Higher and Further Education Debate
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Shabana Mahmood
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Higher and Further Education
Shabana Mahmood Excerpts(11 years, 8 months ago)
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Shabana Mahmood (Birmingham, Ladywood) (Lab)
I beg to move,
That this House notes with concern that September 2012 marks the first term where students will face the trebling of student fees to £9,000 a year; further notes that barriers are also being put up for vocational routes, with direct Government support for learners cut for level 3 courses and above, which includes apprenticeships and access courses to university, and with Higher Education-style loans being introduced, costing learners up to £4,000 a year; and calls on the Government to change course and, as a first step, reduce tuition fees to £6,000, funded by reversing the corporation tax cut for banks and requiring graduates earning over £65,000 a year to pay higher interest rates on their student loans.
In just over a week, university freshers weeks will kick off in earnest ahead of the new academic year. New students will soon start arriving at their institutions excited, nervous and full of anticipation and hope for their futures as they look forward to three, maybe four, of the best years of their life. They do so against a backdrop of confidence in the quality of our world-class higher education sector, which collectively will do all it can to give them the best possible higher education experience.
But this year is also markedly different, for this year we will see the first cohort of students who as a result of the Government’s action will be paying tuition fees of up to £9,000 a year and leaving university with significant debts which for some will exceed £50,000. Until the Government changed the rules of the game, higher education had been paid for by a partnership between the student and taxpayer since 1998, but this Government’s trebling of tuition fees in conjunction with their 80% cut in the teaching grant for universities represents a betrayal of future generations of students.
The partnership model for funding has been torn up, and students have been told to go it alone. They must bear the burden of the cost entirely on their own. We all know that this is not what the Liberal Democrats said they would do before the general election.
Mr Graham Stuart (Beverley and Holderness) (Con)
The hon. Lady is speaking fluently from the Dispatch Box, but she is doing our young people a disservice. She is scaremongering and sending them the message that they cannot afford university when the monthly payments are lower than they were before, the threshold before they start paying is higher than it ever was before and anyone who suffers illness, who is pregnant and stops working or has—
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I am sure that the hon. Gentleman wants to catch my eye and make a speech later rather than waste time now.
Shabana Mahmood
If the hon. Gentleman had not decided to patronise me at the beginning of his intervention, he might have had enough time to complete his mini-speech. I will move on later to the record drops we have seen in the number of applications, including from mature students, and the increase in the withdrawal rate for students who have been offered university places but decided not to take them, which stands in direct contrast to the rather more rosy picture he is trying to paint.
As I was saying, the Liberal Democrats went into the 2010 general election promising to scrap tuition fees altogether—we all remember that famous pledge—but they broke their promise, and the trust of those who voted for them, and betrayed the students whose votes they courted so assiduously ahead of the election. I wonder how many of them will rediscover their pre-election principles in the Lobbies tonight. Although the Conservatives are no doubt pleased that most of the anger surrounding the betrayal on tuition fees has focused on the Liberal Democrats, they too have form, having previously voted against a rise in tuition fees to £3,000.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
I am grateful to the hon. Lady for giving way and congratulate her on her appointment. The motion
“calls on the Government to change course and, as a first step, reduce tuition fees to £6,000”.
As she knows, in Wales fees are substantially lower, and in Scotland there are no fees at all, so if right hon. and hon. Members from Wales and Scotland support the motion, are they in effect advocating an increase in fees to £6,000 in their respective countries?
Shabana Mahmood
Both the motion and our alternative proposal for the Government of a £6,000 cap on fees reflect our position as it relates to England, not the devolved Administrations. The Conservatives and the Liberal Democrats have played politics with tuition fees in the past, and it is students today who are paying the price.
Simon Hughes (Bermondsey and Old Southwark) (LD)
I am happy for us to deal with the allegations about what happened after we did not win the general election and therefore could not deliver what we promised, but I would be grateful if the hon. Lady would quickly confirm that Labour promised no tuition fees, but then introduced them, promised in its manifesto not to increase them, but then did so, and has now adopted tuition fees of £6,000. Will she confirm that that is entirely correct?
Shabana Mahmood
The right hon. Gentleman’s party went into the 2010 general election promising to scrap tuition fees at a time when they knew the country faced a difficult economic situation, so I am afraid that he cannot escape his own record by looking to much older Parliaments. We are talking about the burden of debt that this Government have placed on students, which is much more significant than anything they faced before.
