Education (Student Loans) Regulations 1990

HL Deb 28 June 1990 vol 520 cc1765-92

5.39 p.m.

Baroness Blatch rose to move, That the draft regulations laid before the House on 25th June be approved [21st Report from the Joint Committee].

The noble Baroness said: My Lords, these regulations establish the student loans scheme. They are framed in accordance with the Education (Student Loans) Act which we debated earlier this year.

Lord Boyd-Carpenter

My Lords, before my noble friend proceeds, will she indicate to your Lordships where an accurate and proper copy of these regulations is to be found? The copy I have, which I obtained this morning, is full of amendments of every kind, corrections simply inked in like a schoolboy's notebook. Coupled with that are several pages of typed riders.

Is the noble Baroness asking your Lordships' House to come to a decision on legislation, albeit secondary legislation, of great importance without having before it a proper copy of what it is being asked to approve? Perhaps she would comment on that or say why, if a proper copy is still not available, she feels it necessary to proceed this evening at all.

Baroness Blatch

My Lords, if my noble friend will bear with me, I should say that I believe that the copy he has is an accurate record although it has manuscript annotations. If he will bear with my initial presentation of the regulations, I shall make reference to the point he raised.

Baroness White

My Lords, from this side of the House I strongly support what the noble Lord said. During my long experience in both Houses I have never received at this stage a document put before the House which is difficult to read. There has been no opportunity to obtain a properly printed copy. I obtained my copy on Tuesday afternoon and I went back today with the firm conviction that by now a properly printed copy would be available. However, that is not the case.

Lord Boyd-Carpenter

My Lords, I hope my noble friend Lady Blatch will take this matter seriously. We are being asked to legislate. When one is asked to legislate one is asked to approve of some document, be it a Bill or a regulation, in the clear form in which it is to pass into the law of the land. Can my noble friend really say that this dirty bit of paper with inked-in corrections, deletions and amendments all over it and with two typed-in so-called riders is the form in which your Lordships' House should be asked to approve legislation? If a Minister cannot provide us with a proper copy of a proper document would it not be the responsible line to defer discussion until a proper copy is available, as I am sure it will be in due course?

Lord Peston

My Lords, it may be useful if we all make our complaints at one go so that the noble Baroness can deal with them. There is at least one part of the document which makes no sense whatsoever. At the top of page 2 a Part V appears, but it is as if that part is left over from another document. It does not appear to belong to this document. I was going to make the same point that the noble Lord, Lord Boyd-Carpenter, made, but he was right to raise this matter ab initio before we get involved in debating a document when that may be a complete waste of time.

Baroness Young

My Lords, perhaps I can help my noble friend, who has been put in an extremely difficult position. Like my noble friend Lord Boyd-Carpenter, I picked up a set of these documents yesterday and found them annotated. However, this morning I was sent a copy from the Department of Education and Science which appears to be perfectly printed. I am afraid I did not look further in the Printed Paper Office. I raise that matter only because I think my noble friend is in a difficult position. Properly printed copies must be available and perhaps they could be made available to your Lordships now.

Baroness White

My Lords, I have been to the Printed Paper Office within the last hour and they are not available there.

Earl Russell

My Lords, I wish to extend the point made by the noble Lord, Lord Boyd-Carpenter, to the 21st report of the Joint Committee on Statutory Instruments. In my opinion that is an extremely helpful document and has resulted in improvements in these regulations which I welcome. However, if I had been teaching this morning, as I might well have been, I would have known nothing of that report until I arrived at the House almost ready to speak. In future can the reports of the Joint Committee be made available a little sooner before we have to debate them?

Baroness Blatch

My Lords, at this moment I do not know why the noble Lord does not have today's copy of a completely perfectly printed copy of the regulations.

Lord Boyd-Carpenter

My Lords, I collected it this morning from the Printed Paper Office.

Baroness Blatch

My Lords, I am told it was available this morning. I have two copies here. The Joint Committee on Statutory Instruments which met two weeks ago to discuss these regulations was not quorate on the day it discussed them. That lost the committee one week. As a result of some modifications which we knew were to be discussed on that day—I shall refer to that in my presentation—these draft regulations were relaid in their correct form. I shall refer to the corrections in some detail. The typed-up notes that noble Lords have are the result of this week's meeting of the Joint Committee on Statutory Instruments. They relate in detail to the difference between the original regulations that were laid and the ones that are before your Lordships today.

Lord Peston

My Lords, I must interrupt the noble Baroness because I am now rather annoyed. Although I entirely agree with the noble Lord, Lord Boyd-Carpenter, in the end I tend to shrug and consider that we must soldier on as best we can, even though the document is absolutely scandalous. However, if a correct printed copy exists which the noble Baroness possesses while I, as the principal spokesman for the Opposition do not have one, I do not see why I should continue with this charade. This is an insult to the Opposition. I have been in your Lordships' House all day and every day this week, and I am certainly not willing to debate a matter where I want to discuss the considerable details of these regulations on the basis of not having a proper printed copy as the department did not even have the courtesy to provide me with one. I certainly will not accept one now. This is an appalling state of affairs.

Lord Boyd-Carpenter

My Lords, before the noble Baroness replies to that I must ask her again why, if there is a correct and tidy copy available—apparently one was made available to the noble Baroness, Lady Young,—it has not been made available not only to noble Lords on the Opposition Front Bench but also to other noble Lords who are interested in this matter. In a sense the fact that a proper copy exists but is not available makes the position worse. The noble Baroness should think further before asking your Lordships' House to consider an important matter in such a handicapped way.

Lord Kilmarnock

My Lords, does the noble Baroness accept that I have been in the Printed Paper Office within the last half hour, but the only thing I could acquire was the extremely defective and imperfect version of the regulations that was referred to by the noble Lord, Lord Peston? If we were to approve this draft we should approve on page 2—the noble Lord, Lord Peston, pointed this out—something which is entirely out of place. Part V appears to come before Part I. It is impossible to proceed on this basis.

Lord Graham of Edmonton

My Lords, would it not be helpful, in order to resolve this matter as amicably as possible, for the House to adjourn for a period of, say, 30 minutes? I know that would delay this evening's business, but if we continue as things stand at present there will be a great deal of animosity. If we adjourn for 30 minutes now, it may save us a great deal of time in total. I make that as a suggestion.

Baroness Young

My Lords, while this matter is being considered perhaps I may intervene once again. The reason I have my properly printed copy is that, having read the regulations yesterday, I telephoned the DES about one or two matters. My copy arrived this morning unsolicited. I certainly did not ask for it. I was sent it as the up-to-date copy. I am afraid it never occurred to me that it was not available in the Printed Paper Office. As I had obtained my own copy, I naturally did not seek to find a second one which I did not require. However, the proper copies must be available. I should have thought it would be possible to proceed with the business. I studied yesterday the copy which appears to be available. Anyone else who has done so will know what the content is and what the principles are as set out.

Lord Boyd-Carpenter

My Lords, the noble Baroness, Lady Blatch, appears to have been taken by surprise. However, as the Government Chief Whip was in the Chamber a moment ago, I think it only fair to say that earlier this afternoon I warned him about this point.

Baroness White

My Lords, might we not adjourn during displeasure?

