Lords Sitting of 19 March 1990

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers — Read by the Lord Bishop of Ripon.

Community Sports Facilities
Lord Graham of Edmonton Lord Graham of Edmonton asked Her Majesty's Government: When was the last discussion between the Minister for Sport and the Sports Council of a strategy for expanding community sports facilities.
Lord Reay: My Lords, one of the Sports Council's key aims is to expand participation through a variety of means, including the provision of community sports facilities. My honourable friend the Minister for Sport met the chairman of the Sports Council in December to discuss a range of issues of relevance to this overall objective. He will be meeting him again the day after tomorrow.
Lord Graham of Edmonton: My Lords, I am grateful for what the Minister has told us about the way in which the Minister for Sport keeps in touch with the Sports Council. However, can he tell us whether an item either on the last agenda or the next relates to the sale of playing fields and sports facilities by schools and local authorities? Is the Minister aware that there is a steady rise in the number of sports fields that are being disposed of, very often in order to bring in income to help hard-pressed local authorities? Bearing in mind that one of the ultimate aims of a good community sports programme is that this country will do well at the next Olympics, can the Minister tell us how energetic the Government have been in helping Manchester to get the slot for the next Olympic Games?
Lord Reay: My Lords, I am afraid I have no information as to what is on the agenda for the next meeting between the Minister for Sport and the
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chairman of the Sports Council. However, with regard to the question about the selling off of playing fields, there is no firm evidence that there is a decline in the provision of playing fields. In fact, some local studies suggest that in a number of areas either the position has remained static or gains in provision have outweighed losses.
The Minister for Sport has written to the Sports Council asking it to consider setting up a central register so that the provision of playing fields can be monitored accurately. We understand that the council has since formed a working party with the Central Council of Physical Recreation and the National Playing Fields Association which will consider the matter.
Lord Mellish: My Lords, everyone in the House will be glad to know that some progress is being made in the matter. The Minister will doubtless know that last Thursday his noble friend, speaking on behalf of the Department of the Environment, referred to the club in which I am interested and said how pleased they were with what was being done there. I refer to Millwall. In view of that fact— and this is a line on the strategy for the future— cannot something be done to adopt that policy with regard to sports generally; that is, if the noble Lord knows what I am talking about?
Lord Reay: My Lords, I recollect the parliamentary event to which the noble Lord refers. The Sports Council has developed a strategy of sport— and I think that this may be along the lines suggested by the noble Lord— covering the period from 1988 to 1993 the aim of which is to bring together the public, private and voluntary sectors sports providers in order to increase by some 2 million the number of people participating in sport.
Lord Campbell of Croy: My Lords, when the Sports Minister for Scotland comes to hold discussions with the Sports Council for Scotland— the Minister is one of the Ministers in the Scottish Office— will my noble friend ensure that he conveys the commendations of several Members of this House on the current quality of rugby football in Scotland?
Lord Reay: My Lords, I shall be extremely happy to convey that recommendation to my honourable friend.
Lord Hunt: My Lords, is the noble Lord aware that the School Sports Forum reported jointly to the Department of Education and Science and the Department of the Environment last year on certain adverse consequences of the Education Reform Act on sport and recreation? Is he also aware of the constraints imposed on teachers' time and training, both of which are essential to enable pupils to experience outdoor education in outdoor pursuit and field study centres? As this fact has a very definite bearing not only upon schools but also upon the community, can he assure the House that the adverse consequences reported by the forum are duly monitored with a view to amending the Education Reform Act?
Lord Reay: My Lords, the noble Lord makes a serious point. Many teachers devote their time on a voluntary basis to providing extra curriculum opportunities for pupils to participate in sport. The Government fully recognise the valuable contribution they make.

Vagrancy Acts: Prosecutions
2.40 p.m.
Baroness Ewart-Biggs Baroness Ewart-Biggs asked Her Majesty's Government:
How many young people (under the age of 18) have been charged under Sections 3 and 4 of the Vagrancy Act 1824 or under the Vagrancy Act 1935 in the last 12 months.
The Minister of State, Home Office (Earl Ferrers): My Lords, information for 1989 is not yet available. Statistics are not recorded in the precise form requested, but in 1988 there were 227 prosecutions of persons aged under 18 for offences under the Vagrancy Act 1824. Most of these would be for offences under Sections 3 and 4.
Baroness Ewart-Biggs: My Lords, I am grateful to the Minister for that Answer. However, will he agree that it is a horrifying and worrying situation whereby young people are being "criminalised" purely because they are homeless and penniless? In view of the fact that under the Act no one can be prosecuted for sleeping rough unless he refuses a place of shelter, can the Minister say what places of shelter are offered to young people? As the latest Department of the Environment figures show that homelessness has risen by 10 per cent. over the past year, can he say how the inter-departmental review which includes young people is progressing and when it will be completed?
Earl Ferrers: My Lords, I understand the concern of the noble Baroness about people who are homeless. However prosecutions of those under 18 under the Vagrancy Act have reduced in recent years from 302 in 1985 to 227 in 1988. Of those, there
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were no prosecutions for sleeping rough; there were 105 prosecutions for indecent exposure and 107 for being on enclosed premises for unlawful purposes. The noble Baroness will be aware that the Vagrancy Act covers a lot of curious situations. Regarding the interdepartmental organisation, my right honourable friend the Secetary of State announced a £ 250 million programme of help in this direction last November.
Lord Molloy: My Lords, can the Minister say in regard to this touching problem of our youth whether there is liaison between the Home Office, various police officers and parts of local government which are affected? Do these three meet at any time to try to resolve this disturbing problem?
Earl Ferrers: Yes, my Lords, the Government are at the moment undertaking a review which includes all these different departments to try to see what can be done in order to help the homeless.
Baroness Ewart-Biggs: My Lords, when does the noble Earl expect that review to be published?
Earl Ferrers: My Lords, I think that we had better wait to see what the review says. It is an interdepartmental review trying to draw together the threads between each individual department.
Baroness Faithfull: My Lords, may I ask my noble friend whether this review will show how many of these young people have been in care and have no home or background?
Earl Ferrers: My Lords, I cannot give my noble friend the answer to that. We are trying to co-ordinate the efforts of the different departments in order to find out how best to deal with those who are homeless. Obviously if in the course of the review the information to which my noble friend referred becomes available, that will be an added advantage.
Lord Mishcon: My Lord, is it not a fact that the age group which we are considering constitutes a major and tragic percentage of those responsible for the crime figures that have been given to the House on a previous occasion? Does the Minister ally homelessness to criminality among young people? Is the interdepartmental committee of which he spoke aware of the relevance of homelessness to the crime figures?
Earl Ferrers: My Lords, there is clearly concern for fear that homelessness involves crime. However I do not agree with the noble Lord, Lord Mishcon, that it is a high percentage. The Question of the noble Baroness referred to people under 18 and the figures I have show that only about 2 to 3 per cent. of those under 18 are caught by the Act. Clearly we are greatly concened to ensure, where this can be done, that those who are homeless are housed and that they should not be involved in crime.
Lord Mishcon: My Lords, perhaps there is some misunderstanding. Did the Minister realise that I was talking about the percentage of the total crime

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figures in this age group? I asked him whether homelessness was a factor.
Earl Ferrers: My Lords, I beg the noble Lord's pardon. I misunderstood his question. I quite agree that young people form a significant proportion in the crime figures. Whether or not that is due to homelessness is another matter.
The Earl of Selkirk: My Lords, may I ask my noble friend whether any full examination has been made of the cause of vagrancy? We live today in a country with apparently more people homeless than ever before and with more habitable houses than there has ever been in the history of the country. Why are these two factors not joined together?
Earl Ferrers: My Lords, it is a matter of concern that there is so much homelessness. That is the reason why the Government are reviewing what can be dons in order to find out the causes.
Baroness Seear: My Lords, following the question of the noble Baroness, Lady Faithfull, will the Minister assure us that in the inquiry that is being undertaken we shall have full information as to whether these young persons have come out of care? If the answer is that a high percentage has, I am sure that the noble Earl will agree that it has important implications for our care policies. Is that information being sought in the process of the inquiry?
Earl Ferrers: My Lords, a great deal of information is being sought. Whether or not people have come out of care is a matter of concern. I should just tell the noble Baroness that at present we are involved in discussions with the health and social services authorities and the voluntary bodies in central London with a view to identifying practical steps to help people obtain the support they need.
Lady Saltoun of Abernethy: My Lords, will the noble Earl also bear in mind in this inquiry that young people may have had to leave home because they were being assaulted or abused? Will the inquiry go into that also?
Earl Ferrers: My Lords, obviously if that factor comes out, it will be of great concern. There are a number of different causes for people deciding to go out and sleep rough or to be unhoused. It is our desire to try to find out the cause and how it can be rectified. It is impossible to say that, having discovered the causes, we are able to remove the problem for ever.

Money Laundering
2.49 p.m.
Lord Harris of Greenwich Lord Harris of Greenwich asked Her Majesty's Government:
What action the Bank of England proposes to take against the Bank of Credit and Commerce International following the conviction of its subsidiaries on charges of money laundering in the United States Federal Court in Florida.
The Paymaster General (The Earl of Caithness): My Lords, the confidentiality requirements of Part V of the Banking Act 1987 prevent the Government from commenting on a general point relating to the Bank of England. Nevertheless, as a general point, the Bank can be expected to look very carefully at the outcome of any court proceedings involving an authorised institution.
Lord Harris of Greenwich: My Lords, I thank the noble Earl for that reply. Is he aware that the national drugs intelligence co-ordinator has estimated that drug traffickers in this country have assets of about £ 1,800 million? In the context of that situation, does he appreciate that there is substantial disquiet about this bank operating in the United Kingdom with a considerable number of branches? The bank has been convicted in the federal courts in the United States of laundering large sums of money on behalf of the Medellin drugs cartel. Is it not clear that in that situation it is necessary for the Bank of England to take early action to deal with this matter?
The Earl of Caithness: My Lords, there is a difference in law between the United Kingdom and the United States. In the United States, liability can be taken against a company as regards any of its employees who do something wrong. However, that is not the case in the United Kingdom. The noble Lord presses me to disclose information under Part V of the Banking Act. However, I know that he realises that Section 82 (3) (a) means that if I do so I could face a term of two years' imprisonment or a fine. Perhaps the noble Lord would like that, but I would not.
Lord Bruce of Donington: My Lords, while I express the wish of the whole House that the noble Earl should not find himself incarcerated, how does the question of confidentiality apply in this case? The facts of the case are known. A subsidiary of the bank has been convicted. Surely the Minister's general powers as regards giving directions to the Bank of England enable him to require at least that the Bank of England should inform the Government what action it proposes to take.
The Earl of Caithness: My Lords, I can do no more than draw the attention of the noble Lord to the wording of the Banking Act 1987. It is a decision for the Bank of England whether to revoke or to restrict the banking licence of an authorised institution. That is the power that Parliament gave the Bank of England.
Baroness Phillips: My Lords, whatever happened to parliamentary privilege if the Minister cannot reveal something in this House?
The Earl of Caithness: My Lords, under the terms of the 1987 Act it would be an offence to do so.
Noble Lords: Oh!
The Earl of Caithness: My Lords, noble Lords opposite may be right, but that is my advice.
Lord Hailsham of Saint Marylebone: My Lords, is it not manifest that my noble friend replies on behalf of the Government and is only entitled to disclose matters which are within the Government's responsibility? Is that not plainly the constitutional position?
The Earl of Caithness: My Lords, I am grateful to my noble and learned friend for explaining the position more clearly than I did.
Lord Taylor of Gryfe: My Lords, is not the Minister aware that the Bank of England has on a number of occasions recently threatened to withdraw the banking licence from certain reputable banks operating in this country? Does he not consider that there is a case for looking seriously at taking similar action in connection with this bank?
The Earl of Caithness: My Lords, what the noble Lord says may or may not be true, but that is a matter for the Bank of England. I know that noble Lords opposite would be the first to complain if they felt the Government were interfering.
Lord Brougham and Vaux: My Lords, do the Government feel that the Bank of England fulfils its supervisory duties properly?
The Earl of Caithness: My Lords, in the light of what has been said, I think that my noble friend's question is very pertinent. We have absolute confidence in the Bank of England.
Lord Harris of Greenwich: My Lords, is not the noble Earl aware that the Bank of England was sharply criticised by the Home Affairs Committee of the House of Commons for being rather complacent in relation to money laundering? In the context of that situation, I hope I may remind the noble Earl that the Banking Act, to which he has drawn our attention, requires banks operating in this country to conduct their business in a prudent manner and with integrity. In the light of that situation, have no Treasury Ministers found it necessary to discuss this matter with the Governor of the Bank of England, who is of course accountable to Ministers for his behaviour?
The Earl of Caithness: My Lords, the Banking Act also requires the Bank of England to satisfy itself that owners and controllers are what it terms fit and proper persons. I am sure that that is what the Bank will do.
Lord Mishcon: My Lords, whatever the constitutional position, as so correctly given to us by the noble and learned Lord, Lord Hailsham, may be, is there anything to stop a Treasury Minister from having a discussion with the Bank of England?
The Earl of Caithness: My Lords, Treasury Ministers have discussions with the Bank of England on a number of issues.
Lord Harris of Greenwich: My Lords, have Ministers had any discussion with the Governor of the Bank of England on this matter?
The Earl of Caithness: My Lords, I am not aware of anything particular regarding this issue.
Lord Mishcon: My Lords, will the Minister now have such a discussion?
The Earl of Caithness: My Lords, I shall pass those comments on to my right honourable friend the Chancellor of the Exchequer.

Underground: Ticket Barrier Revenue
2.54 p.m.
Lord Molloy Lord Molloy asked Her Majesty's Government:
Whether the revenue of London Transport has increased since the installation of automatic ticket barriers.
Viscount Davidson: My Lords, London Underground Limited estimates that the installation of the automatic gates has increased its revenue by £ 3 million a year.
Lord Molloy: My Lords, I thank the Minister for that reply. However, is he also aware that the feature known as barrier jumping has increased enormously and that the use of plastic travel cards has been abused by cheats hiring them out or through cheats finding lost cards and using them? If these matters were dealt with, the financial situation of London Underground could be even better. Furthermore, would it not be wise to reinstate the travelling ticket inspectors who achieved so much as regards catching cheats and saving money for London Transport?
Viscount Davidson: My Lords, these are all matters for London Underground. I am sure that the chairman of London Underground will read the comments of the noble Lord.
Lord Underhill: My Lords, we have been told on a number of occasions that in all stations with ticket barriers there will be a safety button and a member of staff always available to use that safety button. Have there been any complaints about the absence of staff in such circumstances? What is the view of the London Regional Passengers Committee on the continuation of the ticket barriers?
Viscount Davidson: My Lords, London Underground has stated that there will always be two members of staff on duty at the ticket barriers. That policy is being carried out. As regards complaints, no more than half a dozen have been received in the past three months.
Lord Boyd-Carpenter: My Lords, has there been an increase in the costs and expenditure of London Underground to put against the increase in revenue of which my noble friend informed the House?
Viscount Davidson: My Lords, I cannot give that information without notice.
Lord Underhill: My Lords, is the proviso that two members of staff should be available at ticket barriers being applied at Westminster station in the mornings? To my knowledge it is not being applied there. I asked the Minister what the view of the London Regional Passengers Committee is on this situation. Has the Minister any comments on that?
Viscount Davidson: No, my Lords. That is a matter for London Underground. I shall draw the attention of the chairman of London Transport to the situation at Westminster station and to problems at particular stations.
Lord Molloy: My Lords, will the Minister convey to his right honourable friend in another place the fact that travelling ticket inspectors not only sorted out cheats but were also useful officers to assist passengers in an emergency? They also helped in the administration of London Transport. Many people feel that the travelling ticket inspectors should be reinstated.
Viscount Davidson: My Lords, again, I shall draw those remarks to the attention of the chairman.

Business
2.58 p.m.
Lord Denham: My Lords, it may be for the convenience of the House to know that the Committee stage of the Education (Student Loans) Bill will be adjourned at about 7 p.m. for about one hour aid that during this adjournment the Northern Ireland (Emergency and Prevention of Terrorism Provisions) (Continuance) Order 1990 will be taken.

Royal Assent
The Lord Chancellor (Lord Mackay of Clashfern): My Lords, I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified her Royal Assent to the following Acts:
Capital Allowances Act,
Civil Aviation Authority (Borrowing Powers) Act,
Coal Industry Act,
British Railways Order Confirmation Act.

National Health Service and Community Care Bill
Brought from the Commons on Friday last; read a first time, and to be printed.
British Film Institute Southbank Bill
Read a third time, and passed, and returned to the Commons with amendments.
Greenwich Hospital Bill [H.L.]
Read a third time, and passed, and sent to the Commons.

Education (Student Loans) Bill
3 p.m.
The Earl of Caithness: My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved, That the House do now again resolve itself into Committee.— (The Earl of Caithness.)
On Question, Motion agreed to.
House in Committee accordingly.
[The CHAIRMAN OF COMMITTEES in the Chair.]
Schedule 2 [Loans for students]:
Earl Russell Earl Russell moved Amendment No. 34A:
Page 3, line 34, at end insert ("for the purposes of this Act, including protection against unauthorised disclosure or use of information").
The noble Earl said: I rise to move Amendment No. 34A. I should like to speak also to Amendments Nos. 39C, 39D, 39E, 47B, 49 and 49C. That, I am afraid, is quite a mouthful of amendments. However, there is a common purpose which informs all those amendments, which is why I believe that they are properly grouped together. They form a civil liberties category of amendments.
The process of debt collection is obviously a necessary incident to any measure for student loans. It is also necessary that where there are loans there should be repayments. Those must, of course, be pursued. The question which concerns us is how. The Price Waterhouse report, which is by way of being the Government's operating manual on this subject, very properly makes the point that the ultimate financial destiny of the scheme depends on successful recovery of debt. Its proposed remedy for meeting that danger is what is described as "enthusiastic" debt collection. The Committee will understand why that adjective causes me a certain amount of misgiving. I should have been very much happier if it had said "efficient" debt collection, for efficient debt collection there must indeed be. However, enthusiastic debt collection, in an area of commercial credit in which error is by no means unknown, is something which I believe we should view with a certain amount of caution.
The amendments deal, first, with the question of unauthorised access to records. It is a very proper and very strongly felt concern of many commercial borrowers that they do not want all their neighbours knowing their affairs. I can see no legitimate reason why that concern should not be satisfied.
The amendments deal with protection against destruction of records. The Committee may consider that that represents an excessive anxiety. In fact there is precedent for it. The main United States' social security computer was once struck by lightning, with the result that the social security records of a good many thousand people were

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destroyed. The error first came to light when an old lady in San Francisco was presented with a pension cheque for five million dollars. Believe it or not, she paid it back. I do not know whether the Student Loans Company will be as lucky. I hope that it will be, but I should very much prefer it if the necessity did not arise. In any case where there is a risk of the destruction of records by an electrical failure some form of back-up system is essential for the preservation of liberty.
Amendment No. 39D, which deals with the requirements of the Data Protection Act, is one of the most vital of this group of amendments. The idea has been floated in the press— and I know that the noble Viscount, Lord Davidson, will tell us that he does not believe everything that he reads in the papers, but we should like to know that we could disbelieve it— of the Student Loans Company being fully privatised and financing itself from the proceeds of selling its mailing list. The Department of the Environment may have misgivings about the generation of a vastly increased quantity of waste paper in this country. That apart, a good many undergraduates feel a good deal of misgivings about the thought of details of their names, addresses, financial liabilities and debts being sold on the open market for all and sundry to bombard them with junk mail. We receive enough of that already.
I should like the most categoric assurance from the Minister that the mailing list of the Student Loans Company will not be parted with, will not be made over to third parties, will not be sold and will not be used as the basis for financing the Student Loans Company as a commercial business. That is vital to any confidence in the scheme. There are people who would be extremely reluctant to take a loan on such a basis, even if they could see no way to live without it.
Finally, the amendments provide for confidentiality of records and access to information. That again is a vital provision. Errors have been made in matters of commercial credit. Perhaps I may give an example from personal experience. I was once threatened with proceedings for failing to pay instalments on a debt which I had paid off completely some months before. Fortunately the payment had been discharged by my lawyer, who had full and proper records and had some words to say on the subject. That error, we discovered, had arisen because in arranging for the payment of the debt the company had given us the wrong file number, which we had then virtuously used. That is the kind of error that might happen to anybody, but not everybody concerned will have a first-class lawyer in the background. I can foresee a great deal of error occurring here. I believe that it is vital that there should be some means of checking those errors.
None of the amendments is meant in any way to interfere with debt collection. The amendments are meant to ensure, in so far as it is possible, that it should be done efficiently. I beg to move.
Lord Peston: My Lords, I too shall speak to this very long group of amendments which, as the noble Earl, Lord Russell, rightly said, have a common
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theme concerning the protection of the individual and particularly the individual's privacy. It is interesting that we start with an apparently simple scheme for student loans and end up dealing with matters of very great significance for civil liberty.
One reason for concern about the matter is the remarks made by the noble Earl, Lord Caithness, in his winding-up speech in the Second Reading debate. He responded to the fact that many noble Lords on all sides of the Chamber were concerned about the question of default. The noble Earl said that it was right that defaulters should be pursued vigorously. He said that there was no need to be apologetic about that and that:
"Graduates who fail to pay their debt to the taxpayer deserve no one's sympathy— [Official Report], 27/2/90; col 716.]
There is a slippery slope. We start with the idea of a loans scheme, which Members of the Committee who support it believe is conducive to higher education, and end up threatening graduates with prison sentences in due course.
Although I am second to none in my belief that those who incur debts have to face up to the responsibilities that are connected with those debts, I am still more concerned about where a Bill of this kind leaves us. I do not seek to make a cheap party political point in referring en passant to the similar remarks that were made about the poll tax. That also began as something that some noble Lords believed to be a highly desirable step, and one which even enhanced our democracy. However, we still do not know the legal consequences and the consequences for the liberty of the subject of that Bill.
A young person aged 18 will set out on a course of higher education. That is what such young people are interested in. I still believe that the main reason they do so is that they believe education at the higher level is desirable. Some of them will gain financially from it, although not all, as we shall demonstrate with regard to other amendments. Some do it for vocational purposes. As an academic, I believe that studying at that level for its own sake is highly desirable and in the national interest.
Those young people start off at that point. They incur the loan because it is available and perhaps because it is their only means of support. Some years go by and they might then find themselves with the most complicated and vigorous procedures for repayment, if I may quote essentially what the Government said, arising possibly from a misunderstanding. Some people might well take out loans with a view to not repaying them, although I do not think that that is likely to be the case. Given all the complexities of when the people who take out loans start to repay them and all that happens to them in the years that go by, they might not repay them, either through oversight or because of their circumstances which, as we have again argued fairly vigorously, are not simply connected with being below 85 per cent. of the national average wage. They will either forget to repay the loan and will be in default or will find it impossible to repay the loan. That is the nature of the problem. That is why some protection is needed, particularly against the ad hoc pursuit of such people.

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That leads me to the second reason the amendments are so important and why I was glad to attach my name to them and support them. It is a consequence of the enabling nature of the Bill, which gives the Secretary of State power to make regulations, that matters of fundamental importance to the liberty of the subject will not, unless the amendments are accepted, appear in the Bill. Speaking for myself and my noble friends and, I hope, for other noble Lords, I should not accept either a ministerial assurance that the Government believe that the loans company will behave reasonably or a statement from whoever runs the loans company that he or she is willing to behave reasonably. Amendments of this kind are required to ensure that those people behave reasonably with due regard to the civil liberties aspects of the matter.
A further cause for concern results from the nature of the Bill. It is not a necessary consequence of introducing a loans scheme but a consequence of the way in which the Government have set about it. We do not know what data the Student Loans Company may collect. We hear rumours and statements and we see pro formas, but we do not know precisely what it can collect. Unless the amendments or others like them are accepted, we shall not know what it can collect. That is an important point. As I see it, there is nothing to that effect in the form that will eventually be sent out to students. We should not forget that the first draft of the form will not necessarily be the one that exists over several years. The Student Loans Company may ask for all kinds of information which, if noble Lords knew about it now, they might think was wholly inappropriate.
Those are the thoughts that I place before noble Lords. I place before them the problem of default. Much of that default will result from chance and from oversight. In particular, the problem is that here, as elsewhere, we are asked to accept reassurances and a pig in a poke— indeed, several pigs in several pokes. All those points should be in the Bill, which is of great importance to the people concerned.
3.15 p.m.
Lord Hailsham of Saint Marylebone: I speak out of ignorance and in the hope that my noble friend Lord Caithness will be able to correct me if I am wrong. With respect, it seems to me that the two speeches to which we have listened deal with two totally different subjects. The noble Earl, Lord Russell, raised the question of confidentiality. I am sure that he was right to do so and that the Committee will be extremely interested to hear what safeguards will be proposed by the Secretary of State when it comes to the confidentiality of the information obtained before or after the grant of a loan.
The noble Lord who spoke from the Front Bench for the Labour Party raised a totally different question; namely, the status of the loan in relation to enforcement. Here is the point at which I hope that my noble friend will correct me if I am wrong because I have not, as I perhaps should have done, researched the matter adequately. As I understand
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it, the loan will in effect be a contract debt and have the status of a contract debt. If that is so, since the implementation of the report of the Pain Committee some years ago, that does not yield the right to imprison the person. There is no threat to liberty in that sense. That point should be made plain if it is so. If it is not so, it should equally be made plain.
Baroness Phillips: As the noble and learned Lord has pleaded ignorance, perhaps I may again raise a point with the Minister, although I am sure that it has been explained. I find it disturbing that the effect of the Bill on public service manpower is that there will be no net increase in civil service manpower. Student loans will be administered by the Student Loans Company Limited. The moment we have a limited company, presumably set up by the Government, surely there can be no real control in the sense that any information it has is liable to be used. We all receive frequent letters from banks. They are notorious for selling addresses. The amendment seems to me to be particularly relevant as we are dealing with the Student Loans Company Limited.
Lord Milverton: I shall support the amendments unless Her Majesty's Government can give a more satisfactory answer and assurance. Morally speaking, the question of student loans is a dangerous one. It is perhaps a case of taking advantage of young people who, as the noble Lord, Lord Peston, said, rightly see not only what their higher education will gain them but the importance of taking part in learning at that high standard.
Baroness Carnegy of Lour: I shall listen with great interest to my noble friend when he replies to the amendments, particularly on the question of how confidentiality is to be maintained. I hope that he will tell us how confidentiality will be maintained when the information is not on computer as well as how that is done when it is on computer, as I believe that the law is different.
Baroness Blackstone: I should like to add a few words to what the noble Earl, Lord Russell, and my noble friend Lord Peston have said about the amendments. As the Bill has gone through the House, many of us have been extremely concerned with the question of access and of being convinced that the proposals will not put off young people from starting the process of higher education, particularly young people from working-class homes. A number of us have registered our concerns about the fear of debt among young people from that social background, but there could be fear about what might happen if those who have taken out loans have some difficulty in repaying them.
Therefore it is vital that we are absolutely sure that we shall be purer than pure on the question of protecting civil liberties, both in the collection of debt and dealing with defaulters. My reason is that any fears that lists of students who have loans will be given to any other body will get round very fast. It could act as a further disincentive to some students. Any fears that the individual's privacy

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might be jeopardised could also affect access. So we need safeguards on confidentiality.
However, I also think that we need safeguards on the whole subject of what we do when people fail to repay. The document, Top-up loans: rules and procedures, sets out what will happen to secure repayment in the case of default. Let me quote from that document which says:
"to secure repayment:
i. persuasion, backed by warning of credit blacklisting and of litigation, leading ultimately to attachment of earnings, seizure of goods, charge on fixed property.
ii. transfer of debt to debt collection agencies for recovery at agency's discretion".
I accept that it will be necessary to instigate procedures for repayment where students have failed to repay. It may be that the noble and learned Lord, Lord Hailsham, is quite correct to say that there is no threat to liberty. But I shall be very grateful for some clarification in the light of what I have just quoted from the rules and procedures document.
These amendments seek to ensure that we set out clearly in the Bill acceptable mechanisms to protect individuals being pursued for debt relating to their loan with respect to their civil liberties. I support the amendments.
The Earl of Caithness: As I understand these amendments, they seek to ensure that the Student Loans Company, and any companies to which it sub-contracts, will act in accordance with the requirements of the Data Protection Act 1984. The Student Loans Company will, like any other organisation holding data, be subject to the Data Protection Act 1984. The Act both protects the individuals— which is very much a concern of all Members of the Committee— while recognising the importance of controlling the exchange and use of personal data. It is there covered in an Act which Parliament has already approved.
Borrowers under the student loans scheme will be entitled to exactly the same protection as they would if they were borrowing from any lender in the commercial sector. The loans company may hold personal data only if it is registered under the Act, and may only use the data for registered purposes. Data may not be disclosed without the authority of the individual to whom the information relates; and an individual is entitled to a copy of any data held relating to him by a data user, on payment of a fee.
Provided that the company acts in accordance with the Data Protection Act 1984 it is entirely appropriate that it should be able to pass details of defaulters to debt collection agencies, in keeping with normal commercial practice. There may be some graduates who, despite earning a respectable salary, wish to ignore their obligation to repay their debt. I am sure that the Committee would agree that such defaulters should be pursued with all the conventional commercial means.
The company and any companies to which it subcontracts are required under the Data Protection Act to take appropriate security measures to protect personal data.
16
The Student Loans Company will also need the option of passing information to credit reference agencies. It is quite wrong that those who renege on a debt to the taxpayer should be able to borrow further money from respectable lenders, without the lenders being able to ascertain that they are unreliable. It would also be unfair on other would-be borrowers who would enter into loan agreements in good faith. The threat of being blacklisted will be a powerful and wholly legitimate inducement to borrowers to meet their obligations.
That is why these amendments, and in particular Amendment No. 34A moved by the noble Earl, Lord Russell, together with Amendments Nos. 39C, 39D, 39E and 49, are unnecessary. They seek merely to oblige the Student Loans Company to comply with an existing statute by which it will be bound in any case.
I turn now more particularly—
Lord Peston: Perhaps I may interrupt the noble Earl. I think it would be useful if we clarified this point simply so that we understand the Government's position. I should like to ask him again whether I understood him correctly to say that the Student Loans Company will be just like any other company offering loans to the personal sector— I think those were the words that he used— and would operate just like any other company.
So in a sense there is nothing special about student loans at all. That is what he is arguing. Indeed there is nothing special about students and, putting this matter in context, there is nothing special about the fact that what we are doing is helping to finance higher education. Is that precisely the impression that the Government wish to create about the Bill and its consequences? If so, I think that that is extremely serious in terms of the judgments that many people will make about what the Government are up to.
The Earl of Caithness: There is no wish on the Government's part to put the Student Loans Company in a different situation from that of any other lending agency. The noble Lord went on to talk about student loans. Of course they are different from commercial loans. They are arranged on a very generous basis. They are granted to all students who wish to take them up irrespective of a means test. It puts them in a different category from other loans.
That brings me to another point made by the noble Lord. I wish to make the position absolutely clear. We are talking here about a company that the Government are setting up which by law will be required to comply with the Data Protection Act 1984. That is why the amendments which I have just been addressing are unnecessary.
Lord Taylor of Blackburn: I rise because I thought that the noble Earl was about to depart from this subject and go on to the next part of his reply. One of the things that he said was that the information would be available subject to a fee. Does he have any idea of what that fee would be?
The Earl of Caithness: I think I am right in saying that it will be a fee not exceeding £ 10. Perhaps I could come back to the noble Lord, Lord Peston. In view of what I said, there is no need for reassurance from me or from the person who heads the Student Loars Company. It is there in the legislation. That is where the noble Lord ought to seek the reassurance that he wants.
I turn to Amendments Nos. 47B and 49C. There is perhaps a small misunderstanding that needs to be corrected. These amendments state that a person would have a liability, for example, to the Student Loans Company:
"by virtue of having qualified for a loan".
That is incorrect. A person will not have a liability to the company by virtue of having qualified, i.e., being eligible for a loan, but only if he proceeds to take out a loan. That is the option that a student has, without a means test, to take out a loan if he or she so wishes.
In so far as the amendment would apply to data held electronicially, it is unnecessary for the reasons that I have already given. However, my noble friend Lady Carnegy of Lour was absolutely right to bring to the Committee's attention the question of information that is held manually. As I am sure the Committee is aware, such data is not covered by the Data Protection Act.
The Government do not believe that the Student Loans Company should be subject to restrictions to which other perfectly respectable private sector companies are not subject. The Student Loans Company will be providing credit to eligible students on very favourable terms. It would be quite wrong to impose a host of restrictions on its activities to which other lenders are not subject. The company will have to provide access in accordance with the provisions of the Data Protection Act. That Act provides important and, we believe, sufficient protection.
I go on to deal with the important point raised by my noble and learned friend Lord Hailsham. He was absolutely right to say that the noble Lord, Lord Peston, was wrong in thinking that a debt of this kind could lead to imprisonment. My information is that it cannot. It is a civil debt and can be pursued through the normal means but not through imprisonment. But I await the definitive answer on that. I think that my answer is in accordance with the views of my noble and learned friend.
Baroness Seear: Before the noble Earl sits down, in view of what he has just said and his admission that manual records are not covered by the Data Protection Act, perhaps I may ask him whether that means that manually held records of students' loans could for example, be sold for mail order purposes. Is tha: what it means? Could we have an answer yes or no to that question?
The Earl of Caithness: I should want to be absolutely certain before I gave a yes or no to the noble Baroness. Quite obviously I do not wish to mislead the Committee. The Student Loans Company would be in no different a situation from
18
any other respectable lending agency. I pick up here the point made by the noble Baroness, Lady Blackstone. She talked about loans in general. As many Members of the Committee know, students at the moment have loans. A great many of them already have overdrafts in the commercial sector through normal lending agencies such as banks or companies which operate credit cards. The Bill provides a loan to the student on much more favourable terms than he has been able to receive so far. The borrowing of the loan is entirely voluntary. The Studnet Loans Company Limited is a body where the data which are electronically held will be subject to the Data Protection Act and with regard to other information will be in no worse and no better a situation than agencies from which students are borrowing at the moment.
Lord Stallard: I am not a lawyer. Will the noble Earl clarify this point? He mentioned civil courts procedure for the repayment of loans. Could there not come a stage in the procedure where the student could find himself in contempt of court, for which offence he could be imprisioned?
The Earl of Caithness: As the noble Lord, Lord Stallard, knows, I am no lawyer either. I wonder whether my noble and learned friend can help. Otherwise I shall obtain a definitive answer for the noble Lord.
Lord Peston: Perhaps I may thank the noble Earl for the response to some of my questions. I am still puzzled by the prison question. I should like to be assured that no question of imprisonment arises. Perhaps we ought to wait for a definitive statement on that which the noble Earl may give us at some other time.
I do not wish to take us away from the issues of confidentiality and so on— they are very important. However, I am genuinely concerned at the concept that the Student Loans Company Limited is being portrayed to us as just like any other loans company and therefore requiring no special restraints on how it behaves. We are talking about 18 year-olds at a very impressionable and exciting time of their lives. They are extremely unlikely to think through the consequences of involving themselves with loans, especially as the Government are vigorously telling them that loans are the right thing for them to have.
I do not wish to become involved in the moral issues of whether it is right for the Government to tell 18 year-olds, "We think it highly desirable for you to go into debt at this stage for your maintenance". Some Members of the Committee have expressed doubts about it; others are less concerned; but it is not a trivial matter. However, will the noble Earl reflect on this? The Government's position with regard to default, as has been stated, is that it is just a loans company which lends money to people and will then pursue them to the very ends of their resources in due course to obtain its money back. Perhaps I may put this point. It is not obvious to me, even though it is the taxpayers' money, that the taxpayers would wish the Government to take that line. The noble Earl may care to reflect on that.

19
I do not know whether any of our banking friends are in the Chamber today. On the whole, the banks do not go out of their way to emphasise the vigour with which they will ill treat their customers, in particular when they are 18. As a public relations exercise, I should have thought that the approach of the noble Earl might be more temperate. Noble Lords may feel that that is a slightly frivolous point. However, we ought not to forget that we are talking about lending money to 18 year-olds where the consequential debits are many years ahead and can concern very large sums of money indeed.
The Earl of Caithness: Of course I shall reflect on what I have said. I am sure that the noble Lord, in his normal way, will reflect on what I have said when he reads it in the Official Report. I am sure that that is the right thing to do.
I was a little surprised by what he said. I know full well that if I did not give the information that I have given the Committee, I would be accused of not giving the full information now. Because I have given the full information, I am accused of frightening off potential clients of the Student Loans Company Limited. When one takes a loan from a bank or takes on a credit card, one is advised to read all the small print. There is quite a lot of it. Perhaps some people do not read the small print with the care that they should. With the help of the Committee, I am making absolutely certain that that small print is spelt out clearly so that it is clear exactly what we are doing. We are not obviously trying to put students off. We believe that it is beneficial to higher education and the numbers going into higher education. But it would be quite wrong for me to hide anything that we propose to do.
Baroness Seear: The Minister refers to reading the small print. Would it not have been a good idea to put more of that into the Bill?
Baroness Young: My noble friend has given us a lot of very useful information in the remarks that he has just made in answer to the noble Lord, Lord Peston, and the noble Earl, Lord Russell. Between now and the next stage of the Bill, would he also consider the anxieties that have been expressed? I felt that his answer on the question of confidentiality went a long way to meet fears on that point. He was quite right to say to the noble Lord, Lord Peston, that he could not have it both ways. One cannot ask for information and then complain when one has the information, as if the Student Loans Company Limited was going to behave in some improper way.
Lord Peston: I am not objecting to the fact that I was answered. I did not like the answer, as the noble Baroness is well aware.
Baroness Young: Perhaps I may complete what I was going to say. It is a very important point. My noble friend has quite properly explained the scheme. That is very helpful to the Committee. If I have understood him correctly, he stated that the Student Loans Company Limited will act as a responsible lending authority. One of the concerns
20
that lies behind this issue is that all of us nowadays are deluged with information about borrowing money. The number of organisations that seem to want to lend money is quite extraordinary. I do not believe that all of us would regard them as always responsible in the sense that my noble friend means.
Perhaps he can give us a closer definition. Will it behave as the clearing banks would behave? That may well be what he has in mind. If so, perhaps he can say so; or can he assist us with more information? I do not expect an answer this afternoon because he will wish to consider it. But we do not want a position where the Student Loans Company might act in the way that an irresponsible lender would act. That is what we wish to avoid. It would therefore be helpful to know how the Government see this matter.
Lord Hailsham of Saint Marylebone: I do not wish to bully my noble friend about this, but there is a point about which I should like a little more precision than I have had in my own mind.
I understand perfectly what he said about the difference between manually obtained information and protected information. We passed an Act about three or four years ago. I understand that perfectly. I should like to know this. I have a bank and, like all banks, it can lend me money on overdraft or whatever. But it owes me a duty of confidentiality. That is to say, although there are many people from whom I obtain goods on credit— for instance, I buy by post because I am unable to walk about— who undoubtedly sell the information they have about me, which leads other people to pester me with junk mail, they owe me no duty of confidentiality. I brought it on myself. I do not complain. That is perfectly all right.
However, when my noble friend can give the information, I should like the clear understanding from him that the relationship between the Student Loans Company and the borrower is analogous to the duty which a banker owes its customer and that there is therefore the same duty of confidentiality towards the student borrower as is owed by the bank to its customer. I do not think that it was absolutely plain from his answers that that was so, because whereas the bank was in a purely contractual relationship with me, and the relationship of the banker and customer is perfectly well established by law, this is a statutory body. There must be a contractural relationship or the loan would not be granted. But does it give rise in addition to a confidential relationship in respect of manually obtained data?— that is, the company would not be free, as an ordinary salesman by post is free, to publish what is known about me; for example, how extravagant and stupid I am, and so on. It would have to keep what it knows about me with the same confidentiality as between a banker and his customer.
If young men or young women of 18 borrow money and at a later stage do not repay it, they can be taken to court in the ordinary way for non-payment of debt. There can be bailiffs and judgment summonses, as they are called, when the man is interrogated as to his means. There are also attachments of earnings. That is the sort of information which I should like.

21
I had assumed from what my noble friend said that when the time comes for repayment, there will be the ordinary court procedures but they will be limited to those: of a civil debt and not to any special category of debt like a secured debt or something protected by the criminal law.
I do not want to bully my noble friend into giving instant answers to complicated questions. The recovery of loans is a complicated sphere of law and I should not dream of trying to deliver a lecture on it without looking up the books. However, I hope that ray noble friend has my point.
Baroness Faithfull: I should like some clarification. Is it certain that there is no relationship between the Student Loans Company and the universities?
The Earl of Caithness: There will be a relationship of some sort between the Student Loans Company and the universities, otherwise the Student Loans Com] 5any will not know who are the students. There has to be some connection. If my noble friend Lady Faithfull would like more information, I shall deal with that separately.
I was grateful for what my noble friend Lady Young said. I understand the anxieties of the Committee. I know that some Members of the Committee have children at university. I have not yet reached that stage, but my children may go there. Therefore I have equal anxieties. I wish to see that the anxieties of the Committee are nullified.
My noble and learned friend raised a most important point which I should wish to study in detail before I come back to him. However, subject to what I said about defaulters, I understand that the names will not be disclosed to third parties without the knowledge or consent of the individuals concerned, and that the Student Loans Company will be under the same duty of confidentiality as a bank and will treat data, regardless of whether it is computerised or manual, with equal care.
Lord Beioff: While the Minister considers this matter further, will he understand why there is so much anxiety about having something written on to the face of the Bill? He appears to have overlooked the fact that in Committee in another place it was suggested by the Minister that the Student Loans Company might be sold. Indeed, it was suggested that one of its assets would be the information which it had.
I am well aware that after pressure from other Members of the Committee in another place, that suggestion was withdrawn. However, the fact that that suggestion was made at all explains why many Members of the Committee are particularly worried about confidentiality, especially in view of the fact that the Data Protection Act does not extend to written records. Therefore, if the Student Loans Company puts everything on paper and then puts up its assets for sale, that would be something which many of us would find wholly deplorable. I ask the noble Earl to take that into consideration because that has not so far been mentioned in our discussions.
The Earl of Caithness: I did not overlook what had gone on in another place. Indeed, I read that with great care. I hope that my noble friend will not overlook what I said about the Data Protection Act for records which are held on computers, or indeed, what I said subsequently about records held manually.
Baroness Seear: The point about manual records is very important. The noble Earl said that the same rules will apply to written records as to computerised records. However, as I understand it, that is not in the Data Protection Act and is not written on the face of the Bill. Therefore, the only guarantee which we have is what the noble Earl has said; but that is no guarantee at all when one comes to a court of law. The noble Earl believes that and wants that to happen; but if it is not in the Data Protection Act or written into this Bill, then there is no protection.
Baroness Fisher of Rednal: Can the noble Earl comment on what is the Student Loans Company? According to the press today, a vacancy for a general manager is being advertised with a suggested salary and a car. Two persons who will be part of that company are a senior civil servant and perhaps a lesser civil servant. So there will be the general manager with the fantastic salary and car and two or three other people. Can the noble Earl tell us what is the Student Loans Company?
3.45 p.m.
The Earl of Caithness: I fully understand the anxieties of the noble Baroness, Lady Seear. I should like to make certain that I have given the answers to her points, and that there have been no contradictions. I know that there is a difference between what is held on computer, which is covered by the Data Protection Act, and that which is not so covered. I made that clear. However, I said that both would be treated with the same care. The same confidentiality applies to the Student Loans Company as to banks.
I understand the anxieties of the Committee. That aspect is something which I should like to look at again between now and another stage. I am sure that all Members of the Committee would like to read what I said. I hope that I have covered most of the points and I shall elucidate further should any Member of the Committee so wish it.
As regards the point made by the noble Baroness, Lady Fisher, I went into some detail about the Student Loans Company last Monday; but unfortunately I do not have the Official Report of that debate with me. I went so see the Student Loans Company in Glasgow. Perhaps I can write to the noble Baroness more fully on the points which she raised.
Lord Jay: Can the Minister make one fact perfectly clear? He said, as regards the manually-held data, that that would be treated with the same confidentiality as would a loan from a bank. Is that on the face of the Bill or is he merely asking us to accept that from his verbal statement?
The Earl of Caithness: That is one of the points on which I wish to be clear.
Lord Boyd-Carpenter: When my noble friend studies this matter, as he has been good enough to say that he will in the light of the anxieties expressed from all quarters of the Committee, will he particularly direct his mind to the following situation? When a student has taken his degree, he starts applying for jobs. Knowing, as a future employer will, that this legislation, if it passes, is in force, the prospective employer may be anxious as to whether he is taking on a man subject to a substantial debt liability. There are a number of jobs where an employer is rightly anxious, and he will not employ someone who is in debt and subject to all the obvious pressures and difficulties which being in debt may produce.
Can my noble friend say whether, either at present or when he has looked into the matter further, it will be quite clear that a prospective employer will not be able to approach the Student Loans Company and ask whether, in respect of the graduate whom he is about to employ, there is a debt and how much is still outstanding?
The Earl of Caithness: I shall certainly look into that. However, I know that my noble friend will be the first to acknowledge that there are many students at university at present who are in debt because they have overdrafts or have built up borrowings on an Access card or another form of credit card. The significant difference, which I know my noble friend will wish to take on board, is that we are not asking the student to pay back the loan, as he would do at present. If a student takes out a loan now he starts to repay from day one. We do not ask students to repay the loan. We are asking graduates to repay the loan and not until nine months after the course has been finished and not until an income is received, which is 85 per cent. of the national average wage; that is, £ 11,500.
Then we have to look at the loan. At the moment the loan will be something in the region of £ 400. That is what we shall ask the student to repay. That equates to £ 8 a week out of a salary of £ 11,500. That puts into context what we are asking of students, or what we are offering students. It is up to the student whether to take it up. If, as they do at the moment, they prefer to take on commercial credit on commercial terms, then my noble friend is faced with exactly the same dilemma as he posed to me just now.
Lord Boyd-Carpenter: With respect, my noble friend has the point wrong. A prospective employer does not know whether a student today has or has not borrowed any money commercially from a bank but he will have a very good idea once the Bill is law that the former student whom he is about to employ has a debt. That is the great difference.
The Earl of Caithness: I am not so sure that I see it as my noble friend does. However, I gave him the assurance— and I repeat it— that I shall look into the specific point he raises. But as so many students
24
have debts at the moment I think that what he is hypothesising is the same as the situation which exists now.
Lord Cockfield: The essential point here is one of confidentiality. The point which my noble friend Lord Boyd-Carpenter is making is that if an employer goes to a man's bank and asks if he has an overdraft the bank must not reply. My noble friend is asking whether, if the student goes to the loans company, the loans company will be enabled to reply. This point is crucial.
There is a further matter. I should be grateful if my noble friend could also look at the first reply he gave in his first intervention and compare it with some of his later replies. In his first intervention he appeared to be defending— I am not saying that he was defending— the right of the loans company to sell information to other commercial operators in the debt field. He said that it was only right that these other people should know whether the student had defaulted. A bank will not provide information of that kind to other creditors.
The Earl of Caithness: I absolutely understand the two points made by my noble friend. I have said on previous occasions this afternoon, and I repeat it now, that those are the points, among others, which I shall be considering.
Earl Russell: Perhaps I may first say something which I think I may say without infringing Standing Orders. I am aware that I have something of a cold today which occasionally leads to coughing. Should that incommode the House I would of course withdraw until it was over. I hope that is understood in the spirit in which it is meant.
I should like to congratulate the Minister on having made the best of an extremely bad brief I should not like to congratulate those responsible for the brief The brief has not included answers to a good many of the vital points contained in these amendments. It has attempted instead to raise the issue of reneging on a debt to the taxpayer. I hoped I had made it plain that it was no purpose of any of the amendments to encourage any attempt to renege on a debt. It is, though, a matter of legitimate concern that attempts should be made to recover the right sums from the right people and without any unnecessary sacrifice of civil liberties in the process. We have not had any real answer to the point about access to records. That, to me, was one of the important points in these amendments. Without access there is no way in which error can be checked, and without checking error there is no way in which there can be any redress against that error.
I was also a little taken aback by the Minister's argument that the loan is voluntary. In a purely technical sense that is no doubt so, but the Minister is, I am sure, familiar with the concept of the captive market. This sense of the voluntary reminded me of Thomas Hobbes's argument that the man who jumped out of the top floor window of a burning building was quite free not to. If one did not have the money available from one's family there is no way one could go to university without taking one

25
of these loans. The voluntary element, though I concede it exists, is minimal. That creates some difference between this and other commercial debts.
The point about manual records is vital. It makes it the more important that we have had no answer to the point in the amendments about the destruction of records. It seems that the Government are on a fork here. Either they have only the computer record, in which case it is vulnerable to destruction, or they have a manual backup, in which case the assurances about the Data Protection Act, though I warmly welcome them and heard them with great pleasure, are not sufficient to meet the case in hand. If there is also a manual record, that manual record enjoys no protection under the Act.
I am grateful to the noble Lord, Lord Beloff, for reminding us what the Parliamentary Under-Secretary of State said about this in the other place. I was unable to lay my hands on the quotation before speaking and did not use it. But that reminds the House that these issues have been before the Government for quite some time. The brief which has come back to us has not convinced me that they have yet received sufficient attention. I cannot see now how any resources can be made sufficient unless by being written on the face of the Bill. I commend the amendment to the Committee.
3.56 p.m.
On Question, whether the said amendment (No. 34A) shall be agreed to?
Their Lordships divided: Contents, 110; Not-Contents, 126.

