ANY QUOTES USED MUST BE ATTRIBUTED TO MURNAGHAN, SKY NEWS

DERMOT MURNAGHAN: We turn now to student debt and other things and the Liberal Democrat’s Simon Hughes, because unpaid student debts could cost the taxpayer around – get this - £9 billion a year it’s estimated. A study by the investment group Skandia says unless a student starts earning £50,000 a year after graduation, a significant amount of their debt will be written off. Now this is as it appears that demand for places at university have been hit by the fee increase. Simon Hughes, the government’s university access tsar and also the Lib Dem’s deputy leader and is with me now. Very good to see you, Simon Hughes.

SIMON HUGHES: Good morning.

DERMOT MURNAGHAN: I mean answer that charge. If this is true, and I’m not sure you buy in to those estimates, now obviously just estimates, not only from the Lib Dem point of view have you done yourself immense political damage in backing this, but it’s going to cost the exchequer more than the current system.

SIMON HUGHES: Well the crucial thing about this debate today is that today is the last day when anybody still thinking about applying to university from October can apply so this is a real issue for those people who haven’t decided, who are sitting at home talking to their mums and dads, talking to their wives and husbands and saying shall I apply? My message would be – and I am going to answer your question –is yes you should because the new deal, whatever the figures that are out there, the new deal means you don’t pay for tuition before you go, you don’t pay when you’re there and – and this is what the report identifies – you won’t have to pay the whole of the cost of your teaching back again unless you have a considerably higher salary.

DERMOT MURNAGHAN: But then that costs the taxpayer more than the current system.

SIMON HUGHES: Well the whole idea of the changes is to take the burden away from the taxpayer to put it to the graduate, the high earning graduate. We don’t know yet what the outcome will be, this is an estimate, this is the first estimate we’ve seen which suggests the figures will be as high as this and yes, there is going to be an issue if the Treasury is going to have to pick up the tab because a much higher number are not going to pay their own way when they graduate.

DERMOT MURNAGHAN: What’s your estimate? What’s the government’s estimate?

SIMON HUGHES: The government’s estimate is lower than that.

DERMOT MURNAGHAN: Which is what?

SIMON HUGHES: Well we can’t tell until we know how many people apply and we know the final level at which the university has set their fees because we do know that when the government announced that fees could go up to £9000 there was an initial batch of applications from universities which were veering towards £9000, a lot just over £8000 on average. Then they were given a second chance to look at them and quite a few pulled their fees down and they may still do it so I can’t give you the answer to this question.

DERMOT MURNAGHAN: But this estimate that Skandia has done is not just on one years’ intake, it is over many decades, adding up to that huge bundle of debt that’s out there that the government is actually guaranteeing.

SIMON HUGHES: But it also depends on other variables, it depends on what bursaries are offered, it depends on what scholarships are offered so I can’t give you the answer now. We know however that the message that we want young people and others who are thinking of university to hear is that you needn’t worry at this stage at all about the cost because it will be linked to your earnings and let me give you one figure, if you earn 21 grand when you start from university, you’ll pay 750 a month once you cross that threshold. That’s affordable so the student shouldn’t be put off by the cost. There is an issue for the tax payer and we as the government and the parliament have to pick it up.

DERMOT MURNAGHAN: Why not just have done with it and call it a graduate tax? I know you’d have preferred that. If that was policy then it would be clear, people would understand that you’re paying for it but you are going to get …

SIMON HUGHES: I wanted us to do that. I’ll tell you what I wanted us to do and that’s in effect what’s happened, I wanted us to say we are abolishing tuition fees and we are going to replace it with a new system called graduate contribution. The reason why you can’t technically call it a graduate tax is because we in this country don’t collect tax from people who work abroad and therefore if people went to work abroad you couldn’t collect the money whereas if it’s a contribution it’s a contract and therefore you can collect it if you go and work in the States or in France or somewhere else, so that’s the answer as to why you can’t call it a graduate tax but graduate contribution is the right phrase, that is what it is, it’s a pay as you earn system. If you are off work because you’re ill, if there isn’t a job, if you are looking after your children, if you are looking after your parents, if you are being a poet sitting under a tree for a few years then you don’t pay anything and that’s the message and therefore it’s a good deal for people and I hope a lot more people will apply before midnight tonight, before the deadline.

DERMOT MURNAGHAN: But that’s the thing, that’s what I wanted to get onto Simon Hughes, because the figures that we have, the latest figures, and you probably have more up to date ones, is that there is a round about 8% fall in the number of applications so far, and you are right, there is still time to the deadline, so that is around about 23,000 people fewer than last year who are going to university, wanting to go to university, possibly because of the amount of money they are going to get in debt.

SIMON HUGHES: That may be true, the really crucial issue for me too is have we been making sure that young people, particularly from families who have never had anybody go to university, go? I mean they are the people we need because universities have been fine for people with families who go to private schools, have always gone to private schools and parents who have been professors and so on, they’ll always go but we have to make sure that everybody knows that university not is right for them but might be right for them, if an apprenticeship or going into work is not a better option.

DERMOT MURNAGHAN: Well it will be interesting to find out and we will find out ….

SIMON HUGHES: We’ll see the figures in the next few weeks.

DERMOT MURNAGHAN: And hopefully you’ll come back and tell us all about that as well but we’ve run out of time Mr Hughes, thank you very much indeed for coming in to talk about that. Simon Hughes there from the Liberal Democrats.