It is a great pleasure to serve under your chairmanship, Dr McCrea. I think that we last met in the Joint Committee on the draft House of Lords Reform Bill—what a spectacular use of all our time that was. I hope to finish a little early to allow some of my colleagues to say a few words—in particular, the shadow Minister, my hon. Friend the Member for Blackpool South (Mr Marsden).
It is a great pleasure to have secured this debate on the last day of term—an important debate that, frankly, following the Minister’s announcements last week should have been held on the Floor of the House. However, as with the Government’s higher education policy, on which we wait in vain for a White Paper and proper scrutiny, the Government have a terrible fear of discussing their skills and education strategy—such as it is.
It is also a great pleasure to have in the debate the Minister for Further Education, Skills and Lifelong Learning, who graciously visited Stoke-on-Trent a fortnight ago to see the excellent work done by Sara Robinson and her team at Stoke-on-Trent college. For a city such as Stoke-on-Trent, the debate is vital. As a report from the Centre for Cities think-tank revealed only last week,
“Skills are the biggest determinant of success for cities, and are critical to the life chances of individuals.”
We are a city with some of the finest craftsman and most skilled workers in the land, who produce objects of inestimable beauty, but we also need to up our educational and skills attainment levels and we expect Government partnership to help us to do so.
Thus far, sadly, we have not had the kind of support that we would like: the scrapping of education maintenance allowances was not helpful, while the botched introduction of higher education tuition fees has seen steep falls in applications to the surrounding universities of Keele, Staffordshire and Manchester Metropolitan. My fear is that some of the strategic thinking that was at work on higher education policy has also been at work in further education—not only the same model of lending, but the same insouciance about detail and accountability.
There are some crucial differences between the higher education sector and the further education sector. A system of loans is an entirely new approach to FE provision and the so-called deterrent factor seems more complex. The argument that up-front course fees can act as a deterrent to learning has some merit. The impact of debt is less clear. I was concerned about the piling up of debt by students moving from level 3 qualifications to higher education and facing a double whammy.
I therefore wholeheartedly welcome the Minister’s concession in last Thursday’s statement that the Student Loans Company will now wipe the outstanding loan for access course students who go on to complete a higher education course. Perhaps the Minister could explain, however, why that offer does not apply to other level 3 qualifications, such as A-levels, BTECs or advanced apprenticeships. The Minister must surely be concerned by his Department’s impact assessment, which suggests that up to 150,000 students might drop out of adult learning altogether.
Clearly, we need a larger evidence base and greater scrutiny of the proposals. Some 375,000 adult learners stand to be affected by the changes, of which a disproportionate number are women—often carers. At Stoke-on-Trent college in my constituency, 1,080 of the 1,780 affected students are women. That is why the £50 million bursary for vulnerable students is a welcome addition, although I would be grateful if the Minister confirmed whether that money is being drawn from other learner support budgets. If so, could he tell us whether the negative impacts of removing the funds have been properly assessed?
I congratulate my hon. Friend on securing the debate. At Stoke-on-Trent, which is similar to Rotherham, he mentioned 1,800 students; in Rotherham and Barnsley, there are probably 3,000 students over 24 who could be hit by up to £4,000 a year extra, for the first time ever paying the full cost of their fees and having to take out student loans for further education. Does he agree that that will put people off and that it is perhaps the worst possible time to introduce student loans for further education, when people are worried about their jobs, their debt and how they are going to pay the bills?
In Stoke-on-Trent and, I imagine, in my right hon. Friend’s constituency, we have seen a fall in the number of those who are seeking to go on to higher education in local universities as a result of the increase in tuition fees to £9,000. Will we see the self-same fall among those who are seeking to go on to further education? That is exactly the wrong strategy to pursue in such cities, which, above all, need to upgrade their skills.
I also welcome Government recognition that there is a capital issue in FE with the STEM subjects of science, technology, engineering and maths, although it is not clear how that will prevent the cost differential between those more expensive courses and the cheaper humanity courses in a sustainable way. Again, we need more details.
Another difference between the higher and further education sectors does not stack up well for the proposals—the relative homogeneity of higher education courses in terms of length, the academic calendar, qualifications offered and the application process, compared with courses in further education, which can often vary in length, begin at different points and have much less obvious timings. To be generous, the Student Loans Company does not have an outstanding record of delivery even when administering the far simpler world of higher education loans. In the Minister’s response, will he outline what steps he is taking to ensure that the Student Loans Company can cope with that added pressure? We will certainly see the consequences in our constituency surgeries if the change goes wrong.
