Student Loans
Danny Beales Excerpts(2 days, 15 hours ago)
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Danny Beales (Uxbridge and South Ruislip) (Lab)
I welcome the opportunity to discuss the student loans system. I took out a student loan under the plan 1 system. I am, fortunately, not young enough to have benefited from a plan 2, or, now, a plan 5 loan. However, despite having graduated with about £40,000 of student debt, I did consider myself fortunate—fortunate that I went to university under a Labour Government who had widened participation in higher education and created a fees, grants and loans system that enabled me to go to university and pay my living costs, which my single-parent family would not have been able to do without the grants that were, unfortunately, then cut by the Conservatives. I was happy to contribute towards my university education on the basis that most people at my school would not go to university, but a system that was one of contribution and fairness has become an aggressive system, and I believe it is time to review the plan 2, and now plan 5, loans systems.
I have heard from many of my constituents about the system as it is operating, including those at Brunel University. Recently, a teacher told me about the challenges of repaying her loan and how she is considering going part-time as a result of high interest rates. There are clearly a number of options that could be taken, such as changing the RPI basis to a CPI basis, capping lifetime interest costs and uprating the thresholds once again. Suggestions have also been made by the Good Growth Foundation.
It is important that, rather than going for any one of those changes, we properly analyse the options and the distributional impacts—work which the Conservative party clearly did not do given the half-baked proposals before us. It is quite baffling that the Conservatives moved this motion. Having been the architects of this regressive student loans system, having maintained the system for a decade, having continually frozen the repayment thresholds, and having trebled the fees when in coalition with the Lib Dems and cut maintenance grants for the poorest, they now pretend to be the party of students.
However, the mask has slipped in the last section of the Conservatives’ motion. They plan to pay for their minor change by reducing the number of people going to university. When they say that fewer young people should go to uni, they almost never mean that they should not, or that their children should not, and they do not mean that the universities in their constituencies should close. They are talking about other people, including those at universities such as Brunel in my constituency. They look down on the arts or “ology” courses that they feel have less benefit, and to be frank, that is elitism.
Alex McIntyre
My hon. Friend is making an excellent point about how, when the Opposition say they are going to cut funding for certain courses, they really mean that those courses will be available for wealthier students who can afford to pay for them without a Government subsidy. Does he agree that that will lead to a decrease in students from working-class backgrounds being able to access arts degrees?
Danny Beales
I completely agree that everyone who would and could benefit from a university education should be able to go. We do not widen opportunities by cutting them.
John Burn-Murdoch’s analysis in the Financial Times has shown that other developed countries have increased participation in higher education and not seen the impact on graduate wages that we have seen. That is not inevitable as part of wider higher education participation. We have seen it because of the stagnation in the economy and of productivity caused by the last Conservative Government, not because of higher education participation.
There is a range of cost of living pressures on younger people. Yes, there are student loan costs, but there are also rising housing costs, the stagnation of wages more generally, childcare costs and renting costs, many of which need urgent action. I hear from young people in my constituency about the impact of starting a family or getting on the housing ladder. There was a generational compact that if people worked hard and got on, they would do better than their parents’ generation, but things we had come to take for granted were broken under the 14 years of Conservative Government.
Action was needed, and I am pleased that this Government are reforming and scrapping the broken leasehold system, capping ground rents and taking action on service charges. They have introduced the Renters Rights Act, which the Conservative party opposed. They are taking action on childcare with the 30 hours free childcare, and bringing down inflation and interest rates. I welcome the fact that the Chancellor and the Minister with responsibility for higher education have acknowledged that action is needed on student loans and are actively reviewing the student loans system. I hope that the Treasury Committee’s full inquiry, which is under way, will be fully and promptly responded to by the Government.
Let us be clear: the proposals before us would not solve the student loans system. They are a gimmick that would close participation and close doors of opportunity, which is exactly the opposite of what people and young people in this country need.
Neil O’Brien
If the hon. Gentleman reads to the end of the IFS report, he will see that it costs our proposal in single-digit billions, and we have explained exactly how we will pay for it—I will come to that in a moment—so there is no gaping hole whatsoever. No wonder so many despair, with more broken promises from the Government and ever-rising debt, and no promise of action at any particular time.
