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Lord Graham of Edmonton: Go on!

Lord Tope: I simply offer a few personal views. Far be it from me to break an embargo. There are some principles to be mentioned. We need to see a system developed that addresses the current problems of student poverty and the inadequacy of support for part-time and mature students. We need such a scheme. The scheme should meet the criteria suggested by the CVCP, which say that,

The Bill before us fails on all those counts. We need a new learning investment partnership where the key stakeholders (we are not afraid to use the expression; indeed, we think we thought of it first) in education--the Government, the employers and the individual learners--contribute fairly and equitably to the cost. The Bill achieves none of those objectives. In view of the Statement made in another place today the Bill should be withdrawn tonight and certainly does not deserve a Second Reading.

6.50 p.m.

Lord Dainton: My Lords, when I put down my name for this Second Reading debate, I did so on the basis that it would be an opportunity--possibly the only opportunity in the near future--to draw attention to the crisis in the state funding of higher education in this country. That is something which your Lordships' House, with its abundance of Members well qualified to speak with knowledge and authority, should debate.

We now know that there is to be a committee of inquiry to begin at Easter and finish by the Summer of 1997. I understand also that there is to be a debate, on the suggestion of the noble Lord, Lord Annan, on 6th March. If that is a possibility, it should go ahead for the simple reason that it would be to the advantage of the committee's deliberations to have some of the views of this House and some of the points emphasised as they have been this evening, not only about the student loans

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Bill, but about the wider issues. No committee can afford to neglect any opinion at its beginning, as it should not during its proceedings.

In those circumstances, I shall confine myself narrowly to the student loans Bill in front of us today. If enacted, it would empower the Secretary of State to make financial grants to private sector financial institutions which, in turn, would make loans to students and presumably recover them.

I am in no way opposed to student loans; indeed, if I had not received one 62 years ago from my local authority to augment my college awards I would have had to withdraw from Oxford. Moreover, I have always taken the view that higher education confers a "private good" on the individual who enjoys it no less than a public good on the society to which he or she belongs. The private good comes in the form of the enhanced life chances which a graduate has compared with contemporaries who miss a university education. It is also a "public good" because well-educated citizens make greater contributions to the common weal.

When I was chairman of the University Grants Committee, I foresaw that the legislation introduced as a result of the recommendations of the Anderson Committee--now nearly 40 years ago and which most people in this House have probably forgotten--which provided that all students accepted by UK universities who had a residence qualification in this country, not less than two A-levels and who had been accepted by a university would be entitled to a means tested maintenance grant, while being a tolerable arrangement when the age participation rate was small, could well prove to be financially insupportable when the age participation rate reached 20 per cent. or more, as it is now. Therefore some form of loan scheme would be inevitable. For that reason I raised no objection at the passage of the original arrangements for making loans to students, but I was disappointed--as were other noble Lords--with the performance of the body initially set up. As we heard, Eric Ash had to rescue it from its poor if not maladministration.

The noble Lords, Lord Morris and Lord Tope, made many of the points I intended to make and I shall therefore restrict myself solely to practical matters on whether or not the Bill is passed. Whatever is the case, it will merely mean either that there is one body, the Government, or two bodies--the group of financial institutions who enter into the scheme--administering it. For both of them it is essential that the loan scheme should be inexpensive to administer and should encourage, not deter, good but poor students from entering universities. The Bill before us sheds no light on those matters, though I hope that the Minister will do so in his reply.

We all know that the major disincentives to students entering higher education relate, first, to the combined level of grant plus loan which is set, and the terms of repayment of the loan. We know the terms of repayment of the existing scheme; but we know nothing at all about the new one. Therefore, what the financial houses will arrange and agree with government as to their terms is something of a pig in a poke; unless it is the intention

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of government--we do not know this--not to scrutinise those terms in any degree but to give a blank cheque to the financial houses regardless of how they administer it. I hope that that is not the case.

If the grant plus loan is not big enough, the student will be discouraged and give less time to his studies by seeking and engaging in part-time work. That is a new development in our universities to which I do not entirely object. However, I fear that it may have excessive and deleterious effects on the progress of students. If the terms under which the loan is granted include a requirement to repay shortly after graduation, as does the existing scheme or the one that I had to endure did, similarly, good students will be deterred.

As was mentioned, it is ominous that, though the size of the 18 year-old group was larger in 1995 than the year before, applications to the universities in that year decreased by 1.5 per cent. I do not know whether that is the beginning of a trend or just a blip. I suspect that it may affect the older students entering our universities who have had their older student allowance withdrawn and therefore find themselves even more strapped for money.

