Margaret Hodge
Student Finance
Student Finance
The Minister for Lifelong Learning (Margaret Hodge):
I am not surprised that hon. Members were not sure whether the hon. Memberfor Newbury (Mr. Rendel) had given way. It was not clear whether he hadfinished his contribution or, indeed, what he was talking about. However, Iam delighted that the Liberal Democrats have given us the opportunity todayto engage in a short debate on higher education. It gives me theopportunity, early in the lifetime of the Parliament, to set out theGovernment's vision for expanding higher education.
I shall have to ignore much of the Liberal Democrat contribution because, inmy simple little way, I do not understand the difference between a Scottishgraduate endowment of £2,000 and payment towards the cost of education in atuition fee. They may be called different names but they are the same.
Mr. Phil Willis (Harrogate and Knaresborough): Will the Minister give way?
Margaret Hodge: If the hon. Gentleman will allow me, I shall make my secondattack.
It was interesting that the Liberal Democrats did not make a commitment towidening participation in and access to higher education. That is the basisfor everything on our agenda for universities.
Mr. Willis: What is the difference between paying an endowment at the end ofan undergraduate's course of study and a graduate tax, which would be paidinto the same pot?
Margaret Hodge: All the systems reflect a contribution from the student--asa student or a graduate; directly or through the family--towards the cost ofhigher education. That principle is accepted by all parties.
Mr. Jon Owen Jones: I thank my hon. Friend for giving way, unlike the hon.Member for Newbury (Mr. Rendel). Does she agree that it is disingenuous of aparty that campaigned on honesty in taxation to talk about getting rid ofstudent tuition fees without mentioning the fact that the policy was to befinanced through graduate endowment payments? Where is the honesty intaxation in that policy?
Margaret Hodge: I completely concur with my hon. Friend's views. LiberalDemocrat policies show little honesty, rigour or ability to add up.
Mr. Don Foster (Bath): The Minister clearly does not understand the systemin Scotland. It is therefore vital to place on record the fact that themoney that students in Scotland pay after they have graduated is used as acontribution to increase maintenance support for students. It is not used topay for tuition.
Margaret Hodge: With great respect, the hon. Gentleman is being rather tooclever. Students are worried about the total cost of their education, whichcomprises tuition and maintenance: simply renaming the contribution oneexpects from individuals before or after they have graduated is beside thepoint.
I should like to set out our ambitions to try to give the debate somecoherence. We have said that by the end of the decade we want half of ouryoung people to have the opportunity to benefit from higher education by thetime they reach the age of 30. That is a tough and challenging ambition, butthat target is part of our wider policies for higher education. Itencapsulates many of the values that underpin our general approach togovernment. If we are to maintain and enhance capability and competitivenessin our economy, we need to improve the skills and capabilities ofindividuals in the labour market.
Expanding higher education is not, as has been suggested by some, aboutdumbing down degree standards. Far from it; it is about raising attainmentand qualifications levels so that we enjoy the appropriate and necessaryskills that we need in the labour market to boost growth and prosperity.Indeed, it has been calculated that a 10 per cent. increase in theproportion of the labour force in higher education would raise the grossdomestic product per person by about 3.3 per cent.
Mr. Edward Davey (Kingston and Surbiton): The Government reformed thestudent finance system only three or four years ago. Why, therefore, doesthe Prime Minister feel the need for a review?
Margaret Hodge: I can answer that easily. The hon. Gentleman focuses on oneelement of a much broader policy, which I shall discuss. Any sensibleGovernment would monitor their policies to ensure that they worked preciselyas they envisaged. I believe that the Liberal Democrats agree that it isappropriate for students or their families to make a contribution towardsthe cost of higher education because of the benefits that they gain throughit. That did not happen before we introduced our reforms. Our economic goalis closely linked with our social objective. We do not perceive economicprosperity and social inclusion as competing ambitions. On the contrary, weshall achieve our economic objectives only if we ensure opportunity for allour young people to develop their full potential. Nowhere is exclusion aharsher reality than in higher education. The facts make grim and starkreading.
