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3.30 pm
Angela Watkinson: Are we to understand from what the Minister is saying about the collection of defaulted loans that there will never be any involvement by unregulated bailiff companies? There is a lot of anecdotal evidence at the moment about unprofessional and bad behaviour. If the collection of unpaid loans is not regulated, there could be unpleasant consequences for young people who are simply struggling to pay their bills.
Bill Rammell: There are clear procedures and guidelines in respect of the powers available to the Student Loans Company to follow up and search out debt that has not been repaid. Those restrictions will apply to the SLC, whether it is administering that debt on behalf of the public sector or the private sector.
The current drafting will also enable us to cater for any future overall change in the administration of the student loans system. Although no such change is envisaged, we must bear it in mind that the Bill will enable a long-term programme. I am happy to emphasise again for the record that it is the Government’s firm intention for the SLC to continue in its current role for all loans. I hope that, with those reassurances, the hon. Member for Reading, East will feel able to withdraw his amendment.
Mr. Rob Wilson:
We have had a fairly brief, but good, debate. Some of the contributions, including that of the hon. Member for Nottingham, South (Alan Simpson), were extremely good. I listened carefully to what the Minister said in response to my amendments,
and I appreciate the patient way in which he has dealt with the many questions on the Bill from both sides of the House throughout this whole process. I am happy to accept his assurances on amendment No. 5. It appears that there will be sufficient parliamentary scrutiny, which was a key factor in my tabling that amendment. I am also happy to accept his assurances on amendments Nos. 6 and 8—I hope that I have got those numbers right.
I do not feel, however, that the Minister has made a compelling case against our attempt to improve the Bill in other respects. On amendment No. 7, I am not reassured that, 10 or 20 years down the track, another agent or person acting on behalf of a loan purchaser will give sufficient reassurance to those who have taken out loans. His response on amendment No. 11 was also insufficiently robust. I listened carefully to what the Minister said about it and although his intentions may be noble—I do not doubt his integrity for a second—it is not only a matter of his viewpoint, as other Ministers will succeed him. As the hon. Member for Nottingham, South said, the ministerial merry-go-round does indeed go round and round, so where the Minister sits today may not be where he sits in a month’s or a year’s time. It is therefore important to have some guarantee built into the Bill.
The Minister also failed to reassure me about the Treasury’s power in this respect. If £6.3 billion is bound up in the comprehensive spending review at a time when black clouds are gathering and the income from taxation may not be as high as the Chancellor hopes for, and given the increase in the power and influence of the Treasury in recent years, it may well push very hard to raise money through the sale of the loans. That may not offer the best value for money outcome for the country. I am not therefore going to press amendments Nos. 5, 6 or 8, but with your permission, Madam Deputy Speaker, I intend to divide the House on amendments Nos. 7 and 11.
Madam Deputy Speaker: Order. The only amendment before the House at the moment is amendment No. 5.
Mr. Wilson: I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendment proposed: No. 11, page 2, line 13, at end insert—
‘(8) In advance of entering into transfer arrangements the Secretary of State shall—
(a) examine the prevailing market conditions and ensure that a competitive market for the loans has been generated;
(b) provide the market with full information about the loan book in order that the assets can be efficiently valued;
(c) ensure that there has been a genuine transfer of risk from the public accounts to the private sector; and
(d) 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 the Government books, in terms of both likely income flows and levels of risk.
(9) The Secretary of State shall make a written statement on expenditure incurred in connection with each transfer arrangement.’.— [Mr. Rob Wilson.]
Question put, That the amendment be made:—
The House divided: Ayes 213, Noes 288.
AYES
Afriyie, Adam
Ainsworth, Mr. Peter
Alexander, Danny
Amess, Mr. David
Ancram, rh Mr. Michael
Arbuthnot, rh Mr. James
Atkinson, Mr. Peter
Bacon, Mr. Richard
Baker, Norman
Baldry, Tony
Baron, Mr. John
Barrett, John
Bellingham, Mr. Henry
Beresford, Sir Paul
Bone, Mr. Peter
Brady, Mr. Graham
Brake, Tom
Brazier, Mr. Julian
Breed, Mr. Colin
Brokenshire, James
Brooke, Annette
Browne, Mr. Jeremy
Browning, Angela
Burns, Mr. Simon
Burrowes, Mr. David
Burstow, Mr. Paul
Burt, Alistair
Burt, Lorely
Butterfill, Sir John
Campbell, Mr. Gregory
Campbell, rh Sir Menzies
Carmichael, Mr. Alistair
Carswell, Mr. Douglas
Clark, Greg
Clarke, rh Mr. Kenneth
Clegg, Mr. Nick
Clifton-Brown, Mr. Geoffrey
Conway, Derek
Cormack, Sir Patrick
Curry, rh Mr. David
Davey, Mr. Edward
Davies, David T.C. (Monmouth)
Davis, rh David (Haltemprice and Howden)
Donaldson, rh Mr. Jeffrey M.
