Student Loan Scheme

HL Deb 15 December 1999 vol 608 cc285-300

7.24 p.m.

Baroness Young

rose to ask Her Majesty's Government whether they will ensure that those who have studied at British schools elsewhere in the European Union can gain access to the student loan scheme.

The noble Baroness said: My Lords, I thank all those who are to take part in this short debate this evening. I expect we all agree that it is at rather an unsociable hour and on rather an unsociable day.

I have now taken an interest in the British schools in the European Union for a very long time. I started, first, when I was a Minister at the DES, as it was then called, in 1979 doing the job that the noble Baroness, Lady Blackstone., does today. On a number of occasions I have raised various matters of concern to those schools.

I should say at the outset that this is in no way a party political issue. I have always received support from all sides of the House and I hope that that will be so again this evening.

Perhaps I may briefly say something about the British schools. Those schools belong to what is known as COBISEC, a rather curious acronym but it covers them all. There are 36 British schools. They educate some 12,000 students in the European Union, but they are unusual in that they are British Schools in the European Union. The national curriculum is taught throughout. the schools, which usually cater for pupils aged from five to 18. Pupils take GCSEs and A-levels. The schools are inspected by Ofsted. They take great trouble to keep up with all educational developments in the UK and receive all the essential publications and materials from the DfEE.

They are independent and charge fees. Of course, they have to do that because they receive no help from the British Government, nor from any other source. Although I have tried on many occasions to secure some financial help for poorer students at those schools, I have not yet been successful.

I believe that the schools make a huge contribution, not only to education, important though that is; their contribution is much wider. As I have heard myself say many times, and, indeed, heard government Ministers say many times, the United Kingdom is part of the wider European open market. Of course, as a result, many British businessmen and women must, of necessity, live in the EU. It is a part of their job and, in most cases, it is not an option. They are in the EU to work and not there for a holiday.

Not surprisingly, under those circumstances, many parents want their children to be educated in a British school and they want that education to be unbroken; that is, the children can go to the British school and can return to a maintained school in the UK without more than the normal difficulties of changing school which they would experience in this country—hence the great value of the British schools. Some children attend for as little as a year or for an even shorter period. Others are educated at such schools throughout their whole school lives.

Therefore, the British schools make a huge educational contribution to our effort in Europe. Indirectly they make a huge contribution to those people who are exporters and who are really involved in the business of developing the large open market which is the European Union.

The subject of this Unstarred Question is a narrow point but it is extremely important. Many pupils from those British schools qualify for entrance to British universities. In fact, a very high proportion go on to further or higher education. But they are not automatically eligible, as would be British students in the UK, for loans from the Student Loans Company. That has had the effect, which I am sure is not intended, that it is much more difficult for the poorer students than for the better-off students. After all, if your father is the chairman of a major company in Europe, you are in a very different position from if you are the son or daughter of a teacher. The Student Loans Company arrangements are, as I am sure the Minister knows far better than I, more favourable than loans from commercial banks. With the added costs of fees at universities, the ability to have a loan from the Student Loans Company makes a great deal of difference.

As I am sure the noble Baroness knows, the Chairman of COBISEC has been in correspondence with the Secretary of State, Mr Blunkett, over the past months on that matter. Perhaps I may quote from the Secretary of State's letter dated 13th October 1999. I understand your concern arises from the requirement that, in order to be eligible for student support, students should have been ordinarily resident in the United Kingdom for the three years preceding the start of their course. You will appreciate that residence criteria have been set so that support reaches those who can be said to have a residential connection with the UK. However, we do recognise that some students cannot meet this requirement because they have been living abroad on a temporary basis. Local Education Authorities are therefore able to waive the three year ordinary residence requirement if they deem that an applicant's absence is due to temporary employment abroad". He goes on to say: We believe this is a fair approach, and we do not have any plans to change it". The difficulty—I hope the noble Baroness understands that there is a difficulty—is that it is unfair. The regulations are applied, I am sorry to say, rather haphazardly and inconsistently in local education authorities. In effect, for a student leaving school, it is a lottery. I am sure that that is not the intention, but that is the effect.

