2.2.4 – The ways that Parliament interacts with the Executive
The Treasury Committee has announced that it will launch an inquiry into the student loan system in the UK. Recently, the cost of student loans has become a prominent political issue. Politicians such as Zack Polanski have sought to make the issue more central to political debate in the UK.
Until 1998, university tuition in the UK was free and funded by taxpayers. Some students could borrow money for maintenance (living costs while at university), and those from lower-income backgrounds could also receive maintenance grants. In 1998, tuition fees were introduced at £1,000 per year. This increased to £3,000 per year in 2004 and then rose to £9,000 per year in 2012.
Under the 2012 reforms, it was expected that the repayment threshold would rise with inflation, and graduates would repay 9% of their income above that threshold for 30 years. These post-2012 loans, known as “Plan 2” loans, have been at the centre of recent debate. Successive governments have frozen the repayment threshold, meaning graduates repay a higher proportion of their income than originally expected. In addition, the interest rate on these loans is set at RPI (Retail Price Index) plus up to 3%. As a result, many graduates accrue more interest each year than they are able to repay.
Notably, Sir Nick Clegg described the current system as a “mess” last week. He has been widely criticised for this statement because he helped introduce the Plan 2 system in 2012 while serving in the Coalition Government, despite the Liberal Democrats’ 2010 manifesto pledge to oppose increases in tuition fees.
Select Committees regularly choose issues to investigate. They invite experts and affected individuals to provide both written and oral evidence. Committees then produce a report, to which the government must respond. Select Committees are often considered one of the more effective mechanisms of parliamentary scrutiny and an important way of drawing attention to significant public policy issues.