Dorrell, rh Mr. Stephen
Dorries, Mrs. Nadine
Duncan, Alan
Duncan Smith, rh Mr. Iain
Dunne, Mr. Philip
Evennett, Mr. David
Fabricant, Michael
Fallon, Mr. Michael
Farron, Tim
Field, Mr. Mark
Foster, Mr. Don
Fox, Dr. Liam
Francois, Mr. Mark
Fraser, Mr. Christopher
Gale, Mr. Roger
Garnier, Mr. Edward
Gauke, Mr. David
George, Andrew
Gibb, Mr. Nick
Gidley, Sandra
Gillan, Mrs. Cheryl
Goodwill, Mr. Robert
Gove, Michael
Gray, Mr. James
Grayling, Chris
Green, Damian
Greening, Justine
Gummer, rh Mr. John
Hague, rh Mr. William
Hammond, Mr. Philip
Hammond, Stephen
Hands, Mr. Greg
Harper, Mr. Mark
Harvey, Nick
Hayes, Mr. John
Heald, Mr. Oliver
Heath, Mr. David
Heathcoat-Amory, rh Mr. David
Hemming, John
Hendry, Charles
Herbert, Nick
Hermon, Lady
Hoban, Mr. Mark
Hogg, rh Mr. Douglas
Hollobone, Mr. Philip
Holloway, Mr. Adam
Holmes, Paul
Horam, Mr. John
Horwood, Martin
Howard, rh Mr. Michael
Howarth, David
Howarth, Mr. Gerald
Huhne, Chris
Hunt, Mr. Jeremy
Hunter, Mark
Hurd, Mr. Nick
Jack, rh Mr. Michael
Jackson, Mr. Stewart
Jenkin, Mr. Bernard
Johnson, Mr. Boris
Jones, Mr. David
Kawczynski, Daniel
Keetch, Mr. Paul
Key, Robert
Kirkbride, Miss Julie
Knight, rh Mr. Greg
Kramer, Susan
Laing, Mrs. Eleanor
Lait, Mrs. Jacqui
Lamb, Norman
Laws, Mr. David
Leech, Mr. John
Leigh, Mr. Edward
Letwin, rh Mr. Oliver
Lewis, Dr. Julian
Liddell-Grainger, Mr. Ian
Luff, Peter
Mackay, rh Mr. Andrew
Maclean, rh David
Main, Anne
Maples, Mr. John
Maude, rh Mr. Francis
May, rh Mrs. Theresa
McCrea, Dr. William
McLoughlin, rh Mr. Patrick
Mercer, Patrick
Miller, Mrs. Maria
Milton, Anne
Mitchell, Mr. Andrew
Moore, Mr. Michael
Moss, Mr. Malcolm
Mulholland, Greg
Murrison, Dr. Andrew
Neill, Robert
Newmark, Mr. Brooks
O'Brien, Mr. Stephen
Oaten, Mr. Mark
Öpik, Lembit
Ottaway, Richard
Paice, Mr. James
Paterson, Mr. Owen
Penning, Mike
Penrose, John
Pickles, Mr. Eric
Price, Adam
Prisk, Mr. Mark
Pritchard, Mark
Pugh, Dr. John
Randall, Mr. John
Redwood, rh Mr. John
Reid, Mr. Alan
Rennie, Willie
Rifkind, rh Sir Malcolm
Robathan, Mr. Andrew
Robertson, Hugh
Robertson, Mr. Laurence
Rogerson, Dan
Rosindell, Andrew
Rowen, Paul
Russell, Bob
Scott, Mr. Lee
Selous, Andrew
Shapps, Grant
Shepherd, Mr. Richard
Simmonds, Mark
Simpson, David
Simpson, Mr. Keith
Smith, Sir Robert
Soames, Mr. Nicholas
Spicer, Sir Michael
Spink, Bob
Spring, Mr. Richard
Stanley, rh Sir John
Steen, Mr. Anthony
Streeter, Mr. Gary
Stunell, Andrew
Swayne, Mr. Desmond
Swinson, Jo
Swire, Mr. Hugo
Syms, Mr. Robert
Tapsell, Sir Peter
Teather, Sarah
Thurso, John
Turner, Mr. Andrew
Tyrie, Mr. Andrew
Vaizey, Mr. Edward
Vara, Mr. Shailesh
Viggers, Peter
Villiers, Mrs. Theresa
Walker, Mr. Charles
Wallace, Mr. Ben
Waterson, Mr. Nigel
Watkinson, Angela
Webb, Steve
Whittingdale, Mr. John
Wiggin, Bill