Despite the rapid expansion in student numbers in the past decade, theproportion of young people from lower-income backgrounds who go touniversity has remained stubbornly low. My hon. Friend the Member for Bury,North (Mr. Chaytor) rightly made that point earlier. Those whose parentscome from an unskilled or manual working background have just over a one in10 chance of getting to university. Those whose parents happen to prosper inthe professional classes have a three in four chance of getting touniversity. It is a 13 per cent. chance for those who are less well-off, buta 73 per cent. chance for those who are better off. That is the measure ofthe challenge that we face and the inequality that we are considering. Thatis the enormity of the gap in opportunity that we are trying to tackle.
Closing that gap is at the heart of our determination to widenparticipation. Our aim must be to challenge all the barriers that inhibitaccess to higher education and to create an intellectual elite, who haveaccess to higher education through their ability.
Adam Price (East Carmarthen and Dinefwr): Does not evidence show thatremoving the maintenance grant has had a greater impact than the abolitionof tuition fees on less well-off students? The National Union of Studentshas produced evidence to show that the average debt for less well-offstudents has increased from £6,000 in 1997 to £12,000 in 2000.
Margaret Hodge: The proportion of people from lower-income backgrounds whoparticipate in higher education has not altered since the introduction ofthe new student arrangements. I wish that the matter was as simple as thehon. Gentleman suggests.
We must deal with every barrier that prevents children from lower-incomebackgrounds from enjoying the experience and benefits of higher education.That challenge is particularly important to me. I know from my constituencyhow huge a mountain we have to climb. In Barking, only 3.5 per cent. of myadult constituents have a degree or equivalent qualification. Theconstituency has a lower participation rate than any other constituency inthe country. I therefore understand how difficult it is to tackle thecomplex barriers that inhibit participation.
I also know, however, what a difference higher education can make to thelives of individuals, as well as to their communities and the economy. Adegree does buy a better income. Indeed, all the evidence shows that,despite a rapid growth in the number of graduates, the graduate premium inearnings has been maintained. A graduate will, on average, earn 35 per cent.more than the work force as a whole. A graduate is half as likely to beunemployed as someone without a degree. Moreover, a graduate is likely tostay healthy for longer than a non-graduate.
Diana Organ: I am delighted to hear that we are keen to ensure that thosewho formerly encountered barriers are given an opportunity to enter highereducation, but are not good further education sectors particularly importantin that regard?
Margaret Hodge: Further education can certainly make an importantcontribution to ensuring that young people obtain prior qualifications, and,perhaps, spend the first years of their higher education in an environmentto which they are accustomed. As we expand higher education, much of it isindeed being delivered through further education.
Mr. David Laws (Yeovil): Liberal Democrats are delighted to learn that theGovernment are to conduct a review of student finance. What perceiveddeficiencies in the existing system will it seek to remedy?
Margaret Hodge: As I told the hon. Member for Newbury, it is sensible andgood practice to review whether one's policies are working properly.
Mr. Laws rose--
Margaret Hodge: I must get on with my speech. If the hon. Gentleman has anew point to make, no doubt it will arise later.
Higher education remains a very good investment for students, which bringsme to an important principle that we have already discussed today. Given thepersonal financial benefits that accrue to graduates, it must be right forthem to contribute to the cost of their higher education. That principle wascourageously established by my right hon. Friend the Member for Sheffield,Brightside (Mr. Blunkett) when he introduced his radical reforms of studentfunding and support in 1998. We will not shift from it as we conduct ourreview--properly and responsibly--to establish whether the reforms areworking effectively.
It might be helpful to recall the context of the 1998 reforms. In 1997, whenLabour took office, there had been a massive 36 per cent. cut in unitfunding for students; the previous Conservative Government--whose membersare not listening very carefully at the moment--had imposed a cap on studentnumbers; and our universities had been starved of proper resources for theirinfrastructure, teaching and research.
