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Lord Wallace of Saltaire: I am concerned about the European dimension. The students I taught this morning included students from Finland, Sweden, Germany, France, Italy, Spain and Portugal. A small central unit in the Department for Education and Employment seems to raise a large question. One talks about knowledge of tax regimes in other European Union states. That also raises questions.

Last week, for other reasons, I read cases heard in the European Court of Justice on payment of fees to students from different countries operating across boundaries within the European Union. It seems to present a potentially classic case and we shall find ourselves before the European Court of Justice if we are not careful. Alternatively, we may find ourselves up against questions about the way in which tax regimes are interpreted in different states.

Universities have discussed this issue. How does one demonstrate that a student from northern Greece is who he says he is without investigating in great detail? I wish the Minister to be aware that a small central unit may get us into potentially extremely deep waters as we try to impose a British system on students who come from 14 other countries.

5.30 p.m.

Baroness Blatch: Perhaps I may add to that point. A rather technical exercise is undertaken in this country to calculate residual income, on the basis of the commitments that an English, Scottish, Irish or Welsh person has in terms of taxation, national insurance, mortgage payments and so forth. It is the most incredibly complicated system. If one is to rely entirely on what the student or his or her family says by way of submitting an application and everything is taken as read because there is no sophisticated verification system, I see great problems building up.

Sadly, I also foresee a kind of resentment building up on the part of students at home, who may see that all sorts of tortuous processes are gone through to verify whether a parent is working, whether everything is being declared that should be declared and so on, and yet see almost none of that taking place for an EU student, simply because it is difficult, because the system is bureaucratic and information is hard to get hold of.

I wish to refer to the question put by my noble friend Lady Park of Monmouth. Like the rest of us, my noble friend is very concerned that in this new world in which students will be living, the only money they will have in their hands come the beginning of term will be money they may have received through the loans system. The latest document from the DfEE states:

That is inconsistent with the reply given to my noble friend by the Minister. As my noble friend knows, and certainly I know, having seen my own children through

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the system, as students arrive at university landladies and landlords expect money in advance for rent and other things. Moreover, students will have some expenses to meet simply in order to eat and to live during the first weeks of their course.

A very large number of young people in this country will be unable to turn to their parents for help. They will be unable to turn to them for the sort of sums they will need to put down as advance rent. Therefore it is important that they have this money in their hands, as a loan--especially those who are borrowing 100 per cent. of the moneys they will need for maintenance. That point is not covered in the documentation.

Baroness Carnegy of Lour: Will the noble Baroness tell the Committee whether any changes will have to be made in Scotland in implementing this provision? In Scotland local authorities are not involved; there is an agency. Will that agency have to be enormously enlarged, and will there have to be an extra unit for overseas students? I could put this point when we discuss the Scottish provision under clause stand part. However, it might save time if the noble Baroness could answer now. I see that the Scottish Office Minister, the noble Lord, Lord Sewel, is sitting at her side.

Lord Walton of Detchant: I agree with noble Lords who said that the problem of means-testing overseas students will bristle with difficulties. I wonder how a central unit in the department will deal with the kind of case that I recall from my former university, of an overseas student who applied to the hardship fund but made the mistake of parking his BMW outside the window.

Baroness Blackstone: A number of questions have been raised. To return first to the point made by my noble friend Lord Peston, yes, of course we will give local education authorities ample notice of any change in the system. We ought to be clear that the means-testing regime which presently applies to grants and will apply to tuition fees will be exactly the same. There will not be two different sets of means-testing. The same eligibility criteria will apply. I wish to be clear on that point.

On the issue of means-testing students from the European Union, we are required under EU law, as I am sure the noble Lord, Lord Wallace of Saltaire, is aware, to treat EU students in exactly the same way as we treat UK students. So it is necessary to have a means-testing regime for tuition fees for European Union students if we are to have it for UK students.

Lord Mackay of Ardbrecknish: I have listened to the argument with some interest. Is it not possible that we could argue before the European Court that a student from a European Union country would not, in his or her own country, receive help from the government? In many countries students do not; they are very much on their own and dependent upon their parents. Yet if they

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come to this country, they will receive help. That would seem illogical enough even for lawyers at the European Court to understand!

Baroness Blackstone: Far be it from me to comment on the logic or otherwise of lawyers in European Union courts. The legal advice that we have received is that we cannot change this provision, at least not for the foreseeable future. We have to accept European Union law and abide by it in this particular respect.

Yes, of course I accept the point made by various Members of the Committee. This is a technical and difficult area, and I do not under-estimate the difficulty. Nor do I under-estimate the strengths of DfEE civil servants in being able to sort out the matter. I am sure that they will be able to do so.

It is also the case that the vast majority of European Union students studying in the UK come from families whose incomes are much higher than would qualify them for the sort of support referred to by the noble Lord, Lord Mackay of Ardbrecknish; namely, exemption from fees. We know that that is the case. After all, such students do not receive any support for maintenance in this country. In most European Union countries they would live at home. If they can afford to pay to live in the UK, away from home, it is very unlikely that they will be eligible for exemption from tuition charges.

Baroness Blatch: I wish to make two points. First, I imagine it would be unlawful to make the assumption that if someone comes from an EU country he or she can afford tuition fees, and therefore the exercise of means-testing has to be undertaken. Secondly, I wonder whether the noble Baroness will tell us for the next stage of the Bill what the verification system will be for EU students.

Baroness Blackstone: It would be unlawful to make an assumption if someone applied for exemption in relation to a fee. But I suspect, and hope, that those EU students whose parents' incomes are well above that which will qualify them for exemption from a fee will not apply. They would be wasting their own time as well as that of everybody else. We shall be making available all the information that we possibly can to applicants from the European Union, setting out what the eligibility will be. There may be people who think that some way or other they can get round the provision. I do not deny that. That is why it is important that the central unit to be established is extremely well-informed and operates effectively in carrying out the means-testing. I made the point in order to provide some reassurance. We should not imagine that every EU student coming here to study will apply for exemption.

Lord Wallace of Saltaire: I strongly agree with the Minister that most of the students who come here are not among the poorest classes. I wish, however, to make two points. Will the Minister assure the Committee that the small central unit so designated will at least consult with other EU member governments as early as possible

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as to how such a scheme might be managed? The British Government have an unfortunate record of pushing matters through without consulting other governments first, and then discovering that there are large problems and obstacles to be faced. The DfEE has not always been the most internationally-minded department.

Secondly, the precise reason that I was reading through the ECJ cases last week was that it seems to me the law is not entirely clear on this whole matter. There are some interesting questions that the British Government ought to be considering as we and other governments move forward on university financing. There is a mess that has to be sorted out. Whether or not the legal advice is entirely clear, some of us are seeking additional legal advice on the matter.

Baroness Blackstone: Officials in my department will, of course, consult with the governments of other EU countries in order to obtain the best and most up-to-date information. I also take the second point made by the noble Lord, Lord Wallace of Saltaire.

Perhaps I may return to one or two other points. The noble Baroness, Lady Blatch, raised the question of what happens to students on day one. Perhaps I can remind her that this autumn students will still be in receipt of grants, and their grants will be available from day one. From 1999, when the grant is to be abolished, it will be vital that the Student Loans Company has paid the loan from day one. That is what I said before, and that is what we intend to do. The noble Baroness's point related to the position in 1998, which is slightly different.

The Student Awards Agency for Scotland currently carries out the functions of the LEAs in relation to student awards. The intention is that it will continue to do so for home and EU students. There should thus be no significant difference in the scale that is required.

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