Clause
2
Sales:
supplemental
Question
proposed, That the clause stand part of the
Bill.
Mr.
Hayes:
I hope that this debate will be
rather shorter than our first one. However, it was important—I
am grateful for your indulgence, Miss Begg—to deal with
fundamental issues respecting the new power at the beginning of our
consideration.
My
question about clause 2 is straightforward. The clause will grant the
Secretary of State flexibility in sales contracts that he thinks are
appropriate, in addition to those specifically expressed elsewhere in
the Bill. The explanatory notes to clause 2
state:
“The
Government intends to require purchasers to use HMRC and the SLC as
part of the sales
contract.”
If that is the
case, why is it not in the Bill? Why are Ministers given flexibility in
that
regard?
Sarah
Teather:
I have a couple of questions
about subsection (4). If the Government lowered the threshold at which
loans could be paid back, the purchaser would get more money than they
expected. The subsection will allow the payment of more money as
compensation if purchasers get less money as a result of the threshold
being raised. What will happen if a future Government do the reverse?
Is reverse indemnity written in, or does it only go one
way?
On subsection
(6), what will happen if borrowers have a dispute? Currently, they must
deal with the Student Loans Company. I get an awful lot of complaints
that the SLC has failed miserably to stop taking payments after the
loan has been paid off. It is quite a common piece of casework in most
MPs’ offices. How will the Bill change those arrangements? Will
graduates have to deal with the private sector, or will they continue
to deal with the SLC? Who is the intermediary mentioned in subsection
(6)?
Bill
Rammell:
In response to the hon. Gentleman’s
question about the flexibility in sales contracts and the notes’
reference to HMRC and the SLC, it will be enforced through the
contract, and we do not believe that it needs to be explicit in the
Bill. In response to the
hon. Lady’s question about the transference of risk if the
repayment threshold is lowered, it could be described as a one-way
process. The measure is about the transference of risk. It is fairly
unlikely, whatever Government are in power—although it cannot be
ruled out—that the threshold will be reduced. The process is
about encouraging and asking the private sector to take on longer-term
risk, and protections must be in place for that to
happen.
To return to the question of
why HMRC and the SLC are not included in the Bill in this regard, it is
possible that student loan repayment systems might change. The
legislation is enabling—it is about a longer-term programme,
which is why it is important to include such measures in contracts and
not in the Bill.
Sarah
Teather:
The Minister did not answer my question about
subsection (6). Whom will graduates deal with in case of a dispute?
Given that disputes are quite common, the question is of concern to
graduates.
Bill
Rammell:
Our intention is that graduates repaying debts to
the private sector should be able to deal with the same independent
assessor to whom they can refer at the moment in respect of debts to
the Government.
The
hon. Lady raised a point about complaints that students are overpaying
at the end of their term of repayment. If one looks at the evidence,
two thirds of the overpayments are of less than £400. That
happens because it is difficult to predict exactly when somebody will
reach the end of their loan, given the nature of the taxation system
through HMRC. However, in response to Ministers, the Student Loans
Company is rightly looking at how it can improve the system in the
likely final year of repayments. It hopes to communicate directly with
the graduate in question to put a stop to the repayments at an earlier
stage, so that such overpayments do not take place. I hope that that
answers the question.
Question put and agreed
to.
Clause 2
ordered to stand part of the
Bill.
Clause
3
Onward
Sales
Question
proposed, That the clause stand part of the
Bill.
Mr.
Hayes:
We are flying through the Bill, and I would
like to slow things down a little by encouraging a thorough examination
of clause 3. Clause 3 is a fundamentally important part of the Bill
with regard to resale, which was mentioned this morning and this
afternoon as an area of concern. I wish to draw attention to a way in
which the Bill might usefully be amended, and perhaps the Government
might consider it before Report or elsewhere during the Bill’s
passage. This morning we focused on subsection (6) of clause
3—on onward sales—and particularly on line 16 and the
phrase “Transfer arrangements may”, which is followed by
a series of steps that the Secretary of State can take to limit the
circumstances in which transfer might take place. I am not sure why it
says “may” and
not “will”. The point was dealt with earlier to some
degree, but I do not feel that we have had a satisfactory
answer.
