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Sale of Students Loans Bill

moved Amendment No. 2: 2: Clause 1, page 2, line 13, at end insert— ““(8) 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 transfer 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 to Parliament on expenditure incurred in connection with each transfer arrangement.”” The noble Baroness said: My Lords, that value for money is essential is a point on which there is agreement from all sides of the House. We do not want to be in a situation where the taxpayer or successive Governments are cheated out of money because of a rushed job now. We still feel that there is not an adequate value-for-money framework and hope that we can work together to resolve this significant problem. We are worried that the Bill will create a fire sale. We understand that it is an enabling Bill to ensure that sales can take place, but it is important for the House to know whether plans are already under way to offload a significant portion of them in the near future. Is the rhetoric about providing a framework for future sales just wool being pulled over our eyes? I am curious to know whether the Treasury has been in contact with the Minister and whether it has made any overtures about the necessity of timing in the Bill. In Grand Committee, the Minister mentioned that there were forecasts of revenue from the sales in the Comprehensive Spending Review. We were told that the first part of the loan book was expected to fetch £3.4 billion, yet that was in 2007. Since then, the credit market has changed dramatically. The Government have had to nationalise a major bank. It seems much less likely that they would get a similar price now. I understand that the Minister was clear that these were forecasts and not commitments. However, if a similar-sized chunk of the loan book was expected to draw a much lower price, would the sale go ahead? We on this side of the House are extremely worried that the Government are trying to make some quick cash and that the sale will go ahead in the near future. We are concerned that the concept of value for money will be spun to become value for money in the current market. That would be unacceptable and is something we must guard against. The student loan book is an enormous financial asset that should be maximised, so we need the most transparent and crystalline assurances that all possible effort will be made and every conceivable model used to deliver value for money to the taxpayer. A big question arises over waiting. Why not? I hope that the Minister will be able to answer this, but I suspect that it will be difficult for her. She maintains, of course, that the Bill is not connected to any particular intention to initiate an imminent sale, although a sale has already been budgeted for in this year’s CSR. Does the Minister truly, honestly and openly believe, amid the flurry of problems in the financial industry, some of which are unprecedented, that we will get the best possible deal for the taxpayer if the sale goes ahead at any time soon? Let us be honest: this Bill is being rushed through. The drafting has been subjected to constant last-minute improvements and there has obviously not been enough pre-legislative scrutiny. What is motivating this hurry? We suspect that it is the Government’s desperation to fill the holes in their budget. It is difficult to believe that the sale will not go through if value for money cannot be achieved, as the Minister claimed in Grand Committee, when the CSR has already taken into account the revenue that it would generate. We have spent a lot of time discussing and debating the notion of value for money, but the Government still refuse to put what they mean by it into legislation. We understand that a precise framework in the Bill would amount to giving away our hand before the game has begun. However, the actual changes we seek to make—an analysis of the current climate and so forth—are the most obvious things to do before any sale takes place. I appreciate the need to protect our interests and ensure value for money by not putting too much commercially sensitive information out in the open. I understand that that would be counter-productive, but not being open about how we determine the benefit to the taxpayer is dangerous. Discussions outside the Chamber seem to indicate that the Government might be willing to consider the precepts in our amendment, but to have them applied retrospectively. Indeed, if I understand the position correctly, there is a chance that the Government will table an amendment at Third Reading outlining a value for money framework such as the one we propose in this amendment. It would be published with an assessment of the Government’s success in realising value for money one year after the first sale. The assessment would be made by independent bodies and published widely. If the Government would agree to drafting and tabling such an amendment, we would accept the concession and withdraw our amendment. In the mean time, I look forward to the Minister’s response.