The Minister of State, Home Office (Earl Ferrers)

My Lords, perhaps I may be able to help on this matter as I see that the House is concerned about it. There is nothing more infuriating than feeling that one does not have the correct papers. As I understand the position, the papers that are in the hands of noble Lords, albeit with some manuscript amendments, are the correct papers. The proper papers were printed overnight and there is a limited number available in the department. I cannot tell your Lordships why they are not in the Printed Paper Office However, that is obviously a matter of great concern and we shall have to discover the reason for it. As I understand it, the papers before your Lordships are the correct papers although they contain manuscript amendments. I suggest that those papers should be the basis for the debate. I shall take it upon myself to discover precisely why the proper papers are not available to your Lordships this afternoon.

Lord Boyd-Carpenter

My Lords, the noble Earl is helpful, as ever. However, he does not appear to appreciate, as he would if he were to look at the document, that, although it may be alleged to be accurate, it is extremely difficult to understand or to follow. It is difficult to be sure what each inked-in amendment means and what it relates to. The noble Earl must appreciate that it is difficult to debate an important order without a properly completed document for us to consider. If copies are available within the department there is a great deal to be said for sending for them.

Lord Kilmarnock

My Lords, the noble Earl the Deputy Leader of the House has told us that it is only a question of manuscript amendments. What about page 2? At the top of the page is Part V and the heading "Higher Education Institutions: Duties". Beneath that is subsection 11 dealing with duties of governing bodies in relation to loans. Then there is a schedule. All of those come before Part I and the general proposition of the regulations. Is that also correct?

Baroness Blatch

My Lords, the printed version which most noble Lords have in their hands today has been available in the Printed Paper Office since Monday. Since then some modifications have been made following discussion between the department and the Statutory Instruments Committee. Noble Lords have a detailed memorandum on that document, complete with manuscript amendments. Since then the document has been reprinted and that is the document which was not available to all noble Lords.

I believe that all noble Lords have in their possession sufficient information for the regulations to be discussed today. In addition to having a two-page explanatory memorandum, in my speech I shall refer in detail to the difference between the regulations as originally laid and the regulations as amended as a result of the Statutory Instruments Committee's meeting on Tuesday.

I am in the hands of the House as to whether the regulations should be received today. My very strong recommendation is that there is sufficient information in your Lordships' hands to do so.

Lord Callaghan of Cardiff

My Lords, I thought that the noble Baroness had risen to respond to the noble Lord, Lord Boyd-Carpenter, by saying that, as the Department of Education and Science is on the other side of Westminster Bridge, a taxi was already speeding across the bridge with printed copies and that we should adjourn for 20 minutes to enable them to arrive so that we could proceed. Why does she not say that?

Baroness Blatch

My Lords, I shall propose to the House that I accept the suggestion from the acting Chief Whip on the Opposition Benches that the House should adjourn for 30 minutes while the matter is discussed.

Lord Blease

My Lords, although the regulations deal with England, Wales and Scotland, there are strong implications for Northern Ireland. I have received documentation from the Committee of Vice Chancellors and Principals. I have also received a briefing from Northern Ireland. I want to put on the record that that suggestion does not suit me and I shall not be able to present my case when the House resumes.

Lord Belstead

My Lords, I apologise to your Lordships that I was not in the House when this exchange began. I should also like to say to the noble Lord, Lord Blease, that he has an important point which ought to arise in the substantive debate.

Perhaps I may pick up the suggestion of the Opposition acting Chief Whip and the noble Lord, Lord Callaghan, and, as my noble friend Lady Blatch proposed, suggest to your Lordships that the House should adjourn during pleasure, unless any of your Lordships feel that that is wrong. I therefore beg to move that the House do now adjourn during pleasure for 30 minutes.

Moved accordingly, and, on Question, Motion agreed to.

[The Sitting was suspended from 5.53 to 6.23 p.m.]

Baroness Blatch

My Lords, noble Lords will now have in their hands a clear copy of the regulations. In content the printed copy is identical to the version laid in the Printed Paper Office on Monday and considered by the Joint Committee on Statutory Instruments on Tuesday. I hope that this copy is easier for noble Lords to use.

These regulations establish the student loans scheme. They are framed in accordance with the Education (Student Loans) Act, which we debated earlier this year. I shall describe in a moment what the regulations contain; but it may be helpful if I also make it clear what they do not contain. They do not affect the availability of social security benefits for students. They relate only to loans. They have no implications for benefits one way or the other.

We have recently debated the issue of social security benefits for students in the context of the Social Security Bill. That Bill has yet to complete all its stages and it will be debated further in this House. In the light of Parliament's final decisions, the exclusion of students from benefits, if it is to go ahead, will then have to be implemented by making regulations under the Social Security Acts of 1975 and 1986. I repeat an undertaking I gave earlier in the context of another Bill; namely, that those regulations will not be laid until the passage of the Social Security Bill has been completed.

Those regulations, if made, will of course be subject to parliamentary scrutiny. And it may reassure your Lordships to know that our intention is that regulations excluding students from benefits should be subject to the affirmative resolution procedure.

For those of us who took part in the debates on the student loans Bill, the draft regulations now before us will contain few surprises. They implement policy already announced by the Government in the 1988 White Paper and in the debates that followed.

As we said from these Benches when we debated the Bill, it will be more important to be able to refine the scheme in later years. But the general approach is established in this first set of regulations. We agreed earlier that they should accordingly be subject to affirmative resolution. I welcome the opportunity to lay them open to your Lordships' scrutiny now.

The draft regulations set out the detailed eligibility criteria for the loans scheme. These are parallel to the criteria for the mandatory award, but are deliberately drawn rather wider. The regulations also set out the amount and terms of the loan. They specify that the amount outstanding will be indexed to inflation, so that interest in real terms is not charged. They set out the repayment period: five years, or seven years for those who follow the longest courses. They determine the deferment and cancellation arrangements that will protect graduates whose income is not high. Finally, they specify the task of the higher education institutions in confirming that their students are eligible for the loan.

Your Lordships may have noticed that the draft before us today differs in some ways from the draft first laid for approval on 13th June. We have added separate protection for disabled borrowers and clarified both the position of minors receiving this form of student support and the role of higher education institutions. Let me explain those changes in more detail.

The regulations include the provision that we announced earlier for disability-related benefits to be disregarded when income is computed for deferment purposes. This means that disabled graduates in receipt of these benefits will be able to claim deferment on higher incomes than their able-bodied peers.

In framing the regulations, we have concluded that we should provide the option in Regulation 8 for the Student Loans Company to allow disabled people a longer grace period before they start repaying, or a longer period over which to complete repayments. The circumstances of disabled borrowers will no doubt vary greatly and we have yet to decide how that discretion will be used. Repayments will not begin until April 1991; these decisions can be taken in good time for that. But it is important that the option should be inserted now.

Secondly, we have made a technical amendment which clarifies the position where a loan is taken out by a student under 18. Under contracts governed by Scottish law a minor should obtain the consent of his curator—in most cases his parent or guardian—before entering into a contract. Only if he obtains such consent, or was already independent of his family when he entered into the contract, may he validly ratify that contract on reaching his majority. The new Regulation 3(3) acknowledges that position.

The Government have consistently taken the view that students under 18 on higher education courses should be eligible for loans. The regulations allow for that. We shall expect such students to repay after their courses on the same basis as other borrowers. To facilitate this, the general intention is that such students, once they reach 18, should ratify their previous loan contract before being entitled to a futher loan. This is important to protect the interests of the taxpayer.

The third change affects the role of higher education institutions. In assessing their students' eligibility for a loan, the institutions will need to determine whether they meet the residence requirement, which is the same as currently applies for the mandatory award. The regulations now make it clear that the institution is required to inquire into the student's residence history only so far as is reasonably practicable. That will ensure that eligible students have access to the loan without requiring the higher education institutions to go into the matter exhaustively where the residence history is not straightforward.