DIVISION NO. 1

CONTENTS

Addington, L.

Graham of Edmonton, L. [Teller.]

Adrian, L.

Allenby of Megiddo, V,

Grey, E.

Attlee, E.

Hampton, L.

Aylestone, L.

Harris of Greenwich, L.

Beloff, L,.

Hayter, L.

Birk, B.

Henderson of Brompton, L.

Blackstone, B.

Hirshfield, L.

Blyth, L

Houghton of Sowerby, L.

Bonham-Carter, L.

Hunt, L.

Boston of Faversham, L.

Hylton-Foster, B.

Bottomley, L.

Jay, L.

Brooks of Tremorfa, L.

Jenkins of Hillhead, L.

Bruce of Donington, L.

Jenkins of Putney, L.

Buckmaster, V.

John-Mackie, L.

Carmichael of Kelvingrove, L.

Kearton, L.

Kennet, L.

Carter, I.

Kilmarnock, L.

Cledwyn of Penrhos, L.

Kinloss, Ly.

Cocks of Hartcliffe, L.

Kirkwood, L.

Congleton, L.

Leatherland, L.

Dacre of Glanton, L.

Listowel, E.

Darcy (de Knayth), B.

Llewelyn-Davies of Hastoe, B.

David, B.

Davies of Penrhys, L.

Lockwood, B.

Dean of Beswick, L.

Longford, E.

Donaldson of Kingsbridge, L.

Lovell-Davis, L.

Dormand of Easington, L.

McGregor of Durris, L.

Ennals, L.

Mackie of Benshie, L.

Ewart-Biggs, B.

Mais, L.

Ezra, L.

Masham of Ilton, B.

Fisher of Rednal, B.

Mason of Bamsley, L.

Flowers, L.

Mayhew, L.

Gallacher, L.

Milner of Leeds, L.

Galpern, L.

Milverton, L.

26

Mishcon, L.

Shaughnessy, L.

Molloy, L.

Shepherd, L.

Morton of Shuna, L.

Sherfield, L.

Nathan, L.

Simon of Glaisdale, L.

Nicol, B.

Stallard, L.

Northfield, L.

Stedman, B.

Ogmore, L.

Stoddart of Swindon, L.

Peston, L.

Strabolgi, L.

Phillips, B.

Taylor of Blackburn, L.

Pitt of Hampstead, L.

Taylor of Gryfe, L.

Ponsonby of Shulbrede, L.

Thomson of Monifieth, L.

Porritt, L.

Thurlow, L.

Prys-Davies, L.

Tordoff, L, [Teller.]

Ridley, V.

Turner of Camden, B.

Ripon, Bp.

Underhill, L.

Roskill, L.

Wallace of Coslany, L.

Russell, E.

Walston, L.

Sainsbury, L.

Walton of Detchant, L.

Seear, B.

Wedderburn of Charlton, L.

Seebohm, L.

Williams of Elvel, L.

Serota, B.

Winterbottom, L.

Shackleton, L.

NOT-CONTENTS

Alexander of Tunis, E.

Hooper, B.

Allerton, L.

Ingrow, L.

Annaly, L.

Johnston of Rockport, L.

Arran, E.

Joseph, L.

Auckland, L.

Kaberry of Adel, L.

Balfour, E.

Killearn, L.

Beaumont of Whitley, L.

Kinnaird, L.

Belstead, L.

Kitchener, E.

Bessborough, E.

Layton, L.

Birdwood, L.

Long, V.

Blake, L.

Lovat, L.

Blatch, B.

Lyell, L.

Boardman, L.

McColl of Dulwich, L.

Borthwick, L.

Mackay of Clashfem, L.

Boyd-Carpenter, L.

Manton, L.

Brabazon of Tara, L.

Margadale, L.

Brougham and Vaux, L.

Marsh, L.

Butterworth, L.

Marshall of Leeds, L.

Caithness, E.

Mersey, V.

Campbell of Croy, L.

Mountevans, L.

Carnegy of Lour, B.

Mountgarret, V.

Carnock, L.

Mowbray and Stourton, L.

Cawley, L.

Munster, E.

Cockfield, L.

Nelson, E.

Cottesloe, L.

Norfolk, D.

Cox, B.

Norrie, L.

Davidson, V. [Teller.]

Nugent of Guildford, L.

Denham, L. [Teller]

Oppenheim-Bames, B.

Dilhorne, V.

Orkney, E.

Donoughmore, E.

Orr-Ewing, L.

Downshire, M.

Pender, L.

Eccles, V.

Peyton of Yeovil, L.

Effingham, E.

Platt of Writtle, B.

Elliott of Morpeth, L.

Pym, L.

Erne, E.

Quinton, L.

Erroll of Hale, L.

Rankeillour, L.

Faithfull, B.

Reay, L.

Ferrers, E.

Renwick, L.

Eraser of Carmyllie, L.

Rodney, L.

Fraser of Kilmorack, L.

Romney, E.

Gainford, L.

St. Davids, V.

Goold, L.

St. John of Fawsley, L.

Gray of Contin, L.

Saint Oswald, L.

Gridley, L.

Sanderson of Bowden, L.

Haddington, E.

Savile, L.

Haig, E.

Selkirk, E.

Hailsham of Saint

Shannon, E.

Marylebone, L.

Skelmersdale, L.

Harmar-Nicholls, L.

Somers, L.

Harris of High Cross, L.

Stockton, E.

Havers, L.

Strange, B.

Henley, L.

Strathcarron, L.

Hesketh, L.

Strathclyde, L.

Hives, L.

Strathcona and Mount

Holdemess, L.

Royal, L.

Home of the Hirsel, L.

Strathmore and Kinghorne, E.

Hood, V.

27

Strathspey, L.

Vaux of Harrowden, L.

Swansea, L.

Westbury, L.

Swinton, E.

Whitelaw, V.

Teviot, L.

Wigram, L.

Thomas of Gwydir, L.

Wise, L.

Thomeycroft, L.

Wynford, L.

Trefgame, L.

Young, B.

Ullswater, V.

Resolved in the negative, and amendment disagreed to accordingly.
4.5 p.m.
Lord Peston Lord Peston moved Amendment No. 34B:
Page 3, line 35, at beginning insert ("subject to sub-paragraph (A1A) below").
The noble Lord said: In speaking to this amendment, with permission I shall also speak to Amendment No. 42C. Once again we are in the broad area that concerns us about the nature of the Bill. Regretfully, one has to make exactly the same kind of argument, the central plank of which is that such an important Bill, at least for students and for higher education in general, should not proceed in this bizarre way based solely on regulations. One must keep pressing, as it were, for the substance to be placed on the face of the Bill.
We have just failed, though not by a very large margin, to move in that direction on the previous amendment. One makes no apology, therefore, for again making the same point. The essence of what we are referring to in these amendments is contained in Amendment No. 42C. Amendment No. 34B simply leads us into that amendment. Essentially, as the noble Earl, Lord Caithness, pointed out, the Government do give information. Sometimes the Government volunteer that information and sometimes it is given in response to questions and to deal with anxieties.
The information set out in my amendment has been given by the Government and refers to what they propose by way of loans, as I understand the position, in the first full year under the London rate, the elsewhere rate and for students living at home. The Government have also made clear their view that final year students should have their loans docked somewhat because it is assumed that the final year is not a full academic year.
The numbers are the Government's numbers; unless I have written them down incorrectly, and I am sure noble Lords know that I am perfectly capable of doing that. They are in the amendment simply to persuade the Government that the time has come for them to specify at least the start position for the regulations.
Perhaps I may make one other comment which I do not say in a mean spirit. The noble Earl and others have often referred to the repayments as £ 8 per week. I know that the noble Earl would not willingly or consciously mislead the Committee but £ 8 per week is simply the repayment for the first loan of the first year of the scheme. The scheme announced by the Government builds up through time until eventually half of the student maintenance is in the form of a loan. As that is the scheme when it is fully operational and as in broad terms— at the moment I use broad terms— we are talking about
28
£ 3,000 a year, the relevant sum that we should be bearing in mind when discussing repayments, student indebtedness and so on, is £ 1,500 a year, or £ 30 a week. The repayment of £ 8 per week is purely a transitional amount for this coming year. Here again I repeat the point I made a few moments ago. I do not complain to the noble Earl for making clear what the Government propose to do; but they are proposing to offer a loan equal to half of the standard award. Unless I do not understand the position correctly, that is £ 1,500 a year.
The amendment I have tabled is simply the opening shot. It relates to the very first year. However, I have taken the opportunity to clarify the true nature of the indebtedness as it builds up. My main complaint is not the numbers but the principle of asking the Committee to proceed all the time with this parallel approach; the approach of the Bill which relates to regulations and contains no substance and the approach of all the other documents and speeches in which the substance is to be found. As I understand it— the Committee will be aware that I am a complete tyro on these matters— nothing said outside this Chamber and none of those documents carries the weight of law. The only matter which carries the weight of law is that which appears on the face of the Bill. I have tabled this amendment and other Members of the Committee have put down similar ones. All seek to make much the same point; namely, that if Her Majesty's Government believe in what they are saying, they should themselves put these amendments on the face of the Bill.
Lord Harmar-Nicholls: I wonder what kind of answers we expect from the Government Front Bench on some of these amendments. This matter has been drawn to my attention by the attitude which the Committee has adopted. Perhaps I should modify that by referring to the attitude adopted by the noble Earl, Lord Russell, on the last amendment. Very pertinent points were made concerning it and my noble friend answered them very clearly. He said that he had given answers clearly as he saw the issue, but that there were still matters of doubt and issues that needed to be looked at. He said that he would look at them and come back at a later stage.
One could not have a more categorical promise that he would look at the matters to see whether there was any weight at all in the arguments put forward by Members of the Committee on that amendment. We are at Committee stage. As I understand the workings of this Chamber, when one receives such a clear offer— namely, that the Government intend to clarify what they have said and knowing that there are other stages of the procedure when we can return to these matters if we are unhappy with the current situation— then the matter can be dealt with at a later stage.
What happened with the last amendment could very well happen in respect of the amendment under discussion. Though the categorical offer was made to look at the issues, and though it was known by the noble Earl, Lord Russell, that there would be other opportunities at a later stage to either accept or reject whatever conclusion the Government came to, he pushed the amendment to a vote. That meant

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that we spent 10 minutes walking through the Lobbies. That 10 minutes should have been spent examining what really matters in this Bill. In another place if the Front Bench say that they will look into a matter and they accept the validity of the points made, there are rules to prevent that particular issue being pushed to a vote. In this Committee I gather that we have no such rules.
My noble friend said that he would look at the matter sympathetically and bring back an answer. Does the fact that the amendment was pushed to a vote, and that the Committee did not agree with the noble. Earl, Lord Russell, mean that my noble friend is absolved of his offer to look at the issue, and that he is no longer under the obligation that he would have been without the vote?
Lord Boyd-Carpenter: No.
Lord Harmar-Nicholls: Is my noble friend under an obligation to give the Committee the information that it needs? When considering intricate matters such as those concerned with this Bill, if we are not careful we shall be destroying our procedures. That would not be in the best interests of good government.
The Earl of Longford: I do not know whether many noble Lords have been here longer than I, but it seems a long time. The doctrine that is being expounded by the noble Lord is new. He speaks with authority of another place though I never managed to make my way there. It would be unbelievable if noble Lords in this Chamber were silenced, and were told that they could not go into the Lobby because a Minister has said that he will look at an issue again. That would be so unlike this Chamber that I am sure no one would swallow that measure for one moment.
4.15 p.m.
Earl Russell: I am grateful to the noble Earl, Lord Longford, for what he has just said. He has been here a great deal longer than I. As I understand it, this is a free Parliament. A noble Lord who decides whether to call a Division has to use his judgment as to whether or not the Committee will like it. We have heard assurances before, and some of them were more categorical. Last week we heard assurances concerning affirmative resolutions, and those assurances were far more categorical. I believe that it is parliamentary practice that a noble Lord retains the right to be unsatisfied by assurances quite as much as the noble Lord, Lord Harmar-Nicholls, retains the right to be dissatisfied with my dissatisfaction.
Lord Peyton of Yeovil: I wish to make clear one point arising from what my noble friend Lord Harmar-Nicholls has just said. I am making no judgmemt on whether it was right or not to call the Division. I voted for the Government on the basis of the undertakings given by my noble friend. I very much hope that he will not run out on it because his undertaking will be very useful. I always find his undertakings very helpful. Without them, I might
30
have stayed in my place or even strayed into another Lobby altogether. When my noble friend comes to wind up, I hope that he will honour those undertakings.
There are two matters I wish to raise concerning this amendment. When I was in another place and we had Labour administrations, in my view they often erred in thinking that they could not be wrong. They knew the answers to every difficult question, and they believed that they should be given carte blanche to do what they thought fit without giving Parliament the details. I recall that I felt very strongly on those matters. I remember dealing with them at some length, but I have no intention of doing so this afternoon.
I hope that my noble friend will at least consider very carefully putting more detail before the Committee than is presently available, and before the next stage of this Bill is reached. I find it very difficult to follow the assumptions, which are sometimes lightly made by Ministers, that they know best and that they had better be left to take powers and exercise them as they think fit.
Lord Boyd-Carpenter: I agree very much with my noble friend Lord Peyton about forcing a Division on the previous amendment regardless of the very full assurances which my noble friend on the Front Bench had given. The noble Earl, Lord Russell, is right in saying that technically in this Chamber one is free to force a Division whenever it is thought right and sensible. I hope that he will consider whether it is sensible. We are at Committee stage and at the close of the debate the Minister concerned promised further consideration of the points raised. In those circumstances, one is at least doing something contrary to the spirit of that approach if a vote is then insisted on and the Committee rejects the amendment. That may well condition my noble friend the Minister to be less agreeable to the propositions that were put than he otherwise would be.
I shall be very distressed if that were to be so. My position is exactly the same as that of my noble friend Lord Peyton. If it had not been for the assurances given, I should have voted for the amendment tabled by the noble Earl, Lord Russell. The full assurances given cover the whole area, and because of those assurances we shall have an opportunity at a later stage to consider the matter. In those circumstances, it seemed utterly wrong to call a Division and was an error of judgment. Perhaps the noble Earl will allow me to say that it was almost an error of taste for him to do so.
I have sufficient confidence in my noble friend Lord Caithness to know that he will not allow the fact that a Division was called to cause him to go back at all on the undertakings that he gave. It is unnecessary for him to say that because those of us who know him are perfectly sure that he will honour those undertakings. The noble Earl, Lord Russell, was within his rights to call a Division, but I believe it was a great misjudgment.
If I am not out of order, I now come to the amendment which is before the Committee. As an opponent of the scheme for student loans, I certainly

31
would not support it. It proposes to fix, by statute, the opening figures of a scheme which I do not like. I have made that clear to the Committee before, and I shall not weary it by repetition. Surely it is inconsistent with that view solemnly to ask Parliament to vote into the Bill certain firm figures. That would be arguing support for a loan scheme which I am not prepared to give. Nevertheless, I agree with the general proposition put again by my noble friend Lord Peyton that the Bill is rather a skinny framework and that a good deal more of what the Government intend to do under it could well and profitably be inserted into it. If there is a Division, the only reason that I shall vote against the amendment is that I do not want to put these or any other figures into the Bill.
The Earl of Caithness: Perhaps I may say something at this stage in view of what has been said. I agree that the noble Earl, Lord Russell, had every right to call a Division if he so wished. I was more than just a little surprised that he did so in view of the categorical assurances that I had given; but that was the noble Earl's wish. The Committee decided, and that is the end of the matter. However, I shall stick by the assurances that I gave despite the fact that we had a vote.
Lord Addington: I shall return to the amendment. As many noble Lords have said, there is very little information in the Bill. Many amendments which try to put in some information have been tabled. Students and their parents should know what the starting figure is to be. They should know roughly on what terms the student loan scheme will operate. They should know what they are getting involved in. On those grounds alone we should have something in the Bill that will tell us what will happen. That information should be in the Bill, because it is the Bill that counts, as has been pointed out before. On those grounds alone I support the amendment. Unless we have firm information, we are merely saying, "Yes, get on with it", in the hope that something certain comes back at the end.
Baroness Blatch: I cannot agree with the noble Lord, Lord Addington, that there has been little or no information about the Bill's details. My noble friend the Paymaster General has given considerable information during the Committee stage, on Second Reading, and in the papers that preceded the Bill coming to this place.
The amendments are similar to Amendment No. 36 which has been tabled by the noble Earl, Lord Russell. As has been explained to the Committee, we do not believe that the loan terms should be set out in the Bill. This place will have the opportunity to debate the regulations under the affirmative resolution procedure when the scheme is established.
The size of the loan facilities in the first year will be set in those regulations and debated at that time. We made clear in the White Paper what the size of the loan facilities will be, and so there is no need to fix them in the Bill.
I also assure the Committee— we have made this point clear previously— that we intend that the
32
full-year rate of loan will be available for students on postgraduate certificate of education courses. We intend the loan to be proportional if the course runs part way into the acadamic year. That point was raised by the noble Lord, Lord Peston. He mentioned repayment of £ 8 a week. It is important to point out that as the loan increases in size the repayment term over which it is to be repaid is extended. Therefore, I can promise the noble Lord that the repayment at current prices is not envisaged to be more than £ 400 per year.
The amendment is consequentially redundant. It does no more than insert into the Bill what the Government intend, and our intentions will be subject to the affirmative resolution procedure. On the basis of those assurances, I hope that the noble Lord will agree to withdraw the amendment.
Lord Peston: We have had two debates. One was a debate upon a debate about what happened before. The ill-feeling felt by noble Lords opposite should not be addressed solely to the noble Earl, Lord Russell. It was a grouped series of amendments, and it is customary to divide on the first. I can assure the Committee that I would have insisted on dividing if the noble Earl had not done so. That is not out of any lack of respect to the noble Earl, Lord Caithness, I look forward to reading his assurances.
We raised many issues on the amendment, upon only some of which we received assurances. On others— my anxieties concerning default, for instance— the noble Earl's forthright statement, for which I was indebted as I said, was one at which I was appalled to say the least.
I should like to associate myself with the noble Earl's decision to divide the Committee. It is a decision that I would have made unless it would have been constitutionally improper. I would not do anything that was constitutionally improper. However I gather that it was not so. I was taken aback by the suggestion that it was in bad taste. I made it a rule never to do anything in bad taste. I shall reflect on that point, and if it was in bad taste I shall never divide in similar circumstances in the future.
Perhaps I may now get down to the amendment. I am indebted to the noble Baroness for the clarity of her reply because it brought out the difference between us. She says, "We have made it clear", meaning that the Government have made it clear elsewhere than in the Bill. It therefore follows, according to her, that the Government do not have to put the details in the Bill. I take the view, which many members of the Committee share, that when the matter has been made clear, the whole point is to put it into the Bill. I am indebted to the noble Baroness for explaining the distinction. That explains why we have to spend time on these matters.
Barroness Blatch: The assurance I gave the noble Lord was that the figure would appear in the affirmative resolution and will therefore be debated in both places.
Lord Peston: With respect, it is not the same point. Let me just invent a possible fantasy. Let us assume that during the course of today sterling plunges— I

33
hope fervently that it will not. Let us assume that the noble Baroness's right honourable friend the Chancellor of the Exchequer during the course of tonight has to modify slightly the Statement that he will make to the other place tomorrow. Let us assume that the modification he has to make means that the not too ungenerous provision within public expenditure in this field has to be reined back for the sake of sterling. He would then announce that there would be no money for the scheme, and that it would not go forward. In other words, there is a world of difference between what is put into the statute and what Ministers say. It has nothing to do with the bona fides of Ministers; it is to do with the way that one proceeds.
Lord Harmar-Nicholls: I wish to make a point on the fantasy described by the noble Lord. If those circumstances arose and it was in the interest of the country that such action should be taken, is not the flexibility that he says is being left to the advantage of the nation?
Baroness Young: I wonder whether I might see that I have understood the Bill correctly. I might be able to help the Committee. My noble friend Lady Blatch put clearly that it is not necessary to have the amount of the loan on the face of the Bill, because that will appear in the regulations, which will be dealt with under the affirmative resolution procedure. Therefore there will be an opportunity to discuss them.
As I understand it— this is where I should like to know whether I am correct, although I do not anticipate the scenario that the noble Lord, Lord Peston, has sketched out— as the scheme progresses, the figures would clearly be increased. If we project ourselves to the year 2000, I can see a variation in the figures. I may be wrong and everything will remain as it is. Were there to be a change in the figures, and were they on the face of the Bill, legislation would be needed to amend them. That would be a much more cumbersome procedure. Where, for reasons we cannot foresee, there needs to be an alteration in the figures, that can be done if the figures are in regulations. That, as I understand it, was the basis of the 1962 Act upon which the Bill is based.
Baroness Seear: Surely the point, as has been pointed out over and over again, is that the 1962 Act was one that was accepted throughout the House and therefore there was much less controversy about it. So it is not a very good argument to say that because it was done in the 1962 Act it is perfectly all right to do it in the 1990 Act.
A second point that I want to make in response to the noble Baroness is that to tell us that it will come forward for affirmative resolution is not a very great help because we shall not be able to amend it. We have to take the figure such as it is. I see no problem whatsoever in writing into the Bill that the figure will be x and can be adjusted by affirmative resolution subsequently, as is required. In that way one has the flexibility that one wants for the future, but also the certainty that one requires for the present.
4.30 p.m.
Lord Peston: If I may just proceed to a conclusion, I was extremely intrigued by the intervention of the noble Lord, Lord Harmar-NichoUs. I was surprised by it. He ought to know that flexibility in economic policy-making is something advocated by old fashioned Keynesians like myself I am somewhat surprised to see him, a loyal supporter of the present Government, also espousing a Keynesian position on these matters. I know that the noble Earl, Lord Caithness, sitting opposite was deeply shocked that such 1960s ideas, to which I still subscribe, have any echo on those Benches.
On a more serious matter, I believe that the point which the noble Baroness, Lady Seear, made so very clearly is what matters. Of course I do not intend to press the amendment to a vote because it was used for probing, but it seems to have led to one further statement that I found extremely interesting. It has been hovering around the Bill and I have tried to get it clear in my mind ever since the start of the Committee stage. It is about the extension of the period for repayment.
The noble Baroness said just now that as the size of the debt went up the period of repayment lengthened. I have to admit that it had not occurred to me that that was an intrinsic feature of the Bill, so that, although you were paying the £ 400 at £ 8 a week, when the debt was £ 1,500 you were still paying at £ 8 a week but over a much longer period of years. If I had realised that I should have put down an amendment on that point as well.
Before I withdraw the amendment, can the noble Baroness assure me that I have misunderstood; that what she said is exactly right about the Government's intentions, that what we will normalise about is the £ 8 a week and that the repayment period will extend far enough into the future so that it is always £ 8 a week? Is that what she said, because it was a very important clarification?
Baroness Blatch: I hope that I can help the noble Lord. The point I was making was that when the loan scheme is at its maximum, the loan at current prices is expected to be about £ 1,500 a year. Therefore the total of the debt will be greater than was envisaged at the beginning of the scheme. When that happens, in order to keep the repayments at around about £ 400 at current prices, one will have to extend the number of years over which it is to be repaid.
Lord Peston: I ask the noble Baroness to bear with me, but it is important that we know what we are debating. The loan starts at £ 400 or £ 450 and eventually it is grossed up and becomes £ 4,500, which is 10 times as much. Therefore, if the student who owes £ 4,500 is to pay £ 8 a week, ignoring the inflation rate interest to be added, he will be repaying over at least 10 years, and if we add the interest to that it will be more than 10 years. As I say, I think that the statement of the noble Baroness is an extremely important one. She may not want to commit herself precisely to it, but it is very important to me in trying to participate in the Committee to know precisely that part of the Government's scheme.
Baroness Blatch: I am not sure that a definitive maximum time period over which a loan can be repaid has been established, other than the basic principle that the level of repayment should not exceed around £ 400 in any one year. Therefore as the size of the loan increases the period over which it is to be repaid will be extended.
Lord Peston: I thank the noble Baroness for that. I shall look very carefully at what she said. It seems to me that that means that the repayment period will be a minimum of 10 years and will probably be more than 10 years, bearing inflation in mind. That might lead to further consideration on Report.
The noble Lord, Lord Harmar-Nicholls, is not here and I was not clear whether he was objecting to my amendment per se, but it is an amendment from which we have learned something. Therefore, I am pleased to have put it down. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Addington Lord Addington moved Amendment No. 35:
Page 3, line 36, after ("year") insert ("with reference to regional variations in housing costs for students").
The noble Lord said: The thinking behind this amendment is quite simple and I think it will be accepted by everybody. Throughout the country there is a great variation in costs of living due to the area in which you are living and probably that is most manifest in housing costs. This amendment was put forward as an attempt to try to build into the Bill something which will take into account the very great regional variation in costs, particularly in housing costs.
Under this Bill, it becomes extremely important that we get some recognition of this problem, for the simple reason that we have lost housing benefit as a supplement to the students' income. It is worth pointing out that anybody paying just in excess of £ 30 a week and receiving over £ 400 a year in housing benefit will lose this. Thus we have the situation that anybody in a high rent area will lose the whole benefit of the student loan.
Although there has been an increase in the grant for next year of approximately 5 per cent. with 8 per cent. inflation, it is easy to see that in real terms, and in some cases in cash terms, students living in certain parts of the country will be worse off. As the housing benefit safety net has been removed, I suggest that the Government have a duty to make sure that certain students will not find themselves becoming worse off.
I was led to believe that the whole idea of the Bill was to make more funds available to students. If this hole is not to be plugged we are going to make less funds available for students. Indeed, we shall have thousands of students piling off to Manchester University because the rents there are low. I doubt whether they will remain low if there are three times more students at that institution in the foreseeable future, even assuming that the Government provide enough places in institutes of higher education in that part of the world to accommodate them.
Also, if we have a squeeze going on there could be a knock-on effect, which means that those on low
36
incomes will only be able to accept places in the cheaper parts of the country, due to financial pressures. Thus we have another squeeze on the availability of places. As the noble Lord pointed out, I am rather a convert to the Scottish education system. Indeed, as he said, he came south for his education and I went north for my higher education. I give him a greeting on the Tweed and carry on with this.
But those in high housing cost areas of Scotland will be incredibly hard hit. Four years at some educational establishment in Edinburgh or Aberdeen, where you are paying fairly high rents, over the rather ominous figure of £ 30 a week on average, will mean having a greater debt over a longer period of time, there will be less funds coming in and students will be on an increasing downward spiral.
The Government have spoken about trying to remove students from the great bugbear of bank debts at higher rates of interest than are proposed in this grant scheme. For that reason alone, I suggest that the Government must build some form of variation into the scheme that takes into account those students who find themselves in these more expensive areas, because without it the scheme is effectively a dead duck. It is defeating its own aims and is thus creating a situation where students will have to rule out certain educational establishments purely on grounds of geography, with no consideration about the course involved. I refer to considerations about their academic ability and future employment. I beg to move.
Lord Flowers: I should like to support the noble Lord, Lord Addington, and thank him for drawing our attention to the problem of the extra regional costs which are most pronounced in London. As a vice-Chancellor in London, I speak with some feeling on the matter. I know how difficult it is for many of our students to cope with the situation. The noble Lord put the essential case and the facts and figures extremely well and clearly.
Two years ago in the University of London we undertook a study intended to help the Department of Education and Science— and it thanked us for our work— on the estimated extra required expenditure of a student in London. We came to the conclusion that it was about £ 800 per annum over and above that of the average student in the average university, wherever it may be in the United Kingdom. It would, of course, be somewhat more now because of the variations in prices. Whatever the sum may be, it would be partly offset by the regional levels of maintenance grant because they are set at a somewhat higher rate for students in London than for students elsewhere. That partly offsets the difference, but only partly.
We estimate that for a three-year course, taking account of every allowance we found it possible to include in this respect, the total extra cost to graduate in London is now in excess of £ 1,500. It would, of course, be more for students undertaking more than three years of study, such as medical students and so on. Therefore there is a good case for increasing the London differential for grants and also for loans.

37
I would be the first to accept that the idea of regional varialion could, and probably should, be applied more generally than just to London versus the rest.
Finally, I should like to point out that for those students living at home who have a third rate of grant and a third maximum loan proposed, there is no regional variation in grant, in existing grants or in the proposal for loans. Yet it costs more to live at home in London than it does elsewhere. There is a case for putting in a regional variation for those students who live at home; that is, both for grants and for loans.
I should welcome an assurance from the Minister that he will think about whether this situation can be rectified. Increased access, which is an improvement we all hope for, will have to come in large measure from those students who live at home and who go to their local university. Moreover, London University, the biggest of our universities by a factor of four— neglecting the fact that there are two other universities and other higher education institutions which abound in London— will have to bear a major share in the expansion that we all desire.
4.45 p.m.
Lord Nugent of Guildford: I should like to enter into this modest auction. I am especially interested in the University of Surrey in Guildford. Housing costs in the area are even more horrific than they are in London. I would not be in favour of changing the whole structure of the Bill with this amendment to cater for such differentials. Of course, London receives a differential under the rules of procedure and therefore its special need is recognised by my noble friend. However, my friends in the University of Surrey do not receive such a recognition, although, as I said, the housing costs in the area are even higher.
I ask my noble friend to meet the needs of that and other special cases by use of the access funds which he is providing, although I cannot be sure that he has provided quite enough for the purpose. I shoulci imagine that in other parts of the country there will be special cases which require special attention. The access funds give maximum flexibility. Therefore I should be perfectly happy to see these problems dealt with in that way. I hope that my noble friend will feel able to say a word in that direction. I do not expect him to commit himself but I ask him at least to undertake to look sympathetically at the particular needs of my friends in the University of Surrey and possibly solve their problems by use of the access funds.
Lord Sherfield: I support the amendment. I, too, am interested in a university which is in a high-cost area. It is quite clear that unless some flexibility is written into the Bill, the whole scheme will suffer a distortion in view of the strong variations in the cost of living in different parts of the country.
Baroness Young: Like most speakers who have taken part in the proceedings on the Bill, I have received correspondence and a great deal of inforrr ation from vice-chancellors. Almost everyone
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has picked upon this point about the loss of social security benefits and the housing difficulties. The way that the noble Lords, Lord Addington and Lord Flowers, put the case, especially that for London, is quite clear. It is true— and this is an important point— that the grant will be increased in 1990. Moreover, it will be considerably higher in London than in other parts of the country. In my view that is quite right and it answers the first part of the question.
However, the second part of the question concerns the loss of social security benefits, especially housing benefit. The difficulties which arise in relation to the issue of the financing of students have been made much more complicated because the social security system has become involved in something for which I do not believe it was ever designed. It is being used for a purpose for which it was not intended and has, therefore, brought to light many anomalies in connection with the Bill.
As I understand it, the Bill only applies to maintenance, and not to the rest of the costs involved in going to university. It will be covered partly by the loan and partly by the access funds. It seems to me that this could be an opportunity for my noble friend the Paymaster General to say a little more about these funds. There are three of them and they are valued at £ 5 million each. One does not have to be a mathematical genius to realise that by the time these are divided among all the institutions of higher education, there will not be much for each institution.
My noble friend Lord Nugent and the noble Lord, Lord Sherfield, asked that more money should go to those in the greatest need, probably in the South-East. I am not familiar with the situation in Scotland; indeed, for all I know, it may be equally expensive in that part of the country. At any rate, there is a need for some change in this connection. I entirely agree that there must be some system whereby more money will go to the areas where it is more expensive to live. However, I am not at all clear as to whether the amount of money in the funds will be anything like sufficient to meet the demand.
I sincerely hope that my noble friend will feel able to look hard and long at this issue. I should add here, just in case we get involved in a terrible constitutional debate today, that I should be quite satisfied if he would say that he will look at the matter in the light of the figures which have been given and which we can all work out. It is quite clear that there will not be enough money for the very people who we would like to see benefit from the provisions of the Bill. I hope that my noble friend will look sympathetically at the amendments, bearing in mind especially the access funds.
Baroness Seear: Before the noble Earl replies perhaps I may anticipate what may be in many people's minds. I know that a number of people believe that during vacations it is appropriate for students to earn money to pay for the costs and to replace the grants and allowances which have been removed. I wish to put the the strongest possible opposition to the idea. I accept that the odd job from

39
time to time does students no harm. However, in this country our three-year courses run from October in one year to the middle of May two-and-a-half years later when students stop being taught in order to take their examinations. That only gives about two years nine months for the vast amount of work. In order to obtain good quality results and good quality students at the end of the day it is highly desirable that much work should be done during the vacation. The belief has grown up in recent years that students should not do this work. It is a deplorable development.
Nothing that the Government do should encourage students to earn in the vacation rather than study, read and pursue special courses. The short period of undergraduate work— because that is what it is— should be used to the fullest possible effect.
Baroness David: I wish to support what has been said by the noble Baroness, Lady Seear, and also the remarks of the noble Baroness, Lady Young, about access funds which will clearly be totally inadequate to make up for the loss of housing benefit. Whether or not we like social security to be mixed up with education and the funding of students, it has happened. The allowances are being taken away and that will make a great deal of difference to many students.
In a letter to my noble friend Lady Blackstone the Minister said that the Government had asked the funding council to take account of relevant accommodation costs in distributing the funds to individual universities and polytechnics. However, it is no use asking for that to be done if the funds are totally inadequate in the first place. There are three access funds: one is for post graduates, another for further education students. That leaves only £ 5 million for the whole student body, the main undergraduate body. Apparently that works out at £ 10 per student, divided between the whole lot. So it will be inadequate.
If the access fund is to deal with housing, greater funds must be provided. I am told that applications for London University are well down. Whether or not that is because of the extra costs for housing I do not know, but it could well be. In the light of all that has been said, particularly about London, by the noble Lord, Lord Flowers, I hope very much that the Minister will be willing to take away this amendment which has received support from all sides of the Committee. Perhaps he will come back with further suggestions rather than directing the access funds in any particular way.
Earl Russell: I am in full agreement with what the noble Baroness, Lady Young, said about the access funds; I am glad that she said it. Were we to be given the kind of assurance that she suggests, I should accept and welcome it with open arms. I am also in full agreement with everything my noble friend Lady Seear said about vacations.
This is a regional amendment; it is not meant simply to apply to London. I listened with sympathy to the noble Lords, Lord Nugent of Guildford, and
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Lord Sherfield. The tentacles of the London housing market have spead over a distance of about 100 miles and prices have moved up accordingly. Nevertheless, there is also a specific London dimension to the amendment. I agree with what the noble Lord, Lord Flowers, said.
I have one specific illustration of how inadequate I think the loan facility for London is. It concerns not housing costs but transport. Suppose the undergraduate concerned lives in fare zone 2, which is typically where students tend to live during the year when they are out of college. The London loan facility would bring them into college on 20 days in the whole academic year. We expect to see them a little more often that than.
Lord Boyd-Carpenter: It is clear from the debate that the problem to which noble Lords on all sides of the Committee have referred has been created by the decision to withdraw housing benefit from students. Frankly, I do not share the view of one of my noble friends who said that it was wrong for social security measures to be, as he put it, "mixed up with education". We are dealing with people, on the whole, over the age of 18 who, for all purposes in law, are citizens, voters, and the rest. I cannot see any reason why an unsuperable barrier should be erected between being a student and drawing either this or other social security benefits if, on the merits of the case, the facts warrant it.
With respect, I do not believe that the problem will be dealt with by the access funds. They will not be large enough. I do not believe that they will necessarily be administered as well. The housing benefit is administered by experts in the social security department who understand the problem. They understand housing costs; they are trained administrators in the subject. However, there is no reason to believe that those responsible for the access funds will have the advantage of such expertise.
Therefore I say to my noble friend: would it not be better to think again on this and on many other matters in the Bill and reverse the decision? In appropriate cases social security benefits such as housing benefit, which would otherwise be available if the person concerned were not a student, should continue to be available to students. That would get over the whole problem.
Lord Cocks of Hartcliffe: I apologise to the noble Lord who moved the amendment for not hearing his initial argument. I must tell your Lordships that however persuasive he may have been I should not have changed my mind if I had heard his remarks. The amendment enshrines in a piece of legislation that students should go away from home in order to study. I have recently referred in your Lordships' House to a conspiracy about higher education to conceal the facts from the public. The plain truth is that there is no piece of research that shows an educational advantage in studying away from home.
A large number of students at Scottish higher education establishments live at home. No one ever suggests that Scottish higher education is inferior to that in other parts of the country: in fact, quite the reverse. On the Continent a large number of students

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are home-based. In this country, for some reason, the idea has grown up that if a student does not go away from home to study in higher education, the education is not complete.
I have had students lobbying me about my allegedly reactionary views. They put the point to me that it is great to get away from home, to experience life and so forth. However I receive no further come backs when I ask them "Are you in favour of the reintroduction of National Service, which had much the same effect?"
I do not wish to weary the Committee. But it is time that we punctured the myth that it is essential to go a way from home to study in higher education. It is not necessary. The burden which it puts on the housing facilities of the country is very great. I have previously referred in your Lordships' House to the way in which vast inroads could be made into the problem of homelessness if some of the rented accommodation now used by students in our big urban areas were released. People who are booted from pillar to post in bed and breakfast facilities could at least in the summer vacations have a decent environment in the university halls of residence.
When I have raised the matter previously in your Lordships' House I have received a lot of guff about courses and seminars being run and so forth. We ought to look at the greater good which is to relieve one of the biggest problems that we are now facing. If people lived at home and took the nearest available course there would be an immense saving in resources which could be translated to other ends.
At Second Reading the university vice-chancellors' committee circulated information saying:
"Cost of living: University accommodation fees account for 68 per cent. of the full grant. Private rents now cost an average of 8.7 per cent. more than the full grant in London and account for 71 per cent. of the grant elsewhere".
The situation ought to be examined. The whole thrust of guidance for school pupils contemplating higher education ought to be changed to encourage them to go to the nearest course for the greatest good. I know that there are some courses where it is essential for students to go away from home because of availability or distance. However, I must tell the Committee again that if only 50 per cent. of students in higher education lived at home and took the nearest available course, we could clear up the problem of homelessness in three years.
5 p.m.
Baroness Lockwood: I find myself in the unusual position of being in complete agreement with the noble Lord, Lord Boyd-Carpenter. It seems to me that there are a number of considerations to be looked at here. I do not think the amendment quite meets them all. I am not opposed to the amendment but I regard it has a second best measure. If it were to be carried, it would mean that those students who suffer from having to pay for accommodation in high cost areas would to a certain extent have that payment alleviated. Nevertheless it would mean that they would find themselves with a larger loan at the end of their student days. They would then have to
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repay that. Therefore, the burden would be moved from the time they were students to the time they graduated.
Further, it has been suggested that the access funds should be made available for this kind of purpose. That could help to some extent, but the access funds are not sufficiently large to meet the whole of this problem. I should not like to see the access funds being used solely for the purpose of helping students in the high cost areas because I believe that they should be more broadly available to help those students from lower income groups and some of the deprived social groups in our society to enjoy the benefits of higher education.
The other point I wish to make is a serious one. I hope that the Government will look at it carefully. It was referred to by the noble Lord, Lord Addington, in his speech moving the amendment. It is that some of the universities in this country, London in particular, will in due course find themselves short of students. Those institutions within London University and institutions within some of the higher cost areas might find themselves in an uneconomical position. Then the whole question of the location and the extent of our university provision might be called into question. It seems to me that there is a real problem here which needs to be addressed. However, I do not think that this amendment is sufficiently comprehensive to address it. I suggest that the shortest and most efficient way to address the matter would be to look again at the question of housing benefit being made available to students who need it.
Viscount Ridley: I must say, coming from the North of England, how nice it is, to hear special pleading from the South-East for a change. That turns things on their head. The reason for the pleading is the higher cost of living in the South-East. However, it is also true to say that students are coming to North of England universities in increasing numbers not only because housing is cheaper but also because, I venture to hope, education is just as good there, if not better. I wish to say how strongly I support everything said by the noble Baroness, Lady Young, and by the noble Lord, Lord Boyd-Carpenter, on the two matters of the access funds and social security. That seems to me to be the nub of the whole problem.
Baroness Carnegy of Lour: I do not go along with the amendment because I do not think it is the answer. I do not agree with my noble friend Lord Boyd-Carpenter that the ideal situation is for students to remain on housing benefit. I do not believe that is the right answer, but I do not know what the answer is. That is my problem. I think it is important that my noble friend looks carefully at the figures. We are really talking about what will happen to individual students as a result of the interaction of the withdrawal of housing benefit and the introduction of the loan.
The students' association of Edinburgh University has provided me with some figures. I have no reason to believe that the figures are incorrect. According to the association, around 2,760 students rent houses

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in the private sector and are claiming and receiving housing benefit. That is a large number. That applies during term time. Some 920 students are claiming housing benefit over the summer vacation. The students who claim throughout the year will lose on average £ 505. That was the figure for 1988–89. Presumably that sum will be larger when the scheme begins. That figure must be looked at. If the problem is to be dealt with by the access funds, a large number of students will apply in Edinburgh alone for help from the access funds. Therefore, a fairly large sum of money will be required. That may be the way to solve the problem. I do not know whether there is any other way of varying the amount that students receive according to where they live.
The attention of the noble Lord, Lord Addington, is being diverted at the moment, but I hope he will reply to my next point. He mentioned students in Aberdeen and their problems in the private rented sector. Will he say how many years they remain in the university residences and how the rents in those residences compare with those outside? I think that in Edinburgh students always have to stay in the university residences in their first year at a lower rent and they have the option of staying longer. It would be interesting to have that information because we are talking about precise figures and how students will be affected by this provision.
In Edinburgh an average of £ 505 will be lost by students who claim benefit throughout the year. As that is an average it means that some students will lose much more and some less. We need to know what figures we are talking about if we are discussing the matter being resolved by the access funds. I hope that my noble friend will pay careful attention to that.
Lord Addington: In response to the noble Baroness, I should say that in Aberdeen accommodation was provided, certainly for the first year students, and generally for the second year for those students who needed it. Two years' accommodation were provided in the private rented sector. It is worth pointing out that anyone who is in housing provided by an education institution is invariably a lot better off. It should be pointed out that those institutions and polytechnics which are less well endowed in their initial funding tend to be far harder hit in terms of accommodation. Someone who attends an institution of higher education in the south of England that does not have blocks of accommodation will find himself particularly hard hit because there will be no back-up and no subsidised housing.
The Earl of Caithness: The purpose of the amendment is to look at the regional variations of housing costs to students. The Government have made it clear that there will be a differential between the loan facilities available for study in London and elsewhere. There will also be a smaller loan facility for those students who continue to live in the family home. That point was stressed by the noble Lord, Lord Cocks of Hartcliffe.
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These differentials reflect those which operate for the mandatory grant. The main reason for them is the higher level of housing costs in the London area. Provision for these differentials will appear in regulations, but this is another case where provision in the Bill would inhibit our scope for flexibility. The differential in the grant is similarly included in the mandatory awards regulations, not in the 1962 Education Act.
While we accept that housing costs are a significant factor affecting students' cost of living, I hope that the Committee will consider that these amendments have the effect of obscuring consideration of other factors such as travel and food. The Government intend that any uprating of the loan will reflect all relevant cost increases, just as with the annual uprating of the grant hitherto. The Committee need have no fear that housing costs will be ignored: nor will other costs. However, the Government's decisions must always reflect what the taxpayer can afford.
We have heard the argument that the distinction in the grant, and in future the loan, between London and elsewhere does not adequately reflect high housing costs outside London. It is not possible to provide in the student support system a multiplicity of different rates to reflect the various housing costs of all the centres of higher education. Nor would the result necessarily be fair. If there was one rate for Birmingham and another for Newcastle, for example, that would still not take account of the significant differences in housing costs within a region and the differences in the types of accommodation that students choose.
Our policy is to provide students with a budget. Within that, they are free to choose how to spend. Some may choose to devote a large proportion of their budget to sporting activities or to travel, others to accommodation. It is not right that the taxpayer should be required to take account of those variations. Within the budget provided it is up to the student to manage.
I can perhaps best illustrate the effects of higher housing costs by considering the position of students in London. It is true that, even after accounting for the extra loan and grant, some students may consider the cost of London simply too high; others, with different priorities, may decide that the extra cost is worth it. Some students will not want to come to London at all. Very few students will wish to take courses which are offered only in London.
In view of what the noble Lord, Lord Flowers, said about living costs in London, it is worth asking whether in practice higher housing costs have influenced recruitment to institutions in London. The recent surveys into students' income and expenditure show no evidence that those coming to study in London are necessarily from better-off families. Housing costs have not made study in London the province of the well-heeled.
As for numbers, a point raised by the noble Baroness, Lady David, my information is that of students with a maintenance grant the proportion studying in London has remained at a steady 17 per cent. over the past five years; so the proportion of students in London is holding constant despite the cost of housing.
Baroness David: I referred to applications and not to students studying in London now.
The Earl of Caithness: I shall look into that point. I am sorry if I have misinterpreted what the noble Baroness said.
In moving the amendment the noble Lord, Lord Addington, spoke very eloquently about the need to make funds available for students and the fact that less funds would be available to students because of the loss of housing benefit for those who had claimed it. I was surprised that the noble Lord did not mention a point which was raised by a number of noble Lords; namely, the access funds.
As the Committee will know, the access funds will equip the educational institutions to direct help where they judge it is most needed. I hope that that will answer the point of the noble Lord, Lord Sherfield, about the need for flexibility. It will be the educational institutions which will deal with the matter. No doubt they will take account of housing difficulties although they will not be limited to that. As the Committee knows, housing costs is one of the factors used in the distribution of access fund cash by the department. There is a total of £ 15 million in three funds.
Some Members of the Committee, including my noble friends Lord Nugent of Guildford and Lady Young, were concerned whether the access funds were adequate. That is a point that I have already discussed with my right honourable friend the Secretary of State. He has listened sympathetically. He has made it clear that he is considering the size of the access funds in the light particularly of concern expressed both in another place and this Chamber about housing costs. I can give the Committee an assurance that my right honourable friend is doing so sympathetically and actively. I can say no more at this stage, but I hope that he will make a further announcement on the matter in the very near future.
Lord Flowers: Perhaps I may be excused for interrupting for just one moment. Will the Minister accept that many of the difficulties that some of us have with the Bill arise from the almost simultaneous withdrawal of social security benefits? If students could once again become eligible for such benefits the problems that we are debating at the moment would go away.
5.15 p.m.
The Earl of Caithness: I fully understand the point that the noble Lord, Lord Flowers, has made. One of the reasons for our introducing the access fund was to cater for those students who will face the additional difficulties that the noble Lord mentioned. I understand his concern and that he would like students to continue to receive housing benefit.
I have to be honest. I do not believe that I can offer him any assurance that we shall change our minds on that point. However, we shall seek to provide access funds to allow the educational establishments the flexiblity to take care of those students who at present receive housing benefit and
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who, in view of the loan that they will receive in the future, will still face problems. That is what the access funds are designed to do. The total amount is the access funds is a question that my right honourable friend the Secretary of State is considering at the moment.
Baroness Seear: Before the noble Earl sits down, perhaps I may ask him what reaction he has received from the universities and polytechnics to the suggestion that they should administer the access funds. It is not only a major administrative task; it is one that many academics would be extremely unwilling to undertake. It means making judgments about the amount of money to be given to student A as distinct from student B. I should not have liked to do that job. It could be an extremely invidious task. Can the noble Earl tell the Committee whether the academic institutions have expressed any opinion about being asked to make such a discrimination between individual students?
The Earl of Caithness: I understand what the noble Baroness said, but she rather surprised me. I was coming to that point, but I had not intended to comment on the point made by my noble friend Lord Boyd-Carpenter that the higher education establishments would not be as good at administering the funds as the DSS. I do not want to get involved in that argument, particularly as I know that many universities already have hardship funds which they use for precisely the purpose for which the access funds will be used. They have the money and they make precisely the judgments about which the noble Baroness is so worried.
Lord Adrian: Before the noble Earl sits down and we leave the question of the access funds, can he tell us the amount of the housing benefits that will be withdrawn in relation to the size of the proposed access funds? We know that it is proposed that the access funds should total £ 15 million, but I do not have a figure for the withdrawn housing benefit.
The Earl of Caithness: I do not have the figures to hand. I shall certainly look them up. I was about to come to the question of funding for students because that was a point that was raised by the noble Lord, Lord Flowers, when he spoke. That is what the Bill is about. What has happened over time is that the amount that a student can receive from various sources has declined since 1962. To date that has been a question of a means-tested grant, parental contribution and some earned income. That has not proved satisfactory, and the value of the grant has gone down. It is for that reason that we are bringing forward a loan scheme. It will boost the income available to students by 25 per cent. this year. It will cover many of the points about which the noble Lords, Lord Flowers and Lord Adrian, are concerned.
The total of the uprated grant for this year, the parental contribution, which I know that some people in higher education do not want to see continued but will still be there, plus the loan, will take the value of income to the student almost back to the 1962 level when my noble friend Lord

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Boyd-Carpenter was Chief Secretary. We have been able to uprate significantly the amount available to students. In addition, we have provided the access funds. I should re-emphasise the fact that it is the total amount in the access funds at which my right honourable friend the Secretary of State will look and on which I hope we shall be able to make a decision in time for our discussions at the next stage.
Baroness David: The Minister said that he did not have certain figures. I have some figures from Hansard, so perhaps I may give them as they show the scale of the problem. Hansard states that government statements differ on the savings to be achieved by removing students from welfare benefits. That is not only housing benefit, but housing benefits form a large proportion. Hansard goes on to say that the savings are large with estimates ranging from £ 65 million— the figures are to be found in cols. 497 to 499 of the Commons Hansard of 21st March 1989— to £ 110 million per annum. Those figures are vastly greater than the access funds of £ 15 million when we consider that only £ 5 million of that will be for undergraduates.
Baroness White: It is unsatisfactory to equate the running of hardship funds in universities with the running of access funds in view of the problems that will be faced with the access funds. They are quite different matters. The hardship funds are for exceptional difficulties; for example, in the case of someone whose grant has not arrived from overseas or someone with a death in the family, where one must step in and ensure that the student can continue his education without having a break on financial grounds. The hardship funds are not for the widespread administrative difficulties which would undoubtedly be faced. That is why the Committee of Vice-Chancellors and Principals is so unwilling to undertake that kind of administration without having any extra resources for the administrative costs involved.
The Earl of Caithness: I am grateful to the noble Baroness, Lady David, for bringing those figures to the Committee's attention. I now have the figures too and I must agree with her. As I understand it, the value of the benefit to be withdrawn is £ 68 million. The value of the loan is £ 178 million, so that is another £ 110 million available for students. In addition, there are the access funds of £ 15 million, which is the sum that we are considering. That entirely substantiates the argument that I have put to noble Lords; namely that the amount of money that will be available to students is a considerable increase.
Earl Russell: I wish to ask for one more piece of clarification. Do the figures which the noble Earl has just given us include housing benefit coming through local authorities?
The Earl of Caithness: Yes, because, as I understand it, that is how housing benefit works at the moment. That will be withdrawn, other than for
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disabled students. We shall come to that matter on a later amendment. They will continue to receive it. Perhaps I should repeat the figures for clarification. The benefit withdrawn is £ 68 million. The increase, because of the loan, is £ 178 million. That gives a net figure of £ 110 million. On top of that, there are the access funds.
Lord Boyd-Carpenter: Is my noble friend aware that those figures are not comparable because the social security benefits go only to a limited number of students whereas the figures that he has quoted generally go very wide? It is obvious that there is great disquiet in the Committee, particularly on the student housing point.
I wonder whether, even at this stage, the Government would be prepared to defer the withdrawal of housing benefit and perhaps the other social security benefits, at least for the first year of the loans scheme, so as to see whether the various expedients that he has suggested, such as access funds, are capable of taking charge of the situation. After all, students have enjoyed those benefits for many years. Is it asking too much to suggest that they be not straightaway abolished when the new scheme starts, but that it be seen for a year whether it is possible to dispense with them without causing dislocation and hardship?
Lord Flowers: I intended to raise exactly the same point.
The Earl of Caithness: I hear what my noble friend says and I shall draw it to the attention of my right honourable friend. There are two points to bear in mind here. One must look at the package as a whole. Part of the package was the withdrawal of benefits and the loan, which is considerably more. My noble friend is right to say that some students will receive a loan and will still be worse off. That is precisely why we added the second point, which is the access funds. I have already given an assurance on the value of the access funds to the Committtee and I know that my noble friend will take it in good faith. If we seek to take out one part of that equation, it upsets the balance of the rest of the equation.
I must clarify a point which arose last Monday during our first day's discussion. The point about which my noble friend is concerned arises under the social security legislation. It does not arise under the Bill. It is part of the package of the Bill but it comes under the social security legislation.
Baroness White: I am sorry to interrupt the Minister again, but the arguments on the Government's side are so unsatisfactory. One must include the 20 per cent. poll tax in the equation. People are bored to death with the poll tax, but it is part of the equation and in some areas it will be a significant amount.
The Earl of Caithness: If the noble Baroness seeks to extend the equation to include the community charge, one must also extend it to include rates. As a student, I had to pay my fair share of the rates for the cottage in which I lived. One must also take that into account.

