Further Education Loans

Kate Green Excerpts

Tuesday 17th July 2012 Westminster Hall

[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?

[Kate Green (Stretford and Urmston) (Lab)]

I congratulate my hon. Friend on securing this important debate. Does he agree that there will be an in-built inefficiency if the numbers of students fall so substantially that the fixed costs of colleges are no longer adequately covered by student fees?

[Tristram Hunt]

That is precisely the kind of area that we will need to look at when considering how the loans play out. What we saw in the higher education loans system was all sorts of additions to the initial policy, as the Government sought to unpick the consequences. In the way that things have been managed, we simply do not have the data to appreciate what will happen.

We can be positive about many elements of the Government plans, but we need to thrash out the questions of the consequences: value for money for the taxpayers; whether the Government have a philosophical objection to public investment in skills, although we know how important they are; and some of the detailed practicalities surrounding last week’s announcement, as my right hon. and hon. Friends have suggested. It would have been helpful to have had the discussion in the House, with more colleagues with FE colleges in their constituencies present to explore such major public policy changes.