Lords Sitting of 12 March 1996

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.
Viscount Leathers—Viscount Leathers— Sat first in Parliament after the death of his father.

RAF Aircraft Losses
The Earl of Kinnoull The Earl of Kinnoull asked Her Majesty's Government:
How many Royal Air Force aircraft have been lost in the last three months.
The Parliamentary Under-Secretary of State, Ministry of Defence (Earl Howe): My Lords, a total of seven RAF aircraft have been lost since the beginning of December 1995.
The Earl of Kinnoull: My Lords, I thank my noble friend for that reply. Can he say whether investigations have shown that there is any pattern of accidents either from low flying or from mechanical failure of certain types of aircraft; and whether such losses will be replaced?
Earl Howe: My Lords, separate RAF boards of inquiry are carrying out thorough investigations in order to determine the cause of each of these accidents. In line with normal policy a summary of each inquiry's findings will be placed in the Library of the House in due course. The Government are in no way complacent about these accidents but there is no common thread to link the accidents together at this stage. The aircraft involved will be replaced from the attrition reserve.
Lord Mayhew: My Lords, does the noble Earl agree that one extraordinary feature is the different types of aircraft involved in this large number of crashes? Will the inquiries therefore be broad ones and will they consider questions such as morale? Will he also let us have the figures for previous years?
Earl Howe: My Lords, I do not believe that morale in the RAF, although a serious matter, has any bearing on this unfortunate series of accidents. The noble Lord asked about the accident figures in previous years. Perhaps I may refer him to a Written Answer to the noble Lord, Lord Judd, which appeared in Hansard recently.
Lord Williams of Elvel: My Lords, does the noble Earl agree that the aircraft that have been lost are not minor aircraft? They were, after all, two Tornado F3s, two Tornado GR1s, one Jaguar, two Sea Harriers from the Navy and one Harrier, and the combined cost of replacing them is of the order of £200 million. Furthermore, the number of crashes in the whole of
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1995 was 10. Is there not something seriously wrong with the maintenance of these aircraft? Are the Government satisfied that the aircraft taking off are properly maintained and that there is not too much pressure on the personnel in their budget and in their performance ratio?
Earl Howe: My Lords, I do not hold with that suggestion for a moment. There is no doubt that the RAF has been busy. The demands on it have been heavy. But the reductions in the number of aircraft and personnel in the RAF have been carefully planned, they have been approved by the air force board, they are consistent with the RAF's commitments and they certainly do not compromise either the requirement for RAF training or indeed for maintenance.
Lord Williams of Elvel: My Lords, in that case, can the noble Earl say why a Hawk Trainer took off from RAF Valley, Anglesey with its ailerons disconnected after maintenance, killing the pilot?
Earl Howe: My Lords, it really is premature to speculate on the cause of any of these crashes in advance of the outcome of the board of inquiry. If mistakes were made during maintenance by service personnel, then a full inquiry into how that occurred will be held and appropriate action will be taken.
Lord Mackie of Benshie: My Lords, is it not a fact that aircraft accidents of this kind often occur in bouts for some extraordinary reason and have not been explained in the past?
Earl Howe: My Lords, the noble Lord is correct. We had an unfortunate spate of accidents in the summer of 1994 and then a long period of no accidents at all. I do not think it is right at this stage to attach any particular significance to the fact that we have had another cluster in the past few weeks.
Lord Ewing of Kirkford: My Lords, the noble Earl calls in aid the air force board to justify the reductions in personnel. Does that mean that if the air force board had not agreed to the reductions in RAF personnel the Government would not have gone ahead with those reductions?
Earl Howe: My Lords, those are decisions for the air force board. Clearly, if the air force board were to come to Ministers and express disquiet about any proposals, those expressions of disquiet would be taken very seriously. As I said, the air force board agreed to the reductions.
Lord Elton: My Lords, there must be concern for the crews as well as for the aircraft. Can my noble friend tell us whether there have been casualties as a result of these accidents?
Earl Howe: My Lords, there have been casualties in a number of these accidents. The Royal Air Force lost two members of the crew and in one of the Royal Navy accidents both occupants of the Harrier were killed. I am sure all noble Lords would like to extend sincere condolences to the families of those involved.

Medical Research Council Studentships
2.43 p.m.
Lord Winston Lord Winston asked Her Majesty's Government:
How many applicants were there for Medical Research Council PhD studentships in each of the past five years and how many studentships were awarded.
Baroness Miller of Hendon: My Lords, the number of Medical Research Council PhD studentships awarded in the past five years are as follows: 393 in 1990–91; 318 in 1991–92; 367 in 1992–93; 388 in 1993–94 and 433 in 1994–95. The MRC does not routinely collect data on the applications for studentships, as student selection procedure is the responsibility of the universities, with the overall quality criteria being agreed with the MRC.
Lord Winston: My Lords, I thank the noble Baroness for her reply. While I am pleased that overall the MRC has increased its studentships by about 10 per cent. in a five-year period, are not Her Majesty's Government rather concerned, in view of the diminishing number of PhD studentships offered by the Wellcome Trust and the pharmaceutical industry, and as a result of the severe cuts in university funding, that there may not be a severe diminution of our scientific base in due course? I would also like to remind the noble Baroness—
Noble Lords: No, ask!
Lord Winston: Is the noble Baroness aware that the national stipend for a PhD studentship under the MRC is only £6,700, or thereabouts, compared with over £11,000 for a Wellcome Trust studentship? Does the Minister agree that that is a further cause of serious concern for our scientific base in the future?
Baroness Miller of Hendon: My Lords, as I pointed out in my first reply, the past few years have seen a substantial increase in the number of PhDs funded by the MRC, well above the levels of the 1970s and 1980s. As regards the second part of the noble Lord's question about stipends, no. Every research council is responsible for setting the stipends at levels which will ensure that there is an adequate supply of quality students. In fact, the research councils' stipends are now at the highest level since 1966. The MRC's stipends are higher than those of the other councils.
Baroness Rawlings: My Lords, has any national lottery money been allocated for medical research and what is the likelihood of any future allocations?
Baroness Miller of Hendon: My Lords, in all the national lottery grant programmes, every application is considered on its merits and is judged against the published criteria. Within the healthcare category some money was awarded to medical research; for example, £201,800 was awarded for cancer research in Glasgow. The next grant round, which is due to begin in the spring
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of 1996, will have, as its priority, health, disability and care issues. The Association of Medical Research Charities has already welcomed that.
Lord Peston: My Lords, I was lost in all the numbers that the noble Baroness read out, so she will forgive me if I misunderstood them. Did she say that the MRC does not know how many people have applied or that it just does not tell us? Given that the country is getting richer and that healthcare is expanding, it is perfectly reasonable that the numbers of studentships should increase. Are they going up relative to those who would like to do research?
Baroness Miller of Hendon: My Lords, I refer the noble Lord to the first Answer. The MRC itself does not collect the data because that is done by the universities themselves. They are responsible for student selection, with the overall quality criteria being a matter for the MRC.
Lord Peston: My Lords, so that I and other noble Lords are not totally misled, will she confirm that the answer is that we do not know how many people want to do research in this field? Is that the simple answer? Let me ask a second question. Does the noble Baroness agree that we ought to know how many are applying?
Baroness Miller of Hendon: My Lords, that is a matter between the Medical Research Council and the universities.

Developing Countries: UK Business Assistance
2.48 p.m.
Lord Archer of Weston-Super-Mare Lord Archer of Weston-Super-Mare asked Her Majesty's Government:
Whether the Overseas Development Administration's efforts to promote political and economic reform in the developing world will encourage further British private sector involvement there.
The Minister of State, Foreign and Commonwealth Office (Baroness Chalker of Wallasey): My Lords, stability, sound economic policies, efficient markets and good governance are essential to attract British and other investment. We encourage developing countries to create these conditions and, through our development programme, support directly their efforts to do so. British business is keen to help the development process and I am taking steps to improve our dialogue so that we continue to learn from each other.
Lord Archer of Weston-super-Mare: My Lords, I thank the Minister for that reply. I am aware of all the work that her department does at times of trouble. Can the Minister say what, in a stable situation, her department is doing in particular to make its whole system more efficient?
Baroness Chalker of Wallasey: My Lords, there are three main types of activity. The first is the funding of important policy changes such as the liberalisation of the foreign exchange market; secondly, the freeing up of prices and the improvement of fiscal control or thirdly, making important changes to the management of the financial sector. In that we work very closely with the international financial institutions. We also give technical expertise and investment finance.
Lord Monkswell: My Lords, when that assistance is provided to developing countries, does it come with a health warning? Are such countries told that the experience of the British people under such economic and political programmes is mass unemployment; social instability; a rising crime rate; and more people in prison?
Baroness Chalker of Wallasey: My Lords, I have been inundated in the past few years by requests from developing countries to learn how to privatise; how to stop wasting money; and how to do things better than they used to be done. I remind the noble Lord that Britain has the highest number of people employed of any major European country.
Lord Avebury: My Lords, how does the Minister reconcile her commendable insistence on good governance and the emphasis of granting aid to countries which observe that principle with the Department of Trade and Industry's encouragement of business missions to countries such as Nigeria and Burma, which in no way comply with those criteria?
Baroness Chalker of Wallasey: My Lords, there are good reasons for British companies being helped to take up industrial opportunities in countries overseas. We work with, but also separately from, the Department of Trade and Industry in the sense that where we can promote good and better government and training which brings proper respect for human rights, we do so. The British example backs us up. Many businessmen are extremely helpful in that.
Lord Cledwyn of Penrhos: My Lords, what liaison is there between the Minister's department and the United Nations in the promotion of economic reform in the developing world?
Baroness Chalker of Wallasey: My Lords, the department has frequent liaison through the mission in New York which is staffed both by officers from the Foreign and Commonwealth Office and by officials from other government departments. There are regular meetings between the agencies working in New York, the UN secretariat and the secretary-general. I make several trips each year to follow up the work that is being done in both Geneva and New York.
Baroness Williams of Crosby: My Lords, following the question from the noble Lord, Lord Cledwyn, perhaps I may ask the Minister whether, in respect of economic reform, the proposals that were advanced and eventually encompassed in the final draft of the Beijing conference—that is to say, the monetisation of the
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subsistence agriculture for which, very often, women are responsible—are now taken into account in policies for economic reform in developing countries.
Baroness Chalker of Wallasey: My Lords, yes, it is. Britain was already taking that aspect into account before the Beijing conference.
Lord Archer of Weston-Super-Mare: My Lords, the Minister has stated clearly the importance of private investment. Can she tell the House what she is doing about introducing dialogue between a country with needs and someone in our business world with something to offer?
Baroness Chalker of Wallasey: My Lords, we have set up a business strategy group with the help of the non-governmental organisation, Worldaware. We are meeting on a regular basis to see whether we can match even better the aspirations of many developing countries and the business acumen which is so readily available in this country and from which they can benefit. That is one way of assisting. The other way is to use retired businessmen, through the British Executive Service Overseas, who frequently give appropriate advice to both companies and governments overseas which are trying to modernise.
Lord Mackie of Benshie: My Lords, can the Minister give us any figures on the amount of private money going into South Africa where, as she said, it could provide great help in reducing unemployment and in helping good government in that country?
Baroness Chalker of Wallasey: My Lords, Britain is the largest private investor in South Africa. I am not completely up to date, but the latest figure shows investment of over £1 billion in the first year after the election of the government of national unity.

Eastwood Park Prison
2.54 p.m.
Baroness David Baroness David asked Her Majesty's Government:
On what basis cells at Eastwood Park prison were certified under Section 14 of the Prison Act 1952 as adequate for prisoners' physical and mental health.
The Minister of State, Home Office (Baroness Blatch): My Lords, Section 14 of the Prison Act 1952 requires that "an inspector" should be satisfied that the size, lighting, heating, ventilation and fittings of a cell are adequate for health. The area manager responsible for Eastwood Park certified the cells, having considered that they met the requirements of Section 14 of the 1952 Prison Act.
Baroness David: My Lords, I am rather surprised at the Answer. However, can the Minister confirm that those battery hen cells are not only smaller than the 5½sq. m. specified in the Prison Service's operating standards but are also very badly designed, so that not only is the bookcase over the lavatory but you have to stand on the lavatory to get a book out of the case; to

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see into the mirror you have to kneel on the bed; the wash basin is largely inaccessible because of the grating over the pipes beside it; and there was no hot water when the prisoners moved in? Are there plans to improve those cells? Indeed, are they really going to continue to use them?
Baroness Blatch: My Lords, the noble Baroness reads the newspapers and is more inclined to believe what they say than to check with the department, which could have put her right. Most of what the noble Baroness has just said is not true. The cells are exceptionally well laid out. The noble Baroness may have read that the bookshelf is inaccessible, but it is not a bookshelf, it is a shelf for the radio. It is where it is because that is where the electric plug is located. It is very accessible. There is, of course, a screen for the toilet and a screen for the sink. It is not true that the bed does not allow for the door to open. The door can open to a full 90 degree angle. Most of what the noble Baroness read from the Observer article—this is true of many other articles—was inaccurate. It was stated that the cells are 6 ft. square. They are not; they are 8 ft. 9 ins. by 6 ft. 2½ ins. Perhaps I should add that the third bedroom of many homes in this country is the same dimension as those cells.
Lord Finsberg: My Lords, is there not a very simple answer to the Question: if people do not commit crimes, they will not go to such places?
Baroness Blatch: My Lords, I absolutely agree. Furthermore, the courts do not lightly send women to gaol. If women are sent to gaol, there is usually a very good case for them being there.
Lord Avebury: My Lords, does the noble Baroness agree that most people do not spend 23 hours a day in the third bedroom of their homes? Do the Government believe in complying with the European prison rules and with the UN's standard minimum conditions for detention? Do those cells comply with those two sets of criteria?
Baroness Blatch: My Lords, these cells do not hold people for 22 hours a day. Again, that information from the newspapers is quite wrong. The cells at Eastwood Park are bedroom cells. Prisoners will be out of their cells from 8.30 a.m. and will return at 7.45 p.m., with just two 15-minute periods a day when there is a roll-call. The dimensions which the noble Lord mentioned are guidelines. The smallest of the cells in the prison are below the recommended standard by just 4 ins. on one side and 4 ins. on the other. That is what we are talking about. Furthermore, 37 cells in the prison are well above the average and there are segregation facilities and good hospital care facilities. Prisoners at Eastwood Park have moved from a prison where they spent more time in their cells; where there was a smaller dining area; no toilets in the cells; only a very basic and limited education provision; a split site gym which was closed for about half of the time; fewer visits per
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session; and two poorly converted rooms to provide health service facilities. The facilities at Eastwood Park are much much better than that.
Lord Marsh: My Lords, does the Minister agree that it is game, set and match?
Baroness Blatch: My Lords, if the noble Lord means to me, I agree.
Baroness Hilton of Eggardon: My Lords, the Minister said that these are convicted prisoners, but surely many of them are on remand or are there for non-payment of fines and did not commit crimes. Is not that so? Is it not a fact that something like one-third of the prisoners contained in those tiny cells have not been convicted?
Baroness Blatch: My Lords, it is not true that many are there because of non-payment of fines. We have done some checks and in any single day in the country between 11 and 18 prisoners in the whole of the prison estate are women non-payers of fines, with about three of them being non-payers of their television licences. The courts do not lightly remand people to custody—and certainly not women. The type of offence and whether the person is a persistent offender who has attracted the attention of the courts previously is taken into account. The women on remand at Eastwood Park are not held in cramped conditions. The cells are perceived as being bedrooms only. At the moment, no prisoner is at Eastwood Park for non-payment of fines.
Lord Harris of Greenwich: My Lords, if the problem of unpaid fines is as negligible as the Minister suggests, why has the Home Secretary announced that he proposes to review that problem as a matter of urgency? Secondly, does the Chief Inspector of Prisons intend to produce a report on this establishment?
Baroness Blatch: My Lords, the inspector has been in. He has done an unplanned spot check. We shall see his report in a short time. As for non-payment of fines, we were talking about women prisoners. My answer was made in the context of women prisoners. Nevertheless it is an issue. The Home Secretary has considered that it may not be the most appropriate use of an expensive prison cell. He has asked for that to be looked into in conjunction with the Lord Chancellor's Department.
Lord McIntosh of Haringey: My Lords, does the Minister accept that after her helpful and expansive reply to my Question last night, her present answers are somewhat disappointing? Does she agree that it is not satisfactory to defend the cells at Eastwood Park by comparing them with the unsatisfactory accommodation at Pucklechurch from which the prisoners came? Will she confirm that, since it is now admitted that these prisoners are not necessarily convicted—many of them are on remand—a high proportion of prisoners on remand are not in the end given a custodial sentence?
Baroness Blatch: My Lords, of course that is true. Perhaps I should be positive rather than negative and say what is available at Eastwood Park. I might preface my remarks by saying that the prison was opened only on

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1st March and it is the 12th now. Inevitably some problems have arisen from the fact that the prison officers, who had agreed up to the point of the opening of the prison to a shift system, at the 11th hour withdrew that agreement. That caused initial problems. As I said, the prisoners will be out of the cells from 8.30 in the morning until 7.45 p.m. at night. They have much better dining facilities. They have toilets in their cells, and that is much more hygienic than chamber pots. The education facilities include a range of national vocational qualifications, courses in industrial cleaning, hairdressing, beauty salon work, pottery, literacy classes, basic skills classes, market gardening, polytunnels and landscaping. They have two gymnasiums, purpose-built visitors' accommodation and good healthcare facilities. I rest my case.
Lord Mackie of Benshie: My Lords, will the Minister tell us whether the prison from which these prisoners came, which she has described in such graphic terms, is still in use?
Baroness Blatch: My Lords, no it is not. In that prison the cells were 8 ft. by 8 ft. for two prisoners. This prison has cells which are 8ft. 9 ins. by 6ft. 2½ ins. for one prisoner.
Baroness David: My Lords, did not the previous Chief Inspector of Prisons, Judge Tumim, condemn the plans for the prison before the conversion was made?
Baroness Blatch: My Lords, that was the case, but that judgment was made long before the prison was ready and long before it was opened. It was also made in the absence of knowing what would be the regime. It is important, and I believe it to be right, to say that these are bedroom cells. They are slightly below average, and they will be acceptable only if they go with a good, purposeful activity regime. That is in place, and that is what will be the case.
Lord Elton: My Lords, does my noble friend realise that the most encouraging and reassuring thing that she has said is the length of time out of cell? If those standards can be extended throughout the Prison Service, and the time out of cell used constructively, that will be an enormous advance.
Baroness Blatch: My Lords, yes.

Business
Lord Strathclyde: My Lords, at a convenient moment after 3.30 p.m., my noble friend Lady Chalker will, with the leave of the House, repeat a Statement on the IGC White Paper that is to be made in another place.

Education (Student Loans) Bill
3.5 p.m.
The Minister of State, Department for Education and Employment (Lord Henley): My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
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Moved, That the House do now resolve itself into Committee.—(Lord Henley.)
On Question, Motion agreed to.
House in Committee accordingly.
[The CHAIRMAN OF COMMITTEES in the Chair.]
Lord Morris of Castle Morris Lord Morris of Castle Morris moved Amendment No. 1:
Before Clause 1, insert the following new clause—
LEVEL OF SUBSIDY
(". No subsidy paid in respect of a private sector student loan to any person in pursuance of arrangements under this Act shall exceed 10 per cent. of the value of the individual loan to which the subsidy relates.").
The noble Lord said: As the great exit pilgrimage takes place, I rise to say that the purpose of the amendment is to initiate a discussion about what is, after all, the hidden heart of the whole of this small Bill—the subsidy. I say that it is the heart of the Bill because in the explanatory and financial memorandum we read:
"The Bill enables the payment of Government subsidies to private sector financial institutions which provide loans to students in higher education. Subsidies will be paid in accordance with arrangements made with the private sector institutions. The idea is"—
the version I have omits the word "to", but it should read:
"The idea is to promote the availability of private sector loans as alternatives to the loans which are provided by the Student Loans Company out of voted money".
That is all very general, and necessarily imprecise. In Standing Committee B of another place on 12th December 1995, the Members of the Committee pressed the Minister to give some idea of the amount of subsidy being considered. They felt that that was something they wished to know. The Minister stated on that occasion:
"We are embarking on a process of negotiation whereby the extent to which financial institutions are prepared to participate in the envisaged loan scheme must he tested. There must be a reasonable balance between public subsidy, as is envisaged in the Bill, and a desirable outcome in terms of what will be available to students. That process is only in its early stages".—[Official Report, Commons Standing Committee B, 12/12/95; col. 16.]
The Committee may feel that that did not greatly advance the degree of clarity about the issue and the question that was being asked. But on Second Reading in this place we took a small but significant step forward. The Minister said:
"A number of points were made, I believe by the noble Lord, Lord Tope, and the noble Lord, Lord Williams, about how we would set out our negotiating position and the cost to the Government. Noble Lords will have to accept that it is quite wrong at this stage for me to say what the subsidy will be, although I certainly reject the figure being bandied about by the Opposition of some £1,500".—[Official Report, 19/2/96; col. 963.]
That I found distinctly helpful.
Ministers argue that giving Parliament even a general idea would advantage tenderers in negotiations. Yet Ministers are asking Parliament to give them what Members in both places have described as a blank cheque. The debate on this new clause will give them another chance to let Parliament in on their rough expectation of the likely level of subsidy. After all, it is not so arcane and secret a matter as to be hugged by the

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Government to their collective breast in such a way as not to divulge a single thing. Even local estate agents will go so far as to put at the bottom of the particulars for sale, after all the usual stuff about "desirable, detached res.", something to the effect of "offers around so-and-so", or "guide price thus". It is not as though at present the banks and the building societies are fiercely competing with one another in trying to get a good deal out of the Government. Far from it. The Government have also had a much longer period of negotiation with the financial institutions than was envisaged before the tendering process had to be delayed and revised. Therefore, the argument that giving Parliament some guide as to the figure would divulge the Government's hand carries much less weight.
Our anxiety arises from the Government's inflated expectations about the scheme. They believe that it will save approximately £1.8 billion. Therefore, they must have some idea of the subsidy that they expect to pay. I cannot understand why there should still be this degree of secrecy on a matter such as this. If the Government can believe that they can save that much money from the PSBR, and if they can guess how many students will yield to temptation, it is not difficult to put a figure on the subsidy. Our guess was that it would be somewhere around £1,500 per loan. The Minister has stated that it is not that figure. It might be £1,499 or £1,502 but we know that it is not £1,500. The banks will have made a similar calculation in which the, only variable is the number of student punters.
In proposing the amendment, my aim is to get the matter out into the open and hear for what amount the Government want Parliament to sign a cheque. I beg to move.
Lord Tope: My Lords, I support the amendment which was moved so well and ably by the noble Lord, Lord Morris. He said that the issue of subsidy is at the heart of the Bill, and that must be right. However, as he also pointed out, we had no idea until at least the Second Reading what level of subsidy we might we talking about.
No one expects the Government to reveal their negotiating hand while negotiations are taking place but we expect them to give us some idea of what we are considering. As the noble Lord pointed out, the Minister, inadvertently or otherwise, gave at least some indication on Second Reading when he said that the figure was not £1,500 per. student. He did not say whether it was more or less, but we all make the assumption that it must be less.
Lord Henley: Perhaps I may assist the noble Lord. I did not say that the figure was not £1,500; I simply rejected that as a figure. Whether the figure is right or not is another matter, but I do not believe that at this stage it is right for the Government to make an assumption. Therefore, I reject the assumptions behind the noble Lord's figure but I am not saying whether it was right or wrong, higher or lower.
Lord Tope: That was a tortuous argument and I believe that we have taken one big step backwards in trying to draw out from the Government what they have in mind in proposing the scheme.
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Negotiations have been taking place for some time and we gather that they have not been terribly successful. However, surely the Government must be in a position to give us at least a broad indication of the level of subsidy that they have in mind or what the upper limit will be. The lack of interest from the financial institutions is well known. Indeed, only recently the National Westminster Bank announced that should the Bill be passed it would have nothing to do with the scheme.
I hope that it is not unworthy to believe that the Government, in their determination to press ahead with the matter, might feel the need to give some greater encouragement to the financial institutions to take up the scheme. If we have no indication of the kind of figures that the Government have in mind, as we said on Second Reading, that is the clearest indication that the Government in presenting the Bill to the House are asking us to give them a blank cheque. That is not acceptable.
3.15 p.m.
Lord Desai: I support the amendment. There are two issues which one ought to clarify. First, because the loans are relatively short-term there is the possibility that they will be bid for by the wrong kind of financial agencies. If the Government were properly proposing long-term loans, insurance companies and others which can make long-term actuarial calculations would be willing to participate in this business. But we have a short-term loan business which will take away from the banks a lucrative business in which they give overdrafts to students and receive a lot of interest.
The banks are fearful that the business will be taken away but at the same time they are waiting to see how much subsidy the Government will give. Obviously, they would like a high subsidy but I reiterate that there is no economic case for such a subsidy. That must be clearly established. As I said on Second Reading, this is piling market distortion upon market distortion. The rational way of providing the facility would be to provide a long-term loan which would be deductible from the national insurance surcharge. That is not been done and therefore we must have a subsidy.
I can see why the Government do not want to say how much the subsidy will be. Normally, when we on this side of the Chamber put forward suggestions the Government are quick to ask, "How much money is it going to cost and how are you going to find the money for it?". There is a general statement in the Bill that it will all depend on the arrangements that are made with the financial institutions. My noble friend's amendment makes the sensible suggestion that we should ascertain the rough size of the limit by putting a percentage on the value of the loan to which the subsidy attaches. If the Minister does not like 10 per cent. it could be up to the figure of the bank rate, say, and we could have a fluctuating subsidy. It is important that some principle is stated as regards the Government's view of the appropriate subsidy and how much that will cost.
Lord Renfrew of Kaimsthorn: My noble friend will know that there are Members on both sides of the Chamber who believe that other schemes such as

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income contingent schemes might be worthy of consideration. However, within the context of the Bill it makes sense to consider private support for student loans just as much as public support. Therefore, I rise to oppose the amendment. While I have some sympathy with the suggestion that it would be useful to have a hall-park figure, Members will be aware of the draft tender document in the Library. I have a great deal of sympathy with the Government's position that if one is inviting tenders one does not necessarily offer the tender figure oneself but waits for the tenders to come in.
I am not a banker but it seems to me that, given that the student will be undertaking studies for three or four years and that there will be a repayment period of several years, a 10 per cent. absolute figure—the amendment does not provide for 10 per cent. per annum, which would be a large sum—clearly represents about two years' interest on a loan at the current bank rate. That is a very small sum indeed. My reason for opposing the amendment is that to hamper the Government with a figure of 10 per cent. would probably make the system unviable.
Lord Henley: I am grateful for my noble friend's support, somewhat unexpected though it may have been on this occasion. I suspect that the noble Lord, Lord Morris, moved the amendment more by way of probing. He said that he wanted to get to the heart of the discussion on the Bill and I do not believe that he addressed the amendment itself. His noble friend Lord Desai came back to it, but I do not intend to follow the noble Lord in that. I believe that the amendment is to some extent economically illiterate—my noble friend Lord Renfrew put it somewhat more politely—and would not achieve the noble Lord's desired effect.
The noble Lord, Lord Morris, seeks to find out how much the subsidy is likely to be. He quoted me, and at least did so fairly, by saying that I rejected his figure of £1.5 billion. The noble Lord, Lord Tope, took the matter further and said that I did not use the word "rejected" but said that it was wrong. There is an important distinction. I rejected the figure because I am rejecting any suggestion as to precisely what the figure should be. The noble Lord, Lord Tope, will well understand that if I reject the figure of £1 .5 billion and he comes forward with others which I continue to reject, finally he will get the answer that he desires. We have no figure in mind and it would be wrong to make any prediction as to what the figure will be.
As I explained on Second Reading, we are determined to bring private sector capital and expertise into the provision of student loans. That is what is behind the Bill. There are distinct advantages in that process to the borrowers and, as I have explained on a number of occasions—and I believe that the noble Lord, Lord Desai, will accept this—there are advantages also to the taxpayer in our doing so. But it is pointless to bring in the private sector and nullify those advantages with an inflexible approach as set out in this amendment.
As I have explained on a number of occasions, the amendment would tie our hands in negotiations. Those negotiations will be extremely difficult. The noble Lord, Lord Morris, gave the example of estate agents, but we
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have been selling houses for a number of years. The privatisation of student loans is something new. The negotiations will be difficult and will involve some difficult concepts. If the private sector knows in advance the level of subsidy on offer, why should it accept less? I am sure that all Members of the Committee will accept that the Government cannot negotiate on that basis. The effect of an amendment of this sort would be to impose damaging inflexibility on our arrangements with the private sector.
Having said that, I understand the desire of Members of the Committee to ensure that public money is not wasted. I give a guarantee that we are not merely looking for a blank cheque. No doubt that is something which we can explore later. However, I assure the noble Lord and all those who have spoken that the question of whether public money is being wasted is a separate issue. I give an assurance that we shall not enter into any agreements with private lenders which do not achieve our objectives cost effectively. This Chamber and another place and all the usual bodies—for example, the NAO—will have an opportunity to scrutinise our spending in the normal way in the future. Having explained the Government's position and why I cannot accede to the demands made by the noble Lord, Lord Morris, that I should provide a precise figure, I hope that the noble Lord will feel able to withdraw the amendment.
Baroness Farrington of Ribbleton: Are we given to understand that the Treasury has not considered the maximum cost in terms of public expenditure in order to subsidise the private sector to take part in the scheme? What other examples is the Minister able to give of subsidies being provided to the private sector to behave in a private sector capacity?
Lord Henley: I am sure that the noble Baroness will not expect me or the officials of my department to go into the negotiating chamber having announced exactly what the subsidy is to be. That would not be right. The private sector would not expect that and might well think that there was something wrong if we did so.
Lord Morris of Castle Morris: I must confess to being disappointed by the Minister's reply. The amendment came first because we see the issue of subsidy as being absolutely at the heart of the Bill. Indeed, it is difficult to table any of the amendments without mentioning the word "subsidy" because you have to fight your way through the Long Title to make sure that everything that is said or suggested or disagreed with comes in some way under that heading.
My noble friend Lord Desai is a distinguished economist. I believe that most of us would agree with him when he says that there is no economic case for subsidy in any event for such an activity based on the Beloff principle with which we are now all becoming familiar; namely, that the fishmonger sells fish because that is his business. We have heard that once or twice before. I do not apologise for using it again because it has remained true and neither the Government nor anybody else has been able to refute it.
The Minister talked about the difficulties of selling something like this. I hesitate to remind the noble Lord, but the Government have a remarkably effective and

745
long history of selling off state assets to the private sector for a number of years. There is nothing new about it. If they have not yet learnt how to do it, it is high time that they did or that they stopped.
This has not been a very satisfactory reply from the Minister about something which is at the absolute centre of the Bill. As he said, he did not address the amendment itself; he has told us nothing; he has given us nothing. I have no alternative but to ask the Committee to express an opinion on this matter.
3.24 p.m.
On Question, Whether the said amendment (No. 1) shall be agreed to?
Their Lordships divided: Contents, 95; Not-Contents, 153.

