Student Loans Agreement

Angela Rayner Excerpts

Monday 18th July 2016 Westminster Hall

[Angela Rayner (Ashton-under-Lyne) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Pritchard. I welcome the Minister to his place. This is the first time I have debated with him. I thank my hon. Friend the Member for Warrington North (Helen Jones) for securing this debate. She is absolutely right to say that students have once again been let down by this Government.

This has been an excellent discussion. I want to reiterate the points made by my hon. Friends the Members for Sheffield Central (Paul Blomfield) and for Ilford North (Wes Streeting), who outlined the issue of trust. They demonstrated how unfair this retrospective change is and spoke about its long-term impact on trust in the Government. Before the general election, my hon. Friend the Member for Sheffield Central asked about this specific issue. Despite there being no indication before the votes were cast in the general election, no indication in the House and no indication in the Conservative party manifesto, the change has happened. That is outrageous, as he pointed out. I agree with him that a retrospective change will destroy any faith that students have in the political system. I urge the Minister to think about that carefully.

My hon. Friend the Member for Cambridge (Daniel Zeichner) asked the Prime Minister a question, and demanded an apology, and not just a bill, on behalf of many thousands of his constituents. Unfortunately, the cost of this disastrous Government has fallen upon our students and the next generation.

The issue of trust goes to the heart of the debate. As my hon. Friends have exposed, time and again the Government have offered grand rhetoric on improving access to higher education and social mobility, but time and again they have failed to deliver. Indeed, they have made matters worse, especially if we take into account the Higher Education and Research Bill, which is having its Second Reading tomorrow, and its potential to increase tuition fees.

I associate myself with the words of the hon. Member for Southport (John Pugh). I commend him for his commitment to education, both inside the House in his work as a Member of Parliament and before coming to this place as a teacher and school leader. He clearly demonstrates a huge amount of knowledge and has great respect in the field.

Every time the Government legislate on higher education, we know that it will mean cuts to the services that mature students and those from low-income backgrounds need and an increased debt burden on our students and that it will make it more difficult for those from low-income backgrounds to attend the top universities. That takes place in the context of spending on adult skills falling in real terms by 41% in the previous Parliament, and funding for post-16 education falling by nearly 16%, the deepest cuts that post-16 education has ever seen.

As my hon. Friend the Member for Heywood and Middleton (Liz McInnes) pointed out, in higher education, the Government, not content with tripling tuition fees, scrapped maintenance grants for the poorest students, meaning that they will graduate with more and more debt. That change, justified as a means to cut the national debt, will fail even the test that the Government have set themselves—the Institute for Fiscal Studies has shown that, for each cohort of graduates, the measure will save the Government only 3% of their contribution to students’ higher education.

Who will pay the price for the Government’s penny pinching from the HE budget? As my hon. Friend said, it will be those students who come from poor backgrounds who go on to earn high salaries. Having needed maintenance loans to get through university, they will face a far higher debt burden than their well-off peers, and will spend more and longer paying off the debt that the Government have lumbered them with. She is right to say that the changes are unacceptable, unjust and underhanded, and that the Conservatives have maxed out the nation’s credit card and it is our children who will be footing the bill.

That is the substance of the issue before us today: the Government’s decision to freeze the repayment threshold on student loans. The decision announced in last year’s autumn statement to freeze the threshold retrospectively is only the latest in a long line of attacks on access to education and social mobility. My hon. Friend the Member for Blackpool South (Mr Marsden) was right when he said that the change amounts to “mis-selling” of loans to students since 2012. He was right to say that it

“will be a disincentive to future loan applicants, in further education as well as higher education”.

Students will now feel that they are writing a blank cheque to the Government, whom they have no reason at all to trust. Will the Minister at least have the decency to tell us why any student should ever trust his Government again? I cannot put it any better than my hon. Friend the Member for Nottingham South (Lilian Greenwood), who described the change as dangerous, unfair and outrageous.

The Government, when they trebled the cost of tuition for students, said that students had at least been given a more generous income allowance before having to start paying back their loans. However, even that small consolation will now cease to be true. The IFS has shown that, after five years of the freeze, the repayment threshold will, in real terms, be the same as it was before fees were trebled. The Government promised investment and gave nothing but more debt. Again, it will be middle earners and those from disadvantaged backgrounds who will suffer the most.

The IFS has shown that the average student, as many Members have pointed out, will lose £6,000 as a result of the change. That is outrageous and indefensible. Hard-working students and socially mobile graduates from low-income backgrounds, the very people we should be giving every encouragement and opportunity to pursue higher education, are the very people the Government seem most determined to put off.