How we would pay for our proposal—this goes to the hon. Gentleman’s question—is equally important. Since the last Government created the longitudinal education outcomes dataset, we have had much better data on which degrees do—or do not—provide economic value for students and taxpayers. Economic value is not the only value put on higher education, or any kind of education, but rather than simply pushing more young people towards courses that the Government’s own data show us do not benefit them—they do not help them, and they leave them feeling like they have been mis-sold and betrayed, with a lot of debt and nothing much to show for it—we need to have a rethink. The current approach is not working.
Since the election, youth unemployment has risen to levels significantly above the eurozone’s for the first time in a generation. That is mainly as a result of the Government’s decision to target lower-paid people for tax increases and to increase regulation, but it is not helped by the Government’s unbalanced approach to skills, based on an endless expansion of university courses whether they are any good or not.
Neil O’Brien
Just one moment.
Analysis by the IFS found that total returns on going to university will be negative for about 30% of both men and women—and that is based on the cohort from the noughties. The problem now is probably even bigger because the graduate premium has declined further. As a result, many graduates now earn so little that they will never fully repay their student loans, leaving the taxpayer to cover about £8 billion in losses every year. That is why we would restore the number controls that existed for 70 years and use that to reduce the number of people who are on courses that are not good value for the taxpayer and not helping the young people, either.
To listen to Labour Members, anyone would think that there was not a single bad course, that every single course is totally brilliant and that there is no prospect of ever reducing spending on any single course. That is a fantasy world. We do not say about any other type of public service that every single instance of it is completely brilliant and there is no scope for improvement. We would use the savings from our proposal not just to abolish real interest rates on plan 2 loans but to double the number of apprenticeships for 18 to 21-year-olds so that quality apprenticeships are a real choice at age 18.
Why would we do that? Recent data shows that five years after finishing a course in 2018, the average level 4 apprentice was earning £32,000; by contrast, the average graduate was earning just £26,500 and the lower quartile of graduates were earning £19,000 or less. In many cases, a high-quality apprenticeship can be a better option than a low-value university course. That is why we would make that change.
Oral Answers to Questions
Danny Beales Excerpts(3 months, 1 week ago)
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Torsten Bell
We are taking a pragmatic approach to reforming pension contributions made via salary sacrifice, the costs of which are set nearly to triple to £8 billion between 2017 and the end of this decade. The case for change was made powerfully by a previous Chancellor:
“The majority of employees pay tax on a cash salary, but some are able to sacrifice salary…and pay much lower tax… That is unfair”.—[Official Report, 23 November 2016; Vol. 617, c. 907.]
So said Baron Hammond of Runnymede.
Danny Beales (Uxbridge and South Ruislip) (Lab)
Pat McFadden
I applaud my hon. Friend’s campaigning for young people in his constituency. We are expanding the number of youth hubs, which will offer support across the country. The precise locations will be announced in due course.
Oral Answers to Questions
Danny Beales Excerpts(1 year, 1 month ago)
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The Parliamentary Under-Secretary of State for Work and Pensions (Torsten Bell)
I recognise the strength of feeling on this issue right across the House. We carefully considered the ombudsman’s report, but as the hon. Member knows, we do not think it is fair to provide compensation costing up to £10 billion when 90% of affected pensioners knew that the state pension age was rising, and the evidence shows that letters being sent earlier would have made little difference.
Danny Beales (Uxbridge and South Ruislip) (Lab)
Liz Kendall
I absolutely will. As my hon. Friend knows, the Government have launched the “Keep Britain Working” review led by Charlie Mayfield, the former chair of John Lewis Partnership. He is doing precisely that—looking at how we can better support employers to help keep people in work and get them back to work. Mental health is a real concern for me, with so many young people not in education, employment or training, primarily driven by mental health problems. This is an issue we have got to sort, because it is terrible for them and for their future, and terrible for the economy too.
Furniture Poverty
Danny Beales Excerpts(1 year, 4 months ago)
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Danny Beales (Uxbridge and South Ruislip) (Lab)
It is a pleasure to serve under your chairmanship, Sir Roger. I thank my hon. Friend the Member for North West Cambridgeshire (Sam Carling) for securing this important debate. We can see from Members’ interest the importance of the subject to everyone.