I
have no doubt that the Government are determined to ensure appropriate
protection. However, it is unhelpful to leave doubts in the Bill about
whether or not the Secretary of State will use those powers. It is
useful for the powers to be stated in the legislation, but I want at
least to probe why “may” has been used, rather than
“will”.
Angela
Watkinson (Upminster) (Con): The Bill provides for
transfer arrangements to be made without the knowledge or consent of
borrowers. That is standard practice in these matters. Does my hon.
Friend feel that something should be included in the Bill that provides
a duty to inform borrowers about the new company to which they are
indebted? Although they deal directly with the Student Loans Company,
borrowers should still have information on the company that is holding
their debt if it is different from the original
company.
Mr.
Hayes:
Yes, throughout this part of the
Bill there is a need to strengthen the kind of reassurance that my hon.
Friend draws our attention to—I suppose linguistically that that
should have been “to which she draws our attention”; one
does not like to end sentences with prepositions.
My point is
about the intent of the Secretary of State. It is about whether we are
being slightly too permissive in the way in which we address those
issues of assurance, security and certainty, which are necessary if
graduates are to feel that their circumstances have, as Minister
assured us, remained unchanged by the transfer. Therefore, with respect
to clause 3, I wonder about both my own suggestion and that of my hon.
Friend.
I think that
I would go further. If one looks at line 23, it might be useful
for the Government to prohibit transfers to an organisation, body or
individual outside the jurisdiction of the United Kingdom. The Minister
will have to tell me whether that is legally possible. I have a slight
worry that if we are passing into law an arrangement that gives the
Secretary of State certain powers to affect ongoing sales, and if that
happens to contradict the commercial reality of an ongoing sale to
another country, a multinational company, or a body that is outside our
jurisdiction, would that have much weight in terms of both the public
interest and, more especially, the interests of graduates? I wonder
whether we should be less permissive in respect of ongoing sales and
whether we should say something about risk, or perhaps about a
prohibition on the sale to multiple purchasers, although that is a
matter for the Minister to comment on.
I take the point made by the
hon. Member for Brent, East that such a move is unlikely, given the
assurances that we have had. In respect of ensuring the kind of
certainty and security that we all want, the worst case scenario would
be for many people to purchase parts of this book all over the globe
and for us to feel that we have lost control about what then happens. I
guess that the Minister will assure us that that is fanciful and that
every step will be taken to ensure that that does not happen. However,
there is no mention of the word “prohibit” in the Bill.
We have a lot of mays,
expectations and hopes, and a fair amount of good will, but we do not
really prevent any of those concerns in the Bill. I wonder whether we
should be slightly more restrictive about how we deal with this. I
raise the points for the sake of proper scrutiny and discussion, but
there are legitimate fears about resale in that
regard. Clause 3
specifically gives the purchaser the right to sell the loans to another
buyer after the initial sale and, subject to any limits on that right,
specifies the powers of the Secretary of State in that regard.
Therefore, we are accepting that the resale might take place and that
we need to be cautious about that, otherwise we would not have included
anything in the Bill about the Secretary of State’s capacity to
intervene.
The necessary
safeguards are of critical importance, given that history has taught us
that loans can be repackaged and can involve a large number of
different players, some of whom could be outside the jurisdiction of
the Secretary of State. It is appropriate to say another word about the
security of data. We do not want to dwell on the Government’s
misfortunes because that would be both unkind and unheroic. It is
important to point out that the greater the number of people involved
in this, and the further the chain moves from its place of origin, the
more those doubts will loom large. I think that the safeguards are
critical. I am grateful for what the Minister has said both on Second
Reading and again today, but this is critically important to clause
3.
On Second Reading,
on this very subject, my hon. Friend the Member for Daventry made such
a point when he described the hypothetical example of a Lithuanian bank
securing a package of loans. Under the current proposals, it seems
entirely possible that a foreign bank could purchase part or all of
this package, and that would create all kinds of issues regarding their
relationship with both the debt and their own local policy, in as much
as it contradicted our approach. I have nothing against Lithuania, by
the way, and I am sure that my hon. Friend the Member for Daventry has
not either.
