Higher Education & Variable Fees

The Institute for Fiscal Studies (IFS) have published an independent analysis of the 3 parties’ policies for higher education funding.

The IFS is a well respected independent think-tank, it's report says:

“Students would be better off under the proposed systems – by the most under Labour, where their net position would improve by almost £1.5bn as a result of grants and fee deferral. The position of students would improve the least under the Conservatives.

“Graduates from the poorest family backgrounds would on average make repayments for longer under the Conservatives than the Labour system, despite having lower levels of initial debt. This is because lower initial debt under the Conservatives would be offset by a higher real interest rate charged.

“By contrast, graduates from the wealthiest family backgrounds would on average repay their debts earlier under the Conservative than the Labour system. This is because even though interest is accumulating on debt under the Conservative system, the relatively lower initial debt level compared to Labour more than offsets the effects of the relatively higher interest rate.

“Banks may struggle to offer a viable interest rate under the Conservative scheme, since they would be required to write off any outstanding debt after 25 years. It would be a real risk under the Conservative system that the type of students who take out the maximum loans would be those who would be less likely to be able to fully repay them.”

The Office for Fair Access (OFFA) have confimed that around 400,000 students from low income backgrounds (with a family income of under £33,000) will benefit from £300 million in non-repayable cash.

From 2006, a student from a low income background could expect to receive around £11,000 in non-repayable cash (a typical bursary of £1,000 and a £2,700 maintenance grant), over the course of a full time three year degree.

OFFA say:

“This would be up to three times as much ‘free money’ in a student’s pocket whilst they are studying compared to what a student from a low income background receives now. Some particularly well qualified applicants could receive up to as much as £20,000.”

The Conservative position:

• The Tories would charge credit card debt on student loans
• Their policy would help the best off and hit the poorest hardest
• There is a £1bn black hole in their funding policy

Under Labour a student loan can only increase in line with inflation but under Tory plans the interest on a student loan would start rising at eight per cent per year immediately. The Tories say eight per cent is a maximum, but their plans show this is only the starting point for credit card levels of interest rates. The Tories say they will hand over the running of student loans to an independent, private sector company (called the Student Loans Corporation) whose job it is to generate income not just for universities, but ‘to offer adequate comfort to investors' too. If inflation rises then the banks will want to raise the interest rates.

The Tories are helping the best off and hitting the poorest hardest.

The interest rates on student loans will rise at credit card levels for every graduate – the rate will be the same for an unpaid postgraduate or a trainee teacher as it would be for a top lawyer or city banker. The richer the student the smaller the loans they need, and the less they will therefore contribute to the cost of HE. Poorer students take larger loans, which will mean that they will contribute more to the cost of higher education. Poorer students will also lose out from only having access to a £1,500 grant under the Tories instead of the £2,700 grant they will receive from 2006 under Labour’s plans.

The Tories have underestimated by £400 million the likely fee income by using data from 2003–04 instead of estimates for 2009–10. They have underestimated by £300 million the income lost to the Exchequer if the student loan debt book is given away. The Conservatives' proposals make no provision to deal with the unfortunate consequences of high interest rates, and the cost of writing off loans for policy reasons. Putting it right could cost another £400 million. So the Conservatives' sums are out by as much as £1 billion a year.

The Lib Dem position:

• The Lib Dems can’t make their sums add up.
• Under the Lib Dems students would have to study at a University close to their family home.
• The Lib Dems would restrict access to Higher Education.

The Lib Dems have made a staggering wish list of uncosted promises to students. From free tuition to introducing housing benefit during the summer, the Lib Dems policies for students are a programme that no responsible government could deliver.

Charles Kennedy spelt out his vision of Higher Education under a Liberal Democrat Government: “Students would normally attend a college or university near to where they lived and worked.” (‘Speech to Liberal Future, 5 June 2003).

Despite the fact that more students are getting the A levels they need to go to university the Lib Dems have joined the Tories in putting forward policies that would limit access to Higher Education.

The Lib Dems refuse to commit to creating the places needed for a significant increase in poorer students and have pledged to scrap Labour’s plans to set up an Office for Fair Access.

For further information visit:

Below you wil find my responses to the various stages of the HE Bill consultation, publication and progress through the Commons. It is in chronological order, with the most recent responses at the top!

After meeting student representatives in the Commons and discussing the details of the Bill with them, Ministers, 'Rebels' and the Prime Minister I am able to report what action I took on the votes in the Commons and why!

Over the lst 12 months I have received hundreds of papers, representations,lobbies and held dozens of meetings with all interested parties. I have considered the implications and details of this Bill and have not taken any decision lightly.

On Wednesday 31st March there were going to be effactively 3 crucial votes. One on the Ann Campbell amendment (129); one on the Ian Gibson amendment (128) and the final passing of the Bill at Third Reading.

