Higher Education Funding

John Bercow Excerpts

Thursday 8th January 2015 Commons Chamber

[Mr Speaker]

I call the Chair of the Business, Innovation and Skills Committee, Mr Adrian Bailey, although I think that he is speaking in a personal capacity.

[Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)]

I beg to move,

That this House notes the Third Report from the Business, Innovation and Skills Committee, Student Loans, HC 558, and the Government response, HC 777; and calls on the Government to outline proposals that will sustain funding for the sector while addressing the projected deficit in public funding.

I thank the Backbench Business Committee for agreeing to hold this debate, which is of huge significance to universities up and down the country and, indeed, to the cohorts of students at or about to go to those universities. The debate is essentially about the Business, Innovation and Skills Committee report on student loans. I must thank my Committee colleagues because the report’s recommendations to the Government were unanimously agreed on a cross-party basis. It is fair to say that they reflect the concerns of Members from both sides of the House.

I will also draw on other reports not mentioned in the motion, including some by academic and university institutions, but particularly a report by the independent Institute for Fiscal Studies and one by the Higher Education Commission. I stress that the IFS is an independent body with expertise across both the academic and economic spheres, and that the Higher Education Commission report was co-chaired by the Conservative peer Lord Norton of Louth and Dr Ruth Thompson. Although the reports’ details may vary, their conclusions are remarkably coherent and consistent.

--- Later in debate ---

[Mr Bailey]

I agree. What I find odd is that Ministers will pray in aid a body such as the OECD, but refuse to recognise the overwhelming consensus of opinion of experts across the academic and economic sphere in this country that the system is unsustainable.

So far, the Government’s approach has basically been to say that the figures on which the estimates are based are essentially projected hypothetical figures, which could be altered if macro-economic conditions change. I certainly accept that that is absolutely true in broad terms. One point quoted more often than others is that if graduate incomes increase, it will substantially alter the projected potential deficits and increase in RAB charges.

The trouble is that it is possible to look at a whole range of economic variables, many of which might work in the other direction. Let me cite a couple of examples off the top of my head, but there are many others. First, if the cap in student numbers is removed and we have a larger number of graduates coming on the market as a result, that could further depress the starting salaries for graduates to a lower level than before. That could also have a significant impact on future RAB charges. If the Government had to borrow money at a higher rate than applies at the moment in order to re-lend, that, too, could considerably alter RAB charges.

[Mr Speaker]

Order. I am listening intently and with great interest to the hon. Gentleman’s opening speech. I hope he will not take it amiss if I express the hope that the four or five sets of papers arrayed in front of him do not constitute individual chapters in the development of his speech. Although we are not hugely pressed for time, there are several other hon. Members who wish to contribute. The hon. Gentleman, being a considerate and sensitive fellow, will wish to tailor his remarks accordingly.

[Mr Bailey]

Thank you, Mr Speaker. I reassure you that, given the expertise of some Government Members, and one in particular, the papers in front of me are there to provide a factual basis on which I can respond to them. I am coming on to conclude my particular comments.

The broad point is that where it is possible to look at future macro-economic variables that will benefit the RAB charge, it is equally possible to look at a whole range of them that do not or even work in the opposite direction. What I find particularly worrying is that so far, on the basis of available evidence, it is the authoritative research organisations that have predicted an increase in the RAB charge and they have proved to be correct, while the Government sources, which have been very complacent on this issue, have not been proved correct.

I have spoken about the range of the research done on this issue. In summing up, as a Committee, we did not put any specific proposals before the Government. What we wanted was a review. I recognise that a number of organisations and individuals have looked at this in some detail. They include, of course, the Higher Education Commission, and I am sure that my hon. Friend the Member for Huddersfield (Mr Sheerman) will talk about some of its recommendations. They also include my right hon. Friend the Member for Southampton, Itchen (Mr Denham), who I know has done considerable research and will want to talk about his suggestion, and, of course, the shadow Minister, my right hon. Friend the Member for Birmingham, Hodge Hill (Mr Byrne).

I think it important for us to begin by recognising that there is a problem, but the Government do not appear to recognise that. It is not possible to solve a problem without starting from the basis that there is one, and it seems to me that the Government are sticking their head in the sand. All those other organisations and individuals are putting considerable effort and research into finding a solution, but from the Government we have had no response, just the complacent argument that there is no problem so no problem needs to be fixed. I believe, my colleagues on the Committee believe, and an increasing body in the academic and economic world believes that there is a problem, that there needs to be a review, and that we need to look at these issues. There is no easy answer, no silver bullet, but universities and future cohorts of students can reasonably expect to have some sort of answers to these questions.