§ 73D.—(1) This section applies to any information which is held—
- (a) by the Commissioners of Inland Revenue, or
- (b) by a person providing services to those Commissioners and in connection with the provision of those services.
§ (2) Information to which this section applies may be supplied to—
- (a) the Secretary of State or the Department of Education for Northern Ireland,
- (b) any person or body acting on behalf of the Secretary of State or that department under the delegation of functions provisions, or
- (c) any person or body by whom any function of the Secretary of State or that department is for the time being exercisable to any extent by virtue of the transfer of functions provisions,
§ for the purpose of enabling or assisting the recipient to exercise any function in connection with the operation of the student loans scheme.
§ (3) Information supplied under subsection (2) above shall not be supplied by the recipient to any other person or body unless it is supplied—
- (a) to a person or body to whom it could have been supplied under that subsection, or
- (b) for the purposes of any civil or criminal proceedings arising out of the student loans scheme.
§ (4) Subsections (2) and (3) above extend only to the supply of information by or under the authority of the Commissioners of Inland Revenue.
§ (5) This section does not limit the circumstances in which information may be supplied apart from this section.
§
(6) In this section—
the delegation of functions provisions" means section 73AA(3) of this Act or section (Transfer or delegation of functions relating to student support) (4) of the Teaching and Higher Education Act 1998;
the transfer of function provisions" means section 73AA(1) of this Act or section (Transfer or delegation
756
of functions relating to student support) (1) of the Teaching and Higher Education Act 1998;and
the student loans scheme" means the provisions of
and in this subsection any reference to a provision of this Act includes a reference to any corresponding Northern Ireland legislation.".'.—[Dr. Howells.]
§ Brought up, and read the First time.
§ The Parliamentary Under-Secretary of State for Education and Employment (Dr. Kim Howells)I beg to move, That the clause be read a Second time.
§ Mr. Deputy SpeakerWith this, it will be convenient to discuss the following: Government new clause 6—Transfer or delegation of functions relating to student support.
Government new clause 8—Supply of information in connection with student loans.
Government amendments Nos. 69, 71, 76, 65, 66, 70, 67 and 72.
Amendment No. 111, in clause 22, page 17, line 38, at end insert—
'(11A) A statutory instrument containing the first regulations under any provision of this section shall be laid in draft before, and shall be subject to approval by resolution of, each House of Parliament.(11B) A statutory instrument containing the second or subsequent regulations under any provision of this section which is made without a draft having been laid before, and approved by resolution of, each House of Parliament shall be subject to annulment in pursuance of a resolution of either House of Parliament.'.Amendment No. 100, in clause 27, page 21, line 30, leave out from beginning to end of line 42 on page 26.Government amendments Nos. 40 to 54.
Amendment No. 114, in clause 35, page 33, leave out lines 30 to 34.
Government amendments Nos. 75 and 68.
§ Dr. HowellsI shall speak to all the Government new clauses and amendments, and I hope that the hon. Member for Bath (Mr. Foster) will appreciate that. I also welcome the hon. Member for Maidenhead (Mrs. May) to her new position and, of course, the hon. Member for Havant (Mr. Willetts) to his greatly elevated position, as well as the hon. Member for Ashford (Mr. Green).
In Committee, I made it clear that the Government would table a number of amendments on Report designed to ensure that the new student support arrangements, in particular the new arrangements for repaying income-contingent loans, worked smoothly. Those amendments are contained within this group. Although there are many individual amendments, they deal with only a small number of substantive issues, so I hope that I shall not detain the House too long in discussing them.
Essentially, the new clauses and amendments do five key things. They provide for the Inland Revenue to make available information to the Student Loans Company for the purpose of loan repayment. They will enable the Secretary of State to transfer or delegate his functions under the student support regulations to the bodies that 757 will administer the scheme, and will enable him to put in place appeals mechanisms in relation to any matters covered in the regulations. They also provide for the Secretary of State to determine, through regulations, the priority that loan repayments should take in relation to other deductions by employers. Finally, they will give the Secretary of State the power to impose penalties on those who fail to comply with the requirements of the new loan repayment regime. The group also contains a number of technical and consequential drafting amendments.