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Perhaps I may move on from those important points, all of which I shall consider. I give that assurance to the Committee and I repeat the assurance about looking at the value of the access funds. Perhaps I may pick up a point made by the noble Lord, Lord Cocks of Hartcliffe, that the universities should do more to help their students by providing halls of residence and that students would be educated nearer home. I am not a specialist in those matters, but I am sure that what he has said has been noted by those with much closer contacts with h igher education than I have.
I was a little suprised that the noble Baroness, Lady Lockwood, said that some colleges would be short of students. I take issue with her on that point in the nicest possible way because the aim of the Bill is to increase the number of students in higher education. I hope that there will be a much greater demand as a result of our proposals.
Perhaps I may return to the basic point of the amendment which in our view is unnecessary and imposes inflexibility on the Bill. Let me assure the Committee that housing costs will be considered alongside other costs in uprating the loan and that there is no need to extend provision to graduates. We beieve that the access funds, along with the general uprating process, offer the best solution.
Lord Addington: I have listened to the noble Earl's reply and I was amazed to see how well he manoeuvred under such heavy fire. I proposed the idea with a view to those students who receive full grant and have the least financial support from the home background. The idea of a regional policy has some p -ecedent because this Government and other governments have accepted that it is more expensive to live in London. There are housing and travel costs. All large cities involve considerable travel costs and there are incredible variations in housing costs in many large cities. Thus, once the housing benefit which ironed out those difficulties was removed we had to do something about bringing the situation back to a state of equilibrium in order to give support especially to those who have the fewest resources available to them and are most dependent on housing benefit.
The access funds of £ 5 million for undergraduates will effectively be broken down among those who are in the most trouble. Suppose the money is used to supplement housing benefit. There are 200,000 students who pay over £ 35 a week. I do not for one minute pretend that they are all claiming housing benefit, but if they were it would cost £ 25 a week each. I suggest that that would not cover all the problems. One could double the figure, assuming that on y half are claiming housing benefit. That would be £ 50 a week. We are speaking of losses of several hundred pounds.
The noble Earl said that his right honourable friend in another place would be looking at this point. I should like to know whether we shall be making more funds available, especially to those who are dependent on full grant. If more funds are to be made available soon I shall not think again about dividing the Committee. If not, I do not think
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that I have any alternative but to test the opinion of the Chamber.
The Earl of Caithness: I find it difficult to offer a more firm assurance than I have given already to the Committee. I said that my right honourable friend was looking very carefully at the value of the access funds. That is precisely to meet the point raised by the noble Lord, Lord Addington. It is, as we all know, a valid point. It is precisely to meet that point that over and above the loan are the access funds. The value of the access funds has been a matter of some dispute both here and in another place.
I know that my right honourable friend would wish to read very carefully what the Committee has said today. I have said that he is looking at the matter sympathetically and actively. I know that at this stage the noble Lord will understand that I cannot say more than that because a decision has not been made. My right honourable friend will want to read noble Lords' remarks. The assurance I can give is that I shall let this Chamber know as soon as possible when a decision has been made, which will be before a further stage is reached.
Lord Addington: Evidently the noble Earl cannot say any more than that at this point. This is a very important issue. In the circumstances I am prepared to withdraw the amendment at this point on the understanding that the noble Earl will come back and inform this Chamber as soon as possible. I categorically reserve the right to come back on this issue. If there is nothing positive forthcoming, let me assure the Committee that I shall certainly raise this issue again and will not be put off a second time. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
5.30 p.m.
Lord Peston Lord Peston moved Amendment No. 35A:
Page 3, line 36, at end insert ("such maximum, and the maximum level of mandatory awards under regulations made under the Education Act 1962, being uprated annually by not less than the same amount, namely that calculable at the end of July in relation to the previous twelve months according to the Retail Prices Index published by the Central Statistical Office of the Chancellor of the Exchequer").
The noble Lord said: I shall try hard to make more rapid progress in view of the fact that it is already 5.30 p.m. This is a probing amendment intended to look further into the Government's mind. The Government have argued that we must look at the scheme as a whole package. I for one am still trying to do that. However, I cannot put the numbers together to see what the whole package amounts to. I hope that before the Report stage I shall be able to do so.
This amendment looks at one special matter. Let us ignore for the moment all the matters that we were discussing with regard to housing benefit and so on, and leave on one side the question of access funds. Essentially, with respect to the maintenance grant itself and the loan, the Government seem to be putting back the real value of the grant approximately to where it was somewhere in the early 1960s. That does not mean that the student on

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full grant is as well off now as he was in the early 1960s because he will now have to bear the cost of the loan element. But, as I said, the cash in hand will be very close, excluding the matters that we have just discussed under the previous amendment.
The important point to bear in mind is that the intention is to probe the Government's plans for the future. The cynical view is to look at the famous Chart 4 in the White Paper and say that if we get the amount up, the next blue and red dot would be close to where the dots were in 1962 and 1963. We then ask— and this is the concern of the amendment— whether over the next 20 years we can expect to see the real value start to erode again. I agree that one cannot prejudge public expenditure, but are the Government trying to tell us by intention that Government policy is to try to maintain the real value of student support for the next decade or two? I do not ask for a guarantee because no government can give such a guarantee but is the Government's position at the moment such that they are unable to say even by way of intention that they would like to maintain the real value of the grant from now on?
I could argue a good case that the real value of the grant ought to grow through time, especially in the context of a loan scheme which is predicated on a growing economy and higher education being productive. The economics of it would certainly argue that the ratio of the real value of the grant to real average graduate earnings should be constant and most of all should grow through time. I do not press that point of doctrine at the moment.
I am merely exploring the Government's intention. I ask how they want us to interpret what they are currently doing this year. I do not look for any kind of government statement of commitment to public expenditure which they could not make. Certainly I am interested in what the Government would like to do if they felt that it could be afforded. I beg to move.
The Earl of Caithness: To anybody who has been connected with the Treasury and had to look after expenditure, the last words of the noble Lord, Lord Peston, would ring like— well, I am not educated enough to get the words out! What would the Government do if they had the resources available to them? That is what he said, or words to that effect. That is something which every government, including that of the noble Lord, Lord Callaghan of Cardiff, whom I am glad to see in his place, would like to have. Every government would love to have more resources available to them. All of us who spend money would love to have more resources available. However, we have to live within budgets. That is very much the key to this amendment.
The point that needs to be emphasised is that this amendment would link both the maximum loan facility and— this is the interesting part— the mandatory award (that is, the grant) to the retail price index. That is presumably what the noble Lord would like to do in the future. If that is the commitment of the Labour Party, I note it. I asked the noble Lord at an earlier stage what he would like to do. I am perhaps getting it in dribs and drabs. If
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he were in my position, obviously he would give that assurance to the Committee.
As the noble Lord indicated, the effect of what he has said would be very dramatically to increase the total resources available to some students, in this case by twice the rate of inflation. Presumably, it would be for the local education authorities to decide whether those students who receive discretionary awards should enjoy the same advantage.
However, the down side to the noble Lord's amendment is that there would be a very substantial increase in the cost of the scheme. Moreover, it would never develop to the point where the loan and the grant became approximately equal in size— and as the Committee will know that is our intention. Instead, the ratio between the loan and the grant in 1990 would be frozen. Since loan repayments would be substantially reduced and grants significantly increased, the scheme would be most unlikely to produce savings in the longer term, as would be the case with the Government's proposals. This would make it more difficult to lift the financial restriction on the supply of higher education, and the taxpayer would not be able to afford the expansion of higher education that we all desire. I think that that is the important difference between the plans of the noble Lord and those of the Government. We shall be uprating the loan and the grant but converting the uprating of the grant into a loan until they are about equal. That is our plan for the future.
Lord Peston: For once I do not seem to have been my normal extremely clear self I thought that the amendment was so clear that it did not require a long lecture from me. Perhaps It would help now if I stated what the amendment meant. I might then receive an answer that corresponded to the amendment.
The Government are raising the total amount of student support this year and claiming that in real terms it is now approximately where it was 25 to 30 years ago. That is the Government's claim. Is it the Government's intention to maintain that real value of total support? That is my simple question. That is perfectly compatible, as a matter of elementary algebra, with still increasing the ratio of loan to total support if that is what the Government so decide. What is incompatible is raising the grant this year, as the Government are proposing to do, and if there is 6 per cent. inflation next year not raising the grant and loan element by 6 per cent; and if there is 10 per cent. inflation the following year not doing so then.
Having raised the real value of support, is it the Government's intention to maintain the real value of support? It has nothing to do with the schemes that I shall put forward a year or so from now, one hopes— and the country hopes— from these Benches. Those will involve much more sophisticated approaches to the question of student support than this rather crude and ill thought out scheme.
However, I am not in the mood— nor, I hope, are Members of the Committee— for such political to-ing and fro-ing. I am asking a simple question

53
that any student will ask: "You are giving me more money this year. But will you maintain it in real terms from now on? Or would you like to try to do so?". I added a few other remarks in addition to that. However, the main point is this. Do the Government regard the real value of the grant plus loan that they are fixing this year as the correct real value? That is as sim ple as I can put it. It is an answerable question.
The Earl of Caithness: I am grateful for the greater clarification that the noble Lord has been able to bring to the amendment that he has proposed. The student will be in no different position from now. As with the grant, so it will be with the grant and the loan. Any uprating in future years will need to be considered in the usual way in the public expenditure survey.
Lord Peston: I thank the noble Earl very much. That was the answer I thought that he would originally give. We did not need any of the other answers. On uprating, nothing has changed as a result of the Bill. The Treasury will decide year after year what it feels it can do by way of uprating, considering the general economic circumstances of the country. In that sense, nothing has changed from the existing student maintenance scheme.
Having learnt something about the Bill, as I am always anxious to do, I thank the noble Earl for giving the answer and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Earl Russell Earl Russell moved Amendment No. 36:
Page 3, line 36, at end insert ("In the first year the amounts of the loan shall be as follows—

London

Elsewhere

Home

Full year

£ 460

£ 420

£ 330

Final year

£ 340

£ 310

£ 240

In determining the amount of the loan for subsequent years, the Secretary of State shall have regard to the retail prices index published by the Central Statistical Office of the Chancellor of the Exchequer.").
The noble Earl said: I speak also to Amendment No. 44 with which Amendment No. 36 is grouped.
Amendment No. 36 simply follows the lines of government policy so far as I can understand them. It states the amount of the loan and seeks only to write it into the Bill. I repeat that we find it very difficult to be satisfied with the answer that the noble Baroness, Lady Blatch, gave on the subject earlier today. We know that the Government are quite prepared to say what they are doing on the subject but they are not prepared to write it into the Bill.
This is supposed to be a revising Chamber. It is not supposed to be a substitute for a press conference. We are supposed to have something in front of us that we can revise. We can only revise what is in the Bill. I am very much concerned that we should let such a precedent pass and let our successors in Parliament think that we regarded it as a fit way to legislate.
The amendment concerns only the drafting of the Bill. It does not concern the size of the loan the principle of loans, or any other matter of government policy. It simply concerns how legislation should be provided.
Amendment No. 44 concerns the same point. We have heard the Bill described as a blank cheque. Amendment No. 44 appears to be picking up a blank cheque book as well as a blank cheque. It relates to an uprating phrase which states that the Secretary of State may use the retail prices index,
"or such other index as appears to him to be appropriate".
That could be absolutely any index. We should have some idea what type of index the Secretary of State will use. If he wishes to change it, he should at least tell us so. I beg to move.
5.45 p.m.
The Earl of Caithness: I can understand the concern of the noble Earl about the Bill and the regulations. He has made it perfectly clear on numerous occasions: his first amendment at Second Reading which was not the one we discussed; his amendment at Second Reading which we discussed; his amendments on the first day of Committee, and his amendments today. I understand the concern of the noble Earl. I happen to differ from him, and the Bill is as it is now before us.
My noble friend Lady Blatch and I have on numerous occasions explained why the Bill is framed in the terms it is. On the first day of Committee we were able to change the way that the regulations which are to be laid will be discussed within Parliament, from the negative to the affirmative resolution procedure. The size of the loan facilities in the first year will be set in those regulations and debated at the time. We made clear in the White Paper what the size of the loan facilities will be. It is for that reason that there is no need to fix it in the Bill.
Turning to the other part of Amendment No. 36, we have said that the level of the grant and the loan together will be reviewed annually. If there is a need to increase the resources available to students then the extra will be provided as loan, until the loan and grant each provide half the public support offered to students— a point we do not expect to reach this century.
One of the factors that the Secretary of State will have in mind is of course the costs that students face. But that cannot be the only consideration. Any Secretary of State must consider what the taxpayer can afford. I hope that the noble Earl will agree with me on that at least. It would be quite improper to commit oneself, however slightly, to automatic increases in the rate of student support.
I must stress that we are giving a substantial boost to student support. The grant and the loan will be worth 25 per cent. more than grant alone this year. We will be making £ 178 million available in loans, in addition to the uprated grant. Once benefit changes are taken into account the net increase is still well above £ 100 million. We discussed that at length earlier this afternoon.
But what increase in students' public support is to be provided in 1991–92 cannot be predetermined now. It must be considered in the light of all the circumstances at the time. Those will certainly include consideration of movements in the retail

55
prices index, though there is no similar requirement in the 1962 Act to take account of the RPI.
Amendment No. 36 is consequently redundant. It does no more than insert in the Bill exactly what the Government intend. And our intentions will be subject to the affirmative resolution procedure.
Turning now to Amendment No. 44, I should begin by pointing out that there is nothing suspicious about the reference in paragraph 1 (3) of Schedule 2 to possible alternatives to the retail prices index. The Government intend to use the RPI to index the debt, so that it retains its value in real terms.
The provision for alternatives is merely a safeguard in case the RPI should become unsuitable or if a new index supersedes it. Without this provision, such an event would require fresh primary legislation. With the provision intact, it will simply be a case of amending the appropriate regulations.
It is right in our view to index the loans so that the value of the repayment will be the same in real terms as the value of the sum borrowed. The outstanding debt will be adjusted annually in line with inflation. But no real interest will be charged.
We consider this to be a matter of equity. It is fair to the graduate who pays back in real terms the same sum as he borrowed, and fair to the taxpayer who receives back in real terms the same sum as was originally lent.
Baroness Seear: Once again, the noble Earl has not answered the point. He says that this matter will be dealt with by regulations. However, even under the affirmative regulation procedure there is no way in which we can argue about the amount of money. That is why my noble friend wants this written into the Bill. I have already said that once this afternoon but the noble Earl repeated the totally unsatisfactory answer which he gave before. That does not meet our problem, which is that the affirmative resolution procedure gives us no opportunity to vary the amount of money.
In relation to Amendment No. 44 and the possible change, at the discretion of the Secretary of State, in the type of index to be used, if there is to be such a change, I ask the noble Earl that it should be brought before the House by way of an affirmative resolution and should not take place merely by the Secretary of State deciding that he will use another index.
Earl of Caithness: On the first point, that is ground which we have covered at length. I fear that we shall continue to disagree throughout the remainder of the proceedings on that point. On the second point, I shall look at the noble Baroness's proposal.
Earl Russell: I am thankful to be able to agree with the noble Earl about something. Of course I agree that we are limited by the constraints of public expenditure. In turn, I ask the noble Earl whether he will agree with something else; namely, that we cannot have any more students than we can afford. However, that is by the way.
I am also grateful for what the noble Earl said to my noble friend Lady Seear. On the subject of the
56
drafting of the Bill, it seems that there is very little common ground between us. I beg the noble Earl not to continue to repeat his answer that we shall be told what is being done. Increasingly, that has the effect of a red rag and we do not wish to turn these Benches into bulls.
I do not intend to press this amendment. However, if other Bills are put before us of the same sort, even if we agree wholeheartedly with the principle of the Bill, we should still feel the need for objection. I hope that when future legislation is drafted that point will be taken into account. In view of the hour, I beg leave to withdraw this amendment and hope that the noble Earl will continue to think about the retail prices index.
Amendment, by leave, withdrawn.
Baroness Blackstone Baroness Blackstone moved Amendment No. 36A:
Page 3, line 36, at end insert;
(" (aa) prescribe as 50 per cent. the maximum proportion of maintenance support payable to a student which shall comprise a loan").
The noble Baroness said: This is a very simple amendment to make clear on the face of the Bill that loans will not go on rising and rising as a proportion of student maintenance from 50 per cent. to 60 per cent. and eventually up to 100 per cent. On Second Reading I made the point that that sort of matter should be in the Bill and should not be left to regulations and I repeat that point now.
To go above 50 per cent. could well deter many more students as the debt will be much greater. It is likely greatly to increase default rates because of the difficulties which some former students will have repaying larger debts. I believe that it is noteworthy that even in the United States of America, where an extensive loan system is in place, loans rarely account for more than 50 per cent. of maintenance costs and usually account for not more than about one third.
If the Government are sincere about their intention not to allow the loan to exceed that proportion, I cannot see how the amendment can be refused. However, should it be refused, then the Government must stop referring to the loans as top-up loans because that would be misleading Parliament, the general public and existing and future students.
That is so fundamental to the nature of the Bill that it must be written on to the face of it. If the Government refuse to do that, many of us will doubt their sincerity. I beg to move.
Lord Addington: I support the noble Baroness's amendment. I believe that she has encapsulated perfectly the argument for this amendment. If we are to have top-up loans which will never be more than 50 per cent. of the total amount of funding, why not say that? Throughout the Bill we have argued that more and more should be written into it so that we know what we are dealing with. This is one situation where we should make the position absolutely clear to those involved and also place a limit on particular elements within the Bill.
We can reach a maximum situation where loans will account for 50 per cent. of maintenance costs,

57
the other 50 per cent. being provided by grant. That was the concept which we were given to discuss and surely it is fair and just that that concept is written into the Bill.
Baroness Blatch: I understand the concerns that lie behind this amendment. We have heard expressed fears that the Government wish to abolish the mandatory grant. I assure the Committee that this is not our intention. As Members of the Committee know, we have uprated the grant by 5 per cent. next year. The loan facility that we will provide in 1990–91 will be on top of that uprated grant.
In 1990–91 we shall be providing over £ 730 million in maintenance grant and £ 178 million in loans— more if take-up exceeds 80 per cent.
In years thereafter we shall look at the total amount of support that is available from both grant and loan and, if any increase is necessary, provide this as loan. The grant will be maintained in cash terms at its 1990–91 level.
In the White Paper we made clear that with this uprating of the total support through additions to the loan facility, the scheme will develop to the point where the loan and grant each provide half the public support for students' living costs. We said that uprating after that date will have to be considered nearer the time.
On White Paper assumptions, that issue will not arise until 2007–08. It would be foolish to set policy hard and fast in a Bill as this amendment seeks to do, for an event some 15 to 20 years ahead. I assure the Committee that our present intention on reaching that point is to run the two systems of grant and loan in parallel.
However, we cannot predict what the higher educat ion system will be like by 2007, nor what the needs of students will be. Who could have foretold, in the mid-to-late 1970s, that by 1990 higher education would be thriving under the present Administration with over 1 million students in higher education and an age participation rate heading towards 20 per cent.?
I assure Members of the Committee once more that the present Government are committed to retaining the mandatory awards system and adding to this the loans scheme. But we cannot accept that this Bill should prescribe decisions about the needs and financing of higher education which will be made in the next century. I invite the Committee to reject this amendment.
Baroness Blackstone: Is the noble Baroness telling us that it is the Government's intention to reconsider what they said in the White Paper and the reassurances which have been given that the proportion of student maintenance which will be covered by loans is to be 50 per cent. and no more? I interpret what she says to mean that when we reach that later date, the Government will wish to consider whether they wish to take the level above 50 per cent. Otherwise, I cannot see why she cannot accept my amendment.
Baroness Blatch: This Government's intention is that there should be a 50: 50 balance. This Government have no plans, once that level is reached, to go beyond that. It will be for the government of the day, in the light of all considerations, to make that decision.
Lord Boyd-Carpenter: In the light of that answer, surely it is sensible to write the 50: 50 balance into the Bill. That does not commit a future government in 2007, whichever government that may be, to maintain that if they are prepared to legislate. However, when you are discussing a provision which, on my noble friend's own view, is to last 17 years, there does not seem to be any objection to writing that into the Bill.
I know that my noble friend will understand that there is great unhappiness and anxiety in the universities about the background to this Bill. I should have thought that there is every need to reassure the universities and the students that the Government will stick to the undertakings which they have given. If the present Government give an undertaking, then I accept that wholeheartedly. However, we are talking of a period when it is at least possible that there may be another government. I profoundly hope not. I should like to see the Government continue in office until 2007 and indeed beyond that. I think they are a most excellent government. But I might be accused of optimism if I said I believed that the noble Baroness would be at the Dispatch Box replying to a debate 17 years from tonight.
I should have thought it sensible, in view of the uneasiness and anxiety which she must know exists, to accept the amendment, put the 50 per cent. maximum into the Bill and leave it to a subsequent government, if they want to alter it in 2007, to come to Parliament and legislate. I cannot see the difficulty in that.
6 p.m.
The Earl of Onslow: My noble friend has suggested that the Government are trustworthy on the 50 per cent. figure, a point with which I totally agree. The noble Baroness, Lady Blackstone, does not agree with loans so she will not want to increase the figure beyond 50 per cent. Therefore I see no reason for putting anything extra into the Bill. In both ways, 50 per cent. will stay.
Baroness Blatch: I can repeat that the Government's intention in this Bill is to take the loan to the 50: 50 level. However, because of the points pressed at this time, I shall, if the Committee will accept that I do it without commitment, speak to my right honourable friend in the meantime and report at a later stage.
Lord Boyd-Carpenter: Will my noble friend amplify that assurance? What is it that she will discuss with her right honourable friend? Is it the question of putting the 50 per cent. into the Bill?
Baroness Blatch: With respect, I think I intend to discuss with my right honourable friend the pressing

59
points made by my noble friend Lord Boyd-Carpenter and the noble Baroness, Lady Blackstone. It is important to consider whether it is necessary at this stage to commit and bind a government possibly in the year 2007. I shall discuss whether it is right that the Government should set a finite date and commit a finite level so that there would be recourse to primary legislation if it should go beyond the 50: 50 level. But I do so without commitment. I hope that the Committee will accept that assurance.
Lord Callaghan of Cardiff: We all thank the noble Baroness. I am sure, although she is anxious to safeguard her own position, that she does not intend to talk to her right honourable friend unless it is to try to persuade him to accept the 50 per cent. I guess, although she would not say so now, that she has been convinced by the arguments from both sides. I believe that we should reinforce her on this point. It would be helpful if she were able to go to her Minister and say that not only was she expressing the views of those who spoke but also of those who did not speak and that those who did not speak expressed their view in the Division Lobby in order to support her in her splendid choice.
I have two other points to make. First, I could understand the Government refusing amendments which would cost them a good deal of money. I do not understand their refusing an amendment that will not cost them anything except in one regard in respect of which the noble Lord, Lord Boyd-Carpenter, will certainly agree. I am deeply suspicious of any estimates that are made as far ahead as the year 2007. Therefore, if I were not a nice, innocent chap who always believed the Minister, I might fear that perhaps it would not be 2007 after all but a date very much closer and that that is why the noble Baroness did not want to accept it. She would not want me to think that; she would not want the Committee to think it. I believe that we should reinforce what she will say to the Minister by going into the Lobby and supporting her, man and boy.
Baroness Blackstone: In the light of what my noble friend has said, I believe that we should divide the Committee and provide the noble Baroness with the support she needs in discussing this matter with her right honourable friend.
Lord Boyd-Carpenter: In saying that and in giving that advice to the Committee, does the noble Baroness appreciate that, if she does so and if as is quite possible she loses the Division, when my noble friend talks to her right honourable friend the Secretary of State she will be bound to say that the Committee rejected the proposal? The noble Baroness seems to be putting in jeopardy the offer of a possible improvement to the Bill. That is most unwise. I advise her not to press it now but to wait until Report stage. If my noble friend did not then come forward with an acceptance the noble Baroness would obtain wider support than she is likely to get tonight when she seems very likely to prejudice what is already a half win.
Lord Callaghan of Cardiff: Is the noble Lord saying that his vote would not follow his voice on this matter? I am sure that he would not wish to convey that impression to the Committee. I am sure that his vote would follow his voice. I believe that Members of the Committee sitting in the Chamber are as convinced as the noble Lord, Lord Boyd-Carpenter, by the arguments adduced. I have no hesitation in assuming that the matter would be carried. Even if it were not carried, the noble Baroness, having said that she intends to go back to the Minister on this matter, will naturally do so. The noble Earl, Lord Caithness, shakes his head. If we decide to vote and the matter is not carried, is that the end of it? Is that what the noble Earl is saying? Is he saying that the noble Baroness will not go back to the Minister although she has been convinced by the argument?
I must say that that is a novel doctrine and one that I would not accept. If that is to be the case I would certainly advise my noble friend not to vote on the issue at this stage but to let it go. We shall then come back doubly reinforced, knowing that the noble Baroness will have put the case not only with all the fervour of the arguments but knowing that those who were hoping to support her stood back on the advice of the noble Lord, Lord Boyd-Carpenter, to whom we always listen with great respect. We know that not only will she have our support but that she will have the noble Lord's support also behind the scenes. We look forward with hope to the next stage of the Bill.
Lord Shackleton: I have just come into the Chamber. The noble Earl has enunciated a principle that is completely unfamiliar to me as a former Leader of the House. He is saying that, because the Opposition and others sought to divide, the noble Baroness will not try to do her best for the Bill.
Baroness Faithfull: As a Back-Bench Conservative who very often votes against her party, as is well known in the Chamber, I would be sorry if the noble Baroness, Lady Blackstone, were to press the amendment. I agree with the amendment but we have been given an assurance by my noble friend on the Front Bench. The Secretary of State would be in a very strong position to say "No" as the Committee had voted the other way. I hope that the noble Baroness will not press the amendment. We shall then have a chance at the next stage to hear what the Secretary of State has to say.
Baroness Seear: Despite all his great experience, the noble Lord, Lord Callaghan, overlooked the fact that it is not the people who heard the argument who will decide the vote but the people who have not heard it.
The Earl of Onslow: As one who quite frequently speaks against his own Front Bench perhaps I may say that on this occasion I happen to agree with it. If I had an undertaking from my noble friend I would be totally happy. If I were the noble Baroness, Lady Blackstone, I would remember,
"Quidquid id est timeo Danaos et dona ferentes",

61
which. I hasten to add, is the only Latin tag I know. It means, "I fear the Greeks especially when they are bearing gifts". I suspect that the noble Lord, Lord Callaghan, is heavily disguised as Ulysses in this life.
Lord Swinfen: If the amendment is pressed to a Division and is lost, am I not right in thinking that it canrot then be brought back?
Bareness Blackstone: I have never received so much conflicting and changing advice in such a short space of time. I am especially grateful to the noble Earl for translating his Latin phrase for me as I did not understand what he was saying. Before I make a final decision, I want to be absolutely sure what the noble Baroness, speaking for the Government, will say to her right honourable friend about the amendment.
Baroness Blatch: I can assure the Committee that I will faithfully report everything said in the debate and the feeling behind what has been said. I will consult with my right honourable friend and report back at the next stage.
Baroness Blackstone: In the light of that assurance I shall not divide the Committee on this occasion. However, if we do not receive a satisfactory result from that consultation, we intend to come back on Report, In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Blackstone Baroness Blackstone moved Amendment No. 36B:
Page 3 line 38, after ("made") insert ("and in the case of students receiving loans in the academic year 1990–91 the repaymert period shall be five years, subject to any provisions of sub-paragraph (c) below").
The noble Baroness said: I can be brief. In reply to an amendment in my name on the first day of our Committee proceedings the Minister repudiated my suggestion that those students facing repayment of loans after a long period of deferment would have a large amount to repay because of indexation throughout the life of the loan. He said that repayments would be around £ 400 per annum; that is, £ 8 per week.
I assumed that the Minister was referring to present values but I was not entirely sure whether that was so or whether the loans would be held at that level in cash terms with a longer period of repayment than five years where deferral was taking place. The Minister has since written to me and made clear that he was referring to figures in real terms rather than cash terms. In the light of that I assume that we are referring to a fixed repayment period of five years in all instances. However, this is a probing amendment to clarify that that is the case. I beg to move.
Baroness Blatch: I can be brief in my remarks. It is our intention that the repayment period should initially be five years. That would mean that a student on a three-year course starting in 1990 who has a debt of about £ 1,500 on leaving the course
62
would make repayments at about £ 31 a month if inflation were to run at 6 per cent.
As the loan scheme develops, the total support that is available from grant and loan together will be reviewed annually. Any addition will be made available as loan. As the loan facility increases in this way in real terms the total liability built up by a student over his course will also increase in real terms. The repayment period will be extended so that repayments remain at a reasonable level.
We intend that this extended repayment period should apply to the whole of the loan of a student who is receiving loan when the extension comes into effect. One perverse effect of this amendment is that if this extension were required in the next few years we could not offer it to students then still studying who had started their course in 1990.
As I have already said in debate on earlier amendments, if a student were on a longer course his liability would obviously be higher than that of a student on a three-year course. We intend in recognition of this that his repayments should remain manageable. The Secretary of State is considering how best this might be done.
Again, this amendment would have a perverse effect. It would constrain the Secretary of State so that if he were to provide a longer repayment period for students on the longest courses, he could not provide this to students starting a course in 1990.
The terms of the repayments will be set out in the regulations which, under the affirmative resolution procedure, the Chamber will have the opportunity to debate. It is better handled in that way than in the Bill.
I trust that in the light of my assurance— that the repayment term will be five years initially— the noble Baroness will withdraw the amendment.
Earl Russell: The noble Baroness said that this amendment would constrain the Secretary of State. I thought that was the purpose of having a parliament.
Baroness Blatch: I believe I said that it would constrain the Secretary of State from helping students who started their courses in 1990.
Baroness Blackstone: As I said, this is a probing amendment and I have no intention of pressing it any further. I certainly would not want to push an amendment that had the perverse effect described. In the light of the helpful clarification given by the noble Baroness, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
6.15 p.m.
Earl Russell Earl Russell moved Amendment No. 36C:
Page 3, line 38 after ("made") insert:
(" (bb) prescribed the maximum total liability which may be incurred by any person as a result of a loan, which shall be not more than twice the amount in financial terms of the total of the loan paid to that person during their period of study; ").
The noble Earl said: This amendment originates from my noble friend Lord Grimond, who offers his

63
apologies to the Committee. He has been in hospital and is unable to be present today.
The purpose of the amendment is to protect students against the effects of rampant inflation. I know that it is government policy to reduce the rate of inflation to zero, but it is a policy in which they have not yet achieved success. One of the unrealistic features of this scheme is the extent to which it is based on an inflation rate calculated at a greatly lower figure than is currently applicable.
I know that the noble Earl will reply that the debt remains constant in real terms but as the noble Lord, Lord Peston, said earlier, real terms never paid any bills. If a student enters the teaching profession, as many do, where salaries consistently rise at a lower rate than inflation, a debt which was light when it was incurred becomes extremely burdensome. I hope the noble Earl will take that into consideration. I beg to move.
The Earl of Caithness: I was sorry to hear the sad news about the noble Lord, Lord Grimond, and I hope that the noble Baroness, Lady Seear, will pass on the very good wishes of the whole Committee to her noble friend and, on our behalf, wish him a speedy recovery.
Noble Lords: Hear, hear.
Baroness Seear: I am grateful to the noble Earl for those remarks and of course I will do as he requests.
The Earl of Caithness: I hope the noble Lord, Lord Grimond, was well enough to see the great triumph on Saturday afternoon at Murrayfield, which so many of us enjoyed.
The amendment seeks to ensure that under the effect of indexation the debt can never grow in cash terms to more than double its original value. It is likely to have practical effect only if a graduate defers repayments for some years during a period of high inflation. The debt would then cease being indexed for inflation and would be frozen in cash terms: in other words, it would progressively diminish in real terms, even if no repayments were made.
Our intention is to be even-handed as between the borrower and the taxpayer. Indexing the sum outstanding in line with inflation ensures that the sum repaid is the same, in real terms, as the sum borrowed. The result is that neither the taxpayer nor the borrower profits from the effects of inflation.
However, the amendment would operate to the detriment of the taxpayer. Some graduates would see their debts shrinking in real terms. This would not, however, be a general benefit because the effect would result only from a particular combination of circumstances. I can see no equity in that, either for taxpayers or graduates and I am sure that, on consideration, the Committee will not see the equity either. Therefore, I hope that the noble Earl will withdraw his amendment.
Earl Russell: In the past I have expressed the view that the noble Earl has surprised me. This time he
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has not. That reply was completely predictable. I cannot regard it as entirely satisfactory. It does not seem to have absorbed the problem behind the amendment. However, at this time of night and with so much business in front of us I ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Darcy (de Knayth)Baroness Darcy (de Knayth) moved Amendment
No. 37: Page 3, line 38, leave out ("and").
The noble Baroness said: In moving this amendment I speak also to Amendment No. 38 which contains the substance of my proposals. I also speak to Amendment No. 47, in the name of my noble friend Lord Henderson of Brompton, because they are grouped together. I fully support his amendment. The repayment of loans by students with disabilities must take account of, first, their reduced earning power and, secondly, their reduced disposable income because of the extra costs of disabled life. I will not enlarge on that amendment because my Amendments Nos. 37 and 38 deal specifically with education costs as opposed to daily living, and it is important that the issues are kept entirely separate.
All three amendments have all-party support. They are also supported by the All-Party Disablement Group, the Association of Disabled Professionals, Skill, the RNID, the RNIB and RADAR. The amendments establish the principle that disabled students should have their educational needs adequately met from sources other than their maintenance grants or loans and thus be free to use the latter on their maintenance— for example, board, lodging and leisure— in exactly the same way as any other student. The Government have acknowledged that in some cases the education costs of disabled students are in excess of the allowance for disabled students.
There have been encouraging moves. As the noble Baroness, Lady David, said at Second Reading on 27th February at col. 644 of the Official Report, the Minister in the other place said at Report stage that the intention was to make a statement before the Bill completed its passage through Parliament. Therefore, I very much hope that the Minister will be able to say something cheering about the upper limit of the DSA and other arrangements connected with it, and also about the repayment of loans.
While the DSA is a very useful way of covering the extra education costs of disabled students, there are a number of problems associated with it which I should like to outline briefly. First, the maximum amount payable is £ 765 a year. While that is sufficient for some students, it is not enough for many others and far too little for a very small number of students. The RNIB, the RNID and the Snowdon Award Scheme, all of which give grants or bursaries to students who cannot manage on the DSA alone, estimate that there are about 300 students a year who need more than the current maximum level of the DSA.
The RNID reckons that only a small handful would need more than £ 5,000. The DSA should be

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more flexible and capable of responding to the actual education needs of the individual student. Many students do not know about the DSA. My noble friend Lord Snowdon, who began his award scheme in 1981 , confirms that. He has asked me to say that he very strongly supports these amendments. He is very sorry that he had to leave before they were called because he hoped to speak to them. I hope that the DSA can be better publicised.
The allowance is distributed inequitably because LEAs follow different practices. We need clear guidelines. I hope that the Minister will be able to say something positive on that matter. For instance, it would be helpful to spell out that the DSA can be paid as a lump sum at the beginning of a course and that it can be used to fund human support as well as technical support because some LEAs appear not to know this.
The DSA is means tested. The All-Party Disablement Group and disabled organisations feel that it is essential that the allowance should be freed from means testing and based on assessment of need. At present those who are not in receipt of a mandatory grant cannot get the DSA however high their education costs. Others do not receive the full amount even though in some cases they may need a very much larger sum because it is assessed in conjunction with the mandatory grant. My impression is that we do not need primary legislation to free the DSA from means testing. I hope that the Minister can confirm that and perhaps even say something encouraging about freeing it from means testing. If not, perhaps he can point out what would need to be amended. I feel that is important and I hope that he will answer the point in his reply.
I wish to make two other points. The All-Party Disablement Group and disabled organisations feel that it is very important to have a fourth access fund to fill the gaps that the DSA cannot plug. The Govern ment have been less keen on a fourth access fund. I shall leave it to others to go into its advantages. I hope that the Minister will be able to say something more positive about it or perhaps we can discuss the matter before the next stage of the Bill.
I am very glad that, as the noble Earl explained at Second Reading, at col. 605, disabled students will remain eligible for unemployment benefit, income support and housing benefit. However, there is one problem I wish to ask him about. In the new draft social security regulations of the DSS, a disabled student is defined as one who qualifies for income support disability premium or severe disability premium. In practice that means that some students, particularly deaf students and those with arthritis or dyslexia, may not be eligible for benefit. I imagine— I certainly hope— that that is a mistake which can be rectified while the regulations are still in draft form. I look for reassurance from the Minister on that point.
To sum up, if the education costs of disabled students are to be properly met, the DSA needs to be more flexible with a higher maximum level, better publicised, more evenly distributed and freed from means testing. I very much hope for a positive and
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encouraging reply from the Minister. I shall also be interested to hear what he has to say about a fourth access fund to fill the gaps. I beg to move.
Lord Henderson of Brompton: I wish to support what my noble friend said concerning Amendments Nos. 37 and 38. I shall confine my remarks to Amendment No. 47 which is grouped with her amendments. The common aim of our amendments is to enable disabled people to have access to higher education like other eligible people who are their peers. I emphasise that it is not to confer privileges on them. I say that because a superficial reading of my amendment might give the impression that we are seeking privileges for disabled people. We are seeking to remove disabilities in order that they may act like other people.
Disabled students start with the handicap of extra costs; in some few cases they are very high costs indeed. These amendments seek to remove those handicaps of extra costs in a variety of ways. We are speaking of quite small numbers. I believe that the disabled student population is something of the order of 3,000 and only about 10 per cent.— those of whom we are speaking— are very severely disabled. Even of those only a handful— quite literally perhaps 10 to 15— at any one time require very expensivea electronic treatment and so forth. So we are not speaking about unmanageable sums of money or very large numbers of people.
Following the White Paper but before the Bill was published ample warning was given to the Government that special provision should be made for disabled people. Unfortunately, the Bill was published without the Government having had regard to that advice. However, sympathetic noises have been made in another place. I go further and call those sympathetic noises "promissory notes" given by the Under-Secretary of State responsible for higher education. I am sure that the Committee is looking for those promissory notes to be honoured in amendments. If they are not honoured in amendments, which I very much hope for, then at least cast-iron undertakings should be given.
As my noble friend Lady Darcy (de Knayth), has covered the need for greater flexibility in the management of the disabled student's allowance and the proposal for a fourth access fund, which I strongly support, dedicated to disabled students, I turn instead to my amendment which, as my noble friend said, has all party support. My noble friend Lord Snowdon was here this afternoon and on the previous day in Committee, but unfortunately he had to leave before the amendment was called. He would have liked very much to have spoken in support of it.
Amendment No. 47 seeks to ensure that the special needs of disabled students or graduates are taken into account by regulations in three main respects. First, their earning prospects are undoubtedly lower than for most other people. Secondly, their living costs are most certainly higher. Thirdly, it is important that there should be flexibility in regard to the terms and conditions of loans which take into account their special circumstances.

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I illustrate this point by referring to repayments. It is entirely unrealistic to expect severely disabled students to be able to repay loans as graduates at the same rate as other students if only because of their extra disability-related costs of living. A disabled graduate may indeed have an income of 86 per cent. of the national average like other graduates, but after deduction of his disability-related costs his dispoable income may be perhaps 75 per cent. of the national average. On that ground alone there should be a different threshold for severely disabled graduates.
The Minister made an agreeable noise in another place on 15th February, at col. 548 of the Commons Official Report. He said that he would look into what I would call the unanswerable case for alternative provision to be made for the repayment of loans in the case of disabled graduates.
People with disabilities face a much higher possibility of unemployment, as is implied in Amendment No. 47, or unfortunately lower paid employment than other graduates. That is sadly borne out in unmistakable terms by OPCS surveys. Higher living costs and lower earnings than other graduates are two compelling reasons for making regulations as provided for in Amendment No. 47. I hope that such regulations, if not accepted by the Government in my amendment, will be brought forward by them at the next stage of the Bill.
I must revert to the disabled student's allowance which was extensively dealt with by my noble friend Lady Darcy (de Knayth). I add my plea to hers that the Government should discontinue means testing for disabled students. I ask the Government to provide that a local authority payment to a student to defray the costs attributable to his disability, which are incurred in the course of higher education, should be disregarded when applying this or any other enactment when regard has to be had to the disabled person's means. Nothing less than that will do. Like my noble friend, I hope for a positive answer on that score.
I have been brief. I do not believe that I have spoken for the 13 minutes shown on the clock. There must be some mistake there. In these amendments we have been debating whether to enable disabled people, by payments or adjustments, to participate in what should be theirs by right; that is to say, higher education with their peers. As a society we surely cannot say that time is too short or that the Bill is too tightly drawn for anything to be done. The means must be found in the Bill in this place. I commend the amendments to the Committee.
6.30 p.m.
Lord Addington: I add the support of all on these Benches for this group of amendments. The amendments aim to give support to disabled people when they attempt to enter higher education. If we are to make higher education available to all, as the Government have said— I hope that they are sincere in that wish— everyone should have access to it. The disabled can contribute to our society provided that they have the correct training. They often have to have the highest form of training to enable them to
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earn a living because the most ordinary forms of economic employment are unavailable to them. When we give them support to enable them to take part in higher education we should do so in a way that does not discourage them. We should also ensure that they have all the support that they need to achieve those aims.
We are facing a demographic downturn. We should look to all sections of our society to make up that economic gap. We should also allow people to fulfil their maximum potential in any field.
There is one group of disabled of which I am capable of speaking with some authority. I am talking about dyslexics. I am a dyslexic. I recently went through higher education. That was made possible only because I was given access to a typist and was allowed to dictate my essays straight on to the typewriter so that I could read them back. The same applied to examinations. That concession was allowed me and I was given funding for it. That was a comparatively small concession, but it enabled me to complete the course. Without it I should have been unable to do so.
Dyslexia is regarded as a hidden disability. I am probably the last person who would be thought of as disabled if I were seen walking down the street. That is one example of one group of disabled people. If we give disabled people a little help, they can achieve a considerable amount. Problems can be overcome. One should allow people to undertake their academic studies on equal terms. Anything that gives the disabled the same opportunity as others must be welcomed because it is beneficial to society and the individuals involved.
Baroness Faithfull: I wish to ask my noble friend the Minister about the access funds. The Committee will be aware that a cash-limited fund was set up under another Act of Parliament. That was the Social Fund. It was cash-limited. Two people had their right to cash turned down. The case was brought here, and this place ruled against the Department of Social Security.
Let us suppose that the access fund runs out. If disabled students apply to the access fund what will happen with a cash-limited fund when there is no money? Secondly, the Committee should know that the speeches made and the amendments relating to disabled students are supported by the National Union of Students.
Lady Kinloss: I support the amendments. I shall speak in particular to Amendment No. 47. Disabled graduates are likely to have a lower disposable income because of having to meet the extra costs of the disability. They will also have more difficulty in finding full or part-time work in the vacations in order to minimise their borrowing. The costs of disability can make large inroads on an individual's income.
If graduates are to repay student loans at rates set according to their earnings rather than their disposable resources, disabled people will amost certainly face considerable hardship.

