Education (Student Support) (Amendment) Regulations 2015

Baroness Sharp of Guildford Excerpts

Monday 25th January 2016 Lords Chamber

[Lord O’Shaughnessy (Con)]

My Lords, I wish to speak in support of the Government’s higher education policy and against the content of the Motion—and, in particular, the contention that these changes will result in a,

“significant decrease in participation in higher education by those in low-income groups, older students, female students, and students from ethnic minorities”.

We have been here before. The doom-mongers have been making these claims about the changes to the higher education system for about 20 years. This is not a party-political point; those doom-mongers were in the Conservative Party in the late 1990s, they were in the Liberal Democrat Party in the early part of the 2000s, and now they are in the Labour Party. At each point they have been proved wrong. I had a small responsibility for working on the policy that brought about the current system, working with my noble friend Lord Willetts.

It is worth remembering what the purposes of these reforms are. The first is to share more fairly the burden of cost between the taxpayer and those who go to university and benefit hugely over their lifetime in terms of income. Therefore, it is only right that they should share some of the cost. It is also designed to set higher education institutions free. Finally, specifically, it is designed to get more disadvantaged students into higher education. It was on that basis that the Liberal Democrats went through an incredible amount of political pain to support the reforms of the coalition Government; it is exactly the same reason why the Labour Government introduced the reforms that they did in the late 1990s and early 2000s, introducing whatever you want to call it—an income-contingent tax liability, or a loan system. What it amounts to is a time-limited graduate tax, which is, I think, all the rage at the moment on the other Benches.

It is important to remember the remarkable benefits that these changes have brought about. We have a record number of students—a 3.1% increase in the number of people entering UK higher education in 2015—and more students from disadvantaged backgrounds. The proportion of English students from disadvantaged backgrounds is up from 13.6% in 2009 to 18.5% in 2015. Part-time students studying for their first degree also get student loans now, and graduate contributions have become more affordable. By sharing out the burden more broadly, graduates now have to earn £21,000 before they start to pay back.

It is also worth thinking that we have the opportunity to compare what would happen if we went back to the old system, because it is running in Scotland. In Scotland there are no fees, yet the poorest fifth of Scots are three and a half times less likely to go to university than the best-off, and that figure is two and a half times in England—it has improved. There is also less financial support available in Scotland, precisely because the taxpayer has to share the entire burden. So the opportunity for the poorest young people has increased, and would be restricted by plans to scrap fees. Specifically, these reforms have had a benefit for disadvantaged pupils. The maintenance loan has risen, as my noble friend Lady Shephard said; there is much more support than was there before. Also, under the access agreements that universities now have, they are planning to spend £719 million in 2015-16, up from £407 million in 2011-12. So, overall, the amount of support for disadvantaged students and the number of students who are studying is increasing.

The final point to bear in mind here, which is critical, is that, as a result of sharing the burden more broadly, we have more students going to university, which is an ambition shared by everybody, throughout the House. An estimated 60,000 more young people are going to university every year because of these reforms. It is important to see these reforms in the round; if you do so, it is difficult to argue that they have done anything other than increase participation and, in particular, increase participation for disadvantaged young people.

[Baroness Sharp of Guildford (LD)]

I join others in thanking the noble Lord, Lord Stevenson, for bringing this Motion of Regret before the House—and I join others in supporting it. I do so because it is very clear from the analysis by the Institute for Fiscal Studies and others that this move will impact more heavily on students from poorer families who, up till now, have received substantial maintenance grants to help offset the considerable debts that they incur from the cumulative effect of tuition fees over three years. As my noble friend Lady Garden said, that amounts to something like £43,000 at the moment. The result of this would be to raise that debt by some £17,000, up towards £60,000.

The numbers involved in this are not trivial. In 2014-15, 42% of students in this country got a full grant, while 14% got partial grants. More than 50% of students currently benefit from the maintenance grant in one form or another; that is approximately 500,000 students—very considerable numbers. As BIS’s own impact assessment makes clear, and as others have mentioned, it will disproportionately affect those such as black and ethnic minority students and women.

