---

Sale of Student Loans Bill

My Lords, I join in welcoming the Minister to her first Bill in her new role and I look forward to working with her. We on these Benches welcome the principle behind the Bill. I am sure that the Minister is aware that at the previous two general elections the Conservative Party advocated similar proposals. The Bill is in line with Conservative intentions to move the student loan book to the private sector. However, I say that not without qualifications. Many of the questions that I shall ask the Minister have already been asked, but it is wise still to ask them so that she understands the importance we put on them. This transfer from the public sector to the private sector cannot be made unless proper safeguards are in place to protect the public interest and, of course, the interests of students. I have listened carefully to what the Minister said and to her assurances. However, I should like to concentrate on asking questions about safeguards. I hope that she will offer some strong reassurances to satisfy those somewhat persistent niggles that seem to arise from the Bill. Will she clarify the nature of the sale? Will all borrowers, present and future, be assured that the transfer will not permit information being passed on to any other organisation? Will it be part of the contract or will it be covered by some other parliamentary mechanism, such as guidance or statutory instrument? In March 2006, the Government published the student income and expenditure survey for 2004-05. The survey found that English domiciled full-time students graduating in the academic year 2004-05 had an average total debt of £7,918. For those students commencing courses after the introduction of variable fees in the years 2006-07, the debt was set to rise to around £15.000. However, the figures from a survey undertaken by NatWest Bank found that graduates leaving university in 2006 had on average debts of £13, 252, a 5 per cent increase from 2005. We will not know the full impact of variable fees until a review has been carried out. Surely it would be sensible to call for that review now rather than wait until 2009, as a proper review of the situation will need adequate time. I am sure the Minister will agree that many people simply do not understand the system of fees, loans and top-up fees, and that this confusion may dissuade them from considering to apply to or even exploring the option of going to universities away from home. While we do not wish to see students amass debts, many are often not aware of what is available to them in the form of bursaries, non-repayable grants and other funds from the Access to Learning Fund. Can the Minister ensure that more is done to make this information more readily available? It is just and right, as we recognise the need to become a more knowledge-based nation, that our population must be both prepared and able to access higher education. We on these Benches are dedicated to widening access to higher education, and we strongly believe in looking at the different ways people can undertake learning and further studies. But given the uncertain economic times we face—a point alluded to by the noble Baroness, Lady Warwick—can the Minister first give us a strong assurance that the Government will investigate fully, in depth and in detail, the point in time at which to transfer the loan book to the private sector? Secondly, if the Government dither a great deal, as they have in the case of Northern Rock, what safeguards will be in place to control the situation if the purchaser gets into financial difficulties or is involved in undertaking unacceptable practices? With the value of the student loan book at around £18 billion at the end of the financial year 2006-07, the Minister must agree that these are not small sums. Are there any estimates of the value of the loan book for the financial year 2007-08? Can she tell us whether a regulatory impact assessment has been prepared? Will the Minister also assure the House that concerns would be raised about the possibility of secondary sales to indeterminate groups of people? What safeguards will be put in place to ensure that the purchaser or purchasers are in full compliance with the terms laid out in the sale, and that if the book is to be sold on, that information is made available? The noble Baroness, Lady Sharp, also asked about this. If the information is made available to the Government, will they give instructions that all necessary checks and balances, as well as due diligence, are carried out on the new purchasers before the loan book can be sold on? This is a crucial point that needs to be addressed in detail because if the debt is sold on the open market, as is so often the case, it may end up being sold to an institution that is already underwritten or guaranteed by the Government, like Northern Rock. Although this is a fairly straightforward Bill, niggling questions keep appearing. How will students who are eligible for loans from the EU be traced? Will a charge be put on those loans, and how do the Government see that being implemented? Students will of course be concerned that the level of interest on their loans does not suddenly rise. They have already seen the rate of interest charged on loans rise from 2.4 per cent to 4.8 per cent. Many students are already missing out on the experience of moving away from home to study in order to avoid incurring even higher levels of debt. Can the Minister assure the House that measures will be put in place to prevent the purchasers imposing new levels of interest on loans? Drawing a little more on that point, with economic conditions showing some instability, what can the Minister say about the area of active default? My honourable friend in another place, Mr Tim Boswell, said at Second Reading that this is essentially a Treasury Bill, a revenue-generating piece of legislation to ease the Government’s economic difficulties. Is it the Government’s intention that moneys raised by the sale of loans will go to the education budget? Which loans will be selected for sale? What formula is the Government going to use or is it to be a random selection? As the Government are looking to raise £6 billion from the sale, what is the total number of loans to be included in the sale? The Government cut £100 million from higher education dedicated to part-time and mature students. Are the Government persuaded to dedicate part of the sales back to support this important sector? Finally, I should like to touch on the concerns around data protection, an issue which has already been raised. Does the Minister agree that recent revelations of lost data are causing much alarm across the various sectors? It will be equally alarming for students to know that their personal details are to be sold on to a private organisation. What assurances can the Minister give the House of policies and procedures that have been put into place since the Government’s recent difficulties with data going missing or being stolen, and the huge difficulties they face with their IT programmes and systems? I look forward to the Minister’s response.