Education (Student Loans) Bill

HC Deb 21 July 1997 vol 298 cc707-30

Order for Second Reading read.

4.31 pm

The Minister for School Standards (Mr. Stephen Byers)

I beg to move, That the Bill be now read a Second time.

It may be helpful if I make hon. Members aware that this measure has nothing whatsoever to do with the Dearing report or the Government's response to it. The measures contained in this Bill relate to loans that have been made to students or might be made in the coming academic year under the existing procedures, which will be totally unaffected by any policy changes that might come as a result of the Government's response to the Dearing report.

Mr. Don Foster (Bath)

Can the Minister confirm that nothing will be proposed arising out of this Bill that will in any way change the repayment mechanism for students who already have loans of one sort or another?

Mr. Byers

Yes, I can confirm that.

Later this year, we will need to produce proposals for regulations concerning repayment as well as many other matters because we will need to put those on a fixed footing, which will mean that we will no longer be able to debate them annually in the House. We will need to freeze, for example, the regulations that affect repayment procedures. Once that is done, there will be no further changes. Recommendations that come out of Dearing, therefore, will not have any consequences as far as those repayments are concerned.

Mr. Ian Bruce (South Dorset)

I am grateful to the hon. Gentleman for trying to put the House straight about the leaks at the weekend. From my reading of the Bill, it would seem that the Government will subsidise any company that decides to buy in the debt portfolio. Is he saying that this legislation will not be affected by any doubling—I suspect that it will be a doubling—of the amount of money being loaned to students, which I assume would be sold on to a financial institution, should the Government decide to double the amount of money going into loans?

Mr. Byers

Those are two separate and distinct issues. The measure before the House relates to the student loan book and the debt that we intend to sell on to the private sector. The recommendations that result from the inquiry and the Government's response to it will be quite separate, and will be dealt with differently from the measure that we are considering.

The Bill is before the House for substantial reasons. The previous Government put into this year's and next year's spending programme receipts from the sale of the student loan book amounting to £1.6 billion in this financial year and £1.5 billion in the year 1998–99.

We made it clear that we intended to stick within the budgets laid down by the previous Administration, so it follows that the receipts that we expect from the student loan debt are necessary to meet the previously published spending plans. Indeed, my right hon. Friend the Chancellor of the Exchequer made it clear in his Budget statement on 2 July that, to meet our spending plans for this financial year, we would expect £1.6 billion from the sale of part of the student loans debt.

The Government have two overriding objectives. First, we are committed to the development of a wide range of public-private partnerships, because they bring private resources and expertise into the public sector and involve a transfer of risk to the private sector. Selling student loans will transfer to private sector financial institutions the credit risk currently borne by the Government. Those institutions have the experience of managing loans and are better placed to deal with such risks.

Secondly, the sale will also enable the financial markets to establish a clearer understanding of publicly funded student loans, which could in future encourage financial institutions to play a more direct role in the provision of student support. We are all aware that the previous Government sought to interest the private sector in student loans, which led to the Education (Student Loans) Act 1996. One reason why the twin-track approach proposed by the then Government in that Act failed to capture the banks' and financial institutions' imagination was that most of them did not understand the nature of student loans.

I understand that that Government's discussions with those bodies that had expressed an interest revealed clearly that they had no understanding of the concept of publicly financed student loans. We hope that the Bill will foster a greater understanding of the nature of the student loans system and that there may be beneficial developments in public-private partnerships as a result.

Mr. Andrew Welsh (Angus)

The Minister is explaining how the legislation will help the Government in their finances; how will it help the students in theirs, given the massive amount of student debt and the surprising and disgraceful number of student dropouts that occur as a result of such measures?

Mr. Byers

A little later, I shall talk about the safeguards that we intend to put in place, to ensure that no student who presently receives a student loan will be adversely affected as a result of the legislation.

The whole of our education service will benefit from the Bill. We intend to receive £1.6 billion in sales this year and £1.5 billion in the next financial year. If that money were not received, there would be a deficit in the Department's budget; that would clearly have an adverse effect on the service that can be offered, whether in universities, in schools, or in higher or further education generally.

Mr. Julian Brazier (Canterbury)

As we are unlikely to have an opportunity before the summer recess to debate any additional burdens that are likely to be placed on students as a result of the Dearing report, I believe, as someone who represents a constituency with a lot of students, that we must consider the total burden on students and that it would be better to focus on tighter quality controls, as several of us suggested in written submissions to Sir Ron Dearing, rather than imposing tuition fees or other still greater burdens on students.

Mr. Byers

I can understand why hon. Members want to focus the debate on what might come out of the Dearing report, but I must reiterate that the measures before us today have nothing to do with the recommendations that will come from the Dearing inquiry or the approach that the Government will adopt towards them. I understand the hon. Gentleman's concern. It may help him to know that my right hon. Friend the Secretary of State for Education and Employment intends to make a statement on the Dearing inquiry to the House on Wednesday. That will provide an opportunity for hon. Members to raise such concerns.

Mr. Phil Willis (Harrogate and Knaresborough)

Are the £1.6 billion in this financial year and the £1.5 billion in the next financial year net of subsidy? If they are not, how much subsidy does Minister expect to be netted off?

Mr. Byers

I am afraid that I cannot comment on the level of subsidy at this stage because, as the hon. Gentleman knows, there is a competition, which was started by the previous Administration, for the sale of student loan debt. I will deal later with the power in the Bill to give a subsidy to the purchaser of student loan debt. We cannot say at this stage how much that subsidy will be, but I can say that there is a very strong competition between 20 leading financial institutions, and we intend to ensure that the lowest possible subsidy is achieved through that. It would be inappropriate to comment on the level of subsidy, because we do not want to show our hand to the competing companies.

The Government were elected on the basis of a manifesto pledge to work within the spending plans already announced for the next two years. That pledge and our pledges on inflation and taxes are designed to create conditions for economic stability and a platform for sustained economic growth. Proceeding with the sale of loans will play a critical role in enabling us to keep that pledge. The public spending plans that we inherited include substantial sales of student loans in this financial year and the next. Given the tightness of those plans, and the need to give priority to our education programmes, as the Chancellor of the Exchequer did in his Budget statement on 2 July, we have decided that we will proceed with the sales.

To achieve the level of receipts planned by the previous Government, we will need to pay some subsidies to the loan purchasers, but the sales will be made through competitive tendering. As I said earlier, 20 substantial financial institutions have already responded to the first stage of the competition. We intend to accept the most competitive bid. While the scale of subsidies cannot be predicted in advance, we will ensure that we get the lowest possible subsidy required to be attractive to the private sector.

Before coming to the details of the Bill, it may be helpful to the House if I put them into context. Two measures on the statute book deal with student loans: the Education (Student Loans) Act 1990, and the Education (Student Loans) Act 1996, which introduced the twin-track procedure. Hon. Members might have found it difficult to understand how this measure impacts on those Acts, so I provided in the Library last Thursday a note that clearly showed its effects. I also sent copies to the shadow Secretary of State for Education and Employment and to the hon. Member for Bath (Mr. Foster). I hope that that will be useful in considering the Bill.

The Bill is, in many respects, a technical matter. Hon. Members may ask why we need to proceed now and why we should not delay at least until the Dearing report comes out. As I said, the Bill is quite different and distinct from the Dearing report, and it would be a mistake to confuse the two issues. Today, we are considering student loans which were made under the existing regime or will be lent in the forthcoming academic year. Those will be unaffected by any proposals that might come from the Dearing report.

