Further Education Loans

John Healey Excerpts

Tuesday 17th July 2012 Westminster Hall

[Tristram Hunt (Stoke-on-Trent Central) (Lab)]

It is a great pleasure to serve under your chairmanship, Dr McCrea. I think that we last met in the Joint Committee on the draft House of Lords Reform Bill—what a spectacular use of all our time that was. I hope to finish a little early to allow some of my colleagues to say a few words—in particular, the shadow Minister, my hon. Friend the Member for Blackpool South (Mr Marsden).

It is a great pleasure to have secured this debate on the last day of term—an important debate that, frankly, following the Minister’s announcements last week should have been held on the Floor of the House. However, as with the Government’s higher education policy, on which we wait in vain for a White Paper and proper scrutiny, the Government have a terrible fear of discussing their skills and education strategy—such as it is.

It is also a great pleasure to have in the debate the Minister for Further Education, Skills and Lifelong Learning, who graciously visited Stoke-on-Trent a fortnight ago to see the excellent work done by Sara Robinson and her team at Stoke-on-Trent college. For a city such as Stoke-on-Trent, the debate is vital. As a report from the Centre for Cities think-tank revealed only last week,

“Skills are the biggest determinant of success for cities, and are critical to the life chances of individuals.”

We are a city with some of the finest craftsman and most skilled workers in the land, who produce objects of inestimable beauty, but we also need to up our educational and skills attainment levels and we expect Government partnership to help us to do so.

Thus far, sadly, we have not had the kind of support that we would like: the scrapping of education maintenance allowances was not helpful, while the botched introduction of higher education tuition fees has seen steep falls in applications to the surrounding universities of Keele, Staffordshire and Manchester Metropolitan. My fear is that some of the strategic thinking that was at work on higher education policy has also been at work in further education—not only the same model of lending, but the same insouciance about detail and accountability.

There are some crucial differences between the higher education sector and the further education sector. A system of loans is an entirely new approach to FE provision and the so-called deterrent factor seems more complex. The argument that up-front course fees can act as a deterrent to learning has some merit. The impact of debt is less clear. I was concerned about the piling up of debt by students moving from level 3 qualifications to higher education and facing a double whammy.

I therefore wholeheartedly welcome the Minister’s concession in last Thursday’s statement that the Student Loans Company will now wipe the outstanding loan for access course students who go on to complete a higher education course. Perhaps the Minister could explain, however, why that offer does not apply to other level 3 qualifications, such as A-levels, BTECs or advanced apprenticeships. The Minister must surely be concerned by his Department’s impact assessment, which suggests that up to 150,000 students might drop out of adult learning altogether.

Clearly, we need a larger evidence base and greater scrutiny of the proposals. Some 375,000 adult learners stand to be affected by the changes, of which a disproportionate number are women—often carers. At Stoke-on-Trent college in my constituency, 1,080 of the 1,780 affected students are women. That is why the £50 million bursary for vulnerable students is a welcome addition, although I would be grateful if the Minister confirmed whether that money is being drawn from other learner support budgets. If so, could he tell us whether the negative impacts of removing the funds have been properly assessed?

[John Healey (Wentworth and Dearne) (Lab)]

I congratulate my hon. Friend on securing the debate. At Stoke-on-Trent, which is similar to Rotherham, he mentioned 1,800 students; in Rotherham and Barnsley, there are probably 3,000 students over 24 who could be hit by up to £4,000 a year extra, for the first time ever paying the full cost of their fees and having to take out student loans for further education. Does he agree that that will put people off and that it is perhaps the worst possible time to introduce student loans for further education, when people are worried about their jobs, their debt and how they are going to pay the bills?

[Tristram Hunt]

In Stoke-on-Trent and, I imagine, in my right hon. Friend’s constituency, we have seen a fall in the number of those who are seeking to go on to higher education in local universities as a result of the increase in tuition fees to £9,000. Will we see the self-same fall among those who are seeking to go on to further education? That is exactly the wrong strategy to pursue in such cities, which, above all, need to upgrade their skills.

I also welcome Government recognition that there is a capital issue in FE with the STEM subjects of science, technology, engineering and maths, although it is not clear how that will prevent the cost differential between those more expensive courses and the cheaper humanity courses in a sustainable way. Again, we need more details.

Another difference between the higher and further education sectors does not stack up well for the proposals—the relative homogeneity of higher education courses in terms of length, the academic calendar, qualifications offered and the application process, compared with courses in further education, which can often vary in length, begin at different points and have much less obvious timings. To be generous, the Student Loans Company does not have an outstanding record of delivery even when administering the far simpler world of higher education loans. In the Minister’s response, will he outline what steps he is taking to ensure that the Student Loans Company can cope with that added pressure? We will certainly see the consequences in our constituency surgeries if the change goes wrong.

My greatest concern with the proposals, however, surrounds their financing. It is my understanding that the Government have estimated that only 40% of all level 3 qualification loans will get fully repaid. As my right hon. Friend implied, under the current policy, the Skills Funding Agency funds 50% of the cost of further education courses. There is a powerful case for not decreasing state support for further education on social mobility grounds—perhaps even more so than for higher education—but the Government have been clear that deficit reduction is part of their motivation. If only 40% of the loans are repaid, how would that represent a better deal for the taxpayer?