§ Mr. WillisOne of the major issues in Committee was whether regulations would be available for students when they took our their loans at the beginning of the new university session this year. We were "promised" that amendments would be tabled to guarantee that regulations would be in place, but I have received a copy of a letter sent to the hon. Member for Havant (Mr. Willetts), which clearly states that the regulations will not be in place. Is the Minister saying that students will be able to take out loans this year, but will have to sign a legally binding document for which the regulations will not be in place?
§ Dr. HowellsThe hon. Member for Harrogate and Knaresborough (Mr. Willis) knows that I have written to the hon. Member for Havant, and I have had a copy of the letter sent to him. I felt it important that he knew that we did not think that the regulations would be drawn up in total. I did not want regulations that were partial or that tried to patch together the whole matrix of regulations that will govern the procedure. I hope that the hon. Gentleman will accept that we will produce a watertight description of what signing for a loan means, what will be delivered and what will be meant by repayment. That will be of infinitely more value to students and their families than the sort of regulations that, as I said in Committee, are rarely read anyway. I give the undertaking that there will be a document for all students and their families to read, which will indicate exactly what they are entering into by signing the contract for income-contingent loans.
New clause 5, for Scotland, and new clause 8, for England and Wales, provide for the Inland Revenue to disclose information to the Secretaries of State for Education and Employment and for Scotland, to the Department of Education for Northern Ireland and, by extension, to bodies to which functions are transferred or delegated under the Bill. In practice, that will allow the Revenue to disclose information to the Student Loans Company, to which the Secretary of State's functions in relation to loan repayment will be delegated. For example, the Revenue will be able to provide details of repayments made via employers to enable the Student Loans Company to update borrowers' accounts.
The amendments are necessary to allow the Inland Revenue's legal duty of confidentiality to the taxpayer to be set aside in the specific case of information required for the collection of loan repayments. Without it, it would be impossible to collect repayments through the tax system. I hasten to add that the normal requirements of the Data Protection Acts will continue to apply in respect of any information that is disclosed under these provisions. There is no question of general details of a borrower's tax affairs being disclosed, but merely information that is relevant to loan repayment. We will 758 make it clear to students before they take out their loans that the information that they provide on their application forms may be passed to the Revenue for the purposes of collecting repayments. There is no need for specific provision in legislation for that purpose.
New clause 6 and, for Scotland, amendment No. 41 clarify the Secretary of State's powers to transfer and delegate the powers given to him in respect of student support, replacing and improving on provisions already in the Bill.
Right hon. and hon. Members will note that the Bill makes provision for the Secretary of State alone to make grants or loans to students. That is different from current student support legislation, which gives the Secretary of State powers to make arrangements for making and collecting loans, and which, in England and Wales, places duties on local education authorities in respect of mandatory and discretionary awards. A variety of bodies will be involved in administration of the new loans scheme, including LEAs, higher education institutions, the Student Loans Company and the Inland Revenue. New clause 6 and amendment No. 41 accordingly provide for those bodies to exercise powers instead of, or on behalf of, the Secretary of State. Amendment No. 41 differs from new clause 6 in that it does not specifically mention LEAs, which are not involved in administration of student support in Scotland.
The new provisions allow functions to be transferred to LEAs and higher education institutions which, as independent bodies, already have distinct responsibilities for administering aspects of the existing awards and loans schemes. Functions will not be transferred to other bodies, but will be delegated. The Secretary of State will retain overall responsibility, and will be subject to judicial review. We believe that that is more appropriate in the case of bodies such as the Student Loans Company, which is wholly owned by the two Secretaries of State, or the Inland Revenue, which will collect loan repayments on the Secretary of State's behalf.
The new provisions also enable the Secretary of State to establish an appeals procedure in respect of functions that are transferred or delegated. We are considering the details of the appeals mechanism, but I am happy to give an undertaking that a right of appeal will be put in place in relation to collection of student loans.