Gareth Johnson (Dartford) (Con)
Does the hon. Lady not agree that there is something inherently right about those who benefit from having a degree paying for it?
Shabana Mahmood
The principle that those who benefit should pay a contribution towards their degree is absolutely right and one we support, but we believe that paying for higher education should be a partnership between the individual student who benefits and the taxpayer, who also benefits greatly from those going into higher education.
Andrew Percy (Brigg and Goole) (Con)
The hon. Lady might recall that I voted against tuition fees, and I am saddened that some of the things we warned about have come to fruition, but I struggle to understand why the income level of £65,000 has been chosen. How would that be funded, and when would the interest rates come in? If someone drops below that income level, would they fall back down? Can she also explain why the Labour party defends retaining child benefit for people on £65,000 but wants to land them with a higher interest rate on their student loans?
Shabana Mahmood
Our proposal that the Government should reduce the headline level of tuition fees from £9,000 to £6,000 is an alternative measure that they could introduce right now, paid for by not going ahead with the corporation tax cut for the banks. It would be a way for the Government to send a message to the country that they will support future generations of students, rather than saddle them with ever higher levels of debt. As for those earning £65,000 or more, that reflects earnings in each and every year of their working lives. All we are asking is that the wealthiest 10% of graduates pay a little more towards the cost of higher education in order to reduce the costs for those elsewhere.
Shabana Mahmood
I will make a little progress before giving way again.
The biggest impact has been on the number of applicants. Although applications for the coming term are still open, we already know that there are around 50,000 fewer applications to higher education for the coming year and that one in 20 18-year-olds who would have been expected to apply in previous years have not applied this time around, which represents a decline of around 15,000. I am told by the sector that total accepted applications are down by about 30,000 on last year. That is equivalent to shutting down two mid-sized universities—for example Imperial college and the university of Lincoln.
Shabana Mahmood
Not at the moment.
That is set against a backdrop of a worsening economic outlook as a result of the Government’s failed economic policies. The economy is in a double-dip recession made in Downing street. We know that there is a strong link between periods of recession and interest in higher education, as people seek to enhance their employability and competitiveness in difficult economic circumstances, but this year that is not the case. There is a massive drop that, combined with cuts in the number of places, will result in tens of thousands fewer students entering higher education in 2012. It indicates straight away the impact of the Government’s trebling of tuition fees. Students are being put off and are basing decisions not on whether a university education is right for them, but on whether they can afford it. That is a tragedy for both the person making the decision and the country as a whole, because if they miss out on higher education, we miss out by failing to capture their full potential.
Nadhim Zahawi (Stratford-on-Avon) (Con)
On affordability, will the hon. Lady at least admit that a graduate earning £21,000 will pay £45 less than they would have done under the system we inherited from her Government?
Shabana Mahmood
If the hon. Gentleman’s party took on board our £6k proposal, there would be an even more progressive system for future generations of students.
Cost is the real problem. The Centre for Economic Performance recently surveyed 12,000 teenagers and found that all the indications are that the hike in fees in late 2010 increased the perception that going to university is simply too expensive. That perception was significantly higher in comprehensive schools, compared with independent and selective state schools, and among children eligible for free school meals. If these perceptions influence effort at school or behaviour post-16, they will increase future socio-economic inequality.
Mature students are one of the worst affected groups, as many more are choosing not to go to university this year. The Government failed to take into account the effects of their policies on that group, and we have seen an 11.3% drop in such applications, making them the biggest group affected. There are around 30,000 fewer older applicants this year than last year.
Lisa Nandy (Wigan) (Lab)
Does my hon. Friend agree that, at a time when the Government are closing off opportunities for young people at every turn, with the axing of the future jobs fund, the abolition of the education maintenance allowance and youth unemployment now over 1 million, opening up these opportunities to young people from deprived backgrounds is more important than ever?
Shabana Mahmood
My hon. Friend makes an extremely powerful point. I agree with her comment and endorse it entirely.
Too often we in this House consider higher education issues through the prism of the 18-year-old undergraduate going to university for the first time. Although the experience of such undergraduates is of course incredibly important, we know from the figures that in 2009-10 more than a third of undergraduates entering university for the first time were 21 or older. The impact of the trebling of tuition fees on that group is particularly interesting, as their perspective and actual experience of debt and finance are very different. These are people who often have significant financial and family commitments, with mortgages to pay and child care costs. If they are making a decision to walk away from enhancing their skills by obtaining a degree, they are doing so on the basis of cost.
