My Lords, I will touch on three issues, all to do with higher education, and I declare an interest as a member of council at UCL. The first is the decline in part-time and adult students. There really is a crisis here. Between 2010 and 2016, there was a 60% fall in part-time students. The decline was especially heavy in sub-degree courses which we rely on to train the next generation. Because of this enormously steep decline, and the failure of the Government to intervene, since 2010 we have lost about one-third of part-time education providers. All those who gave evidence to the recent Economic Affairs Committee inquiry stressed the huge importance of life-long learning, of part-time study, of upskilling and reskilling, but none had a plan for actually doing any of that at scale. How do the Government intend to address this enormously important issue, and what is their plan for delivering lifelong learning?
The next issue is the very high interest rates charged on student loans, currently standing at RPI plus 3%. Students have been paying, and are continuing to pay, around 6% interest. This is a very high rate and very much greater than the Government’s cost of borrowing. The Government and some commentators have defended this very high interest rate on the grounds that it is progressive. Many disagree, including the Economic Affairs Committee. We concluded that,
“graduates who only just pay off the loan within the 30 years will pay far more in real terms than higher-earning graduates who pay the loan off sooner”.
We called for the interest rate to be reduced to the level of the 10-year gilt rate, currently around 1.5%. Do the Government still believe that the 6% interest rate is progressive? Will they consider adopting the committee’s proposal to reduce it?
The third issue is that of a sharia-compliant student funding system. I first raised this issue with Ministers in January 2016 and have raised it frequently since. Sharia law forbids interest-bearing loans. That prohibition is a barrier to Muslim students attending our universities and has been a problem since 2012. Successive Governments have known about this problem and have recognised that the current system effectively discriminates against devout Muslims. In April 2014, a BIS consultation on the issue generated an astonishing 20,000 responses. The consultation report noted:
“It is clear from the large number of responses ... that the lack of an Alternative Finance product as an alternative to conventional student loans is a matter of major concern to many Muslims”.
But the report also identified the solution. The solution is a takaful, a well-known and frequently used non-interest bearing Muslim financial product. The Government explicitly supported,
“the introduction of a Sharia-compliant Takaful Alternative Finance product available to everyone”.
That was five and a half years ago. Two years ago, we passed the enabling legislation, but nothing else has happened. Why this extraordinary delay? The Government blame complexity, completely overlooking the fact that the sharia-compliant version of Help to Buy took only five or six months from the beginning to develop and launch. I am told that the reason really lies in a lack of political will and in the inability of the Student Loans Company and HMRC to organise themselves to deliver the product.
I last asked the Government about this in an Oral Question on 25 July. I asked what progress was being made. The Minister replied that the Government would,
“set out plans for implementation as we conclude the post-18 review at the spending review”.—[Official Report, 25/7/19; col. 813.]
The spending review took place seven weeks ago, and still we hear nothing. I remind the Minister that in 2013 David Cameron promised, at the World Islamic Economic Forum, to introduce a sharia-compliant student finance scheme, saying:
“Never again should a Muslim in Britain feel unable to go to university because they cannot get a student loan – simply because of their religion”.
That was six years ago. It is shameful that we have allowed so much time to elapse; it is shameful that we have known the solution for more than five years; and it is shameful that the Government display such an apparently casual contempt and disregard for our Muslim community. Can the Minister say when David Cameron’s promise will be fulfilled?
8.20 pm