The amendment has a consequence for the requirements placed on higher education institutions in certifying their students' eligibility. In the previous draft there was an unqualified requirement to certify the accuracy of the information. The requirement is now to certify its accuracy to the best of the institution's knowledge and belief.

These amendments to the requirements placed on higher education institutions follow a series of meetings and seminars around the country, to which all institutions providing eligible courses have been invited. There have proved invaluable in allowing the Student Loans Company and the department to refine their procedures. They augur well for the smooth introduction of the scheme in the autumn. I am glad to pay tribute to the co-operative spirit of the administrators in the higher education institutions, who are professionally discharging their rôle of ensuring that their students have access to this new source of support.

We believe that the loan scheme is a necessary precondition for the further expansion of higher education that we all desire. With zero real interest and deferment and cancellation if income is low, our scheme offers students more money on very favourable terms. The regulations before your Lordships are entirely consistent with primary legislation and with the details as set out in the course of our debate on the Bill. I beg to move.

Moved, That the draft Regulations laid before the House on 25th June be approved. [21st Report from the Joint Committee]—(Baroness Blatch.)

6.30 p.m.

Lord Peston

My Lords, I thank the noble Baroness for her statement. I shall be obliged to speak on these matters at some length. That is inevitable with such legislation. The Education (Students Loans) Act is an enabling Act for which the regulations are of the essence. In addition, I am allowed to speak only once. I intend to concentrate my remarks on the regulations. I shall not go into other extraneous matters.

In my opinion the regulations in so far as they correspond to the Act as it was passed into law, do so in as limited a way as possible. Many of the concessions that noble Lords asked for on the face of the Bill, which were rejected by the Government, could have been introduced by regulations, but have not been. There has been no extension of the scheme to some or all postgraduates. There has been no modification of the payment obligation to graduates who enter work of national importance. There has been no help to women graduates who stay at home with their families. The concessions to the disabled, although welcome, are about as grudging as they could be. They relate to deferment of repayment, but no more. The list of what the Government could have done by regulations but have not done, is endless.

As was predicted, what has been let loose is an administrative nightmare. I saw today the basic pack of material that has been sent to the universities. Apart from what I believe is technically called the multipart form which has to be filled in, it includes an eligibility questionnaire about which I believe we were not warned when we debated these matters—if we were, I missed that—and which certainly adds to bureaucratic cost.

Apart from the primitive nature of these forms, which are not easily amenable to electronic processing, we must also note the time involved. It is worth emphasising that the institutions will be responsible for handing out those forms. As I understand it, the forms are being treated as a matter of security, probably for very good reasons, but that certainly does not lower the cost. The institutions are responsible for ensuring that they are filled out correctly. They are responsible for certifying eligibility. In that regard the noble Baroness answered one question that I had in mind. However, she may wish to state it more clearly when she replies. The question is: what is the legal liability of institutions in this regard? Do I now understand that, so long as the institution states that it has done the best it can in the circumstances, it has no further legal liability whatever, either to the Government, or—and this is very important—to the students?

On the question of costs, having seen the forms this morning, my view is that at best the average time per student to fill out a form will be a quarter of an hour. Therefore a university or college such as mine with 4,000 students will be confronted with a minimum of 1,000 person hours or 25 person weeks of direct labour input plus a good deal of additional input and of course overheads. To pay £3.50 per student in my view is not to meet the cost. Thus, the Government appear to be going back on their pledge that, while they did not wish to sign an open-ended cheque, they would pay a fair and proper price. Perhaps I may quote the exact words of the noble Earl, Lord Caithness, when under considerable pressure from several noble Lords who are present tonight. He said at col. 1013 of Hansard on 29th March: Your Lordships have a commitment from me that the Government will pay the money". At col. 1014 he stated: What the Government are willing to do is obviously to meet the reasonable costs of this scheme". On another occasion he stated in answer to the noble Lord, Lord Renton: It is a question of getting the matter right. I put it to your Lordships that the best way of getting it right is to have a commitment from the Government that they will meet the costs". I have to say—and this is in no sense an accusation of bad faith against the noble Earl, Lord Caithness; I speak now of the Government—that in my view those pledges have simply not been met.

Instead what appears to have happened is, as many of us feared, that the department has used its bargaining power to squeeze our higher education institutions. Resources that ought to have been deployed on the proper functioning of those institutions—I remind noble Lords that that is not to administer loan schemes but to teach students to engage in scholarship and research—will clearly be diverted to administering the loan schemes.

I must raise another point on that connection. I understand that universities and colleges have been told that they must not act as agents in promoting the loans. In administering these regulations, it appears that they must not even offer advice to students or answer such questions as, "Should I take out this loan?" As I understand it, if a tutor or an administrator involved is asked that question, legally the student is to be told, "I cannot advise you on that matter because of the legal consequences." As I understand the situation, it is not even clear whether putting up such notices as, "Remember to go to room such-and-such for your eligibility questionnaire or loan form", is legitimate.

I shall refer to only a few detailed points because other noble Lords wish to speak and it would be quite wrong of me to hog all the detailed criticisms. However, although not covering them all, it does not mean that I am unaware of them. Perhaps I may draw the attention of noble Lords to some matters that they may find disturbing. For example, a student who does not have a bank account or building society account, simply on that basis, will not be allowed to have a loan. The form states clearly that he has to give such an account number. I believe that the regulations state the same. I am all in favour of students having bank accounts. But the idea that they must have bank accounts, even if they do not want them as a matter of principle, seems to be going a little far.

The point goes further and I must draw your Lordships' attention to paragraph 7(4) of the regulations. It states: Repayments shall be made by direct debit from the borrower's bank or building society account unless the loans administrator agrees otherwise. Again, that appears to be pushing it a little bit. Most people ask at least: "Do you wish to have direct debit?". To be told, "That is what you are going to have unless I agree that you should not", is going too far. In order to arrange for a direct debit, one must have a bank account. The relevant account may be a joint account and it is not obvious that the joint holder will accept the arrangement.

I shall come to a more serious matter in a moment, but I have one other point to make about the detail. Paragraph 7(5) states: Nothing … shall be taken to prevent a borrower from reducing or discharging his liability in respect of his loan with the agreement of the loans administrator … where a borrower wishes so to reduce or discharge his liability … shall be determined by the loans administrator". That requirement is also a little tough. A student who has taken out a loan and says simply that he wishes to repay it should not need to have any agreement about that. In any event, I believe that on grounds of economic policy the Government should welcome it and the matter should be straightforward.

Those are one or two points of detail. I have many more which I hope other noble Lords will raise. In the light of what happened an hour ago, it is with a certain amount of trepidation that I turn to the central question that worries me. It is whether the regulations are faulty. Noble Lords will recall that in my opening remarks about the regulations I used the words "in so far as they correspond to the Act". The question is: do they correspond to the Act? I then said that with so much written in longhand, they show every sign of being done in a hurry and at the last minute. The fact that I now have a copy that is not in longhand is irrelevant because I am as yet unable to make use of the copy.

Schedule 2 paragraph 1(4)(b) on page 5 of the Act states: the rates shall be such as appear to the Secretary of State to be requisite for maintaining the value of that amount in real terms". Noble Lords will recall that we debated the issue at great length on more than one occasion. What is meant by the phrase "maintaining that amount in real terms"? In other words, what is meant by a zero real rate of interest? It means that during the period of the loan the principal is repaid in real terms. (I wish I could now use a blackboard, but I shall try to do my best without one). If over three years the inflation rate is X per cent. for every £100 borrowed at the beginning, the correct repayment is (1 + X) cubed times £100 at the end of the three years. That is what is meant by maintaining the amount in real terms.