I am very much in agreement with the Committee of Vice-Chancellors and Principals that some applicants will be deterred by the prospect of an additional financial responsibility which they would have to face early in the first years of employment. I expect that that will remain the situation even with private financing. That is a situation which is particularly acute with doctors who are dealt a "double whammy". Their much longer courses--five-and-a-half years, sometimes six--and their inability to earn in the last three of those years means that they find themselves entering the medical profession with a debt in the order of £5,000 plus. That is a considerable amount.

It has already been mentioned that the income contingent debt collection through tax or the national insurance scheme avoids many difficulties for the students. Because it removes the disincentive it ought to be seriously considered. If that can be accommodated with a private scheme, so be it. However, it seems to me that it has not been given the consideration that it deserves. I urge the Government to think again at least to see whether it can be incorporated into what one may call the residual scheme, which is a continuation of the exiting scheme.

I promised to be brief and I shall be. I turn now to the students' point of view. Students will not be particularly concerned where the money comes from--the source is of little importance to them--but they will be intensely interested in the conditions of the loan and how the debt is to be repaid. I can find nothing in the Bill or indeed in the previous Act, apart from the condition of beginning to repay as soon as one has graduated, apart from certain exceptions which relate to the practicalities of the loan and recovery.

I shall be interested to know whether the Minister can at the end of the debate--I apologise to him publicly as I have done privately for the fact that for illness reasons in my family I have to leave early and will certainly not

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be able to hear his response--assure us that, although the financial houses will of course be seeking a profit from any scheme--otherwise they would not go in for it--the administrative costs of private sector student loans will be no higher than public sector student loans are at present.

I heard the Minister say that the arrangements will be audited. I hope that he can give us the assurance I have asked for and say in particular that for every £1 million which the Government spend in this way at least as many, and preferably more, students will benefit from financial house arrangements than is the case at present. Otherwise, I cannot see any possible justification for this new system.

I also ask for consideration to be given to the burdensome and expensive nature of the work which the universities have to do now in responding to the existing scheme, which I do not see will be diminished in any way by going into the private sector. Can he assure the House that the Government's mind is not closed to income contingent schemes--that is of vital importance to students--and that some special consideration will be given to the plight of medical students.

Finally, can a place be found in the Bill or in the schedule relating to the administration of the scheme which meets this point and makes sure that this House fully understands what it is the Government intend to do in practical terms? The lack of information within the Bill makes it very difficult indeed to make an assessment as to its desirability or otherwise, though I have indicated what my own preference is. I hope that the Minister will be able to give us some assurance on these points.

I conclude as I began by simply saying that I found some of the points made by the noble Lords, Lord Morris and Lord Tope, very moving and very convincing indeed.

7.2 p.m.

Lord Williams of Mostyn: My Lords, I declare an interest. I am pro-chancellor of the University of Wales. My immediate predecessor was my noble friend Lord Cledwyn of Penrhos and until quite recently the president of the university council of the University College of Wales, Swansea, was my noble friend Lord Callaghan of Cardiff. My noble friend Lord Cledwyn authorises me to say that I speak for both of them as well as for a much larger constituency in the University of Wales.

It is a peculiar institution in the life of Wales since it was Prifysgol y Werin, the People's University, started on small donations of modest people, colliers, slate workers, school teachers and ministers of religion. It has a strange focus of affection therefore within the land of our country. I have never known morale to be so low among the vice-chancellors, those who teach, those who research, and those who study in the university. There is a deep, bitter, corrosive sense of anger. They are weary of no consultation. They are tired of delay and dissembling.

The Minister urged us to attend only to the Bill. Well, it would it not take long, would it? What was it that Senator Mondale said? Where's the beef? I cannot even

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see the crust in this Bill, let alone the beef. All it says is that the Secretary of State may make financial arrangements about student loans. What arrangements? On what basis of public scrutiny? To what effective policy or practical purpose? What are the four institutions in Wales that are thrusting themselves forward to offer these loans? What is the sensible purpose, in the conduct of academic life, to have this dual occasion--a consultation paper put out this afternoon elsewhere and in effect a two-and-a-half line Bill here? Is it simply coincidence that when the Government have no leg to stand on they look for a crutch called "consultation paper"? It seems to happen rather often now, does it not? Would any proprietor of a self-respecting though small chip shop run his affairs in this way?

These are too important matters to be dealt with in this cavalier fashion. If the funding of further and higher education is to be dealt with on a rational basis, by all means have a committee of inquiry but let it be a committee that is to report and whose findings and conclusions will be attended to as part of an overall project, and a committee which takes an overall philosophical view of how we pay for further and higher education, what it is for, and what we hope to offer those who work and study in it.

I said, accurately I believe, that I had never known morale so poor. I have never known such bitterness of feeling among people who are normally very slow to express bitterness. The vice-chancellors and others have borne a very heavy load in the heat of the day for a long time. In the end, if you treat people with no consideration, no consultation and no decency of respect, what you end up with is resentment. Resentment is no useful basis upon which to run a university system.

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