This evening I do not want to be entirely negative because the issue is far too important. I am confident that it is an issue that could be solved without too much difficulty. The COBISEC schools have made a number of suggestions, but they would really like a straightforward and clear system that is intelligible to the students involved as well as to the local education authorities.

We have raised, first, the issue that it is government policy to place no restrictions at all on the movement of people for employment purposes in the EU. Why not apply the same principle to education? Secondly, why not have a consistent application of regulations in every local education authority? It seems to us that the Secretary of State could set consistent criteria which would be uniformly applied throughout the UK. That would make all the difference.

Thirdly, it would be helpful if all applications could be dealt with by one central unit, similar to that set up to deal with the payment of university fees by EU students. We have considered that one criterion might be a letter or a contract from a parent's employer which could be regarded as sufficient evidence of the temporary character of employment. Alternatively, a right to a loan could be linked to domicile rather than to residence, although that is not such an easy criterion. I understand that the Inland Revenue consider British citizens born in the UK to be domiciled here for life for inheritance tax purposes unless they can prove that they have a new domicile, which is extremely difficult.

It may be that none of those suggestions is quite right, but they are meant to be constructive. I hope that the noble Baroness will be able to tell us that she is able to move on this issue. I feel that we are handicapping a number of young people who could come to this country to qualify at our universities. They could make a contribution to this country or to the EU, or anywhere else in the world, in future but at the moment some of them will find it difficult to get to a British university, despite having the correct qualifications, simply because they happen to reside in Europe.

We simply ask for a clear, straightforward system. I hope that the Minister will look favourably on that. If she cannot give a positive answer this evening perhaps she will take the matter away and return with one in the not too distant future.

7.34 p.m.

Baroness Hooper

My Lords, I believe that the British education system has a fine reputation throughout the world wherever it exists. British schools are well recognised. We should do all that we can to encourage and nurture that reputation. I congratulate British schools on the excellent job they carry out throughout Europe. I am happy that I have had the opportunity of visiting some of them, not when I was a Member of the European Parliament, but more recently as a Member of your Lordships' House.

Tonight we are speaking particularly of the 36 COBISEC schools in the European Union. In that respect, I also congratulate my noble friend Lady Young on championing the COBISEC British schools on a number of occasions and on a variety of issues, not least, as I remember well, during discussion on what became the 1988 Education Reform Act. In many ways the COBISEC schools have been joined and integrated into the British system or at least they have been able to co-ordinate their activities with the British curriculum. Those schools should be further encouraged to continue that process by allowing the pupils to progress from British schools abroad to British universities. I believe that the input of such students in our British universities would be beneficial. For those, like myself, who wish to see a Europe which understands itself better, the value of that contribution cannot be underestimated.

The subject of the debate is a technical issue. It is not a problem of principle because, as my noble friend said, successive government policies have encouraged the free movement of people for employment purposes throughout the EU. Therefore, it follows that people who, together with their families, have to move should have facilities for the education of their families.

In respect of university fees, I would be glad of clarification from the Minister. I had understood that there was full reciprocity for university fees between European countries so that university students could move from one country to another and expect to receive from their governments the same assistance and support. That has always been something of a problem for us as we pay not only fees but also accommodation costs to our students. That is not so in all European countries, and it puts us at a disadvantage. An Italian student coming to study at a British university would have far more financial support than a British student studying at an Italian university. Although the rights are reciprocal, they are based on what a student receives in each country and in Italy a student would receive only payment of fees and nothing towards accommodation. In that respect I do not fully understand why student loans should not be made available to students coming from other parts of the European Union, particularly when they are emerging from British schools and have had the benefit of a British school curriculum.

