HC Deb 16 April 1996 vol 275 cc616-9

Lords amendment: No. 1, in page 3, line 22, leave out from beginning to ("and") in line 26.

10.16 pm
The Minister of State, Department for Education and Employment (Mr. Eric Forth)

I beg to move, That this House doth agree with the Lords in the said amendment.

Madam Deputy Speaker (Dame Janet Fookes)

I inform the House that amendment No. 1 involves privilege.

Mr. Forth

This is a small, technical amendment. We feel that it is necessary in order to implement fully our policy to limit the number of loans that may be taken out by a student in any one year. Regulations under the Student Loans Act 1990 already apply this restriction in respect of loans taken out with the Student Loans Company Ltd. It makes good sense that the position should be the same for private loans when they become available.

The Bill as originally drafted therefore contained, in paragraph 3(2)(b) of the schedule, a power to limit public loans where an applicant already had a private one. In turn, our contracts with the private lenders would have limited private loans where a public one already existed. However, we reflected further on that after the issue was raised in Committee. As a result, we are bringing the private sector into student loans to create competition and extend student choice. Part of that choice includes the freedom for students to move from one lender to another year by year.

In these circumstances, it is important that our policy of one subsidised loan per student per year is fully and easily implemented. The amendment deletes the regulation-making power in paragraph 3(2)(b) of the schedule. Instead, the general regulation-making power in section 1(2)(b) of the 1990 Act will be used to limit the number of loans, whether public or private. It is surely sensible that the number of loans be limited in this way. It is fair to students and to the taxpayer. The amendment makes our objective more secure. I commend it to the House.

Mr. Bryan Davies (Oldham, Central and Royton)

As the Minister has said, this issue was considered in Standing Committee. In fact, it was my hon. Friends who drew attention to the important point that none of us would countenance circumstances in which subsidy from the public purse to those who took out student loans should be available more than once in any one student year. Therefore, the Opposition also support this technical amendment, which gives effect to what is clearly the will of the House and which been commended by the other place.

Lords amendment agreed to [Special Entry].

Lords Amendment: No. 2, in page 3, line 30, leave out ("2(1)") and insert ("2—(a) in sub-paragraph (1)").

Mr. Forth

I beg to move, That this House doth agree with the Lords in the said amendment.

Madam Deputy Speaker

With this it will be convenient to take Lords amendment No. 3, in page 3, line 32, at end insert (", and (b) after that sub-paragraph insert— (1 A) Regulations under sub-paragraph (1) above may include provision for the making of payments to governing bodies in respect of the taking by them of steps prescribed by the regulations.)

Mr. Forth

Currently, higher education institutions have a significant role in certifying students' eligibility for loans. In return, the Student Loans Company pays them a fee for each certificate of eligibility. We intend that to continue. Higher education institutions will also play a role in providing information on their students' eligibility for private sector loans. We intend them to receive payment for whatever work they do in that regard.

A number of concerns have been expressed, here and in another place, about how much work higher education institutions will have to do, and about its cost. One such concern was that there was no specific provision for payment to such institutions for any eligibility work that they may do on private loan applications. The amendment will remove that concern.

Paragraph 3 of the schedule would amend schedule 2 of the Education (Student Loans) Act 1990. In so doing, it would provide for regulations requiring work on eligibility by higher education institutions to apply to private as well as public loans. It would provide for payments to be made to higher education institutions in relation to work on all loans. It addresses a reasonable concern that was put to us in both Houses. I hope that this House will support it on that basis.

Mr. Bryan Davies

The Opposition do not oppose the objective of the amendment, but it should be noted that, in justifying it, the Minister laid claim to a position that has not been substantiated either here or in the other place, and is not supported in the higher education sector.

The Minister claimed that universities are fully recompensed for the administrative costs that they incur in processing student loans. That is palpably not the case. The figures that have been quoted—which are not contested significantly by any source—suggest that universities' costs are probably twice as high as the sum that is currently returned to them. Naturally, the universities are very concerned. These are difficult days for the higher education sector: the downward pressure on resources is fierce, and institutions are hard pressed. Now they are being asked to subsidise the operation of the Student Loans Company, and the process that enables students to obtain the necessary maintenance to enable them to continue their studies.

