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Lord Carter: My Lords, it has been a very exciting day for some of us and I am sure that it would not have been complete without the intervention I have come to expect from the noble Lord, Lord Mackay, now joined by the noble Lord, Lord Steel, and the Opposition Chief Whip.

The noble Lord, Lord Mackay, said that under the previous agreement he thought that he could finish the Committee stage of the Bill before Friday and that the Bill could be finished in the Recess. As Chief Whip, I think that that is a brilliant idea, but I think that he meant the spill-over period.

We have had two Statements today on important subjects. The Opposition, as is their right, properly took them. As the noble Lord knows, we were prepared to sit in the first week of August, but the Opposition Chief Whip said in the House that he would regard that as a hostile act. Therefore, we are under a certain degree of constraint and have had the problems with the Northern Ireland legislation.

This is the last week and we all know of the problems that arise in the last week. Let us make some progress tonight. I suspect that we shall have a full day tomorrow and a full day on Thursday. That is the time to see how far we have gone. I apologise to the noble Lord, who knows of the problems I have had. He has been very patient, so let us keep trying.

Lord Mackie of Benshie: My Lords, could we have five minutes more for our dinner now?

Lord Carter: My Lords, if the Question is put, noble Lords will get their dinner.

On Question, Motion agreed to.

27 Jul 1998 : Column 1264

Education (Student Support) Regulations 1998

7.32 p.m.

The Minister of State, Department for Education and Employment (Baroness Blackstone) rose to move, That the draft regulations laid before the House on 17th July be approved [42nd Report from the Joint Committee].

The noble Baroness said: My Lords, I beg to move the Motion standing in my name on the Order Paper. With the leave of the House, I shall speak to both Motions.

My purpose today is to seek your Lordships' approval for the Education (Student Support) Regulations in respect of England and Wales and the Education (Student Loans) (Scotland) Regulations in respect of Scotland which will give effect to our proposals for making income contingent loans to students entering higher education from 1998-99. With the agreement of the House, this debate covers both sets of regulations. There is virtually no difference between them other than the dates of the academic year and one small difference in drafting, which has an identical legal effect. Otherwise, the two sets of regulations are identical. Parallel regulations for Northern Ireland will be made shortly, and they will also be the same. The two sets of regulations under consideration tonight were tabled on 17th July and have been looked at by the Joint Committee on Statutory Instruments.

This House has had a series of lively and interesting debates over these proposals. I believe today is not the time to go over all that ground again. I emphasise that these regulations cover the making of loans and are nothing to do with tuition fees. I hope that we will not be diverted by that issue again today.

The regulations relate to the academic year 1998-99 which is essentially a transitional year. New students will still be able to receive a maintenance grant, albeit at a reduced rate, but will be compensated by having access to a larger loan. The maximum full-year loan for a student studying in London will be £3,145. Existing students and those falling within the gap year and A-level/Highers appellants schemes will continue to receive a 50 per cent. grant and a 50 per cent. mortgage-style loan. Regulations covering the loan rates for these students were laid on 10th July.

We will make a commencement order to bring into effect Section 44(2) and part of Schedule 4 to the Teaching and Higher Education Act once the regulations now before the House are made. This order will repeal the existing student loans legislation; namely, the Student Loans Acts of 1990, 1996 and 1998. However, as I outlined to the House in some detail earlier this year, savings provisions will ensure that those Acts continue in force in relation to second and third-year students and certain others for as long as they are required. Mortgage-style loans will therefore be available for as long as there are students still entitled to them.

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These regulations provide for the payment of new loans and do not cover the collection of repayments. Repayment provisions will be dealt with in another set of regulations to be made early next year. I know that some of my noble friends and noble Lords opposite have expressed concern about that, but I do not believe that there is any need to have such regulations ready now. They will be principally of interest to employers and those involved in the collection arrangements. They will be available over a year before any students begin repaying their loans. The regulations before us provide that no students will have to begin repaying before 6th April in the year 2000. Repayment regulations will require a great deal of further detailed preparatory technical work and we intend to consult employers about those details.

