Hansard

I welcome this opportunity to make a statement to the Parliament announcing the decisions that I have reached on how the Scottish Government intends to improve financial support for full-time higher education students, with an additional investment of £30 million from 2010-11.

The Government's stated purpose is

"to create a more successful country where all of Scotland can flourish through increasing sustainable economic growth."

That vision for the future of our country becomes more important, not less, as a guiding principle for responsible government through these toughest of economic times.

Despite the tightest settlement that has been received from the United Kingdom Government since devolution, with cuts of about £500 million imposed on our budget in the next financial year, we have put in place a range of policies that will help students today, tomorrow and in the future to overcome the financial barriers that they face. Those measures make a real difference to students and include abolishing the graduate endowment fee; replacing loans with grants for part-time higher education students; increasing student hardship funds year on year since we came into office; introducing fairer assessment of income for further and higher education students, to ensure that the available funding gets to the students who need it most; and making further improvements to the support that is available for part-time students, through changes to individual learning account 200 and ILA 500. Between April and September, 42 per cent more people attended courses supported by ILA funding than was the case last year.

On 15 December 2008, the Scottish Government launched "Supporting a Smarter Scotland: A consultation on supporting learners in higher education". The consultation set out a number of options for how higher education student support could be improved through additional investment of £30 million from 2010-11. It ran for 20 weeks, which reflected the importance of the issues and my express wish to engage widely with students and other stakeholders during the process. I thank everyone who took the time to submit a response.

What I will announce today has been heavily influenced by a range of factors. First, it has been influenced by the evidence in the consultation responses, the findings from the recent higher and further education student's income, expenditure and debt in Scotland survey and findings in the National Union of Students publication, "Overstretched and Overdrawn: A survey of student hardship".

Secondly, what I will announce has been influenced by three ministerial meetings with the main Opposition parties in the Scottish Parliament, which have taken place since September, and by our discussions with NUS Scotland. Thirdly, it has been influenced by the operational implications. Any changes must be capable of being designed, tested robustly and delivered by the end of March 2010. Finally, and most important, it has been influenced by the economic situation. According to official figures that were released last week, this is the first time since records began in 1955 that United Kingdom gross domestic product has contracted for six consecutive quarters. This is the worst recession for a generation.

When I launched the consultation, I said that we would consider the responses in the context of the wider economic and social environment and that we would listen to stakeholders' views. Our response to the consultation was published on 7 October and set out three options, which I said that I would discuss with the Opposition parties and the NUS before I came to a final decision. I am pleased that I have found common ground with the NUS on the need to improve financial support for independent students, in particular. I welcome the NUS's recent change of approach and its acknowledgement that the Government's direction of travel in the area is fundamentally correct.

The overwhelming majority of independent students are over 25 and many have dependent children. Our evidence on student income and expenditure tells us that the budgets of such students are under the most pressure and that those students have the highest levels of commercial debt. The majority of respondents to our consultation highlighted the inconsistency of the current student support system and thought that the additional resources that we are making available should not be focused exclusively on dependent students. This time last week, the Universities and Colleges Admissions Service published data that show that the largest percentage increase in applications to Scottish universities is in applications from independent students. That is another compelling reason why such students must be better supported. I am sure that in many cases the increase has been driven by the impact of the recession, as people enter higher education before they seek to re-enter the job market after being made redundant.

As a result of the discussions that I mentioned and after consideration of all the factors that I set out, I am able to announce additional measures for higher education students at university and college. They are based on option A in our consultation response of 7 October, but I decided to vary elements of that option in light of further discussions with the NUS.

Under option A we said that we would provide—for the first time—a new grant of up to £1,000 for independent students who are studying in Scotland, increase by £2 million the amount of money that is available to all students to meet the costs of child care, and increase the maximum level of the income-assessed student loans. We will still do each of those three things. We will also increase the amount of money for young students, as we said that we would do. To ensure that the money goes as far as possible and is targeted at improving the income levels of the poorest students, at a time when other sources of finance are more limited, we will do that through a further increase in student loans, rather than through student grants. We will therefore widen the scope of the additional loan to include independent students, and we will increase it to £785 for those who are eligible. That means that the income of up to 75,900 students will rise by up to £442; up to 44,500 students will see their incomes rise by up to £622; and up to 14,000 new students will now receive a grant and benefit from the introduction of the new independent students bursary.

Those measures will mean that the income of dependent and independent students from low-income backgrounds who are living away from home and studying courses of higher education in colleges and universities will rise to £5,852 per annum. For the first time since devolution, every student who qualifies for an income-assessed student loan, irrespective of their age, will be eligible for the same level of financial support. Over and above that, I can announce another first. These proposals are to provide low-income students aged over 55 who study in Scotland with access to grants through the new independent students bursary for the first time.

Although I have gone further than many in the chamber would have anticipated, I am anxious to make further progress. I accept that the system of student grants and loans should be examined more closely to see what further changes can be made and what scope we have to spend our existing budget smarter. I am prepared to agree to adapt our option A in the way that the NUS requested to ensure that our shared goal of the best possible deal for Scotland's students is achieved. Although the strict terms of the motion that the Parliament passed on 21 May might not have been met, particularly the Opposition's original wish to increase the young students bursary, the main element of it—addressing student hardship—has, I believe, been realised.

Our proposals also demonstrate that the Scottish Government is prepared to adapt its policies in the short term to raise students' income at a time when part-time work to supplement the support that they receive from the Scottish Government is harder to come by. Evidence suggests that banks are lending less money to students and on less favourable terms, with many students resorting to credit card debt. We have no choice but to respond to those concerns with proposals to alleviate debt where we can and make loans available on the best possible terms where debt is still accumulated.

Although a number of factors surround access to learning, we believe that the availability of realistic levels of student support plays an important part in any decision to study beyond school. Our colleges and universities have never been more popular: acceptances to universities are up by 5.5 per cent this year alone, and the greatest rise is in the number of independent students who will benefit the most from what I have announced today.

In these toughest of economic times, I believe that we have a duty to protect and promote the income and interests of this generation of students. I take that duty seriously, which is why I commend the £30 million-worth of proposals to support students to the Parliament.