5
pm
I
also wonder whether we might think about the position of EU students.
Again, we had some discussion about that this morning. There is a
question of how this will change over time. The Minister
accepts—he predicted it—that this is a growing issue. The
changes to the entitlement of EU citizens are only just beginning to
take effect. Indeed, they will take effect during the course of the
sale of this product. Given that we might not sell the book in part or
whole for some time—perhaps some years—by the time that
it is sold, this will be a matter of even greater significance. We
could well be dealing with a larger number of people who are not living
in the United Kingdom. There are questions about both the management of
this process and the collection of debt. This seems to be the aspect of
the Bill on which Minister might want to reaffirm one or two
points.
It is
important to establish how far the Secretary of State is likely to
intervene in any commercial issues associated with the sale. I am sorry
to return to this, but it is relevant to the clause—I made the
point on clause 1. I am still not clear whether the Secretary of State
would intervene if he felt that certain commercial
arrangements were not in the interests of the graduate community or the
nation. Would he intervene in such circumstances? It says in the clause
that he might, or may, but we are not really clear about whether he
would. Quite how would he intervene, given that this sale might take
place some way down the line? It might not happen in the first six
months or the first year. Indeed, we might be talking about events that
take place a good time after the original transaction. I hope that with those points
on the clause we have once again highlighted some of our concerns about
resale and the way in which the Bill is framed in that respect. I press
the Minister once again to look more closely at this to see whether
these words might be strengthened so that no one can be in any doubt
that the Secretary of State would have not only the power, but the
duty, to intervene if the circumstances of resale were unacceptable or
inappropriate.
Sarah
Teather:
I want to pick up on the points that the hon.
Gentleman has just made and also our discussion this morning. I was a
bit baffled by the reply that changing “may” in
subsection (6) to “shall” would completely change the way
in which the sale would be recorded on the Government order books. I do
not understand that, so will the Minister explain it? Using the word
“may” seems to make it perfectly clear that the
Government intend to use this power. I cannot see how changing the word
to “shall” alters
that.
A
further answer that was given this morning suggested that the reason
that the power was permissive was because circumstances could change
and the Government may or may not wish to use that power. Surely if the
power is there, it will be written clearly into the Government’s
contract with whoever buys the debt. If it is not written into the
contract, I cannot see how it can be changed retrospectively, if we
suddenly find that circumstances have changed and the Government really
want to use it. It would be helpful if the Minister could explain
that.
Another question
that I asked this morning that was not really answered was about what
circumstances would be required for the Government to use any of these
powers. I accept that the Minister might wish to use the three powers
separately, but could he outline some of the likely circumstances that
would trigger the use of the Secretary of State’s
powers?
Rob
Marris:
Following on from the comments of the hon. Member
for Brent, East, I understood what the Minister said this morning about
the use of the words “may” and “shall”, and
whether or not this is on the public accounts. The situation seems
strange, but that is the advice that has been given by the experts. The
hon. Lady’s point was that if there was no prohibition in the
original sale, could a prohibition be retrospectively inserted into the
original sale document?
If there was no prohibition in
the original sale, company A, having bought from the Government, can
sell to company B so that it owns the loan book. Can the Secretary of
State insert a prohibition for the future into the arrangements with
company B, or is it the case that once the Government have decided, as
they might, not to insert that prohibition in the original sale to
company A, they cannot insert it later, even if the loan
book is sold on down the line to various financial institutions that are
perceived by the Government to be dodgier and
dodgier? Does the
Secretary of State intend to insert into the transfer arrangements any
prior notification clause so that company A, if it considers selling
the loan book to company B, must first notify the Secretary of State to
give him the opportunity to consider whether to insert a prohibition at
that point? Otherwise, if no such protection is built in, company A
could buy the loan book and subsequently sell it on to company B,
potentially without the Government even knowing. If the Government took
a different view of the suitability of company B, they would have
missed the opportunity to review whether the arrangements needed to be
amended.
Mr.
Hayes:
That was precisely the point that
I was trying to make when I spoke, rather inelegantly, about a chain.