Division No. 1

CONTENTS

Addington, L. [Teller.]

McIntosh of Haringey, L.

Allen of Abbeydale, L.

Mackie of Benshie, L

Ashley of Stoke, L.

McNair, L.

Avebury, L.

Mar and Kellie, E.

Barnett,L.

Mason of Barnsley, L.

Beaumont of Whitley, L.

Mayhew, L.

Birk, B.

Merlyn-Rees, L.

Blackstone, B.

Milner of Leeds, L.

Blease, L.

Molloy, L.

Borrie, L.

Morris of Castle Morris, L

Bruce of Donington, L.

Murray of Epping Forest, L.

Callaghan of Cardiff, L.

Nicol, B.

Carter, L.

Ogmore, L.

Castle of Blackburn, B.

Peston, L.

Cledwyn of Penrhos, L.

Phillips of Ellesmere, L.

David, B.

Ponsonby of Shulbrede, L.

Dean of Beswick, L.

Prys-Davies, L.

Desai, L.

Rea, L.

Diamond, L.

Redesdale, L.

Donaldson of Kingsbridge, L.

Richard, L.

Ewing of Kirkford, L.

Ritchie of Dundee, L.

Ezra, L.

Robson of Kiddington, B.

Falkland, V.

Rochester, L.

Farrington of Ribbleton, B.

Sainsbury, L.

Gallacher, L.

Samuel, V.

Glasgow, E.

Seear, B.

Glenamara, L.

Sefton of Garston, L.

Gould of Potternewton, B.

Serota, B.

Graham of Edmonton, L. [Teller.]

Grey, E.

Shannon, E.

Hanworth V.

Shepherd, L.

Harris of Greenwich, L.

Simon, V.

Hayman, B.

Soper, L.

Hilton of Eggardon, B.

Stallard, L.

Hollis of Heigham, B.

Stoddart of Swindon, L

Holme of Cheltenham, L.

Strabolgi, L.

Howell, L.

Taverne, L.

Howie of Troon, L.

Taylor of Blackburn, L.

Hughes, L.

Thomas of Walliswood, B.

Hutchinson of Lullington, L.

Thomson of Monifieth, L.

Jay of Paddington, B.

Tope, L.

Jenkins of Hillhead, L.

Tordoff, L

Jenkins of Putney, L.

Whaddon, L.

Kirkhill, L.

White, B.

Kirkwood, L.

Williams of Crosby, B.

Lester of Herne Hill, L.

Williams of Elvel, L.

Lockwood, B.

Williams of Mostyn, L.

Longford, E.

Winston, L.

746

NOT-CONTENTS

Aberdare, L.

Holderness, L.

Abinger, L

HolmPatrick, L.

Acton, L

Hooper, B.

Addison, V.

Hothfield, L.

Ailsa, M.

Howe, E.

Alexander of Tunis, E.

Hylton-Foster, B.

Allenby of Megiddo, V.

Ilchester, E.

Alport, L.

Inglewood, L.

Ampthill, L

Ironside, L.

Annan, L.

Johnston of Rockport, L.

Archer of Weston-Super-Mare, L.

Killearn, L.

Astor of Hever, L.

Kintore, E.

Balfour of Burleigh, L

Knollys, V.

Bathurst, E.

Lane of Horsell, L.

Belhaven and Stenton, L.

Leigh, L.

Blake, L.

Lindsay, E.

Blaker, L.

Liverpool, E.

Blatch, B.

Lucas, L.

Boardman, L.

Lyell, L.

Boyd-Carpenter, L.

McConnell, L.

Brabazon of Tara, L.

Mackay of Ardbrecknish, L.

Brookeborough, V.

Mackay of Clashfern, L.[Lord Chancellor.]

Brookes, L.

Brougham and Vaux, L.

Mackay of Drumadoon, L.

Butterfield, L.

Marlesford, L.

Butterworth, L.

Merrivale, L.

Cadman, L.

Middleton, L.

Campbell of Alloway, L.

Miller of Hendon, B.

Campbell of Croy, L.

Milverton, L.

Carnegy of Lour, B.

Monteagle of Brandon, L.

Carnock, L.

Montgomery of Alamein, V.

Cayzer, L.

Mottistone, L.

Chalker of Wallasey, B.

Mountevans, L.

Charteris of Amisfield, L.

Mowbray and Stourton, L.

Chelmsford, V.

Munster, E

Chesham, L. [Teller.]

Murton of Lindisfarne, L.

Clanwilliam, E

Noel-Buxton, L.

Clark of Kempston, L.

Norrie, L.

Cockfield, L.

Northbourne, L.

Constantine of Stanmore, L.

Northesk, E.

Cooke of Islandreagh, L.

O'Cathain, B.

Courtown, E.

Oliver of Aylmerton, L.

Cranborne, V. [Lord Privy Seed.]

Oppenheim-Barnes, B.

Cuckney, L.

Orkney, E

Cullen of Ashbourne, L.

Orr-Ewing, L.

Davidson, V.

Park of Monmouth, B.

Dean of Harptree, L.

Pearson of Rannoch, L.

Dixon-Smith, L.

Peyton of Yeovil, L.

Donegall, M.

Pike, B.

Eden of Winton, L.

Pilkington of Oxenford, L.

Elibank, L.

Platt of Writtle, B.

Ellenborough, L.

Pym, L.

Elliott of Morpeth, L.

Quinton, L.

Elton, L.

Rankeillour, L.

Fairhaven, L.

Rawlings, B.

Fanshawe of Richmond, L.

Reay, L.

Ferrers, E.

Renfrew of Kaimsthorn, L.

Finsberg, L.

Renton, L.

Flather, B.

Renwick, L.

Fraser of Kilmorack, L.

Roskill, L.

Gainford, L.

St Davids, V.

Geddes, L.

Sanderson of Bowden, L.

Gisborough, L.

Seccombe, B.

Goschen, V.

Sharples, B.

Gray of Contin, L

Shaw of Northstead, L.

Hailsham of Saint Marylebone, L.

Shrewsbury, E.

Hampden, V.

Soulsby of Swaffham Prior, L

Hardinge of Penshurst, L.

Strange, B.

Harlech, L.

Strathclyde, L.[Teller.]

Harvington, L.

Strathcona and Mount Royal, L.

Hayhoe, L.

Swinfen, L.

Hayter, L.

Terrington, L.

Henderson of Brompton, L.

Teviot, L.

Henley, L.

Thomas of Gwydir, L.

747

Trumpington, B.

Westbury, L.

Vivian, L.

Wilcox, B.

Wade of Chorlton, L.

Young, B.

Resolved in the negative, and amendment disagreed to accordingly.
3.30 p.m.
Lord Addington Lord Addington moved Amendment No. 2:
Before Clause 1, insert the following new clause—
IMPLEMENTATION
(". The Secretary of State shall not put in place any arrangements under this Act to implement the making of private sector student loans until he has demonstrated that more than one person by whom private sector student loans would be made is committed to making such loans and is so committed for a period of at least two years.").
The noble Lord said: The amendment is very straightforward in its construction. Basically, it says that the whole scheme—that is, the Bill—should not effectively be enacted until the Government have an institution to guarantee that it will take on the scheme. We have a scheme here which does not have any great burden of support from the financial institutions or from the people who are supposed to be providing support for it. We believe that the Government should be able to find at least one institution which is prepared to guarantee for a nominal period of time, at least two years, that it will back the scheme and become involved in it before it comes into being.
Our proposition is very simple. Unless there is that degree of support from the banks or institutions, there is absolutely no point in having the scheme. If the scheme cannot provide that degree of support, there is absolutely no point in it being there. In effect, the legislation is a dead duck anyway. Surely having such a provision in the Bill will guarantee that we will not be bothered with the scheme unless it has the support from those institutions right from the beginning. I beg to move.
Lord Morris of Castle Morris: The lack of interest being shown in the scheme by financial institutions comes as no very great surprise to those of us who oppose the Bill. Without wishing in any way to say, "We told you so", we told you so. One of the poet Wordsworth's later sonnets—perhaps not in the National Curriculum English Studies, but none the worse for it—begins with the immortal line:
"Another year, another dreadful blow".
The Government must have felt rather like that when on 4th March the NatWest Bank announced its decision. In the National Union of Students' press release there is, perhaps, a note of grim satisfaction when it says:
"NatWest bank has today confirmed to NUS that it has told the government that it will not tender to provide private student loans even if the Education (Student Loans) Bill becomes law, despite the small concessions made in the government's revised tender document".
Perhaps I may remind Members of the Committee who may not have recently looked again at the tender document, which is available for all to inspect in the Library of the House, that the second version of the tender (which all banks, building societies or financial
748
houses would have to peruse carefully and fill in and return before their bid would be accepted) weighs 471 grammes. I weighed it after I read it in the Library. For those Members of the Committee who have not yet caught up with the European Union, 471 grammes is just over one pound, one ounce. Either way, it was as I believe George III said to Gibbon:
"Another damned, thick, square book"—
Lord Henley: Perhaps I may assist the noble Lord, it was his son!
Lord Morris of Castle Morris: I am grateful to the Minister for that correction. That quote was not in my script. I used it straight off the top of my head and got it wrong.
The president of the National Union of Students, Jim Murphy, said in the course of considering that rejection:
"First, the Midland, the Co-op Bank and the Woolwich turned them down, then Lloyds expressed 'serious misgivings', then they were forced to delay the plan's implementation for a year, and now NatWest has put the exclamation mark on the writing on the wall".
Was it not the Royal doctor of his day—and I shall be careful with this one—who coined the historic phrase:
"The King's life is moving peacefully towards its close"?
So, it seems, is the life of this sad Bill as one bank after another creeps silently out of the sick room.
However, the Bill presents a danger even though it does not get any success. There is a danger that the Government may be forced now into some sort of "sweetheart deal" with one loan provider. It seems perfectly possible that one bank or building society might be induced—I use the word "induced" carefully; I shall not say "bribed"—to come aboard the Government's scheme. That seems to me a dangerous situation in which we all, as a nation, might find ourselves.
Let us consider the next two or three moves in a situation like that, if there were only one lender. Such a deal would almost certainly involve a much higher level of subsidy than that originally envisaged by Ministers—whatever that might have been—for two reasons. First, the lender would, of course, have the whip hand over a Government who would be desperate to get the egg off their face. Secondly, the lender would face a student boycott of its student loan business and other business, organised by the National Union of Students. That, I have taken care to find out, is a real, practical possibility which the National Union of Students is willing to consider. Not only is it a real possibility; it is a real and a potent threat to this Bill and to the Government's plan for privatising student loans as far as they can.
Let us play the next couple of moves. If only one lender took part in the scheme it would be possible for that lender to offer preferential deals until the Student Loans Company attracted so few applicants that it would have to be wound up, at which point the Government would have replaced a public monopoly with a private monopoly and the private lender could revert to the standard Student Loans Company terms because there was no one else in the field—it had seen them all off.

749
The requirement for a two-year contractual commitment would remove the possibility of one lender using the same loss-leading tactic to force out a weaker competitor in addition to the Student Loans Company.
I should have thought the Government would welcome this amendment because it will get them out of what could be three serious holes. We support the amendment. My noble friends—if I can call them that—on the Liberal Democrat Benches (they are for the moment anyway) propose it in a spirit almost of helpfulness, because we feel we are in a position to be reasonably helpful now that there does not seem to be much danger of this Bill ever coming to anything very much. Competition and choice—the Government's sacred watchwords in this as in every other activity—absolutely require that there shall be more than one private lender. It takes two to tango and it takes two to make competition, which is why we on these Benches wholly support this amendment.
3.45 p.m.
Lord Peyton of Yeovil: I was grateful to the noble Lord, Lord Morris of Castle Morris, for establishing as a fact what I had heard only as a suggestion; namely, that the NatWest Bank had turned down the invitation to tender. I wish to make the observation that the weight of the invitation to tender document is probably its chief virtue. Certainly I have examined it not all that closely; but such examination as I have made suggested to me that it was not a document which yielded up its meaning to the casual reader. Indeed, I was tempted to believe—I would feel better if this were the case because I find the document extremely difficult to understand—that the reason for NatWest's rejection of the invitation to tender was the difficulty of understanding the document. That would make me feel better because I would be happy to know that such intelligent people as bankers had found the document a little difficult to understand.
As to this amendment, for exactly the same reasons as those given by my noble friend Lord Renfrew when he refused to support the previous amendment, I do not support this amendment. I think it quite wrong to intervene at the negotiation stage. What I would much prefer to do—indeed what I propose in a later amendment—is that Parliament should be given a full opportunity to scrutinise the arrangements when they have been finalised. That would seem to me to be a proper course, and one which I hope that my noble friend will in due course accept. I do not think it right to press the course suggested in the amendment.
Lord Ponsonby of Shulbrede: Before the noble Lord, Lord Henley, replies to this amendment, will he indicate to the Committee whether the length of the contractual commitment is at least part of his negotiating arsenal? It seems to me that while the Government continually profess their belief in competition, banks will do almost anything to avoid competition. If they can be induced to accept reduced subsidies through the length of commitment which the Government will make, it seems to me that will be to the benefit of the Government, the students and the banks themselves.
Lord Henley: I start by thanking the noble Lord, Lord Morris of Castle Morris, for his interesting little literary tour, and particularly for choosing a great Cumbrian poet. I am sure that that was of considerable use to the education of my noble friend the Chief Whip. I remind the noble Lord of the full quotation from Gibbon that he used. I quote this for the noble Lord's own interest,
"Another damned, thick, square book! Always scribble, scribble, scribble! Eh! Mr. Gibbon?"
I believe that it is normally attributed to the late—now very late—Duke of Gloucester, son of the then King, King George III.
My noble friend Lord Peyton similarly complained that it was possibly unfair on the banks to have this "damned, thick, square book" and the noble Lord, Lord Morris, gave its weight both in metric form and in imperial units. I believe it weighed a little over one pound. I accept that for my noble friend Lord Peyton the document can have problems yielding its message—as I think my noble friend put it—to the casual reader. But I should say that it is obviously not designed for the casual reader. It is designed for the financial institutions and not—if I dare say so—for my noble friend. Nevertheless, we thought it would be of some use to noble Lords, in trying to indicate where we are going, to place copies of it in the Library. That is why we did so.
Although we obviously deeply regret the fact that the National Westminster Bank has withdrawn, I can give an assurance to the Committee that there are still a reasonable number of banks who are interested. We hope very much that they will consider the invitation to tender in detail and come forward with proposals that we can negotiate in due course. Our aim is that up to four private sector lenders would be chosen for each of England and Wales, Scotland and Northern Ireland. The invitation to tender documents make that quite clear. They also make quite clear our aim—this will deal with the points raised by the noble Lord, Lord Ponsonby—that the contracts should each last for five years.
For obvious reasons we cannot be more precise about the number of private lenders until the tenders have been received and we have been able to come to a view on them. But I can assure the noble Lord, Lord Addington, that if there is none, we shall obviously not go ahead. We do need a number of lenders. We shall consider the tenders carefully to ensure that the benefits of the private sector involvement are achieved cost-effectively for the taxpayer. We shall also look carefully at each tender to ensure that that institution is able to deliver the service standards that are an important element of private involvement. We shall also look carefully at the tendering process as a whole to judge whether our objectives of choice, competition and diversity will be met. I am not worried by those words, as the noble Lord, Lord Morris, is. He seems to reject choice, competition and diversity. I know his party rejects that in much of our educational programme. But obviously the number of high quality and potentially successful bids will be an important factor in that whole process.
Again, I give an assurance that we shall not sign contracts unless they provide effective choice and competition at the right price. But we have to take that

751
decision on the merits of the tenders received. I think there is no case for putting quite such a general restriction on the face of the Bill. I therefore hope that the noble Lord, Lord Addington, will feel able to withdraw his amendment on this occasion.
Baroness Farrington of Ribbleton: Before the Minister sits down, in his reply, to which I listened carefully, he said that the Government hope that there will he interest from a minimum of four institutions in England, four in Scotland and four in Wales. That would be the Government's aspiration and not a fixed target. Surely it is reasonable to have a minimum of at least 50 per cent. of the Government's target and to say that at least two would be a reasonable minimum, given the assertion that four would be the ideal.
Lord Henley: I regret to say that the noble Baroness has misquoted me. I said that our aim is to have up to four private sector lenders in each of the three areas that I discussed. I did not talk about minimums.
What I rejected about this amendment was that it said that we had to have at least a plurality, that we had to have at least two. It is exceedingly unlikely in view of what I said about the need to have competition and choice that we would ever have fewer than two, but we might feel we could pilot some scheme in a limited number of areas and then later move on to a wider scheme, if necessary. That is not our intention at the moment.
The noble Baroness must remember that this is an enabling Bill. Our intention is to have at least up to four and to have the appropriate choice and diversity. I do not think it would be right to be limited in the way that the amendment limits us.
Lord Morris of Castle Morris: Before the noble Lord sits down again, may I get this quite clear because it is an important point that he has made? I was about to bound to my feet but was beaten off the starting blocks by my noble friend. At the end of the Minister's reply it seemed to me that he committed himself to a plurality. He stressed that there would be competition. I made the point that competition requires at least two people; you cannot compete with yourself. Is that what he is stating, and, if that is the case, why does he not accept the amendment?
Lord Henley: As I explained in my rejoinder to the noble Baroness, obviously we would want competition and that requires a plurality. I pointed out that this was merely an enabling Bill and that there could be an occasion, if there were only one institution interested, when we might be able to try out some pilot scheme that might allow us to build on those advantages and persuade other institutions that there were merits in involving themselves in this. The amendment itself would completely preclude that.
Having said that, what I make quite clear is that our intention was not to go down that line if at all possible but to seek a plurality of the different providers so that there was the necessary competition.
Baroness Farrington of Ribbleton: Is the Minister prepared to give the House an assurance that in the event
752
of financial institutions choosing to submit tenders—for example, three institutions, one choosing Scotland, one choosing England and another choosing Wales—they would then be prepared to sign agreements with what could be seen by some as a sort of cartel?
Lord Henley: Again, I do not think the noble Baroness listened to my earlier remarks when I talked about up to four private sectors for each of the three different areas, England and Wales, Northern Ireland or Scotland. Quite obviously the situation she is talking about would be merely one provider in each of those areas, and I do not think that would allow us the appropriate choice, diversity—words I know that the noble Baroness and her party hate—and competition.
Lord Addington: Having heard the noble Lord's answer, at one point I thought he was giving us exactly what we wanted, guaranteeing that there must be a number of people involved in the scheme. We heard him say: "We hope for", "Hopefully there shall be", "It is almost impossible that there will not be", or, "Well, we might live with one if we haven't any other choice". This is exactly what this amendment is about. Unless you guarantee yourself a degree of choice you are placing an institution in a tremendously strong position. This amendment is like guaranteeing that you will have at least two people there for a set period of time.
The Minister said: we do not think it would be a very good idea to have one person there but we might have to if it is the only way to get the scheme off the ground so that we can show to other people—I think I am more or less paraphrasing his words—that this is a good scheme. That is unacceptable. This is not something which is interfering with negotiation; it is about something which is a result of negotiating. This is the final thing, the final product. If the noble Lord is not prepared to give us firmer guarantees, which I thought he was at first, we have absolutely no choice, on these Benches anyway, but to press this amendment, because without it this Bill would be fundamentally flawed.
3.55 p.m.
On Question, Whether the said amendment (No. 2) shall be agreed to?
Their Lordships divided: Contents, 104; Not-Contents, 156.

Division No. 2

CONTENTS

Acton, L

Butterfield, L.

Addington, L.

Callaghan of Cardiff, L.

Allen of Abbeydale, L.

Carter, L.

Ashley of Stoke, L.

Castle of Blackburn, B.

Avebury, L.

Chorley, L.

Bancroft, L.

Cledwyn of Penrhos, L.

Barnett, L.

Dahrendorf, L.

Beaumont of Whitley, L.

David, B.

Birk, B.

Desai, L

Blackstone, B.

Diamond, L.

Blease, L.

Donaldson of Kingsbridge, L

Borrie, L.

Durham, Bp.

Bridges, L.

Ewing of Kirkford, L.

Bruce of Donington, L.

Ezra, L.

753

Falkland, V.

Morris of Castle Morris, L.

Farrington of Ribbleton, B.

Nicol, B.

Gallacher, L.

Ogmore, L.

Gladwin of Clee, L.

Peston, L.

Glasgow, E.

Ponsonby of Shulbrede, L.

Glenamara, L.

Prys-Davies, L.

Gould of Potternewton, B.

Rea, L.

Graham of Edmonton, L. [Teller]

Redesdale, L.

Grey.E.

Richard, L.

Harris of Greenwich, L.

Ritchie of Dundee, L.

Hayman, B.

Robson of Kiddington, B.

Henderson of Brompton, L.

Rochester, L.

Hilton of Eggardon, B.

Russell, E

Hollis of Heigham, B.

Sainsbury, L.

Holme of Cheltenham, L.

Seear, B.

Howie of Troon, L.

Sefton of Garston, L.

Hughes, L.

Serota, B.

Hutchinson of Lullington, L.

Shannon, E

Jay of Paddington, B.

Shepherd, L.

Jenkins of Hillhead, L.

Simon, V.

Jenkins of Putney ,L

Stallard, L.

Kintore, E.

Stedman, B.

Kirkhill, L.

Stoddart of Swindon, L.

Kirkhill, L.

Strabolgi, L.

Lester of Herne Hill, L.

Strafford, E.

Lockwood, B.

Taverne, L.

McGregor of Durris, L.

Taylor of Blackburn, L.

Mclntosh of Haringey, L.

Tenby, V.

Mlackie of Benshie, L.

Thomas of Walliswood, B

McNair, L.

Thomson of Monifieth, L.

Mar and Kellie, E.

Tope, L.[Teller.]

Masham of Ilton, B.

Tordoff, L

Mason of Barnsley, L.

Walton of Detchant, L.

Mayhew, L.

Whaddon, L

Merlyn-Rees, L.

White, B.

Milner of Leeds, L.

Williams of Crosby, B.

Molloy, L.

Williams of Elvel, L.

Monkswell, L.

Williams of Mostyn, L.

NOT-CONTENTS

Abinger, L.

Cuckney, L.

Addison, V.

Cullen of Ashbourne, L.

Airedale, L.

Davidson, V.

Alexander of Tunis, E.

Dean of Harptree, L.

Allenby of Megiddo, V.

Dixon-Smith, L.

Alport, L

Donegall, M.

Archer of Weston-Super-Mare, L.

Drogheda, E

Astor of Hever, L.

Elibank, L

Belhaven and Stenton, L.

Ellenborough, L

Blake, L.

Elles, B.

Blaker, L.

Elliott of Morpeth, L.

Blatch, B.

Elton, L.

Boardman, L.

Fairhaven, L.

Boyd-Carpenter, L.

Ferrers, E

Brabazon of Tara, L.

Finsberg, L.

Brookeborough, V.

Flather, B.

Brookes, L.

Fraser of Kilmorack, L.

Brougham and Vaux, L.

Gainfond, L.

Butterworth, L.

Geddes, L.

Cadman, L.

Gisborough, L.

Campbell of Alloway, L.

Goschen, V.

Campbell of Croy, L.

Hailsham of Saint Marylebone, L

Carnegy of Lour, B.

Halsbury, E.

Carnock, L

Hampden, V.

Chalker of Wallasey, B.

Hanworth, V.

Charteris of Amisfield, L.

Hardinge of Penshurst, L.

Chelmsford, V.

Harlech, L.

Chesham, L .[Teller.]

Harmar-Nicholls, L.

Clanwilliam, E.

Harris of Peckham, L

Clark of Kempston, L

Harvington, L.

Constantine of Stanmore, L.

Hayhoe, L.

Courtown, E.

Henley, L.

Craigavon, V.

Holderness, L.

Cranborne, V. [Lord Privy Seal.]

HolmPatrick, L.

Cross, V.

Hooper, B.

754

Hothfield, L.

Orkney, E.

Howe, E.

Orr-Ewing, L.

Hylton-Foster, B.

Park of Monmouth, B.

Ilchester, E.

Pearson of Rannoch, L.

Inglewood, L.

Peyton of Yeovil, L.

Ironside, L.

Pike, B.

Johnston of Rockport, L.

Pilkington of Oxenford, L.

Kimball, L

Platt of Writtle, B.

Knollys, V.

Plummer of St. Marylebone, L.

Lane of Horsell, L.

Pym, L.

Lauderdale, E

Quinton, L.

Leigh, L.

Rankeillour, L.

Lindsay, E

Rawlings, B.

Liverpool, E

Reay, L.

Long, V.

Renfrew of Kaimsthorn, L.

Lucas, L.

Renwick, L.

Lyell, L.

Romney, E.

McColl of Dulwich, L.

Roskill, L.

McConnell, L.

St. Davids, V.

Mackay of Ardbrecknish, L.

Samuel, V.

Mackay of Clashfern, L. [Lord Chancellor.]

Sanderson of Bowden, L.

Sandford, L.

Mackay of Drumadoon, L.

Seccombe, B.

Marlesford, L.

Sharples, B.

Shaw of Northstead, L.

Marsh, L.

Simon of Glaisdale, L.

Merrivale, L.

Slim, V.

Mersey, V.

Soulsby of Swaffham Prior, L.

Middleton, L.

Strange, B.

Miller of Hendon, B.

Strathclyde, L. [Teller.]

Milverton, L.

Strathcona and Mount Royal, L.

Montgomery of Alamein, V.

Swansea, L.

Mottistone, L.

Swinfen, L.

Mountevans, L.

Terrington, L.

Mowbray and Stourton, L.

Teviot, L.

Munster, E

Thomas of Gwydir, L.

Murton of Lindisfarne, L.

Trefgarne, L.

Nelson, E.

Trumpington, B.

Norrie, L.

Ullswater, V.

Northbourne, L.

Vivian, L.

Northesk, E.

Wade of Chorlton, L.

O'Cathain, B.

Westbury, L.

Oliver of Aylmerton, L.

Wilcox, B.

Oppenheim-Barnes, B.

Young, B.

