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Baroness Chalker of Wallasey: My Lords, in answer to the noble Lord's second question, it is clear that the role of the Commission, the European Parliament and the European Court should continue to be strictly limited. That is exactly what we say in dealing with the whole question of justice and home affairs, in which I know the noble Lord is extremely interested. The answer which he seeks about the recommendations on the ECJ of your Lordships' sub-committee is one to which I shall return because a final decision has not been taken upon it.

Lord Harmar-Nicholls: My Lords, I hope that the Government will be successful when they start these negotiations. However, can my noble friend give more details about the sentence on which the whole of her Statement is based? One sentence at the beginning of the Statement refers to the benefits we have already derived from being a member of the European Union and suggests that we ought to look with sympathy at remaining there, extending our commitment and moving in certain directions. Can my noble friend give a list

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of the benefits we have obtained through being in the European Union? I should like to know what those benefits are. When I have had a brief answer on occasions the Government have mentioned an increase in trade. But that has nothing to do with membership of the Union. That has happened because we have become more competitive and have offered better quality. I should like a clear explanation to justify the statement that because of the benefits we have already derived from our membership we ought to go on with it.

When subsidiarity was first announced I asked the Government to define it. I asked what was the meaning of subsidiarity. At the time I said that it meant that any decisions we make here will automatically be accepted by the others because under subsidiarity, with our special knowledge of our own affairs, that is what should happen. However, that is not the definition that others have applied and it certainly is not the definition that has applied in the way we have been dealt with. I should like a list of the great advantages that have been brought to my country as a consequence of our membership of the European Union.

Baroness Chalker of Wallasey: My Lords, my noble friend has raised this issue on many occasions. He asks about benefits to the United Kingdom. Many of the benefits are indeed in industry. The majority of respondents to a CBI survey last November showed clearly that they had greater trade opportunities and efficiency savings. Many of those things could not have happened without our membership of the European Union. I can refer my noble friend to all types of information but I shall not give him a list at the Dispatch Box today. I ask him to read the introduction. If, when he has read that and the other material that is available, he then wants a list, I shall write to him.

My noble friend referred to subsidiarity. If he reads the whole of paragraphs 20 and 20(a) of the White Paper he will find exactly what we have always said. Subsidiarity is only to do, at European level, those things which will bring benefits which cannot be achieved by member states acting alone. I believe that that has been clear throughout our debates in the nearly four years that I have been privileged to be a Member of your Lordships' House.

Lord Finsberg: My Lords, perhaps I may thank my noble friend for what she said on the issue of defence.

Lord Henley: Order!

Education (Student Loans) Bill

House again in Committee.

Lord Morris of Castle Morris moved Amendment No. 3:

Before Clause 1, insert the following new clause--

Similarity of terms

(". No subsidy shall be paid in pursuance of arrangements under this Act in respect of any private sector student loan whose interest rate or repayment period differs from that available in respect of a public sector student loan.").

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The noble Lord said: We put this amendment forward in an attempt to establish some kind of--I pause before I use the phrase "level playing field"--between public and private loans. I dislike the idea of a level playing field, but it has now become such a cliche that we know what we are talking about. The level playing field, of course, in any sport that I have had anything to do with does not matter a toss because you change ends at half-time. When you are used to playing rugby as I was on a pitch that was on the top of a coal tip, and sloped viciously from one end to the other, and if you were 13 down at half-time, you reckoned that you were probably in with more than a fighting chance. The level playing field has become a cliche which we must all observe.

On looking at the way in which this Bill had gone through its various stages in another place, I found that there was a crucial moment in the debate when the Minister of State confirmed to my honourable friend Mr. Bryan Davies, MP--and I quote his exact words:

    "If a lender wishes to offer different terms, including a shorter repayment period and lower interest rates, that is a matter between it and the borrower".--[Official Report, Commons, 4/12/95; WA col. 120.]
I would first like to establish from the Minister, if he can help us on this, exactly what the phrase means:

    "If a lender wishes to offer different terms, including a shorter repayment period and lower interest rates".
Does that mean both together--namely, a shorter repayment period together with lower interest rates--or could it be that it means that the lender offers a lower interest rate alone? It is a grammatical or syntactical point. It is a question of whether,

    "a shorter repayment period and lower interest rates",
is a double object or a pair of alternatives. If I put it as a grammarian, does the word "and" there mean that or could it mean "or"?

