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Lord Williams of Mostyn: I support Amendment No. 4. The noble Lord, Lord Peyton of Yeovil, mistook

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his title on his accession to your Lordships' House. I always think that he should be known as Lord Peyton of Stiletto since he wields the weapon with such grace and precision that it always finds its niche in the Minister's ribs with such satisfaction, at least to me.

Amendment No. 4 is the single most important amendment to this Bill because if the Government felt able to accept it, it would lay to rest a great many doubts and feelings, not of suspicion but of uncertainty. The blank-cheque syndrome has been referred to already. It is such an impertinent request that even the most extravagant promoter of the South Sea Bubble would have paused for a moment of silent shame--no payee, no amount, no date.

I should point out to the Committee that I am not speaking to the linked amendments; namely, Amendments Nos. 9 and 21. If this Chamber had an opportunity, were the spirit of the amendment to be accepted, to consider details of payment, repayment and terms--all those matters which are wholly accommodated by the bulk of the remaining amendments--that would be a proper way to legislate. This is an improper way to legislate. It is asking for the irresponsible, uncontrolled, unknowable and unknown abuse of taxpayers' money.

Lord Morris of Castle Morris: I shall be brief. I shall speak to Amendment No. 4 only, though I would love to speak to the others. The Bill provides for the Secretary of State to make arrangements--471 grammes of arrangements so far--with private sector financial institutions for the payment of subsidy in respect of private sector student loans. Those arrangements are not to be subject to any parliamentary scrutiny at all. The detailed handling of student loans is to be worked out in the "arrangements" which will also set out the amounts of subsidy payable to the private sector.

Once the Bill is enacted, Parliament will have no further influence over it. So far there is no reporting mechanism or accountability. Once again, all power is put in the hands of the Secretary of State. That is something which we on this side of the Chamber have been worried about in Bill after Bill during the past few years.

The Minister argued in Standing Committee B in another place that submitting the arrangements to the House prior to their agreement would be--and I quote him--a "novel" way of dealing with the negotiation of commercial contracts. We all understand the need for a degree of confidentiality during the negotiations. However, many of the details of the scheme, such as the universities' relationships with private lenders, will not become apparent until those final arrangements have been agreed.

Bringing those arrangements before Parliament would allow the detail of the scheme to be examined before implementation and would set to rest some of the universities' concerns about it. As public subsidies will be paid to the financial institutions, it is also important that the taxpayer is publicly satisfied that they are being well spent and will be properly accounted for. At present that simply is not the case. That is why we support the amendment most strongly.

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Lord Addington: The amendment which was moved and the other two that were spoken to by the two Members of the Committee on the other side are most sensible. With the arrangements which will be made under the Bill, we are basically giving the Government a blank cheque. We are talking about commercial arrangements which will affect the future education of our entire population. Surely there should be some sort of scrutiny involved. We are basically asking for Parliament to be allowed to do its job.

The other arrangements refer to a repayment system. Amendment No. 21 refers to repayments being made through a system which would be "appropriate to current earnings". That is similar to the policy of my party. Therefore, the Committee will not be surprised to learn that we support that proposition. A provision which is fairer and which relates to the ability to pay is something which our entire system of financing higher education has needed for a long time.

Lord Henley: My noble friend has grouped Amendment No. 4 with Amendments Nos. 9 and 21. I commend him for doing so. In fact, I tried to do a large amount of grouping, as Ministers always do; but, as Oppositions always do, they ungrouped those that I suggested. I believe that all is fair in that respect. My noble friend wished to group the three amendments in his name and that of my noble friend Lady Park. That, too, is fair enough. However, the amendments are somewhat different in that they cover rather contradictory matters and cannot all be taken at once. I make those remarks only to tell my noble friend that if following what I say he felt it necessary to press Amendment No. 4 to a Division, I would not accept that as binding me on Amendments Nos. 9 or 21, especially as those matters were not addressed by the noble Lord, Lord Morris of Castle Morris, who said quite clearly that he was not speaking to Amendments Nos. 9 and 21. However, following Dearing, I hope that my noble friend will feel able to support what I have to say on those amendments in due course.

I shall deal first with the two latter amendments. As regards what my noble friend said about the schedule and about its incomprehensibility--for example, how difficult it was for a layman such as he to understand it--I quite accept his point. I can assure him that I shall try to ensure that he has a copy of what the schedule to the 1990 Act will look like as amended by this legislation before Report stage. That will also be available to other Members of the Committee who are having problems following the "legalese", if I may put it that way, of the schedule.

I do not think that I can go further than that; indeed, I am not sure that this would necessarily be a matter where the whole schedule ought to be amended in the form of a consolidation measure. That is probably something that would be better left for consolidation Bills in due course. However, if my noble friend will accept a copy of what it would look like, I am sure that he will find it somewhat easier to understand.

