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Sale of Student Loans Bill

moved Amendment No. 6: 6: Clause 1, page 2, line 11, at end insert— ““( ) In advance of entering into transfer arrangements, the Secretary of State shall— (a) examine the prevailing market conditions and ensure that a competitive market for the loans has been generated; (b) provide the market with full information about the loan book in order that the assets can be efficiently valued; (c) ensure that there has been a genuine transer of risk from the public accounts to the private sector; (d) assess the proceeds that look likely to be achieved in the transaction using full and clear market information and a comparison with keeping the loans on the Government books, in terms of both likely income flows and levels of risk; (e) make a written statement on expenditure incurred in connection with each transfer arrangement.”” The noble Baroness said: I understand that this is an enabling Bill and that there is no specific timetable for the use of its powers. However, timing is all-important. The commercial attractiveness of student loans generally is fairly high. Students rarely default and payment is made through the tax system, but that does not mean that there will always be a fair price. Market conditions are extremely influential. The current market, especially in terms of the packaging and sale of debt, does not seem to present the most attractive options for sale. We are very concerned that there does not seem to be any mechanism to ensure that we get value for money for the sale. While ministerial assurances go some way, we strongly feel that there needs to be provision in the Bill that guarantees proper investigation of market conditions, as well as adequate disclosure of information, so that loans can be valued efficiently. It is essential that loans generate the appropriate amount of income for the Treasury. Let me be frank. There seems to be nothing in this Bill to stop the Secretary of State from selling off parts of the student loan book hastily, just to plug a few holes in a leaky budget. I should like the Government to be upfront about their intentions. Of course, I expect that the Minister will assure me that the Government intend to do their best to realise value for money on these assets, but is that good enough? It would go a very long way to assuage some cynical feelings if the Minister gave a firm commitment that they will not be sold off without the most thorough examinations of market conditions and an assurance that the sale fetches the best possible price that can be achieved. This price should be the best possible in general terms, not the best in a bad time. The priority for the sale should be achieving value for money, not plugging holes in a mismanaged Treasury. Achieving value for money can come only when there is no time pressure to capitalise on the loan book. There is genuine worry that in order to raise extra revenue, the Government might too hastily sell off the loan book, and thus not get as much as could have been achieved had they been more prudent. I think the Minister will completely understand this scepticism. Thus, will she explain if there is an expected timetable for sales, what is their volume and what analysis has been conducted about the current state of debt markets and the commercial viability of loans in such a market? Has there been a report from the Treasury on these matters? It would be interesting if she were willing to give me her analysis of the current debt markets and the relationship to the commercial viability of the loans. With the collapse of sub-prime debt affecting credit products with much higher ratings in concert with the pressing need for increased liquidity in the market, does the Minister not agree that that getting value for money seems unlikely in the present climate? What general economic factors and broad market trends generally bolster debt sales? Are the Government willing to wait for a recovery in the debt markets? What would signify such a recovery? Essentially, we need transparent and open value-for-money criteria. Indeed, some of the words we used in this amendment came from the undertakings by Bill Rammell in another place; thus we sincerely hope that this amendment will find support on the Government Benches. I beg to move.