Unfortunately due to a procedural quirk the Ann Campbell amendment was not taken. I was prepared to support this amendment - even though I had enormous difficulties with maintaining one fixed fee.

Next came the Ian Gibson amendment. I could not support this. The actual effect of this amendment was to completey de-regulate fees and thereby there woudl be nothing to stop universities chargin any fee they liked, say œ10-15,000. It would have also removed OFFA and of course wuold remove the financing of the new œ2,700 grant. I therefore voted against this amendment as I want to protect students from œ10,000 pa fees.

Finally once all of the technical amendments were completed we returned to the final stage - Third Reading. I supported the Bill at 2nd Reading to allow changes to take place in Committee and Report stage. Whilst I fully acknowledge that the final version of the Bill is very different from that originally proposed and many positive changes have taken place which give a pretty good overall package, I still felt that it did not do enough to keep our pledge and therefore could not vote for the Bill to become law and 'rebelled'.

Throughout this process I have tried to balance the needs of the Univerities, of the whole education sector, increasing access to university to more students and balancing this with a realistic contribution and repayment method for students. The end package was reasonable but still not perfect. Whilst I could not support the Bill I do not beleive that much of the negative impact suggested by those who have oppsed it from the start will come to fruition.

Report and Third Reading Stage - 31st March

As the Bill enters its final stages in the Commons I have been considering the options very carefully. We now have sight of the amendments proposed by the government and by those opposed to the Bill.

I am receiving final representations from those concened and will meet with representatives of the Loughborough Student Union on 31st March in the Commons and will take into account their views along with others who have expressed both detailed comments as well as general observations.

As always this is actually more complicated than being for or against something, because the wording of the amendments and their effect are often very different from the basic understanding of journalists who report on these matters.

I will update this site with news of the vote(s) on 1st April.

Committee Stage

The Bill entered Committee stage and has been ealt with line by line by the Standing Committee. Only the MPs on that Committee can attend and vote. As a consequence I have had to keep in touch with the Bill through this stage by talking and meeting with colleagues who serve on the Committee. As the Bill is of interest it is of course necessary for those on the Committee to talk to their colleagues. I understand that Anne Campbell MP moved amendments on Variability and lost.

When the Bill in its amended form returns to the floor of the House of Commons for Report Stage I will consider very carefully how to respond.

Decision Day - 27th January 2004

Although there is much hype about today and the vote on 2nd Reading of the Bill, there is still much up for grabs in the future as the Bill progresses through Parliament. I know this is inconveneint for the media who can only concentrate on the simple headlines!

I will be supporting giving the Bill a Second Reading(which is what we are actually voting on) because as I have consistently said - I want to see the ending of up front tuition fees, want to see Universities given additional resources, and want to see the package negotiated since the first introduction of the Bill for poorer students introduced. There is too many good things in this Bill to lose at this stage. We have managed to create a Bill which is very different from that first introduced. The Ministers have moved a great deal towards those of us with genuine concerns, and deserve the chance to take this forward for further debate, if nothing else.

The Bill as it now stands gives a better support package to students from lower income families - one of my concerns.

It ends the up front tuition fee which is crucial. There still seems some misunderstanding of this element in emails and letters I receive. It is vital to understand that the new system will be very different to the current fees. No student will pay anything up front. So when parents say we ca't afford to pay... they won't. Instead the graduate will leave with an real interest free loan repayabale only based on the ability to pay and for a maximum of 25 years. The payment levels are such that at œ15,000 a graduat will pay nothing. At œ18,000 a student will pay just above œ5 per week. Only at a salary level above œ41,000 will a student pay the same levels of repayment as the current system. I think this is fairer and worth supporting.

On the 50% 'target' I am fully behind the Minister in the desire to match our global competitiors. It would show a great lack of ambition to beleive Britain should be left behind on this on. In most of the OECD countries participation rates are much higher than ours. I can't support the elitist snobbery that suggests we are not capable of getting 50% of pupils to a level where they can benefit from University education.

On debt - this is where I share many concerns. However debt is not a new issue for students. One has to ask if this is debt in the tradional sense of the word. This is a 'debt' that is based on income - unlike a mortgage or loan. If you earn nothing you pay nothing. If after 25 years you still owe money it is written off. It is payable at real 0% interest rates ie it is basically interest free. I originally supported the concept of a 'graduate tax' to assist students in making a contribution. In a way the new system is a form of improved graduate tax. It is improved because it is time limited to 25 years and based on the size of the 'loan'. So unlike a graduate tax one would finish paying and one cold control the originla size of the debt.