Chris Grayling (Epsom and Ewell): Will the Minister acknowledge that, overthe 18 years of Conservative government, the opportunities to attenduniversity that she considers so important expanded dramatically? In 1979,only about 10 per cent. of young people went to university; by the timeLabour took office, the figure had risen to about a third.
Margaret Hodge: I acknowledge that there was a rapid expansion of studentnumbers under the Conservative Government. My point is that that expansionwas appallingly funded, which has created difficulties in regard to thequality of education. The last Government caused their own difficulties bycapping student numbers.
I pay huge tribute to the higher education sector. Despite that enormousunderfunding, it managed to expand numbers while maintaining quality. We arestill punching well above our weight in terms of research, and theuniversity sector is in good health.
Mr. Willis: Will the Minister also acknowledge that, if we subtract theWellcome Foundation's investment in research, the unit of funding per highereducation student during this Government's lifetime has continued to fallyear on year, and is now less than it was in 1995?
Margaret Hodge: I do not accept that. I do accept that unit funding declineduntil, during the last comprehensive spending review, we injected a further£1.7 million of publicly planned resources into the higher education sector.That has enabled us to achieve a 1 per cent. increase this year, for thefirst time in more than a decade.
Mr. Chaytor: During the last Parliament, did not the amount given to primaryand secondary education increase dramatically, thereby enabling far moreyoung people to go to university after leaving school?
Margaret Hodge: Indeed--and what underlies that is the fact that, during ourfirst term in government, we focused additional resources on schools inparticular. It was important to get that right. Our reforms of studentfunding enabled us to start tackling the unholy mess that we had inherited.We have lifted the cap on student numbers, and every individual capable ofundertaking higher education now has the opportunity to do so. We areinvesting an extra £1.7 million of publicly planned expenditure--18 percent. in real terms. For the first time in a decade, we have financed a 1per cent. increase in the funding of each student, and, together with theWellcome Foundation, we have invested £1 billion on the researchinfrastructure in our universities.
That investment is supporting our participation agenda. This year's figurescontinue to show a buoyant demand for places. The latest figures from theUniversities and Colleges Admission Service show a 5.5 per cent. increase inthe number of people allocated a university place this year, and aparticularly pleasing increase of more than 10 per cent. in the number ofmature students who have managed to enter higher education. Having achievedthose considerable advances in the first term of a Labour Government, we areconsidering what further action we need to tackle all the existing barriers.
Joan Ryan (Enfield, North): I applaud the Government's focus on highereducation and the increase in participation rates, but is it not importantfor the review to examine the possibility of more up-front support forstudents with less advantageous socio-economic backgrounds?
Margaret Hodge: Support for students throughout post-compulsory education iscrucial. We have introduced an education maintenance allowance, albeit on apilot basis applying to only 30 per cent. of the country. That is a verygood way of increasing participation. I accept, however, that we must bearin mind the link between the perception of debt and lower-income families.
Let me now deal with what I consider to be equally important issues. Perhapsour most important and difficult task is to increase the number of youngpeople who obtain level 3--A-level--qualifications. At present, nine out of10 of those who obtain A-levels go on to university. Our challenge is tostop the haemorrhage of young people who leave school at 16 after theirGCSEs, and to increase the number who remain in full-time education. That iswhat our secondary school reform proposals are about, and that is what willbe addressed by the strategy on 14 to 19-year-olds that we will publish inthe new year. That is why we have introduced the education maintenanceallowances, which have achieved a dramatic increase, and that is why we areintroducing the ConneXions service. That is our key task.Equally challenging is the task of raising aspirations among young people.
Charlotte Atkins (Staffordshire, Moorlands): Does my hon. Friend agree thatyear 8 is a particularly important year? It is the year before students taketheir GCSE options, and a year in which universities and secondary schoolscould work much more closely together to ensure that students' aspirationsare raised. I commend the work that Staffordshire university does in termsof widening access and working with local schools.