Resolved in the negative, and amendment disagreed to accordingly.
Baroness Miller of Hendon: I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Intergovernmental Conference: White Paper
4.4 p.m.
Baroness Chalker of Wallasey: My Lords, with the leave of the House, I shall now repeat a Statement on the Intergovernmental Conference which is being made in another place by my right honourable friend the Secretary of State for Foreign and Commonwealth Affairs. The Statement is as follows:
"I should like to make a Statement on the forthcoming Intergovernmental Conference.
"Britain has a vision of Europe which is reflected in the White Paper which we are publishing today and which is entitled A Partnership of Nations. We want

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to see a Europe that respects cultural and political diversity, which only does those things at the European level which need to be done at that level, which is outward-looking, free-trading, democratic and flexible: a partnership of nations working together to advance their national interests. The IGC is, of course, only one means available to us through which we intend to realise our objectives. We shall continue to work tirelessly in all the other fora for the same goal.
"Successive British Governments have seen the European Union as a means of safeguarding stability and creating prosperity in Europe. Of course there have been frustrations and controversies. But, overall, the UK has greatly benefited from more than 20 years of membership.
"So the Government approaches the launch of the Intergovernmental Conference at Turin on 29th March unambiguously committed to our membership of the European Union. We shall play a leading role in the Union as one of Europe's biggest and most powerful nations. Our voice is influential. We have helped shape the European Community in the past. Britain was the pioneer of the single market. We have been one of the leading advocates of enlargement and of a European Union open to the world.
"The Government believe the European Union will succeed only if it respects the integrity of the independent democratic nation states which comprise its membership; and if it is flexible enough to accommodate their political and cultural differences. The Government are totally opposed to a monolithic, centralised, federal Europe.
"The Treaty on European Union, like the original Treaty of Rome, calls for an 'ever closer union among the peoples of Europe', not, let it be noted, among the states of Europe or among their governments. This aspiration for strengthened co-operation and friendship across the whole of Europe is a noble one, fully shared by the Government. But it should not mean an ever closer political union in the sense of an inexorable drift of power towards supra-national institutions, the erosion of the powers of national parliaments, or the gradual development of a United States of Europe. The Government reject that conception of Europe's future. That is why it is crucial that national parliaments remain the central focus of democratic legitimacy. Europe must develop with the instincts of free people in free nations. As the European Union matures it needs a clearer sense of what it is and of what it should never aspire to be. These principles are closely adhered to in the White Paper.
"The Intergovernmental Conference is clearly important to the European Union's future. But it is not the only, or perhaps even the most important, challenge which the Union faces. Outside the Intergovernmental Conference, we must prepare for the enlargement of the Union to the east and south. That will involve the herculean task of reforming the Community's agricultural and regional policies.
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Meanwhile we cannot ignore the urgent need to strengthen Europe's competitiveness and thereby generate new jobs. There will also be hard choices to make on a single currency and on the Union's future financing. These critically important matters do not fall within the scope of the Intergovernmental Conference, though the United Kingdom is developing clear and robust policies in each area.
"The Maastricht Treaty came into force little more than two years ago. We agree with the conclusion of the study group which was set up to prepare for the IGC that,
"the Conference should focus on necessary changes, without embarking on a complete revision of the Treaty".
British objectives such as a major reform of the common agricultural policy do not need treaty amendment and will be taken forward in other negotiations.
"The IGC has yet to begin. In common with other member states, the Government are still considering their detailed approach. We may have further proposals to make as the negotiations proceed. The following represent our specific proposals for this Intergovernmental Conference.
"First, subsidiarity is the key to ensuring that the Union concentrates single-mindedly on doing what needs to be done at a European level, and only that. The UK introduced this vital concept into the treaty at Maastricht. The principle has been developed at subsequent European Councils. It is having the effect we intended. But more clarity is needed in the treaty itself. We will therefore bring forward proposals at the IGC to entrench subsidiarity still further in the treaty.
"Secondly, we are concerned at the way in which certain directives have been used or may be used for purposes that were never intended by the governments that agreed to them. For example, health and safety articles that may be used for social policy; or fiscal measures that may be added on to single market or environment proposals. Another example is in the common fisheries policy where the practice of `quota-hopping' is preventing fishing communities from enjoying a secure benefit from national quotas, thereby undermining their entire purpose.
"The Government do not believe that directives once enacted are irreversible and will press for treaty amendment if that proves to be the best way of ensuring that the original purpose of these directives is fully respected.
"Thirdly, the President of the Commission, Jacques Santer has said that the Union should do 'less but better'. Britain agrees. The volume of new legislative proposals being put forward has been falling rapidly, with only 19 proposals for principal legislation expected in 1996. This compares to 61 in 1990. But there is also an urgent need to improve the quality of European legislation. We shall be pressing for a range of measures to achieve this, including much wider consultation of interested parties via the Commission

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before proposals are put forward, and the automatic withdrawal of proposals which are not adopted by the Council within a given period.
"Fourthly, Madam Speaker, national parliaments are the primary focus of democratic legitimacy, in the Union. This House, like the Government, rightly attaches importance to the role of national parliaments in EU decision-making. We have taken careful note of views expressed in a number of helpful reports by committees of this House. We are examining a range of ideas, including a binding period for parliaments to scrutinise Community documents before decisions are taken in the Council, and a greater role for national parliaments in the justice and home affairs pillar. The European Parliament, by contrast, already has a major role in the European legislative process, including a number of new powers acquired at Maastricht, some of which have yet to be fully tested. The Government do not, therefore, see the case for new powers for the European Parliament at the expense of national parliaments or governments.
"Fifthly, we believe that foreign and defence policy must remain the responsibility of national governments. The common foreign and security policy has, since its inception, achieved more than many had expected. It is in this country's national interest that members of the EU should speak and act together on the world stage where our objectives are the same. Our joint support for the Middle East peace process or for democratic institutions and market economies in central and eastern Europe are obvious examples. We shall be pressing for a more effective CFSP at the forthcoming conference. But, crucially, Britain believes that the CFSP must remain based on unanimity and be intergovernmental in character if it is to succeed. As the House knows, I put forward our ideas in a speech in Paris last week. Ultimately, the CFSP will only carry weight internationally if it represents a genuinely common policy, not a majority one.
"Sixthly, the IGC will also be considering the arrangements for European defence co-operation. The Government set out their approach in a full memorandum last year. That memorandum has been attached to the White Paper which is being issued today. We believe it would be useful to improve defence co-operation in Europe by closer co-operation between the European Union and the Western European Union. We do not, however, believe in the integration of these two bodies or the subordination of the WEU to the European Union. NATO must remain the bedrock of Western security. The European Union, four of whose member states are neutrals, and who are neither in NATO nor the WEU, cannot expect to take decisions on defence policy or on the use of military forces.
"Seventhly, co-operation in justice and home affairs will be of particular importance in the IGC because terrorism, organised crime, illegal immigration and drug trafficking are among the greatest challenges facing modern society. They require a co-ordinated, multi-national response.
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Substantial progress has been achieved in the last few years in this area and Britain has proposals for improving this co-operation. But, as with CFSP, the Government believe that these issues must remain intergovernmental and subject to unanimity if they are to carry the support of the peoples of Europe. These are matters of high political sensitivity involving questions of national sovereignty.
"Eighthly, the European Court of Justice is another area where we shall be pressing for improvements at the IGC. Britain is committed to a strong and independent Court without which it would be impossible to ensure even application of Community law or to prevent abuse of power by the Community institutions. But the functioning of the Court can, and in the Government's view must, be improved. There is very great concern that the ECJ's interpretations sometimes seem to go beyond what governments intended when laws were framed.
"The Government are working up a number of proposals to enable the Court to address these concerns better. These include: strengthening the ability of the Court to limit retrospective application of its judgments; introducing the principle that a member state should only be liable for damages in cases of serious and manifest breach of its obligations; applying national time limits to all cases based on EC laws except where the member state's failure to implement a directive is in serious and manifest breach of its obligations; and internal appeals procedure; streamlined procedures for the rapid amendment of EC legislation which has been interpreted in a way which was never intended by the Council; an accelerated procedure for time-sensitive cases; and a treaty provision clarifying the application of subsidiarity in the interpretation of EC laws. The Government will shortly be issuing a memorandum setting out their proposals in detail.
"Ninthly, certain changes to the Council voting system will be necessary if the Union is to continue to function democratically in an enlarged Union. At present, the system of weighted votes is biased against the larger member states. There is growing acceptance across Europe that a way must be found to address this imbalance. Possible alternatives include changing the number of votes of larger countries so that population is better reflected. What is clear is that the system must not allow countries representing a significant percentage of the EU's population or the major net contributors as a group to be out-voted.
"Tenthly, as the Union enlarges to as many as 27 members it will be necessary to change the current policy whereby every member state, however small, has a commissioner and is responsible for a six-month presidency. Such a structure would quickly become unworkable in an enlarged Union.
"As the White Paper makes clear, there are a number of other specific areas where the Government see scope for improvements to the treaty at this IGC, including animal welfare and possible changes to the common fisheries policy as announced by my right honourable friend the Minister of Agriculture last

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week. There are many areas where the countries of the Union could and should co-operate more closely in their own national interests and in the interest of Europe as a whole. But at a time when there is concern about Europe trying to do too much, we do not believe that the rules on qualified majority voting in the treaty should be changed to make it easier to override national concerns in areas of particular sensitivity. That is why we will oppose the extension of majority voting at the IGC.
"Nor do we favour further harmonisation or the extension of Community competence in the area of employment. The need to create jobs is one of the highest priorities facing the European Union. But jobs cannot be wished into being simply by legislating for them. It is businesses that make jobs. That is why the Prime Minister negotiated Britain's Social Chapter opt-out at Maastricht. I can tell the House that our opt-out is here to stay.
"The Government approach this IGC with confidence and determination. The national interest of this country is the starting point for our approach since for all free nations the national interest can be defined as the collective expression of the democratic process. In many areas, our national interest coincides with that of our European partners and in those areas working with our partners enables our collective effort better to achieve our ends. We shall argue constructively for treaty changes to improve the operation of the Union. We want to strengthen the treaty so that Europe can face and overcome the challenges ahead and, in particular, so that we can prepare for further enlargement. As I have said, the conference is only one forum where we shall press for our vision of Europe. There are others and we shall argue robustly in all of them. Britain will be at the heart of the debate about the future of the European Union because it is our future and we can best shape our national destiny by working with our closest neighbours to make a strong and effective partnership of nations."
My Lords, that concludes the Statement.
4.22 p.m.
Lord Richard: My Lords, I am grateful to the noble Baroness .for repeating the Statement made in another place. It was somewhat lengthy and I assure the House that I shall take nowhere near as long as the Minister. In that connection, we must do something about our procedures. I do not have quite the same volume of complaints, either in terms of sound or content, this afternoon as I did over Scott. However, the White Paper is detailed and to receive it, as one does on these occasions, relatively shortly before one has to rise to deal with the detail is a difficult task. As in all such matters, as the House knows, the devil is in the details, not in the Statement that is made upon them.
I start by expressing sympathy for the Minister in making the Statement. I suppose that one should express sympathy with the Government in totality because the impression that they are trying to give under all the verbiage is: "Here is a government committed to a
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policy of ever-closer co-operation with our partners in Europe. But we're terribly sorry, we can't actually say so because we have problems within our own party and because of the divisions within the Conservative Party". Therefore, on the big issues the White Paper is silent.
On the little issues—or littler anyway—the White Paper has quite a lot to say, particularly on the veto. There is not a word on EMU, not a word on monetary union. Of course, that is an issue on which we might have trouble behind us. I also looked in vain for a mention of the word "referendum" throughout the paper, but there is nothing on it. Perhaps we will have trouble with the people sitting behind us if we mention that.
It is a predictable and somewhat pallid document. I sympathise with the Government's difficulties—good Europeans as some of them are—in dealing with their recalcitrant Back-Benchers. It is a document in which the Prime Minister, in the foreword, produces a ringing statement that,
"we should throw ourselves into the debate … with confidence and determination".
He then produces a document in which the vision, when we come down to it, seems to resolve itself into animal welfare and what to do about the procedures of the European Court. That does not entirely ring true and it did not so far as I was concerned.
The problem is not new; it will not go away. If we wish to co-operate with our partners, we have to accept some of the disciplines and constraints that arise from that relationship. That is precisely what the Government cannot admit at present. In his foreword, the Prime Minister said that there is:
"a strong sense of shared purpose and common enterprise".
One cannot achieve a shared purpose except by being openly prepared to share a common purpose. One cannot achieve a common enterprise except by being prepared to identify what the common enterprise is and say how one will co-operate with one's partners in pursuing those enterprises. In some ways, the most interesting part of the document is what it does not contain rather than what it does.
Perhaps I may turn to the Court, with which a considerable section of the White Paper deals. Will the Minister confirm that there are no proposals for altering the jurisdiction or competence of the European Court of Justice? There is a lot about procedures and matters of detail, and I shall be asking about that later. However, the central issue is whether the European Court shall continue to have the powers that it has been given in the treaty. As I understand it, there are no proposals or suggestions from the Government that that should be changed.
One point in the White Paper about the European Court slightly intrigued me. It asks for:
"streamlined procedures, for the rapid amendment of EC legislation which has been interpreted in a way which was never intended by the Council".
Who is to decide what the Council intended or did not intend unless there is a far greater degree of openness in the procedures of the Council? Are the Government in favour of opening up the Council to such disclosure?

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I may be wrong but I received the impression that it was not something that the Government were prepared to contemplate.
The White Paper mentioned the reform of the common agricultural policy. There are no proposals in the document about how the Government will set about reforming it. It would be interesting at some stage to hear about it. There is little in the document on unemployment, one of the major factors facing the countries of the European Union at the moment. There is a ritual attack upon the Social Chapter but no reference to the referendum or the EMU.
It is a White Paper of a government who are running scared of a considerable part of their own supporters. In my view, it is a blinkered document with little vision. The Government are extremely good at erecting windmills and then spending a great deal of time and effort tilting at them. There is a lot of windmill about the White Paper. Finally, the White Paper now having been produced, on our side we would expect an opportunity for an early debate on the details.
Lord Thomson of Monifieth: My Lords, I join the noble Lord, Lord Richard, in thanking the Minister for repeating the full Statement which was made in another place on the White Paper on the IGC. Like the noble Lord, I have not had much opportunity to examine the White Paper in detail. It is attractively produced and we shall wish to consider whether the policies set out in it are as attractive to us on full examination.
I noticed with contentment, in a brief glimpse at the small print on page 33 that,
"Britain is irrevocably part of the European Union".
I hope Euro-sceptics on both sides of this House will remember that statement as our debates develop.
I was also glad to see at the beginning a robust statement from the Government that overall the United Kingdom has greatly benefited from more than 20 years of membership. I also noted the commitment to play a leading role in the Union as one of Europe's biggest and most powerful nations. However, will the Minister tell the House how that is consistent with the generally negative tone of much of the main body of the Statement? It seems to us to be full of inconsistencies.
The United Kingdom is thoroughly committed to enlargement of the European Union; it is thoroughly committed to reform of the common agricultural policy. Is it not a fact that both those aims are achievable only on the basis of some extension of qualified majority voting? Yet the Government remain stubbornly opposed to any extension. How on earth do the Government seek to justify that position? The Statement is full of ambiguous language which, as we know very well since we have all been through this over the years, is designed to fudge the gap between the Government's serious commitment to European union and their appeasement of the Euro-sceptics within their own ranks.
The very title of the White Paper is typical of that approach: A Partnership of Nations. The whole thrust of the Statement, and what I was able to see of the
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White Paper, provide a blueprint for Britain being a very junior partner of nations—and a very reluctant junior partner—within the European Union.
The truth that emerges in every sentence of the Statement is that the Government would just love it if only the European Union would decide to stand still. But the European Union will not stand still. As the noble and learned Lord, Lord Howe, said yesterday in a very interesting article in the Financial Times, the Government by their policy are deliberately excluding themselves from the inner core of the European Union that will shape developments which, as usual, we shall ultimately have to live with and adapt ourselves to, often when it is too late.
Baroness Chalker of Wallasey: My Lords, I thank the noble Lords, Lord Richard and Lord Thomson of Monifieth for their cautious welcome—not all their remarks—for the Statement. I apologise to both for the length of the Statement; but I felt it important to try to spell out, to those who may not have time for a few days to take in the whole of the White Paper, the broad outlines of what it covers. I did my very best to make sure that both noble Lords had a copy of the White Paper some one and a half hours before we began the Statement.
I agree that the detail is in the devil and perhaps I might reply right away—the devil is in the detail! It is amazing the effect that the noble Lord, Lord Richard, has upon me. The noble Lord asked for an early debate. I am sure that the usual channels heard his request, as we all did, and that it will be dealt with in the normal manner.
The reason that neither the White Paper nor my Statement covered the issues of EMU or the referendum is that these are not matters for the IGC; they are matters for the Government. So far as a referendum on a single currency is concerned, the Cabinet will decide whether to hold a referendum within weeks rather than months and the noble Lord will hear the news very soon.
The noble Lord went on to say that he thought the White Paper was predictable and padded. Or was it my Statement? It was probably both. We felt it important to put in one place all those elements of the discussions that had been going on in a rather unfocused way for far too long. That is why there may be many items which noble Lords know only too well. But at least the information is brought together in a comprehensive document in an effort to be helpful.
The noble Lord, Lord Richard, also asked about openness and who would decide what was in line with the original intentions so far as the Court was concerned. I ask the noble Lord to read again paragraph 36, which states quite clearly that,
"The IGC will provide an opportunity to examine the role of the European Court of Justice".
It goes on to give our view, our commitment to a strong, independent court, and explains in subsequent paragraphs exactly what we believe; namely, that the functioning of the Court could be further improved. Much of what is stated in those paragraphs is contained

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in my Statement. The noble Lord is, however, quite right. I confirm that they are not proposals for a change in the jurisdiction.
The CAP is a matter at which we have to work. It is not a matter for the IGC. The IGC would probably get itself totally tied up if it were to face that as well. It is a matter for separate negotiation.
In regard to unemployment, we are absolutely clear. I have never made any secret of the fact in this House that to gain jobs, not only in this country but in the Community as a whole, is one of the most important aspects of what we need to do in Europe. It is absolutely right that we are showing a good performance in our economy and that our unemployment has fallen. One important reason why that has happened is that we are unfettered by the social chapter, and we intend to go on being unfettered by it. It is very important that unemployment is discussed, and also the positive side of employment creation. That is obviously a very big subject for other member states. In general this will all be subject to our debate, when it is held.
To reply to the questions put by the noble Lord, Lord Thomson of Monifieth, I understand why he believes that many changes would come about as the result of an extension of qualified majority voting. However, I do not believe it to be in the best interests of the needs of this country to go down that path. That is why I spoke as I did. We are neither junior nor reluctant in the European Union. In many of the ideas that we have put to the European Union, we may have been a single voice, but they have eventually been accepted. One example is the concept of subsidiarity, which we wish to entrench further through the work of the IGC.
I do not believe that the European Union has to stand still. It cannot stand still. It will evolve. But it should evolve as a partnership of nation states, and the United Kingdom will play its full part in shaping that evolution of the European Union.
4.38 p.m.
Lord Boyd-Carpenter: My Lords, will my noble friend say whether it is the intention of the Government at the forthcoming meeting to secure that there are no further examples of the European Court interfering in our social security system, and in particular altering the age entitlement for social security benefits, as it recently did, at an annual cost to the British taxpayer of £40 million? Will the Government secure that that does not happen again?
Baroness Chalker of Wallasey: My Lords, I am grateful to my noble friend. The meeting of the Intergovernmental Conference which starts on 29th March in Turin will not be just one meeting. It will continue into next year.
Regarding the judgments of the ECJ, we are certainly working out proposals for the IGC to prevent the misuse of articles in the way my noble friend described. However, this is not just a straightforward matter concerning one area of government policy; it concerns a number of areas of government policy, and we shall do that most thoroughly.
Lord Moran: My Lords, as a member of your Lordships' committee concerned with the 1996 IGC, I am glad to note that the proposals in the Statement follow very much the recommendations made by that committee. In particular, I am glad to see that two of its recommendations—that an extension of majority voting should he opposed and that the European Parliament should have no new powers at the expense of national parliaments—have been adopted in the Government's proposals.
I should like to ask the noble Baroness whether the question of the common fisheries policy will be actively pursued in the IGC. Can she give an assurance that the Government will not be satisfied with any arrangement that does not fully meet their case that quota-hopping has torpedoed the entire basis of the policy and therefore must be put right.
Baroness Chalker of Wallasey: My Lords, I am grateful to the noble Lord, Lord Moran, for his comments. The work of your Lordships' committee on European affairs has been most useful, not only in the preparation of the White Paper but in many aspects of the European Union. I commend to the noble Lord paragraph 65 of the White Paper. The paragraph refers to the common fisheries policy. The penultimate sentence reads:
"The Government is determined to address [quota-hopping] and other problems in the Common Fisheries Policy and will explore every avenue for that purpose. If Treaty changes arc needed, we shall seek them".
I hope that the noble Lord is satisfied with the approach that we take. We cannot at this time spell out all of the detail, but we intend to follow it through.
Lord Taverne: My Lords, I should like to put a further question about qualified majority voting. I understand the reluctance to see an extension of qualified majority voting to sensitive areas like defence. But how can the noble Baroness reconcile the immense benefits derived from the single market programme, made possible only through the extension of qualified majority voting, with an apparent reluctance to envisage any further qualified majority voting, even in areas such as third-party access to national energy markets where we have much to gain nationally?
Baroness Chalker of Wallasey: My Lords, I understand the point that the noble Lord, Lord Taverne, makes. However, this does not appear to be the time to extend qualified majority voting when across the whole of the European Union there is not popular concern for the growth of centralised decision making. It would give entirely the wrong signals and make it easier to overrule national governments. We need to keep unanimity for key constitutional and policy issues. I believe that there are issues that we have properly dealt with by QMV. The matter mentioned by the noble Lord, because it is a single market area, is probably one that should he covered by QMV. But I shall look again at what he said because I am not sure that I have entirely taken his point. I shall reply to him by letter.
Lord Shaw of Northstead: My Lords, I congratulate my noble friend on her Statement. I believe it to be a

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thoroughly practical and worthwhile Statement. I hope that the whole country unites behind it and extends every good wish to all those who take part in the IGC later this month. It has been said that the EU will not stand still. I entirely agree. If it goes forward it must do so on sound and firmly-based foundations. There are practical matters which have to be discussed and examined in detail and proper solutions found in order that we can in confidence go forward into the future. I believe that many of the matters which have to be looked at closely are clearly and properly identified in the Statement.
I hope that during the forthcoming and continuing conference the basic need for financial regularity will not be neglected. I am afraid that this is a matter that I raise every time in dealing with the European Union. Until we can ensure at every stage that this is being achieved, any further enlargement of the Union will bring disaster, because the irregularities which currently exist, and which were shown in the last auditors' report, will become much greater should other countries to the east be brought in.
Baroness Chalker of Wallasey: My Lords, I thank my noble friend for his comments. I thoroughly agree that there must be a sound base. I can assure him that in the continuing discussions of the IGC we will, as we always have done, continue to take the lead in the fight against fraud, waste and financial mismanagement. It was the United Kingdom who at Maastricht secured full institutional status for the European Court of Auditors, the statement of assurance—that is, the general audit of the Union's finances—greater status for the ECA's reports, and the obligation upon member states to treat fraud against the Union's budget as seriously as if it were fraud against national finances. It is absolutely crucial that we work on this matter prior to enlargement and continue to work on it. Just as one devises schemes to detect any fraud or bad dealings, so new ones are invented. It will not be something that comes to an end; it will be a continuing process, as it is in business and life in general.
Lord Bruce of Donington: My Lords, at the risk of not accelerating any differences that may conceivably exist between the Government and Her Majesty's Opposition on this matter, I should like to congratulate the Government in one respect. On page 7 of the White Paper they have reproduced, very conveniently, their views as to what progress may be made over the next five years. I find the diagrammatic form very convenient. It will certainly be helpful in holding the Government down to their own programme. I suggest that during the course of the proceedings outlined here the Government do not wait until the end before they report to Parliament on certain aspects that they achieve. It would be hopeless if a whole series of IGCs went on more or less indefinitely without Parliament being informed from time to time, on an interim basis, of what was being achieved.
The defect in the whole approach of the Government is that all the time it deals in generalities. For example, the Statement is replete with phrases such as "we see
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the force of this", "we shall continue to work tirelessly towards", "we shall play a leading role", "we are totally opposed to", or "we must prepare for". All of those phrases are beloved of the Civil Service. If the noble Lord, Lord Bancroft, had been present he would have been able to give a far more amusing comment than I am capable of doing.
Neither the White Paper nor the Statement addresses the existence of institutional powers, particularly those exercised by the Commission, which were certainly not anticipated at the time the treaty was signed or the various directives determined. In particular, I refer to the concept of subsidiarity. The Government must be aware—and both Opposition parties should be aware—of the endeavours that are being made by the Commission in bypassing national parliaments. The House should be aware of the efforts that are being made to enable the Commission to establish lines of communication and powers of legislation and direction, excluding member states, directly with the regions. It is happening all the time on a gradual basis. There are now conferences between the Commission and various local authority interests. It has already divided Europe into four different zones based on the various authorities that belong to them.
We have to be aware of this point. It is one thing to emphasise, as the noble Baroness has done today, the importance of the nation state, which I trust my own party will also endorse. It is another thing altogether to tolerate the progressive growth of Community powers exercised by the Commission direct to the regions inside the Community rather than through the member states. I hope that some endeavour will be made to correct that development.
Apart from that I wish to congratulate the noble Baroness and to say that I trust that nothing I have said has determined the coalition on this matter that presently exists between all three parties as to the essential validity of Maastricht.
Baroness Chalker of Wallasey: My Lords, I am always careful to thank the noble Lord, Lord Bruce of Donington, for his remarks but afterwards to re-read them three or four times over to make sure I really do know what I have let myself in for. He was certainly very generous in describing the diagram on page 7 as helpful. I, too, found it extremely helpful. To have it all in one place saves an endless number of pieces of paper.
The noble Lord asked that we should keep your Lordships informed during the negotiations. At the conclusion of any set of negotiations it may be possible to do so but obviously not during the negotiations. It would be foolish to reveal more widely in the middle of negotiations something that was happening before we had secured the things we are after, which I outlined in the Statement and which are stated in the White Paper.
I do not think the Statement is full of generalities, as the noble Lord tried to say. To state that one is totally opposed to something is pretty clear. I understand very well his concern about institutional powers but I do not believe that the Commission would be successful if it tried to bypass the established communication lines to national governments. I have to point out to the noble

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Lord that many Labour Members of the European Parliament have encouraged regionalisation because they believe it to be in the best interests of the regions of this country to have a direct line to Brussels. I can understand why that is seen, superficially at least, to be a quick way of doing things. But it will not fit unless it also fits with the policy of the national government of the day. Therefore, in dealing with regional matters, it is essential that the government of the country concerned are also involved in what is happening in their regions. That is something the Government seek to ensure the Commission never forgets. If the noble Lord re-reads paragraph 33 on page 15, and re-reads what I have said this afternoon, he will see that we are second to none in believing that national parliaments must remain the primary focus of democratic legitimacy.
Lord Lester of Herne Hill: My Lords, like the noble Lord, Lord Moran, I had the privilege of serving on the IGC sub-committee. I very much welcome the fact that in the Statement there is strong support for the role of the independent court in deciding what the law is and what European legislation is meant to be. However, there are two aspects of the Statement that I do not entirely understand. I should be very grateful to the Minister if she could deal with them.
First, do the Government agree or disagree with the IGC sub-committee when we say that at present no suitable tribunal is available, apart from the European Court, which could sensibly be given the job of interpreting and applying conventions drawn up under the justice and home affairs pillar? It is not clear to me whether the Government have accepted that.
Secondly, there is a reference to entrenching subsidiarity in the treaty. Is there not a danger that by doing that and making it, as lawyers would say, justiciable, we would turn the European Court into one that had to deal with political questions rather than legal questions? If that is not to be the position, who in the system will decide how the principle of subsidiarity is to be interpreted and enforced?
Baroness Chalker of Wallasey: My Lords, in answer to the noble Lord's second question, it is clear that the role of the Commission, the European Parliament and the European Court should continue to be strictly limited. That is exactly what we say in dealing with the whole question of justice and home affairs, in which I know the noble Lord is extremely interested. The answer which he seeks about the recommendations on the ECJ of your Lordships' sub-committee is one to which I shall return because a final decision has not been taken upon it.
Lord Harmar-Nicholls: My Lords, I hope that the Government will be successful when they start these negotiations. However, can my noble friend give more details about the sentence on which the whole of her Statement is based? One sentence at the beginning of the Statement refers to the benefits we have already derived from being a member of the European Union and suggests that we ought to look with sympathy at remaining there, extending our commitment and moving in certain directions. Can my noble friend give a list
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of the benefits we have obtained through being in the European Union? I should like to know what those benefits arc. When I have had a brief answer on occasions the Government have mentioned an increase in trade. But that has nothing to do with membership of the Union. That has happened because we have become more competitive and have offered better quality. I should like a clear explanation to justify the statement that because of the benefits we have already derived from our membership we ought to go on with it.
When subsidiarity was first announced I asked the Government to define it. I asked what was the meaning of subsidiarity. At the time I said that it meant that any decisions we make here will automatically be accepted by the others because under subsidiarity, with our special knowledge of our own affairs, that is what should happen. However, that is not the definition that others have applied and it certainly is not the definition that has applied in the way we have been dealt with. I should like a list of the great advantages that have been brought to my country as a consequence of our membership of the European Union.
Baroness Chalker of Wallasey: My Lords, my noble friend has raised this issue on many occasions. He asks about benefits to the United Kingdom. Many of the benefits are indeed in industry. The majority of respondents to a CBI survey last November showed clearly that they had greater trade opportunities and efficiency savings. Many of those things could not have happened without our membership of the European Union. I can refer my noble friend to all types of information but I shall not give him a list at the Dispatch Box today. I ask him to read the introduction. If, when he has read that and the other material that is available, he then wants a list, I shall write to him.
My noble friend referred to subsidiarity. If he reads the whole of paragraphs 20 and 20(a) of the White Paper he will find exactly what we have always said. Subsidiarity is only to do, at European level, those things which will bring benefits which cannot be achieved by member states acting alone. I believe that that has been clear throughout our debates in the nearly four years that I have been privileged to be a Member of your Lordships' House.
Lord Finsberg: My Lords, perhaps I may thank my noble friend for what she said on the issue of defence.
Lord Henley: Order!