Why do we need the reform. This is simple. As we expand the access and numbers going into HE we need extra resources - money. This can come from 3 main sources. More taxpayers money - the students and business. As the government is already increasing its spending on the HE sector it is right we all make a contribuiton. However, I do not think it unreasonable that students (like in many other countries) also make a contribuiton (5/6th of funding will still be from thr taxpayer). Some people argue that we should raise taxes to pay for the expansion. I sense from my electorate there is not a great appetite for further tax increases, and if there were I also don't get the sense that student finance would be a popular priority. Even within the education budget there are other calls on any new money - lifelong learning, vocational education, secondary and primary schools as well under 5s provision.

People say that those of us who benefitted from 'free' education are now denying others. The fallacy with this argument is that when most of us got the chance to go to university/poly only about 7% of the population attended. It was a minority privelege. People left university with debt - but it was in the form of commercial loans/overdrafts which were far less generous than the package on offer now. If we areto extend the opportunity we do need to expand the numbers and seek a reasonable contribution.

Most students recognise the investment they are making in their education and 90% say it is worthwhile.

Although I still remain concerned about variability because of our manifesto commitment I am worried by the pre occupation of the debate on the percentage of students who currently don't pay variable fees. Where has been the outcry about variability for part-time, mature and overseas students who of course already pay variable fees.

So this has been a complex and difficult debate that wiill continue. I will let it continue because there are so many good things in this Bill that outweigh those areas where I still have concerns.

So what am I still opposed to. It is our commitment on top up fees. This is why at Report Stage I will not support this apsect of the Bill. It will also mean at Third Reading I will have to consider carefully my own position, and may have to refuse to vote in favour of the Bill.

Debate Improves as People Talk about the Issues

Whilst I have received many hundreds of standard responses to the debate on the future of Higher Education funding I am also pleased to see many people have engaged in the issue. As somebody who arrived at this issue with grave concerns abuot the Bill and the specific issue of Variable Fees I like many others opposed to the Bill have rightly been challenged about a number of basic assumptions.

I will attempt to set out responses to the most Frequently Asked Questions and myths below.I trust you will find the answers to the questions we have been putting to the government as challenging to some of these basic assumptions.

I will try to address the points you have raised - access for lower income families, the 50% target, the question of debt, the amount of money raised, fees v income tax, two-tier education system.

Why will you Support the Bill at 2nd Reading?

Actually this is very straightforward. I have never voted down an entire Bill because they often contain many proposals I wish to see brought into law. The consequence of voting out a Bill at this 2nd Reading stage is that these positive things are lost.

I support the ending of up front tuition fees. I support the reintroduction of grants. If I vote aginst the Bill these will not happen in the lifetime of this parliament.

There are plenty of opportunities for me to keep to my commitment to vote against Top-up-Fees when they are specifically debated at Report Stage.

Bill Published

The HE Bill was published today. I attended the Statement to the House and met with Charles Clarke to discuss my reactions.

I support large elements of the Bill to get rid of up front tuition fees and increase thresholds on repayment. I will therefore, be voting to support the Bill at Second Reading to ensure this can happen. However, this in no way means I endorse Top up Fees/variable Fees and I will use Report stage to see if this can be removed from the Bill.

When the Higher Education Bill is introduced in the Commons and goes through its various stages I will update these pages to reflect the ongoing debate.

I support much of what is in the Bill, including the abolition of up front tuition fees, for example.

I am not convinced about the arguments for Top up Fees and will not vote for this element of the Bill if this remains as currently proposed. However, I do not sign EDMs so my name may not appear in some campaigning material distributed.

However, it is vital that there is a genuine and open debate about the way forward and even though I remain opposed to the variable fees element of the Bill there are many myths flying around about the proposal and their consequences. There is though an intellectual and indeed fairness and social justice debate to support Variable Fees which has to be taken on, not simply dismissed out of hand.

Therefore, I at least urge people to look at the full picture and choices faced as outlined in the sites and articles below. For those of us opposed to Top up Fees there is a real challenge to come up with a costed and viable alternative. Being in government is about making tough and real choices. Being in opposition should require the same discipline in approach.

I certainly don't support the policies of the Tories for example, to slash university funding and cut the number of places and I know that the Liberal Democrats figures simply do not add up!! I will work with other MPs to find a solution from the other alternatives available to find the money to fund the gap in Higher Education spending and create a world class university system that is fair an open to all.

Government Plans at a Glance

The Government's proposals at a glance

- Upfront fees will be abolished. Neither parents nor students will have to pay upfront fees before or during their university education.

- The poorest 30% of full time students are guaranteed a minimum £3,000 package. All students from families on incomes between £15,970 and £33,533 will receive a means-tested percentage of the full amount.

- Student loans will rise to meet the average basic living costs. We will increase the amount of student loan available to ensure that all students have enough money to meet their average basic living costs while at university.

- Repayments will be linked to graduates' wages when they earn œ15,000 or more, paid through the tax system.
Graduate's Salary Weekly Payments 2005
£12,000 £0
£15,000 £0
£18,000 £5.19
£20,000 £8.65
£30,000 £25.96

- Loans for fees and living are rolled together, so the graduate pays one contribution based on money earned, NOT money owed, on an interest-free basis.