Many people believe that there are sufficient powers under the 1990 and 1996 Acts to allow my right hon. Friend the Secretary of State to pursue the measures in the Bill. However, experience and, in particular, advice from our private sector advisers and from counsel, as well as feedback from the first stage of competition, have shown that there are substantial gaps in the legislation that need to be filled if we are to achieve a sale that meets the needs of the loan purchasers, the borrowers and the Government.

The Bill has three main provisions. In brief, their purpose is to make the loans into something that the private sector can recognise, work with and value. Clause 1 is about the power to sell public sector student loans. It amplifies and replaces an earlier power contained in the 1990 Act. In particular, it allows the lender, in this case the Student Loans Company, the power to assign its rights over the loans in question. It also allows my right hon. Friend the Secretary of State to pay subsidies to loan purchasers in such circumstances as he judges necessary in the light of the competition. It also allows us to buy back some of the loans sold and to assign them as necessary to a third party.

Mr. Robert Jackson (Wantage)

Will the Bill enable future student loans to be dealt with in the way that the Bill provides?

Mr. Byers

Student loans made available during the academic year 1997–98 will be covered by the provisions outlined in the Bill. In later years, it will depend on the circumstances that arise from any recommendations that come from the Dearing report. We will have to bide our time and wait to see what recommendations the Government will make on Wednesday in the light of the report of the Dearing inquiry.

Clause 1 also allows the Government to buy back some of the loans that have been sold and assign them to a third party. Our intention in taking this power is to enable the Government to buy back loans that we want to cancel for social policy reasons. For example, it is the policy of the Government to cancel loans where the borrower dies. In such circumstances, we might want to be able to buy back loans assigned to a private sector party. Clause 1 allows us to do precisely that. We do not believe that it would be reasonable to pass such a burden to the private sector. It is a matter of public policy and it is therefore right that that power should reside with the Secretary of State.

Finally, clause 1 provides for an independent complaints procedure. Currently, borrowers can take complaints about how their loans are administered to an independent assessor, whose rulings are binding. Clause 1 will ensure that borrowers whose loans are sold retain that important right.

As I said, to achieve the planned level of receipts, it will be necessary to pay subsidies to the purchaser. That is inevitable because student loans are unusual. The loan scheme is relatively recent, and there is little track record to allow the private sector to assess the risks involved. The purchaser therefore takes a gamble on the unknown. There is no real interest rate; loans are pegged at the rate of inflation so that borrowers repay only what they borrowed. Additionally, borrowers earning less than 85 per cent. of average income can defer repayments year on year. Those are not commercial loan terms, so the debt cannot be sold on such terms.

In those circumstances, without a subsidy, loans could be sold only at a fraction of their face value. By paying a subsidy that compensates the purchaser for some of the risk outside the purchaser's control, we will be able to achieve the best return. We shall do everything possible to ensure that the competition between bidders is strong. At the end, we shall accept only the best bid.

In clause 2, our objective is to freeze the terms of the loans when sold—which refers to the point made just now by the hon. Member for Bath. Loan terms can vary. The most significant core terms are the time and manner in which repayments are made, and the deferment and cancellation rights. If those terms are varied—for example, if more loans are cancelled for policy reasons, or the repayment periods are shortened—it could have a significant and adverse financial effect on the purchasers. Clearly, they are not risks that the private sector can control: companies would price the risk of change into their bids, or expect compensation in full. Either way, there would be a substantial cost to the Government.

Clause 2 therefore provides that loan agreements must set out in detail the core terms on time and manner of repayments, deferment and cancellation. Those matters are currently discussed annually when we debate the relevant regulations in the House. Once the Bill becomes law and before the sale, we shall make new regulations fixing the core terms for all loans. The terms will therefore be frozen, and loan purchasers will be protected from the financial cost of changes. The act of freezing will also protect borrowers. We shall make sure that the terms are frozen without change to those existing when the loans were taken out. That is one of the safeguards that we shall put in place to protect existing borrowers.

As to Clause 3, we want to put public loans on an entirely contractual basis, like any other commercial loan. It removes from the lender—the Student Loans Company—and subsequently from the loan buyer, the operation of public law functions. The key point is that, under existing legislation, the loans purchaser must exercise the public law functions by reference to the Student Loans Company. The functions cannot be transferred, and it cannot take any decisions itself. That makes administration complex, cumbersome and expensive—and, frankly, it is doubtful whether the loans could be sold on that basis.

Clause 3 ensures that buyers are dealing with the sort of loans they understand—loans subject to contract law and to consumer credit legislation—and not public law procedures, such as judicial review. Therefore, the clause removes all public law functions so that the lender and purchaser administer the loans purely as commercial contracts.

Hon. Members would naturally be concerned if the clause were to mark any reduction in the rights of borrowers, but it will not do so. The borrower will be safeguarded through our sale agreement with the purchaser, which will set down minimum requirements as to administration. The borrower will also have the protection of the terms of the loan agreement, which will have specific provisions on the core issues of repayment. Borrowers will continue to have the general protection of consumer rights legislation.

Clause 4 is a straightforward extension of the provisions to the whole United Kingdom, and the remaining clauses are consequential. However, I draw the attention of the House to two specific issues. The first relates to the rights and the position of existing borrowers—which I know will concern hon. Members—and the second to the future role and function of the Student Loans Company. As far as the existing rights of borrowers are concerned, selling the loans and transferring the risk of default to the private sector inevitably means that the purchaser must take over responsibility for loans administration.

However, that does not mean that borrowers will be abandoned. We shall introduce a number of important and significant safeguards. We shall specify in the sale agreement with purchasers minimum collection standards that must be adhered to. They will be based on the present procedures adopted by the Student Loans Company. A purchaser's failure to abide by the minimum collection standards could lead to legal action. The borrower will be safeguarded by the terms of the loan agreement and, more generally, by consumer and data protection legislation.

Student loans are made on generous terms. With the right of deferment and the discretion that lenders have to deal with borrowers who run into financial difficulties, there is no reason why borrowers should default. Those who do must expect to have legal action taken against them, whether their loans are owned publicly or privately. However, such a regime should be sympathetic. We believe that the one presently operated by the Student Loans Company forms the correct basis for introducing our minimum collection standards.

Nor need there be concern that an unscrupulous private sector party will use information held on student borrowers for his own ends. The Bill states explicitly that no person shall provide or make available to anyone else any information held in connection with the loans if that information is to be used for soliciting custom and services.

Disabled borrowers are a special case, and they are dealt with as such in the existing legislation. There is considerable discretion to treat them more favourably according to the measures that the House has introduced already. We intend to ensure that they continue to receive such sympathetic consideration.

We therefore intend that such loans, when identified, should be bought back from the private sector. We shall retain an independent complaints procedure. At present, borrowers can take complaints about the way in which their loans are being administered to an independent assessor, whose rulings are binding. That important right must remain—and, under our proposals, it will.

The legislation will allow loans to be sold on by the original purchaser. Without this normal market freedom, it is unlikely that we would attract a buyer—certainly, the competition would be limited and the subsidy costs higher. However, our contract with the buyer will provide protection for borrowers by ensuring that the Secretary of State must approve all subsequent sales. Hon. Members may be concerned about the future role of the Student Loans Company. That is a non-departmental public body, and its shares are wholly owned by the Secretary for Education and Employment and the Secretary of State for Scotland. Private sector institutions will have the freedom to choose whom they wish to administer the loans. The purchaser of the debt will have the option to administer the debt himself, to contract it out to a third party, or to use the Student Loans Company.

