---

Sale of Student Loans Bill

I note my hon. Friend's comments from a sedentary position. Let me be clear on the issue. The decision will always be one for the ONS, but the Government and I are confident that a statement as stark as, ““You cannot sell the loans on without the Secretary of State's say-so,”” would, under the current classification rules, trigger a decision that it was not a true sale. That is our judgment, and we want to keep that option in case of a future change in the classification rules. Clause 3(6)(b) and (c), which are addressed by the amendment, provide two legal ways of achieving the same end: to ensure that the Secretary of State can enforce the terms of the original contract against future purchasers. That might include provisions that, for example, purchasers must continue to administer loans though the Student Loans Company, or that borrowers continue to have access to a mediator in the event of dispute. Clause 3(6)(b) would achieve that end through contractual novation, which effectively means substituting the subsequent purchaser for the original purchaser in the contract with the Secretary of State. Clause 3(6)(c) would allow the Secretary of State automatically to be a party to any subsequent sales contract, so that he would be able to enforce its terms. It is important that we retain both those options so that we can use whichever is most appropriate at the time of a sale, bearing in mind the long-term nature of the intended sales process. I do not want to restrict our hand at this stage if, in the longer term, that would compromise the Secretary of State's interests and those of the borrower.