--- Later in debate ---

[The Minister for Further Education, Skills and Lifelong Learning (Mr John Hayes)]

It is a pleasure to speak in this debate, and I congratulate the hon. Member for Stoke-on-Trent Central (Tristram Hunt) on securing it. He is right to say that it is timely and, to pick up on his first point, that we should have an opportunity to debate the issue at greater length. I have already made, and I will continue to make, overtures to create some space for such a debate when we return, not least because I am always happy to debate skills and further education. I do not say that those things are the Government’s only shining example of success—far from it—but they are certainly shining brightly. That is because we are determined to give FE colleges the freedoms and flexibilities that they need to become increasingly responsive to employer need and learner choice—my hon. Friend the Member for Wirral West (Esther McVey) referred to that.

Disraeli said that it is easier to be critical than to be correct. The hon. Member for Stoke-on-Trent Central was not terribly critical and was correct to welcome the measures that have been put in place, which I shall mention in a moment. First, however, let me set the scene. With the new freedoms that I have given the sector, it is essential that further education is able to offer as many people as possible the opportunity to gain learning as a means of improving their prospects through progressive learning or access to employment.

When we debated the comprehensive spending review, I and my colleagues in Department for Business, Innovation and Skills—in particular the Secretary of State—were determined that our priority should be those who are most disadvantaged, either by an absence of prior learning or by their circumstances, and those to whom we could make the most difference in terms of further education. That is not to underestimate the significance of lifelong learning or second and third chance education. Indeed, in the same CSR negotiations we cemented and safeguarded the adult and community learning budget that had been threatened and—I am reluctant to say this—sometimes disparaged by the Labour party when in government. That safeguarding surprised some who had not anticipated that we would be so protective, but I believe in adult and community learning not only as a means of re-engaging people but because it adds to the individual and collective well-being of our nation. As you know, Dr McCrea, I believe in the promotion of the common good and would not do anything to inhibit the interests of the people.

To that end, we made it clear that priority would continue to be placed on basic skills, younger learners and people below level 3. When introducing loans, we limited them to people over the age of 24 and those studying for a qualification at level 3 or above. That was a deliberate attempt—more than an attempt; a deliberate policy decision—to prioritise the least advantaged, because in my judgment, it is the duty of the fortunate to promote the interests of the less fortunate, no less in government than in our personal affairs.

In net terms, around 10% of FE learners will be affected by the new loans, and as I have said, they will be older learners and people studying at level 3 and above. Notwithstanding, however, that that is a small minority of the FE cohort, I received representations over time, we conducted an impact assessment, we surveyed the sector, and we engaged in discussions with the 157 Group, NIACE, the AOC and others—the hon. Member for Blackpool South (Mr Marsden) referred to them all. Those representations made it clear to us, and that analysis showed, that some kinds of learner might be, in the words of the right hon. Member for Wentworth and Dearne (John Healey), disproportionately affected by the prospect of loans. One has to be a little cautious, because similar evidence before the introduction of HE loans suggested a lower take-up than subsequently occurred. One therefore needs to qualify one’s doubts in those terms, but I do share the view that we needed to do more. Indeed, that was set out in the very good letter sent to me at the end of June by the hon. Member for Blackpool South, who has contributed for the Opposition. He identified four areas in which he believed that there was a particular issue and he put his case, as ever, very reasonably and fairly. Those four areas were essentially access to—

[John Healey]

Will the Minister give way?

[Mr Hayes]

Yes, I will happily give way.

[John Healey]

When I came into the Chamber, the Minister said, “Are you here to pay tribute to my work?” I have been known to do that and I suspect that his hand has been forced somewhat on this question of student loans. Before he moves off the impact assessment and the research, is he not worried that that research showed that only one in 10 current students would definitely do their course if they were faced with having student loans as he is proposing?

[Mr Hayes]

Actually, if one looks at the impact assessment closely, it suggests that after clear communication of the offer, we will expect full take-up of the funding for loans. A very significant majority of people, when the circumstances of the loans were explained to them, said that they would participate. Initially, some were very likely to do so and some were less certain, but the number saying that they would participate grew as these things were explained to them. By the way, full take-up of the loans would be 90% of 24-plus learners studying at level 3 and above. We are therefore talking about a very significant majority of 10% of the cohort. That is where we are in terms of the overall FE numbers.

It should be borne in mind that the impact assessment was carried out before I announced the mitigation package, to which the hon. Member for Blackpool South has referred. I was coming on to why we put that in place. A case was made about access to HE. It seems to me perfectly fair to argue that it would be unacceptable for someone to borrow to study an access course and then borrow again to study an HE course. The hon. Member for Blackpool South asked whether we could look at the issue of timing. I think that we should and I will do so. I think that there is an argument for people who do not immediately progress to HE, but do so perhaps a year or two years later. We need to consider how we manage that, but the hon. Gentleman makes a fair point and I will certainly look at it.