Given that the process that the hon. Gentleman has described might take
place over many months or years, it is entirely possible that the
Government might be unaware. The Bill suggests that the Secretary of
State may include provision to make himself automatically a party to
any onward sales contracts, but, frankly, if that were to involve a
multiplicity of bodies over a considerable period of time, there would
be real doubts as to whether he would have that capacity, purely
because he would be ignorant of the facts.
Rob
Marris:
I agree with the hon. Gentleman. I am probing the
Government on whether there would be some kind of notification clause,
if I can put it like that. With the greatest respect to my hon. Friend
the Minister, for whom I have the greatest regard, this is arguably a
Treasury Bill, and this is probably the ninth such Committee on which I
have sat. People who deal with the Treasury are seared by the
experience of Mapeley—that name might mean something to my hon.
Friend.
Mapeley
bought Government buildings and sold back the lease. Unfortunately, the
then Paymaster General was, to put it charitably, not fully informed by
her officials as to the identity of Mapeley. There were two Mapeleys.
One was called something like Mapeley Holdings UK Ltd and the other was
called something like Mapeley Holdings, Bermuda Ltd. Hon. Members can
guess which company ended up owning that estate and not paying tax in
the UK, which was rather ironic given that the buildings had formerly
been owned by Her Majesty’s Revenue and Customs and had been
leased back to it. I wonder whether my hon. Friend the Minister can
assure me that there will not be any transfer to an offshore financial
company that will not be subject to tax in the United
Kingdom.
Will
thought be given to putting prohibitions in the sale agreement in
respect of a further transfer from an onshore company, or company A in
my example, to an offshore company—company B—because
otherwise the Government will be losing out on tax revenues? If the
loan book ended up in the hands of an offshore company—for
example, “SLC (Bermuda) Holdings Ltd”—that might
ex post facto affect greatly all the value for money calculations that
had been made before the process was put in train. One part of the
value for money calculations would be the potential corporation
tax payments from the purchasing company, as a trading organisation,
back to the Government. However, if that trading company, or an
ultimate purchaser down the line, were not UK-registered and not paying
UK tax, it would somewhat change the
equation.
Bill
Rammell:
Let me set this out in as up front a way as I
can. I hope that I can reassure members of the Committee. It is
pertinent to ask how the Government will be sure that an ongoing sale
on the part of a special purpose vehicle has taken place, despite the
fact that for 10 years we have been operating a special purpose vehicle
in respect of mortgage-style student loans and there has been no onward
sale. There is no question of the Government being unaware because we
will have used, in the initial contract, one or other of the powers
under clause 3(6) to ensure legally that we are a party to the onward
sales contract. We would expect a notification clause to be part of the
contract, and we would ensure that there was. I hope, on that basis,
that members of the Committee are
reassured.
As for the
question asked by the hon. Member for Brent, East, I am not sure,
according to the rules of the House, whether I am allowed to
acknowledge that I have debated it with my officials. I am sure that
Hansard will correct me if I was not supposed to have done so.
Were we to say “shall” instead of “may” in
clause 3, that would be contrary to the current accounting rules in
that the proceeds would not count as a sale and thus release resources
to
reinvest.
Sarah
Teather:
Is the Minister willing to publish that advice to
the Committee so that we can understand its
basis?
Bill
Rammell:
I am more than happy to do so. The reason for the
proposal, as a possible tool in our tool box, is that the rules
governing the classification of Government debt change from time to
time. As I said this morning, the rules are different in respect of the
mortgage-style student loans, which is why the sale under discussion
will be undertaken on a different basis from the basis of the original
loans. I will happily write and confirm
that.
As for the
question asked by the hon. Member for South Holland and The Deepings,
we have made matters clear. Our views will be reported in
Hansard. As with any commercial sale of debt, it is not normal
practice to write to the borrower in advance. However, as soon as a
sale has taken place, the Student Loans Company will write to the
individual graduates who are
affected.
As
for sales to bodies outside the United Kingdom, to which the hon.
Gentleman referred, there is a track record. Thinking back to asset
sales undertaken under the Conservative Government, I do not recall
them saying that there ought to be prohibition on the sales of gas and
water. The key protections are that borrowers should be protected, that
we have sufficient mechanisms in place to give us control, and that
loans remain governed by English
law.