If the Student Loans Company is used, it would have to be on the basis of an arm's-length contract. We would ensure, first, that the fee the company charges is without subsidy, thus preventing unfair competition against other prospective administrators; and, secondly, that the fee charged is not connected to collection rates, thereby preventing the Government from re-assuming any of the default risk transferred to the debt purchaser through the loans administration contract. The long-term future of the Student Loans Company will have to considered as part of any changes to student support that emerge from the Dearing inquiry and the Government's response to its recommendations.

This sale will involve the private sector in an area where we wish to see public-private partnerships develop in the future. Its measures propose to ensure that the interests of existing borrowers are safeguarded. The Bill will guarantee receipts of more than £3 billion in the next two years to support our education plans, based on raising standards, extending access and high-quality provision. I commend the Bill to the House.

4.58 pm

Mrs. Angela Browning (Tiverton and Honiton)

I begin by congratulating the Minister for School Standards—particularly on his delivery of information which falls not far short of having to read the telephone directory from the Dispatch Box. We welcome the Bill. Its measures carry on from where we left off, moving to a system whereby private sector lenders take responsibility for the provision of student loans.

It is our view, and has been for some time, that the Government should not be in the business of lending to individuals. The private sector has a proven record of being much better placed to manage the risks involved, and much more experienced in recovering loans.

In government, we took action to move in that direction. I promise the Minister that I shall not repeat what he has said page by page, but he made reference to the Education (Student Loans) Act 1996, which sought to enable the payment of Government subsidies to financial institutions in the private sector to facilitate the provision of loans to students in higher education. Under the Act, students would still be able to apply for loans from the Student Loans Company. However, the clear aim was to ensure that most subsidised loans would eventually come from the private sector, with the choice resting with the student.

Following extensive negotiations with financial institutions, that twin-track, public-private model did not proceed. As a result, the Conservative Government came up with an alternative proposal to sell some of the existing student loan debt to the private sector, and to contract out the work of the Student Loans Company. That proposal is contained in the Bill.

There is estimated to be about £2 billion in outstanding loans. Selling some of that debt will bring benefits to the Government and to the taxpayer by transferring some of the risk to the private sector.

We welcome the fact that the Government have decided to press on with the sale of student loan stock. It is a step in the right direction, and we hope that the Government will continue to look for ways of involving the private sector still further in the provision of student loans.

In response to questions from Conservative Members, the Minister said that there will be a statement on Wednesday on the Dearing report. It would be helpful if he could confirm whether any additional loans or changes to the loans system will be accompanied by a decision on Wednesday on how loans are to be serviced and whether they are to be part of a package that will be passed on for the private sector to deal with.

Mr. Byers

I have not briefed anyone on the Dearing report, and do not intend to do so now. Hon. Members must wait until the statement on Wednesday afternoon to find our how the Government intend to respond to the recommendations of the Dearing inquiry, and in particular our views on student support in future years.

5.2 pm

Mr. Phil Willis (Harrogate and Knaresborough)

On Friday last, the same cast of hon. Members sat in the Chamber and, despite our differences, we congratulated the Government on producing a White Paper that was a good basis for discussion. I spoke to a number of head teachers in my constituency this morning, and there was also a great deal of support on the ground. The Minister and his team rightly went away on Friday with some satisfaction about a job at least well started.

Today, the same Minister is at the Dispatch Box attempting to put a brave face on legislation that was cobbled together by the previous Administration to meet cash-limited spending plans. The present Chancellor admits that this legislation is a critical element in meeting the Government's manifesto pledge to work within spending plans already announced for the next two years. Our schools will be starved of cash this winter and, at a time when our universities are crying out for resources, the Secretary of State for Education and Employment sees yet another valuable asset snatched from under his nose in the name of financial expediency, because that is exactly what the Bill is about.

We now know why the Government did not include the Bill in the Gracious Speech. It was not an oversight, as was said in a leak to the newspapers this weekend. It was not included because the Government were embarrassed at having to introduce such unacceptable legislation.

The Minister and the Labour party when in opposition, together with the Liberal Democrats, condemned the proposals contained in the 1996 Education (Student Loans) Bill as much for their vagueness and lack of detail as for their intention. However, today the script is so similar to that used by his predecessor, the right hon. Member for Bromley and Chislehurst (Mr. Forth), that the House could be forgiven for believing that the general election never happened. Like a long-running play, the director merely changed the cast to give the script new life.

To be fair, I know how committed the Minister is to his portfolio, and I am sure that he is embarrassed at having to introduce the Bill. I do not, therefore, want to cause him any more anxiety than he deserves.

The Liberal Democrats do not have any philosophical difficulty with the principle of student loans or with the involvement of the private sector. We understand the need to keep the public sector borrowing requirement under control, and we recognise the part that the private sector must play. We have always asked for negotiations to be open and capable of scrutiny, and for there to be a tight regulatory system that protects the students and the taxpayer. Above all, we seek a system that treats all students, both part time and full time, with equality.

We fully accept that the Government have real difficulties in funding higher education. I have no doubt that, despite the leaks, Wednesday and the following days will be traumatic for the Government as Back Benchers try to wrestle with their consciences. However, we have never supported the current student loans scheme. The Bill fails to meet the criteria for our support, so if there were a Division, we would not support the Government.

Had parts of the proceeds of this "fire sale" been allocated to our universities to make up for the 28 per cent. cut in funding for students in the past six years, or for the 30 per cent. cut in capital budgets last year, there may have been some justification. As the hon. Member for Angus (Mr. Welsh) rightly pointed out, the Bill does nothing for our universities, which are experiencing a funding crisis. Not a single penny of the £1.6 billion that the Government are hoping to raise this year will go into higher education.

I may be doing the Government a disservice and our interpretation may be wrong. Will the Minister explain what proportion from the sale of this debt will be reinvested in higher education this year, and what proportion will be used to alleviate student hardship? After all, it is the students who have created the debt.

Although the Treasury may benefit from receiving £1.6 billion this year and £1.5 billion next year, the taxpayers may not benefit in the long term. Under the Bill, the Secretary of State can make any arrangements "as he thinks fit" to subsidise private sector buyers and to guarantee any losses through default. The Bill contains no details of the extent or the limit of those subsidies, or the cost to the taxpayer of making the portfolio saleable. In short, the Bill enables the Secretary of State to write the private sector a blank cheque.

One can imagine the howls of dissent from Labour Members if this measure had been introduced by the previous Administration. During the Budget debate, the hon. Member for Bolsover (Mr. Skinner) and his hon. Friends, when they espied the former Chancellor, the right hon. and learned Member for Rushcliffe (Mr. Clarke), in the Gallery, shouted to him, "Come on down, the price is right." This proposal is akin to a game show called "The price is always right, whatever it is."

To give them credit, the previous Government always hoped that the private sector would take some, if not all, responsibility for student loans, including administration. We know that the private sector was not interested in 1990, and, as predicted, the burden for administration and cost fell on the taxpayer and the universities.

