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Mr. Andrew Mackinlay (Thurrock) (seated and covered): On a point of order, Mr. Deputy Speaker. Not all the Division bells are working. I think that it is due to people not checking whether all the plugs have been put back in following building work during the summer recess. Could that be looked into, especially in relation to the Cloister Huts block? Some hon. Members could be substantially embarrassed by not knowing of the Division because--due to meetings--they do not have their television sets switched on. It is a matter of fact that not all the Division bells are working, and it is bad form.
Mr. Deputy Speaker: Does the hon. Member wish to hear my response to his point of order?
Mr. Mackinlay indicated assent.
Mr. Deputy Speaker: I am grateful to him for bringing the matter to the attention of the House. I am sure that it has been noted by the Serjeant at Arms. If there appears to be any sign of difficulty, I may be a little generous in the time that I allow for the Division.
Committee appointed to draw up Reasons to be assigned to the Lords for disagreeing to certain of their amendments to the Bill: Mr. James Cran, Mr. John Greenway, Jane Kennedy, Mr. Alun Michael and Mr. Colin Pickthall; three to be the quorum of the Committee.--[Mr. Alun Michael.]
To withdraw immediately.
Reasons for disagreeing to certain Lords amendments reported, and agreed to; to be communicated to the Lords.
The Parliamentary Under-Secretary of State for Education and Employment (Dr. Kim Howells):
I beg to move amendment No. 1, in page 2, line 26, after 'repayments,' insert--
The Chairman of Ways and Means (Sir Alan Haselhurst):
With this, it will be convenient to discuss Government amendments Nos. 2 to 5.
Dr. Howells:
This is a small technical amendment to a Bill that is already purely technical. It would require that loan agreements specify how and when inflation is measured in setting the annual interest rate payable on the loans. It involves no change in our policy towards borrowers, or towards the debt sale itself. For the borrowers, the key point remains that they will repay no more in real terms than they borrowed. Interest rates will continue to be pegged to the rate of inflation.
The method used in calculating the annual interest rate already exists in the student loan regulations. The amendment will not change the method, the index used or the period over which inflation is measured. In line with our objectives for the rest of the Bill, we are simply transferring a provision in the loan regulations to loan agreements.
The need for the amendment is straightforward. If we do not introduce it, the Secretary of State for Education and Employment will continue to have discretion over the period in which inflation is measured and over which the index is used to measure inflation. We have been advised that even that limited discretion could create potentially significant levels of uncertainty on the part of those buying the loans. That uncertainty would be pricedinto the bids and would add to the Government'scosts. Removing the uncertainty will increase the competitiveness of the bids.
The change is entirely in line with the broad thrust of the Bill. Clause 2 already freezes the time and manner of repayment of the loans and the borrowers' right to deferment and cancellation. The amendment will freeze the method used to calculate the annual rate of interest. There will be no losers from the change. The Government will get more competitive bids, and borrowers and debt purchasers will know where they stand and that no adverse changes can be made at a later date. I urge the House to accept the amendment.
Mrs. Angela Browning (Tiverton and Honiton):
We have no objections.
Amendment agreed to.
Amendments made: No. 2, in page 2, line 31, at end insert--
No. 3, in page 2, line 32, leave out '1(3)' and insert
No. 4, in page 2, line 33, leave out '(3A)' andinsert '(6)'.
No. 5, in page 3, line 1, leave out '1(3A)' andinsert '1(6)'.--[Dr. Howells.]
Order for Third Reading read.
The Minister for School Standards (Mr. Stephen Byers):
I beg to move, That the Bill be now read the Third time.
I stress that the Bill does not deal with measures arising from the Dearing report or the Government's response to it. It relates solely to the student loan book and the debt that we intend to sell on to the private sector.
As my right hon. Friend the Chancellor of the Exchequer made clear in the Budget on 2 July, we intend to raise £1.6 billion from the sale of part of the student loans debt in this financial year, to be followed by a further £1.5 billion in the next financial year. We have ensured that the changes introduced by the Bill will not adversely affect students. The key terms of the loans will be frozen to protect student borrowers, and we shall retain an independent assessor to deal with any complaints from students. Because the loans will become commercial agreements, they will be subject to both consumer and data protection legislation. Minimum collection standards will be laid down in the sale agreement. Borrowers with a disability are presently treated as a special case, and that will continue.
