Select Committee on Public Accounts Minutes of Evidence



Examination of Witnesses (Questions 100-119)

MR DAVID NORMINGTON CB AND PROFESSOR SIR HOWARD NEWBY CBE

MONDAY 28 JANUARY 2002

  100. My questions have been totally thrown out because I was expecting you to say yes it had. At least, I was hoping Professor Newby was going to say that it had. Now I have to change tack. What percentage of the tuition fees that have been paid have gone into higher education teaching then? Do you know?
  (Professor Sir Howard Newby) Over the period that the fees have come in there has also been an expansion in student numbers, so it is true that the overall public investment in higher education over that period has gone up, but it has not gone up anything like as much as it would have done if you add the tuition income to the public investment already going in. So there has been a displacement effect. In terms of where it has gone in institutions then, as the Permanent Secretary quite correctly said, since the last Spending Review the long-term decline in the amount of money each institution receives for teaching students has halted, in fact it has gone up very slightly over the intervening period.[3]

  101. That is extremely disappointing, as far as I am concerned anyway. I have not got long left. I am sorry I was late but it took me five hours instead of three to get here. Perhaps some of these tuition fees could go into the railways! The system of student support is universally unpopular. I represent Durham City, which is home to one of the biggest universities in the country, and at the last Election my majority went down considerably. It was not because they did not like me, it was not because I was not a good MP, it was simply because I had 15,000 students who hated the system of student support at the present time and that was the reason they voted Liberal. I cannot think of any other reason why they would want to vote Liberal anyway! I saw that the Chairman had mentioned Figure 19, which clearly shows that the system of student support is very complicated. With all the options there seem to be on Figure 19, it still leaves students with huge debts and puts many off going into higher education. Do you think the system should be simplified?
  (Mr Normington) Yes. The Government is doing a review and the first objective of that review is to simplify the system.

  102. The last question is can you tell us some of the options that are being investigated?
  (Mr Normington) I cannot today talk to you about the review, I am afraid. I can tell you what its objectives are but I cannot go into the review.

  Mr Steinberg: I have got loads more questions but you are here again on Wednesday, are you not, so I do not need to do much work for Wednesday because I have still got these here. Thank you.

  Chairman: We can hear part two of this drama on Wednesday. Mr Bacon?

Mr Bacon

  103. Mr Normington, I would like to start by reading you a quote: ". . . the current financial system for full-time higher education students is ineffective, insufficient and administratively complicated and is therefore a deterent to higher education in itself." Do you agree with that?
  (Mr Normington) I do not agree with every aspect of that.

  104. Can we go through it. Ineffective; you do not think it is ineffective?
  (Mr Normington) It depends how you measure that. The number of students going into university continues to rise. The entry rate last year was 5.4 per cent up and this year it looks as though—and we get the applications shortly—that applications are up again, so it does not appear that students are being put off.

  105. It is true that the proportion from poorer social background is not increasing?
  (Mr Normington) I was going on to say that there is an issue about students from poorer backgrounds.

  106. So to that extent you would say it probably is ineffective?
  (Mr Normington) I would say that is an issue that is being looked at in the review.

  107. What about insufficient?
  (Mr Normington) There is an argument about this. The basic loan is intended to cover the essential support that students need to live, and the overall level has not changed from the time ten or 15 years ago when it was largely paid in grants.

  108. I am not asking how it was ten or 15 years ago.
  (Mr Normington) It has never been the case that student support was to cover all of the students' living costs. It has always been a contribution to that. It has always been the case that students have looked to supplement their grant in other ways.

  109. The Report, Paragraph 2.10 says: "Median expenditure of 5,464 exceeded the maximum loan and grant support of 3,619. . . " Is it not the case that students spend much more time scrabling around trying to find money and getting jobs during the academic term in order to make ends meet?
  (Mr Normington) There has been an upward trend in students working during term time.

  110. What about administratively complicated?
  (Mr Normington) I said in answer to one of the earlier questions that we do think that the hardship and access funds, the funds for those from poorer families, are complicated and do need some refining.

  111. Too complicated? I cannot entice you to say too complicated? It looks pretty complicated to me. Figure 19, which somebody has already referred to, has 23 different sources of funding on it. Of course you have said that the vast majority of people have only two sources but the other sources, lone parents and childcare grants, although they apply to a relatively small proportion of the population, precisely affect the people from the poorer social groups who find it difficult to access them, do they not?
  (Mr Normington) My Minister of State said the other day that she thought it was too complicated in those areas for those students. If you have dependants, for instance, it is complicated.

  112. You would agree, would you, that the financial support system itself has a negative impact on participation from lower social groups?
  (Mr Normington) There is some evidence that fear of debt has some impact on the likelihood of people from poorer families to go to university.

  113. You are taking that evidence into account when you are doing your review?
  (Mr Normington) Of course. Apart from simplifying the system, one of the declared aims of the review is to provide more up-front support for students from lower socio-economic backgrounds and it is in response to that issue.

  114. How many times have tranches of the Student Loan Book been sold?
  (Mr Normington) I think twice.

  115. What was the percentage of the face value of the debt?
  (Mr Normington) They were sold in billion pound tranches at face value.

  116. At face value? They were sold at face value, not discounted face value?
  (Mr Normington) They were sold at face value. It is very important to say this: because the interest rates paid on the loans are at inflation and not at commercial rates, there was a subsidy to those who bought the debt to recognise that. So that may be what you are saying.

  117. So net, net, net the sentence should be "the sales yielded only 50 per cent of the face value of the debt".
  (Mr Normington) I do not know the precise figure, but the net figure would be less because of the payment we had to make.

  118. Why do you think the discount is so large?
  (Mr Normington) I do not think I know. I am afraid I have not come briefed to tell you what the discount was.[4]

  119. There was a large discount, that is a fact.
  (Mr Normington) As I understand it, we sold it at face value but we took into account the fact that the loans are not repaid at a commercial rate, they are repaid at a substantially lower rate which is basically inflation, and therefore if you were doing this on the open market you would be paying a lot more in repayments.

 


3   Ref Qs 483-486, evidence taken before the Committee on 30 January 2002, Improving student achievement in English higher educationBack

4   Ev 48, Appendix 1. Back

 
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