Budget Resolutions and Economic Situation

Liz McInnes Excerpts

Monday 13th July 2015 Commons Chamber

[Liz McInnes (Heywood and Middleton) (Lab)]

I am pleased to be able to contribute to the debate. We have heard the Tories’ repeated claim to be the party of working people, but we have a Tory Budget that is not the Budget that working people need. It leaves working people worse off and fails the test of building a more productive economy to bring the deficit down.

Cuts to tax credits will hit working people on middle and lower incomes, as well as those with larger families. My hon. Friend the Member for Hornsey and Wood Green (Catherine West) asked the Secretary of State last week for an equality impact assessment of the Budget. She was assured that the Budget had been fully equality impact assessed, but the document appears to be a closely guarded secret. It certainly does not appear as an accompanying document to the Budget on the Government’s website. I hope that in his winding-up speech the Exchequer Secretary will direct me to where I can find that elusive document.

Certain groups seem to be hit hard by the Budget, and I would like to concentrate specifically on the effect of the change from maintenance grants to loans on young people hoping to go to university. It might dissuade many students from poor and modest backgrounds from going to university, but might none the less result in large sums never being paid back to the Treasury.

The current system of maintenance grants supports students from the poorest backgrounds through university. In England, students from households with incomes of £25,000 or less receive a grant of £3,387 each year to cover accommodation, living expenses, books and course materials. In 2014-15, 400,000 full-time students in England received a full maintenance grant and 135,000 received a partial maintenance grant. Even with those grants, the system is stacked against working-class students. Students from wealthy backgrounds are 10 times more likely to receive a place at university than those from poorer backgrounds, according to the Sutton Trust, an education charity.

Following the Budget, our students will be saddled with even more debt, in addition to repaying tuition fees. Maintenance grants will be replaced with loans to be repaid under the same terms as tuition fee loans—that is, once a graduate is earning more than £21,000 a year. I will give credit where it is due: during the coalition years, the Liberal Democrats blocked plans to convert maintenance grants into loans. Here we have a fully fledged Tory Budget, and we see just what the Government want to inflict on our young people.

The general secretary of the University and College Union, Sally Hunt, has said:

“Maintenance grants are crucial for engaging students from disadvantaged backgrounds who are already daunted by cripplingly high tuition fee debt. Increasing the debt burden on students will act as a disincentive to participation, and it does not make sense for the taxpayer either, as the extra loan amount is unlikely to be repaid in full.”

We already have students living in poverty, and the replacement of grants with loans will just exacerbate that. The president of the student union of the University of the Arts London, Shelly Asquith, has described her university’s students as having to use food banks and payday loans to make ends meet. Others are being forced to take on work,

“often for so many hours it has a huge impact on their study.”

A typical student currently leaves university with debts averaging about £44,000, and no one knows what effect a loans-only system will have on university applications. There is a real risk that the Government are experimenting with the future of the current generation of secondary school students. In my constituency, 40% of working people do not even get paid the living wage —and that is the real living wage, which is set independently by the University of Loughborough and is currently £7.85 an hour. Five years ago, poorer students also received education maintenance allowance, which the Government have also taken away. We need to look urgently at the impact of the Budget on disadvantaged young people who aspire to go to university, and who will get the most out of it.