Blunkett aims for 35% participation

September 26, 1997

LABOUR, which came to office last May committed to expanding higher education, has given the clearest indication yet of its first-term ambition.

David Blunkett, secretary of state for education and employment, told the House of Commons select committee that the Government hoped to increase the participation rate of 18 to 21-year-olds in higher education to 35 per cent by 2001. "We have already made a start on subdegree qualifications and perhaps over the next five years we could ease the position to 35 per cent," he said.

He said the demand created by higher standards in schools would push the participation rate beyond 30 per cent. There would also be demand from those wishing to return to study. Mr Blunkett declined to set a longer term target, and said he did not wish to place limits on expansion.

Speaking on the day after he had announced a fresh Pounds 165 million cash injection for higher education, he rejected the view of London School of Economics economists Nick Barr and Iain Crawford that factors such as inflation and higher student numbers would cut the real benefit to well under half the amount.

He said he accepted that there will be a tough negotiating session with the Treasury to win further new funding for the financial year 1999/2000 but pointed out that the freeze on departmental budgets imposed by Chancellor of the Exchequer Gordon Brown for the first two years of the Labour government would by then have ended.

He added there was "still debate to be had" with Treasury ministers over the accounting conventions used by the Treasury, which were derided by Barr and Crawford as illogical and a serious constraint on expansion.

The select committee was meeting during the parliamentary recess to take evidence on the financial, access and participation sections of the Dearing report.

Asked by a Conservative committee member, Nick St. Aubyn, for assurances that universities would receive the extra money raised by the Government's planned introduction of student tuition payments Mr Blunkett said: "A strong percentage of the money should go into universities". But he left the door open for investment in other areas of post-compulsory provision.

The mechanics of collecting student loan repayments remain uncertain but Mr Blunkett said that he had not ruled out giving the job to the Inland Revenue. He acknowledged worries which many potential students feel over getting into debt, although he noted that "not so many young people seem to worry about taking out a loan for a car which depreciates from the moment you get it". He said concerns about student debt, making it difficult for young people to get mortgages, had been "brought forcibly to my attention" and that if necessary he was prepared to contemplate legislation.

He said that he hoped that a Higher Education Funding Council for England report on fees paid to Oxbridge colleges would be completed by Christmas. He said any action taken must protect both the colleges that did not have large financial endowments and ensure that the quality of education was not harmed. "Some of the best education in the world is provided by colleges in Oxford and Cambridge. As a graduate of a redbrick university, that is as generous as I can get," he said.

Evidence, page 3; Leader, page 17

WHERE THE Pounds 165M HAS COME FROM AND WHERE THE TUITION FEES WILL GO

The government says it has found the extra Pounds 165 million from within the department's total baseline budget for 1998/99.

It has been found by paying out loans to students in three termly instalments, rather than as a lump sum at the beginning of the academic year. About 90 per cent of students currently take their loan in a lump sum in this way.

This means that ministers have been able to shunt the cost of the third loan instalment into the 1999/2000 financial year. Effectively, it has borrowed the money against the following year. They say this is a genuine saving because it will continue indefinitely. They also claim to be helping students to budget sensibly by paying the larger loans available from next year termly.

The government says Pounds 150 million will be raised through charging fees to better-off students in 1998/99. About 30 per cent of students will pay no fees at all and another third with family gross income of less than about Pounds 35,000 will pay less than Pounds 1,000. The remaining third will pay Pounds 1,000. With about 300,000 students entering university next year, this will result in the Pounds 150 million.

But this is not extra money in the short-term as the Government is giving around Pounds 150 millionless to local authorities towards fees. It will need the money it saves in this way to provide increased loans of up to Pounds 1,000per student to offsetthe fee.

Under present accounting rules, loans are counted as grants in the public sector borrowing requirement, so there will be no net savings for the department in 1998/99. Income from loan repayments will only startcoming in in 2001.

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