5.15
pm
Mr.
Hayes:
There are two issues. One is the protection of
those graduates involved, which is critical in respect of multiple
sales and sales that take place outside UK jurisdiction. Indeed, we
would not have to build so many caveats into the Bill if that was not a
problem; we
are giving the Secretary of State additional powers partly to ensure
that very protection. The other of my concerns, the effect on the
public interest in respect of offshore companies, was raised by the
hon. Member for Wolverhampton, South-West. I use the term
“outside UK jurisdiction” broadly, but it might include
the sort of concerns that he raised. I speak not only about the
protection of the graduates concerned but about the public interest.
Multiple purchasers in foreign countries and a range of offshore
companies—is that the future we want to see for the student loan
book?
Bill
Rammell:
If we look at the track record,
that is not the scenario that we are projecting. It is my understanding
that through paragraphs (a), (b) and (c) to clause 3(6), which put a
number of tools at our disposal, the Secretary of State will be able to
make judgments about the onward sale in order to protect the graduate.
That is of fundamental importance. It is clear—for the
record—that we have those protections in
place.
The
hon. Gentleman also raised some questions about data—an issue
that was the subject of some debate in Committee this morning. He
argued that the greater the number of people involved, the greater the
potential for risk. It is important to state, as I did this morning,
that for practical purposes personal data will remain with the Student
Loans Company, which will act as agents of the purchaser. The bonds
will be tradeable in the market, but loans will remain with the special
purpose vehicle, which is most unlikely to be sold.
The criminal
penalties in respect of the untoward and illegal onward passing of data
are significantly increased under the Bill, with a maximum prison
sentence of two years. We have a very robust
framework.
Mr.
Hayes:
There are two circumstances in
which data may need to be made available. The first is in order to
tempt a prospective buyer. That would not mean that the data did not
need to be anonymised, but enough information would need to be made
available to potential purchasers to ensure them of the character of
the risk and the value of the product. The second circumstance, which
was alluded to this morning, is for audit purposes. Will the Minister
explain both circumstances in more detail, so that the Committee can
give them full and proper
consideration?
Bill
Rammell:
I am happy to try to do that.
Before a sale takes place, a potential purchaser needs to understand
the type of debt being purchased. For example—I think that I
used these words this morning—an indication would be given of
the graduate income level, age and other such factors, but it would be
given on an anonymised basis so that it could not be traced back to
individuals. That is an important protection. There would also be a
need for information, after sale, for audit purposes. To some extent,
audits are undertaken on a sample basis, so a sample of individual
personal details would need to be transferred to the special purpose
vehicle. However and as I said this morning, that would be undertaken
in respect of the existing mortgage-style student loans. That data
transfer is undertaken by a protected, encrypted channel, and that
would be our intention for the income-contingent loans.
Finally, the hon. Gentleman
raised points about other European Union students. I made the point
this morning that European Union students have been able to access
loans for fees only since 2006, so we are not yet into the repayment
phase. There is EC directive 2001, which, crucially, enables us to take
action in the UK courts to chase a debt that is in default, and then to
have that ruling enforced within the court of the country in which that
individual resides.
I believe that that will give
us a robust protection over time. We want certainty that, even if a
European Union student comes from a country where the cost of living
and average income are less than in this country—so that they
are probably unlikely to end up earning more than £15,000 a
year—the banding system for thresholds will reasonably ensure
that people repay, wherever they reside after
graduation.
Mr.
Hayes:
This is an important issue, and the reason is that
we may not be selling the loan book in the short term. We have all been
clear that this may take place over many years, according to market
conditions. Given the likely change in the character of the student
population, and the changes that the hon. Gentleman has detailed, it
would be interesting to know whether he and his Department have done
any modelling on the nature of the student population, and the
consequent nature of debt. He has indicated that they have, because he
started to talk about the circumstances in some of the countries of the
EU and their ability to repay loans. That modelling would be critically
important to the sales, would it not? If I were a potential purchaser,
for example in 2009 or 2010, I would want to be looking at the
proportion of people who had taken these loans who live in different
parts of the EU. By the way, Miss Begg, when I mention the EU, I expect
a thunderclap and a streak of lightning, but we will leave that to one
side. I would want to conduct that examination so that I had a
reasonable chance of accurately assessing repayment profiles. Is that
reasonable? Is that modelling taking place, or has it taken place? If
not, should it take
place?