The regulations are different because they use the retrospective inflation rate. For example, they state that the inflation rate, which becomes the interest rate as it were, for the first period of the loan, will be the inflation rate up to June 1990. Therefore, for the first 100 borrowed now, the repayment will be one plus the inflation rate up to June 1990, times one plus the inflation rate up to June 1991, plus one plus the inflation rate up to June 1992. Any economist will say that that is perfectly all right provided the inflation rate is constant. It then amounts to exactly the same formula that I have given. However, if the inflation rate is falling, given this scheme, then one will be repaying at a positive rate of interest. In other words, if the inflation rate is falling, one will be infringing the provisions of the Act as set out.

We all hope that the inflation rate will fall. Therefore, the position is even worse; not only are the regulations faulty, but they will turn out to be incorrect in practice. My view is that that is a matter of the utmost seriousness. However, I have a second problem. As regards repayment, paragraph 7(3) of the regulations states: On the date mentioned in paragraph (6) in each year the amount of the monthly repayment shall be calculated by dividing the aggregate amount of the loan outstanding at that date (including interest added during the preceding twelve months) and of interest which will accrue during the remaining period of payment", and this is the key phrase, (on the assumption that the rate of interest will not change during that period)". That is what the regulations provide. The key phrase is: (on the assumption that the rate of interest will not change during that period)". However, in this context the rate of interest is the inflation rate. Another way of reading the provision is: on the assumption that the inflation rate will not change during that period". One thing that we know about the inflation rate in this country is that it fluctuates. At present, we are all hoping that it will fall; but anything may happen. If the monthly rate of repayment is based on constancy, that formula, given the inflation rate changes, will mean that the student will repay too much or too little. It means that an adjustment will be necessary. But, unfortunately, there is not a word in the regulations about adjustments. Therefore, for the second time the regulations are flawed.

I have taken legal advice about the matter. I have been assured that regulations must correspond to the provisions of the Act of Parliament that they seek to bring into practice. I have described two parts of the regulations which demonstrably show beyond any peradventure that they do not stand up and are flawed. Indeed there is no doubt about the zero real rate of interest as mentioned in the Act.

I now look straight at the noble Lord the Leader of the House because—and this is where my difficulty arises—I believe that in the circumstances the Government should stop at this very minute, go away and bring back correct regulations that correspond to the Act of Parliament concerned.

6.45 p.m.

Earl Russell

My Lords, I thank the noble Baroness and the noble Lord the Lord Privy Seal for the consideration and courtesy with which they dealt with an awkward situation. However, I was slightly strengthened in my growing suspicion that the initials DES stand for "Department of Ethelred the Second". Some of your Lordships may remember that he was commonly known as the Unready.

I welcome the changes. It is better to have them late rather than never. They improve the regulations, although in some respects not as much as we might have hoped. I wish to express my gratitude to the noble Baroness, Lady Young, for her efforts to obtain the affirmative procedure. It is of great value.

On this occasion it would be entirely improper to open up the principle of any of the provisions in the Bill. It would be entirely improper to open up any of the issues upon which we divided during the progress of the Bill and which, therefore, are res judicata. It is a fact that we have student loans and therefore we are concerned only to make the scheme as good as possible.

There is one major question which we are now able to address for the first time in the appropriate place; that is, whether a sufficient amount of money will be provided. We are in some difficulty in addressing that question because, as the noble Baroness reminded us, we do not yet know what will happen to our amendments on the Social Security Bill.

However, having read the interview given last week by the Parliamentary Under-Secretary, which I was amused to notice in my college's student newspaper, I am not very optimistic as regards those amendments. Therefore, we should discuss this matter on the hypothesis that this is all the money which is available. I do not believe that it is anywhere near enough.

In discussing this matter, I shall rely on London evidence because I wish to speak of matters which are within my knowledge. On that basis I wish to ask one specific question about Regulation 5(1) concerning the area eligible for the London extra rate of loan. The regulation states that the student must be attending a course within the Metropolitan Police district or at the University of London. Am I right in construing the disjunctive effect of that as making Royal Holloway and Bedford New College, which is part of the University of London and functions as such, eligible for the London rate of loan? That point is of considerable importance inside the university.

In using London evidence, I do not intend to imply that this is only a London problem. I listened to the remarks of my noble friend Lord Addington, the noble Baroness, Lady Faithfull, the noble Lord, Lord Sherfield, and others, on regional housing costs outside London. I am ready to believe that the problem which I am delineating covers the whole of the South East and other areas where housing is expensive; for example, at the University of Edinburgh. In speaking of what I know, I do not wish to imply that the problem does not exist elsewhere. I believe it does.

As regards the available figures, the Government have relied quite heavily on the survey of students' income and expenditure carried out by Research Services Limited. There is one major flaw in that survey; namely, that it under-rates considerably the amount which students have been drawing in social security benefits. I shall not go into that now because I imagine that there will be a future occasion on which to do so.

The other flaws in the survey are that the field work on which it depends is out of date. It was carried out between February and June 1989 and the Government are relying on information gathered at that time. The rate of inflation since that time has been a great deal larger than the rate of grant increase—9.7 per cent. against 5 per cent.

Secondly, the field work took place before the rise in rents as a result of the Housing Act 1988. Among my pupils it is in the region of 20 per cent. A further effect of the Act is that a good many landlords are now demanding rent for nine months of the year. Otherwise, they make a loss. The Government may say that that should not happen but they have vigorously supported a free market in housing. That is one of the consequences. In a free market one cannot expect landlords to function as a social service. If they can obtain more money by letting property for the whole of the year, then they will do that. Therefore, there has been about a 20 per cent. increase in rents since the survey and a demand for rent for a longer period.

We have also the current London Transport fare increases. When my noble friend Lord Tordoff asked whether those increases were inflationary the noble Viscount, Lord Davidson, replied, "Yes and no". I now understand what the noble Viscount meant. The increases are inflationary for the students but not for the Department of Education and Science.

Another problem spotted by Research Services Limited in the survey is declining parental contributions because of the ceasing of deeds of covenant. That should have been expected. Finally, except in Scotland, the survey was carried out before undergraduates had to pay the community charge. For all those reasons the Government's information is inaccurate.

Let us look at some figures. I take mine from undergraduates whom I am teaching. For London the grant is£2,650 and next year the loan will be£460. I trust that I shall be forgiven for taking this year's rate of grant because I am taking this year's expenses. It is wildly improbable that next year's grant will increase faster than expenses.

Taking a budget of 40 weeks, a typical undergraduate pays £2,000 rent. That is £50 per week—the sum that most students pay. To travel in from fare zone 2 on four days a week costs £240 per year or from fare zone 3—about 25 per cent. of students living out travel in from that zone—£408 per year. I am told that most students manage on £10 to £15 per week for food which is not very much. If one takes a figure of £12.50, that comes to £375. Travel home three times per year is very difficult to average, but I have made an estimate of £100. The poll tax in London is usally about £100. That comes to a total of £2,815 out of a total sum available of £3,110, leaving £295 per year for all other expenses. If that is calculated over 30 weeks, one arrives at a total of £9.83 per week. That allows nothing for books or for travel home one weekend during term. That is at least £400 short. I expect others to have comparable figures.

