Student Maintenance Grants

Lord Johnson of Marylebone Excerpts

Tuesday 19th January 2016 Commons Chamber

[The Minister for Universities and Science (Joseph Johnson)]

I welcome the opportunity to explain, I hope briefly, why it would be a mistake to vote for the Opposition motions that attempt to annul the statutory instrument agreed by the Delegated Legislation Committee last Thursday. The instrument delivers the Government’s policy of offering increased financial support for living costs for new students in the 2016-17 academic year in the form of loans rather than grants. The policy is part of the Government’s plan to ensure that our world-class higher education sector remains sustainably financed and open to more students from all backgrounds. The Government are extending the benefits of higher education to more people than ever before. We have lifted the artificial cap on student numbers, allowing record numbers to secure places last year.

A higher education sector that is not properly and sustainably funded cannot deliver the life-changing education that students expect.

[Mr David Hanson (Delyn) (Lab)]

Will the Minister give way?

[Joseph Johnson]

I will when I finish my introductory remarks.

In the context of fiscal restraint, ensuring that we have a sustainable model for our higher education system is crucial. In this respect, the measure builds on successive reforms since 2010 which have delivered a higher education system that safeguards social mobility and delivers for students and taxpayers. Indeed, the OECD has commended the reforms in aggregate for the sensible balance they strike between the interests of taxpayers and students. Its director of higher education has said that England is

“one of the very few countries that has figured out a sustainable approach to higher education financing.”

Very recently, on a trip to London, he added that England

“has made a wise choice. It works for individuals, it works for government.”

[Mr Hanson]

If that is all so well and good, why was it not in the hon. Gentleman’s manifesto?

[Joseph Johnson]

I am grateful to the right hon. Gentleman for making that point. If he reads page 35 of the Conservative party manifesto, he will see a clear commitment to continuing the funding reforms that I have just described and ensuring a fair balance between the interests of taxpayers and students. There are also many other references in the Conservative manifesto to the need to achieve budget deficit savings.

Let me start by beginning to address the questions about the scrutiny of the regulations that were raised by the hon. Member for Blackpool South (Mr Marsden). The regulations were not sneaked in, as he suggested. In fact, the policy was first announced in principle in the 2015 summer Budget, nearly six months ago. It was in fact included in the Chancellor’s summer Budget speech, one of the most closely scrutinised events in the parliamentary calendar. The decision finally to proceed was made as part of the spending review in November 2015 and the instrument was laid before the House on 2 December. A comprehensive 80-page equality analysis was published the next day, in line with an earlier commitment I made voluntarily to the House. I shall say more about that later.

The regulations were made under powers granted to the Secretary of State by the previous Labour Government, under the Teaching and Higher Education Act 1998. Rather than using some obscure and arcane procedure, as hon. Members have suggested, we are following the very parliamentary processes that the previous Labour Government created for this purpose. Labour asked for a debate on the regulations on 9 December and the Government tabled a motion that appeared on the Order Paper on 5 January, referring the regulations to a Delegated Legislation Committee. Labour did not object, and the regulations went to such a Committee on 14 January. To put it simply, the processes were put in place by Labour when they were last in government and they did not object on 5 January, when they had the chance. I now welcome the opportunity to debate the issue further in this Opposition day debate and I note that the other place will also have a chance to consider the instrument following the tabling of a motion by the noble Lord Stevenson of Balmacara on 13 January.

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

I have been contacted by a large number of people, including students from Walbottle Campus, Gosforth Academy and Newcastle and Northumbria Universities. They would like to know from the Minister when they will have the opportunity to feed into the public consultation on this issue.

[Joseph Johnson]

The House debated the matter in the Delegated Legislation Committee. There was a thorough 80-page equality analysis. The Department for Business, Innovation and Skills maintains an ongoing and regular dialogue with all stakeholders on matters relating to higher education.

We welcome the scrutiny, because this Government are rightly proud of our record on higher education. Since 2010 we have delivered a bold reform of higher education, putting in place a funding model that has ensured that our universities are properly funded and properly able to deliver world-class, life-changing education. At a time of significant fiscal consolidation, total income for the higher education sector has risen in real terms; it has increased from £24 billion in 2012-13 to £26 billion in 2013-14 and is forecast to rise to £31 billion by 2017-18.

Let us not forget the difficult fiscal context in which this has been achieved. Against the background of a record budget deficit, providing universities with that level of financial security could only be achieved by asking students to meet a greater part of the cost of their education, paid not upfront but out of their future earnings. That recognises the principle that if someone benefits from higher education and secures higher lifetime earnings than taxpayers who do not go to university, they should contribute to the cost of their education.

