Tuition Fees

Debate between Andrew Percy and Lord Johnson of Marylebone

Wednesday 19th July 2017 Commons Chamber

[Joseph Johnson]

The hon. Gentleman makes an important point, and I acknowledge the fall, but he needs to understand that there are complex reasons for it, including the rapid increase in the proportion of people entering higher education at the young age of 18. This means that there is a smaller stock of students seeking to participate in part-time and mature study later in life. We also have one of the most buoyant labour markets of any economy anywhere in the world, which increases the opportunity cost of study for people later on in life, at a time when they would otherwise be earning significant sums of money. But we recognise that there is a fall, and we are taking significant steps to address some of the financial barriers that mature students face. That is why from the next academic year we are introducing a part-time maintenance grant on the same basis as the current full-time equivalent grant.

[Andrew Percy]

On the point about disadvantage, before young people get to university they have to go through the FE system. Will the Minister therefore congratulate North Lincolnshire’s Conservative council, which has confirmed this week that its post-16 student bus passes will again be set at £30 for the coming year, down from £200 a year under Labour? Does this not demonstrate once again that, when it comes to students, Labour says one thing when in opposition and does something very different when in power?

[Joseph Johnson]

My hon. Friend makes some superb points, and he is a tireless champion of his constituents.

On the repayment of loans, our repayment system offers a fair deal to students. The current student loan system is deliberately subsidised by the taxpayer and is universally accessible to all eligible students, regardless of their personal financial circumstances or credit history. Our repayment system is based on income, not on the amount borrowed. Graduates with post-2012 loans pay back only when they are earning more than £21,000, and then only 9% of earnings above that threshold. After 30 years, all outstanding debts will be written off altogether with no detriment to the borrower, and the Student Loans Company has no recourse to their other assets. The maximum fee cap is being maintained in line with inflation in 2017-18, so it will not be increasing in real terms for anyone going to university. We believe that it is right for those who benefit most from the higher education they receive to contribute to the cost of it. We should not forget that higher education leads to an average net lifetime earnings premium that is comfortably over £100,000.

Labour continues to scaremonger about the changes to higher education. The Conservative-led coalition and this Government have introduced important reforms. The Opposition have promised to write off student debts, to cut tuition fees and to restore maintenance grants. However, they have failed to set out a credible plan on how to fund their promises, and are now shamelessly abandoning them just weeks after the general election. That is hardly surprising, given that they had not even managed to persuade key figures in the Labour party who served in their previous Government. For example, Lord Mandelson described their policy offer as “not credible” and urged Labour to

“be honest about the cost of providing higher education”.

Of course, it is not just Lord Mandelson who has commented on this. The former shadow Chancellor, Ed Balls, said that his party’s failure to identify a sustainable funding mechanism was a “blot on Labour’s copybook”.

I therefore challenge the Opposition to explain how they would fund their alternative proposals on tuition fees, maintenance grants and the write-off of student debt. We estimate the annual cost of their policy on tuition fees to be £12 billion a year over the next five years of this Parliament. In addition, a one-off expenditure would be required to make good the promise of writing off historical student debt to the tune of £89.3 billion in cash costs. If Labour wanted to go the whole hog, a further £14 billion would be required to compensate graduates for historical borrowing that they had already repaid.

Make no mistake, Labour’s policy of abolishing fees would be a calamity. It would be ruinous for our world-class university sector, leading almost certainly to a fall in per-student funding of the same magnitude we saw in the decades before the introduction of top-up fees—a fall of around 40% in terms of the unit of resource. It would lead to the inevitable re-imposition of student number controls, which would cause the poorest and most disadvantaged to miss out on university, throwing social mobility into reverse. It would do all this at an eye-watering cost to the hard-working general taxpayer, whether he or she had been to university or not. Gone would be the concept of a fair sharing of the costs of university between graduates with higher-than-average lifetime earnings and society at large; taxpayers would foot the entire bill. That would be bad for universities, bad for students and bad for the taxpayer. It is no surprise that in the one place where Labour is in power, it has chosen a different approach. Last week, the Labour Government in Wales quietly increased their tuition fees for 2018-19 to £9,295 a year, making them marginally higher than the current rates in England. Labour in Wales at least knows that the party opposite’s plans are unfair to students and ruinous to universities. Perhaps it should tell the Labour party leader.