---

Sale of Student Loans Bill

My Lords, I thank your Lordships for the warm welcome that has been extended to me in my new role. I associate myself very closely with the warm words of tribute to my predecessor, my noble friend Lord Triesman, who played a very important role in championing the question of the Minister for Students. I am delighted to take up his baton in that regard. The debate has been interesting and important and I am grateful to noble Lords for raising a number of important questions. I hope that I can pick up on them today but, if I do not, I look forward to returning to all the issues raised at the Committee stage. Contributions from all sides of the House have indicated that there is a great deal on which we can all agree. We can all accept that our higher education system is recognised as one of the finest in the world and that we must ensure that such prestige is maintained in the years to come. We are as one in our belief that no potential student should be deterred from applying to university or college because of fears that they will not be able to afford it. There is broad consensus, I believe, that a responsible Government should consider how best to manage large and growing public assets such as the student loan book. It is this latter point that is most relevant when considering the Bill before us today. The Government do not believe there is a compelling reason to retain ownership of student loans. As I have said, the private sector is best placed to manage these assets and to assume their associated risks. Initiating an ongoing programme of student loan debt will allow us to release vital resources for government priorities and we are sure that it is the best way to proceed. We would engage in such a programme only if we were sure that it could be implemented without a negative effect on the Government’s broader policy commitments to the higher education sector and if its passing would have no impact on the financial provisions for students. The Bill passes both these tests and provides future Governments with the flexibility to conduct sales according to the legal and financial conditions of the day so that transactions represent good value for money. On the point raised by the noble Lord, Lord Roberts, with regard to powers for Welsh Ministers, as a Welshwoman who is very committed to the devolutionary principle, I feel comfortable in responding to him by saying that, as the responsibility for student loans in Wales has been devolved to Welsh Ministers, it is important that this provision equally applies to Wales. Any decisions on future sales of the Welsh loan book needs to be made in Wales by Welsh Ministers. Clause 8 of the Bill gives them that power. Welsh Ministers are keen to ensure that maximum value for money is achieved for Welsh student loans and that these powers are in place so they can ensure that they do so. The Bill will enable Welsh Ministers to decide when they deem it appropriate to use these powers, bearing in mind the relevant economic and value-for-money considerations. As in England, money gained from any sale of the Welsh loan book is expected to transfer to the Treasury, as the noble Lord has pointed out, with no direct financial gain for the Welsh bloc. In the same way as for England, that is appropriate as the ongoing repayments from student loans also return to central government now. I stress that Welsh Ministers may decide that they do not want to leave this loan book risk on their balance sheet. That is a matter for them, and we are giving them the powers to take those decisions at a time that suits them. Again, as in England, it is important to note that any sale of the Welsh loan book will not have an impact on individual borrowers. The loan system will continue to be administered for Welsh students by the Student Loan Company. The noble Baroness and my noble friend Lady Warwick raised the issue of the use of proceeds—the word ““hypothecation”” comes to mind. She brought up this question when we discussed the legislative programme and the humble Address. I take this opportunity to stress that the Government have a proud record on higher education funding; there has been a 20 per cent real terms increase in the higher education budget. That contrasts with the 36 per cent real terms cut over the past eight years under the Conservative Government, so I do not accept the lessons being taught by the noble Baroness, Lady Verma, when she refers to a £100 million cut in funding for higher education. We need to be clear on the funding pattern. We have set challenging targets for the higher education system over the spending review period.