[Rushanara Ali]

The Minister is aware that students from disadvantaged backgrounds are already less likely to go to university; those from more advantaged backgrounds are two and a half times more likely to do so. This change will make that much worse. Will the Minister please face up to the facts and do something to respond to this question? If his Government are serious about social mobility, these cuts would not be made and he should be honest about that.

[Joseph Johnson]

This Government are committed to social mobility and we are delighted that we now have more students from disadvantaged backgrounds going into higher education than ever before, at a record level of 18.5%. Those from a disadvantaged background are now 36% more likely to go to university than when we took office in 2010. The Prime Minister has committed to doubling the proportion of students from disadvantaged backgrounds in our universities from 2009 levels by 2020, and we are going to be doing everything in our power to ensure that happens.

It is this sustainable model of funding that has allowed more people to benefit from higher education, which in turn promotes social mobility. Removing the cap on student numbers has allowed more people to benefit from higher education than ever before. We are now in a position in which almost 50% of young people are likely to undertake some form of higher education during their lifetime. This would simply not have been possible in an unsustainably funded higher education system.

[Peter Kyle (Hove) (Lab)]

Brighton and Hove City Council has set up a fairness commission to make sure that it delivers fairness and social mobility in its public policy making. With 3,700 students out of 10,000 at Sussex University and 6,700 out of 16,000 at Brighton University on maintenance grants, has not their job just got an awful lot more difficult because of the Government’s policy?

[Joseph Johnson]

The hon. Gentleman can tell his constituents that university and going into higher education remain transformational experiences, especially for people from disadvantaged backgrounds. They are likely on average to go on to earn £100,000 more over their lifetimes as a result. Owing to the instrument that we are debating today, they will have access to more financial support while they are at university than ever before.

Let us acknowledge the success of these reforms. As a consequence, we today have a higher education system with record numbers going to university, record numbers of disadvantaged students, the highest ever rates of black and minority ethnic participation, and more women in higher education than ever before. The principles underpinning these reforms flow from a clear manifesto commitment to

“control spending, eliminate the deficit, and start to run a surplus.”

I have already referred to the other commitments in the manifesto, on page 35, relating specifically to higher education funding.

Those Opposition Members who oppose our policy and want to reintroduce more direct taxpayer support must think about whether they would also have to reintroduce the student number controls we abolished and prevent thousands of young people from attending university.

[Neil Coyle (Bermondsey and Old Southwark) (Lab)]

rose—

[Joseph Johnson]

Does the hon. Gentleman wish to reintroduce student number controls?

[Neil Coyle]

The point I want to make is that applications to the most selective universities from students from the lowest income households has fallen since 2010, from 16.2% in 2010 to 15.3% in 2014. What impact, in terms of the number dropping further, will this policy have?

[Joseph Johnson]

We want people from disadvantaged backgrounds to go to the very best universities in this country in as high a proportion as possible. We want to see that increase, which is why we asked in our guidance letters to the director of the Office for Fair Access that he pay particular attention to institutions that are not pulling their weight in getting people in from disadvantaged backgrounds. We will continue that in our next letter to the director of the OFA.

[Rebecca Harris (Castle Point) (Con)]

On paying for university, does the Minister agree that it is difficult for me to explain to residents in my constituency on low or moderately low incomes who have not had the benefit of a university education that the alternative is for them to pay more in their taxes for people who will have the opportunity to earn considerably more in their lifetimes?

--- Later in debate ---

[Joseph Johnson]

I thank my hon. Friend for her intervention, and that is precisely the point: it is unfair on people who do not go to university to pay for the educations of those who in their lifetimes will go on to earn considerably more. On average, men who go to university will earn £170,000 more in their working lifetimes than someone with two A-levels who does not go to university, and women who go to university will earn £250,000 more over their working lifetimes. It is entirely fair that we ensure that they contribute towards the cost of their higher education.

Let me turn now to specific changes to student finance for the coming academic year. We should first note that the instrument delivers more money for students from some of the most disadvantaged backgrounds. Evidence suggests students are primarily concerned about the level of maintenance support they receive while studying. They understand that student loans are not like commercial debt, in that they are progressive and only repaid in line with future incomes.

As a result of these regulations, an eligible student whose family income is £25,000 or less and who is living away from home and studying outside London will qualify for up to 10.3% more living-costs support in 2016-17 than they would under current arrangements, which is an additional £766 of support. Those who vote for the motion to annul this instrument will be denying poorer students this extra cash.