- A 25-year cap ensures that any graduate with debts outstanding 25 years after graduation will immediately have the amount written off. For example a graduate earning £18,000 throughout their life with an outstanding loan of £15,000 when they graduate, will only pay £7,000 of the £15,000 back.

- Independent and secure funding for universities. All money raised through variable fees will go directly to the university, providing a sustainable and independent source of income. Under our plans for variable fees, we expect that universities might receive around £1 billion more a year in tuition fees, making £1.8 billion in total.

- Freedom for universities to vary fees from £0 to £3000 for any course they offer.

Some Useful Documents

My Own Thoughts and Tests of Acceptability

I have been opposed to the introduction of Variable Fees because I have genuine concerns about the impact of the policy on both students and the university sector. In particular I am worried about the effect of perceived increased debt and its effect on those from lower income groups. I am worried about the effect of a market in different universities and courses charging different fees and I am worried about breaking a manifesto commitment.

However, as I have said above, we are all challenged to tackle this debate by not simply saying what we are against but also saying what we would do.

So there are fundamental questions which need answering as the debate takes place which will affect the way I am able to vote for various elements of the HE Bill.

My starting point therefore is as follows.

* I support the expansion of Higher Education to the figure of around 50%.

* I reject policies which would see us go backwards in our expansion plans, and reject totally the position, when I was at University in the 80s, when only about 8% of the population received a University education.

* My support for paying for the expansion is on the basis that I realise those who benefit most i.e. the student, will have to make a contribution.

* I support the ending of up front tuition fees, as these implied that parents needed to help financially at the start. A proper repayment scheme/tax should mean no upfront payments and no payback until somebody is earning a reasonable wage.

* I will support a scheme which sees a greater proportion of those from lower income groups going into HE.

* I would support a scheme that sees the revenue raised ploughed back into the HE sector only

* I need to be convinced what the extra costs for HE are per annum, and that these cannot be met out of existing funds. However, if it is correct that taxes alone cannot realistically pay for underfunding, this then begs the question to those opposed to increasing revenue from variable fees, where would we get the extra investment needed. If we couldn't find an alternative would the impact then be worse on Universities than the introduction of Variable Fees?

* I do accept that there is little appetite for additional taxes to pay for HE expansion. Indeed if there was extra money available for education from any source I would support its spending elsewhere in the sector. (See the figures for spending in each sector in the briefing s above)

* I do realise that those who follow a vocational route have been paying and making a contribution for years.

* I have mixed feelings about the argument that this scheme will hit poorest students hardest. If one looks at the facts I believe poorer students could actually benefit (through grants, exemptions and the generous payments regime) but I still have a genuine fear about the perception of debt and whether this will lead to non applications from poorer students.

* I originally favoured a Graduate Tax or something similar, but of course there are different problems with such a scheme - i.e. never ending repayment for example.

* So the picture is not as simple as some would profess (from both those in favour and those against) and the final solution will probably be a mixture and watered down version of tuition and variable fees. If the correct package can be put together which meets my concerns I would have to look seriously at its details.

The Higher Education White Paper - Spring 2003

This is a lengthy document that runs to over 100 pages of changes to our Higher Education system. Our newspapers of course find it hard to cover much of the innovative thinking in the Paper and concentrate on a small number of issues.

I have held my own local consultation exercise with the University, Unions, Students and staff about the White Paper as a whole. As a consequence I have fed back much of this to the Education Ministerial team. I am preparing my own views on a wide range of the issues raised - from Tuition Fees to Foundation Degrees. The whole White Paper has to be viewed in the round to understand much of its thinking.

Obviously the most controversial area surrounds the funding of students. My position is clear. I oppose top up fees. I support deferring Tuition Fees to the end of the degree and maintaining the two thirds of students who do not have to pay the full amount. Although I support the new grants for poorer students I would like to see them more widely available and at higher thresholds. I would also like to see the thresholds increased for repayment triggers on Tuition Fees for example.

So I will support what is good in the White Paper but oppose some of the fundamental problems like Top Up Fees. I have already joined the Labour rebels on this issue when we abstained on a Liberal opposition day in June - helping to send a clear signal to the government that they cannot rely on our support on top up fees. However, as a matter of principle I no longer sign EDMs.

Although I will not be backing the plan to introduce Top up Fees in their current form I do think we need a more honest and open debate about HE funding.

There is a potential long term crisis and the oppostion have been opportunistic on this issue to a staggering degree of dishonesty. It is one of the frustrations of our modern media obssessed world that conducting a sensible debate has become almost impossible.

"We will not introduce 'top-up' fees and have legislated to prevent them."

Manifesto 2001.