My noble friend Lady Young covered many of the issues relating to this matter and in particular emphasised the unfairness of the system as it applies here. As I said, it seems to be a technical issue rather than a matter of principle. It is the unfairness of the way the system is interpreted which has given rise to the discussion this evening. I urge the Minister to support the case that has been made and look forward with interest to what she has to say in reply.

7.40 p.m.

Baroness Elles

My Lords, first, I have an interest to declare in that I have a British grandson at school in Brussels who is hoping next year to go to a British university, if he is accepted, and also no doubt, following this debate or further discussions, hoping for the availability of a student loan.

My noble friend Lady Young gave a detailed picture of the background of the subject of the debate tonight. It is clear that with regard to student loans a fairly fluid position seems to obtain. According to which university in the UK one desires to go—for instance, Sussex University—a student loan may or may not be available. It depends on the interpretation of the regulations by the local authority.

I contacted Westminster City Council's education department asking for information and was told that student loans are sometimes given to British students who have been educated on the Continent and come back to enter an English university—in this case it would be the University of London, King's College, or one of the other colleges of the university—but it said that certain criteria are used to judge whether the student will be given the loan, and those criteria do not necessarily apply in other parts of the country. That is the difficulty. My noble friend Lady Young was right to ask that there be some sort of regular standard throughout the Gauntry whereby if regulations exist but need not be strictly adhered to, the same criteria are used to make that judgment. That is where the prime difficulty arises.

As I understand it, there is a three-year residence requirement immediately prior to going to a British university, regardless of nationality. Someone from South America, Canada or even Mongolia may be eligible for a student loan while at university in Britain, but someone born and bred in London who has been living since the age of, say, 13 outside Britain with his or her parents would not be eligible for a loan unless a specific local authority decided to help out in a particular field.

Children receiving education under the British system in another member state of the EU will clearly benefit more from the British university system than from going on to a foreign university, with all its different ways and standards. A French university programme, for example, is different from that in a British university. Clearly someone who benefited from a British school in an EU member state and who was coming back to Britain would hope to benefit from all that other British students have been able to benefit from, including a student loan.

Other countries, of course, have other regulations. For instance, France—ever keen to keep its nationals in a close relationship with their home country—enables the young to have free or subsidised education at French universities, regardless of the length of time they lived outside France. In fact, they may never have been in France before but on coming to a French university they are given the same benefits as any other French student. One would hope, of course, as my noble friend Lady Young said, that we eventually reach that situation in this country.

Since the introduction of student loans in the United Kingdom, there seems to be some variation in the way the rules are applied. Apparently some councils grant loans to students whose parents are working and living abroad on temporary contracts; for example, those who do so for not more than five years and who remain closely connected with the United Kingdom by still having a home here This point was raised by those I spoke to at Westminster City Council. If someone keeps a home in this country, though they are not living here and for the time being do not pay United Kingdom tax, the fact of having a home here would entitle the child to come back to a British university and have the benefit of a student loan. It is not a happy situation for a new Labour government to encourage those who have homes all over the world, including the United Kingdom, who are working elsewhere in the Community to receive the benefit of student loans for their children while, as my noble friend Lady Young pointed out, someone who is not well off and has a modest post in France or Germany would not be eligible because they could not afford to keep a home in this country while working abroad.

The measures seem to vary according to the interpretation placed on them by individual local education authorities. That is the problem. How is it possible to persuade a local authority to interpret the rules in a way which will apply equally and fairly to those citizens who come back from other parts of the world? There are clearly different methods of dealing with these arrangements. Can the noble Baroness, Lady Blackstone, say what consideration has been given to the plight of those not residing in the United Kingdom immediately prior to the envisaged date of entry to university, who will have lived here for many years before going abroad and who may also have the intention to return after their employment? What chance will there be for those students?

The three years prior to university is one of the most difficult times for a child. The parents are abroad, and they come back to the United Kingdom to find all those who came over just three years before and who are living in the United Kingdom have the benefit of student loans, whereas they, who have been working abroad either for the United Kingdom or for its benefit, do not have that opportunity for their children.