There is a much higher rate of withdrawals from the application process this year than last year—16% higher. At this stage, 13,138 students who are holding offers from universities have decided to withdraw from the process. That is an extremely worrying sign that students who had already made the decision to go to university are now being put off. Having attended open days, filled out applications and gone to interviews, they are now saying “No thanks.” Where will they end up? What are their prospects for the future given the record levels of youth unemployment and the ongoing recession?
Shabana Mahmood
Not at the moment.
Reading the Government’s amendment, one would think that there were no problems with their policy whatsoever and that it has had hardly any impact—further proof, if any were needed, that they are complacent and out of touch.
Shabana Mahmood
I am not going to take any more interventions at the moment; I will do so later.
The Government try to explain away the impact of their choices by saying that the drops in applications are due to the decline in the population of 18-year-olds. However, that does not get them off the hook because, as the Independent Commission on Fees pointed out in its recent report, in the rest of the UK, where the fees regime has remained the same, there has not been the same drop in applications.
Naomi Long (Belfast East) (Alliance)
It may be relevant to look at the applications of Northern Ireland students to Northern Ireland universities versus GB universities. While applications to Northern Ireland institutions have been consistent with previous years, this year applications to GB institutions have dropped by 14%. Even allowing for demographics, it is clear that students are choosing to stay at home and not to apply to university, perhaps in England specifically, because of the rise in fees.
Shabana Mahmood
The hon. Lady makes a very powerful point, and she is entirely right in her conclusions.
The Independent Commission on Fees found that in Scotland, Wales and Northern Ireland the number of applicants aged 20 or over increased between 2010 and 2012 while, by contrast, in England they fell by 12%. The number of younger applicants—those aged up to 19—fell by 7%, but by only 1% to 2% in the other home countries. Although population size could be a factor, the report found that the relative decline in English applications was much higher. That raises concerns about the impact of fees, because there are falls in the number of applicants both in absolute terms and relative to the rest of the UK.
Shabana Mahmood
I have taken an intervention from the hon. Member for Stratford-on-Avon (Nadhim Zahawi), so I give way to the hon. Member for Winchester (Steve Brine).
Steve Brine
They say that persistence always pays off. I thank the hon. Lady for giving way; she is being very generous with her time. She keeps saying that applications are down. At the university of Winchester, fees have increased from just over £3,000 a year to just on £8,000, and applications are up on last year. The main reason is that the graduate employment outcomes of students at the university of Winchester, with teacher training being one of the biggest parts of its business, are 97%. Does she accept that the key point is that it is up to higher education institutions to make the case for students to come and spend their money with them so that they will get the benefit from it?
Shabana Mahmood
I am glad that I gave another hon. Gentleman an opportunity to make a mini-speech. If only the experience of the whole of the higher education sector was the same as that in Winchester.
Shabana Mahmood
I am afraid not; I have no desire to respond to a Whips’ question.
The trebling of fees is not the only thing that this Government have done to destabilise and put at risk the quality of our higher education sector.
Mr Gareth Thomas (Harrow West) (Lab/Co-op)
Is there not another reason to be concerned about the current admissions data? For example, has my hon. Friend seen today’s report suggesting that even vice-chancellors of universities that have done reasonably well in applications continue to be worried about a decline in the number for humanities and languages?
Shabana Mahmood
My hon. Friend is absolutely right. There are worrying signs of perverse things happening as a result of the Government’s policies. Of course, there has been a focus on STEM subjects—science, technology, engineering and maths—which are very important to our continued economic growth, but that should not happen at the expense of modern languages or humanities. It is very worrying that we are seeing drops in the number of applications for those subjects.
Nic Dakin (Scunthorpe) (Lab)
Is it not true that the impact of Government policy is putting off not only UK students but, with the visa debacle, international students, and that that combination threatens to destabilise our universities to the detriment of individuals and UK plc?
Shabana Mahmood
I thank my hon. Friend for raising the subject of international students, which has been much in the news recently with the case of London Metropolitan university. I have written to the Minister for Universities and Science with some detailed questions about the handling of the London Met affair. I have yet to receive a response, but I very much look forward to it given that at last week’s Business, Innovation and Skills questions he ducked the opportunity to promise that no genuine international student at London Metropolitan university would be financially worse off. Perhaps he would like to intervene now to confirm that that will be the case—but I see that he is not going to do so.