My greatest concern with the proposals, however, surrounds their financing. It is my understanding that the Government have estimated that only 40% of all level 3 qualification loans will get fully repaid. As my right hon. Friend implied, under the current policy, the Skills Funding Agency funds 50% of the cost of further education courses. There is a powerful case for not decreasing state support for further education on social mobility grounds—perhaps even more so than for higher education—but the Government have been clear that deficit reduction is part of their motivation. If only 40% of the loans are repaid, how would that represent a better deal for the taxpayer?
I congratulate my hon. Friend on securing this important debate. Does he agree that there will be an in-built inefficiency if the numbers of students fall so substantially that the fixed costs of colleges are no longer adequately covered by student fees?
That is precisely the kind of area that we will need to look at when considering how the loans play out. What we saw in the higher education loans system was all sorts of additions to the initial policy, as the Government sought to unpick the consequences. In the way that things have been managed, we simply do not have the data to appreciate what will happen.
We can be positive about many elements of the Government plans, but we need to thrash out the questions of the consequences: value for money for the taxpayers; whether the Government have a philosophical objection to public investment in skills, although we know how important they are; and some of the detailed practicalities surrounding last week’s announcement, as my right hon. and hon. Friends have suggested. It would have been helpful to have had the discussion in the House, with more colleagues with FE colleges in their constituencies present to explore such major public policy changes.
It is a pleasure to serve under your chairmanship, Dr McCrea, and I congratulate my hon. Friend the Member for Stoke-on-Trent Central (Tristram Hunt) not only on securing this debate, but on the detailed, cogent and strong case he made that gave both an overview of the issue and the specific details from his constituency. This debate is necessary because, as has been pointed out, the Government have used negative resolution procedure to lay regulations on these loans without any debate or oral statements. This is the biggest change for a generation; it will affect 375,000 learners, and because of the way the Government have introduced the regulations, it will come into effect on 1 September which is before the House returns from its summer recess. That is why it is so important to have more details from the Minister today.
Further education colleges now have to make decisions about retaining courses and staff as part of a Treasury cuts-driven loans system—let us make no bones about it—that even the Department’s officials say will cover only 80% of the current learner cohort. I appreciate the concession that the Government have made in response to widespread concerns across the sector, and the personal diligence shown by the Minister and the Secretary of State on this matter. Those concessions, however, and the written ministerial statement, have only provoked further concerns of substance from all FE stakeholders, and I want to raise one or two of those points with the Minister today.
My hon. Friend noted that only about £20 million of the bursary money is new money, and the 157 Group has also drawn attention to that. Will the Minister say how the funds will operate, what flexibility he is going to give to colleges, and what extra administrative burdens that will place on them? Will he pledge to lobby the Treasury if the £50 million proves inadequate?
The chief executive of the National Institute of Adult Continuing Education said that the loans system is new territory and creates uncertainty, and as we have heard, the Government have asked the Student Loans Company to administer FE loans as well. The SLC’s mixed record in such matters is well known. Will it have additional staff to administer the more complex FE structure, without the central processing mechanism used by UCAS in higher education? Will the Minister comment on the admission by his officials to stakeholders—I was present when it was made—that colleges may have to work with a paper-based system from the Student Loans Company for the first year because of the speed with which FE loans are being introduced?
The Government have promised to write off HE access course loans, but stakeholders such as Million+ are rightly concerned—as was my hon. Friend—that vulnerable individuals will shy away from taking up access courses in the first place. Will the Minister look at a potential broadening of the write-off, or at a grace period of perhaps three to five years for HE access students who, through no fault of their own but due to family circumstances or whatever, find themselves unable to get on an HE course immediately?
Loans are also to be enforced on adult advanced and higher apprentices to take out on an individual basis. However, the written ministerial statement made little reference to how that will work, or to the concerns voiced by the Government’s Commission for Employment and Skills about the potential reluctance of individuals and employers to participate. Why has the Minister so far not taken note of those concerns and those of Unionlearn? What consultation has he had with major employers involved in apprenticeship programmes, including the armed forces, about such reservations? Have his officials made an estimate of the number of adult apprentices who are at risk of dropping out if they are forced to take up loans on an individual basis? In a written reply, the Minister told me that he currently has no agreement with the Treasury to prevent it from clawing back unused loan funding if take-up is slower or poorer than anticipated. Will he undertake to obtain such an agreement before the loans are introduced next March?
As my hon. Friend and other colleagues have said, we need adult learners to continue to prosper and thrive, and not to be put off in places such as my hon. Friend’s constituency in Stoke, from improving their life chances and—this is important—from contributing to kick-starting growth in our local economies, something that we desperately need.
I, too, congratulate the hon. Member for Stoke-on-Trent Central (Tristram Hunt) on initiating this important debate. He and the hon. Member for Blackpool South (Mr Marsden) have spoken about skills being critical to cities. Do they therefore concur that the FE freedoms outlined in the “New Challenges, New Chances” report will give more freedom to employers to meet the needs and demands of the future work force, and are a positive step in the right direction?