Williams, Hywel
Williams, Mark
Williams, Mr. Roger
Williams, Stephen
Willott, Jenny
Wilson, Mr. Rob
Wilson, Sammy
Winterton, Ann
Winterton, Sir Nicholas
Wright, Jeremy
Yeo, Mr. Tim
Young, rh Sir George
Younger-Ross, Richard
Tellers for the Ayes:
Mr. Richard Benyon and
Mr. Crispin Blunt
NOES
Ainger, Nick
Ainsworth, rh Mr. Bob
Alexander, rh Mr. Douglas
Allen, Mr. Graham
Anderson, Mr. David
Armstrong, rh Hilary
Atkins, Charlotte
Bailey, Mr. Adrian
Baird, Vera
Balls, rh Ed
Banks, Gordon
Barlow, Ms Celia
Barron, rh Mr. Kevin
Battle, rh John
Bayley, Hugh
Beckett, rh Margaret
Bell, Sir Stuart
Benn, rh Hilary
Benton, Mr. Joe
Berry, Roger
Betts, Mr. Clive
Blackman, Liz
Blackman-Woods, Dr. Roberta
Blears, rh Hazel
Blizzard, Mr. Bob
Blunkett, rh Mr. David
Borrow, Mr. David S.
Bradshaw, Mr. Ben
Brown, Lyn
Brown, rh Mr. Nicholas
Brown, Mr. Russell
Browne, rh Des
Bryant, Chris
Buck, Ms Karen
Burden, Richard
Burgon, Colin
Burnham, rh Andy
Butler, Ms Dawn
Byers, rh Mr. Stephen
Byrne, Mr. Liam
Caborn, rh Mr. Richard
Cairns, David
Campbell, Mr. Alan
Campbell, Mr. Ronnie
Caton, Mr. Martin
Cawsey, Mr. Ian
Challen, Colin
Chaytor, Mr. David
Clapham, Mr. Michael
Clark, Ms Katy
Clark, Paul
Clarke, rh Mr. Tom
Clelland, Mr. David
Clwyd, rh Ann
Coaker, Mr. Vernon
Coffey, Ann
Cohen, Harry
Connarty, Michael
Cook, Frank
Cooper, Rosie
Cooper, rh Yvette
Corbyn, Jeremy
Cousins, Jim
Crausby, Mr. David
Cruddas, Jon
Cummings, John
Cunningham, Mr. Jim
Cunningham, Tony
David, Mr. Wayne
Davidson, Mr. Ian
Davies, Mr. Dai
Dean, Mrs. Janet
Denham, rh Mr. John
Dhanda, Mr. Parmjit
Dismore, Mr. Andrew
Dobbin, Jim
Dobson, rh Frank
Donohoe, Mr. Brian H.
Doran, Mr. Frank
Dowd, Jim
Drew, Mr. David
Dunwoody, Mrs. Gwyneth
Eagle, Angela
Eagle, Maria
Efford, Clive
Ellman, Mrs. Louise
Ennis, Jeff
Field, rh Mr. Frank
Fisher, Mark
Fitzpatrick, Jim
Flello, Mr. Robert
Flint, Caroline
Follett, Barbara
Foster, Mr. Michael (Worcester)
Foster, Michael Jabez (Hastings and Rye)
Francis, Dr. Hywel
Gapes, Mike
Gerrard, Mr. Neil
Gibson, Dr. Ian
Gilroy, Linda
Godsiff, Mr. Roger
Goggins, Paul
Goodman, Helen
Griffith, Nia
Griffiths, Nigel
Grogan, Mr. John
Gwynne, Andrew
Hain, rh Mr. Peter
Hall, Patrick
Hamilton, Mr. Fabian
Hanson, rh Mr. David
Harman, rh Ms Harriet
Havard, Mr. Dai
Hendrick, Mr. Mark
Hepburn, Mr. Stephen
Heppell, Mr. John
Hesford, Stephen
Hewitt, rh Ms Patricia
Heyes, David
Hill, rh Keith
Hillier, Meg
Hodge, rh Margaret
Hodgson, Mrs. Sharon
Hoey, Kate
Hood, Mr. Jim
Hoon, rh Mr. Geoffrey
Hope, Phil
Hopkins, Kelvin
Howarth, rh Mr. George
Howells, Dr. Kim
Hoyle, Mr. Lindsay
Hughes, rh Beverley
Humble, Mrs. Joan
Hutton, rh Mr. John
Iddon, Dr. Brian
Illsley, Mr. Eric
Ingram, rh Mr. Adam
Irranca-Davies, Huw
Jenkins, Mr. Brian
Johnson, rh Alan
Johnson, Ms Diana R.
