Higher Education and Student Finance

Duncan Hames Excerpts

Tuesday 12th October 2010 Commons Chamber

[Vince Cable]

Markets are not being allowed to rip—if they were, I would not have mentioned a £7,000 level; we would have simply lifted all restrictions, and there would be no question, as Browne suggested in his report, of extensive conditionality. If the hon. Gentleman is worried about that problem, why did he participate in a Labour Government who introduced variability in fees?

[Duncan Hames (Chippenham) (LD)]

Given the Government’s determination to link graduate contributions with ability to pay, will my right hon. Friend ensure that those with the greatest ability to pay, who can afford to make payments early and therefore choose to avoid progressive interest rates, will still be required to make the greatest contribution?

[Vince Cable]

Yes. One of the scandals under the existing system is that affluent people can take advantage of loans at subsidised rates and invest the money. That has happened on a substantial scale, but it will no longer be attractive to people on very high incomes.

I urge Labour Members to have a careful look at the income analysis in the report. The explanation of how the interest rate relates to work is technical and complicated, but even with a system of early repayment—I am sorry to go into economics jargon—the net present value of high earners’ contributions will remain higher than for any other income group.