A further attempt in 1996 by the former Secretary of State for Education and Employment, the right hon. Member for South-West Norfolk (Mrs. Shephard), also failed. Her comments in a press release on 19 December 1996 were most revealing and, if I may say so, characteristically frank. She said: In the event we have not been able to agree a deal which could meet their"— the private sector's— requirements at the right price for the taxpayer". Now it seems that the right price is any price. The market knows that the Chancellor must meet his cash requirements this year because he has said so. It knows that the cash is required by an arbitrary date because he has said so. The market therefore knows that it can demand whatever subsidies it requires to cover its costs and guarantee its profit margins. It can even build in subsidies to cover default if students fail to pay.

When the Chancellor said that the size of the continuing subsidies cannot be predicted in advance", what he was saying, loud and clear, was that this was yet another opportunity for the City fat cats to profit at the taxpayer's expense. It is rather as though someone wishing to sell a car put an advertisement in the paper stating, "Must be sold by Friday—owner emigrating and needs cash for air fare". That is the extent to which we are in hock to the private sector. Such an approach to the selling of public assets is not only bizarre; it is exactly the sort of approach of which the Labour party would have been extremely critical when in opposition.

The Liberal Democrats do not believe that the Bill will be in the best interests of taxpayers. Indeed, we believe that the Chancellor has seriously compromised the position. If the Bill is passed, we shall want the National Audit Office and the Public Accounts Committee to examine the arrangements for the sale of the student debt portfolios, and to report to the House before any sale is confirmed. We seek the Minister's assurance that no sale will proceed without that level of scrutiny, and the guarantees for which we ask.

The third issue that I wish to raise concerns the terms on which loans will continue to be offered. We have long argued—and, indeed, the Labour party argued when in opposition—that the repayment of student loans should be income-contingent. We would favour a system whereby more generous loans were repaid through a national insurance contribution scheme or, in the future, a joint tax and national insurance contribution scheme.

As the Minister will recall, during the Committee stage of the Education (Student Loans) Bill in 1996, an amendment tabled by my hon. Friend the Member for Bath (Mr. Foster) proposed that the Secretary of State shall be under a duty to ensure that the level of repayments to be made by borrowers is, so far as practicable, income contingent". The Minister will also recall a similar amendment tabled by the then hon. Member for Oldham, Central and Royton, Mr. Bryan Davies. Although not pressed to a vote, the amendment received considerable support, and, I understand, formed part of the Labour party's proposals to the Dearing inquiry.

On Second Reading of the Bill in 1995, the then hon. Member for Oldham, Central and Royton outlined a number of principles for the future of student loans. He said: any system of student funding should be fair to both students and the taxpayer. That means that it must be efficient and progressive". Is that still the Government's position? If so, why have they not taken the opportunity to include changes in the regulations in the Bill? Such changes would have framed future loan repayments, thereby delivering what we believe is essential if we are to attract the next generation of students from poorer homes into higher education—even if it would not have been possible to do the same for existing borrowers.

That leads me to the fourth and final reason why we believe that the Government should stop and think before proceeding with this "sad and miserable little Bill"—a phrase used by my hon. Friend the Member for Bath, which he insisted that I put in. I refer to the publication of the Dearing report on Wednesday this week. I remind the Minister of what his former colleague the then hon. Member for Oldham, Central and Royton said in the House on 27 November 1995 when discussing the last Education (Student Loans) Bill. He said: He should also recognise that the Government are involved in an extensive consultation exercise on higher education. Why are they rushing to implement one particular measure when a whole range of higher education issues are part of a national debate?"— [Official Report, 27 November 1995; Vol. 267, c.953–57.] What has changed? Surely the logic of the position taken on 27 November 1995 is even more apparent now, just two days before the publication of the Dearing report.

Both the last Government and the present Government acted bilaterally to commission Sir Ron Dearing to examine, among other things, the future funding of higher education. The report will inevitably be controversial, particularly if it suggests that students pay for tuition as well as maintenance. If students are to be expected to make larger contributions to their higher education costs, they will need to be underpinned by an efficient system of student loans that is both cheap for the student and the taxpayer", as Tim King said in The Independent on 15 July.

It is, we think, inevitable that the private sector will be asked to play a significantly greater part in developing such a scheme. We repeat that we have no principled objection to that; but, if the student loan portfolio is to be significantly larger in the future, it may be more valuable to students, taxpayers and the market for the current debt portfolio to be included in a more comprehensive scheme. Surely it is in everyone's interest at least to await what the Dearing report has to say about funding, and to evaluate its proposals, before embarking on legislation.

The Bill is a short-term expedient which does nothing to resolve the long-term funding crisis in our universities. It does nothing to create a long-term level playing field for our students, and, as such, it does not deserve our support.

5.14 pm

Mr. Robert Jackson (Wantage)

I support the Bill, which, I believe, contains hidden depths. On the surface, it looks like a piece of purely technical legislation—so technical, indeed, that it has been capable of being carried over from one Parliament to another, and from a Conservative to a Labour Government. Notwithstanding the disclaimers in the Minister's opening speech, however, beneath the surface, it opens the way potentially—I stress the word "potentially"—to a revolutionary improvement in the conditions in which higher education is provided in Britain. That is why I strongly disagree with the analysis that we have just heard from the hon. Member for Harrogate and Knaresborough (Mr. Willis).

On 27 November 1995, on Second Reading of the earlier, related Bill, I set out something of the background to the legislation as I saw it. The significance of this Bill—the Minister glossed over this point—is that, by privatising the debts of students and former students to the Student Loans Company, it enables that debt to be increased without reference to the public sector borrowing requirement and the limits on public borrowing. That opens the way to a welcome extension of support, through loans, for the many students who are currently excluded, such as part-time and postgraduate students. It opens the way to an extension of student loans to support the payment of tuition fees for higher education. That, in turn, opens the way to an increase in the resources available for higher education—for which the hon. Member for Harrogate and Knaresborough called—after many years of falling per capita costs. Perhaps even more important, it will potentially enable universities to recover a stronger sense of their autonomy and independence, after a long period in which those values have been regrettably eclipsed.

On Wednesday, the Government will make a statement about the report of Sir Ron Dearing's committee of inquiry into the funding of higher education. The Bill can, I think, be seen as paving the way for that statement—I do not believe that the timing of today's debate is accidental. As the two are thus intimately linked, and as this is almost certainly the only opportunity that I shall have to make a speech on this issue before the autumn, I want to say one or two things about the new regime of tuition fees which at last seems to be coming into view.

The reports in the press about the Government's intentions are confusing and contradictory. We have already engaged in some discussion of them during points of order. It seems that the Government have decided three main points—first, that there will be a tuition fee; secondly, that this will constitute an additional income for universities; and, thirdly, that the parental contribution to student maintenance will continue.

If those are indeed the Government's intentions, I congratulate them. It is 10 years almost to the month since, as the Minister responsible for higher education, I attempted to launch a public debate about what were then called top-up fees. I remember a conversation with some journalists—leading to blaring headlines—in which the figure of £500 a year was mentioned. Ten years later, after a period of some inflation, it looks as though the figure will be £1,000. My comment is "Better late than never". If the Government are indeed taking that line, let me say to my right hon. and hon. Friends on the Opposition Front Bench that, after 10 years, it is high time that the nettle was grasped. If that is what the Government are going to do, they deserve and should have our support.

We should support the Government if they have indeed decided to accept the recommendation of Sir Ron's committee, which envisages a tuition fee of £1,000 a year. I refer my right hon. Friend the Member for Charnwood (Mr. Dorrell) to my speech in the public expenditure debate on 6 March, when I argued against replacing the parental contribution to student maintenance by an extension of the loan scheme. As I explained in that speech, replacing parental contributions by loans would be regressive in terms of social and financial equity. Above all, it would remove the prospect of the universities acquiring access to a new stream of income under their own control and, therefore, of strengthening their autonomy and independence.

