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Sale of Student Loans Bill

I feel that I need to congratulate the Committee on anticipating some of the things that I am about to say—it is important to have this debate. Before I do so, I refer Members of the Committee back to the protection and regulation of terms and conditions. That comes not under this Bill, but under Section 22 of the Teaching and Higher Education Act 1998. I shall write to the noble Baroness on that point, but it is helpful to let her know that other legislation helps with the protection that we discussed. As we have heard, this group of amendments covers value for money. The principles behind the approach to value for money set out in Amendment No. 6 are wholeheartedly endorsed by the Government. Indeed, as the noble Baronesses, Lady Verma and Lady Sharp, stressed, my honourable friend the Minister for Higher Education and Lifelong Learning placed them on the record in another place during earlier stages of this Bill. The Government have a duty to obtain value for money in all that they do, and all sales of student loans will be subject to a rigorous assessment in that respect. If Ministers and departmental accounting officers are not satisfied that a sale at a given time represents good value for money, it will not go ahead. It is right that the Government have clearly set out for the record the principles of their approach to value for money, but we should not take the unusual step of translating those principles into a set of statutory tests, as Amendment No. 6 would do. The Government have published forecasts of the anticipated receipts from the proposed sales programme over the period of the Comprehensive Spending Review. They total £6.3 billion: that is, £3.4 billion in 2008-09; £1.3 billion in 2009-10; and £1.6 billion in 2010-11. These amounts are forecasts rather than commitments. The Government are committed to the student loans sale programme, but only if it represents good value for money. We have made it clear that these are estimates, and that the actual profile will be subject to market conditions. The noble Baroness referred to market turbulence. The Bill is about enabling a long-term programme of student loans sales, so we need to think about market conditions over the long run. As for any continuation of the current market turbulence translating into poor value for money in any sales, we would not go ahead with a sale in that case. It is important for the Committee to understand that we are not talking about one sale; we are talking about an ongoing programme of sales. Every year, the student loan book is increasing in value as there are more students, particularly with the widening participation agenda. We need to appreciate that this is an ongoing enabling Bill. The noble Baroness, Lady Sharp, raised the question of repayment track records. The whole point of the sale of student loans is to transfer the risk away from the Government. As she suggests, it would be counterproductive if the Government were left holding the riskiest loans and those with a poor repayment profile. We are talking about loans of a particular vintage, regardless of their repayment history. When it comes to the securitisation process and the creation of bonds, perhaps the riskier profile loans might be of interest to particular investors. The noble Baroness is right to highlight that as a concern, and I want to reassure her that that is precisely what we do not intend to happen. We do not intend to see the riskiest loans remaining with the Government.