In Committee, the Opposition pressed the amendment forcefully, but at that time it did not find favour with the Minister. Now, at last, it has become acceptable to the Government. It will ensure that, even if the universities are not paid the full cost of the exercise in which they are involved, they will at least receive some payment for providing information that is needed by the private sector.

The higher education sector is anxious for obvious reasons. The Government are making increasing demands on productivity: they are making increasing demands on the institutions to fulfil Government policy in regard to the number of students that they accept, while being extremely ungenerous in terms of funds. Although this may be a small area from the universities' point of view, it is an example of their being expected to provide, from limited funds, a subsidy not only for the public sector and the Student Loans Company but, regrettably—under the Bill's provisions—for the private sector, assuming that the private sector system of student support ever gets under way. Perhaps this exercise is already redundant. That was mentioned in the House of Lords because, plainly, the Government are undertaking a review of higher education and student finance and have asked Sir Ron Deering to carry it out.

This is the last time that the House will have a chance to comment on the Bill, and it is being asked to persist with a Bill that is widely regarded as redundant because it is unlikely to be implemented and in any case contains noxious elements. One such small noxious element is that the private sector will obtain a subsidy from the universities which currently goes to the Student Loans Company and the Minister has still not fully reimbursed universities for their work in this area.

As I have said, this is the last occasion on which we shall consider the Bill. It is an enabling measure that will empower the Minister to carry out a series of negotiations with various agencies. When and in what form will the House receive a statement from the Minister about the conclusion of the negotiations so that Parliament can be properly reassured about the processes, procedures and conclusions? The Minister has been offered a blank cheque in his negotiations with the banks and financial institutions and, having been empowered in that way, he should inform the House about the conclusions of his negotiations and the House should have a chance to consider any proposals. Perhaps the Minister will say how he intends to fulfil that obligation, which has been pointed out to him repeatedly on Second Reading, in Committee and on Third Reading, and in the other place. It has been said with great force that the Minister should respond to that request.

Mr. Roy Beggs (East Antrim)

It is important that the Minister should return to the House with that information because the legislation will later be applied to Northern Ireland and we ought to know what is intended for us there.

Mr. Davies

I accept the hon. Gentleman's supportive comment, which plainly shows that there are widespread concerns about the measure. I expressed it in parliamentary terms in the context of both Houses and I am grateful to the hon. Gentleman for his geographical reinforcement of my case.

Mr. Forth

I welcome the hon. Gentleman's support for the amendment and the spirit in which he expressed at least that element of his speech. However, I cannot accept his contention or the terms in which he put it, because not only are the fees that are payable to higher education institutions entirely a matter between the Student Loans Company and the institutions, but the Department and I are not aware of the higher education institutions pressing particularly hard on the SLC for a review of the terms of the compensatory payments that they receive. The hon. Gentleman exaggerated somewhat in that regard. Perhaps concealed in the comments of the hon. Member for Oldham, Central and Royton (Mr. Davies) was a spending commitment on behalf of his party that he would arrange, were he ever in a position to do so, to make much more generous payments to the universities. He was not prepared to do more than hint at that, but I have no doubt that in due course, after he has received the permission of his hon. Friend the Member for Dunfermline, East (Mr. Brown), he will make the commitment which seemed to be implied in his comments.

I can tell the hon. Gentleman and the hon. Member for East Antrim (Mr. Beggs) that we have extended yet again the deadline for the receipt of tenders from private lending institutions, at the request of one of them, by some two weeks to Monday 13 May. That will give them every opportunity to respond positively and comprehensively to our invitation to tender.

I envisage that at that time, after an appropriate period to consider the tenders, we shall wish to notify the House of the outcome of the tendering process so that everyone is kept fully informed of the position, should the Bill receive royal assent, should its provisions be in place, and depending on the private lenders who respond to the tendering arrangements. It is my wish that the House be kept fully informed. The deadline has been extended, but at a material time after that date I will inform the House fully of the progress being made.

I hope that the House will now feel able to support the amendment.

Lords amendment agreed to [Special Entry].

Lords amendment No. 3 agreed to [Special Entry].

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