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Taylor, Matthew (Truro)

Thomas, Dr Dafydd Elis

Thompson, Jack (Wansbeck)

Turner, Dennis

Vaz, Keith

Wallace, James

Wardell, Gareth (Gower)

Wareing, Robert N.

Watson, Mike (Glasgow, C)

Welsh, Michael (Doncaster N)

Williams, Rt Hon Alan

Williams, Alan W. (Carm'then)

Wilson, Brian

Winnick, David

Wise, Mrs Audrey

Worthington, Tony

Wray, Jimmy

Young, David (Bolton SE)

Tellers for the Noes :

Mr. Frank Haynes and

Mr. John McFall.

Question accordingly agreed to.

Lords amendments Nos. 11, 29, 31, 33 and 40 to 42 disagreed to. Mr. Speaker -- then proceeded to put forthwith the Questions on amendments moved by a Minister of the Crown relevant to Lords amendment No. 42 disagreed to.

Schedule 1

Amendments Relating to the Recovery from Damages etc of Sums Equivalent to Benefit

Amendments made to the words so restored to the Bill : (a) in page 28, line 13, leave out paragraph (b) and insert

(b) for the words following that paragraph there shall be substituted the words--

"but does not include benefit or an exempt payment or so much of any payment as is referable to costs incurred by any person ;"." (b) in page 28, line 20, at end insert--

(3) In consequence of the amendment made by sub-paragraph (1)(b) above, in the definition of "relevant period" in the said section 22(3), the words from "whether or not" onwards shall be omitted. (4) In paragraph 13 of Schedule 4 to that Act, after sub-paragraph (2) there shall be inserted--

"(2A) A person who makes any payment (whether a compensation payment or not) on behalf of himself or another--

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(a) in consequence of any accident, injury or disease suffered, or any damage to property sustained, by any other person, or (

(b) which is transferable to any costs, or, in Scotland, expenses, incurred by any such other person by reason of such an accident, injury, disease or damage,

shall, if the Secretary of State so requests him in writing, furnish the Secretary of State with such particulars relating to the size and composition of the payment as may be specified in the request.".".-- [Mr. Scott.]

Consequential amendment made : (c) in page 70, line 25, column 3, at end insert--

In section 22(3), in the definition of "relevant period", the words from "whether or not" onwards.'.-- [Mr. Scott.]

Mr. Speaker-- then proceeded to put forthwith the Question, with respect to the Lords amendments designated by him which had not been disposed of, That this house doth agree with the Lords in the said amendments.

Lords amendments Nos. 24, 25, 28, 59, 70, 73, 74, 76 to 78, 83, 84, 86 to 89 and 91 agreed to. [Special entry.]

Remaining Lords amendments agreed to.

Ordered,

That a Committee be appointed to draw up reasons to be assigned to the Lords for disagreeing to their amendments Nos. 1 to 3, 7 to 9, 11, 29, 31, 33, 40 and 41.-- [Mr. Scott.]

Ordered,

That Mr. Paul Flynn, Mr. Greg Knight, Mr. Michael Meacher, Mr. Nicholas Scott and Mrs. Gillian Shephard be members of the Committee.-- [Mr. Scott.]

Ordered,

That three be the quorum of the Committee.-- [Mr. Scott.]

Ordered,

That the Committee do withdraw immediately.-- [Mr. Scott.]

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Student Loans

10.29 pm

The Parliamentary Under-Secretary of State for Education and Science (Mr. Robert Jackson) : I beg to move

That the draft Education (Student Loans) Regulations 1990, which were laid before this House on 25th June, be approved.

The draft regulations are laid under the Education (Student Loans) Act 1990. They will establish the loans scheme with effect from the autumn of 1990. The Government agreed that they should be subject to the affirmative resolution procedure, a course which provides a welcome opportunity to lay the detail open to the scrutiny of both Houses of Parliament. There was approval following a constructive debate in another place.

The draft regulations set out the detail of the policy that the Government have already announced and which the House has already debated. They demonstrate the merits of the flexible approach which the Government have adopted. That approach was criticised at the time, but I think that all can now see the advantages of the procedure that we have followed. The basic Act is underwritten by detailed regulations which are capable of being adjusted annually. Some of the provisions will need to be changed each year while others may need to be altered in the light of the monitoring to which we are committed. The general substance of the scheme is outlined in this first set of regulations, and that is why it should be adopted under the affirmative resolution procedure, which gives the House an opportunity to examine the scheme.

