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Baroness Carnegy of Lour: My Lords, yet again the noble Lord is separating one issue in a package contained in the Bill. He has just moved an amendment which, had it been won, would have cost the country £2 billion. I wonder whether the noble Baroness, in replying, will tell us what this one would cost.

Baroness Blackstone: My Lords, these amendments deal with the way in which income is assessed for the purpose of determining, on the one hand, the repayment arrangements for disabled borrowers; and on the other, the level of contribution that students' parents or spouses are expected to make towards the costs of their higher education.

I am pleased to be able to reassure the noble Lord, Lord Addington, that the Government are totally in accord with the spirit of his amendment. At Second Reading the noble Lord expressed the hope that he was pushing at an open door in seeking confirmation that the Government's response to the Dearing Committee's recommendations on the treatment of disabled students would be positive. Members of your Lordships' House will know that we have already announced that the disabled students allowance will no longer be means-tested for full-time students. We are currently exploring the possibility of extending it to other groups, including part-time and postgraduate students and those who have become disabled and wish to seek a second qualification. So they would be treated differently from other students wishing to seek a second qualification.

We also intend to ensure that disabled borrowers continue to be treated fairly when it comes to repaying the costs of their maintenance. I can unequivocally assure your Lordships that we shall ensure that disability benefits are disregarded for the calculation of income for repayment purposes.

I have reservations about the noble Lord's amendment as it stands, however. In the first place, I am not sure that the amendment would have the effect that the noble Lord intends when considered in isolation. For example, there is no specific provision elsewhere in the clause relating to the calculation of income on which this amendment might bite. But this is not simply a question of the amendment being defective. If that were the only difficulty, I should happily undertake to come back to the noble Lord with another form of words. The fact is that the structure of the Bill simply does not permit an amendment of this kind; nor do I believe that it would be appropriate to make such detailed provision on the face of primary legislation.

Moreover, the amendment is based on the assumption that it will be necessary to make provision in regulations under Clause 16 to disregard disability benefits when calculating repayments. In fact, it is far from certain to what extent that will be the case. As Members of your Lordships' House will know, we intend that loan

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repayments should be collected by the Inland Revenue alongside tax and national insurance contributions. At present, most disability benefits are disregarded for taxation purposes because they do not fall within the definition of taxable income. Under certain definitions of income, therefore, it is quite possible that such benefits would similarly be automatically disregarded for repayment purposes. If they were not automatically disregarded, we should make specific provision to ensure by other means that they were disregarded. It would be quite inappropriate to require provision to be made in regulations under Clause 16 when that provision might be made elsewhere.

We have stressed throughout our debates on the Bill the need for flexibility to ensure that the legislation can cater for a wide range of future possibilities. It is quite likely that in the future the definition of income to be used, or indeed the types of benefits to which disabled people are entitled, will change from time to time. We should, of course, make specific provision in regulations under this clause to exclude disability benefits from the calculation of income if that were necessary. But, as I indicated, disability benefits might be disregarded by other means in which case the amendment would be otiose and would fail to achieve the effect that the noble Lord intends. Therefore, with the assurance that the Government will take whatever steps are necessary to put in place fair arrangements, as I have outlined, for disabled borrowers, I invite the noble Lord to withdraw the amendment.

Your Lordships may not be surprised that my response to the second of the amendments is less positive. The provisions in Clause 16(2)(c) enable us to target support for fees and maintenance on those who most need it. In the Government's view, there is a clear case for relating the level of support to family income; otherwise our proposed system of grants and loans would disproportionately benefit the better off. Our aim is to encourage access to higher education from those sections of society that are currently under-represented. Means testing grants will ensure that students from less well-off backgrounds will not have to contribute to tuition fees. Means testing loans will mean that these students will have access to the maximum funds available for maintenance. Since the loans will be highly subsidised, this also means that the largest subsidies will go to those from the poorest backgrounds.

The amendment, if accepted, would allow the means testing of grants and loans but only on the basis of an individual's income, not that of the parents or spouse. Means testing an individual's income without regard to the income of the household to which that individual belongs and from which he or she benefits, would be regressive and unduly expensive, as the intervention of the noble Baroness, Lady Carnegy of Lour, indicated. For example, as I highlighted in Committee, we estimate that ending means testing altogether might cost around £700 million per annum in the short term. That is money we can ill afford to divert from our higher education system; nor would it be right to reduce the support available to the poorest students in order to give additional subsidies to those who could well afford to

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do without them. This is a view shared by the Dearing Committee which also recommended maintaining the parental and spouse's contribution.

I accept that, as the noble Lord, Lord Tope, said, 18 year-olds are, for most purposes, adults in the eyes of the law. But in reality, as I am sure Members of your Lordships' House agree, most 18 year-olds are not fully independent of their parents and receive support from them in a variety of ways. I myself have had that experience and remember it from the size of my telephone bills at the time. This is particularly true of 18 year-olds whose sole activity is full-time higher education. Young people in this position are inevitably not economically independent, and it is not the function of the student support system to make them so. We believe therefore that where parents are able to continue to provide support by contributing to their child's living costs such support should be encouraged. This position is widely recognised across the world and indeed by many of our European friends. In some countries--Germany and Italy, for example--parents are under a legal obligation to maintain their children for as long as it takes the child to complete a course of vocational or professional education, irrespective of their age. In other countries--Austria and Italy, for example--this obligation does not cease until the child first becomes financially independent, whenever that is. I see no reason to fall completely out of step with the rest of the world in the way this amendment would have us do.

The current system in the UK, which we are proposing to retain, steers a middle course. Where students are financially supported by their parents, that support will continue to be taken into account, as it is at present. However, students will be treated as "independent" once they reach the age of 25--or in some cases sooner if they have been married for two years or supporting themselves for three--and their own income or that of their spouse will be assessed. The essence of the argument remains. Where a student is married and his or her spouse has the means to support him or her while he or she studies, he or she should be encouraged to do so. Government resources can then be targeted on those who do not have recourse to such support.

At the same time, our policy relating to such contributions essentially maintains the current situation. Only those who can afford it will be expected to contribute, and they will have to pay no more than they would under the current arrangements.

I acknowledge that some noble Lords may have concerns about students whose parents or spouses do not make the contribution expected of them. There is no reason why this should be more likely to happen when our proposals are implemented than under the present arrangements since, as I have made clear, no parent or spouse will be expected to pay more.

Our proposals build on the existing and generally accepted principle that students' families should, where they can, meet a proportion of the costs of their

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education. They do not, however, impose any additional burden on parents or spouses. I therefore urge your Lordships to reject the amendment.

Lord Addington: My Lords, I had hoped to receive an answer in that tone. At the same time, I cannot help feeling a little wary when I hear about regulations that might apply, that will apply, or that will cross-apply. With the caveat that I shall study the Minister's answer and perhaps seek guidance in trying to decipher that spider's web of regulations, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

5.45 p.m.

[Amendments Nos. 44 to 46 not moved.]

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