Education (Student Loans) Bill
House again in Committee.
Lord Morris of Castle Morris Lord Morris of Castle Morris moved Amendment No. 3:
Before Clause 1, insert the following new clause—
SIMILARITY OF TERMS
(". No subsidy shall be paid in pursuance of arrangements under this Act in respect of any private sector student loan whose interest rate or repayment period differs from that available in respect of a public sector student loan.").
The noble Lord said: We put this amendment forward in an attempt to establish some kind of—I pause before I use the phrase "level playing field"—between public and private loans. I dislike the idea of a level playing field, but it has now become such a cliché that we know what we are talking about. The level playing field, of course, in any sport that I have had anything to do with does not matter a toss because you change ends at half-time. When you are used to playing rugby as I was on a pitch that was on the top of a coal tip, and sloped viciously from one end to the other, and if you were 13 down at half-time, you reckoned that you were probably in with more than a fighting chance. The level playing field has become a cliché which we must all observe.
On looking at the way in which this Bill had gone through its various stages in another place, I found that there was a crucial moment in the debate when the Minister of State confirmed to my honourable friend Mr. Bryan Davies, MP—and I quote his exact words:
"If a lender wishes to offer different terms, including a shorter repayment period and lower interest rates, that is a matter between it and the borrower".—[Official Report, Commons, 4/12/95; WA col. 120.]
I would first like to establish from the Minister, if he can help us on this, exactly what the phrase means:
"If a lender wishes to offer different terms, including a shorter repayment period and lower interest rates".
Does that mean both together—namely, a shorter repayment period together with lower interest rates—or could it be that it means that the lender offers a lower interest rate alone? It is a grammatical or syntactical point. It is a question of whether,
"a shorter repayment period and lower interest rates",
is a double object or a pair of alternatives. If I put it as a grammarian, does the word "and" there mean that or could it mean "or"?
In any case, such a deal would have to be agreed between the lender and the borrower at the start of the contract. Nearly all students in my 40 years of university teaching are unaware, even at the start of their final year, whether they are going to be employed at the end of their course—unless they are medical students or people in similar positions—nor do they know what salary they will be on. Such preferential terms, if that is what Mr. Eric Forth meant, would be a practical proposition only for those with a private income, or whose parents, or whose rich and ingenious friends, found the idea of a low interest loan, providing a principal to invest at high interest, to be an attractive one. I can well see why it might, but is that what it is for? In our view such a scheme is not an appropriate use of taxpayers' money.
Added to that is the fact that the choice of whether to offer preferential terms, or indeed any loan at all, would be solely up to the private lender. We have said again and again that the choice is not that of the students choosing their lenders but of lenders selecting their students in the private sector. There has never been any sense that a private sector lender would be obliged to offer a loan to a student regardless of that student's condition or acceptability.
Ministers may argue that it is not the state's business to interfere in commercial decisions. We have heard that defence put up more than once already today. It is surely, however, the state's duty to be even-handed. If the Government believe that all students require a certain level of financial support, which would seem to be the logic behind the diminution of the grant at the same time as we have an escalation of the loan facility, then it would be wrong to use taxpayers' money to give some a better financial deal than others at the direction of the private companies that can be induced into this scheme.
But if the attraction of private student loans to students is not to be a financial inducement or a longer term in which to repay, what other form of inducement can a bank or building society possibly offer—a leather wallet, a shiny key ring, a holiday in Tuscany at the bank's expense, the chance of a stake in a lottery where the prize is a big new motor car? We shall be most interested to learn why precisely a student, after being chosen by a bank, should choose that bank rather than the Student Loans Company. As far as I can see, that has never clearly emerged in any of our discussions so far.
This amendment then requires that the interest rate and the repayment period should be the same whether the loan is from the Student Loans Company or from the bank or banks which have read, marked, learned, inwardly digested and, what is more, signed up to the 471 grammes of tender. I beg to move.
Lord Tope: I support this amendment. The noble Lord, Lord Morris, has said much of what I would have said as the reasons for supporting it. He quoted from the Minister of State in another place, although I believe that it was in answer to a Parliamentary Question; but that is a detail. I shall not repeat the quote. But it leads us to look at what sort of student borrower might be taking advantage of this provision and be likely to qualify for these preferential rates, whether they be a shorter repayment period or low interest rates or both. It may be that the answer to the noble Lord, Lord Morris, is that the reference should be "and/or" in the quote.
In the Second Reading debate I puzzled as to who wanted to take advantage of the provisions in this Bill. I said:
"the only people who may have wanted this Bill are those better-off parents who can afford to invest a low-interest student loan to attract a much higher rate of interest".—[Official Report, 19/2/96; col. 922]
I believe that that is exactly what this amendment is trying to address. Many of us know that this happens already under the present arrangements. What we are fearful of is that it is likely to become even more the practice if this amendment is not passed.
It may well be that the sorts of students who are likely to attract this preferential treatment from the bank will be not those who necessarily know what their employment is going to be that far out from the time when they leave university but those whose parents can afford to offer that security. One of the reasons why those parents may wish to offer that security is just that they can get a low interest loan through their offspring,

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of course, and can afford to invest it at a higher rate of interest. It is entirely a matter between the lender and the borrower—the parent and the child, if I may use that term; the parent and the student—and how they might divide the proceeds. That is a matter entirely for them. It is certainly not something for which we should be using taxpayers' money. That is a practice we are trying to address with this amendment, and that is the reason why we are supporting it.
Baroness Farrington of Ribbleton: So that we may understand fully the Government's position with regard to the proposals in the Bill, can the Minister say exactly what the Government intend? Do they intend that all students can choose between a loan from the Student Loans Company and a private sector loan? Do the Government intend that there should be no greater constraints on the loan options available through the Student Loans Company as opposed to the private sector scheme? Do the Government intend that the total cost—that is, the cost to the student and the subsidy to cover the administrative costs of the institutions—will be no greater under the private sector loan scheme than under the Student Loans Company scheme? Can the Minister assure us that the administrative costs will not be greater? Can the Minister confirm that the subsidy will cover only administrative costs and will not be a direct subsidy to the financial institutions? If the private sector lender wishes to offer longer repayment terms, is that merely a matter between the lender and the borrower? In those circumstances, and in the name of choice, would the same options be available to students if they took out their loan through the Student Loans Company?
Lord Desai: I support the amendment which was moved by my noble friend Lord Morris of Castle Morris and spoken to by the noble Lord, Lord Tope. Following what my noble friend said, I take it that it must be an "and/or" situation. Obviously, private sector lenders will want to offer a variety of "products", if I may use that word, and will try to segment the market as they offer them to students. It would not be desirable to restrict the kind of packages that may be offered. That is fine. Indeed, I would even go so far as to say that it would be fine if the lender wanted to offer a loan at a lower rate of interest to somebody who was thought to be a better risk.
However, the amendment seeks to point out that if lenders do that, it must be because they find it profitable. They cannot offer low interest loans but then complain that that is costing them more than the student will pay. The principle is that subsidies should not be paid when the loan-givers are cherry picking, as it were. That is a perfectly sound, free market principle. Indeed, I would even recommend it to the Minister because I am sure that his party believes in it. Firms which are cherry picking are operating in highly profitable areas and should not, therefore, be subsidised. However, subsidies should be available where the market may find it difficult to make a loan because the risks are too great or because those seeking loans may have uncertain career prospects.
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I believe that what my noble friends are trying to say in the amendment is that subsidies should he paid only to deserving lenders in deserving cases, not right across the board. I have a genuine question on that for the Minister. Is a subsidy element to be calculated for each product which is offered or will the subsidy be given to a firm across all of its loans? Will a firm be able to offer a portfolio of loans—some good, some bad—and then say, "This is what we need in the way of a subsidy", or is the subsidy to be given only for specific hard cases where the market is thin? I should be grateful if the Minister could respond to those points.
5.15 p.m.
Lord Henley: Oh dear, the party opposite really does not change at all. Noble Lords opposite simply do not like choice. The amendment is designed further to restrict the choice that would he available to both institutions and students. The noble Lord, Lord Morris of Castle Morris, spoke long and eloquently about the level playing field, that cliché, and his experiences on the level playing field.
We have made it clear that private loans will be offered on similar terms to public ones. The invitation-to-tender documents, copies of which the noble Lord has seen and which are in the Library, make clear that private loan interest rates would he no higher than public ones. Neither would involve real interest rates. Similarly, private loan repayment periods would he no longer.
As the noble Lord knows from the 1990 Act, interest rates and repayment periods for public loans are set out in regulations. Our contracts with the private lenders will provide that any changes to these periods in the regulations will he reflected in similar changes to private loans.
As for the comments made by my honourable friend in another place in answer to a question—I refer to the comments which the noble Lord, Lord Morris, quotedx2014;we think that there is a case for some innovation. That is why the invitation-to-tender documents envisage that private loans might—I repeat "might"—charge lower interest rates in return for a shorter repayment period. I do not accept the noble Lord's point that that would be attractive only to the richer student with his own private means. It might be in the interests of a student, even if he does not know what his future will be, to pay out a larger proportion of his income so that he can get rid of the burden earlier. That would be a matter for him. It is something which the private sector institutions should continue.
I do not accept the point made by the noble Lord on this and other occasions that there is not much else that the financial institutions can offer. I accept that in the short term the terms will be broadly similar and that the emphasis will be very much on service enhancement and on providing a quicker service than that offered by the Student Loans Company. Obviously, a major financial institution can offer a much bigger network of offices which the student can use. Obviously, in the longer term, I would expect new products to emerge as the private institutions develop their thinking in this area.

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I hope that the noble Baroness, Lady Farrington, will accept that in such arrangements the level of public subsidy will be exactly the same. There is the level playing field for which the noble Lord was looking.
That increase in product choice for the consumer, with no downside for either the taxpayer or other students—whatever the noble Lord, Lord Desai, might say about cherry picking—is just the sort of benefit that will flow from the involvement of the private sector. In the longer term, loan products will be increasingly tailored to the needs of individual borrowers. For that reason I hope that the noble Lord will feel prepared to withdraw his amendment which I think is unnecessarily restrictive. There is no case for building in such inflexibility.
Baroness Lockwood: If a student took out a loan at a lower rate of interest in order to repay it more quickly, and if that student's earnings were 85 per cent. of the national average, would those provisions apply? If so, surely there could be no certainty that, having taken out the loan at a lower rate of interest, it would be repaid more quickly.
Lord Henley: If I may say so, the noble Baroness shows a fundamental misunderstanding of the Bill. This is a very simple Bill which, in effect, simply changes the system of having one single lender, the Student Loans Company, to having a plurality of lenders. The Student Loans Company will still be able to offer the same terms and conditions, but we hope that a number of other financial institutions will sign up to the advantages that we are proposing for both them and students. Therefore, the same conditions, the same protections and the same income-contingent arrangements will apply. Indeed, it has been put to me several times that there are no income-contingent arrangements in the present system, but under the new system the individual student will be able to have such protection. The subsidy is designed to protect financial institutions from that.
Baroness Farrington of Ribbleton: The Minister said that there is room for innovation. He said that it was possible to amend the system of repayment to allow for lower rates over a shorter period through the private sector loans scheme. He did not say whether the same freedom and choice would be available through the private sector loan scheme to increase the interest rate and lengthen the period of time to whatever seemed an appropriate arrangement as between the borrower and the lender. He did not say whether the same choice would be available to students who, for whatever reason, chose to take up their loan arrangements through the Student Loans Company scheme.
I was pleased to hear the Minister say that we now have a ceiling on the cost of the subsidy to the private sector scheme, and that it will be no greater than the subsidy to the public sector scheme. I presume by that that he was referring not to the amount of money that the student borrows but the administrative and any other subsidy arrangement that applies at the moment to the Student Loans Company scheme, and that that would be the upper ceiling for the private sector scheme.
Lord Henley: If the noble Baroness is asking me to come back on that point, yes, I made it clear that in this sort of arrangement the level of public subsidy concerned would be the same. I am not seeking to say anything other than that. As regards the earlier points made by the noble Baroness, she will be aware that under the 1990 Act we have an ability under regulations to lengthen the repayment period and to make other such adjustments. That is something that will involve considerable cost, and is something that will have to be addressed in the light of the extra costs.
What we are saying about the private sector is that we see a case, if it wants it, for it to tailor the product in the right way and the manner appropriate for the individual student and, as I put it, to charge lower interest rates in return for shorter repayment periods. It is up to the banks themselves to develop such schemes. They will not receive extra subsidy for devising a scheme that might be of greater benefit to individual students, through a longer or shorter repayment period, or whatever. In that, there is a level playing field.
Baroness Farrington of Ribbleton: This is important. Will the Minister guarantee that in the interest of choice, to which we on these Benches are wedded, a student taking a Student Loans Company loan will be entitled to the same range of choices, whether or not as an individual the student chooses to make an application in that scheme or whether the student is forced into that scheme because the private sector turns down the student?
Lord Henley: First, I am fascinated by the declaration made by the noble Baroness that her party is wedded to choice. That is something I had not noticed in some of its more recent confused statements on the subject of education. No doubt we will discuss more of that later.
No, it is obviously for the financial institutions to develop their own packages and personalise them in the appropriate way. I imagine that we will see a number of them in due course. The Student Loans Company will continue to operate as it does at the moment, but, as I said, if we wanted to extend the repayment period that is a matter that can be addressed in regulations. It is obviously a matter that would have serious financial implications.
Lord Ponsonby of Shulbrede: Will the Minister confirm that he said that the administration subsidy will remain the same for whatever type of loan is made? However, if the loan is for a shorter period, surely that will reduce the administration costs for the bank concerned. So does it not follow that it will be in the interests of banks to minimise the period of the loan to maximise their profits?
Lord Henley: I can confirm that I said that the level of public subsidy will be the same in both cases, but it might be in the interests of individual institutions to charge a lower interest rate in return for a shorter repayment period. That is a matter for them and the individuals concerned.
Lord Ponsonby of Shulbrede: Will the Minister confirm that the private institutions will receive the same administration subsidy for a short-term loan as they would for a long-term loan?
Lord Henley: Obviously I am not going to speculate on how the negotiations will take place between us and the institutions concerned. We have set out roughly the design of that in the invitation to tender and in the draft contracts. Obviously there will be differences between one and another. That matter must be left to those negotiations.
Lord Morris of Castle Morris: I hope that the Minister will not think it in any way patronising if I say that I am grateful for that. I have not been terribly grateful for his previous answers, but he has given us some factual answers to this amendment, which are helpful and which have illuminated at least me. The playing field looks a little more level, but a bit of a mist has descended over the game.
We learn that private loans will be offered on—I wrote it down—very similar terms to those of the Student Loans Company; that interest rates and the repayment period will be the same unless the private lender decides that they will not be and offers a shorter repayment period and a lower interest rate. That may be and/or, but there is the possibility of offering a quicker service, benefits of a larger network, and other things of which the Minister has not yet thought. I can well see that there may he other fringe benefits which could be an inducement: greater protection, possibly; greater long-term benefits for being signed up with the particular bank over a particular period.
I do not want to pursue this matter any further tonight, because I want to take away what the Minister has said, read it tomorrow morning and think about it at much greater length. I think that he has offered us what we have asked for on this amendment. Because of that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 1 [Subsidy in respect of private sector student loans]:
Lord Peyton of Yeovil Lord Peyton of Yeovil moved Amendment No. 4:
Page 1, line 13, at end insert—
("(1B) No subsidy may be paid by the Secretary of State under subsection (1A) unless the arrangements referred to in subsection (1A) have been laid before, and approved by resolution of, each House of Parliament."").
The noble Lord said: My noble friend has, on a number of occasions, reminded us that this is an enabling Bill. It enables the Government to do rather a lot. I am not all that fond of enabling Bills. When they exist in an almost total vacuum of information, I like them even less.
The Bill as it now is seeks authority on behalf of the Government to write cheques payable to unnamed persons, on dates unspecified, and for amounts unknown. On top of that, it makes absolutely no provision for scrutiny. It may be for the convenience of the Committee if I were to deal with Amendments
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Nos. 4, 9 and 21 which are in my name. It would save me, and relieve the Committee from enduring an unnecessary amount of tedious repetition by me.
By Amendment No. 4, my noble friend Lady Park of Monmouth and I seek to ensure not that we interfere in the course of negotiations with the private sector institutions, but that when those negotiations are completed the conclusion is submitted to an adequate form of parliamentary scrutiny. That does not seem much to ask.
It is the Government's wish to enlist the private sector institutions to take the risk—to use my noble friend's words on Second Reading—to he responsible for raising and lending much of the money (a total of £5 billion) and bearing most of the risk. The Committee should consider that on the previous occasion the private sector institutions showed no interest in participating, and so far as I am aware there has been no ugly rush on this occasion. Indeed, we are informed that the National Westminster Bank has declined the invitation to tender which was contained in that extraordinary document.
In passing, I venture to comment that we in this country appear to have developed a real taste for complexity. It is generally accepted that once one gets into matters of finance there is something indecent and naive in even attempting to express a point simply. I almost conclude that obfuscation is now considered to be the height of respectability instead of being denounced as it should be.
I suggest that since the necessary information is not available the Government have no alternative but to take the amendment away, if they cannot accept it tonight as drafted, and give it very serious consideration.
I turn to Amendment No. 9. In doing so I wish to lament at the outset the form in which the Bill now stands. A casual reader would soon reject any possibility of understanding the schedule as it stands. I seriously wonder why the legislature cannot have in front of it, in the form of, say, a schedule, a clear statement of the law as it would be if the Government's proposals in the Bill were accepted. Instead we have a terrible mixture of the 1990 Act and the present Bill pancaked together in a schedule which is totally comprehensible without a great deal of unnecessary labour. I have made that point on other occasions and I make no apology for repeating it today. I am happy to see my noble friend in an amenable mood nodding his head.
The Government's purpose is clear enough. They seek the power to subsidise private sector institutions and to amend the 1990 Act. Amendment No. 9 is a polite way—I should hate my noble friend to think that I am minded to be anything but polite where he is concerned—of asking the simple question: would it not be better to wait at least until sufficient of the private sector institutions have shown themselves willing to come to the party? It seems to me that in the meantime the Government would be well advised to apply their attention not to what may happen a long time ahead but to present needs. Perhaps I may use the words of the noble Lord, Lord Dainton, on Second Reading. He said that the Government's aim should be to ensure that,

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"the loan scheme should be inexpensive to administer and should encourage, not deter, good but poor students from entering universities".—[Official Report, 19/2/96; col. 924.]
That is a simple purpose.
I wish to call in aid the words of my noble friend Lord Renfrew on the same day. He referred to a,
"crisis which may soon become a catastrophe".
He later said:
"Damage is being done now to the higher education system and the Bill does nothing to rectify it".—[Official Report, 19/2/96; col. 928.]
Those are serious words and they deal with the present situation. However, the Bill concerns itself only with an uncertain date in the future, and that while everything progresses as the Government would wish. I believe that the Government have every reason for putting the measure on one side and returning to the immediate perils with which higher education in this country is confronted.
I turn to Amendment No. 21. It is important that arrangements for repayment should, as far as possible, be simple, fair and realistic. There will be problems of default—indeed, there are already—and there will be increasing arrears. Perhaps I may remind my noble friend of the wise comment on the subject made by my noble friend Lady Park of Monmouth on Second Reading. She said that under the present arrangements it is virtually certain that arrears, which have already grown to an unacceptable level, will increase further.
Much the simplest way of achieving a fair and orderly repayment system would be to have it handled by the Inland Revenue. The Inland Revenue has the advantage of knowing the names, addresses, earnings and debts of all concerned. No other body has those advantages. It would be unnecessary to create a new organisation. Therefore, even if my noble friend does not leap to accept this sensible amendment tonight, I hope that he will indicate that he will take it away and look at it carefully. If he cannot accept the amendment I hope he will come forward with a form of repayment which takes account of current earnings. It is stupid and cruel for this House of Parliament to lay down that in the future students who have been given loans but who are not earning sufficient to have even the hope of repayment shall be required to do so. My noble friend and the Government must come to terms with that need.
I wish to make clear to my noble friend my discontents. I wish to make it clear to him that they are in no way related to him. He has been good enough to give me the opportunity of speaking to him and he listened patiently to what I said prior to the Committee stage. I am grateful to him for that. My complaint is that only too often the Government, that great big amorphous machine, find it easier to turn a deaf ear to representations to which a great deal of thought has been given and which we think are important. Coupled with that unwillingness to listen, there is a certain refusal to learn from experience. I find that intensely irritating. I can just, by a stretch of the imagination, entertain the idea that I am capable of being irritating to Ministers and their advisers. Indeed, I know that that is so. But I
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hope that Ministers, and in particular their advisers and superiors, will understand just how profoundly irritating they can be when they do not appear to listen and learn.
I make my position clear. My hope is that this evening the Minister has a discretion to move a little and that he will undertake to think again on behalf of the Government. Now that they have appointed Sir Ron Dearing, I hope that the Government will see that there is rather less point in focusing entirely on the long-term issues at the expense of the short-term immediate crisis. As my noble friend said in the words that I have quoted already, that crisis may turn into a catastrophe.
I shall listen with the greatest possible interest to every word and every nuance of my noble friend's reply. If he cannot as a minimum at least allow the possibility of some scrutiny following upon the conclusion of the arrangements which the Government hope to make, then I shall be obliged to take that very painful course and seek to divide the Committee. But I am sure that that will not be necessary on this occasion. I beg to move.
5.45 p.m.
Baroness Park of Monmouth: That is an extraordinarily difficult act to follow, but I must try. I strongly support all that my noble friend said. There has to be an opportunity for Parliament to scrutinise the arrangements referred to once the nature and cost of those arrangements is known. The market-testing to which the Minister referred on Second Reading has already required a new invitation to tender after the decision taken by the Government in this Bill not to implement the scheme for private lending until 1997 rather than 1996. Of course, the outcome of the negotiations cannot be known; that is, the Government will not know who has tendered and on what terms until at least after Easter. Nor, we understand, will the private institutions know until then what will be the cost of rejigging their computer technology and training their staff. Nor will the Government be able, until then, to cost the relationship between the universities, which must still do the paperwork, and two funding mechanisms rather than one.
Given all those unknowns, quite apart from the impenetrable language of the tender document, there is no clear set of proposals for us to legislate upon other than the simple propositions that commercial negotiations, of their nature, must be secret, with which I agree; and the Minister wants a blank cheque. Not only that, but, as my noble friend said, we are being asked to sign three blank cheques because we do not know the date, the amount or the payee. The Minister is asking for authority to sign all those three blank cheques. We know only his signature.
We argue that once those arrangements have been completed and only then can the proper powers of this House and another place be exercised. Therefore, we very much hope that the Minister can find a way to meet us on this point.
My second argument, which I believe is vital, is that, as my noble friend Lord Renfrew of Kaimsthorn said on Second Reading, and as we all argued then with varying degrees of urgency and anxiety, there is a crisis in

779
student funding which cannot wait, as we were told that it must wait, until the whole question of student support is reviewed by the Dearing Committee.
The crisis is a double crisis. First, the shift from maintenance to loan has moved so quickly and is still moving so quickly that graduates going down from 1996–97, if they succeed in obtaining employment at £15,200 per annum and above, depending on whether they followed a three-year or four-year course, will be expected to repay in the region of not less than £90 to £100; and that figure will increase. That is a very sizeable slice of income. For those reading medicine, veterinary science and so on, it will be correspondingly much more. The longer the deferment, the more the interest will mount up.
That is not only a frightening prospect for graduates. I submit that it should also frighten the Treasury. I remind the Minister that in November of last year the National Audit Office reported that:
"As at 31st March 1995, 269,000 accounts were in repayment status. Of those deferment of repayment…had been approved on 122,600 (45 per cent.)".
Payments were deferred because their earnings were less than the required £15,200. By July, according to the CVCP, 187,000 were granted deferment, and there were 9,000 in arrears and 35,000 in default.
The Minister may well see, quoting from a National Audit Office Report, that from 1991–92, to 1994–95, the Student Loans Company successfully collected 94.7 per cent. of the moneys due to be repaid. Only £1.9 million of £35.5 million was uncollected. But that was in the early days of a very small loan. The size of the loan has increased many times over since then.
It seems only too certain that the Treasury is looking at some very large losses. Our argument is that to replace the present inequitable and ineffective method of repayment by an income-contingent pay system would benefit not only students but also the taxpayer. But that must be done now. It cannot wait until 1998–99 which is the earliest date at which it seems to me any of the Dearing proposals would be likely to reach the stage of legislation.
In the context of proposals to extend eligibility, as we would certainly hope the Dearing Committee would propose, and proposals to extend repayment periods in the present system, the Minister said on Second Reading:
"There are powers already available under the 1990 Act … should we wish so to do".—[Official Report, 19/2/96; col. 963.]
That is good. Therefore, let us first defer any further consideration of private sector loans until we have some facts; and secondly, I urge the Government to proceed at once to use the powers already afforded by the 1990 Act to change the method of repayment. If they can change the length of time over which the loan is repaid and a number of other matters, they can change that. Better still, as we have proposed, they should use the present Bill to do that. Such government action would receive widespread approval and the money would come in.
Lord Williams of Mostyn: I support Amendment No. 4. The noble Lord, Lord Peyton of Yeovil, mistook
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his title on his accession to your Lordships' House. I always think that he should be known as Lord Peyton of Stiletto since he wields the weapon with such grace and precision that it always finds its niche in the Minister's ribs with such satisfaction, at least to me.
Amendment No. 4 is the single most important amendment to this Bill because if the Government felt able to accept it, it would lay to rest a great many doubts and feelings, not of suspicion but of uncertainty. The blank-cheque syndrome has been referred to already. It is such an impertinent request that even the most extravagant promoter of the South Sea Bubble would have paused for a moment of silent shame—no payee, no amount, no date.
I should point out to the Committee that I am not speaking to the linked amendments; namely, Amendments Nos. 9 and 21. If this Chamber had an opportunity, were the spirit of the amendment to be accepted, to consider details of payment, repayment and terms—all those matters which are wholly accommodated by the bulk of the remaining amendments—that would he a proper way to legislate. This is an improper way to legislate. It is asking for the irresponsible, uncontrolled, unknowable and unknown abuse of taxpayers' money.
Lord Morris of Castle Morris: I shall be brief. I shall speak to Amendment No. 4 only, though I would love to speak to the others. The Bill provides for the Secretary of State to make arrangements—471 grammes of arrangements so far—with private sector financial institutions for the payment of subsidy in respect of private sector student loans. Those arrangements are not to be subject to any parliamentary scrutiny at all. The detailed handling of student loans is to be worked out in the "arrangements" which will also set out the amounts of subsidy payable to the private sector.
Once the Bill is enacted, Parliament will have no further influence over it. So far there is no reporting mechanism or accountability. Once again, all power is put in the hands of the Secretary of State. That is something which we on this side of the Chamber have been worried about in Bill after Bill during the past few years.
The Minister argued in Standing Committee B in another place that submitting the arrangements to the House prior to their agreement would be—and I quote him—a "novel" way of dealing with the negotiation of commercial contracts. We all understand the need for a degree of confidentiality during the negotiations. However, many of the details of the scheme, such as the universities' relationships with private lenders, will not become apparent until those final arrangements have been agreed.
Bringing those arrangements before Parliament would allow the detail of the scheme to be examined before implementation and would set to rest some of the universities' concerns about it. As public subsidies will be paid to the financial institutions, it is also important that the taxpayer is publicly satisfied that they are being well spent and will be properly accounted for. At present that simply is not the case. That is why we support the amendment most strongly.
Lord Addington: The amendment which was moved and the other two that were spoken to by the two Members of the Committee on the other side are most sensible. With the arrangements which will be made under the Bill, we are basically giving the Government a blank cheque. We are talking about commercial arrangements which will affect the future education of our entire population. Surely there should be some sort of scrutiny involved. We are basically asking for Parliament to be allowed to do its job.
The other arrangements refer to a repayment system. Amendment No. 21 refers to repayments being made through a system which would be "appropriate to current earnings". That is similar to the policy of my party. Therefore, the Committee will not be surprised to learn that we support that proposition. A provision which is fairer and which relates to the ability to pay is something which our entire system of financing higher education has needed for a long time.
Lord Henley: My noble friend has grouped Amendment No. 4 with Amendments Nos. 9 and 21. I commend him for doing so. In fact, I tried to do a large amount of grouping, as Ministers always do; but, as Oppositions always do, they ungrouped those that I suggested. I believe that all is fair in that respect. My noble friend wished to group the three amendments in his name and that of my noble friend Lady Park. That, too, is fair enough. However, the amendments are somewhat different in that they cover rather contradictory matters and cannot all be taken at once. I make those remarks only to tell my noble friend that if following what I say he felt it necessary to press Amendment No. 4 to a Division, I would not accept that as binding me on Amendments Nos. 9 or 21, especially as those matters were not addressed by the noble Lord, Lord Morris of Castle Morris, who said quite clearly that he was not speaking to Amendments Nos. 9 and 21. However, following Dearing, I hope that my noble friend will feel able to support what I have to say on those amendments in due course.
I shall deal first with the two latter amendments. As regards what my noble friend said about the schedule and about its incomprehensibility—for example, how difficult it was for a layman such as he to understand it—I quite accept his point. I can assure him that I shall try to ensure that he has a copy of what the schedule to the 1990 Act will look like as amended by this legislation before Report stage. That will also be available to other Members of the Committee who are having problems following the "legalese", if I may put it that way, of the schedule.
I do not think that I can go further than that; indeed, I am not sure that this would necessarily be a matter where the whole schedule ought to be amended in the form of a consolidation measure. That is probably something that would be better left for consolidation Bills in due course. However, if my noble friend will accept a copy of what it would look like, I am sure that he will find it somewhat easier to understand.
I should like to say a few words on Amendment No. 21. I appreciate that what both my noble friends are attempting to do is to change to a system whereby one
782
uses the tax system for repayments. There might or might not be some merit in such a system. We have certainly argued, as I am sure my noble friends will be aware, against such systems in the past. Indeed, they do incur a certain amount of costs, they can impose a greater regulatory burden on individual employers and there are significant transitional costs. However, I do not think that it would be right or proper to argue the case as to what repayment method should be made available at present, other than to remind my noble friend Lady Park that obviously we have powers to extend the repayment period if the burden on individual students grows in due course. That is something which would certainly be borne in mind if, as my noble friend rightly put it, the burden on individual students increases. But having said that, if one extended the repayment period (as we can do under the 1990 Act), that would have significant cost implications for employers.
It is important for me to remind the Committee that it is only some three weeks ago that we announced the setting up of the committee of inquiry under Sir Ron Dearing. It would be somewhat odd if having announced that committee and having accepted the general idea that there should be such a committee of inquiry—a committee that was generally welcomed on most sides of the Chamber; indeed, I can certainly say that about the party opposite and my own Back-Bench colleagues, and the same was true in the other place—we then pre-empted a large part of Dearing and said, "Well, yes you can do this. You can look into the shape, funding, structure and so on of higher education, but here is one thing we are going to decide in advance and we would rather you didn't go down that track". That would be unnecessary. For that reason, I hope that my noble friend will not feel it necessary to press Amendment No. 21 when we reach that stage. I give way to my noble friend.
Baroness Park of Monmouth: I am much obliged to my noble friend the Minister. Does not the argument that it would be improper to pre-empt Dearing on the method of repayment hold equally good for the Bill that we are now considering?
Lord Henley: Absolutely not. The change that we are making now is, as I have explained, a very small one. It is a change from the singular—the individual Student Loans Company and an individual means of lending—to a plurality of institutions which could offer the loans. I do not believe that that changes the shape or structure. We made that quite clear—
6 p.m.
Lord Morris of Castle Morris: I cannot understand the logic of that. It surely pre-empts Dearing. Dearing may suggest something different. The Government have decided that before they consider the question of student loans, or student funding, this measure shall exist. That pre-empts Dearing.
Lord Henley ILord Henley I simply do not accept that. We have a Student Loans Company. We have a student loans system, operating as it does under the 1990 Act. We are making one small change. That does not pre-empt