Part of amendment No. 69 and, for Scotland, amendment No. 50 relates to appeals. The amendments will enable the Secretaries of State to put in place appeals mechanisms where functions have not been transferred or delegated, but have been imposed by regulation, as in the case in which they are undertaken by employers. I hope that hon. Members will agree that the provisions offer borrowers full protection against potential maladministration of the scheme.
New clause 6 and amendment No. 41 also provide for the Secretary of State to make payments to bodies to which functions are transferred or delegated, or which are appointed to hear appeals. The payments can be toward the cost of making grants or loans, or as payment for administering the scheme.
Amendments Nos. 69 and 70, and, for Scotland, amendment No. 48, allow for a relationship to be established between the Bill's student support provisions and other legislation that governs deductions from income. They will allow other legislation to be amended 759 accordingly. The amendments are necessary to take into account the fact that students and graduates may be subject to other deductions from their income. A court may, for example, impose an attachment of earnings order for unpaid council taxes or fines. There is also a limit to the amount that employers may deduct from an employee's income—the protected earnings rate, which is designed to ensure that the employee is left with enough to live on. Where total deductions payable exceed the limit, it is obviously necessary to determine which deductions should take priority. Amendments Nos. 70 and 48 enable provision to be made in regulations for determining the priority of student loan repayments and other amounts due from the borrower.
Hon. Members will note that the Bill will enable provisions to be made in regulations for student loan repayments to be deducted at source through the tax system, as the Dearing committee recommended. That will have an impact on other legislation governing deductions from income where that legislation defines how the deductions are to be calculated. Amendments Nos. 69 and 48 would permit other legislation to be amended through regulations to take account of the impact of loan repayments. The amendments would also allow income from student loans or grants to be taken into account or disregarded when calculating a person's total income for the purpose of some other deductions.
Amendment No. 65 and. for Scotland, amendment No. 45, ensure that provisions can be made for the imposition of penalties on borrowers or persons required to make deductions from borrowers' pay in the event of default. The amendments provide for the imposition of interest and penalties on borrowers who fail to make repayments that are due, or to provide information when required to do so. They also provide the means to impose penalties on those charged with making deductions from the borrower's salary when the borrower wilfully or negligently fails to carry out that obligation. I am sure that hon. Members will agree that we should have the power to recover public money that would be lost as a result of wilful default.
The provisions will have no effect, of course, on those who meet their obligations. The precise penalties that apply will be set out in regulations. We envisage that they will not exceed those that apply to non-payment of income tax or national insurance contributions. For employers, that might mean the imposition of a penalty if they fail to make deductions from the borrower's salary or transmit payments to the Inland Revenue, although that would apply only when the failure was due to fraud or negligence. For borrowers, interest would he charged on any outstanding repayments, and in the event of persistent default, further surcharges might be applied, on which interest would also be charged. I stress that the charging of interest is not intended to be punitive, but is necessary to cover losses of public funds. Similarly, penalties are intended to be no higher than is necessary to discourage wilful or negligent default such as I have described.
Amendment No. 51 is technical, and relates only to the Scottish provisions. It will enable the regulations governing the student loan scheme in Scotland to deal appropriately with borrowers who are declared bankrupt or sequestrated. Individuals who have been declared bankrupt have always been eligible to receive student loans, to enable them to undertake courses of higher education which might—we hope—improve their prospects.
760 Arrangements are in place to ensure that any loan payment for maintenance received during the period of such courses cannot be claimed by creditors. Amendment No. 51 will ensure that that situation can continue in Scotland. Parallel provisions are not needed for the English clauses, which are already sufficiently widely drawn.
6.30 pm
Amendment No. 68 extends the scope of certain provisions of the student support clauses for Northern Ireland. That is necessary to ensure that the scheme can operate effectively on a United Kingdom basis. For example, if an English student takes out a loan and goes on to work in Northern Ireland, we shall need to be able to impose duties on his or her employer in relation to loan repayment. Separate provisions with the same effect in relation to Scotland are contained in amendment No. 61.
Amendments Nos. 40, 42 to 44, 46, 47, 49, 52 to 54, 66, 67, 71 to 73, 75 and 76 are either purely technical or consequential to the changes that I have described, and I commend them to the House.