Margaret Hodge: I completely agree with my hon. Friend about ensuring thatwe raise students' aspirations at an early enough age. There has, possibly,been a tradition of thinking that if we can capture students at 15 or 16,before they take their GCSEs, we will achieve that increased participation.I agree with my hon. Friend that we need to reach them at a much youngerage. Again, access to the 14 to 19-year-old agenda is all about ensuringthose raised aspirations.
One of the most shocking statistics that I discovered when I first took overthis portfolio was that 44 per cent. of children from the lowersocio-economic groups--nearly half--never hear about the opportunities ofhigher education during their school years. Abandoning such a huge number ofpotentially talented young people cannot be right. That is why we arefunding a range of programmes to widen participation among non-traditionalgroups of students. Our £190 million excellence challenge will work withchildren from the age of 13 in excellence in cities areas and educationaction zones to raise their aspirations.
Adam Price: The Minister has referred to arrangements in Scotland. Is sheaware of the Rees report on student finance, which also examined the issueof support for further education students? It suggested introducing amaintenance grant in Wales for further education and higher educationstudents. Will the Government allow diversity to flourish in FE and HE, asthey claim to do in other areas?
Margaret Hodge: The hon. Gentleman will be happy to note that that isentirely a matter for the Assembly in Wales.
Let us look at what we are trying to do. We are introducing programmes to domore, with mentoring, out-of-school support and master classes. We areintroducing programmes to get universities and further education colleges todo more, with access courses and summer schools. We are also encouragingthem to look at how they recruit their students, because we want to tacklethe disadvantage faced by children from schools in disadvantaged areas ingaining access to our best universities. We are introducing foundationdegrees, which are both relevant to the labour market and attractive to theuncertain student, for whom we hope they will provide a passport to a job.
We are introducing programmes to encourage universities to change the way inwhich they work, to form closer links between further and higher education,so that they can give support to students from schools in disadvantagedareas. We are introducing programmes to target support on those for whom thefinancial burden is the greatest, with our opportunity bursary scheme, ourchild care support programme, our support for students with dependants andour support for disabled students. All those crucial initiatives shouldsupport our objective of widening access.
Mr. Laws: In the light of the review, can the Minister think of a singleproblem with access to higher education created by the existing system ofstudent finance?
Margaret Hodge: The Government are now reviewing the system of studentfinance. The hon. Gentleman presses me again on an issue on which I havegiven endless replies, and which his party is patently not addressingproperly. If all his solutions are going to come out of the 1p that hisparty wants to put on income tax, that 1p will have to stretch a long, longway. I was trying to stress that the issue of widening participation is muchmore complicated than the hon. Gentleman suggests, and that if the LiberalDemocrats will not address that wider agenda they will fail to achieve thebasic purpose of a student funding system, or anything else.
Caroline Flint (Don Valley): One of the issues that I believe affectsparticipation is the visual aspect of having a university within acommunity. Has any research been carried out into whether the location of auniversity in a deprived area has an impact on the community, notnecessarily in terms of young people going to the university on theirdoorstep, but of their at least thinking about universities elsewhere? InSouth Yorkshire, I believe that there is a case for building on the greathigher education developments that we have achieved and having a universityin Doncaster.
Margaret Hodge: As we widen participation, no doubt we shall want to extendaccess for students right across the country.
I strongly believe that if we can get more young children to go into auniversity at a young age, just to get a feel of what life there would belike, it would be one way of raising their aspirations. We shall experimentwith that through our excellence challenge programme.
I turn to the way in which we are monitoring and evaluating our studentfunding reforms. The principle that the beneficiaries should contribute tothe cost of higher education was right when we introduced the reforms and itremains right now. Having said that, it is worth remembering that not allfull-time undergraduates pay a contribution to their tuition fees. Fullyhalf of those students have all their fees paid by the taxpayer, and onlyone third pay the full fee. We must also remember that the fee covers onlyabout a quarter of the full cost of providing tuition.