We have to consider the problem of the vacations. When we were debating the Social Security Bill, the noble Baroness, Lady Blatch, said that students should be construed as having withdrawn from the labour market. There is a strong academic case for that. I wish they had. However, on those figures, students cannot afford to withdraw from the labour market. It is not financially viable. If one divides that figure of £295 by 52 weeks, it comes to £5.67 per week. That is probably less than many students received as pocket money when they were 12 year-olds.

That brings me to the problem of undergraduates working during term time. A very casual and off-hand allusion to that appears in paragraph 3.25 of the White Paper. My noble kinsman Lord Henley, in his letter to me dated 15th June, which is deposited in the Library together with my reply to it, said that many students find work during the vacation and some during term time. I should like to ask the noble Baroness whether she can tell me that it is not government policy that students should work during term time.

In this country we have three-year courses. We get through about as much work in three years as an undergraduate at Yale gets through in four years. However, that is only possible because hitherto undergraduates have been able to concentrate full time on academic work. Should that cease to be the case, we must either demand a fourth year which will be extremely expensive for the Government or we must devalue the standard of the British degree which, of course, competes in an international market. If we were to have a situation where those who want the best degree for their children have to send them to Harvard or Yale at a cost of 80,000 dollars over four years, I should not envy the Secretary of State the job of explaining that situation to the Conservative Party conference.

The noble Baroness will doubtless say that public money is limited. Of course it is; but I do not believe it is quite as limited as she thinks. I am certainly not suggesting that it is possible to have overall increases of public spending at the percentage levels that would be needed to bring the allowance up to a living subsistence. However, the Government being short of money does not make it any cheaper to be a student. The Government must cut their coat according to their cloth. It is a wasteful way of handling public money to give it out in a form which is insufficient for everybody, so that people cannot stick to their work, have to earn money and cannot do the job properly. That is not frugality; it is Micawberism—hoping that something will turn up.

The Government must decide how much money they can spend and enrol no more students than that amount of money will support. In our system of allocating public spending we do not cut our coat according to our cloth. We have a series of competing bits, all of which get scaled down and none of which therefore gets done properly. I was delighted to see my right honourable friend Mr. Ashdown writing in The Times Educational Supplement last week that this matter needs urgent attention.

I shall not detain the House for long on the other points I wish to raise. The question of compound interest concerns me because I have always worried about the effect on married women who choose to stay at home with children, as they have a right to do, and wish to return to work around the age of 45. They may have worked for five years without reaching the level which made them eligible to repay their loan. I remind your Lordships that the starting salary for a university lecturer is now low enough to be eligible for deferment of a student loan.

If one wants to return to work at 45 and has a large debt, it may be thought to be in one's interest to defer returning to work until the age of 50 so that one does not have to repay that debt. As the noble Baroness, Lady Phillips, knows very well, there is age discrimation in employment and therefore it is not always as easy to go back to work at 50 as one would like. That provision may therefore have the effect of excluding some highly qualified people from the labour market.

On the subject of four-year courses, we voted on an amendment tabled by my noble friend Lord Addington that there should be no repayment for the fourth year. That is not what I am proposing. I am asking that the deferred repayment terms for five-year courses be extended to courses of four years. The last we heard on this point was when the noble Earl, Lord Caithness, said that he would think about it. I am sure that he did. I shall be interested to know the results of those thoughts.

I shall touch on two points which are not in the regulations but which cause me considerable anxiety. One is the question of how promptly the loans will be paid. That is vital to undergraduates. They have no safety margins. For example, if they deal with the kind of regime there has been in the London boroughs of Brent and Ealing—I am delighted it is no longer in place—they may find that they are borrowing large sums of money because the loan comes to them late. We have not yet had an adequate answer to the fears expressed by my honourable friend Mr. Hughes in another place that the Student Loans Company does not have enough staff to pay quickly enough.

I have not heard anything adequate regarding the scheme for recovery of the money. The scheme will save public money only if the money is recovered. My father-in-law used to say that one's importance is known by how long it takes for one's mistakes to become apparent. This mistake may take 15 years to become apparent. By that reasoning the Parliamentary Under-Secretary of State is a very important man indeed!

Baroness Young

My Lords, before my noble friend responds to the speeches that we have heard I should like to say how grateful I am that the amendment we had to the original Bill, allowing the regulations to be taken by affirmative resolution, was agreed to by the Government because it is valuable to have this further discussion. I should again like to place on record my appreciation for that.

I should also like to take the opportunity, as we had a slightly chequered start to this debate and as my noble friend Lady Blatch may not feel able to do so, to say that I am certain that no discourtesy was meant on her part to anybody in the House. I am certain that I can speak also for my right honourable friend the Secretary of State and say that certainly no discourtesy was intended on his part.

As other noble Lords have said, I do not feel that it is right to go over all the arguments that we had on the Bill. They were very extensive and well rehearsed. What is encouraging is that student numbers in higher education in this coming academic year are expected to be around 1 million in one form or another. That compares with just over three-quarters of a million students in higher education in 1979. That is a fact which is to be welcomed because we all want to see a better educated population and recognise the importance of that. In a way it illustrates the problem which the student loans Bill is designed to meet. Clearly, with an increase in the numbers of students it is important to tap a new source of support.

Listening to my noble friend Lady Blatch in her opening remarks I was glad to welcome the amendments that she drew to our attention, which are in the regulations. They meet some of the anxieties that staff of universities and other places of higher education had regarding the administration of the scheme. However, there is one specific point that I should like to raise with her. The regulations refer consistently to universities, whereas some universities are collegiate universities. That is a point which needs to be clarified. When my noble friend responds to the debate I hope that she will be able to clarify that point.

We are entering a new world at the start of the academic year. I was glad to hear my noble friend say in her opening remarks that there have been a number of discussions and seminars with universities and institutes of higher education regarding how the Bill will work. From what has been said it is important that we have the smoothest possible running of the scheme. On the introduction of any new scheme there are invariably some teething troubles, but a lot of matters are best resolved not across the Floor of the House—we can do no more than lay down general principles—but in discussions where these points arise.

I should like to say to my noble friend and her colleagues that I hope there will be the closest possible co-operation both for the Student Loans Company and for the institutions of higher education over the administration of the scheme. I hope that the Government will not hesitate to amend further regulations in the light of how they are working so that we obtain a sensible solution to a number of the problems. That will be greatly welcomed and I am sure it is something the Government would like to see.

We are now at the end of a very long discussion on this matter. I support the principle of student loans. We already see in the regulations some amendments to make them work better. I hope that we shall see their smooth introduction in the new academic year.

7.10 p.m.

Baroness White

My Lords, I wish to reinforce some of the points made by my noble friend Lord Peston, but in particular to stress the gravity of the problems which face university administrative staffs. I consulted this week with officials of the Committee of Vice-Chancellors and Principals. I have also made inquiries of the appropriate officers at the University of Wales at Cardiff with which I am familiar. They face a daunting prospect at Cardiff of trying to make the scheme work for upwards of 8,000 students this coming October.

We have been told that the Department of Education and Science did not trouble to consult the officials at the CVCP in advance about the details of the draft regulations before us. Had they done so they might have learned something more about the hard facts of university administration.

I was left with the suspicion that the officials at Elizabeth House who drafted these regulations have never actually seen a UCCA form which, as most of us know, is the application form for admission—at least, outside Oxbridge—for most university students. A good deal of the information which will be required for student loans is in fact to be found on the UCCA form, but this apparently has not been discussed at all by those who will be most concerned about administering the loan scheme.