§ Mr. Damian Green (Ashford)I thank the Minister for his nearly gracious welcome to the Dispatch Box, and I assure him that, as a fellow Welshman, I not only know his constituency, but can pronounce it, which may put me at an advantage over some hon. Members. It was kind of him to give us a full description of the various new clauses and amendments. I will be briefer, because I know that this is very much the hors d'oeuvres to the main course to be served this evening. I am sure that he will be as pleased as I am to see how many of his colleagues appear to wish to speak in that later debate. In this and in future appearances at the Dispatch Box, I will be as constructive and helpful as the Government deserve in every case.
In that spirit, I must question the Government's competence in having to make so many changes to the Bill. From the outset, the motto for their policy has been, "React in haste and legislate in panic". In this relatively small part of the Bill, they have tabled three new clauses and 14 amendments, which does not suggest a finely crafted piece of legislation.
The essential purpose of amendments Nos. 111 and 114 is to allow the House a significant say in the future organisation of the loan system. I hope that the Minister will acknowledge that the loans will be an extremely important part of life for many millions of families over the years, and that to have all the powers relating to their organisation delegated to the Secretary of State, with only minimal parliamentary scrutiny, is wrong both for those who will receive the loans and for the respect in which one would hope that the Government hold the House.
Too much of the Bill, and especially this part, is skeletal—that word was used a lot in Committee—and too much power has been left in the Secretary of State's hands. The purpose of the regulations appears to be to allow maximum flexibility for the Secretary of State and minimum flexibility for those in charge of higher education and student loans. That is exactly the wrong way round and the Government should rapidly reverse the policy. The debate in Committee reverberated with that worry.
761 I assure those who toiled in the vineyard of the Standing Committee that, although they may have thought that they were talking only to each other, they have had at least one extremely avid reader of every word that they said, so their labours were not in vain. I am delighted to say that I am up to speed with all the great thoughts expressed by members of the Committee from all parties in what appear, from the Hansard report, to have been some quite long sittings in which, although wisdom was dispensed, it was not necessarily received.
The hon. Member for Harrogate and Knaresborough (Mr. Willis) referred to the letter that the Minister sent to my hon. Friend the Member for Havant (Mr. Willetts), which may symbolise why it is so important to make amendments Nos. 111 and 114. The Minister said that he would try to make the regulations available for scrutiny in time, and he has simply failed to do so.
The letter says:
instead of draft (or partial) regulations we should produce a detailed guide to the repayment terms for students which will be published in the summer.It will be impossible for that detailed guide to be accurate and full, simply because the regulations will not be available. The letter continues:the regulations will need to be laid … probably in early 1999—in order to allow employers sufficient time to make whatever arrangements they need to implement collection.If the regulations are not laid until early 1999—they have been significantly delayed once already—students and their families will not know this autumn what regulations will be in place to organise their loans, and could be left in uncertainty for some months. That extra uncertainty may discourage students from taking out loans or, even worse, from taking up places and contributes, in its own small way, to the damaging effects of other parts of the Bill.Our essential purpose is that priority should be given to Parliament and not to the Secretary of State. Why are Departments to be excluded by amendment No. 71 from the obligations on employers? I may be unduly cynical, but when I see that impositions are to be placed on non-public bodies, but that Departments are to be excused those obligations, my eyebrows go up and I suspect that the convenience of Whitehall is coming before that of the citizens of this country. I hope that the Minister can reassure me on that point.
What will be covered by the word "emoluments" in amendment No. 76 that would not be covered by "remuneration"? It is important at this stage to clear up as much as possible of the uncertainty that students and their families will face.
The Minister has said a couple of things that I also found slightly disturbing. First, he talked about a protected earnings rate being retained. Visions of the Child Support Agency appeared before me. One hopes that, with all the uncertainty that we have had in setting up the regulations, the House will not, in two or three years' time, be reverberating to debates about constituents complaining bitterly that student loan organisations do not understand what sort of protected earnings rate they need. The proposal seems similar to the provision for the agency. I hope for the sake of all concerned that we are not setting up the same sort of organisational mess as arose with the agency.