In any case, such a deal would have to be agreed between the lender and the borrower at the start of the contract. Nearly all students in my 40 years of university teaching are unaware, even at the start of their final year, whether they are going to be employed at the end of their course--unless they are medical students or people in similar positions--nor do they know what salary they will be on. Such preferential terms, if that is what Mr. Eric Forth meant, would be a practical proposition only for those with a private income, or whose parents, or whose rich and ingenious friends, found the idea of a low interest loan, providing a principal to invest at high interest, to be an attractive one. I can well see why it might, but is that what it is for? In our view such a scheme is not an appropriate use of taxpayers' money.

Added to that is the fact that the choice of whether to offer preferential terms, or indeed any loan at all, would be solely up to the private lender. We have said again and again that the choice is not that of the students choosing their lenders but of lenders selecting their students in the private sector. There has never been any sense that a private sector lender would be obliged to offer a loan to a student regardless of that student's condition or acceptability.

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Ministers may argue that it is not the state's business to interfere in commercial decisions. We have heard that defence put up more than once already today. It is surely, however, the state's duty to be even-handed. If the Government believe that all students require a certain level of financial support, which would seem to be the logic behind the diminution of the grant at the same time as we have an escalation of the loan facility, then it would be wrong to use taxpayers' money to give some a better financial deal than others at the direction of the private companies that can be induced into this scheme.

But if the attraction of private student loans to students is not to be a financial inducement or a longer term in which to repay, what other form of inducement can a bank or building society possibly offer--a leather wallet, a shiny key ring, a holiday in Tuscany at the bank's expense, the chance of a stake in a lottery where the prize is a big new motor car? We shall be most interested to learn why precisely a student, after being chosen by a bank, should choose that bank rather than the Student Loans Company. As far as I can see, that has never clearly emerged in any of our discussions so far.

This amendment then requires that the interest rate and the repayment period should be the same whether the loan is from the Student Loans Company or from the bank or banks which have read, marked, learned, inwardly digested and, what is more, signed up to the 471 grammes of tender. I beg to move.

Lord Tope: I support this amendment. The noble Lord, Lord Morris, has said much of what I would have said as the reasons for supporting it. He quoted from the Minister of State in another place, although I believe that it was in answer to a Parliamentary Question; but that is a detail. I shall not repeat the quote. But it leads us to look at what sort of student borrower might be taking advantage of this provision and be likely to qualify for these preferential rates, whether they be a shorter repayment period or low interest rates or both. It may be that the answer to the noble Lord, Lord Morris, is that the reference should be "and/or" in the quote.

In the Second Reading debate I puzzled as to who wanted to take advantage of the provisions in this Bill. I said:

    "the only people who may have wanted this Bill are those better-off parents who can afford to invest a low-interest student loan to attract a much higher rate of interest".--[Official Report, 19/2/96; col. 922.]
I believe that that is exactly what this amendment is trying to address. Many of us know that this happens already under the present arrangements. What we are fearful of is that it is likely to become even more the practice if this amendment is not passed.

It may well be that the sorts of students who are likely to attract this preferential treatment from the bank will be not those who necessarily know what their employment is going to be that far out from the time when they leave university but those whose parents can afford to offer that security. One of the reasons why those parents may wish to offer that security is just that they can get a low interest loan through their offspring,

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of course, and can afford to invest it at a higher rate of interest. It is entirely a matter between the lender and the borrower--the parent and the child, if I may use that term; the parent and the student--and how they might divide the proceeds. That is a matter entirely for them. It is certainly not something for which we should be using taxpayers' money. That is a practice we are trying to address with this amendment, and that is the reason why we are supporting it.

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