Oral Answers to Questions

Debate between Liam Byrne and Greg Clark

Thursday 12th February 2015 Commons Chamber

[Greg Clark]

Our universities need to benefit from the confidence and stability that our reforms have introduced. I am perfectly happy with all the arrangements that we have. The uncertainty comes from the Labour party’s proposals, about which the university vice-chancellors are deeply concerned. They said that they would mean

“cuts to universities that would damage the economy, affect the quality of students’ education, and set back work on widening access to higher education”.

At a time when confidence is needed, the Labour party is proposing chaos.

[Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)]

Actually, the UCAS figures published recently show that there are 7,000 fewer British applicants to our universities than there were in 2011. Figures from the Library show that we are wasting and writing off £1 in every £2 that we invest in the higher education system, and our students will not pay back their debts until they are in their 50s. We are educating fewer of our young people and we are wasting more of our money.

The Chancellor forecast that there would be 60,000 extra students this year, yet the UCAS data show that there are only 12,000 extra applicants for this September. Does the Minister want to explain to the House why, if his system is so good, he has just missed his growth target by an incredible 80%?

[Greg Clark]

That is total nonsense. We have more students than ever before in this country. We have been able to take the cap off the number of students able to go to university, a historic decision that implements the recommendation of the Robins report of over 50 years ago. In terms of putting people off going to university, the big concern of the vice-chancellors is that the Labour party’s proposals would specifically damage the prospects of poorer students and risk the quality of education for all. It is time that the right hon. Gentleman, who has failed to come up with a policy for all this time, said, weeks before the election, what Labour’s policy on higher education is.

Higher Education Funding

Debate between Liam Byrne and Greg Clark

Thursday 8th January 2015 Commons Chamber

[Greg Clark]

I want to make some progress. I have the least time of all, which is appropriate in a Backbench Business debate. However, if I have some time later, I will of course take an intervention.

Since the Committee took its evidence, which the Chair will acknowledge was about a year ago, the evidence in favour of the positive effects of the reforms has been mounting. We have discussed whether to undertake a review. I encourage the successor Select Committee in the next Parliament to undertake a stocktake of the system in practice. I suspect that it will draw the same conclusion as I have.

In the words of the OECD, which is widely regarded as the leading authority in the world on comparing education systems, the UK is one of the few countries that has figured out a sustainable approach to higher education finance and the investments pay-off for individuals and taxpayers:

“among all available approaches”—

the OECD includes 34 countries—

“the UK offers still the most…sustainable approach to university finance.”

In responding to the debate, I want to summarise how the advantages are clear for students, the taxpayer and universities.

The system is good for students, because it has allowed more of them than ever before to fulfil their dream of a place at university. Many Members have acknowledged the importance of achieving what has previously been beyond the reach of many of our fellow citizens. This autumn, for the first time in the history of this country, half a million applicants were placed in higher education. The head of UCAS put it this way just last month. It is, she said,

“a stunning account of social change, with the most disadvantaged young people over 10 per cent more likely to enter higher education than last year and a third more likely than just five years ago – 40 per cent more likely for higher tariff institutions.”

Despite predictions to the contrary, students have seen that going to university is an exceptional investment. Graduates earn on average £9,000 more than non-graduates. In the past year, the graduate premium for young graduates—those under 30—has risen to £6,000. Graduates are half as likely to be unemployed as non-graduates and two-thirds are in highly skilled jobs, a proportion that has been rising substantially as we recover from recession. Students know that they will pay nothing up front and that they will pay back only if and when they can afford to do so. It is important to be clear to the House that for a graduate earning £30,000, a high salary compared with the population as a whole, for the benefit of a three year degree they will repay £2.22 a day. That is an eminently reasonable reflection of the value they obtain from that degree. It is no wonder that students are responding with such alacrity—more than ever before.

Let me say why the system is good for taxpayers, as the OECD director said. The reforms have made it possible—without them it would not have been possible—to abolish the cap on student numbers. That is overwhelmingly in our national interests, as I think most Members would acknowledge. The earning power of graduates means that it is not just the graduates themselves who gain—the Exchequer gains hundreds of thousands of pounds over a graduate’s lifetime of employment. That is many times more than even the most conservative estimate of the so-called RAB charge. Andreas Schleicher of the OECD said that what one loses through non-payments is small versus the tax revenue uplift from more students earning more in work and that this premium is expanding.

It is important to emphasise—it has not been clear in some of the contributions—that this subsidy is nothing like a commercial loan, in which any debt that is written off is somehow a mistaken lending decision. It is not like that. It is a reflection of a set of deliberate policy choices to write off, for example, outstanding debt after 30 years, and to repay at 9% above earnings of £21,000. It is highly progressive, according to the Institute for Fiscal Studies: the lowest earning 10% get a 93% subsidy and the highest earning 10% get a 1% subsidy. For the record, I am perfectly content with all the policy choices that produce the published RAB charge.

