---

Sale of Student Loans Bill

Let me again make it clear that we will act prudently and responsibly in undertaking the sales. The hon. Member for South Holland and The Deepings asked who was likely to purchase the loans. We believe, based on the advice that we have received, that a wide range of investors will be interested in buying bonds based on the loans, because they are a new asset class that will diversify investors’ portfolios and meet specific investor needs, for which there is a market. Those investors are likely to include pension funds, banks, insurance companies and fund managers; they will buy different loans according to their risk appetite. The hon. Members for South Holland and The Deepings, and for Brecon and Radnorshire (Mr. Williams), asked about the implications for Wales and the Welsh Assembly. As the hon. Member for Brecon and Radnorshire knows, student support policy and ownership of the Welsh student loan book was devolved in 2006. As responsibility for student loans in Wales has been devolved to Welsh Ministers, it is important that the provision applies equally to Wales. Any decision on the future sales of the Welsh loan book must be made in Wales by Welsh Ministers. Clause 8 gives Welsh Ministers the power to make those decisions. Welsh Ministers are keen to ensure that the powers are in place, so that they can ensure that maximum value for money is achieved for Welsh student loans. The Bill will enable Welsh Ministers to decide when it is appropriate to use the powers, bearing in mind the relevant economic and value-for-money considerations. The hon. Member for South Holland and The Deepings also asked whether I could give an indication of protected proceeds—that is, of the price that we will achieve. It would not be right to talk about the level of proceeds ahead of a rate. There will be a competitive process to maximise value for money for the taxpayer. My hon. Friend the Member for Great Grimsby (Mr. Mitchell), who is no longer in the Chamber, made a number of points. He talked about £18 billion-worth of sales; our only commitment at this stage is to seek £6.3 billion over the coming three-year period. The hon. Member for Brent, East (Sarah Teather), who leads for the Liberal Democrats, asked me to write into the Bill our future intentions with respect to fees and student finance. That would not be the right thing to do. We should stick to our policy of having an independent commission in 2009 and not prejudging it. That is the position of the Government, not of the Opposition. The right hon. Member for Wokingham has said that we should lift the cap now, and a Liberal Democrat think-tank says the same. We need to be responsible and stick to our policy. The hon. Lady asked about the implications for the Student Loans Company. Let me be clear. Following a sale, the Government plan to include provision within the contract that the SLC will continue to carry out the administration and enforcement of the loans that have been sold, and will continue to have all direct day-to-day contact with borrowers. That should give significant reassurance. The hon. Member for Daventry (Mr. Boswell) made an important contribution, based on his previous experience. We will not sell at any price. He made some important comments about students who travel overseas or students from elsewhere in the European Union. We need to be clear that loans to EU citizens for tuition fees started only in 2006-07. The first graduates will begin repayment from 2010. For that reason, those loans will not be part of the early sales of the loan portfolio. We are putting in place with the Student Loan Company a comprehensive system for collecting loans. The principle of income-contingent loans means that we will collect repayments according to purchasing power in the country where the borrower is resident. That is important. No one will be able to avoid repaying because a good local salary does not meet our £15,000 threshold simply as a result of the currency rates. We will ensure that enforcement across the EU will be possible under EU law by taking action in the UK courts—from memory, I think EC directive 1441 deals with that. The hon. Member for Reading, East (Mr. Wilson) wound up for the Opposition. I welcome him formally on his first appearance at the Dispatch Box. He asked me about paying interest subsidies to the purchaser. That is not how we expect the sale to work. There will not be an ongoing subsidy to purchasers; all that will be taken into account in the sale price. The hon. Gentleman commented on second degrees. Let me state for the record that we are not cutting funding to universities. We are saying—rightly, in my view— that £100 million over three years ought to be transferred from institutions spending that money on people who already have an undergraduate qualification to those, especially in the workplace, who do not have a first degree. There will be protection and transition. No university will lose out in cash terms at the end of that period. That is the right priority. Some 70 per cent. of the adult work force do not have a first degree qualification. That is a higher priority than people who already have their first degree. In conclusion, the Bill is important. We have had a sensible and measured debate and I commend the Bill to the House. Question put and agreed to. Bill accordingly read a Second time.