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I should like to give the example of a severely disabled microbiology graduate working in a pathology laboratory in a London hospital. It illustrates the point clearly. From a take-home pay of £ 125 a week, that graduate has to pay £ 30 a week for a helper to attend to his basic personal care needs to enable him to go out to work. That leaves £ 95. If that graduate has also to repay the loan, he will not be left with much to live on in London. Will the Government consider freezing the loan when a disabled student has finished his or her degree or course against any rise in the cost of living?
I support the idea of a fourth access fund, which has already been mentioned by my noble friend Lady Darcy (de Knayth) and the noble Baroness, Lady Faithfall. If a separately administered fund were set up it could be used for adaptations and equipment at the institution concerned as well as to provide support for the student. If it were used for adaptations and equipment in institutions, they could also be used for future generations of students.
The Minister in another place said that the Government would consider the suggestion that there should be a special access fund. Have any further discussions on that subject taken place? Although the Government have said that disabled students will be able to continue to receive benefits, some disabled students will find that they are unable to claim those benefits. As my noble friend Lady Darcy (de Knayth) has already said, that is particularly so in the case of deaf students unless they have additional disabilities. That is contrary to assurances given in another place in Committee and on Report, and so I look forward to hearing what the Minister has to say on that point.
I am glad that registered blind students are automatically included for benefit, but it is rather strange that one disabled group should receive those benefits and not another.
Lord Beloff: Having put my name to Amendment No 38, I should like to make it clear that I support the entire group of amendments. On the face of it Amendment No. 38 seems to be so unexceptional that I cannot even imagine the arguments that the Government might have for not accepting it.
This Bil has been described as unique in a variety of ways I have just thought of another way in which it is unique. It is the only Bill that I can remember coming before your Lordships at Committee stage without a single government amendment. To the best of my recollection, this has never happened before and it is very surprising because, as various noble Lords have pointed out, the issues that we are discussing now with regard to the disabled were raised in another place. Various pledges of greater or lesser significance were given that these would be dealt with in this Chamber. But we are now on what we are told is the last Committee day that we can have and we still have no indication that appropriate amendments are to be forthcoming.
I very much hope that the noble Earl the Minister, when he comes to reply, will tell us that possibly the Report stage might be postponed for a week or two in order to enable the Government to meet the various points that have been made. Clearly it would
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not have been necessary to raise these points if greater thought had been given from the very beginning to the complications of a Bill of this kind.
First, as illustrated by our current concern with disabled students, and indeed as was illustrated when we were dealing with students in areas of high housing cost, students are not numbers on a computer. They are individual persons with greatly varying needs, and a Bill which is to deal with their financing— and we are told that it is to be of permanent duration— ought to take into account, or should have taken into account, all the problems that arise with respect to particular classes of students, of whom the disabled students are the ones before us.
There is also the complication, which will obviously figure again in the Minister's reply, that hitherto a great deal of the financial burden of giving disabled students what they require in order to put them on a par with their peers has been borne by another department of government. It has not normally fallen on the education budget. If it is to be now a fourth access fund— and we are waiting to hear whether or not this fourth access fund is to come into existence— then it becomes part of the education budget and this ought to be clearly spelt out in the Bill.
The point of Amendment No. 38 is, as I said, so simple that it is difficult to see how the Government can possibly disagree with it. They have said all the time that the loan is to be maintenance. Maintenance means having a roof over one's head, eating meals, and so forth. There is nothing to suggest that disabled students eat less or require less shelter or fewer clothes than other students. Even if we assume that they have no extra needs in relation to their maintenance— and that is arguable— it will still be the case that they ought not to have to take out of their maintenance anything that goes towards their special needs as disabled students. That is all this amendment says and I shall be flabbergasted, if I may coin a phrase, if the noble Earl the Minister cannot accept it.
Baroness David: I should like to support these amendments. My name is to the first two and it would have been to the amendment of the noble Lord, Lord Henderson, if there had been room to put it on. Unfortunately, it was a competition to put names to that amendment.
I spoke at Second Reading at certain length about the disabled and I should like to thank the Minister for responding to some of the points I made. But he did not say what would be done. I agree with the noble Lord, Lord Beloff, that it is very surprising that, after the Bill has been through all its stages in another place and we are now on the second Committee day, the Government have said that they are going to do something but are being totally secretive about it. It would have been a great help, and would have shortened these proceedings a great deal, if we had had some government amendments or had been told what they will do.
It is a good thing that the DSA exists, but I do not think it works altogether well in every circumstance. The different LEAs treat it in a different way, and the same sort of disability may be given more or

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less money in a different authority. Furthermore, sometimes it is paid a year in arrears, not at the beginning of a year, which is not very satisfactory.
I should particularly like to press for the fourth access fund, which has been mentioned already by several noble Lords, The position is that disabled students will be able to apply for the access fund, but it will be on the same basis as all the other students and not necessarily an incentive to help the disabled. But if the fourth separately administered fund was set up it could be used to fund adaptations and equipment at the institution, as well as providing support directly to the students, allowing staff and students to work in partnership to set up the most appropriate support.
Mr. Jackson said on 15th February this year that the Government would consider the suggestion that there should be a special access fund. We have talked about the access fund already today in relation to housing. The access funds that exist will have a tremendous demand upon them. I hope that the Minister will tell us that there will be this fourth special fund. What we have to remember is that there are not very many disabled students and the numbers who applied for the disability allowance were not great. It is not very large sums of money that we are talking about. I hope very much that if I sit down now we shall hear some good news from the Minister.
6.45 p.m.
Earl Russell: Very briefly, I should like to add my name to those supporting these amendments. One of the values of going to university is that you meet all sorts of people, so one of the great arguments for keeping up the number of disabled students is that it is a better education for everybody else. It is the same argument as for mature students.
I should also like to point out the effect of the growth of information technology. To take one example among many, the microfilm reader printer now makes it possible for a disabled person to do a ph.D. based on the study of manuscripts in areas where this would have been quite impossible 20 years ago. So this opens up opportunities for the disabled. But those opportunities cost money, so the amount of money that could be needed is going up quite rapidly.
On the subject of Amendment No. 47, there is an argument of public expenditure. It is in the interests of the Exchequer that people should go to work whenever possible. I imagine, though I hesitate to speak on it, that it costs a certain effort of will to go to work in these circumstances. Incentive is something which is not to be sneezed at and which might be worth providing. I have one final point to make and then I shall sit down. Has any thought been given to what happens to those who become disabled after their graduation and are left with a debt?
Lord Milverton: I too should like to add my support to these two amendments and also to Amendment No. 47, in the name of the noble Lord, Lord Henderson. I hope that Her Majesty's
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Government will be able to accept them because, as has been said, they are very reasonable and it is not as though there are thousands and thousands of disabled students who would benefit.
The Earl of Caithness: Before I reply to the points that have been made I should like to welcome the noble Lord, Lord Henderson of Brompton, back among us. I am delighted to see him. I hoped very much that with his experience he would be here this evening and we are very pleased that he is.
The circumstances of disabled students and disabled graduates have been the subject of much debate. Several amendments, as your Lordships know, were put forward in another place and I should like to pay tribute to those Members who brought them forward for discussion, as indeed I should like to pay tribute to those of your Lordships who have contributed to our discussions today. Having carefully considered all the representations and having reviewed our proposals in their light, we believe that we have identified a way forward. That will be good news for the noble Baroness, Lady David, who has been waiting on tenterhooks since my letter for a final decision. I shall explain in detail our responses to the various suggestions that have been advanced.
First, let me turn to the amendments. Amendments Nos. 37 and 38 would require regulations making unspecified provision to ensure that disabled students do not use the loan to meet,
"educational costs arising from a confluence of the disability of a student and the demands of a course".
The loan is intended to meet students' living costs. That applies as much to disabled students as to any others. But it makes little sense in practice to differentiate between educational and living costs, particularly in the case of persons with disabilities.
Depending on their circumstances, disabled students will have a portfolio of resources, and from several different providers. Those which are not tied to meeting specified kinds of costs are likely to be used to help meet the totality of a student's needs. Moreover, the implementation of regulations in line with this amendment would be time-consuming, costly and likely to lead to many disputed cases. It would be impracticable to ensure that students did not use their loan money to cover any educational costs. Would there be a penalty if the loan was used for educational costs? If that was the case, I put it to Members of the Committee that it would be a nightmare.
We believe that we should not specify for any student what the loan may or may not be used to buy. That is a matter of individual choice. In the light of that principle, and given the problems which I have just enunciated, we consider that the amendment would create more problems than it would solve.
From autumn 1990, we intend disabled students to receive three sources of support: basic grant, additional allowances, and benefits. Benefit entitlement will not be withdrawn from disabled students. They will still be able to claim housing benefit in term-time and the long vacations, income

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support in the long vactions and disability benefits, should they be elegible. We are confident, too, that the charitable and voluntary organisations will continue to play an active role, for which we are all most irateful.
From the autumn, in addition to the existing sources of support, disabled students will be able to make use of the loan facility, initially worth £ 420 for a student studying outside London; and they will also be candidates for assistance from the access funds, to be administered on a discretionary basis by the institutions.
My noble friend Lady Faithfull was especially conceined about the question of a fourth access fund and she, among other Members of the Committee, will know that we are looking carefully at the size of the access funds in the light of the many representations received. Although I understand her concern, I put it to her that it is perhaps a more fruitful approach to look at the value of the access funds than to establish a separate, earmarked access fund. I believe that the educational institutions will be in far the best position to judge the needs of their students.
My noble friend also raised the question of the cash limit. If one had a fourth fund one would be more likely to have the cash limit about which my noble Friend is so concerned.
Nevertheless there remain two major concerns about this enhanced package: that the level of support, particularly the additional allowances for disabled students, may still be inadequate; and that the loan will be more difficult for disabled graduates to repay. The first is a concern about the position of disabled students while they are studying; and the second about the position of graduates who are disabled while loan repayments are due. I shall consider each separately.
There have been several representations about the level and operation of the disabled students' allowarce. We have reviewed its purpose and operation, and have concluded that the existing provision is appropriate for the majority of those eligible to claim for such items as special diet, clothing heating or basic equipment costs. However, there are some who need rather more sophisticated facilities, such as radio aids, for which the present ceiling is rather too low. A small minority need special equipment such as word-processors with braille printers, or personal helpers such as sign language interpreters, and the ceiling is much too low to accommodate the cost of such facilities.
My right honourable friend the Secretary of State announced today that the basic ceiling for the disabled students' allowance in 1990–1991 will be raised from £ 765 now to £ 1,000 a year. That is a 30 per cent. increase. I should say that the allowance will continue to be means tested. The reason for this is that it is right that the Government should target the resources they have at their disposal at those most in need. That is the purpose of means testing. However, there is good news. In addition, two new allowances will be introduced: one is for specialist equipment up to a value of £ 3,000 in total for the duration of the course. That news will be especially
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pleasing to the noble Lord, Lord Addington, in view of the problems he suffered. It meets the very concern he mentioned. The other is for non-medical personal helpers and is worth up to £ 4,000 a year. The DES will take steps to ensure that local education authorities and disabled students are fully aware of the new arrangements.
I was concerned to hear that some people are saying that the local education authorities are not getting the message across. I shall take that message back to my right honourable friend and ensure that we get this new and very generous proposal for disabled students properly into the public domain. Parallel improvements will be made for Scotland and Northern Ireland.
I am sure that Members of the Committee will welcome this substantial uprating of the resources available to disabled students. The increase in the basic allowance will give disabled students additional resources where needed to help meet costs incurred as a result both of their disability and attendance at the course. It specifically responds to the concerns which lay behind the tabling of Amendment No. 38.
The additional allowances for equipment and personal help will be a boon to those students who need complex personal communication aids, notetakers and interpreters. It should be of particular help to deaf students, to whom the noble Baroness, Lady Darcy (de Knayth), paid special attention. We hope that this reform will encourage disabled people to take full advantage of higher education opportunities, and on equal terms with their non-disabled peers. That is something of which I am sure we all approve.
I turn now to disabled graduates, the basis of the amendment put foward by the noble Lord, Lord Henderson of Brompton. Representations have also been made about the disposable income of disabled graduates. The argument has been put foward that they face additional costs because of their disability, and have less disposable income out of which to repay a loan than a non-disabled graduate with the same gross income.
I should tell the Committee that my right honourable friend has also announced today a measure to extend protection to disabled people receiving disability benefits. We intend that income from disability benefits will be disregarded for the purposes of assessing an individual's eligibility for deferment. In other words, only income net of benefit will count towards the assessment. That means that, if a disabled person's income is lifted above the deferment threshold as a result of benefit income, but would remain below the threshold if the benefit income is discounted, then that person will remain eligible for deferment.
That is equivalent to increasing each individual's deferment threshold by the value of his benefit income. It has the major advantage that it targets assistance specifically at those who are judged by the social security system to need it most. I hope that this will be welcomed as the most appropriate solution to the problem.

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In conclusion, perhaps I may summarise the proposed changes: we shall increase the general level of the disabled students' allowance by 30 per cent; on top of that, we shall introduce additional allowances— namely, £ 3,000 for specialist equipment during a course, and £ 4,000 for non-medical helpers; and, to help the disabled with loan repayments, we shall disregard disability-related benefits in assessing the 85 per cent. threshold for deferment. I hope that Members of the Committee will welcome those measures.
Baroness David: Before the noble Baroness replies, I should like to ask the Minister a question. Of course we are very pleased to hear about the increased grants. However, will they be administered by the local authorities? I ask this because, apparently, in some cases, authorities have not been very generous in this respect up until now. Further will the grants be paid in advance of the academic year rather than in arrears as is sometimes the case at present?
The Earl of Caithness: On the second question I should say that that is very much dependent upon when the student feels he needs the particular benefit. Although one would wish to get the money to the student as soon as possible— and I fully appreciate that fact— it is not possible to do so until he knows what he wants. Indeed, it may be at the beginning of the course or at some stage thereafter. I can assure the noble Baroness that it wilt be done as soon as possible. As regards her first point, perhaps I may write to her specifically on the matter.
Lord Henderson of Brompton: Before the Minister sits down, I should like to ask him a question about the second part of the package, which, incidentally, I warmly welcome. I refer to the disregard and the loans. Is it something which can be done without amendment to the Bill, or will an amendment be required at a later stage?
The Earl of Caithness: As I understand it, this will be done by regulations and therefore there will be no need to amend the Bill. Perhaps I may come back to the point of the noble Baroness, Lady David. Local authorities will look after the grants.
7 p.m.
Baroness Darcy (de Knayth): First perhaps I may thank all noble Lords who have given splendid support. Not a single voice was raised against the amendment, but then as the noble Lord, Lord Beloff, said, it was a totally reasonable amendment. I thank the Minister. At first I was slightly disappointed in his package but he certainly knows how to build up to a crescendo. He times himself very well. I was disappointed at his only raising the level of the DSA to £ 1,000 because, as organisations have pointed out, 300 students probably need in excess of the amount, or between the £ 500 and the £ 1,000 level. However, it is very good news about the £ 3,000. Am I right in saying that this is not per annum but £ 3,000 for specialist equipment for the whole course? The
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noble Earl nods. It is up to £ 4,000 in human support per annum. I believe that that is right and it is pretty good. I thank the noble Earl for that. I am delighted that this will be publicised because it is very important.
I may have missed the point, but did the noble Earl say anything about guidelines? Did he mention what the equipment could be used for so that LEAs will distribute it more equitably? That is important. The noble Earl suggests that there will be guidelines. Good, that is excellent. I thank him. Did I miss means testing or did the noble Earl mention it in connection with the DSA, and freeing the allowance from means testing?
The Earl of Caithness: I mentioned that the DSA would continue to be means tested. The reason is that within the limited resources it is right that the Government should target the allowance at those most in need. That is its purpose and that is where we shall be able to get the money to those most in need.
Baroness Darcy (de Knayth): In a way I thank the noble Earl for that reply. It makes the matter clearer. However, I agree with my noble friend Lord Henderson of Brompton who put the case strongly. He summed up by saying that nothing less than abolishing the means test would do. We need to respond to the individual education needs of the disabled student. I wonder whether the noble Earl will consider discussing this further with us. I see that he is nodding which means that he will speak to us about possibly freeing the DSA from means testing. That is great.
Would the noble Earl be willing to discuss further the fourth access fund? There are merits in the argument but he still does not seem much warmer about it than Mr. Jackson in another place. As the noble Baroness, Lady David, said, the individual piece of equipment could be used for the college and would be available for future students. I can understand that with the disabled student competing against able-bodied students with help from the other access funds, the inclination would be for the institution to give help to individual able-bodied students rather than the one disabled student who might have a greater need. Will the noble Earl nod and say that he might even discuss that further as well?
The Earl of Caithness: Perhaps I should rise to my feet to give an answer. I certainly say to the noble Baroness that of course my door is open. We could perhaps look at the package in the cold light of day. If the noble Baroness or the noble Lord, Lord Henderson of Brompton, have any concerns I should be happy to discuss any of the issues. However, when we examine it overall and take into account what we are doing as opposed to having a fourth access fund, I believe that the noble Baroness will understand why I am colder on that but warmer on other suggestions.
Baroness Darcy (de Knayth): I thank the noble Earl very much. That is helpful. I agree that we need time to examine the whole package and that we shall have

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to pursue certain matters. Before I finally say that I am gxateful and beg leave to withdraw the amendment, the noble Earl did not mention deaf students and the definition of a disabled student. I mean the deaf students, the dyslexics, the arthritics and so on who are not eligible for income support disability premium and income support severe disability premium. Consequently they would not be eligible for housing benefit and other allowances.
The Earl of Caithness: I apologise to the Committee, I did not cover that point. It is at the moment in draft regulations relating to student social security entitlement which are currently being considered by the Social Security Advisory Committee. Of course I shall draw what has been said today to the attention of my right honourable friend the Secretary of State.
Baroness Darcy (de Knayth): I am grateful to the noble Earl. I believe that it is peculiar and unjust to treat students who, for example, are blind and those who are deaf in different ways when both have high extra costs. I thank the noble Earl quite a lot for the package. I welcome some parts very much. I am more lukewarm towards other parts. I thank him enormously for his response to the suggestion of further talks with us. I beg leave to withdraw my amendment.
Amendment, by leave, withdrawn
[Amendment No. 38 not moved.]
Baroness Blatch: I believe this would be an appropriate time at which to break for dinner. I suggest that the Committee stage be resumed not before five minutes past eight. I beg to move that the Ho use do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Northern Ireland (Emergency and Prevention of Terrorism Provisions) (Continuance) Order 1990
7.6 p.m.
The Parliamentary Under-Secretary of State, Northern Ireland Office (Lord Skelmersdale)The Parliamentary Under-Secretary of State, Northern Ireland Office (Lord Skelmersdale) rose to move, That the draft order laid before the House on 26th February be approved [12th Report from the Joint Committee].
The noble Lord said: My Lords, the order was laid before your Lordships' House on 26th February. It continues in force for a further 12 months the temporary provisions of the Northern Ireland (Emergency Provisions) Acts of 1978 and 1987. The provisions provide the police and armed forces with extra powers to stop and question people to ascertain their identity and movements; and to search for, and to seize, weapons, explosives and radio transceivers. They create the category of proscribed organisations in Northern Ireland, and offences associated with terrorist activity. In addition, they provide the legal authority for the so-called Diplock courts and the
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trial of scheduled offences, and establish a scheme for the regulation of the security guard industry in Northern Ireland.
The Acts also guarantee statutory rights for terrorist suspects to have someone informed of their arrest and whereabouts and to have access to legal advice within 48 hours of their arrest. This year the order also continues in force for a further period certain parts of the Prevention of Terrorism Act 1989 relating to terrorist funding and investigations in Northern Ireland, and also certain exclusively Northern Ireland provisions in the Act. The main body of the Prevention of Terrorism Act was the subject of a separate continuance order which your Lordships debated last week.
I should like to thank my noble friend Lord Colville of Culross, for his report on the Acts, which the House may know is the third annual report which he has written on their operation. It is a short report this year because, as my noble friend says in it, he is now engaged in a more substantial review of the legislation to consider what changes should be made to it when the current Acts expire in 1992. My right honourable friend the Secretary of State for Northern Ireland has asked my noble friend to submit this larger report by Easter. In due course the Government will, thereafter, bring forward proposals.
So far as today's debate is concerned, my noble friend's main recommendation is that all the powers currently in force should be continued for a further 12 months. The Government accept that recommendation and the order before this House will give effect to it. The Government's policy remains that any powers that are no longer strictly justified by the demands of the security situation in Northern Ireland should be allowed to lapse. Your Lordships may recall that last year three minor sections of the Acts were allowed to lapse. These were the sections relating to the police and armed forces' power to call upon assemblies to disperse; to allow the police to impose directions on the conduct of funerals and to allow the Secretary of State to close licensed premises. I am pleased to report to the House that, as my noble friend commented in his report, the loss of these powers has not adversely affected the police or armed forces in Northern Ireland.
Your Lordships will also be aware that it had been the Government's intention, on my noble friend's recommendation, to allow a further section to lapse this year. This was Section 13 of the 1978 Act, which provides a police power of arrest. For the reasons set out in his latest report, however, that provision must clearly be retained for the time being.
The one other matter on which my noble friend comments this year is the possibility of video-recording of interviews with terrorist suspects in the holding centres at Castlereagh, Armagh and Londonderry. The Government have been examining this proposal in consultation with those responsible for overseeing the present system. The Government will consider this proposal carefully and fairly, both in relation to the technical and security aspects of video-recording, once we have received my noble friend's further report at Easter.
I note the interest of the noble Lord, Lord Mishcon, in tape recording, which he expressed last week.
The House will need no reminding that the level of terrorism, both Republican and Loyalist, continues at a very high level in Northern Ireland. In 1989, 62 people lost their lives as a result of the security situation in Northern Ireland, and around 800 people were injured. Some 11 people have also died this year. In the past two weeks we have seen a number of horrific sectarian murders directed against members of both communities. These killings serve no purpose but to deepen the bitterness and the divisions in Northern Ireland society, and cause grief and suffering to the friends and relatives of those who are killed. Each death reopens old agonies. The terrorists do absolutely nothing to protect either community, quite the reverse. The killings bring out more clearly than anything the awful, futile nature of terrorist activity in Northern Ireland society. As my right honourable friend the previous Secretary of State said to me some years ago, the attitude of the terrorists is essentially Marxist; it is to destroy for destruction's sake rather than to build on what others have achieved.
Your Lordships will want to join me in paying an unreserved tribute to the work of the RUC and the army in their commitment to seek out, to deter and to prevent the terrorists from their ruthless attacks. They continue to pay a very considerable price for their commitment and courage. During 1989, nine members of the RUC and 14 members of the armed forces lost their lives as a result of terrorism. Many others were seriously injured. I wish to pay a particular tribute to both full-time and part-time members of the UDR, many of whom live constantly at threat, both on and off duty, in some of the most dangerous parts of Northern Ireland. I also pay tribute to the judiciary and the staff of the prison and court services, who continue to maintain the system of criminal justice in Northern Ireland despite the constant pressures which the terrorist organisations bring against them. It is a sad fact that the intimidation of witnesses, the bombing of court houses and attempts against the lives of judges and others remain as great a problem as they were when the Emergency Provisions Act was first enacted in 1973.
The eradication of terrorism, Loyalist or Republican, remains the Government's first priority in Northern Ireland. We will continue to work unreservedly for the defeat of terrorism with all the means at our disposal that are compatible with the letter and spirit of the rule of law. The police and armed forces will continue to receive the full support of Her Majesty's Government in their difficult and dangerous work. They recognise that to be fully effective, they must command support across the community and achieve the highest professional standards in that work. The Government will also continue to work actively for the political, economic and social progress in Northern Ireland that is also necessary if their efforts are fully to succeed, and lasting peace is to be won. For the same reason, we will also continue to maintain and improve security co-operation with the Irish Government under the
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auspices of the Anglo-Irish Agreement. It is the Government's wish to create a society where there exists the fullest opportunity for all the people of Northern Ireland, without coercion and the threat of violence.
It is against this background that the order before us is being considered today. The provisions to which it relates remain, in the Government's view, essential if vigorous action is to be taken to pre-empt and disrupt terrorist activity and to bring to justice those who have committed these serious crimes. Without these powers the levels of violence would undoubtedly have been higher. We all look to the day when the powers will no longer be needed, but regrettably that day is still some way off. I therefore commend the order unreservedly to the House. I beg to move.
Moved, that the draft order laid before the House on 26th February be approved [12th Report from the Joint Committee] .— {Lord Skelmersdale.)
7.15 p.m.
Lord Prys-Davies: My Lords, I thank the noble Lord, Lord Skelmersdale, for the manner in which he moved this brief but not unfamiliar order. He rightly refreshed our memories about the range of the emergency and anti-terrorist powers which are to continue in force for yet another year. They are powers of fundamental importance to the freedom of the individual, the privacy of his home and to the rule of law. The need for their renewal after two decades of violence and direct rule must be a source of sadness. Whether it is necessary to renew each and every one of the powers, or to do so without modification or without stronger safeguards, are matters which rightly exercised many of my colleagues in another place.
For my part I should mention for example that I regret that interviews of alleged terrorists by the police are still not being video recorded. In that context, we are reminded in paragraph 5.5 of the short report of the noble Viscount, Lord Colville of Culross, that of the 319 complaints that were received by the Northern Ireland independent Police Complaints Commission in 1989, the large majority related to interviews by the police.
I also regret that there is still no sign that the Diplock courts are to be replaced by three-judges courts, until such time as jury trials are available for all criminal offences.
Those are some of the important issues to which we shall possibly have to return when the noble Viscount, Lord Colville, presents his full report. In the meantime we agree that the legislation should be renewed for another 12 months. The Minister took us through the Government's case for renewing the legislation. Violence continues to rise, to fall and to rise again. The House was reminded that about 800 people had been injured and 62 lives had been lost since the legislation was last renewed.
We on these Benches join with the Minister in paying unreserved tribute to those who have borne heavy sacrifices and human costs in the lawful execution of their duties as members of the security forces. We wish to add from these Benches that we

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also remember with respect the civilians who have beer, killed or injured and also all the families in Northern Ireland or on the mainland who have suffered grievous and lasting losses.
The Minister expressed his appreciation of the contribution of the noble Viscount, Lord Colville, who is in his place. The noble Viscount already has the respect of every Member of this House, and he is obviously earning the respect of both communities in Northern Ireland, for his fairness. We look forward to the enhanced review of the emergency provision Act upon which the noble Viscount is now engaged. That will be a major report. I hope and expect that the Minister can say that when the review is completed, adequate opportunity will be given for full consultations and that the recommendations will receive the fullest consideration by the Government. But in the meantime the powers contained in the emergency provisions Acts and in the prevention of terrorism Act, to the extent that the latter applied in Northern Ireland, which are being renewed by this order, will continue to be exercised day in and day out.
Those who operate these substantial powers are ordinary people, albeit in positions of authority. Because they are ordinary people the powers can sometimes be operated clumsily. There is already plenty of evidence that the powers are unpopular. That is not surprising. There is also evidence that they are bitterly resented in those areas in Northern Irelard with high levels of police and army activity and where there is ingrained hostility to authority. That is the opinion of experienced political observers of the Northern Ireland scene. For those reasons it is desperately important that the powers are exercised in a fair and impartial manner and perceived to be exercised with sensitivity. That is a point which needs to be emphasised again and again on the occasion of the renewal of the emergency powers.
The Secretary of State, in his speech in support of this order the other day, concluded on a slightly more positive note than usual. I noticed that the Minister was silent on that point. Like other Members of your Lordships' House I have been reading the speeches that the Secretary of State has made over the past few months. He has been saying two things, and both are hopeful. First, he has said that there is a climate of political realism in the Province, and, secondly, that there is some common ground between the political parties that would enable them to engage in political dialogue.
Perhaps we may ask: what and where is the tangible evidence? I wonder whether the Minister— who was silent on the point— is in a position to enlighten us when he replies. However, even if he is not in a position to help the House on that particular question, I believe that the mere fact that the Secretary of State, who is after all at the centre of government policy in and for Northern Ireland, announces publicly at home and abroad that after two decades of direct rule and dreadful violence there are now grounds for cautious optimism must be encouraging. The Secretary of State could be wrong. Indeed, he has acknowledged that he could be wrong. Yet I am encouraged that after nine
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months in office he has not been discouraged. That I believe to be refreshing.
Obviously there are major obstacles. We observe in passing that relevant judgments delivered by the supreme courts in the three jurisdictions— Eire, England and Wales and Northern Ireland— are sometimes difficult to understand. Such judgments are splashed across newspapers and have inescapably an adverse influence on public opinion. Although they add to the short-term difficulties of both governments I accept that that is the price that we properly pay for an independent judiciary.
We are approaching the threshold of a new century. That could help to concentrate minds about the institutions of government which we should now be building in Northern Ireland to meet the requirements of the coming century. We do not want to carry the legacy of direct rule and of violence into the new century. It is therefore our fervent hope that the leaders of the political parties in Northern Ireland will put aside their age-long differences and distrust and use their considerable skills, energies and influence to design a workable constitutional formula based on devolution which would lead to peace and an improvement in the conditions of living in the Falls, in the Shankhill and throughout the Province.
It is on that note that I want to conclude these few comments. While we approve the continuance of the emergency legislation for another 12 months, there is a pressing need for political progress towards peace. That is the jewel yet to be won.
Viscount Brookeborough: My Lords, first, I should like to mention a matter which is slightly outside the scope of this debate— the outrageous decision on extradition last week in Dublin. Mr. Haughey has said that there will be no safe haven for terrorists. These were not suspects; they were convicted terrorists. I wonder what has happened to this haven now.
I totally support the Northern Ireland (Emergency and Prevention of Terrorism Provisions) (Continuance) Order. The reasons for the order have been given: the number of incidents and the problems which continue to arise. In particular I should like to mention just one; namely, the raid by the IRA on the Derryard border checkpoint. I mention it because that was not an ordinary raid by a group of hooligans. Fourteen armed men, from seven feet up in the back of a lorry, which reversed into an enclosure smaller than this Chamber, sprayed the place with bullets. They also used flame-throwers, grenades and rocket launchers. If there is any doubt— I do not believe that there is— as to what the terrorists are, that is an example of their organisation and how they go about things.
Remember also the additional terrorist attacks in Britain and in Europe. Without the prevention of terrorism emergency provisions in Northern Ireland those attacks would undoubtedly become more frequent outside the shores of Ireland.
I welcome the report of my noble friend Lord Colville of Culross. However, I do not agree with

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one of his points. In paragraph 2 on page 1 of the report he suggests yet again that a charge of manslaughter may be used rather than one of murder where members of the security forces who may have killed someone are concerned. I spoke about that matter two years ago at some length and I shall not go into it again other than to register the fact that I do not agree with the suggestion.
I believe that it is also my noble friend's intention to take internment out of the statute book. I consider that there are two reasons for keeping it in. The first is that we do not know how terrorism in Northern Ireland will develop. It may conceivably be the case that we shall need it again. If it is taken out, when we need it again it will not be there. The second point is that although there is no intention of using the power now, if it has any deterrent value then every deterrent against terrorism is worth something.
My noble friend's report is short. Perhaps that is because he does not consider that many changes are possible. In his report for last year, however, I picked up one point which I should like to discuss further. He said that the battle for the hearts and minds should be the paramount preoccupation of those who exercise emergency powers. I thank the noble Lord, Lord Prys-Davies, for his remarks supporting that comment.
What of that? The vast majority of people in Northern Ireland are opposed to terrorism. Why, therefore, do they not fully support the emergency powers? What is it that upsets them about those powers, even though they do not support terrorism? I believe that there are two reasons for that. First, they may misunderstand the emergency powers. Secondly, the use of those powers affects their lives to too great an extent. We should endeavour to lessen those effects.
There are two ways in which people who are not involved in terrorism are influenced. The first is through contact with the security forces, whether it is at a vehicle checkpoint during searches or at other times. The second is by the news media— what is read and what is seen on television. Without those two influences— although it would not be possible to remove them— people in Northern Ireland would not be worried about the powers which apply there.
Then we come to those who administer them— the RUC and Her Majesty's Forces. The public meet members of the RUC on duty. They also meet them off duty to a certain extent because they are a part of the community and they have community and police liaison committees with councils. There is a renewed effort to get those going. As from January this year, there are proposals for committees with the Down District Council, the Ards Borough Council and Craigavon Borough Council. In addition, they have various activities, mainly for the young, including ramble schemes, summer camps, top of the form quizzes, sport and Duke of Edinburgh Award schemes in which they take some part. Those are all good things.
My noble friend Lord Colville believes that hearts and minds are important. So they are, but are the Government giving enough funds and support to
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that side? I accept that they give support, but could they perhaps give more? In his last report, the Chief Constable said:
"It is with regret that due to financial considerations I was forced to deploy 20 community relations officers on other duties".
I accept that the Government's reply might be that it is up to the chief constable and how he divides his pudding. However, perhaps more should be given to that side when so many people are sure that the hearts and minds issue is important. I ask my noble friend the Minister to consider the consequences of underfunding that vital role of the RUC.
Her Majesty's Forces are on a different level. The only time that the public meet them is on duty, in uniform and with weapons. There is no chance to discuss security policy in the broadest possible terms. We must remember that the RUC committees deal predominantly with elected bodies and the young. A massive part of the population is neither young nor on elected bodies.
Perhaps I may take an example from Great Britain. With regard to the report on the Brixton disorders in 1981 by the noble and learned Lord, Lord Scarman, it was pointed out that the establishment of arrangements for obtaining the views of the people in each police area, and for obtaining their co-operation with the police in preventing crime, became a statutory requirement in England and Wales with the introduction of the Police and Criminal Evidence Act in 1984. The noble and learned Lord, Lord Scarman, recommended the involvement of as wide a spectrum of the local community as possible, and the involvement of non-elected representatives in liaison committees in Great Britain has been a considerable success and has led to a healthy exchange of views on policing issues at the local level.
Surely that should apply to some extent to the RUC and the army in Northern Ireland. It would help to avoid some of the bad PR decisions or at least take more local feeling into account. I know Roman Catholics and Protestants who are neither young nor elected who would gladly share their thoughts once a month over a cup of tea in the local army base or police station.
Perhaps I may give an example of what happens when that does not occur. About a year or a year and a half ago, the army went into Brookeborough village, where I live, with cameras and upset everyone by filming. Clearly, the locals thought that they were considered to be terrorists, that their names would be put in a file and, when anything came up, they would be jumped on. There was therefore considerable bad feeling. However, I happen to know, because someone rang me and I inquired about it, that it was done purely for regimental records. If an officer had gone into a shop in Brookeborough and said, "We would like to do this for our records. Would you very much mind if we film in the village? Will you tell everyone that we shall do so in a week's time?", I guarantee that there would not have been a problem, except perhaps in respect of one or two people who might have wanted to cause a problem anyway. Building a military or police obstacle beside a church or school might be a sensitive issue. Perhaps the building could

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be moved slightly. One feels that local opinion is not sufficiently considered on those occasions. Elected representatives are not always as good at talking to the security forces as they might be.
Border checkpoints are another example. They are vital to security in Northern Ireland. However, they were built 10 years ago and there is now approximately three times the amount of traffic going through them. A firm near me has 42 lorries, most: of which are brand new. It has 42 lorries instead of 36 because every time a lorry goes through the local checkpoint it is stopped for 15 minutes or more. It is not stopped for searching. That is where the problem lies. It is stopped waiting for someone else to be searched. Those lorries are invariably not searched. People are therefore sitting around waiting for 15 minutes. That costs the firm approximately a quar; er of a million pounds a year. People often have to wait an hour and, when they go through, a nice soldier says, "Thank you very much. Please go on". It would not take much money and only a little thought to redesign those checkpoints on busy roads so that there could be free traffic when people are not being checked. The soldiers can only check x number of vehicles in a given time, so one will not improve on the one in 10 or one in 20 vehicles that are checked. That is security as it is at the moment. Even if one lets through the traffic, one will not slow down or speed up the searches.
In addition, many workers in the factory in question must now park their vehicles on the other side cf the border and walk to work in order to arrive on time. The Garda then ring up and ask them to move their vehicles. They therefore have to pile out of their offices and go down and wait for another 15 minutes. A great deal could be done to get the right people on the right side. People who are anti-terrorist would support the emergency provisions if their personal lives would permit it.
As I said, the second area which influences the public perception is that of the media. It is an undisputed fact that society is anti-terrorist. If so, how do people sometimes get the wrong impression from the media? Perhaps I may take the example of the "Panorama" programme on the Ulster Defence Regiment on 19th February this year. The programme was unhelpful, hostile and biased. It attempted to deceive the viewer into believing that the activities of a tiny minority were representatives of the whole regiment. Even if one accepts the worst figures put forward by John Ware and his team that, in the past 20 years, 197 soldiers have been convicted of criminal acts, very few of them related to terrorism. When set against the figures of 6,000 serving soldiers and 35,000 retired soldiers, it represents less than half of 1 per cent.
Another point related to briefing on Loyalist suspects. In Fermanagh, for example, no so-called Loyalist incidents have occurred in the past five years. It is not difficult therefore to find some soldiers who have not been briefed on Loyalist suspects. We must remember that throughout the period of the troubles, 13 times the number of incidents have been caused by the IRA compared with so-called Loyalists. We must also remember the detection rate of so-called Loyalist incidents— 11
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people arrested for every 10 crimes. On the Republican side, one person is arrested for every five. Those figures come from the chief constable's report and they are not fudged.
The RUC asks for help from the army, which includes the UDR, when it needs it. In the "Panorama" programme, John Ware suggested that the Stevens report would be devastating for the regiment. He did not use those words, but that is what he suggested. However, the charges resulting from the Stevens inquiry are quite interesting. A total of six persons were charged with possession of ammunition. We should note, first, that the ammunition was in excess of amounts already permitted on their firearms certificates. The magistrate said, when he fined five of them £ 50 each and one of them £ 100, that there was no suggestion that the offences had any relation to terrorist offences.
There was one charge of possession of an illegal firearm. Every one welcomes the apprehension of that man, no one more so than the army and the Ulster Defence Regiment. The main interviewee in the programme was none other than a convicted criminal, presumably with an axe to grind. Even Father Dennis Faul said:
"I have said it again and again— most UDR men are very decent men— good, law-abiding men who are well disciplined".
Father Dennis Faul is not exactly a fan of the security forces.
I shall leave noble Lords to judge for themselves whether the impression given by the programme was justified. That programme is but one example of where the media is at fault. Some members of the media stirred it up over the Gibraltar incident, in which the SAS was involved, so much so that it was suggested that there could never be a fair outcome.
As a last example, let me take the case of the horrific murders of two corporals in Belfast a couple of years ago. A single point comes out of it. Everyone will remember the reluctance with which the televised news media handed over their footage to the authorities and the length of time that they took to do so.
On the back page of today's Telegraph there is an article on Magnum, the famous photograph agency. The last paragraph reads:
"George Rodger was the first photographer to enter the Belsen concentration camp after its liberation in 1945. The book George Rodger— Magnum Opus, published in 1987 records his reaction:
'I didn't know until then— despite over five years of war— what effect the war had had on me personally, when I discovered that I could look at the horrors of Belsen— the 4,000 dead and starving lying around— and think only of a nice photographic composition, I knew something had happened to me, and it had to stop'".
I suggest that the media should take a check and think hard about their role.
Last night on television during a screening of the BAFTA awards, which I understand are the television and film industries' awards, it was said that all that the public expects from programmes such as "Panorama" is that they should be fair, accurate and impartial. Personally, I do not believe that the media are keeping to those criteria. Investigative journalism is one thing; to point out

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faults so that they can be put right is correct. It cannot be for individuals such as John Ware to voice their private prejudices and mislead society about what is just— the fight against international terrorism.
On 19th February in The Times, John Birt, Deputy Director-General of the BBC, wrote:
"The BBC aspires keenly to the concept of impartiality in all its programmes".
To my way of thinking what he believes is not very well disseminated to his reporters.
Until the public's perception of the emergency provisions improves, we shall have a problem. It is my hope that my noble friend the Minsiter will pass on the right messages about hearts and minds. Let us get for us the people who are basically anti-terrorism. Let us get them behind the emergency provisions. I fully support the continuance order.
7.45 p.m.
Lord Dunleath: My Lords, I am glad to follow the noble Viscount, Lord Brookeborough. While agreeing with much of what he said, I should add, "Thank goodness for a free press and for independent broadcasting media". That is one of our strongest guarantees against abuses at all levels. Had there been a free press and independent broadcasting in Eastern Europe, the abuses which survived there for such an astonishing length of time— until late last year— would not have been able to continue. Thank goodness, too, for investigative journalism which is an art in itself but which has to be very carefully handled.
The noble Viscount made reference to the "Panorama" programme. I accept that it is far from easy to make a balanced, investigative documentary programme. For instance, if one were to make a programme about violence and crime in the city of Westminster, one might show the odd shot of tourists taking photographs of Westminster Abbey and Big Ben. There might be the odd shot of the changing of the guard at Buckingham Palace and the odd shot of the exotic birds (both feathered and otherwise) in St. James's Park just to give the atmosphere of the place. But one would not devote a great deal of footage to people who had not been mugged, whose house had not been broken into and entered and who had not been subject to violence while walking through one of the parks after dark.
It is not easy to give a complete balance in any one programme. Someone who had never been to London and knew nothing about the place but who had watched such a programme on crime and violence in the city of Westminster might gain the impression that it was not a safe place to walk about in but somewhere in which one was in danger at all times. However, if such a person came to the City of Westminster he would see the tourists, the changing of the guard and the birds in the park and would get a completely different impression.
I may be wrong but I believe that the noble Viscount, Lord Brookeborough, and I are probably the only two Members of this House who have served in the Ulster Defence Regiment. I know that the
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noble Lord, Lord Fitt, served in the navy with much distinction but I do not think that he was in the Ulster Defence Regiment. Therefore perhaps the noble Viscount and I can give a personal view of the other side of the picture. Rather than believe what is portrayed in a programme such as the "Panorama" documentary to which the noble Viscount referred, and which was screened a month ago, we can say what things are like in fact.
Allegations over collusion with so-called loyalist paramilitaries were a feature of that programme. When I was a platoon commander I went out on patrol at night with my platoon. As is always the case when on duty with people, one gets to know them fairly well. Quite genuinely I do not believe that any one of the men with whom I served would have colluded with paramilitary organisations, would have had a divided loyalty or would have had loyalty to anything other than the regiment. Queen and country.
It would be wrong to prejudge the Stevens inquiry but, as the noble Viscount said, out of 41,000 people who served in the Ulster Defence Regiment or who presently serve in it only a minute number have defaulted in any way. Whatever number it may be— I per cent. and 5 per cent.— it is too many. Equally regrettably a small number of the members of the medical profession have defaulted and have been disciplined for professional misconduct. But that does not mean that we hold the entire medical profession in disrepute or suggest that it ought to be disbanded. Far from it.
Allegations have also been made that at vehicle checkpoints members of the Ulster Defence Regiment have been guilty of intimidating or indeed roughing up people whom they have stopped late at night. That was an allegation that I heard when attending the first session of the British-Irish interparliamentary body. I did not like to say too much about it at that time. However, when I was promoted in the Ulster Defence Regiment from a platoon commander to a company operations officer, I made it my business to train the soldiers how to operate a vehicle checkpoint. I remember spending a full weekend putting them through the various hazards with which they might be presented. I would set forth in our old Cortina estate car with a lot of old mackintoshes and different dunchers and hats in the back and drive in disguise through the vehicle checkpoint that I had told the soldiers to set up. On one occasion I would be abrasive and ask them what business they thought they had to stop me when I was travelling in a orderly manner on the Queen's highway.
On another occasion I would be suspicious and evade their questions to see how they would cope with that. On yet another occasion I would try their patience by engaging them in lengthy conversation while the civilian traffic was building up in a queue behind. They said to me afterwards, "We did not know it was you, sir," such was the effectiveness of my disguise and the authenticity of the accents that I assumed on those occasions. However, the men took the point. They always manned a vehicle check point in a sensitive and courteous manner

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irrespective of the attitude of the vehicle driver whom they were stopping.
In my service in the Ulster Defence Regiment only twice were we faced with a potentially awkward situation. On one occasion we were summoned by the police to a Roman Catholic church in the Holy wood Road, Belfast, because it was under attack by a gang of Protestant youths who were at that time known as the "tartan gangs". We therefore concentrated on that area. We had stones thrown at us, and I had to send one of my soldiers to hospital afterwards because he had a leg injury, but nothing worse than that happened. But the UDR men on that occasion were as resentful of the Protestant youths attacking that Roman Catholic church as they would have been of Roman Catholics attacking a Protestant church.
On the other occasion in Newtownards a publican came out of a public house and shouted, "Why aren't you doing anything about this?" I said, "I have only just arrived. I don't know what is happening." It turned out again that it was a Roman Catholic-owned public house and that it had been under threat from some Protestant louts. We therefore mounted guard and everything was all right. The situation was successfully defused.
The picture is therefore much broader than that presented by the "Panorama" programme to which the noble Viscount referred. If there is a block on that picture it is so small that it is almost indiscernible.
It is regrettable that whereas in 1971 the percentage of Roman Catholics in the Ulster Defence Regiment was 18 per cent. the figure is now only 3 per cent. But great tribute must be paid to the 3 per cent. for their courage because it is not easy being a Roman Catholic and a member of the security forces in certain parts of the country.
Before anyone criticises the Ulster Defence Regiment I respectfully suggest that he bears in mind the stress that is endured by members of that regiment. He should bear in mind the anguish endured by those who have lost husbands, fathers brothers and sons, very often murdered in cold blood. He should also consider the facts before adversely criticising the UDR.
Lord Fitt: My Lords, sitting in your Lordships' House, looking across the Floor at the noble Viscount, Lord Brookeborough, it makes me feel rather ancient because I recall vividly sitting in Stormont in the Northern Ireland Parliament and having the same discussion with his grandfather, the first Viscount Brookeborough.
Lord Dunleath: And my godfather too.
Lord Fitt: I had not realised that. So it would appear that nothing has changed.
Let as consider the Northern Ireland problems and the Irish problem in the context of today. We have been watching this weekend the elections taking place in East Germany. The question was about reunification. I am not very happy with the result but it gives an indication of how people will vote on an emotional plane. They will vote for unity even
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when it is not attainable. They will vote for a rejection of those who appear to be attaining unity too slowly or not wishing to go ahead apace.
The situation in Ireland today is not unique. If one considers the emergency regulations before us this evening one might think that Ireland is a unique situation. I was born and reared in Northern Ireland. There are other situations throughout the world where two communities are fighting for one portion of land or trying to put forward their claim to one portion of land. In Cyprus one has the Turkish and Greek populations. In Ceylon— now Sri Lanka— one has a terribly serious campaign of murders. We have it in French possessions in the Pacific. Therefore the situation is not unique. What makes Ireland different is that it has existed for three or four centuries. The history of what is happening in Cyprus goes back further, but that is not the case with other claims and territorial ambitions.
We are here tonight debating emergency regulations. Let us first make clear what the regulations involve. There are 26 counties in the Republic of Ireland. There are six counties in the North. The real trouble is that Articles 1 and 2 of the constitution of the Republic of Ireland lay claim to the six counties of Northern Ireland. If one is an Irishman one realises that either the 26 counties or the six counties is a derogatory term. But we are all prisoners of our Irish history and our Irish history is all British history. It has not been solely confined to the island of Ireland. Irish history and British history in the 17th century were one and the same thing.
I have here a history lesson. This year, 1990, is the anniversary of the famous or infamous Battle of the Boyne which decided the monarchy in England and the partition of Ireland 300 years hence. The history lesson is this, and it should be put on record. I have been watching the commemorations of 1688, 1689 and 1690 which have taken place concerning the glorious and bloodless revolution of 1688, King William and so on. So far as concerns Ireland it was not glorious and bloodless. We are living now with the consequences of that glorious and bloodless revolution which led to the emergency provisions measure that we are debating today.
It would be as well to put the history lesson on record. The history lesson says:
"A Dutchman called Prince William,
and an Englishman, King James,
fell out and and start feuding,
and called each other names,
T'was for the throne of England,
but for reasons not quite clear,
they came across to Ireland,
to do their fighting here.
They had Sarsfield,they had Schomberg,
they had horse and foot and guns,
and they landed up at Carrick,
with a thousand Lamberg drums …
They had lots of Dutch and Frenchmen,
and battalions and platoons,
of Russians and of Prussians,
and Bulgarian dragoons,
and they politely asked the Irish if they'd kindly like to join,
and the whole affair was settled,
at the Battle of the Boyne.
Then William went to London,
and James went off to France,

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And the whole Kibosh left Ireland,
without a backward glance,
and the poor abandoned Irish,
said "goodbye" to King and Prince,
and went on with the fighting,
and we've been at it ever since".
That is a true story of what happened in the 17th century; it is the true reason for what we are debating here this evening.
Like all noble Lords, I have been watching television over the past six months. I have seen the taking down of the Berlin Wall; I have heard the clamour for national independence. There have been the results of the voting in East Germany and the calls for independence in the Baltic republics. Once again I am reminded of a famous quotation by none other than Winston Churchill. In 1922, after the war, speaking on the free state Bill in the House of Commons he said:
"Then the came the Great War … Every institution, almost, in the world was strained. Great Empires have been overthrown. The whole map of Europe has been changed. The position of countries has been violently altered. The mode and thought of men, the whole outlook on affairs, the grouping of parties, all have encountered violent and tremendous changes in the deluge of the world, but as the deluge subsides and the waters fall we see the dreary steeples of Fermanagh and Tyrone emerging once again. The integrity of their quarrel is one of the few institutions that have been unaltered in the cataclysm which has swept the world. That says a lot for the persistence with which Irishmen on the one side or the other are able to pursue their controversies. It says a good deal for the power which Ireland has, both Nationalist and Orange, to lay her hands upon the vital strings of British life and politics and to hold, dominate and convulse, year after year, generation after generation, the politics of this powerful country".
How true is that today, 70 years later.
There must be a reason why those politics, that atmosphere and that reasoning prevail. However, one views events in Lithuania, East Germany, Latvia and Estonia, the fact remains that we have this problem— and it is a problem— within the British Isles and the United Kingdom.
Ireland is an island which, the Irish nationalists believe, is the one indivisible geographical island which should not be partitioned. That is something with which I may not totally agree but it is certainly something in which the Irish republican and nationalist community in Northern Ireland believe. However, given that we are now living in the 20th century, how can we contain that political entity known as Northern Ireland, opposed as it is by the Irish republican or nationalist community? We must have emergency legislation such as this.
As a democrat, I have always been opposed to emergency legislation. I said that one day last week in this House on the Prevention of Terrorism Act. I do not believe, as the noble Viscount and the noble Lord, Lord Dunleath, have said, that the vast majority of people in Northern Ireland are willing either to support or give support to men of violence to try to change the constitutional position of Northern Ireland. However, I now go further than what I said last week on the Prevention of Terrorism Act. There are far too many covert paramilitary supporters both on the republican and loyalist sides. While not prepared themselves to take action, they are quite prepared to give covert support.
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In the Irish Republic over the past two weeks there has been the very injurious decision given by the Irish Supreme Court in relation to Articles 2 and 3 and, within a few days, the totally disastrous decision of the Irish Supreme Court in relation to the release of two convicted criminals in Northern Ireland. We are told, and I understand, that both the Irish Government and the British Government are prepared to play that down and to say that it was not really serious; merely a hiccough; and one of those small things which should not be allowed to interfere with the Anglo-Irish Agreement. As a nationalist, a Catholic and one who has opposed the Unionist Party in Northern Ireland, the noble Viscount, Lord Brookeborough, his father and his grandfather, again I put on record that the Anglo-Irish Agreement will do absolutely nothing to unite the community in Northern Ireland.
We were told that the Anglo-Irish Agreement would lead to a situation where the Government of the Republic would do whatever they could to apprehend criminals and terrorists. That has not been so. The Irish Government could have done an awful lot more to apprehend terrorists in the Republic of Ireland. Every time that it appears that they are doing less than they should, the people of Northern Ireland— particularly the Unionist population ask, "What was the Anglo-Irish Agreement all about?" If it appears that one side or the other are victors in the Anglo-Irish Agreement, then it will not do what it is supposed to.
I remember very well 15th November 1985 when the Irish Government and the British Government signed the Anglo-Irish Agreement. I kept two versions of it. The British version said: "This is an agreement between the Government of the United Kingdom, of Great Britain and Northern Ireland and the Government of the Irish Republic". That was a statement of fact. The Irish version said: "This is an agreement between the Government of Ireland and the Government of the United Kingdom".
They could not agree on the nomenclature of the agreement. That was an indication of the position. That paved the way for the decisions in the Irish court last week. There is no such thing at the moment as the Government of Ireland. Where the governments of that island are in dispute, IRA men, UVF men or people in other paramilitary organisations will be prepared to push their ideas about the constitution of the country concerned.
We were told that the Anglo-Irish Agreement would do away with megaphone diplomacy. It would mean that where there was disagreement between the Republic of Ireland and the United Kingdom people would not be engaged in shooting at each other across the Irish Sea. That has not happened. Every month when there is a meeting of the Anglo-Irish intergovernmental council we see the Foreign Minister of the Irish Republic on television telling the world at large what he is going to say to the Secretary of State for Northern Ireland. Then he comes out of the meeting and tells the world at large what he has said to the Secretary of State for Northern Ireland. I do not see that that is any great advance on the position that existed before the signing of the Anglo-Irish Agreement.

