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Sale of Student Loans Bill

moved Amendment No. 2: 2: Clause 1, page 2, line 4, at end insert— ““( ) Transfer arrangements shall not confer on the loan purchaser the right to alter loan arrangements made under the terms of subsection (4)(b).”” The noble Baroness said: In moving Amendment No. 2 I shall speak also to Amendment No. 4 in this group. Paragraph 8 of the introductory note that explains the purpose of the Bill says: "““The primary protection for borrowers is that the purchaser of loans cannot alter the terms and conditions of that loan (for example, interest rate, repayment rate or repayment threshold)””." It continues: "““As noted, those matters remain governed by Regulations scrutinised by Parliament””." The question underlying Amendments Nos. 2 and 3 is whether it is sufficient to leave this commitment to regulations or whether more detail needs to be written into the Bill. There is nothing in Clauses 1 or 2 to provide any guarantee to students that the onward sale of their loans will not involve any change in the terms and conditions of that loan. All we have is subsection (4)(d), which enables the Secretary of State to, "““require a loan purchaser to make specified arrangements in connection with the administration of loans””," and subsection (4)(e), which prohibits, "““the loan purchaser from making specified arrangements without the Secretary of State’s consent””." Amendment No. 2 would strengthen the commitment by writing into the Bill the principle which has throughout the proceedings in the other place been stressed by Ministers and incorporated into the introductory note. The amendment merely adds a new subsection stating the principle that: "““Transfer arrangements shall not confer on the loan purchaser the right to alter loan arrangements made under the terms of subsection (4)(b)””." In fact, the amendment should really refer to loan regulations rather than—or, perhaps, as well as—loan arrangements. However, in preparing these notes I noticed that paragraph 16 of the Explanatory Notes says explicitly: "““The Secretary of State is not obliged to transfer all of his rights and obligations with respect to the loans in any contract with a purchaser—he may retain some of them if he wishes. For example, the Government does not intend to grant purchasers the right to alter the repayment terms of sold debts. Such terms ""will continue to be governed by Regulations made pursuant to section 22 of the Teaching and Higher Education Act 1998, which are subject to Parliamentary Scrutiny””." Whether regulations or loan arrangements, the principle remains the same. This is an important aspect of the sale arrangements and should be written into the Bill, not left to reliance on Ministers’ intentions as written into the Explanatory Notes or in Hansard. Amendment No. 4 deals with a different issue. It is the intention of the Secretary of State that repayments of student loans should continue to be administered by the Student Loans Company and collected for it by Her Majesty’s Revenue and Customs. In this respect, as was pointed in debates in the other place, for the borrower nothing has changed. The terms and conditions of repayment remain the same. The bodies with which they deal remain the same. Is there any reason why the borrower should not know that the loan has been sold on? Again, the Explanatory Notes are helpful. Paragraph 18 says that it is common practice for sales of this type, "““to proceed without the permission of the borrowers whose loans are being sold, and without giving them prior notice of the sale””." It also says: "““The Government intends to write to borrowers whose loans have been sold soon after the sale has been completed to inform them of the new owner of their debt””." This is necessary because borrowers will read in the newspaper about the sale of the debt and many may be very alarmed at the thought that the new commercial owners will demand a commercial rate of return on their loans. Amendment No. 4 makes it an obligation on the part of the Secretary of State that has statutory standing. It writes into the Bill what is at present merely an intention expressed in the Explanatory Notes. We feel that this would be of advantage. I beg to move.