It is that concern with the universities' independence and autonomy that leads me, however, to say to the Government that I hope that the figure of £1,000 that has been bandied about will not be regarded as a flat-rate sum, and that the legislation to enable tuition fees to be paid by loans from the Student Loans Company Ltd. or its successors will be as flexible as possible. The right approach is that which I set out in my speech in March, according to which the Government should indicate a maximum sum that they are prepared to allow the student loan fund to provide for tuition fees, but, beyond that, the Government should not intervene to require a fee at that rate, and only at that rate, to be levied. Indeed, one might argue that, with the passage of the Bill, even such a limitation on the part of the Government would be unnecessary as, with student loans in the private sector representing no additional cost to public expenditure, the Government no longer have any financial interest in restricting the amount of student borrowing and, therefore, of university charging.

I hope that the Government will disregard the out-of-date view that they have a duty to intervene by fixing a flat-rate fee to ensure that institutions of higher education do not compete with one another. They are already in fierce competition to attract the best students. I hope also that the Government will disregard the view that it is somehow illegitimate to distinguish between courses on the ground of price. There are already huge incentives for students to choose one course rather than another, arising from the different expectations of income after graduation that are held out by different courses—not that any of this seems to be in any way a material factor in influencing student choices. Arguments such as those reflect an outdated and excessively paternalistic concept of the Government's role in relation to students and universities.

It needs to be recognised that, inevitably, the costs of higher education courses vary considerably. There are some courses—for instance, those provided by the conservatoires of music—that cannot be taught without high-cost one-on-one or small-group tuition. There are also remedial and access courses for the all-too-many students with high intellectual potential that has not been sufficiently developed in our schools. Those also often require one-on-one or small-group tuition, leading to costs higher than the average. Similarly, dare I say it, there are students whose intellectual potential and attainments are such that they, too, will benefit significantly from higher-cost methods of tuition.

It would be unnecessary and a reflection of an outdated, bureaucratised concept of the relationship between Government and higher education for the Government to insist on any policy that presupposes or tends towards the equalisation of costs in higher education. In this context, I want to make special mention—I hope that the Minister will note this point—of the position of Oxford and Cambridge and their college fees. This is an important question because of its relation to the international stature of those universities and the advantages that that brings to this country.

The justification of these college fees is, as I have pointed out, that, for certain types of student, in certain specific situations, it may be desirable that higher tuition costs should be incurred. Admittedly, it was always anomalous in the old bureaucratic system, which we are now, I hope, replacing, that this claim was not fairly and squarely measured against other claims through the higher education funding system operated by the University Grants Committee and its successors. There was always, I concede, something suspect about the fact that the Oxbridge college fees were paid, so to speak, out of the Secretary of State's back pocket. But I hope that, in this new era, the Oxford and Cambridge colleges will not now have to pay a penalty for the special dispensation that they have received in the past. It would not be right for the Government simply to abolish their contribution to Oxbridge college fees. And it would be still worse, and probably unconstitutional under the forthcoming Bill of Rights, for the Government to seek to prevent the colleges from charging such fees.

The proper course is to remit the question of Oxbridge college fees to the higher education funding councils and, at the same time, to leave it to the colleges to charge fees at their own discretion, using the private sector loan scheme that the Bill will open up.

I know that one of the concerns here relates to equality of access to Oxford and Cambridge and, indeed, to all our institutions of higher education. But, again, it would be an example of outdated thinking to conclude from the admirable principle that access should be open equally to all on merit, that the only way of doing that would be by equalising the financial terms for all courses. As I suggested in my speech in March, the right way for the Government to address this issue is for them to say to higher education institutions that, as they benefit and will continue to benefit from substantial taxpayer funding, the Government expect them to continue to operate, under a new regime of tuition fees, what the American private universities call a "means-blind" system of admission. Admission to universities, including our world-class universities, must be strictly on academic merit—and I hope that I need not add that that does not mean that their admission policies should be determined by any sort of quota system.

Behind and above all these technical details, there stands a high principle that I believe the Government wish to honour. That principle is that there is, indeed, such a thing as "society" and that there is and needs to be a wide range of flourishing, independent and diverse "intermediate institutions" between the state and the individual—intermediate institutions of which the university is not the least important.

Our universities are, in legal form, free and independent private corporations. For some few recent decades, they have chosen not to charge fees to their United Kingdom students. That period is now coming to an end and the Bill opens the prospect of a return to higher education funded in part by student tuition fees.

The period during which universities relied only on the Government and taxpayers' money as a source of funding was a period in which, despite many great achievements, the independence and, consequently, the morale of our universities steadily declined. If that trend were to continue, the consequences would be dire for a society such as ours that increasingly depends on knowledge and its expansion. That is why the Bill and the policy that I hope will be announced on Wednesday could represent what I called earlier a revolutionary improvement in the outlook for our universities. I look forward with keen anticipation and with high hopes to the Government's statement later this week.

5.27 pm

Mr. Andrew Welsh (Angus)

I agree with the hon. Member for Wantage (Mr. Jackson) that intellectual need and educational attainment should be the guiding factors, but the heavy price now imposed on individual families militates against that. Listening to the Minister for School Standards, a Labour Member, it was almost as though I was listening to a Conservative Minister and the general election had never happened: it is the same voice, the same philosophy and exactly the same policy. I wonder whether the Minister for School Standards inherited his speech from his Tory predecessor and whether he has read the opinion poll in Scotland on Sunday, which showed that 75 per cent. of Scots want educational provision to be provided free, through taxpayers' money, and that they want it to be available to all, as of need and as of right. His policy is overwhelmingly opposed in Scotland because it jars against our national educational tradition.

The Bill is all about the technical means of achieving a policy to which my party is totally opposed. We prefer to remain faithful to the Scottish education tradition and to make the right to educational provision available to all, irrespective of background, ability to pay or other such reasons. The guiding factors should be intellect and the will of our society, rather than the short-termism of any one Government.

I intend to speak briefly in the debate because my party's position on the principle of the Bill is clear. We are opposed to the privatisation of student debt. It is clear that the devil in these proposals will be in the detail, as it affects each student and each family coping with the debts that are imposed by the loans.

A few simple principles underline my attitude to the legislation. First, if I had entered government on the cry, "Education, education, education", my first act would not have been to "Privatise, privatise, privatise". The student loans system is anathema to the SNP and we would seek to abolish it rather than hand it over to the private sector. It fails to meet the needs of the student population and it has created an overhang of debt for thousands of young people as they make the already precarious transition from study to the workplace.

The greatest irony is that the very people who now champion this privatised loan system benefited from universal student grants and were able to launch their careers with a clean financial slate, rather than a combination of debts, amounting for many to half their first income. I was one of my generation who benefited from access to university and I am ashamed to find that that generation may be cutting off swathes of the current generation from the ability to enjoy such educational achievement. By so doing we are treating that generation shamefully.

The system hits at the tradition of Scottish education. Since 1995 alone, average student debt has leapt by a dramatic and unacceptable 40 per cent. to about £2,500, and the current average debt of those who are leaving university is almost £4,000. The Bill may help to reduce Government debt, but it will do nothing to tackle the mounting crisis of student poverty and debt. It is the people and the parents who will pay for this policy.

