Student Loans

HC Deb 09 July 1990 vol 176 cc123-48 10.29 pm

The Parliamentary Under-Secretary of State for Education and Science (Mr. Robert Jackson)

I beg to move,

That the draft Education (Student Loans) Regulations 1990, which were laid before this House on 25th June, be approved. The draft regulations are laid under the Education (Student Loans) Act 1990. They will establish the loans scheme with effect from the autumn of 1990. The Government agreed that they should be subject to the affirmative resolution procedure, a course which provides a welcome opportunity to lay the detail open to the scrutiny of both Houses of Parliament. There was approval following a constructive debate in another place.

The draft regulations set out the detail of the policy that the Government have already announced and which the House has already debated. They demonstrate the merits of the flexible approach which the Government have adopted. That approach was criticised at the time, but I think that all can now see the advantages of the procedure that we have followed. The basic Act is underwritten by detailed regulations which are capable of being adjusted annually. Some of the provisions will need to be changed each year while others may need to be altered in the light of the monitoring to which we are committed. The general substance of the scheme is outlined in this first set of regulations, and that is why it should be adopted under the affirmative resolution procedure, which gives the House an opportunity to examine the scheme.

The draft regulations set out the detailed eligibility criteria for the loans scheme. Basically, the scheme is parallel to the criteria for mandatory awards, but we have deliberately drawn the criteria wider. This means that 50,000 or more students who are not eligible for grant will be eligible for loan. The regulations set out the terms of the loan. The amount that is outstanding will be indexed to inflation so that no real interest will be charged. The repayment period will be five years, or seven years for those who are taking the longest courses. We expect that the amount of repayment each year will be about £400 per annum for those who are eligible to repay. The deferment and cancellation arrangements will protect those with low incomes. Under the regulations, no graduate with an income below £11,500 will be expected to repay his loan.

Finally, the regulations set out the responsibilities of the higher education institutions in confirming their students' eligibility. The House will have seen the minutes of evidence of the Joint Committee on Statutory Instruments, which caused some excitement last week. I am pleased to see in his place an eminent member of that Committee, the hon. Member for Bradford, South (Mr. Cryer). Now that the House has had a chance to study these matters, I hope that it will think that any delay has been worth while.

I should explain to those who have not read the regulations that they bear on three main points. First, there is clarification of the position of disabled borrowers. That is to be found in regulation 8. Regulation 9 includes provision—this has been announced already—for the disregard of disability-related benefits when income is assessed for deferment purposes. Disabled borrowers may claim deferment on higher incomes than other borrowers. In regulation 8, we have added to the discretion of the Student Loans Company Ltd. in relation to the starting time of, or the period for, the disabled borrower's repayments.

Regulation 3(3) is a technical amendment which deals with loans for Scottish minors. It recognises that, under contracts that are governed by Scottish law, a minor should obtain the prior consent of his curator, who in most instances is his parent or guardian. Courts in Scotland may possibly take the view that a minor can validly ratify contract on reaching his majority only if he obtains such consent or if he was already independent of his family when he entered into the contract.

Regulations allow for students under 18 years of age on higher education courses to be eligible for loans. Obviously we must expect such students to repay their loans once they have graduated.

Mr. Tam Dalyell (Linlithgow)

Have the Law Society of Scotland and the Scottish banks formally agreed to this?

Mr. Jackson

The issue of Scottish minors and their responsibilities vis-a-vis credit is one of the more recondite points of Scottish law. There are different views on the matter. It has never been tested in the courts. The Government take the view that the issue is not ratification. If the issue is enforceability of the loan, the loan will be enforceable.

Mr. Dalyell

It is not quite so technical a matter as the Minister makes out. It is a practical matter and affects many people. I repeat the blunt question that I asked: have the Law Society of Scotland and the banks agreed to this? The frank answer is no, is it not?

Mr. Jackson

I have difficulty in answering the hon. Gentleman's question, because I do not see how the banks come into it. I do not believe that the Law Society of Scotland has been asked about the matter. Ultimately this is a matter for the courts to determine. If the hon. Gentleman studies the regulations, he will see that the issue that we are considering is ratification at the age of 18, not enforceability. The Government's view is that the loans will be enforceable.

Mr. Toby Jessel (Twickenham)

Will my hon. Friend remind the House that on 11 May the parliamentary assembly of the council of Europe, meeting at Strasbourg, passed a unanimous resolution, to the effect that Systems of loans … can be encouraged". That resolution was proposed by the rapporteur, Mr. Bassinet, a French Socialist. Not one of the 12 British Labour Members of Parliament who are members of the Council of Europe's parliamentary assembly voted against it. Why is the Labour party so hopelessly inconsistent? Why does it say one thing at Strasbourg and the opposite at Westminster?

Mr. Jackson

My hon. Friend asks a very good question, but we could come even closer to home. There is a marked difference of emphasis and tone on student loans between some of the Front-Bench Opposition spokesmen in this House and some of the Opposition Front-Bench spokesmen in another place. My hon. Friend is right to draw attention to that inconsistency.

Mrs. Margaret Ewing (Moray)

Does the Minister suggest that the Government are so incompetent in the law relating to minors in Scotland that they cannot draft appropriate regulations, but they have to rely on test cases in Scottish courts? It is ridiculous to place any Scottish student in that position. I ask the Minister to take the regulations back. It seems to me that the Government drafted panic measures before the Joint Committee on Statutory Instruments met.

Mr. Jackson

The enforceability of loans against minors who take them out before they reach 18 is an obscure area of Scottish law. There are differences of view about it. The issue can be determined only by the courts. Under the regulations, students who are minors will be allowed to make use of a loan. That is entirely as it should be. We expect the students to repay their loans. The general rule is—

Mr. Max Madden (Bradford, West)

On a point of order, Mr. Deputy Speaker. Does the fact that the Minister of State is not occupying her normal place on the Treasury Bench have any implications, as rumoured in the press, or does it mean that we ought to be told something that so far she has not been allowed to tell us?

Hon. Members

Shame.

Mr. Deputy Speaker (Sir Paul Dean)

I think that the hon. Gentleman had his answer while he was raising his point of order.

Mr. Jackson

The general rule is that students under 18 can claim the loan. We expect them to repay it. To do so, we need to protect the taxpayers' interests. I am sure that the House will agree with me that the interests of taxpayers, whether they are in England or Scotland, should be safeguarded.

Mr. Tony Marlow (Northampton, North)

I have an interest to declare, in that I have two children who will be going to university this autumn, and they will probably be taking out loans. My hon. Friend has been talking about the enforceability of loans in Scotland. Is he implying that, if the loans turn out not to be enforceable in Scotland, Scottish students will not have to pay back the money, whereas my children will have to pay it back because they have attended English universities?

Mr. Jackson

My hon. Friend is looking too far ahead. There is a question about the enforceability of loans to minors in Scotland. The Government believe that such students would be obliged to repay their loans for that period but there is some dispute about the matter. We have made arrangements in the regulations for ratification as a way of handling the problem. We shall have many opportunities to return to the issue, because repayments will not start for some time to come.

Mr. Jack Straw (Blackburn)

Have the Scottish Law Officers been consulted about this matter, and what is their opinion?

Mr. Jackson

The matter has been discussed within the Government. As I have said, the Government's view is that loans taken out by minors in Scotland are enforceable, but there is an argument about it. That was one of the matters that surfaced during the deliberations of the Joint Committee on Statutory Instruments.

Let me proceed now—

Mr. Simon Hughes (Southwark and Bermondsey)

Will the Minister give way?

Mr. Jackson

I shall give way finally to the hon. Member for Southwark and Bermondsey (Mr. Hughes).

Mr. Hughes

Why will not the Under-Secretary be honest with the House and say that there is an omission from the regulations because the Government cannot deal with the point? And is not that only one of the omissions? For example, the name of the company administering the scheme is omitted: the regulations contain no reference to the Student Loans Company. Does that betoken an omission or was it the result of an intentional decision to provide for privatisation in the near future?

Mr. Jackson

The hon. Gentleman is very good at speculation. The Government have said previously that that course might be followed—it might not be—but it is certainly not an intentional feature of the regulations that that should be so. No decisions either way on that point are made in the regulations.

Let me press on to the third technical point arising from the regulations—the clarification of the role of the higher education institutions. For those who are following the matter in close detail, that is dealt with in regulation 11(2).

In assessing students' eligibility for loans, the higher education institutions must determine whether they meet residence requirements identical to those that apply for mandatory awards, which are verified by the local education authorities. That is mostly a straightforward matter, but there are a few cases in which detailed information may be needed from the student.

The regulations now ensure that the institution's investigations go only as far is reasonably practicable. There is no need for them to pursue the matter exhaustively. In addition, the unqualified requirement in the earlier draft to certify the accuracy of information on students' eligibility is replaced by the requirement to certify accuracy to the best of the institution's knowledge and belief.

