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Sale of Student Loans Bill

Let me develop the point. What about those students from the European Union whom we have discussed? That is especially relevant as more students move around. What happens if students move abroad? Are they more or less likely to default? With a free market in higher education across Europe, are we sure that such loans will always be a secure investment? I am not quite so sure. Those points need to be explored. What requirement is there on HMRC to pursue those students who fail to pay back their loans? If the buyers of the student loan book are to rely on HMRC’s competence to realise the value of their purchase, this week will have fatally undermined the price of the assets on offer. The hon. Member for Great Grimsby referred to debt bundles, and he made a good point. With the lack of liquidity in the financial market today, there is a serious question about whether any bank would want to take on the risk of buying the student loan book. If banks are loth to invest at the moment, there is a risk that the Government will have heavily to sweeten the deal to interest buyers. A number of hon. Members have asked how large a discount the Government will need to give to investors and what proportion of the book they will sell to raise the £6 billion. The Minister has consistently said that he cannot answer because that would reveal all the Government’s cards to investors, but the cat is out of the bag. We know that the Government’s finances are tighter this year and that there is a greater squeeze on spending. Selling the student loan book under those circumstances is rather like advertising on lastminute.com: ““The plane leaves in 24 hours, all tickets must go. Any price accepted.”” We should perhaps be a little concerned that there is a risk that the Government will put in far too great a sweetener, which would lower what is good value for money. How will the Government decide what is good value for money? How will we know what they have done to establish that? If the Government do not reach a deal that is good value for money, will they postpone the sale or proceed anyway? They will need to receive a capital amount to balance the books this year. The Tories did at least postpone the sale in 1996 when they failed to obtain a good price for the taxpayer. The problem is that the Government’s record is not good. The forthcoming National Audit Office report on QinetiQ, which we expect to be published tomorrow, is a prime example. A large stake in the defence firm was sold at rock-bottom prices to the Carlyle group and then floated on the stock market, which made the group a hefty £300 million profit. That is a prime example of what happens if we do not ensure that we get value for money at the time. If the Government succeed in selling the student loan book at a level they believe to be fair, will they undertake to report to the house on the details of the sale before proceeding with further sales? That is the point that my hon. Friend the Member for Harrogate and Knaresborough (Mr. Willis) made when he asked the Minister to put on the record the discounted rate for the previous sales. I accept that we will not know all the details before the sale, but if the House is to have confidence in what the Government are doing we need to know the success rate that they have achieved so far. From the investors’ point of view, it is not clear how they will know exactly what they are buying unless the Government intend to release much personal data about the loans. The Minister said that all the information for potential purchasers would be anonymised, but I cannot understand how investors could genuinely appreciate what they were buying without knowing far more about those who owe the debt. That raises concerns. What will happen if students default on their payments? The hon. Members for South Holland and The Deepings (Mr. Hayes) and for Great Grimsby asked about that. Will HMRC pass on information about individuals to the new owners of the debt? What data will be passed to them? What safeguards will be in place? Will HMRC or the new loan owner be responsible for chasing up those who default? How will the relationship work? How will the data be transferred? I presume that the Minister does not want the Opposition to give him details of a reliable courier company and that a better system will be used in future. There was some hubris in the Government’s reference to their intentions on data protection in the Q and A that the Department released. I suspect that no hon. Member will be as ready to accept the Government’s reassurances about the matter now. What will happen when the initial purchaser sells on the debt? The hon. Member for Daventry (Mr. Boswell) made that point in interventions. Are the Government genuinely saying, as the Minister told me in private, that they will undertake to draw up a new agreement and contract with any new purchaser, all the way down the line, regardless of the way in which the debt is broken up, the number of people to whom it is sold on and whether it is sold here or abroad? What data protection will be in place as the debt is passed along the chain? The Government trespassed on principle long before we reached this point, when they decided to impose large debts for higher education on students just as they start out in life. There are few points of principle in the Bill, but it contains several holes that leave graduates in uncertainty. I hope that the Minister will turn his mind to them in Committee. However, for now, we are content to let the measure through.