Studies show that graduates will, on average, earn £100,000 more than non-graduates over their lifetime. BIS research suggests that this premium could be as high as £250,000 for female graduates compared with those who hold two A-levels or fewer. This is our progressive A-level system and our progressive repayment system in action, and those who do not benefit from increased earnings as a result of undertaking higher education will not pay any more as a result of this policy.

The system we have put in place ensures that higher education is open to everyone with the potential to benefit from it, irrespective of background. Opposition scaremongering only risks deterring students from attending university. While the data available so far on this application cycle are provisional, early data from UCAS indicate applications in 2016-17 are broadly in line with last year. The BIS-funded student finance tour sends out recent graduates to schools to bust the myths about student finance. Let us not undo the good work they do in undertaking this tour; they are passionate advocates of the benefits of university, and speculating and scaremongering about the effects of this instrument will undermine their good work.

[Patrick Grady (Glasgow North) (SNP)]

More than 45,000 students from England each year choose to study elsewhere in the UK, including at Glasgow University in my constituency. How does scrapping maintenance grants incentivise them to travel further from their home to get the benefit of education at universities outside England?

[Joseph Johnson]

We are making a record amount of financial support available to those students—more than has been provided by any previous Government. That will enable them to travel further away from home than they have in the past.

Let me turn to the significant savings achieved by these changes. The switch from maintenance grants to loans will, in a steady state, save around £2.5 billion per year from the fiscal deficit—not the £1.5 billion mentioned. We acknowledge that a proportion of the loans will not be repaid. This is a conscious decision to invest in the skills base of our country, and protect those who go on to lower-paying graduate jobs. We forecast that the long-term annual economic savings will be around £800 million per year.

[Mr Geoffrey Robinson]

The Minister said earlier that this is a deficit-reducing policy and we take that, and of course I entirely agree with all the points that have been made on the grounds of social mobility and denial of educational opportunity that this policy implies, but is not the point the Minister really has to answer that 45% of his loan books at the moment have been declared delinquent for one reason or another? How much of this so-called saving does he think he is going to get back? Is he not really just pretending he is making this saving, while in fact building up unfunded liabilities?

[Joseph Johnson]

There is an immediate grant saving of £2.5 billion, which comes directly off the budget deficit. As I just mentioned, there is of course the prospect down the line of some loans not being repaid, as a result of a conscious decision by the Government to invest in the skills base of the country and to allow people to pursue incomes that do not enable them to pay off the full value of the loan. The economic value of the savings, as I just said, is £800 million a year in a steady state.

I challenge the Opposition to explain how they would fund their alternatives. I note that the Labour party has in the past year put forward competing higher education funding policies, although they share one significant feature: their huge cost to the taxpayer. Labour’s leader, the right hon. Member for Islington North (Jeremy Corbyn), said in July that fees should be removed completely, with grants retained in full. The policy was costed by Labour itself at £10 billion. Such policies move us backward. They are unsustainable and, at a conservative estimate, would add more than £40 billion to the deficit over a five-year Parliament. We should be clear about what the results would be: more reckless borrowing, more taxes on hard-working people, and the reintroduction, inevitably, of student number controls. We have lifted student number controls and we will not allow the Labour party to reimpose a cap on young people’s aspirations.

I will deal with the risks associated with this policy as set out in the equality analysis, but let me first quickly respond to the false accusation that we refused to publish the assessment until prompted to do so by the National Union of Students. That is simply not true. Every year, when the Education (Student Support) Regulations 2011 are amended, an equality analysis covering the changes is published on gov.uk. This is standard practice. On 14 September, in a written response to a parliamentary question asked by my hon. Friend the Member for Totnes (Dr Wollaston), I said:

“The Government expects to lay amendments to the Education (Student Support) Regulations 2011 later this year and publish an Equality Analysis when the Regulations are laid. The Equality Analysis will include an assessment of potential impacts of the changes.”

Only on 22 September 2015, more than a week after that answer was given, did the NUS give notice that it would seek legally to challenge our policy. There has been no evasiveness in the presentation of the policy or its potential impacts.

I will deal now with some of the issues identified in the equality analysis and how they will be mitigated. Let it be remembered that similar issues were identified as a result of the 2012 reforms, but did not crystallise. Indeed, we now have a world-class higher education system, with record numbers of disadvantaged students in higher education, the highest rates of BME participation in higher education and more women in higher education than ever before. Our impact assessment explains that the risks will be mitigated by at least three factors, including the 10.3% increase in the maximum loan for living costs, the repayment protection for low-earning students and the high average returns on higher education.

