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Sale of Students Loans Bill

My Lords, this is a crucial amendment. It was debated at length in Grand Committee and we are still hoping for further assurances in the Chamber. I agree with the noble Baroness, Lady Sharp, that it is a wide amendment and does not really answer or cover many of the points that we raised in Grand Committee. The Minister said that the original motivation for laying these amendments was, "““creating certainty for potential purchasers””.—[Official Report, 8/5/08; col. GC 198.]" My understanding is that it allows the Government a wider scope to append conditions to the sale to make certain that purchasers do not have too much unquantifiable risk in the form of a future Government. It seems that the necessity of these amendments was oversight; that is, the first mechanism that was designed to give this certainty to investors was a programme that allowed for compensation should any changes be made. This, according to the Minister, was insufficient to give investors certainty. Can she confirm that this assessment—that the compensation package might mean that the loan book was less attractive—was provided by Deutsche Bank? Other discussions revealed another issue that did not seem to preoccupy the Government; namely, whether the Office for National Statistics was able to classify the sale as a genuine sale and a legitimate transfer of risk given that Eurostat is reviewing its guidance. Surely this creates a substantial element of uncertainty. We understand that this guidance often changes. However, if this amendment is really about ensuring increased certainty by allowing for other channels to be considered, does it not make sense to wait until Eurostat has finished revising its guidance? Surely that would enable a clearer picture to emerge of what it is necessary to do to ensure value for money. These amendments bring home the point that the Bill is a rushed job. If the Government’s intentions are as pure as they claim, why are they rushing through a Bill when the jury is still out on one of its primary mechanisms? Are they legislating for failure? Is the Treasury so desperate for the cash that it does not want to make a decision based on all the best information about the nature of the sale? Although we sympathise with the need to do what it takes to get value for money, this confusion remains a serious worry. Obviously, we will have to wait for precise figures to emerge when a sale is imminent, although we do not know when that will be. All the facts seem to point to a bad result. To cover up for badly managed funds, the Government are planning to sell loans in the worst credit market in history without the benefit of knowing where the goalposts lie. This does not seem to be a situation in which the taxpayer will win. Let us be clear: a newspaper headline that read, ““Government get good deal on loans in bad markets””, would be utterly unacceptable. The point about this enormous asset is that ensuring value for money must not constitute the best course in a bad bunch but the best possible course of action. If the markets seem unwilling to recover, has the Minister considered delaying the sale by, say, two years or so? It is important that she should explain the likelihood of the Government abandoning the sale. Value for money for the taxpayer should be deemed an absolute value in our calculations. I sincerely hope that, during the Government’s efforts to ensure that we get it, economists will do the work, not press officers. Telling the public that the loans were sold to protect the taxpayers’ interest when the Government might have been able to get a much better deal had they waited would be tantamount to dishonesty. If uncertainty remains in the classification that makes these amendments necessary, why not wait until that uncertainty can be banished and the taxpayer would be better off?