I take this opportunity to repeat the tribute that has been paid in another place to the constructive approach that is adopted by the institutions' administrators, who have been attending a series of meetings and seminars arranged by the Student Loans Company. They have provided invaluable feedback. They have allowed the company to refine its procedure. They have also demonstrated their professional commitment to making the scheme work in the interests of their students, and I am sure that that approach will attract the support of hon. Members on both sides of the House.

On 20 June, my right hon. Friend the Secretary of State announced that the Student Loans Company's provisional budget for 1990–91 is £14.25 million exclusive of VAT. That includes payments to the higher education institutions for certifying their students' eligibility—£3.50 for each correctly completed application form. The administration costs therefore fall within the £10 million to £20 million range to which the Government referred throughout the passage of the Bill, and are far lower than the extraordinary figures that were bandied about by the supporters of alternative approaches. I can remember some of them citing the figure of £150 million.

Hon. Members already know the justification for the Government's scheme, but let me repeat the basic points. The idea of the loans scheme is to lift a financial restriction on the growth of higher education. There are now more than 1 million students in all kinds of higher education —almost a quarter of a million more than in 1979. Both the Government and the Opposition are committed to continued expansion. However, the expanding cost of supporting students' living expenses cannot be supported by taxpayers and parents alone. Between 1962 and 1989–90, the cost in current prices of student grants has increased by 264 per cent. Parental contributions have increased under successive Governments and about 40 per cent. of students whose parents are assessed for a contribution find them unable or unwilling to make up the full amount.

Mr. Andrew Smith (Oxford, East)

Is the Minister going back on earlier answers that he has given to me, which show that, over the next 20 years, it would cost £2.17 billion more to operate the scheme than it would cost to uprate grants in line with inflation?

Mr. Jackson

The hon. Gentleman knows perfectly well that with any loans scheme there is a period when money is advanced before it starts to come back. If the hon. Member studies the White Paper he will see our projections and we have given the basis of the projections in exhaustive answers to the hon. Gentleman's parliamentary questions. As the number of students starts to grow substantially at the end of the decade, we will reach a point at which the student loans scheme will be repaying larger and larger sums of money and that will help to fund the expansion to which we are committed and which we intend to pay for in the way that we are proposing. The hon. Member for Oxford, East (Mr. Smith) is committed to expanding, but he has not said anything about how he will pay for that.

Loans offer additional funding through the anticipation by students of their own future income as graduates. We follow the line that is taken by every other country that has large numbers of students. In an earlier debate, the hon. Member for Birmingham, Ladywood (Ms. Short) referred to other countries that have large numbers of students in higher education. All those countries have loan schemes, and those schemes help fund those students.

The loans are being offered on generous terms and there is full protection through deferment for those not achieving high incomes. Providing additional resources as grant is simply not a viable option, as no savings would accrue. The cost to the taxpayer would continue to rise inexorably.

Around 500,000 students will be eligible for loans in 1990–91. We are budgeting to provide £178 million in loans next year and there will be more than that if the take-up exceeds 80 per cent.—the sum is not cash-limited. We are also making available £14 million of access funds for those who are eligible for loans. Discounting the estimate of £68 million in social security benefits forgone by those students, there is an increase in the public support for eligible students of about £124 million. Students will also, of course, benefit from the uprating of mandatory grant. Loan and grant together will constitute a 25 per cent. increase in student funding in the course of a single year.

There are substantial additional resources for students in the next academic year. The freezing of the grant means reducing the parental contribution in real terms from 1992 eventually to little over half its present level. We have in prospect the relief of a burden on taxpayers as loan repayments accrue and cumulative savings are produced.

The scheme is necessary to the future of higher education. The regulations are necessary for the implementation of the scheme. There is no need to debate the principles of the scheme, but I shall respond later to the points that are raised about the details of the regulations. I commend the regulations to the House.

10.47 pm

Mr. Jack Straw (Blackburn)

We oppose the regulations and the scheme behind them. The loans scheme is ill-considered, misconceived and extraordinarily wasteful of public funds. As the Minister has just admitted, it will cost over £2,000 million extra above the cost of uprating the grant system in line with inflation between now and the year 2009—nearly 20 years away.

The scheme has been brought in with a degree of administrative chaos that has rarely been seen for any new scheme. That is reflected in the fact that the regulations had to be withdrawn last Tuesday and in the way in which they were pushed through the other place. Lord Boyd-Carpenter, who we should remember is chairman of the Association of Conservative Peers, launched a strong attack on the way in which the regulations were physically presented to that House. He said: Can my noble Friend really say that this dirty bit of paper with inked-in corrections, deletions and amendments all over it and with two typed-in so-called riders is the form in which your Lordships' House should be asked to approve legislation?"—[Official Report, House of Lords, 28 June 1990; Vol. 520, c. 1766.] That would be funny were it not serious. It shows that Ministers have been working hand to mouth, not knowing what they have been doing from one minute to the next. That was clearly demonstrated when the Minister failed to answer a number of questions about the applicability of Scottish law to the regulations.

The regulations are unfair. They provide no help for postgraduates, and there are no special conditions for low-paid professionals such as teachers or nurses. It is true that, if someone is earning less than £965 a month—£11,500 a year—he or she can defer the loan, but, during the period of deferral, for every minute that he or she defers, interest accrues. Therefore, people will have to pay more when they come to repayment when their salary rises above £11,580. In case the Minister is wondering about that, it is specified clearly for the avoidance of doubt in paragraph 9.6 of the regulations. No help is provided for women returners to work, and there is a lack of serious concession for disabled students.

Let me refer to the detail of the regulations and to the applicability to them of Scots law. They had to be withdrawn in their initial draft form because it was clear that they did not properly take account of the law of Scotland relating to minors. I concede that the law of Scotland relating to minors is complicated. In certain circumstances, under the doctrine of quadrennium utile, it is possible for a minor to enter into a contract and for it then to be voidable at his suit within a period of about four years if he can show that he entered into the contract under duress. There are also certain circumstances that appear to apply here. It is essential that a contract for a loan is guaranteed by the student's or the minor's curator—his parent or guardian.

I, in common with the Minister and his officials, am no expert on Scots law, but it is appalling that the Minister has admitted that no consultation took place with the Law Society of Scotland. Nor, as became clear from his evasion of my question, has there been any consultation with Scottish Law Officers. It is not good enough for the Minister simply to say that the matter was dealt with in government. Everyone knows that, when Law Officers are brought in, Ministers are able—they frequently do so—to state categorically before the House that the Law Officers have been consulted and that they assent to what has been brought before the House. In this case, the Minister either does not know whether the Law Officers have been brought in or, as I suspect, knows that they have not been brought in and wishes to avoid giving that information to the House.

There is then the detailed matter of the deferment of the arrangements that apply. My hon. Friend the Member for Oxford, East (Mr. Smith) was told by the Minister: The terms and conditions of a loan agreement will not authorise the Student Loans Company to investigate borrowers' incomes through their employers or banks. Borrowers wishing to defer repayments will be required to produce evidence that their income falls below 85 per cent. of national average earnings."—[Official Report, 19 June 1990; Vol. 174, c. 504.] Hon. Members were pleased to hear that, but how does his answer square with information that the Secretary of State gave in press notice 6590 on 26 February 1990? It said specifically: Verification could be required of banks. Paragraph 6 of the press notice states: In applying, the borrower authorises checks of current income with employer, bank, etc. Are banks to be consulted without the direct knowledge of the student application?

Then there are the duties of the Student Loans Company and the duty of the institutions that are required to implement the regulations. There is a marked contrast between the great powers given to the Student Loans Company and the Secretary of State which are not specified in the regulations—indeed, as has already been pointed out, the Student Loans Company is not even mentioned in the regulations—and the overbearing duties that are imposed on higher education. Why is the Students Loans Company not specified at any point in the regulations, and why not are its duties specified?

Ministers have produced an extraordinarily complicated administrative scheme for student loans. Under paragraph 11(5) no fewer than three separate forms will be required from individual students. Under paragraph 11(2), the student is issued with and has to return an eligibility questionnaire provided by the loans administrator. Having returned that, under paragraph 11(2)(d), the student then has to complete an eligibility form provided by the loans administrator", and then, under paragraph 11(2)(g), the student is provided with and must complete a loan application form provided by the loans administrator. The Committee of Vice-Chancellors and Principals has claimed—Opposition Members accept this—that the procedures are unnecessarily cumbersome … Universities are quite capable of making effective administrative arrangements and may well be able to find more efficient ways of doing things. As currently laid down the procedures are more complicated than for grant applications to the LEAs. Is it really necessary for students to be required to complete three separate forms before they get a loan? Why cannot they complete one form, and if they turn out to be ineligible, be sent a note telling them so? What is the purpose of laying one layer of bureaucracy upon another, upon another?