It is perfectly true that the last minute amendments which we received, at first in manuscript and now decently printed, bring in the concept of what is reasonably practicable. That undoubtedly is a very helpful addition to the Bill, but it does not go very far. To expect hard-pressed officials to turn their minds now to working out both the loan scheme and the access fund administration—which is not before us in the regulations but which, nevertheless, is very much in the minds of university administrators—between July and October is quite absurdly impracticable and, to my mind, grossly unfair to those concerned.

The academic registry with which I am familiar is working at present at full strength at maximum capacity, and will be doing so between now and the autumn. It is the most strenuous period of the whole academic year. Examinations are only just concluding. The conferment of degrees for several thousand students have to be arranged in July. In August, the pressure of sorting out admissions builds up as school examination results become available. In September, the referred students have to be dealt with and various individual student admission problems have to be sorted out; and, come October, the new entrants are there on your doorstep.

No firm information has so far been available. No one knows for sure what extra staff will be needed, especially for this first year when returning students, as well as the new entry, will be eligible for loans for the first time. It is a far heavier operation this year than it is ever likely to be in the future. The prospect of simultaneously having to set up a mini-social service department for the access funds is regarded as an additional nightmare by the academic colleagues to whom I have been speaking this week.

The CVCP has set up a working group to advise, under the chairmanship of Mr. Newcombe, registrar of Essex University, but so far this group have not felt themselves to be in a position to offer any detailed advice at all, nor have they worked out any scheme for assessing how far the proposed £3.50 per eligible student will cover the true additional expenditure which will fall upon university funds.

It seems to me that a compatible scheme to be adopted by all the universities is essential, if reliable estimates are to be made of the true administrative costs to the universities, as opposed to the administrative expenditure of the loans company itself, but no such scheme so far appears to be forthcoming. If it is not put in place for this coming autumn, there will be no evidence on which improvements in this scheme can be based in the ensuing year.

The access fund administrative costs, as I understand it, are to be subsumed in the Universities' Funding Commission awards, in the sums made available to the university. They will not be separately costed, so I am told. Who is to know whether they will really be met? No one whom I have consulted believes that the true costs of the access scheme will be covered for the university.

What I am really saying is that to press on with implementing by October the regulations which are in draft before us now will, on any informed judgment, result in pressures and errors which will inevitably sour relationships and cause much confusion and a good deal of unhappiness both to staff and to students.

I am not discussing the merits of the student loan scheme per se. We have gone through that process and we are not discussing that now. What I am discussing are the realities of trying to make the scheme work in the time which is now available. I suggest to your Lordships that this is a classic example of more haste less speed.

7.17 p.m.

Lord Kilmarnock

My Lords, practically all the points have been made which need to be made, but the general point remains that the detailed administrative procedures set out in Part V are quite unnecessarily cumbersome. The noble Baroness, Lady White, has already referred to the existence of the UCCA form, on which a great deal of this information is to be found, so why a wholly different process of an eligibility questionnaire is necessary I do not understand.

On a point of detail which puzzles me, paragraph 4(e) states: in the case of any other person except a refugee, his passport (if he holds one), and a letter or other document issued by a responsible person which contains particulars of his date, place and country of birth and his names at birth. Is it really necessary for university authorities to have to check both the passport and the supporting letter, when all this information would have had to be given to the passport authorities in the first place, in order to obtain a passport? That is one instance of the proliferation of unnecessary detail for which, as we have heard from a number of speakers, there does not appear to be adequate financial provision. Surely we can get rid of nonsense like that and streamline all the requirements in Part V. It is only a minor point, but if all these minor points were taken together they would add up to a very considerable workload. If we can eliminate them as unnecessary, that workload would be reduced.

I entirely agree that we are very grateful to the noble Baroness, Lady Young, for the amendment which made it possible for us to debate these draft regulations under the affirmative procedure. But it will not be a great deal of good unless the Government seriously take on board what is being said, monitor all the points being made and make changes to get the whole procedure working better.

Lord Butterfield

My Lords, perhaps I may intervene briefly. I promise that I shall try not to keep the noble Baroness, Lady Young, too long from her evening meal.

When I first spoke on this issue, my son-in-law, who is a strong member of the Conservative Party, told me that he had heard in certain quarters that my speech had been regarded as singularly unhelpful. I hope that the noble Baroness, Lady Blatch, will not feel the same about my remarks this evening. She mentioned that she might go to Edinburgh to see the administrator of the loans scheme. I should be grateful if she would ensure privately that he realises what the noble Earl, Lord Russell, indicated; namely, that quite a proportion of our students are very hard up and that the speed with which they obtain their loan money is an important factor. Their state of wealth is often judged by the clothes that they wear which come from Oxfam. Certainly, there are few reasonable dinner jackets visible on the streets of that former centre of elegance and privilege—Cambridge—in the summer. I am sorry that we have not found a system that provides a grant to all freshmen so that they can have a taste of university without feeling inhibited about trying it.

There are aspects of the regulations that are irritating. I am anxious that the income level for repayment should be adjusted according to inflation. That is the level at which people will have to start repaying. If, after a few years, £965 a month is down in purchasing value, we may find ourselves asking people who are pretty hard up to make repayments.

Equally I wonder whether there may be a case for allowing the maximum loans that students can raise to be corrected for inflation. As some of them are hard up, I do not want the additional loan of £330 a year if they reside at home or £240 if they reside elsewhere to be too little to make the kind of improvement in their living circumstances that we all want to provide.

I have one final—not completely light hearted—point to make. I offer it to the noble Baroness as a factor ameliorating some of the difficulties of university administrators. When I was master of my college, I was keen that the last cheque that an undergraduate paid should be photocopied by the bursar's office. If we had his or her bank account number and branch from the cheque, and at some time in the future we had to make an appeal, that information might be extremely helpful in tracing the person concerned. Colleges may be quite pleased to have an official reason for recording that information, although it is likely that the better off students will not provide us with it because they will not think of raising a loan.

Baroness David

My Lords, I agree with the noble Lord, Lord Butterfield. Many students are hard up, but I shall refrain from commenting on their dinner jackets.

I have two important points to make on behalf of my noble friend Lord Blease. First, the regulations relate to England, Wales and Scotland. My noble friend is anxious to know what will happen in Northern Ireland. He has received a letter from the vice-chancellor of Queen's University, Belfast, who is anxious, as are many other people, about the trouble that they will have in dealing with the administration. They want to know how the scheme will operate in the interests of economy and efficiency. My noble friend is sorry that he cannot be here. I undertook to make the points on his behalf.

I wish to mention also the lack of eligibility for loans of anyone who has attained the age of 50, as stated in paragraph (2) of Part II. Perhaps I may refer to a letter from a colleague who started a course after the age of 50, received a grant for a year and hoped to be able to continue the course. He then discovered that the grant was not to be increased and that he was not eligible for a loan. Surely, that is manifestly discriminatory and unjust, particularly to a student who, having completed a least one year of a degree course prior to the introduction of the scheme, had every expectation of receiving either a grant that kept pace with inflation should the Bill be thrown out or taking advantage of an unhappy loan system should it become law. It is hard that people who have started courses with certain expectations should be disappointed. My colleague says that he plans to seek a judicial review.

I thought that it was well to make the point so that the Government are aware of the very justifiable dissatisfaction of those who started courses in the expectation of a grant or loan and, with that expectation gone, are left with nothing to take their place.

7.26 p.m.

Lord Addington

My Lords, I rise briefly to follow through a couple of the points which were initially raised by my noble friend Lord Russell.

