Blair banks on loans

The Labour Party is planning a two-stage reform of student awards and loans.

The party's education team, which met academics and union leaders for a policy-shaping seminar in Oxford this week, plans a "Learning Bank" to manage investment in education and training and student repayments on maintenance costs.

A Labour government would phase in learning accounts with the Bank, involving contributions by students, the state and employers to provide support for part-timers. Students could be allowed to go overdrawn. Accounts would initially replace the discretionary awards system which has been heavily cut and virtually disappeared in some parts of the country.

Labour also wants to beef up maintenance for full-time students by replacing the present loans system with an income-contingent repayment scheme with a long pay-back period, and reintroducing social security benefits for students.

Bryan Davies, Labour's further and higher education spokesman, who is involved in writing a Lifelong Learning policy paper for the Party, said he expected learning accounts would be introduced gradually, but could become a chief means of support for all students in time.

Party activists are divided over whether to extend the principle of repayment to fees, with many prominent people accepting that such a move may be necessary to establish true equity but not prepared to take the political risk it would involve.

Mr Davies said: "Some people within the party have canvassed the idea of repayment of fees, but I do not see any real interest in it among those with an interest in education."

But David Robertson, professor of public policy and education at Liverpool John Moores University, who attended the Oxford seminar and is a member of several Labour Party education think tanks, suggested that repayment of up to 20 per cent of tuition costs would help fund more opportunities and ultimately make the system more equitable.

In an article published by the left-wing journal Renewal, and aimed at next week's Labour Party conference in Brighton, Professor Robertson challenges the party to "take higher education policy much more seriously, foresaking ritualistic jibes at targets it will not summon the political will to address".

The British Banking Association has been asked to look into the practical implications of the Learning Bank, and a high-profile meeting involving the commercial banks is planned for early next year.

The Student Loans Company in Glasgow would not be scrapped, but "recast" to fit into the new system, Mr Davies added. Sources suggest it is likely the company could become the embryonic Learning Bank.

One significant determining factor for the shape of the new scheme will be the probable formation of a Shadow Education and Employment department as part of the Shadow reshuffle following the Brighton conference.

Mr Davies said that the new shadow team would be in a better position to work out the details of the learning account concept, possibly extending it to cover support for training as well as education.