762 Secondly, I am disturbed that details of the penalties, particularly those that will be imposed on employers, are to be left to some later date. Again, the various Government amendments and new clauses seem to suggest throughout that it will be the employer who will be in the frame, rather than the Government or even the individual who may be defaulting on the loan.
This is a wide-ranging set of powers. It is wrong for all the powers to be exercised by the Secretary of State without sufficient scrutiny by Parliament. I hope that the Government will accept our amendments because they do not in any way alter the main purpose of this part of the Bill. They will give the House the proper scrutiny that it will need over the years to ensure that these arrangements are made satisfactorily and fairly, in the interests of all those who will be concerned with student loans.
§ Mr. WelshI say to the hon. Member for Ashford (Mr. Green), the official Opposition spokesperson, that the hors d'oeuvres are just as unpalatable as the main course. The Government amendments simply clear up the debris covering the Government's mistaken policy. Attention has been deliberately focused on the introduction of unfair tuition fees, but the real deterrent to university students and to their families is student loans. Future generations of young people and their families will find themselves saddled with considerable debts on loans, as well as on tuition fees, and all that will have been placed on them by Ministers who benefited from the grant system. They should be ashamed of themselves for the way in which they are acting.
Worse still, as the Government sell off the debt loans book to private hands, income from repayments will disappear into those private hands as profit. None of it will return to replenish or to improve the higher education system. It is bad enough that tuition fees will be paid and then disappear out of the university system, but that will be compounded by the Government's short-term policy of student loan privatisation.
The Scottish National party has consistently opposed both the privatisation of student loans and the student loans system. The amendments simply tinker with the detail of collection, while the glaring unfairness of the Government's failure to fund the university system properly will mean that the situation will worsen for universities as they deal with their student populations.
§ Sir Teddy Taylor (Rochford and Southend, East)Will the SNP make it clear that it will sort out this horrible mess in the Scottish Parliament?
§ Mr. WelshThat is a very good point, which I shall come to later. A fundamental change in policy is required to sort this mess out.
§ Ms Margaret Hodge (Barking)Will the hon. Gentleman give way?
§ Mr. WelshNo. Time is short.
I therefore support amendment No. 100, which would remove the Scottish provisions. This matter should be dealt with by the new Scottish Parliament, not imposed by this Parliament. The Minister has recognised that the Scottish system is distinct. In less than a year, that Scots Parliament will be in charge of Scottish education. There is no reason why it should not also deal with this matter.
763 It is bad enough that legitimate Scottish questions are ducked by an English Minister when a Scottish Office Minister, the Minister for Education and Industry, is sitting next to him, as happened in a previous debate. It is worse when this Parliament does not allow the Scottish Parliament to undertake what are legitimate devolved matters. This matter should be dealt with by that new Parliament. It should not suffer diktat by this organisation.
§ Dr. HowellsThere are many questions to answer in two minutes.
I understand that the hon. Member for Angus (Mr. Welsh) envisages an SNP-controlled regime in future. He has said:
We will make good, as far as we can within the limit of resources given".—[Official Report, Scottish Grand Committee, 20 May 1998;c. 22.]I have heard that one before somewhere.The hon. Member for Ashford (Mr. Green) asked me to explain the difference between emoluments and remuneration. I was tempted to say cars, but I think it is a broader definition, which encompasses benefit in kind, in Whitehall-speak; I hope that he will accept that as an answer. I tried to deal with the points that he raised about regulations as honestly as I could in my answer to the hon. Member for Harrogate and Knaresborough (Mr. Willis), who has properly pressed us on this matter on several occasions, and in my letter to the hon. Member for Havant (Mr. Willetts).
§ It being one hour and thirty minutes after the commencement of proceedings on consideration of the Bill, MR. DEPUTY SPEAKER, pursuant to the Order [19 May] and the Resolution [this day], put forthwith the Question already proposed from the Chair.
§ Question put and agreed to.
§ Clause read a Second time, and added to the Bill.
§ MR. DEPUTY SPEAKER then proceeded to put forthwith the Questions necessary for the disposal of the business to be concluded at that hour.