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Lord Morris of Castle Morris: My Lords, obviously we should not expect the Minister to name names, but could he give a number?

Lord Henley: My Lords, at this stage all I say is that there are a reasonable number, but I am not prepared to give that number. I am referring to establishments which have expressed an interest in receiving the invitation to tender. I am glad that the noble Lord does not expect me to name names, but at this stage I believe it would be unwise of me to give numbers.

The noble Lord referred to the role of the banking ombudsman and the fact that he is not able to look at rejections of loan applications because such decisions are based on commercial judgments. We have discussed that with the banking ombudsman after the noble Lord's colleague, Mr. Boyes, made those allegations in another place. It is quite clear that he may look into a complaint as regards rejection if there is evidence that the decision was based on maladministration. He said also that the latter would cover apparent discrimination against an applicant on broad grounds including a rejection on the basis simply of the student's background or the course that he was following. All students would fall within the ombudsman's scheme and could complain on the grounds of unfair treatment by a bank.

A number of points were made, I believe by the noble Lord, Lord Tope, and the noble Lord, Lord Williams, about how we would set out our negotiating position and the cost to the Government. Noble Lords will have to accept that it is quite wrong at this stage for me to say what the subsidy will be, although I certainly reject the figure being bandied about by the Opposition of some £1,500. I am not prepared to speculate. Similarly, I am sure that everyone accepts that it would be naive and unbusinesslike to set out in public our negotiating position. However, I can assure noble Lords that we shall look at what steps will be necessary in the light of all the spending plans for 1996-97. We shall certainly examine most carefully just how far we can go. The same will apply to the deficit to which the noble Lord, Lord Tope, referred when he complained about the loss as a result of the delay in the Bill.

I turn now to the question of the exclusions of post-graduates, part-timers, mature students and so on. Again, that point was addressed by many speakers. I believe that the noble Lord, Lord Tope, was the first speaker to raise it, but my noble friend Lady Park and, indeed, the noble Baroness, Lady David, also mentioned it. The Bill itself is not about extending eligibility. There are powers already available under the 1990 Act to extend eligibility should we wish so to do. But those pressing the case for other constituencies--for example, for including part-timers, mature students and post-graduates--need to explain most carefully where the money is to be found to pay for such an extension. In the case of the party of the noble Lord, Lord Tope, we may hear an answer at 10 o'clock tomorrow when its fascinating document will be released. I look forward

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to reading it. The same applies to those who would seek longer repayment periods. Again there is power within the Act to extend that by five or seven years in the case, I believe, of medical students or those who receive--

Lord Prys-Davies: My Lords, can the Minister say whether the Government intend to exercise the powers in the 1990 Act?

Lord Henley: My Lords, as I said, the powers are there; but, in answer to the noble Lord, we have no immediate plans so to do. However, I can tell the noble Lord that, obviously, considerable concern has been expressed by a number of speakers that at present the debt burden is not an excessive one. I believe that that was the general gist of the comments. But that debt burden will increase in due course as the full take-up builds in. That might be an occasion when the Government would have to consider extending those powers. But merely to criticise the Government because there is no such provision in the Bill when we already have it in the 1990 Act is slightly unfair. Such powers could be exercised. As I said, we also have to address the question of where the money is to come from and who is to pay for it.

Perhaps I may take the matter referred to by the noble Lord, Lord Prys-Davies; namely, the extension to part-timers. We calculate that if all part-timers took out part-loans the cost would be something in the region of £200 million to £220 million. If they all took out full loans the cost, according to the figure I have, would be £637 million. Those are very considerable sums of money in the light of our total educational spend within the United Kingdom of some £35 billion of which £7 billion to £7.5 billion goes on higher education. If the noble Lord is looking to leave that much extra money in, he really should address the point as to where it will come from.

The noble Baroness, Lady David, asked what we were doing about disabled students. That was a very fair point to make and it is one which I, with my responsibilities within the department for disability matters--responsibilities which come both from the old employment side and the old DFE side--take most seriously. I shall consider it with great care. I can assure the noble Baroness that with private loans, as with the current scheme, the disabled students allowance will still provide financial help for equipment and expenses. Disabled borrowers will still be able to defer payment for longer and repay over a longer period, and disability related benefits will not be taken into account in calculating income for deferment purposes.

I come now to the question as to whether the conditions that apply will be the same. That point was put by my noble friend Lord Soulsby. I can assure him that the same loan ceiling will apply. The key elements, that is the nominal RPI interest rate and deferment, will stay, although obviously if banks wish to bring it below that they would be so entitled to do and students would be at least as well off. I stress for all those who seek the income contingency plan--no doubt this can be looked at in due course and no doubt it can be looked at by Sir Ron Dearing and his committee--that there is a degree

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of income contingency within the scheme as it is at the moment. I think the noble Lord, Lord Prys-Davies, ought to remember that, as it is, the repayment only starts when income reaches a certain level--85 per cent. of average earnings--and that is an income contingency element. I do not think that the noble Lord, Lord Prys-Davies, seemed to grasp that particular fact. The debt is deferred when one's income is below, currently, £15,204 a year. It only starts to bite above that figure.

Finally, I should like to address the crucially important question as to whether there is a case for delay whilst the inquiry proceeds, which I do not think to be the case. The Bill will enable us to establish arrangements characterised--as I put it--by choice, competition and diversity. It will enable us to bring in private sector capital and expertise and I believe, as I said in my opening remarks, there are real, tangible benefits here for student borrowers and for the taxpayer. We remain determined to get them as soon as possible. If we wait for the committee of inquiry to finish its work, private loans would not be available until 1998, 1999 or even later. I do not think that that delay could be justified given the benefits to be had. I do not see any difficulties in implementing our proposals while the committee does its work. We have made clear that it will need to take account of our intention to enable private financial institutions to make loans to students. This, and the extent to which the introduction of private capital for loans will reduce the burden on public spending, will be issues that the inquiry will no doubt want to consider, but that is obviously entirely a matter for the inquiry itself. The fact that we have made clear

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that private loans will go ahead does not mean that we have made up our minds in advance of the inquiry's recommendations. All we have said is that the inquiry does not start with a blank piece of paper; it starts from where we are, but the ground to be covered is a matter for the committee itself.

Baroness Farrington of Ribbleton: My Lords, will the Minister explain to the House what happens if the committee of inquiry suggests a completely different or a very modified scheme immediately after the Government have signed an agreement with a particular range of private banks and building societies committing everyone for five years?

Lord Henley: My Lords, we already have a scheme in operation; it is called the student loans Act of 1990. As I said, we do not start with a blank piece of paper, and that is the point I am making. It will be a matter for the Government then to consider the recommendations as appropriate. I do not think that the announcement of the inquiry will affect the responses of the banks and the building societies to our proposals. We are testing the market for a sensible and realistic development of our existing and successful loans scheme--a scheme that has been in existence since 1990 and a scheme that is now working very well. I hope and believe that the banks and building societies will take advantage of those opportunities, but obviously that is a matter for their judgment. Let us see how they respond.

On Question, Bill read a second time, and committed to a Committee of the Whole House.

        House adjourned at eleven minutes before ten o'clock.

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