As we debate this measure, we are told that the Government are looking favourably on proposals to charge every student a £1,000-plus annual tuition fee. We shall not know about that until later this week, but leaks lead us to believe that that is in prospect. That is unacceptable. What twisted priorities and short-term proposals are these? I thought that Labour had been elected to stop that sort of Toryism, but instead the Government are implementing it. Apparently, a Scottish Assembly will soon be in charge of education. Perhaps it should be responsible for such decisions and should not be presented with a fait accompli. Has the Minister consulted his Scottish Office colleague with responsibility for education? If he has, what was the response?

The Bill and similar measures hit at the heart of the traditional Scottish four-year honours degree; by pursuing such students, the Government are throwing away a valuable asset. Perhaps in considering England and Wales, the Government have not thought about what they are doing in Scotland. I ask them to think again. The reality that the Government must recognise is that education is an investment in all our futures. They must realise that penalising students through loans and a fees system that are barriers to entering higher education is unacceptable in a country that needs to mobilise its most talented young people and not burden them unnecessarily.

Mr. Robert Jackson

The hon. Gentleman says that the loans system is a barrier to entering higher education. That argument was put when, a few years ago, I was taking through the House the Bill that became the Education (Student Loans) Act 1990. Has he noticed that there has been a huge expansion in higher education since the student loans system was introduced? Since that time, higher education has expanded faster than in any other period.

Mr. Welsh

That shows the demand. There has been vast expansion at a time of contracting resources, and that is at the heart of the problem that the measure will not address. Instead of properly resourcing higher education, the Government are turning their guns on the students. The measure will be a deterrent: it will dissuade youngsters from undertaking higher education. As I have said, my generation benefited from the grants system. I was not lumbered with massive loans of the sort that we are inflicting on present and future generations of students. It is an unnecessary burden, and I repeat that it hits the traditional Scottish outlook on education, which is that it should be available to all irrespective of background. The intellect and not the purse should decide, but the Government have decided that it will be the purse. The Government's mechanism will affect students and their families.

Mr. Jackson

The hon. Gentleman was probably at university at about the same time I was. About 5 per cent. of 18-year-olds went to university at that time and had the huge privilege of the grants system. There is now 30 per cent. participation, which is one of the highest percentages in the world, and that is against the background of student loans.

Mr. Welsh

I was an adult entrant to university and I could not have gone there without a Government grant. If there had been a loans scheme, I could have been deterred; but if I had gone ahead, a large burden would have been placed on me. I refer the hon. Gentleman and the Government to the effects within universities. Yes, there are more students, but there are restricted resources and, as a result, there is a massive increase in drop-outs and in student debt. Students and their families are paying the price for the policy.

Measures that pull the rug from under the feet of students who have signed agreements with the Student Loans Company are unacceptable. Their agreements must not be meddled with against their interests, and my party hopes that the Government will table amendments to guarantee such protection. We must not allow future generations of students to be offered an even more disadvantageous loan arrangement than the current one. The present measure is only the start—the door being kicked open. The system will advance and loans will gradually rise.

By introducing the profit motive into the provision of loans, there is a real risk that student need will be exploited and adequate protections will not be in place. My party opposes the measure, and I call on the Government to reconsider the whole sorry package of higher education measures which they seem set on forcing through against the interests and needs of our students. I urge the Government to raise their sights and to enter the new millennium guaranteeing free and equal access to higher education, rather than glorifying in an empty status symbol, a mere funfair dome on the Thames. The next generation of Scots will judge the Government by their priorities.

Many of the people who voted Labour in Scotland hoped that there would be a change, but the same speeches and policies are being carried through. There will be much disappointment. I again refer the Government to the traditional Scottish view. We must allow all our youngsters, irrespective of background and the wealth of their parents, the right to take themselves forward in education as far as their talents and abilities will carry them. That is the strength of our society. The Scottish education system is fundamentally strong, and we must build on its traditional views and values. The Bill and the proposals, which I hope will not appear on Wednesday but which leaks tell us are on the way, are an attack on the heart of Scottish education, which should be leading us into the 21st century. The Government will pay a heavy price for such an attack.

5.37 pm

Mrs. Browning

The speeches, and especially that by my hon. Friend the Member for Wantage (Mr. Jackson), have shown that the issues of higher education, students and student loans concern and interest the House. The Bill is essentially technical. Before the week is out, we shall be able to consider the Dearing report and, as the Minister promised, later in the year there will be an opportunity to discuss and legislate in more detail on the terms of student loans and on issues such as the access fund. We support the Bill.

5.38 pm

The Parliamentary Under-Secretary of State for Education and Employment (Dr. Kim Howells)

We have had a short but very interesting debate in which we have heard some interesting speeches. I should like to highlight especially the speech made by the hon. Member for Angus (Mr. Welsh), who raised some points about which I, too, am very concerned. When I was pursuing my career in higher education, back in 1965—like the hon. Member for Angus, who is two years older than I am—[Interruption.] Yes, he has a good head of hair.

The grim fact is that the proportion of young people from working-class backgrounds in higher education is as low now as it was when we were in higher education. We must realise that we will have to get schools right if we are to widen access to university and other higher education institutions. It is not good enough to say that people have been denied access to higher education because of a particular maintenance funding system. Such systems are enormously important, but, fundamentally, we must ask where the majority of university students come from. The truth is that they come predominantly from the leafy suburbs.

Mr. Welsh

When the Minister mentions unavailability of access to higher education for working-class people, is he really including Scotland? For the people who surrounded me growing up—many of whom went on to do degrees in Scotland—the higher education system was open to all. Such availability is what I want to preserve and enhance. Is the Minister sure that his comments are true of Scotland? They are perhaps true of England and of Wales, and that is sad. I should like England and Wales to adopt, not destroy, the Scottish attitude.

Dr. Howells

All I can say to the hon. Gentleman is that I should like to see the statistical breakdown of postal addresses of those in higher education. The Higher Education Funding Council conducted such an exercise in Wales and in England and the results were very interesting, showing pretty dismal patterns of access to higher education for people from lower social and economic groups.

Mr. Robert Jackson

I, too, share the concerns expressed by the Minister and by the hon. Member for Angus (Mr. Welsh). Does the Minister accept that the proportion of working-class children entering higher education has risen only in the past five or six years, under the regime of student loans? Why has that increase occurred? It has occurred because universities expanded enormously. The main determinant of access to university for working-class people is the size of the university system. In the old system—with its low participation levels and very expensive grant scheme—unit costs were so high that the system was kept small, militating against access. Now, however, by spreading the burden through loans, we are able to have a larger system, thereby promoting access.

Dr. Howells

That is a fair analysis of what has happened over the past 10 years, and it is important that the hon. Gentleman has reiterated it in the House.

Mr. Barry Sheerman (Huddersfield)

Will my hon. Friend allow me to intervene before the hon. Member for Wantage (Mr. Jackson) gets away with his comments completely?

Dr. Howells

Yes.

Mr. Sheerman

I agree with much of what the hon. Member for Wantage said, such as the importance of widening availability to higher education. The cultural element, however, is also important. I am not aware of any system that successfully enough breaks into working-class culture to open the minds of young working-class people, so that they regard education as a part of their lives and culture. Action dealing with the cultural element must accompany widening the scope of availability. I agree with half of what the hon. Member for Wantage said, but we must go further. Forty years ago, Brian Jackson wrote "Education and the Working Class", based on a study in Huddersfield. He understood the problem; we have still not found a solution.