The Government’s own consultation said that women, black and minority ethnic students, those with disabilities, and mature students will be disproportionately affected by the change. As my hon. Friend the Member for Walsall South (Valerie Vaz) outlined today and in her Adjournment debate last month, many groups who have historically not had access to higher education are set to face a £6,000 disincentive. When the Government talk about widening access to education, they must tell us who exactly they are trying to help.

As my hon. Friend the Member for Warrington North pointed out, no private company would get away with retrospectively changing the terms of a deal, as the Government have done. Perhaps the Minister can at least tell us their justification for doing so. Given that it will be several years before the Exchequer makes any substantial gains from the policy, can the Minister tell us how much money it will be likely to save in future? That is based on the fact that, for the first several years under the changed scheme, there will be little difference between £21,000 as it was in 2012 and what it was in real terms.

Why are the Government pursuing a policy that will heavily penalise those who come from disadvantaged backgrounds, go to university and then become high earners? Given that the Government’s own consultation document has shown that it will be women, BME students and those with disabilities who will lose the most as a result of the policy, why have the Government still failed to publish an equality impact assessment? When can we expect them to do so?

The overall changes to how higher education is financed are basically worse for those who are from low-income backgrounds, because they need the maintenance loans alongside the tuition loans. Increasing their debt burden means that they will spend more and longer paying off their loans. Those from affluent backgrounds, who do not take out the maintenance and tuition loans, will not have that issue. Why, at a time when those from disadvantaged backgrounds are attending top universities in smaller and smaller numbers, are the Government pursuing a policy that will do little more than create a worrying disincentive for those from disadvantaged backgrounds who want to pursue higher education? The changes to the fee repayment threshold will act as a disincentive to many, as will the increase in the student debt burden, especially when taken alongside the change from maintenance grants to loans.

Was the reason the Government did not announce the policy in the spending review that they knew at the time that it would be universally condemned? I agree with the Minister’s recent comments that there has been a “worrying lack of progress” on widening participation in higher education. I share his conviction to “redouble our efforts” to boost social mobility. So can he please explain how breaking the trust of students and increasing their debt burden will achieve those laudable goals? It is clear from the debate today that the measure will have the opposite effect. Given the new Prime Minister’s words last week—about equality and bridging the gap—will the Minister reconsider that position today?

[Mark Pritchard (in the Chair)]

Before I call the Minister, as colleagues will know, changes made in this Parliament to the Standing Orders allow the mover of a motion to speak for two or three minutes after the Minister has sat down. Helen Jones, would you like to do that?

--- Later in debate ---

[Joseph Johnson]

Certainly. We, too, are committed to increasing the proportion of students from disadvantaged backgrounds who go to university. As I said a moment or two ago, we in fact intend to double that proportion by the end of this Parliament compared with the level that we inherited from the previous Labour Government in 2009-10, taking the proportion from 13.6% to 27.2%. We also want the number of students from BME backgrounds who go to university to increase significantly, by 20%.

[Angela Rayner]

I stress the point made by my hon. Friend the Member for Warrington North (Helen Jones). The fact is that we still are not making progress with the Russell Group and ancient universities. Can the Minister be more specific about what the Government will do to try to make progress in those vital areas?

[Joseph Johnson]

Yes. As I said, we have written to Les Ebdon to give him guidance for his dealings with all universities. That guidance gives him strong political cover to ensure that all institutions do the heavy lifting that he requires of them as he negotiates access agreements. Through the Higher Education and Research Bill, which hon. Members have mentioned, we will strengthen his powers further, so he can start to look beyond the point of access to universities and at the whole student lifecycle. Widening participation is about much more than simply whether disadvantaged people get to university; it is also about how well they attain when they are there and how successfully they move on from higher education into employment or further study.

--- Later in debate ---

[Joseph Johnson]

Modelling the RAB charge is not an easy process, but the figures that the hon. Gentleman referred to earlier were simply not correct. We never modelled the RAB charge at over 50%. We expect about 20% to 25% of the loan book not to be repaid, and that is a deliberate, conscious investment by the Government in the skills base of the country. It is a progressive policy that enables people to go into careers that may not necessarily allow them to repay the full amount, and the Government do that knowingly and willingly.

[Angela Rayner]

Will the Minister not acknowledge some responsibility of the Government for the lower than expected average earnings projection he has just outlined, in terms of decent jobs and high wages?

[Joseph Johnson]

I reject the characterisation of our labour market as a failure. Clearly, when we look at the unemployment figures today, we cannot but be struck by the extent to which we have succeeded in getting many thousands more young people into work. The latest unemployment data from the ONS show 23.1 million people working full time, which is 300,000 more than even a year ago, let alone than in 2010. The percentage of young people out of work is now at a record low altogether.