No doubt there are other alternatives. But whatever system may be agreed, it is arguably simpler to waive the residence criteria which local authorities apply in different ways. I shall be grateful if the noble Baroness, Lady Blackstone, will give consideration to that and to the other proposals made by my noble friend.

7.48 p.m.

Lord Tope

My Lords, I too begin by thanking the noble Baroness, Lady Young, for introducing this debate. She said quite rightly it is not in any sense a party political issue and for once I am delighted to be on the same side and agree with everything she said. She also described the point as "narrow", and that may be right. But, as she also said, it is an extremely important point for a considerable number of students and their parents. It is also a point which should be capable of resolution.

The noble Baroness spoke of her many years of involvement with this subject. I believe we all acknowledge that fact and pay tribute to her. My noble friend Lord Sharman has also had many years of involvement. Indeed, I believe that he was co-founder of COBISEC back in the 1970s. He has asked me to pass on his apologies to the House tonight. Unfortunately, he has to be out of the country, otherwise he would certainly have taken part in this debate and would have spoken with very considerable personal knowledge of the issue, which I do not claim to have.

The noble Baroness, Lady Young, described the work of the British schools. I believe she rightly said that there are 12,000 pupils in the 36 schools affiliated to COBISEC. By no means are all of those pupils the children of well-paid, senior business executives. Of course, some may be, but many are not. This issue is of great importance to them.

The essential difficulty is the fact that the current arrangements are discretionary and that local education authorities apply the regulations and interpret their discretion haphazardly and inconsistently—or, let us just say, differently. I asked my own LEA today what its practice was. After 25 years of membership, I must confess that I did not know. My authority confirmed all that we have heard today; namely, that it applies the criteria as best it can and that it is aware that other LEAs, with equal good faith, do it differently. Those concerned recognise that it is inconsistent and unfair and would welcome clearer guidance and criteria against which to work.

The noble Baroness, Lady Young, quoted the letter from the Secretary of State of 13th October to the chairman of COBISEC. I should like to do the same because, in that letter, the Secretary of State said that LEAs are able to waive the ordinary three-year residence requirement. He also said that DfEE officials were then in the process of reviewing the way that they advise LEAs on the interpretation of the residence requirements and, in particular the temporary absence provisions". I have looked through the Eligibility Guide for Mortgage Style Student Loans 1999/2000 and could not help noticing a remark made during Question Time on 6th July by a noble Lord on the Government side. He said that he thought that anyone eligible for a student loan ought to be capable of understanding the regulations. I must say that the Minister disagreed with him on that occasion; and now I know why. Having read through the guide, it seemed to me more suitable for a PhD thesis than for a first degree.

However, the regulations seem to show that the state of the law on these temporary absence provisions is alarmingly flexible and that to ask the relevant authorities to judge each case on its own particular facts gives them an undue degree of discretion. As regards temporary residence abroad, students and their parents have no clear guidance as to which pattern of behaviour is likely to be acceptable and which is not. That cannot be satisfactory.

As I said, the Secretary of State said in his letter of 13th October that officials were reviewing the advice to LEAs. I hope that the Minister will tell us the results of that review tonight, what advice, if any, will now be given to LEAs, and, indeed, whether it is to be varied. If that review, which I imagine to be relatively straightforward, is not yet completed, can the noble Baroness tell us when it will be and what is delaying the process? As we have said, this is an important issue which needs to be resolved.

I cannot fail to use the opportunity of this debate to widen the discussion slightly. Your Lordships will be very aware of the commitment from these Benches to make the European Union a success. Free movement of labour has always been one of the central aims of the Union. But with so many different regulations and charges being applied to the sons and daughters of European citizens, it is clear that free movement of labour is seriously impeded. For example, a business executive wishing to develop his or her company's work in the European Union may have decided that it is important to live and work on the spot in Brussels, Hamburg or Madrid. Indeed, he or she may wish to encourage other company employees to do likewise. However, if those with children have good reason to believe that doing so may discourage their children from attending a British university, that is a powerful reason to consider staying put.