783
Dearing. The change proposed by my noble friend is actually a major change. It proposes a change from repayments to the Student Loans Company to a scheme—it was suggested at the time of the 1990 Act—using the tax system. There are other suggestions. Some people argue for using the national insurance structure; some prefer a different form of repayment covering longer periods. Those matters, quite rightly, can be addressed by Dearing. To go down my noble friend's route would pre-empt that. I do not think that continuation with the Bill—which is what the noble Lord is putting to me and which is a matter I have addressed in private with him—pre-empts Dearing.
I turn now to the principal and main amendment, Amendment No. 4, moved by my noble friend. I can obviously tell my noble friend that we shall in due course announce the names of the successful private sector lenders following the tendering exercise. But, as I think my noble friend would accept, the actual commercial negotiations have to remain confidential. There is nothing unusual or suspicious about that. It is standard government practice when one enters into commercial arrangements with the private sector. I see no compelling reason why we should make the substantial change of practice required by the amendment.
We expect shortly to be negotiating with the financial institutions which submit tenders. As I made clear, there are still a reasonable number of institutions interested. The process will be competitive and confidential. Out of it we hope to be able to choose a number—as I made clear earlier—of up to, say, four individual institutions in England, Wales, Scotland and Northern Ireland. I do not believe that it would be practical to submit the details of those negotiations to Parliament for approval, nor do I believe it necessary. Indeed I think that the involvement of Parliament in the negotiations would impede them and make them unwieldy. I think, again, my noble friend would accept that.
Obviously, I accept that there are the concerns—the concerns that lie behind the amendment—that taxpayers' money will be paid in subsidy to the private sector lenders. It is clearly right that there should be proper parliamentary scrutiny of that expenditure. There will be ample opportunity for that. First, I make it clear that while we are determined to realise the substantial benefits of private sector involvement in student loans, we shall only sign a contract with a private lender when we are convinced that the deal is the most effective one for the taxpayer.
Secondly, our contracts will safeguard the interests of the taxpayer and the student borrower. We have already made available in the Library a copy of the invitation to tender documents which have been sent to the financial institutions. They include a standard contract. I believe that together the documents provide considerable detail on how all the key elements of the scheme will operate. Points of detail in the final contracts may well differ but all the substantive issues are covered in documents already available.
Thirdly, the noble Lord, Lord Morris, said that Parliament would have no further control over these matters after the passage of the Bill. That is simply not
784
so. Parliamentary scrutiny of the public spending on subsidy will be through the normal channels of the appropriation accounts, and detailed information will also be included in the department's annual report. We envisage that there will be details of the amount of the annual subsidy paid in order to ensure favourable terms for students; the number of subsidised loans made annually and the total sums involved; the level of public payments in respect of the Government's share of the risk; and, in total for private sector loans, the number of loans in deferment and default. From that information the overall impact in public expenditure terms will be clearly visible. Further, the department is audited annually by the National Audit Office and that would include spending on both public and private sector loans. The department will also be able to examine the private lenders' operation of subsidised student loans to ensure that the government subsidies are correctly applied. The NAO will also—
Lord Peyton of Yeovil: I hope my noble friend will forgive me for interrupting. I am sorry about that but I want to be careful on this point. I hope my noble friend will make it clear whether the information to which he is referring will be published, or whether it will be reported to Parliament. I do not put the two on the same level.
Lord Henley: I mentioned the detailed information that will be available in the department's annual report. That, as I understand it, is always published and made available to Parliament. Parliament has a chance to scrutinise that annual report and certainly can find time to do so. I am sure that my noble friend will be the first so to do if he thinks it is necessary.
I shall continue with what I was saying on the National Audit Office. I stress that it, too, will have a right of access to the private lenders' operation of subsidised private sector loans. I appreciate that that does not go quite as far as parliamentary involvement before the signing of contracts, which is what my noble friend seeks. However, I hope the assurance that there are considerable safeguards through parliamentary scrutiny will be sufficient to satisfy my noble friend that we are going far enough. If, of course, my noble friend would prefer to have further discussions between this and another stage, obviously my door is more than open. However, I do not think that it would be right for Parliament to be involved in quite the manner that he suggests before the contracts are signed.
Baroness Lockwood: I think the Committee is in rather a difficult situation following the Minister's reply. The noble Lord, Lord Peyton, and the noble Baroness, Lady Park of Monmouth, spoke to all three amendments. The Minister, in effect, has said that he is not going to accept the tradition of the Chamber in linking the three amendments together, should the noble Lord, Lord Peyton, wish to press his first amendment. If that is so, I would hope that the noble Lord, Lord Peyton, would insist upon dealing individually with the three amendments because I think all three amendments are important ones.
I wish to respond to some of the other remarks the Minister made in relation to both Amendment No. 4 and Amendment No. 9 on the availability of information. It is

785
not just this Chamber that needs the information to be available, and available in a way which is easily followed and understood. It is the whole of the educational world which needs to implement the Bill and all the supporting information to which the Minister referred, and, of course, the students themselves and the parents of students. Therefore, I think the suggestion of the noble Lord, Lord Peyton, in his amendment, to leave out subsection (2) of Clause 1 and to rewrite the schedule would be far more helpful to people outside the Chamber who will not be able to see the information that the Minister has kindly said he will make available to us.
Lord Henley: On the second point the noble Baroness made about information being available outside the Chamber, I think Amendment No. 4 is directly related to parliamentary scrutiny. That is why I addressed my remarks to that subject. On the first point of the noble Baroness about my, in effect, ungrouping the three amendments, obviously if amendments which are grouped are consequential on the first amendment, it is the tradition that having accepted one in one form or another, one accepts the others. However, I think the noble Baroness will accept, if she looks at the three amendments, that they are contradictory. One amendment, for example, takes out the schedule; the next amends the schedule. So one cannot obviously accept all three at the same time. For that reason I was making it clear—I have every right to do so as the Minister responding—that I would obviously listen to the debate and would then make a decision on Amendment No. 4, but that does not bind me or the Chamber on the subsequent amendments which are not consequential on Amendment No. 4.
Lord Peyton of Yeovil: I really do complain when my noble friend says that the amendments are contradictory. They are nothing of the kind; they are just alternatives. The first suggestion I wanted to make was to bury the whole schedule. I did not expect the Government to accept that proposal with enthusiasm. Therefore I suggested as an alternative the very modest amendment about the methods of repayment. To say the amendments are contradictory is just nonsense and my noble friend should know that.
Lord Henley: If my noble friend says it is nonsense I take his point. But the noble Lord would accept that we cannot—as I think the noble Baroness seemed to be saying—accept the noble Lord's Amendment No. 4, and then take the other two. That would be a nonsense and everyone knows it. That is why I was making it clear that my position was that I did not feel bound by the decision of this Chamber on Amendment No. 4, nor should anyone else feel so bound. If the noble Baroness can find the usual paper that comes with the groupings, she will note that it states at the top,
"Although every effort is made to secure agreement to these groupings, they remain informal and not binding. It is therefore open to any Peer to speak to an amendment in its place in the Marshalled List",
and so make such a decision.
Baroness Lockwood: I think it is in the interests of the Committee that important amendments such as these are discussed together if they are grouped. Clearly the Minister accepted the grouping in the first place, because I understand that the usual chann Baroness Lockwood: I think it is in the interests of the Committee that important amendments such as these are discussed together if they are grouped. Clearly the Minister accepted the grouping in the first place, because I understand that the usual channels were involved.
Lord Henley: If the noble Baroness would give way, I accepted them at something like 1.20 p.m. so it was fairly late that they were put to me. I think in terms of the convenience of the House there is nothing wrong with discussing them together, but it was right that I made my position clear, and I suspect it is a position shared by the noble Baroness's friends on her Front Bench, that one cannot take all three together when it comes to making a decision.
Baroness Lockwood: I accept what the Minister is saying about these amendments. I reiterate that all three are very important amendments, but my main point is that the amendments have not been thoroughly aired individually and, therefore, I hope—and I expressed this hope in my earlier intervention—that the noble Lord, Lord Peyton, will exercise his right to bring them before the House again in due course as we reach them on the Marshalled List.
Lord Peyton of Yeovil: May I start on an agreeable note? First of all, I am very much obliged to my noble friend for his promise to make available in the next stage of the Bill a version of the schedule to the 1990 Act which will contain the amendments presently suggested by the Government, so that we will be able to understand with reasonable ease what the schedule was intended to mean in its new form. That would be helpful.
May I now address the points which were raised by the noble Baroness, Lady Lockwood? At the beginning of my remarks I did say, and I remind her now, that I thought it would be for the convenience of the Committee if I were to deal with all three amendments together. It would save me some breath and the Committee the weariness and tedium of listening to me repeating the same points three times, because, although they are clearly not intimately connected, at least they have some relationship to one another. Perhaps I may also make this clear. My present feeling, if my noble friend were to be gracious enough to go a bit further on Amendment No. 4, would be certainly not to move those amendments tonight. In fact, as they have come up at this hour I think it would be much more useful to move the subsequent amendments, or to put them down again for consideration on Report rather than now. My noble friend the Minister has said something about them and I would like to reflect upon them. I assure the noble Baroness that it is not my intention to drop them altogether.
Perhaps I may now return to the amendment to which I attached particular importance. I note all that my noble friend has said. There was a time when I began to be hopeful. But when he offered an alternative to a formal report to Parliament of the arrangements which they had made in pursuit of an authority conferred by Parliament, when he seemed to suggest that the information would

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be contained in a departmental annual report, not only did I feel it very inadequate but I felt it would come in a totally indigestible and boring form, and not for one moment would I regard it as satisfactory.
I do not want to use rough language to my noble friend, and I know the constrictions he is under from his advisers and his superiors. But let me beg him, because I do not wish to divide the House now, to say that between now and Report stage he will give this matter very serious consideration indeed and will ensure that those whose authority he is bound to acknowledge will lend an ear to what has been said; that they too will give some thought to this matter and will not go down the road that at least appears to suggest that they take the opinions of either House of Parliament lightly.
6.15 p.m.
Lord Henley: I always take the opinion of my noble friend "heavily", if I can put it that way.
Lord Peyton of Yeovil: I did not say "my noble friend"; I said "my noble friend's superiors".
Lord Henley: I will ensure that my colleagues in the department, my right honourable friend the Secretary of State, note what my noble friend has had to say. There is so far that I can go in terms of looking at things, and I certainly think there are further discussions my noble friend and I can have between this stage and Report stage. But I have to say to my noble friend that I do not think that parliamentary scrutiny before the signing of the contract is something I could offer as a realistic hope. Whether there might be some greater degree of scrutiny, something beyond a departmental report, that I can consider is another matter, although a departmental report is obviously a public document. Whether my noble friend will accept that and be prepared to consider on this occasion withdrawing his amendment is a matter for him. I leave it at that.
Baroness Park of Monmouth: Is it really impossible and unheard of for contracts to be negotiated and made conditional upon the approval of Parliament, which is going to pay?
Lord Henley: It would constitutionally be very, very unusual.
Lord Peyton of Yeovil: I accept what my noble friend has said. But please will he not even consider for one moment that enshrining the conclusions reached with the private sector institutions in something so pedestrian as a departmental report, which neither House of Parliament could think of devoting time to debate, would be inadequate? I hope he will dismiss that totally from his mind.
Lord Henley: I do not take quite the same view as my noble friend about departmental annual reports. I thought what I said earlier in response to his invitation to me to intervene would have been sufficient—that I would consider whether something a little more than a departmental annual report was sufficient.
Lord Peyton of Yeovil: The mere mention of a departmental annual report brings it down to a measure
788
and a level which I find totally inadequate. Until my noble friend makes it quite clear he is not suggesting that something just marginally above the level of a departmental annual report would be sufficient, until he dismisses that idea, I must say I would be very unhappy indeed. His offer now really has to be that the Government will put before Parliament a full report of what they have done. I would accept that. But you cannot say we are going to sign this subject to Parliament's will. My minimum requirement is that there must be a special report to Parliament. It should have nothing to do with a departmental annual report. There should be a special report to Parliament setting out the precise terms and exactly what has happened. There will then be an opportunity for both Houses of Parliament to express their views as to whether what has been done is acceptable.
Lord Henley: I am not sure that I can go much further to help my noble friend. I make no promises from the Dispatch Box, but I made it clear that I would consider whether we could go further. My noble friend will have to decide whether he accepts my word that I and my right honourable friend will be prepared to consider whether we can go further. However, I can make no promise beyond that.
Lord Peyton of Yeovil: I am very sorry that that is the case. It is not a question of whether I accept my noble friend's word. I always accept it without difficulty. I am worried about the constraints under which he is acting. If he cannot now accept that Parliament must have a chance to review the conclusions which have been reached in its name after the signing of a contract (I do not say that that should be before the signing of a contract) then I do not see that I have any alternative but to take the opinion of the Committee.
6.21 p.m.
On Question, Whether the said amendment (No. 4) shall be agreed to?
Their Lordships divided: Contents, 81; Not-Contents, 109.

Division No. 3

CONTENTS

Addington, L.

Dean of Thornton-le-Fylde, B.

Ashley of Stoke, L.

Desai, L.

Barnett, L.

Dormand of Easington, L.

Birdwood, L.

Ewing of Kirkford, L.

Blackstone, B.

Falkland, V.

Blease, L.

Farrington of Ribbleton, B.

Borrie, L.

Gallacher, L.

Broadbridge, L.

Geraint, L.

Brookes, L.

Gladwin of Clee, L.

Brooks of Tremorfa, L.

Glasgow, E.

Butterfield, L.

Glenamara, L.

Carmichael of Kelvingrove, L.

Graham of Edmonton, L. [Teller.]

Carter, L.

Gregson, L.

Chorley, L.

Grey, E.

Cocks of Hartcliffe, L.

Halsbury, E.

Crook, L.

Hamwee, B.

Darcy (de Knayth), B.

Harris of Greenwich, L.

David, B.

Harrowby, E.

789

Hilton of Eggardon, B.

Park of Monmouth, B.

Holme of Cheltenham, L.

Peston, L.

Hutchinson of Lullington, L.

Peyton of Yeovil, L. [Teller.]

Hylton-Foster, B.

Ponsonby of Shulbrede, L.

Jay of Paddington, B.

Rea, L.

Judd, L.

Redesdale,L.

Kennet, L.

Richard, L.

Kilbracken, L.

Ripon, Bp.

Kilmarnock, L.

Rochester, L.

Kirkhill, L.

Russell, E.

Saltoun of Abernethy, Ly.

Kirkwood, L.

Seear, B.

Lawrence, L.

Sewel, L.

Lockwood, B.

Stoddart of Swindon, L.

McIntosh of Haringey, L.

Strabolgi, L.

Mackie of Benshie, L.

Taylor of Blackburn, L.

Mason of Barnsley, L.

Thomson of Monifieth, L.

Mayhew, L.

Tope, L.

Mishcon, L.

Turner of Camden, B.

Monkswell, L.

Walton of Detchant, L.

Morris of Castle Morris, L.

White, B.

Napier and Ettrick, L.

Williams of Elvel, L.

Nicol, B.

Williams of Mostyn, L.

NOT-CONTENTS

Abercorn, D.

Hothfield, L.

Abinger, L.

Howe, E.

Addison, V.

Inglewood, L.

Alexander of Tunis, E.

Kingsland, L.

Allenby of Megiddo, V.

Lane of Horsell, L.

Arran, E

Layton, L.

Bethell, L.

Leigh, L.

Blake, L.

Lindsay, E.

Blaker, L.

Liverpool, E.

Blatch, B.

Long, V.

Boardman, L.

Lucas, L.

Bowness, L.

McColl of Dulwich, L.

Boyd-Carpenter, L.

McConnell, L.

Brabazon of Tara, L.

Mackay of Ardbrecknish, L

Butterworth, L.

Mackay of Clashfern, L. [Lord Chancellor.]

Cadman, L.

Caithness, E.

Mackay of Drumadoon, L.

Carnegy of Lour, B.

Marlesford, L.

Carnock, L.

Merrivale, L.

Chalker of Wallasey, B.

Mersey, V.

Charteris of Amisfield, L.

Miller of Hendon, B.

Chelmsford, V.

Milverton, L.

Chesham, L. [Teller.]

Montgomery of Alamein, V.

Clanwilliam, E.

Mottistone, L.

Clark of Kempston, L.

Mountevans, L.

Coleridge, L.

Mowbray and Stourton, L.

Colwyn, L.

Munster, E.

Courtown, E.

Murton of Lindisfame, L.

Cranborne, V. [Lord Privy Seal.]

Orkney, E.

Cumberlege, B.

Orr-Ewing, L.

Dean of Harptree, L.

Pearson of Rannoch, L.

Dilhorne, V.

Peel, E.

Dixon-Smith, L.

Rankeillour, L.

Elles, B.

Reay, L.

Ferrers, E.

Rees, L.

Finsberg, L.

Renton, L.

Gilmour of Craigmillar, L.

Renwick, L.

Gisborough, L.

Sanderson of Bowden, L.

Goschen,V.

Seccombe, B.

Gray of Contin, L.

Selborne, E.

Harding of Petherton, L.

Sharples, B.

Hardwicke, E.

Shaw of Northstead, L.

Harlech, L.

Shrewsbury, E.

Harmar-Nicholls, L.

Skelmersdale, L.

Harmsworth, L

Soulsby of Swaffham Prior, L.

Hayhoe, L.

Stewartby, L.

Henley, L.

Stodart of Leaston, L.

Hesketh, L.

Strange, B.

Holderness, L.

Strathclyde, L. [Teller.]

Hooper, B.

Sudeley, L.

790

Swinfen, L.

Ullswater, V.

Tebbit, L.

Wilcox, B.

Teviot, L.

Wynford, L.

Thomas of Gwydir, L.

Young, B.

Trumpington, B.

Zouche of Haryngworth, L.

Resolved in the negative, and amendment disagreed to accordingly.
6.30 p.m.
Lord Morris of Castle Morris Lord Morris of Castle Morris moved Amendment No. 5:
Page 1, line 13, at end insert—
("( ) The Secretary of State shall require any person to whom subsidy is to be paid who refuses to make a private sector student loan to an eligible student to provide the student with a statement of reasons for the refusal."").
The noble Lord said: The purpose of the amendment is to reopen an inconclusive and distinctly unsatisfactory debate which took place in Standing Committee B of another place on 19th December last, at cols. 104 and following of the Official Report, on the subject of privacy and credit rating for students seeking loans.
Creditworthiness is an essential virtue in this monetary age. Members of the Committee may have seen on television last night a documentary by that very agreeable company Granada Television on the ease with which one person can assume the identity of another. An entirely innocent young woman, Susan Cobb, had her identity stolen by a drug dealer who obtained a copy of her birth certificate. Miss Cobb knew nothing of that until she was refused credit by her bank. So also were her parents because the address had been blacklisted and so was everyone living at it. This went on and she was deemed not to be creditworthy even after the impostor was caught, tried, found guilty, sentenced and in prison. Creditworthiness is a vitally important thing that we have to preserve, certainly more than virginity in this difficult age.
A student is forced to seek a loan. He or she has no choice. You cannot live on a maintenance grant alone. You cannot live on a maintenance grant plus your earnings as a barperson or a sweeper-up of floors. You need to have the facility of a loan if you are going to do anything like justice to the academic demands of the course on which you are engaged. A student is forced to seek a loan and he may endanger his creditworthiness with no reason whatever given. It is that which seems to us unjust. That is the reason for bringing forward the amendment. I hope that the Minister will explain why this statement should not be given to a student. I hope that he will explain more fully how the ombudsman can operate. I hope that he will accept the amendment.
Lord Tope: I support the amendment. The Minister said several times tonight and on previous occasions that he is keen to encourage choice. As I understand it, the objective of the scheme is to offer that choice to students. But we are asking, indeed the Government wish to encourage, students to move from a scheme where a loan is guaranteed through the Student Loans Company into a private sector scheme where there is no guarantee that a loan will be forthcoming. It is important that they are offered the security of knowing the reasons

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that they are refused a loan. As the noble Lord, Lord Morris of Castle Morris, said, the refusal of a loan can affect the student's creditworthiness for many years to come. We all know of and hear about stories and occasions where dreadful and appalling errors of fact are made, completely unknown to the person concerned. If the students have no knowledge of the reason that they have been refused a loan, they can suffer for that whenever they seek creditworthiness in the future.
For better or worse, some form of student loan, by whatever term and by whatever repayment method, will he a fact of student life. We have to seek a way of offering students at least the reassurance that if they have to embark on a private sector loan the refusal of that loan will not blight them for many years to come in their attempts to seek another loan.
When the Minister replies, I hope that he will be able to offer reassurance on a point which is of great concern to many students, and will be increasingly so. Without such a reassurance, the Bill will be even more flawed than it is already.
Lord Ponsonby of Shulbrede: The points have been made succinctly by the two previous speakers. Choice is available for the banks; it is not available for students. Students need money to exist. I believe that that puts them in a different category from other borrowers of money. The Government are requiring them to make this application to incur debt. The banks may refuse that application. That puts the student in a different category. For that reason, students should be better treated than other applicants. If they are informed as to why their application has been turned down, they can either put some misapprehensions right, or they will know the problem for future applications.
Amendment No. 7 also provides an imaginative way of meeting our concern. I shall be interested to hear the Minister's principled arguments as regards putting students in the same category as those who wish to borrow money for cars, houses or any other reason. Why should students be treated in the same way when undertaking such a vital task as getting themselves properly educated?
Lord Henley: I dare say that we shall reach Amendment No. 7 in due course. I had originally wanted to group the amendments but I believe that the party opposite wished to "ungroup" them.
The amendment highlights a philosophical difference between our approach and that of the Opposition. We believe quite simply in the benefits of private sector involvement and the freedom it must be given to deliver those benefits. I suspect that the Opposition are mistrustful of the private sector and want to regulate it into inertia.
To get the benefits of the private sector, you need to work with the grain of the private sector's approach. It would be quite wrong to impose particular rules on how private companies should deal with loan applications. They are lending and risking their own money. That is one of the points behind the Bill. They must be free to reject applications; and they must be free to decide what to tell
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such applicants. We would not dream of doing so where, for example, students are refused current accounts or graduates are refused mortgages.
I appreciate that we are talking about public money in the form of subsidy. But the money risked on a loan is largely the private lender's. If we are to involve commercial practices, we must trust them. We cannot trust them and over-regulate them at the same time.
I think that the concerns on this issue are simply disproportionate. I do not accept that private lenders will be falling over themselves to reject applications, or that they will be secretive about their decisions.
I believe that it will be a strongly competitive market. Private lenders will not commit themselves to student loans unless they are keen to be major lenders to students. They will be committed to securing a fair share of the market. They will not achieve that by being over-selective or secretive.
Those students who are rejected will have the ability to turn to competitors; and the Student Loans Company will still be there as a formidable competitor available to all. I believe, therefore, that it would be as unreasonable as it is unnecessary to put on private lenders the restriction that the amendment imposes.
The noble Lord, Lord Morris, also asked about the role of the banking and building societies' ombudsman who will be able to consider genuine complaints from student loan borrowers about the service that they receive from the private lenders. I thought that I had made the position clear at Second Reading but perhaps I did not in the time available. Contrary to the remarks made by Mr. Byers (a colleague of the noble Lord, Lord Morris of Castle Morris) during Report stage of the Bill in another place, the ombudsman will look into complaints about an institution's refusal to offer a loan provided that the complainant has a piece of evidence of substance, however small, that the institution acted unfairly or illegally in granting a loan. I am certainly confident that the ombudsman will offer a rigorous and effective safeguard.
As we are only on Amendment No. 5 at twenty to seven, I hope that the noble Lord will feel able to withdraw his amendment.
Lord Morris of Castle Morris: I am grateful to the Minister for that reply. He clarified the matter of the ombudsman. He did not make clear why a student should not be entitled to be given the reasons for the refusal of the loan under the Bill. However, at this hour of the night it is time that we got on. We shall return to the question of creditworthiness on Amendment No. 7. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Borrie Lord Borrie moved Amendment No. 6:
Page 1, line 13, at end insert—
("( ) The Secretary of State shall require any person to whom subsidy is to be paid to maintain confidentiality in relation to any details provided by eligible students and, in particular, not to make available to any third party (other than the eligible student concerned or to the Secretary of State) without the applicant's permission any information on whether an application by an eligible student was accepted or rejected or the reasons for such acceptance or rejection."").
The noble Lord said: In moving the amendment, I accept that when a student seeks a private sector loan, as when anyone seeks any type of loan, he or she must expect to answer questions about himself or herself and the financial circumstances. That is necessary not only for the lender's sake but for the applicant's sake, to ensure that he or she is not over-committed.
Confidentiality about the student should be maintained to a particularly high degree. It should apply not only to the information supplied by the student but also to the decisions that are made to deny a loan to the student applicant. As I understand it, the Data Protection Act 1984 already protects the confidentiality of the loan records of a student. If so, it would be helpful if the Minister would confirm that. It is important that lenders should not be able to pass on to others—particularly credit reference agencies—any information as to whether a student loan application has been rejected and the reasons for such a rejection, if any have been given.
I know what is the normal behaviour in the private sector and fully understand it. If I am asking for special treatment for students, it is because at the stage of life of a normal student one would not wish any stigma to attach to a refusal which would detract from—I use the same word as my noble friends when debating the last amendment—the creditworthiness of the student. I beg to move.
Lord Tope: There is not much more to say. As might be expected, the noble Lord, Lord Borrie, has put the case very well. This is another amendment concerned with the future of students, and it is important that it should be supported.
Lord Henley: I hope I can persuade the noble Lord, Lord Borrie, that his amendment is unnecessary. It may be helpful if I say a little about it. In seeking to regulate the flow of information from lenders of subsidised student loans to other parties the amendment assumes that other parties (in particular, I presume, other lenders) will have something to gain from knowing why a lender has rejected a student's application.
As mentioned earlier, private lenders will to some extent have their own selection policies and procedures. Just because a student has been rejected by one private lender, it does not follow that he will be rejected by all the rest. As the noble Lord will appreciate, such information can quickly go out of date anyway. I do not believe that a private lender will reject applications out of hand on the basis of old information about a student.
In any case, as the noble Lord is aware and as I mentioned, there is already significant protection. It is right that lenders should not be allowed to provide third parties with information for the purpose of soliciting goods or custom. The Student Loans Act 1990 prevents that and we intend to keep the provision. It will be applied to private sector lenders. In addition, there are specific safeguards in the Data Protection Act, mentioned by the noble Lord, Lord Borrie. It may be helpful if I set out what they are. They require that a financial institution be registered and that the
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registration includes details of what information it will hold, for what purpose it will be used, and to whom it could be passed.
The borrower has a right to know what information is held and to have any mistakes corrected. Borrowers also have the right of access to all personal computerised records on them held by a lender. Banks and building societies would have to follow those requirements in their dealings with student borrowers, as with other lenders. I do not believe that further safeguards are required. I hope that on this occasion the noble Lord will agree to withdraw the amendment.
Lord Borrie: I am grateful to the Minister for his reply. I shall read it closely. At this stage I can safely withdraw my amendment while reserving my position for the future.
Amendment, by leave, withdrawn.
6.45 p.m.
Lord Morris of Castle Morris Lord Morris of Castle Morris moved Amendment No. 7:
Page 1, line 13, at end insert—
("( ) A refusal to an eligible student of a private sector student loan shall not be regarded as a refusal of credit for any purpose and may not be required to be declared in any other application for credit."").
The noble Lord said: This amendment returns to the question of creditworthiness and specifically the refusal of credit to someone whose loan was refused by a private sector bank. I am perfectly content to leave the elaboration in the capable hands of my noble friend Lord Williams of Mostyn. I beg to move.
Lord Williams of Mostyn: This amendment is of some importance to students who may suffer if they have to declare that they have been refused a student loan in any subsequent application in their financial lifetime. It is intended to underline the fact that a student is obliged, in the overwhelming majority of cases, to look to this form of loan. It is not a matter of choice but of necessity. If relatively few safeguards are to be imposed within the scheme, we respectfully commend this one on the basis that it is a necessary protection for students.
As has been said, the Bill is skeletal. We do not know the arrangements. We have no likely opportunity of reviewing them, bearing in mind what happened on Amendment No. 4. This is an important matter. One would have thought that it was not an issue that the Government would feel comfortable resisting. However, we shall see.
Lord Addington: The amendment refers to disclosure of a refusal to grant a loan to a student. Students would probably say that their financial situation could change radically when they stop being students. That fact is behind the amendment. However, it has been pointed out already that students have no choice but to apply for the loans. They are a necessity.

