| Previous Section | Index | Home Page |
“for purposes in connection with a transferred loan.”
I might add that his definition of “exciting” clearly differs from mine.
The House will be aware that my right hon. Friend the Chancellor of the Exchequer made a statement on Tuesday on the breach of procedures that led to personal data relating to child benefit going missing from Her Majesty’s Revenue and Customs. My right hon. Friend rightly stated that that was an extremely serious failure by HMRC in its responsibility to the public. He also stated that immediate steps had been and were being taken to prevent that from happening again.
The Government take the protection of personal data, in whatever form, extremely seriously, and student loan data are no exception. The provisions catering for the sharing of HMRC information in the Bill will strengthen the framework for legal protection of HMRC data in respect of all loans, whether sold or unsold. The Bill will extend an existing criminal sanction prohibiting the wrongful disclosure of HMRC information outside the terms of the legislative gateway.
Mr. Peter Bone (Wellingborough) (Con): Is the Minister saying that the Bill includes legal sanctions for the misuse of data?
Bill Rammell: As I said, we will extend the legal protection of HMRC data in respect of all loans, whether sold or unsold, and we will also extend an existing criminal sanction prohibiting the wrongful disclosure of HMRC information outside the terms of the legislative gateway. I am sure that hon. Members will wish to explore that point in Committee.
Mr. Boswell: I am grateful to the Minister for giving way again, but this is obviously a matter of great and current concern. Can he assure the House that in cases in which an official of HMRC or some other person has wrongly disclosed information, and an element of culpability in the management of that official has enabled the information to get out, the Government or the commissioners will—at least in principle—compensate individuals to the extent of their actual pecuniary loss for the leak of their personal information?
Bill Rammell: I need to be careful and precise about this, but the Chancellor set out those reassurances in his statement on Tuesday, and a review is taking place.
Following the statement on Tuesday, Lord Triesman, the Minister responsible for intellectual property, has asked the Student Loans Company to review its operations and data management processes. No breaches of data protection protocols have occurred in respect of student loan administration. Furthermore, we are certain that no data have gone missing in respect of student loan administration. HMRC has initiated a wide-ranging review of its security processes and procedures, and so naturally we are doing so for student loans, as are all other Departments for their data management processes.
HMRC has temporarily suspended its data-sharing operations with the SLC in respect of student loans while the measures described by the Chancellor are being put in place. However, repayments are continuing to be deducted from borrowers in the usual manner.
Mr. Hayes: I apologise to the Minister for these persistent interruptions and I am grateful for his tolerance, but these are sensitive and topical matters. He has given us an assurance that checks have been made on the situation: I welcome that and acknowledge his diligence. However, the issue is surely whether the protocols will be in place, unaltered and with the same level of protection, under the proposed arrangements. If he can give us that assurance, Members on both sides of the House will rest more easily.
Bill Rammell: The best, most effective protocols possible will apply to both Government owned debt and privately owned debt. There will be no distinction and no difference in the way in which these matters are treated between the public and the private sector.
The idea of selling student loans is not new. The Government have successfully sold tranches of student loans in the past. In 1998 and 1999 there were two sales of the old “mortgage-style” student loans for a total of around £2 billion. The Government believe that there will be an appetite for these assets in the marketplace in respect of the Bill, not only because of the previous sales, but because of the distinctive characteristics that make student loans an attractive purchase. The loans would provide an investor with access to a new instrument with unique characteristics, allowing them further to diversify their portfolio, and a sustained income over a long period from a group of borrowers who, when taken as a whole, are considered relatively low-risk. Those features make the student loans an attractive candidate for purchase by a wide range of potential investors.
All transactions will be subject to a rigorous assessment that we are achieving good value for money. In making that assessment, the Government will examine the prevailing market conditions and ensure that a competitive market for the loans has been generated. The Government will also provide the market with full information about the loan book in order that the assets can be efficiently valued. The Government will ensure that there has been a genuine transfer of risk from the public accounts to the private sector. The Government will assess the proceeds that look likely to be achieved in the transaction, using full and clear market information and a comparison with keeping the loans on their books, in terms of both likely income flows and levels of risk. As with the previous loan sales, the Government will draw on specialist advice from within Departments and from appropriate external sources. We will draw on NAO guidance in our approach to assessing value for money, and these judgments will of course rightly be subject to scrutiny by the NAO in due course.
Making a sound judgment about the timing and pricing of sales is particularly important given the recent turbulence in world credit and financial markets. It is not possible to predict the potential market conditions in the future, and the market conditions will naturally vary for different sales in a long-term programme, which is what we are talking about. Our intention is that portions of the loan book would be sold at regular intervals as part of an ongoing programme, and we will closely monitor the market so that sales can be made at the right time. Decisions will, rightly, always be informed by what provides the best value for money for the taxpayer.