The plethora of different and conflicting regulations and charges in different EU countries is an impediment to the free movement of labour. The Liberal Democrats would like to see this Government open negotiations with partner states to establish common standards in such regulations and charges.

As regard this particular issue, I must say that this ad hoc treatment is part and parcel of the general ad hoc-ery—if that is the correct word—in the students' support system. We would argue for a simple system to be available to every British subject wherever resident. We want a single body for all students, including mature student. UCAS could well be given an enhanced responsibility for this by taking over the role of the Student Loans Company and the LEAs. That would solve many problems, including the one we are debating tonight.

Pending that, perhaps I may press the Government at least to consider establishing a central unit to deal with this particular issue. Such a unit could deal with British students who are temporarily resident abroad and enable them to apply for their student loan in that way. Indeed, that would be a similar arrangement to the process that I believe now applies for the remission of student tuition fees. It is not reasonable to expect students living abroad to negotiate with a local authority in the United Kingdom with which they may have only a distant connection.

I cannot conclude my remarks without saying a few words about LEAs. I said earlier that my LEA confirmed that the situation is as has been described tonight; in other words, haphazard at best and open to different interpretation in different areas. Most importantly, that is unfair to the students concerned. It is also unfair to the LEAs or, more particularly, to the staff. As I demonstrated by my own ignorance, it is not the members who deal with such issues; it is the staff who have to do so. They encounter students who describe the circumstances of their friends and colleagues who happen to be dealing with another LEA, which is interpreting the regulations in a different way. That is also unfair.

Perhaps I may press the Government, first, to tell us the results of the review or when we will have them; and secondly, to agree to establish a central unit to deal with these applications as a matter of urgency. All those who have spoken are looking forward to the Minister's reply. I am sure she will acknowledge that there is a problem here, although I am sure she already knew about it. As I said at the beginning of my remarks, it is a problem that is capable of solution and one that needs to be solved. It is clear that the present arrangements are not working well. I hope that the noble Baroness will tell us what she is going to do about it.

7.57 p.m.

Baroness Seccombe

My Lords, it is good to have a unanimous view on the problem before the House. I hope that the Minister will he able to share our views. I am grateful to my noble friend Lady Young for raising the matter this evening, as it certainly needs readdressing. I am also grateful for the support of my noble friends Lady Elles and Lady Hooper.

As my noble friend said, there are 12,000 pupils who are vulnerable and subject to arbitrary discrimination. Today, as we prepare to enter the 21st century, we are witnessing mobility of people that would have been unimaginable only 25 years ago. Families move around the European Union particularly but also around the world as the global market takes hold. I can only see this escalating in future years.

My noble friend Lady Young has a particular point concerning British students in British schools in Europe. It is simply this: access to student loans. The Council of British Independent Schools in the European Community is a respected, sizeable organisation with a membership of 36 schools teaching those 12,000 young people and children. These British schools are in 11 European countries. The students are taught in English by qualified teachers who are eligible for the teachers' superannuation scheme and also eligible to qualify as Ofsted inspectors.

Given these points, if I were a parent sent overseas I would feel that my children would be following a British education abroad. I would also expect my child to sit British examinations and to have the opportunity to follow on to a British university with the benefits that go with that. However, as my noble friend Lady Elles said, that does not happen automatically. Depending on the local education authority there may be access to the student loan scheme for some but the applications of others may be rejected.

We now have a system of loans, not grants as in the past. Therefore the cost to the Government must be far less. Perhaps the Minister can tell us the financial commitment involved. Indeed it would be strange to say the least if the Government recognised European students going to Scottish universities by giving them preferential treatment over fees while at the same time denied British students access to the loan scheme. If the present situation continues, I am sure that many parents will take this into account before accepting a position abroad, especially if they have children about to enter the last years of school. The letter that has been mentioned that was sent by the Secretary of State to the chairman of COBISEC in October leads to uncertainty and ambiguity.

