European Union (Withdrawal Agreement) Bill
Debate between Gary Streeter and Daniel ZeichnerFriday 20th December 2019
(5 years ago)
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Daniel Zeichner (Cambridge) (Lab)
Sadly, we live in a very divided country. I have listened in vain to those on the Government Benches to hear whether they have any understanding of the 16 million people who voted to remain in the European Union—in my city last week, people voted 44,000 to 9,000 to remain. I have no sense that the Government understand those people, and that is a very dangerous situation, because people are proud to be citizens of the European Union. We do not welcome the erosion of the rights that we currently enjoy, so when there is celebration in a few weeks’ time by some, there will be real grief and anger from others. They will have a good reason to be angry, because in the previous Parliament there was a real prospect of securing a confirmatory referendum. The Prime Minister knew that, which is why he was so desperate to get to his election. He was on the ropes, but to everyone’s astonishment the Liberal Democrats came to the rescue—of course, they are not here. They took a huge gamble with the future of this country, and of course it failed and they have paid a heavy price, but sadly, so, too, has the whole country. What I will say is that their role in this will not be forgotten. [Interruption.] No, I did not vote for the election; I voted against it, which actually got the biggest cheer in the hustings in Cambridge—no elections in December ever again, please.
I am an optimist and I say to remainers: there is hope. We have seen that the Prime Minister, despite the bluster, folds under pressure. He folded when the Irish issue looked to be derailing his progress and, as my right hon. Friend the Member for Leeds Central (Hilary Benn) explained so well, he buckled and did what he and the previous Prime Minister said they would never do: create a border down the Irish sea. Less commented on is how he buckled under pressure from Farage when he threatened to put up candidates in every seat. That was when no deal was brought back: by that promise to not allow an extra extension of the transition period. We know it is all a stunt and negotiating ploy, but it shows that pressure works, so I say: keep the pressure on the Prime Minister.
A so-called skinny trade deal might keep goods flowing, and that is important, but so are the flows of people and research collaboration, and however hard we try, we will no longer be a voice in the room in those important negotiations. Instead, we will have an army of people in Brussels trying to persuade others to make the argument on our behalf—a delicious irony that we will come to see. We will have to follow rules over which we have no influence in making. That is the future. People will come to say, “Wouldn’t it be better if had some influence and a say?” That debate will come, but in the meantime we will have to live with what is a Brexit fiction, because in reality there is no Brexit. We always have to have a relationship with our neighbours. The question is how we manage and negotiate that: do we have endless negotiations and arguments, or do we live within a civilised set of institutions and rules that make it so much better?
Funding Higher Education
Debate between Gary Streeter and Daniel Zeichner(6 years, 9 months ago)
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Mr Streeter
It would be a little bit late, but I thank the hon. Gentleman for the thought.
Repayment of loans is a shared responsibility between the Student Loans Company and Her Majesty’s Revenue and Customs. The Student Loans Company receives all its funding from the UK Government and the devolved Administrations. Therefore, the system is based on the student owing however much money he or she needed to borrow to get through university and gradually paying it back during their working lifetime. Perhaps not surprisingly, 93% of all students in England take up student loans.
The total amount of debt that an average student who completes a three-year undergraduate course will owe has now risen to around £50,000, according to the Institute for Fiscal Studies. That sum will include just under £6,000 in interest accrued during the period of study, at a rate of up to 6.1%. A student who has taken out a loan will begin repaying 9% of their income when they are earning higher than the repayment threshold, and any unpaid debts are written off after 30 years. Broadly, that is the system.
The Government announced in October 2017 that the repayment threshold on student debts would be raised from £21,000 to £25,000, commencing from April 2018. At the same time, the fee cap was frozen at £9,250.
Daniel Zeichner (Cambridge) (Lab)
I commend the hon. Gentleman for making a very good speech. He has just outlined the way that the system is currently working, but does he agree that what is happening now is not what people anticipated when the coalition Government introduced it? They anticipated that there would be differential fees—different amounts paid at different universities—but because the system has not worked, a whole generation has been left with enormous debts. The system is absolutely broken, and the levels of interest are unacceptable. We really have to change it quite dramatically. Does he agree?
Mr Streeter
I do agree. I am looking for change and I think the Government are looking for change, which I guess is why the review is taking place. When the level of fees was increased, we were led to believe that different universities would charge different fees. Some of us who have been around for quite a long time recognised that that might not happen, and indeed all universities went for the maximum more or less straight away. However, the reason why we are here today and why the Government are reviewing this matter is that the system is not working as planned, and we now need to see some real change. That is very much what I am calling for.