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This debate is all about internal security in Nonhern Ireland and the relationship between Northern Ireland and this country. I do not oppose the order as it stands at the moment because I have seen the problem of terrorism not only in Northern Ireland where I live but in the United Kingdom over a number of years. I advise the Government that whatever arrangements they have agreed with the Irish Government in relation to the Anglo-Irish Agreement the Irish Government should be made to live up to whatever promises they have made or indications they have given that they will do what they can to prevent any further erosion of the response to terrorism.
8.15 p.m.
Lord Hylton: My Lords, I am grateful to the Minister for the way in which he introduced the order. I very much welcome what he said about future video recordings of interviews. It is certainly no frnction of this Parliament, let alone of your Lordsihips' House, to criticise the decisions of the courts of other countries. However, the fact remains, as has been pointed out, that two recent decisions of the Supreme Court of Ireland have unfortunately been a major setback to relations between our two countries. This has implications for security in Northern Ireland and for co-operation between the security forces of the North and South of Ireland.
Such co-operation is vital and has, I am glad to say, greatly increased since 1985. The constitutional and legal situation could be clarified and improved by amending the constitution of the Irish Republic, a maf.er to which I have previously referred in the House. I note briefly that the Kilbrandon Commission in 1984, the Northern Consensus Group in Belfast, the New Consensus in Dublin and Mr. Conor Cruise O'Brien have all expressed clear views on Articles 2 and 3 of the Irish constitution. Another and perhaps more fruitful approach would be for both governments to remove the present ambiguities, which the noble Lord, Lord Fitt, so rightly pointed out, by using the Helsinki process. The Conference on European Security is, after all, designed to ensure that no member states make territorial claims upon their neighbours. To confirm and underwrite the existing frontier would remove a great deal of quite understandable Unionist fear. It would also help to make elections in Northern Ireland less divisive and more constructive. It would enhance the chances of an internal settlement and improve the outlook for stability and economic investment. One thing is sure: uncertainty is the enemy of progress.
It has become almost a tradition of these debates to express admiration and support for the army, the police and the prison service. I recognise the courage and devotion to duty of the great majority of their members. I support them willingly and most wholeheartedly when they uphold the law, promote peace and seek to disarm terrorism. They thereby protect the lives and interests of law-abiding people throughout the whole community regardless of political or religious traditions. I particularly welcome the efforts of the Chief Constable of the Royal Ulster Constabulary to recruit more Catholics
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and thus to balance the composition of the force. The RUC professional code of conduct is an excellent document. I hope that it will be more and more widely understood and implemented.
Now that some sections of the RUC are heavily armed and equipped, there is a strong case for phasing out, over a period of years, the Ulster Defence Regiment. Its full-time and part-time members could be given the option of continuing to serve either in the police or in the regular army. Those who took the army option might be retained as guides and instructors to the rotating units of the army. Their local knowledge could be invaluable. This suggestion is not original. It was first made in 1985 by the report of the commission set up by the Alliance Party of Great Britain and was endorsed this year by the noble Lord, Lord Hunt, who had some special knowledge of these matters.
I have the greatest sympathy for those members of the security forces who are confronted with difficult decisions about how much force to use and whether or not to open fire. This is particularly the case when law breakers use replica weapons. There are, however, serious grounds for concern about the killings of Messrs. Thompson, Hale and McNeil on the Falls Road on 13th January and about the nearly fatal wounding of Mr. Kearney on 26th February in Lenadoon. The army was responsible for all those shootings.
At least three measures could be taken to improve this difficult situation. The Government could formally adopt the code of conduct for internal conflicts prepared by Dr. Gasser of the International Committee of the Red Cross, or the draft model declaration by Professor Meron of New York University. I understand from the Government that most of the points in the IRC documents are covered by existing international conventions which we have ratified. I shall try to obtain a copy of the New York document. The point, however, about formally adopting such documents is that it would make it clear beyond any doubt that not only the police but also the army, its special units and the UDR are committed to the use of minimum appropriate force.
A second approach would be to create a new offence, applicable to the security forces, of using force in a reckless manner. Here I am afraid I have to disagree with the noble Viscount, Lord Brookeborough. This, I believe, would help by making it easier for the courts to convict where the mark had been overstepped. Once again, this suggestion goes back to Kilbrandon. It has since been endorsed by various professors of law and by at least one former Minister in the person of the noble Lord, Lord Donaldson of Kingsbridge.
A third approach lies in reforming the terms of reference and rules for coroners inquests in Northern Ireland. Unfortunately, they are at present all too often meaningless. If they could take place sooner after the event and if they led to remedial action they might begin to be more useful. Probably all three approaches are necessary.
Very serious apprehensions have been aroused about collusion between the security forces and loyalist paramilitaries by doubts about adequate

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vetting of recruits to the Ulster Defence Regiment and by the exploitation of civilian contracts within the Ballykelly base. The Stevens inquiry has been widely welcomed and we must hope that it will have more positive results than the earlier Stalker inquiry. Accountability in all the security services, including the police, is a major worry. The problem of course goes wider than this debate since it concerns the whole of the United Kingdom and probably the Irish Republic as well. The fact that the Home Secretary is a one-man police authority for London and that in 1989 many of the English police forces were investigating each other merely confirms the difficulties.
The pamphlet, Police Accountability in Northern Ireland published in 1988 by the Voluntary Committee on the Administration of Justice is probably one of the best attempts to find a way forward. Pending major reforms in accountability, several useful minor improvements could and should be made in Northern Ireland. Police and the public liaison committees should be more widely used, drawing on the experience of the successful committee in Derry. Here I welcome the proposal from the noble Viscount for three new committees.
The system of duty solicitors available to advise arrested persons should be extended to all police stations where such people are held and questioned. In England, lay visitors to police stations have been a recent success and similar experiments should be tried in Northern Ireland.
We can rejoice that the month of February passed without a single violent death in Northern Ireland. In March, alas, there have been several sectarian killings. Such fluctuations from month to month perhaps underline the importance of restoring normal civilian policing as widely as possible. If traditional methods of dealing with hooliganism, disputes between neighbours, car thefts, and so on, can prevail then the climate in which terrorism flourishes will be greatly reduced.
My final request has already been made several times by the Standing Advisory Committee on Human Rights in Northern Ireland. Will the Government arrange the consolidation of the emergency provisions Act and the prevention of terrorism Act in so far a both affect Northern Ireland? That would be a major step forward for all who are in any way concerned with the operation of this complex but regrettably necessary legislation. I once more underline the cardinal importance of accountability.
Lord Skelmersdale: My Lords, this has been a most interesting debate. It has been particularly interesting for me as it is the first debate on this subject that I have had the privilege of answering in this House. It ranged over a number of issues of fundamental importance, as the noble Lord, Lord Prys-Davies, said.
In summing up I remind the House that the Government's first priority remains the defeat of terrorism, from whatever source it comes. Our wish is that all the people of Northern Ireland should once
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again be able to live peaceful and stable lives and be able to take decisions about the government of their Province, free from the threat of violence and coercion. In this endeavour the police, supported by the armed forces, will continue to enjoy our full support.
It is easy to forget that quite apart from the problems of terrorism the police have to continue with their everyday activities of tackling ordinary crime. That is in itself a daunting enough task at the best of times but in Northern Ireland it is, I am afraid, still overlaid with problems of terrorism. I therefore commend the police and the armed forces for the brave and resolute way in which they tackle their heavy and dangerous responsibilities.
Public confidence in all the forces of law and order is essential. My right honourable friend emphasised this in his recent statement when he said that there is,
"no place in the security forces of Northern Ireland for those who breach their trust".
Action is already being undertaken that should increase public confidence. Allegations of individual wrongdoing are receiving rigorous investigation. That is what the Stevens inquiry, the last such example, is all about.
We are increasing the professionalism and improving the training of the Ulster Defence Regiment, which of course— a point which has not been adverted to this evening— has more full-time permanent cadre members. I say to the noble Lord, Lord Hylton, who spoke in support of a letter in The Times from the noble Lord, Lord Hunt, that the UDR is largely a Protestant force, not by intention but because of a campaign of intimidation by the IRA. At the start, 18 per cent. were Roman Catholics, but I regret to say that the figure is now only 2·75 per cent. The regiment has shown this year that it can and does act effectively against loyalist paramilitaries by arrests, fines and well-targeted pre-emptive patrolling.
As regards the future, the UDR is a reserve force called out because of the current terrorist violence in support of the police. When such military support is no longer needed, the role of the UDR will inevitably need to be substantially altered. I disagree with the noble Lord, Lord Hylton, that that time has arrived.
I am grateful to my noble friend Lord Brookeborough, with his great experience of the security situation, for putting flesh on the bones of the necessarily curt statistics that I used earlier. He spoke of the need for public relations, especially in regard to the army and the UDR. I most certainly agree with him.
The noble Lord, Lord Prys-Davies, spoke very realistically, if I may say so, concerning complaints about the police. As he will recall, the Independent Commission for Police Complaints was set up two years ago. Its powers go beyond those of its predecessor and also those of the Police Complaints Authority in Great Britain, reflecting the additional difficulty of policing in Northern Ireland. The commission provides an independent and effective complaints system and has made a significant

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contribution towards strengthening the relationship between the public and the RUC. I have no doubt that as it further develops its role it will make a material contribution to the confidence of the community in the RUC. The commission's second annual report will shortly be submitted to my right honourable friend, who will lay it before Parliament.
The noble Lord also mentioned the Diplock courts. There is no direct evidence that the present Diplock system has resulted in unsafe convictions. In recent years between 40 per cent. and 50 per cent. of contested cases have ended in acquittals. This compares favourably with other forms of trial. The noble Lord will recall that, to compensate for the absence of juries, defendants have an automatic right of appeal on any ground against sentence or conviction. The judge must also set out in writing his reasons for convicting a person. This is unique to the United Kingdom judicial system and clearly assists the defence if it wishes to appeal. Appeals are to three judges.
The Government are not presently persuaded that the Bench should be expanded to three judges rather than one in Diplock trials. There would be substantial practical difficulties in such courts.
The noble Lord referred to my noble friend Lord Colville. I should remind the noble Lord that it is not the Government's practice in Northern Ireland to mike changes in legislation, or indeed new legislation, without consultation. Before the new legislation and after my noble friend Lord Colville has reported at Easter, there will be plenty of time for that.
Not surprisingly, the debate has wandered somewhat from the security situation into the realms of political development. The Government believe that there may be scope for political progress to agree a basis on which the parties could talk. My right honourable friend's judgment is that Unionists, SDLP and other parties want to make progress. It is in their interests to seek agreement on how political power and authority can be exercised by locally-elected representatives and how wider relationships are managed.
I say that despite recent happenings on the Anglo-Irish Agreement. The noble Lord and the House generally, will agree with me that there are many hurdles still to be overcome in progressing such talks. I agree that that is a condition devoutly to be desired. The House may not be aware of a press communique that was issued following a meeting between my right honourable friend and the Unionist leaders. It says that the two Unionist leaders raised with the Secretary of State the very serious implications, in their view, of two recent judgments of the Irish Supreme Court. They expressed especial concern at the court's decision that the registration of the national territory was a constitutional imperative. I believe that that is an important point in that the Anglo-Irish Agreement should be used to serve that purpose.
I share very many of the concerns of those noble Lords who commented on the recent decisions given in the extradition cases of Finucane and Clarke. I was particularly impressed by the feelings expressed
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by the noble Lord, Lord Fitt, on Thursday last. In part of his speech today he repeated them. Those speeches will be very unpopular in certain sectors of Northern Ireland, but their bravery is something which I am sure noble Lords will remember for a very long time.
Your Lordships will recall that these two judgments were described by my right honourable friend the Prime Minister as:
"grossly offensive and totally unjustified",
and by my right honourable friend the Secretary of State as "deeply disappointing" and
"an unacceptable slur on the professionalism of the men and women of the Northern Ireland Prison Service".
I do not detract one iota from those views. Indeed having visited a prison in Northern Ireland, I have no hesitation in agreeing with a senior prison officer from Scotland who has visited many prisons both in the United Kingdom and abroad. He said that the prison regime in Northern Ireland is the most relaxed in Europe outside Sweden. That said, the decision was a judicial one and as such must be respected.
It is also worth recording that it was the Irish authorities who originally sought these extraditions on our behalf and who have continued to make strenuous efforts at every level of their judicial system to bring them to a successful conclusion. We regard extradition as a vital component in our arrangements for bringing fugitive offenders to justice. Both Governments remain committed within the framework of the Anglo-Irish Agreement to ensuring that extradition arrangements between our two countries are both fair and effective.
The judgments in these cases are long and complex. We are studying them carefully. We are in touch with the Irish Government and will be pursuing with them our concerns at the possible implications of these judgments for future cases through the Inter-Governmental Conference. As far as those conferences are concerned, progress has been made in all areas covered by Article 9 of the Agreement. However, incidents such as Derryard demonstrate that more can and will be done.
Security co-operation was recently discussed at a meeting between my right honourable friend the Minister of State and the Irish Minister of Justice and at the last conference meeting. Significant finds of weapons, ammunition and explosives have been made not only in Northern Ireland but also by the Garda. Up to 27th November 1989, the Garda had recovered 111 weapons, 24,627 rounds of ammunition and 1,825 pounds of explosive which included 58 pounds of Semtex.
As regards the McGimpsey case in which the noble Lord, Lord Hylton, is particularly interested, I note that the Supreme Court has given its judgment. I confess to a certain amount of pleasure that the constitutionality of the Anglo-Irish Agreement has been upheld. The Government will need to give careful consideration to the terms of the judgment before commenting further. I can tell the noble Lord that, irrespective of the Irish constitution, the status of Northern Ireland in international law is quite clear. It is a part of the United Kingdom. It is staying there until the majority of the people in Northern

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Ireland decide otherwise. How that squares with the Irish constitution is not a matter for Her Majesty's Government.
As to whether the Irish are now refusing to extradite people on the ground that they consider that they have a legal claim to Northern Ireland, I am aware of no evidence of this from the recent judgments. My noble friend Lord Brookeborough went a little further than I have been able to do so far in commenting on police and public liaison committees. I note his constructive remarks on that subject. He will recognise that Article 82 of the Police and Criminal Evidence Order, which came into force on 1st January, provided a new and statutory basis for such bodies. I trust that those new provisions go some way to meet his concern.
I can tell my noble friend that the security forces recognise the importance of maintaining and improving levels of support and confidence throughout the whole community. In a leaflet published by the army in 1985 members of the public are advised to make their complaints to the RUC for it to determine whether a criminal offence has been committed. The public may of course complain direct to the army. As a result, the army attaches great importance to complaints being dealt with properly and quickly. Army units have been reminded of the importance of dealing swiftly with complaints and they have been encouraged to handle them at a local level through direct personal contact with the complainant.
The aim is to reply within three to four weeks or less. The number of justified complaints against the army is very small: there were 26 out of a total of 282 in 1989. I accept the point made by my noble friend that even that number is too many. When he speaks about vehicle checkpoints in the parts of the Province about which he spoke, I remind him that, as he will know only too well, there are genuine problems on narrow country roads. Currently, there is no facility for by-passing or being waved on by the security forces as, for example, happens on occasions at the entrance to Aldergrove Airport.
I know that my right honourable friend the Minister responsible will take his remarks most seriously and that he will be in touch with HQNI for its advice on this undoubted problem. My noble friend, ably abetted, if I may somewhat cheekily say so, by the noble Lord, Lord Dunleath, made a strong complaint against the BBC for its recent "Panorama" programme on the UDR. I share with them many of their concerns and agree with the noble Lord, Lord Dunleath, that if there is any impropriety in the UDR it should be rooted out root and branch. That is why we have various periodic inquiries, the current one being that of Mr. Stevens.
I believe I have covered the main points that have been spoken to tonight except for one. The noble Lord, Lord Hylton, made the suggestion that there should be consolidation of the two Acts. The Government entirely understand the desirability of consolidating the emergency legislation for the sake of consistency and clarity. My noble friend Lord Colville is considering the form of any future
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legislation including the question of whether it will be appropriate to consolidate into it those parts of the prevention of terrorism Act that apply to Northern Ireland.
As has been mentioned, my noble friend is here and he will have listened to the points made by the noble Lord, Lord Hylton. Should he respond in any way the Government will be listening.
The order continues in force the emergency provisions for a further 12 months. That is in line with my noble friend's recommendation. I have no hesitation in saying that the powers continue to be needed. They provide a balanced package which, on the one hand, gives the police, the armed forces and the courts the extra powers that they need to tackle terrorism while, on the other, providing safeguards to protect the individual.
As the House will be aware, my noble friend Lord Colville is conducting a further, more substantial review of the legislation at present and we shall in due course be bringing forward proposals. In the meantime the existing powers remain necessary. I therefore ask unreservedly for approval of the order.
On Question, Motion agreed to.

Education (Student Loans) Bill
8.40 p.m.
House again in Committee on Schedule 2.
Earl Haig Earl Haig moved Amendment No. 39:
Page 3, line 40, at end insert:
(" (d) make provision for differentials in rate of repayment for those with longer courses and for graduated scales of repayments according to various levels of income.")—
The noble Earl said: The amendment is a probing amendment. I am seeking an assurance from my noble friend the Minister that where there are repayment difficulties for graduates a way will be found to vary the amounts to be repaid according to the level of their income. Clearly all those who can pay off their loans will do so as quickly as possible. Those on longer courses, or those on postgraduate or travelling courses of some kind will be among those having to delay repayment. Longer courses include modem languages, architecture, medicine, dentistry, higher engineering courses, teacher training, speech therapy, audiology and virtually all Scottish honour degree courses.
The longer the delay, the greater the escalation due to inflation. The less well paid professions (doctors and artists) who would be unlikely to reach 85 per cent. of the average wage for some time, if ever, would be disadvantaged. The amendment recommends a graduated scheme which would encourage young people into higher education en route to lower paid professions without the threat of a future millstone of debt around their necks. A doctor might find himself above the 85 per cent. level with a debt of well over £ 2,500.
Extending a course by one year increases the size of the debt by over 60 per cent. That debt would make banking facilities hard to acquire and difficult to face at a time when a graduate was having to buy

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a house, start a family and take out a mortgage. Those difficulties will affect recruitment to longer courses. They will affect the Scottish system in particular. They will affect arts and crafts course students in the universities. That could lead to fewer graduates, and fewer teachers could lead to fewer students. Some 25 per cent. of Scottish university students are from outside Scotland. Faced with the prospect of higher debt levels many students will avoid going north. That will have a disastrous effect on our Scottish higher education institutions.
Some variant in the amount to be repaid on the loans for fourth year students is required. The amendment calls for a degree of flexibility so that students will feel that their special circumstances are being watered for so that the harsh effects of a sudden transition to repayment liability will be avoided. I beg to move.
Lord Peston: The noble Earl has put his finger on what is wrong with the Bill. If one were specifying a suitable student loans Bill such provisions would be intrinsic to the Bill. We would go out of our way to see that students on longer courses did not suffer because of that, as the noble Earl has said. Secondly, when one is considering repayment, instead of having the crude mechanism that the Government have invented (the 85 per cent. point for deferment) — one would have a graduated scale of repayment, according to the various levels of income, as the noble Earl has said. One would be on the way to the graduate tax version of this form of maintenance.
The noble Earl is right and one is sympathetic, but our problem is that the Government have set their face against any amendments to the Bill because they have set their course for disaster in order to get the Bill on to the statute book. That is up to the Government. I can say only that the type of considerations that the noble Earl is asking to have included in the Bill are right. We have argued this point before, as has the noble Earl, and there are several other amendments this evening upon which we will make much the same point. I must say— perhaps because it is already late— that I despair of this type of amendment because it is so sensible and the Government have decided that sense is not what they want to involve themselves in with respect to this legislation.
8.45 p.m.
Lord Addington: I made similar points last week. The problem is that no courses lasting more than three years were considered in the initial thinking or in the White Paper. The Minister said that he would look into the problem. I wonder whether any light has been cast upon it. How have any ideas developed: Scotland will be hard hit. I have gone on at some length about Scotland previously and I shall not repeat the arguments. The problems are fundamental because four-year courses do not come within the scope of the White Paper.
Lord Dormand of Easington: I understand that the amendment refers to continuous courses which are necessary to obtain a particular qualification. In
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certain subjects— I think particularly of physical education and music, but there are others— it is highly desirable from an educational point of view as regards the pupils, the schools and the whole educational system for an additional course to be taken. When the Minister replies, will he tell us whether the point would be considered in that context if the amendment were accepted.
Baroness Faithfull: Perhaps I may follow the point made by the noble Lord, Lord Dormand, and ask a question in relation to the amendment. I had been going to ask it in relation to another amendment but I shall ask it now in the light of what the noble Lord has said. It has been laid down by the Government that social workers should be trained for two years— we had all asked for a three-year training— return to their offices and then take a post-qualifying course of one, two or three years. I am not sure how the repayment of their loans will be manipulated. The point may fall under this amendment, and I merely ask that question of my noble friend.
The Earl of Caithness: I am glad to have the opportunity again to go over the question of repayment terms— a matter about which I believe some Members of the Committee already know. The Government recognise that it is important to get those terms right. The repayment regime has been carefully considered to take account of the need to protect those on low incomes and to produce a cost-effective administration of the scheme. The Bill sets the framework for deferment and cancellation, but, as the Committee knows, we do not intend to set the detailed repayment conditions in the Bill. We have already debated the nature of the Bill as enabling, and I have agreed that when the subordinate legislation is introduced to establish the scheme it will be subject to this House's approval under the affirmative resolution procedure. Your Lordships will then have the opportunity to debate the regulations which deal with repayments.
It might be helpful if I first repeated the intended repayment terms. Repayment can be deferred if income falls below 85 per cent. of national average earnings for whatever reason; the outstanding debt will be indexed in line with inflation to maintain its value in real terms; the debt will increase in this way during the period of deferment; there will be a fixed repayment period and repayments will be equal each year in real terms; any outstanding loan will be cancelled after 25 years or at the age of 50, whichever is earlier; or, for students starting courses at 40 or over, at 60— if there has been no evasion of repayments; and, in any case, in the event of death.
Amendment No. 39, which was moved by my noble friend Lord Haig, seeks to relate repayment scales directly to income. We do not believe that different rates of repayment are the right way forward. A graduate of a three-year course starting in 1990–91 who borrows the maximum loan faces a repayment of less than £ 400 a year, with the option to defer if income is low. The repayment period will be increased as the scheme develops and the size of the loans increase. We intend to ensure that annual repayments are kept around £ 400 at present prices.

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The deferment threshold of 85 per cent. of national average earnings provides protection for those on low income. In today's circumstances, this threshold would mean that a graduate on an income of up to £ 11,500 could defer repayment for up to a year at a time. I ask your Lordships to consider whether £ 400 a year for five years out of salary of more than £ 11,500 is an unacceptable repayment.
If there were to be a variable repayment term according to income, the administrative complexity would increase. This would add to the cost of the scheme. I make no apology for using an argument of this kind: administrative complexity would lead to confusion and inefficiency.
A graduate would not know how long he would have to repay his debt, for his instalments would change according to income. The flow of repayments to the Exchequer would also be affected. This would delay the savings that should accrue to the taxpayer.
It is much simpler to have a fixed repayment term, from the point of view of administration and, more importantly, from the point of view of the borrower. We believe that repayment at the level of £ 400 a year will be reasonable for all graduates.
The amendment also seeks to make special provision for graduates on longer courses, and I shall be brief on this. As I have said before, we are examining the possibility of allowing longer repayment terms for those on courses longer than four years, so that repayments do not become too burdensome. It is a point about which the noble Lord, Lord Addington, asked me in particular. I cannot give any further information today. I shall do so at the earliest opportunity, because I know that it is of concern. I was more than surprised to hear the noble Lord, Lord Peston, say that we had set our face against any amendment. I though the one thing the Government had not done was to set their face against any amendment, and this is another area that we are looking at.
Lord Dormand of Easington: I wonder whether the Minister would care to deal with the points which I and his noble friend made.
The Earl of Caithness: I am sorry. I meant to cover those points and I did not. What is important, when we are talking about repayment, is not necessarily the course that the student has been on. It is the amount that that student has to repay, the amount which he took up in the way of a loan. Accordingly, students will not be asked to repay anything until they have completed the course. At the end of the course, there is a nine-month gap from the end of July to April the following year, when the repayment period will start. That repayment will start only if the income is above 85 per cent. of the national average, which is at the moment £ 11,500. So it is not the course that the student has been on but the income he receives which is the determining factor in the cases of both the noble Lord, Lord Dormand, and my noble friend Lady Faithfull.
Lord Peston: I am delighted to hear the noble Earl's remarks on the amendment and I wait to see
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what these acceptable amendments will turn out to be. I wait to see that on this coming Monday. What I am not clear about is this. We agree— do we not?— that a student on a longer course will have a larger loan. There is no disagreement about that. Therefore, a student on a longer course will incur larger costs. We must agree that that is a disincentive to such people and it must add to their burden.
As I understand it, the amendment of the noble Earl, Lord Haig, is directed towards the fact that there is something rather inequitable and, possibly, rather inefficient about that. It is at least possible to put forward a valid argument that says essentially that, even if they are on a five- or six-year course, everybody has three years' worth of debt because they are on a five- or six-year course not because they want to be but because it is in the nature of the course. I am certain that doctors would love to be educated and trained as rapidly as economists, but you cannot train a doctor as rapidly as that so it is more expensive to be a doctor.
As I understand it, the point that the noble Earl is making and the point that the medical profession has made in getting in touch with us is that that is a misunderstanding on the part of the Government of what is required here, and that consideration would not depend on administrative simplicity, which is the noble Earl's other argument. In other words, it is a possible suggestion that the noble Earl, Lord Haig, has put forward that the Government could take on board. It is not obvious why someone deciding to be a doctor— I use that as one example though there are many others— should as a result incur a greater debt to the taxpayer when in many ways the taxpayer wants that person to be a doctor.
Lord Flowers: Will the Minister also bear in mind one further point before he replies? He said that £ 400 a year is not so much to think of paying— and maybe it is not for many people. But what many of us assume is that it is the Government's intention that the loan element will as the years go by form a much greater proportion of the total maintenance support of the student, so the figure might rise from £ 400 to £ 2,000 or something of that sort. When levels of that kind are reached there is a case for graduated repayments, according to one's ability to pay, which does not apply with such force to a mere £ 400. We are not talking about the exact sums, but about the principle, in the expectation that the amount will get more important later on.
Earl Russell: We seem here to be running into a brick wall in government thinking. I am trying to work out exactly what that brick wall may be. I am wondering whether the problem that we have run into is the determination to apportion repayments exactly to the size of the individual borrower's debt; whether we have once again hit what the noble Earl had to expound to us so many times on the Local Government Finance Bill— the principle of accountability. Is it not more trouble that it is worth?
The Earl of Caithness: I hear and note carefully what the noble Lord, Lord Peston, and the noble Lord, Lord Flowers, said. What I said was that we

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are looking at those courses that last more than four years Clearly I have said that this evening; I said it this afternoon; I said in last Monday; and I think I said it at Second Reading. I hope that this time the noble Lord, Lord Peston, will understand that that is what we are doing. I shall come back with an answer, because we want to keep the level of repayment at about the £ 400 a year mark.
That takes me on to the point of the noble Lord, Lord Flowers, that in due course, as the loan builds up towards the 50/50 level, it becomes a larger amount. I repeat what my noble friend Lady Blatch said earlier this afternoon— that we will again look at the repayment period, so that we keep the level of repayment at a very reasonable level, which we are seeking to do. If it comes to that stage, then it could be extended at a later stage.
I do not think the noble Earl, Lord Russell, is throwing up a brick wall, unless he is facing in the opposite direction to me. I am trying to be as helpful and accommodating as I can. We think it is absolutely fair, and I am sure that the Committee agree with the Government, that if a student borrows from the taxpayer a certain amount of money it is right that in real terms he pays that back when as a graduate he can afford it.
Earl Haig: I thank my noble friend for his reply. However, I think that Members of the Committee from all sides must be rather disappointed in his response. I cannot see that there is any indication that there will be any change or flexibility in regard to the problems which I mentioned. I hope that before the Bill returns to another place there will be more thinking on the matter. As the noble Lord, Lord Peston, said, it raises crucial problems which produce among students the feeling of disquiet about a certain divisive situation which I think led to some of those noises about which we heard earlier today. However, it is now pointless to put the amendment to the Question. I beg leave to withdraw it.
Amendment, by leave, withdrawn.
9 p.m.
Earl Russell Earl Russell moved Amendment No. 38A:
Page 3, line 40, at end insert:
(" (d) make provision to ensure an individual borrower's liability remains that individual borrower's liability and does not pass to another person.").
The noble Earl said: I think that the noble Earl will find the point that the amendment is making extremely familiar. It concerns the joint or several liability which I recall this Chamber debating at great length during the passage of the Local Government Finance Bill. The suggestion behind the amendment is that the Government actually took the right decision on that occasion. They decided to stick strictly to the principle of individual liability; that it should not become a joint or shared responsibility; that it should not— as I believe the noble Earl assured us it should not— be a negative doubt; but that a loan should be the proper and sole responsibility of the borrower. I do not think that that conflicts with government thinking but I should be very glad to hear the noble Earl's confirmation on that point.
Baroness Blatch: The amendment would ensure that liability for the loan could not transfer to anyone other than the original borrower. I must remind the Committee that there will be a contract between the borrower and the Student Loans Company. There will be no provision in the contract making anyone other than the borrower liable for the loan. Even if there were, it would be ineffective unless the other person agreed to accept liability. Nor will there be any provision in the contract making the referees liable for the loan. Again, if there were, it would be ineffective unless the referee accepted it. Nor is there any provision in the Bill that could override the contract so as to transfer liabilities.
The arrangements for the loan will be set out in the regulations, which this Chamber will have the opportunity to discuss. These terms will then be embodied in the contract between the individual borrower and the Student Loans Company. The borrower will not of course be obliged to enter into the contract if he does not like the terms, though as they are extremely beneficial I do not expect many objections. But it would be quite wrong to seek to regulate in public legislation detailed contract terms which are essentially matters of private contract.
The amendment would prevent what cannot in any case happen. I repeat: the Government intend to do exactly what these amendments require.
I hope that I have allayed the fears of noble Lords and that on the basis of that assurance I have given the noble Earl will feel able to withdraw the amendment.
Earl Russell: I thank the noble Baroness warmly for that reply. Those assurances are precise and specific and go right to the point desired. I am delighted to accept them. In the circumstances, I happily beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Peston Lord Peston moved Amendment No. 39B:
Page 3, line 40, at end insert:
(" (d) make provision for the cancellation of liabilities in respect of loans taken out by students undertaking such courses of a vocational nature as may be designated by the Secretary of State from time to time in consultation with relevant bodies,").
The noble Lord said: With the leave of the Committee I should like to speak also to Amendments Nos. 42, 42B and 46. This set of amendments clearly involves certain principles or criteria which conflict with what one might call the "simplicity"— I purposely use the word in inverted commas— of the Bill.
On Second Reading, and on other occasions, several noble Lords indicated that once one introduces the Bill the Government have an opportunity to consider whether the full provisions of the legislation should apply to all students irrespective of the course they take and irrespective of the employment they eventually obtain.
The argument I have already put forward— and therefore I do not need to detain Members of the Committee too long— is that there are all sorts of graduates to whom the argument that is put forward in favour of loans or in favour of reducing the cost

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to the taxpayer does not apply. It does not apply partly because they do not earn that much. The Government have taken a view, first, that they will not cancel the loan but that on the 85 per cent. criterion they will defer repayment.
However, the first argument I press upon Members of the Committee for consideration is that graduates on average income are still not terribly well off, especially if one bears in mind certain points mentioned by other noble Lords. For example, one should bear in mind circumstances; but the Government have simply set their face against circumstances. Nevertheless, there is no doubt that some of the professions which I have in mind are clearly ones which involve serious costs for simply being in the profession. I refer to expenses which are unavoidable and which the Government's deferment scheme does not take into account.
That point leads to another matter. The economic case for student loans has overwhelmingly been built around the idea that graduates earn over their lifetimes— I emphasise this point— a great deal more than non-graduates. A key part of the argument which we have neglected a great deal is that that extra earning is itself a consequence of the graduates having been to university. Much of the research suggests that that proposition is problematic, but that is by the way.
Many of the professions that I and other noble Lords have in mind earn somewhat more than average earnings, but not a great deal more. In the White Paper the Government seem to base their case on calculating rates of return on investment in higher education over the whole range of graduates. However there is a world of difference between what is earned by the average or typical graduate and what is earned by any specific graduate. Many graduates will do rather worse than that. Except for the 85 per cent. criterion, which is only a deferment criterion, no account is taken of that. That is part of the reason for asking noble Lords to consider sympathetically this set of amendments.
The other part of the argument is that on grounds of efficiency and of how to staff certain of our under-staffed professions, this happens to be a sensible way of dealing with the problem. I regret to say that the noble Baroness, Lady Carnegy, is unable to be with us at the moment. She argued last Monday on our first day on the Committee stage that she believed that employers would bear the cost of the loans. Local education authorities anxious to recruit teachers would simply offer to pay off the loans for teachers. By implication, it was suggested that local authorities anxious to recruit social workers would do the same and that health authorities anxious to recruit nurses would do the same.
I argued at the time— and it is still a subject that interests me a great deal— that there is quite an interesting economic question as to who bears the full cost of the loan. Since last Monday I have inquired of those likely employers in the public sector whether they have available or are likely to use funds for that purpose. I agree that it is rather ad hoc; I have not been able to do a full piece of
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research to cover all local authorities. The response I received is that that is about as far-fetched an idea as one could possibly think of. Local health authorities have no spare money to use to pay the loan costs of nurses. The same point applies to social workers and largely to teachers.
Members of the Committee will also notice that under my Amendment No. 46 I include the clergy. The idea that vast sums of money are available to pay off the loans of clergymen only has to be mentioned to be seen to be as preposterous as it is. Therefore we must assume that unless such an amendment is accepted these individual people will largely bear the cost of the loans.
The Government have argued that they want individuals to bear more of the costs of their education. However, I wonder whether they want the specific groups to bear these costs. It must be assumed that if we introduce a greater burden on people— the point that the noble Baroness, Lady Seear, has made— that is bound to be a disincentive. Put differently, either it is a disincentive or the whole of the economics on which the Government allegedly claim to act are wrong. I cannot believe that they are willing to abandon the whole of the economics of the market mechanism to score a debating point on my amendments. Therefore they must agree that to place greater burdens on people will deter them from doing what they would otherwise do.
I now have to accept late on the second day of the Committee stage that there seems to be no way of persuading the Government to give up on this; they are determined to go through to the bitter end. If the Government insist on going down the path of this Bill, the least they could do is to modify the criteria for loan repayment according to certain professions. My list is merely for illustrative purposes; it is not meant to be complete.
I was interested in the response of the noble Earl to the previous question where he argued that one thought that lay behind the Bill was the criterion of administrative simplicity. I do not doubt and do not need to be persuaded that introducing the amendments I have in mind here will complicate the administration of the scheme. However, all of us who have looked at such schemes, all of us who have concerned ourselves with the reform of student maintenance— as the noble Earl will recall, in my Second Reading speech I welcomed the Government's interest at least in reforming student loan schemes— have been aware that to do the job properly requires a certain amount of sophistication in administration. It cannot be done easily.
I suppose that the difference between noble Lords on this side and those on the Government side is that we would rather accept some of the complexities of administration in order to get the content right than say, "For the sake of administrative simplicity and getting the Bill on the statute book, we shall have a rather imperfect content". I can well see the difference between us. That is the reasoning that lies behind this class of amendments. I appreciate that I sound rather cynical on these matters, but I am bound to say that it seems to me that if the Government were not in such a tearing hurry they could well incorporate these amendments in some

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form or other. I felt the same way about the earlier amendment of the noble Earl, Lord Haig. These amendments are in that same spirit. I wish the Gove rnment were not in such a tearing hurry because we could end up with a very much better Bill if the Government would only begin to take amendments of this kind seriously. I have covered all the ground I wished to cover and I shall conclude my remarks. I beg to move.
9.15 p.m.
Baroness Seear: I wish to support the noble Lord, Lord Peston, particularly as my name is down to Amendment No. 42B. I shall be brief as I do not have a great deal to add to what the noble Lord has said, except to underline that this is an opportunity for the Government to help us out of what will be an extraordinarily difficult position— as the Government have often stressed— in finding people for certain professions. The amendment provides an instrument which could be used quickly at times of acute undermanning of these central occupations. It will be extremely difficult to fill such vacancies unless some financial incentive can be provided quickly, outside improvements in the pay structure, by letting people off loan payments. In the interests not sc much of the major purposes of this Bill, but rather of providing the Government with an instrument to help us out of our future difficult labour market problems, I urge the Government strongly to accept these amendments.
Baroness Young: Like all Members of the Committee I shall listen carefully to what my noble friend has to say when he replies to this series of amendments. I wish to make two points. It is unfair to suggest that my noble friend has not been helpful on a number of amendments today. In our earlier discussions my noble friend gave an assurance that he would consider further the access funds. He also gave specific promises on the whole question of disabled students. That was helpful to everyone. As regards the previous amendment from my noble friend Lord Haig, the Minister gave an undertaking to consider the matter involved. I make those points because, having been in a similar position on the Front Bench myself, I often wish that I had been allowed to say as many generous things as my noble friend has been allowed to say. In the past I frequently had to argue difficult cases in this Chamber.
We are all bound to have a certain sympathy with this group of amendments. It would be much easier if we cculd stand pat on where we are. It would be so much easier if we had grants and unlimited amounts of money to give to everyone who wanted them. That would make us all feel much more comfortable. I have the feeling that perhaps the noble Lord, Lcrd Peston, will tell us at some stage that it is the po icy of the Labour Party to continue to give grants to everyone, as well as doubling the numbers of students in higher education at the same time. The noble Lord, Lord Glenamara, said that was what he wanted on Second Reading. However, when I re-read the end of the delightful speech of the noble Baroness, Lady Blackstone, I noticed that she did
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not commit herself to anything at all. That is perhaps fair game for the Opposition.
However, when one is considering a matter, one needs to know where everyone stands. It is easy to say that everyone must be an exception to the Bill. My noble friend has, I believe, identified a number of people who, we all agree, are exceptions; for example, the disabled, those who will be genuinely affected by the ending of housing benefit and those who undertake longer courses such as doctors, vets and chemists at Oxford who undertake a four-year course. The latter people have not been mentioned in the course of this Bill, but as the wife of a chemist I feel that I should put in that plea. Classicists and others are in a similar position.
As regards the people covered by this group of amendments, my noble friend has said that they will not have to repay their debt while they earn up to 85 per cent. of average earnings. Many of the people referred to in Amendment No. 42 obviously fall within that category because they will not be particularly well paid. At the same time no one has mentioned in the course of the debate any monitoring of how this will work. Sooner or later we must turn to that point. It is important that over the next few years we should monitor how this legislation is working and whether the fears that no one will enter teaching or the Church or some of the other professions that have been mentioned have been realised. There is a very clear case for looking at the matter again. However, the truth of the matter is that any government would find themselves in a very difficult position over the whole question of paying for higher education. It is very expensive.
What is being proposed for students next year is a far more generous grant, plus the loan and in addition the other items that have been added to the Bill as it has proceeded through the Chamber. I shall of course listen with interest to what my noble friend has to say, though I am bound to say that he has already made a number of very positive and helpful decisions which I hope will be seen in that light. I believe that it is up to some of those who have been so critical to say what they would do in similar circumstances rather than simply pick holes in what has been put before the Committee.
Earl Russell: I have listened with interest to the noble Baroness, Lady Young. I take her point about the difficulty in making everybody exceptions. I hope that she will also take the point that here is an area where the Government have to choose between two of their stated objectives.
I do not have the Notes on Clauses with me, but I believe that the phrase used was that the loan scheme was designed to increase students' economic awareness, or words to that effect. In other words, there is a design deliberately to influence the labour market by making students aware of the cost of their education. At the same time the Secretary of State is desperately aware of the need to alleviate the teacher shortage, which is becoming serious, significant and urgent. The point of the amendments, among other points, is to tell the Secretary of State that he cannot have both of those together. It is of considerable interest to us to know which he really wants.

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Teaching is not the only profession to which the group of amendments could apply. It could apply to nursing. At Second Reading the noble Baroness, Lady Faithfull, mentioned social work, which seems to me very much to need consideration. I take the point which I am sure the Minister will make in his, or her, reply— I do not know who will reply— that there will be deferment for below 85 per cent. of average earnings. That is not a complete answer.
It is central to the thinking behind the Bill that it should create an incentive to students to earn higher salaries in order to pay off their loans. I believe that that is the meaning of the Notes on Clauses. Therefore, those who earn between 85 per cent. and 100 per cent. of average earnings must be under pressure to look for higher salaries. This Government, like other governments, seem to have a problem with public sector pay. We hear a good deal about it from time to time. A likely effect of the Bill will be to make that problem a good deal worse.
One of the points to which attention has been given in the drafting of the amendments is that a great deal of the problem in the public services is not so much a problem of recruitment as one or retention. That is why a progressive cancellation, stage by stage, is a very good idea indeed. It increases the incentive to stay rather longer in the profession and to give a bigger return on the training. It is very much like the provision that my late employers put in their contract for paying removal expenses. Liability for that was to be cancelled stage by stage over years. That had the effect of contributing to retention.
Among the amendments I particularly like Amendment No. 42B in the name of my noble friend Lady Seear. We on these Benches see virtue in flexibility on occasions. That is the amendment which I have come to think of as the tap. I can imagine situations in which a future Secretary of State would be very glad indeed to turn it on.
Baroness Blatch: The Government have designed a loans scheme that will be suitable for all eligible students, regardless of course of study or future profession. Any graduate earning less than 85 per cent. of national average income will enjoy deferment of repayments. If the scheme were in operation today, that would mean deferment for those earning less than £ 11,500 a year.
We must also keep in perspective the amount of annual repayment that will be required from those above the threshold. When the scheme matures, the typical debt will be about £ 1,500 in current prices for each year of study. Annual repayments will be around £ 400 a year in current prices, out of an income in excess of the equivalent at the time of £ 11,500 a year or £ 220 a week.
Former students whose incomes are below that threshold may defer their repayment for up to a year at a time. If their income remains low, deferment can be repeated year by year. If that continues for a period of 25 years or after the age of 50 (or 60 for students who start their course after the age of 40),
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the outstanding debt will be cancelled. So there is no need for the prospect of repayments to deter people from entering lower paid professions.
The deferment protection means that anyone not confident for any reason of securing a direct financial benefit from higher education need not be worried by the repayment obligation.
Contrary to what the noble Lord, Lord Peston, said last week— I quote from col. 1414 of Hansard — We do not expect that there will be a large number of cancellations because of the generous deferment arrangements for those on low incomes.
Turning first to Amendments Nos. 39B and 42B, which are similar in effect, Amendment No. 39B would require the Secretary of State to cancel the liabilities of students undertaking such courses of a vocational nature as he chooses, after consultation, to specify. Amendment No. 42B would require the Secretary of State to cancel the liabilities of borrowers who had undertaken certain courses or were in certain jobs that he had designated.
Both amendments are redundant because, under paragraph 1 (1) (c) of Schedule 2, the Bill already gives the Secretary of State the power to make provisions in regulations to cancel a person's liability.
We intend to set out in regulations that will be debated by your Lordships the provision that a borrower's loan liability should be cancelled after 25 years, or on the borrower reaching the age of 50, whichever is sooner. For a student starting a course after the age of 40, it will be cancelled on reaching the age of 60.
There is some confusion about the definition of 20 per cent. cancellation. It is not clear in the amendment. It could mean cancellation of 20 per cent. of the debt on leaving the course, uprated for inflation; or cancellation of 20 per cent. of the outstanding debt each year. The former would cancel the debt after five years. The latter would reduce the debt to a tenth of its value after 12 years. Under the most generous concession— cancellation of 20 per cent. of the debt on leaving the course— the cost by the turn of century would be tens of millions of pounds. The least generous option would be likely to cost at least £ 10 million.
I have said before that we do not intend to set specific conditions in the Bill by making exceptions to the general rule. We believe that it would be quite wrong to write special terms into primary legislation without evidence that they are needed or that they are the right solution for the difficulties that it is supposed that those groups might face.
I repeat assurances to my noble friend Lady Young and to the Committee that I have given before that the scheme will be monitored carefully and, if adjustments are necessary, the structure of the Bill provides for them to be introduced in regulations.
Amendments Nos. 39B and 42B would add nothing to the Bill.
The Government are determined to tackle poor recruitment in the shortage subjects. The noble Earl, Lord Russell, referred to that point. We shall continue to direct measures to boost recruitment in those subjects.