The question of the new structure of funding—the loan and the top-up grant—being not enough to live on is an issue on which I spoke at considerable length during our debates on the Bill. It was my experience that most people were totally dependent on social security payments of various kinds to make ends meet if they were on full grant and they lived in the south-east of the country or in certain more expensive parts of Scotland. Edinburgh was the worst example in some respects, but even Aberdeen rivalled it in terms of rent. The bigger the city, the higher the travelling expenses. That is why London is often so badly hit. Students here have high rents and spend a great deal on travel because they have to cover such great distances to get to their classes.

Furthermore, the new payments do not cover those people who are hardest hit by the loss of benefits. I presented some rough calculations during our debates. The payments do not compensate for people in the most extreme circumstances.

The regulations merely enforce what I suspected. It may become desirable to ask someone who wishes to go to university how he or she will be funded and say, "If you are dependent on the state support scheme, I recommend that you go to university in Sheffield, Newcastle or Manchester because everything is cheaper there". Shall we effectively drive people out of the universities of the south-east? Shall we say, "You can go to university in certain parts of the country only if your parents' income is over £x a year"? We have already taken steps in that direction by the erosion of the value of the system. Social security protected us from that great anomaly; but, as it has been removed, and taking house rents into account, there will effectively be an income bar on certain parts of the country. I hope that, as the noble Earl, Lord Caithness, pointed out many times, the situation will be kept under review. Indeed, the review is probably already well overdue.

I thank the Government for taking into account the terms of repayment of disabled students and the conditions for cancelling repayment by such students. However, why have the Government not expanded the definition of disabled to cover those people who are deaf or have the disability from which I suffer, dyslexia? Those people are counted as disabled when they are at school and when they leave as they will be entitled to disabled-for-work grants. Why are they not counted as disabled when they are students? Why are they not given beneficial repayment terms? They have higher costs of living. That point applies especially to deaf people who need other pieces of equipment. It applies also to dyslexics who may require secretarial help for day-to-day living. I know that I do. If one cannot write a letter, one may well have to sit down with someone and dictate simple letters about moving house, bills, changes of address, and so on. I ask the Government to bear these points in mind.

Baroness Blatch

My Lords, despite its difficult start, this has been a useful debate because it will allow me to clarify some points that still need clarification. It may be helpful if I restate the principles of the scheme. The Government are budgeting for a substantial increase in student support. We have already announced that the grant will be uprated in the usual way this autumn. On top of that will come the loan. That will provide £178 million, or even more if take-up exceeds 80 per cent. The final sum will be determined by demand and is not cash limited. On top of that will come £25 million for the access funds, of which £14 million is for students in the ambit of the loans scheme. The saving from the removal of social security benefits, if it goes ahead, is expected to be £68 million in respect of students in the scope of the loans scheme. Therefore the net increase is of the order of £125 million.

We expect this to make higher education more attractive. Our information to date shows that applications for the coming autumn term, made in the knowledge that we intend to introduce the loans scheme, are higher than applications made for the corresponding time last year.

Because repayments will accrue, the loans scheme will permit higher education to continue to expand without the burden of supporting students' living expenses falling on taxpayers and parents. A new source of support will be introduced to share the burden: anticipation by students of their own future incomes as graduates. Your Lordships will know that the deferment provisions set out in the regulations will provide protection to those who do not realise the graduate income advantage. The other terms of the loan are also generous, in particular the indexation to inflation.

It may be helpful if I now respond to some of the specific points that were raised. The noble Lord, Lord Peston, began by querying liability and asking where that falls. I am advised that if someone makes, for example, a false representation in obtaining a loan, any liability will lie with that individual. It will not lie with the institution. But we shall expect institutions to be properly prudent where public money is at stake. Their accuracy in certifying eligibility will be subject to audit.

Lord Peston

My Lords, perhaps I may intervene. It is my fault that the noble Baroness did not understand my question. My point was not that way round—at least it was only partly that way round. If a student claimed that he failed to get a loan because he was misled by the institution, would the institution be liable to be sued by the student? I do not necessarily need a reply now, but that is partly what I was asking about.

Baroness Blatch

My Lords, if a college or university deliberately—

Lord Peston

Inadvertently!

Baroness Blatch

or even unwittingly misled a student, there would be an inquiry. One hopes that the matter would be put right. I am waiting for a specific answer to the noble Lord's question.

My noble friend Lady Young queried the distinction between universities and colleges. I am advised that in collegiate universities it will be the college not the university that is responsible for certifying its students' eligibility. This is clear from the way "university" is defined in the Act. The regulations impose duties on the governing bodies of institutions attended by eligible students. This is in accordance with Schedule 2 to the Act which contains the power to impose these duties. In Schedule 2 the power to impose a duty on governing bodies of institutions includes a definition of what is meant by the governing body of a university. The term "university" is itself defined in the Act—in Section 4(3)—as including a college and any other institutions in the nature of a college within a university. Therefore the power to impose duties on governing bodies applies to universities, understood in that sense, including colleges and other institutions within a university. The result is that in a collegiate university it will be the college not the university which is responsible for certifying its students' eligibility for a loan. The argument that it does not apply to a college overlooks the way in which "university" is defined in the Act.

The noble Lord, Lord Peston, and other noble Lords, said that £3.50 per student is unreasonable and is not a realistic sum. The £3.50 per student is based on a reasonable estimate at this time of the work involved. I concede that only in the light of experience will we know whether that sum is adequate. It will be necessary to review this sum of money. What has to be said is that 90 per cent. or more students come into unviersity and higher education via the mandatory awards system. Therefore it will be relatively straightforward to I establish qualification for loan. Much of the information that is involved in applying to university through the mandatory award system will be the same kind of information that will apply for certification. I am told that something like 5 per cent. of students will present a problem for the universities in terms of their having to do a little more than taking a straightforward look at the information contained in the application for a mandatory award.

The noble Lord, Lord Peston, was concerned about advice to students and the role of the tutor. I am advised that the Consumer Credit Act already regulates financial advice that is given to students or others. The introduction of the loan does not change the bearing of existing legislation on the giving of financial advice. I believe that the noble Lord was actually referring to informal advice where a student asks whether it would be advantageous for him to take a loan and asks to have the loan explained. The noble Lord was concerned about the thin line between explanation and pure information on whether to take a loan. I am informed that that kind of informal advice would not be precluded by anything in the regulations or anything in the Bill. But the advice must not overstep the line and become involved with the application. In other words, the tutor would not be expected to become involved in the processing of a loan. Once the advice had been given about how to accept a loan and what a loan would mean to a student, it would be very much up to the individual student to process his own application.

The noble Lord also asked about bank accounts. It is stated that payments must go into a bank account to ensure payment. I am again advised that the payment must go into a bank acccount to ensure that it does not go astray. There is no charge to a student for setting up a bank account. There is no requirement once payment has been received to leave the money in a bank. It can be paid into a bank and immediately withdrawn. The student would then have the use of it and it would be entirely his decision as to how to use it.

The issue of direct debit was also raised by the noble Lord. This is needed to simplify the arrangements for repayment. The facility is there for the borrower to vary that part of the regulation. In other words, if it is not suitable for the individual student, the student can negotiate a different way of repayment.

A number of noble Lords referred to measures to help disabled students. A rather cynical comment was made by the noble Lord, Lord Peston. He said that we had done very little by disabled students. It is worth noting that a great deal has been done for disabled students. I am reminded that my noble friend the Paymaster General brought together a list of measures to help disabled students. We have increased the disabled students' allowances—the general level itself was raised to £1,000. There are special allowances of £3,000 for the course and in some cases £4,000 a year for non-medical helpers. There are concessions for disabled borrowers. Their income from disabled-related benefits will be disregarded when calculating income for purposes of deferment. The Student Loans Company will have discretion to allow disabled borrowers to start repayments later or to make repayments over a longer period if they judge it to be appropriate. I am not sure that I agree with the rather cynical comment made by the noble Lord, Lord Peston.

