Further Education Loans

Tristram Hunt Excerpts

Tuesday 17th July 2012 Westminster Hall

[Tristram Hunt (Stoke-on-Trent Central) (Lab)]

It is a great pleasure to serve under your chairmanship, Dr McCrea. I think that we last met in the Joint Committee on the draft House of Lords Reform Bill—what a spectacular use of all our time that was. I hope to finish a little early to allow some of my colleagues to say a few words—in particular, the shadow Minister, my hon. Friend the Member for Blackpool South (Mr Marsden).

It is a great pleasure to have secured this debate on the last day of term—an important debate that, frankly, following the Minister’s announcements last week should have been held on the Floor of the House. However, as with the Government’s higher education policy, on which we wait in vain for a White Paper and proper scrutiny, the Government have a terrible fear of discussing their skills and education strategy—such as it is.

It is also a great pleasure to have in the debate the Minister for Further Education, Skills and Lifelong Learning, who graciously visited Stoke-on-Trent a fortnight ago to see the excellent work done by Sara Robinson and her team at Stoke-on-Trent college. For a city such as Stoke-on-Trent, the debate is vital. As a report from the Centre for Cities think-tank revealed only last week,

“Skills are the biggest determinant of success for cities, and are critical to the life chances of individuals.”

We are a city with some of the finest craftsman and most skilled workers in the land, who produce objects of inestimable beauty, but we also need to up our educational and skills attainment levels and we expect Government partnership to help us to do so.

Thus far, sadly, we have not had the kind of support that we would like: the scrapping of education maintenance allowances was not helpful, while the botched introduction of higher education tuition fees has seen steep falls in applications to the surrounding universities of Keele, Staffordshire and Manchester Metropolitan. My fear is that some of the strategic thinking that was at work on higher education policy has also been at work in further education—not only the same model of lending, but the same insouciance about detail and accountability.

There are some crucial differences between the higher education sector and the further education sector. A system of loans is an entirely new approach to FE provision and the so-called deterrent factor seems more complex. The argument that up-front course fees can act as a deterrent to learning has some merit. The impact of debt is less clear. I was concerned about the piling up of debt by students moving from level 3 qualifications to higher education and facing a double whammy.

I therefore wholeheartedly welcome the Minister’s concession in last Thursday’s statement that the Student Loans Company will now wipe the outstanding loan for access course students who go on to complete a higher education course. Perhaps the Minister could explain, however, why that offer does not apply to other level 3 qualifications, such as A-levels, BTECs or advanced apprenticeships. The Minister must surely be concerned by his Department’s impact assessment, which suggests that up to 150,000 students might drop out of adult learning altogether.

Clearly, we need a larger evidence base and greater scrutiny of the proposals. Some 375,000 adult learners stand to be affected by the changes, of which a disproportionate number are women—often carers. At Stoke-on-Trent college in my constituency, 1,080 of the 1,780 affected students are women. That is why the £50 million bursary for vulnerable students is a welcome addition, although I would be grateful if the Minister confirmed whether that money is being drawn from other learner support budgets. If so, could he tell us whether the negative impacts of removing the funds have been properly assessed?

[John Healey (Wentworth and Dearne) (Lab)]

I congratulate my hon. Friend on securing the debate. At Stoke-on-Trent, which is similar to Rotherham, he mentioned 1,800 students; in Rotherham and Barnsley, there are probably 3,000 students over 24 who could be hit by up to £4,000 a year extra, for the first time ever paying the full cost of their fees and having to take out student loans for further education. Does he agree that that will put people off and that it is perhaps the worst possible time to introduce student loans for further education, when people are worried about their jobs, their debt and how they are going to pay the bills?

[Tristram Hunt]

In Stoke-on-Trent and, I imagine, in my right hon. Friend’s constituency, we have seen a fall in the number of those who are seeking to go on to higher education in local universities as a result of the increase in tuition fees to £9,000. Will we see the self-same fall among those who are seeking to go on to further education? That is exactly the wrong strategy to pursue in such cities, which, above all, need to upgrade their skills.

I also welcome Government recognition that there is a capital issue in FE with the STEM subjects of science, technology, engineering and maths, although it is not clear how that will prevent the cost differential between those more expensive courses and the cheaper humanity courses in a sustainable way. Again, we need more details.

Another difference between the higher and further education sectors does not stack up well for the proposals—the relative homogeneity of higher education courses in terms of length, the academic calendar, qualifications offered and the application process, compared with courses in further education, which can often vary in length, begin at different points and have much less obvious timings. To be generous, the Student Loans Company does not have an outstanding record of delivery even when administering the far simpler world of higher education loans. In the Minister’s response, will he outline what steps he is taking to ensure that the Student Loans Company can cope with that added pressure? We will certainly see the consequences in our constituency surgeries if the change goes wrong.

My greatest concern with the proposals, however, surrounds their financing. It is my understanding that the Government have estimated that only 40% of all level 3 qualification loans will get fully repaid. As my right hon. Friend implied, under the current policy, the Skills Funding Agency funds 50% of the cost of further education courses. There is a powerful case for not decreasing state support for further education on social mobility grounds—perhaps even more so than for higher education—but the Government have been clear that deficit reduction is part of their motivation. If only 40% of the loans are repaid, how would that represent a better deal for the taxpayer?

[Kate Green (Stretford and Urmston) (Lab)]

I congratulate my hon. Friend on securing this important debate. Does he agree that there will be an in-built inefficiency if the numbers of students fall so substantially that the fixed costs of colleges are no longer adequately covered by student fees?

[Tristram Hunt]

That is precisely the kind of area that we will need to look at when considering how the loans play out. What we saw in the higher education loans system was all sorts of additions to the initial policy, as the Government sought to unpick the consequences. In the way that things have been managed, we simply do not have the data to appreciate what will happen.

We can be positive about many elements of the Government plans, but we need to thrash out the questions of the consequences: value for money for the taxpayers; whether the Government have a philosophical objection to public investment in skills, although we know how important they are; and some of the detailed practicalities surrounding last week’s announcement, as my right hon. and hon. Friends have suggested. It would have been helpful to have had the discussion in the House, with more colleagues with FE colleges in their constituencies present to explore such major public policy changes.