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Higher Education

I am surprised by some of the claims made by millennium plus, because our estimates are extremely cautious. We require only 1 per cent. of the outstanding stock of student debt to be repaid earlier to generate the cash needed for our policy, and that is a cautious assumption. However, I have heard the objections of the Government, and want to take a few minutes to go through them, because I do not think that they are well founded. We had the opportunity to hear what the Minister's concerns were in last week's Guardian debate on higher education. I want to do him the credit of going through his four contentions and seeing whether any of them stand up. The first is that our policy is supposed to be""Regressive, benefiting only the very wealthiest graduates,"" the argument being that only wealthy graduates will wish to repay. The key feature of our proposal is to enable more university places to be offered. The crucial point is that the extra applications this year are from students from black and minority ethnic backgrounds, students from poorer backgrounds and students from families without a history of going to university. The 10,000 extra places will benefit students who, given their backgrounds, would otherwise be unlikely to go to university. The key test is the purpose for which the money is used. In this instance, it is being used for a purpose about which Conservative Members care greatly: improving social mobility and opportunities in this country. The Minister's second objection, which we have just heard from the hon. Member for Bolton, South-East (Dr. Iddon), was that our proposed scheme would not generate anything like the sums needed to provide 10,000 additional fully funded places. As I have said, the scheme already operates in other countries. Obviously the specific circumstances of countries differ, but early repayment reward schemes operate in Australia, New Zealand and Canada, and in all those countries they generate substantial extra early repayments. We only need 1 per cent. to be repaid early to fund our scheme. The Minister's third objection was not expressed in a particularly coherent way. He said:""The interest on the amount saved invested instead over the period of the loan repayment by the graduate would outweigh the benefit of the discount by far."" I think that, translated, that means that in the Minister's view it would cost more for the repayment to be made earlier, and that he would prefer to receive a flow of income from the interest receipts from the loan over a period of years. My understanding is that he did not want to end up losing interest on the amount that would otherwise have been repaid gradually. However, he is proposing his own sale of the student loan book. The Government have taken powers to sell it. Indeed, given some exchanges during the Committee stage of the Sale of Student Loans Bill, it seems that they may have envisaged selling it at a discount—a larger discount, I rather suspect, than the 10 per cent. that we propose. It is all right for Ministers to sell the student loan book early at a substantial discount on a wholesale model, but as soon as we, in true Conservative manner, give individuals the ability to choose whether to repay early with a 10 per cent. discount, apparently it is suddenly a bad return. All that we are doing is offering a retail individual option alongside the wholesale option which, as we know, Ministers have been discussing with banks. I would welcome an assurance from the Minister that in no conversation with the banks has he ever considered a discount of more than 10 per cent. for the sale of the student loan book. I strongly suspect that he has considered a substantially larger discount, and I therefore do not think that he is well placed to make that objection.