Young people seeking access to the scheme live abroad because their parents do, not because they choose to do so. Therefore they cannot fulfil the residence requirement. In the latter part of the letter the Government state that they wish to ensure that temporary absence provisions are applied consistently and are understood. I hope that the Minister will be able to tell the House the result of the review of advice to local education authorities and what is the current advice on the residence requirements and the temporary absence provisions.

Surely it would be sensible if all the applications were dealt with by one body so that consistency and clarity are obvious. Residence and domicile often cause problems to people. I was fascinated to hear that British citizens born in the UK are deemed to be domiciled here for life for inheritance tax purposes unless they can prove to the contrary. Perhaps therefore access to a loan should be linked to domicile and not residence as my noble friend has suggested.

In summary, there is a problem. One student is lucky; another in identical circumstances is not. The Government surely cannot condone that situation or allow it to continue. I hope that the Minister will agree that the time has arrived when this matter should be looked at again.

Finally, I thank my noble friend for the clear and unambiguous way in which she has presented her case.

8.2 p.m.

The Minister of State, Department for Education and Employment (Baroness Blackstone)

My Lords, I, too, am grateful to the noble Baroness, Lady Young. for raising this issue. I very much agree with all the speakers in this debate that this is in no sense a party political issue. As I think that the noble Baroness, Lady Hooper, said, it is a technical matter which concerns eligibility for the student loan scheme. I also recognise the contribution made by British schools in the European Union. Of course, they educate not just British students but also a number of students from EU countries and from further afield.

The student support system, including student loans, provides help with the costs of higher education for those with a relevant residential connection with the UK. This criterion of residence, rather than nationality, has been the principle of successive governments, including those under which the noble Baroness, Lady Young, served. I believe that she has already indicated that. Consecutive governments have taken the view that it is right that the support provided by the taxpayer should be targeted at those who have a history of residence in the United Kingdom. Where students at British schools in the EU can meet the residence requirement and are on a designated course of higher education, they will be eligible for student support.

I agree with the noble Baroness, Lady Hooper, that such students make a valuable contribution to university life in the UK through their rather diverse and sometimes interesting experiences. However, perhaps I can explain to the noble Baroness why I felt that she may have been a little confused. As regards tuition fees, European Union students in whichever country they are studying are treated in exactly the same way as students in that country. That would apply, for example, to a British student in Italy. If tuition fees are charged in Italy—as they are in some universities—the student would pay on the same basis as an Italian student.

However, student maintenance is a matter for each individual country. There is no reciprocity there. If, for example, a British student is studying in Sweden or the Netherlands where there are loan schemes, he or she is not eligible. Similarly European Union students studying in the UK are not eligible either. A quite different regime applies for tuition costs as opposed to loans.

The noble Baroness, Lady Young, may find it helpful if I say a little more about the residence conditions that prospective students have to meet before they can be eligible for student support. I hope that she will forgive me if I recount a little history with which she may be familiar but which may not be familiar to all the contributors to the debate.

The 1958 Anderson report, which provided the foundation for all subsequent systems of student support, enshrined three principles relating to residence. First, a student should be ordinarily resident in the UK. I shall say a little more about what that means in a moment. Secondly, the student should not have been ordinarily resident solely for the purpose of receiving full-time education. Thirdly, there should be some provision to cover temporary absence from the country. These principles continue to apply today.

I give a little more history. The Anderson report did not specifically recommend a minimum term of residence, although a three-year residence requirement was introduced in the 1962 Education Act. Inevitably, there are good arguments for a shorter or longer minimum period. This is a question of balance but we, like many previous governments, believe that the requirement to be resident in the UK for three years is fair and clearly demonstrates a substantial residential connection with the UK.

