Select Committee on Education and Skills Minutes of Evidence


Examination of Witnesses (Questions 311 - 319)

WEDNESDAY 22 MAY 2002

BARONESS WARWICK OF UNDERCLIFFE, PROFESSOR RODERICK FLOUD AND PROFESSOR DIANA GREEN

Chairman

  311. Good morning. It is good to see you back here. We have seen you in the past, and it is delightful to have someone in the House of Lords willing to give evidence. You will be aware that we only have an hour of questions and we are starting to write up our report so that we can have some influence on the Government's departmental inquiry. We will be starting that process this afternoon. I have already urged my colleagues to ask direct and sharp, quick questions, so can we have reasonably sharp, quick answers back? There is a lot to get through and this is a very important inquiry. What is wrong with the present system of student finance? Many of us would have argued that it has hardly bedded down, and the results from the first full graduate intake will not happen until later on this year. What is wrong with the present system?

  (Professor Floud) It is much too complicated so that hardly anybody actually understands it, in terms of its impact on individual students. That imposes very significant burdens on institutions that are trying to guide students through the maze. Secondly, it appears to be, perhaps because of poor publicity about the nature of the scheme, inhibiting students from entering higher education, particularly whose who, for various reasons, may be debt-averse. Those are the main objections.

  312. How much hard evidence is there yet that this new-ish system is putting off students from studying, who otherwise would have studied?
  (Professor Green) The student debt project is underway at the moment and we do not have the results of that until December. Already, there is some evidence emerging, particularly in terms of social class and ethnicity, but we do not have the hard data at the moment, and we will not have it until this year. We have other studies that have been done by other people, and some work has been done by Claire Callender, who you have already seen, particularly in her most recent report for the GLC on the impact on the students of London. It is quite clear that the size of indebtedness, in terms of approaching higher education, is a significant problem for certain groups of students, and does constrain their choices. That reinforces the point that Roderick is making: one of the problems with the current system is that not only is it complex in terms of institutions guiding students through it, but when students have to make a rational choice as to whether or not they can and should take the risk of investing in higher education, in terms of their contribution to it, it is very difficult to make that in a rational kind of way. They do not know, until they have applied, what the costs are likely to be. They cannot make the decision before.

  313. You represent the supply side of higher education. What evidence have you got, as the great providers of higher education, that you are not getting students that you were getting under the old system? Where is the hard evidence? You have pointed out one researcher, who we know well and who we will be interviewing later this morning, but where are the hard facts of student indebtedness, of them not paying off loans and falling into debt? What is the hard evidence that universities are picking up?
  (Professor Green) There are two responses to that. You gave one answer yourself: the new system is only three years into that. It is only this summer that we will get the first graduates who entered into the new system, so we do not have the trend data. It is too early. The second area of hard evidence is the institutions themselves, in terms of what happened over the last three years and the extent to which they have been able to recruit and retain students and the extent to which they have found that debt is one of the problems.

  314. Baroness Warwick, can I ask you a slightly different question. There is a view that if the Government and the Department had come back from this inquiry, generally, when one anticipated it, with four or five ameliorating suggestions and modifications to the system, and said, "fine, it is not bedded down yet; we are doing something on the edges", people would have said "fair enough". This inquiry has gone on a long time, and we do not anticipate the results of it until July. Has it not raised expectations that something root-and-branch will be announced and should be announced?
  (Baroness Warwick of Undercliffe) I am sure that we would appreciate a root-and-branch review, particularly if it is not only of student support. We want to ensure funding for institutions to provide the resources to give students a decent experience, irrespective of the institutions they attend, and the review should address that point as well. The hard evidence is that student numbers have held up. The anecdotal evidence is that in those institutions that are attracting students and have a history of attracting students from the poorer social backgrounds, although students might be attracted, financial constraints are making a difference in their choice whether or not they stay in the institution. It is relatively anecdotal because, as Professor Green says, we do not have systematic evidence to that effect. But it is interesting to note that overall student numbers have held up over the last three years. In terms of the nature of the review, we simply await what the Government decides. I do not know whether we can comment on just how radical it ought to be. We have perceived that it is a very complicated system. We hope that at least it will address the complexity of the number of schemes that exist at the moment.

Mr Simmonds

  315. Is it your view that the current system supports the students from the neediest backgrounds, or is it your view that it merely subsidises those coming from middle-class backgrounds?
  (Professor Floud) Clearly, there is an element of subsidy involved, as indeed there is in virtually every public service in every part of the welfare state that one is talking about. At the moment, the system provides additional help to those from low-income families, partly through the means-testing of the tuition fee element but also through the system as a whole. We believe that together with not just the loan element, but also the different hardship grants, those are clearly and rightly targeted towards those low-income recipients. The difficulty of that, as I pointed out, is that the current system is simply too complex for anybody properly to understand. We believe that that therefore constitutes a disincentive.

  316. How would you like to simplify the system?
  (Professor Floud) We would like to simplify the system in the direction of a simple grant for people from low incomes. The next question is, obviously, how low is low? That is a difficult question to answer.

  317. Would that be means-tested, or the income of the parents, and what happens if the parents are not giving the grant for those who—
  (Professor Floud) That has been a constant and difficult feature of all our systems for the last twenty or thirty years, parents who do not make the expected contribution to their children's education. All universities have attempted to argue to such parents that they ought to be doing so. I do not think any scheme will guard against that particular problem, other than a scheme which does not look at parental income at all and simply provides grants to the students. We have not got rid of that problem by the current system and you cannot get rid of that problem until there is some kind of means-testing, which almost inevitably has to be based on the parental income.

  318. Are universities, in general, under this current funding system, having problems reclaiming fees from students, and, if so, is that a large problem?
  (Professor Floud) There is a problem, not with the 50 per cent of students who do not pay fees of course, although there, but there are often administrative difficulties in dealing with the local authorities concerned, and that particularly applies in the cases of universities that were approved through the clearing period. It can take several months to establish with the local authority whether they are prepared to accept responsibility for a particular student. That imposes a substantial cash-flow difficulty and burden on the universities concerned. The Government instructed us to institute instalment schemes for the payment of fees for those who do have to pay fees. That, in my view, leads to a rather silly situation in which we are obliged to offer instalments for really trivial sums of money. The administrative costs of setting up direct debits or other instalments in order to collect in perhaps £20 or £30 three times a year for a student paying a relatively small fee as a result of means-testing, is simply inefficient. This is a silly system. The current system can be simplified administratively and should be. It does not help that we have to deal with the student, with the student loans company, and the local authority. That system should be simplified.

Mr Shaw

  319. Baroness Warwick, you commissioned your research to look at student debt. You said that the fear of debt is one of the factors deterring such applications, and that we should address the issue urgently as part of our current funding review. You were confident that a current research team would offer new evidence for a useful policy debate about what we should do about it. Has your research team evaluated the Barr/Crawford proposals?
  (Baroness Warwick of Undercliffe) We have looked at Nicholas Barr's proposals, along with a range of other proposals.


 
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