Blair urged to act now on student cash

Roderick Floud, president of Universities UK, has called on the government to review its student loans and tuition fees policy urgently.

Professor Floud, who took over as president from Sir Howard Newby on Wednesday, said that the abolition of grants and their replacement with loans had increased graduate debt and that this was having a disproportionate impact on the poor.

Professor Floud's call came as prime minister Tony Blair revealed his concerns about the student-support systems set up by former education secretary David Blunkett in 1997.

Speaking at the Labour Party National Policy Forum last Saturday, Mr Blair said that the abolition of grants and increased student hardship were the top complaints on the doorstep during the general election campaign. There is concern in the government and the Labour Party that student hardship might have contributed to the particularly low election turn out among younger people.

Mr Blair said that he and education secretary Estelle Morris would reconsider the balance of contributions between government and student, while making sure that universities were adequately funded.

The policy forum - comprising cabinet members and Labour Party activists from across the country - also heard that, despite the government's widening participation policy, the proportion of students from low-income families had not increased.

The policy forum is a good indicator of concerns within the Labour Party and of issues that might arise at the party's conference.

The Department for Education and Skills said this week that it had no plans for a review despite the prime minister's clear statement about the need for reconsideration. A spokesman said that the department would continue to monitor the situation - as it had done since 1998.

Professor Floud, provost of London Guildhall University, said: "The student support arrangements need urgent review, in particular because of the increasing evidence of the costs and debt built up by students. It is obvious that this is going to have a greater effect on families with low incomes. We welcome the prime minister's interest in this issue."

From September, half of all people in higher education will be exempted from paying tuition fees, set at a maximum £1,075 for 2001-02. But those exempted from fees because their parents or partners earn below £20,000 a year will still build up more debt, on average, than wealthier, fee-paying undergraduates.

The government's insistence that wealthy parents, who are liable for the full tuition fee, should be no worse off than they were under the previous grants system meant that loans were increased by a sum equivalent to the tuition fee. But because children from higher-income backgrounds receive more parental support, they tend to borrow less than their poorer colleagues.

Owain James, president of the National Union of Students, said: "We are pleased that Tony Blair is talking about a review. The system is clearly not working. We would like to see the Department for Education and Skills act upon Mr Blair's comments and announce a full review of student support. There is money available from the changes in student funding that would allow for the reinstatement of means-tested maintenance grants without taking money from universities."

Barry Sheerman, Labour MP and chairman of the education and skills select committee, said he would welcome a review of student support, but warned against a knee-jerk reaction to restore grants that could drain money from higher education.

Mr Sheerman said: "Going back to the old system of universal, means-tested grants would ruin the potential for expanding our universities. If there are people hurting out there, then let us do something about it. But we must get the balance right."

The Conservative Party will review student support arrangements if Kenneth Clarke is elected leader later this year. Mr Clarke said that the last Conservative government would not have dared to introduce fees at the same time as scrapping maintenance grants.

He said that he would ask the party to look again at student support and, while he could not commit to reintroducing means-tested grants, he would investigate the possibility.

Mr Clarke's rival for the Tory leadership, Iain Duncan Smith, has refused to speak publicly about higher education funding.

* Ivor Crewe, vice-chancellor of Essex University, became chairman of UUK's England and Northern Ireland Council this week, taking over from Professor Floud.