That is probably more a point for the Minister than for me, but I will observe that freedoms are great but, as we know, the freedom to dine at the Ritz is not a very useful freedom. This measure must be seen in the context of extra administrative burdens that the FE loan system may place on colleges. In a way, that brings me to my final point. The devil is in the detail, and the Government will be judged on how they deliver this huge change to the further education system over the next 12 months.
It is a pleasure to speak in this debate, and I congratulate the hon. Member for Stoke-on-Trent Central (Tristram Hunt) on securing it. He is right to say that it is timely and, to pick up on his first point, that we should have an opportunity to debate the issue at greater length. I have already made, and I will continue to make, overtures to create some space for such a debate when we return, not least because I am always happy to debate skills and further education. I do not say that those things are the Government’s only shining example of success—far from it—but they are certainly shining brightly. That is because we are determined to give FE colleges the freedoms and flexibilities that they need to become increasingly responsive to employer need and learner choice—my hon. Friend the Member for Wirral West (Esther McVey) referred to that.
Disraeli said that it is easier to be critical than to be correct. The hon. Member for Stoke-on-Trent Central was not terribly critical and was correct to welcome the measures that have been put in place, which I shall mention in a moment. First, however, let me set the scene. With the new freedoms that I have given the sector, it is essential that further education is able to offer as many people as possible the opportunity to gain learning as a means of improving their prospects through progressive learning or access to employment.
When we debated the comprehensive spending review, I and my colleagues in Department for Business, Innovation and Skills—in particular the Secretary of State—were determined that our priority should be those who are most disadvantaged, either by an absence of prior learning or by their circumstances, and those to whom we could make the most difference in terms of further education. That is not to underestimate the significance of lifelong learning or second and third chance education. Indeed, in the same CSR negotiations we cemented and safeguarded the adult and community learning budget that had been threatened and—I am reluctant to say this—sometimes disparaged by the Labour party when in government. That safeguarding surprised some who had not anticipated that we would be so protective, but I believe in adult and community learning not only as a means of re-engaging people but because it adds to the individual and collective well-being of our nation. As you know, Dr McCrea, I believe in the promotion of the common good and would not do anything to inhibit the interests of the people.
To that end, we made it clear that priority would continue to be placed on basic skills, younger learners and people below level 3. When introducing loans, we limited them to people over the age of 24 and those studying for a qualification at level 3 or above. That was a deliberate attempt—more than an attempt; a deliberate policy decision—to prioritise the least advantaged, because in my judgment, it is the duty of the fortunate to promote the interests of the less fortunate, no less in government than in our personal affairs.
In net terms, around 10% of FE learners will be affected by the new loans, and as I have said, they will be older learners and people studying at level 3 and above. Notwithstanding, however, that that is a small minority of the FE cohort, I received representations over time, we conducted an impact assessment, we surveyed the sector, and we engaged in discussions with the 157 Group, NIACE, the AOC and others—the hon. Member for Blackpool South (Mr Marsden) referred to them all. Those representations made it clear to us, and that analysis showed, that some kinds of learner might be, in the words of the right hon. Member for Wentworth and Dearne (John Healey), disproportionately affected by the prospect of loans. One has to be a little cautious, because similar evidence before the introduction of HE loans suggested a lower take-up than subsequently occurred. One therefore needs to qualify one’s doubts in those terms, but I do share the view that we needed to do more. Indeed, that was set out in the very good letter sent to me at the end of June by the hon. Member for Blackpool South, who has contributed for the Opposition. He identified four areas in which he believed that there was a particular issue and he put his case, as ever, very reasonably and fairly. Those four areas were essentially access to—
When I came into the Chamber, the Minister said, “Are you here to pay tribute to my work?” I have been known to do that and I suspect that his hand has been forced somewhat on this question of student loans. Before he moves off the impact assessment and the research, is he not worried that that research showed that only one in 10 current students would definitely do their course if they were faced with having student loans as he is proposing?
Actually, if one looks at the impact assessment closely, it suggests that after clear communication of the offer, we will expect full take-up of the funding for loans. A very significant majority of people, when the circumstances of the loans were explained to them, said that they would participate. Initially, some were very likely to do so and some were less certain, but the number saying that they would participate grew as these things were explained to them. By the way, full take-up of the loans would be 90% of 24-plus learners studying at level 3 and above. We are therefore talking about a very significant majority of 10% of the cohort. That is where we are in terms of the overall FE numbers.
It should be borne in mind that the impact assessment was carried out before I announced the mitigation package, to which the hon. Member for Blackpool South has referred. I was coming on to why we put that in place. A case was made about access to HE. It seems to me perfectly fair to argue that it would be unacceptable for someone to borrow to study an access course and then borrow again to study an HE course. The hon. Member for Blackpool South asked whether we could look at the issue of timing. I think that we should and I will do so. I think that there is an argument for people who do not immediately progress to HE, but do so perhaps a year or two years later. We need to consider how we manage that, but the hon. Gentleman makes a fair point and I will certainly look at it.