We have already provided students with information on the proposed repayment arrangements and we will be issuing all students taking out an income contingent loan with a detailed booklet explaining the Government's proposals on repayment of the new loans so that they are fully aware of how the loans are to be repayed. That will be more useful to students than a set of complex, highly technical regulations which normally only lawyers are able to follow.

I turn to the main provisions of the regulations before us. They deal with eligibility; amounts of loans for 1998-99; the application process; arrangements for paying loans in instalments; and the new hardship loans.

While the new loans will offer different and more flexible repayment arrangements, the eligibility criteria and the actual application process will be very similar to the current scheme. Loans will be available for all full-time designated courses, as defined in Schedule 2 to the regulations. In addition, we shall designate all part-time courses of initial teacher training for loans. For 1998-99, loans will be limited to those aged under 50 on the first day of the course, but as the Secretary of State has already announced, loans will be extended to those aged under 55 on the first day of their course--including those who start in 1998-99--from 1999/2000 onwards, where they plan to enter the labour market after graduation. I believe this is a welcome extension which will be of real benefit to those wishing to retrain or develop new skills at this stage of their lives.

Applications for new loans will be made as now, through the student's college, once they have enrolled on the course. The administration of the new and the existing schemes has been kept broadly similar to minimise the impact both on colleges and the Student Loans Company in advance of the much bigger changes planned for student support in 1999-2000. The application process is almost the same as for existing loans and colleges and universities are familiar with it. We have shown the draft regulations to representative organisations such as the Committee of Vice-Chancellors and the Standing Conference of Principals in Scotland and they have indicated that they are content.

There are one or two differences to draw to your Lordships' attention. First, we have decided that all new loans should be paid in instalments to help students to

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manage their finances better throughout the year. Students will of course still be able to apply at any time and for as much as they want. But if they do not take the maximum entitlement first time, they will now have a second opportunity to top that up.

Secondly, we are introducing a provision which will allow a student to be absent for up to 60 days if they are ill but continue to receive instalments during that time. A further discretion will enable payments to be made even if the student is absent for longer than this or if the absence is for other reasons such as caring duties if the college considers that the student could suffer hardship as a result. I hope that noble Lords will welcome these measures which go some way to ensuring that students in this unfortunate position--students who become seriously ill--are not left without financial support.

I said at the beginning that these regulations do not cover repayment arrangements, beyond providing that no repayments will be due before 6th April 2000. However, they do prescribe the rate of interest which the loans will attract, which is linked, as for the current scheme, to the rate of inflation. Borrowers will pay no more in real terms that they borrow. The interest rate for 1998-99 will be 3.5 per cent. based on the March retail prices index.

I turn now to hardship loans. Noble Lords will recall that as part of our programme to target support to those most in need, we announced our intention to introduce a discretionary loan of up to £250. The regulations we are debating cover the arrangements for paying and administering these loans. New students will be able to apply once in each academic year for an amount between £100 and £250 provided they have already applied for their maximum student loan. The hardship loan will be added to the student loan and repaid at the end of the course on exactly the same basis. It will be for universities and colleges to determine whether a student should receive a hardship loan taking into account students' individual circumstances. We will leave it to the institutions to set their own criteria, except that we believe the main test should be exceptional financial hardship such that the student might be unable to continue their course for the rest of the year and would therefore have to drop out.

Hardship loans will be paid by the Student Loans Company directly into students' bank accounts and we shall set it a target of seven days to make such payments. I know that colleges and universities have been anxious for information about this new loan and have been asking for further advice. The department will issue guidance before the start of term in the annual eligibility guide which will describe in detail how the new scheme should work and in particular will suggest what criteria colleges may wish to use when allocating hardship loan funds.