[Lord Winston (Lab)]

I am grateful to the noble Baroness for giving way. Could she clarify a point that is puzzling us on these Benches? It has been stated that students undertaking part-time studies can get their grant in full; that is the impression that has been given. Is that correct? I know that she has spent a lot of time discussing part-time students and their remuneration.

[Baroness Sharp of Guildford]

The answer, I believe, is that until now part-time students have had no maintenance grants. One of the beneficial effects of this—I was going to mention it later—is that it has enabled the Government to extend maintenance grants to part-time students. That is one group of people who will be better off. But it is noticeable that among the students who will be affected are, as the noble Baroness, Lady Kennedy, said, mature students—those who come to university late. They have shown already, by the way they have reacted to the introduction of high tuition fees, that they are much more risk-averse than younger students.

Perhaps I should declare an interest as a member of the all-party Higher Education Commission, which a couple of years ago published a study of the financing of higher education. The evidence that we took included a short survey of quite a number of students and their reactions to this. An interesting fact that emerged from the survey was that the 18 year-olds knew very little about the financial effects of the debts they were taking on. As far as they were concerned, it was all a long way in the future. They felt, as I remember I felt when I was 21 and people were talking to me about pensions, something along the lines of, “I couldn’t care less”. Later on one realises how important these things are.

It became clear that older students, on the other hand, are worried about taking on further debt. Many of them already have mortgages and children, and are trying to manage their costs. They are much more worried about taking on debt than younger people are. That was one reason why, among mature students, who are disproportionately also part-time students, there has been an enormous drop in numbers. There has been a 45% drop in the number of part-time students since the introduction of tuition fees.

I feel strongly about all these issues. I accept that under the present repayment terms the actual amount repaid will remain at 9% on all income over £21,000 each year. The only difference is that those from lower-income households will have bigger debts, which for many of them will remain for 30 years. The Institute for Fiscal Studies reckoned that under the old system, before the introduction of these new measures, 73% of student loans would never be fully repaid. The measures before us will mean that more students from lower-paid households—these are the students who tend to go into lower-paid jobs—will have bigger debts, and that proportion can only increase.

As the noble Lord, Lord Stevenson, pointed out, there is a certain amount of creative accounting which enables the Government to take some £2 billion off the books today, with the idea that it will be picked up 30 years hence, in never-never land. There are only two good things about this. First, it has enabled the Government not to cut the adult education budget in money terms. I was very pleased about that. Secondly, it has enabled them to put some funding into maintenance grants for part-time students.

But I am particularly sorry to see this measure involving maintenance loans, because the previous system, along with the national student scholarship scheme and all the fair access measures taken in 2012, was part of the compact between the coalition partners on the introduction of full-cost tuition fees. My former leader in the other place, the right honourable Nick Clegg, went to considerable trouble to ensure that the introduction of fees would not impact more toughly on students from lower-income backgrounds. This measure seems to me to be yet another cynical unwinding of the coalition agreements. What were very carefully balanced measures to promote equity are now being cast aside with remarkably little thought.

[Lord Berkeley of Knighton (CB)]

My Lords, may I make a point, not as an expert on the figures—we have heard from them in various parts of the House—but to suggest that the Government might be walking into a false economy here? I say this as someone who, as a broadcaster, has talked to artists, musicians, novelists and other people who have made the creative economy glow—a glow in which the Government frequently feel able to bask. Many of those people who came from very impoverished backgrounds feel that they owe their success, their chance in life, to the support they got at a moment when they needed a maintenance grant.

I will not bore your Lordships with lots of names, but I could reel off pop stars, painters, novelists—you name it—who, had it not been for this support, might not have been able to make the contribution to our creative economy that they have. We should tread very carefully in cutting off funds to that section of our community.