Jones, Helen
Jones, Mr. Kevan
Jones, Lynne
Jones, Mr. Martyn
Joyce, Mr. Eric
Kaufman, rh Sir Gerald
Keeble, Ms Sally
Keeley, Barbara
Keen, Ann
Kelly, rh Ruth
Kemp, Mr. Fraser
Kennedy, rh Jane
Kidney, Mr. David
Kilfoyle, Mr. Peter
Knight, Jim
Kumar, Dr. Ashok
Ladyman, Dr. Stephen
Lammy, Mr. David
Lazarowicz, Mark
Lepper, David
Levitt, Tom
Lewis, Mr. Ivan
Linton, Martin
Lloyd, Tony
Love, Mr. Andrew
Mackinlay, Andrew
Mactaggart, Fiona
Mahmood, Mr. Khalid
Malik, Mr. Shahid
Mallaber, Judy
Mann, John
Marris, Rob
Marsden, Mr. Gordon
Martlew, Mr. Eric
McAvoy, rh Mr. Thomas
McCabe, Steve
McCarthy, Kerry
McCarthy-Fry, Sarah
McCartney, rh Mr. Ian
McDonagh, Siobhain
McFadden, Mr. Pat
McFall, rh John
McGovern, Mr. Jim
McGuire, Mrs. Anne
McIsaac, Shona
McKechin, Ann
McKenna, Rosemary
McNulty, rh Mr. Tony
Meacher, rh Mr. Michael
Merron, Gillian
Michael, rh Alun
Milburn, rh Mr. Alan
Miliband, rh Edward
Mitchell, Mr. Austin
Moffat, Anne
Moffatt, Laura
Mole, Chris
Moon, Mrs. Madeleine
Moran, Margaret
Morden, Jessica
Morgan, Julie
Morley, rh Mr. Elliot
Mudie, Mr. George
Mullin, Mr. Chris
Munn, Meg
Murphy, Mr. Denis
Murphy, Mr. Jim
Murphy, rh Mr. Paul
Naysmith, Dr. Doug
O'Brien, Mr. Mike
Olner, Mr. Bill
Osborne, Sandra
Owen, Albert
Palmer, Dr. Nick
Plaskitt, Mr. James
Pope, Mr. Greg
Pound, Stephen
Prentice, Bridget
Prentice, Mr. Gordon
Prosser, Gwyn
Purchase, Mr. Ken
Purnell, rh James
Rammell, Bill
Raynsford, rh Mr. Nick
Reed, Mr. Andy
Reed, Mr. Jamie
Reid, rh John
Riordan, Mrs. Linda
Robertson, John
Robinson, Mr. Geoffrey
Rooney, Mr. Terry
Roy, Mr. Frank
Ruane, Chris
Ruddock, Joan
Russell, Christine
Ryan, rh Joan
Salter, Martin
Sharma, Mr. Virendra
Shaw, Jonathan
Sheerman, Mr. Barry
Sheridan, Jim
Simon, Mr. Siôn
Singh, Mr. Marsha
Skinner, Mr. Dennis
Slaughter, Mr. Andy
Smith, rh Mr. Andrew
Smith, Ms Angela C. (Sheffield, Hillsborough)
Smith, Angela E. (Basildon)
Smith, Geraldine
Smith, John
Snelgrove, Anne
Soulsby, Sir Peter
Spellar, rh Mr. John
Starkey, Dr. Phyllis
Stewart, Ian
Stoate, Dr. Howard
Straw, rh Mr. Jack
Stringer, Graham
Stuart, Ms Gisela
Sutcliffe, Mr. Gerry
Taylor, David
Thomas, Mr. Gareth
Timms, rh Mr. Stephen
Tipping, Paddy
Todd, Mr. Mark
Touhig, rh Mr. Don
Trickett, Jon
Turner, Dr. Desmond
Turner, Mr. Neil
Twigg, Derek
Walley, Joan
Waltho, Lynda
Whitehead, Dr. Alan
Wicks, Malcolm
Williams, rh Mr. Alan
Williams, Mrs. Betty
Wills, Mr. Michael
Wilson, Phil
Winterton, rh Ms Rosie
Wood, Mike
Woodward, rh Mr. Shaun
Woolas, Mr. Phil
Wright, Mr. Anthony
Wright, David
Wright, Mr. Iain
Wright, Dr. Tony
Wyatt, Derek
Tellers for the Noes:
Mr. Dave Watts and
Mr. Sadiq Khan
Question accordingly negatived.