The draft regulations set out the detailed eligibility criteria for the loans scheme. Basically, the scheme is parallel to the criteria for mandatory awards, but we have deliberately drawn the criteria wider. This means that 50,000 or more students who are not eligible for grant will be eligible for loan. The regulations set out the terms of the loan. The amount that is outstanding will be indexed to inflation so that no real interest will be charged. The repayment period will be five years, or seven years for those who are taking the longest courses. We expect that the amount of repayment each year will be about £400 per annum for those who are eligible to repay. The deferment and cancellation arrangements will protect those with low incomes. Under the regulations, no graduate with an income below £11, 500 will be expected to repay his loan.

Finally, the regulations set out the responsibilities of the higher education institutions in confirming their students' eligibility. The House will have seen the minutes of evidence of the Joint Committee on Statutory Instruments, which caused some excitement last week. I am pleased to see in his place an eminent member of that Committee, the hon. Member for Bradford, South (Mr. Cryer). Now that the House has had a chance to study these matters, I hope that it will think that any delay has been worth while.

I should explain to those who have not read the regulations that they bear on three main points. First, there is clarification of the position of disabled borrowers. That is to be found in regulation 8. Regulation 9 includes provision--this has been announced already--for the disregard of disability-related benefits when income is assessed for deferment purposes. Disabled borrowers may claim deferment on higher incomes than other borrowers.

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In regulation 8, we have added to the discretion of the Student Loans Company Ltd. in relation to the starting time of, or the period for, the disabled borrower's repayments.

Regulation 3(3) is a technical amendment which deals with loans for Scottish minors. It recognises that, under contracts that are governed by Scottish law, a minor should obtain the prior consent of his curator, who in most instances is his parent or guardian. Courts in Scotland may possibly take the view that a minor can validly ratify contract on reaching his majority only if he obtains such consent or if he was already independent of his family when he entered into the contract.

Regulations allow for students under 18 years of age on higher education courses to be eligible for loans. Obviously we must expect such students to repay their loans once they have graduated.

Mr. Tam Dalyell (Linlithgow) : Have the Law Society of Scotland and the Scottish banks formally agreed to this?

Mr. Jackson : The issue of Scottish minors and their

responsibilities vis-a-vis credit is one of the more recondite points of Scottish law. There are different views on the matter. It has never been tested in the courts. The Government take the view that the issue is not ratification. If the issue is enforceability of the loan, the loan will be enforceable.

Mr. Dalyell : It is not quite so technical a matter as the Minister makes out. It is a practical matter and affects many people. I repeat the blunt question that I asked : have the Law Society of Scotland and the banks agreed to this? The frank answer is no, is it not?

Mr. Jackson : I have difficulty in answering the hon. Gentleman's question, because I do not see how the banks come into it. I do not believe that the Law Society of Scotland has been asked about the matter. Ultimately this is a matter for the courts to determine. If the hon. Gentleman studies the regulations, he will see that the issue that we are considering is ratification at the age of 18, not enforceability. The Government's view is that the loans will be enforceable.

Mr. Toby Jessel (Twickenham) : Will my hon. Friend remind the House that on 11 May the parliamentary assembly of the council of Europe, meeting at Strasbourg, passed a unanimous resolution, to the effect that

"Systems of loans can be encouraged".

That resolution was proposed by the rapporteur, Mr. Bassinet, a French Socialist. Not one of the 12 British Labour Members of Parliament who are members of the Council of Europe's parliamentary assembly voted against it. Why is the Labour party so hopelessly inconsistent? Why does it say one thing at Strasbourg and the opposite at Westminster?

Mr. Jackson : My hon. Friend asks a very good question, but we could come even closer to home. There is a marked difference of emphasis and tone on student loans between some of the Front-Bench Opposition spokesmen in this House and some of the Opposition Front-Bench spokesmen in another place. My hon. Friend is right to draw attention to that inconsistency.

Mrs. Margaret Ewing (Moray) : Does the Minister suggest that the Government are so incompetent in the law relating to minors in Scotland that they cannot draft

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appropriate regulations, but they have to rely on test cases in Scottish courts? It is ridiculous to place any Scottish student in that position. I ask the Minister to take the regulations back. It seems to me that the Government drafted panic measures before the Joint Committee on Statutory Instruments met.

Mr. Jackson : The enforceability of loans against minors who take them out before they reach 18 is an obscure area of Scottish law. There are differences of view about it. The issue can be determined only by the courts. Under the regulations, students who are minors will be allowed to make use of a loan. That is entirely as it should be. We expect the students to repay their loans. The general rule is--

Mr. Max Madden (Bradford, West) : On a point of order, Mr. Deputy Speaker. Does the fact that the Minister of State is not occupying her normal place on the Treasury Bench have any implications, as rumoured in the press, or does it mean that we ought to be told something that so far she has not been allowed to tell us?

