Financial Support (Students)

Nick Gibb Excerpts

Wednesday 15th December 2010 Westminster Hall

[The Minister of State, Department for Education (Mr Nick Gibb)]

It is a pleasure to serve under your chairmanship, Ms Clark. I congratulate the hon. Member for Erith and Thamesmead (Teresa Pearce) on securing today’s debate. I know that she cares passionately about supporting young people in their continuing education, a passion that I share.

One of the Government’s objectives is full participation in education, training, or employment with training, for all young people up to the age of 18. I listened to the hon. Lady carefully, and I understand the concerns of students at Bexley further education college, where 43% of students qualify for education maintenance allowance, and those at Greenwich community college, where 38% of students qualify. Nationally, 45% of students qualify for EMA, so I am aware that the decisions that we have taken affect a large number of 16 to 18-year-olds.

We need to set the debate in the context of the budget deficit. It is £156 billion this year, the highest among G20 countries.

[Graham Jones]

Will the Minister give way?

[Mr Gibb]

I shall give way once I have finished this point.

The interest on accumulated Government debt to date is £42.7 billion per year, which represents 70% of the entire Department for Education budget. Unless we take serious measures to tackle the deficit, we will face a higher cost of borrowing as capital markets demand greater compensation for the heightened risk. Without the action that the Government are taking, we would ultimately face the economic crises that now confront Ireland, Greece, Spain and Portugal. This country was on the brink of financial crisis.

[Several hon. Members]

rose—

[Mr Gibb]

I will give way once I have finished the point.

This country took action in the emergency Budget and the spending review. As a result, that crisis has been averted. I listened to the 14 or 15 Opposition Members who spoke during the debate, and I did not hear one alternative suggestion of how to find a saving of £500 million elsewhere in the Budget. They had no answer on how to avoid financial meltdown, or how to tackle the record budget deficit that the Labour Government left for this Government to clear up. They had no answer on how to bring our economy back from the brink.

Labour’s stewardship of the economy has left young people struggling to find jobs, as employers freeze recruitment. Unless we get the economy moving again, that tragedy will persist. Not tackling the deficit will put that recovery in jeopardy. I give way to the hon. Member for Hyndburn (Graham Jones), to see whether he can tell us how to find £500 million of savings elsewhere in the Budget.

[Graham Jones]

Is it not the case that it was the Government’s choice to cut so deep? Is it not the case that, before the election and afterwards, the Government accused Labour Members of not cutting deep enough? Is it not the case, therefore, that the Government chose to remove the EMA for the economic decisions that the Minister has outlined? The Opposition would not have needed to do that, nor go as far, because, as the Minister says, we would not have cut the deficit so fast.

[Mr Gibb]

The economy would have suffered as a result.

EMA costs £560 million a year. As we heard, it has been in existence for about six years; it was rolled out nationally in 2004, following a pilot. It was successful in raising participation rates among 16-year-olds from 87% in 2004 to 96% this year. As a consequence, attitudes among 16-year-olds to staying on in education have changed. When the National Foundation for Educational Research questioned recipients of EMA, it found that 90% would have stayed on in education regardless of whether they received EMA.

[Dr Julian Lewis (New Forest East) (Con)]

I am grateful to my hon. Friend for giving way. Does he accept that the two strands of the allowance are becoming intermixed? There is the role of the allowance in persuading people to stay on, and there is the role of the allowance in enabling people to stay on who might otherwise not be able to afford to do so.

A briefing from the Conservative Councillors’ Association points out that the staying-on age will be raised, but that will not happen until 2015. What worries people such as the principal of Brockenhurst college in my constituency is that the EMA will stop in September 2011. In the limited time that remains, I hope that my hon. Friend will focus on the transition arrangements, which are of great concern to us all.

[Katy Clark (in the Chair)]

I remind Members that interventions should be short.

[Mr Gibb]

I shall come to that point in a moment.

The fact is that 90% of recipients of EMA would have stayed on in education regardless. Given that evidence, the fact that we have a major budget deficit crisis and the fact that the programme costs so much each year, it was clearly going to be a candidate for major reform.

[Mrs Hodgson]

Will the Minister give way?

[Mr Gibb]

I am sorry, but I cannot give way as I have only four minutes left.

In reaching the decision to end EMA, we were of course concerned that the 10% of recipients whom the evidence said would have been put off from staying in education but for the money might then drop out of education. We believe that a payment designed as an incentive to participate—a point hinted at by my hon. Friend—is no longer the way to ensure that those facing real financial barriers to participation get the support that they need. That point was made well by my hon. Friends the Members for Brighton, Kemptown (Simon Kirby) and for York Outer (Julian Sturdy).

We therefore decided to use a proportion of that £560 million to increase the value of the discretionary learner support fund. Final decisions about the quantum of that extra funding still have to be taken, but we have already spoken of increasing the value of that fund by up to three times its current value, which stands at £25.4 million. A fund of that size would enable 100,000 young people to receive £760 each year. Those 100,000 students represent about 15% of those young people who receive EMA, which is more than the 10% about whom we are particularly concerned who might not stay on in education. The figure of £760 is more than the average annual EMA paid in 2009-10 of £730, and only slightly less than the £813 paid to 16-year-olds who received the full £30 a week, or the £796 paid to 17-year-olds receiving the full £30 per week.

We are erring on the side of doing all that we can to assist the poorest, as sought by my hon. Friend the Member for Stourbridge (Margot James). However, the Government will not set expectations on how much young people should receive from the enhanced discretionary fund. It will be up to schools and colleges to determine which young people should receive support under the new arrangements, and what form that support should take. In answer to a question, I can tell the House that colleges can use 5% of the fund for administration.

To help schools and colleges administer the fund, and to ensure that those young people who really need support to enable them to continue their education or training have access to the new fund, we are working with schools and colleges, and other key organisations such as the Association of Colleges, Centrepoint and the Sutton Trust, to develop a model approach that schools and colleges can choose to adopt or adapt.

In the remaining minute, I shall try to answer some of the questions raised during the debate. Many hon. Members asked about transport. Under current arrangements, discretionary support funding cannot be routinely used for transport to and from college. It is local authorities that have the statutory responsibility for making the necessary transport arrangements. However, we will consider that restriction as we develop the arrangements for enhanced discretionary learner support funding. The House can be assured on that point.

I have dealt with the question about administration. The hon. Member for Erith and Thamesmead asked about the sum of £174 million. That is the estimate of what will be spent on EMA in the 2011-12 financial year, the payments being made during the 2010-11 academic year. However, it will not be available in the next academic year.