I am almost as excited about that as my hon. Friend. I will certainly come to it, because it is wonderful news. I have been asked to give more detail and I will in the time available. Let me just finish my point about the access-to-HE measures. They mean that anyone who goes on to HE will see their access loan written off. That is very important, as that route disproportionately contains people with poor levels of prior attainment; after all, that is why they are doing access-to-HE courses. They are often doing so later in life. There is also a disproportionate number of women and women returners in that group. That is very important, too. What we are doing is therefore socially regenerative; it is about social justice. All I do is driven by my passion for social justice. That is what those courses are about and that is why we have taken this action.
However, that alone, in my judgment, would not have been sufficient. That is why I wanted a bursary fund. The hon. Member for Blackpool South has asked how much of that is drawn from existing provision. About £20 million is completely new money. As hon. Members will know, there is some existing learner support money in FE. It is targeted at, for example, people with learning difficulties and disabilities. That will be made part of this bursary, but I do not anticipate that any learner will be worse off as a result of these changes. In other words, we are not displacing the interests of any group of learners. It is just more straightforward for colleges and learners to have these things in a single national bursary package.
I have always favoured the idea of a national bursary fund, by the way, so this is the fulfilment of another long-held ambition, framed by the discussions that I have had over many years with the sector, which argued that it would be a very effective way of allowing colleges to respond to local circumstances. They know their cohort best; they know their circumstances better than I ever could. We therefore need to build in a level of discretion to allow colleges to work with their communities, their learner base and their local employers to ensure that what they are providing meets the needs.
However, the point made from the Opposition side of the Chamber about how much discretion there will be was well made. I think that we should set down some criteria according to which we expect the money to be allocated and I will do so, having had discussions with the sector and bearing in mind—let us get the time scale clear—that the application period for loans opens in April 2013 for courses starting in August or September 2013. Therefore, although it is true that we will not have a chance to debate the matter more fully until this September, it is not happening until the year after the next academic year. The hon. Member for Blackpool South makes the point that FE colleges must plan and he is right. That is why we have done what we have now, rather than waiting any longer. I hope that the fund will address the issue of older learners, who were, according to the impact assessment, disproportionately risk averse in terms of loans. That is hardly surprising. Someone of 55 might perceive a 30-year loan in a rather different way from someone of 20 or 25.
My hon. Friend the Minister makes a very important point. May I welcome the cautious approach that he has taken in this area? Does he agree with me that at a time of recession, when we are trying to get our economy going, supporting adult learning is incredibly important for reskilling the work force and those who may find themselves out of work?
As I am the champion of apprenticeships, my hon. Friend would hardly expect me to disagree with that analysis. He is right that skills are critical to recalibrating the competences of our work force in a way that makes our economy more sustainable by making our businesses more resilient.
The bursary fund is exciting and new and will allow us to address some of the perfectly properly argued concerns of Opposition Members, but more than that, I wanted to accept NIACE’s proposal of a mid-life learning health check, so that we could look at people at the age of 40 and 50 perhaps and use the national careers service to gauge when and where they could study to upskill or reskill. That there is a need for that has been argued by the sector for some time, and we have taken it on board as part of this package.
On the issue of STEM, which was raised specifically, I take the view that tying capital investment to STEM is not only about growing capacity, but about pinning down the costs of those courses. It is often argued that the costs are so high because of the need to resource in order to deliver them. I will look at how we can be specific about that in the next FE capital round. We have already had a number of such rounds, and we will have many more, because it is vital that we invest in our college infrastructure. We have excellent colleges, such as the one that I visited in Stoke, when, as a result of the kindness of the hon. Member for Stoke-on-Trent North (Joan Walley), I was able to take away with me an Arnold Bennett volume to read over my brief summer sojourn.
All of that represents responsiveness. It was developed after discussion with hon. Members on both sides of the House. It was certainly discussed with the sector. It is a considerable step forward. But I just say this. Our determination is to ensure that it is put in place efficiently and effectively, so there will be no paper-based system. This will be done properly. The Student Loans Company will get it right, as the hon. Member for Blackpool South urged it to do, quite properly. This is a fair package—a just package. It is a package of which we can all be proud. We should now move forward together with confidence to put in place loans and get rid of up-front fees—a point that the hon. Member for Stoke-on-Trent Central very generously made and that I would have made otherwise. We should do so in the spirit that has imbued all we have done; one of elevating practical learning by elevating those who teach and learn in our FE colleges, who change so many lives by changing so many life chances.