Hon. Members : Shame.

Mr. Deputy Speaker (Sir Paul Dean) : I think that the hon. Gentleman had his answer while he was raising his point of order.

Mr. Jackson : The general rule is that students under 18 can claim the loan. We expect them to repay it. To do so, we need to protect the taxpayers' interests. I am sure that the House will agree with me that the interests of taxpayers, whether they are in England or Scotland, should be safeguarded.

Mr. Tony Marlow (Northampton, North) : I have an interest to declare, in that I have two children who will be going to university this autumn, and they will probably be taking out loans. My hon. Friend has been talking about the enforceability of loans in Scotland. Is he implying that, if the loans turn out not to be enforceable in Scotland, Scottish students will not have to pay back the money, whereas my children will have to pay it back because they have attended English universities?

Mr. Jackson : My hon. Friend is looking too far ahead. There is a question about the enforceability of loans to minors in Scotland. The Government believe that such students would be obliged to repay their loans for that period but there is some dispute about the matter. We have made arrangements in the regulations for ratification as a way of handling the problem. We shall have many opportunities to return to the issue, because repayments will not start for some time to come.

Mr. Jack Straw (Blackburn) : Have the Scottish Law Officers been consulted about this matter, and what is their opinion?

Mr. Jackson : The matter has been discussed within the Government. As I have said, the Government's view is that loans taken out by minors in Scotland are enforceable, but there is an argument about it. That was one of the matters that surfaced during the deliberations of the Joint Committee on Statutory Instruments. Let me proceed now--

Mr. Simon Hughes (Southwark and Bermondsey) : Will the Minister give way?

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Mr. Jackson : I shall give way finally to the hon. Member for Southwark and Bermondsey (Mr. Hughes).

Mr. Hughes : Why will not the Under-Secretary be honest with the House and say that there is an omission from the regulations because the Government cannot deal with the point? And is not that only one of the omissions? For example, the name of the company administering the scheme is omitted : the regulations contain no reference to the Student Loans Company. Does that betoken an omission or was it the result of an intentional decision to provide for privatisation in the near future?

Mr. Jackson : The hon. Gentleman is very good at speculation. The Government have said previously that that course might be followed--it might not be--but it is certainly not an intentional feature of the regulations that that should be so. No decisions either way on that point are made in the regulations.

Let me press on to the third technical point arising from the regulations-- the clarification of the role of the higher education institutions. For those who are following the matter in close detail, that is dealt with in regulation 11(2).

In assessing students' eligibility for loans, the higher education institutions must determine whether they meet residence requirements identical to those that apply for mandatory awards, which are verified by the local education authorities. That is mostly a straightforward matter, but there are a few cases in which detailed information may be needed from the student.

The regulations now ensure that the institution's investigations go only as far is reasonably practicable. There is no need for them to pursue the matter exhaustively. In addition, the unqualified requirement in the earlier draft to certify the accuracy of information on students' eligibility is replaced by the requirement to certify accuracy to the best of the institution's knowledge and belief.

I take this opportunity to repeat the tribute that has been paid in another place to the constructive approach that is adopted by the institutions' administrators, who have been attending a series of meetings and seminars arranged by the Student Loans Company. They have provided invaluable feedback. They have allowed the company to refine its procedure. They have also demonstrated their professional commitment to making the scheme work in the interests of their students, and I am sure that that approach will attract the support of hon. Members on both sides of the House.

On 20 June, my right hon. Friend the Secretary of State announced that the Student Loans Company's provisional budget for 1990-91 is £14.25 million exclusive of VAT. That includes payments to the higher education institutions for certifying their students'

eligibility--£3.50 for each correctly completed application form. The administration costs therefore fall within the £10 million to £20 million range to which the Government referred throughout the passage of the Bill, and are far lower than the extraordinary figures that were bandied about by the supporters of alternative approaches. I can remember some of them citing the figure of £150 million.

Hon. Members already know the justification for the Government's scheme, but let me repeat the basic points. The idea of the loans scheme is to lift a financial restriction on the growth of higher education. There are now more than 1 million students in all kinds of higher education

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--almost a quarter of a million more than in 1979. Both the Government and the Opposition are committed to continued expansion. However, the expanding cost of supporting students' living expenses cannot be supported by taxpayers and parents alone. Between 1962 and 1989-90, the cost in current prices of student grants has increased by 264 per cent. Parental contributions have increased under successive Governments and about 40 per cent. of students whose parents are assessed for a contribution find them unable or unwilling to make up the full amount.