Under our current system, students in the United Kingdom are landed with the greatest amounts of student debt in the developed world—greater even than the notoriously large student debts in the United States of America, which reach an average of $36,000 on graduation. The Institute for Fiscal Studies has recently reported that 77% of UK graduates will never pay off their full debt, even if they are still repaying in their fifties, and that is projected to rise to 83% once the new figures have been introduced. This is an important point: we have a system that is almost set up to fail. Built into the system is an understanding that most of the people who participate will not repay. I do not want that system in place for the long term. When graduates immediately move abroad, that results in more unpaid debts. When a graduate’s employer is not UK-based, they are not subject to the automatic repayment system as they would be in the United Kingdom. In 2014, it was estimated that, by 2042, £90 billion of student support funded by the Treasury will remain unpaid.
It is certainly right for students to contribute to the cost of obtaining a degree. The stats still demonstrate that, over a lifetime, a graduate is likely to earn significantly more than a non-graduate. According to Universities UK:
“Official figures are clear that, on average, university graduates continue to earn substantially more than non-graduates and are more likely to be in employment.”
In debates with sixth-formers and others, I guess many of us have argued, “Why should a proverbial taxi driver who does not have a degree pay extra tax to help others improve their income?” There are pushbacks and answers to that, but it is still a compelling and important point. We must remember that the figures involved are significant, with each new crop of student loans being £13 billion a year. That is a substantial sum that we are having to find to support students going to university.
The principle of students contributing to their own higher education is surely right, but it must be sustainable. I am beginning to see that it is not sustainable for someone to have a debt of up to £50,000 around their neck when they enter the workplace.
Mr Streeter
I agree. When the panel reports its findings, I hope the Government take action to help us put in place a system that is both fair and sustainable. We have a world-class university system in this country that we must not in any way seek to undermine. It is hugely important that, as young people increasingly compete with people from other countries, we keep our highest university standards.
Daniel Zeichner
It is important to recognise that there is a dispute going on in higher education at the moment and that staff have been out on cold picket lines. Whatever one’s view of that dispute, it is partly about how resources are allocated and ensuring we have a sustainable system. Does the hon. Gentleman agree that we need an urgent resolution to the dispute? If we are to support academics in future, they must have a pension scheme in which they can have confidence.
Mr Streeter
I must confess I do not know the details of the current dispute. I am not a huge supporter of strikes, but I agree that it would be better to have the dispute resolved as quickly as possible. All people are entitled and should aspire to a proper and decent pension settlement.
Moving on to my three points, you will be pleased to hear that the first two are very brief, Mr Hosie. I have some ideas for the Government to grapple with, although I am sure they have thought about these things in advance. One possibility to soften the blow for students could be to make the monthly repayments tax deductible, which would basically reduce the true impact of the repayments and seems both reasonable and fair. Secondly, the current interest rate of 6.1% seems almost punitive when we have interest rates so much lower. I do not think that that was ever the intention when we started off on this journey. We should consider reducing the interest rates to the amount that Her Majesty’s Revenue and Customs pays us when it has our money for any length of time. The interest calculation for overpaid tax is a lot less than 6%. If it is fair for that purpose, it would be fair for students. Again, it would encourage people to embrace the student loan system if the rate of interest was significantly lower.
Thirdly, and in a little more detail, for the first time in my life I wonder whether it is time to consider a graduate contribution system in place of the current tuition fees and student loans: in other words, what some people would call a graduate tax. We have all been involved in debates over the years in which we have said that that is an absolutely disastrous idea but, for the reasons that I am about to give, I think it should be reconsidered.
A graduate contribution tax is essentially a system sub in which the student becomes obligated to an income-related additional tax on graduating in return for Government subsidisation of higher education, resulting in low or no tuition fees to the student. The Government would in effect pay all or most of the fees directly to the university, and the student would pay a contribution over and above ordinary levels of tax for a limited period of time once they start work. That removes the burden of individual borrower accounts or balances owed. The exact percentage of earnings that graduates would be required to pay back would be up for discussion, but one option is to have a banded system in which the percentage paid back is determined by income and increases across income bands. What is the point? Two things. First, a system based on the ability to pay rather than the amount of money the student has borrowed to get through university is more reasonable and fair than the current system.