There is also the question of the fee of £3.50 to each institution in respect of each set of applications that is completed. That fee is insufficient, given the burden of the administrative arrangements.

Mr. Andy Stewart (Sherwood)

More resources.

Mr. Straw

The Secretary of State's private secretary, who should know that his job is to be seen, not heard. says, "More resources." As he knows only too well, this is a very wasteful scheme—and his deeply embarrassed Secretary of State knows it, too. We wish the scheme to be scrapped altogether, but if it is to go ahead, the Government must pay the institutions the cost of the scheme, or, the institutions will be using money that was given to them for other purposes, such as teaching students, to run this damn silly scheme. Is the Minister genuinely satisfied that the £3.50 fee is sufficient?

During the considerations of the Joint Committee on Statutory Instruments, the official who gave evidence accepted that the original draft was "very harsh, perhaps … oppressive" on the institutions that are required to implement the regulations. It is a great tribute to the work of my hon. Friend the Member for Bradford, South (Mr. Cryer) and his colleagues in this place, and counsel to the Commiteee, that they were able to force these changes in the regulations. However, the truth is that the regulations are still oppressive on the institutions and, above all, on the students.

There is a nice irony and contrast between the debate that we have just had and this debate. In the previous debate, at the behest of the Government, a carefully targeted benefit, housing benefit, was denied to students. Now we are having a debate that will force through regulations to help those students who need it least. As the hon. Member for Chichester (Mr. Nelson) said on 20 October 1989: Far from helping poorer people to gain access to higher education, the scheme will amount to an indiscriminate subsidy to the middle classes who need it least."—[Official Report, 20 October 1989; Vol. 158, c. 428.]

Mr. Spencer Batiste (Elmet)

rose—

Mr. Straw

I am just about to complete my remarks.

This is the truth about the scheme. In tonight's Evening Standard, we read that, according to a Gallup poll, four out of five parents believe that the state should pay all or part of the costs of their children's higher education, and only 4 per cent. think that their children should contribute anything to their further education—[Interruption.]—except through taxes, of course. That finding is paralleled only by the proportion of Conservative Members who think that the Minister should stay on after the mini-reshuffle.

Mr. Batiste

rose—

Mr. Marlow

rose—

Mr. Straw

No, I am just about to complete my remarks—[HON. MEMBERS: "Give way."] I shall be delighted to give way to the hon. Member for Elmet (Mr. Batiste).

Mr. Batiste

The hon. Gentleman said that a Labour Government would scrap the scheme. If that is added to his intention to uprate the benefit in the form of grant, what does he intend to do about all the students who are included in the loans scheme but are not at present eligible for grant? Will he include them in a new scheme? Has he quantified that cost, and if so, where does he intend to find the money?

Mr. Straw

I think that that was the hon. Gentleman's first intervention on the grants scheme. If he had attended the debates on it more assiduously, as many of his hon. Friends have, he would have worked out what they have and what has made them oppose the scheme with such force—that not only is this a rotten and unfair scheme but it will cost the country far more than the grants scheme. The answer to the hon. Gentleman's question is that we are satisfied that by replacing loans with fair grants we shall not only do better for students but save the country a great deal of money.

This is a rotten scheme and these are rotten regulations, and we shall oppose them tonight.

11 pm

Mr. Norman Miscampbell (Blackpool, North)

In this debate on the regulations, I do not want to go over in detail again why I find them so astonishing. That is why I propose to take only two or three minutes to say why I oppose the regulations.

No one outside the House who is associated with higher education has a good word to say for what we are doing tonight. I should be interested if any hon. Member could mention any responsible body which says that it is the way forward.

Mr. John Butterfill (Bournemouth, West)

Does my hon. and learned Friend accept that, in Sweden, the socialist Education Minister says that a loan scheme is the right way to proceed and that he is not prepared to introduce a grants scheme in Sweden, because it would damage the motivation of students in Sweden?

Mr. Miscampbell

Of course, other countries have schemes which are different from that which I favour. The West Germans are changing their system. The Americans are also changing their minds. But we must understand that we are tail-end Charlie in producing graduates. It is not a question of charging students but of finding out how we can cease to have the lowest production of graduates in the industrial western world. Of course, it would be those who have no difficulty. We should examine West Germany's production of graduates and compare it with what we produce. We should ask why there is a difference and what we should do to produce more.

I shall take only a moment or two, because other hon. Members wish to speak. We must understand that the scheme will produce nothing for the Government as we move into the next century. It will do nothing to supply our present lack of engineers and many other graduates whom we need badly and who are the seedcorn of our future. We are not producing sufficient numbers of such people.

My constituency of Blackpool produces people capable of going to the top. Many of them come from fairly humble backgrounds. Let us consider a simple practical problem. How will it help us if, by the turn of the century, such people face a heavy debt? Never mind the figure now —it may be £300 or £400—but by the end of the century students may have a debt of £7,000 or more around their necks. How will that help us to solve our problems?

At the beginning of the 1980s, students were radicalised. By the middle of the 1980s—I know, because my children were educated through the 1980s—they had stopped agitating. They had decided that a good job was available for them and that, with a good degree, they had a future. That has all changed now. The Government have simply made students today angry with us. How will that help?

It may be that those who have a privileged education and a further degree could be asked to pay more. I do not agree with that, because I believe that such people are the seedcorn of all our futures. If one accepts that, that is what should happen. It is not as if the scheme were the only one open to the Government. The academics offered two schemes, either of which would do. Why not simply pick up the money in income tax from those who had a proper and substantial grant, if that is what is wanted?

If, 25 years ago, when I and, dare I say, others were adopted by our executive, I had said, "I propose that when your children have completed their university education they should leave university with £7,000 round their neck in debt," I would not be here, for the good reason that I would not have been adopted.

11.5 pm

Mr. Matthew Taylor (Truro)

I associate myself with the remarks of the hon. and learned Member for Blackpool, North (Mr. Miscampbell). He spelled out the fundamental objection that there must be to the student loans scheme which the Government have persisted in introducing. He is absolutely right to object to it on that principal ground. His objection goes to the heart of the debate, although Ministers have seen fit simply to shrug it off, despite being plagued with difficulties that others predicted they would run into from the start. A Government with a little more humility might well have withdrawn the proposals at an early stage or at least gone back to the drawing board to start again, rather than attempt to cobble the regulations together as they went along. The Government will be saddled politically with this for a long time.

Rather than make general criticisms, I shall deal with specific points, as important detailed problems have already been highlighted in the debate. The problems arise precisely because of the way in which the Government have cobbled the regulations together in response to one crisis after another as their original proposals were undermined and fell apart, even as they tried to present them.

The Minister should at least have the humility to acknowledge that this is an important debate and that it is as well that it is taking place under the affirmative resolution procedure. He was wrong to reject that principle originally as unnecessary. If nothing else, the hasty, additional handwritten amendments to the regulations, even as we came to debate them, and the embarrassing events of last week have proved that this is a worthwhile procedure.

Mr. Jackson

I am happy to pay tribute to the Liberals, who proposed in the House this idea, which we decided to accept in the House of Lords.

Mr. Taylor

That is courteous of the Minister, and I thank him for his comment. I hope that in future he will advocate the principle on Bills and on other occasions. In some circumstances, it is a lifebelt for Governments and Parliament.

Why does there appear to have been no consultation on the regulations, at least in relation to part V? It is hard to believe that it is Department of Education and Science policy not to pursue consultation on these matters. Had there been consultation, some of the problems would not have arisen and some of the hasty amendments would not have been needed at an earlier stage.

Given that the Department has not consulted on the matter, why has it opted for such a cumbersome administrative system? It requires questionnaire forms, security checks, eligibility forms, further security checks and final despatch to the Student Loans Company. I cannot believe that a system as administratively complicated as that was proposed by Price Waterhouse or any other leading management consultant. I wonder why Ministers have insisted that such a system should be used.

I am amazed that the regulations lay out the range of specified tasks for universities and polytechnics, but do not even mention by name the company that will administer the loans scheme. It seems that civil servants, in drafting the regulations, have sought to put the problems that they are creating on to the universities and polytechnics that have opposed the system and not acknowledged—through detailed regulations about the operation of the Student Loans Company and its taking on board some of the difficulties—that such problems should be tackled by the Government Department that pushed the system through.

We have every reason to expect such details about the Student Loans Company to appear in the legislation, not least because the Bill states that we shall receive them. The fact that such details are missing has already led my hon. Friend the Member for Southwark and Bermondsey (Mr. Hughes) to ask whether the Minister would pursue privatisation for the Student Loans Company. The Minister has again, following a number of interviews outside this place, suggested that that option is still on the agenda.

Perhaps the Minister will make his position on that clearer later. If we have not received the details in order to open the way for privatisation of the company, would it not be more appropriate for the Minister to spell out what the administrator of student loans would be expected to do as a public, and potentially private, service?