I should perhaps remind the House that these loans have been made available in addition to the access funds, where resources have been doubled for next year. Our advice will be that in general students should apply for a hardship loan before receiving any payment from the access funds, but again we will leave it to the

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discretion of the higher education institutions to decide which form of support is more appropriate for a particular student's individual circumstances.

I end by saying how much I value the excellent work which student loan administrators do in ensuring that students can apply for loans, often acting as financial advisers for students in difficulty.

Noble Lords will no doubt have noticed that the regulations do not mention the role of higher education institutions in the application process, nor do they set out any duties for colleges and universities. This is because the primary legislation places the duty on the Secretary of State. It does, however, allow him to transfer functions to other bodies--and he intends to do so--to universities and colleges with eligible students by way of a separate determination. I recognise that having to administer two systems and deal with hardship loan applications will place an added burden on administrators in universities and colleges next year. We have tried to keep their role to a minimum and they will of course benefit from 1999-2000 onwards by having much of their work in determining eligibility for student loans taken over by the local education authorities, the Awards Agency in Scotland and the education and library boards in Northern Ireland.

However, I am able to tell the House that we are making a small increase in the fee paid to institutions for each eligibility certificate they process--both for mortgage-style and for income contingent loans--from £4 to £4.50. This is the first increase for over five years. That is in line with inflation. We have also decided that for every income contingent loan processed we will also pay a further £1 in recognition of the work involved in assessing hardship loan applications, where there will inevitably be some unsuccessful applications. We believe that is fairer than just paying colleges for successful hardship loan applications.

As I explained earlier, the arrangements which these two sets of regulations cover are identical in purpose. They make transitional provisions for loans to new students in 1998-99, and are a crucial first step towards the implementation of our new student support system which we will have fully in place by 1999-2000. I hope that my opening remarks have been helpful in explaining some of the detail. I commend the two sets of regulations to the House.

Moved, That the draft regulations laid before the House on 17th July be approved [42nd Report from the Joint Committee].--(Baroness Blackstone.)

7.45 p.m.

Baroness Blatch: My Lords, I am grateful to the noble Baroness for explaining the two documents before us tonight. Perhaps I may say from the outset that the Department for Education and Employment, formerly the Department of Education and Science, has notoriously been very bad at producing regulations and orders. I do not believe I have ever seen one come out of the DfEE that does not suffer from manuscript amendments. This document is no exception.

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On one page there is an unreadable and indecipherable change. That is on page 7, paragraph 8(2). The particular change there is completely obliterated in my copy and I have tested a number of copies in the office. If the Scottish Office can not only produce an absolutely identical document with no manuscript changes at all, and produce it in a manner which is much more readable and in a typeface which lends itself to being easily read. I think that my criticism of the DfEE is one that carries force.

The noble Baroness says that the regulations have nothing to do with tuition fees. It is no intention of mine tonight to bring up the subject of tuition fees, except to say that my understanding is that loan facilities have been extended to some students to cover tuition fees. The term starts very shortly, in a matter of weeks. If there is a loan facility that is extended to cover tuition fees, when will we see the regulations which will cover that? It seems to me to be important that the students know about it.

The noble Baroness says that we will not see the repayment regulations until next year. I made the point, and it is worth repeating, that that is unfortunate. The regulations will confirm the repayment arrangements. As the noble Baroness has said, leaflets, which I am sure will be helpful to students, will be produced in advance of the regulations. They will be much more readable, more digestible and less complex. However, I have to say to the Minister that whatever they say, and however much they resort to lay language, they have to be based on the regulations which are approved by Parliament. It is Parliament that gives authority for those regulations, not glossy pictures and cartoon balloons talking to students about what Parliament may approve next spring. Not a mention has been made of means-testing overseas students. I am not sure when we shall see some reference to that in regulations.