Keith Vaz (Leicester East) (Lab)
I have met some of the students at London Met. It is not just a question of being financially worse off; some had come to the end of their degrees and had been asked to take re-sits when they were six weeks away from getting their PhDs. It is very important that no matter what the Government have done—they may have done the right thing; the courts will decide in the end—genuine students should not lose out as a result of their decision.
Shabana Mahmood
My right hon. Friend, who is Chair of the Home Affairs Committee, has been speaking up powerfully on behalf of genuine international students at London Metropolitan university, and I commend him for his efforts in trying to protect them from the impact of the decision to revoke its highly trusted status. He is absolutely right. Genuine international students who have paid huge sums of money for the privilege of a UK higher education and who have come to the end, or almost the end, of their studies at London Met should at least have been given the opportunity to continue and complete them there rather than have to scramble around to find an alternative institution that might take them. It seems entirely right that new international students are prevented from coming to London Met until these issues are resolved, probably through the courts system, but those who were already here and were genuine international students should not have had to suffer in this way.
This is one of the hardest years for universities, which begin the year 20,000 places down thanks to 10,000 places being directly cut by the Government and a further 10,000 being taken away because of the discredited, and frankly chaotic, core and margin policy. Core and margin was a deliberate attempt to force fees down—but crucially, not to benefit students but because the Minister got his sums wrong when he, the Business Secretary, who is sitting next to him, the Deputy Prime Minister and the Prime Minister were busy telling everybody that £9,000 would be the exception rather than the norm and that the average would be much more like £7,500. We now know that that is not how things panned out. To cover that up, and no doubt to get the Treasury off his back, the Minister introduced his core and margin policy. That policy does not put students at the heart of the system. First, it sends a dangerously conflicting message about the cost of tuition. On the one hand, the Government tell students that they can afford £9,000 a year because of the repayment terms, but on the other they try to show that cheaper courses are a good option for those put off by the top level of £9,000. It also acts as an inverse pupil premium. Incentivising poorer students to take up cheaper courses means that they are entering into a higher education experience with the least being spent on them, their learning resources, their activities and their institution. This undermines the Deputy Prime Minister’s pupil premium policy, and there is a risk that it will further entrench educational inequality in the UK.
Mr Thomas
Some of the cheaper courses to which my hon. Friend refers are clearly intended to be provided by commercial, for-profit universities. Why does she think that Ministers believe that commercial, for-profit universities should be regulated to a lower standard than mainstream universities?
Shabana Mahmood
I thank my hon. Friend for his question, which the Government have managed to duck through their refusal to introduce a higher education Bill in this Parliament. Frankly, they were taught a very hard lesson on the Health and Social Care Bill and other reforms that they have tried to make, so they have bottled it on higher education, which means that there are regulatory gaps in the system. I and others in the sector have warned that regulation is incredibly important to the reputation of our higher education sector, and that the Government should not miss an opportunity to ensure that the regulatory system for all providers of higher education in our country is robust and represents a fair and level playing field.
The core and margin model further undermines the idea of student choice. The policy makes a mockery of the Minister’s ambition to put students at the heart of the system, because it artificially takes places away from institutions that have high demand for their courses, to much lower-demand colleges. It is incoherent, hypocritical, bad for students and bad for universities. Alongside the core and margin model, the Government have removed a number of controls for recruitment at grades AAB as a result of the plan to go down to ABB next year. Again, the implementation of the numbers control policy poses a threat to the stability of the higher education sector.
John Healey (Wentworth and Dearne) (Lab)
My hon. Friend is making a very powerful critique of the chaos caused by recent policies. We have two very fine universities in Sheffield in south Yorkshire. Sheffield Hallam university has told me, just as she has said, that the problem is that
“the goalposts were moved often and late this year…This made it difficult for potential students to decide where they might want to go and difficult for Universities to be precise about what they could offer and how many places they had.”
Does my hon. Friend recognise those problems, which are being caused by the Government’s policies?
Shabana Mahmood
I thank my right hon. Friend for his intervention. In fact, I visited Sheffield Hallam university during universities week and the academic staff I met made exactly the same point to me. The way in which the Government have gone about making their changes to higher education, with the introduction of the core and margin model after applications had been made and after fees for the academic year had been set, was chaotic, caused universities no end of difficulties and is absolutely not the way to treat a world-class higher education system.