The 1998 legislation, which enabled the previous sales, has been repealed, and so cannot be amended to enable sales of income-contingent loans. We are therefore introducing this Sale of Student Loans Bill, which will allow sales to take place while protecting the interests of all borrowers regardless of whether their loan is sold or retained. I give borrowers this reassurance: purchasers of loans will not be able to charge a different rate of interest; they will not be able to change the income threshold for repayments; and they will not be able to use a borrower’s personal details for any purpose beyond that which is required for management of the loans.
Mr. Chaytor:
On that final point, does the Minister mean that the purchaser of the loan will not be able to change the interest rate without the approval of the
Government? Can he confirm that this will not in any way restrict a future Government’s decisions over the appropriate interest rate?
Bill Rammell: That is correct, although I should state for the record that we have no plans to do so. Yes, that responsibility rightly rests with the Government.
Adam Afriyie (Windsor) (Con): Clearly, Northern Rock has got into serious financial difficulties recently, as we are all aware. If a purchaser of the loan book got into serious difficulty or undertook unacceptable practices, what safeguards are there that the Government would have any control over that situation?
Bill Rammell: We have detailed external advice that there is a secure market for this kind of transaction. I think we can go forward with confidence on that basis.
Several Members want to speak, so I shall move to a conclusion. Clause 1 allows the Government to sell some or all of our obligations relating to student loans, while retaining the power to require that purchasers administer the loans in a way that meets our requirements. Clause 2 gives the Secretary of State flexibility to include provisions in sales contracts to ensure that borrowers’ interests are fully protected. That means that borrowers of sold loans will be entitled to the same process of mediation to which all borrowers currently have access, further underlining the Government’s commitment to ensure that all borrowers are treated equally. The next two clauses extend that principle.
Clause 5 allows the Government to insist that the Student Loans Company continue to fulfil its current functions and remain the institution that will contact borrowers about their loans. That is important. Clause 7 explicitly confirms an existing understanding that all student loans are exempt from the terms of the Consumer Credit Act 1974 because their characteristics differ substantially from commercial loans. In Clause 8, the Bill provides powers for Welsh Ministers in respect of Wales, equivalent to those it proposes for the Secretary of State in relation to England.
Mr. Roger Williams (Brecon and Radnorshire) (LD): As I understand it, the powers given to Ministers in the Welsh Assembly are known as mirror powers, not the framework powers usually associated with legislation such as the Bill. Mirror powers are limiting and only allow Welsh Ministers to proceed in exactly the same way as Ministers in the UK. Has the Minister received any representations about changing the mirror powers to framework powers?
Bill Rammell: I have received no such representations.
In conclusion, when the House last considered student loans the matter was of some controversy. In contrast, this is a short and mainly technical enabling Bill, and I hope that its purpose will not be misunderstood. Its provisions have no relation to future decisions on broader student finance policy, and will have no impact on the manner in which students can obtain financial support for their time in higher education; rather, the Bill enables the Government to manage efficiently a large and growing asset, and on that basis I hope it will be supported.
I commend the Bill to the House.
3.2 pm
Mr. John Hayes (South Holland and The Deepings) (Con): I had not expected the Minister to begin his peroration with a short statement in general terms on access to higher education. As he did so, however, may I briefly say that the Conservative party and the Conservative education team in Parliament are dedicated to the principle of widening access to higher education by all means? In that regard, and to reflect the intervention of the hon. Member for Harrogate and Knaresborough (Mr. Willis), may I add that one of the best ways of widening access is to look at modes of learning as well as at other factors? Part-time learning, modular learning and distance learning have a vital role to play in the mission of widening access and participation. However, that might be a debate for another day, Mr. Deputy Speaker, so I shall address the matters before us.
We welcome the principle behind the Bill. As the Minister said, it transfers risks from the public to the private sector, but in a measured and careful way. Indeed, as the Minister and the House will know, at the last two general elections the Conservatives advocated similar plans, so it is ironic that the Minister suggests that we are imitating the Government—ironic that the Government’s plan for the sale of student loans appears to be on loan from the Conservative party. However, when we announced our plans, we proposed that the money raised should be used to endow universities—a point to which I shall return.
The Bill is short and, seemingly, straightforward, but I want to bring a number of issues to the House’s attention. They will no doubt be scrutinised in detail in Committee and when the Bill goes through its other stages before becoming law.
Mr. Willis: Does the hon. Gentleman not think it odd that the Minister’s excellent presentation of the Bill missed out a key area—what will happen to the money? Does the hon. Gentleman feel, as I do, that as the Bill is a Department for Innovation, Universities and Skills matter and the money is collected from university students, at least some proportion of it should be guaranteed for the support of higher education? That may accord with his theme on endowments, although I would not necessarily agree with that specific policy.