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Those measures include bursaries for some trainee teachers (those on PGCE or two-year Bachelor of Education courses). The Secretary of State announced on 12th March an increase in the amount of the bursary and the extension of the scheme to modern languages. The level of the bursary paid to students will be increased to £ 1,500 in maths, chemistry, CDT, technology and modern languages. In physics, the bursary will be increased to £ 2,000 That differential reflects particularly poor recruitment to physics courses last year.
To pursue the point made by the noble Lord, Lord Peston. who is also a friend to boot, regarding local education authorities, there is no question of local education authorities paying off teachers' loans generally. Rather, that is an option which particular authorities might wish to use in recruiting teachers of certain subjects.
I have explained how graduates with low incomes will be able to defer making any repayment for a year at a time and how, if that is repeated, the loan will eventually be cancelled altogether. That is a crucial feature of the scheme. It offers protection to anyone entering a low paid profession— also to women who do not work while they raise a family. Amendments Nos. 42 and 46 would give an additional bonus to certain occupational groups irrespective of income. That is an unwarranted additional subsidy. The cost of giving a concession to all these groups would be in tens of millions of pounds each year.
We have heard the argument that loan repayments will lead graduates to press for higher pay. I do not thirk that repayments on the scale that I have describe d will weigh largely in pay bargaining. Many graduates now start employment with overdrafts from their student days. If repayments become an issue in recruitment, employers— including public sector employers— will have to decide how to react. But this is a matter for employers. It is not a student support issue.
The deferment and cancellation provision will provide protection for graduates on low incomes.
With that answer I hope that the noble Lord will feel able to withdraw the amendment.
9.30 p.m.
Baroness Seear: The noble Baroness has not taken the point that I was trying to make in Amendment No. 42B, which was not primarily about protection for students. The amendment is an instrument for dealing with a serious position in the labour market as regards recruitment. The noble Baroness says that students will not be worried about paying back the loan because the pay level is so low that they have to reach £ 11,500. I am afraid that the argument is very much on the other side. Presumably the people whom we want to enter nursing and teaching will be people who will stay and move up the career ladder. If the loan still has to be repaid— the noble Baroness said that it will be deferred, as the Bill indicates— as these people progress, do better and take on more responsibility, they will move into a position at which they will have to start repaying the loan, which is scarcely an encouragement.
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My point was very much on the theme of this being a way to get people into jobs where we need them badly, not because it is good for them in this case but because it is good for the professions of teaching and nursing, which are not going to be able to recruit people. I think I devoted the whole of my short speech to saying that. If the people going into those professions know that for a period of years they will not have to repay the loan, surely that is a big inducement to encourage men and women to go into those professions. I tabled Amendment No. 42B not to protect the students but to protect the occupation.
Baroness Blatch: The noble Baroness makes a very good point. I dealt with whether the scheme would act as a deterrent for people entering those occupations. I also made reference to the options that employers could take. If I may put it this way, it seems to me that the difference between us is whether one has an across-the-board, on-the-face-of-the-Bill, special treatment for those named occupations or whether one allows the employers to determine particular shortages and special treatment for particular recruits. In other words, I think that it is still a matter for employers.
Baroness Seear: But the professions are not named. This simply gives the Secretary of State the right to do that where he sees fit. They are not named professions. When he is suddenly aware that he will not obtain his nurses and the teachers, he can say that over the next five-year period people coming into those professions will not have to repay the loans. We have not listed them. It is for him to choose.
Baroness Blatch: I still think that the same point applies. If one says that teachers are in short supply, to have something on the face of the Bill or even allowing the Secretary of State a power to name a whole occupation— whether it be teachers, nurses or social workers— and have an across-the-board exemption from the scheme or special treatment within the scheme is probably not as effective as determining particular shortages and having individual remedies or ways of attracting people into those professions. I do not think that there is a great deal of difference between us about the importance of attracting people to occupations where labour is short. We are probably arguing about the means to an end.
Earl Russell: I was a little dismayed to hear the noble Baroness quoting the 85 per cent. deferment provision as a protection for low paid professions. I hope that she will assure the Committee that that is not evidence of the Government's thinking on the likely direction of teachers' salaries. Since I believe I am right in saying that at the moment the starting salary of a university lecturer is low enough to obtain a student loan deferment, perhaps one cannot be sure.
The noble Baroness also said that considerable cost was involved. I accept that. It is an important point and one that should give rise to concern. But it is not enough to say simply that this proposal has

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a cost unless one can address the question: is the alternative cheaper? That is the question on which I should like to hear the thoughts of the noble Baroness.
She states that we need not regard repayments on this scale as a significant deterrent. I have said it before and I am sorry to say it again: I do not believe that the Government have absorbed what a burden buying a house now is to people starting a professional career. Repayments are often likely to be about 45 per cent. to 50 per cent. of income. In such a context one worries about a little extra even if the amount is small. If the Bill goes ahead government will need to spend more money on professional salaries, which would cost them a great deal more than accepting the amendments.
Baroness Blatch: The reference to 85 per cent. of national average wage does not signify government thinking on what teacher salaries should be. It was determined at a level of salary that allowed for a repayment of about £ 400 a year at today's prices, being a reasonable repayment cost in any one year.
On the point made by the noble Baroness, Lady Seear, about cancellation, I am reminded that the Bill does not need an amendment to allow for cancellation. The power is already in the Bill. If cancellation needs to be made then cancellation can indeed be given.
Lord Peston: I thank the noble Baroness for her response. In particular, I thank her for emphasising paragraph 1 (1) (c) of Schedule 2, which gives the Secretary of State power for concellation.
The Secretary of State ought to have taken the opportunity at this very moment to announce that in certain cases he is proposing to do precisely that. He could gain a certain amount of kudos for himself. For those on the other side of the Chamber who worry occasionally about the popularity of their party and Government, the Secretary of State might well have thought that this would be a suitable opportunity to intervene in a way which would make him a few friends in higher education. Perhaps he does not want any friends in higher education; I do not know. Nonetheless, the noble Baroness is right to say that in many ways these amendments could be made redundant simply by the Secretary of State saying that he proposes to act under that heading.
I thought that the figure of 85 per cent. was simply a rabbit pulled out of a hat. I can think of no rationale for 85 per cent. It is simply a number. I shall argue in due course that it is a rather inappropriate number. The idea that it has any logical foundation is simply absurd. Someone simply sat down and thought, "What number can we get away with? Eighty-five per cent. seems a reasonable number. It is not a prime number, so there are no problems there. Let's proceed with that". I shall be interested to hear any serious argument on why 85 per cent. is the right figure.
I thought the 20 per cent. was a little nitpicking on the part of the noble Baroness. The amendment quite clearly means that those who stay in these
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professions for five years would find the whole of their loan cancelled. If the wording is capable of being read differently— which certainly was not apparent to me at the time; but I have learnt that with legislation (which is not my subject) almost anything can be read to mean anything— and the Government were sympathetic, they could find wording that could not be misread. I was not happy with the suggestion that it was not clear in those terms.
Baroness Blatch: Perhaps the noble Lord will allow me to intervene. The point was not meant to be nitpicking. I was trying to give some costings and I had to take an interpretation. I therefore took the low and the high.
Lord Peston: The point on costing is that it will cost money. The noble Earl, Lord Russell, is quite right that it is never adequate to say, "This will cost money". One has to ask whether it will cost less than the alternative. Many of us believe that alternative recruitment schemes will cost the Government, whichever government are in power, enormously larger sums of money.
Members of the Committee know that my views on the subject are not biased. There has been no response from the noble Baroness on the problem of the clergy. I cannot see how the clergy can raise their productivity. I should be interested to know what they are supposed to do. It is not obvious to me how they can negotiate higher salaries in the sense that the rest of us can.
I speak as someone who, although not wealthy, is reasonably well off. However, for many of the people about whom we are talking, even though they are on salaries at or a little above the national average, £ 8 per week is still real money and money which they cannot find. On the whole, those people do not have the ability to save; yet somehow they must save the equivalent of £ 8 per week.
Therefore, if we forget the other points, that concerning the clergy is one which the Government should have taken on board. I have received a fair amount of correspondence from members of the clergy. Some are worried about the morality of the loans scheme, although we have stayed away from that. However, it seems to me that this burden will fall on people on whom I should have thought the Government would not particularly want it to fall. I believe that the Government should say something to them which may justify what is happening because I cannot think of a way of justifying it to them. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 39C to 39F not moved.]
Lord Peston Lord Peston moved Amendment No. 39G:
Page 3, line 40, at end insert:
(" (d) make provision to ensure that any person or body by whom functions are discharged under paragraphs 3 (1) or 3 (7) below shall publish annually details of any sources of data which it has used for the purposes of its functions").
The noble Lord said: This amendment refers to the Student Loans Company. Since the Student Loans Company as defined does not actually exist per se

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within the Bill, one must refer to it as the persons or bodies whose functions are discharged and so on.
Originally I had in mind a much longer debate on this issue which would enable us to clarify the nature of the Student Loans Company. I believe that it is a company in the ordinary sense but it is a company which is in the public sector and therefore akin to being a nationalised industry. However, I am not sure whether it is a nationalised industry within the Treasury definition. Earlier I heard the noble Earl, Lord Caithness, refer to it as being essentially a personal loans business. At some point I should welcome clarification on what precise phenomenon is the Student Loans Company.
This amendment is a minor part of the clarification. Whatever the company is, it should make public its mode of operation and in particular its data sources. That is not unrelated to the civil liberties question which we debated earlier and also not unrelated to the fact that many of us are somewhat mystified about what this company will get up to. If the company must state the sources of its data in connection with its functions, we might learn something about it rather than see it as a secret body which is not subject to proper scrutiny. I beg to move.
Lord Addington: I should like to support the amendment of the noble Lord, Lord Peston, and also speak to my Amendment No. 39H. The amendment is virtually self-explanatory. It proposes that there should be no immediate access by the Student Loans Company, or the body which functions as that, to the bank accounts of students or former students affected by the scheme. That is to ensure that the Student Loans Company does not have direct access to the money of those students who have gone through the system. It means that the students can have some control over their own repayments.
9.45 p.m.
The Earl of Caithness: The first amendment, tabled by the noble Lord, Lord Peston, would require the Student Loans Company, or any other person or body discharging functions under the scheme, to publish annually details of any sources of data which it has used for the purpose of carrying out its functions.
I should remind the Committee of one important point at the start. Unlike many credit companies, the Student Loans Company will not be vetting applicants for a loan for credit worthiness. It is a fundamental principle of the scheme that loans will be available for all eligible students, except those in default on a previous student loan. The company will not be picking and choosing those to whom it lends money.
As the company will not be checking credit-worthiness in advance of granting a loan, the main effect of the amendments would be to control any checks made by the company when borrowers apply for deferment of repayments. The Government have already published details of the verification procedures that will be open to the company when a borrower applies for deferment.
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They include checks of current income with the borrower's employer or bank; and retrospective spot-checking against a graduate's actual income, by requiring the production of, for example, a P60. It is entirely proper that the company should have these options available.
Let us not forget that we are talking here about the recovery of money that is rightly due to the taxpayer. Honest borrowers who are entitled to defer repayments have nothing to fear from such checks. Those few borrowers who renege on their loan agreements and decide that they are not going to comply with the provisions of the scheme deserve no one's sympathy. They are quite simply defrauding the people of this country, who will, in very many cases, be earning less than those very same borrowers once they leave their university or college.
I do not believe that the company should be required to publish an annual report on sources of data. Preparation of such a report would be a mammoth and ultimately unproductive task.
I mention one final possible effect of the second amendment, in the name of the noble Lord, Lord Addington. This relates to the meaning of the phrase "secure access". There is room for laywers to debate this point, but it is arguable that it would prevent the company from making payments to students by means of transfers through the bankers automated clearing systems and from recovering repayments by direct debit. If the company were unable to pay and recover money by these means, its administrative costs would increase markedly. There would also be substantial delay and considerable inconvenience for the borrower. Payments would be made more slowly, and repayments would be more inconvenient. Furthermore, since it is the taxpayer who pays for the company's administrative expenses, it is he who would ultimately have to bear the additional costs.
The noble Lord, Lord Peston, asked specifically about the nature of the Student Loans Company. It is a Companies Act company limited by shares.
Lord Peston: I thank the noble Earl for his reply. My own view is that the Student Loans Company will turn out to be a loathsome and loathed company particularly because it will be following the principles which the noble Earl himself pointed out. I refer to the vigorous pursuit of defaulters whom it will assume are purposeful defaulters rather than defaulters who happen to become so because circumstances made them like that. That is one reason why I believe that what we are discussing here cannot survive in its present form. At the very least this company, when it eventually comes to realise that it should pay some attention to its public image for as long as it survives, ought to adopt a totally transparent approach to its functions. The purpose of my amendment, which I agree is not very expert although its spirit is clear, is, as it were, to guide the company in the right direction.
One point immediately worries me. The noble Earl said that the company could require to see a person's P60. I speak as a taxpayer and as someone who believes that a person should pay his taxes and his debts. But that is not my idea of how I would

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want graduates in this country to be treated. In due course Ministers will come to that view as well. That illustrates the Government's error in going down this road.
Perhaps I may refer back to the remarks of the noble Baroness, Lady Young, about what my party would do. I certainly have views on what I would do, but if anyone is inferior to a junior Minister on the Government Benches it is a spokesman or a spokeswoman on the Opposition Benches. He or she is certainly not allowed to step out of line and announce what he or she would do, but it should not be assumed that I do not have a good many ideas. I can tell the noble Baroness that the one thing I would not do— I said this on Monday last— is pursue this loan scheme. I hope to see the day when it is taken off the statute book. With that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 39H not moved.]
Lord Peston Lord Peston moved Amendment No. 40:
Page 3, line 40, at end insert:
" (1A) The Secretary of State shall by regulations made under sub-paragraph (1) (c) above provide for the deferment of liability in respect of any person whose annual earnings in any year do not exceed 120 per cent. of the average male national wage in that year").
The noble Lord said: This amendment is linked with Amendment No. 41 and is a probing amendment. I can put the amendment simply in the form of a question. I require an explanation of why 85 per cent. has been chosen. The whole theory of student loans is based on the assumption that graduates earn more than the national average. They do not necessarily earn more than the national average in a year but they do so over their lifetimes. To put it in technical terms, at the test rate of discount, the discounted present value of the return on the investment in higher education more than justifies the cost. That is the whole theory that lies behind loans, graduate taxes, and so on.
That seems to lead inexorably either to the view expressed by the noble Baroness, Lady Seear, that the break-point should be average earnings, or to my view that it should be above average earnings to err on the side of not detering those who earn a little above the national average but not a lot.
Clearly I do not intend to divide on this amendment but my main aim is to see whether the Government can put up any kind of case for 85 per cent. I beg to move.
Baroness Seear: I should like to emphasise the word "male" in these amendments. The Government refer to the average wage, but the average male wage and the average female wage are quite different. Combining the two gives a much lower figure at which students will have to start paying back loans than if average male earnings are taken. That is why I put the word "male" in my amendment. What is the actual figure we are talking about?
The Earl of Caithness: I knew that this debate would eventually arise. It is no surprise to me that it has because wherever one had drawn the level— whether 85 per cent. of national average wages, 85 per cent. of male earnings, or 120 per cent. of the national average wage— I know that noble Lords opposite would have said that it was far too mean and that we should have a figure of 140 per cent., 180 per cent. or even 200 per cent. for a start. I could see that coming. I have been involved in enough legislation in this Chamber to know that every line the Government have drawn has been queried.
Overall, we looked at the fact that we wanted to have a generous level before the repayments were due from graduates. A person who goes to university and who takes out a loan has a greater potential for earning a significant amount of money than the person who does not. We thought that a reasonable repayment level would be 85 per cent. of average national earnings which at the moment equates, as we have said on numerous occasions, to £ 11,500. Over the repayment period that we have put forward that is about £ 400 a year.
I realise that that is a line that will be disputed by some people. However, it is a line that the Government have chosen and I have heard no arguments to say that it is not right.
Baroness Seear: We have heard no good arguments to say that it is right. The noble Earl has not answered my question as to whether average earnings refer to male or male and female taken together. It can be one or the other but we should be clear as to which it is. The noble Earl knows perfectly well that the two figures are different. Which figures is he talking about?
The Earl of Caithness: We are referring to the national average, taking into account the earnings of both the male and female. If we went for the male national average wage that would be about £ 15,275 in today's circumstances.
Lord Peston: I thank the noble Earl. He is being a little harsh. I have in mind certain figures he could have included in the Bill which would have so astonished me that I would not have been foolish enough to query them. However, I have to admit that he has had more experience of legislation than I have, so perhaps he is right and I would have been difficult over any number; but I do not think so.
The noble Earl said that no valid arguments had been put forward. I seem to recall that I did; that the whole point of the loan scheme is precisely because graduates earn more, on average, than the national average. This is the whole point and that is why the 85 per cent. seems difficult to justify. Having discovered that the noble Earl is unable to justify the point which is essentially the purpose of this amendment, I beg leave to withdraw it.
Amendment, by leave, withdrawn.
9.55 p.m.
[Amendments Nos. 41 and 42 not moved.]
Lord Addington Lord Addington moved Amendment No. 42A:
Page 3, line 40, at end insert:
(" (1A) The Secretary of State shall by regulations make provision to cancel 20 per cent. of the obligation of any person for each year during which that person is not in gainful employment or has no income of their own").
The noble Lord said: Amendments Nos. 42A, 42D and 4: 1 are all basically concerned with the deferment of repayment of a loan due to being without work or income. Amendment No. 42A, tabled in my name and that of the noble Lord, Lord Peston, is concerned that anyone who is unemployed for a year will at present find himself without an income and incurring an amount of debt— that is, the inflation rate on interest on that debt— with no means of repaying it. Thus he is incurring greater debt and he will be incurring other debts for other reasons.
The amendment proposes that 20 per cent. of the debt incurred over a year while not employed will be removed for the simple reason that in this way the person concerned will not be compounding debt or hardship.
The other amendments follow on in the same vein, giving relief to those who find themselves without income or any means of servicing a debt. I suggest that placing this extra burden of debt on people who have no way of repaying it at the time in question is of no help to anybody, and least of all to society as a whole. We are simply making people more hard up and giving them less incentive to return to a situation where they can begin repaying the debt. I beg to move.
Baroness Blatch: Amendment Nos. 42A and 42D are two of a number of amendments— for example, the grouping of Amendments Nos. 39B, 42, 42B and 46, which we have recently debated— that would require the Secretary of State to cancel the liability of a certain group of borrowers. My arguments against these amendments are similar to my arguments against other such amendments.
We intend that if a graduate's income falls below 85 per cent. of national average earnings, then he will be able to defer repayment for up to a year at a time. If income remains low he or she can repeat deferment year by year. This provision will provide adequate protection for those uncertain of the financial benefits of entering higher education. This condition will be introduced in regulations which your Lordships will have the opportunity to debate.
As my noble friend the Paymaster General sought to explain in a letter to the noble Baroness, Lady Blackstone, during a period of deferment the liability will be frozen in real terms, since it will be uprated only in line with inflation. A period of deferment will also not count as part of a person's repayment period. So if he started a period of deferment having to pay £ 400 over three years, he would still owe only £ 400 in real terms over three years at the end of deferment.
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Amendment No. 42A seeks to cancel 20 per cent. of the obligation of a borrower for each year that he is not in gainful employment or has no income of his own. This would apply to graduates who are unemployed, to those who marry and leave work to raise a family, and to those undertaking a period of study.
The cost to the Exchequer in lost repayments would be very considerable. The taxpayer would stand to lose some tens of millions of pounds as a result. The provision could also have the damaging effect of writing off a substantial part of the loan while a student is studying. During study students could quite rightly claim that they were not in gainful employment and claim the cancellation of 20 per cent. of their liability. This would turn a substantial part (up to one-third) of the loan into a non-means tested grant. The cost of this would be hundreds of millions of pounds.
That would work entirely against the principle of providing a loan. It would increase rather than reduce the burden on the taxpayer. It would encourage students not to take part-time jobs, knowing that 20 per cent. of their loan would be cancelled for doing nothing.
This amendment would also encourage people to remain unemployed after leaving a course, knowing that the whole of the loan liability would be cancelled in five years if 20 per cent. were cancelled each year.
For some, that unwarranted cancellation during study would continue after graduating as it would also apply to periods of post-graduate study. Thus a graduate entering low-paid employment and deferring repayment would find that a peer entering a period of further study would have another large part of his loan cancelled.
Amendment No. 42D would require the Secretary of State to cancel the liabilities of borrowers whose personal disposable income fell below 85 per cent. of the national male average wage for a period of five consecutive years after completing the course.
The amendment would cancel the liability of large numbers of graduates; but after a period of deferment they will have an income from which they can repay. Those who remain on low income can opt to defer once more. The loss to the taxpayer from not receiving those repayments would be very considerable. The cost to the taxpayer would be tens of millions of pounds. We would effectively be giving those graduates a non-means-tested grant.
The amendment would also be a disincentive to seek employment after leaving a course, knowing that after five years the whole of the loan liability would be cancelled. It would throw up certain anomalies. It would mean for instance that some graduates who had started repaying because their gross income was above 85 per cent. of the national average earnings would find that if their disposable income was below 85 per cent. of national average male earnings for five years their loan would be cancelled; but during that five-year period they would have been repaying their loan. Only after

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five years had elapsed would they be eligible for cancellation. Would they then be entitled to a refund for repayments already made? That type of case highlights the problems of setting complex cancellation arrangements before the scheme has commenced.
Turning away from the contents of the amendments, the principle that I have referred to before remains clear; we do not intend to set the terms of the loan in the Bill. We believe that it would not be right to place special terms into the Bill without strong evidence that they were required or that they were the correct answer to the problems that it is feared that graduates might face.
I repeat assurances that I have given before to my noble friend Lady Young and others that we will monitor the scheme carefully. If alterations are necessary the enabling character of the Bill will allow them to be introduced through regulations.
Amendment No. 43 seeks to provide interest-free loans to borrowers during periods when they are not in gainful employment or when they have no income of their own. This would apply, like Amendment No. 42A, to graduates who are unemployed and to those who marry and leave work to raise a family. It could also apply to students while they are studying.
I have explained indexation previously. Perhaps I should give more detail of how the Government intend to index loans and why they intend to do it. The loans will be indexed in such a way that the value of what the borrower pays back is the same in real terms as the value of the sum borrowed. To achieve that the outstanding debt will be adjusted in line with inflation; but no positive interest will be charged over and above this. It is right that we should do that as a matter of equity. If we were not to index loans at all we would increase the cost to the taxpayer, as the amount of money repaid would be less in real terms than the amount borrowed. Under our scheme the amount of taxpayers' money borrowed by a student and the amount subsequently repaid will be the same in real terms.
Not indexing the loans would also encourage borrowers to defer their repayment so that over time their debt reduced in real terms. So by comparison those who did not defer would pay more in real terms than those who did. On the other hand if the loans bore interest at a rate higher than inflation that would unfairly penalise those who had legitimately deferred repayment because their income was low, as their debt would increase in real terms.
Under the Government's proposals, there is neither an incentive nor a disincentive to defer. Both legitimate deferment when a graduate's income is low, and standard repayment without deferment, will be financially neutral. Indexing the loan in that way is a good deal for students. A zero real rate of interest gives loans at a rate well below commercial loans and overdrafts.
Turning to the specific exclusions in Amendment No. 43, the Government intend that indexation should continue during periods of study and deferment. As I have already explained, it is important for both taxpayers and students that the
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value of outstanding debt is maintained in real terms. If there were to be no indexation during periods of study, students on courses of differing length would not be treated equally.
If there were no indexation during the deferment that we shall allow whenever income is low, then the outstanding debt would be eroded by inflation. When they resumed repayment, graduates in this position would find that they owed less in real terms than they did when they started deferment. We think it right that a graduate who experiences a period of low income should be able to defer repayments, but not that he should effectively be excused part of the debt when his income rises again. I hope that with that explanation the noble Lord will feel able to withdraw the amendment.
10 p.m.
Baroness David: I cannot accept all that the noble Baroness says. She seems to think that it is a person's choice whether or not he defers. It really depends on the sort of a job a person can get. The fact is that people who defer will be paying more in the long run than if they had not been able to defer.
I wish that the noble Lord, Lord Boyd-Carpenter, was here because he made a very strong speech on this point at Second Reading. He said:
"What has not wholly emerged is that a graduate who is earning below 85 per cent. of the average wage will not for many years be relieved of the burden. On the contrary, the loan will be left waiting for the 85 per cent. level to be exceeded and, of course, it will increase year by year in accordance with the rate of inflation for the years concerned. Therefore, it is a mistake to suggest that, because of the 85 per cent. rule, this scheme will not hurt the less well-off student. It is more than likely that someone, particularly with a degree, who is unable to earn more than 85 per cent. average earnings to begin with, will reach average earnings and above in due course. He will then be faced with a very substantial liability indeed" .— [Official Report, 27/2/90; col. 650.]
Such people really will be penalised for deferring when they simply cannot help it. That is why we moved this amendment.
Baroness Blatch: The noble Baroness addresses herself to one part of the loan scheme and not another. The loan will not substantially increase in real terms. In real terms the effect is neutral. But at the same time 85 per cent. of the national average wage will also increase over a period. Therefore the actual effect of the repayment scheme will be neutral to the student.
Lord Addington: Having heard the noble Baroness, Lady David, I must agree that I do not think anybody will make himself poverty stricken for a period of years to avoid repayments on these loans, especially when we are told that these will not be very onerous repayments. I wonder whether the two positions are not in contrast to each other.
I agree that there may be some error in the drafting of Amendment No. 42A, and the danger of a student claiming two years of a course as being time spent ungainfully employed is certainly an area which I had not considered. But given the hour, I shall not press the amendment as the mood of the Committee is not right for it. Therefore I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 42B to 42D not moved.]
Baroness Blackstone Baroness Blackstone moved Amendment No. 42E:
Page 3, line 40, at end insert:
(" (1A) Regulations made under sub-paragraph (1) (c) above shall—

(a) make provision for deferment over a period of twelve months;

(b) include the option to resume repayment voluntarily within the deferment period;

(c) enable applications and deferments to have effect at any date in the repayment period;

(d) provide for application up to one month in advance of the date from which deferment is sought, or three months retrospectively;

(e) make provision for refunds on grounds of low income of repayments made within the relevant twelve month period;

(f) provide for no interest to accrue during any period of deferral;

(g) provide for all applications to be made to, and dealt with by, the Student Loans Co. Ltd.;

(h) provide for applicants to be entitled to a deferment where—

(i) their personal disposable income is less than a figure to be determined by the Secretary of State in each year, which shall be not less than 85 per cent. of the most recently available figure for the average male national wage calculated according to the Department of Employment Average Earnings Index; or
(ii) the applicant's personal circumstances (including numbers of dependants) are such that deferment is reasonable to avoid hardship").
The noble Baroness said: With the leave of the Committee I think I am meant to be moving Amendments Nos. 42E and 42F, which are grouped. I have to say that I am a little puzzled. I spent some time yesterday reading both amendments and they seemed to be completely identical, so I fear that we have got ourselves into a little mess here. Therefore I shall move Amendment No. 42E, which is exactly the same as Amendment No. 42F.
The purpose of this amendment is to ensure that deferment of liability can be arranged and that it follows a clear set of principles regarding the operation of the procedures for deferment. If I may take your Lordships through each of the subparagaphs of this amendment, subparagraph (a) enables the Secretary of State to make arrangements for deferral for up to a year at a time. A wide range of personal circumstances could cause the need for a deferral, mostly relating to low income. Subparagraph (b) maintains the option for repayments to be made during the deferment period should the person liable feel able to do so. This arrangement is obviously in the interests of both the ind ividual with the liability and the Exchequer, making it possible for the overall liability to be reduced once the principle of deferment has been accepted.
Subparagraph (c) ensures that it will be possible for reliable persons to arrange for deferment at any time. For example, if a person needs to stop work to care for a dependant, a deferment can be arranged immediately. Subparagraph (d) set down timescales within which applications should be made and deferments granted. Subparagraph (e) allows for repayments to be made by the Student Loans
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Company should a person's income fall below a certain level during any repayment period. Again, this will ensure that people who suddenly face real hardship through no fault of their own would be able to defer their loan liabilities until their income level had increased to an appropriate level.
Subparagraph (f) attempts to ensure justice in the deferment scheme. Those people on low incomes being forced to defer will be heavily penalised for having to defer under current plans. Interest will accrue at an increasing rate the longer the debts are incurred. For example, for graduate couples, the currently proposed arrangement could amount to a tax on the family. If a man or woman takes four or five years out of work to raise a family the loan debts will have multiplied by the time repayments can be made. Alternatively, it may be seen as a tax on misfortune. For example, if a reliable person became seriously ill for a period, was forced to leave work and then fell below the threshold levels, he or she could accrue a considerable debt during that period of illness which may then cause additional stress and even greater unjust burdens when returning to work at a later date. These are real problems which arise in connection with the current loans scheme and they will have to be answered.
Subparagraph (g) ensures that the responsibility for administering the applications for deferment should rest with the Student Loans Company and with no other body. Finally, subparagraph (h) states the principles whereby deferment would be granted in the case of personal income falling below 85 per cent. of average earnings. Account would be taken of an applicant's personal circumstances so as to avoid hardship; for example, those with dependants. The amendment aims to be helpful. It is designed to introduce into the Bill the practical arrangements for the implementation of deferment. I beg to move.
10.15 p.m.
Baroness Blatch: The noble Baroness is quite right. The two amendments are almost identical. There is one small difference to which I shall refer shortly. As the Committee will know, the first set of regulations relating to deferment will be subject to affirmative resolution.
I turn now to the substance of the amendments. In either case, provisions (a) to (d) inclusive are lifted, more or less word-for-word, from the rules and procedures document we published just before Second Reading. Those provisions will form the basis of the regulations on deferment which we intend to introduce after Royal Assent.
Subparagraph (e) of each amendment departs from the rules and procedures document which specified that there would be no refunds on low income grounds of repayments already made. The reason is that to make deferment retrospective is an invitation to deceit. The graduate would have made the repayments; he would then be saying that at the time his income had after all entitled him to deferment.
There would of course be cost implications. Moreover, the assessment of deferment would become more and more difficult the further back the period to which the application applied. We do not

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agree with this provision and we do not intend to include it in regulations. But if noble Lords remain concerned about the matter, they will be able to raise it again when the regulations are debated.
Subparagraph (f) of each amendment provides that no interest shall accrue during any period of deferment. We oppose that on the grounds that it would make loan repayments less valuable in real terms than the amounts borrowed. It infringes the principle of equity underlying the application of indexation to the outstanding amount. We believe it is right that interest should continue to accrue during deferment. It is incorrect to argue that this unfairly penalises those who defer. The sum they repay will be identical in real terms to what they would have paid if they had not deferred.
Subparagraph (g) of each amendment would ensure that the deferment process is handled exclusively by the Student Loans Company. That is presently our intention. The rules and procedures document indicates that the higher education institutions will have no role in the application process. We do not intend that the institutions should become involved at all in handling deferment applications. In due course, we shall be discussing the role of the institutions with representative bodies. They need not be concerned that we intend to foist this work upon them.
Subparagraph (h) contains the difference between the two amendments. Let me begin by dealing with the similarities. First, there is the requirement that deferment should relate to disposable income rather than gross income. We have discussed the point in relation to the particular needs and circumstances of disabled people, and Members of the Committee know what the Government are proposing in response to the representations received. This amendment extends to all borrowers one of the arguments advanced about disabled people: that they have a reduced disposable income because of the additional costs incurred as a result of their disabilities.
Now we are asked to assess the personal disposable income of all borrowers. How is personal disposable income to be defined? How is the assessment to be carried out? I submit that it would be impossible to achieve without looking at each application individually and in detail. That is not a proper task for the Student Loans Company and, even if it were, it would be prohibitively expensive. The deferment threshold is sufficiently high— £ 11,500 in today's terms— and the repayment sum sufficiently low— some £ 400 in today's prices— for the repayment not to be a burden, with the exception of the very special case of the disabled.
The Student Loans Company is also invited to assess whether an applicant's personal circumstances— including the number of dependants— are such that deferment is reasonable to avoid hardship. The same arguments apply. The company will not be equipped to judge what is and what is not hardship: that is a matter for the DSS. The DSS may be expected to provide social security benefits to those it judges to be at risk. In any case, it seems to me unlikely that anyone with a gross
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income above the threshold could be said to suffer hardship. Repayments of £ 400 a year represent no more than 3–5 per cent. of gross salary at that level currently.
The difference between the amendments is that one would judge deferment on the basis of national average earnings and the other in relation to the average male national wage. The former is what we propose; the latter would produce a higher threshold, since men earn more on average than women. That would make the scheme even more attractive to women. I say "even more" because, by using an average across both sexes, they already derive some advantage: the threshold will be relatively higher in relation to their average salaries than it will be for men. We believe that what we propose is quite sufficient. Even if the threshold is based on gross income, the alternative would mean a threshold of around £ 13,000 in today's prices. If the calculation is based on disposable income, the threshold would be substantially higher.
I repeat: these are properly matters for the regulations and can be debated then. The terms of the scheme are generous. For all those reasons I hope that the noble Baroness will feel able to withdraw her amendment.
Lord Beloff: Before the noble Baroness replies to that invitation perhaps I may make one point which has been borne in upon me during our proceedings today and which has just been reiterated. A great many matters will be debated on the regulations and we know that these are now to be under the affirmative procedure. While these pledges have been made I wonder whether anyone on the Government Front Bench has worked out the amount of time we shall require on the regulations. We usually deal with an order of delegated legislation in a dinner hour. Sometimes if it involves Northern Ireland it is a slightly prolonged dinner hour. However it would take all our dinner hours for the whole of the summer if all these detailed issues were to come before us in regulations which we are entitled to debate. I wonder whether the Government have given any thought to the timetable.
Baroness Blatch: First, I think I made the point about how complex some of these issues are. While they are being resolved all I can say on the second point is that the Committee won the concession for us to resort to an affirmative resolution. I suspect that we shall have to take as much time as it requires in order to discuss the matter.
Baroness Young: Before the noble Baroness rises to reply to the debate perhaps I may say in response to my noble friend Lord Beloff that once again he is being less than fair. The Government have agreed to the affirmative resolution procedure, which was requested from all parts of the Committee. I have not the slightest doubt that when the regulations come before the House the usual channels will be perfectly well aware of the extensive debates which have taken place on the Bill. To the best of my knowledge and belief the original proposal was that there would be one Committee day. It is now two

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and at our present rate of progress we shall be almost into three Committee days by the time we finish. There is no reason whatever for supposing that there will not be adequate time to debate these matters and any others that may come up.
Baroness Blackstone: I was about to say that I looked forward to debating these issues again when the regulations are brought before the Chamber. However, I do not look forward to spending every supper break during the summer on these matters. I am a little disappointed in the answers given by the noble Baroness who is speaking for the Government. I had hoped for one or two possible signs of concessions in discussing this amendment. However, we did not receive any.
I am particularly surprised that the noble Baroness claims that there will be no cases of hardship among those who are above the threshold. That seems to me highly unlikely. Earnings which are just above the threshold are not very high and people with particular difficulties such as those with large numbers of dependants and those who may have a dependant with high medical costs or something of that kind may find themselves in considerable hardship. Therefore, I was surprised at the comment of the noble Baroness. However, I have no intention of pressing the amendment this evening, and I look forward to hearing what the Government's intentions are in more detail when we come to discuss regulations. I hope that more consideration will be given to the problems of those with hardships who need to defer payment. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 42F and 42G not moved.]
Lord Peston Lord Peston moved Amendment No. 42H:
Page 4, line 5, leave out from ("as") to ("the") in line 6 and insert ("maintain").
The noble Lord said: In moving this amendment I wish to speak also to Amendment No. 42J to clarify something that at long last is on the face of the Bill. In discussing interest rates, subparagraph (2) (b) of Schedule 2 states that,
"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".
For the moment we accept that the words "real terms" refer to the retail prices index, although one can find good arguments why the rate of inflation confronting students may rise above that of the Retail Prices Index. However, that is another matter. The amendment standing in my name and that of the noble Earl, Lord Russell, perhaps over-eggs the pudding by simply seeking to maintain the value of the loan in real terms but no more. I believe that another noble Lord was reassured by the noble Earl on the first day of the Committee stage that the Bill means exactly what it says and no more. I have tabled the amendment to gain further reassurance that when the Bill states that the value will be maintained in real terms, it means simply that and no more. I have tabled this amendment to allay certain anxieties. It has a purpose in that sense. I beg to move.
The Earl of Caithness: For a moment I felt positively excited that I had managed to reassure the noble Lord on something, but he was quick to dispel any illusion that I had achieved that. However, perhaps I can try yet again to reassure him. The general intention of these amendments is to tie the indexation of the loan to the inflation rate. As the Committee knows, this is exactly what the Government intend. However, I must say that the link cannot be exact because the inflation rate cannot be known in advance. Indexation of the loan in one year will have to be based on actual inflation in the previous year. Borrowers will then know in advance what the impact of indexation will be.
The first amendment would require an exact match between inflation and loan indexation. That would involve waiting until the actual inflation rate is known at the year's end, then applying it as an indexation factor retrospectively.
That would have two highly undesirable effects. For graduates repaying the loan, it would be impossible to calculate what the instalments should be to clear the debt. They would have to make repayments based on an estimated inflation rate, followed by a balancing item— which might be positive or negative— after the year's end. That would impose on them great uncertainties which are quite unnecessary and are avoided by the system that the Government propose.
Secondly, graduates who had completed repayments in the course of a year would not know until the year's end whether they had cleared the debt or not. They would have to wait until the retrospective indexation calculation was performed, then either make an additional final payment or receive a refund.
The Government's system will give borrowers under the scheme the certainty they need about its administration year by year. I can see that the intention behind the amendment may have been to offer greater certainty, but in practice it would generate confusion for borrowers.
The second amendment seeks to ensure that the indexation can never exceed the rate of inflation. That is of course what we mean by indexation— taking one year with another. But with the lagged system I have just described, when inflation falls in successive years, the loan will still bear indexation at the higher inflation rate of the previous year. Conversely of course if inflation rises the loan will continue to be indexed on the basis of the lower inflation rate in the previous year.
Lord Peston: I thank the noble Earl for his reply. Yet again I have learnt something, because I did not fully appreciate that that was what the Government would do. Perhaps I may ask the noble Earl to reassure me that I understood what he said. My understanding is that the inflation rate that will apply will be the inflation rate of the previous year. Therefore one would know the inflation rate in advance.
The intention of my amendment was not to object to that but simply to say that there should be a defined inflation rate. Essentially, as I understand

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it, the Minister has said that there will be a certain amount of averaging. When the inflation rate rose one would gain, but one would lose when it went down. There would be swings and roundabouts. My intention was to make clear that the inflation rate applied. Given that clarification, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 42J not moved.]
Baroness David Baroness David moved Amendment No. 42K:
Page 4, line 6, at end insert:
(" (2A) No student in receipt of a loan payable in accordance with regulations made under sub-paragraph (1) above specifying the maximum amount of the loan, the time and manner of repayments or conditions for its possible deferment or cancellation shall be ineligible for Income Support or Housing Benefit during his period as a student whether as a consequence of the operation of the loans scheme under such regulations or of the provisions of or regulations made under this or any other enactment").
The noble Baroness said: With this amendment we come back to the question of students and social security. We talked about housing benefit earlier when the costs of housing were under discussion.
The purpose of the amendment is to enable students who are in receipt of loans to continue to claim income support and housing benefit. It is the Government's intention that from October this year full-time students, except students who are disabled or single parents, will no longer be eligible for unemployment benefit, income support or housing benefit during term time or vacations. On Monday 19th February the Department of Social Security published draft regulations— proposals for Social Security Benefits (Student Loans) (Amendment) Regulations— which have been referred to the Social Security Advisory Committee and the local authority associations for comment prior to regulations being laid before Parliament. Loss of entitlement to each benefit will be subject to the negative resolution procedure.
When in 1985 the Department of Social Security announced its intention that students should lose their eligibility for social security benefits it was given some very specific advice by the Social Security Advisory Committee, which said:
"As the grant has declined in value students have come to depend on benefits and we do not believe that this trend should be reversed by a transfer of resources to the grant system in which payments are made without reference to individual need".
The DSS, faced with that onerous task, decided to pass it over to the DES as part of the review of student financial support. The review team's findings have never been made public. However, it is obvious that it totally ignored the advice given. Instead, it has devised a system of loans which, linked to the withdrawal of benefit entitlement, takes no account of variation in individual need. The principle of social security is that of a safety net. Those who have the misfortune to be unemployed are entitled to a degree of support from the state. In the case of students, that is no longer to be the case. Students, merely by virtue of their occupation, are to be excluded from benefits while unemployed. Surely that is a dangerous precedent to set.
One of the arguments given in support of the removal of entitlement is that there is a growing dependency culture among students and that students are avoiding vacation employment. That is a myth. If the economic cycle of the past 10 years is examined with the associated high levels of unemployment over that period, we see an interesting phenomenon. According to data in the Government's publication, Employment Gazette, student unemployment rose more slowly than general unemployment. It peaked earlier at a lower level and it has fallen further. Surely that demonstrates, not a growing dependency among students, but a level of mobility within the labour market that the Government could only applaud.
On the question of the long vacation, under the Government's proposals, any student who is unable to find a job is to be literally left out in the cold. Many students have to rent accommodation for 52 weeks of the year. Many have to live in that accommodation and are not able to move to another area to find work. What are they to do?
If we compare the amount of loan on offer in different years of a course, for the first two years— that includes the summer vacation— the loan is £420 and, for the final year, it has decreased to £310. If we subtract the two, we may presume that, for each of two summer vacations while at college, a student is expected to live on a mere £110. Is it realistic for anyone to be forced to live on a mere £7·85 per week?
On the subject of housing costs, students are to be removed not only from income support and housing benefit during the summer vacation, but also from assistance with housing costs during term time and the short vacation.
If the Government heeded the advice of the Social Security Advisory Committee, they would have noted its view that it should be possible to devise a grant system which is sensitive to the variation in housing costs. Housing costs vary across the whole country as does the housing benefit entitlement of students. That point was mentioned earlier. Outside London a student receives assistance on a pound-for-pound basis when his or her rent rises above £18·67 per week. A student in Coventry may pay an average of between £15 and £22 per week while one in Kent pays between £30 and £40 per week. Yet they receive exactly the same size grant. At present they are compensated for the difference by housing benefit. The student in Coventry would receive nothing or only a few pounds per week, but the student in Kent would expect to claim up to £800 in housing benefit over the course of an academic year. The Government propose that, from next year, those same students should receive a loan of £310 for the academic year. The student in Coventry may be better off until he or she graduates and is then faced with repayments. But the student in Kent is likely to be over £400 out of pocket and faced with loan repayments to come.
The Government justify their case in terms of an increase in resources to students. They always do that by using survey data showing an average of benefit received per student of £187 over the calendar year. But that hides the average of £499 for

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the 49 per cent. of students in London who claim. Outside London, the mean amount per claimant is £ 275, but, as the example showed, there would be a concentration of high claims in the more expensive South-East.
It is easy to foresee students voting with their feet and giving up going to college in high-cost areas. The depression of demand for places last year in London is probably an indication of that already happening, as I mentioned earlier. The withdrawal of housing benefit will mean that colleges in London and the South-East will face major falls in applications. The Government may mistakenly believe that loans will tempt more students into college, but surely they cannot believe that making them worse off will be an incentive.
Two other important cases must also be considered. The DES-commissioned survey on student income and expenditure shows that mature students are among the highest claimants of social securi; y benefits. The average single mature student claims £ 682 per year. The average married student claims £ 947. If those groups are to lose their benefits in exchange for a £ 420 loan, are they likely to remain a feature of our higher education system? The case of a student who has no choice but to return home for the summer vacation must also be considered. He or she will have only £ 110 to live on so will inevitably become dependent on his or her parents.
The Government have claimed that they are reducing the burden on parents, but is that in fact the case? Certainly it will be a burden if those parents themselves are unemployed, as they too will have their benefit entitlement cut because of the presence of a non-dependent adult in the household. What will happen to those students and their parents?
To conclude, housing benefit and income support should be seen as an integral part of the student financial support system. They are the only elements of it that are entirely related to both need and varying costs. The Government are pretending to replace these benefits with a single flat rate top-up loan which neither takes into account the availability of work where a student lives nor his housing costs.
The Government have failed to understand the relationship between students as claimants and their overall social policies. The Housing Act 1988 allowed for rents to rise. That is clear from the Government's expenditure plans for housing benefit which show a massive rise in housing benefit per claimant. Students can expect to face the same scale of rent increases but suffer a complete loss of housing benefit When the Housing Act was debated the Secretary of State for the Environment promised that housing benefit would be available to all those whose incomes were low enough to qualify for full or partial benefit. In the case of students the Government are breaking that promise.
I am sorry that the noble Lord, Lord Boyd-Carpenter, is not in his place. Earlier he made the case that he did not see any reason why social security benefits should not be available as they give a very lair estimate of what is needed and they are based on need. I beg to move.
Viscount Eccles: I was at Oxford the other day and I spoke to the heads of two colleges. They both said that removal of the housing benefit was the one black spot in the whole of this loan scheme. I do not know what it costs but if a student can obtain a room in college it seems that the difference between that and probably a rather bad room from a landlady in Oxford is £ 1,000 a year. If nothing is done about that, one is creating a disabled class; namely, those who cannot get rooms in college.
I should feel very dubious about this part of the Bill unless the Government can give us some assurance that they are not creating two classes of student: one living in and the other living out.
Earl Russell: I am grateful to the noble Viscount, Lord Eccles, for what he has said. The Oxford heads of colleges tell him exactly the same as my pupils tell me. I know that it is late at night and I am mindful of the Committee's time, but as this is an issue of quite considerable magnitude, I hope that I shall be forgiven if I spend a few minutes on it.
First, I want to touch on the fact that this action is to be taken by regulations and is not embodied in a social security Bill. I should like to thank my noble kinsman, Lord Henley, for his Written Answer on 5th March, when in effect he argued that because the Government have the right to do this by regulation therefore they should do it by regulation. It reminds me a little of the car crash between the Englishman and the German. The Englishman leapt out of his Jaguar in a rage saying, "Didn't you see me coming?" and the German looked out of the wreck of his Mercedes and said, "Yes, but it was my road".
I do not think that rights necessarily need to be exercised on every occasion. But if that view is to be taken, maybe we should be a little more careful about conferring regulation-making powers.
My first concern is that the Government have simply got their sums wrong. They have grossly underestimated the amount of social security benefit which at present goes to students. We have had figures quoted that range from £ 65 million to £ 110 million. That is quite a considerable variation. Answering Questions in another place on 5th March, Mrs. Shephard, who had been asked for information about the total cost of housing benefit in each region, replied very fairly that information was not available in the form requested. Since it is not available in the form requested, perhaps there should be a pause in the matter until it is. The sense that the Government have their sums wrong is very widespread indeed. If the Government do not have any contrary figures, perhaps they ought to pause and consider.
In London we are told that the average amount claimed per student is £ 449 per year. That is a considerable sum. The NUS has been taken to task on this issue by the Parliamentary Under-Secretary in another place for seeking the worst cases of rent levels that it could find. My comment, based on a cross-check of what my pupils have been paying over the past few years, is that the NUS has rather undersold its case, that the rent levels are 5 per cent. to 10 per cent. above those alleged by the NUS. Therefore, with that amount on top of the

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community charge, there will not be an increase, as the Government suggest, but a rather serious diminution in the amount of money available.
However, this is not the most important point. The most important point was the principle raised by the withdrawal of a category of people from the social security system. We are told repeatedly that the Government think that students should not be in the social security system. I understand that. I do not altogether understand why. The Secretary of State for Education and Science, writing on 24th November to the chairman of the Committee of Vice-Chancellors and Principals, said that the Government's intention was to wean students gradually off the dependency culture. Apart from the choice of verb— which I find gratuitously offensive— I do not altogether understand what is meant by that.
On the other hand, I understand the feeling that the social security system was not designed for students and that it causes some surprise to find them within it. I remember listening to Mr. Philip Malcolm of the Federation of Conservative Students saying that social security was not designed for students. It was designed for the poor. I can see the point of that. I do not join issue with it. But, by any quantitative measure, present-day students are the poor, and if it is felt inappropriate that they should be in the system the only appropriate answer is to give them enough money to make sure that they are not in the system. Creating a category of citizens who are not entitled to social security means creating a class of second-class citizens. It should not be done lightly.
It is not the first time that the Government have done so. It was done for teenagers in the Social Security Act 1986 and this Chamber has debated some of the consequences that resulted. We seem to have another piece of the same thinking. It makes it more urgent to understand much better than I do now the thinking behind that issue.
These are responsible people. Those whom I teach— who are the only ones for whom I can answer— work very hard indeed. The only irresponsibility that I can see in the matter is that of the London borough of Brent, whose inability to pay housing benefit is notorious.
There are also some practical points. I cannot see the logic of excluding postgraduates from the social security system. I can follow the logic that because students are receiving the loan, and the loan is supposed to be sufficient, they should therefore not receive social security instead. But postgraduates are not receiving the loan. Part-timers are not receiving the loan and they are not being withdrawn from the social security system. Why, therefore, are postgraduates? I do not understand that. When we reach the point in the next century when there are practically no university teachers remaining, it will be rather urgent to recruit postgraduates quickly. We may find that there are none.
Here, I should like to raise one point which is rather tangental but is, I believe, relevant. It was reported in last week's Times Higher Education
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Supplement that postgraduate students of more than four years' standing are being denied student certification for the poll tax. This, in many cases, will bring their studies to a dead halt. I should be grateful if the noble Earl will check whether that is the case and if so, on what authority.
There is a wider problem. Often we are told that our system of student support is the most generous in the Western world. That is not unconnected with the fact that our undergraduate course is the shortest in the Western world. As my noble friend Lady Seear has already said, we have always assumed that people were capable of working full time during term and at least part time during vacation. If that is not to be so, then we shall need to ask for a fourth year. If we cannot have a fourth year, our degree will no longer be internationally competitive and we shall not continue to attract overseas students.
Students have no desire to be dependent. That is one of our problems. They do not like to be dependent either on the state or on their parents, on whom they are not being discouraged from being dependent. Therefore, when short of money they are going off and working surreptitiously part time. We know that that is going on and we know that, if they do that, they cannot do their courses properly. However, we know that, if we stop them, they will have to withdraw. That leaves us with the problem of having either to penalise them in their exams for something which is not their fault or else to take part in devaluing the degree. I believe that it is time that more thought is given to that.
10.45 p.m.
Baroness White: It is unfortunate that this debate should be taking place at this hour because it touches on one of the most serious aspects affected by the legislation before us. I am not adequately prepared and the time is too short to try to go into any great detail. Surely the Government must recognise that there is something wrong when they are accused, as they are in relation to housing benefits and students, of neither respecting real need nor ascertaining true cost. There is something quite fundamentally wrong about that.
I am concerned about the emphasis which the Government have quite properly placed in their discussions on higher education on mature students, who are placed in a very difficult position. They are less flexible in their housing arrangements than under-graduates. Very often they have to maintain a permanent home in one place and their student accommodation in another. I have yet to learn that that situation and the variations on it, which are legion, have been adequately discussed by anybody. I may be at fault. I try to read the Times Higher Education Supplement assiduously every week and other periodicals from time to time. One cannot believe that adequate thought has been given to the problem. I seriously believe that the House should now resume and adjourn so that we can have an adequate discussion and reply from the Government on this subject at a civilised hour.
Baroness Young: There is no doubt that everyone taking part in these proceedings recognises that this