We can envisage moving rapidly towards the privatisation of the Students Loans Company, as the Government originally intended. We shall do so without any idea or debate in the House of the details of what the company, in the public or private sector, is expected to do, how it is expected to do it and what commitments and obligations it will have. It is high time for the Minister to spell out the discussions that have taken place with the Department about how the company will operate and what its long-term future is. I do not believe that discussions about the possibility of privatisation and how it will happen, have not taken place in the Department.

There has been strong pressure from both Houses about future loan arrangements for disabled people. Concern about that should unite Members across the House. Schedule 2(3) of the Education (Student Loans) Act 1990 makes it clear that the availability of loans is not intended to bring hardship to any disabled borrower. The regulations have gone some way towards meeting that aim, but they have not achieved what was intended, particularly by the other place.

The fatal flaw lies in the tie for a student or subsequent graduate to be in receipt of a disablement benefit before he or she is eligible to begin repayment at a later date or to have the length of repayment extended. It is well known that many disabled students who come within precisely the criteria mentioned in both Houses are not in receipt of benefit, of which the outstanding group must be deaf students, although there are many others as well.

Research shows that deaf students, who will mostly not be eligible for this sort of support, are likely to earn lower incomes than other students after graduation. British studies confirm that the number of deaf students going into higher paid professions is proportionately lower than the number of other students. Disabled people face living costs associated with their disability, and that is riot recognised in the regulations. By tying the regulations to eligibility for benefit, the Government have missed the essential point, which is that we should tie repayment to ability to repay, not to eligibility for benefit.

The regulations are unamendable—that is one of the faults in the way in which the government have decided to proceed—so I want an assurance from the Minister that, when the regulations made under the Education (Student Loans) Act are examined next year, the Department will ensure that disabled students are not defined by virtue of their receipt of benefit; a wider definition of disability must be used, under which repayment exemptions for disabled borrowers are based on need, not benefit entitlement.

The regulations fail to make clear the legal situation of people under the age of 18 who take out loans. The Under-Secretary of State referred to Scottish law, and we shall await developments with interest. But it appears that the Department itself is uncertain about the position of 18-year-olds, whether in Scotland or in England or Wales. What preparations has it made to fight legal battles in a year or so—or even next September—when people start to make claims against the Government and refuse to pay?

It is dubious whether the Government, under any legal system, can impose on students who are not old enough to enter into one an agreement by which they must abide under threat of receiving no further payments. That they should attempt this is extraordinary.

The Government stand condemned by the regulations in general and the student loan scheme in particular—and by the faults of detail that they have left in the regulations. The Liberal Democrats will vote against them, and they deserve to be defeated.

11.17 pm

Mr. John Marshall (Hendon, South)

I shall try to be briefer than the hon. Member for Truro (Mr. Taylor) who rather selfishly used up too much time.

The hon. Member for Blackburn (Mr. Straw) said that he was in favour of a fair grant scheme. Does he believe that the present grant system is fair given that it denies grants to some students and means that others do not receive the assessed parental contribution? My hon. and learned Friend the Member for Blackpool, North (Mr. Miscampbell) said that no academic approves of these regulations. As a former academic, I must point out to him that 364 academic economists signed a letter to The Times in 1981. They were wrong, just as the academic opponents of the regulations are wrong.

I recognise that the universities of this country offer a first-rate system of education and provide a unique ladder of opportunity for the students who go to them. I welcome the regulations because they will play an essential part in the expansion of higher education.

The paradox is that we have the most generous system of student support in the western world, and a lower percentage of young people in higher education. The hon Member for Birmingham, Ladywood (Ms. Short) adversely compared the United Kingdom with South Korea. She did not tell the House that Japan, which has more students than the United Kingdom, has no system of university grants. Our opponents ignore the fact that our present grants system is unsustainable if we are to have the expansion in higher education that we all want. The choice facing us is between grants for the few or higher education for the many. The vast majority of our people want to see more people entering higher education rather than a system of privileged grants for the few who are currently in education.

Mr. Robert Rhodes James (Cambridge)

rose—

Mr. Marshall

I will not give way. My hon. Friend has said that I am the temporary Member for Hendon, South. The temporary Member for Hendon, South is not giving way to the temporary Member for Cambridge.

Our opponents also fail to recognise that even with the proposed changes we will still have the most generous system of student support anywhere in the western world. Our critics compare our performance with that of Japan, Korea, Germany, and Sweden but fail to say that even under these proposals we will be far more generous than any country that they can name. The proposals are socially just. On the whole, those going to university can look forward to a much higher income than those who do not have the privilege of such an education.

It is right that those who benefit financially from higher education should make a contribution, albeit small, to the cost of that education by repaying a loan. Of course some graduates will have a low income, but that is no argument for saying that no one should repay the loan. It is an argument for deferring the repayment for such people, as the scheme does. It is also an argument for higher salaries. It is no argument against a loan scheme to say that teachers, vicars, nurses and social workers are paid too little. That is an argument for paying such people more and not for presuming that in our system of support for university students all students are underpaid. The vast majority of British students receive very large incomes when they enter the real world.

Those who talk about access fail to mention that, last October, a record number of students entered higher education. A parliamentary reply to me last week showed that in October there will be a 4 per cent. increase in the number of students going to university. Those who will repay the loans do not share the doubts of my hon. Friend for Cambridge. They know the worth of higher education and are willing to take the chance.

I am appalled by the patronising attitude of some people towards children whose parents are on low incomes. Those potential students recognise that a course of higher education will provide them with the best possible opportunity in life. They will not be put off by the need to repay a loan at some stage in the future. They recognise that, if they do not take the opportunity of higher education, their future will be bleak.

It is important for children from low-income families to stay on at school. If they do not remain there beyond the age of 16, they have no chance of entering higher education. The Conservative party has been responsible for encouraging more children to stay on after the age of 16. The introduction of the GCSE, which is more interesting and relevant than the old GCE O-level, will encourage more students to stay at school and proceed to A-levels and university. The regulations are fair to the taxpayer, the student and the country. They will help to underwrite the expansion in higher education which all Conservative Members so earnestly desire.

11.24 pm

Mr. Bob Cryer (Bradford, South)

I genuinely intend to be brief; however, I feel that it is incumbent on me, as Chairman of the Joint Committee on Statutory Instruments, to confirm that the evidence that the House decided should be available has illuminated the debate. My hon. Friend the Member for Blackburn (Mr. Straw) mentioned the debate in the House of Lords. It is worth pointing out that the House of Lords cannot debate these or any other regulations until the Joint Committee has reported: it was therefore quite wrong of the Minister to try to continue the debate—as he did at one stage—when a vital piece of information had not been made available.

It is clear from the evidence that the regulations were rushed into existence. It is worth pointing out that they were changed only on the representation of counsel to the Committee, who pointed out that, in their original form, they made unusual use of powers and were almost certainly ultra vires, as well as being mistaken in another context. That referred to the proposals for disabled students, the Scottish legislation and the attempt to ensure that the academic institutions provided information that was certified correct when it was patently impossible for any such body to do so. As a result of those representations, and for no other reason, the regulations were withdrawn and retabled.

It is incumbent on the Department and the House to endorse regulations that are as clear as possible, so that people—students in particular—are not faced with court actions, whose costs could run into tens of thousands of pounds, in an attempt to clarify the legal position. I am delighted that tonight the House has demonstrated the value of the Joint Committee's work—work that the Minister was prepared to ignore.

I have dealt with the Committee's point of view; I wish now to speak briefly about the merits of the regulations, with which the Committee does not deal. The loan scheme is anathema to me. I speak as probably the only hon. Member who had to go to university with a loan: in 1953, when it was very difficult to obtain a grant, the local authority refused me one. Had I known that I would have to go through university on an annual loan, I would not have entered in the first place. Instead of spending pleasurable weeks at home, as all the sons and daughters of wealthy Tories will be able to do, I had to work week after week in a part-time job to eke out my university existence.

The loan was a millstone round our necks. I say "our necks" because it continued well into my married life—and I was married at 29; I was not exactly a child groom. The burden of those repayments was still there in my early 30s. I would not wish to impose such an onerous duty on any other student, and for that reason alone I strongly oppose the regulations: they are unfair and unjust. All credit to Tory Members who have had the guts to stand up and put their point of view—to the intense and sneering displeasure of the hon. Member for Hendon, South (Mr. Marshall), who dismissed a potential intervener with a disdain and lack of courtesy that I have never before witnessed on the Conservative Benches.

I can say from my experience that the loans system is unfair, unjust and onerous, and should be opposed.

11.28 pm

Dr. Keith Hampson (Leeds, North-West)

My hon. Friends will know that, way back in the days when the Conservatives were in opposition, I supported one of the colleagues of the present Leader of the Opposition—a member of his education team when he was a political adviser to Baroness Castle—who advocated student loans. It always seemed admirable in principle, for the very reasons that the then Government advisers gave, which is that the grant system is a millstone around the neck of expansion of higher education, as my hon. Friend the Member for Hendon, South (Mr. Marshall) said. I have opposed the scheme as inadequate in a number of ways. I shall now ask some specific questions about the regulations.