The term "ordinarily resident" was defined in this House several years ago. Briefly, the judgment stated that local education authorities should ask themselves whether an applicant for support has shown that he or she has lawfully, habitually and normally resided in the British Islands from choice and for a settled purpose. An exception is made where this condition cannot be satisfied because the applicant or his or her parents have been temporarily employed or absent abroad.

Local education authorities are responsible for determining whether an individual student meets this three-year residence requirement. Their decisions are based on information which is supplied by the student. It is for the student to satisfy the LEA that he or she was resident within the UK throughout the three years immediately preceding the start of the academic year in which the course of higher education began.

Local education authorities may also determine that an applicant can qualify for support where he or she has not been ordinarily resident in this way because of temporary employment or absence abroad. The parents of some students attending British schools abroad may, indeed, meet the temporary absence provisions—as I think that the noble Baroness, Lady Young, quite rightly pointed out—and their children will then be eligible for the full range of student support, including, of course, student loans.

The word "temporary" is not defined in regulations. A statutory definition of the term could not reflect the range of circumstances under which students and their families may find themselves temporarily abroad. It would end up being more restrictive and would not work in favour of students in this category. We believe that the fairest approach is to allow LEAs to judge each case on its individual merit.

A number of speakers—the noble Lord, Lord Tope, and the noble Baronesses, Lady Elles and Lady Young—have suggested that LEAs are indiscriminate and inconsistent. That is not our experience. LEAs are more constructive in the way in which they approach this problem than has been suggested; they use their discretion very sensibly.

Nevertheless, to help achieve consistency between LEAs, my department has offered authorities extensive advice on what they should take into account when considering whether a person is temporarily employed or absent abroad. The same criteria apply throughout the country. Perhaps I may read a paragraph from the guidance. It states: In reaching a judgement, the LEA will wish to satisfy itself that the period abroad arises from employment; judge whether or not the absence is temporary; and decide whether, but for the employment of the applicant … he or she would have met the ordinary residence and settlement criteria It goes on to say, In making its decision, the LEA may wish to take into account, among other things, the nature of the posting; the terms of any contract or employer's letter; the period of time spent abroad; the time spent in this country; and whether a residence has been maintained in the UK". So, to come back to the point raised by the noble Baroness about contracts, that is something that the guidance suggests LEAs should look at.

My department also tries to provide clear information for every applicant for student support. Each year we publish a booklet, Financial Support for Students, which we ask LEAs to issue to all applicants. The noble Lord, Lord Tope, felt that it was a rather heavy read. In order to be comprehensive and cover all the different issues that could arise, it has to be rather complex. I accept that. On the other hand, if one has got as far as wanting to go to university, one probably should be able to get a grip on this. If one cannot, there should be teachers, parents and others who may give one help in doing so.

The booklet sets out the eligibility requirements for support, including the residence conditions I have mentioned. In addition—I hope this will be helpful—I have asked my officials to provide this information directly to all British schools in the European Union in case there are some which may not have easy access to it.

All EU nationals—and this includes British nationals studying abroad—are, as I said to the noble Baroness, Lady Hooper, entitled to means-tested support towards the cost of tuition fees, provided that they have resided in the European Economic Area throughout the relevant three-year period. However, these students are not entitled to support for living costs.

We have an obligation to those applicants who are recognised as refugees by the Government. Those who are now ordinarily resident in the British Islands are exempt from the three-year residence requirement, as are their spouses and children. But that is a rather special category.

As the noble Baroness, Lady Young, said, we have received representations from the Independent Schools Joint Council asking for British nationals educated elsewhere in the EU to be exempt from the residence requirement. Similar representations have been made within the Service Families Task Force. That is a cross-Government body established to address the problems experienced by service families outside the control of the Ministry of Defence.

We have given very careful consideration to the arguments put forward. We intend to make a specific exemption from the three-year residency requirement for Armed Forces personnel and their families serving abroad. This will take effect from the academic year 2000–01. We believe that it is right that we make such an exemption. Armed Forces personnel are bound by military law to accept overseas postings. We therefore consider that this group of people are in a special situation because of the unique nature of their employment.