Mrs. Browning:
I shall not detain the House long, because, as was outlined on Second Reading and in Committee, the Opposition recognise that the Government are building on a measure introduced by the previous Government. Therefore, we have no objections to the measures that the Minister has outlined tonight. I noticed, however, that his opening remarks about the Dearing report were somewhat defensive. Since we first debated the matter, the Government's response to Dearing has become clear and students'
Mr. Andrew Welsh (Angus):
I hate to break into this collusion between the Conservative party and the Labour Government but, as on Second Reading, the Bill has been allowed to slip through as if it does not matter. It does matter; far from helping students, the measure will be a great burden on future generations of students. I find it disgraceful that those of us who benefited from the grant system should be the very generation to impose massive debt problems on future generations of students.
It is important to point out that the co-operation between the Government and the official Opposition is not accepted by every opposition party. The Scottish National party's view has remained unchanged throughout the Bill's passage--we are opposed in principle to student loans, whether in government or, as the Government wish, private hands. We see it as anathema that current and future debt should be transferred into the hands of private profiteers.
The collusion between the two main parties will ensure that the Bill goes through this evening, as they have decided to get it through as quickly as possible. However, we must not forget that this is a Tory proposal from before the election, and the Bill is yet another example of the Labour Government doing the Tories' dirty work. I urge the Government to come clean on how they expect to redirect the resources that will arise from this latest sell-off.
On 10 July, the Chancellor of the Exchequer gave the Government's reasons for proceeding with the privatisation of the Student Loans Company. He said:
I have a suggestion for how to spend £3 million to £5 million of the money. The House will be aware of the absurd position whereby Scottish students studying in Scotland will pay for only three years' tuition fees for their four-year courses, while English, Welsh and Northern Irish students studying in Scotland will pay for the full four years. The Scottish universities have suggested that the cost of removing this anomaly would be between £3 million and £5 million.
I ask the Minister to give a guarantee this evening that the money raised from the sale will be used to remedy that outrageous situation. I am happy to give way to the Minister. As he does not rise, I presume that he does not have an answer, which is very enlightening, in terms of the Government's attitude. Many folk who voted for them will be shocked, as they will have expected more from the incoming Government--particularly given the nature of the Government they replaced.
The Minister will be aware also of recommendation 82 in the Dearing report, which stated:
The Bill forms the basis of the Government's other student finance reforms. The privatisation of the Student Loans Company--with one or two companies eager to win control of student debt--is a necessary first step towards expanding the level of student debt burden. To ease the way towards ever-higher loans for tuition fees and maintenance, the Government are prepared to hand over student debt to companies whose sole motivation is profit; profit at the expense of student need and in the face of student hardship. Under the private profiteers, student debt will quadruple.
The average student will have no option but to take out those additional loans, but will do so with no real guarantee that their loan arrangements will not or cannot change in future. The Government have opened the door to future private exploitation of students and student debt, and that is the real failure of the measure. Student drop-out rates have increased by 12 per cent. under the state-owned Student Loans Company. I dread to think what that rate will be under the higher levels of private debt.
The Bill represents a new dogma shared by the Labour and Conservative parties, and forms part of a cosy consensus between the parties. It is the first blow of many in a year that will hit students, universities and colleges with outrageous and, to my mind, unjustifiable changes to the established pattern of student finance. The Scottish National party opposes the Bill in principle, and I hope that the Minister will listen to the message from students the length and breadth of the country. Some 6,000 students gathered in Edinburgh to make clear their objection to what the Government are doing. Many of them voted Labour in the hope that there would be a change in philosophy and policy. They have been quite shocked to find that the Labour Government are carrying out a Tory policy.
'(ia) such terms relating to the interest to be borne by the loan,'.
'(3A) For paragraph 1(4) and (5) there shall be substituted--
"(4) Regulations made in pursuance of sub-paragraph (1)(b)(ia) above shall make such provision with respect to the rate of interest for the time being applicable to a public sector student loan as the Secretary of State considers appropriate to maintain the value in real terms of the outstanding amount of the loan.
(5) The provision required by sub-paragraph (4) above shall be framed by reference to such index of prices as may be specified in or determined in accordance with the regulations".'.
'1(5) (as substituted by subsection (3A) above)'.
7.26 pm
7.28 pm
"Given the tightness of our plans generally and in particular the priority we wish to give to education programmes, the Government have decided to proceed with the sale."--[Official Report, 10 July 1997; Vol. 297, c. 608.]
Does this mean that the, as-yet undefined, resources released by the sale will be reinvested in education? How much do the Government expect to "save", in their own words? Will the money be redirected? If so, will it be reinvested in higher education?
"We recommend to the Government that the Inland Revenue should be used as the principal route for the collection of income contingent contributions from graduates in work, on behalf of the Student Loans Company."
To my mind, that is a clear sign that Sir Ron Dearing and his committee viewed their suggested reforms of student finance within a context of a state-owned and operated loans company. Are the Government considering using the good offices of the Inland Revenue to allow private companies to collect their debts? The House is entitled to hear the Government's view on that.
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