39. The previous administration set up a coherent package of measures to ensure fairer funding and financial support for higher education. Much of this was unpicked on 5 July when John Denham, the new Secretary State for Innovation, Universities and Skills, announced a new £400 million support package for higher education students.
40. Under the proposals, to be implemented from September 2008, two-thirds of students will receive some form of maintenance grant compared to just over half of students now. The main proposals are that:
■ More students will receive the full maintenance grant (worth £2,835). Full grants will be available to new students from families with incomes up to £25,000 (compared to the existing cap of £18,360). A third of all students will now be eligible for full grants.
■ More students will receive partial maintenance grants. Students will be eligible if their families have household incomes of up to £60,000 a year. A third of students will be eligible for partial grants, compared to a fifth previously. Much of the funding will be taken up by relatively small payments (£250-500) to a large number of people.
■ Graduates will be able to take a break of up to five years in their loan repayments (a "repayment holiday") at any point after leaving university.
41. The announcement is a clear retrograde step for higher education policy.
42. Firstly, it is inequitable. The package is presented as having the key aim of helping low income families - but in fact much of the funding will go to families well above the low income level. Many disadvantaged young people will stand to lose from this announcement. Those not attending university will see a higher proportion of their incomes going to support those that do, affecting their ability to save for their own futures. Increases in bursaries from government and universities in recent years have so far failed to markedly change the proportion of students from disadvantaged homes attending university, with the proportion staying at around 28 per cent of all students. Analysis by the Institute for Fiscal Studies has concluded that students from the poorest families (parental income below £17,500) will see no gains.29
43. Secondly, the financial cost is high, with the sources of funds unaccounted for. The Secretary of State has failed to confirm where the additional £400 million is to come from, apart from stating that it is in within the Comprehensive Spending Review limits. The Institute of Fiscal Studies has estimated that the cost of increasing the generosity of grants in terms of new year-on-year spending will be £202 million in 2010-11 compared with 2007-08, after accounting for economy-wide inflation.30
44. Thirdly, the announcement lacks transparency. The timing of this announcement, coming only a few days after the creation of the new Department on 28 June, is questionable. The new Ministers could not have had time to review the proposals sufficiently. The announcement also increases uncertainty in the sector, coming two years before the planned review of tuition fees. The Government has said that stability should be a goal of higher education policy.
45. The introduction of top up fees was part of a coherent set of proposals which was designed to improve the quality of universities and to achieve a fairer distribution of the costs. It was also widely debated. This new announcement has brought in a contradictory policy without proper debate and without adequate supporting evidence.
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29 Institute for Fiscal Studies (2007), Are the Government's recent changes to Higher Education student support well-targeted?, press release, 23 July.
30 Ibid.