Mr. Hayes: Far be it from me to make a spending commitment on behalf of the Opposition. I have been around too long to be seduced into going down a road that it would not be in my interests to travel, but I will return to the matter that he raises in general terms later during my, I hope, relatively short speech—at least, short by my standards.
According to the explanatory notes to the Bill, the intention is to enable
“a programme of sales of student loans, as announced in paragraph 6.42 of the 2007 Budget Report”.
Indeed, the Minister made reference to that. Paragraph 6.42 states that the sale of part of the student loan book
“will raise around £6 billion by the end of 2010-11.”
We have already discussed the turbulence in the financial markets. The Minister will appreciate that there are understandable concerns therefore about whether this is the best time to conduct such a sale. I suspect that he
knows well that it is not, and I hope that he will comment on that when he responds to the debate.
The student loan book was valued at about £18.1 billion at the end of the 2006-07 financial year, but I have no doubt that the Minister will have estimated the face value of the book in 2007-08. He has already suggested that further projections have been made—indeed, “projections” was the word that he used. It would be useful in considering the Bill if the House were to have some feel for the nature of those projections. It is true that there are commercial sensitivities, but if we are to consider the Bill with the proper diligence that the House and the hon. Members currently represented here certainly would wish us to do, we should have some sense of the notional estimates that the Government have made and that their advisers have offered. Will the Minister therefore say a little more about those projections? The hon. Member for Harrogate and Knaresborough intervened on that subject when the Minister was on his feet.
I appreciate that it is not necessarily the Government’s intention to conduct the sale at the moment, but there are good reasons to be concerned that a sale might be rushed and the taxpayer consequently short-changed. Figures released this week show that public sector borrowing stands at £24.2 billion in the financial year to date—the highest figure for the first seven months of the year since 1994-95, and £6.7 billion worse than last year.
Mr. Boswell: Before my hon. Friend leaves the point, will he remind the House that the former Chancellor of the Exchequer—now, of course, the Prime Minister—took it upon himself to sell off a large chunk of the Government’s gold stock in extremely adverse conditions, far ahead of what was possibly appropriate?
Mr. Hayes: I am grateful to my hon. Friend for his advice. There is nothing worse when speaking from the Dispatch Box than for an altogether more sagacious colleague to intervene and anticipate the next few lines of one’s speech, is there not? My hon. Friend, who is always one step ahead of me, has done just that, for I was going to point out—
Mr. Hayes: An equally sagacious colleague is about to anticipate the next line but one of my speech.
Mr. Willis: I am trying to encourage the hon. Gentleman, when he gives the answer to the hon. Member for Daventry (Mr. Boswell), to include in his remarks what happened in September 1992, when a former Chancellor, Lord Lamont, lost £15 billion in a week.
Mr. Deputy Speaker (Sir Michael Lord): Order. I do not wish to interrupt the debate, but I encourage the hon. Member for South Holland and The Deepings (Mr. Hayes) not to go too far down either of those roads.
Mr. Hayes: Mischievous voices in the House are encouraging me to do things that you would not want me to do, Mr. Deputy Speaker. I will not allow them to have their way.
It is important for the Minister to assure the House that the sale of student loans will not be rushed to fill a hole in the public finances. It is true that we have had some experience of that kind. Our fears are legitimised
by those sorry experiences—those of the kind mentioned by my hon. Friend the Member for Daventry (Mr. Boswell).
The Minister must also explain how the estimate of £6 billion has come about. With an estimated face value of £18.1 billion, what mechanisms were used to arrive at the estimated £6 billion, which is what the Government say is likely to be raised, for the sale of the loan book? What proportion of the asset do the Government estimate they will need to sell to raise £6 billion? What is the expected time scale for the sale of the loan book, and what are the notional volumes? The Minister said that the Government were likely to sell the loan book off in parts, but he gave us no feel for what estimate had been made of the timetable for that or the size of the parts. Again, one appreciates that there are commercial necessities in this regard, but the House deserves a little more information than we have had thus far.
As the right hon. Member for Oxford, East (Mr. Smith) suggested, it is also important that the House and the wider public are absolutely assured about any possible impact on students. The Minister has been helpful in that regard, both privately in briefings and today in the House. However, let us be frank: there will be fears and worries about this matter among existing students, potential students, families and so on. Anything that disincentivises people who have the capacity and potential to study at university or college needs to be countered. Those assurances will need to be made repeatedly during the passage of the Bill.
“No aspect of this Bill will create a material impact on borrowers, higher education institutions or employers.”
As a result, no regulatory impact assessment has been prepared or published. However, clause 5(2), which covers repayments, states that
| Next Section | Index | Home Page |