The regulations say about the designation of courses that the Secretary of State will have power to designate courses of higher education at institutions other than institutions receiving support from public funds. Can my hon. Friend the Minister say categorically that he will be allowing loans for students attending the University of Buckingham? Will he consider other vocational qualifications, which increasing numbers of students are taking, as the Government's philosophy encourages them to do, at institutions other than universities and polytechnics?

As that is about qualifications through institutions, what would be the position regarding the eligibility of categories of students? Am I right to suggest that nothing in these regulations, and certainly nothing in the statute, prevents my hon. Friend the Minister, or his successors, from allowing loans to be granted to postgraduates or part-time students? I recall that the Prime Minister, when she was Secretary of State for Education and Science, came out against student loans for graduates, but was keen on grants to postgraduates. My hon. Friend should explain whether, with the statute as we have it, that would be possible.

An admirable provision allows deferment and reduced repayments for those who have problems. It says that a person will not have to repay if his income for any month does not exceed £965. That is a precise figure. Is the suggestion that, as inflation goes on—even under this Government, it goes on—the Minister will regularly return to the House with regulations, which will all be subject to affirmative resolution of the House?

I agree with the provision in regulation 9(4): In determining whether a borrower's gross income in any month exceeds the amount specified in paragraph (1) no account shall be taken of any disability-related benefits paid to him in that month. However, what about other sources of income? What about unemployment pay, and what is the position of deemed interest? We have the acute problem with the community charge that, under social security regulations, it is necessary, when determining the income rate at which the threshold operates, to count an exorbitant interest rate, of 20 per cent. or so on capital. Does that apply to mature students, who may have to defer their payments?

Will my hon. Friend look at the German scheme? Regulation 7(5) on page 4, says: Nothing … shall be taken to prevent a borrower from reducing or discharging his liability". That is admirable. If people wish to pay off their loan faster than five years, that is great. However, are we not in the business of building incentives into the system? In Germany, lower interest is charged if one pays back early. Equally, it should be possible to get concessions on the interest and repayments if one gets good grades. That is also a feature in many other loans systems. Why are we not thinking like that?

11.33 pm

Mr. Mike Watson (Glasgow, Central)

The debate on these regulations was delayed, as my hon. Friend the Member for Bradford, South (Mr. Cryer) said, because of Government incompetence. The evidence that we sought on Tuesday last week is now available. Those of us who have had the chance to look at it know that the officials concede that the first set of regulations published were flawed in that they did not adequately reflect the law north of the border.

That was just the latest in a production line of disasters throughout the sorry passage of the Education (Student Loans) Act. It has been blighted by one disaster after another. The consultation process on the loans scheme was a sham. On Second Reading, Conservative Members lined up to attack the plans, and the Bill was a disgrace—only a few pages of enabling clauses, with no mention of the limits of the scheme. During the Committee stage, in which I participated, the faults in the Government's arguments were largely exposed.

Matters went from bad to worse. Earlier this year, under pressure from all sides, the banks withdrew their support and left the scheme in tatters. It had no friends then, and it has picked up few in the intervening period. The Under-Secretary contributed to the Bill's misfortunes at its various stages. On Second Reading, he made the remarkable statement that the top-up loan equated to nothing more than the cost of a skiing holiday, seemingly unaware that skiing holidays are relatively rare in my constituency and, I am sure, in his.

In Committee, he made another remarkable comment to the president of the Edinburgh university students' association. He said that he had published the address of the Student Loans Company in Glasgow for the specific reason that the demonstrators could smash its windows, and apparently thereby give added weight to the Government's case. That was mentioned in Committee. The comment may have been made in a jocular manner, but it called into question the Under-Secretary's judgment in the way that he has guided the Bill through the House.

When the Bill went to another place, several important amendments were carried—but the Government ran scared and, in a dramatic move, introduced a guillotine to curtail debate on the Lords amendments. They did the same this evening when entitlement of students to housing benefit under the Social Security Bill was discussed. The Bill has been little more than an unmitigated disaster for the Government, yet it will be forced through at the last minute.

Two substantive issues arise in Scots law. It is regrettable that it is impossible to amend the regulations to take account of them. First, the regulations set out the Scottish legal position—that a loan to a minor cannot be made without parental consent, other than a minor without a curator. Secondly, what will happen to a student with a curator or parent who refuses to sanction the loan? Would the Student Loans Company still make the loan? If it did, that would be against Scottish law. It gives rise to the question of discrimination as English and Welsh students do not require parental consent; they need only have the agreement ratified when they reach the age of 18. That is an important point, because more 17-year-olds go into higher education in Scotland than in England or Wales because of the different system of education.

A sizeable minority of parents fail to complete the forms for student grants, so it is possible that a greater number will not give their consent to a loan application. In Scotland, if a loan were granted on the expectation of the consent of the parent or curator, but it was subsequently refused, I presume that the loan would have to be returned and the agreement made null and void. I hope that the Under-Secretary answers those points.

The regulations do not rectify an anomaly. All that they do is to spell out the legal position. They do not facilitate the provision of loans to all eligible under-18s in Scotland, and that is just one of a number of serious faults in the regulations and in the Bill.

11.39 pm

Mr. Spencer Batiste (Elmet)

The objections to the regulations seem to fall under two broad heads, and the first set relate to technicalities. Those who are familiar with parliamentary procedures will know that any regulations, in whatever form of words, on a controversial issue of this sort would undoubtedly be subject to criticism. If every proposal that has been advanced by the opponents had been set out in the regulations, the opponents would have found other proposals. The regulations need to be in place for the coming academic year, and the Government have acted properly in trying to bring them forward as quickly as possible, so that there is as much time as possible for them to be understood and implemented.

It is no fault of the Government's that the banks withdrew from discussions at a late stage and that alternative arrangements had to be made for the administration of the scheme. It is—[Interruption.] The scoffing of Opposition Members reminds me of a saying that was coined at the time when the railways were being built. It was said that no one would ask a stagecoach company to build a railway.

With the benefit of hindsight it was not an especially good idea to ask the banks to be involved in the student loans scheme. We were asking them to act in direct competition with a fair part of their lending. Only this week I visited a polytechnic, at which the academics said clearly that one of the benefits of the scheme will be that many students who are borrowing from the banks by using plastic credit cards and paying 34 per cent. and more in interest charges will be relieved from their present onerous obligations.

Most students who go to a university, as I did many years ago, and many other students, end up borrowing. They borrow on straight commercial terms, which leads to an onerous burden. The hon. Member for Bradford, South (Mr. Cryer) has drawn attention to that already. The scheme will enable borrowing to take place on much more realistic terms.

Mr. Miscampbell

How will the scheme save students a penny? Loans that are made under the scheme will be only a substitute for grants. Students will be borrowing from the banks as well as entering into loans under the scheme.

Mr. Batiste

That just is not so. I am sure that my hon. and learned Friend will come to understand the position more clearly when he thinks about it.

If students want to borrow more than the sum which is made available to them under the scheme, they will be able to do so. The reality, however, is that students will have a loan option that will broaden the base of their financing from Government grant alone, and on terms that are far more advantageous than at present through normal commercial lending.

As my hon. and learned Friend the Member for Blackpool, North (Mr. Miscampbell) will know, there is never a final word on detailed regulations for a complex scheme. Experience will be gained as years pass and lessons will be learnt. I hope to hear from my hon. Friend the Minister that the Government will have an open mind when they consider ways in which the technicalities of the scheme can be improved.

Whatever the regulations were about and whatever they included, the Opposition would oppose them. That is because they do not want a loans scheme in principle. There lies the fundamental division between the two sides of the House. That is why I ask the hon. Member of Blackburn (Mr. Straw), the Opposition spokesman on education and science, what his commitment to an alternative would be. We heard the same weasel words from the Opposition tonight as we heard from them last week about schools. We are told, "We shall introduce a fair loans scheme." It is then said, "When resources permit, we shall add resources to the scheme." No one believes that a Labour Government would ever be capable of managing the economy better than a Conservative Government. Extra resources would never be available to a Labour Government.

We know from our surgery experience that there are flaws in the existing grant system. Students tell us that they cannot obtain either mandatory or discretionary grants to enable them to take courses. Those students are not covered by the present system and they will be major winners as a result of any new proposals that are included in the regulations. When I asked the hon. Member for Blackburn (Mr. Straw), who led for the Opposition, whether that large number of potential students would benefit from the Labour party's alternative proposals, he deliberately avoided answering the question. The Labour party will continue to avoid answering it. The hon. Gentleman has no discretion to commit additional resources to student funding.