I accept that some real issues have emerged from the reform. The system isextremely complex and difficult to understand. There are concerns about theup-front payment of a fee. There is some evidence, although it is notextensive, that debt and the perception of debt are deterring people fromlower-income backgrounds from going to university and might be having animpact on students staying the course once they get to university. We haveestablished the review of student funding to examine these issues.
We are, quite sensibly, working across government to look at whether we havegot the balance right, and properly profiled, between contributions from thestudent, their family and the state. The review is now in place, but at thisstage it would obviously be absurd to speculate on the outcome. Nothing hasbeen ruled in or ruled out.
What is clear is our aim. For too long, access to higher education has beena privilege for the few. We are determined to make access an opportunity forthe many, because it is socially just and economically sensible. At the sametime, we want to nurture and enhance the excellence that exists in so manyof our universities--an excellence that enhances our productivity agenda,enriches our lives and strengthens our communities. Our ambitions for highereducation reflect our ambitions for Britain: delivering on those ambitionsis the task that we face in our team. That is precisely what we are doing.
The Minister for Lifelong Learning (Margaret Hodge): With the leave of theHouse, I wish to respond to the debate. We have had an interesting debateand some hon. Members have chosen to address some of the real challengesthat we face in developing a strategy and policy to meet our ambitioustargets for higher education. The debate was initiated by the Opposition-
Alistair Burt: It is not an Opposition debate: it is a Liberal Democratdebate.
Margaret Hodge: They are both the same. Either way, we do not have much tolearn from the their contributions today or from their actions outside theHouse. I remind the House for example that the Conservatives slashed theunit funding by 36 per cent., put a cap on student numbers and starved ourinstitutions of the money that they needed to retain their global status.
The Liberal Democrats, on the other hand, do not have a clue. The infiniteelasticity of their 1p on tax is the stuff that dreams are made of. Forexample, they have responded to every plea on higher education. They wouldabolish fees, restore grants for poor students, and open access to benefitsfor students in the holidays--[Hon. Members: "No."] I have read it all inLiberal Democrat manifestos and other documents. They would raise thethreshold for repaying loans, put up salaries in higher educationinstitutions, give universities more money for taking working classchildren, give more money to universities for every student that they take,solve the equal pay issue in higher education, extend generous studentsupport to part-time students and bring in student support for all studentsin further education. Then the Liberal Democrats would spend the change fromthe extra 1p tax by cutting class sizes, recruiting more teachers andspending more on equipment for our schools. Who do they think they arekidding?
I welcome the hon. Member for North-East Bedfordshire (Alistair Burt) to hispost and I look forward to engaging in debates with him. As I understand it,he will consult on subsidies for poor students by the introduction ofmaintenance grants and on top-up fees to give our universities some money.As I see it, the only outcome of that will be taxing the very rich, the onlypeople who still occasionally support the Conservative party. Given the hon.Gentleman's record at the Child Support Agency, we should not have expectedmuch more from him today.
Alistair Burt: The Minister is trying to draw conclusions that simply arenot there. I made no specific reference to any particular partner group. Weare having an open consultation with all the parties involved in highereducation. That is in total contrast to the closed review that the Ministerstarted, but which now seems to have been completed by the Chancellor andthe Prime Minister.
Margaret Hodge: I was simply drawing to the House's attention the spendingimplications of some of the suggestions that the Conservatives have put onthe table.
My hon. Friend the Member for Bury, North (Mr. Chaytor) asked us not toabandon the principle that those who gain from education contribute towardsit. I can give him the assurance that we will not. I also recognise my hon.Friend's support for early-day motion 308, and I recognise the additionalfinancial pressures that exist for students in London. I hope that herecognises that their entitlement to loans is 23 per cent. higher thanelsewhere, but we will keep that under review.
