000 were distinctly unflattering. If that is the way this is going, then this sort of amendment may well be something we need to discuss later.
Baroness Verma
My Lords, the recently published Higher Education White Paper places students at the very heart of the higher education system. Our goal is a system that offers students better information and opportunity, is more responsive to student choice and helps to improve social mobility. We will ensure funding follows the student, is progressive and fair, and better responds to their situation and choices.
The amendment of my noble friend, Amendment 146, seeks to allow home and EU students to opt out of their eligibility for student support. First, let me make it clear that there is no requirement for students who have already been offered a place in higher education to draw down their entitlement to student support. At the moment, we have to control student numbers overall because we must control the costs to the public purse.
This amendment would mean that students who could afford to pay up front the full cost of their courses would then be at an advantage because they could pay. In effect, it has bypassed our student number controls. On the face of it this may appear attractive, but there would be a strong perception that wealthier students or their families would be able to buy a university place.
The Prime Minister has made the Government’s position absolutely clear on this. University access is about the ability to learn and not the ability to pay. There is no question of people being able to buy their way into university, however attractive that proposal looks. The Government are interested in expanding employer or charity sponsored places outside the quota system and are committed to freeing up the controls on student numbers in general.
In the Higher Education White Paper, we have committed to increasing such opportunities, provided that they do not create a cost liability for Government and that they meet three key principles: there should be fair access for all students applying, regardless of their ability to pay; the places must be genuinely additional; and there must be no reduction in academic standards in recruitment. The Higher Education Funding Council for England is looking at options to incentivise more sponsorship and will include this in its consultation this winter. This is a sensitive issue and we will consider carefully the outcomes of both these consultations before introducing further changes to the system.
On Amendment 147, I absolutely agree with my noble friend Lord Lucas that students need accessible, accurate and reliable information that clearly shows what they expect from their courses, helping them to make informed choices. We are doing a great deal of work in this area. It is our intention that by September 2012 all higher education institutions will publish key information sets for each course on their website. These sets will provide the information that students request the most, together with information about course charges.
The White Paper encourages good practice in institutions to allow students to become more discerning in understanding how their tuition charge is spent. It recommends that institutions provide the sort of material that local councils offer their residents to demonstrate where council tax is being spent. We have therefore asked the Higher Education Public Information Steering Group to consider whether this sort of data should form part of the future wider set of information we ask institutions to provide for prospective students.
I hope that I have reassured noble Lords, but before I conclude I would like to respond to the question of the noble Lord, Lord Sutherland. He mentioned that students taking their second first degrees would be outside the student number controls and would be able to pay for their courses. He is correct, but the Government, like the previous one, is regulating students’ first degrees. I hope that answers the noble Lord.