Bill
Rammell:
The modelling on repayment track record cannot
take
place.
Mr.
Hayes:
Modelling
can.
Bill
Rammell:
Well, modelling can, but the repayment track
record is not known, because the loans for fees for European Union
students started only in 2006. There is, however, a certain amount of
good track record for UK citizens who live abroad or who emigrate to
other countries—where such records exist and where there are
robust repayment systems. With the legal processes that are now in
place, which have been achieved only by co-operation with our European
partners on repayment mechanisms, I am confident that we can ensure
that wherever students reside their loans will be
repaid.
Rob
Marris:
I am not sure that my hon.
Friend the Minister had the opportunity to answer my question on prior
notification by company A of a proposed sale to company B, and I wonder
whether he could deal with that. Let me mention another issue, however.
I might have misunderstood what he said. My understanding is that what
he said this morning about the word “shall” in clause
3(6) was slightly different from what he said this afternoon. I am in
no way suggesting that he is ducking and diving, but I want to be
clear.
My
understanding this morning was that if the word “shall”
replaced the word “may” in clause 3(6), that would mean
that the loans would stay on the public account. I understood my hon.
Friend as saying that, were we to leave the word “may” in
the Bill, and the Secretary of State then inserted a prohibition in the
sale agreement under that permissive power, the loans would not go off
the public account. If we get the wording one
way—“shall”—it means they will not go off
the public account; on the other hand, if we leave “may”
in the Bill, and the Secretary of State then inserts a prohibition,
they also will not go off the public account. If it be the latter case,
that would tend to militate against the Secretary of State using the
permissive power to insert the prohibition. I would like some idea as
to which of those two scenarios might be the
case.
Bill
Rammell:
I am genuinely not trying to
duck and dive. It is not my style to do so. My clear understanding is
that, were we to insist upon the use of clause 3(6)(a), that would lead
to a reclassification of the debt, and we would not be able to transfer
the debt from the public to the private sector. However, the rules on
classification may change, which is why, at this stage, we feel it
prudent to keep that provision in. We would not want to have to come
back and legislate were the rules to
change.
Rob
Marris
indicated
assent.
Bill
Rammell:
I can see by the nods that I am getting that I
have answered my hon. Friend’s question. Even if we were not
able to use that provision because the rules of classification had not
changed, we have other tools at our disposal to protect the
graduate’s
interest.
Sarah
Teather:
That exchange was extremely
helpful, but I am still concerned about the point made by the hon.
Member for Wolverhampton, South-West. It remains the case that the
Government are very unlikely to use this power until such a time as
their accounting rules change. That is my understanding of the
exchange. Will the Minister clarify that point, and will he tell us
whether he has any kind of powers that can prevent the onward sale of
the SPV if the Government do not like
it?
Bill
Rammell:
That is but one tool at our disposal. If we look
at the others that are available, we see that we are able
to—this is in clause
3(6)(b)—
“require
further transfer arrangements to be effected by way of novation or
other arrangements to which the Secretary of State is a
party”.
I believe that
gives the protection that hon. Members are looking for, and I hope that
we can agree that the clause should stand
part.
Mr.
Hayes:
I do not quite understand the difference, in that
case, between subsection (3) and subsection (6). If the hon. Gentleman
is saying in response to the point made by the hon. Member for Brent,
East—perhaps he wants to revisit this; I think he said
subsection 6 but he may have said subsection
3—
Bill
Rammell:
Clause 3(6)(a).
Mr.
Hayes:
Yes. That is what I thought he said. I do not quite
understand the hon. Gentleman’s point, because if he is saying
that the Government do have the power to effect these further
commercial changes—this resale—I do not understand why
the clause should not say “shall”. Either the Government
have these powers, or they do not. Either they intend to use them, or
they do not. Either they intend to use them by this means, or by some
other prohibition. I am not absolutely clear about this, and I am
getting less clear as time goes
on.