The hon. Member for Epsom and Ewell (Chris Grayling) showed more concern fortoday's students than for our ambition to increase participation to half ofall people under 30 in Britain today. The financial burden imposed ontoday's students by the mortgage-style loans system introduced by theConservative party in government creates far more difficulties for today'sgraduates than our proposal, which is based on the ability to repay becauseit is income-contingent. My hon. Friend the Member for Luton, North (Mr.Hopkins) is right that we are a listening Government. We are listening tohim and to all other hon. Members. I agree that providing support to enablepeople to participate post-16 is one of the key issues that we must address.
The hon. Member for Harrogate and Knaresborough (Mr. Willis) also referredto post-16 participation. I agree entirely that if we cannot get that right,we will not achieve the ambition that we have set ourselves. Part of ourtask is to ensure that those students who go through further education--mostof the 16 to 19-year-old cohort is in that FE sector--should receivehigh-quality education. We must work to improve the retention and attainmentrates of those students who go through the education system. The attentionthat we are placing on raising quality and standards in the FE sector--amatter addressed by the chief executive of the Learning and SkillsCouncil--is important. The matter may not have been raised in the mostappropriate way, but the issue is important. I hope that the hon. Gentlemanwill join me and the Government in what we are trying to do to raisestandards.
Only the Government have the credibility, the energy, the commitment and thebottle to tackle the tough and challenging issues that need to be tackled toachieve real change. Getting more people through higher education will notbe easy. We have to keep more young people in full-time education beyondschool-leaving age. We must raise attainment levels at level 3. We must liftyoung people's aspirations, especially those from the lower socio-economicgroups. We must change attitudes in schools, universities and colleges.
My right hon. Friend the Secretary of State said in her speech to theuniversities on Monday, we want universities to put down roots into schoolsand colleges so that the presence of someone from higher education in ourschools becomes the norm. We want young people's ambitions to be raised sothat they are persuaded that university is for people like them.
We must also ensure that the student funding systems are right to supportour policies. I should like to make three brief points.
First, we should not get the issue out of proportion. The UCAS figures forthis year, far from showing a decline, show a healthy increase in the numberof people seeking and securing a place in higher education. The exception,interestingly enough and in contradiction to an earlier claim, is Scotland.That goes for mature students, who belong to the group that many haveclaimed were the most fearful of debt and most likely to reject universitybecause of the new funding regime.
Secondly, we need to be clear about what is in place already. The tuitionfee is means tested. This year, more than half of students will pay no feesat all. There is a range of specifically targeted schemes to support thosestudents most likely to face most financial difficulties. That rangeincludes opportunity bursaries, grants for disabled students, grants tostudents with dependants and child care grants.
Thirdly, I believe that all hon. Members share and accept the importantprinciple that it is right that those who benefit from the investment inhigher education should contribute to the costs of it. The issues that weneed to address have to do with the balance between the contributions fromgraduates, their families and the state, and about how and when repaymentsoccur.
That is why we have established our review. Now is the right time to takestock. We want to look at the concerns that have been expressed aboutstudent debt, especially among students from lower-income families. We wantto maintain and enhance the standards of excellence in our universities, andwe want to make sure that we can reach our target of widening access.
Despite speculation to the contrary, nothing is ruled in, and nothing isruled out. This is a complex and difficult area, and the debate has shownthat we will need to consider it carefully. I reassure hon. Members that theGovernment will want to consult widely on the options that we develop, butour ambition is clear. We want to open up opportunity for many more youngpeople. We want them to have the opportunity to widen their horizons byengaging in further and higher learning, and to develop their intellectualskills, imagination, confidence and understanding.
We want young people to be able to enhance the qualifications that they gainso that they can contribute more to the world of work, and to be able toearn more through their adult lives. We want them to have the opportunity tocontribute fully to our country's economic, social, cultural and politicallife. Our agenda is about widening opportunity for individuals, andenhancing the potential for the economy.
Higher education has a vital contribution to make to that agenda. It is ourtask to deliver, and we will.