More funding is also being provided through access agreements: in 2016-17, £745 million is expected to be spent by universities through access agreements, up from £404 million in 2009-10. That is money that makes a real difference to disadvantaged students, and we will of course monitor the progress of the policy through the data available from the Higher Education Statistics Authority and the Student Loans Company.

[Rachael Maskell (York Central) (Lab/Co-op)]

At the University of York, 40% of students get a maintenance grant. What assessment has been made of the impact on universities of not attracting students because they simply cannot afford to attend?

[Joseph Johnson]

As I have already said, we are making a record amount of financial support available to students, and students from the poorest backgrounds will benefit from a 10.3% increase in financial support. They will have more cash in their pockets than ever before.

I hope that I have been able to clarify some of the misconceptions about our policy, the steps we are taking to increase living costs support and the process surrounding it. I will finish by directing Labour Members’ attention to the interview with Ed Balls in Times Higher Education this week, which should be of interest to them. He said that the

“blot on Labour’s copybook”

was that

“we clearly didn’t find a sustainable way forward for the financing of higher education”.

He went on to say:

“If they”—

the electorate—

“think you’ve got the answers for the future, they’ll support you”.

We have a plan for the future. In a time of fiscal restraint, we are taking action to ensure that university finances are sustainable, so that more people than ever before can benefit from higher education.

[Several hon. Members rose—]

--- Later in debate ---

[Paul Blomfield (Sheffield Central) (Lab)]

I have the privilege to represent more students than any other Member of the House. I am pleased to have the chance to raise their concerns, and more importantly, the concerns of those who hope to take their place in the future but will, I fear, be deterred from doing so by the Government’s proposals. Such a decision is one of huge significance for 500,000 students.

It is a major reversal of Government policy, and it is being taken without any mandate. The Minister for Universities and Science tried to bluster his way out of that by referring to page 35 of the Conservative manifesto. I challenge his colleague, the Minister for Skills, to read out the precise section of the manifesto that gives the Government the mandate to remove maintenance grants from the poorest students. I will happily give way now if the Minister for Universities and Science wishes to read it out.

[Joseph Johnson]

Keep going.

[Paul Blomfield]

I urge Conservative Members to think carefully about the policy. [Interruption.] Their party—it is a shame none of them is listening—has consistently supported maintenance grants. In November 2009, the then Conservative shadow Minister told the House that it

“is students from the poorest backgrounds who are most desperate when they cannot get their maintenance grant”.—[Official Report, 3 November 2009; Vol. 498, c. 737.]

When we debated the Government’s changes to student funding in November 2010, a Conservative Minister said:

“Our proposals…help to encourage people from poorer backgrounds…because of the higher education maintenance grant… That crucial commitment…is one of the reasons we commend these proposals to the House.”—[Official Report, 3 November 2010; Vol. 517, c. 940.]

Reflecting on their approach, in September 2012 a Conservative Minister said:

“The maintenance grant and support for bursaries are going up. That is why we…have record rates of application to university”.—[Official Report, 11 September 2012; Vol. 550, c. 216.]

In opposition and in government, Conservative shadow Ministers and Ministers have rightly made the case for maintenance grants year after year.

That was, however, suddenly thrown into reverse by the Chancellor in the July Budget, without any proper consideration of its impact. Such a consideration is important because we are talking about the poorest students. We still have not seen the original assessment behind the July decision, but even the massaged assessment that the Government were prepared to publish in November, four months after the decision was made, is extremely worrying.

Conservative Members should pay heed to it, because it is the Government’s own assessment. On participation by low-income households, it warns of the evidence from past reforms on which the Government are relying that

“there are limits to its direct applicability”.

On gender, it expects a “decrease in female participation”. On age, it says that there is a

“risk for the participation of older students”.

On ethnicity, it says that there is a

“risk to the participation of students from ethnic minority backgrounds”.

On religion, it talks about

“a decline in the participation of some Muslim students”.

That is the real impact on real people.

That impact has been confirmed by those affected. A survey of students in receipt of maintenance grants found that 35% said that, because of their circumstances, they would not have gone to university without a grant. A new survey by Populus says that 40% of parents from low-income households believe their children will be discouraged from going to university without a grant. Evidence from the Institute of Education shows that for every £l,000 increase in the grant, there is a 4% increase in participation from lower-income families. No doubt the reverse is true, so with the level of cuts being made, there will be a significant decrease on the basis of that assessment.

The irony is that the Government have set ambitious objectives for widening participation. The problem is that this policy will prevent that. I urge Conservative Members to vote with us to annul it.