Last year’s estimate of the number of students who would fall into the grade AAB category was 20,000 lower than what transpired when the results came out a few weeks ago. That places a considerable burden on the student support budget, which cannot properly be planned, and risks exacerbating funding pressures on top of the points that my hon. Friend has made about Sheffield Hallam university.
There is a considerable risk that the nature of equivalent qualifications—a distinction for a BTEC, for example, will be counted in with the AAB-plus grading—means that estimates will be very difficult to calculate and are highly likely to be inaccurate. This adds yet more uncertainty and instability to a sector already fraught with upheaval. Institutions will lose out, budgets will not stretch, and services and support for students will be put under significant strain.
The early indication is that the policy is not working. The vice-chancellor of Southampton told the press last week that his university, which was meant to benefit from the AAB policy, has been struggling to recruit and is about 600 students down. I have visited Southampton university with my hon. Friend the shadow Business Secretary. It is an excellent institution and I am sorry to see that it is facing such difficult circumstances as a result of the Government’s ill-thought-out and ill-planned policies.
On the heels of the trebling of tuition fees and the scrapping of the education maintenance allowance from 2013-14, the Government are withdrawing the support that they offer for people aged 24 or over who take A-level equivalent courses and above, and are introducing a system of loans for further education students. These could be as much as £4,000 a year. Course fees are expected to rise dramatically as colleges look to recoup the money they lose from Government funding. At present, the Government provide about 50% of the funding for such courses, so this mirrors the problems that occurred as a result of their disastrous changes to higher education loans. According to the Skills Funding Agency’s figures, about 376,000 people took such courses in 2010-11. The changes could have a real and damaging effect on social mobility and on individuals’ career and job prospects. It is an attack on aspiration and on people trying to get on. Many of those taking level 3 qualifications missed out on the opportunities the first time around and may come from disadvantaged backgrounds.
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
The further education college in my constituency, Hackney community college, provides a lot of support to precisely those people whom my hon. Friend is talking about—people who did not receive education the first time around and who now often have children. Now they have to make a choice about whether they can commit to a course for three years and I fear that many will choose not to. Does my hon. Friend have any further comments on the Government’s policy in that regard?
Shabana Mahmood
I thank my hon. Friend for her intervention. She is absolutely right. As I have said, choices that are being made on the basis of affordability represent a tragedy not just for the individual making them, but for us as a country, because we are missing out on their potential at a time when we should be investing in our education and skills base. In a highly skilled economy we need our people to have high-level skills. This Government are creating circumstances in which that will not be possible in the future.
This Government’s policies will affect level 3 apprenticeships for those aged 24 and over. The added costs could act as a deterrent for potential apprentices and the added bureaucracy could put off businesses from offering places.
A high percentage of learners are also enrolled in courses directly related to, or benefiting, public services. For example, just over 90,000 learners were enrolled in courses in health, public services and care, and over 45,000 in those for education and training. Sixty three per cent. of those affected are women. A drop-off from those numbers would hit local services, and local economic growth prospects could hit the productivity of the public sector and the life chances of tens of thousands of adult learners. The policy will also affect those taking courses in science, technology, engineering and maths when we need more people, not fewer, to take STEM subjects in order to compete in the world with new technology and new industries.
As with higher education, the Government’s policies on further education take us in the wrong direction on participation and social mobility. We are mindful of the impact that the trebling of fees is having on students and would-be students, so this time last year we suggested an alternative to the Government. We have called on them to cut the tuition fee cap to a third, to a maximum of £6,000. We have proposed a fully funded way of doing that, paid for by not going ahead with the corporation tax cut for the banks and through some additional payments by the wealthiest graduates.
Pete Wishart (Perth and North Perthshire) (SNP)
The hon. Lady is being very generous in giving way. We know now the difference between a Labour tuition fee and a Conservative tuition fee—it is £3,000. She says that the proposal will be funded by reversing the corporation tax for banks. Does that include Scottish financial institutions? Why should they pay for a cut in tuition fees for English students?
Shabana Mahmood
No, I will not, because I must wrap up. Under our alternative package, the top 10% of earners—those with average incomes of £65,000 or more over their working lives—would pay more, but research from the House of Commons Library has shown that all other income groups would be better off under this package. Universities would receive funding to compensate them for the loss of income from lower fees and the package would be revenue-neutral. The important point is that the headline level of debt carried by students would be significantly lower and would avoid the harm to families and graduates that would be caused by the Government’s plans.