This topic is also quite dear to my own heart, as I have discussed before. Growing up, my mum and I were unfortunately homeless twice. After moving to hostels, B&Bs and temporary accommodation, we were finally given the keys to a new council house—but with no curtains to keep out the daylight and give us privacy, and no bed, only a duvet, and then eventually a shared mattress on the floor to sleep on, so although we had a roof over our heads, we certainly did not have a comfortable and warm home. Unfortunately, experiences like that are all too common in 2024.
For families like mine when I was growing up, who have been made homeless or squeezed out by the precarious private rented sector, it is rare to be able to afford to furnish a property. Colleagues will have seen properties in their constituencies with furniture dumped outside, as people have to quickly leave their private rented sector property with nowhere to go. That challenge has been compounded by the cost of living crisis: we have seen a 31% increase in the cost of furniture between 2020 and 2023.
When my constituents in Uxbridge and South Ruislip are evicted from their homes—my inbox is a testament to the fact that that is an all too common occurrence—they have no idea where they are going to sleep that night. They are told by the council to fit all their belongings into one black bin bag and to turn up at the civic centre. Clearly, one bag of belongings will not contain a bed frame for their children to sleep on, an oven to cook their meals or a fridge to store their medication. These families are also clearly unable to afford storage, which is very expensive, or transport to move their belongings to whatever temporary accommodation they are eventually given. They have to throw away vital belongings or leave them behind, leading to further distressing and life-changing impacts, on top of their homelessness.
Should a family eventually be fortunate enough to get a permanent house, as we have heard today and from the excellent work of charities, only 2% of social housing is furnished—significantly less than in the private rented sector. Many are left without the essential items that we all need for a constructive and healthy life. As we have heard, this issue affects 26% of people in social housing, and a significant group are in deep furniture poverty as they lack three or more essential items. That particularly affects the most disadvantaged, the disabled and people from ethnic minority communities, who have a higher rate of furniture poverty.
The impacts of furniture poverty are scarring; they are often lifelong and life-changing. There is a health impact if a young family cannot get the nutrients they need from a balanced diet because they cannot afford an oven, or even a microwave to heat up a ready meal. If children are unable to get a good night’s sleep because they do not have a bed, or if they cannot do their homework because they do not have a desk like their peers do, there will be a lasting impact on their development. Great research from the End Furniture Poverty campaign, about which we have rightly heard fantastic things, shows that there is a significant extra financial impact on families, through their food and heating bills, if they are not able to afford those basics.
Lacking the necessary furniture items is a trap. It often forces families already facing financial hardship and homelessness to approach unscrupulous loan sharks, take out further debt or borrow money from friends and family if they can, and that leads to a cycle of poverty and destitution, which leads to rent arrears and higher eviction rates—and the cycle begins again.
The good news is that we can end furniture poverty. Since taking power, the Government have shown that they understand the importance of working with local government, where many of the solutions lie. We need to empower and support local authorities to tackle this issue. There are many good local initiatives—we have heard about some in Liverpool—but we need more. We need to work with local and regional government on regional reuse hubs, so that furniture and appliances left behind in properties can be reallocated to the families most in need. Local recycling centres often have furniture that people do not want to see go to waste. Why can we not reuse it for those in social housing and furniture poverty?
We need to look at the household support fund, to which the Government made a strong commitment of £1 billion in the Budget. Unfortunately, a lot of that funding is used not for household items, but for other issues. Can the guidance for the fund be strengthened to highlight the importance of tackling furniture poverty?
As has been said, we need to work with housing providers and registered social landlords to help them reach the key goal of 10% furnished social housing stock. We are rightly updating the decent homes standard, but it must include both the inside and the outside of a home. Furnishings are part of decent housing. I welcome the Government’s commitment to the homelessness strategy and the child poverty taskforce. Those welcome and much-needed pieces of work could play convening roles in tackling this issue.
Tackling furniture poverty will also address the strain on the public purse. We know about the impact on poverty, health and education. Although there is a cost to tacking this issue, it will ultimately lead to savings for health, education and special educational needs bills and for the welfare state.
I thank the charities for their fantastic work on this issue. They give much-needed support to families in our communities—Trinity Homeless Projects in my constituency does fantastic work—and provide advocacy and action in this space. I thank Members for their contributions. I look forward to hearing from the Front-Bench team and working with them to tackle this issue, deliver the change that people in this country not only want but desperately need, and end furniture poverty for good.