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issue is extremely important. In fact we discussed the whole question of housing benefit on Amendment No. 35 earlier this afternoon. Indeed, the noble Baroness, Lady David, quoted my noble friend Lord Boyd-Carpenter. It is an important issue.
The social security system was never designed to become an adjunct of student education, which is in effect what it has become. It was designed for a quite different purpose. Whatever arguments have been set out in letters, that must be true. I am only too conscious that figures can be read in different ways— and plenty of figures have been bandied about— so it would be helpful if my noble friend the Minister could set out the figures. As I understand the position, from next September students will receive a greatly increased grant from the Government. It will be more for those in London than for those outside. Added to this will be the top-up loan, which is the subject of the debate, and there will still be a parental contribution. The important question is whether the total sum will be such that students cannot afford to live in a house other Khan purpose-built student accommodation.
Quite a proportion of students live in purpose-built accommodation. That is the case at Oxford although I recognise that it is not true at all universities. I am bound to say that members of my family who went to universities around the country lived in purpose-built accommodation for two out of three of their student years. I do not know what the figures are generally but it is certainly cheaper to live in purpose-built accommodation than to live out of it. We are not referring to all students. We are referring to a proportion of them.
It would be helpful to the Committee to know what s: udents will receive in October in relation to what they have received in the past and to know just how many we are talking about. We do not wish to exaggerate. The position of mature students is a separate issue. Mature students who choose to go to university and to live away from home have always faced difficulties. They are automatically committed to two homes. Whatever provision is made, that commitment is very expensive. I believe that a good many mature students— and I hope that more will be coming back— will choose a course which will enable them to live at home and possibly commute to an educational establishment reasonably near to their homes.
Baroness White: The chance of uninterrupted study in certain homes is minimal.
Baroness Young: I entirely agree with that. There will always be hard cases. What is remarkable is the number of people who succeed in getting a degree. I have seen the figures from the Open University. I admire enormously anyone who decides later in life to undertake a degree course and to do so via the Open University. It is a remarkable achievement. We ought to look at the successes of people. We should look at those who are really motivated to do something to overcome a good many difficulties. The point of our discussion is to see how the money that is available will be spent and how the figures really work out for that proportion of students who
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will be affected by this amendment. If I have the figures correct, students will not be disadvantaged. I think we should say so and welcome these proposals.
Viscount Eccles: If my noble friend is right that from next autumn students who are not living in college accommodation will get enough money to live quite well outside college, then those who are living inside college are getting too much money and we ought to take some away.
Baroness Young: Perhaps I may respond to my noble friend, although I realise that that is a job for my noble friends on the Front Bench. The truth of the matter is that from next September students will receive more money in real terms than they receive at the present time. They will receive a higher grant they will have a top-up loan and in some cases they will still have a parental contribution. My understanding is that they will be better off. That point needs to be made continuously. That is what is to happen next September. The anxiety is about how the scheme will proceed. Those who will be affected by the loss of housing benefit are by no means all students if those students are living outside purpose-built accommodation.
Lord Beloff: I find it difficult to follow the logic of the noble Baroness. We know that a very high proportion of students at Oxford, as elsewhere, live for the whole or part of their studies in rented accommodation. It is not merely, as my noble friend Lord Eccles said, a couple of heads of houses who have told him of their anxieties. The University of Oxford has looked into this. The vice-chancellor himself communicated with me and said that this is the immediate issue that is the most disturbing. It is not a question of the future but of what happens this autumn.
Although it may well be the case that the majority of students under these new arrangements will be as well off or, if you like, better off than they were last year, that does not apply to those students who have to pay for rented accommodation. That is agreed by the heads of all universities and in particular by the University of Oxford.
Lord Addington: I should like briefly to say that we seem to be covering much of the ground covered earlier today and the same arguments apply. The real point here is that there will always be some people who will be better off— those who manage to stay in university accommodation. The students we should be worrying about are those who are in institutes which do not have accommodation and those who fall outside them.
If we go down the academic tree we find those in the less prestigious institutions— generally the younger students with less money— are the hardest hit. It is those students we should be seeking to defend and not the others. If we miss out anyone or find that a substantial body of students are worse off then the scheme is faulty and we should reconsider it.
Baroness Seear: I do not want to delay the Committee but I should like to ask the Minister to

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comment particularly on graduate students. This issue was raised among a number of issues by my noble friend Lord Russell. Graduate students are not getting loans. They are going to have housing benefit withdrawn. Clearly they are to be worse off. Graduate students are, by definition, the cream of the undergraduate population. The academics of the future will be drawn from them and we would expect them to take a leading role in a number of areas. We must not cut down the number of graduate students, given that we only have the three-year undergraduate course which I agree and defend; and provided we allow them to work throughout the three years that is fine. Graduate students form a vital component of university work and are vital for the future. I ask the Minister to look again at housing benefit for graduate students given that they will not be able to get loans and therefore must be worse off.
Lord Butterfield: Perhaps I may briefly share with the Committee a remark I stumbled across when reading up Francis Bacon, later Lord Verulam. This brief quotation is very germane to the difficulties we seem to be experiencing in regard to information. He said:
"Where there is much controversy"—
and that, it seems to me, is where we all stand tonight—
"there is at many times little enquiry".
I look forward to having the true facts of this very awkward situation. I am particularly concerned about the poor graduate students who are so important. If any group of people in this country can be so described, they are the seed com.
11 p.m.
The Earl of Caithness: I shall take a little time to answer the points that have been made. To some Members of the Committee it will not be the repetitious argument that has gone on for most of today, but some of it will.
First, it is a fundamental plank of the Government's student support policies that financial assistance provided to students out of public funds should be directed through the education system according to educational criteria.
We do not believe that the social security system is an appropriate mechanism for channelling support to students, for the following reasons. First, the decision to undertake full-time study is a decision to opt out of the labour market: it is not the function of the benefit system to subsidise able-bodied people without family responsibilities in this way.
Nevertheless, we do recognise the need to protect those in vulnerable groups, such as students with families and disabled students, and have undertaken that those in such groups will retain eligibility for benefits. So some of the concerns that my noble friend Lord Beloff, among others, has expressed to the Committee are taken care of by what I have just said.
Secondly, the benefit system was never intended for the support of students. For a variety of reasons the scale of student claims has increased very
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significantly over the past two decades, putting an unintended and inappropriate burden on the welfare system.
Thirdly, the short term, cyclical nature of students' benefit claims generates administrative problems and costs which are out of all proportion with the amounts actually claimed. For all these reasons, the Government believe that it is now appropriate to remove students' entitlement to benefits and place the responsibility for student support where it properly belongs— with the education system.
Not only is support through the benefit system innappropriate for students; it is also unnecessary. The Government's policies are generous to students, giving the great majority more in loans than they might otherwise have claimed in benefits. From the recent survey of students' income and expenditure we estimate that in 1990–91 young single students who would have been able to claim benefits would have received an average of £ 315 over a full year. The average for all such students, including those who would have claimed nothing, would have been £ 210. Instead of this level of benefit entitlement, students will have available a loan of in most cases £ 420.
I turn to the arguments of the noble Baroness, Lady David. Later, as my noble friend Lady Young reminded us, I return to Amendment No. 35. We are sorry that the noble Baroness, Lady White, was not with us then.
Baroness White: I was. I heard everything that the noble Earl said which was based on regional differences of costs. That is not what we are discussing now.
The Earl of Caithness: It was very much what the noble Baroness, Lady David, was talking about during a great deal of what she said and I have to deal with it. As I said earlier today, the total amount available to students in loan and access funds will far outweigh what would have been available in benefits. We estimate that in the first year of the scheme expenditure on loans and access funds for undergraduates will be £ 183 million compared with savings on social security expenditure of only £ 68 million.
The Government therefore will be spending well over £ 100 million more on students next year as a result of the new student support system. I hope that that clarifies the figures for my noble friend Lady Young. They are impressive figures. There is an increase in spending of over £ 100 million.
Baroness Seear: The noble Earl will admit, will he not, that the first money was spent and the second amount of money was lent? There is a difference.
The Earl of Caithness: It is an increase of new money available to the students should they wish to take it up. Let me repeat, particularly to my noble friend Lord Eccles who raised this point, that we acknowledge that, even given this extra sum of money, there is concern in some quarters about the effect on individuals of the loss of benefit entitlement. We accept of course that a few students

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might have been able to claim more in benefits than they will have been able to claim in loans. We have taken great note. I can reassure the Committee that the Government have not neglected the position of such students. If students are in financial difficulty as a result of the withdrawal of benefit entitlement, they will be able to apply for assistance from the access funds. And the Committee knows that we are considering carefully the size of the access funds at the moment. That point answers the noble Baroness, Lady Seear, and the noble Lord, Lord Butterfield, who were concerned about graduate students. They too will have an access fund designed to meet that problem. I know that it is a matter of concern. I am only too well aware of what has been said today. As the Committee is aware because of the discussion on Amendment No. 35, that is one of the matters that I shall be taking up with my right honourable friend the Secretary of State.
I shall now answer two of the particular worries of the noble Earl, Lord Russell, who is paying homage to the Labour Front Bench in a wonderful way. There is no need for him to be so courteous to the Labour Front Bench. He talked about taking powers by regulation to remove benefit entitlement. He will be aware that the 1975 and 1986 social security Acts conferred a power to implement by regulation the benefit changes proposed by the Government. Those powers have been conferred by Parliament. It is proper for them to be used. The regulations are subject to consultation in the usual way.
The other point that the noble Earl made was that students are the poor. Social security statistics show that a minority only of students claim benefits, and a proportion of those who do will retain entitlement to benefits because they are lone parents, disabled or student families. Some of the Committee's concerns are already catered for by those groups which will not have the benefits to which they are at the moment entitled removed. For the others there is the access fund in addition to the loan, which, as I have already made clear, exceeds by over £ 100 million the value of the benefit that we are withdrawing.
The Committee has expressed its views strongly on the question of access funds. That is also a matter that I have promised to take away for further consultation with my right honourable friend the Secretary of State.
Baroness David: First, I should like to thank all noble Lords who have spoken in support of the amendment, which has had strong support. The only voice that defended the Government was that of the noble Baroness, Lady Young, who often comes to the rescue of her Front Bench when she sees it in difficulty. Her points were based on the average student. A total of 60 per cent. of students live in the private rented sector. There is no doubt that they will be worse off.
I have some figures which show how students will be worse off under the loan scheme. If we take a rent of £ 45–50, which is the average London rent, under the new loan scheme the student will be £ 1,126–64 worse off. The average rent outside London is
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£ 25·40. The student will be worse off by £ 575·30. On a rent of £20, which is below average outside London, the student will be worse off by £ 195·50. The Minister has made a great deal of the fact that the grant and loan will give students a 25 per cent. increase, but we must remember that the grant has been eroded over the past 10 years. The grant and the loan together do not bring students back to where they would have been in 1979.
The Minister has made a great deal of the access loans. We know that he will look at them. I repeat what I said earlier: if we average out the £ 5 million which will be available for undergraduates, that comes to £ 10 per student. That is ridiculous. The access loans will have to do so much that unless they are vastly increased they will not make a significant difference.
I should also like to point out that polytechnic students and those in colleges of further education will be in even greater difficulty than university students because far fewer polytechnics than universities have halls of residence. I know of this from my own home town of Cambridge, where we have both a university and something which is about to be a polytechnic. Having served on the governing body of the technical college for some time, I know that at almost every governors' meeting problems of accommodation arise and we are told how difficult it is to find accommodation for the students who are coming.
I should like to make one other point. These regulations which will change the social security arrangements are now out. Prior to the regulations being laid before Parliament they were referred to the Social Security Advisory Committee and the local authority associations for comment. It is not too late to have another look at this. After all that has been said tonight and earlier this afternoon it would be sensible for the Government just to say that they will take it back and think about it. It is not too late, so I wonder whether the Minister could think again and consider. May I give him the opportunity to say that he will consider that?
The Earl of Caithness: For a start, the noble Baroness referred to access loans. They are not loans, they are payments; and of course she calculated them on the basis that every student would be claiming them regardless, which is a totally inequitable position from which to attack that problem.
As I said earlier, I will refer to my right honourable friend the Secretary of State the comments made on this matter of social security, because it has been before the Standing Committee in another place. I said earlier to the Committee that it was very much part of a package. It was at that stage that the noble Baroness, Lady White, mentioned the question of the community charge. I then upped the ante and said that one must take into account that they are paying rates as I also did as a student.
This is a package put forward by the Government. It is very much a question of a substantial increase in the monies available to a student through a form of loan. It is the access funds which are not loans, which will be targeted on those students who will still be in serious difficulty. The same applies to

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graduates, because the noble Lord, Lord Butterfield, raised a valid point. It takes into account the fact that one will be withdrawing from the students £ 68 million that they currently get in benefits.
Baroness David: I have found another figure which I shall quote. It is a Government figure which shows that over 77 per cent. of undergraduate students have claimed welfare benefits, some receiving sums well in excess of the proposed top-up loans; those benefits will no longer be available. If a similar proportion to 77 per cent. seek assistance from the access fund, it will provide only an average of £ 15 per student per annum. I do not think we have had a satisfactory answer, and as there is a great deal of anxiety on all sides all I can do is test the opinion of the Committee.
11.13 p.m.
On Question, Whether the said amendment (No. 42K) shall be agreed to?
Their Lordships divided: Contents, 19; Not-Contents, 51.

DIVISION NO. 2

CONTENTS

Addington, L.

Lockwood, B.

Adrian, L.

Peston, L.

Beloff, L.

Pitt of Hampstead, L.

Blackstone, B.

Ponsonby of Shulbrede, L. [Teller.]

Butterfield, L.

Carter, L.

Russell, E.

David, B.

Seear, B.

Fitt, L.

Sherfield, L.

Flowers, L.

Tordoff, L. [Teller.]

Kilmarnock, L.

White, B.

NOT-CONTENTS

Arran, E.

Johnston of Rockport, L.

Balfour, E.

Joseph, L.

Belstead, L.

Kimball, L.

Blatch, B.

Lindsey and Abingdon, E.

Boardman, L.

Long, V.

Borthwick, L.

Lyell, L.

Brabazon of Tara, L.

Mackay of Clashfern, L.

Brougham and Vaux, L.

Mills, V.

Butterworth, L.

Mottistone, L.

Caithness, E.

Mountgarret, V.

Carnegy of Lour, B.

Rankeillour, L.

Carnock, L.

Reay, L.

Colwyn, L.

Romney, E.

Davidson, V. [Teller.]

Sanderson of Bowden, L.

Denham, L. [Teller.]

Skelmersdale, L.

Downshire, M.

Stockton, E.

Eccles, V.

Strathclyde, L.

Elliott of Morpeth, L.

Strathmore and Kinghorne, E.

Ferrers, E.

Swinton, E.

Fraser of Carmyllie, L.

Thomas of Gwydir, L.

Gisborough, L.

Trumpington, B.

Goold, L.

Uliswater, V.

Henley, L.

Vinson, L.

Hesketh, L.

Wynford, L.

Hives, L.

Young, B.

Hooper, B.

Resolved in the negative, and amendment disagreed to accordingly.
11.20 p.m.
[Amendment No. 43 not moved.]
Baroness Blackstone Baroness Blackstone moved Amendment No. 43A:
Page 4, line 8, leave out ("have regard to") and insert ("apply").
The noble Baroness said: In moving this amendment, I shall speak also to Amendment No. 43B. The way in which the Bill is worded is extremely puzzling. Schedule 2, paragraph 1 (3) says that,
"the Secretary of State shall have regard to the retail prices index published by the Central Statistical Office of the Chancellor of the Exchequer, any substituted index or index figures published by that Office or such other index as appears to him to be appropriate".
Rather than stating clearly, so that we all know where we are, that the index of inflation will be the RPI, the Bill gives the Secretary of State carte blanche to use any other index. We could have a Secretary of State who decided all of a sudden to use average earnings, for example, or an index of educational costs or house prices, or even an index of the popularity of the Conservative Party. I must say that in today's circumstances he might wish to use it inversely.
When we discussed Amendment No. 44, grouped with an earlier amendment, the Minister said, with reference to the use of another index, that this was merely a safeguard in case the retail prices index was unsuitable. It is not exactly clear to me in what circumstances it would be unsuitable. Perhaps he can tell us. What is wrong with sticking to the retail prices index? It is the best measure of inflation that we have. It is clearly understood by most graduates, I should have thought. Perhaps I should report that some years ago when Lord Rothschild went round the Cabinet of the day— this was in the early 1970s— to find out what studies he ought to take on as the new director general of the Central Policy Review Staff", he found out that only three of the Cabinet of that day knew what the RPI was. I have no doubt that things have changed since then. I believe that most graduates understand what it is.
In giving students a loan we are taking out a contract with them. They should know what the basis of the contract is and not be in a situation where the goalposts can be moved. If for some reason the Government wish to introduce a different index, it should be the subject of proper parliamentary scrutiny. I can see no reason whatever why the amendment could possibly be rejected. I beg to move.
The Earl of Caithness: We have a little repetition again, I am afraid. The first amendment would allow no choice but to apply the inflation rate as the indexation factor. It would thus deprive a future Secretary of State of the option of indexing the loans at a rate below that of inflation. We have heard many arguments to the effect that the loans should not be indexed at all, or not for particular groups. It does not surprise me that we now have an amendment which is totally contrary to those which the Opposition have moved before by removing the possibility of using something less than the rate of inflation.

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I do not say that this Government would wish to depart in either direction from the inflation rate as the basis of indexation. The Committee must bear in mind that indexation is compulsory. Paragraph 2 of Schedule 1 is governed by the verb "shall".
The second amendment would remove the possibility of basing indexation on some measure of inflation other than the retail prices index. The RPI is indeed the measure that we intend to use. But we must provide for the possibility of its being abolished and replaced by some other index. At that point it will be necessary to be able to adopt the alternative measure, and the Bill as drafted allows for that.
The amendments are designed to fix in the Bill exactly what the Government intend. However, the Committee is familiar with the arguments about flexibility. In future the loans scheme may have to deal with quite different circumstances that we cannot foresee today. Members of the Committee opposite have also suggested that it should apply to a quite different range of students. The Government at that time must have the flexibility to deal with such changes.
Baroness Blackstone: I was a little surprised to hear the Minister suggest that the RPI might be abolished. I am not sure how long that index has been in operation but I believe it is a long time. I cannot foresee any circumstances in which any Government would wish to abolish it. It is of proven usefulness and is the normal measure used for indexation. I am surprised by the arguments that the Minister has used in responding to this amendment. At this late time of night I have no intention of pressing the amendment any further, but I hope that the Government will think again about it. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 43B and 44 not moved.]
Lord Colwyn Lord Colwyn moved Amendment No. 45:
Page 4, line 10, at end insert:
("() Students on courses of more than three years' duration shall have the repayments cancelled on that proportion of their loan;; incurred in any years subsequent to the initial three years of their course.").
The noble Lord said: At a little before eleven o'clock this time last week my noble friend the Minister said that he was greatly excited at the prospect of reaching Amendment No. 45.I hope he still feels the same way this evening about the effect of my amendment which will limit the loan scheme to the first three years of any course. Any student with a course of five years or more would thus have a loan in the normal way for the first three years of the course but the top-up element for any subsequent years would be in the form of a grant. The amendment does not seek to challenge the underlying principles of the Bill but would represent a compromise recognising that a loan inevitably bears more heavily on those with longer courses.
As the Committee is aware, I am a practising dentist and for that reason I speak with particular reference to dental students and of course to other students whose courses exceed three years in
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duration. I was pleased to hear in previous discussions on this matter that my noble friend has this problem under consideration and has agreed that annual repayments for students on longer courses could be a major burden. Dental and medical students undergo a rigorous course which usually runs for five years. In addition, each academic year is 45 weeks instead of the usual 30 weeks. Long hours and long terms provide little opportunity for dental and medical students to supplement their grants with part-time work. I managed this myself and was able to supplement my grant by playing my trumpet, but jobs in any of the normal university holiday periods were out of the question.
Students must also purchase expensive equipment as well as textbooks, although I shall not make a major issue of that as many students of medicine and dentistry are able to buy most of their books and instruments second-hand from recently qualified students. It will come as no surprise that many dental and medical students already face large debts on qualification. A survey of final-year clinical academic students undertaken by the British Dental Association in February this year found that in London the average student's annual essential expenditure— that is, excluding any social activities— totalled £ 3,488, but the maximum grant awarded is only £ 2,650. As a result, the survey found that 71 per cent. of the students possessed an overdraft of which more than two-thirds exceeded £ 500. One-third of the students also possessed a bank loan, often amounting to more than £ 1,500. A similar survey of medical students has shown that 60 per cent. of final-year students have an overdraft and that 46 per cent. of these have an overdraft of over £ 1,000.
Allowing for 5 per cent. inflation, a junior doctor could be faced with a total loan as a proportion of income of 35 per cent. by the year 2006. I accept that in the first academic year the top-up loan will include the total resources available to students that year. I also understand that the repayments will be deferred if the graduate's income is low. Nevertheless, it is clear that a student embarking on a three-year course will face a lower repayment than a student starting a five-year course.
My noble friend the Minister has made much of the evidence from abroad showing that loans do not deter those from poorer backgrounds because such students make rational decisions knowing that a degree will ultimately lead to a higher income. That I accept. However, for a student considering the pros and cons of a three-year course or a five-year course, the rational decision will be to choose the shorter one unless the rewards of the longer course are proportionately higher.
I do not wish to plead poverty on behalf of the medical and dental professions. However, the introduction of student loans is against a background of falling numbers of applicants for dentistry courses. Since 1980 the number of applicants to dental schools has declined by one-third. The introduction of loans might not be such a worry if we had too many dental students, but we have too few.
In conclusion, I believe that I am correct in saying that one-third of all medical and dental school places

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are in London, where the cost of living is highest. The loss of housing benefit and the introduction of the 20 per cent. contribution to the community charge may also deter potential students, particularly those from low income families, from applying to London medical and dental schools. My concern is that the medical and dental professions should not be restricted further and that the quality of students should not suffer through lack of choice. This amendment to the Bill would put longer courses, such as dentistry and medicine, on an equal footing with three-year courses and encourage students of the right calibre to enter the professions and continue to provide the first-class standards of medicine and dentistry that we have today. I beg to move.
11.30 p.m.
Lord Adrian: I should like to support the amendment moved by the noble Lord, Lord Colwyn. Perhaps in doing so I should declare an interest, having been a medical student a good many years ago.
It seems to me that if one of the arguments for loans and repayments is that students will earn more because of their courses, one needs to show that students who have taken five-year courses will earn more than those students who have taken three-year courses. I do not believe that that is the case.
On the basis of that argument, it does not seem unreasonable to burden students on five-year courses with the same repayments as those on three-year courses. I hope that the Minister will think about the suggestion and bring forward an amendment of his own later in the proceedings on the Bill.
Lord Pitt of Hampstead: I should like to support the amendment. There is a serious situation in relation to medical students. Not only do they take five-year courses, but they continue for a further two, three or four years before they are in a position to repay the loan. Having completed their undergraduate courses they qualify, but merely qualifying is not enough. They must then qualify themselves further. If they are to be GPs they have to take a vocational course for another three years. If they are going to be specialists they must train for a further three or five years before they are in a position to earn enough to be able to repay the loan.
I am not in favour of the plan, but, if we are to go ahead with it, let us decide that certain students, because of their position, must be safeguarded. We must therefore stop at a certain stage. The vast majority require only a three-year course, so the loan received by anyone on a course longer than three years should be regarded as a grant. That is what is required. I hope that the Government will accept that principle; otherwise, we shall create problems for many people who will be needed by society. We need doctors and dentists. We need all the chaps who will be burdened unless we find a way of dealing with this matter. I hope that the Government will accept the proposal in the amendment.
Lord Addington: I am glad that the principle that I and the noble Earl, Lord Haig, proposed is receiving
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the full backing of the medical profession; namely, that longer courses require different consideration. Having said that, this is the third time that we have covered the subject. I hope that the Minister appreciates the considerable concern in virtually all parts of the educational establishment, whether in Scotland or among teachers or the medical profession.
Lord Butterfield: I hope that the Minister will not be cross with me for adding to the plea for consideration of that point. My point relates to the extension of the general course of training for doctors, dentists and other professions; namely, the tendency we all have to find the best students and encourage them to take an intercalated BSc to turn them into the intellectual leaders of the profession when their training is over. I hope that the Government will give serious consideration to ensuring that we offer minimum impedance to that development among our ablest young men and women in those professions. Only in that way will our professions be able to hold up their heads with the professions in the States, Europe, Japan and elsewhere.
Baroness Blackstone: Amendments were tabled on the first day of the Committee stage on the subject of students on longer courses, but rather disappointing answers were given by the Government. There appeared to be little acknowledgement of the fact that those students will be disadvantaged compared with others on shorter courses or the standard three-year undergraduate degree courses.
I was therefore pleased to hear both the noble Baroness, Lady Blatch, and the noble Earl say, in response to an earlier amendment this afternoon, that consideration will now be given to the possibility of repayment over a longer period for such students. We shall look forward to hearing the outcome of the Government's deliberations with reference to the amendment of the noble Earl, Lord Haig.
However, the present amendment seeks to go a little further than that of the noble Earl in cancelling repayment for students on longer courses for that part of their course which is over the standard three-year length. As has been said, students who have to take those long courses— it is not just doctors and dentists; there are also architects, vets and other groups— will have greater debts under the present proposals.
There are two questions here; first, that of equity and, secondly, what the effects will be on the demand for such courses, especially once the amount of loan has increased to 50 per cent. of all maintenance costs. Do we want potential doctors, dentists or architects— professions in which we certainly need the highest quality young people— to change their plans and decide to study something else even though their convictions and talents would lead them into those professions which have longer courses of study? Repayments over a longer period will help but will still not eliminate the fact that those students will be penalised. This amendment is a way to avoid penalising them. We support it from these Benches.
The Earl of Caithness: My noble friend Lord Colwyn reminded us that I had brought this amendment to the attention of the Committee. I commented on it way back during our discussion on Amendment No. 16. It was then that I said that we intended that the annual repayment should be kept manageable for students on courses longer than four years. The noble Lord, Lord Addington, has also been ploughing that furrow, even at Second Reading. As he said, we covered that point at least three times. I do lot object to covering it yet again, even though I have to be repetitious.
Let me reassure my noble friend Lord Colwyn that we are actively considering how this may best be done. The terms of this provision will be set out in regulations. I remind the Committee once more of our commitment to monitor the scheme. If my noble friend Lord Colwyn is right and we see adverse effects on recruitment to longer courses— and I must say that I do not agree with him— it will be possible to rrake any changes swiftly by amending the regulations. But we are not in a position now to be certain that special provision will be required for this particular group. As I said, I doubt the need. If this is a group that needs special provision, we are equally not in a position now to be certain that the solution proposed in the amendment— cancellation of part of their loan— would in fact meet their circumstances. I hope that my noble friend will bear with the Government a little longer while we consider our position with regard to the longer courses. But his argument is well taken.
I should just like to deal with a point made by the noble Lord, Lord Butterfield, on the matter of the intercalated year. I remind the Committee that the grant is not automatically available for the intercalated year with medical students but the loan will be available. I think that that is the point that exactly meets the concern of the noble Lord, Lord Butte-field.
Lord Colwyn: I am grateful for the support that I have had this evening from all Members of the Committee who have spoken. Despite the late hour there is obviously strong feeling about this matter. I shall look forward to reading what my noble friend the Minister said, with a view to taking advice on it. In the meantime I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 46 and 47 not moved.]
Lord Flowers Lord Flowers moved Amendment No. 47A:
Page 4, line 22, at end insert—
(" (3) Prior to the making of regulations under sub-paragraphs (1) and (2) above, the Secretary of State shall hold consuItations with representatives from the institutions which will be required to provide certification and jointly agree a method by which certificates are to be provided.").
The noble Lord said: I tabled this amendment as a simple precaution and I shall be very brief. Under paragraph 2 of Schedule 2 the Government require institutions to certify that a student has been accepted on a course before he or she may apply for a loan That is a perfectly reasonable requirement but it will involve some administration on the part
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of the institutions. How much administration it will need is a question of what precisely is required to be done.
The people who know about these matters and would be responsible for administering them are not the officials of the DES but the registrars of the institutions of higher education. This amendment ensures that the DES will discuss its requirements for certification with the registrars before making its regulations. I shall be perfectly content if the Minister will himself undertake to amend the Bill in order to give effect to what I have proposed. I beg to move.
Lord Adrian: In rising to support this amendment, my chief feeling is one of sadness that it should be necessary to spell out on the face of this forlorn and unloved Bill what should surely be the normal state of affairs. That it is not the normal state of affairs and that it should seem necessary to oblige the Secretary of State to hold consultations with institutions I believe is largely a consequence of the way matters have gone so far.
Essentially the universities and polytechnics do not know what they are expected to do and how whatever they are expected to do will be financed. I understand that when institutions have made their own proposals they have been told that they cannot be discussed and that the Secretary of State may have to make amendments to force acquiescence in whatever scheme emerges from the DES.
The amendment we are considering may be seen as an inevitable riposte to the possibility that the Secretary of State will amend the Bill to bend universities to his own will. If we can be assured that the Secretary of State is seeking agreement with the universities and polytechnics about the mechanisms of implementation, I for one would hope that the noble Lord, Lord Flowers, might be able to withdraw his amendment. I should be happy to see the amendment withdrawn if it could be shown in that way that it was unnecessary. I am fully conscious that the amendment must be no less distressing to the Secretary of State than I fear his proposed or threatened amendments will be to the universities.
11.45 p.m.
Lord Peston: I rise, first, to support the amendment, and, secondly, to echo some of the words of warning that the noble Lords, Lord Flowers and Lord Adrian, have given.
I had originally understood when we were considering the Bill that all that higher education institutions were required to do was fairly straightforward, with no fuss; namely, that they would write, "X is a student at this university." That is what I assumed the certification required. I also noticed that the schedule in connection with certificates used the words:
"The Secretary of State may by regulations require".
Therefore, I had somewhat taken for granted originally that the Secretary of State would not do that: he would simply discuss the matter with the universities and polytechnics and they would agree that it was perfectly reasonable for them to issue that simple certificate.

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However, for reasons that I do not fully understand— one learns about most of this by rumour and leaks to the press— there seems to be some ill feeling now between the Secretary of State and those who are responsible for the running of these major institutions. We hear of the matter having reached the rather dreadful state to which the noble Lord, Lord Adrian, has drawn our attention; namely, that the Secretary of State himself may well be introducing regulations or amendments to the Bill that go very much further than the very simple position as I had understood it.
Lord Flowers: Perhaps I may intervene to say that there is no ill feeling between the heads of universities and the Secretary of State.
Lord Peston: As a university professor, albeit retired and emeritus, I am sorry to hear that. From what we have heard there ought to be a modicum of ill feeling between the Secretary of State and the institutions if the institutions are being threatened, which is the point at issue. I speak entirely from the outside.
Clearly the key point is that threats should not be the way to deal with the matter. Co-operation and consultation should be used. The two amendments say precisely that. I should hope that there is nothing between any of us on this matter. All that one requires is some reassurance, first, that the Government have in mind only a simple certificate; secondly, that the Government will consult; and, thirdly, that the whole matter will proceed without any ill will because that is how matters ought always to take place with regard to higher education.
Baroness Blatch: As the noble Lord, Lord Flowers, has stated, the amendment would require the Secretary of State to consult with representatives of the higher education institutions and to agree with them how the certification process should operate. However, contrary to what the noble Lord, Lord Adrian, said, we have consulted widely at all stages of formulating our policy on student loans. We have listened carefully to all representations and taken account of all views put to us both before the introduction of the Bill and since. Even where we have not thought it right to incorporate such views in the scheme, we have been grateful for them.
Officials of the Department of Education and Science and the company have been hard at work on a procedure for certifying eligibility. My right honourable friend the Secretary of State expects to annuonce shortly how this will operate. The aim will be to make the certification process simple and straightforward, both for the institutions and for their students.
There has to come a point in the development of any scheme where one recognises that the time for formal consultations has passed. However, that does not mean that informal discussions on related matters are impossible. My right honourable friend's door is always open. In particular we wish to discuss with the representative bodies how best to brief the institutions on their responsibilities before the start
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of the autumn term. We shall always be ready to listen to the views of the institutions as the scheme matures and, if necessary, to make improvements. We are by no means opposed to talking to the institutions. Indeed, we welcome such dialogue. However, to oblige my right honourable friend the Secretary of State to embark on formal consultations at this stage would impose an unacceptable delay which would not be in the interests of students or the institutions themselves.
To compel my right honourable friend to reach agreement with the representative bodies of the institutions concerned would be undemocratic and unworkable. The amendment would allow one party to withhold, however unreasonably, its consent to the proposed certification process. That would be unacceptable.
We have consulted widely on this Bill and have listened to all the views put to us. The amendment would delay the scheme and effectively allow one particular interest group to overrule the will of Parliament if it so chose.
The Secretary of State has been in touch with the Committee of Vice Chancellors and Principals, the Committee of Directors of Polytechnics and the Standing Conference of Principals. Discussions of the detailed administrative arrangements have been offered as soon as possible after Third Reading. With that explanation, I hope that the noble Lord, Lord Flowers, will feel able to withdraw his amendment.
Lord Flowers: This is a question of what one means by consultation. By consultation I mean sitting round a table, arguing it out, talking about the "ifs" and "buts" and the details and discussing what would or would not work. It is not a question of somebody throwing out an idea to this House or in a letter to a Minister and civil servants and the DES considering the matter and advising the Minister that the idea will not work. That is not consultation.
We have been told many times by Ministers in this Chamber during the passage of this Bill that there has been much consultation. In my sense of the word, there has been no consultation on almost any detail of this Bill. However, the noble Baroness suggested that the Secretary of State's door is open. I am very glad to hear that. I knew that and have walked through that door on at least one occasion and may have to do so again. That being so, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 47B not moved.]
The Deputy Chairman of Committees (Baroness Lockwood): If this amendment is carried, I cannot call Amendment No. 48.
Baroness David Baroness David moved Amendment No. 47C:
Page 4, line 24, leave out ("arrangements may") and insert ("Student Loans Company Ltd. shall").
The noble Baroness said: In speaking to Amendment No. 47C, I shall speak also to Amendments Nos. 48B, 48E and 48K.
If these amendments are accepted paragraph 3 (1) will state:

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"The Student Loans Company shall provide for the loans to be made and recovered, and other functions in relation to the loans to be discharged".
The purpose is to make the Student Loans Company the only body which can be responsible for the student loans scheme. The Student Loans Company was originally proposed as a company to be wholly run by the banks. Following the withdrawal of the banks in December of last year, the Secretary of State set up a company. That is a private company, limited by shares, and all the present shares are owned by the Government. The Government have appointed Mr. John Vereker, who is the Deputy Secretary of DES, to be the company chairman. At Second Reading I asked whether such a job is normally taken on by civil servants and whether this was not a precedent. I received no answer. I hope to receive one tonight when the noble Earl replies to the amendment.
As a private company the Student Loans Company could be sold and privatised. When asked about this in Committee in another place, the Under-Secretary of State, Mr. Jackson, said:
"There is no problem about that. Many organisations lend money to customers and collect money from them. The chief executive of the company has great experience in consumer credit and wi11 do a good job".
The Under-Secretary of State confirmed that the company could be sold as a banking business. Obviously the company will have enormous value as a banking and credit business as it will have access to the country's graduate workforce. This amendment requires that the Student Loans Company is kept as a company and is not subsumed into a banking and credit agency. We want to be told whether it is possible for the company to be sold. Will it be sold? Is it the Government's intention that it might be sold? Could it be sold to an overseas company? I look forward to the answers to those quest ions. I beg to move.
The Eari of Caithness: These amendments seek to ensure that the loans scheme is administered exclusively by the Student Loans Company. I first assure the Committee that it is the Government's intention, subject to the passage of the legislation, to administer the loans scheme through the Student Loans Company. Since its formation in November 1989 the company has made excellent progress in preparatory work for the scheme. It has secured premises, staff and computer systems. The company is on schedule to deliver loans to students this autumn.
There is every expectation that the loans company will prove to be a cost-effective vehicle for the administration of the Government's scheme. However, the Government must retain the option of administering the loans scheme in other ways. The Bill, as presently drafted, provides the essential element of flexibility which will allow the administration of the scheme to be developed to take account of new opportunities and changed circumstances. While it is the Government's intention to enter into arrangements with the Student Loans Company for the administration of the scheme, there is no reason in principle why this
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should be a perpetual arrangement. The Government will monitor the administration of the loans scheme in order to ensure that it gives value for money for the taxpayer and efficient access to loans for the student. The Government must be able to take advantage of new opportunities and react to changing circumstances as the scheme matures.
These amendments would not only restrict administrative options; they would also severely limit the discretion open to the company. Such restrictions cannot be to the benefit of students. The company will follow best commercial practice, operating within the framework of the published rules and procedures. Within that general framework there must be sufficient flexibility to allow the company to respond to the specific requirements of individual students; for example, where students are seeking especially tailored repayment schedules in order that they may meet their obligations to repay their debt. It is not possible to say with certainty that a person's financial and other circumstances will always fit within written rules. The loans scheme must recognise that fact. That is why the Bill provides that essential element of discretion for the person or body with responsibility for the administration of the scheme.
The noble Baroness reminded me of a point that she raised at Second Reading and which I have omitted to answer. Now that she has chided me for not replying earlier, perhaps she will allow me to do so as soon as possible.
Baroness David: I thank the Minister for his reply but he did not answer two specific questions: could the company be sold, and could it be sold to an overseas company?
The Eal of Caithness: As I understand the position, it could be sold at some future date as a result of the legislation before us. But the intention is to get the company up and running for the benefit of students.
Baroness David: I cannot say that I am altogether satisfied with that last reply. I should like to think about it and consider whether we should come back with a slightly different amendment at Report stage. For the moment, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 48 to 48F not moved.]
12 midnight
Lord Peston Lord Peston moved Amendment No. 48G:
Page 4, line 30, after ("shall") insert (" (a) ").
The noble Lord said: I speak also to Amendment No. 48H. It is absurd that at midnight we are debating amendments of this nature. I can only echo the remarks made sometime ago by my noble friend Lady White that arrangements are such that we reach a fundamental matter when very few noble Lords are able to be present in the Chamber and when we are tired.
Essentially the purpose of these amendments is to clarify the financial basis of the Student Loans Company and yet again endeavour to ascertain some

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information about the company. We know very little about it and the more I hear the less I feel I know. Earlier this evening the noble Earl said that the company was guaranteed by something or other— I cannot remember his words. At any rate, I am not clear in one respect. Is the company owned by the Government in some sense? Is it in the public sector? I assume the answer is that it is in the public sector.
I asked point blank: is it a nationalised industry? I still do not have a yes or no to that question. It seems to me that it is a nationalised industry— a company owned by the Government. Perhaps one way to throw light on that question is to ask which Select Committee in the other place would be able to query this company. Would noble Lords in this Chamber be able to ask questions about the Student Loans Company and actually receive answers other than "That is a matter for the Student Loans Company and the Minister cannot answer"?
However, all that is background to the general question which concerns me. We must have an explicit statement of the financial basis of the company. Will it essentially work by the Government giving the company a loan? Is that how it will operate, or will it receive a gift of money? In other words, what is the nature of its balance sheet?
Given its balance sheet, which is at least in part about disbursing money to students and also receiving money back from students as the Government hope, that does not generate income on which the company can operate. All that that involves is the flow of money out to students and the flow of money back from graduates. I take the point further. If the company is to operate on the basis of a loan from the Treasury, presumably that loan will be calculated at an appropriate market rate of interest whereas the repayments, as the Government are keen to emphasise, will be at a rather more favourable rate of interest; that is, the rate of inflation. Therefore, by definition the company is a loss-making enterprise with an income which will always be less than expenditure.
All that sets aside one further matter. None of that covers the operating costs of the company. Therefore, I ask again: will the Treasury simply make subventions to the company to cover its operating costs, and how will that be controlled? These are just some of the many questions that arise when we consider the economics of this extraordinary company about which we know very little. Therefore, if we are to learn anything about the company, if we are to scrutinise and to take seriously its operations, then at the very least the company needs to make a specific report to the Secretary of State in much more detail than the report which it would make under the Companies Act legislation. In making that report to the Secretary of State, what we have in mind is that the report will be made to the Houses of Parliament so that we can look at it.
I have used this amendment, the imperfections of which I am well aware of, as a probing amendment simply to try to discover what the Student Loans Company is about. The Government have certainly not issued any statements or detailed documents
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that I have seen that actually describe the company as an economic enterprise. Nonetheless, the noble Earl, in answer just now to my noble friend Lady David, made two remarks, one of which was explicit. I am not certain whether the other was implicit. Whatever the company is, the noble Earl said that it could be sold.
If my view of its economics is right, it may be capable of being sold but it certainly has no market value. The only way it could possibly have a market value is if it were able to do other things and, in particular, to sell information which I now understand it will not be able to do. Even worse, we were told that if it were sold to the highest bidder it might go to a foreign person. I am as much an internationalist as anybody in this Committee. I do not believe in adopting a xenophobic view of foreigners as opposed to British people.
The issue concerns an economic enterprise. I find it very difficult to view the Student Loans Company as an economic enterprise. In the end, it seems to be just a branch of government. Almost the only way in which I can describe it is as a government office, and one can invent all the rest as a kind of fiction around it. I am sorry to have to moan on at this late hour on a matter which I regard as deeply significant. There is no other way in which we are going to find out about this company before this legislation is passed into law. There is no other time and there are no other Committee days. We cannot rely on Report stage because we may need to raise the matter further at that time on the basis of the answers that we receive now.
I end with my original remonstrance. I do not believe that we should be discussing these matters at this hour and in this condition. The fact that we have been forced to do so does not reflect well on our proceedings.
Earl Russell: I wish to add one simple question to what the noble Lord, Lord Peston, has said: are the staff of the Student Loans Company to be civil servants?
The Earl of Caithness: The noble Lord, Lord Peston, has made complaint about the lateness of the hour at which we are discussing an amendment such as this. My noble friend the Leader of the House has heard it. All I can say is that I have sat not in his position but behind him when we were in opposition. We were kept up to all hours of the night by the Labour Party when it was in power in the 1970s. It is a complaint made by whoever is in opposition. Whenever it gets a little late one tends to think that the next amendment is the most important and that it should be taken at a more convenient hour for a particular person.
This amendment seeks to ensure that the Student Loans Company will make a full annual report to the Secretary of State on its income and expenditure. But that is exactly what the company will be obliged to undertake under arrangements made between the company and the Secretary of State. As Members of the Committee will know already, the Secretary of State intends that the annual report of the company

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as well as its audited accounts will be made available to Parliament.
The loans company will be subject to the Companies Acts and its audited accounts will be submitted to the Registrar of Companies. These accciunts, as I have said already, will be made available to Parliament. The loans company will be fully accountable to the Secretary of State for its use of public funds. In the usual ways, Parliament will have the opportunity to question the Secretary of State on the issue of these funds. Additionally, the permanent secretary, as accounting officer, will be answerable to Parliament. It is likely that as presently constituted the company will generate income. That may occur, for example, through the company sub-letting office space or selling equipment which, for the company's purposes, is surplus to requirement or obsolete. Any such income will of course be included in the company's accounts. Moreover, it will be offset against the company's running costs to be met by the Government.
I hope that I have covered most of the points raised by the noble Lord. To answer one of his questions, those who work for the Student Loans Company will not be civil servants. However, the company is owned by the Government and its shares are owned by the Secretary of State. For loan outgoings the company will be funded by the Government and repayments from graduates will be returned to the Government. No interest will be charged to the company by the Government. Operating costs will be fully funded separately by the Government as they arise.
Lord Peston: I thank the Minister for his answer. To describe such a company as a company, given all that he has said, seems extremely far-fetched. It is a government office. I cannot but congratulate the Minister on his ingenuity when he said that it might generate some income. What were the two examples? It would sub-let office space. Where did it get that office space in the first place that it is now sub-letting? The other was that it would get rid of obsolete equipment. Again, that is a strange concept of income. The whole thing is odd.
On the other hand, the Minister has done what I askec; which was to tell me something more about the company. I hope— I shall raise this point again on Report— that the Government might take the opportunity some time in the next week to try to inform this place rather more about the nature of the company. We are learning about it, and I thank the Minister for the lesson that he gives us every so often A definitive statement overall would be much more welcome than having to pick up these points. Nonetheless, we have learnt something from the amendment. I thank the Minister for that, and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 48H to 49 not moved.]
Baroness Blackstone Baroness Blackstone moved Amendment No. 49A:
Page 4, line 51, at end insert—
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(" (8) The Student Loans Company Ltd., or any body or person acting on its behalf for the purpose of the recovery of loans, shall exercise any such right through due process of law.
(9) The courts shall, where it appears to them that no repayment can be secured by reasonable arrangements made by them for staged payments by the person owing the debt, order the Company to cancel the debt or such part of it as cannot be paid other than by such means,").
The noble Baroness said: The purpose of the amendment is to require the loan to be collected through means provided by statute. The proposal is that the courts should provide for the repayment of the loan by stage payments if possible or cancel it. Subparagraph (7) provides for the Student Loans Company to assign a debt collection agency to recover loans. Subparagraph (8) puts on the face of the Bill the important principle that loan recovery must be through the due process of the law; in other words, the Student Loans Company and its agents must resort to the courts to recover loans and not resort to any intimidatory tactics that might be employed by debt collecting agencies.
Subparagraph (9) provides for the courts to intervene in cases where difficulties have arisen with the repayments. The courts may decide, after examining the debtor's personal affairs, to order reasonable repayments. Alternatively, they may conclude that it is not reasonable to recover the debt. The latter provision will be of benefit to many students who take long courses and then do postgraduate study or take jobs where the pay is low. Although such people will not be repaying the loan because they are not earning more than 85 per cent. of average earnings, when they do earn above that level the repayments will become larger due to the accrued interest. The amendment will ensure that the repayments are reasonable. A former student may never be able to repay the loan due to serious illness or a serious accident. This amendment provides a means of cancelling their debts before they reach the age of 50 or 60, as proposed by the Government in the rules and procedures. I beg to move.
12.15 a.m.
Baroness Blatch: This amendment is in two parts. The effect of the first part is that the Student Loans Company would, when exercising its right to recover loans from borrowers in default, have to pursue them through the courts. The second part would compel the courts to order the company to cancel some or all of a borrower's outstanding loan, if it appeared to them that repayment could not be secured by reasonable arrangements made by them for staged payment by the borrower.
I have to say that neither part of the amendment is sensible. The first part is otiose. It is entirely appropriate that the Student Loans Company should seek to recover loans from defaulters by the usual lawful means open to companies providing consumer credit. It goes without saying, however, that if a defaulter refused requests to repay, the company (or any debt collection agency it instructed) would have to consider suing for the debt in the courts. This, of course, would be very much a last resort.