Tonight’s vote is the last opportunity before the new academic term begins for this House to force the Government to change course on their trebling of tuition fees and to give hope to future generations of students that we as a House are prepared to prioritise them and their future; that we will not abandon them; that we understand that we need to provide them with ladders of opportunity, not kick them away; and that we will do whatever we can to help them fulfil their aspirations. If they are allowed to succeed, we as a country will succeed, and I commend this motion to the House.
Mr Deputy Speaker (Mr Lindsay Hoyle)
I warn Members that I will have to introduce a seven-minute limit on speeches, and that that will have to go down later on, due to the amount of time that we have.
Shabana Mahmood
The Minister has tried to defend his £9k policy, but has avoided saying anything about the 80% cut to teaching grant funding, which has necessitated the trebling of tuition fees to £9,000 a year. What does he have to say about that?
Mr Willetts
That leads me on neatly to setting out what our reforms are accomplishing. The first thing they are accomplishing—[Interruption.] The hon. Member for Birmingham, Ladywood (Shabana Mahmood) will have to be patient, because I am going to set out the figures for her. Our reforms ensure that students will continue to get well-funded higher education, while at the same time—we make no apology for this—saving money for the Exchequer, because of the fiscal crisis that we inherited from the previous Government. The total amount of cash going to universities to pay for the teaching of students is £7.2 billion for 2011-12, £7.4 billion for 2012-13 and £7.9 billion for 2013-14. We are increasing the amount of cash available to finance the education of university students, while significantly reducing the Exchequer contribution.
Contrary to what the Opposition spokesman said, we are maintaining a partnership between Exchequer funding and private funding. The latest OECD figures, which were published yesterday in its excellent education handbook, estimate that approximately 40% of the costs of educating students will be met directly by the Exchequer. The other 60% does indeed come not from students, but from graduates when they can afford to pay it back. That is a sensible way of financing higher education in an age of austerity.
As well as providing more cash for universities while saving money for the Exchequer, our second achievement is increasing the choice and flexibility in the system by liberalising the controls over numbers that we inherited. We have started that this year with our liberalisation for AAB students. We estimate that approximately one in four students will benefit from the freedom of choosing a university without any of the old corporatist controls on the total number of places at individual universities that we inherited. We are proud to be going further next year by including ABB students, meaning that one in three students will enjoy those freedoms.
Mr Willetts
I want to make some progress, but I will of course give way to the Opposition spokesman for a second time.
Shabana Mahmood
I thank the Minister for giving way a second time. Will he remind the House why he had to introduce his core and margin model? Does he remember telling the House on many occasions that £9k fees would be the exception, not the norm?
Mr Willetts
I did not recognise what the hon. Lady said about fees of £7,500. I have explained to the House many times the basis of the calculations. We introduced the policy to bring more diversity into the system. There are local further education colleges across the country that, for the first time, will be able to offer higher education, financed out of our core and margin policy, which is to be welcomed.
We have therefore increased choice and flexibility. We have also transformed the amount of information that is available for prospective students, which we believe will drive up standards in universities as prospective students think about what contact hours they will have, what the class sizes will be, how universities score on the national students survey and, crucially, how universities score on employment outcomes for graduates.
Indeed, this morning, I joined Which? at a London comprehensive for the launch of its excellent new website, which offers far more information to prospective students than ever before. It was a great moment. It was also a pleasure to be joined by the president of the National Union of Students. The NUS is working with Which? to provide better consumer information for prospective students.
Mr Willetts
The OECD actually believes that our proposals are a way of continuing to ensure that a good number of people go to university even when we are having to save Exchequer funding. It believes that other countries can learn from our model.
I have set out our policies, and I should like to turn to the Labour party’s policies, about which the hon. Member for Birmingham, Ladywood said surprisingly little in her lengthy speech. We know from the motion that Labour’s policy is £6,000 fees. There is a long and unhappy history to Labour’s higher education policy. I will not take her through the whole of it, although I am tempted. I will jump straight to where we are at present, as stated in the motion and in the longest single statement of Labour’s policy that we have found, the speech by the shadow Secretary of State on 2 December. His explanation of that policy took up a tiny fragment of the speech, a few lines. It was the type of fragment of text that academics in our universities love to pore over. He said:
“I’ll explain how this works: reducing the maximum level of fees to £6,000 while compensating universities for the difference costs £1.1 billion.”
