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Sale of Student Loans Bill

My Lords, I want to speak briefly on the Sale of Student Loans Bill. I am delighted that it gives me an opportunity to welcome the Minister to her new position as Parliamentary Under-Secretary at the Department for Innovation, Universities and Skills. I also pay tribute to her predecessor, the noble Lord, Lord Triesman, who even in his relatively short time in the department, was committed to ensuring that the issue of the student experience played a prominent part in the political agenda. I have every confidence that it will continue under the stewardship of the noble Baroness. This relatively uncontroversial Bill seeks to raise £6 billion for the government coffers from selling parts of the student loan portfolio. It has been done twice before, as my noble friend said, in 1998 and 1999, when loans worth more than £2 billion were sold. I am very much in favour of the Government’s rationale in wishing to transfer this risk to the private sector and, ultimately, reduce this part of the public debt. However, it would be helpful, with the current state of the financial markets, if the Minister could reassure the House whether this is the most appropriate time to make the sale. I was reassured by many of the conditions that the Minister described: the terms under which a sale might be contemplated. However, it would be helpful if she could say whether she has received advice from the financial services sector on the best time to obtain the optimum price. There is concern, particularly among student groups, that individual student debt is growing. They worry that this is having a negative impact on access to higher education. It is worth reminding the House that the current student support package is one of the best that there has ever been, with a generous bursary package and student loan repayments not starting until a graduate is earning £15,000. While there is of course no room for complacency on access, it is particularly pleasing to see that university applications between 2002 and 2007 have increased by 5.5 per cent from the lowest socio-economic groups. The UCAS application figures for this year, released last Thursday, show an overall 6.7 per cent rise in student applications over the 2007 figures. I declare an interest as chief executive of Universities UK. I should like to highlight a report that UUK commissioned from PricewaterhouseCoopers in 2007 on the graduate earnings premium. It illustrated the fact that, over a working life, a graduate is predicted to earn some £160,000 more than someone with two A-levels. It is clearly a sound investment. There is benefit both to the individual and to society at large. The sale of the loan book leads me to ask a wider question about the financial state of the higher education sector, if the Minister and your Lordships will indulge me for just a further moment. As I said in the House on 8 November 2007, during the debate on the Loyal Address, universities were grateful for the Government’s commitment to the maintenance of the unit of public funding for teaching in the recent spending review. I also welcomed the additional funding for the Higher Education Innovation Fund. However, the financial climate in the higher education sector is increasingly volatile and an investment backlog still exists. The sector needs stability to plan for the future. With that in mind, I ask the Minister whether any further thought has been given to my proposal in the Loyal Address that at least some proportion of the money raised by the sale of student loans would be reinvested in higher education.