Education (Student Support) (Amendment) Regulations 2015

Debate between Gordon Marsden and Rupa Huq

Thursday 14th January 2016 General Committees

[Mr Marsden]

The hon. Lady needs to look more carefully at the differential impacts. The point that I, and I am sure my hon. Friends, would make about this is that debt aversion depends on where someone is coming from. It is perfectly possible to have a situation with those common factors. It is not, however, at all clear from any of the evidence that has been put forward that that would not be a significant disincentive.

I was talking about the things that were said previously: those words will do little to enhance the Government’s alleged commitment to increasing social mobility. The Government and their predecessors set great store by the principle of “nudge”—actions that persuade people to change their behaviour for the better. I remind the Minister that is possible to nudge people away from desirable outcomes such as getting higher education, rather than towards them. The question that the Minister and his colleagues must answer is what attention they have devoted in the regulations, which are highly specific, to preventing that.

A new BIS study included in the impact statement by the Government says that more than half the applicants said they felt put off by the cost of university. Also, for poorer applicants, tuition fee loans and the income-contingent repayment threshold were more important in persuading them to apply, despite the costs. However, the Government seriously underestimate the effect that the grant and the cost of universities have on student decisions. That is backed up by what the Sutton Trust has said:

“Shifting grants to loans may move them off the balance sheet, but it could also put off many low and middle income students and tip the balance against their going to university. Since grants were reintroduced, there have been significant improvements”—

and we welcome that—

“in participation from full time less advantaged students, and this will be put at risk by today’s Budget plans.

The reality is that the Government has miscalculated the levels of repayments it will get from its student loans under the new fees system. Rather than penalising poorer students, it should have a fundamental review of the repayments system. We need long term solutions not a short term fix.”

Research from the NUS that was published yesterday by Populus shows that parents are concerned that the Government’s plans to scrap the maintenance grant will discourage their children from applying to university. Two fifths of those with a combined income of £25,000 or less believe that their children would be discouraged from applying to university if grants were replaced by loans. More than half the parents believed that the plan to scrap grants undermined the Government’s objective of increasing access to university for poorer students.

I want to deal with some other surveys that have been conducted. The changes may well pile even more pressure on to students to alter their work-study balance while pursuing a degree. According to the 2015 Endsleigh survey, produced by a company that has specialised in the area for many years, already 77% of students must work to help fund their studies, using time that could be spent on academic work. That already high number looks set to increase further with the removal of maintenance grants.

The Government claim that they want to strengthen our skills base and that they have given more support for postgraduates. The initial steps that were announced on that are welcome; but there is a risk that they will be undercut because of the debt aversion of the group of students who will lose their grants. The NUS found that after a student finished their undergraduate degree, access to a maintenance grant could also influence their post-study choices.

I want to turn my attention to the specifics of the equality impact assessment that BIS produced for the regulations. It concedes, for example, that black and minority ethnic students, in particular, will be disproportionately worse off than others following the removal of maintenance grants:

“We believe that the proposed changes will disproportionately affect people from ethnic minority backgrounds. This is based on evidence of debt aversion in this group and the increased likelihood for these students to receive the full maintenance grant. We have assessed that there is a small risk to the participation of students”—

given participation rates—

“both from high and low socio-economic backgrounds”.

Additionally, there is risk to the outcomes of these students if they choose not to take out the additional loan available.”

However, a recent BIS study also stated that non-white applicants were likely to cite the importance of maintenance grants in overcoming their concerns about costs. Thus the removal of the maintenance grant will seriously discourage BME students from attending HE institutions.

There is potentially bad news for older learners as well. The equality analysis states:

“Mature students will be disproportionately impacted by the policy proposals to remove the full maintenance grant and replace with additional loan as well as the freezing of targeted grants. The proportion of students aged 21 and over that claim maintenance grant support is significantly higher than their representation in the population of all student support claimants. The available evidence points to the cost sensitivity and debt averseness of this group. The policy change presents a risk for the participation of older students in higher education.”

The assessment has worrying words for disabled students as well:

“As for all students from low income backgrounds we expect the risk to participation of low income disabled students…to continue to be mitigated by the high average returns to HE investment and the repayment protection for low earning graduates.”

That, of course, assumes that current ratios quoted in that respect will remain the same with the massive expansion of the cohort entering full-time work in the next 10 to 15 years. There is no evidence whatever on that.

However, the Government have conceded in the assessment that disabled people will also be disproportionately affected by the decision not to protect the real value of disabled students’ allowances. The assessment says:

“Students from low income backgrounds will be able to access DSA at same level in cash terms but may be disproportionately affected by the freezing (real terms reduction)”—

a term the Government were reluctant to use at the beginning of the equality impact assessment—

“of DSAs and dependants grants.”

For all of the groups that I have cited so far, I and the rest of the Committee want to know what the Government propose to do to mitigate those disproportionate impacts, which their own equality impact assessment so candidly concedes will be the case.

In addition, there is the separate worrying implication that a significant number of would-be students may be discriminated against under these regulations because of their religious beliefs. The impact assessment states:

“There is evidence to suggest that there are groups of Muslim students whose religion prohibits them from taking out an interest bearing loan. This means that this group of students will no longer have access to funding for living costs as non-repayable finance is no longer available. This could lead to a decline in the participation of some Muslim students.”

The complacency about the failure to have available a sharia-compliant alternative to grants that will be withdrawn borders on discrimination. Does the Minister agree that the regulations as they stand will restrict Muslim students from accessing valuable finance, while the removal of grants threatens to weaken further their ability and capacity to carry through their higher education studies?

The Government claim that they are making an alternative to traditional loans available that is sharia-compliant, but it is not there yet, is it, Minister? Yet the Government have known about the issue since April 2014. Will the Minister guarantee that the change will not be implemented until there are firm regulations in law for an alternative finance proposal that will be acceptable to people of the Muslim faith?

[Dr Rupa Huq (Ealing Central and Acton) (Lab)]

I want to share my own example, because these matters are often seen as hypothetical. I started my undergraduate degree in 1990, the first year that voluntary loans were introduced. I did not take one of those because Muslim students are very risk-averse and debt-averse and do not want to carry interest-bearing loans. Does my hon. Friend agree that these are real people, not just hypothetical examples?