Higher Education

Sharon Hodgson Excerpts

Wednesday 3rd November 2010 Westminster Hall

[Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)]

Thank you, Mr Betts. I am grateful for this opportunity to speak under your chairmanship on this important topic, and I congratulate my right hon. Friend the Member for Tottenham (Mr Lammy) on securing this important debate. If there were ever any doubt that he cared passionately about the future of higher education, and the future of children from estates such as his, mine and those of other hon. Friends here today, his speech will have proved his passion and commitment—long may it continue.

I wish to discuss what the Government’s plans will mean for many of my constituents. In a Liberal Democrat press release during the election campaign, Nick Clegg said:

“If fees rise to £7,000 a year”—

[Mr Clive Betts (in the Chair)]

Order. The reference should be to the Deputy Prime Minister.

[Mrs Hodgson]

I apologise, Mr Betts. The Deputy Prime Minister stated:

“If fees rise to £7,000 a year, as many rumours suggest they would, within five years some students will be leaving university up to £44,000 in debt. That would be a disaster.”

I have to say this, Mr Betts: this is one of the few occasions on which I agree with Nick.

Even if most universities charge the minimum of £6,000, it will still be a disaster, and if most of the more prestigious ones charge £9,000, it will be an even bigger disaster. If I were a 16 or 17-year-old working-class girl from Gateshead—not too much of a stretch of the imagination, as I once was—looking at my options for the future, a potential debt of £44,000 would make me think seriously about whether I should go to university, especially if I were the first in my family to do so. It was not a journey that I was ever able to make personally because of cost constraints, and having to go out to work to help support my mam, who was on benefits, and two younger brothers.

If I were desperate to go to university, I would probably have to go to one of my local universities to avoid the extra living expenses, rather than the best university that would accept me based on my ability and grades. That seems to be what the Secretary of State for Business, Innovation and Skills intends people from my constituency to do. I would also most likely have to take a significant amount of paid part-time work, reducing the amount of time that I could dedicate to my studies, and consequently my attainment.

Even then, when I had struggled through three years and racked up a debt of £15,000 to £20,000 for the privilege—assuming that I had received some of the grants that the Minister of State outlined—my debt would continue to grow at a rate far above that at which my earnings would be likely to grow. An interest rate of 2.2% plus RPI, which would currently be 6.8%, does not compare favourably with a typical increase in median income of 3% to 4%. By that logic, somebody finishing university this year with £20,000 of debt would see that debt grow by more than £1,300 in a year and would need to find a job paying more than £30,000 just to keep up with paying that off. Today, though, we have heard that someone earning £30,000 could be liable to pay even more interest. That will mean millions of young people never paying off their loans and quite a number of those loans—not just the odd one—probably being written off after the end of the 30-year period. The thought of being 16 or 17 and realising that I would still be paying for my education in my 50s would definitely put me off higher education.

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

Unfortunately, I am one of those Members of Parliament who are still paying back their student loans, even though I left higher education more than a decade ago. Does my hon. Friend share my concern that no one in government seems to consider the aggregate effect of people having these levels of debt for so long, when house prices are rising, mortgages are hard to obtain and contributions to the pension system will have to be higher? No one seems to look at the fact that the sheer amount that people pay out on their loans every month diminishes their capacity to spend their money on other things, which is detrimental to family life and their prospects.

[Mrs Hodgson]

I certainly agree. We should also remember that some of the young people being burdened with huge debts will be from families that have no other mechanism to support them in making further life choices, such as getting into the housing market, or in paying unexpected bills. Having large elements of their earned income tied up for the next 30 years will be more of an ask for those young people than it will be for young people from a more middle-class background, but that has not been taken into account. For people from some of the backgrounds that we are talking about who might want to strike out and go to university, such factors will have a big detrimental impact on the decision that they take.

[Mr Gareth Thomas (Harrow West) (Lab/Co-op)]

Following on from the intervention from my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds), will my hon. Friend the Member for Washington and Sunderland West (Mrs Hodgson) join me in asking the Minister to comment on the impact of today’s announcement on undergraduates who want to go on to postgraduate education? We heard nothing about that impact in today’s statement, and it would surely be useful to hear whether those from lower-income backgrounds who have heavy loans to pay back will be deterred from going on to postgraduate study.

[Mrs Hodgson]

That is an important part of the debate, but it has not been discussed yet, and I certainly hope that the Minister will refer to it in his closing remarks. Even during my time as an MP, I have seen a change among the people who have applied to work for me as a researcher, with those who apply now having chosen not to do postgraduate qualifications for the reason that my hon. Friend sets out. Degree-level qualifications will therefore probably be the maximum attainment for some children from working-class backgrounds.

I want now to touch on the education maintenance allowance. At the same time as the current changes are being made, the Government are planning to overhaul the EMA system, which has been instrumental in ensuring that talented young people from less well-off backgrounds get the necessary qualifications to apply to university in the first place. There was a debate on this subject in Westminster Hall yesterday, which was secured by my hon. Friend the Member for Glasgow North West (John Robertson). He is a great advocate of the EMA, and I see from Hansard that he put the case for its retention impeccably, so I will not repeat it.

My hon. Friend has plenty of evidence to back up his case. The evaluation of the roll-out of EMA showed that it reduced the level of those not in education, employment or training and encouraged those receiving it to work harder. Indeed, Institute for Fiscal Studies research showed that attainment among recipients has increased by 5% since the introduction of the EMA. If the Government remove something that encourages less well-off children to stay in further education and to aim higher, and they couple that with huge disincentives to apply for higher education, applications from that group will almost certainly drop significantly, particularly to the better universities.

[Paul Farrelly]

In his intervention, the Minister talked about the importance of encouraging further applications. When I was growing up, I was one of those people whose family encouraged them to go out to work at 16. The EMA, which I argued for in my maiden speech in 2001, has been really important in changing that, but the Government gave us no indication of the implications of scrapping it when they announced the changed regime today.

[Mrs Hodgson]

My hon. Friend makes a good point. I always tell people that the EMA would have been the one extra thing that would have given me the confidence to resist the push to go out to work, because I would have had just that little bit of money that was mine.

I note from Hansard that the Minister who answered yesterday’s debate tried to shift the blame for the decision to remove the EMA on to the previous Labour Government, much as I expect the Minister, unfortunately, to do today. The fact is that there are alternatives to those choices that have been made—ones that would have put more of the burden on the people who caused the situation that we are in, rather than on a generation that has had nothing to do with it.

The Minister for Universities and Science is not representing the Government here today, but he is apparently the author of an interesting book called “The Pinch”. I regret to say that I have not had time to read it yet, although perhaps a friend will be watching the debate and get me a copy for Christmas—if they do, I will be sure to pop along to the office of the Universities Minister to request an autograph. In his book, he argues that his generation—it is not quite my generation, because I am not that old—has benefitted from all the things that it is now unwilling to fund for the current generation and the next generation, including subsidised higher education. Does he not think that the Government’s reforms enforce that attitude, which he clearly sees—or saw—as hugely detrimental to young people?

I have a copy of today’s statement by the Universities Minister; he spoke of introducing a progressive system. The only progress that I can see between when he wrote his book and his speech today is a kind of backwards progress, which is, I believe, an oxymoron—a bit like his claim that the Government’s changes are progressive.