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Lord Chesham: My Lords, we do not favour trial by television or by any other form of media. However, if there is a problem, it should be investigated. I do not think that one should make any judgment until such an investigation has been carried out.

Lord Dean of Beswick: My Lords, is the noble Lord aware of the definitive report in The Sunday Times which stated that one lady Member of the European Parliament had admitted that she had "made a profit"--that was the term used--of £45,000 per year out of travel on top of all the other money that she was allowed to draw? Bearing in mind that a large slice of that will

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be paid for by the taxpayers of this country, does that not contrast with the tardy increase which has just been forced on your Lordships?

Lord Chesham: My Lords, I feel absolutely certain that the majority of Members of your Lordships' House would love to have the allowances given to Members of the European Parliament. I am aware of that article in The Sunday Times and, although we all know that one should not always believe what is written in the press, the President of the European Parliament has recognised that there is a problem with the allowance system. He announced on 24th October that he was launching a full review of that system. Today's Daily Telegraph notes that the Parliament's leaders will meet tomorrow to consider reforms. We welcome those steps to put the house in order.

Lord Pearson of Rannoch: My Lords, is my noble friend aware of the research which shows that each active Member of your Lordships' House costs the taxpayer about £50,000 per year; that each Member of the House of Commons costs the taxpayer about £450,000 per year; and that each Member of the European Parliament--for 60 days of rather doubtful work per annum--costs the taxpayer more than £1 million per year? Does my noble friend agree that that might be less unjustifiable if the European Parliament ever did anything useful?

Lord Chesham: My Lords, I refrain from commenting on the last point. However, when making these comparisons noble Lords should bear in mind that the costs of the European Parliament reflect rented buildings in Brussels, Luxembourg and Strasbourg and the costs of travel, translation and interpretation. By contrast, the Palace of Westminster is rent free. I believe that the costs of the French and German parliaments are on a par with those of the European Parliament.

Lord Bruce of Donington: My Lords, is the noble Lord aware that on 17th October last at precisely 7.30 p.m. ITV broadcast a programme entitled "Fat Cats" which incorporated a full examination, with the aid of cameras, of how various expenses were claimed and gave a broad indication of the result? Does the noble Lord agree that it would be helpful if a video tape were placed in the Library so that noble Lords could gather the contentions put forward? Is the noble Lord further aware that on 17th October, entirely by coincidence, the Treasury sent to Sub-Committee A of the Select Committee of your Lordships' House an indication that there was a gentleman's agreement between the European Parliament and the Council that they should not examine or amend each other's claims on European funds for administration? Does the noble Lord agree that we ought to know a little more about this matter before we proceed much further?

Lord Chesham: My Lords, a copy of the big story on 17th October, which was an ITV programme, has been placed in the Library. As far as concerns the allegations made in that programme, we take seriously

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any suggestion of the improper use of public funds. We have been at the forefront of efforts to combat waste and fraud within the European Community.

To deal with the agreement between the European Parliament and the Council, a Council resolution in 1970, prior to the accession of the United Kingdom, provided that the European Parliament and the Council would not examine each other's budgets, although noble Lords will be aware that overall limits are set.

Lord Clark of Kempston: My Lords, in view of the inordinate costs of European Members, does the Minister agree that it would be logical for the Government to press the Commission to end the farce of having three locations for the European Parliament instead of one?

Lord Chesham: My Lords, the situation is far from ideal. However, the establishment in three different countries pre-dates the UK's accession. I believe that there is little prospect of securing the unanimous agreement of member states for a single site.

Lord Richard: My Lords, for the sake of accuracy, can the noble Lord confirm that the agreement as to where the European Parliament sits is nothing at all to do with the Commission, and that it is the Commission's view that it would be much better if it sat in one place?

Lord Chesham: My Lords, yes.

Student Loans Act: Cost

3.14 p.m.

Baroness David asked Her Majesty's Government:

    What is the estimated cost of putting the Education (Student Loans) Act 1996 on the statute book.

The Minister of State, Department for Education and Employment (Lord Henley): My Lords, it is not possible to isolate the different components which relate directly to enacting the Education (Student Loans) Act 1996. This would involve disaggregating the time spent by officials and Parliament from other work they were doing at the same time both in my department and elsewhere. There are no detailed records which would enable estimates to be produced with any degree of accuracy.

Baroness David: My Lords, I am not entirely surprised by the answer, although I am disappointed. It is a great pity that costs cannot be calculated a little more accurately. Is the Minister aware that this Act, which he described at Second Reading as giving students a better, quicker, convenient, more varied and comprehensive service, had its Third Reading in this House on 1st April 1996, which is perhaps a rather appropriate date in view of what happened later? Is he further aware that in September of this year, less than six months later, the Secretary of State announced that she was dropping the twin-track scheme in favour of privatisation of the Student Loans Company which will

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be a private monopoly? How can the Government possibly justify the waste of money and parliamentary time that the passing of this Act involved?

Lord Henley: My Lords, I do not believe that it was a waste of parliamentary time or the time and cost of my officials. I believe that to have attempted to give the accurate reply which the noble Baroness sought would have been a disproportionate use of taxpayers' money and would not have been recommended. As we made clear earlier, lending to private individuals is not a natural or desirable function of the public sector. Our policy was to transfer provision from the public to the private sector. That will result in significant improvement in both effectiveness and customer service. The noble Baroness will be aware that we had discussions with a number of financial institutions. We concluded, in the light of the assurances that I gave to this House and that colleagues gave in another place, that our long-term goal to bring the private sector into the student loans scheme could best be achieved through the sale of part of the existing student debt and the contracting out of the administrative work of the Student Loans Company. We would not have been able to come to that conclusion had we not been able to carry out the market test that we did earlier this year. The 1996 Act enabled us to do just that market test.

Lord Morris of Castle Morris: My Lords, will Her Majesty's Government learn from what was certainly an unnecessary and expensive fiasco that it is foolish to rush privatisation legislation through Parliament before it has been accepted by the private sector? Can the Minister give this House an assurance that they will never do such a silly thing again?

Lord Henley: My Lords, we will continue to pursue privatisation wherever it is suitable. No doubt the party opposite will continue to oppose every single small act of privatisation, as it has done over the years; and it has been wrong on every single occasion.

Lord Campbell of Alloway: My Lords, will my noble friend accept from one noble Lord on these Back Benches that his explanation is wholly unacceptable?

Lord Henley: My Lords, I am sorry that my noble friend does not find my explanation as helpful as it might have been. I shall not repeat the explanation that I have given, but I may have further discussions outside the Chamber and possibly convince my noble friend of the correctness of our approach.

Baroness Farrington of Ribbleton: My Lords, would the noble Lord expand a little on the reply that he gave a few moments ago? Does he agree that the market testing occurred prior to the Bill becoming law and that there was no necessity for it in order to carry out that market testing?

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Lord Henley: My Lords, I am afraid that the noble Baroness is wrong. We could not conduct that market testing without the legislation. That was why we had to have discussions with the financial institutions after the passing of that Act.

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