I should like to say a few words on Amendment No. 21. I appreciate that what both my noble friends are attempting to do is to change to a system whereby one

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uses the tax system for repayments. There might or might not be some merit in such a system. We have certainly argued, as I am sure my noble friends will be aware, against such systems in the past. Indeed, they do incur a certain amount of costs, they can impose a greater regulatory burden on individual employers and there are significant transitional costs. However, I do not think that it would be right or proper to argue the case as to what repayment method should be made available at present, other than to remind my noble friend Lady Park that obviously we have powers to extend the repayment period if the burden on individual students grows in due course. That is something which would certainly be borne in mind if, as my noble friend rightly put it, the burden on individual students increases. But having said that, if one extended the repayment period (as we can do under the 1990 Act), that would have significant cost implications for employers.

It is important for me to remind the Committee that it is only some three weeks ago that we announced the setting up of the committee of inquiry under Sir Ron Dearing. It would be somewhat odd if having announced that committee and having accepted the general idea that there should be such a committee of inquiry--a committee that was generally welcomed on most sides of the Chamber; indeed, I can certainly say that about the party opposite and my own Back-Bench colleagues, and the same was true in the other place--we then pre-empted a large part of Dearing and said, "Well, yes you can do this. You can look into the shape, funding, structure and so on of higher education, but here is one thing we are going to decide in advance and we would rather you didn't go down that track". That would be unnecessary. For that reason, I hope that my noble friend will not feel it necessary to press Amendment No. 21 when we reach that stage. I give way to my noble friend.

Baroness Park of Monmouth: I am much obliged to my noble friend the Minister. Does not the argument that it would be improper to pre-empt Dearing on the method of repayment hold equally good for the Bill that we are now considering?

Lord Henley: Absolutely not. The change that we are making now is, as I have explained, a very small one. It is a change from the singular--the individual Student Loans Company and an individual means of lending--to a plurality of institutions which could offer the loans. I do not believe that that changes the shape or structure. We made that quite clear--

6 p.m.

Lord Morris of Castle Morris: I cannot understand the logic of that. It surely pre-empts Dearing. Dearing may suggest something different. The Government have decided that before they consider the question of student loans, or student funding, this measure shall exist. That pre-empts Dearing.

Lord Henley I simply do not accept that. We have a Student Loans Company. We have a student loans system, operating as it does under the 1990 Act. We are making one small change. That does not pre-empt

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Dearing. The change proposed by my noble friend is actually a major change. It proposes a change from repayments to the Student Loans Company to a scheme--it was suggested at the time of the 1990 Act--using the tax system. There are other suggestions. Some people argue for using the national insurance structure; some prefer a different form of repayment covering longer periods. Those matters, quite rightly, can be addressed by Dearing. To go down my noble friend's route would pre-empt that. I do not think that continuation with the Bill--which is what the noble Lord is putting to me and which is a matter I have addressed in private with him--pre-empts Dearing.

I turn now to the principal and main amendment, Amendment No. 4, moved by my noble friend. I can obviously tell my noble friend that we shall in due course announce the names of the successful private sector lenders following the tendering exercise. But, as I think my noble friend would accept, the actual commercial negotiations have to remain confidential. There is nothing unusual or suspicious about that. It is standard government practice when one enters into commercial arrangements with the private sector. I see no compelling reason why we should make the substantial change of practice required by the amendment.

We expect shortly to be negotiating with the financial institutions which submit tenders. As I made clear, there are still a reasonable number of institutions interested. The process will be competitive and confidential. Out of it we hope to be able to choose a number--as I made clear earlier--of up to, say, four individual institutions in England, Wales, Scotland and Northern Ireland. I do not believe that it would be practical to submit the details of those negotiations to Parliament for approval, nor do I believe it necessary. Indeed I think that the involvement of Parliament in the negotiations would impede them and make them unwieldy. I think, again, my noble friend would accept that.

Obviously, I accept that there are the concerns--the concerns that lie behind the amendment--that taxpayers' money will be paid in subsidy to the private sector lenders. It is clearly right that there should be proper parliamentary scrutiny of that expenditure. There will be ample opportunity for that. First, I make it clear that while we are determined to realise the substantial benefits of private sector involvement in student loans, we shall only sign a contract with a private lender when we are convinced that the deal is the most effective one for the taxpayer.

Secondly, our contracts will safeguard the interests of the taxpayer and the student borrower. We have already made available in the Library a copy of the invitation to tender documents which have been sent to the financial institutions. They include a standard contract. I believe that together the documents provide considerable detail on how all the key elements of the scheme will operate. Points of detail in the final contracts may well differ but all the substantive issues are covered in documents already available.

Thirdly, the noble Lord, Lord Morris, said that Parliament would have no further control over these matters after the passage of the Bill. That is simply not

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so. Parliamentary scrutiny of the public spending on subsidy will be through the normal channels of the appropriation accounts, and detailed information will also be included in the department's annual report. We envisage that there will be details of the amount of the annual subsidy paid in order to ensure favourable terms for students; the number of subsidised loans made annually and the total sums involved; the level of public payments in respect of the Government's share of the risk; and, in total for private sector loans, the number of loans in deferment and default. From that information the overall impact in public expenditure terms will be clearly visible. Further, the department is audited annually by the National Audit Office and that would include spending on both public and private sector loans. The department will also be able to examine the private lenders' operation of subsidised student loans to ensure that the government subsidies are correctly applied. The NAO will also--

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