Lord Peston

My Lords, perhaps on a matter of fact I may interrupt the noble Baroness. I thought I heard the noble Lord, Lord Addington, imply that he was under the impression that the loan could be waived entirely for a disabled student. Will the noble Baroness confirm that that is not the case and that only deferment is possible?

Baroness Blatch

My Lords, yes; only deferment is possible. The loan would not be waived entirely. The noble Earl, Lord Russell, asked a specific question about the definition of the Metropolitan Police district. I am assured that the London rate for loans is precisely the same as the London rate for grants. Students at the Royal Holloway and Bedford New College can receive the London rate of grant and they will also be able to borrow at the London rate of loan.

The noble Earl raised the question of employment during term time. As regards the amount of loan, I am glad to say that from what he said, the noble Earl appears to be reconciled to the principle of loans for students. I believe also that the noble Lord, Lord Peston, agrees with the principle of loans for students. He has said so a number of times during the course of the debate. However, he is now arguing that not only should students receive loans, but even greater loans. I hope the noble Earl will forgive me because it may sound as though I am jesting.

He has argued that students should not be free to take paid employment during term time or in the holidays. We do not share that view. The specific question was posed as to whether we have a policy either for students working or not working. We do not take a paternalistic view about students. Whether they work during term time or in the holidays must remain a matter for the individual student.

Earl Russell

My Lords, I ask the Minister for a little clarification on this matter. It is the policy of a number of academic institutions, including the one to which I belong, that undergraduates are not free to take paid employment during term time. Do Government policies conflict with ours in continuing to take that line?

Baroness Blatch

My Lords, as I have said, the Government are not involved as to whether students take paid work in term or holiday time. That must remain a matter for the individual student. I doubt whether any single college in this country can ban a student from taking paid work either inside or outside of term time.

Earl Russell

My Lords, we need a little clarification here. Is it government policy that students should be supported at a level that makes it financially possible for them to manage without paid employment during term time?

Baroness Blatch

My Lords, the Government provide an adequate level of support for a student to be maintained without work during the course of study. However, it is the choice of many students who choose freely to work during term time and/or holiday time. That must continue to remain a matter for the individual student.

The noble Lord, Lord Peston, referred to repayments and the instalment system. I am advised that the instalments for the remaining period of the loan will be recalculated annually. If the inflation rate changes, the instalments will vary to reflect that. Therefore, there will be no need for a further adjustment at the end. The noble Lord went into some detail concerning interest rates. It is not possible for the interest rate to follow exactly the inflation rate as that cannot be known in advance.

The noble Lord would be quick to complain if the interest rates were varied retrospectively. However, borrowers need to know in advance what rate will apply. I notice that the noble Lord did not point out that if the inflation rate rises, then the lagging system works very much to the benefit of the borrower. The regulations are not technically flawed on this matter. I am advised that the requirement is that the Secretary of State shall specify the interest rate that appears to him requisite for maintaining the loan's value. He has concluded that the use of the latest actual rate of inflation is the most appropriate way to meet these requirements.

Lord Peston

My Lords, I am sorry to interrupt the noble Baroness. This is a very serious matter. I must place on record that I am not wrong, but that I am right. If the Secretary of State is now following that argument, he is mistaken. I ask the noble Baroness to go back to her department and to speak to the appropriate people. I know what is meant by a real interest rate. These regulations are flawed. It cannot be said that the Secretary of State can do just what he likes under the Act and get away with it. The regulations are wrong. I am willing to delay this matter, but if noble Lords are prepared to agree a set of regulations that are wrong, then it is for noble Lords to say. I am not mistaken.

Baroness Blatch

My Lords, I simply repeat what I have just said. The requirement in the Act is for the Secretary of State to specify the interest rate that appears to him—I emphasise that—requisite for maintaining the loan's value. At the moment he has concluded that the use of the latest actual rate of inflation is the most appropriate way to meet that requirement.

The noble Earl, Lord Russell, was interested in the speed of payment to students. I am assured that the company is successfully recruiting staff. It is very much on top of the work that it has to do in preparation for the loans' scheme. I am assured that the objective is that all students shall receive their loans within 20 days of application. That is the aim. We shall have to wait to see whether that objective can be met. If it can, I would consider that to be most reasonable. It will also depend on the accuracy of the application form that is presented for payment.

The noble Lord, Lord Butterfield, was concerned about the repayment threshold. That will be adjusted annually to equate to 85 per cent. of the average earnings at any given time. He was also anxious about the size of the loan. Again, that is something that will be reviewed annually. The noble Lord was also concerned about the confidentiality of bank details. I am assured that, for reasons of privacy, the forms are designed to leave no record whatever of the student's bank account number with the higher education institution.

The noble Baroness, Lady David, speaking on behalf of the noble Lord, Lord Blease, asked about Northern Ireland. Before this debate I had discussions with the noble Lord on that subject. I am assured that there will be Orders in Council that will reflect both primary legislation and regulations. I know the noble Lord, Lord Blease, well and I know that there will be considerable and detailed discussions about the practicalities of the way in which the system will work. The scheme will very much shadow what will happen in England and Wales.

The noble Baroness, Lady David, referred to the case of a student over 50 years of age. My response will be of cold comfort to her. The decision has been taken that loans will not be available for students over 50 years of age. I must leave the matter there.

The noble Lord, Lord Addington, raised issues about deaf students. He knows that deaf borrowers will not be eligible for repayment and deferment provisions for disabled people. At the moment consideration is being given to the proper definition of the severity of deafness. Eligibility is determined by the issue of whether or not the borrower receives one or more of the disability-related benefits listed in Regulation 9 paragraph 5. The provision is confined to disabled borrowers who are identified by the DSS as needing assistance through the benefit system. At present there is no benefit payable for people whose sole disability is deafness. Decisions on what kind of disability need support through the benefit system are matters for the Secretary of State for Social Security.

Deaf people will be eligible for the special deferment arrangements if they receive one of the benefits listed because of another disability. If in future any of the benefits listed are extended to people whose sole disability is deafness, they will come within the scope of these arrangements. If a new benefit is introduced specifically for deaf people, we shall no doubt want to take that into account in future loan regulations.

Lord Kilmarnock

My Lords, before the noble Baroness enters upon her peroration, as she has dealt with most of the detailed points that were made, perhaps I may ask this. Will she take into account the point that I raised about the unnecessary complication of the particulars to be verified by the institutions of higher education, with particular reference to passports? If she cannot answer that question immediately, I ask that she writes to me.

Baroness Blatch

My Lords, the information that is involved in applications through the mandatory award system will suffice for the vast majority of students. We are talking about a very small number of students where it may be necessary to resort to other methods of identification. I now turn to the points raised by the noble Lord, Lord Kilmarnock and the noble Baroness, Lady White. They made heavy weather in references to the administration and access to access funds.

Universities and colleges throughout the country have taken a pastoral interest in their students in terms of their well-being and their financial circumstances. I believe that the availability of access funds will make their work very much easier in that not only will they be able to identify the needs of their students; they will now also have the financial wherewithal to do something about the situation. It is most important that loans reach the right people and that the identity of such people should be properly established.

These regulations offer an additional source of support to students on what I believe to be favourable terms. They will underpin the expansion of higher education which we all want to see. I commend them to the House.

On Question, Motion agreed to.