I shall use the device that the hon. Gentleman used last week. If he is prepared to give a commitment on behalf of the Labour party that in his definition of a fair loan scheme he will include in the uprating of all students who at present do not qualify for grants but who will qualify under this scheme for loans, including help for all those students who are entitled to a parental contribution but who do not get it, I shall give way to him now. I see that the hon. Gentleman is making not the slightest effort to rise to his feet. Nor will he, because the Opposition's case is based on humbug. They imply that they will devote more resources. As soon as they had an opportunity to do anything about student loans, however, they would welsh on their commitment.

The scheme is vital. It represents a great step forward in broadening the basis of financing higher education. It is a basis on which future Governments of this complexion will build. I would take a bet with anyone that there is no way in which a future Labour Government could find the resources that would enable them to undo the loan scheme.

11.46 pm

Mr. Andrew Smith (Oxford, East)

rose—

Mr. Dick Douglas (Dunfermline, West)

On a point of order, Mr. Deputy Speaker. This has been a short debate. The Front-Bench spokesman will have consumed more than half the allotted time. I do not cavil at your calling of hon. Members, but on the next occasion could the usual channels come to an understanding? There does not need to be a summing-up speech from an Opposition Front-Bench spokesman.

Mr. Deputy Speaker

I have sympathy for the hon. Gentleman and for other hon. Members who have not been called. However, the Opposition Front-Bench spokesman rose to his feet and, as is customary, I must call him. Mr. Andrew Smith.

Mr. Andrew Smith

The hon. Member for Dunfermline, West (Mr. Douglas) should not judge my speech before he hears it. The time that remains to me means that my speech will be far shorter than those of other hon. Members who have spoken in the debate.

It has been true from the outset of this half-baked and mean-spirited legislation that the regulations have all the hallmarks of a rushed and botched job. The Government embarked on a dogma-driven dash for the statute book and have tripped themselves up all the way. It is significant that the only two speeches that we have heard in support of the regulations were from the hon. Members for Hendon, South (Mr. Marshall) and for Elmet (Mr. Batiste). Their speeches must have reassured the Minister. On the strength of what they said, we can be sure that they will not be in the front rank of candidates for his job.

The scheme has been a comedy of errors from the word go. However, it is not very funny for the students who will lose or for those who may never become students because of the barriers that it places in their path. As my hon. Friend the Member for Glasgow, Central (Mr. Watson) pointed out, it began with the Government's refusal to publish, even in summary form, the responses to the White Paper consultations. When we analysed them, we found that 95 per cent. of the respondents rejected the scheme. That was why the Government refused to publish the responses.

The Government dragged their feet for almost 12 months before they would even provide time for a proper debate on the scheme. On Second Reading, the Under-Secretary told the House that we could amend the regulations. However, as he subsequently recognised, and as we recognise tonight, we cannot do so.

Then there was the, "will they, won't they?" pantomime of the banks pulling out of the scheme and the Prime Minister fizzing with fury and promising retribution. And so it has gone on. As the hon. Member for Truro (Mr. Taylor) pointed out, the universities have not been properly consulted about the regulations. The Joint Committee on Statutory Instruments has drawn our attention to the fact that the version of the regulations that was put to it was ultra vires on three counts.

More recently, such was the rush to incorporate last-minute amendments in time for the equivalent debate in the other place that properly printed copies of the regulations were not even available, and their Lordships debate was delayed while hapless officials leapt back to the printers for copies without handwritten corrections and typed riders. We have witnessed a Government display of concentrated incompetence from start to finish.

Mr. Edward Leigh (Gainsborough and Horncastle)

On a point of order, Mr. Deputy Speaker. Should not the hon. Member who closes the debate for the Opposition sum up the debate rather than reading out word for word what was written yesterday?

Mr. Deputy Speaker

Let us get on with the debate. Mr. Smith.

Mr. Smith

The hon. Member for Gainsborough and Horncastle (Mr. Leigh) did not hear all the debate. In any case, numerous hon. Members mentioned the concentrated display of incompetence to which I referred.

In implementing the Education (Student Loans) Act, the regulations will reflect all the damaging consequences of the parent legislation—the deterrent effect on poorer students, to which the hon. and learned Member for Blackpool, North (Mr. Miscampbell) referred; the unfair penalties for longer courses and on students in Scotland; the difficulties imposed on those entering poorly paid jobs; the administrative burden and the £2,170 million extra that the scheme will cost for the next 20 years, over and above the cost of uprating grants in line with inflation; as well as all the hardship that will be caused by the withdrawal of entitlement to social security benefits, which we discussed in the previous debate.

Dr. Hampson

That is all very well, but is it not about time that at least some Opposition Members acknowledged the fact that both the Minister for higher education in the last Labour Government, Gerry Fowler arid Maurice Peston, now Lord Peston, who was special adviser to Fred Mulley, now Lord Mulley, when he was Secretary of State for Education and Science, agreed with the principle of student loans? Will not the hon. Gentleman accept that?

Mr. Smith

That is not true, and our record speaks for itself. We did not cut student maintenance by more than 20 per cent., as this Government have done during their period in office, making that an excuse for introducing the regulations before us. On the question of the much-vaunted but hopelessly inadequate access funds. what incompetence it is that, even now—not a couple of months before students will be making applications—institutions still do not know how much they will have available to allocate to them.

I invite the Minister to attempt to answer the question that he failed to answer earlier about the technical position in Scotland. Has he or has he not taken the advice of the Scottish Law Officers, and is it or is it not the case that the last-minute amendments that have been spatchcocked into this wholly inadequate legislation do not cover the position in Scotland in respect of a minor who does not have the consent of his parent or curator? Let the Minister answer that question in his reply and let him answer, too, the points raised by the hon. Member for Leeds, North-West (Dr. Hampson) on other vocational qualifications. What about the physiotherapists and others registered under the Professions Supplementary to Medicine Act 1960? Are they or are they not covered?

Time does not permit me to go all through the inadequacies of the regulations, but they are flawed from start to finish, as is the legislation on which they are based. That so many questions should remain unanswered at this very late stage in the introduction of the student loans scheme is as bad for parliamentary democracy and public accountability as it is for the many students who, like their places of study, Will be facing enormous difficulties this autumn. These are bad regulations under a bad Act, and they give effect to a thoroughly bad scheme. I urge the House to vote against them tonight for the sake of the educational opportunities that should be available as a right and not a privilege. The Labour party will stand up for that right when in government.

11.53 pm

Mr. Jackson

With the leave of the House, Mr. Deputy Speaker, I shall respond to the debate in the six minutes that the hon. Member for Oxford East (Mr. Smith) has left me. It is important that students should have access to loans in the academic year starting this autumn. There is no trace of the deterrent effect that has been argued by the Opposition. As my hon. Friend the Member for Hendon, South (Mr. Marshall) pointed out, applications in both the university and the polytechnic and colleges sectors are up by 6 to 7 per cent., and that is a substantial—indeed, a record—number of applicants.

The hon. Member for Blackburn (Mr. Straw) asked about the use of the banks to verify graduate income. Policy has developed since February. The Student Loans Company will not contact a graduate's employer or a bank for evidence of income, but it will seek evidence from the graduate. That may include information that is available to the graduate from such sources as employers.

The hon. Member for Blackburn and the hon. Member for Truro (Mr. Taylor) both asked why there was no Student Loans Company by name. The reason is simply consistency with the main Act, which does not mention the Student Loans Company either. According to the main Act, the Secretary of State is empowered to make arrangements with such person or persons as may agree to do so … or bodies constituted … for that purpose. That is the basis on which we are proceeding in the regulations.

The hon. Members for Blackburn and for Truro also asked about the alleged cumbersomeness of the procedures. Of course, there is a need to protect public money in the scheme. We also need to square the operation of student loans with the requirement of the Consumer Credit Act 1974. However, we can review the procedures each year in the light of experience and that is one advantage of the flexibility that we have allowed ourselves. We will keep the matter under review. We can also keep the £3.50 fee to the higher education institutions under review in the light of experience.

The hon. Member for Truro asked about disabled students. A happy feature of the legislation is the considerable improvement in the position of disabled students and graduates. They retain their entitlement to benefits as well as to the loan and that has now been extended to include deaf students. Disabled students allowance, which is payable with the mandatory grant, is increasing by 30 per cent. and we have introduced two further allowances to help disabled students for non-medical personal helpers and for major items of specialist equipment. For disabled graduates, we have provided that disability-related benefits will be disregarded when income is assessed for the purpose of deferment, and we have given discretion to the Student Loans Company to provide for a longer grace period.

The hon. Member for Truro asked for assurances that we would keep the position of disabled students under review. I am happy to repeat that we will continue to keep the position of all students under review.

The hon. Members for Bradford, South (Mr. Cryer) and for Glasgow, Central (Mr. Watson) asked why we changed the regulations after they had been tabled. The simple fact is that the draft regulations were submitted to the Joint Committee on Statutory Instruments, of which the hon. Member for Bradford, South is chairman. The Committee was inquorate, and that gave my officials the opportunity to discuss the draft with counsel. Although we were not obliged to, we were happy to revise the form of the regulations in line with counsel's advice on a couple of technical points. I emphasise that those are changes in the form of the structure of the regulations and not in their underlying policy.