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Students are calling for a subsistence level of income. Surely, a refusal should not be raised when their record of creditworthiness is being considered in later life.
Lord Henley: The noble Lord, Lord Williams, says that I should not feel comfortable in resisting the amendment. I have to say to him that it is a matter for me to decide as to the degree of comfort I feel rather than for him to impute it. I have to resist the amendment for two reasons. First, it goes considerably beyond the scope of the Bill. It seeks to regulate not only the private lender of student loans but private lenders of every kind. It is also unnecessary and impractical.
The amendment seeks to give a student refused a loan from the private sector the right to withhold that information whenever he applies for credit again. I sympathise with the feelings behind the amendment and the concern about students refused loans from the private sector possibly having a hard time getting credit in the future to buy a house, a car, or whatever. However, financial institutions, whether they be lenders of subsidised student loans or lenders of mortgages to graduates, must have the freedom to make commercial decisions. It would be wrong to expect a credit institution, when considering a mortgage application, to make a special exception for an applicant because he was refused a student loan by another institution.
In any case it is wrong to assume that future prospective lenders will have a great deal to gain from knowing why an applicant was refused a student loan some time before. They will all have their own selection policies and procedures, as I said earlier. The applicant's circumstances will also have changed. One should not make assumptions about the weight that past information will carry. I therefore consider the amendment unnecessary. I urge the noble Lord to withdraw it.
Lord Williams of Mostyn: Will the noble Lord say why he thinks the proposal is impractical?
Lord Henley: First, I consider that it goes beyond the scope of the Bill. I also think it wrong to impose such an obligation on the financial institutions, which must have the appropriate freedom to make their own commercial decisions.
Baroness Carnegy of Lour: It is very important to be clear about what my noble friend is saying and about the implications of the Bill. If a student is refused a subsidised private sector loan, can he or she then apply for an agency loan? If so, is that information confidential—so that we know what a student might do if he or she wanted a loan but was refused it by the public sector?
Lord Henley: If a private institution refuses the student a loan, as I have made clear more than once there will always be the availability of the Student Loans Company. It would always be possible for an individual to go to the Student Loans Company.
Baroness Carnegy of Lour: That is confidential under the Bill, is it not?
Lord Henley: Obviously it would he known that the individual had a student loan—it would come from the Student Loans Company. The point I am making is that the private sector institution should be free, should it so wish, to take account of a refusal of a loan. That is a commercial decision that it can make. The individual student will always have the availability of a loan. If he fails in the private sector, there is the Student Loans Company.
Lord Williams of Mostyn: Does the Minister appreciate that I am not speaking about feelings of discomfort, because discomfort is entirely subjective like questions of taste? The question I understood to have been put was: if a student is refused a private sector loan and then makes an application for a publicly supported loan, is there an obligation to report the refusal of the private sector loan on the occasion of the public sector application?
Lord Henley: I do not see that there would be any obligation to report to the Student Loans Company the fact that the student had been refused a loan elsewhere.
Baroness Farrington of Ribbleton: Will the Minister agree that if an individual applies for a mortgage on a house there are two reasons why that application may be turned down: one is the deemed creditworthiness and the ability of the individual to repay; the other is the quality, siting and value of the property? In the case of an application for further credit, often now in these days of computerisation there is merely a box to tick: "Have you, or have you not, ever been turned down for credit before?". Is it not possible that a bank or other financial institution may decide fairly arbitrarily in the case of a particular career option such as dance or fine art that the career possibilities are limited; and may it not rather arbitrarily reject certain careers as being less likely to lead to people being in a position to repay? Surely this is a very different set of circumstances. In the case of a car it is a question of whether the income is adequate. Here we are dealing with a subsidised private sector loan scheme in relation to which judgments will be made about particular careers leading to the ability to repay.
Lord Henley: We shall come to that point when we discuss the noble Baroness's Amendment No. 13, when we can address the matter in somewhat greater detail. The simple point I make is that these matters must be left to the institutions themselves to make their own commercial decisions.
Baroness Farrington of Ribbleton: It is not the same point.
Lord Morris of Castle Morris: This is an important amendment, as my noble friend said. We take it extremely seriously. The Minister laid out his position, with most of which we firmly disagree. Obviously we shall return to the matter at a later stage when we have had a good look tomorrow morning in Hansard at what he had to say. Meanwhile, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Walton of Detchant Lord Walton of Detchant moved Amendment No. 8:
Page 1, line 13, at end insert—
("( ) No subsidy may be paid by the Secretary of State under subsection (1A) except where provision is made under the arrangements between the Secretary of State and persons making private sector student loans as to the maximum amount of loan that may be made to a student in any year, having regard to the length of the period of study for students with additional weeks of study in their final year."").
The noble Lord said: This amendment is tabled in the interests of students of medicine, dentistry and veterinary surgery. Medical, dental and veterinary students face particular problems because of the length of their final year of study. Most study for five years, some indeed for six, as undergraduates compared with three, or perhaps occasionally four, for most students. The longer period of study means that medical and dental student needs are greater and more debt is accumulated.
The most severe hardship is in the final year, when students are at present entitled only to a reduced final year rate of loan. For most medical and dental students the final year begins much earlier than for other students, finishing in mid to late June. Medical students then have to wait until 1st August before starting their pre-registration posts. That short interim period is now increasingly taken up with induction courses, so that students are unable to take up paid employment. The beginning of the final year to the start of employment is over 11 months. A CVCP survey found that nearly all medical and dental students study for between 40 and 45 weeks in their final year. Veterinary students usually have to undertake a number of weeks of extra-mural training in addition to the weeks of term. This is unpaid and eats into vocation time.
The Committee of Vice-Chancellors and Principals would like to see medical, dental and veterinary students receive the full rate of loan entitlement in the final year of study rather than the reduced final year rate as at present. There is a situation at the moment whereby students studying for the postgraduate certificate of education do receive the full loan in their final year. The same is true of those taking accelerated courses.
It is true that medical and dental students receive extra weekly amounts in mandatory grant as a recognition of the difficulties they face in studying for much longer periods than many other students. But those studying for the postgraduate certificate of education and for accelerated courses already receive these additional amounts in mandatory grant as well as being eligible for a full year loan in their final year. It seems inconsistent and illogical that the same benefits are not allowed to medical, dental and veterinary students. I beg to move.
Baroness Park of Monmouth: I very strongly support the amendment. We are all very much aware of the special problems of medical students because of the final year. The average level of debt is over £5,000 for finalists now; and that will go up and up. I cannot help feeling that it is extremely important that they—and, I may add, law students—should have some special consideration of this kind.
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In Standing Committee B on 9th January the Minister made the amazing statement:
"I am not aware of a shortage of good quality students of medicine".
Why then are we being reproached by South Africa for poaching much-needed doctors? Why are so many of our young registrars from the European Union? This is a very important amendment, not only now but because we have to think about the supply of medical students for the future.
Lord Soulsby of Swaffham Prior: I support the amendment. As mentioned at Second Reading, the length of the final year for veterinary, dental and medical students is such that it amounts to a whole year—at least of 46 weeks. Unlike so many other courses, in my own profession there is now a cumulative requirement of 35 weeks during a course of five years, or six years as it is in Cambridge, which is notionally a complete academic year but has to be taken out of vacation periods. The implication is that these students cannot earn the kind of money that other students earn by doing jobs in vacation periods. In the result, no financial sum is built up over the years to buffer the total cost of university education in vacation times.
I join the noble Lord, Lord Walton of Detchant, in pleading for special consideration to be given to these particular students. I believe that it is realistic to take into account the fact that the final year is a fully subscribed year of teaching (at least 46 weeks) but that previous vacation earnings do not permit a budget to offset the debt that may have accumulated over the five or six years of the course.
Lord Butterfield: I support the amendment moved by the noble Lord, Lord Walton. There is no doubt that the last year of a medical course can be a difficult one. The same is true for vets. I hope that the Minister will give consideration to this request.
Lord Henley: The noble Lord, Lord Walton, said that this amendment was related directly to medical, dental and veterinary students. I accept that. I imagine that it could apply also in a number of cases to architectural students. In reply to my noble friend Lady Park of Monmouth, as an ex-law student I am not sure that this applies necessarily to them. However, all of us have much less sympathy for lawyers than for doctors.
The Bill is very small and deals with a relatively short point. It is about enhancing the student loan system. It is not about who should get loans or how much they should get. In any case, the matter of rates of loan, with which this amendment is concerned, is dealt with in the Student Loans Regulations, which are reviewed annually, and not this Bill.
Obviously, we are aware of the concerns. They have been put to us on a number of occasions by a number of different bodies. I can assure the Committee that only recently my honourable friend Mr. Forth met representatives of the BMA to discuss their concerns about medical students in regard to this particular issue. The same applies to dental, veterinary and—dare I say?—architectural students. We very much note those

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concerns and welcome their ability to put them to Sir Ron Dearing. I believe that this is a matter which it is appropriate for the Dearing Committee to look into. If we felt that there were an immediate case—no doubt other representations would be put to us for increasing the support available to these students—we would consider it at the appropriate time when we reviewed the Student Loans Regulations. I am not persuaded that at the moment the existing arrangements for students who have to study for the additional weeks are inadequate, but obviously we will note the concerns and consider them in due course.
I hope that with the assurance that we will keep the matter under review, the noble Lord, Lord Walton, will feel able not to press his amendment on this occasion.
Lord Morris of Castle Morris: We on these Benches entirely agree that architectural, medical, dental and veterinary students form an easily recognisable special case in matters of this kind. We wholly support the amendment. I regret that my noble friend Lord Winston is unable to be present tonight. He has been delayed at another very necessary academic meeting, if not in an operating theatre. I know that he was most anxious to be here and that he would echo everything that has been said by the noble Lord, Lord Walton.
I am glad to hear that the Minister's right honourable friend met some of the representatives. I was worried when at the Committee stage of this Bill on 9th January Mr. Forth said that he was unaware of a shortage of good students of medicine, or of dental or veterinary studies, or that the present arrangement was a disincentive. I hope that all Members of this Chamber will find that tone slightly disagreeable.
Lord Walton of Detchant: In the light of the support that this amendment has received from all parts of the Committee, these concerns are real and are growing. It is unfortunate that one may have to wait for the outcome of the Dearing Committee before there can be a proper resolution of this matter. Nevertheless, I am much reassured by the statement of the Minister that he will draw these concerns to the attention of his colleagues and his right honourable friend, and that if they are satisfied—as I believe many of us are—that this is a matter of considerable seriousness, the regulations can, it is hoped, be amended. In the light of that assurance, and in the hope that he will urge upon his right honourable friend our increasingly serious concerns, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 9 not moved.]
Clause 1 agreed to.
Baroness Lockwood Baroness Lockwood moved Amendment No. 10:
After Clause 1, insert the following new clause—
DISCRIMINATION ON GROUNDS OF RACE, SEX OR DISABILITY
(". No subsidy may be paid by the Secretary of State under section 1(1A) of the Education (Student Loans) Act 1990 unless the Secretary of State is satisfied that the person by whom the private sector student loan will be made has ensured that the assessment criteria to be used in assessing applications by eligible students do not discriminate on grounds of race, sex or disability, directly or indirectly.").
The noble Baroness said: The purpose of Amendment No. 10 is to put on the face of the Bill a clause to prevent discrimination on the grounds of sex, race or disability. There is on the statute book already anti-discrimination legislation that covers those three areas. No doubt the Minister would say, as his colleagues in another place said when the Bill was before that House, that it was unnecessary to have on the face of the Bill such a clause because anti-discrimination legislation was already in place. He may even say that it is all the more unnecessary now that the Government have put a reference to discrimination in the terms of the contract. Nevertheless, we feel that it is important to have this written into the statute. It is particularly important to bear in mind the wording of the amendment. It refers to both direct and indirect discrimination. I do not expect finance companies to go in for blatant discrimination in any one of these three areas. They should already be familiar with some of the provisions. Nevertheless, indirect discrimination is much more subtle, and I believe that we should flag it up in relation to this Bill.
My noble friend Lord Morris of Castle Morris in an earlier amendment spoke about lenders selecting their students, not students selecting their lenders. He said that lenders would determine those students to whom they could provide loans. We have to guard against such discrimination, particularly in relation to a financial Bill. I remind the Committee that in the context of sex discrimination, on average, women's pay is still 20 per cent. below that of men. There are already examples of racial discrimination in the education field. As to disability, the Disability Discrimination Act 1995 is a much newer piece of legislation.
There are all kinds of implications in relation to the education of disabled people. For example, many of the disabled students already need additional funding and they are provided with that funding by the Government. But even then they go to other sources for additional funding to assist them with learning aids. Furthermore, they may have to take longer in carrying out their period of study, whether for a degree or a diploma, than an able-bodied person. In relation to their accommodation, they often need extra care and help to live an independent life. It is important that all these factors should be taken into account. The amendment recognises that and makes it clear from the outset that there shall be no discrimination on these grounds.
All three groups to which the amendment refers and about which I have spoken have a more uncertain future at the end of their period of study. In that sense they may appear to be the "less ripe cherries for picking", which is the phrase that has been used in connection with the Bill. I hope that the Minister will be sympathetic to the amendment.
Lord Desai: I must apologise that I was not in my place when the amendment was called. However, my noble friend Lady Lockwood has given an eloquent exposition of what the amendment is about.

801
If someone is refused a loan early in life, despite what safeguards one may like to put in place, it will block his creditworthiness for the rest of his life. Therefore, it is important that we should have safeguards in the Bill. We are talking about people who will take a loan when they are 18. It will probably be the first loan they have applied for—I hope it will be the first loan they have applied for; I hope that they are not already in debt. We should ensure that if they are refused a loan by one private agent or another it does not happen on grounds which are unconnected with their true creditworthiness. I can understand that for commercial reasons there are people to whom one would not like to give a loan. But there should not be discrimination on grounds which are irrelevant to creditworthiness and irrelevant to their ability to pursue a career.
I know that the Minister does not like the phrase "cherry picking". Indeed, he probably does not like "level playing field" any more. None of us does. However, it is an established point in economics that when these things are done by the market, the market will not take up "difficult" cases. Who are the difficult cases? They are usually people who are known on objective criteria to be the lower paid. They are lower paid on the grounds of race, sex and disability. We want to ensure that people are not refused loans on those grounds.
I know how these loan applications are processed. One is asked to tick certain boxes on the application form. The young clerks—I do not want to be pejorative—who are supposed to feed the information into the computer add up the score. If one has said that one is black, or a woman, or a disabled person, out one goes before anything further has been asked. I recently had a very nice experience of being asked by one of the Labour Party magazines to apply for a credit card. I applied for the credit card but I did not get one because I did not put myself down as a houseowner. I was honest because my wife is the houseowner and so I could not claim to be a houseowner. But I did not get the credit card. If one is not a houseowner, one does not get a loan. Very crude criteria are used by people who think they are scientific criteria. I bet that some of the criteria on which people would not be given loans are those which I have mentioned. It is very important to lay down these requirements in black and white.
I know the Minister will say that legislation already exists to cover these points. However, I have a suspicious mind about some of these matters. If it exists, fine; adding to it will not make any difference. One would not be imposing extra burdens on the loan givers. Therefore, why not do it? It will be a belt and braces approach. We can be extra cautious. Unless we do so, we will be likely to blight people's careers, especially their careers as borrowers, for a long time.
7.15 p.m.
Lord Henley: I understand the anxieties put forward by both the noble Lord, Lord Desai, and the noble Baroness, Lady Lockwood. I was also interested that the noble Lord should tell the Committee in advance what
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I am going to say. But I shall say it, nevertheless. I hope that in so doing I can persuade the Committee that the steps we have taken are sufficient, and that what is in place is sufficient.
The invitation to tender documents that we have heard so much about this evening ask that the financial institutions bidding should provide details of the credit selection policies and processes they intend to follow. We shall consider that information very carefully in evaluating the tenders. The documents also include a model contract. I can assure the Committee that our contract with successful bidders will include a requirement that they do not commit any act of discrimination rendered unlawful by the Sex Discrimination Act 1975, the Race Relations Act 1976 or the Disability Discrimination Act 1995. Further, I believe that the institutions to which we have sent the tender document are responsible organisations. I do not believe they would be guilty of discrimination or guilty of breaching the law as set out in those three Acts. But if they are, they will be in breach of the law and of our contracts.
I believe therefore that effective sanctions exist to deal with the points that have been raised by the noble Lord and by the noble Baroness. Useful though this debate has been, I hope they will accept that the new clause would add nothing to the Bill and that therefore it is not necessary to press it on this occasion.
Baroness Lockwood: The Minister has, unfortunately, responded in the way I expected. I am sorry about that. He clearly has nothing against the new clause. He did not speak against the clause as such. But he felt that it was unnecessary in the light of the arrangements that have already been made. I am grateful to him for the arrangements that have been made. I hope that the scrutiny will be careful.
No one would expect the financial institutions to discriminate. I certainly would not; and, as I said in my opening remarks, I know that they have had experience of the anti-discrimination legislation already operating. Nevertheless, some of those financial institutions, responsible though they are, have on occasions discriminated, and action has had to be taken. Sometimes it has been taken by the Equal Opportunities Commission and there has been an agreed programme of action to eliminate that discrimination. No matter how established a firm may be, there are still dangers, as I said originally, of indirect discrimination.
I am sorry that the Minister will not accept the amendment. It would add to the Bill and be an additional warning to organisations that they must be absolutely sure that there were no provisions likely to affect one sex or disabled people more adversely than others. However, in the light of what the Minister has said, I shall look at the details of the programme which he is suggesting. If I feel that they are satisfactory I shall leave the matter there. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Addington Lord Addington moved Amendment No. 11:
After Clause 1, insert the following new clause—

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AGE DISCRIMINATION
(". No subsidy may be paid by the Secretary of State under section 1(1A) of the Education (Student Loans) Act 1990 unless the Secretary of State is satisfied that the person by whom the private sector student loan will be made has ensured that the assessment criteria to be used in assessing applications by eligible students do not discriminate on grounds of age.").
The noble Lord said: There are two reasons behind this amendment. It is basically to stop age being used as a ground for discrimination. Ageism is a problem that we are facing more and more in our society. I say that with a certain degree of temerity, realising that I am the youngest person involved in this debate. One may be dealing with people who feel that they have missed out on educational prospects. I hope that that is something we shall never lose sight of in the education system. The other factor which I hope will get a better hearing from the Government is updating skills. For both these aspects we are talking about academic training. In the job market one constantly needs to update one's skills or go through new training processes. With the current level of prejudice against people over the age of 50, it is almost vital that one is up to date.
Currently, one cannot obtain funding for university or higher education courses. The current loan system does not give that support. Surely this is an opportunity to bring in this new provision. We need to bring back in to the system large sections of our society which are becoming almost permanently without hope of employment. If we can retrain them to a sufficiently high level of skills, they will surely stand a much better chance. That, combined with the fact that others may fulfil their life potential later on, is a very good reason why this amendment, or something very similar, should be included on the face of the Bill. I beg to move.
Lord Henley: I believe that there are two points here. First, there is the much wider question as to whether loans generally, either through the Student Loans Company or through the new private institutions, should be extended to the over-50s. I do not believe that that is a matter we should be debating this evening. We have discussed it on a number of other occasions. We have no intention of changing our policy in that regard. I am not sure that this amendment would achieve the point anyway. It would be wrong to press amendments to the Bill which might cast doubt on that policy.
Secondly, on the narrower point as to whether the institutions themselves should have anti-ageist policies, we shall obviously consider the policies of the private lenders on assessing applications when considering their tenders. If we have anxieties on that they will be reflected in our decisions. The noble Lord ought to accept that it is not generally unlawful to take decisions based on someone's age. Therefore, there is absolutely no case for seeking to regulate the private lenders on this occasion as if there were. Therefore, I hope that the noble Lord will feel that it is not necessary to press this amendment on this occasion.
Lord Addington: Although it may not be unlawful to discriminate on the ground of age, I cannot help but feel that at times it should be. I was also trying to introduce a provision to correct a major flaw in the current legislation
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and arrangements. The reasoning behind the amendment was to correct a fault of omission. But the hour is late and I do not believe that I have many allies to my left on this issue.
A noble Lord: There is one here.
Lord Addington: There is a possible disagreement between Front and Back Benches, which is interesting. At this moment I shall resist opening that can of worms. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Desai Lord Desai moved Amendment No. 12:
After Clause 1, insert the following new clause—
DISCRIMINATION ON GROUNDS OF SOCIAL OR ECONOMIC STATUS
(". No subsidy may be paid by the Secretary of State under section 1(1 A) of the Education (Student Loans) Act 1990 unless the Secretary of State is satisfied that the person by whom the private sector student loan will be made has ensured that the assessment criteria to be wed in assessing applications by eligible students do not discriminate on grounds of the applicant's social or economic status, or that of his family, as defined by any system of classification.").
The noble Lord said: In this, as in the previous two amendments, we are pushing the same sort of argument. We argue that there are a variety of grounds on which discrimination will be practised unless care is taken specifically to introduce a ban against it. The ways in which discrimination on grounds of social or economic status can take place are very simple. In political discourse we talk about CI s, C2s, the Ds and the Es as though they were separate nations almost. It would be very easy for a form to be prepared on which a student could be asked the father's occupation or income or even his place of residence. That could easily be used in a computer program to grade people as coming from those classifications and therefore count as disqualification. It sounds incredible but that is exactly how many people do not get loans.
We must take care that assessment criteria are not so designed as to facilitate or even mask discrimination on the ground of social or economic status. It is a matter of fairness as regards people applying for loans. I beg to move.
Lord Addington: I believe that discrimination on the ground effectively of one's family background and income would be utterly inappropriate for people starting out on a new form of training. I support the amendment.
Baroness Farrington of Ribbleton: In supporting this amendment I ask the Minister to have regard to the fact that there is evidence that finance companies and finance credit rating are often denied to people simply because of the locality in which they live. The student making an application and going straight from school will be using the parental home. There is a danger here of finance companies applying a similar mechanism.
Lord Henley: In view of the hour I shall respond briefly. Here again is an issue which goes to the heart of the differences in approach between ourselves and the parties opposite. There are a number of reasons why

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this amendment is misconceived in its view of the private sector and the role that it will play in increasing choice and improving service quality.
Perhaps I may first make clear that we neither want nor expect private lenders to assess applications in the way that some fear. On the contrary, we want to involve the private sector so that students get the benefits in service quality of the expertise that it has in personal lending. To get these benefits we need to put a system in place which allows the banks and the building societies to operate efficiently along normal commercial lines.
Secondly, we must not lose sight of the fact that the financial institutions will be lending their own money and putting their own money at risk. In those circumstances, decisions on whether to lend to a particular applicant must be left to the private lenders.
Thirdly, although I understand the concerns that some students might suffer rejection because of their background, I believe that that possibility has been exaggerated. If the banks and building societies tender for the right to offer subsidised loans, they will do so because of the advantages of being in that market in a substantial way. Once in, why should they then take a restrictive view of applicants' creditworthiness? The incentive will be to maximise their share of the market. We trust that there will be strong competition and that they will be competing against other private lenders. They will also be competing against the Student Loans Company, which will obviously have a substantial share of the market. The private lenders will have market share to build up and reputations to protect. Why should they want to get involved in the scheme and then court adverse publicity by rejecting a large number of applicants? I hope, therefore, that noble Lords will feel that the amendment is unnecessary and that their fears are unjustified. I hope also that the noble Lord, Lord Desai, will feel able to withdraw his amendment.
7.30 p.m.
Baroness Farrington of Ribbleton: My Lords, I can only express deep concern about the tenor of the Minister's response to this series of amendments. We have heard almost an inversion of the words associated with the Statue of Liberty. The Minister keeps referring to the financial institutions wanting to maximise their share of the market. There is no evidence for that assertion. Perhaps their financial motive will be to maximise their share of the market with the least possible risk, having received a subsidy from the Government, from the public purse to help them to offset that risk.
I cannot accept that a young person of 18 will go to the media and make a fuss because the locality in which he or she lives happens to have been turned down by the financial institutions. We are not talking about a purely hypothetical issue. I have experience of it. I worked in a shop which dealt with a finance company. I have to tell the Minister that I came across cases of people being turned down for credit because they were considered unsuitable but, as a mere cog in the machine, I never
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heard why. However, it was not difficult to spot the trend. It seemed that anyone called Singh or Patel was considered uncreditworthy, although it was impossible to prove. It seemed that people living in a certain area of town were deemed to be feckless because of the location of their home. I have no evidence that people in those circumstances have the confidence to make a fuss or that young people at the start of their careers would want to risk going to the media because they had been turned down.
I find the Government's attitude unacceptable. This is about cherry picking and choice for private sector institutions masquerading under the Government's public statements as choice for students. A student who is discriminated against may have no recourse. I am sorry, but the Government cannot get away with claiming that they are providing student choice. This is about two issues. The first is the Government's wish to reduce the public sector borrowing requirement so that they can have maximum scope for making their own future financial decisions as a government. The second is that they want the private sector to be able to pick and choose between students. I find those answers unacceptable.
Lord Henley: I find the noble Baroness's remarks incomprehensible. They show complete and utter misunderstanding of the private sector. Obviously, we could compel private lenders to accept any application from any eligible student, but such a provision would work very much against the grain of the private sector's approach which I dare say the noble Baroness does not begin to understand. It is doubtful whether such an approach would be acceptable to the banks and the building societies. Frankly, we see nothing to be gained by compelling, first, their involvement and then their acceptance of all eligible applications.
We could seek to persuade the private lenders to take any applicant, but there would then inevitably be a much higher cost in higher subsidies. If the taxpayer were to meet that extra cost of universal provision in the private sector, how could we also ask the taxpayer to continue to fund the operation of the public sector through the Student Loans Company? For that reason, I do not accept what the noble Baroness said.
Lord Addington: Are we not dealing with a universally available system of higher education and are we not referring to its funding on an individual basis? If the financial institutions can pick and choose to whom to lend, they are going against the Government's intention of encouraging greater numbers into higher education.
Lord Henley: The expansion of higher education is something of which we can be proud. I believe that the numbers have doubled and doubled again since 1979. In addition, and in the teeth of opposition from the parties opposite, we recognise that those benefiting from higher education should make some direct contribution to it themselves. Hence we introduced the student loans scheme back in 1990, the principle of which now seems to have a degree of universal acceptance. Having said that, we shall always have the Student Loans Company

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to provide a loan to anyone who wishes to make use of it. Finance will also be available through the private institutions. Those private institutions have to be free to make their own decisions, on good commercial grounds, as to whom they should accept.
Baroness Farrington of Ribbleton: The Government need to make clear to this Chamber and to people in the country whether they are talking about providing a genuine choice for students with a scheme in which the private sector takes part in return for a degree—I believe that I quote the Minister—of shared risk. The question between us is whether in those circumstances the private sector should be allowed to pick and choose students as it wishes without any control
If that is the Government's approach and if market forces alone are to determine whether or not the private sector takes part, why are the Government putting hard-earned taxpayers' money into subsidies? If the private sector is to come in entirely on its own terms, surely it could do that anyway, yet the Government are putting up public money to encourage that involvement. Surely the Government have a responsibility to ensure that everyone is equally entitled to benefit from that subsidy of public money which has been paid not only by the parents of the young people who will be considered a good risk but also by the parents of those who are not regarded as a good risk by the financial institutions. If the Government are not going to protect the latter, they have no right to use their money.
Lord Henley: The Government are putting money into the scheme by way of the subsidy, but obviously there will be major savings to the PSBR, as the noble Baroness knows full well. The noble Baroness and I do not see eye to eye on the role of the private sector. The Student Loans Company will be able to offer loans to all students. The private sector will also be able to offer loans. Subject to the tenders, we shall allow the private sector institutions to make their own commercial decisions, as is right, as to the granting of their loans. I have made clear to the noble Baroness that if she wants to extend to the private sector a compulsion to accept everyone, against its wishes, she also has to accept that that will cost yet more money. I do not think that the noble Baroness wants that.
Lord Desai: The Minister has been saying that we do not understand choice. That is not the case. If he looks at the experience of the United States of America where there are loans, he will see that there are strict regulations about non-discrimination. We must be careful to ensure that unfairness is not exercised.
The Government are muddled about the free market. They do not have the courage to opt fully for loans for higher education. They considered the matter for eight years, but have now appointed a committee to deliberate on it for another two or three years. Then there is the limited loan scheme, which is a distortion. The Government still say they will not make it fair. That is their choice.
I find it strange that with choice they will not agree to a minimum degree of regulation to ensure fairness. As my noble friend Lady Farrington said, the
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Government are using the tax money of those who will not get loans to subsidise private companies which are cherry picking. I am sorry to say that again. It is late in the day. I shall have to look at all this. I beg leave lo withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Miller of Hendon: I beg to move that the Committee be adjourned until 8.40 p.m., and that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Children Act 1989 (Amendment) (Children's Services Planning) Order 1996
7.40 p.m.
The Parliamentary Under-Secretary of State, Department of Health (Baroness Cumberlege)The Parliamentary Under-Secretary of State, Department of Health (Baroness Cumberlege) rose to move, That the draft order laid before the House on 12th February be approved [10th Report from the Joint Committee].
The noble Baroness said: My Lords, if noble Lords will allow me, I should like to express my concern and sympathy, I feel sure supported by your Lordships, for my noble friend Lady Faithfull who has been taken ill today. She is in hospital, and, I hope, being well looked after by the NHS. I hope that she will make a speedy recovery. The order is a subject close to my noble friend's heart and I know she would have wished to have been here had she been able.
The order is under Section 17(4) of the Children Act 1989. It amends Schedule 2 to the Act to make it mandatory on local authorities to plan children's services; consult a wide range of agencies; publish the resulting plans.
The services referred to are those provided by local authorities under Part III of the Children Act. They are some of the most important. They are for children who are deemed to be "in need". The Act defines children "in need" as those who without local authority services would be "unlikely to achieve or maintain … a reasonable standard of health or development",
or whose
"health or development is likely to be significantly impaired, or further impaired",
or who are disabled.
In other words, those are children who must have that extra bit of help if they are to be given a fair chance in life. These are children whose families need support, or children whose parents—for whatever reason—cannot look after them. They are truly personal services aimed at individual children and families and a challenge for local authorities who have to plan and provide them.
The Children Act has always required local authorities to provide services to children "in need" and to publicise them. But in 1991 Sir William Utting in his report Children in the Public Care recommended that:
"The Secretary of State issue a direction requiring local authorities to produce and publish plans for children's services; the Department of Health to issue guidance on the content of plans and monitor their implementation."
The following year, local authorities were advised that they should produce and publish children's services plans. Two studies subsequently undertaken by the Social Services Inspectorate showed that in 1993 the majority of local authorities were heeding this advice and intended to produce plans; in 1994 many authorities had addressed the task with much thought, thoroughness and creativity, but that the standard varied and the picture was not uniform.
The Audit Commission report Seen But Not Heard published in 1994 represents the second "big push" to establish planning for children's services. It drew attention to the overlap, yet lack of co-ordination, between health, education and social services. It promoted joint planning as a means to make resources go further. The report recommended that the Government should take the lead in raising the status of children's services plans by ensuring that they were joint, mandatory and published.
In response to that call, we announced in June last year that we intended to make an order to make the planning of children's services and the publication of the resulting plans a social services function by amending Part I of Schedule 2 to the Children Act 1989.
A draft circular and guidance were issued for consultation last year. I am happy to be able to report that there was strong support for our proposals from local authority organisations, social services departments and the voluntary sector. Not one voice opposed the proposal.
We are issuing guidance to explain the order and to suggest what local authorities could think about when planning services. It will not be "Section 7" guidance, as we do not want to be prescriptive. We recognise that those plans must meet local needs, solve local problems and reflect local patterns of inter-agency co-operation.
Inter-agency co-operation is vital. The order requires local authorities to consult health and education authorities, NHS trusts, certain voluntary organisations, the police, the probation service and other relevant bodies. This is a wide range. But they have a core common interest—the sound development of children. Children's services planning is about forging alliances between those agencies. The way they work together is crucial for children and families. They will have different perspectives and different priorities, but that core common interest should underpin their willing co-operation in planning children's services.
We are not making inter-agency co-operation mandatory. We know that good partnerships exist, not because legislation demands it, but because all the agencies involved realise that it is the only way to
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deliver good quality, efficient and economic services to children and their families. We want to encourage others to that realisation.
The Government are setting a modest example. The guidance on children's services planning will be issued jointly by the Department of Health and the Department for Education and Employment and will be distributed by the NHS Executive and the Home Office.
The voluntary sector is also recognised as a key player. It has a distinguished history of providing services for children and families and its contribution has always been acknowledged.
While the order specifies consultation with statutory and voluntary agencies, they should not be the only ones involved in the planning process. The Children Act stresses the importance of working with children, parents, family and carers. Children's services are not something "done" to the people who use them. They must be designed to suit children and families and not vice versa. So the guidance encourages local authorities to listen to users, involve them in planning and take their views seriously.
Today people expect to be more involved in the services they receive. Thanks to the Citizen's Charter, there are now, quite rightly, higher expectations of public service. Citizen's Charter principles should underpin children's services planning, as should the principles of the UN Convention on the Rights of the Child, ratified by the UK in 1991.
This order offers a real opportunity for all agencies concerned with children to sit down and plan services which are effective, efficient and meet their needs, and those of their parents and families. I beg to move.
Moved, That the draft order laid before the House on 12th February be approved [10th Report from the Joint Committee].—(Baroness Cumberlege.)
Baroness Jay of Paddington Baroness Jay of Paddington: My Lords, first, I echo the Minister in wishing the noble Baroness, Lady Faithfull, well, and say how sad on we on these Benches were to hear of her sudden illness.
We on these Benches welcome this important amendment to the Children Act. As the Minister has explained, there was wide consultation on the proposals contained in it. We do not intend to be the lone voice opposing them. As she said, it attracted universal support.
The order will provide a secure basis upon which children's services can be jointly planned and executed. In many areas of course the statutory and voluntary agencies which are now explicitly included in the order already work together to provide a co-operative approach to the needs of each child. Their best practice will now become a mandatory requirement for all local authorities, and that is greatly to be welcomed.
We are especially delighted that the Government have decided—perhaps one can say somewhat uncharacteristically—to create a national gold standard, because too often in our view they are content to leave the detailed administration of the social policy entirely

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to local discretion. That (what we see as an abrogation of central responsibility) has often led to unfair discrepancies between services in different places.
It is therefore particularly significant that the Department of Health has decided to take a proactive lead to ensure universal standards and procedures for children's services. We hope very much that the order will produce coherence and equality.
The Government were stimulated to act by the Audit Commission report Seen But Not Heard, as the Minister explained. At the time of that report only one-quarter of the authorities visited had developed a joint approach for planning for children in need. The Audit Commission noted the ambiguity between the roles of professionals and the fact that services were often unfocused on the specific needs of one individual child.
Disturbingly, the report spoke also of a lack of evaluation and stated that there was little information about the impact of the £2 billion a year that is spent on community health and social care for children. Sadly, there have been many tragic cases in recent years where children have been seriously abused or even murdered by members of their families. However, local agencies already knew they were at risk. So often a subsequent inquiry has cited lack of co-ordination between agencies as a primary cause of a child being inadequately protected. Perhaps schools did not keep in touch with social services or health visitors did not report their suspicions to the police. Or a child might be discharged from a casualty department with broken bones and then fall through any follow-up net in the provision of services. Now co-ordination will be obligatory and it is to be hoped there will be fewer disastrous cases to inquire into.
Co-ordination is equally important in considering less extreme circumstances involving children. Problems such as truancy, school exclusions, petty crime and drugs misuse should benefit from the joint approach which will be the result of the order. I am particularly pleased that the order includes voluntary agencies in the consortium approach. Local voluntary sector workers are so often able to gain the confidence of families in trouble, perhaps more quickly than statutory services. The voluntary sector should play a central role in an effective framework of children's services and it is right that they will be automatically included through the new legislation.
In 1994 the Audit Commission stated in summary that the Government could raise the status of joint children's service plans by making them mandatory between social services and health and education authorities and requiring them to be published. At last the Government have acted. We welcome this national approach to strategically planned and co-ordinated services for families and their children in need.
Baroness Cumberlege: My Lords, I welcome support from the noble Baroness. I am not surprised because it echoes the strong support that we have received from local authority associations, individual authorities, voluntary organisations and professional bodies. We believe that the order represents an important step forward for children. We know that
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careful planning in consultation with other agencies can result in a seamless approach to the provision of services. If families can receive the services and he supported at an early stage some of the most drastic interventions, which we believe are so traumatic, may be avoided. I commend the order to the House.
On Question, Motion agreed to.

