HL Deb 12 March 1996 vol 570 cc816-38

House again in Committee.

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 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.

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 moved Amendment No. 14: 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 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 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 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 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.

Amendment, by leave, withdrawn.

Clauses 2 and 3 agreed to.

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.

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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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.

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.