Mr. Andrew Smith (Oxford, East) : Is the Minister going back on earlier answers that he has given to me, which show that, over the next 20 years, it would cost £2.17 billion more to operate the scheme than it would cost to uprate grants in line with inflation?

Mr. Jackson : The hon. Gentleman knows perfectly well that with any loans scheme there is a period when money is advanced before it starts to come back. If the hon. Member studies the White Paper he will see our projections and we have given the basis of the projections in exhaustive answers to the hon. Gentleman's parliamentary questions. As the number of students starts to grow substantially at the end of the decade, we will reach a point at which the student loans scheme will be repaying larger and larger sums of money and that will help to fund the expansion to which we are committed and which we intend to pay for in the way that we are proposing. The hon. Member for Oxford, East (Mr. Smith) is committed to expanding, but he has not said anything about how he will pay for that.

Loans offer additional funding through the anticipation by students of their own future income as graduates. We follow the line that is taken by every other country that has large numbers of students. In an earlier debate, the hon. Member for Birmingham, Ladywood (Ms. Short) referred to other countries that have large numbers of students in higher education. All those countries have loan schemes, and those schemes help fund those students.

The loans are being offered on generous terms and there is full protection through deferment for those not achieving high incomes. Providing additional resources as grant is simply not a viable option, as no savings would accrue. The cost to the taxpayer would continue to rise inexorably.

Around 500,000 students will be eligible for loans in 1990-91. We are budgeting to provide £178 million in loans next year and there will be more than that if the take-up exceeds 80 per cent.--the sum is not cash- limited. We are also making available £14 million of access funds for those who are eligible for loans. Discounting the estimate of £68 million in social security benefits forgone by those students, there is an increase in the public support for eligible students of about £124 million. Students will also, of course, benefit from the uprating of mandatory grant. Loan and grant together will constitute a 25 per cent. increase in student funding in the course of a single year.

There are substantial additional resources for students in the next academic year. The freezing of the grant means reducing the parental contribution in real terms from 1992

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eventually to little over half its present level. We have in prospect the relief of a burden on taxpayers as loan repayments accrue and cumulative savings are produced.

The scheme is necessary to the future of higher education. The regulations are necessary for the implementation of the scheme. There is no need to debate the principles of the scheme, but I shall respond later to the points that are raised about the details of the regulations. I commend the regulations to the House.

10.47 pm

Mr. Jack Straw (Blackburn) : We oppose the regulations and the scheme behind them. The loans scheme is ill-considered, misconceived and extraordinarily wasteful of public funds. As the Minister has just admitted, it will cost over £2,000 million extra above the cost of uprating the grant system in line with inflation between now and the year 2009--nearly 20 years away.

The scheme has been brought in with a degree of administrative chaos that has rarely been seen for any new scheme. That is reflected in the fact that the regulations had to be withdrawn last Tuesday and in the way in which they were pushed through the other place. Lord Boyd-Carpenter, who we should remember is chairman of the Association of Conservative Peers, launched a strong attack on the way in which the regulations were physically presented to that House. He said : "Can my noble Friend really say that this dirty bit of paper with inked-in corrections, deletions and amendments all over it and with two typed-in so-called riders is the form in which your Lordships' House should be asked to approve legislation?"-- [ Official Report, House of Lords, 28 June 1990 ; Vol. 520, c. 1766.]

That would be funny were it not serious. It shows that Ministers have been working hand to mouth, not knowing what they have been doing from one minute to the next. That was clearly demonstrated when the Minister failed to answer a number of questions about the applicability of Scottish law to the regulations.

The regulations are unfair. They provide no help for postgraduates, and there are no special conditions for low-paid professionals such as teachers or nurses. It is true that, if someone is earning less than £965 a month--£11,500 a year--he or she can defer the loan, but, during the period of deferral, for every minute that he or she defers, interest accrues. Therefore, people will have to pay more when they come to repayment when their salary rises above £11,580. In case the Minister is wondering about that, it is specified clearly for the avoidance of doubt in paragraph 9.6 of the regulations. No help is provided for women returners to work, and there is a lack of serious concession for disabled students.

Let me refer to the detail of the regulations and to the applicability to them of Scots law. They had to be withdrawn in their initial draft form because it was clear that they did not properly take account of the law of Scotland relating to minors. I concede that the law of Scotland relating to minors is complicated. In certain circumstances, under the doctrine of quadrennium utile, it is possible for a minor to enter into a contract and for it then to be voidable at his suit within a period of about four years if he can show that he entered into the contract under duress. There are also certain circumstances that appear to apply here. It is essential that a contract for a loan is guaranteed by the student's or the minor's curator --his parent or guardian.

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