Juries (Northern Ireland) Order 1996
7.53 p.m.
The Lord Chancellor (Lord Mackay of Clashfern)The Lord Chancellor (Lord Mackay of Clashfern) rose to move, That the draft order laid before the House on 31st January be approved.
The noble and learned Lord said: My Lords, by way of general introduction to the order, I should explain that the statute law governing the procedures for the selection, summoning and empanelling of juries in Northern Ireland is found in a series of measures enacted between 1828 and the present day. This order is primarily directed therefore at consolidation of the several statutory provisions in this area but the opportunity has also been taken to modernise the legislation and to make some adjustments, some of which will bring Northern Ireland into line with England and Wales.
The draft order was subject to the normal public consultation which is part of the procedure for all Northern Ireland Orders in Council made under paragraph 1 of Schedule 1 to the Northern Ireland Act 1974. The value of this consolidation measure, and the contents of the order in general, were broadly welcomed on consultation. Accordingly, I propose to concentrate on explaining those provisions which effect significant alterations to the existing practice whether those amendments are proposed in order to align more closely with England and Wales or to take cognisance of distinctive considerations relevant to jury practice in Northern Ireland, or to take proper account of comments made in the course of consultation.
I turn then to the provisions of the order. Article 3, Article 10(2) and the associated schedules—that is, Schedules 1, 2 and 3—set out the details of those who are eligible to serve, those who should not serve, and those who may serve unless they opt to claim excusal.
The existing law in Northern Ireland recognises only two categories; those who are disqualified from jury service and those who are exempt. In both cases the prohibition on jury service is absolute. That is clearly necessary and justifiable in respect of disqualification. But the provisions on exemption are unduly rigid and their effect is to prevent some persons—such as the holders of specified senior public offices and the caring professions—from serving on a jury even when they would wish to do so. The introduction of a new category of persons, set out in Schedule 3, described as excusable as of right will remove this absolute bar on jury service as regards some of the persons who at the moment cannot serve on a jury in any circumstances. At the same time an absolute and proper prohibition in certain circumstances, such as where there is a connection with

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the administration of justice, is preserved. The lists of those falling into the revised categories are also required of necessity to be reviewed, modernised and rationalised in several respects.
In essence therefore the order re-categorises the structure of jury qualification with the overall purpose and effect of bringing Northern Ireland more closely into line with England and Wales. The new provisions will draw a clear and useful distinction for the first time in Northern Ireland between those who are disqualified because of, for example, the gravity of their criminal record, those who are ineligible, and those who, because of vocation, profession or age may claim excusal from jury service as of right.
During the consultation process a number of issues were raised which are now addressed in these particular articles and schedules. The Criminal Justice and Public Order Act 1994 amended the law on juries in England and Wales. Several consultees drew attention to those amendments and asked that equivalent changes be considered in the context of this order. I have accepted, and this order reflects, that Northern Ireland should be aligned with England and Wales in two further important respects.
First, members of religious societies or orders the tenets or beliefs of which are incompatible with jury service will be entitled to be excused from jury service as of right. Originally this was a recommendation of the Royal Commission on Criminal Justice and was subsequently approved by Parliament for jury service in England and Wales. I believe that your Lordships will agree that those in Northern Ireland with the same conscientious objection should have the same entitlement.
Secondly, the 1994 Act amended the Juries Act 1974 so that in circumstances where a potential juror suffers from some form or degree of physical disability, but is nonetheless capable of acting effectively as a juror, the judge is required to affirm the summons. In the interests of justice, of course, the judge must retain a discretion to discharge the jury summons. Article 11 of the order will make the same provision for Northern Ireland. Again, the emphasis is on the responsibility of the judge to affirm the summons unless he is of a view that the person in question is incapable of acting effectively as a juror.
The order consolidates without amendment the existing law concerning the various types of challenge to service on a jury which may arise in criminal and civil cases. Articles 13 through to 17 deal with these arrangements. In consulting on this specific consolidation the Government have recognised, of course, that there are arguments both for and against the existing arrangements. In the absence of conclusive arguments for change and in the context of well documented support for retention of the existing rights to both peremptory challenge and Crown stand-by, the Government have concluded that there is no compelling reason to interfere with the long established practice at this time. This may be particularly so in the context of a measure which is principally directed at consolidation rather than fundamental review.
Article 21 introduces a new power in Northern Ireland which has been available in England and Wales for some considerable time. At present in Northern Ireland on the death or discharge of a serving juror in a criminal trial the case may proceed only with the written consent of both parties. The existing arrangement has the potential to disrupt trials unnecessarily and is considered unduly inflexible. A valuable improvement is made to existing practice by this article to allow the trial to continue at the discretion of the judge in such circumstances, subject to special arrangements in capital cases.
I turn now to Article 27 which will enable me to prescribe by secondary instrument, subject to negative resolution, the oath taken by jurors. In England and Wales and in Scotland the oath taken by jurors has been reviewed and, as a result, simplified and modernised. The form of oath taken in the rest of the United Kingdom is, I think, recognised as concise, appropriate and intelligible. By comparison the oath used in criminal trials in Northern Ireland remains in its antiquated and somewhat arcane form. The power to prescribe the oath is likely to be used in due course to bring Northern Ireland into line with England and Wales. I think it is fair to say that the need for change to the oath has been widely acknowledged. Given that the modernisation is likely to involve a removal of a specific reference to the sovereign, however, it would be ingenuous for me not to recognise that there may be some who attach what I believe to be an unmerited significance to this aspect of the proposal. The retention of a reference to the sovereign is not thought to be an essential part of the jury process elsewhere in the United Kingdom, and the Government do not see that there can be any reasonable objection to align Northern Ireland in this respect.
Finally, I think I need draw the attention of the House to only one other specific provision of the order. Article 31 brings juries in coroner's inquests within the statutory framework for all other juries. The arrangements for juries in inquests are at present outside the formal scope of the juries legislation in Northern Ireland although in fact the procedures for selection and summoning of juries from the relevant divisional jurors list has been used by the coroners in making arrangements for inquests for a considerable time. Article 30 and Schedule 4 formalise those arrangements.
Although the order is primarily a consolidating instrument, and nonetheless valuable for that, we have taken the opportunity to review some of the present arrangements and to make some sensible adjustments which, although relatively modest, will be beneficial. I commend the order to the House.
Moved, That the draft order laid before the House on 31st January be approved.—(The Lord Chancellor.)
Lord Williams of Mostyn: My Lords, I am most grateful to the noble and learned Lord the Lord Chancellor for outlining the thinking behind the order. I know that he has had stormy waters to navigate recently, which I think he navigated with admirable patience and calm, as always. It is not my intention to be in any way controversial. I simply wish to ask one

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or two questions. I recognise entirely the burden on the noble and learned Lord the Lord Chancellor recently and, if it is thought more suitable, I should be more than happy with a written reply.
The first question derives from Article 15. I understand the retention of challenge for cause of up to 12 jurors to be merely an illustration of what the noble and learned Lord indicated as being special circumstances in Northern Ireland. I quite understand that.
I have a question about Article 21. That allows the sensible procedure available in England and Wales of the continuance of a criminal trial where a juror dies or is discharged for a proper cause by the presiding judge. My question arises in relation to the phraseology in relation to Article 21(2). The exclusion offered there by way of example is:
"On a trial for any offence punishable with death paragraph (1) shall not apply … unless assent to its then applying is given in writing by or on behalf of both the prosecution and the accused or each of the accused".
My dim recollection is that if that is intended to refer to murder, as it does in this country, where the sentence is life imprisonment, that is the occasion when written assent is called for. It may be my misunderstanding of the alternative sentences available in Northern Ireland.
I should have thought that if murder is punishable with life imprisonment in Northern Ireland, Article 21 should be phrased slightly differently. I put forward that suggestion extremely tentatively because I may have an imperfect understanding of the position. But I believe, with some degree of trepidation, that that article may not be worded properly to achieve the desired objective.
I concur with what the noble and learned Lord said about Article 27. There may be some anxieties about altering the form of the oath but I believe that the safeguards provided in that article—namely that a specific order is required subject to annulment by resolution of either House of Parliament—are proper and appropriate.
As regards Article 31, anything which improves the system of coroner's juries in Northern Ireland in my view is a useful advance. Therefore, subject to the particular question relating to Article 21, which may be as a result of my misunderstanding, I welcome the order.
The Lord Chancellor: My Lords, I am grateful to the noble Lord, Lord Williams of Mostyn, for his support for the order and in particular his support for the provisions to which he referred specifically; namely, the continuation of the arrangements for peremptory challenge and the arrangement for bringing coroner's juries within the statutory scheme.
My understanding of Article 21 is that that is the exception appropriate in a trial for treason. That is an offence punishable by death. I believe that that is the only type of offence which remains punishable by death in Northern Ireland. Therefore, this provision would not apply to a trial for murder where the sentence in Northern Ireland, as in England and Wales, is a mandatory life sentence. Nor would it apply to any other trial in which there is the possibility of a discretionary
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life sentence. It is intended to apply to the possibility of a trial for treason. I am glad to say that those are extremely uncommon and the more uncommon they remain the better for all of us.
I am grateful for the reception of the order. In particular, I welcome what the noble Lord said about the jurors' oath. That is the provision which has concerned me most and I particularly welcome his support in that respect.
Lord Williams of Mostyn: My Lords, I am extremely grateful for that elucidation of Article 21(2). But if I understand Article 21(1) correctly that means that in a murder trial, provided that the reduction in the number of jurors is not fewer than nine, the judge may direct the continuation of the trial without the assent of the defendant. I believe that to be different in England and Wales where the written assent of the defendant is required if there is a shortfall. That may be a gap in the order.
The Lord Chancellor: My Lords, with the leave of the House, my understanding of the order is as the noble Lord has just said. I do not recollect exactly the position in relation to England and Wales. I am being referred to the corresponding position for England which states:
"On a trial for any offence punishable with death subsection (1) shall not apply",
and so on. Therefore, the information I have at present suggests that that is the position in England and Wales also. However, in view of the question raised by the noble Lord, I shall check and, if I am wrong about it, I shall write to him. However, my understanding is that the provision to allow the trial to continue at the discretion of the judge so long as the number of jurors is not reduced to fewer than nine applies in every case except where the offence is punishable by death which, as I said, will only be for a crime of treason. That would be a highly exceptional circumstance.
On Question, Motion agreed to.
[The Sitting was suspended from 8.10 to 8.40 p.m.]

Education (Student Loans) Bill
House again in Committee.
Lord Morris of Castle Morris Lord Morris of Castle Morris moved Amendment No. 13:
After Clause 1, insert the following new clause—
ASSESSMENT CRITERIA
(". No subsidy may be paid by the Secretary of State under section 1(1A) of the Education (Student Loans) Act 1990 unless the Secretary of State is satisfied that the person by whom the private sector student loan will be made has ensured that the assessment criteria to be used in assessing applications by eligible students do not include consideration of the applicant's course of study or the institution he attends.").
The noble Lord said: We believe that students should choose their course and their institution on their academic, vocational and individual merits and not because a particular choice would give them a better chance of a private loan with preferential terms. The

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danger in that situation is that it would give rise to all sorts of opportunities for social and academic engineering depending, as it would, on the prejudices, preferences or the simple whim of a bank manager. For example, a bank manager might not like someone studying philosophy. He might consider that that is an unnecessary call upon the nation's resources. He might feel that he does not like lawyers, in which case he would be in remarkably good company. He might even feel that it is a waste of time for someone to be given a loan to study English literature. Similarly, he might feel that Oxford and Cambridge are not the places to be in and that everyone should be supported who is in the London School of Economics.
As we see it, the Clause 1s, again, an anti-cherry-picking device. The DFE's terms of reference for the Dearing inquiry are helpful in that respect saying, as they do, that the committee should have regard to certain principles among them that,
"there should be maximum participation in initial higher education by young and mature students and lifetime learning by adults insofar as this can be shown to be consistent with labour market needs".
Finally, the terms of reference state:
"Arrangements for student support should be equitable and should not distort students' choices inappropriately".
That seems to me to be at the heart of the amendment that we propose. I beg to move.
Lord Addington: The amendment touches on a most important point and one which I am afraid no one in the current job market will be able to judge with any degree of accuracy. We do not know what the demand for, say, physicists or biologists will be in five or 10 years' time. In any event, who is to say that one very good student of English literature or history will not make a considerably better living than a very bad lawyer? If we start to make such judgments—or allow them to be made by someone else—we will be opening up the whole system to abuse. I support the amendment.
Lord Ponsonby of Shulbrede: Perhaps I may inform Members of the Committee that the banks are certainly making such calculations at the present time. When I was taking my post-graduate degree in petroleum engineering, I was constantly harassed by my bank, which was forever offering me more convoluted ways of getting into debt. I suppose that the manager thought I was a good bet. Banks do make those calculations. The concern which the amendment seeks to address is to stop them from doing it even more. I also support the amendment.
8.45 p.m.
Lord Henley: I am not sure that there is much more that I can add to what I said earlier in response to other amendments where, to some extent, we went through very similar arguments. Indeed, I would put forward the same sort of arguments on this matter. I reiterate what I said earlier. I reject the view expressed by the noble Lord, Lord Morris of Castle Morris, about bank managers. It is an honourable profession and one that I am sure will make decisions in the appropriate manner.
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Speaking as a lawyer—and I notice that one or two other lawyers are present in the Chamber—I must say that I rather resent the noble Lord's attack on lawyers. However, I do recognise, as the noble Lord, Lord Addington, put it, that there is a distinction between the very good and highly successful lawyers, of whom at least two are sitting opposite, and those who might or might not have been called to the Bar who one might describe as being not very good lawyers. It is possible that banks might wish to make distinctions on that basis. I should stress that I am thinking from my own personal point of view.
I also note what the noble Lord, Lord Morris of Castle Morris, said about what I shall now call the "Dearing terms of reference". Those matters ought to be considered. As I said, we have agreed to consult and take note of the concerns expressed about the terms of reference; and, indeed, about who should be on the committee. However, I believe that that is a matter for another occasion.
All that I can add to what I said earlier is to say that we have asked prospective private lenders to include in their tenders details of their policies and processes for considering applications. We have also asked for an estimate of what proportion of applicants they might reject. I can tell noble Lords opposite that we shall look very carefully indeed at their responses in evaluation of the tenders. That is something that my right honourable friend and the department will take most seriously. If we are not satisfied, then clearly that would be a factor in our decision on which tenders we ought to accept.
Having said that, I can only underline what I said in response to earlier amendments. The amendment may be well intentioned, but I believe that it could prove to be counterproductive and unnecessary. Therefore, I hope that the noble Lord will not feel it necessary to press the matter on this occasion.
Lord Morris of Castle Morris: I am grateful to the Minister for that reply. However, I should point out to him that I did not leave lawyers alone in my castigation; indeed, I also included my own subject as well as the Minister's. There are people who might even feel that they should discriminate against English literature and who believe that someone was wasting the nation's resources who spent three years looking at Shakespeare and Milton. I would not be among them.
I am relieved to know that the tender document will take the matter seriously into account. Indeed, I must study the document again and see what is said in the 471 grams of "Tender Mark II" in that respect. We have been concerned with the power of the private sector in particular cases, especially banks, to influence the free market of student choice which is what brought the amendment to the fore. However, we have aired the matter and, bearing in mind the fact that we may return to it if we feel that we must at a later stage, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Farrington of Ribbleton Baroness Farrington of Ribbleton moved Amendment No. 14:

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After Clause 1, insert the following new clause—
MEDICAL EXAMINATION OR TESTING
(". No subsidy may be paid by the Secretary of State under section 1(1A) of the Education (Student Loans) Act 1990 unless the Secretary of State is satisfied that the person by whom the private sector student loan will be made will not require any eligible student to undergo a medical examination or medical tests.").
The noble Baroness said: In moving the above amendment I should like to refer to an earlier debate regarding the issue of disability. I have in mind in particular the importance of all students being treated fairly and equally. There are particular circumstances, such as the identification through medical information and examination of a particular genetic predisposition—though not certainty—of specific diseases. I would argue that it is extremely important that students are protected from discrimination arising from the results of medical examinations or medical tests. In passing the Disability Discrimination Act the Government resisted protecting those who might be considered by others to suffer from a disability, although they did not in fact have it. There was a lengthy debate on that point. In these circumstances it is extremely important that conditions attaching to student loans do not become similar to those attaching to private insurance. I refer in particular to the importance of the Government's stated objective to maximise student choice. This particular category of students would not be covered by existing legislation. I beg to move.
Lord Winston: I hope I may add my two penn'orth to the debate. I apologise for not being present when the early amendments were discussed, one of which was in my name. Unfortunately, I was detained at the Hammersmith Hospital. I feel strongly about the amendment. We must recognise that students are particularly prone to certain diseases suffered by young people, for example, lymphatic diseases such as Hodgkin's Disease, leukaemia and other such illnesses, many of which are treatable. I know of two recent cases where, had a diagnosis been made of the incipient stages of the diseases after a medical examination, it is doubtful whether those students would have been supported through university. One particular student who was at Cambridge had a severe form of Hodgkin's Disease and was given a less than 10 per cent. chance of surviving. I am glad to say that he has not only survived but has also played rugby for his college. That is the kind of student who might have been severely disadvantaged as regards obtaining a loan. I am certain he will obtain a good degree. There are a number of areas where institutions which are considering granting loans might ask for medical records to be provided or for medical examinations to be conducted. Quite naturally, we are nervous about that. I ask the Minister to consider the issue carefully.
Lord Henley: I start by saying to the noble Lord, Lord Winston, that his apology was unnecessary. It was explained to me—I think by the noble Lord, Lord Morris of Castle Morris—that the noble Lord was not able to be here earlier. I completely accept that and regret the fact that we were not able to have the benefit
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of his advice on that occasion, but no doubt on other occasions we shall hear more from the noble Lord. I look forward to that.
Again, I do not think there is much I can add to what I have said on earlier occasions. Obviously we believe it is important that private lenders must be allowed to decide which applications they accept and what assessment procedure they use. I made the point earlier that they are obviously using their own money, in the main, to do this and they are the ones taking the risk.
As regards disabled students, it was right that the noble Baroness, Lady Farrington, should raise the question, particularly in the light of the fact that the Disability Discrimination Act reached the statute book only last year. Our contracts with the private lenders—as I think I made clear earlier in response to the noble Baroness, Lady Lockwood, and the noble Lord, Lord Desai—will make it a condition that they do not commit any discrimination outlawed by the Disability Discrimination Act. If they do, they will he in breach both of the law and of our contracts. Sanctions are obviously available to deal with any such action.
Finally, as I said on the previous amendment, we have asked private lenders to include in their tenders details of their policies and processes for considering applications. We have also asked for an estimate of what proportion of applicants they might reject. We shall look carefully at their responses in evaluating the tenders. Clearly, if we are not satisfied, particularly in the light of what the noble Lord, Lord Winston, said, that that will be a major factor in our decision on which tenders to accept. I hope that with those assurances the noble Baroness will feel able to withdraw her amendment.
Baroness Farrington of Ribbleton: I thank the Minister for that reply. I would ask that in considering this area particular attention is paid to the issue of those potential students who would not be covered by the disability discrimination measures although the grounds for their rejection might rest on assumptions about their medical condition. We look forward to hearing the Minister's comments on that aspect.
Lord Henley: I would say, obviously without prejudice, that I shall consider the latter point that the noble Baroness made in her earlier remarks.
Baroness Farrington of Ribbleton: I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Williams of Mostyn Lord Williams of Mostyn moved Amendment No. 15:
After Clause 1, insert the following new clause—
VOCATIONAL COURSES
(". No subsidy may be paid by the Secretary of State under section 1(1A) of the Education (Student Loans) Act 1990 to any person by whom private sector student loans may be made unless that person has indicated a willingness to make private sector student loans to any student undertaking a course of study leading to a vocational qualification.").
The noble Lord said: This amendment is not dissimilar in feeling and scope to that moved earlier by the noble Lord, Lord Walton of Detchant, which stood

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in his name and that of the noble Lord, Lord Winston. I have to declare an interest in that I was chairman of the Bar Council in 1992 and therefore I am still interested in the education of those who wish to become barristers. I have no interest in the Law Society although some of my best friends are solicitors.
The real problem is that no one can become a barrister or solicitor without at least three years' study to achieve a first degree—normally in law—and then, in the case of the Bar, one year at Bar school and one year in pupillage, which is a long period of time for a young person to support him or herself. It is helpful to bear in mind what the Lord Chancellor's Advisory Committee on Legal Education and Conduct stated recently,
"Unavailability of awards is a direct threat to … progress [in making law a career as open as possible to people with diverse backgrounds]. It would be wrong to move towards a situation in which entry to the legal profession would be the preserve of the wealthy".
Local education authority provision of discretionary awards has fallen from 39 per cent. of authorities making such awards in 1992, to 19 per cent. in 1993, and to as low as 15 per cent. in 1994. Of those on the Bar vocational course—the Bar school year—three quarters are in debt, and the average level of debt is £6,000. The Bar has notoriously been a profession for middle class, white males. We have done a lot over the past 10 years to make sure that women entered the profession in roughly their proportion in society—about 49 per cent.
Lord Henley:52 per cent.
Lord Williams of Mostyn: I said roughly 49 per cent. To be perfect it should have been 52 per cent. I am conscious that we fell short by 3 per cent. However, I am sure that many a government would be pleased if they only fell short of their usual aspirations by 3 per cent. It should have been a little higher. We did better as regards ethnic minorities. Those from ethnic minority backgrounds came to the Bar in much higher proportions than the equivalent component in that relevant age group in ethnic minority communities. I am afraid that all that is now starting to fall away. The numbers of women entering the profession are starting to decline, as are the numbers from ethnic minorities.
It is a great shame, therefore, if there is not to be a possibility of loans, which are that and no more. I put forward the amendment in the hope that I shall have from the Minister a similar response to that which he was able to give to the noble Lord, Lord Walton of Detchant; in other words, that the problem is recognised and that a kindly eye will be put on the difficulties which are substantial for those who do not come from monied backgrounds, who do not have scholarships or other awards, and whose avenue to local authority discretionary awards has been closed. Nevertheless in many cases they are the brightest, best and most committed students who have most to offer to the legal profession, and therefore to the community as a whole. I tabled the amendment on that basis, recognising that I
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cannot expect more than possibly a fair wind from the Minister in the same manner as was given to the noble Lord, Lord Walton of Detchant. I beg to move.
Lord Borrie: It will not surprise the Minister to hear that I wish to support the noble Lord, Lord Williams of Mostyn. I was for some years chairman of my Inn scholarship committee and a member of the Inns of Court general trust funds committee. I saw many indications of tremendous financial hardship. I appreciated the dedication of the students, the urgent and earnest desire to qualify to be a barrister. But I realise that for all those who were so dedicated there must be many who were deterred and there must be many among those who received what financial help we were able to give who fell by the wayside because, most definitely, of the unwillingness of the local authorities to provide discretionary grants. This is an extremely serious problem if we want to achieve the objective of getting students from all walks of life to undertake vocational training.
9 p.m.
Lord Henley: With some diffidence, following two such eminent lawyers, I should obviously declare my interest in law even if I have never practised. When I first saw this amendment I, and those who advised me in these matters, experienced some degree of confusion about the amendment and I suspect the amendment is drafted in a manner which is not entirely satisfactory. That is my first point.
I think the noble Lord, Lord Williams, would accept there are problems of definition—for example, what on earth does a vocational qualification mean—and those matters would have to be addressed. His elucidation of what he was aiming at was useful and I am not sure whether it is a matter for this Bill, as I explained to the noble Lord, Lord Walton of Detchant, when I dealt with his amendment. The best thing I could say at this moment totally without prejudice would be that I am prepared to look at these concerns, but I do not think they are necessarily concerns of this Bill. They might be matters that could be addressed in some other way, but they might be matters that could have significant cost to the taxpayer by means of extending student loans on to other classes which are not currently covered.
Having said that, I would look totally without prejudice at the ideas behind what the noble Lord, Lord Williams, is putting forward, and I hope that he will feel able to withdraw his amendment. I am not hopeful that any solution can be produced in regard to this Bill. It might be a matter for regulation, as I explained to those speaking for the medical professions, so it also might be a matter where the concerns about expenditure again precluded making any changes of the sort that the noble Lord, Lord Williams, wanted. Having said that, I hope the noble Lord will feel able to withdraw his amendment.
Lord Williams of Mostyn: That is a most generous and helpful response for which I am personally most grateful. Speeches get shorter and responses more accommodating as time passes. I beg leave to withdraw.