My hon. Friend the Member for Leeds, North-West (Dr. Hampson) asked several questions. We have to consider the designation of private sector institutions and we will make an announcement shortly. He asked about part-timers and postgraduates. They could be brought within the scope of the scheme, but that would require an amendment to schedule 1 of the Education (Student Loans) Act 1990. The deferment threshold will be reviewed annually and the revision will not be subject to affirmative resolution.

My hon. Friend the Member for Leeds, North-East also asked about the possibility of scholarships. We have considered that, but the loans are being made on favourable terms and there is no need for us to make them more favourable.

I was also asked about the Scottish Law Officers.

Mr. Dick Douglas (Dunfermline, West)

On a point of order, Mr. Deputy Speaker. Surely we are not going to pass the regulations without a clear sign from the Minister that the Scottish Law Officers will—[Interruption.]

Mr. Jackson

I hope that the hon. Gentleman has left me time to answer that point. The Scottish Law Officers were not consulted, because there is no specific question to put to them. As indicated, only the courts can rule whether a loan agreement is enforceable in the particular circumstances of any case.

We are now in the last stages of the enactment of student loans. It has been a privilege for me to have had a share in the responsibility for the legislation. As hon. Members have pointed out, some with greater relish than others, we have had some exciting—

It being one and half hours after the commencement of proceedings on the motion, MR. DEPUTY SPEAKER put the Question, pursuant to Standing Order No. 14 (Exempted business).

The House divided: Ayes 300, Noes 217.

Division No. 288]	[12 midnight
AYES
Aitken, Jonathan	Cran, James
Alison, Rt Hon Michael	Currie, Mrs Edwina
Allason, Rupert	Curry, David
Amery, Rt Hon Julian	Davies, Q. (Stamf'd & Spald'g)
Amess, David	Davis, David (Boothferry)
Amos, Alan	Day, Stephen
Arbuthnot, James	Dorrell, Stephen
Arnold, Jacques (Gravesham)	Douglas-Hamilton, Lord James
Arnold, Sir Thomas	Dunn, Bob
Ashby, David	Eggar, Tim
Atkins, Robert	Emery, Sir Peter
Atkinson, David	Evans, David (Welwyn Hatf'd)
Baker, Nicholas (Dorset N)	Evennett, David
Baldry, Tony	Fairbairn, Sir Nicholas
Banks, Robert (Harrogate)	Fallon, Michael
Batiste, Spencer	Favell, Tony
Bellingham, Henry	Fenner, Dame Peggy
Bendall, Vivian	Field, Barry (Isle of Wight)
Bennett, Nicholas (Pembroke)	Fishburn, John Dudley
Benyon, W.	Fookes, Dame Janet
Biffen, Rt Hon John	Forman, Nigel
Blaker, Rt Hon Sir Peter	Forsyth, Michael (Stirling)
Body, Sir Richard	Forth, Eric
Bonsor, Sir Nicholas	Fowler, Rt Hon Sir Norman
Boscawen, Hon Robert	Fox, Sir Marcus
Boswell, Tim	Franks, Cecil
Bottomley, Peter	Freeman, Roger
Bottomley, Mrs Virginia	French, Douglas
Bowden, A (Brighton K'pto'n)	Gale, Roger
Bowden, Gerald (Dulwich)	Gardiner, George
Bowis, John	Garel-Jones, Tristan
Boyson, Rt Hon Dr Sir Rhodes	Gill, Christopher
Brandon-Bravo, Martin	Glyn, Dr Sir Alan
Brazier, Julian	Goodhart, Sir Philip
Bright, Graham	Goodson-Wickes, Dr Charles
Brown, Michael (Brigg & Cl't's)	Gorman, Mrs Teresa
Browne, John (Winchester)	Gorst, John
Bruce, Ian (Dorset South)	Gow, Ian
Buck, Sir Antony	Grant, Sir Anthony (CambsSW)
Budgen, Nicholas	Greenway, Harry (Ealing N)
Burns, Simon	Greenway, John (Ryedale)
Butcher, John	Gregory, Conal
Butler, Chris	Griffiths, Peter (Portsmouth N)
Butterfill, John	Grist, Ian
Carlisle, John, (Luton N)	Ground, Patrick
Carlisle, Kenneth (Lincoln)	Gummer, Rt Hon John Selwyn
Carrington, Matthew	Hague, William
Carttiss, Michael	Hamilton, Hon Archie (Epsom)
Cash, William	Hamilton, Neil (Tatton)
Channon, Rt Hon Paul	Hampson, Dr Keith
Chapman, Sydney	Hanley, Jeremy
Chope, Christopher	Hannam, John
Churchill, Mr	Hargreaves, A. (B'ham H'll Gr')
Clark, Hon Alan (Plym'th S'n)	Hargreaves, Ken (Hyndburn)
Clark, Dr Michael (Rochford)	Harris, David
Clark, Sir W. (Croydon S)	Hayes, Jerry
Colvin, Michael	Hayward, Robert
Conway, Derek	Heathcoat-Amory, David
Coombs, Anthony (Wyre F'rest)	Heseltine, Rt Hon Michael
Coombs, Simon (Swindon)	Hicks, Mrs Maureen (Wolv" NE)
Couchman, James	Higgins, Rt Hon Terence L.

Hill, James	Norris, Steve
Hind, Kenneth	Onslow, Rt Hon Cranley
Hogg, Hon Douglas (Gr'th'm)	Oppenheim, Phillip
Holt, Richard	Page, Richard
Howard, Rt Hon Michael	Paice, James
Howarth, Alan (Strat'd-on-A)	Parkinson, Rt Hon Cecil
Howarth, G. (Cannock & B'wd)	Patnick, Irvine
Howe, Rt Hon Sir Geoffrey	Patten, Rt Hon Chris (Bath)
Howell, Rt Hon David (G'dford)	Patten, Rt Hon John
Howell, Ralph (North Norfolk)	Pattie, Rt Hon Sir Geoffrey
Hughes, Robert G. (Harrow W)	Pawsey, James
Hunt, David (Wirral W)	Peacock, Mrs Elizabeth
Hunt, Sir John (Ravensbourne)	Porter, Barry (Wirral S)
Hunter, Andrew	Porter, David (Waveney)
Irvine, Michael	Portillo, Michael
Jack, Michael	Powell, William (Corby)
Jackson, Robert	Price, Sir David
Janman, Tim	Raffan, Keith
Jessel, Toby	Raison, Rt Hon Timothy
Johnson Smith, Sir Geoffrey	Rathbone, Tim
Jones, Gwilym (Cardiff N)	Redwood, John
Jones, Robert B (Herts W)	Renton, Rt Hon Tim
Jopling, Rt Hon Michael	Riddick, Graham
Kellett-Bowman, Dame Elaine	Ridsdale, Sir Julian
Key, Robert	Roberts, Sir Wyn (Conwy)
King, Roger (B'ham N'thfield)	Roe, Mrs Marion
Kirkhope, Timothy	Rossi, Sir Hugh
Knapman, Roger	Rost, Peter
Knight, Greg (Derby North)	Rowe, Andrew
Knight, Dame Jill (Edgbaston)	Rumbold, Mrs Angela
Knowles, Michael	Ryder, Richard
Lamont, Rt Hon Norman	Sackville, Hon Tom
Lang, Ian	Sainsbury, Hon Tim
Latham, Michael	Sayeed, Jonathan
Lawrence, Ivan	Scott, Rt Hon Nicholas
Lawson, Rt Hon Nigel	Shaw, David (Dover)
Lee, John (Pendle)	Shaw, Sir Giles (Pudsey)
Leigh, Edward (Gainsbor'gh)	Shelton, Sir William
Lennox-Boyd, Hon Mark	Shephard, Mrs G. (Norfolk SW)
Lester, Jim (Broxtowe)	Shepherd, Colin (Hereford)
Lightbown, David	Shersby, Michael
Lilley, Peter	Sims, Roger
Lloyd, Peter (Fareham)	Skeet, Sir Trevor
Lord, Michael	Smith, Tim (Beaconsfield)
Luce, Rt Hon Richard	Soames, Hon Nicholas
Lyell, Rt Hon Sir Nicholas	Spicer, Michael (S Worcs)
MacGregor, Rt Hon John	Squire, Robin
Maclean, David	Stanbrook, Ivor
McLoughlin, Patrick	Stanley, Rt Hon Sir John
McNair-Wilson, Sir Patrick	Steen, Anthony
Malins, Humfrey	Stern, Michael
Mans, Keith	Stevens, Lewis
Maples, John	Stewart, Allan (Eastwood)
Marland, Paul	Stewart, Andy (Sherwood)
Marlow, Tony	Stewart, Rt Hon Ian (Herts N)
Marshall, John (Hendon S)	Stokes, Sir John
Marshall, Sir Michael (Arundel)	Stradling Thomas, Sir John
Martin, David (Portsmouth S)	Sumberg, David
Mates, Michael	Summerson, Hugo
Mawhinney, Dr Brian	Tapsell, Sir Peter
Mayhew, Rt Hon Sir Patrick	Taylor, Ian (Esher)
Mellor, David	Taylor, John M (Solihull)
Meyer, Sir Anthony	Taylor, Teddy (S'end E)
Miller, Sir Hal	Temple-Morris, Peter
Mills, Iain	Thompson, D. (Calder Valley)
Mitchell, Andrew (Gedling)	Thompson, Patrick (Norwich N)
Mitchell, Sir David	Thorne, Neil
Moate, Roger	Thornton, Malcolm
Montgomery, Sir Fergus	Thurnham, Peter
Moore, Rt Hon John	Townend, John (Bridlington)
Morrison, Rt Hon P (Chester)	Tracey, Richard
Moss, Malcolm	Tredinnick, David
Moynihan, Hon Colin	Trippier, David
Neale, Gerrard	Twinn, Dr Ian
Needham, Richard	Viggers, Peter
Nelson, Anthony	Waddington, Rt Hon David
Newton, Rt Hon Tony	Wakeham, Rt Hon John
Nicholls, Patrick	Waldegrave, Rt Hon William
Nicholson, David (Taunton)	Walden, George
Nicholson, Emma (Devon West)	Walker, Bill (T'side North)