Dr. Howells

My hon. Friend is correct: we do not have a solution. Because we did not have a solution, the previous Government—with the support of all Opposition parties—commissioned an inquiry into the future of higher education, and it will be as important as the Robbins report was 30 years ago. I hope that the report will be vigorously and robustly debated and examined.

Anyone who argues that the current situation is perfect is a fool, because it is not perfect. If we are to create a learning society—no hon. Member or member of the public who thinks about the matter would argue that that is not necessary—we must determine how to make higher education attractive and how to make communities understand the great part that education can play in generating wealth in those communities.

Mr. Robert Jackson

Notwithstanding the comments of the hon. Member for Huddersfield (Mr. Sheerman), we can address those goals against a very optimistic background. There are some striking figures. There has been a huge increase in the staying-on rate in schools after the end of compulsory education at 16, and, in the past 10 years, there has been a huge increase in the uptake of higher education. The penny is dropping, and we are reaching a situation in which people accept a learning society. The key to the future is to provide a large, open, flexible and diverse higher education system.

Dr. Howells

I agree.

Mr. Welsh

I make a plea to the Minister to examine the situation in Scotland, because the Government's proposals will restrict access to higher education and deter students. The Minister has described a system that has perhaps already deterred folk in England and Wales. He said also that diverse student backgrounds are necessary. Perhaps he has heard of Rab C. Nesbitt. I come from Govan and attended Govan high school. Many of the people with whom I attended high school went on, like me, to attend Glasgow university, reflecting the traditional Scottish outlook on education.

It should not matter from which part of the country someone comes. There should be a national system that is available to all, and education from the elementary to the university level should be available to all according to ability. That is our system in Scotland, and the Government's policy is working against it. I should be happy for the Government's proposals to apply to England, but let us, please, not ruin what we have in Scotland.

Dr. Howells

The hon. Gentleman clearly has his opinion on the great virtues of the Scottish education system, and, as someone from Wales, I certainly will not decry it. The virtues that he is extolling surprise me, however, because many of my Scottish friends would not agree with his analysis. They have told me that the situation in Scotland—the percentage of young people from working-class backgrounds in the university population—is as dismal as it is in England and in Wales.

Ms Roseanna Cunningham (Perth)

Will the Minister give way?

Dr. Howells

No, the hon. Lady was not in the Chamber for the debate, and I will not give way now. I want to press on.

I suggest to the hon. Member for Harrogate and Knaresborough (Mr. Willis) that, in future, he should not let the hon. Member for Bath (Mr. Foster) write his speeches for him. Having been a member of the Public Accounts Committee for more than two years, I know the value of the contribution that the Comptroller and Auditor General's office can make in getting legislation right. We hope that the House has learned from the National Audit Office's examination of past privatisations, and I assure the hon. Member for Harrogate and Knaresborough that the NAO will examine this one, too. I give him that undertaking. The NAO examines all privatisations, and it will examine the privatisation of student loans carefully.

The hon. Member for Wantage (Mr. Jackson) says that it has been 10 years to the month since he tried to initiate a debate on top-up fees. He provided a fascinating history, and I understand his desire to put straight the record on his part in the matter. I should remind him and all other hon. Members, however, that today's debate is not about top-up fees or about any type of fees; we are debating a technical matter which, as the Bill states, is about selling the debt of the student loan book.

Mr. Robert Jackson

Does the Minister accept that the proposal will take student loans out of the public sector borrowing requirement, thereby providing a crucial link to the debate about fees?

Dr. Howells

The measure certainly has elements of that in it, but there is no hidden agenda.

The Bill is straightforward and technical. Its sole purpose is to enable us, this year and next, to complete sales of student loans. We are completing those sales because they are critical to meeting, this year and next, our manifesto commitment to living within existing spending plans. Some Opposition Members questioned our objective. I repeat: we shall meet our manifesto commitment. In doing so, we shall be able to give priority to our education programmes, which have been enthusiastically received.

Some hon. Members have raised concerns about the position of borrowers whose loans are sold. Let me stress that we are selling the loans by way of competition. The bidders are all large and reputable organisations, and there is no question of the loans being sold to some ruthless or fly-by-night organisation. That is complete fantasy, which does no service to students and borrowers. We shall retain control over whom the loans are sold to now and in the future.

There are other safeguards for students. The sale agreement with the purchasers, a model of which will be placed in the Library in due course, will stipulate minimum collection standards to be followed. The loan agreements will protect students. In particular, key terms such as time and manner of repayment and deferment will be retained and frozen. Borrowers will have the protection of consumer credit legislation. In addition, there will be an independent assessor to investigate complaints. Overall, borrowers' legal rights will be entirely unaffected by the sale.

The Minister for School Standards and I have explained why we are going ahead with the loan sales this year and next. We have also accepted that meeting the overriding objectives we have identified will result in the payment of subsidies to the purchasers. Existing loans are subsidised. There is no real interest rate; there is deferment. The loan book that we are selling has to be subsidised. That is the price of having loans that are generous to the borrowers. We cannot predict the level of subsidies in advance, because we are running a strong competition. Twenty substantial bidders are already competing against each other. We shall, in due course, choose the most competitive bid from the vigorous competition.

As I have said, we are now committed to the same plans and same sales for two years, but this is not our only objective. We are also committed to the establishment of public-private partnerships which, like this sale, will transfer risk to the private sector. The sale may also enable financial institutions to get a clearer understanding of student loans and encourage them to play a more direct role in the provision of student support in the future.

The Bill is not about the Dearing report. Its reference to Dearing is limited, as my hon. Friend made clear. The Bill is about meeting a key manifesto commitment that we would work within the spending plans already announced for two years. Those plans, which we inherited from the previous Government, include substantial sales of student loans this year and next. The plans are tight, and we must proceed with the debt sales if we are to meet them and give to education the priority that we want.

Our timetable is pressing. The sale competition is inevitably complex and time consuming. It will take at least another six months. Hon. Members should understand that we cannot resume the competition before Second Reading. Second Reading is needed before the recess, which is why we are here today and why I commend the Bill to the House.

Question put, That the Bill be now read a Second time:—

The House divided: Ayes 267, Noes 3.