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Amendment, by leave, withdrawn.
Clauses 2 and 3 agreed to.
Lord Addington Lord Addington moved Amendment No. 16:
After Clause 3, insert the following new clause—
MONITORING
(". Within six months of each anniversary of the granting of the first private sector student loan, the Secretary of State shall lay before both Houses of Parliament a report on the grant of private sector student loans by sex, age, ethnic origin, disability, institution, course of study and parental income of applicants and showing whether loans were granted or refused and the reasons given and comparing the same with similar information for public sector student loans.").
The noble Lord said: Amendments Nos. 16 and 17 are grouped together and I shall speak to them together. Amendment No. 16 is basically an instrument of monitoring:
"the Secretary of State shall lay before both Houses of Parliament a report on the grant of private sector student loans [on groupings of] sex, age, ethnic origin, disability, institution, course of study",
etc. Basically that sort of monitoring is very important when we come to look at how well the system is dealing with many of the problems we have just raised in debates on amendments within this Committee stage. On virtually all the matters that are being addressed to him, the Minister has said that the commercial realities we are dealing with either are being confronted here, or are within the scope of the Bill. Whatever is happening should be monitored. If we have this sort of information we will know who is right should this Bill ever come into effect. Surely that is something that should at least he taken on board in some way by the Government.
The second amendment says there should be an annual review of how the scheme works. I would suggest that, taken as a package, these two amendments provide the necessary instruments for any government to look at how the scheme is working and also provide the necessary information to find out if it is going wrong and where it is going wrong. I beg to move.
Lord Morris of Castle Morris: These amendments are a weakened form of the amendments championed so splendidly by the knight on the noble charger, the noble Lord, Lord Peyton of Yeovil, and the noble Baroness, Lady Park of Monmouth. It asks for no more than a report with an analysis of the year's work in the matter of the private sector loans. It would, as the noble, Lord Addington, said, be useful if nothing else in that it would solve the question of the ideological debate which divides the two sides of this Chamber, because this report would enable us all to quantify the situation and find out whether there is any evidence of discrimination on any of the grounds that we have been discussing tonight. A winner would emerge, and if for no other reason that would be a very good reason for backing these two amendments. It is vital in any case that proper monitoring and auditing takes place because the amendments that we have put forward are evidence of the misuse, mistakes, malfeasances and distortions which could take place in a Bill so widely drawn as this one. It will make the operation public and so go some way to satisfy the real worries of many on both, nay, on all sides of the Chamber.
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The usual clichés come to mind and are nonetheless true for being common: the price of liberty is eternal vigilance and justice must not only be done but must be seen to be done. The review suggested here would be even better, in my view, than the annual report of the Department for Education and Employment. This amendment would permit an illumination of both Houses of Parliament in the words of my countryman, Dylan Thomas, when he wrote,
"Light breaks where no sun shines".
I am happy to support these amendments.
Baroness Farrington of Ribbleton: In speaking in support of these amendments I would like to add to the points already made the importance of the information being sought and required from the very beginning. It is often the case that when information is required about a project or scheme, or the way in which a particular law works, it is said at a later stage that is very difficult to acquire the necessary information because the information that is available is not set out in the required form. By agreeing the amendments it would be possible for the Government to ensure, at no additional cost, through changing the compilation of information that the information was readily to hand.
Secondly, should the Bill become an Act, the information would be invaluable to those who were in a position to decide what to do about the recommendations of the committee of inquiry following its report in 1997. The information would be extremely useful in those circumstances.
Lord Henley: I appreciate that the amendments are, as the noble Lord, Lord Morris of Castle Morris, put it, a weakened form of the amendments of my noble friend Lord Peyton. The noble Lord will have noted the assurances that I tried to give my noble friend before he, sadly, felt it necessary to test the opinion of the Committee. I can assure the noble Lord that they are commitments that I shall continue to consider. Even so, I feel that the amendments would result in further overregulation and would hamper the effectiveness of the private sector.
Having said that, I appreciate and share the anxiety of Members of the Committee to ensure that the new student loans scheme will operate efficiently and effectively and will offer value for money to the taxpayer. It is a concern which, dare I say, all of us in this Chamber share. I also share their anxiety that, to ensure that that happens, the operation of the scheme is subject to parliamentary scrutiny.
As I made clear earlier in response to my noble friend, we shall monitor closely the performance of the new scheme. Once the scheme is up and running the department's spending on private sector loans will be included in the appropriation accounts and the department's annual report. I appreciate that the noble Lord, Lord Morris of Castle Morris, and my noble friend Lord Peyton of Yeovil are not the greatest fans of my department's annual report. I can assure them that it makes very good reading. I shall ensure that a copy is

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sent post-haste to the noble Lord whensoever the next one is due. If he would like a copy of last year's report I shall ensure that he receives one.
Lord Morris of Castle Morris: I am grateful to the noble Lord for giving way. I cannot but say that I shall keep it closely by my bedside, treasure it and read it with great care.
Lord Henley: I am more than grateful for that commitment from the noble Lord to take what we publish and produce so seriously. I hope that he will find that the standard of the written English in the report of the Department for Education and Employment meets with his approval and the approval of other noble and, dare I say, learned Lords, although they are not learned in the law.
Perhaps I may say a little about what the report will contain in relation to our concerns this evening. We envisage that the report will contain details of the amount of annual subsidy paid in order to ensure favourable terms for students, the number of subsidised loans made annually and the total sums involved, the level of public payments in respect of the Government's share of the risk and, in total for private sector loans, the number of loans in deferment and default. We believe that from that information the overall impact in public expenditure terms will be clearly visible.
I add that the department is audited annually by the NAO. That would include spending on both public and private sector loans.
I see that the noble Lord, Lord Winston, wishes to intervene.
Lord Winston: Can the Minister say whether it is also the intention to monitor the faculty or academic discipline of the students in the monitoring process? It seems to me to be important to do that also.
Lord Henley: That is not something that we intend to do. That point relates to the amendment which we debated earlier. All I can say is that I shall give some consideration to what the noble Lord suggests, but it is not part of our plans at the moment. I do not believe that it would necessarily be relevant.
The department will also be able to examine the private lenders' operation of subsidised student loans to ensure that government subsidies are correctly applied. The NAO will also have a right of access to the private lenders' operation of subsidised private sector loans.
I believe, therefore, that the proposed new clauses are unnecessary. I hope that the assurance that I have given about the degree of information that we shall make available will be sufficient. I hope that the noble Lord will feel able to withdraw his amendment.
Baroness Lockwood: I am not sure whether the noble Lord meant by his final remarks that the department will monitor the number of applications for loans that are not granted. Will that be included in the monitoring? That would give an indication in relation to the anxiety that some of us have about the possibility of discrimination in the allocation of loans.
9.15 p.m.
Lord Henley: I believe that that is similar to the point raised by the noble Lord, Lord Winston. I hope that what I said to the noble Lord—that we have no current plan so to do but that I would consider the point the noble Lord put to me—is sufficient for the noble Baroness. I shall take on board what she said and consider it, using legal jargon, without prejudice.
Baroness Farrington of Ribbleton: Does the Minister agree that for the Government to be certain that discrimination on grounds of gender or race does not exist it is necessary for the information to be available in order to justify decisions taken? If there is discrimination against women or minority ethnic group applicants, it is necessary for the Government to have such information to ensure that the money is being spent in pursuit of the Government's objective: maximum choice for individual students.
Lord Henley: I note what the noble Baroness said. Again, I can only refer to what I said in response to earlier interventions. Obviously there is always the danger that the amount of information that one is asked to collect will impose overburdensome conditions on individual institutions. As I said, I am prepared to consider the issue but at this stage I am not prepared to respond in the manner in which the noble Baroness wishes me to respond. It is something that I shall consider.
Lord Winston: I am sorry to press the point. I wish to clarify what I see as a potential problem. I hope that he will agree with me that this situation might arise. Vocational courses such as medicine and law might be better funded in the private sector than, let us say, arts students. That is why I was anxious that there should be some recognition that the Government consider the funding of the various courses to ensure that we do not underfund arts students simply because they may not command such a big salary when they leave university.
I hope that the Minister will bear that issue in mind in his deliberations.
Lord Henley: In seeking yet further clarification, the noble Lord reminds me of my noble friend Lord Peyton who repeatedly sought clarification from me. I do not think that I can add anything further to what I said previously. I take note of what he said.
Lord Addington: Much of the debate has centred on Amendment No. 16. Virtually everyone is agreed that the information sought in the amendment might be useful. Perhaps I may ask the Minister one further question. Could there be a subsection to this great departmental report which includes the vast number of subjects? At least we would have access to that information if we do not call for an annual review. One would then have a vehicle for addressing most of the concerns expressed during this debate and throughout the day. Will the Minister put this suggestion to his department? It might put our minds at rest, at least for the time being.
Lord Henley: I am incapable of putting noble Lords' minds at rest on this issue. That is exactly what I thought

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that I had done. I said that I would consider the concerns expressed. However, I stressed that I would consider them without prejudice. What views I come to and what views colleagues in the department come to is another matter.
Lord Addington: At this late stage in the Committee, at least that is something to be going on with. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 17 not moved.]
Clause 4 agreed to.
Lord Morris of Castle Morris Lord Morris of Castle Morris moved Amendment No. 18:
After Clause 4, insert the following new clause—
COMMENCEMENT
(".—(1) This Act shall come into force on such day as the Secretary of State may by order made by statutory instrument appoint.
(2) No order may be made under subsection (1) less than six months after the final report of the Committee of Inquiry into Higher Education has been published.").
The noble Lord said: The purpose of the amendment is to put on record my strongly held view that the whole question which the Bill addresses should be put on hold because of the new circumstances which obtain. It should not be rushed into action or activated prematurely. We should give time for proper consideration and reflection to take place in the entirely new circumstances which have come to obtain since the initial preparation of the Bill.
I refer to the wise decision which has been widely approved to call in Sir Ron Dearing and ask him to report not on student funding but on the whole spectrum of higher education—to do another Robbins Report. The reticulation of one part of higher education to another is sensitive, difficult and important. It would be wise, in my view and that of all of us on these Benches, to pause rather than rush ahead. As the Old Testament writer of Ecclesiastes says in Chapter 3 verse 1:
"for everything there is a season, and a time for every matter under heaven".
I propose that, whatever the merits or faults of the system for private sector student loans, the time to implement this is not now. The time is assuredly not ripe for it. I say that for two reasons. First, the terms of reference for Sir Ron Dearing's committee ask it to take account of context. That includes:
"demand for higher education from suitably qualified applicants of all ages is growing as more people achieve qualifications at level 3 and more of those who already have higher level qualifications look to upgrade or update them".
The Bill makes no provision for older students, part-time students, postgraduate students or FE students. To pass the Bill now and pay subsidies before Dearing reports on matters like that which are bound to be his concern cannot but muddy the waters, discriminate where he has been tasked to be inclusive and disable all the calculations of numbers and resources which he will need to make.
Secondly, it may well be that the "arrangements for student support" mentioned in the terms of reference will go well beyond the present framework and be far more radical than anything envisaged in the Bill. I look forward to something much more radical being considered. Dearing may espouse the idea of student support totally by loan. We must not rule that out. He may well prefer the Australian income-contingent loan system to anything currently on offer here. He may recommend a voucher system for all higher education. That would mean that the whole system now obtaining would have to be unpicked.
Surely it would be more rational, more economical, more prudent to pass the Bill, if we must, as a possible option, but delay its implementation until the Dearing committee has had time and unfettered freedom to think out the best way forward. It may well be a way which none of us has yet thought of. For those reasons I commend the masterly policy of the Roman general, Quintus Fabius Maximus, who, noble Lords opposite will recall, died in 203 BC. He was nicknamed "Cunctator", "the delayer". He defeated Hannibal by the simple process of avoiding any direct engagement with him; by not being there when Hannibal and his army appeared and wearing him out by prudent procrastination. Sir Ron Dearing may well bless us for doing likewise. I beg to move.
Lord Addington: Perhaps it would be convenient for the Committee to consider Amendment No. 19 with Amendment No. 18 since they are both about commencement. It might push things along and at least I could raise the points involved in Amendment No. 19.
Before we consider commencement, surely we should have consideration of the views of the people who will be eligible to become students and go into the system. That would be appropriate. Further, the case of the higher education institutions should be taken into account. It makes sense to discuss both amendments on the commencement of the scheme and the institutions of higher education now.
Baroness Farrington of Ribbleton: I support this and the allied amendment. Will the Minister explain how, in terms of the best possible use of public finance, the Government—particularly in the light of their own delay in bringing into effect the system proposed in the Bill—justify the higher level of subsidy that would be required in the light of what is potentially the comparatively short life of the new system? It cannot appeal to responsible and serious private sector finance institutions to embark at this juncture on the high degree of cost involved in setting up what is for them a totally new system so short a time in advance of the report of the Dearing committee.
It is quite clear from the exact wording that it would be open to the Secretary of State at that time to enact this legislation no more than six months after the final report of the committee of inquiry. It would leave an opportunity for the government of the day to consider the report without being fettered by a combination of commitment to high administrative start-up costs and

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penalty clauses which could act against the interests of the very harmony that the Government have created all round in setting up the committee of inquiry.
Lord Henley: I am more than happy to take on board Amendment No. 19, as the noble Lord, Lord Addington, suggested. I hope that will slightly speed up the process. As the noble Lord knows, as does the noble Lord, Lord Morris of Castle Morris, I am a great grouper of amendments. The more I can group together, the happier I am.
I note the remarks of the noble Lord, Lord Morris of Castle Morris, about Dearing. As I understand him, we are not here to discuss Dearing this evening; and Dearing may or may not recommend this or that in relation to student support and the funding of higher education. We should consider that at the time when he reports some time next year.
The noble Lord raised questions of military history. As Ministers we are asked to respond on a great many matters very often covering departments other than our own. However, on this one occasion I shall not follow him into wider debates on the history of the Punic Wars since on that subject my ignorance is fairly extensive.
If I understood the noble Lord correctly, he made a complaint that this Act does not address the question—and these might be questions that Dearing ought to address—of further education students, part-time students or whatever. I agree; it does not. But the important point the noble Lord must remember is that the 1990 Act does just that. By means of regulations under that Act, we could extend provisions for student loans to part-time students and further education students. However, I believe the noble Lord would accept that, were we to do so, it would have major implications for public expenditure. I simply make the point en passant.
The amendment as drafted, and for that matter the amendment in the name of the noble Lord, Lord Tope, to which the noble Lord, Lord Addington, referred, would further unnecessarily delay the benefits of the Bill which would be provided both to the students themselves and to the taxpayer. That would not be justified.
As I believe I made clear at Second Reading and on other occasions—and points were made by my noble friend the Leader of the House in response to a request from the Leader of the Opposition—the Bill represents only a limited change to existing legislation. It would simply allow the Secretary of State to pay subsidies to private sector lenders. As the Bill is enabling legislation, a date for the coming into effect of its provisions is not required. They should come into effect immediately the Bill comes into force. Any further delay would not be fair.
The national committee of inquiry into higher education will need to take into account our intention to introduce the private financing of loans. I do not believe there is a case for delaying the Bill while the inquiry proceeds. The inquiry's conclusions will inevitably take some time to implement, particularly if legislation is
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required. I do not believe that it would be in the students' interests to delay implementation of the Bill until that time.
The inquiry has been asked to take into account in its deliberations our intention to introduce private finance into the loans scheme. It is a very small change to the existing scheme which first introduced those loans in 1990. We are merely changing from a singular lender to a plurality of lenders. Further, we have not signed any contracts yet. I expect that the inquiry will be a matter of concern to private lenders and that before any contracts are signed there will be detailed discussions with them. Whatever happens, we shall meet our obligations in full.
I turn to the points that have been raised by the noble Lord, Lord Addington. I can give him the assurance that officials in my department have already met representatives of the Committee of Vice-Chancellors and Principals, as have Ministers. They have met the NUS and the Student Loans Company to discuss the Bill's provisions. We stand ready to discuss our proposals with any interested party. As always, my door will stand open to anyone who wants to make submissions to me. More importantly, my honourable friend Mr. Forth, the Minister within the Department who has responsibility for higher education, will also be prepared to meet any relevant bodies. He will certainly consider carefully any representations that are made to him. I do not believe that there is a need for a statutory requirement so to do, nor that the Bill should be delayed until such statutory requirement is met. But I can give the assurance that there will be appropriate discussions as and when necessary.
I hope that that satisfies both the noble Lord, Lord Morris, and the noble Lord, Lord Addington, and that they will feel able on this occasion to withdraw their amendments.
Lord Morris of Castle Morris: I am grateful to the Minister for that very full reply. I hear what he says. I am not surprised, and I am not delighted. I feel rather like Pontius Pilate when asked why he had put the inscription at the top of the cross of our Saviour. He replied:
"Quod scripsi, scripsi",
or,
"What I have written, I have written".
What I have said, I have said. In years to come I may look back at this volume of Hansard and will be able to say, like John of Gaunt, quietly to my grandchildren,
"Methinks I was a prophet new inspired".
I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 19 not moved.]
The Schedule [Consequential Amendments]:
Lord Addington Lord Addington moved Amendment No. 20:
Page 3, line 14, at end insert—
("( ) In subsection (2)(a) after "attending" insert "full or part time".").
The noble Lord said: Amendment No. 20 covers ground that was hinted at when we discussed mature students over the age of 50. In 1994/95, 28 per cent. of those who took on higher education were part-time students. Part-time students along with older students have suffered rather badly under the loan system. The Government have withdrawn many of their support schemes for the older student. The part-time student has always had a rather rough deal. The amendment is an attempt to bring those students into the main thrust of higher education, for the simple reason that almost inevitably they will become an increasing part of the higher education student base. This will be beneficial. Whatever may be said about the re-skilling of our population or taking advantage of educational benefits, surely part-time students are those at the very heart of it. They are the people who respond on a part-time basis to many of the educational needs which they and society have. I hope that the Minister will be able to give a favourable response to the amendment. I beg to move.
Lord Morris of Castle Morris: I wish to support the amendment. As we have said from both sides of the Committee, part-time students are not currently eligible for student grants or student loans. Funding remains geared to full-time undergraduates even though the composition of the student body has altered so radically in recent years.
It is perfectly true, as the Minister has just reminded us, that under the 1990 Act loans could be extended to cover part-time students, mature students or any other type of students. The point is that it has not been so extended and there is no prospect of them being funded in this way in the foreseeable future. The reason is perfectly obvious. The cost would be inordinately high—the cost would be impossibly high—which is why, in my view, the entire issue of who should be funded and who should not and who should be eligible for loans and who should not should not be decided by this small and rather insignificant Bill but should be left to Sir Ron Dearing.
Baroness Lockwood: As one who has always supported the idea of bringing part-time students into the whole area of student support, I should like to support this amendment. In doing so I wish to make just two points. The first concerns discrimination, which we have discussed at length over various amendments. The fact that we exclude part-time students from student loans could constitute discrimination under the Sex Discrimination Act. I am rather surprised that we have not had any test cases under the Act. I flag that up as a warning to the Government that other government legislation has been challenged in the courts and this Bill is certainly open to challenge.
Secondly, I should have thought that the amendment is in line with the Government's policy of supporting the extension of part-time study as part-time students are much less expensive than full-time students. The Minister said in response to the previous debate that to include part-time students under the student loans scheme operated by the Student Loans Company could involve the Government in considerable expenditure. But that point will not apply to the same extent under
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the private loans scheme. Nevertheless, one has to balance that with the savings that could he made if more people applied to become part-time students rather than full-time students as part-time students are responsible for all of their expenditure. In support of the Government's policy I hope that the Minister will look favourably on this amendment.
Lord Winston: This problem is particularly important in the field of medicine and biological and nursing sciences. In my own unit we mix all three of those disciplines. We have scientists working side by side with medics in training and with nurses. It is quite common for us to see applications for part-time students to go for M.Sc. courses or courses of that kind. Those students have great hardship in trying to apply for those courses; particularly, a nurse who wants to better herself but who is paid a limited salary or is perhaps working on an attachment in a unit. There is a great need to help these part-time students. The amendment would seem to promulgate the Government's aims and would be a helpful way of keeping people in some employment while they better themselves and improve their qualifications. I strongly support the amendment.
Lord Henley: I start by repeating what I said earlier and what the noble Lord, Lord Morris of Castle Morris, stressed, and I thank him for it. The 1990 Act, as amended by the Bill, as drafted, does not exclude part-time students from the loan scheme. Through regulations in the Act we can extend the scheme to part-time students and a number of others that I have mentioned.
I believe that it was the noble Lord, Lord Addington, who stressed that the composition of the student body has changed quite dramatically over the years. First, we have seen a dramatic growth in higher education and, secondly, a growth in the number of part-time students. It is that growth and change to higher education that is one of the main reasons why we instituted Dearing and why we received support from the party opposite, if not from the party of the noble Lord, Lord Addington, for the committee of inquiry under Sir Ron.
I was somewhat surprised by the opening remarks of the noble Lord, Lord Morris of Castle Morris. He said, if I understood him correctly, that he supported the amendment. He quite rightly stressed that the costs would be inordinately high. I have no doubt that he checked that with his shadow Treasury colleagues in another place. I am sure that they would be very careful about any assurance that he gave about public expenditure.
Lord Morris of Castle Morris: Not at all. I have not consulted my colleagues at all. I simply believed what the Minister himself told me.
Lord Henley: I am absolutely fascinated that on a fundamental matter of this sort there is a not a degree of collective agreement in the party opposite. The noble Lord has accepted that the cost would be inordinately high. Depending on definitions, the cost could be something like £600 million. It is for that reason, and for the reason that the noble Lord, Lord Morris of Castle

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Morris, gave, that we believe these matters should be left to the Dearing committee of inquiry. That is a matter that can he addressed. It is not a matter for this Bill, but one that can be addressed, should there be a major problem, by the 1990 Act.
I end by saying that I noted what the noble Baroness, Lady Lockwood, had to say. Having served in a number of departments which have been on the receiving end of judgments in various courts, I note with trepidation what she had to say about government legislation being challenged on occasions in those courts. If we feel that our case is right we shall continue to resist such challenges as far as is possible within the law. I am sure that we have a perfectly good case. As regards this Bill, I do not believe that there is a case for extending eligibility to part-time students. It is definitely a matter that should be left to Sir Ron Dearing's committee of inquiry.
Lord Addington: I thank Members of the Committee on the Labour Benches who have given rather unexpected support on this matter. It was more than welcome. I expected the Minister's reply. The fact that the scheme may cost money does not mean that it is not necessary. The Dearing report seems to hang very heavily over every sentence that has been uttered in this debate. It has been suggested on more than one occasion—
Lord Henley: For the sake of the record and before the noble Lord seeks to withdraw his amendment, which I expect he is about to do, perhaps I may put matters straight on one thing. I referred both to FE students and part-time students. The 1990 Act allows the possibility of extending the provision to part-time students. It does not give us the power to extend it to FE students.
Lord Addington: I had remembered that and was about to say that it was a pity that further education could not be brought within the scope of the scheme. But that matter is for another day. As I said before, the Dearing report appears to hang heavily over what we are doing here. Although all this may very well be changed soon, it is right that the subject should be aired. I withdraw the amendment for at least this stage of the Bill.
Amendment, by leave, withdrawn.
[Amendment No. 21 not moved.]
Lord Henley Lord Henley moved Amendment No. 22:
Page 3, line 22, leave out from beginning to ("and") in line 26.
The noble Lord said: I now come to the Government's amendments. This is a small technical amendment. We judge it necessary to implement fully our policy to limit the number of loans that may be taken out by a student in one year. Student loans are offered under generous terms. Obviously, it is necessary to limit the amount of public money spent on them. We believe the fairest and simplest way to do so is to restrict students to one per year. Regulations under the Education (Student Loans) Act 1990 do so for loans
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taken out with the Student Loans Company. We intend that the position should be the same when private loans are available.
The Bill therefore contains in paragraph 3(2)(b) of the schedule a power to limit public loans where an applicant already has a private one. In turn, our contracts with the private lenders would have limited private loans where a public one already existed.
We have reflected further on this since the issue was raised in another place. Our objective in making private loans available is to extend choice and competition. Inevitably, this means that students may well make frequent moves between lenders year by year.
In those circumstances, it is important that our policy of one subsidised loan per year is fully and easily implemented. We have therefore decided to simplify the arrangements. This amendment will delete the regulation-making power in paragraph 3(2)(b) of the schedule. Instead, the general regulation-making power in Section 1(2)(b) of the 1990 Act will be used to limit the number of loans, whether public or private. It is sensible that the number of loans be limited in this way. It is fair to students. It is fair to the taxpayer. The amendment makes our objective more secure. I hope the Committee will support me in this amendment. I beg to move.
9.45 p.m.
Lord Morris of Castle Morris: I was interested in this amendment, not least because it took me some time to understand what was going on. I think that I now understand and my understanding accords, as far as I can see, with what the Minister has just said. It is a small, technical amendment. It puts me in mind of that other phrase which is well known to lawyers, de minimis non curat lex—the law does not concern itself with trifles; except in this case it does.
As the Minister said, Amendment No. 22 covers the question of student eligibility. Government policy is that students should have only one subsidised loan, public or private, per year. I concede that now because it is necessary to control spending for fairness and to increase administrative simplicity. In fact, we on these Benches are not quite as inflexible as noble Lords opposite occasionally feel moved to believe.
I confess that we began consideration of this Bill by being rather sceptical and asking, "Why shouldn't students have as many loans as they want?" We think that we are less sceptical now than we were a few weeks ago. I note that the Government too have since reflected on the complex situation which could arise with students switching from one loan provider to another year by year. I am not sure that they would because I do not really see that there is still very much to chose between the one and the other, but people do flirt and change their relationships, especially earlier in life.
The Minister went on to say that the amendment will delete the specific regulation-making powers in the schedule and that the policy would then be implemented for public and private loans through the existing general regulation-making power in Section 1(2)(b) of the 1990

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Act. As I understand it, that simply means that the Government are not making a new regulation now when the powers that it would confer are already available.
If I am right in that analysis, it is a tidy little amendment which makes no difference to anybody very much except to the parliamentary draftsman, but it is important that we should satisfy the parliamentary draftsman's rage for tidiness. I think that I can speak on behalf of every student—part-time, full-time, undergraduate, postgraduate—when I say that they will be remarkably unimpressed.
Lord Henley: If that was a welcome for the amendment, I take it in the spirit in which it was given and thank the noble Lord.
On Question, amendment agreed to.
Lord Henley Lord Henley moved Amendment No. 23:
Page 3, line 30, leave out ("2(1)") and insert ("2—
a) in sub-paragraph (1)").
The noble Lord said: I shall speak also to Amendment No. 24. With these two amendments, as with the previous one, I wrote to the noble Lords, Lord Morris and Lord Tope, to explain the purpose behind the amendments.
Currently, higher education institutions play an important part in certifying their students' eligibility for loans from the Student Loans Company. In return the SLC pays a fee for each certificate of eligibility. Our intention is that that should continue.
HEIs will also play a role in providing information on their students' eligibility for private sector loans. Our intention is that they should receive payment for whatever work they do. A number of concerns were expressed during debate in another place over the eligibility work HEIs have to do. One concern was that there was no specific provision for payments for eligibility work on private loan applications. These amendments would remove that concern.
Paragraph 3 of the schedule to the Bill would amend Schedule 2 to the 1990 Act. In doing so, it would provide that regulations requiring work on eligibility by HEIs apply to private loans as well as public ones. This amendment would provide that payments can be made to HEIs in relation to work on all loans. Concern has been expressed about the likely volume of HEI work on private loan eligibility and about the level of the payments for that work. I hope that I can reassure the Committee on those points as well.
This Bill, as we know, is about providing a better service for the student consumers. One improvement will be in the availability of a rapid and efficient over-the-counter service through the private lenders' branch networks. To deliver that, the private lenders will probably want to take responsibility for eligibility checking. The invitation to tender documents encourage the private lenders to do so. While the arrangements will he a matter for them, we envisage that in the large majority of cases they will deal directly with the students and no separate work will be required of the HEIs. In a small number of more complex cases they may need to involve the HEIs. But the intention is that
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it would he for the HEIs and the private lenders to negotiate the terms of that arrangement, including the level of fee which the private lender would have to pay.
However, it is possible that in some cases HEIs may be required by regulation to certify eligibility, and in those cases payment would be provided for in the relevant regulations. It is clear from that that the likely approach on eligibility checking for private loans will lead to a reduced burden on HEIs. The amendment addresses a reasonable concern put to us. I hope the Committee will support it on that basis and in the light of assurances I have given on the workloads involved. I beg to move.
On Question, amendment agreed to.
Lord Henley Lord Henley moved Amendment No. 24:
Page 3, line 32, at end insert (", and (b) after that sub-paragraph insert—
"(1A) Regulations under sub-paragraph (1) above may include provision for the making of payments to governing bodies in respect of the taking by them of steps prescribed by the regulations.'"').
On Question, amendment agreed to.
Lord Morris of Castle Morris Lord Morris of Castle Morris moved Amendment No. 25:
Page 3, leave out lines 34 to 37.
The noble Lord said: I shall speak also to Amendment No. 26. I do not know whether the Minister has ever found himself in the position of discussing a Bill, a regulation, or an order with officials in his department and heard them say, "I hear what you say, Minister. I understand what you want. I know how you feel. If this is really as necessary as you say it is, then of course we must find a way, but it is going to he very, very difficult".
In the amendment I wanted only to secure full repayment to HEIs, and to ensure that there shall he an independent assessor, to which I shall come later. Following pressure from the CVCP on behalf of universities, the Government have now produced an amendment to secure provision to make payments to universities for the cost of administering both the public and private sector loans. We all welcome that as a step forward.
Currently, universities may be paid for the administration of the present student loan scheme. However, the 1990 Act is permissive so there is no duty to meet these costs. The Government's amendment is also permissive and there will be no duty on private financial institutions to cover the universities' costs in full. The universities are only partially recompensed for the expense of administering the current system. My amendment will ensure that the universities' costs will be fully covered for administering any loans, public or private.
Universities have been subsidising the Student Loans Company for quite some time. There is no reason why they should also have to subsidise the private-sector financial institutions, in particular in the

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light of the universities' current financial difficulties since the previous Budget. We would welcome a copper-bottomed assurance on that. I beg to move.
Lord Henley: Having moved my previous amendments, I am not sure that I can take the noble Lord much further. As the amendments that I put forward demonstrated, it is our intention that the HEIs should be paid for the work that they do in certifying eligibility for student loans. We do not expect that the Bill will create any additional work for the HEIs. Indeed, we expect their workload to decrease. However, we wish to ensure that they are paid for the certification work that they do on both public and private-sector loans. That is what our amendment achieved.
I was somewhat confused by the noble Lord's amendment when I first read it and I am further confused having listened to him. I am sure that at this late hour he has no intention of pressing it to a Division and I should like to look at what he said about it.
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Perhaps we can have further discussions at an earlier hour at a later stage of the Bill. It would be wrong for me to respond in any other way.
Baroness Farrington of Ribbleton: It is helpful that the Minister has agreed to look at the detail of the amendment. Will he also look at whether, for example, the Department for Education and Employment considers it necessary to have additional staff in the light of the proposed dual system? Is the same kind of consideration given to the HEIs?
Lord Henley: I can assure the noble Baroness that I will consider the points that she has put to me.
Lord Morris of Castle Morris: I am happy to agree to the Minister's suggestion that we should take the matter up at another time and perhaps in more salubrious circumstances. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 26 and 27 not moved.]
The Schedule, as amended, agreed to.
House resumed: Bill reported with amendments.
House adjourned at two minutes before ten o'clock.