Waller, Gary	Wilshire, David
Ward, John	Wolfson, Mark
Wardle, Charles (Bexhill)	Wood, Timothy
Warren, Kenneth	Woodcock, Dr. Mike
Watts, John	Yeo, Tim
Wells, Bowen	Young, Sir George (Acton)
Wheeler, Sir John	Younger, Rt Hon George
Whitney, Ray
Widdecombe, Ann	Tellers for the Ayes:
Wiggin, Jerry	Mr. Alastair Goodlad and
Wilkinson, John	Mr. Tony Durant.
NOES
Abbott, Ms Diane	Fisher, Mark
Adams, Allen (Paisley N)	Flannery, Martin
Allen, Graham	Forsythe, Clifford (Antrim S)
Alton, David	Foster, Derek
Anderson, Donald	Foulkes, George
Archer, Rt Hon Peter	Fraser, John
Armstrong, Hilary	Fyfe, Maria
Ashdown, Rt Hon Paddy	Galloway, George
Ashton, Joe	Garrett, John (Norwich South)
Banks, Tony (Newham NW)	George, Bruce
Barnes, Harry (Derbyshire NE)	Gilbert, Rt Hon Dr John
Barnes, Mrs Rosie (Greenwich)	Godman, Dr Norman A.
Beckett, Margaret	Golding, Mrs Llin
Beggs, Roy	Gould, Bryan
Beith, A. J.	Graham, Thomas
Bell, Stuart	Grant, Bernie (Tottenham)
Benn, Rt Hon Tony	Griffiths, Nigel (Edinburgh S)
Bennett, A. F. (D'nt'n & R'dish)	Griffiths, Win (Bridgend)
Bermingham, Gerald	Grocott, Bruce
Blair, Tony	Hardy, Peter
Blunkett, David	Hattersley, Rt Hon Roy
Boateng, Paul	Haynes, Frank
Boyes, Roland	Heal, Mrs Sylvia
Bradley, Keith	Henderson, Doug
Brown, Gordon (D'mline E)	Hinchliffe, David
Brown, Nicholas (Newcastle E)	Hoey, Ms Kate (Vauxhall)
Brown, Ron (Edinburgh Leith)	Hogg, N. (C'nauld & Kilsyth)
Bruce, Malcolm (Gordon)	Home Robertson, John
Caborn, Richard	Hood, Jimmy
Campbell, Menzies (Fife NE)	Howarth, George (Knowsley N)
Campbell-Savours, D. N.	Howells, Geraint
Canavan, Dennis	Howells, Dr. Kim (Pontypridd)
Carlile, Alex (Mont'g)	Hoyle, Doug
Carr, Michael	Hughes, John (Coventry NE)
Clark, Dr David (S Shields)	Hughes, Robert (Aberdeen N)
Clarke, Tom (Monklands W)	Hughes, Roy (Newport E)
Clay, Bob	Hughes, Simon (Southwark)
Clelland, David	Illsley, Eric
Clwyd, Mrs Ann	Ingram, Adam
Coleman, Donald	Jones, Barry (Alyn & Deeside)
Cook, Robin (Livingston)	Jones, Ieuan (Ynys Môn)
Corbyn, Jeremy	Jones, Martyn (Clwyd S W)
Cousins, Jim	Kaufman, Rt Hon Gerald
Cox, Tom	Kilfedder, James
Crowther, Stan	Kirkwood, Archy
Cryer, Bob	Lambie, David
Cunliffe, Lawrence	Lamond, James
Dalyell, Tam	Leadbitter, Ted
Darling, Alistair	Leighton, Ron
Davies, Rt Hon Denzil (Llanelli)	Lestor, Joan (Eccles)
Davies, Ron (Caerphilly)	Lewis, Terry
Davis, Terry (B'ham Hodge H'l)	Litherland, Robert
Dewar, Donald	Livingstone, Ken
Dixon, Don	Livsey, Richard
Dobson, Frank	Lofthouse, Geoffrey
Doran, Frank	Loyden, Eddie
Douglas, Dick	McAllion, John
Duffy, A. E. P.	McAvoy, Thomas
Dunnachie, Jimmy	McCartney, Ian
Dunwoody, Hon Mrs Gwyneth	Macdonald, Calum A.
Eastham, Ken	McFall, John
Evans, John (St Helens N)	McKelvey, William
Ewing, Mrs Margaret (Moray)	McLeish, Henry
Fatchett, Derek	Maclennan, Robert
Fearn, Ronald	McNamara, Kevin
Field, Frank (Birkenhead)	McWilliam, John
Fields, Terry (L'pool B G'n)	Madden, Max

Mahon, Mrs Alice	Ross, Ernie (Dundee W)
Marek, Dr John	Ross, William (Londonderry E)
Marshall, Jim (Leicester S)	Rowlands, Ted
Martin, Michael J. (Springburn)	Ruddock, Joan
Martlew, Eric	Salmond, Alex
Meacher, Michael	Sedgemore, Brian
Meale, Alan	Sheerman, Barry
Michael, Alun	Sheldon, Rt Hon Robert
Michie, Bill (Sheffield Heeley)	Shore, Rt Hon Peter
Michie, Mrs Ray (Arg'l & Bute)	Short, Clare
Miscampbell, Norman	Skinner, Dennis
Mitchell, Austin (G't Grimsby)	Smith, Andrew (Oxford E)
Molyneaux, Rt Hon James	Smith, Rt Hon J. (Monk'ds E)
Moonie, Dr Lewis	Smith, J. P. (Vale of Glam)
Morgan, Rhodri	Snape, Peter
Morley, Elliot	Soley, Clive
Morris, Rt Hon A. (W'shawe)	Spearing, Nigel
Mowlam, Marjorie	Steel, Rt Hon Sir David
Mullin, Chris	Steinberg, Gerry
Murphy, Paul	Stott, Roger
Nellist, Dave	Straw, Jack
Oakes, Rt Hon Gordon	Taylor, Rt Hon J. D. (S'ford)
O'Brien, William	Taylor, Matthew (Truro)
O'Neill, Martin	Thomas, Dr Dafydd Elis
Orme, Rt Hon Stanley	Thompson, Jack (Wansbeck)
Owen, Rt Hon Dr David	Turner, Dennis
Parry, Robert	Vaz, Keith
Pendry, Tom	Wallace, James
Pike, Peter L.	Wardell, Gareth (Gower)
Powell, Ray (Ogmore)	Watson, Mike (Glasgow, C)
Prescott, John	Welsh, Michael (Doncaster N)
Primarolo, Dawn	Williams, Rt Hon Alan
Quin, Ms Joyce	Williams, Alan W. (Carm'then)
Radice, Giles	Wilson, Brian
Randall, Stuart	Winnick, David
Redmond, Martin	Wise, Mrs Audrey
Rees, Rt Hon Merlyn	Worthington, Tony
Reid, Dr John	Wray, Jimmy
Rhodes James, Robert	Young, David (Bolton SE)
Richardson, Jo
Robertson, George	Tellers for the Noes:
Robinson, Geoffrey	Mr. Allen McKay and
Rogers, Allan	Mr. Robert N. Wareing.
Rooker, Jeff

Question accordingly agreed to.

Resolved, That the draft Education (Student Loans) Regulations 1990, which were laid before this House on 25 June, be approved.