John McDonnell: I beg to move amendment No. 4, page 3, line 22, leave out ‘may’ and insert ‘shall’.
Madam Deputy Speaker: With this it will be convenient to discuss the following amendments:
No. 9, page 3, line 24, at end insert—
‘(6A) Transfer arrangements shall—’.
No. 10, page 3, line 29, at end insert—
‘(d) include provision to prohibit transfers to another person outside the jurisdiction of the Secretary of State;
(e) prohibit the making of further transfer arrangements under which rights in respect of student loans are transferred to multiple purchasers.’.
John McDonnell: Amendment No. 4 stands in my name, and I see that amendment No. 9 is virtually the same as it—it would certainly have the same effect. I was not privileged to be a member of the Public Bill Committee, so— [Interruption.]
Madam Deputy Speaker: Order. Would Members who are leaving the Chamber please do so as quickly and as quietly as they can?
John McDonnell: When I get to my feet I usually speed the rush out of the Chamber, so it was surprising that those hon. Members delayed.
I was not a member of the Public Bill Committee, so I come to this debate as a humble seeker of the truth. I want to focus on the issue of onward sales. During the debate we have received helpful assurances that provide some security, in particular for people who have taken out a student loan but also for the Government in respect of the long-term future of student loans. However, the issue of onward sales remains a matter of concern and does not yet offer us the security that is required.
I welcome any correction if I have got this wrong, but I understand that the process from here on in is that a financial adviser will be appointed—I am not sure whether that has happened yet, but the last indication was that it would be Rothschild—a special purpose vehicle will be established, the sale will take place and the Government will pocket a sum. The loans will be protected, as my hon. Friend the Member for Wolverhampton, South-West (Rob Marris) has mentioned, by the contract on the loan itself and by the assurances given today by the Minister that the regime will be protected by, at least, a report to the House and the use of the negative procedure of the House. That still means that the Government will be able to vary things at a future date—I hope that such a variance will be beneficial when the rate applied at the moment is examined—and they still have the opportunity to go in a different direction. The argument is that this system will offer value for money via the terms of the sale and the contract that will then be issued by the purchaser.
Our anxieties are about onward sales. We live in a complex financial market and financial system, where we experience a range of what can only be described as “exotic financial instruments”. They are complex, and in being so, they are increasingly precarious. So, a difficulty over regulation has emerged, as a result of which market conditions have become exceptionally difficult. In some instances, it would be difficult to envisage a purchaser of the loans, given the current market instability.
I do not want to dwell too much on Northern Rock, but the Bank of England, the Financial Services Authority and the Government charter have all been unable to control Northern Rock and to ensure predictable certainty. That has thrown up a number of regulation issues that the Government have responded to by undertaking reviews that may lead to reform. In that uncertain climate, the Minister rightly made it clear on Second Reading and in Committee that there
was a perceived need for protection for all parties in the future. That protection certainly needs to be given to those who have taken out loans. For most people, a student loan will probably be one of the biggest loans that they will take out in their lives alongside their mortgage, their car loan—and, if membership rates keep increasing, their loan for membership of the Labour party.
It is vital that we secure the future financial arrangements beyond the initial sale. The positive decision on the initial sale will be made by the Secretary of State. Amendment No. 4 would ensure that an onward sale would require the same level of ministerial consent. The amendment would mean that the Secretary of State’s consent “shall” rather than “may” be required. If it were accepted, the Bill would require that “transfer arrangements shall”, rather than may,
“prohibit the making of further transfer arrangements without the Secretary of State’s consent”.
In Committee, the Minister said in response to that suggestion that it was doubtful whether there would be a sell-on given the experience in the past decade of the first tranche of sales. I believe that the world has changed, and it is changing rapidly. New financial mechanisms are evolving almost daily to enable swifter sell-ons in a variety of forms.
The Minister also said that there was no need to require the Secretary of State’s consent because clause 3(6)(b) and (c) would provide satisfactory protection. However, it is uncertain whether those paragraphs would require the involvement of the Secretary of State. The Bill states:
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