Bill
Rammell:
I am not responsible for
drawing up the rules on the classification of Government debt, although
clearly I support them. They are there for good reasons. My clear
understanding is that were we to insert the word “shall”
in clause 3(6)(a), that would make us unable to classify the debt as a
transfer from the public to the private sector. However, there are
other protections available to us in clause 3(6)(b) and (c) to enable
us, through the contract, to protect the interests of the
graduate.
5.30
pm
Sarah
Teather:
Perhaps the Minister could
explain what “by way of novation” means so that we
understand exactly what would occur. Reading paragraph (c), it is not
clear how it differs from paragraph (a), except by virtue of being a
different way of explaining it.
Bill
Rammell:
We can bat this backwards and forwards. All I can
say, clearly and precisely, is that the advice I have, based on the
accounting rules, is that the mechanisms available to us in clause
3(6)(b) and (c) enable us to protect the graduate interest. Were we to
insert the word “shall” in respect of paragraph (a) so
that in all circumstances we would have to prohibit the making of
further transfer arrangements without the consent of the Secretary of
State, it would contravene the rules of classification and it could not
be classified as a transfer from public to private sector
debt.
Sarah
Teather:
I am genuinely seeking clarification. I am not
trying to prolong the Committee. I understand the Minister’s
point about inserting the word “shall”, but that is not
the discussion that we had a few moments ago, which was that if he
enacted paragraph (a), it would affect the way in which the loans were
recorded on the balance sheet. I thought that we had come to a point
where we understood that the Government are very unlikely to use the
powers under paragraph (a) until the Government accounting rules are
changed. Therefore, for the Committee’s purposes, paragraphs (b)
and (c) are essential in terms of the protection that is enabled. I am
trying to get the Minister to clarify what those protections really
mean.
Bill
Rammell:
My apologies. Perhaps it would help if I set this
matter out in writing. We will certainly have at our disposal the
protections afforded by clause 3(6)(b) and (c), which will enable the
Secretary of State to insert into a contract, for example, the
stipulations that we expect the Student Loans Company to continue to
administer the loans on behalf of the private purchaser and that the
graduate will continue to have access to the independent assessor.
Those are two examples, but I will happily set out for the hon. Lady in
writing the kind of examples that those paragraphs will give
us.
Mr.
Hayes:
Perhaps I might make a suggestion to the Minister
because it seems to me that we are in a bit of a pickle. My
understanding is beginning to emerge from the murky darkness into a
clear light. It seems that the Minister is telling us that paragraphs
(b) and (c) are sufficient, in his judgment, to offer the kind of
protection that hon. Members in the Committee—and I am sure in
the whole House—would seek. In that case, the questions are
begged: why are paragraphs (b) and (c) grouped with paragraph (a), and
why can they not be prefixed with the word “shall”? Why
are those paragraphs all part of the same
provision?
I agree
with the hon. Lady that the likelihood of using paragraph (a), given
the current rule, is small. That is why “may” is there,
but I am not sure that that is a convincing prefix for paragraphs (b)
and (c). I want to revisit this issue on Report because it is clear
that the eagle eyes of hon. Members on both sides of the Committee have
focused on it. We all spotted this “may” and
“shall” issue and thus we all spotted what seems to be a
potential
weakness.
The Minister
has gone some way to reassuring us that there is strength at least in
paragraphs (b) and (c). During the passage of the Bill, will he
consider looking at the drafting of this subsection again to assist
those of us who have been in the darkness and come into the light in
bringing others to the light with
us?
Bill
Rammell:
I am always happy to consider constructive
proposals. Having looked at the matter in detail, I do not believe that
we need to amend the legislation at this stage. If amendments are
tabled on Report to the effect that has been set out, I will consider
them. However, I state for the record that under clause 3(6)(a), (b)
and (c) we have the protection that members of the Committee are
looking for. I hope that on that basis we can agree that the clause
should stand part of the
Bill.
Question put
and agreed
to.
Clause 3
ordered to stand part of the
Bill.
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