British forces serving overseas do an outstanding job in meeting our international commitments. They are increasingly taking the lead within NATO and the UN. We ask a lot of them and it is right that we extend this eligibility for support to them. These are rights they would have retained had they not been posted abroad. I should point out that our intention is that this exemption will apply only to regular military personnel; it will not include reservists, whose families are not posted abroad, or civilian personnel, who are not subject to the same disciplinary sanctions as regular military personnel.

Baroness Elles

My Lords, I thank the noble Baroness for giving way. Will this exemption apply also to diplomats, in the same way that some of the other exemptions have applied to both service personnel and diplomats? Will it apply in this case?

Baroness Blackstone

My Lords, no. This is specifically for the children of service personnel. Almost without exception, diplomats will get access to the student loan scheme in any case.

However, the families of the vast majority of British students being educated abroad choose to live and work abroad. Where this is short-term, the temporary absence provisions will meet their needs. Where it represents a decision to make long-term commitments outside this country, the Government believe that they cannot expect the British taxpayer to provide support. That is what would be involved here.

We do not routinely collect information on the number of British nationals who are educated at British schools in the EU. However, we do know that this year about 1,500 British nationals have applied to my department for tuition fee support under the arrangements for EU nationals that I have already mentioned. Some of these applications will have come from pupils from British schools in the EU. If loan support were extended to these students—this answers the question of the noble Baroness, Lady Seccombe—it would cost the taxpayer more than £4.5 million a year. It could also create considerable complications with our European partners, who could, quite reasonably, argue that we were in breach of EU legislation by treating our own nationals more favourably than nationals from other parts of the EU.

As I said, the current rules are both long-standing and clear cut. I have listened to the arguments but I am not sure that there are compelling reasons to change the residence requirements for these applicants. We do not believe that it is right to open up the student loan scheme to people, whether British or not, who have lived and been educated in other parts of the EU. We have therefore decided that the current arrangements for these particular applicants should remain in place.

However, as I explained earlier, if any British national educated at a British school elsewhere in the EU can demonstrate that he or she has a residential connection with the UK and meets the residency criteria, he or she can have access to student loans. That would apply to the grandson of the noble Baroness, Lady Elles. Whether or not he is eligible, I do not know, but I wish him well and I hope that he gets his place.

Baroness Young

My Lords, I thank the noble Baroness for giving way. I listened to what she said with great interest and I shall read very carefully the report of the debate. Although I completely understand and accept the case for the Armed Forces, can the noble Baroness explain to the House why she feels that members of other groups who help the United Kingdom—not, of course, in the same way as does a soldier under military discipline—through business, exports and other entrepreneurial effort, about which we hear so much, should be ranked as members of a kind of second-class category who have merely chosen to go to Europe? Many are sent over by their companies. I do not believe it is quite fair to say that it is purely a matter of choice.

Baroness Blackstone

My Lords, I take the point made by the noble Baroness that there may be some people in this category who are sent to Europe by their companies. However, I believe that such people have some choice as to which company they work for. Under normal circumstances, if someone did not wish to move abroad, most companies would prefer to retain a valued member of staff and would allow that person to remain in the United Kingdom. For that reason, I believe that there is a substantial difference between a member of the Armed Forces who can be posted abroad for a long period and who has no choice whatsoever in the matter—a soldier who refuses to serve abroad is subject to court martial—and a member of another group.

I recognise that the noble Baroness may be a little disappointed with some elements of my response. I shall certainly check again the points that were made in the debate about the way in which LEAs deal with their discretionary powers in this area. I was surprised by the words of the noble Lord, Lord Tope, when he said that LEAs are unhappy with this discretion and with the guidance provided by my department, because this issue has never been raised with us.

House adjourned at twenty-two minutes past eight o'clock.