That was his starting point. Well, the Department’s official costings show that his policy of bringing fees down to £6,000 would cost £2 billion. That £2 billion is currently going to our universities to pay for the education of students and for outreach, bursaries and access programmes that we thought Labour supported. He would take away that £2 billion of funding for higher education. He claims that he would miraculously be able to finance that, although admittedly he would only have £1.1 billion so he is £900 million short already.
Let us go through how the shadow Secretary of State claims he would plug that gap. He stated:
“£350 million will come from automatic savings from reducing the cap to £6,000 because it will mean some associated expenditure, such as on as fee waivers, will no longer be required”.
The trick is in the words “such as”, because it is not just fee waivers. Let us be clear about what that “associated expenditure” is. It is programmes to assist with student retention; outreach programmes whereby universities go to local schools and encourage students to apply to university; and bursary programmes financed out of the higher fees to offer our students increased financial support. I have a simple question for the hon. Member for Birmingham, Ladywood. I have already permitted her to intervene twice, and I will do so again. Can she offer a guarantee that no student at university would be worse off as a result of the changes that she would make to save that £350 million?
Shabana Mahmood
I am very happy to intervene on the Minister, and I can absolutely guarantee that. What he is missing in his desperate attempt to attack the much more progressive £6,000 fee proposal is that it would automatically obviate the need for quite so many fee waivers and bursaries created by his more expensive system of tuition fees.
Mr Willetts
That is a very confusing intervention. First, the hon. Lady said that she could guarantee that nobody would be worse off, then she said that Labour’s policy would obviate the need for bursaries. Let us be absolutely clear that no student will pay fees up front. They will be paid by graduates. Bursaries matter because they are cash for students now. Is she pledging that the extra money from fees above £6,000, some of which finances bursary programmes and extra support for students, would continue after fees were reduced to £6,000? Yes or no? Would all bursaries be preserved?
Shabana Mahmood
The position of bursaries would be unaffected under the £6,000 proposal. We are saying that the additional cost incurred by moving to £9,000 tuition fees would be brought down. We would not need quite so much money, because people would not have the same level of debt.
Mr Willetts
We are talking about future graduate debt, and the House is noticing that the hon. Lady is wriggling on the issue. We are saying that the extra funding helps to pay out cash for students at university through higher bursaries that are paid for out of revenues from higher fees. Students will have observed the failure of the Labour party to commit to maintaining that money.
Let us look at the next item that will supposedly meet those losses. We have established that the cost is not £1.1 billion but £2 billion, and that £330 million of that already comes from a set of measures that students will dislike. The shadow Secretary of State went on:
“£300 million comes from cancelling the Government’s planned cut to the corporation tax on the banks”.
That is the next extraordinary device that he thinks will help him save that money. Let us be clear: this Government have introduced a bank levy to raise at least £2.5 billion a year. That was set out by the Chancellor in the 2012 Budget, to take account of the benefit to the banking system from additional reductions in corporation tax on banks. In other words, we are already raising this money; we are already collecting extra money from the banks through the banking levy which is to offset the effect of lower corporation tax. There is no reduction in the taxation on banks that the Labour party could use to pay for this policy; the banking levy is extracting that funding.
If any Member of this House were remorseless in ensuring that every pound of revenue was extracted from our banks to contribute to education and other purposes, it would be my right hon. Friend the Secretary of State. We are already extracting a large amount of money from the banks, and it is evidence of the bankruptcy of the Labour party’s thinking that when faced with any problem or public expenditure challenge it keeps claiming that it can meet the cost by taxing the banks. The evidence shows that the funding is simply not available to pay for it.
Reversing the VAT increase—£13.5 billion—is supposed to be met by taxing the banks. The Opposition have called for more capital spending—£5.9 billion—which will supposedly be met by taxing the banks. Reversing the child benefit savings of £2.5 billion will apparently be met by taxing the banks. Reversing tax credit savings—£5.5 billion—will be met by taxing the banks. They want more regional growth funding, and now we learn their plans for universities as well. There is simply no way in which taxing the banks will solve the gaping black hole in the Opposition’s financial proposals, and we will not let them get away with it.