When will the students see the money in the bank? When the noble Baroness talked us through the draft statutory instruments, she referred to applications being made by students when they actually go to university. A good many of us have had children in that position. Many students will be required to produce considerable sums of money in advance for their accommodation on their very first day in college. Given that students will have no grants on which to rely, they will have to find large sums of money ahead of making an application.

According to the regulations, the Secretary of State is bound to pay an instalment of the loan to a student within 30 days. Therefore, if the application is made when the student arrives at university and the Secretary of State makes sure that the loan is paid within 30 days, the student will already be one month into the course and that will be too late for many students.

Paragraph 5(4)(i) of the regulations on page 5, refers to students making certain whether they were, on the first day of the course, ordinarily resident, for the purposes of the regulations, in England, Wales, Scotland and Northern Ireland. First, is there an official definition of "ordinarily resident"? If so, upper case letters should have been used or the term should have been singled out as an official term. If there is no definition other

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than being resident for the first day of the course, does that mean, for example, that a student resident for the first day of the course in Scotland could come under the Scottish regulations for loans for the fourth year?

Later, in the same section dealing with the certificate of eligibility, there is reference to the process which must be undertaken in order to secure a loan. First, the student must seek a certificate of eligibility which seems to take some time. Again, I believe about one month passes between the start and the end of that process. Only after receiving a certificate of eligibility will a student receive an application form. The process then starts all over again. If I read page 6 correctly, which deals with the application for the loan, it seems that students must supply almost the same information all over again. If the certificate of eligibility has secured a student's bank's or building society code, age, date on which the course starts and so on, why is it necessary to undergo all that again? In today's technological age, is there not a system whereby that information could be passed down the line, in view of the fact that that certificate of eligibility is an extremely important document and a prerequisite in applying for the loan?

Arrangements for payment have not been referred to. I may be out of order on this, and, if I am, perhaps the Minister will tell me. However, as regards the arrangements for paying sums of money over to the universities for tuition fees, again, we are a matter of weeks away from the beginning of the year but we do not yet know what sort of money students will be expected to have; at what stage in the academic year they will be expected to pay; and whether they will pay in one sum for the year, monthly, termly or half-yearly. I understand that that is a matter to be decided by the universities and colleges. Will any criterion be applied? Will it just be bad luck for a student who arrives at a college which expects him to pay in advance six months' tuition fees? I make no apology for raising that matter and I accept that it may be out of order. However, I wish to place that on record because that question is exercising many students at this time.

The references to hardship in the regulations are fairly scant in terms of how this will be managed by the universities. The section on it is very thin; it gives very little information about how a student will qualify and what will be the criteria used to judge what is hardship. I imagine that a student who simply spends money too quickly will not qualify. Every student with full loan facilities and/or partial loan facilities but deemed to be funded by the better-off parents will start with the same money for the same courses in the same colleges and universities. Therefore, how will a student qualify for a hardship loan? What criteria will be used? Are the criteria to be established nationally so that there will be some consistency of application of this policy across the board, or will the matter be dealt with on a college-by-college basis, in which case a student may be lucky or unlucky, depending on the way in which a particular college operates?

The timescales are particularly worrying. If a student applied for certification of eligibility today, he would barely receive his loan by the first date of term. If that process does not start until the students arrive at

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university, they will not see the money in the bank until well into the autumn term. That will be much too late for many students.

The noble Baroness referred to access funds and the fact that they have doubled. I remind the noble Baroness that so too has the number of students who will be able to draw down the access funds. I wonder whether the number of students means that the sum of money available per student in terms of drawing down on the access funds is the same or better.

Finally, I deal with the increased payment made to universities for administration. The noble Baroness said quite rightly that it keeps pace with inflation. That is all it does. It does not reflect the extra administrative burden which will be placed on universities, which will be considerable. Universities are not only dealing with loans and the administration of them but also with the administration of tuition fees too. I wonder whether an extra sum of money will be paid on top of that which will reflect both inflation and the administrative burden.

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