[Mr Byrne]

Is the Minister therefore ruling out any further increase in the tuition fees ceiling if he is re-elected?

[Greg Clark]

I have been very clear on this. I am not persuaded that there is any reason to increase the ceiling. I think the ceiling at £9,000 is reflective of the costs of providing a good education to people.

Oral Answers to Questions

Debate between Liam Byrne and Greg Clark

Thursday 20th November 2014 Commons Chamber

[Greg Clark]

My right hon. Friend is absolutely right. We take a very cautious view of the RAB charge. The OECD is amazed that we take such a conservative view. For example, we take no account of the fiscal benefit that results from people paying more taxes because they earn more as a result of having a degree. The average salary of a non-graduate is £21,000, but the average salary of a graduate is £33,000. The graduate’s salary means extra tax for the Treasury, but that is not taken into account. We are expanding student numbers, and we have a record number of students with the most disadvantaged backgrounds. It is a tribute to the work done by my right hon. Friend that we are able to say that.

[Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)]

The Institute for Fiscal Studies says that the system is going bust, the Select Committee says that the system is going bust, and the Higher Education Commission says that the system is going bust. When will the Minister get the message? Let me ask him about uncapping student numbers this year. We were promised that the ceiling would be removed from places this year, next year and the year after. Earlier in the week, when I asked the Minister how he would pay for that, I received the immortal answer:

“The Department…has indicated that it will not be possible to answer this question within the usual time period.”

Will the Minister tell the House now how he will pay for lifting the ceiling on student numbers this year? If he cannot answer that question, we shall have to conclude that it is a case of “Never mind a long-term plan; he has no plan at all.”

[Greg Clark]

First of all, the IFS did not say that the system was unsustainable. We have one of the best systems of student finance in the world, and it is achieving the results that we on this side of the House all want to see. I will give the right hon. Gentleman the answer to his question on how the removal of the cap is being paid for. The Treasury has allocated £550 million to pay for it, and it is fully funded. This has enabled us to implement the Robbins report, which was produced 50 years ago and recommended that anyone with the capability and desire for a university education should be able to have one. We are the first Government in 50 years who have been able to implement that.

Oral Answers to Questions

Debate between Liam Byrne and Greg Clark

Thursday 11th September 2014 Commons Chamber

[Greg Clark]

My right hon. Friend is absolutely right. I pay tribute to him for the work he has done in this field, which is respected on both sides of the House and across all the institutions of higher education. One of the great pleasures of taking this office was to check my desk drawer and discover that there was no note from my predecessor with some unwelcome news. It is a very happy inheritance.

My right hon. Friend is absolutely right: the system we have in place for student finance, which he took through the House, is proving remarkably successful. We have seen record student numbers, and only this week the OECD said that the

“UK is…one of the few”

countries

“that has figured out a sustainable approach to higher education finance”

and that

“that investment…pays off for individuals and tax payers.”

He grasped the nettle and made the reforms, and those reforms are now working.

[Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)]

I welcome the Minister to his post, and as he rightly acknowledged, he has some big shoes to fill—I, too, pay tribute to his predecessor, the right hon. Member for Havant (Mr Willetts), and the extraordinary work he undertook. I am surprised, however, that he did not leave the new Minister a briefing on the disaster of the student loans system and the £50 billion to £100 billion extra that will now be written off as public sector net debt as a result of the spiralling resource accounting and budgeting charge.

My question today, however, is different. This week, the Minister has to decide whether to abolish the disabled students allowance. All over the country over the next month, disabled students will be applying to Oxbridge and medical schools, and they deserve to know whether they will have good support in place—not just PCs, but people. This week, will he heed the call from vice-chancellors, the National Union of Students and Members on both sides of the House and ensure that disabled students do not have their chance to study—wherever they get into—destroyed by the abolition of that vital allowance?

[Greg Clark]

I second the praise that the right hon. Gentleman gave to my right hon. Friend the Member for Havant, but it is curious that he should reflect in the way he did on the finances of the system. I would have thought that he of all people might have cause to reflect on the state of the finances. Reading his recent pamphlet, I noticed that he said that to win arguments

“we must show that we will spend taxpayers’ money sensibly, effectively and efficiently.”

I wonder whether, on reflection, he would regard that as consistent with his record in government.

On the disabled students allowance, I think everyone here shares the ambition, as I stated in my first answer, that everyone who is capable of benefiting from a university education should be able to do so. That of course applies forcefully to people with disabilities. The decisions we take on support for people with disabilities will be entirely about making sure that they have the support to be able to pursue their studies to the best of their abilities.