Division No. 63]	[5.52 pm
AYES
Ainsworth, Robert (Cov'try NE)	Davidson, Ian
Allen, Graham (Nottingham N)	Davies, Rt Hon Denzil (Llanelli)
Anderson, Donald (Swansea E)	Davis, Terry (B'ham Hodge H)
Ashton, Joe	Denham, John
Atherton, Ms Candy	Dewar, Rt Hon Donald
Atkins, Charlotte	Dobbin, Jim
Austin, John	Dobson, Rt Hon Frank
Banks, Tony	Doran, Frank
Barnes, Harry	Dowd, Jim
Barron, Kevin	Drew, David
Battle, John	Drown, Ms Julia
Beard, Nigel	Eagle, Maria (L'pool Garston)
Beggs, Roy (E Antrim)	Edwards, Huw
Bennett, Andrew F	Efford, Clive
Benton, Joe	Ellman, Ms Louise
Berry, Roger	Ennis, Jeff
Blackman, Liz	Etherington, Bill
Blears, Ms Hazel	Fatchett, Derek
Blizzard, Bob	Field, Rt Hon Frank
Blunkett, Rt Hon David	Fitzpatrick, Jim
Borrow, David	Fizsimons, Lorna
Bradley, Keith (Withington)	Flint, Carolin
Bradley, Peter (The Wrekin)	Follett, Barbara
Brown, Rt Hon Gordon (Dunfermline E)	Foster, Michael Jabez (Hastings)
	Foster, Michael John (Worcester)
Brown, Rt Hon Nick (Newcastle E)	Gapes, Mike
Brown, Russell (Dumfries)	Gardiner, Barry
Burden, Richard	George, Bruce (Walsall S)
Burgon, Colin	Gerrard, Neil
Byers, Stephen	Gilroy, Mrs Linda
Campbell, Mrs Anne (C'bridge)	Godsiff, Roger
Campbell, Ronnie (Blyth V)	Goggins, Paul
Campbell-Savours, Dale	Golding, Mrs Llin
Cann, Jamie	Gordon, Mrs Eileen
Casale, Roger	Grant, Bernie
Cawsey, Ian	Griffiths, Nigel (Edinburgh S)
Chapman, Ben (Wirral S)	Grogan, John
Chisholm, Malcolm	Gunnell, John
Church, Ms Judith	Hain, Peter
Clapham, Micheal	Hall, Mike (Weaver Vale)
Clark, Paul (Gillingham)	Hanson, David
Clarke, Eric (Midlothian)	Heal, Mrs Sylvia
Clarke, Tony (Northampton S)	Healey, John
Clelland, David	Henderson, Doug (Newcastle N)
Clwyd, Ann	Hepburn, Stephen
Coaker, Vernon	Heppell, John
Coffey, Ms Ann	Hesford, Stephen
Cohen, Harry	Hill, Keith
Colman, Tony (Putney)	Hodge, Ms Margaret
Cook, Frank (Stockton N)	Hoey, Kate
Cooper, Yvette	Home Robertson, John
Corston, Ms Jean	Hood, Jimmy
Cousins, Jim	Hope, Phil
Cox, Tom	Hopkins, Kelvin
Cranston, Ross	Howells, Dr Kim
Cryer, Mrs Ann (Keighley)	Hoyle, Lindsay
Cryer, John (Hornchurch)	Hughes, Ms Beverley (Stretford)
Cummings, John	Humble, Mrs Joan
Cunningham, Jim (Cov'try S)	Hutton, John
Cunningham, Rt Hon Dr John (Copeland)	Iddon, Dr Brain
	Illsley, Eric
Darling, Rt Hon Alistair	Jackson, Ms Glenda (Hampstead)
Darvill, Keith	Jackson, Helen (Hillsborough)
Davey, Valerie (Bristol W)	Jackson, Robert (Wantage)

Jenkins, Brian (Tamworth)	Prentice, Ms Bridget (Lewisham E)
Jones, Barry (Alyn & Deeside)	Prentice, Gordon (Pendle)
Jones, Helen (Warrington N)	Primarolo, Dawn
Jones, Ms Jenny (Wolverh'ton SW)	Prosser, Gwyn
	Purchase, Ken
Jowell, Ms Tessa	Quinn, Lawrie (Scarborough)
Kaufman, Rt Hon Gerald	Rammell, Bill
Keeble, Ms Sally	Rapson, Syd
Keen, Alan (Feltham & Heston)	Reed, Andrew (Loughborough)
Keen, Mrs Ann (Brentford)	Robertson, Rt Hon George(Hamilton S)
Kennedy, Jane (Wavertree)
Kidney, David	Robinson, Geoffrey (Cov'try NW)
King, Andy (Rugby & Kenilworth)	Roche, Mrs Barbara
King, Ms Oona (Bethnal Green)	Rogers, Allan
Kumar, Dr Ashok	Rooker, Jeff
Lawrence, Ms Jackie	Roy, Frank
Laxton, Bob	Ruane, Chris
Lepper, David	Russell, Ms Christine (Chester)
Leslie, Christopher	Ryan, Ms Joan
Levitt, Tom	Salter, Martin
Liddell, Mrs Helen	Savidge, Malcolm
Linton, Martin	Sedgemore, Brian
Lock, David	Shaw, Jonathan
Love, Andrew	Sheerman, Barry
McAllion, John	Sheldon, Rt Hon Robert
McAvoy, Thomas	Short, Rt Hon Clare
McCartney, Ian (Makerfield)	Singh, Marsha
McDonagh, Siobhain	Skinner, Dennis
Macdonald, Calum	Smith, Rt Hon Andrew (Oxford E)
McGuire, Mrs Anne	Smith, Angela (Basildon)
McIsaac, Shona	Smith, Jacqui (Redditch)
Mackinlay, Andrew	Smith, John (Glamorgan)
McLeish, Henry	Smith, Llew (Blaenau Gwent)
McNamara, Kevin	Smyth, Rev Martin (Belfast S)
MacShane, Denis	Soley, Clive
Mactaggart, Fiona	Southworth, Ms Helen
McWilliam, John	Spellar, John
Mahon, Mrs Alice	Squire, Ms Rachel
Mallaber, Judy	Starkey, Dr Phyllis
Marek, Dr John	Stevenson, George
Marsden, Gordon (Blackpool S)	Stewart, David (Inverness E)
Marsden, Paul (Shrewsbury)	Stinchcombe, Paul
Marshall, Jim (Leicester S)	Stott, Roger
Martlew, Eric	Strang, Rt Hon Dr Gavin
Maxton, John	Stringer, Graham
Meale, Alan	Stuart, Ms Gisela (Edgbaston)
Merron, Gillian	Taylor, Rt Hon Mrs Ann (Dewsbury)
Michie, Bill (Shef'ld Heeley)
Milburn, Alan	Taylor, Ms Dari (Stockton S)
Miller, Andrew	Taylor, David (NW Leics)
Moffatt, Laura	Timms, Stephen
Moran, Ms Margaret	Tipping, Paddy
Morgan, Rhodri (Cardiff W)	Todd, Mark
Morley, Elliot	Touhig, Don
Morris, Ms Estelle (B'ham Yardley)	Trickett, Jon
Morris, Rt Hon John (Aberavon)	Truswell, Paul
Mountford, Kali	Turner, Dennis (Wolverh'ton SE)
Mudie, George	Turner, Desmond (Kemptown)
Mullin, Chris	Twigg, Derek (Halton)
Murphy, Jim (Eastwood)	Vaz, Keith
Norris, Dan	Vis, Dr Rudi
Olner, Bill	Ward, Ms Claire
Palmer, Dr Nick	Watts, David
Pearson, Ian	White, Brian
Pickthall, Colin	Whitehead, Dr Alan
Pike, Peter L	Wicks, Malcolm
Pond, Chris	Williams, Rt Hon Alan (Swansea W)
Pope, Greg
Pound, Stephen	Williams, Mrs Betty (Conwy)

Winnick, David	Wyatt, Derek
Winterton, Ms Rosie (Doncaster C)
Wood, Mike
Wray, James	Tellers for the Ayes:
Wright, Dr Tony (Cannock)	Mr. John McFall and
Wright, Tony D (Gt Yarmouth)	Mr. Clive Betts.

NOES
Cunningham, Ms Roseanna (Perth)	Tellers for the Noes:
Dafis, Cynog	Mr. Andrew Welsh and
Wigley, Dafydd	Mrs. Margaret Ewing.

Question accordingly agreed to.

Bill read a Second time, and committed to a Standing Committee, pursuant to Standing Order No. 63 (Committal of Bills).