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The noble Baroness seems to wish the company to take defaulters to court, rather than employing other lawful means to seek recovery. The resultant burden on the court system would be quite unjustifiable. Furthermore, if this amendment were passed, borrowers would find themselves before the courts much quicker and much more frequently than if the company had access as well to the other usual means of seeking recovery of loans.
The second part of the amendment would fetter the discretion of the courts in a totally unacceptable way. It has long been the tradition in this country that Parliament makes laws and the courts decide how to enforce them. This amendment would force the courts to deliver a particular judgment in individual cases. The court's function is to establish whether the debtor is liable. The question of whether a debtor has the means to repay is irrelevant to determining liability.
Furthermore, the amendment would reward those borrowers whose recklessness had got them into financial difficulty. There would be a positive incentive for borrowers to spend all their money as fast as they could, in the knowledge that the courts would release them from their obligations to repay what the Student Loans Company had lent them in good faith.
The scheme makes generous provision for the deferment of repayments where a borrower's income is only moderate. It also provides for cancellation in certain circumstances. Given those generous provisions, a borrower who defaults on repayments does not deserve the sympathy either of the courts or of the general public. In the light of my answer, I hope the noble Baroness feels able to withdraw her amendment.
Baroness Blackstone: Before the noble Baroness sits down, can she say what the Government intend to do about those students who have had a very serious illness with subsequent infirmity, or a very serious accident that prevents them from working for the rest of their lives?
Baroness Blatch: I think that the deferment scheme would work. If they were not working, for whatever reason whether through accident, illness or simply not being able to get a job— the deferment scheme would work.
Baroness Blackstone: My concern is that in cases of this sort it would surely be far more sensible to cancel the requirement for repayment, rather than leaving a debt of this kind hanging round the necks of such unfortunate people.
Baroness Blatch: The level of income assumed to be reasonable for someone to repay at the rate of at today's prices £ 400 a year is £ 11,500. If, for whatever reason, a person is earning at that level or above, there will be a requirement to repay the scheme. If through illness or any other reason a person is not able to earn up to that level, then the deferment part of the scheme would apply.
Baroness Blackstone: There is a substantial difference between deferment and cancellation, so I do not think the noble Baroness has answered my question. But at this time of night I have no intention of pressing the amendment further. I shall read what she has said and consider it further. Meanwhile, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Earl Russell Earl Russell moved Amendment No. 49B:
Page 4, line 51, at end insert—
(" (8) No person exercising a right of recovery of loans shall approach or otherwise seek information from any referee, teacher or other person who is or has been in a position of responsibility or trust in relation to the borrower and no such person shall be required to act as a guarantor").
The noble Earl said: I should declare an interest in speaking to this amendment as the position of referee is one in which I might perfectly well find myself I do not mean to speak at present to the second part of this amendment dealing with the use of the referee as guarantor. The noble Earl the Minister has already said something about that tonight and I want to read what he said before I consider the matter further.
However, I intend to pursue the provision on the use of the referee to provide information. It seems to be part of a move towards privatisation of law enforcement which has potentially undesirable implications. It also creates a problem of trust. The referee will normally know the person for whom he or she is acting because of a relationship of trust which carries with it an obligation, so far as is possible, to act in that person's interest. Obviously anyone will wish to encourage people to pay their just and true debts. But, what worries me is the obligation to convey information which will lead to the person getting into trouble and being held responsible for default.
I do not think that it would be very easy to combine the relationship of trust which would put one in a position to hold this office with what I would see as the breach of trust which is involved in giving the necessary information. I think that the case should be regarded as being analogous to that of solicitor and client. One cannot expect a solicitor to carry out his job and yet, at the same time, provide information to the courts which will ensure that his client is convicted. The situation that we have here is very similar and unless the position is clarified there will be a good many people in the academic world who will be very reluctant to act as referees. I wonder whether the noble Earl can explain a little more carefully exactly what the referees are supposed to do and what they are not supposed to do.
Lord Beloff: The problem we are discussing was brought to my attention not by an academic but by a head mistress from Manchester. Representations from Manchester always go straight to my heart. Her school is a comprehensive which has both boys and girls. She pointed out that when pupils wish to go on to higher education, she regards herself— rightly, as she is a graduate from Oxford— as one of the people in the school to whom they would naturally turn for advice; that is, advice as to whether they

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are up to the standard for higher education, to what institution they should seek admission, and so on.
When she saw the proposals for the introduction of referees she felt that she would be the natural person for them to consult. On the other hand, because of the implications that at some future date she might be required to give information about them, she would be reluctant to act as a referee because, to take up the point made by the noble Earl, Lord Russell, that might damage the trust which she feels is essential to the proper running of her school in this respect.
Again, this is one of the many cases which has led to my deep depression over the Bill. The Government seem to be very remote from the concerns of ordinary people. They see the Bill from above as a method of altering financial arrangements which may or may not be to the general advantage; they do not see how it is interpreted on the ground by students, by prospective students and by their teachers. Therefore, I ask my noble friend the Minister to consider why a referee is required.
My noble friend the Minister has repeatedly stated that this is an unusual form of loan: there is no test as to the person's financial viability; and, as we discussed, anyone who is certified as being a student in one of the eligible categories is entitled, without question, to a loan. The person asks for a loan and, so far as we understand the position, the Student Loans Company has no option but to give it to him. Why then is a referee introduced into the situation?
I accept the statement from the Minister that it is a mistake to believe, as some people apparently do, that the referee would be a sort of guarantor. But why, if the loan is automatic, is a referee needed and why should this additional worry be created when there are already so many others?
Lord Flowers: May we take it that nobody shall have his name used as a referee without his permission? Quite often I am asked to give references. Usually the person who wishes me to do so approaches me first and asks whether I would mind if he gave my name. I say yes or no, according to my whim. But some give my name without consulting me— they get a very bad reference. I hope that it would be understood that, when the names of referees are given on a form, the referee's signature will also be on the form to indicate his consent.
The Earl of Caithness: I think it would be helpful if I made one thing clear right at the start. It relates to a point that the noble Earl, Lord Russell, made which was picked up by my noble friend Lord Beloff. I wrote to him on the matter. I wish to make it absolutely clear so that everybody knows that there is no question of referees acting as guarantors for a loan taken out by a student. That should be placed firmly on the record so that there can be no dispute.
I turn now to what the noble Earl, Lord Russell, concentrated on— the first part of his amendment. The amendment would prohibit the company from seeking information from any referee, teacher or other person who is or has been in fiduciary relationship with the borrower. This part of the
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amendment is misconceived. The scheme makes generous provision for the deferment of repayments where a borrower's income is limited. It also provides for the entire loan to be cancelled in prescribed circumstances. Those who default on their loans will therefore be those who have deliberately decided to renege on the terms of their loan agreement and to deprive the taxpayer of the repayment rightly due to the exchequer.
At this point I remind the Committee that the noble Earl, Lord Russell, mentioned the word "trust". There is a contract between the Student Loans Company and the student. We expect— and rightly, particularly with taxpayers' money— that the student will repay that. If he does not do so he is breaching an act of trust and I know that the noble Earl will take that seriously.
In such circumstances, it is entirely appropriate that the Student Loans Company should be able to adopt all proper commercial practices to ensure that the money due is recovered. This may well include seeking information from the borrower's referees as to his current whereabouts. As I have explained, that is one of the reasons why the student must nominate two referees.
As for approaching other persons who have been in a position of responsibility or trust with regard to the borrower, it will be for the company to decide whether this would be appropriate in a particular case. In most cases, it probably will not be. But I do not believe that it would be appropriate to impose restrictions on the company to which other entirely respectable credit companies are not subject.
I think that the noble Earl, Lord Russell, mentioned that he might be a referee and my noble friend Lord Beloff suggested a teacher. We are obviously looking for two people to whom we could go to seek an address and no more. A friend or relative might be a more appropriate person than a teacher or lecturer.
I agree with the noble Lord, Lord Flowers: I should be very annoyed if somebody used my name as a referee without my permission. On the situation that he posed to me that we should prevent this, I am not sure how we could do so. If the student used his name as a referee without him knowing about it, what action would he anticipate being able to take or expect the Student Loans Company to take?
Lord Flowers: That is very easy. On the form on which the student gives the names of his referees, the proposed referees also have to sign to indicate their agreement.
The Earl of Caithness: I note what the noble Lord says and I shall take up the point later.
Lord Flowers: This is another case where proper consultation around a table would have shown up the problem at an early stage.
Baroness Seear: In view of what the noble Lord said, if the academic concerned— the headmistress, for example— decided that she would not be prepared to act as a referee, what would be the

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position? I think it is quite likely that that might happen.
12.30 a.m.
The Earl of Caithness: I wonder whether, on consideration, this matter of not acting as a referee is as serious as the Committee considers it. I of course take account of what the noble Baroness has said. However, as I have explained, the purpose of the measure is to help the Student Loans Company to try to trace graduates who are in debt. It may not even be necessary to go to a referee. I do not see that as being a great deterrent to being a referee.
Lord Peston: I did not intend to take part in this discussion because I had assumed that what the noble Lord, Lord Beloff, had said was right and that the role of the referee was negligible. However, I now discover from listening to the noble Earl that the role of the referee is rather serious. It appears that the referee is to be a sneak and a copper's nark. He is to be someone who is approached for information.
As the kind of person who would expect to be asked to be a referee and would feel a moral obligation to fulfil that role, I should say that there is a class aspect to this matter that people are often not aware of. People from poorer social backgrounds do not have the access that Members of the Committee have to referees. We know lots of people who will write letters for us, but the kind of people I am concerned about do not know such people. There are only two people that those people can approach. One is a teacher. I do not share the view of the noble Earl that this is all rather trivial. I feel that if most teachers are told that their role will be that of a sneak, they will not be able to take on the job. The other person who could fulfil the role is a doctor. I feel that doctors may take the same view of the matter.
Having thought that this was a fairly minor matter on which we would obtain some straightforward reassurance, I now feel this is a serious matter that the noble Earl should reconsider. It will introduce into the pupil/teacher relationship an element of a wholly undesirable kind which essentially states that teachers shall act in this sneaky role. The noble Earl is constantly harping on deliberate default. There will be defaulters who are not deliberate defaulters. After all, one is a defaulter if one does not start to repay when one attains 85 per cent. of the national average wage. People do not go around all day asking themselves whether their salary is equal to 85 per cent. of the average national wage. That does not exercise them a lot of the time.
We cannot predict total numbers, but some people will be defaulters through nothing but negligence, as it were, because the matter has genuinely slipped their minds. They may be involved with other matters— for example, bringing up their families and starting work. It appears that we should worry about those people and not the deliberate defaulters. I do not entirely accept the scenario of the noble Earl, but I am now very worried about the points that caused this amendment to be tabled. When we put
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it down, I thought it was a minor matter on which we could easily reassure teachers. However, I now think it is a much more serious matter to which I, for one, will want to return on Report.
The Earl of Caithness: I have listened with care to what the noble Lord, Lord Peston, said. I take his point that some people will for some reason quite inadvertently get behind with their payments or will not start paying when they should. I understand that, but I believe there will also be the deliberate defaulters. However, what amazes me is the attitude of the noble Lord as regards helping to track those people down. Those people have borrowed off the taxpayer and are due to repay the taxpayer. The attitude of the noble Lord as regards recouping that money filled me with amazement.
However, having said that, the four Members of the Committee who have spoken in the debate have all been involved in higher education, whereas I have not. They have registered a concern which I shall pass on to my right honourable friend.
Earl Russell: We are in danger of having a clash between right and right. With respect, allowing for the point that the noble Lord, Lord Peston, made about default sometimes being involuntary, there is also force in what the Minister said about defrauding the taxpayer. I did not mean to say anything that suggested that I had no respect or understanding for that point.
The question here is what the liability of the person concerned should be. The Minister did not help me by invoking the question of a relative. I could also find myself in this position in the capacity of parent. I hope that the Minister knows that in that capacity I would do everything in my power as a private citizen to cause the people concerned to pay their debts. Were I to fail I should be bitterly disappointed. However, I hope that the Minister will understand that in that situation I would not regard it as part of my parental duty to go to the authorities to help to shop the people concerned. I believe that that would deprive me of the chance to have an influence on them in favour of paying their debts which I ought to have and would attempt to exercise.
We have here something approaching the dimensions of a culture clash. We have had that before when we have talked about higher education. I can see situations arising like those in which a priest or a doctor is found guilty of contempt of court because he will not testify against a parishioner or patient. There are two genuine obligations. Both need to be respected. Where we have a culture clash we need a cultural dictionary. As the noble Lord, Lord Flowers, said, that calls for people sitting round a table and seeing whether they can find a practical way of solving the matter where, I hope I am right in saying, the ultimate objectives are not in conflict.
I do not want to divide the Committee at this time of night. However, I wonder whether the Minister could say any more to persuade me that my concerns have been taken on board and that he realises that, in its present form, the system he is proposing is unworkable.
The Earl of Caithness: I am not convinced of the last remark of the noble Earl although I was impressed by his earlier arguments. I should like to reassure the Committee that, as I said earlier, I shall look at the matter again and bring it to the attention of my right honourable friend in view of the concerns that have been expressed. There are some arguments that I should like to tease out, perhaps later today.
Earl Russell: I should like to thank the Minister for that reply, for which I am grateful. I shall read what he said very carefully, and I look forward with a great deal of interest to what he has to say on the subject at a later stage. I beg leave to withdraw the amendment
Amendment, by leave, withdrawn.
[Amendment No. 49C not moved.]
Earl Russell Earl Russell moved Amendment No. 50:
Page 4, line 51, at end insert—
{''Repayment 3A.— (1) Loans made under section I shall be repaid in equal monthly instalments within a standard period ("the standard period").
(2] The standard period shall be five years, or such other period as may be prescribed by regulations made by the Secretary of State.
(3) Where more than one loan has been received under section 1, the total of such loans shall be consolidated into a single debt repayable within the standard period in force at the end of the latest period of study.
(4) Payments under sub-paragraph (1) shall be calculated to repay the whole amount of the loan and the interest as determined in accordance with sub-paragraph (2), within the stancard period.
(5) Loans shall bear interest as laid down in paragraph 1 (2) and (3) above.
(6) Repayments shall be made by direct debit, or by such other method as may be agreed by the borrower with the authorised person or body which shall be activated automatically on 1st April in the year following the completion of a course of higher education as specified in Schedule 1.
(7) Exemptions from repayments shall be granted only where—

(a) the borrower notifies the authorised person or persons referred to in paragraph 3 (1) above that he intends to extend his course or begin a new course of higher education; or

(b) the borrower has agreed to defer repayment in accordance with the provisions of paragraph 3B below.

(8) Nothing in sub-paragraphs (1) and (2) above shall prevent full or partial early repayment of any loan.
(9) The borrower may increase the amount of his regular instal ments, but such increase shall be applied only to bringing forward the date of completion of repayment.").
The noble Earl said: The amendment is one which I hope will not be offensive to the Government because it is simply taken from their own leaflet, translated with professional assistance for which I am extremely grateful, into proper legal language. I shall rot elaborate on the arguments for having a properly drafted Bill. I have made them before. I beg to move.
Lord Beloff Lord Beloff moved, as an amendment to Amendment No. 50, Amendment No. 50A:
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Line 3, at beginning insert ("Subject to the provisions of the legislation to be introduced under section 4 (6) above,").
The noble Lord said: The purpose of Amendment No. 50A is to call attention to Amendment No. 63, with which it is linked. The intention is to suggest, even at this late hour, that it is wrong to imply that those who have criticised the various details of the Bill, as we have now over two long days of Committee, are inherently opposed to the idea that the beneficiaries of higher education should pay something back into general funds out of money which may have come to them as a result of the higher education paid for by other people. That has been throughout common ground in most parts of the Chamber. It is certainly admitted by the universities and, I think, the polytechnics.
I should like to put on record the view, which I hope the noble Lords, Lord Adrian and Lord Flowers, who are associated with the amendment, will support, that there is a perfectly adequate alternative in the shape of the scheme put forward by the Committee of Vice-Chancellors and Principals for what is loosely known as a graduate tax. As I have said before in the Chamber, it is wrong to regard that as a hypothecated tax. It would be money going into the Government's general funds in the way in which, if the present scheme were adopted, the money paid into the Student Loans Company would go into the Government's general fund. It is another way of collecting what is regarded as a debt to society. It has the enormous merit of being simple.
The Minister has repeatedly referred to a general package of arrangements for student support— the grant, which will continue, although as a smaller proportion of the whole; the parental contribution which is to continue; the loan; the possibility of access funds for certain cases, and so on. That is an enormously complicated apparatus administered by different institutions— in the case of the grant, by local government; in the case of the loan, by the Student Loans Company; and, in the case of the access funds, by the institutions. All of that must involve a great deal of administrative expense. It cannot be done cheaply. Anyone who administers any part of the scheme would have large administrative expenses, although it has been difficult to tease out exactly what they would be in the case of the Student Loans Company.
In contrast to that, a scheme by which the Inland Revenue would be able to recover in a given period of years up to a given sum what it is thought proper that someone should repay has enormous merits. No one who was not paying income tax would come within the threshold; so the problem of a threshold would be simplified. Records are kept. The Inland Revenue has the facilities for collecting money. It seems to me that this point should be on record. If the Government pesist with the scheme and find it as unpopular among the young and their teachers as I fear it will be— I believe it to be a grave political as well as a grave administrative mistake— it would be desirable to have it on record that they turned down a scheme which many of us in higher education think is more just and both simple and cheap. I beg to move.
Lord Flowers: I wish to support this group of amendments because I believe that the Government's proposal can be improved upon. To make my position clear, together with that of my university senate, I should much prefer that there was no scheme at all. However, if there is to be one, I should prefer some more equitable variant of what is proposed.
I must reiterate that, until the last couple of weeks, there has been no opportunity to discuss the Government's ideas with them or the possible alternatives, contrary to what was said at Second Reading and earlier in Committee. It may be that the Government have heard what we have been saying but have not been prepared to discuss it. On the contrary, all along the propaganda has been that there was no acceptable alternative to the Government's proposals. That was difficult to deny when nobody outside the DES, except presumably the Treasury, knew what the proposals were.
The CVCP has put forward an alternative scheme with which I am perfectly happy. However, other variants are also possible. Perhaps I may briefly describe my own variant. It is a mechanism more than a scheme. It begins with the Government creating a fund. To that extent I suppose that the pejorative word "hypothecated" could be used. I would prefer it to be a trust fund. Although that is not essential, it helps to explain what I have in mind. In any case it could be administered by the Student Loans Company.
A student who has been accepted on a course can apply to the company for partial support from that fund. It is a matter for negotiation with the higher education institutions whether they would administer that part of the process and who would bear the cost of doing so. If the student accepts that offer, he enters into an irrevocable commitment to contribute to the fund when later he takes a job. To give effect to this the loans company will inform the Inland Revenue of the commitment, so that when the eventual employer is told the employee's tax code it will have been appropriately annotated with the letter G or something. That is the only role for the Inland Revenue in this scheme.
Payments into the loan fund will be made by the employer by deduction from the monthly pay packet. That would resemble charitable giving which many firms nowadays administer, sometimes themselves contributing matching donations. Perhaps I may point out that it might be worth while for some employers to bear some share of the monthly contributions in order to attract graduates to their employment. But that also is not essential. In any case the employer carries the cost of administering the payments. The monthly deduction would be calculated by the employer from a simple formula laid down by the Government in which the only variable— apart from annual inflation and such like— would be the employee's personal tax code.
In essence that is the mechanism. Is it a loan or is it a tax? I suggest that that depends on how the payments are terminated. If they terminate after a predetermined sum has been paid, allowing for
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interest, then it is simply a loan, albeit one repayable at a rate that the employee can afford as judged by his tax code. But in that case someone— and it would probably have to be the Inland Revenue— would have to keep the amounts to determine when the loan had been repaid. That might involve too much administration. On the other hand, if the commitment were to make monthly repayments for a fixed period of years, it would not attract the cost of accounting for the repayment of a loan.
Some would then say that the scheme is a short-term graduate tax except that it is payable into a trust fund instead of the Inland Revenue. The formula which determines the rate of contribution would have to be adjusted each year to ensure that the fund remained in approximate balance. So one could perhaps say that it was a loan scheme repayable on the average.
The self-employed will have to do their own sums and the problem of defaulters is no different from that in the Government's own scheme. I shall say no more about it, except to emphasise that there are many details open to discussion. Subject to that, it seems socially fair as well as flexible.
The Government may believe that their scheme is the best possible. I do not believe that. I call upon them to consider this proposal and indeed other and probably better suggestions that people may wish to make. The present amendment allows the Committee to consider whether it is worth while to discuss alternatives of this kind. I therefore support the amendment.
12.45 a.m.
Lord Adrian: I shall say no more than that I agree entirely with what the noble Lords, Lord Beloff and Lord Flowers, have said. At this hour of the morning I do not want to repeat their arguments. I do not disagree that some repayment by students is appropriate, but I do not agree that the scheme that has been put before us by the Government— or at least that part of it that we have been permitted to see— is a good scheme. Indeed, the more I hear of it the less I like it. I believe that the CVCP's proposals, or some derivative of them, are a substantial improvement on what is presently proposed by the Government.
Lord Peston: Although it is late this is our only opportunity to debate these matters and I see no reason for being brief This is genuinely the only chance that we have to deal with certain very important matters, as the noble Earl, Lord Caithness, has already pointed out. I shall concentrate on Amendments Nos. 50A and 63, since the noble Earl, Lord Russell, has put the other amendments into appropriate perspective.
The reason why it is necessary to put forward an amendment such as Amendment No. 63— I do not like its form of words; I do not believe that the noble Lord, Lord Beloff, would have wished to go about it in this way had he had an alternative— is because the way that the Government have written the legislation leaves us with no alternative.

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In taking part in the Committee, and at the earlier Second Reading, I have learned a great deal about the subject. I have done research and have lectured in the field. I have learned that the question of student maintenance is a good deal more complex than I ever understood. Merely by scrutinising the govemment loan scheme, I have learned a great deal about loan schemes in general. The noble Baroness, Lady Young, chided me about what scheme I would put farward. I am inclined to agree that, were I in a position to put forward a scheme, I might find, if it were subjected to critical scrutiny for example, with regard to many of the lectures I have given in the past concerning the correctness and ease of application of a graduate tax— it turning out not to be quite so correct and easy. However, the problem that has confronted us in dealing with this subject is that we have not been in a position to debate any of those matters because it is impossible to put down such amendments to the Bill. For example, the suggestions put forward by the Committee of Vice-Chancellors are not allowable in the context of the Bill. That is the nature of our problem.
If the legislation had been written in another form, much as I dislike the government loan scheme, like the noble Lord, Lord Adrian, I might have discovered that it was making the best of a bad job. But how am I ever to discover that it is making the best of a bad job if I am not allowed to discover any of the other possibilities? Therefore we are indebted to noble Lords for raising these matters.
Perhaps I may emphasise that it is not too late. It is still possible for the Government, without ruining their desire, to put more material before us so that we can clarify these matters. I am very sensitive to the notion that Members of the Committee should not wreck a government Bill on which the Government are keen. But I am also sensitive to the notion that we have a responsibility to prevent the Government doing something stupid even if they insist on it. I can find few justifications for this Chamber better than the desire at least to ask the Government, "Have you really thought through what you are doing?" One of our great problems is that we have not reached that point.
Perhaps I may mention a matter that deeply troubles me. The noble Earl and the noble Baroness have referred to widespread consultation. What they have omitted to mention is that they do not have any supporters as a result of their widespread consultation. No one supports the Government. It might well be that if we were to subject the alternative schemes to the scrutiny to which we have subjected the government scheme the Government might find themselves with some support because they would then be able to demonstrate that they had considered all the alternative possibilities.
However, as I can testify, it is not merely the students who are opposed to the scheme. The National Union of Students certainly reflects the views of students, which have been overwhelming, in my experience. But no one I know in higher education, even among those who are most devoted to the Government and their welfare, supports the
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scheme. It is difficult to know how the Government have managed to invent a scheme which offends all interested parties. However, I say that en passant.
Even now, I ask the Government to think again. This is not the last minute before the twelfth hour because we are now into Tuesday which is something for which I do not particularly care. The fact remains that the Government would do a great deal of good for education if, even at this late stage, they would take the suggestion of the noble Lords, Lord Beloff, Lord Adrian, Lord Flowers and Lord Kilmarnock, and if they could convince the Committee that they have seriously considered the alternative possibilities on their merits.
I repeat something for the last time. I regard myself as open minded. I am ready to be persuaded that this is the best of a bad job. Until the Committee has the opportunity to consider all the alternatives, it will remain unpersuaded. I hope that we shall not divide because I do not believe that this is a matter for Division. However, we must say to the Government that they have not approached this properly. They have not done their job properly.
Baroness Young: It is valuable that, even at this late hour, the graduate tax point has been raised. It has been uppermost in the minds of many Members of the Committee. Like others, I have received a copy of the vice-chancellors' memorandum setting out the graduate tax.
However, it is perfectly clear that the Government could not possibly accept these amendments. They run completely counter to the rest of the Bill. At this stage to introduce a completely different scheme would be quite impossible. I understand the desire of those who support the scheme. That is the scheme they like. However, it is very unfair to say that no one has known anything about the matter. My right honourable friend wrote to the noble Lord, Lord Annan, on Second Reading about the graduate tax. My right honourable friend held a meeting in the time between Second Reading and Committee at which he went over in great detail the whole question of the graduate tax. Therefore, to say that that has not been looked at, thought about or discussed is grossly unfair.
The truth of the matter is that everybody in the university world, for completely understandable reasons, would rather continue as we are. The noble Lord, Lord Peston, shakes his head but he has said consistently throughout the discussions on this Bill that he prefers not to have the loan scheme but to continue as we are.
Lord Peston: I realise we are all tired. However, if the noble Baroness reads my Second Reading speech, she will see that I went to a great deal of trouble to say that I fully accepted that we had to rethink the whole question of student maintenance. I went to a lot of trouble to say that the status quo is not sustainable. I repeat that the status quo is not sustainable. However, the Government have produced something worse than the status quo and that takes some doing.
Baroness Seear: From these Benches we have repeatedly said that we accept that there must be a system of repayment. We must not let it be said that everybody is opposing a system of repayment.
Baroness Young: I do not wish to put words into people's mouths which are not true. I take back anything which I have said which has implied that. I accept that everybody agrees that there must be change. We have discussed the Bill at considerable length. For students, the present scheme is infinitely better than any future scheme of loans, a graduate tax or anything else which may be devised. Therefore, it is not surprising that they are unhappy about the proposals. That seems perfectly reasonable. They think that they will not be as well off in the future as they are today. Time will tell.
I do not see how the Government could accept the amendment. We have had the opportunity to discuss it. I believe that my right honourable friend the Secretary of State has gone into the matter in considerable detail with others. I hope that the mover of the amendment will withdraw it, having discussed the matter.
1 a.m.
Baroness Blackstone: In an earlier intervention the noble Baroness, Lady Young, made reference to the need for the Opposition to say what they would do. Of course it is a long time since the noble Baroness has been in opposition, but it will not be very long now. We shall watch with interest the commitments she makes when she speaks on behalf of the Opposition. I should also like to remind her that her party's record on setting out clearly what it will do is not all that good. It said for a long time that it would abolish rates but it never said what would be put in their place.
On this side of the Committee we recognise the need to explore different ways of funding student maintenance. I agree with my noble friend Lord Peston on this point. If we are to double the number of students in higher education we know that it will be expensive. But we are convinced that the Government's scheme is not a sensible one, as many Members of the Committee have argued. I suspect that one of the reasons why the Government have gone down this route is that they have been conned. They have been conned largely by the gentlemen and perhaps ladies of the Inland Revenue.
The noble Baroness, Lady Young, referred to the discussions with the Secretary of State between Second Reading and the Committee stage. She may have been convinced by what the Secretary of State said. I was not, although it was helpful that he was willing to talk to us. He made a number of comments on what the Inland Revenue had said about the problems of introducing a graduate tax. I shall give two or three examples. He said that the Inland Revenue was concerned about the issue of thresholds. It was concerned that if we linked the repayment of loans to the standard rate of tax the threshold would be very much lower than that of the current loan scheme. There is absolutely no reason why repayments should be linked to the standard rate of tax. The threshold can be fixed at any level the Inland Revenue or the Government decide.
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The Inland Revenue apparently said that it would have to co-ordinate and co-operate with employers. We all know very well that the Inland Revenue is in constant touch with employers about every aspect of the taxation system. There was reference to the fact that special arrangements would be needed for the self-employed. Again, special arrangements for the self-employed already exist. We were told that the Inland Revenue would have to handle requests for information. Well, well, well. Of course it would, but it has to handle countless requests for information about many aspects of the taxation system.
We were told that it would have to police the PAYE return for graduates from employers. I assume that it polices the PAYE returns already. We were also told that the Inland Revenue believes that the cost of extra manpower would be very considerable and much greater than the costs involved in the student loans scheme. I simply do not believe that. I should like to see the figures. I should like to see details from the Inland Revenue as to why the cost of extra manpower would be greater than in the case of the student loans scheme. I suspect that the position would be quite the reverse. If one sets up a completely new system with a completely new organisation one will have higher manpower costs than if one makes use of existing structures and existing organisations. We were told the new computer support needed by the Inland Revenue would cost a good deal of money and would cost more than that which would be deployed by the Student Loans Company. I cannot see how this could possibly be the case. I should be grateful if we could be supplied with more details.
The Government have been conned partly by the well known reluctance of the Inland Revenue ever to take on anything new. We have heard this from the Inland Revenue on countless occasions over the years. I am surprised that Ministers have not been prepared to stand up to the Inland Revenue on these matters. I also believe that the Government have been conned by the overenthusiasm of their DES advisers who seem to fancy themselves as directors of companies, a role not normally played by civil servants. I suspect that they have been caught in a pincer movement, with the Inland Revenue's tendency to exaggerate the difficulties and the over-enthusiasm of the DES.
Above all, some form of graduate tax would allow the highly paid to contribute more than the low paid. That is not allowed for under the Government's current proposals. To have some kind of progressive system for recouping the costs of student maintenance would be infinitely preferable to the proposals in the Bill. A graduate tax would also get us away from the absurd and silly view that loans, and only loans, will deal with the culture of dependence that some Ministers have conjured up as an affliction of our current students. For those reasons I support the amendment.
Lord Elton: In a few words I should like to draw the Committee's attention to what I regard as a danger which is developing. We have a Bill which has been passed on Second Reading for one system

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but we have spent a great deal of time repeatedly discussing another system. If that is to become a habit we shall be wasting a great deal of time. I am not objecting but warning that if that becomes a habit it will be a great waste of time.
Earl Russell: If the Government are to make a habit of tabling Bills which they cannot convince us can be put into operation they must expect fairly lengthy discussions.
Lord Elton: One does not pass on Second Reading a Bill which one does not believe will work.
Lord Tordoff: Can the noble Lord tell us what the system is that is contained in the Bill?
Lord Elton: It is described in the Long Title to the Bill which the noble Lord can read.
The Earl of Caithness: The original amendment is Amendment No. 50 in the name of the noble Earl, Lord Russell. That is a classic case of the noble Earl saying that he does not have enough information and when we provide that information the noble Earl seeks, almost word for word, to put it on the face of the Bill. I hope that he will accept that in principle I have agreed the amendment of my noble friend Lady Young that this will all be subject to affirmative resolution procedures, when it will be discussed.
Amendment No. 50 and the subsequent amendments, which also take word for word the information produced by the Government, are not necessary and do not need to be put on the face of the Bill. I know that the noble Earl considers his amendment to contain an important point but perhaps I can save repetition on subsequent amendments.
Amendment No. 50A, which is an amendment to Amendment No. 50, is a paving amendment for Amendment No. 63. As we have discussed this Bill both sides of the Ides of March, I feel like a person some centuries ago who was warned that some of his friends were causing trouble. The name of my noble Friend Lord Beloff seems to have been ringing round the Chamber for the past few weeks and here is his amendment. I realise that this is a somewhat strange amendment that has been proposed in order to allow us to debate the pros and cons of a graduate tax. The amendment says nothing about a graduate tax as a possible alternative to the student loans scheme. There are a number of other alternatives. If my noble friend had wanted us to discuss a graduate tax I am sure he would have tabled an amendment to that effect.
Lord Beloff: Perhaps the Minister will give way. There is a little matter of House of Commons privilege which prevents any Member of this House from proposing a tax.
The Earl of Caithness: I am sure that my noble friend is ingenious enough to get the subject into discussion. He has done so very much through a side door but it is a well marked side door.
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As well as being a probing amendment facilitating debate on a range of alternatives including graduate tax— I now choose my words with care— this is also a wrecking amendment. It would limit the life of the scheme to less than two years. By April 1992 the Government will have been obliged to replace both the loan scheme and the existing mandatory awards provision set out in the Education Act 1962. If the Bill were not approved in time to take effect in 1992 the loan at least would cease to be available to students who would be left, at best, with only a devalued grant.
The amendment would effectively compel Parliament to approve whatever may be in the Bill. I should add in passing that the replacement of one scheme by another in April would give rise to all kinds of difficulties. I challenge any noble Lord to defend the concept of changing the entire student support system in the middle of the academic year. I have heard no justification for that from any Members of the Committee and nor would I expect to.
I call this a wrecking amendment because I am sure that Parliament would not countenance the passage of a Bill requiring the establishment of an administrative structure that would have to be torn down again almost immediately. That would be an irresponsible waste of taxpayers' money.
I now wish to go over some ground that I have been over before; I went over it at Second Reading. It is the history to what has gone before. There has been a great deal of consideration and research into alternatives for higher education funding. Our manifesto for the 1987 election indicated that we were thinking along these lines. We then published a detailed White Paper on which consultations were held with a great many people whose thoughts we sought.
The response of the Committee of Vice-Chancellors and Principals to the Governments' White Paper Top-Up Loans for Students (Cmnd. 520), consisted of 13 paragraphs, four of which were related to an alternative approach. That was on 3rd February 1989. Since then there have been discussions with a number of groups. As I understand it, the Committee of Vice-Chancellors and Principals took the view that it would be better not to have a graduate tax, but to have some kind of scheme linked to national insurance contributions.
My right honourable friend the Secretary of State wrote to the Committee of Vice-Chancellors and Principals on 9th February this year about the national insurance contributions, which it was thought was rather a good wheeze, setting out the disadvantages. Members of the Committee have seen that letter. The very day that letter was sent was the day that the Committee of Vice-Chancellors and Principals issued a press release about some kind of graduate tax in vague outline. That was February of this year and that was after the Bill had been through another place in all its stages. Then we had Second Reading here.
I have heard more tonight about the ideas and principles behind the proposals of the Committee of

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Vice-Chancellors and Principals than has ever been put to my right honourable friend the Secretary of State. No scheme has been put to him. For anybody to say that this matter has been discussed in any kind of way that compares with what we have done, which has taken many years of gestation, is a complete fallacy.
My noble friend Lady Young and I have been pressing the noble Lord, Lord Peston, to put forward his alternatives clearly. While we put ours in the manifesto, the noble Lord has remained utterly silent and it is depressing that he has remained so. Alas, we expect nothing more. The noble Baroness, Lady Blackstone, has little idea of the tax system in this country or how it operates. Australia is the only other country which has a graduate tax. It has been in operation for one year. There is a very big difference between the tax system in Australia and the tax system here and that is the question of PAYE. It is wise to remember that our cumulative PAYE systems mean that we do not need to call for annual tax returns for the large majority of UK taxpayers.
That would all have to change and we would have completely to re-organise the system to get anywhere near the principles of the scheme that has been outlined today. We have plenty of evidence from Europe that a mixture of loans and grants— which is what we are proposing and what most people in Europe are now moving to— has worked very successfully for a number of years. Of course, the Liberal Party, which is so keen to tell us that all that is in Europe is good and that we should hurry along and follow, has been markedly reluctant to say anything nice about what the Europeans have been doing for many years.
1.15 a.m.
Baroness Seear: Before the Minister gets away with that cheap jibe perhaps I may point out that we do not have to accept every mortal thing that goes on in Europe because we are good Europeans. We believe in getting into Europe, putting our point of view and arguing when we do not agree. If the Government did that we would be a great deal further on the way.
The Earl of Caithness: I have been doing that a few years, especially in the Environmental Council and, more recently, the Budget Council.
I turn finally to what the noble Lord, Lord Flowers, said. He said that the Government's proposals can be improved upon. I hope that he has realised that through our debates in Committee that is what we have done. I have accepted amendments; I have made commitments; I have taken matters away to think about again with my right honourable friend, to improve the Bill. This is a revising Chamber, and in the two days in Committee that is what this place has done and done well, if I may say so.
Earl Russell: Before the Minister sits down, does he accept that many of us believe that the words "wrecking amendment" are not nearly as appropriate as "salvage amendment"?
Lord Beloff: I do not propose to detain the Committee. My object has been achieved. We have at long last had a discussion on possible alternatives, and it may be that in a year or two the Government will turn back to the Hansard of today and wonder why they did not take them up. I beg leave to withdraw the amendment.
Lord Denham: No.
On Question, Amendment No. 50A, as an amendment to Amendment No. 50, negatived.
Earl Russell: I tabled Amendment No. 50 with the intention of pressing it and incorporating it into the Bill. It does not seem appropriate to do so at the moment. I beg leave to withdraw it.
Amendment No. 50, by leave, withdrawn.
Earl Russell Earl Russell moved Amendment No. 51:
Page 4, line 51, at end insert—
("Deferment
3B.— (1) Borrowers whose current gross personal income is below a threshold ("the threshold") which is 85 per cent. of the national average income shall be able to defer repayment of any loan for a year.
(2) The threshold shall be calculated from the most recent available Average Earnings Index, and shall be determined annually in August by the Secretary of State, to apply from 1st September.
(3) No allowances shall be made against the borrower's income for the purposes of determining whether such income falls below the threshold defined in sub-paragraph (1) above.
(4) Borrowers applying for deferment shall certify that their total gross personal income is below the threshold, and shall produce supporting evidence.
(5) Applications for deferment may be made, and deferment may begin, at any time within the standard period.
(6) Applications for deferment shall be subject to verification by the authorised person or body constituted under paragraph 3 (1), and shall be subject to the retrospective checking against the borrower's actual income by requiring the production of either—

(a) for employees, their most recent form P60; or

(b) for the self-employed, their most recent accounts agreed by the Inland Revenue.

(7) Nothing in sub-paragraphs (1) to (5) above shall prevent the borrower from resuming repayment voluntarily within the period of deferment.
(8) Applications for deferment shall be made by the borrower directly to the authorised person or body.
(9) Applications may be made up to one month in advance of the date from which deferment is sought, or up to three months retrospectively, but no refunds shall be made of payments already made.
(10) Misrepresentations by the borrower of his financial position may lead to—

(a) rejection of his application;

(b) accelerated repayment of his outstanding debt;

(c) the provision of information on such misrepresentation to credit— reference agencies; or

(d) proceedings for fraud.").

The noble Earl said: This is a probing amendment. There are points here which we need to understand further and points which call for further thought. Now that the Bill has reached this far I should like the scheme to become effective, if possible. I speak to the amendment in that hope.
I want to raise the point that no allowances shall be allowed as provided for in paragraph (3). How much thought has been given to the question: is this going to give rise to real inequity? Income and disposable income are not the same. In cases of large mortgage commitments, or even more in case of alimony, the provision may have the effect of considerably increasing the amount of bad debt, which was not the object that was originally considered.
I should also like to raise the question of paragraph (10) which again is based on the government leaflet. I was a little puzzled by the first part of that, which says:
"Misrepresentations by the borrower of his financial position may lead to rejection of his application".
This is an application from an 18 year-old, presumably with no economic record. I do not see what sort of financial position would need to be represented here or how it would be misrepresented. I wonder whether that has merely been copied at great haste from a normal commercial credit company's rules of operation. I should like also to hear a little more about what is meant by accelerated repayment. But I am not pressing that point further at the moment. I beg to move.
The Earl of Caithness: There is one point that I should like to make after the last discussion that we have had; and I see that the noble Lord, Lord Adrian, is still in his place. I should like to confirm, just so that there is absolutely no misunderstanding, the point that my noble friend Lady Blatch and I have been making at great length. My right honourable friend's door is open for further discussions on the scheme that we have before us. I know that the noble Lord has been to see my right honourable friend and I hope that that has been valuable. I hope, too, that if he feels there is any point that he would like to discuss with me or my right honourable friend he will take the opportunity to do so.
On the amendment before us, yes, on sub-paragraph (3) that the noble Earl has raised, considerable discussion has gone on. We have discussed in great detail over the past two days the question of thresholds, why we have arrived at the figure we have and the proposals for deferment. But I must take the noble Earl back.
He talked about mortgages and other costs that there might be. When one is a student one will be offered a loan. If one accepts that, one enters into a contract with the Student Loans Company and it is only right, I am sure, that that student, when he completes the course and nine months afterwards is or is not in a position to repay, should take into account that he or she will be required to do so. It is fundamental that if one is borrowing, particularly if one is borrowing taxpayers' money, that should be taken into account, and we have done so.
With regard to sub-paragraph (10), we think it is also appropriate that these matters should be in regulations, because if the borrower has misled the Student Loans Company he is dealing with taxpayers' money and it is right that there should be a remedy for that, to get the monies back as quickly
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as possible if that is appropriate. It might not be, but equally it might very well be so. There might also be under sub-paragraph (10) (d) proceedings for fraud. That, too, might be appropriate. I do not say that this would be so in every case, but it is appropriate that the alternatives are there.
Earl Russell: I entirely agree with the noble Earl about taxpayers' money. If there is to be a loan scheme at all, the money must be recovered. I will repeat that as many times as is needed. I hope that all I was saying about the point of allowances was something that would be within the commercial practice of any normal banking manager, of making as much allowance as is necessary for maximum efficiency in recovering the debt.
I do not undersand what the noble Earl said about rejection of the application. I entirely agree that anyone who obtains taxpayers' money by misrepresentation should not do so and should be proceeded against. But I do not understand where misrepresentation comes into the application, because I understood that that came before there was an economic record. Nevertheless I beg leave.
The Earl of Caithness: I shall try to help the noble Earl very briefly. What we are talking about here is misrepresentation in an application for deferment, not for the loan.
Earl Russell: That helps considerably and, with that assurance, I am happy to beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 52 to 54 not moved.]
Schedule 2 agreed to.
Baroness David Baroness David moved Amendment No. 55:
Before Clause 2, insert the following new clause:
("Monitoring of scheme: participation in higher education..— (1) From the commencement of the student loans and grants scheme, the Secretary of State shall gather information relating to the effects of the loans system on the participation of students in higher education.
(2) In relation to subsection (1) above, the Secretary of State shall gather information particularly on—

(a) students by socio-economic background;

(b) students from ethnic minorities;

(c) students with disabilities;

(d) students aged over 25 years at the commencement of their course;

(e) women students; and

(f) such other categories of student as may be determined by the Secretary of State in consultation with appropriate bodies.

(3) The information gathered under subsections (1) and (2) above shall be laid annually before each House of Parliament, and shall be taken into account by the Secretary of State in prescribing the maximum amount of loan that may be made available to students in any year under paragraph 1 (1) (a) of Schedule 2 to this Act.").
The noble Baroness said: In moving this amendment I shall, with leave of the Committee, speak also to Amendment No. 58. The purpose of Amendment No. 55 is to ensure that there is full and proper monitoring of the loans scheme and its effects on participation, especially from those groups

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listed in paragraphs (a), (b) and (c), which seem most threatened by the student loans scheme.
Ministers in both places have stated that there will be monitoring procedures for the loans scheme, both for financial costs and for participation. Mr. McGregor the Secretary of State, stated during the Report stage in another place:
"I assure my honourable friend, the Member for Leeds North West (Dr. Hampson) that we shall be monitoring the scheme". [Official Report. Commons, 15/2/90; col. 448.J
Unfortunately, the mechanisms cited as examples for such monitoring present no new initiatives specific to the loans scheme, especially concerning its effects on participation. Answers to parliamentary Questions on the current situation and likely effects on disabled students have shown up a gap in knowledge within the DES. Similarly, parliamentary Answers to Questions concerning the withdrawal of benefits from students have shown that there is very limited information available for such policies to be confidently implemented.
The Secretary of State has stated that the Education and Science Select Committee may consider such information. However, this does not put any obligation on the DES or the Minister to monitor systematically the effects of the scheme. The fact is that the Select Committee determines its own subjects for scrutiny and does not have a monitoring-reviewing function that is comparable with relevant and systematic investigation of the loans scheme. Reference is also made to the possibility of income and expenditure surveys. Again, these are vague references and will only provide limited ad hoc information. Annual reports and accounts of the Student Loans Company Limited have been promised, although the level of scrutiny to be undertaken in Parliament is minimal. There is wide support for the principle of proper monitoring on participation in both Chambers.
In several debates during the previous Committee day on the Bill in this place the Minister gave assurances that the effects of the scheme on various groups— namely, people with dependants, women and certain other types of students— would be monitored. In a similar response the noble Baroness, Lady Blatch, stated on behalf of the Government that she returned to the basic assumption and repeated the assurance that the scheme would be monitored. The Government have still not specified how this monitoring will take place, especially in relation to participation. The loans scheme is controversial and new. It deserves to have full and proper monitoring.
The experience of loans schemes abroad shows that regardless of overall rates of participation any problems resulting from participation are felt most acutely by certain groups of the population, as identified in the amendment. While no one knows the precise likely effect of the scheme on participation until the scheme is in operation, clear mechanisms need to be set up to ensure that the accurate information needed is collated. This is not the case at present as the Bill stands.
After earlier assurances about monitoring, I see no reason for the Government to turn down the amendment. Amendment No. 58, tabled in the name of my noble friend Lord Peston, asks for the monitoring of accounts in relation to the scheme and for the laying of these accounts before the other place. I hope therefore that the Minister will feel able to accept the amendment. I beg to move.
Lord Flowers; As the noble Lord, Lord Beloff, is no longer present in the Chamber perhaps I may say a word on behalf of the universities. I consider such monitoring to be most important. I say that because our main concern all along with the scheme has been that it will frustrate the Government's other excellent intentions to broaden access to higher education. I very much fear that such a scheme will not have that effect. In any event it must be monitored to see whether it produces the desired effect.
The groups of students mentioned in subsection (2) of the proposed new clause are the very students about whom we would be most anxious. I hope therefore that when she replies, even if the clause is not acceptable, the noble Baroness will be able to give us some indication that the monitoring requested in the amendment will go ahead.
Baroness Blatch: It appears to me that throughout the first day of the Committee stage and, indeed, today I have given a number of assurances that monitoring of the scheme will take place. We regard monitoring as extremely important. The details of the scheme are not set in stone, and the Bill is designed to permit a swift response through regulations if changes are required. The effect of loans on participation is one of the major areas in which the monitoring effort will be concentrated.
The monitoring of the loans scheme will of course take place alongside the Government's more general monitoring and evaluation of higher education policies such as the switch to fees and the promotion of improved participation and access for groups traditionally under-represented in higher education.
The key to this aim is education for young people aged 16 to 19 years. Our school and further education reforms are designed to equip more young people with the qualifications and motivation to enter higher education. I include among these the introduction of the General Certificate of Secondary Education, the national curriculum and the associated assessment arrangements, and our recent initiative on core skills for 16 to 19 year-olds. The Council for National Academic Awards and the Committee of Vice-Chancellors and Principals are also encouraging higher education institutions to consider applicants with qualifications other than GCE Advanced and Advanced Supplementary levels mainly by means of the access course recognition scheme.
There are also other initiatives aimed at promoting access among adults as well as younger students. We are encouraging more flexible forms of further and higher education provision, such as part-time and distance learning, and credit accumulation and transfer. We are also funding projects to help develop programmes to improve access and promoting the

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development of access courses and their acceptance as a suitable route into higher education. Many such courses are designed for particular groups such as women or ethnic minorities.
Amendment No. 58 would require the Secretary of State to submit annually to the House of Commons accounts relating to the loans scheme in such form as may be determined by the Comptroller and Auditor General.
The Student Loans Company is a limited company and therefore its accounts must be audited under the provision of the Companies Acts and a copy of its accounts lodged with the registrar of companies.
My honourable friend the Parliamentary Under-Secretary of State has confirmed in another place that the audited accounts of the Student Loans Company Limited will be made available to Parliament. In addition, the company will be required to produce an annual report on the discharge of its responsibilities. That too will be made available to Parliament.
The Government will be accountable to Parliament for expenditure on top-up loans in the same way as they are for expenditure in grants or other aspects of education expenditure. The usual process of Parliamentary accountability supplemented by the audited accounts and annual report of the company will provide Parliament with all the information it requires about the loans scheme.
There is no need for an elaborate statutory framework for monitoring. The Government are alive tc the importance of monitoring the effect of the loans scheme, particularly the effect on participation by under-represented groups. The audited accounts of the Student Loans Company will be made available to Parliament as will the company's annual report. The Secretary of State will be accountable to Parliament for all education expenditure including that on student loans.
Since I believe that the amendments are unnecessary, I hope that the noble Baroness will feel able to withdraw her amendment.
Baroness David: That is an unsatisfactory reply. The noble Baroness has gone at great length into many matters which do not have much to do with my amendment. She again makes the point that there will be monitoring. I think it odd that the amendment cannot be accepted. I shall not press it at this time of night, but it is likely that I shall return to the matter at the next stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 56 to 58 not moved]
Clause 2 agreed to.
Clause 3 [Financial provisions]:
Earl Haig Earl Haig moved Amendment No. 59:
Page 2, line 29, at end insert ("including all costs of implemen: ing the scheme.").
The noble Earl said: The purpose of this amendment is to give maximum play to the
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advantages of the Bill in order to encourage as many young people into higher education as possible. They are being offered the advantages of a student loans benefit scheme at no cost to themselves.
It would be more encouraging to them, particularly the doubting Thomases among them, if the fact that the Secretary of State will pay all the costs of implementing the scheme were spelt out clearly in the Bill. This would also reassure them that these costs will not fall on the institutions which they will attend. They will be well aware that these institutions are likely to be hard pressed financially and that their resources will be already committed to the various costs of education including teaching and books. This amendment is of some importance given the probable high costs of administering the scheme. I beg to move.
The Earl of Caithness: I would like, first, to explain briefly the Government's plans for the administration of the student loans scheme. It is the Government's intention, subject to the passage of this Bill, that the Student Loans Company Limited will administer the loans scheme. Thus applications will be made to the company which will make the appropriate payments to students. The company will also collect repayments and determine whether loans should be cancelled or repayments deferred. It is therefore the loans company that will bear responsibility for the administration of the scheme. I confirm to my noble friend that the Government will meet the company's costs in full. However, my noble friend raised the important point of the role of those in the higher education institutions. I confirm to my noble friend that we are considering whether it would be desirable to seek to amend the Bill to place the higher education institutions under the duty they require. That is an important point on which I know the noble Lords, Lord Flowers and Lord Adrian, will seek reassurance. Any question of remuneration would have to be considered in the light of that decision. The Government intend that loans will be made available to students in the most cost-effective manner.
Earl Haig: I thank my noble friend for reassurance and for clarification. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 3 agreed to.
[Amendment No. 60 not moved.]
Clause 4 [Short title, citation, interpretation and extent]:
[Amendment No. 61 not moved.]
[Amendment No. 62 had been withdrawn from the Marshalled List.]
[Amendment No. 63 not moved.]
Clause 4 agreed to.
House resumed: Bill reported without amendment.

Coal Industry Bill
Returned from the Commons with the amendments agreed to.
House adjourned at twenty-three minutes before two o'clock.